Key Points
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MercadoLibre’s operating margin fell to 6.9%, down six percentage points in Q1 2023.
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The company achieved a revenue of $8.85 billion, exceeding estimates of $8.3 billion and reporting a 49% growth.
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Free shipping thresholds were lowered, contributing to a 38% increase in gross merchandise volume in Brazil.
MercadoLibre (NASDAQ: MELI) faced a significant decline in its operating margin during the first quarter of 2023, which was halved as competitive pressure grows from Amazon and Sea Limited’s Shopee. Despite this, the company reported a 49% year-over-year revenue growth, reaching $8.85 billion, marking its fastest growth rate in nearly four years.
The decline in operating margin is attributed to increased investment in infrastructure and a growing credit portfolio, as well as strategic decisions to lower the free shipping threshold in Brazil, where it earns half of its revenue. Operating income fell 20% to $611 million, with earnings per share decreasing from $9.74 to $8.23, underperforming against the consensus estimate of $9.37.
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