What happened

Shares of MercadoLibre (MELI -1.69%) were climbing today after the Latin American e-commerce company delivered a strong third-quarter earnings report last night and beat estimates on the bottom line.

As of 2:54 p.m. ET, the stock was up 7.1%.

So what

Revenue jumped 60.6% on a currency-neutral basis to $2.69 billion, which essentially matched estimates at $2.68 billion.

Growth was strong in both e-commerce and payments as gross merchandise volume (GMV) rose 31.5% to $8.6 billion, and total payment volume jumped 76.4% to $32.2 billion.

GMV was up 20% in its three biggest markets -- Brazil, Mexico, and Argentina -- and the company said the number of buyers on the platform continues to grow, increasing 10% to 79 million, even as brick-and-mortar retailers come back to life in the region.

Profitability also improved as the business scaled, with operating margin increasing to 11% even as the company's allowance for doubtful accounts nearly tripled, showing it's planning for a recession to hit its credit portfolio. Earnings per share, meanwhile, jumped from $1.92 to $2.56, topping expectations at $2.42.

In the shareholder letter, management said, "After a successful third quarter that delivered strong growth and profitability, our attention is now focused on executing well in the fourth quarter, which brings Black Friday, the FIFA World Cup and Christmas back onto the retail calendar."

Now what

MercadoLibre didn't offer guidance, but the company's results are especially impressive considering the challenges that U.S. e-commerce counterparts like Amazon are facing.

Gross margin has now improved for five quarters in a row and topped 50% in the third quarter, a level it hasn't reached since 2018. That's a sign the company is deriving more of its profits from higher-margin services like its marketplace, payments, and logistics, and it's a bullish indicator for future growth.

With a wide-open market in front of it in Latin America's expanding middle class, the stock should continue to be a winner if margins keep ramping higher.