MercadoLibre: Revenue Jumps 38%

MercadoLibre (NASDAQ:MELI), a leading e-commerce platform in Latin America, released its fourth-quarter 2024 earnings on February 20, 2025.

Delivering a significant earnings surprise, the company reported diluted earnings per share of $12.61, topping the analyst estimate of $7.90 by a large margin. Revenue for the quarter reached $6.1 billion, exceeding expectations of $5.88 billion.

The overall performance highlighted solid results across its e-commerce and fintech divisions, despite regional challenges.

Source: Analyst estimates for the quarter provided by FactSet.

Overview of MercadoLibre

MercadoLibre is a dominant force in Latin America's e-commerce market, operating an extensive online ecosystem that connects millions of buyers and sellers. The company offers a diverse range of products across 18 countries, solidifying its status in the growing marketplace. Recent focus areas include expanding its digital payment solutions, strengthening logistics operations, and increasing market penetration in key regions like Brazil and Mexico.

The key to MercadoLibre's success is its multifaceted approach, integrating e-commerce, logistics, and fintech. Its seamless fulfillment services and trusted payment methods bolster customer satisfaction, while strategic investments continue to drive growth.

Quarterly Highlights

During Q4 2024, MercadoLibre's total payment volume increased significantly to $58.9 billion, up 32.5% year-over-year. This surge was powered by strong growth in digital payment services across Brazil and Mexico. Additionally, gross merchandise volume (GMV) rose by 8.2% year-over-year to $14.5 billion, highlighting effective market strategies and rising consumer engagement. In particular, MercadoLibre's total foreign exchange-neutral GMV grew 56% year over year, underscoring market strength despite regional challenges.

On the logistics front, Mercado Envios, the company's delivery and fulfillment service, processed an impressive 1.79 billion items throughout 2024. The fourth quarter alone saw over half a billion items delivered, demonstrating a 27% year-over-year increase. Technology enhancements and improved infrastructure, like Metro fulfillment centers, contributed to logistical efficiency. However, the proportion of same-day or next-day deliveries slightly decreased from 51% to 49%, indicating a need for further enhancements.

The fintech arm, Mercado Pago, witnessed a 29% year-over-year increase in monthly active users, reaching 61.2 million, driven by enhanced digital payment capabilities and credit offerings. Meanwhile, the company's total credit portfolio expanded to $6.6 billion, a 74% increase year-over-year. The robust growth, accompanied by lower credit risk, indicates successful scaling in key financial services.

Though achieving a record net income of $639 million in Q4, MercadoLibre faced economic instability in Argentina impacting revenue growth. In contrast, it saw more robust developments in other key markets like Brazil and Mexico. Despite challenges, the company remains optimistic about continued growth, focusing on e-commerce and fintech investments.

Looking Ahead

Management conveyed optimism for 2025, emphasizing strategic investments to bolster e-commerce and fintech capabilities. The goal is to further enhance logistical efficiencies and expand financial services across Latin America. Monitoring asset quality within its credit operations remains crucial to mitigating potential risks as it expands its financial footprint.

Forward guidance suggests sustained growth potential, with substantial revenue and profit increases anticipated. Investors should watch for developments in logistics optimization, regional market expansion challenges, and evolving fintech services as key indicators of the company's trajectory in the coming quarters.

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JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends MercadoLibre. The Motley Fool has a disclosure policy.