Latin American e-commerce technology platform MercadoLibre Inc has released its financial results for Q1 2016 including a 6 per cent increase in revenue to $157.6 million based on USD.
In local currencies the increase is 75 per cent.
The company's growth was carried by Mercado Pago’s Merchant services, which achieved its fourth consecutive quarter of triple digit growth with revenues up by 128 per cent year-over-year in local currencies.
MercadoLibre says its advertising revenue hike of 136 per cent in local currencies shows the product ad format is continues to gain traction over traditional display formats in terms of market share.
It says overall growth was driven by enhancements in user experience and functionalities, as well as execution of key initiatives such as open platform integrations and cross border payments.
As an example, Mercado Envios was launched in Chile at the end of the quarter through local carrier Chilexpress, completing the enhanced marketplace offering in the country.
Total items shipped through this platform grew 114 per cent year-over-year to 17.2 million units, with most of the volume coming from Brazil, where 70 per cent of sold items use the shipping solution.
During the first quarter of 2016, MercadoLibre also closed the acquisition of software development company Monits and the intellectual property of Mango with the onboarding 50 software engineers to contribute to the company's technology development capabilities in the areas of mobile and payments .
Overall MercadoLibre reported 38.3 million sold items, up 39 per cent, primarily driven by Brazil’s operation, which posted strong growth of 45.6 per cent YOY.
On an FX Neutral basis, the company adds, gross profit margin would have been 67.4 per cent.
Operating expenses increased to $71.7 million, although they were down 7.9 per cent on last year’s first quarter on an as reported basis. Excluding one-time effects of the adoption of SIMADI exchange rate in Venezuela in 2015, operating expenses grew 16.4 per cent.
As a percentage of revenues, OPEX was 45.5 per cent, down from 41.6 per cent in last year’s first quarter.
Income from operations was up as a result to $30.5 million up 19.1 per cent year-over-year, down 27.2 per cent excluding adjustments last year.
As a percentage of revenues, income from operations was 19.3 per cent, down from 28.2 per cent in the same period of 2015. On an FX neutral basis, operating margin would have been 24.4 per cent.
Net income was $30.2 million, up from $1.7 million in the first quarter of 2015. Earnings per share for the first quarter were $0.68.
The company ended the first three months with a negative cash flow of $29.1 million, primarily explained by working capital variations of the Mercado Pago business during the quarter.
Chief Financial Officer Pedro Arnt says he is satisfied to see our business outperform market growth rates, while continuing to improve the quality and quantity of value added services we offer in Latin America.
"We believe that this quarter’s results are clear indicators that Mercado Libre is driving value to its users, while also scaling the business for the long term,” he says.