Image: MercadoLibre.

Latin America has been far from healthy from an economic standpoint lately, and that has had huge implications for regional e-commerce giant MercadoLibre (NASDAQ:MELI). Just as eBay (NASDAQ:EBAY) proved sensitive to economic conditions during the 2008 recession, so too has MercadoLibre suffered from a big slowdown in Brazil and elsewhere in the Latin American region. Coming into Wednesday's third-quarter financial report, MercadoLibre investors were braced for tepid sales growth and a big drop in earnings, but the company's results actually held up far better than expected. Let's look more closely at MercadoLibre and how it managed to surprise investors this quarter.

MercadoLibre wins big
MercadoLibre's third-quarter numbers surpassed even the rosiest expectations among those following the stock. Revenue jumped 14% to $168.6 million, doubling the 7% growth rate that investors had expected to see from the e-commerce specialist. Net income soared 35% to $45.6 million, and even after taking out the positive impact of certain nonrecurring items, adjusted earnings of $0.75 per share were a nickel better than the consensus forecast among investors.

MercadoLibre grew strongly on the operational front, with total items sold jumping 26% to 34 million. Gross merchandise volume climbed nearly 10% to $1.84 billion, and that masked much faster growth of 77% when measured in local currencies, most of which have fallen sharply against the U.S. dollar over the past year. On MercadoPago, total payment transactions climbed 75% to 22 million, with volume climbing 42% in dollar terms to $1.38 billion. MercadoPago's penetration picked up another percentage point since the second quarter to 58%, and shipping service MercadoEnvios reached the 45% mark in the company's four major markets, including 60% in Brazil.

MercadoLibre also kept expanding its network. The company added 300 new brands and large retailers to its Official Stores initiative, and its free-financing listing type in Brazil helped the company boost revenue from financing options by more than 80% in local-currency terms. MercadoPago's merchant services solutions also gained in popularity, with local-currency-based sales doubling from year-ago levels.

CFO Pedro Arnt once again noted how well MercadoLibre has done lately. "Our business continued to show strong traction across the board," Arnt said. "We remain excited about our business and future prospects and will continue to focus relentless on innovation and execution of our strategic initiatives."

What's ahead for MercadoLibre?
Despite the solid quarter, MercadoLibre can't afford to take better conditions for granted. Operating margins fell more than five percentage points from year-ago levels, with most of the decline coming from currency devaluations. Even with some signs that the Latin American economy might be firming up, weakness in key commodity markets could continue to put pressure on certain countries that are particularly reliant on natural resources. In turn, MercadoLibre can't rule out the possibility of further devaluations down the road that could hurt results.

Nevertheless, the popularity of MercadoLibre shows that the company has a much steeper potential growth trajectory than the more mature eBay has in the U.S. market. MercadoLibre boasted 138.4 million registered users at the end of the third quarter of 2015, up by more than 23 million users over the past year. That growth has accelerated recently, with 6.1 million new users in the third quarter alone, suggesting that the network effect that MercadoLibre wants -- and that eBay used to its advantage during its highest-growth phase -- could finally be kicking in after a tough economic period.

Investors were quite pleased with MercadoLibre's surprising results, sending the stock up 5% in the first hour of after-market trading following the announcement. Even though it's too early to call a full-blown turnaround in Latin America, MercadoLibre has all the growth potential that eBay had in the U.S. market along with still having its payment service and other key units under its corporate umbrella. Given how much all of those services are growing, MercadoLibre should have plenty of room to grow further in the months and years to come.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends eBay and MercadoLibre. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.