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Latin American e-commerce and fintech company MercadoLibre (NASDAQ:MELI) reported Q1 CY2024 results exceeding Wall Street analysts' expectations, with revenue up 42.7% year on year to $4.33 billion. It made a GAAP profit of $6.78 per share, improving from its profit of $3.92 per share in the same quarter last year.
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MercadoLibre (MELI) Q1 CY2024 Highlights:
- Revenue: $4.33 billion vs analyst estimates of $3.87 billion (12.1% beat)
- EPS: $6.78 vs analyst estimates of $5.95 (14% beat)
- Gross Margin (GAAP): 46.7%, down from 50.6% in the same quarter last year
- Free Cash Flow of $1.37 billion, down 21.9% from the previous quarter
- Market Capitalization: $73.84 billion
Online MarketplaceMarketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission-paying sellers, generating flywheel scale effects that feed back into further customer acquisition.
Sales GrowthMercadoLibre's revenue growth over the last three years has been exceptional, averaging 51.1% annually. This quarter, MercadoLibre beat analysts' estimates and reported excellent 42.7% year-on-year revenue growth.
Ahead of the earnings results, analysts were projecting sales to grow 17.2% over the next 12 months.
Key Takeaways from MercadoLibre's Q1 Results
We were impressed by how significantly MercadoLibre blew past analysts' revenue and EPS estimates this quarter, driven by better-than-expected GMV on its e-commerce platform. The company stated it's seeing record levels of retention for its newest customer cohorts and strong traction for MELI+ as loyalty members are spending more than non-loyalty members. MercadoLibre's ad business is also growing nicely (64% year on year) and reached 1.9% of GMV, up from 1.4% in the same quarter last year.
On the other hand, the company's TPV missed Wall Street's projections, but looking under the hood, traction was still strong. MercadoPago users were up 38% year on year to 49 million MAUs while assets under management were up 90% year on year. The credit quality of its loan book also rose with late payments (90 days+) falling 10 percentage points year on year.
Turning to macro, Brazil and Mexico are still performing extremely well while Argentina is still struggling. Despite the Argentina headwinds, MELI still posted better consumption trends than the broader economy, which is encouraging. We're hopeful Argentina can turn it around with Javier Milei as its new president.
Zooming out, we think this was a fantastic quarter that should have shareholders cheering. The stock is up 7.2% after reporting and currently trades at $1,615 per share.