MercadoLibre Q3 Revenue Jumps 45% as Investment Weighs on Margin

MercadoLibre Inc. (NASDAQ: MELI) reported strong third-quarter growth across commerce and financial services, but continued spending on shipping, customer engagement and credit expansion weighed on profitability. Revenue and financial income rose 45% year over year to $10.75 billion, or 41% on a foreign-exchange-neutral basis, while operating margin narrowed to 6.3% from 9.8%.

Operating income declined 6.5% to $676 million, or 4% on an FX-neutral basis. Net income increased to $448 million from $421 million, though net margin fell to 4.2% from 5.7%. Adjusted EBITDA, a non-GAAP measure, rose to $982 million from $933 million.

Commerce growth remains broad-based

Commerce revenue increased 47% in reported dollars to $6.14 billion and 41% on an FX-neutral basis. MercadoLibre said its third-party take rate benefited from advertising growth and shipping-fee adjustments, partly offset by fee discounts in Brazil and the expansion of the MELI+ loyalty program in Argentina.

Gross merchandise volume reached $22.82 billion, up 38% as reported and 33% on an FX-neutral basis. Items sold increased 36% to 866.9 million, continuing to grow faster than GMV.

The number of unique active buyers rose 22% to 93.9 million, an increase of more than 17 million over the past year, with Brazil contributing the largest absolute gain. Purchase frequency reached 9.2 items per active buyer, up 12%, marking a fifth consecutive quarter of double-digit growth in that measure.

MercadoLibre’s logistics network handled 591 million shipments during the quarter. Same- and next-day deliveries rose 49% to 258 million, outpacing overall shipment growth and supporting the company’s focus on faster delivery.

Mercado Pago and credit continue to expand

Fintech revenue rose 42% in reported dollars to $4.61 billion and 40% on an FX-neutral basis. Credit was the main contributor to revenue growth, while Mercado Pago continued to expand in online and in-store payments, according to the presentation.

Fintech monthly active users increased 29% to 92.9 million, with Brazil and Mexico growing faster than the regional average. Total payment volume climbed 53% to $108.8 billion, or 51% on an FX-neutral basis. Acquiring payment volume reached $68.3 billion, representing 40% FX-neutral growth.

Assets under management increased 67% to $25.12 billion. MercadoLibre’s credit portfolio expanded 62% to $17.88 billion, while quarterly originations reached $17.56 billion. Credit cards represented 47% of the portfolio, compared with 44% a year earlier.

Net interest margin after losses was 20.1%, down from 21% in the prior-year quarter and slightly below 20.7% in the second quarter. The company attributed the level partly to the growing share of credit cards, while noting that credit-card margins improved sequentially as customer cohorts matured.

Asset-quality indicators were mixed. Loans between 15 and 90 days past due remained unchanged sequentially at 7% of the portfolio, while loans more than 90 days past due increased to 19.3% from 18.7% in the preceding quarter. Provision coverage for loans more than 90 days overdue declined to 140% from 143%.

Investment pressures margins

MercadoLibre said the expansion of free shipping and the introduction of take-rate and PIX discounts in Brazil reduced gross margin. A larger credit portfolio also increased bad-debt expense, while operating leverage in general and administrative costs and product development provided a partial offset.

Compared with the second quarter, operating margin declined 40 basis points. The company attributed that change to a net shipping headwind of 60 basis points and higher sales and marketing spending, partly offset by product-development leverage.

Adjusted free cash flow was $285 million, compared with $206 million a year earlier. The quarter included $503 million of capital expenditure and a $2.14 billion cash investment in the credit portfolio, partially funded by $1.5 billion of net fintech financing.

Available cash and investments stood at $8.13 billion at the end of September. Net debt, a non-GAAP measure, totaled $8.03 billion, compared with $4.68 billion at the end of 2025. MercadoLibre said much of its debt relates to fintech operations: $9.69 billion of fintech debt was covered 1.3 times by a $13.04 billion credit portfolio net of allowances.

The presentation emphasized continued investment in customer engagement and long-term growth rather than providing quantified forward guidance. MercadoLibre cautioned that future results could differ materially from its current expectations, citing factors including macroeconomic conditions, inflation, customer demand, market expansion and the execution of new products and services.