MercadoLibre reported a 44% surge in net profit for Q1, reaching $494 million, and beating forecasts. Revenues hit $5.9 billion, with Argentina showing significant GMV growth of 126%. The fintech division expanded rapidly, despite a decreasing default ratio. The company’s impressive performance boosted share prices remarkably on May 8.
MercadoLibre, the leading player in Latin American e-commerce, enjoyed a significant jump in net profit, registering a 44% increase in the first quarter, pushing the total to $494 million. This figure notably surpassed analysts’ expectations of $420.9 million, as outlined in the company’s recent public statement. The company’s overall revenues reached $5.9 billion, marking a 37% year-on-year growth, easily exceeding the anticipated $5.51 billion.
Argentina emerged as a notable contributor, achieving an astounding 126% surge in sales measured by Gross Merchandise Value (GMV) on a foreign-exchange neutral basis. This figure stands out against the company’s overall GMV growth of 40%. Consequently, Argentina has reclaimed its title as MercadoLibre’s second-largest market by revenue, trailing only behind Brazil and surpassing Mexico once again.
Chief Financial Officer Martin de los Santos shared insights into the team’s performance: “We have seen improvements on our platforms (in Argentina) in the last few quarters, and they continued in the first quarter,” he stated to Reuters. He credited the impressive results to a lower comparison base, decreased inflation rates, and reduced interest rates that have collectively fostered increased sales and heightened credit demand.
On the fintech side of operations, MercadoLibre did not disappoint either. Their credit portfolio surged an impressive 75% year-over-year, reaching $7.8 billion, predominantly due to the increased usage of credit cards. Encouragingly, the default ratio decreased to 8.2%, down from 9.3% over the past year.
In another positive development, earnings before interest and taxes (EBIT) rose by 45% to hit $763 million. The EBIT margin experienced a healthy improvement, climbing to 12.9% from the previous year’s 12.2%. These results continue to showcase MercadoLibre’s ability to outperform market forecasts while investing heavily across the region. Some investors, however, express caution over these aggressive expansion tactics and their implications for short-term profitability. Yet, strong market growth indicators could pave the way for long-term gains.
The firm also showcased robust growth across its service ecosystem, with gross merchandise volume soaring 40% year-on-year to $13.3 billion. This success was driven by a significant customer base, comprising 66.6 million unique buyers. Moreover, total payment volume experienced impressive escalation, rising by 72% to reach $58.3 billion.
On May 8, shares of MercadoLibre on NASDAQ (MELI) showed remarkable performance, rising as much as 10.6% and eventually closing with a 6.7% gain during mid-afternoon trading. This surge came on the heels of the company’s quarterly financial report that significantly outstripped market expectations and fueled investor optimism.
In summary, MercadoLibre’s first quarter displayed remarkable financial health, with a substantial profit increase driven by strong sales, particularly in Argentina, and notable fintech growth. Although some investor concerns linger regarding the costs of expansion, the overall market conditions suggest a promising future for the company.
Original Source: www.intellinews.com
