Japan-based marketplace operator Mercari recorded its highest-ever quarterly operating income of JPY5.6 billion ($41.3 million U.S.) during the third quarter to March. The company attributed it to “group-wide efforts to strengthen our profit base.”

In comparison, the group incurred an operating loss of JPY2.9 billion in the same quarter of FY2022.

In Q3, the group’s net sales rose 13% year on year (y-o-y) to JPY43.6 billion ($321 million) with fraud countermeasures curbing the number of incidences, according to its earnings announcement.

The revenue of the company’s marketplace segment (web and app) in Japan rose by 16% y-o-y to JPY26.3 billion, while its operating profit soared 87% y-o-y to JPY12.5 billion.

“While GMV growth rate temporarily slowed to y-o-y +8% due to reconsidering some development plans among other factors, we achieved a record-high adjusted operating margin of 48% as a result of thorough investment discipline and cutting costs,” said Mercari.

In the U.S., where Mercari launched one year after starting in Japan in 2013, the company contained its adjusted operating loss by taking product initiatives aimed at encouraging buying.

“In Q3, we continued to implement initiatives mainly geared at promoting purchases. These included reduced shipping costs for small packages and adding a feature that allows gift cards from other companies to be used on Mercari,” it said. “We lowered costs in favor of more lean business management and reduced adjusted operating loss to $5 million, down $35 million y-o-y.”

However, headwinds stemming from high inflation and interest rate spikes impeded sales growth for Mercari U.S., which was down 14% y-o-y to $83 million in Q3 from $92 million in the same period a year earlier.

“With consumer spending prioritized on necessities and aggressive discounting in primary distribution, the company also took a significant hit, with purchase numbers slowing down and y-o-y GMV growth rate landing at -14%,” said Mercari.

The company also operates a fintech business in Japan.

For the full year, the group forecasts 16% y-o-y growth in net sales to JPY170 billion and operating profit of JPY13.5 billion, in contrast to a JPY3.7 billion operating loss in FY2022.

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