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MercadoLibre's Sales Growth Accelerates But EPS Falls Short

MercadoLibre (MELI) surged 11% in after-hours trading Monday after the Latin American e-commerce giant reported accelerating sales growth that beat analysts' first-quarter forecasts, even though earnings missed.

The Buenos Aires, Argentina-based "eBay (EBAY) of Latin America" earned 40 cents a share. Excluding the impact of Venezuela's currency devaluation, MercadoLibre earned 53 cents, 18% above a year earlier. But that was still a penny shy of the consensus of 11 analysts polled by Thomson Reuters.

Q1 revenue leapt 23% to $102.7 million, beating analyst views of $97.44 million. That was the second straight quarter of modest sales growth acceleration after four quarters of deceleration.

Shares soared 11% late to 115.25. During the regular session, the stock hit a record high before closing down 7 cents to 103.95.

MercadoLibre, which means "free market," offers a buying and selling platform to a market of 550 million in Latin America that includes Argentina, Venezuela, Mexico, Colombia, Ecuador, and Panama, as well as Brazil. It also runs e-tailing platforms in the Dominican Republic, Panama and Portugal.

"The MercadoLibre ecosystem was off to a good start in 2013," said CFO Pedro Arnt in a post-earnings conference call with analysts. "We saw volume accelerate across both our core marketplace and payments businesses, as we are meeting the growing demands of a quickly expanding base of users.

Arnt said extended election results and holiday factors in Venezuela combined with the currency devaluation to affect MercadoLibre in that key market.

Volume Trends Improve

Gross merchandise volume. or GMV, grew 18.3% from a year earlier to $1.563 billion, while total Q1 payment volume grew 43.8% year-over-year to $532 million.

Items sold on the ecommerce site jumped 20.5% to 18.1 million. Total transactions via its MercadoPago online payment service rose 37.9% to 6.7 million.

MercadoLibre said its registered users surged 16.6% from Q1 2012, or by 4.2 million to 85.7 million.

As usual, MercadoLibre didn't forecast for the current quarter or the full year. CFO Arnt did note that comparisons "will get easier as the year progresses.

JPMorgan analyst Andre Baggio said in a March 4 report that MercadoLibre has attracted steady and growing numbers of buyers and sellers in a "very balanced" way. "Since 2006, there have been three buyers per seller," Baggio wrote. "Also, the number of purchases and sales per user is increasing steadily, suggesting that buying and selling goods in an Internet marketplace is becoming more common in Latin America.

MercadoLibre's average active seller performed 11 transactions in 2012, up from eight in 2006, Baggio said. The average buyer acquired four items in 2012 vs. three in 2006.