Executive Summary

Q1 2025 delivered broad-based strength: Net revenues & financial income rose 37% YoY to $5.94B, EBIT of $763M (12.9% margin), and net income of $494M (8.3% margin) as Argentina’s recovery and ecosystem reinvestment offset Brazil/Mexico cost pressures .
Significant beats vs S&P Global consensus: revenue by ~$0.41B, EPS by ~$1.75, and EBITDA by ~$0.16B; the beat was driven by stronger Argentina, resilient commerce KPIs, and expanding Ads contribution, while credit portfolio growth remained disciplined* .
Management reiterated a growth-first, reinvestment posture (shipping, credit card, product/UX) rather than near-term margin targets; margins improved YoY, aided by Argentina mix, but Brazil/Mexico saw short-term compression tied to strategic investments .
Strategic updates: Ads grew ~50% FX-neutral with Display acceleration and Mercado Play on >70M smart TVs; Fintech MAUs reached 64M (+31% YoY), credit portfolio grew 75% YoY to $7.8B with asset quality at “comfortable” levels .
Stock narrative catalysts: clear estimate beats, accelerating Argentina KPIs, Ads runway (Display/Video), and confidence in credit asset quality with disciplined risk appetite; management emphasized “the best is yet to come” .

What Went Well and What Went Wrong

What Went Well

Argentina momentum: FX-neutral GMV +126% YoY and items sold +52% YoY; contribution margins reached record levels, helped by lower interest rates, SG&A dilution from growth, and improving credit profitability .
Ads expansion: Advertising revenue grew ~50% FX-neutral, with Display revenue more than doubling YoY and broader availability via self-serve; Mercado Play launched on TVs (>70M devices) to extend inventory beyond marketplace .
Fintech scale with healthy asset quality: MAUs reached 64M (+31% YoY); Brazil credit card first-payment defaults hit an all-time low in March, with overall 15–90 day NPL at 8.2% and NIMAL spread 22.7% despite mix effects .

Management quotes:

“Argentina performed exceptionally well… income from operations grew 45% YoY to $763mn in Q1’25” .
“Advertising revenue grew 50% YoY on an FX-neutral basis… share of Display within our Ads revenue rose by almost 10ppts YoY” .
“First payment defaults on the credit card in Brazil… reached another all-time low in March… 15-90 day NPL of 8.2%… remains within the same range” .

What Went Wrong

Margin pressure in Brazil/Mexico: contribution margins compressed ~5pts YoY in both, reflecting logistics expansion and scaling credit card; currency depreciation also weighed on margins .
Mexico tech category softness: weaker sales trends in a high ASP technology vertical due to aggressive competition (pricing/financing) and selection gaps; company is deploying targeted rate/rebate initiatives to address .
NIMAL spread compressed YoY to 22.7% (from 27.6% in Q4’24 and 24.2% in Q3’24), driven by higher credit card mix and move upmarket to lower-risk users, partially offset by maturing cohorts .

Financial Results

Headline P&L vs prior periods and vs estimates

Metric	Q3 2024	Q4 2024	Q1 2025	Vs. S&P Consensus
Net Revenues & Financial Income ($USD Billions)	$5.31	$6.06	$5.94	$5.52* → Beat by ~$0.41B*
Income from Operations ($USD Millions)	$557	$820	$763	—
Operating Margin (%)	10.5%	13.5%	12.9%	—
Net Income ($USD Millions)	$397	$639	$494	—
EPS (Basic/Diluted, $USD)	$7.83	$12.61	$9.74	$7.99* → Beat by ~$1.75*
Adjusted EBITDA ($USD Millions)	$714	$972	$935	$785* → Beat by ~$150M*

Values retrieved from S&P Global for estimate comparisons.*

Segment breakdown (Net revenues & financial income; direct contribution)

Segment	Q3 2024 Net Rev & FI ($M)	Q3 2024 Direct Contrib ($M)	Q4 2024 Net Rev & FI ($M)	Q4 2024 Direct Contrib ($M)	Q1 2025 Net Rev & FI ($M)	Q1 2025 Direct Contrib ($M)
Brazil	2,913	505	3,136	544	3,082	542
Mexico	1,145	192	1,347	244	1,222	217
Argentina	1,033	457	1,307	613	1,382	648
Other	221	30	269	40	249	45
Total	5,312	1,184	6,059	1,441	5,935	1,452

KPIs and Operating Metrics

KPI	Q3 2024	Q4 2024	Q1 2025
Unique Active Buyers (Millions)	61	67	67
Fintech MAUs (Millions)	56	61	64
GMV ($USD Millions)	12,907	14,548	13,330
Items Sold (Millions)	456	525	492
TPV ($USD Millions)	50,691	58,914	58,303
Acquiring TPV ($USD Millions)	36,042	41,833	40,317
NIMAL (%)	24.2%	27.6%	22.7%
Capital Expenditures ($USD Millions)	223	305	256
Depreciation & Amortization ($USD Millions)	157	152	172
Adjusted Free Cash Flow ($USD Millions)	—	680 (Q4)	-10

Guidance Changes

MercadoLibre did not issue formal quantitative guidance for revenue, margins, OpEx, OI&E, tax rate, or segments. Management reiterated focus on reinvestment for long-term growth and explicitly noted they “don’t guide regarding margins.”

