MercadoLibre, Inc. (MELI) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

August 2, 2023 5:00 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Richard Cathcart

Hello everyone and welcome to The MercadoLibre Earnings Conference Call for the quarter ended June 30, 2023. Thank you for joining us. I am Richard Cathcart, Investor Relations Officer at Mercado Libre. Today, we will share our quarterly highlights on video, after which we will begin our live Q&A session with our Chief Financial Officer, Pedro Arnt; and Fintech President, Osvaldo Gimenez; and Commerce EVP, Ariel Szarfztejn.

Before we go on to discuss our results of the second quarter of 2023, I remind you that management may make, and this presentation may contain, forward-looking statements, so please refer to the disclaimer on screen, which will also be available in our earnings materials on our investor relations website.

Before turning to our quarterly results, we would like to highlight that our new Investor Relations website is live and has new resources, such as videos, podcasts and frequently asked questions to help investors better understand our business. We have also improved navigation around the site, making it easier to find our earnings and SEC documents.

With that, let's begin with a summary of our results.

Pedro Arnt

Hello everyone. I'm pleased to share with you that Mercado Libre continues to sustain its strong momentum over the last few quarters. Q2 '23 was once again a very, very solid quarter. Rapid top-line growth and strong margin expansion were broad-based across geographies and business units, showing the strengths of our business and the potential of our financial model as we continue to scale.

Let me begin with the financial highlights. Our revenue growth remains high despite our size, and this, combined with operational efficiency and scale, led to a big step-up in our income from operations margin. Income from operations more than doubled year-on-year, reaching a new quarterly record.

This quarterly result is a testament to the potential for solid margin expansion combined with above market rates of growth inherent in our performance. In the short run, not every quarter will look like this, there are still multiple growth vectors for us to invest behind, but it certainly points to the long term margin and cash upside we believe we can deliver.

Turning to the KPIs of our commerce business. In Q2, Mercado Libre’s GMV surpassed the 10 billion mark for the first time. This growth was driven mainly by Brazil and Mexico, which overtook Argentina to become our second largest commerce geography for the first time. Brazil and Mexico both delivered an acceleration of successful items growth compared to the previous quarter. As we continue to bolster MercadoLibre’s value proposition, our leadership position in the region has been going from strength to strength.