MercadoLibre, Inc. Reports First Quarter 2025 Financial Results

Rhea-AI Summary

MercadoLibre (MELI) reported strong Q1 2025 financial results with significant growth across key metrics. Net revenues reached US$5.9 billion, up 37% YoY (64% FX-Neutral). The company's e-commerce platform saw GMV rise to US$13.3 billion (40% FX-Neutral growth), while Total Payment Volume through Mercado Pago surged to US$58.3 billion, up 43% YoY. Net income grew to US$494 million with an 8.3% margin. The platform's user base expanded significantly, with 66.6 million unique active buyers (25% YoY growth) and 64.3 million fintech monthly active users (31.2% YoY growth). The credit portfolio grew 75% YoY to US$7.8 billion, while Assets Under Management doubled to US$11.2 billion. The company maintained strong operational efficiency with a 12.9% operating margin, though it reported a small adjusted free cash outflow of US$10 million due to continued investments.

Positive

• Net revenues increased 37% YoY to US$5.9 billion, with 64% FX-Neutral growth
• Net income grew to US$494 million, with improved margin of 8.3%
• Strong user growth with 66.6 million unique active buyers (25% YoY increase)
• Total Payment Volume surged 43% YoY to US$58.3 billion
• Assets Under Management more than doubled YoY to US$11.2 billion
• Improved operating margin at 12.9%, up 70 basis points YoY
• Year-over-year improvement in Non-Performing Loans (NPLs)

Negative

• Adjusted Free Cash Flow showed an outflow of US$10 million
• Net Debt to Adjusted EBITDA ratio increased quarter-over-quarter to 0.79x
• NIMAL compression due to strategic move upmarket and higher proportion of credit cards
• Increase in bad debt provisions due to higher share of credit cards in portfolio

Insights

Financial Analyst

MercadoLibre delivered exceptional Q1 results with strong growth across all metrics while expanding profitability despite aggressive investments.

MercadoLibre's Q1 2025 results showcase exceptional performance across both commerce and fintech segments. Net revenues surged 37% year-over-year to $5.9 billion (64% on an FX-neutral basis), demonstrating the company's ability to maintain high growth rates despite its scale.

The bottom line shows impressive improvements, with operating income reaching $763 million (up from $528 million in Q1 2024) and operating margin expanding by 70 basis points to 12.9%. Net income grew to $494 million, with margin improvement of 40 basis points to 8.3% – particularly notable given the company's continued heavy investments.

The e-commerce marketplace continues its strong momentum with unique active buyers increasing 25% to 66.6 million – the fastest growth rate since the pandemic-fueled Q1 2021. Gross Merchandise Volume reached $13.3 billion, growing 40% on an FX-neutral basis, while items sold jumped 28% to 492.2 million. The improved 3P take rate of 21.4% signals MercadoLibre's strong market position.

Perhaps even more impressive is the fintech segment's performance. Total Payment Volume surged 72.4% on an FX-neutral basis to $58.3 billion, with acquiring TPV (merchant payments) reaching $40.3 billion and fintech services TPV hitting $18.0 billion. The credit portfolio expanded 74.9% year-over-year to $7.78 billion, with a healthy distribution across consumer loans, credit cards, merchant loans, and asset-backed loans.

MercadoLibre maintains a strong balance sheet despite aggressive investments, with $4.96 billion in cash and investments and a modest Net Debt to Adjusted EBITDA ratio of 0.79x. The $10 million adjusted free cash outflow reflects strategic choices: $770 million invested in fintech funding and $256 million in logistics capex.

The geographical revenue breakdown shows strong diversification, with Brazil contributing $3.08 billion, Argentina $1.38 billion, Mexico $1.22 billion, and other countries $249 million. This multi-country strength helps mitigate regional economic risks while demonstrating MercadoLibre's execution capabilities across diverse markets.

MercadoLibre, Inc. (referred to as MercadoLibre or "the company") announced its financial results for the first quarter ended March 31, 2025, on May 7, 2025, showcasing significant year-over-year growth in key operational and financial metrics. The Latin American e-commerce and fintech giant reported substantial increases in revenue, payment volumes, and user engagement across its platforms.

