MercadoLibre reported a 44% increase in net profit for Q1, totaling $494 million, outperforming analyst predictions. Total revenues reached $5.9 billion, up 37% year-on-year. Argentina led growth with a staggering 126% GMV increase. The fintech sector also thrived, with a 75% year-on-year increase in credit portfolio. Despite some concerns regarding expansion costs, shares rose significantly following the positive quarterly report.
MercadoLibre, the e-commerce powerhouse in Latin America, has announced a remarkable 44% increase in net profit for the first quarter, soaring to $494 million. This figure notably surpassed analyst expectations of $420.9 million. Additionally, total revenues for the company reached $5.9 billion, an increase of 37% compared to the previous year, outpacing forecasts of $5.51 billion.
Argentina has emerged as a key growth area for MercadoLibre, with Gross Merchandise Value (GMV) skyrocketing by 126% on a foreign-exchange neutral basis. This surge stands in stark contrast to the company’s overall GMV growth, which is at 40%. With such impressive numbers, Argentina reclaimed its status as MercadoLibre’s second-largest market by revenue, following Brazil—but ahead of Mexico.
The Chief Financial Officer, Martin de los Santos, commented on the positive trajectory, stating, “We have seen improvements on our platforms (in Argentina) in the last few quarters, and they continued in the first quarter.” De los Santos pointed out that factors such as a lower inflation rate and reduced interest rates contributed to enhanced sales and credit demand.
In terms of fintech, MercadoLibre’s operations exhibited extraordinary growth too, with the credit portfolio expanding by 75% year-on-year, totaling $7.8 billion, driven primarily by credit card use. Interestingly, the default ratio also saw improvement, declining to 8.2% from 9.3% in the previous year.
Earnings before interest and taxes (EBIT) showed a robust increase of 45%, amounting to $763 million, and EBIT margin improved to 12.9%, up from 12.2% last year. These results reflect the company’s ongoing ability to exceed market expectations while making significant investments throughout Latin America. However, some investors have expressed concerns regarding the impact of these expansion strategies on short-term profitability.
Additionally, MercadoLibre’s service ecosystem has thrived, with gross merchandise volume climbing 40% year-on-year to $13.3 billion, buoyed by 66.6 million unique buyers. The total payment volume in the same period saw a whopping 72% growth, now reaching $58.3 billion.
On May 8, the company’s shares, trading on NASDAQ under the ticker MELI, experienced a sharp increase, rising as much as 10.6% at one point, and finally settling with a gain of 6.7% by mid-afternoon. The impressive quarterly financial report played a significant role in driving this rally, significantly exceeding market projections.
MercadoLibre’s financial results for the first quarter indicate strong growth and substantial profit increase, driven by performance improvement in Argentina and robust expansion in its fintech operations. While short-term profitability debates linger due to aggressive expansion strategies, the long-term outlook remains optimistic as the company continues to outperform market expectations. This positive trajectory highlights MercadoLibre’s significant market position across Latin America.
Original Source: www.intellinews.com
