Why MercadoLibre Shares Are Surging Today

MercadoLibre Inc MELI shares are trading higher by around 5% after the company reported strong Q2 results.

Revenue stood at $3.42 billion, up 31.5% Y/Y and 57% Y/Y on FX-neutral basis, beating the consensus of $3.28 billion.

On FX-neutral basis, revenues in Commerce segment rose 65% Y/Y to $1.94 billion on higher marketplace monetization and the step-change in the growth of 1P. Fintech segment increased 48% Y/Y on FX-neutral basis to $1.48 billion.

EPS of $5.16 surpassed the consensus of $4.13. 

Gross merchandise volume (GMV) increased 47.2% Y/Y on FX-neutral basis, with higher items sold items (+18% Y/Y).

Total Payment Volume stood at $42.1 billion, up 96.6% Y/Y on FX-neutral basis.

Gross margin stood at 50.4% vs. 49.4% a year ago, reflecting cost dilution, efficiency improvement and lower POS device sales. 

Income from operations reached a new quarterly record of $558 million, up 175.2% Y/Y on FX-neutral basis, with a 16.3% margin (up 6.7 ppt Y/Y). 

Operating cash flow stood at $1.41 billion in the quarter.

As of June 30, 2023, the company held a cash balance of $3.82 billion. 

Price Action: MELI shares are trading up 4.65% at $1,218.99 premarket on the last check Thursday.

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