In absolute terms, I think the quarter was spectacular on all fronts. In relative terms, it’s been a normal quarter for Mercado Libre. 2020 and 2021 proved to be a severe issue for many companies that grew more than they were used to. Almost all of them are citing ‘tough comps’ and are seeing little to no growth, or some’s revenue is even declining. This is not bad, it is natural, when companies experience one of these abnormal periods of growths, they then have to digest it, which means they’ll experience a short term headwind. In Mercado Libre’s case, the rule does not seem to apply. In 2020, the company grew 73% to 4bn in revenue, following a 2021 in which it grew 77% to 7bn. Now, they’ve reported 10.5bn in revenue in this last fiscal year, 2022, which means another 50% growth over 2021.

Moreover, 2022 has been accompanied by increased efficiency, from all perspective, but without impacting the business. Gross margin expanded over 800bps, the operating margin over 1100bps and net profit margin 600bps. However, even though the company spent less at an overall level, Mercado Envíos kept growing penetration, Mercado Pago’s TPV grew at 80%, the marketplace grew GMV by over 30% and the credit portfolio as well.

The upside at a topline and at an operating level are very large. The company keeps expanding its catalog of offerings and becoming an ‘everything business’, now focusing more than before on advertisements, a sector they mentioned has ‘an attractive EBIT margin’.

Lastly, I think the continued investments Mercado libre has made over the past couple of years have been very rewarding, making the company the authentic and undisputed leader in every main market they operate. I believe further investments to solidify their position in Mexico can be in that line as well.