$MELI Results vs. What I Was Looking For
MercadoLibre continues to just be an absolute powerhouse. It's my #1 position in terms of cost basis and current percentage of my overall portfolio, and I continue to have no regrets.

Here's what I wrote yesterday along with my notes (in italics) of how they did.

MercadoLibre, Inc. ($MELI) - Reporting earnings tomorrow (5/5) afternoon
One of my highest conviction positions. They do it all and they do it incredibly well.

Here's what I'm looking for:

  • Can they sustain the revenue growth they've seen since COVID began (73% in 2020 and 78% in 2021)?

63% here in Q1, roughly matching Q3 and Q4 2021.

  • Can they bring margins back up (59% in 2017 vs 42.5% in 2021)?

Q1 jumped to 47.7%, 480bps above Q1 2020 and their highest quarterly GPM since Q2 2020.

  • FCF plummeted as capex more than doubled in 2021. I'm not against it. Fulfillment services is a key cog in the wheel. Just curious to see if that trend continues in 2022. I would imagine it does.

Q1 FCF of (370MM) vs Q1'21 (378MM). Q1 is always red so it's good to see this Q1 a little less red.

  • In terms of specific KPIs, I'd like to see growth of unique active users by >50%, gross merchandise volume by >33%, and total payment volume by >45%.

Ok, I was a bit ambitious here. UAUs came in at a healthy 16%. GMS at 27%, and TPV at 72%. A couple other KPIs worth noting: Their Commerce take rate was up 170bps to 16.7%, their Fintech take rate was up 60bps to 3.8%, their logistics network penetration broke 90% for the first time ever (90.55), their credit card portfolio has gone from non-existent in 2020 to 468MM in Q1'22, and their overall credit portfolio hit $2.4B (up 319%).

  • Watching total payment transactions via MercadoPago closely as well.

Up 73%.

  • Will management comment on Shopee (Sea Limited $SE) becoming authorized to operate as payment institution in Brazil?

TBD. I haven't listened to the call/read the transcript yet.

All in all, they continue to impress me.
Thomas's avatar
Extremely strong results! My highest conviction stock too, doing this in the current economic environment shows the strength of this business.
Steve Matt's avatar
@smh Amen!

Let me know if you ever link your portfolios. I'd love to use the compare feature to see what percent overlap we'd have. I'd imagine it'd be high if MELI is both one of our highest conviction stocks lol
Thomas's avatar
@interrobangbros Wish I could! My European broker doesn’t let me connect it sadly..
Steve Matt's avatar
@smh Ah, bummer!
Great earnings digest! Management did not address Shopee's operation in Brazil though.
Steve Matt's avatar
@deeboinv Yeah. I didn't get a chance to listen but I Ctrl-F'ed the transcript. No mention of Sea, Shopee, competition, etc.
@interrobangbros the greatest insight management provided imo was stating that their biggest concern is to correctly dimension it's technology team (ie, having enough systems engineers to develop code in the appropriate pace). They shared that this was more a constraint of growth in the past than competition.
Steve Matt's avatar
@deeboinv Great information, thanks! Of All the companies I own, I think I trust MercadoLibre management the most. They've done an incredible job executing their vision and expanding their optionality.