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Why Is MercadoLibre (MELI) Down 17% Since Last Earnings Report?
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It has been about a month since the last earnings report for MercadoLibre (MELI - Free Report) . Shares have lost about 17% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MercadoLibre due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Mercadolibre's Q2 Earnings Beat Estimates
MercadoLibre reported second-quarter 2022 earnings of $2.43 per share, which surpassed the Zacks Consensus Estimate by 44.6%. Further, the figure surged 77.4% year over year.
The company’s revenues jumped 53% on a year-over-year basis (57% on a FX-neutral basis) to $2.6 billion. The top line surpassed the Zacks Consensus Estimate of $2.5 billion.
The total revenues were driven by accelerating commerce and fintech revenues, which grew 23% and 113% year over year to $1.4 billion and $1.2 billion, respectively.
Increasing total payments volume (TPV), courtesy of the robust Mercado Pago, aided the company.
MercadoLibre’s rising gross merchandise volume (GMV) remained another positive. Strong shipment growth on MercadoEnvios and the growing penetration of managed networks in the reported quarter were tailwinds.
Strengthening momentum across Mercado Fondo and Mercado Credito also benefited the company.
Quarter in Detail
Brazil: Net revenues in the second quarter were $1.45 billion (55.9% of the total revenues), rising 53% year over year.
Argentina: The market generated revenues of $594 million (22.9% of the top line), which surged 62% year over year.
Mexico: Net revenues in the reported quarter were $428 million (16.5% of the total revenues), soaring 65% year over year.
Other countries: The markets generated revenues of $124 million (4.7% of the total revenues), declining 2.4% on a year-over-year basis.
Key Metrics
GMV of $8.6 billion jumped 21.8% and 26.2% on a reported and a FX-neutral basis, respectively, from the year-ago quarter.
The number of successful items sold was 275 million, up 12.2% year over year. The number of successful items shipped rose 14.3% year over year to 264 million. This can be attributed to the sturdy performance of MercadoEnvios.
TPV increased 72.2% and 83.9% year over year on a reported and a FX-neutral basis, respectively, to $30.2 billion. This was driven by the strong performance of Mercado Pago. Off-Marketplace TVP was $21.2 billion, up 135% year over year on a FX-neutral basis.
Acquiring TPV, which includes on-platform, online payments, MPoS and QR payments, was $20.8 billion, up 47.5% year over year.
Also, $9.4 billion of digital accounts’ TPV, including wallet payments, P2P transfers between Mercado Pago accounts, and card transactions, surged 167% year over year.
TPV on the marketplace was $8.3 billion, up 23.3% year over year. Total payment transactions increased 72.9% year over year to 1.3 billion.
Unique active users totaled 84 million, up 10.5% year over year.
Operating Details
For the second quarter, the gross margin was 49.4%, expanding 510 basis points (bps) year over year.
Operating expenses were $1.03 billion, which increased 75.9% year over year. As a percentage of revenues, the figure expanded 530 bps from the year-ago quarter to 39.8% in the reported quarter.
The company reported $250 million of income from operations in the reported quarter, which rose 50.6% year over year. The operating margin was 9.6%, contracting 20 bps from the prior-year quarter.
Balance Sheet
As of Jun 30, 2022, cash and cash equivalents were $1.3 billion, down from $1.6 billion as of Mar 31, 2022.
Short-term investments were $1.6 billion for the second quarter, up from $1.4 billion in the previous quarter.
Accounts receivable amounted to $102 million, up from $98 million in the first quarter. The inventory level at the second-quarter end was $183 million, down from $239 million at the end of the prior quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 47.44% due to these changes.
VGM Scores
At this time, MercadoLibre has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, MercadoLibre has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is MercadoLibre (MELI) Down 17% Since Last Earnings Report?
It has been about a month since the last earnings report for MercadoLibre (MELI - Free Report) . Shares have lost about 17% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MercadoLibre due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Mercadolibre's Q2 Earnings Beat Estimates
MercadoLibre reported second-quarter 2022 earnings of $2.43 per share, which surpassed the Zacks Consensus Estimate by 44.6%. Further, the figure surged 77.4% year over year.
The company’s revenues jumped 53% on a year-over-year basis (57% on a FX-neutral basis) to $2.6 billion. The top line surpassed the Zacks Consensus Estimate of $2.5 billion.
The total revenues were driven by accelerating commerce and fintech revenues, which grew 23% and 113% year over year to $1.4 billion and $1.2 billion, respectively.
Increasing total payments volume (TPV), courtesy of the robust Mercado Pago, aided the company.
MercadoLibre’s rising gross merchandise volume (GMV) remained another positive. Strong shipment growth on MercadoEnvios and the growing penetration of managed networks in the reported quarter were tailwinds.
Strengthening momentum across Mercado Fondo and Mercado Credito also benefited the company.
Quarter in Detail
Brazil: Net revenues in the second quarter were $1.45 billion (55.9% of the total revenues), rising 53% year over year.
Argentina: The market generated revenues of $594 million (22.9% of the top line), which surged 62% year over year.
Mexico: Net revenues in the reported quarter were $428 million (16.5% of the total revenues), soaring 65% year over year.
Other countries: The markets generated revenues of $124 million (4.7% of the total revenues), declining 2.4% on a year-over-year basis.
Key Metrics
GMV of $8.6 billion jumped 21.8% and 26.2% on a reported and a FX-neutral basis, respectively, from the year-ago quarter.
The number of successful items sold was 275 million, up 12.2% year over year. The number of successful items shipped rose 14.3% year over year to 264 million. This can be attributed to the sturdy performance of MercadoEnvios.
TPV increased 72.2% and 83.9% year over year on a reported and a FX-neutral basis, respectively, to $30.2 billion. This was driven by the strong performance of Mercado Pago. Off-Marketplace TVP was $21.2 billion, up 135% year over year on a FX-neutral basis.
Acquiring TPV, which includes on-platform, online payments, MPoS and QR payments, was $20.8 billion, up 47.5% year over year.
Also, $9.4 billion of digital accounts’ TPV, including wallet payments, P2P transfers between Mercado Pago accounts, and card transactions, surged 167% year over year.
TPV on the marketplace was $8.3 billion, up 23.3% year over year. Total payment transactions increased 72.9% year over year to 1.3 billion.
Unique active users totaled 84 million, up 10.5% year over year.
Operating Details
For the second quarter, the gross margin was 49.4%, expanding 510 basis points (bps) year over year.
Operating expenses were $1.03 billion, which increased 75.9% year over year. As a percentage of revenues, the figure expanded 530 bps from the year-ago quarter to 39.8% in the reported quarter.
The company reported $250 million of income from operations in the reported quarter, which rose 50.6% year over year. The operating margin was 9.6%, contracting 20 bps from the prior-year quarter.
Balance Sheet
As of Jun 30, 2022, cash and cash equivalents were $1.3 billion, down from $1.6 billion as of Mar 31, 2022.
Short-term investments were $1.6 billion for the second quarter, up from $1.4 billion in the previous quarter.
Accounts receivable amounted to $102 million, up from $98 million in the first quarter. The inventory level at the second-quarter end was $183 million, down from $239 million at the end of the prior quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 47.44% due to these changes.
VGM Scores
At this time, MercadoLibre has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, MercadoLibre has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.