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3 Key Things You Probably Missed From MercadoLibre's Earnings Report

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You'll want to know what it's doing with airlines, insurance, and this strategic shift.

Not surprisingly, MercadoLibre (MELI 3.57%) finished 2020 on a high note with another record quarter in the books. In addition to reviewing its fantastic results on its earnings call from earlier in March, management shared details about important new initiatives. On a Fool Live episode of "The Wrap" recorded on March 2, contributors Jamal Carnette, Jason Hall, and Brian Withers discuss the three things that investors want to know about this Latin American e-commerce and payments leader's earnings call, but may have missed.

Jason Hall: Brian, let's hop over and talk about MercadoLibre. We've talked about them a little bit a couple of times on Live recently. But Brian, I know you found three things that you want to make sure people haven't missed about their earnings call.

Brian Withers: These are "behind the headlines" tidbits that investors should be really interested in as to why I think MercadoLibre is just a solid company and one that I'm going to hold for the long term. The first thing was they just made a side comment that said they've launched now MercadoLibre Air and have a fleet of seven airplanes. They're following in Amazon's footsteps and really continuing to build out their logistics infrastructure. What they call their managed network where somebody uses their Mercado Envios, which is their logistic services, is 80% of all orders going through their e-commerce business. It might be just they're taking advantage of their shipping network and not using their fulfillment centers. But their fulfillment business is also growing considerably.

Just remember that before this year, they were all entirely third party, which means they're facilitating sales from a brand or a business, or an individual to a consumer. They didn't own inventory, but they're owning this large fulfillment network. In fact, in Mexico, which has helped the penetration there, their consolidated fulfillment has reached 60%. Sixty percent of all the items go through their fulfillment network. That's really helping them grow in Mexico and giving, back to what Jason said, trust in the e-commerce platform.

The second thing is now they offer insurance for theft and damage of cellphones. If you're buying your cellphone through MercadoLibre, MercadoLibre is actually the one that's offering insurance. Now, they've had extended warranties and stuff in the past, but this is just another step to build out an extensive fintech platform that's going to help the significantly under banked and unbanked population in the region. In fact, 50 million people have funds invested in their mobile wallet and are making money on their money market funds. Pretty cool.

The other thing in Brazil, just on the back of how deep they are getting into this Fintech business is they now have their own MercadoLibre branded debit card, and they replaced 3.8 million third-party cards in Brazil to the MercadoLibre. They are really moving heavily into this fintech business.

The last piece that you might have missed is they are getting into first-party sales where this is where Amazon started. They bought the books and then would resell them to consumers. I don't think MercadoLibre is doing books, but in the quarter, they did $200 million worth of first-party sales. This was the first time they announced the volume and they did $200 million worth of business like it was nothing. That's amazing. That's a great way to start and they're looking at doing this for anchor products, filling in gaps where they don't have the full end-to-end stuff on their platform and where they can deliver better pricing and bulk pricing to consumers in regions where they can be the low-cost retailer. Look for them to start to grow that business and become a larger portion of what they do.

Really, a couple of things and the stock sold off to me. Part of it, it's quadrupled in the last 12 months. I'm not surprised it's pulled back a little bit. But this is a really smart management team and they have a tremendous amount of scale and they're taking advantage of it and just pushing the pedal to the metal on taking share of e-commerce in Latin America.

Hall: I always leave myself muted at the most inopportune moments.

Withers: I'm sorry [laughs]

Hall: Brian, thanks for sharing that. Jamal, I don't know if you have anything to add on MercadoLibre.

Jamal Carnette: I own it, love it. Brian nailed it. Perfect.

Hall: I agree.

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