The news: Despite persistent high inflation and mounting economic uncertainty across Latin America, Mercado Libre generated nearly $10 billion in retail ecommerce sales in Q4 2022.

2022, in review:

• Retail ecommerce sales grew by 21.5%, reaching $34.45 billion in 2022. Remarkably strong performances in Brazil and Mexico drove these gains, leading to incremental growth in market share in both countries.
• Our forecast was largely on track with Mercado Libre’s results. Its reported full-year sales growth was slightly lower than the 22.6% expected, but our estimates were still within a 0.9% margin of error.
• Retail media is on fire. Mercado Libre’s advertising unit, Mercado Ads, grew at a rapid pace in 2022 in all key geographies, at over 70% year-over-year (YoY), per our preliminary estimates. Ad revenues as a percentage of GMV reached 1.3% for the entire year, with the company raking in 2.7% of all digital ad spending in Latin America last year.
• Over 1 billion items were sold on—and shipped by—Mercado Libre for the first time in the company's history. That's more than triple the number of items sold and shipped just three years earlier. On average, 54% of orders were delivered within the same or next day across the region.
• Mercado Libre is an island in a sea of recent tech layoffs. While players like Amazon, Shopify, and H&M have all recently announced layoffs, Mercado Libre’s strong financial discipline over the past few years helped it stave off any potential job cuts. The company’s decision to not over-hire, or over-spend, during the pandemic, has given it a “competitive advantage,” said CFO Pedro Arnt during the Q4 earnings call. That puts Mercado Libre in a “unique position” where it can continue to hire in 2023—albeit at a “slower rate” than in years past—he said.

Looking ahead: Mercado Libre’s ongoing investments will continue to pay dividends over the short and long terms. The company remains a regional powerhouse and has weathered Latin America’s macroeconomic headwinds better than most.

• 2023 will be an equally challenging year, but Mercado Libre has the building blocks it needs to find success where others, like Singapore-based Shopee, have struggled.
• We expect its retail ecommerce business to grow by 18.7% to over $40 billion, increasing its share of the regional market to roughly 22%.