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY/Quarter	N/A	No formal guidance; growth-first reinvestment posture	Maintained “no guidance”
EBIT Margin	FY/Quarter	N/A	“We don’t guide regarding margins”; continue investing in shipping and credit card	Maintained “no guidance”
Tax Rate	FY/Quarter	N/A	Not provided	N/A
Segment-specific (Commerce/Fintech/Ads)	FY/Quarter	N/A	Qualitative growth plans (logistics, credit card, Ads Display/Video)	N/A

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024 and Q4 2024)	Current Period (Q1 2025)	Trend
Credit card & credit portfolio	Scaling credit card; cohorts maturing; NIMAL down on mix/upmarket	NIMAL 22.7%; Brazil first-payment defaults at all-time low; continued cautious risk appetite; portfolio +75% YoY to $7.8B	Healthy asset quality; mix continues to dilute spreads
Logistics expansion	New FCs; fulfillment penetration records; investment weighed ~0.8ppt in Q3’24	Continued investment; fulfillment penetration >60% in Brazil in March; cost per order down YoY locally	Improving efficiency; sustained capex
Advertising (Retail Media)	Ads penetration ~2.0% of GMV in Q3; 2.1% in Q4; building Display/Video	Ads +50% FX-neutral; Display up >100% YoY; Mercado Play TV app launched	Accelerating; expanding inventory/channels
Argentina macro & operations	Consumption improving; items sold growth; record NPS	FX-neutral GMV +126% YoY; items sold +52% YoY; contribution margin records	Strong acceleration; favorable mix
Mexico competitive dynamics	Tech vertical strength in Q4; broad growth	Tech vertical weaker on competition/selection; targeted rate/rebate initiatives	Addressing category-specific headwinds
Tariffs/competition	Competitive environment; tariffs raising import costs; Argentina opening	U.S. tariffs not materially impacting; Argentina open—opportunity; TikTok Shop early days	Monitoring; limited near-term impact

Management Commentary

“We are excited to kick off 2025 with another great quarter… strong growth across both e-commerce and fintech… fueled by continued investments.” — Martin de los Santos (CFO) .
“We want users to see the relationship of win-win… build MercadoPago to become users’ primary financial relationship.” — Richard Cathcart (IR) .
“Mercado Pago has turned yellow… a single ecosystem… updated identity more aspirational and modern… evolved UX toward specialized banking experience.” — Richard Cathcart (IR) .
“The percentage yield at 120% of CDI in Brazil is about positioning ourselves as the leading digital bank… driving principality via loyalty and engagement.” — Osvaldo Giménez .
“We don’t guide regarding margins… we will invest behind the large opportunity in commerce and fintech even if it brings short-term pressure.” — Martin de los Santos .

Q&A Highlights

Argentina sustainability: strong items sold and GMV; margin gains driven by growth dilution, lower rates, and credit profitability; credit card not launched yet in Argentina (investments to come) .
1P and Supermarket dynamics: 1P GMV +102% YoY; supermarket +65% YoY with better UX and unit economics than 3P, aiding downstream GMV/engagement .
Logistics plan & capex: continued footprint expansion; logistics capex intensity consistent YoY; maintaining capacity for demand .
Credit risk appetite/funding: tightened at lower-score cohorts amid market signals; warehouse facilities (JPM, GS, Citi) remain core funding; tactical shifts in Brazil funding mix .
Mexico technology softness: competition in pricing/financing and selection gaps; initiatives underway (premium take rate tweaks, rebates) with early positive results .
Ads penetration: acceleration driven by Brands self-serve and Display; $1B annualized ads business with room to scale Display/Video; Mercado Play supports long-term ambition .
Competition/tariffs: TikTok Shop early; tariffs modestly reduce cross-border into Mexico/Brazil; Argentina opening increases opportunity; MELI expanding Texas-to-Argentina offering .

Estimates Context

Q1 2025 actuals vs S&P Global consensus:

Metric	Consensus	Actual	Surprise
Revenue ($USD Billions)	$5.521*	$5.935	+$0.414*
Primary EPS ($USD)	$7.99*	$9.74	+$1.75*
EBITDA ($USD Millions)	$785*	$935	+$150*
# of Estimates (Revenue / EPS)	11* / 7*	—	—

Values retrieved from S&P Global.*

Implications: Consensus is likely to move higher on FY revenue/EPS/EBITDA given strong beat, Argentina trajectory, and Ads momentum; margin commentary suggests continued reinvestment could temper near-term EBIT expansion, but mix (Argentina) and efficiency improvements provide support .

Key Takeaways for Investors

Clear beat on revenue, EPS, and EBITDA vs S&P consensus; strength anchored in Argentina recovery, resilient commerce KPIs, and expanding Ads contribution .
Growth-first posture remains: logistics and credit card scaling will continue to pressure Brazil/Mexico contribution margins near-term but strengthen ecosystem and long-term share .
Ads runway expanding beyond product ads—Display/Video scaling and Mercado Play TV broadens inventory; expect continued penetration gains .
Credit asset quality robust despite mix shift: Brazil first-payment defaults at all-time low; disciplined risk appetite and diversified funding across warehouse facilities .
Mexico tech category softness manageable: targeted rate/rebate and selection initiatives already underway; broader marketplace growth trends remain solid .
Argentina offers outsized contribution potential as macro stabilizes; items sold and contribution margins at record levels provide near-term EPS leverage .
Near-term trading: beats and Ads narrative can support positive sentiment; medium-term thesis hinges on execution in logistics/credit scaling and further Ads monetization, with FX and competitive dynamics as key watch items .

MERCADOLIBRE INC (MELI)·Q1 2025 Earnings Summary