Latin American e-commerce powerhouse MercadoLibre has announced a robust 44% increase in net profit for the first quarter of the year compared to the same period last year, surpassing analysts’ expectations. The company’s net profit reached $494 million for the quarter ending in March, exceeding the anticipated $420.9 million, according to a poll conducted by LSEG.
In its earnings statement, MercadoLibre highlighted Argentina as a significant contributor to this growth, with sales in the country increasing by 126% on a foreign-exchange neutral basis. This growth in Argentina stands out against a total Gross Merchandise Value (GMV) increase of 40% across MercadoLibre’s operations. The company’s CFO, Martin de los Santos, noted that the strong performance in Argentina is partly attributed to a weaker comparison base due to the effects of a peso devaluation from late 2023.
Additionally, declining inflation and interest rates in Argentina have stimulated greater spending and credit demand, encouraging a positive trend in sales. De los Santos commented on the ongoing improvements in MercadoLibre’s platforms within Argentina, suggesting that these enhancements have contributed to the favorable quarter.
As a result of this growth, Argentina has regained its position as MercadoLibre’s second-largest market by revenue, surpassing Mexico and trailing only Brazil. Last year, Argentina had lost this ranking, making this turnaround noteworthy.
MercadoLibre’s total revenues reached $5.9 billion, a 37% increase from the previous year, also beating analyst forecasts of $5.51 billion. In recent years, the company has consistently exceeded market estimates, despite concerns over short-term profitability due to significant investments across Latin America.
Earnings before interest and taxes (EBIT) stood at $763 million, marking a 45% year-on-year increase and outpacing the forecasted $617.4 million. The EBIT margin slightly improved to 12.9%, up from 12.2% a year earlier.
On the fintech side of its operations, MercadoLibre reported a 75% year-on-year growth in its credit portfolio, reaching $7.8 billion, primarily driven by an increase in credit card usage. Meanwhile, the default ratio for loans in the 15-to-90 day range was recorded at 8.2%, which reflects a slight increase from the previous quarter but is down from 9.3% a year ago.
Overall, the strong performance and recovery in the Argentine market signal optimistic growth prospects for MercadoLibre, reinforcing its dominance as a key player in the Latin American e-commerce landscape.