Financial and Operational Snapshot for Q1 2025

According to the company's Q1 2025 investor presentation, MercadoLibre delivered strong performance highlights compared to the same period in the previous year:

• Net Revenues and Financial Income: Reached US$5.9 billion, a 37% increase year-over-year, or 64% on an FX-Neutral basis. FX-Neutral figures adjust for foreign currency exchange rate fluctuations, providing a view of underlying business performance.
• Gross Merchandise Volume (GMV): Climbed to US$13.3 billion, up 17% year-over-year (40% FX-Neutral). GMV represents the total value of all goods sold through its e-commerce marketplace.
• Total Payment Volume (TPV): Surged to US$58.3 billion, a 43% rise year-over-year (72% FX-Neutral). TPV reflects the total value of transactions processed through Mercado Pago, its fintech platform.
• Items Sold: Increased to 492.2 million, marking a 28% year-over-year growth.
• Income from Operations: Stood at US$763 million, with an operating margin of 12.9%.
• Net Income: Amounted to US$494 million, resulting in a net income margin of 8.3%.
• Credit Portfolio: Expanded to US$7.8 billion, a 75% increase year-over-year.
• Adjusted Free Cash Flow: Reported an outflow of US$10 million. Adjusted Free Cash Flow is a non-GAAP (Generally Accepted Accounting Principles) measure, which the company states is reconciled in its shareholder letter.

The company noted that certain financial measures presented, such as FX-Neutral growth and adjusted free cash flow, are not calculated under U.S. GAAP. Reconciliations for these non-GAAP measures are available in MercadoLibre's Q1 2025 earnings press release and its upcoming Form 10-Q filing for the quarter ended March 31, 2025.

Detailed Financial Performance

MercadoLibre's total net revenues and financial income of US$5.935 billion for the first quarter of 2025 represented a 37.0% year-over-year increase on a reported basis and 64.1% on an FX-Neutral basis. This growth was driven by strong performances in both its commerce and fintech segments.

Income from operations reached US$763 million, up from US$528 million in the first quarter of 2024. The operating margin improved by 70 basis points year-over-year to 12.9%. The company attributed this margin expansion to efficiencies in product development and marketing and sales expenses, which were partially offset by an increase in bad debt provisions related to a higher share of credit cards in the overall portfolio (from 35% to 42%).

Net income for the quarter was US$494 million, compared to US$344 million in the prior-year period. The net income margin expanded by 40 basis points year-over-year to 8.3%. This improvement was primarily due to better Cost of Goods Sold (COGS) and operating expenses (OPEX) leverage and higher net interest income, partially offset by increased taxes and a slight negative impact from foreign exchange, according to the presentation.

Marketplace Segment Momentum

MercadoLibre's e-commerce marketplace continued its growth trajectory. The number of Unique Active Buyers reached 66.6 million in Q1 2025, a 25% year-over-year increase, which the company described as the fastest growth rate since the first quarter of 2021, during the pandemic. This acceleration was attributed to investments in its value proposition.

Consolidated Gross Merchandise Volume (GMV) grew 40% year-over-year on an FX-Neutral basis, reaching US$13.3 billion. The number of items sold on the platform rose by 28% year-over-year to 492.2 million. The company highlighted particularly strong FX-Neutral GMV growth in Argentina (126% YoY) and solid growth in Brazil and Mexico.

Shipping capabilities saw further enhancement, with Same & Next Day Shipments increasing by 25% year-over-year to 143.4 million units. The company stated that 50% of all shipments were delivered within the same or next day. The share of slow shipments, chosen by the buyer, rose by almost 3 percentage points year-over-year.

Items sold per unique buyer were 7.4 units in Q1 2025. MercadoLibre noted that a significant increase in new buyers has diluted this metric in the short term, but it is observing faster growth among users who have been on the platform for more than a year.

Commerce net revenues totaled US$3.303 billion, a 57.4% increase year-over-year on an FX-Neutral basis. The company reported that its third-party (3P) take rate rose to 21.4% year-over-year, primarily due to the final implementation of last year's changes to Shipping Terms & Conditions; otherwise, the take rate was broadly stable.

Fintech Services Expansion

MercadoLibre's fintech arm, Mercado Pago, also demonstrated robust growth. Fintech Monthly Active Users (MAU) grew by 31.2% year-over-year to 64.3 million. The company defines fintech MAU as users who performed at least one financial transaction, such as a card payment, QR code payment, online payment, investment, insurance purchase, loan, or sales transaction payment, in the last month of the reporting period.

Total Payment Volume (TPV) through Mercado Pago increased by 72.4% year-over-year on an FX-Neutral basis to US$58.3 billion. This included US$40.3 billion in Acquiring TPV (related to payment processing for merchants) and US$18.0 billion in TPV from Fintech Services (such as digital wallet payments and P2P transfers).

