MercadoLibre, Inc. MELI reported fourth-quarter 2018 loss of 5 cents per share, narrower than the Zacks Consensus Estimate of 18 cents. The figure also compares favorably with loss of $1.53 in the year-ago period and loss of 23 cents per share in the third quarter.
Total revenues increased 19.5% year over year (61.8% on an FX neutral basis) to $428 million, surpassing the Zacks Consensus estimate of $404.4 million.
The company’s online-to-offline payment offerings continued to gain traction in the fourth quarter, which contributed considerably to revenue generation.
Key Metrics
GMV of $3.2 billion decreased 10.6% year over year but increased 17.6% on an FX neutral basis. This can be primarily attributed to a decline in the company’s free shipping offers.
Total confirmed registered users at the end of the reported quarter were 267.4 million, improving 26.2% year over year. Further, new confirmed registered users during the period were 18.8 million, increasing 75.7% on a year-over-year basis.
Total payment volume (TPV) was up 22.1% on a year-over-year basis to $5.3 billion. This was due to strong performance of MercadoPago.
Total volume of payments on marketplace was $2.95 billion, up 0.1% year over year. Further, total payment transactions increased 71.6% year over year to 125.6 million.
Unique buyers improved 7.3% year over year to 19 million. However, unique sellers were 4.1 million, down 10.9% from the prior-year quarter.
Operating Details
Gross margin was 47.8%, contracting 900 basis points year over year. This can be attributed to increasing expenses related to transition of infrastructure on public clouds, free shipping subsidies, warehousing and discounts on mPOS devices.
Adjusted operating expenses totaled $205.6 million (48% of total revenues), reflecting a decrease of 23.3% year over year.
The company reported operating loss of $0.8 million compared with the year-ago figure of $64.6 million.
Balance Sheet & Cash Flow
At the end of the fourth quarter, cash and cash equivalents were $440.3 million, and short-term investments amounted to $461.5 million.
In the fourth quarter, cash generated from operations was $34.8 million compared with $96.6 million in the prior-year period.
Zacks Rank and Stocks to Consider
MercadoLibre carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Expedia Group, Inc. EXPE, AMETEK, Inc. AME and Inphi Corporation IPHI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for Expedia, AMETEK and Inphi is projected to be 13.4%, 9.6% and 18.5%, respectively.
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