Q3 numbers show Mercado Libre winning big

Mercado Libre, the leading e-commerce platform in Latin America, has reported a substantial surge in profits for the third quarter. The company recorded $359 million in net income, marking a remarkable 178% increase compared to the same period last year. This surge can be attributed to the strong performance of e-commerce in Mexico and the continued expansion of its fintech division, Mercado Pago.

In its financial services arm, Mercado Libre saw a 33% year-over-year growth in net revenue, reaching $1.6 billion during the quarter. The company’s more aggressive credit strategy contributed to this growth.

Mercado Pago, the company’s neobank and primary platform for e-commerce payments, has been rapidly expanding its presence across Latin America. It not only facilitates in-site transactions but has also ventured into off-platform services, including in-store QR payments and digital wallet initiatives.

The user base for Mercado Pago has witnessed significant growth, with the number of unique active users reaching 48.8 million by the end of September. This represents substantial growth over the previous year.

Mercado Pago’s credit originations experienced a 22.7% year-over-year growth in the quarter, resulting in a loan portfolio of $3.4 billion. The majority of these loans are short-term obligations, with consumer loans accounting for more than half of the total.

Despite expansion, the company managed to maintain slightly better delinquency ratios. The 90-day non-performing-loan ratio was reported at 20.3% in the quarter, down from 25.1% in the previous period. However, this figure remains higher than that of traditional banks, underscoring the risk involved in expanding into the credit segment for neobanks.

Mercado Libre’s fintech division, Mercado Pago, continues to demonstrate its growing influence in the digital payments and financial services sectors in Latin America. The company’s expanding fintech offerings, coupled with the growth of its e-commerce platform, position it as a major player in the evolving digital economy of the region.