Mercado Libre Posts Stellar Q1 Results, Shares Jump 10%

Mercado Libre, the Latin American e-commerce powerhouse, has driven outstanding first-quarter results for 2024, surpassing Wall Street projections and propelling its stock up by more than 10%. The company's net profit skyrocketed 71% year-over-year to reach $344 million, largely driven by robust growth in key markets such as Brazil and Mexico.

Why this matters: Mercado Libre's remarkable performance has significant implications for the Latin American e-commerce market, underscoring the region's growing importance in the global digital economy. Mercado Libre's remarkable performance has significant implications for the Latin American e-commerce market, underscoring the region's growing importance in the global digital economy. It may inspire other regional players to follow suit, continuing to expand its services and reach.

The company's financial performance was nothing short of impressive, with adjusted earnings per share of $6.78, handily beating the anticipated $6.03. Total revenue soared to $4.3 billion, a 36% year-over-year increase that exceeded the estimated $3.85 billion. Mercado Libre's gross merchandise volume (GMV) also rose by 20% year-over-year, reaching $11.4 billion and underscoring solid commerce expansion.

Mexico and Brazil emerged as the primary drivers behind Mercado Libre's remarkable results, thanks to the company's strategic investments and initiatives in these markets. Both countries witnessed a 30% year-over-year increase in GMV, fueled by a substantial rise in the number of items sold - a 32% increase in Brazil and a 28% increase inMexico.

Mercado Pago, the company's fintech arm, also experienced significant growth, with monthly active users surging by 38% to reach 49 million. The credit portfolio in both Mexico and Brazil expanded, with total originations growing at an impressive 71% year-over-year to $4.4 billion. CFO Martin de los Santos commented on the company's performance, stating, "Brazil's and Mexico's performance have enabled an expansion year on year. We obviously continue to run a profitable business in Argentina. It's just that it's not as profitable as it used to be."

Operational efficiency played a crucial role in Mercado Libre's success. Despite the scale of its operations, the company achieved record lows in late deliveries while maintaining stable costs per package. Average delivery speed remained near record highs, and on-time fulfillment rates increased by nearly 8 percentage points year-over-year,surpassing the 50% markfor the first time.

MELI+, Mercado Libre's loyalty program, has proven to be a resounding success. Users who enroll in the program have increased their spending, buying frequency, and shopping across more categories. Engagement with initiatives like MELI Delivery Day has exceeded expectations, showcasing the company's ability to create compelling shipping benefits for its loyalty members.

Key Takeaways

• Mercado Libre's Q1 2024 net profit surged 71% to $344 million, beating Wall Street projections.
• Total revenue rose 36% to $4.3 billion, exceeding estimated $3.85 billion.
• Gross merchandise volume (GMV) increased 20% to $11.4 billion, driven by Mexico and Brazil.
• Mercado Pago's monthly active users jumped 38% to 49 million, with credit portfolio growing 71%.
• Operational efficiency improved, with record lows in late deliveries and stable costs per package.