For MercadoLibre, Payoff From Payments

For MercadoLibre, the Argentine eCommerce firm incorporated in the United States, with platforms such as the eponymous mercadolibre.com, there has been payoff in payments.

As seen in a soaring stock (via American Depository Receipts) that surged 20 percent on Friday (May 3), earnings results were received positively through the day.

The jump came on the heels of a March IPO that raised $1.9 billion. And in terms of headline numbers, the top line was up 48 percent to $473.8 million, which beat the Street at $427.7 million. And perhaps most noteworthy in terms of expectations, the company posted an earnings number of 13 cents a share, where the Street had been expecting a loss of 13 cents a share.

Though gross merchandise volume was off 2 percent year on year, total payments volume was up 35 percent (and where there was also double-digit growth seen for the company’s MercadoEnvios shipping service, at 19 percent).

As Bloomberg reported, a slew of analysts upgraded their assessments of the stock, boosting price targets, where for example Credit Suisse raised its target to $640 from $520, and held an outperform on the name. At Stifel, to offer another example, analyst Scott Davis raised his price target to $560 from $300, and said that mPOS and digital wallet trends underpin the payments results.

Delving into management commentary on the conference call with analysts, CFO Pedro Arnt said revenues on an FX neutral basis were in fact up 93 percent. The payments volume was also much higher on an FX neutral basis to 83 percent growth to $5.6 billion.

The executive said on the call that “as we increasingly focus our efforts on expanding our online and off-line payment solutions in the markets where we are currently in and expanding the financial services we offer our merchants away from MercadoLibre’s marketplaces, off-marketplace total payment volume already explained a 95 percent of the incremental payment volume during the quarter.” He said, too, that off-marketplace total payment volume reach $2.5 billion and “continues to gain incremental share” from total payment volume, now accounting for 45 percent of total volume in the quarter versus a third a year ago. Within those numbers, Argentina QR in-store payments were 43 percent of wallet total payment volume, said management.

The CFO said mobile point-of-sale (mPOS) payment volume surpassed the $1 billion mark during the first quarter, up 171 percent year on year on an FX neutral basis, and up 260 percent as measured in U.S. dollars.

Said Arnt, “this growth of our mPOS business delivery during the quarter was driven for the most part by solid performances in Brazil and Argentina … the build out of our mobile wallet two-sided network also continues to scale and grow in size and frequency of use.”  The company passed the 3 million active payer mark on its wallet.