Assets Under Management (AUM) within Mercado Pago more than doubled, growing 102.9% year-over-year to US$11.2 billion. This figure includes remunerated accounts, savings, investments, and non-invested balances. The company stated that higher AUM is translating into increased account usage.

The credit portfolio reached US$7.78 billion at the end of Q1 2025, up 74.9% year-over-year. The portfolio consisted of:

• Consumer loans: US$2.97 billion
• Credit Card loans: US$3.24 billion
• Merchant loans: US$1.39 billion
• Asset-backed loans: US$178 million

The Net Interest Margin After Losses (NIMAL) for the fintech segment was 22.7% in Q1 2025. MercadoLibre explained that the year-over-year compression in NIMAL was due to a continued strategic move upmarket for consumers and merchants, as well as a higher proportion of credit cards in the portfolio, which typically carry different risk and cost profiles. The company also reported year-over-year improvement in Non-Performing Loans (NPLs), attributing it to enhanced asset quality and portfolio mix adjustments.

Fintech net revenues grew to US$2.632 billion, a 73.3% increase year-over-year on an FX-Neutral basis. The fintech take rate was 4.5%, remaining flat year-over-year, with gains from higher credit penetration offset by a small reduction in transactional and financing fees, according to the company.

Acquiring Business Strength

The acquiring TPV, which represents payments processed for merchants, showed 32% year-over-year growth in U.S. dollar terms, reaching US$40.3 billion in Q1 2025. On an FX-Neutral basis, acquiring TPV grew 59% year-over-year. MercadoLibre attributed this performance to delivering a more compelling and differentiated package of products, leading to positive results among its merchant base. The company also noted robust growth trends across geographies in its acquiring segment, with a rising cross-sell of credit products to merchants. The percentage of monthly active sellers with credit increased to 26.3% in Q1 2025 from 16.9% in Q1 2024.

Cash Flow and Capital Allocation

MercadoLibre reported an adjusted free cash outflow of US$10 million for the first quarter of 2025. The company explained that continued investment drove this outflow. Specifically, net investment in fintech funding, primarily for the growth of its loan book, amounted to US$770 million in Q1 2025. Capital expenditures (capex) were US$256 million, mostly directed towards logistics expansion.

The company's leverage remained low, as stated in the presentation. Available cash and investments totaled US$4.958 billion at the end of the quarter. The Net Debt to Adjusted EBITDA (Last Twelve Months) ratio stood at 0.79x. The small quarter-over-quarter increase in leverage was related to the funding of Mercado Pago's operations, according to the company.

Geographic Revenue Contribution

Breaking down net revenues by geography for Q1 2025, the company reported:

• Brazil: US$3.082 billion (up from US$2.571 billion in Q1 2024)
• Argentina: US$1.382 billion (up from US$615 million in Q1 2024)
• Mexico: US$1.222 billion (up from US$971 million in Q1 2024)
• Other Countries: US$249 million (up from US$176 million in Q1 2024)

This article is based solely on information provided in MercadoLibre, Inc.'s Q1 2025 investor presentation dated May 7, 2025. The content is for informational purposes only and does not constitute financial, investment, legal, or tax advice. Stock Titan and its writers make no representations as to the accuracy, completeness, or timeliness of the information. Investors should conduct their own due diligence before making any investment decisions.

Source: MercadoLibre, Inc.

FAQ

What were MercadoLibre's (MELI) key financial results for Q1 2025?

In Q1 2025, MercadoLibre reported net revenues of US$5.9 billion (37% YoY growth), net income of US$494 million, and an operating margin of 12.9%. Total Payment Volume reached US$58.3 billion, while GMV was US$13.3 billion.

How many active users does MercadoLibre (MELI) have in Q1 2025?

MercadoLibre had 66.6 million unique active buyers (up 25% YoY) and 64.3 million fintech monthly active users (up 31.2% YoY) in Q1 2025.

What is the size of MercadoLibre's (MELI) credit portfolio in Q1 2025?

MercadoLibre's credit portfolio reached US$7.78 billion in Q1 2025, up 74.9% year-over-year, consisting of consumer loans, credit card loans, merchant loans, and asset-backed loans.

How much are MercadoLibre's (MELI) Assets Under Management in Q1 2025?

MercadoLibre's Assets Under Management grew 102.9% year-over-year to US$11.2 billion in Q1 2025, including remunerated accounts, savings, investments, and non-invested balances.

What was MercadoLibre's (MELI) shipping performance in Q1 2025?

MercadoLibre delivered 143.4 million units via Same & Next Day Shipments (25% YoY growth), with 50% of all shipments delivered within the same or next day.