Here's our initial take on MercadoLibre's (NASDAQ: MELI) fiscal 2025 first-quarter financial report.
Key Metrics
| Metric |
Q1 2024 |
Q1 2025 |
Change |
vs. Expectations |
| Revenue |
$4.3 billion |
$5.94 billion |
+37% |
Beat |
| Earnings per share |
$6.78 |
$9.74 |
+44% |
Beat |
| Gross Merchandise Volume (GMV) |
$11.4 billion |
$13.3 billion |
+17% |
n/a |
| Total Payment Volume (TPV) |
$40.7 billion |
$58.3 billion |
+43% |
n/a |
Fantastic Results Throughout the Business
In the first quarter of 2025, MercadoLibre beat expectations on both the top and bottom lines. And throughout the business, all of the key numbers looked very strong. On MercadoLibre's e-commerce marketplace, $13.3 billion in gross merchandise volume was achieved, and the number of items sold on the platform was 28% higher than the comparable quarter a year ago.
One particularly impressive statistic is that while marketplace sales declined a bit compared with the seasonally strong fourth quarter, growth in the number of unique active buyers on the platform accelerated sequentially -- for the fifth quarter in a row. There are now 25% more active buyers on the marketplace than there were a year ago.
The Mercado Pago fintech side was even more impressive, with total payment volume soaring 43% year over year and the credit portfolio reaching $7.8 billion, a 75% annualized growth rate. There are now 64.3 million active monthly users on the fintech platform, compared with less than 50 million a year ago. The company's credit card business was especially strong, with 111% growth in credit card receivables compared with a year ago.
Profitability looked incredibly strong as well. Operating margin improved by 70 basis points year over year to 12.9%, and net margin expanded by 40 basis points. Free cash flow was slightly negative for the quarter, but it's important to note that this is because of aggressive investment in the business (especially funding the growth of the fintech platform) and not because of anything wrong with the business itself.
Immediate Market Reaction
Not surprisingly, the initial reaction to MercadoLibre's results was overwhelmingly positive. About 10 minutes after the earnings report was released on Wednesday, MercadoLibre's stock price was higher by about 9%. If this move holds, it will be a fresh all-time high for the commerce leader.
It's worth mentioning that this move is before the company's earnings call, which was scheduled for 5 p.m. EDT on the date of the earnings release. Management's commentary could certainly move the stock in one direction or the other.
What to Watch
As mentioned, the first quarter is seasonally weak, so for the company to produce such positive surprises on both revenue and earnings is great to see. The credit portfolio (especially the credit card business) could still have massive growth potential in the quarters ahead, and it will be interesting to see what commentary management has about the extremely promising MELI+ subscription business and its advertising platform.
MercadoLibre's ad revenue grew 50% year over year in the first quarter, but the company just launched the Mercado Play app for smart TVs at the end of the first quarter, so it will be interesting to see if that gives the ad business even more traction.
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Matt Frankel has positions in MercadoLibre. The Motley Fool has positions in and recommends MercadoLibre. The Motley Fool has a disclosure policy.
