MercadoLibre (NASDAQ:MELI) Beats Q2 Sales Targets But Stock Drops
Is now the time to buy MercadoLibre? Find out in our full research report.
MercadoLibre (MELI) Q2 CY2025 Highlights:
Revenue: $6.79 billion vs analyst estimates of $6.54 billion (33.8% year-on-year growth, 3.9% beat)
EPS (GAAP): $10.31 vs analyst expectations of $11.89 (13.3% miss)
Adjusted EBITDA: $1.02 billion vs analyst estimates of $1.06 billion (15.1% margin, 3.2% miss)
"This compression [in margin] was primarily driven growth investments..., and marketing spend also increased to support our free shipping and Mercado Pago campaigns. We are confident these are the right investments to make for the benefit of our users and our ecosystem"
Operating Margin: 12.2%, down from 14.3% in the same quarter last year
Free Cash Flow Margin: 38.7%, up from 12.8% in the previous quarter
Unique Active Buyers: 71 million, up 14.4 million year on year
Market Capitalization: $121.5 billion
Company Overview
Originally started as an online auction platform, MercadoLibre (NASDAQ:MELI) is a one-stop e-commerce marketplace and fintech platform in Latin America.
Revenue Growth
A company's long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, MercadoLibre's sales grew at an incredible 39.7% compounded annual growth rate over the last three years. Its growth surpassed the average consumer internet company and shows its offerings resonate with customers, a great starting point for our analysis.
This quarter, MercadoLibre reported wonderful year-on-year revenue growth of 33.8%, and its $6.79 billion of revenue exceeded Wall Street's estimates by 3.9%.
Looking ahead, sell-side analysts expect revenue to grow 27.8% over the next 12 months, a deceleration versus the last three years. Still, this projection is eye-popping given its scale and implies the market is baking in success for its products and services.
Unless you've been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories.
Unique Active Buyers
User Growth
As an online marketplace, MercadoLibre generates revenue growth by increasing both the number of users on its platform and the average order size in dollars.
Over the last two years, MercadoLibre's unique active buyers, a key performance metric for the company, increased by 20.8% annually to 71 million in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction.
In Q2, MercadoLibre added 14.4 million unique active buyers, leading to 25.4% year-on-year growth. The quarterly print was higher than its two-year result, suggesting its new initiatives are accelerating user growth.
Revenue Per User
Average revenue per user (ARPU) is a critical metric to track because it measures how much the company earns in transaction fees from each user. ARPU also gives us unique insights into a user's average order size and MercadoLibre's take rate, or "cut", on each order.
MercadoLibre's ARPU growth has been exceptional over the last two years, averaging 15.4%. Its ability to increase monetization while growing its unique active buyers at an impressive rate reflects the strength of its platform, as its users are spending significantly more than last year.
This quarter, MercadoLibre's ARPU clocked in at $95.63. It grew by 6.7% year on year, slower than its user growth.
Key Takeaways from MercadoLibre's Q2 Results
This compression [in margin] was primarily driven growth investments..., and marketing spend also increased to support our free shipping and Mercado Pago campaigns. We are confident these are the right investments to make for the benefit of our users and our ecosystem"
Should you buy the stock or not? If you're making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it's free.
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