MercadoLibre reported a 44% profit increase in Q1, reaching $494 million, beating expectations. Revenues hit $5.9 billion, buoyed by a 126% GMV rise in Argentina, its second-largest market. Its fintech unit grew 75%, with improved credit conditions. Shares surged 10.6% amidst strong quarterly results, indicating robust market confidence despite concerns over expansion costs.
MercadoLibre, the leading e-commerce platform in Latin America, has reported an impressive surge in profits, a 44% increase for the first quarter, totaling $494 million. This figure surpassed analyst expectations, who anticipated $420.9 million. The company’s total revenue reached $5.9 billion, reflecting a 37% year-on-year growth, also outstripping the expected $5.51 billion, as outlined in their latest public statement.
Argentina’s performance stood out remarkably, with the Gross Merchandise Value (GMV) soaring 126% when adjusted for foreign exchange variations. This growth outpaced the company’s overall GMV growth of 40%. Thanks to this surge, Argentina has regained its position as MercadoLibre’s second-largest market based on revenue, following Brazil and surpassing Mexico for the first time in some time.
Chief Financial Officer Martin de los Santos discussed the positive trends in Argentina during an interview with Reuters, noting, “We have seen improvements on our platforms (in Argentina) in the last few quarters, and they continued in the first quarter.” He credited lower inflation and reduced interest rates for boosting sales and enhancing consumer credit demand.
In addition to retail, MercadoLibre’s fintech division is also thriving, with a staggering 75% year-on-year increase in its credit portfolio, now totaling $7.8 billion, driven chiefly by the growth of credit card usage. Notably, the company has seen a decrease in its default ratio, improving from 9.3% last year to 8.2% now.
Earnings before interest and taxes (EBIT) climbed 45% to $763 million, and the margin also showed improvement, rising to 12.9% from 12.2% in the previous year. These figures illustrate a company consistently surpassing market expectations despite ongoing significant investments across the region. Investors, while encouraged by growth, express caution regarding the potential short-term profitability impacts of these aggressive strategies.
MercadoLibre’s ecosystem continued to exhibit robust growth, with GMV increasing 40% year-on-year to reach $13.3 billion, supported by 66.6 million unique buyers. The total payment volume displayed exceptional results as well, escalating 72% to $58.3 billion.
On May 8, shares of MercadoLibre (NASDAQ:MELI) experienced a notable surge, climbing as much as 10.6% before settling for a 6.7% gain by mid-afternoon trading. This rally followed the release of their financial results, which significantly outperformed market projections and energized investor confidence.
MercadoLibre’s recent financial performance underscores its significant growth trajectory, particularly in Argentina, where it recorded a staggering increase in GMV. Its success in both retail and fintech sectors reflects a solid recovery amid economic challenges, with investors cautiously optimistic about future profitability. The company’s shares responded positively to the quarterly report, reflecting strong market confidence in its ongoing expansion strategy.
Original Source: www.intellinews.com
