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Fletch
MercadoLibre's Expanding Prowess
Jun. 20, 2014 3:05 PM ET | 1 comment | About: MercadoLibre, Inc. (MELI)
According to an eMarketer research, business-to-consumer e-commerce sales in Latin America are projected to grow 20% in 2014 to $57.69 billion from $48.14 billion last year. eMarketer projects Brazil to be the leading market in the region with total e-commerce transactions projected to grow 8.5% and reach $23.05 billion in 2015. The research predicts the number of digital buyers in Brazil to increase from 30.9 million in 2013 to 55.4 million by 2018. Markets of Mexico and Argentina will also see strong growth, with users in Mexico growing from 8.4 million in 2013 to 18 million by 2018, and in Argentina from 7.5 million in 2013 to 12 million by 2018.
MercadoLibre’s Financials
Recently, the e-commerce giant of Latin America MercadoLibre (NASDAQ: MELI) announced impressive first quarter results. Revenues grew 12% over the year to $115.4 million, significantly ahead of the Street’s target of $109.4 million. EPS of $0.69 was also 73% higher than previous year’s and shot past the Street’s projections of $0.57.
Among other operating metrics, Gross Merchandise Volume grew 15% to $1.8 billion and total payments volume grew 25% over the year to $664 million. During the quarter, their payments platform MercadoPago processed nearly $9.2 million in payments, recording an increase of 36% over the year. The company now accounts for nearly a quarter of the e-commerce transactions in the region. There are more than 102.7 million registered members on their website as they added 4.3 million members over the year.
MercadoLibre’s Mobile Focus
MercadoLibre realizes that the growth in the coming quarters will be attributed to success on the mobile front. During the quarter, mobile transactions accounted for 14% of their Gross Merchandise Volume from 7% last year. Mobile app downloads reached 10 million and nearly 20% of total new users registering on their site came from mobile devices.
MercadoLibre believes that the mobile portion of the Gross Merchandise Volume will increase to nearly 50% in five years from now. To cater to this growth, they are continually writing software and adapting services to these new formats.
MercadoLibre’s Acquisitions
During the recent quarter, MercadoLibre announced several new acquisitions to expand their vertical offerings. Last month, MercadoLibre announced plans to acquire VMK, a holding company for two major real estate websites, for an estimated $40 million. VMK Holdings is known for their websites portalinmobiliario.com in Chile and Guiadinmuebles.com in Mexico. The Chilean website was started in 2000 and based on their success, expanded operations in Mexico in 2010. Over the past 18 months, access to MercadoLibre’s real estate listings have increased from 30,000 to 1 million.
MercadoLibre’s stock is trading at $90.67 with a market capitalization of $4 billion. It touched a 52-week high of $145.99 in October 2013.
