Net Revenues of $3.0 billion up 56.5% year-over-year on an FX neutral basisIncome from operations of $349 million, with a 11.6%margin$36.0 billion Total Payment Volume, up 80.0% year-over-year on an FX neutral basis$9.6 billion Gross Merchandise Volume, up 34.7%  year-over-year on an FX neutral basis

MONTEVIDEO, Uruguay, Feb. 23, 2023 (GLOBE NEWSWIRE) -- MercadoLibre, Inc. (Nasdaq: MELI) (http://www.mercadolibre.com), Latin America’s leading e-commerce technology company, today reported financial results for the quarter ended December 31, 2022.

To our Shareholders

The end of the fourth quarter of 2022 brought a highly successful year to a close. Over the last 12 months, we have processed more than $100bn in payments, booked over $10bn of net revenues, shipped more than 1bn items through Mercado Envios, and surpassed $1bn of Income from operations, all for the first time in our history. These major milestones confirm a successful and transformational multi year period for MercadoLibre.

Over the last three years, we have built a GMV base that is 2.5x larger than in 2019 and continues to grow, we have ramped-up a logistics network with world-class delivery speeds (GMV delivered within 48 hours rose from an average of 44% in 2019 to almost 80% in 2022) and we have strengthened the other key pillars of our Commerce value proposition: assortment, price and service. The much-increased scale gained through this three year period solidifies our position as Latin America’s e-commerce leader. It also positions us well to continue to capitalize on the growth opportunity of the offline to online shift in retailing across the region.

During the same three year period we have also grown our TPV more than 4x, and our Fintech revenues nearly 5x, making our Fintech business a major contributor to our top and bottom line growth. At the same time, we have launched a full suite of products and services that extends our original payments offering to cards, credit, insurance and savings, amongst others. Although we still have more products to build, the launches of the last 18 months give us - for the first time - the critical mass of services that would enable our users to have their principal financial services relationship with Mercado Pago. Of our almost 44mn unique active Fintech users in Q4’22, more than half already utilize the wallet to make payments. These users are a natural (and growing) audience for us to cross-sell additional services and products in a unified and simple manner, and build towards achieving principality. Our competitive advantages in distribution and credit underwriting should support these cross-selling efforts.

Our market share of SMB Financial Services distribution is still low, with plenty of upside. In Brazil, we expect that our move “upmarket” to serve larger long tail merchants and the lower end of the SMB segment will continue to drive growth and market share gains. Mexico and Chile are both at an early stage of development, and we expect to be a protagonist in the expansion of SMB services in those markets.

As a consequence of the building blocks we have laid over this past period, we believe we are well-positioned to continue to drive growth and profit expansion in our businesses in the coming years. Our results in the fourth quarter provide a good example of how a combination of strong execution, increased scale, solid competitive advantages and appropriate long-term thinking can yield high growth and market share gains alongside robust profit increases.

Commerce

A strong performance in the fourth quarter rounded-off a great year for our Commerce business. Our FX-neutral GMV growth accelerated to 35% in Q4’22, with Brazil (22% FX-neutral GMV growth) and Mexico (28% FX-neutral GMV growth) driving the acceleration. Our Black Friday campaign in Brazil significantly outperformed a weak market and this was just one of the highlights in a year of major market share gains in several categories that was consistent across most geographies. These gains have been achieved not with silver bullets, but with consistent investment and execution around all aspects of our value proposition over an extended period.

We delivered a record-breaking El Buen Fin campaign in Mexico, placing the country as our fastest growing market in volume terms. This growth shows the traction we have achieved, with unique buyers growing above 20% year-on-year in 2022. These metrics reflect our strong competitive positioning, which helped us to extend our market leadership in Q4’22 in Mexico, and across most markets.

Argentina has shown weaker volume trends, with sold items growth decelerating for a third successive quarter, and falling into negative territory. Consumers’ budgets are facing headwinds from rising prices but, despite short-term pressures, profitability is strong and we remain confident in our long-term competitive position. Macroeconomic factors also continue to impact Chile, but we are pleased to see that our GMV growth has improved on a sequential basis, and our volume growth is back into positive territory.

Mercado Envios sustained its delivery speed leadership across the region, helping us to achieve the strong peak season GMV growth mentioned above. Mercado Envios also reached its highest ever level of fulfillment penetration of 43% in Q4’22, surpassing the previous record reached in Q4’21. Brazil saw a sequential increase in fulfillment, with penetration back to its peak level of 40%. Mexico and Chile reached new highs in fulfillment penetration. Our logistics teams have done a good job of mitigating external cost pressures through efficiencies and pricing, so even with the costs related to higher fulfillment penetration, our Q4’22 net shipping cost was broadly stable as a percentage of GMV, with a notable improvement in Mexico.

Mercado Ads continued to grow at a rapid pace in 2022 in all key geographies, with revenue as a percentage of GMV reaching 1.4% in Q4’22. This marks another consistent step in the business’ expansion, making the Ads business more than 5x larger than it was three years ago. This year has also been an important year in building-out our capabilities, supported by doubling the number of engineers allocated to the Ads business. This year’s technology deployments included our own Ad Server, which enables the automatic insertion of display advertising, targeting capabilities and an automated dashboard for real-time reporting for Display performance, as well as enhancements to the bidding process and placement logic of product ads. We have also made important progress in the development of our DSP (demand side platform), which we expect to launch in 2023 and will significantly upgrade our capabilities. All of these improvements are aligned with our strategy to build a complete Ad Tech platform in Latin America.

Fintech

Momentum in our Fintech business remains strong. Our unique active fintech users reached almost 44mn in Q4’22, rising 27% year-on-year, whilst TPV grew at 45% in US dollars and 80% on an FX-neutral basis. A strong off-platform performance in Q4’22, with growth of 58% in US dollars and 121% on an FX-neutral basis, took our quarterly off-platform TPV over $25bn for the first time. This is a big accomplishment, placing us on an annualized run rate of over $100bn, but this is just the latest milestone on a path that has much further to run.

One of the main ambitions on that path is to achieve principality amongst the portion of our user base where our distribution and underwriting capabilities enable us to offer a strong value proposition. One of the keys to unlocking principality is being able to offer the products and services that satisfy our users’ day-to-day needs. After 12 to 18 months of product development and deployment, we now have the tools in place to shift Mercado Pago from being mainly a payments wallet to a full-service digital account for our users. In Q4’22, the average number of products being used by our Digital Account customers continued to rise. We are already seeing this fast growth translating to profitability in Argentina.

In Brazil and Mexico, the Credit Card will have an important role to play in achieving the aforementioned principality, given the product’s value to consumers for their day-to-day needs. Through the second half of 2022, we have seen a significant improvement in the performance of our Credit Card business after the slowdown of new card issuance in the first half. Our underwriting has improved, although the latest cohorts remain small, so we have further to go before being comfortable to re-accelerate. That said, we are pleased with our progress, and we expect to launch in Mexico in 2023.

Mercado Credito as a whole continued to deliver strong results in Q4’22 with a period-end portfolio of $2.8bn and IMAL spread of 48%. This was the highest spread achieved in 2022, a function of adjustments to our APRs, broadly flat originations (which means slower formation of new provisions than earlier in the year), a larger mix of lower risk cohorts in all markets, and better asset quality. The steps that we took in mid-2022 to mitigate the risks of a weaker lending environment - particularly in Brazil - have worked as intended and, as a result, our early