(Reuters) -MercadoLibre Inc posted a larger quarterly loss on Wednesday, hit by a higher tax bill and weak margins, as the Argentine e-commerce giant boosts spending to respond to a surge in online shopping and digital payments in Latin America.
The company has been increasing investment in key areas including warehouses and fintech services as it battles competitors such as Amazon.com Inc in a rapidly growing market where many shoppers are still unaccustomed to spending money online.
Its income tax expense swelled to $43.5 million in the first quarter ended March 31, from $4.4 million a year earlier, while its gross profit margin shrunk by about 5% to 42.9%.
Its net loss widened more than 61% to $34 million, or 68 cents per share, from a year earlier. Excluding income tax expenses, the company posted a net income of $9.5 million. (https://bit.ly/3vNgIps)
As a company operating out of Argentina, MercadoLibre also incurred foreign currency losses worth $15.1 million due to additional costs for buying U.S. dollars following restrictions imposed by Argentina’s government.
But its quarterly revenue more than doubled to $1.4 billion, beating a Refinitiv IBES estimate of $1.14 billion.
The second wave of COVID-19 that has hammered Brazil, which comprised 56% of MercadoLibre’s total revenue, has sustained a surge in online shopping and digital payments in the region and neighboring countries including Argentina.
Total payment volume from its fintech arm Mercado Pago rose 81.8% to $14.7 billion, as the company revs up its digital payments engine with many shops shifting online during the pandemic.
MercadoLibre, whose shares fell 1.3% in extended trading, said it had purchased $7.8 million of bitcoin.
(Reporting by Chavi Mehta in Bengaluru and Aluisio Alves in Sao Paulo; Editing by Christian Plumb and Aditya Soni)