MercadoLibre MELI reported fourth-quarter 2024 earnings of $12.61 per share, which beat the Zacks Consensus Estimate by 73.69% and surged 288% year over year. Revenues rose 24% on a year-over-year basis (75% on an FX-neutral basis) to $6.05 billion. The top line surpassed the Zacks Consensus Estimate by 3.7%.

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Total revenues were driven by accelerating commerce and fintech revenues, which grew 44.4% and 28.6% year over year to $3.5 billion and $2.5 billion, respectively. In the commerce segment, strong momentum across Brazil (up 32% year over year) and Mexico (up 28% year over year) contributed well to the reported results. Trends in Argentina are encouraging. Items sold grew 18% year over year in the fourth quarter.

In the Fintech segment, Net Promoter Score hit record levels in Brazil and Mexico in the fourth quarter of 2024 and was the highest since 2021 in Argentina. This drove greater adoption, with strong trends across all three countries. Monthly Active Users  rose 34% year over year to 61.2 million (with even faster growth among heavy users). Assets Under Management grew 129% year over year to $10.6 billion (due to the success of our yielding account) and Insurtech active users surpassed 10 million for the first time.

Revenues from MELI’s advertising services grew 41% on a year-over-year basis and were equivalent to almost 2.1% of gross merchandise volume (GMV) at the end of the fourth quarter.

Increasing total payments volume (TPV), courtesy of the robust Mercado Pago, aided the company. MercadoLibre’s rising GMV was another positive.

MELI Quarter in Detail

Brazil: Net revenues in the fourth quarter came in at $3.31 billion (51.8% of the total revenues), rising 37.7% year over year.

Argentina: The market generated revenues of $1.3 billion (21.6% of the top line), which grew 31% year over year.

Mexico: Net revenues in the reported quarter were $1.34 billion (22.2% of the total revenues), which soared 43% year over year.

Other countries: The markets generated revenues of $269 million (4.4% of the total revenues), reflecting an increase of 40.1% on a year-over-year basis.

Key Metrics for MELI

GMV of $14.5 billion jumped 8% year over year and 56% on FX-neutral basis year over year. The figure, however, missed the consensus mark by 1.08%.

The number of successful items sold was 525 million, up 27.1% year over year. 

TPV surged 33% year over year and 49% on an FX-neutral basis to $58.9 billion. This was driven by the strong performance of Mercado Pago. The figure missed the Zacks Consensus Estimate by 1.47%.

Total payment transactions increased 43.3% year over year to $3.32 billion.

MercadoLibre Operating Details

For the fourth quarter, the gross margin contracted 110 basis points (bps) from the year-ago quarter to 45.4%.

Operating expenses were $1.92 billion, which increased 12.5% year over year. As a percentage of revenues, the figure contracted 710 bps year over year to 31.8% in the reported quarter.

The operating margin expanded 590 bps from the year-ago period to 13.5%. This margin expansion was driven by strong execution and disciplined cost management across its logistics network, efficiencies in collection fees, and operating leverage in Sales & Marketing and Product Development. These factors more than offset the margin headwind caused by provisions for doubtful accounts.

Balance Sheet

As of Dec. 31, 2024, cash and cash equivalents were $2.63 billion, up from $2.16 billion as of Sept. 30, 2024.

Short-term investments were $1.05 billion as of Dec. 31, 2024. Net debt was $2.04 billion at the end of the quarter.

MELI Zacks Rank & Other Stocks to Consider

Currently, MercadoLibre carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Retail-Wholesale sector are Bath and Body Works BBWI, Beacon Roofing Supply BECN and Cars.com CARS, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bath and Body Works, Beacon Roofing Supply and Cars.com are scheduled to report their respective fourth-quarter 2024 results on Feb. 27.

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