MercadoLibre announced first quarter 2020 results and main trends related to COVID-19
By MercadoLibre
MercadoLibre, Inc. (Nasdaq: MELI), today reported the financial results for the first quarter of the year. “Given the difficult circumstances facing the world, we are optimistic about the results we have delivered during the first quarter of 2020. Although less affected than other businesses and industries in Latin America, our e-commerce and fintech businesses showed short-term impacts generated in March due to the outbreak of Coronavirus, with a strong rebound throughout April,” said Pedro Arnt, Chief Financial Officer of Mercado Libre.
During the presentation of the quarterly results, he highlighted: “In this context, our strategy has focused mainly on three fronts: the well-being of our collaborators, the uninterrupted operation of our e-commerce and fintech solutions, which are proving to be particularly suitable to help society to face the current pandemic, and the coordination of our efforts with the authorities of the countries in which we operate. ” “Finally, and most importantly, our hearts go out to those individuals and families affected by COVID-19, and our gratitude and thanks to all who are on the front lines working side by side in this unprecedented global health crisis,” concluded Arnt.
Key trends related to Covid-19
- The total or partial isolations imposed at the end of March by governments throughout Latin America affected countries and business units differently. In addition, the negative impact was greater in the initial weeks, with gradual improvements over time.
- The e-commerce business reached a low point during the second half of March. In April, growth rates have recovered, both in the number of items sold and in the total volume of money transacted. The drop and subsequent recovery was more pronounced in Argentina and, to a lesser extent, in Brazil, while Mexico, Chile and Colombia did not show significant differences during the second half of March and April.
- Initially, consumers seem to have reduced spending on non-essential items until they were clearer about the evolution of the situation. This led to a mixed change in sales. The health, everyday products and toys categories showed strength, with 100% year-on-year volume growth. In contrast, certain non-essential categories, such as auto parts and consumer electronics, recorded declines in growth rates. Quarantine regimes, when implemented in ways that impeded the operation of stores, lead to delays in orders and possible cancellations.
- The logistics network managed by MercadoLibre continued to function normally, guaranteeing on-time deliveries and the storage centers remain fully operational throughout the region.
- The fintech business also experienced an initial slowdown during the third week of March, followed by sequential weekly improvements during the last week of March and April. The slowdown in the number and volume of payments processed was mainly a consequence of the lower traffic in physical stores, with a direct impact on the mPos and QR businesses, partially offset by the relative strength in commercial services for sellers within the platform.
General results for the quarter:
● The unique active user base during the quarter increased by 30.9%, reaching 43.2 million.
● First quarter net income was USD 652.1 million, a year-on-year increase of 37.6% in dollars and 70.5% in constant currency.
● Gross profit for the quarter was USD 312.8 million, with a margin of 48.0%, compared to 50.0% in the same quarter of last year.
● The quarter ended with an operating loss of USD 29.7 million, significantly less than the USD 68.9 million in the previous quarter.
● The same occurs with the net loss for the quarter that totaled USD 21.1 million compared to USD 54.0 million in the last quarter of last year, as a result of the premise of maintaining a sustainable balance between growth and investments.
Outstanding results of the fintech business quarter:
● The total volume of payments processed during the quarter through Mercado Pago was USD 8,094.5 million , a year-on-year increase of 43.5% in dollars and 82.2% in constant currency. 290.7 million transactions were processed in the period, representing an interannual increase of 102.0%.
● Mercado Pago continues to grow its payment processing service outside of the MercadoLibre platform. On a consolidated basis, the total volume of payments off the platform reached USD 4,650.1 million, with growth
84.2% year-on-year in dollars and 139.5% in constant currency, through 217.3 million payments in the quarter, representing 146.2% year-on-year growth.
● In consolidated terms, the total volume of payments processed through “MPOS” mobile point of sale devices grew by 103.3% year-on-year in constant currency.
● Transactions through the virtual wallet exceeded USD 1.3 billion on a consolidated basis, which implies a growth of 299.2% year-on-year in constant currency. The active wallet base of the virtual wallet grew by 155.1% compared to the first quarter of 2019, already adding more than 8 million unique payers during the reported period. The total volume of payments processed through the digital wallet continues to grow at triple-digit year-on-year rates in Argentina, Brazil and Mexico.
● During the quarter, the balance investment functionality was implemented in Mexico, which was already available in Argentina and Brazil. Thus, 7.3 million users in the region have already invested their balances in Mercado Fondo.
Results highlights two of the quarter of the e-Commerce business:
● The total value of the traded items for the quarter was USD 3,414.1 million, which represents an interannual growth of 10.6% in USD and 34.2% in constant currency. 69.8% of that value comes from transactions made from mobile devices.
● 105.7 million items were sold, implying a year-on-year growth of 27.6%.
● 267.4 million publications were registered on our platform, which represents an interannual increase of 29.8%.
● 90.2 million items were shipped through Mercado Envíos, a 44.6% year-on-year increase, driven mainly by the growth of the company's free shipping program.
This is a machine translation of the original press release issued in Spanish.
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