Market Livre reverses losses and gains R$ 845 million in the 4th quarter – 02/23/2023 – Market

MercadoLibre released this Thursday (23) higher-than-expected earnings in the fourth quarter, reversing the loss of the same period of the previous year, with sales growth on its platform and greater revenue generation from its financial arm.

The company had a net profit of US$ 164.7 million (R$ 845 million) from October to December, after a loss of US$ 46.1 million (R$ 236.6 million) a year earlier. Analysts, on average, were projecting a profit of $125.8 million (R$645.7 million), according to data compiled by Refinitiv.

The company, with shares listed in New York, had net revenue of US$ 3 billion (R$ 15.4 billion) in the fourth quarter, growth of 40.9% in comparison with the same period of the previous year (56.5% in constant currency).

In the e-commerce business, net revenue increased 22.3% in the quarter compared to a year earlier, with marketplace sales growing 20.8% (34.7% at constant currency), to US$9.6 billion ( R$ 49.3 billion), according to the GMV concept (gross value of goods).

The GMV, whose trend of deceleration in many retailers has been the focus of the market, had been US$ 8.6 billion in the third quarter of last year and US$ 8 billion in the fourth quarter of 2021.

“The number of items purchased by buyers remained at the same level when compared to the same quarter of the previous year, but the expansion in the average amount spent per item and the increase in the number of users was reflected in the significant increase in the sales volume on the marketplace” , the company said in a statement.

Market Livre said it gained market share across its e-commerce operation, particularly in Mexico and Brazil.

The company’s financial arm, Market Pago, saw its net income rise 73.5% (92.7% in local currency) in 12 months, to US$ 1.3 billion (R$ 6.7 billion).

“Market Pago performed above expectations with the contribution of payment services and the digital account, both categories whose total volume of payments grew by three digits last year”, said the company.

The credit portfolio was stable at US$ 2.8 billion (R$ 14.4 billion), and defaults up to 90 days fell from 13% to 10% on a sequential basis.

“We had a relevant reduction in bad debt partly due to a decision in the middle of the year to focus on lower risk customers and partly also due to seasonality”, said to Reuters the senior vice president of strategy, corporate development and investor relations, Andre Keys. He added that factors such as taxes and back to school could impact the data at the beginning of the year.

The executive also said that the company’s portfolio is short-term. “Being stable does not mean that we have not made new concessions, but that we continue to grant at the same pace. It remains a business that is very much alive, but we are not with our foot on the accelerator”, he said.

The total volume of payments increased 45.3% (79.5% in constant currency), to US$ 36 billion (R$ 184.8 billion), compared to the same period in 2021.

Chaves said that Market Livre will continue to increase investments in Brazil in 2023, but did not provide further details on the magnitude of the growth.

Regarding the crisis at rival Americanas, he stated that the situation does not change Market Livre’s plans, but that it opens up opportunities for growth in areas that the company had already planned.