By Andre Romani
SAO PAULO, Aug 5 (Reuters) - MercadoLibre on Wednesday posted an about-11% fall in its second-quarter net profit from a year earlier, hit by free shipping investments, but above estimates given record revenue and growth of customers who simultaneously use its two main businesses.
MercadoLibre, which operates an ecommerce platform and fintech Mercado Pago across Latin America, reported a net income of $466 million for the April-June quarter, compared to $433 million expected by analysts
in a LSEG poll.
The profit decline, its third consecutive, was impacted by increased free shipping in Brazil as of mid-last year and provisions related to credit card expansion, Mercado Libre's senior vice president of investor relations, Leandro Cuccioli, told Reuters.
Quarterly net revenue landed at $10.2 billion, a 50% growth, the highest growth in four years and beating the $9.7 billion estimated in a LSEG poll. Total ecommerce sales measured by gross merchandise volume (GMV) rose 36% on a forex-neutral basis.
Meanwhile, income from operations, or earnings before interest and taxes (EBIT), came in at $683 million, falling some 17% but above the $658 million expected by analysts. EBIT margin declined to 6.7% from 12.2% a year earlier and 6.9% in the first quarter.
In the past few quarters, MercadoLibre has entered a trend of maintaining sequential revenue increases, but delivering profit and margin decline, as its long-term investment strategy - including expansion of free-shipping, credit card and cross border sales - weighed on short-term profitability.
Cuccioli said that these measures have been paying off, with users active in both, the ecommerce platform and the fintech business, rising 37% in the quarter, compared to a growth between 20% to 30% a year ago.
"This is the most valuable segment for us," Cuccioli said, noting these users are making more transactions and are more profitable than the customers that use just one of the business -- fintech or ecommerce.
The investment strategy, the executive said, is generating operational leverage, but MercadoLibre has been deliberately reinvesting its gains into the business, a scenario the executive added will not change in the short-term.
Credit portfolio reached some $16 billion, a 75% increase in dollar terms, driven by credit cards. The 15-to-90-day delinquency rate stood at 7%, a 0.3 percentage point rise year-on-year but 1 point decline from the first quarter.
Total volume processed in the acquiring business rose 42% year-on-year on an forex-neutral basis.
(Reporting by Andre Romani; Editing by Natalia Siniawski and Kylie Madry)
