MercadoLibre’s first-quarter earnings surged, with a 44% profit increase to $494 million. Total revenues reached $5.9 billion, exceeding forecasts. Argentina saw a remarkable GMV growth of 126%, solidifying its status as MercadoLibre’s second-largest market. Fintech operations also expanded significantly, with a 75% growth in credit portfolio. Shares rose sharply following the financial report.
MercadoLibre, the prominent e-commerce entity in Latin America, reported a significant 44% increase in net profit during the first quarter, reaching $494 million—surpassing analyst predictions that pegged the figure at $420.9 million. The company also announced total revenues of $5.9 billion, reflecting a 37% year-over-year increase, which beat forecasts of $5.51 billion.
Argentina has proven to be the highlight in this financial performance, as sales, measured by Gross Merchandise Value (GMV), skyrocketed by 126% on a foreign exchange neutral basis. This stands in stark contrast to the overall GMV growth of 40% across the company. With Argentina regaining its position as MercadoLibre’s second-largest revenue market, it now ranks behind Brazil while outpacing Mexico.
Chief Financial Officer Martin de los Santos shared insights with Reuters, noting that the improvements in Argentina’s performance stemmed from a weaker comparison base as well as lower inflation and interest rates. These factors collectively stimulated increased sales and heightened demand for credit among consumers.
The fintech sector of MercadoLibre also showed remarkable growth, with its credit portfolio soaring 75% year-on-year to reach $7.8 billion, largely driven by credit card usage. Interestingly, despite this expansion, the default ratio improved, decreasing to 8.2% from 9.3% in the prior year.
Additionally, the report highlighted that earnings before interest and taxes (EBIT) jumped 45% to $763 million, leading to an enhanced EBIT margin of 12.9%, compared to 12.2% last year. This trend of consistently surpassing market expectations comes amid significant investments made throughout Latin America. Some investors, however, express concern over the potential impacts of this growth strategy on short-term profitability, even as consistent market expansion may set the stage for long-term success.
MercadoLibre also marked a robust performance across its service ecosystem, with gross merchandise volume climbing 40% year-on-year to reach $13.3 billion. Remarkably, the company reported a total payment volume increasing by 72%, reaching $58.3 billion, supported by the engagement of 66.6 million unique buyers.
Following this positive financial report, MercadoLibre’s shares (NASDAQ:MELI) experienced a sharp spike on May 8, with increases of up to 10.6% before settling at a gain of 6.7% by midday. This surge in stock price was largely attributed to the company exceeding market projections and showcasing its strength in the competitive landscape of e-commerce and fintech.
MercadoLibre’s latest quarterly performance reveals not just a robust growth trajectory but also highlights Argentina as a key market driving these results. The impressive profit and revenue figures, along with the growth in fintech operations and a strong GMV, underscore the company’s solid position in the Latin American market. Despite some concerns from investors regarding short-term profitability due to expansion efforts, the company’s solid fundamentals appear promising for sustained success.
Original Source: www.intellinews.com
