MercadoLibre
Q3 2022 Earnings Call
Nov 03, 2022, 5:00 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Pedro Arnt
Hello, everyone. I'm pleased to have the opportunity to share some of the achievements and key messages from our third quarter of 2022 results. During Q3, we were able to deliver a strong combination of growth in commerce and fintech with continued progress toward our annual targets for profit expansion. Our operating margin expanded more than 500 basis points to 11%, contributing to quarterly profit of $296 million, while operating cash generation was solid once again.
This reflects the strong performance of our business, our ability to dilute costs as we scale and our long-term commitment to delivering sustainable and profitable growth. Our commerce business continues to show resilience amid macroeconomic challenges and as physical retail fully reopens, with GMV growing 32% on an FX-neutral basis. Our investments across the businesses over the last few years in technology have enabled us to improve our service levels significantly, and this is translating into market share gains across geographies both on a consolidated level and also across multiple product categories. Logistics investments have been the other major contributor to the improvements in service levels as our managed Mercado Envios network penetration hit 92% during the third quarter, up 5 percentage points over the last 12 months.
We are progressing our strategy to increase monetization with our ads business reaching 1.3% penetration over gross merchandise volume, a small but steady increase on previous quarters. We delivered a series of improvements in our ad tools and we have a road map of improvements that is accelerating. Mercado Pago had another exceptional with unique fintech active users surpassing 40 million mark for the first time. Off-platform TPV achieved its fourth consecutive quarter of triple-digit growth, reaching $23 billion with growth of 122%.
Our MPOS businesses in Mexico and Chile made a strong contribution to this growth, as did QR in Brazil and our digital banking account solutions in Argentina. Mercado credito's portfolio reached $2.8 billion, growing at a slower rate than in past quarter as we slowed originations. This is a reflection of our prioritization of risk management and margin over growth. Our credit business delivered a resilient financial performance with annualized IMAL spreads rising quarter-on-quarter to 37%.