Key facts
- MercadoLibre's net income for the April-June quarter was $466 million, exceeding analyst expectations.
- The company experienced its third consecutive quarterly net profit decline, down 11% year-over-year.
- Net revenue surged 50% to $10.2 billion, marking the highest growth in four years.
- Investments in free shipping and credit card expansion impacted short-term profitability.
- Users active across both the e-commerce platform and fintech business increased by 37%.
MercadoLibre reported a second-quarter net income of $466 million, surpassing analyst expectations of $433 million, despite an 11% year-over-year decline in profit. This marks the company's third consecutive quarter of profit decline, attributed to increased investments in free shipping and credit card expansion.
Net revenue for the quarter reached $10.2 billion, a 50% increase and the highest growth in four years, exceeding analyst estimates of $9.7 billion. Total e-commerce sales, measured by gross merchandise volume (GMV), rose 36% on a forex-neutral basis. Income from operations (EBIT) fell 17% to $683 million but was still above the $658 million expected by analysts, with the EBIT margin decreasing to 6.7% from 12.2% a year prior.
The company's strategy of reinvesting gains into long-term initiatives like free shipping, credit card services, and cross-border sales has weighed on short-term profitability. However, these investments are yielding results, with users active in both the e-commerce platform and the fintech business increasing by 37% compared to the previous year. MercadoLibre considers this segment the most valuable, as these users conduct more transactions and are more profitable than single-service customers.
The credit portfolio grew 75% to $16 billion, primarily driven by credit cards. The 15-to-90-day delinquency rate was 7%, a slight increase year-on-year but a decrease from the first quarter. Total payment processing volume in the acquiring business rose 42% year-on-year on a forex-neutral basis.