MercadoLibre stock jumps on strong Q2 beat

Investing.com -- Shares of MercadoLibre (NASDAQ:MELI) were up 8.7% in pre-open trade on Friday after the company reported second quarter results beating estimates.

For the second quarter, the e-commerce giant beat estimates by 11% on net revenue and 25% on earnings, reinforcing Jefferies' "Buy" rating on the stock.

The company also reported an 8% beat on EBITDA and EBIT, and a 25% beat on net income, which surged by 103% year-on-year to $531 million.

Key revenue drivers surpassed market expectations, with Gross Merchandise Volume (GMV) up by 6%, third-party (3P) commerce revenue up by 16%, fintech revenues up by 7%, and credit revenue up by 4%.

In the commerce segment, MercadoLibre saw significant GMV acceleration in Brazil, which grew by 36% in Q2 compared to 30% in Q1. Argentina showed marked improvement, with GMV down 8% in USD terms versus a 28% decline in Q1, and items sold returning to 8% growth.

Mexico remained solid with 30% growth. Unique buyers increased by 19% to 56.6 million, and items per buyer grew by 9% year-on-year. Factors contributing to strong GMV growth included rising penetration of fulfillment and free shipping, and record delivery speeds in key cities.

The 3P take rate improved by 1 percentage point sequentially to 17.8%, excluding ads, partly driven by higher shipping revenue. Ad penetration increased by 10 basis points to 2.0%, resulting in 51% ad revenue growth.

Credit revenue grew by 47% year-on-year, supported by a 51% increase in the loan book to $4.9 billion, with credit cards driving 73% of this growth over the past 12 months. MELI issued 1.6 million new credit cards in Brazil and Mexico. 

Although the net income margin after losses (NIMAL) declined by 5.7 percentage points year-on-year and 0.4 percentage points sequentially, this was due to a portfolio shift towards credit cards, with management reporting stable to improving NIMAL in each specific portfolio.

Assets under management in the Pago remunerated accounts grew by 86% year-on-year to $6.6 billion, with strong growth in Brazil and Argentina, and acceleration expected in Mexico following the launch of 15% deposit rates.

Logistics net costs increased by 1.3 percentage points of net revenue year-on-year due to investments in fulfillment and the expansion of MELI+, as well as higher short-term costs in Mexico driven by network capacity constraints.

However, the net income margin improved by 3.2 percentage points y/y on a like-for-like basis.