• Revenue: Achieved $21 billion for the fiscal year 2024.
• Free Cash Flow: Generated over $1 billion.
• Unique Buyers: Surpassed 100 million in the marketplace.
• Monthly Active Users: Reached 60 million on the fintech platform.
• Credit Cards Issued: 5.9 million new cards in 2024.
• Items Shipped: Increased by 29% year on year.

• Warning! GuruFocus has detected 6 Warning Signs with MELI.

Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• MercadoLibre Inc (NASDAQ:MELI) achieved significant market share gains in Brazil, Mexico, and Argentina, highlighting its leadership in e-commerce and fintech in Latin America.
• The company surpassed 100 million unique buyers on its marketplace and 60 million monthly active users on its fintech platform, reflecting strong user trust and loyalty.
• Investments in logistics infrastructure, including new fulfillment centers and expanded free shipping, have attracted a record number of new buyers.
• MercadoLibre Inc (NASDAQ:MELI) issued 5.9 million new credit cards in 2024, doubling its portfolio and enhancing its position as a potential leading digital bank in Latin America.
• The company achieved $21 billion in revenue and generated over $1 billion in free cash flow, demonstrating its ability to drive profitable growth while investing in long-term strategic objectives.

Negative Points

• Short-term pressure on margins is expected due to ongoing investments in logistics and credit card offerings.
• The rising interest rate environment poses a challenge, leading to a more cautious approach in credit issuance, particularly in Brazil.
• There is a potential risk of cannibalization in Mexico, where taxes paid on the marketplace with credit cards are replacing consumer loans.
• The contribution margin in Brazil was down year-over-year, partly due to higher provisions for credit card build-out.
• The company faces competition from peers focusing on lower ticket size items, which could impact growth in that segment.

Q & A Highlights

Q: How does MercadoLibre view its credit risk amid rising interest rates, and what impact could a cautious approach have on the ecosystem? A: MercadoLibre has not seen deterioration in its credit portfolio, with Brazil's credit card showing the lowest first payment default on record in December. The company has reduced the issuance of micro cards and tightened payback periods to manage risk. Despite these measures, MercadoLibre is comfortable with its risk levels and sees room for growth in credit penetration, particularly in Mexico, where credit products are increasingly used in the marketplace. (Unidentified_6, Unidentified_7)

Q: What are the expectations for margin trends in Argentina and Brazil, considering recent performance? A: MercadoLibre is optimistic about Argentina, noting a strong recovery in commerce and fintech, with a quadrupled credit book. Argentina's higher margins contribute positively, while Brazil's margin decline is attributed to higher credit card provisions. The company focuses on long-term growth rather than short-term margin targets, aiming to dilute fixed costs over time. (Unidentified_7)

Q: Can you provide an update on warehouse expansion and competition in low ASP items? A: MercadoLibre opened new warehouses to meet peak season demand and plans to continue expanding capacity to support long-term growth. For low ASP items, sales are growing at or above marketplace averages, driven by platform improvements, free shipping, and cross-border trade. The company is pleased with its performance in this segment. (Unidentified_13)

Q: How is MercadoLibre managing credit risk in Brazil, and what are the trends in credit card profitability? A: MercadoLibre has reduced micro card issuance and tightened payback periods for riskier segments. The credit card portfolio is growing, with older cohorts becoming profitable. The company is cautious but continues to expand credit offerings as long as repayment behavior aligns with expectations. (Unidentified_6, Unidentified_7)

Q: What are the strategic priorities for MercadoLibre's advertising business? A: MercadoLibre aims to build relationships with brands and agencies, expand its product offerings beyond product ads, and improve its tech stack. The company sees significant long-term potential in advertising as a percentage of GMV, aiming to reach levels comparable to international competitors. (Unidentified_13)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.