MercadoLibre, the leading e-commerce company in Latin America, announced Thursday that its second-quarter net profit more than doubled compared to the same period last year, significantly exceeding analysts’ predictions. The company’s outstanding performance was largely due to 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 forecast by analysts surveyed by LSEG. The company’s revenue reached $5.1 billion, marking a 42% increase from the previous year and exceeding the $4.68 billion anticipated by analysts.
Gross Merchandise Value (GMV), a key sales metric, grew 20% year-over-year, driven by a 36% increase in Brazil, the company’s largest market.
“We continue to gain market share in Brazil,” said Chief Financial Officer Martin de los Santos in an interview with Reuters. He attributed this growth to consumers increasingly turning to online shopping and the company’s strategic investments aimed at improving 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 outperformed the broader market, and results in Argentina improved after a challenging first quarter.
The company’s operating performance, measured by earnings before interest and taxes (Ebit), was $726 million for the quarter, reflecting a 9% increase year-over-year and exceeding analyst expectations of $669 million. However, the Ebit margin decreased 4.4 percentage points to 14.3%, impacted by previously reported changes, challenges in Argentina and provisions for bad debts.
“When we accelerate loan growth, we record losses in advance,” de los Santos explained. MercadoLibre’s loan portfolio reached $4.9 billion for the quarter, representing a 51% year-over-year increase. The 90-day delinquency rate fell 6.6 percentage points year-on-year to 18.5%, although it rose slightly from 17.9% in the first quarter.
MercadoLibre’s strong financial performance underscores its strategic position and adaptability in Latin America’s rapidly evolving e-commerce landscape.
