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MercadoLibre Marches On

Posted on Thursday, Mar 6th 2008

MercadoLibre (NASD: MELI), the leader in e-commerce in Latin America, announced fourth quarter earnings yesterday.

Their revenues for Q4 at $26.9 million, a year on year growth of 73.9%, were in line with market expectations. Their Marketplace revenues grew 61.5% to $21.1 million and Payments revenues grew 141.1% to $5.8 million over the same period last year.

Net income for the quarter was $5.3 million, compared to $1.8 million the previous year – a significant increase of 188.5%.

For the year ended December 31, 2007, their annual revenue increased by 63.5% to $85.1 million over $52.1 million for previous fiscal. Marketplace revenues for grew 55.4% to $69.5 million and Payments revenues grew 112.9% to $15.6 million. The stunning growth in revenue shows how the company has gained critical mass in the rapidly evolving Latin American market.

Net income for the fiscal 2007 of $9.7 million reported an increase of 804.1% over the $1.1 million of fiscal 2006. Their diluted EPS for the year of $0.22 met analyst expectations to the cent.

For the quarter, Mercado added 1.6 million new confirmed users. Their total confirmed registered user base increased by 37.1% to 24.9 million over the 18.2 million users of the previous year.

Their gross merchandise volume showed an increase of 40.2% to reach $461 million compared to $328.8 million for Q4 the previous year. Successful sales aggregated 4.8 million units for Q4, up 17.9% from the 4.1 million successful items sold in Q4 of 2006. Total payment volume for Q4 was $56.8 million compared to $30.4 million for Q4 2006, showing a growth of 86.8%.

At market capitalization of $1.6 B, with shares trading at $41.13, the company is quite a hot pick for investors looking for a Latin America technology play. There aren’t that many of those, and due to lack of supply, the stock got run up to over $80 in December, soon after I returned from Buenos Aires after working with them. Similar run-ups could happen again for the exact same reason: lack of supply.

In an interview conducted in Argentina, CEO Marcos Galperin told me how he founded MercadoLibre. With the company having successfully listed last year on NASDAQ, MercadoLibre sure has come a long way. If you are trying to understand the company and its business, and why their growth is likely to continue unobstructed for a while, I suggest you read the interview.

MELI 1 year graph

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