Key Takeaways
- Q4 revenue reached $8.76B for MercadoLibre, marking a 45% year-over-year increase and surpassing analyst projections by approximately $300M
- Merchandise volume across the platform increased 37% YoY, with Mexico jumping 49% and Brazil gaining 46%
- Earnings per share landed at $11.03, falling short of the $11.43 forecast as the company ramped up AI and advertising technology spending
- The MELI+ loyalty program accelerated growth by bundling streaming services including Disney+, Netflix, HBO Max, and Apple TV+
- Shares initially dropped nearly 5% after-hours following earnings but rebounded 3% on Tuesday and gained 4.29% Wednesday
The Latin American e-commerce giant delivered impressive fourth-quarter revenue of $8.76 billion, representing a 45% surge compared to the prior-year period and beating analyst expectations by around $300 million.
This robust revenue performance helped shares recover on Tuesday with a 3% gain, bouncing back from Monday’s sharp 7% selloff — the steepest single-day loss since November.
However, the stock retreated approximately 5% in after-hours trading as market participants digested the bottom-line shortfall.
The company reported earnings per share of $11.03, missing the Street’s consensus forecast of $11.43 and declining from $12.61 reported in the year-ago quarter.
Management attributed the profit shortfall primarily to elevated spending on artificial intelligence capabilities and advertising platform enhancements, both strategic priorities for the organization.
Strong Volume Expansion Across Key Markets
Total gross merchandise volume across the platform expanded 37% on a year-over-year basis. Mexico delivered standout performance with 49% growth, while Brazil posted a solid 46% increase.
In Mexico specifically, fulfillment penetration reached an all-time high approaching 80% during the fourth quarter, with free shipping availability now matching levels seen in Brazil.
Payment volume processed through the platform totaled $83.7 billion during the quarter, representing 42% growth versus the prior year.
The company generated net income of $559 million alongside free cash flow of $763 million.
Loyalty Program Gains Momentum
The MELI+ membership program concluded the year showing accelerated subscriber uptake.
In Brazil, two strategic initiatives fueled this expansion: reducing the minimum order value for expedited shipping from R$79 down to just R$19, and introducing MELI+ Mega — an enhanced subscription package that includes Disney+, Netflix, HBO Max, and Apple TV+.
The dramatically lower shipping threshold helped reduce member attrition while boosting conversion rates, especially given the R$9.90 monthly fee often equaled or undercut the cost of a single shipping charge.
MercadoLibre continues expanding its artificial intelligence footprint throughout the platform. During Q4, the company introduced an AI-powered search experience in Argentina that leverages individual buyer search patterns and purchase history to recommend relevant items.
The algorithm tailors results based on whether specific users gravitate toward premium offerings or value-oriented products — delivering a more customized experience compared to traditional keyword-based search.
For merchants, the Seller Assistant solution helps streamline new vendor onboarding while guiding them toward achieving higher reputation scores.
The tool can also generate short-form product videos using just a single photograph and manages customer service inquiries that would traditionally require human intervention.
Investments in the advertising platform are beginning to yield positive results. Management noted that expenditures on bidding algorithms, ad placement optimization, and user experience enhancements are encouraging greater adoption among major brands and leading sellers.
AI-powered tools now support account managers working with large brand partners, while separate automated systems engage smaller, long-tail merchants to generate additional demand.
The company characterized these initiatives as early phases of a comprehensive strategy to integrate AI throughout its marketplace ecosystem.
Shares finished Wednesday’s session with a 4.29% advance as market participants balanced the impressive revenue performance against the earnings disappointment.
