MercadoLibre’s Q1 Profit Surges 44%, Fueled by Strong Argentine Market Activity
MercadoLibre reports a 44% profit increase, totaling $494 million in Q1, exceeding expectations. Revenue reached $5.9 billion, spurred by rapid growth in Argentina, where GMV surged 126%. The fintech sector also expanded notably, with positive credit metrics. Shares rose significantly post-report, reflecting investor confidence.
MercadoLibre, the leading e-commerce platform in Latin America, reported a remarkable 44% surge in net profit during the first quarter, totaling $494 million. This figure far surpassed analysts’ expectations, which had estimated $420.9 million. The company’s total revenues reached $5.9 billion, reflecting a 37% year-on-year growth and exceeding the anticipated $5.51 billion.
Argentina stands out as a dominant market for MercadoLibre, where sales, gauged by Gross Merchandise Value (GMV), soared by 126% on a foreign-exchange neutral basis. In contrast, the company’s overall GMV growth was recorded at 40%. This impressive performance has reinstated Argentina as MercadoLibre’s second-largest market by revenue, following Brazil and surpassing Mexico.
CFO Martin de los Santos highlighted the platform’s improvements in Argentina over recent quarters, stating, “We have seen improvements on our platforms in the last few quarters, and they continued in the first quarter.” He attributed this strong showing to more favorable economic conditions including a weaker comparison base, lower inflation, and improved interest rates, all of which stimulated sales and credit demand.
Fintech operations within MercadoLibre have also exhibited significant growth, with the credit portfolio expanding by 75% year-on-year to $7.8 billion, driven primarily by credit card offerings. Notably, despite this aggressive expansion, the default ratio saw a positive trend, decreasing to 8.2% from 9.3% last year.
Earnings Before Interest and Taxes (EBIT) leaped 45% to $763 million, while the EBIT margin rose from 12.2% to 12.9%. These results reflect MercadoLibre’s continued success in exceeding market expectations despite aggressive investment strategies across Latin America. Investors express some concern regarding the potential impacts of this expansion on immediate profitability, yet prevailing market growth could set a solid foundation for future earnings.
The overall service ecosystem remains strong, with gross merchandise volume increasing 40% year-on-year to $13.3 billion, aided by 66.6 million unique buyers. Additionally, total payment volume climbed 72%, reaching $58.3 billion.
On May 8, MercadoLibre’s shares, traded under NASDAQ: MELI, experienced a significant increase, peaking at 10.6% before settling with a 6.7% gain by the afternoon. The firm’s exceptional quarterly performance, which greatly exceeded market forecasts, was a crucial factor in spurring this positive market activity.
In summary, MercadoLibre has achieved remarkable growth in the first quarter, marked by a significant increase in both profits and revenues, particularly driven by strong performance in Argentina. The expansion of fintech services has also contributed to this growth while maintaining a relatively low default rate. Despite some concerns about future profitability amid aggressive investments, the company appears well-positioned for long-term success amid robust market activity.
Original Source: www.intellinews.com
