MercadoLibre Profit Dips Despite Revenue Surge

MercadoLibre announced a 12.5% decrease in its net profit for the fourth quarter, a result that fell below the projections of financial analysts. This decline was attributed to a deliberate increase in strategic investments aimed at enhancing long-term performance and market penetration across Latin America.

The company's revenue, however, demonstrated robust growth, climbing approximately 45% year-on-year to $8.8 billion. This figure surpassed the $8.5 billion estimated by analysts, with significant contributions from its operations in Brazil and Mexico, which saw a 35% increase in sales on a currency-neutral basis.

These investments include expanding credit card offerings, increasing free shipping provisions, and developing a direct-to-customer sales format known as 1P. While these initiatives compressed EBIT margins to 10.1% from 13.5% a year prior, MercadoLibre views its current market position as early in its development, likening it to "minute 15 of the first half of market development."

The company's credit portfolio experienced substantial growth, jumping about 90% year-on-year to $12.5 billion, with a slight increase in the 15-to-90-day delinquency rate to 7.6%. Operations in Venezuela remain largely unchanged and are not material to the company's overall financial results.