MercadoLibre experienced a 44% rise in net profit for Q1, reaching $494 million and exceeding forecasts. Revenue hit $5.9 billion, with Argentina leading growth at 126%. Fintech operations also surged, while the company faces investor scrutiny over expansion impacts. Stock prices rose following strong report.
MercadoLibre, the leading e-commerce platform in Latin America, has reported a noteworthy 44% increase in net profit during the first quarter, tallying up to $494 million. This figure notably outstrips analysts’ expectations, which pegged the profit at $420.9 million. Furthermore, the company’s revenue soared to $5.9 billion, marking a 37% year-on-year growth and surpassing the predicted $5.51 billion.
Argentina’s market emerged as particularly robust for MercadoLibre, with sales indicated by Gross Merchandise Value (GMV) witnessing a striking 126% spike on a foreign-exchange neutral basis. This growth notably outpaced the overall company GMV increase of 40%. As a result, Argentina has reclaimed its position as MercadoLibre’s second-largest revenue market, just behind Brazil and ahead of Mexico.
The financial fortitude displayed by MercadoLibre was attributed by CFO Martin de los Santos to a few factors: a more favorable comparison base, a decline in inflation rates, and lower interest rates which all contributed to an upswing in sales and heightened demand for credit. De los Santos remarked that improvements on their platforms in Argentina have been persistently observed over the last few quarters.
Fundamentally, MercadoLibre’s fintech operations are thriving too, with a credit portfolio expansion of 75% year-over-year, now totaling $7.8 billion. This growth is primarily fueled by an uptick in credit card utilization. Interestingly, even with this rapid growth, the default rate saw an improvement, slipping to 8.2% from 9.3% last year, indicating better credit risk management.
Earnings before interest and taxes (EBIT) also reflected strong performance, rising 45% to reach $763 million. The EBIT margin shifted positively to 12.9%, up from 12.2% last year. Consistently exceeding market expectations, the company is navigating substantial investments across Latin America, although some investors are wary about how this focus on expansion might affect short-term profitability. Yet, the continuous growth in the market could set the stage for sustained long-term profitability.
Moreover, the service ecosystem remains strong with gross merchandise volume climbing by 40% year-on-year to a total of $13.3 billion. This rise is buoyed by the engagement of 66.6 million unique buyers. In particular, total payment volume impressively surged by 72%, hitting $58.3 billion.
Following the announcement of these outstanding quarterly financial results, MercadoLibre shares, traded under the ticker NASDAQ:MELI, saw a notable increase. On May 8, shares climbed as much as 10.6% before settling for a 6.7% gain by mid-afternoon. The exceeded market projections have driven this surge, highlighting the company’s strong position in the market.
MercadoLibre’s latest quarter reveals impressive financial growth, notably in net profits and revenue, especially from the Argentine market. Its enhanced fintech operations and improvements in credit management signal a positive trajectory, despite some investor concerns over short-term profitability. With consistent market growth driving its expansion strategy, there appears to be a solid foundation for long-term success for the company. The strong surge in stock value following its quarterly report underscores investor confidence in its financial health and strategic direction.
Original Source: www.intellinews.com
