MercadoLibre’s Q2 profit doubles on higher sales volume, user growth

SAO PAULO (Reuters) -South American e-commerce giant MercadoLibre (NASDAQ:) reported a 113% rise in its second-quarter net income on Wednesday to $261.9 million, amid higher sales volume and an increase in users.

The company, with a presence in over 18 countries across Latin America, saw its net revenue rise 57.3% in constant currency to $3.4 billion.

Over the quarter, MercadoLibre said it added 8.1 million new users across its operations, bringing its total active user base to 108.6 million.

Operating income rose 123.7% in dollar terms, reaching $558 million, while its operating margin was 16.3% compared to 9.6% a year ago, boosted by its performance in Brazil and Mexico.

At its fintech unit, revenues grew 48.4% in local currency to $1.5 billion, fueled by an 18.3% growth of active Mercado Pago users. Total payment volume jumped 96.6% in constant currency to $42 billion.

“Rapid top line growth and margin expansion were broad-based across geographies and business units,” Chief Financial Officer Pedro Arnt said in a statement.

Arnt added that the company intends to use “some of the headroom” created by its operating leverage to “lean into certain areas of the business” during the remaining of the year.

The company’s loan portfolio meanwhile rose over 21% and reached $3.3 billion in the quarter, as the period was marked by good profitability and default rate remained stable in operations with major exposure until 90 days.

Gross merchandise volume (GMV), a key metric in the e-commerce industry, was up 47.2% in constant currency to hit $10.5 billion.

Citi analysts said in a note that the company had a good quarter, highlighting it continues to gain market share, “especially in Brazil and Mexico,” and deliver consistent margin expansion.

“The next steps? It seems the focus is to explore the credit opps in Mexico, invest in ads technology and gain scale in 1P (still not profitable),” they said.