MercadoLibre, the leading e-commerce company in Latin America, announced on Thursday that its net profit for the second quarter more than doubled compared to the same period last year, significantly surpassing analysts’ predictions. The company’s standout performance was driven largely by its operations in Brazil.
Operating in 18 countries and owning the fintech Mercado Pago, MercadoLibre reported a net profit of $531 million for the quarter ending in June. This exceeded the $432 million forecasted by analysts polled by LSEG. The company’s revenue reached $5.1 billion, marking a 42% increase from the previous year and surpassing the $4.68 billion anticipated by analysts.
MercadoLibre’s Gross Merchandise Value (GMV), a key sales metric, grew by 20% year-on-year, bolstered by a 36% surge in Brazil, the company’s largest market.
“We continue to gain market share in Brazil,” Chief Financial Officer Martin de los Santos stated in an interview with Reuters. He attributed this growth to consumers increasingly turning to online shopping and the company’s strategic investments aimed at enhancing customer experience, which also helped it capture market share from local competitors.
De los Santos highlighted the company’s successful moves to capitalize on opportunities arising from the bankruptcy of local retailer Americanas, which was embroiled in an accounting scandal last year. He also noted that MercadoLibre’s sales in Mexico outpaced the broader market, and results in Argentina improved following a challenging first quarter.
The company’s operational performance, measured by earnings before interest and taxes (Ebit), stood at $726 million for the quarter, reflecting a 9% year-on-year increase and exceeding analysts’ expectations of $669 million. However, the Ebit margin declined by 4.4 percentage points to 14.3%, impacted by earlier reporting changes, challenges in Argentina, and provisions for doubtful accounts.
“When we accelerate the growth of credits, we record the losses upfront,” de los Santos explained. MercadoLibre’s credit portfolio reached $4.9 billion for the quarter, representing a 51% year-on-year increase. The delinquency rate for over 90 days dropped by 6.6 percentage points year-on-year to 18.5%, although it rose slightly from 17.9% in the first quarter.
MercadoLibre’s robust financial performance underscores its strategic position and adaptability in the rapidly evolving e-commerce landscape of Latin America.
