MercadoLibre — Q3 2026 Earnings Summary

Financial Performance:

• Net revenues and financial income reached $10,750 million, a 45% year-over-year increase and 41% FX-neutral growth.
• Income from operations was $676 million, down 6% year-over-year, with an operating margin of 6.3% (40 basis points lower than Q2 2026).
• Net income was $448 million, up 6% year-over-year, with a net income margin of 4.2%.
• Total Payment Volume (TPV) grew 53% year-over-year to $109 billion, with 51% FX-neutral growth.
• Gross Merchandise Volume (GMV) grew 38% year-over-year to $23 billion, with 33% FX-neutral growth.
• Adjusted free cash flow was $285 million for the quarter.
• Capital expenditures were $503 million for the quarter.
• Net debt stood at $8,028 million as of September 30, 2026, compared to $4,682 million as of December 31, 2025.
• Cash and cash equivalents were $4,162 million, with restricted cash and cash equivalents at $14,559 million.
• Foreign currency losses were $72 million, down from $102 million in Q3 2025.
• Provision for doubtful accounts was $1,342 million for the quarter.

Guidance and Future Outlook:

• Management expressed confidence in the long-term margin trajectory, noting that current investments in habits and scale will eventually flow through to profitability.
• Ecommerce penetration in Latin America is rising at the fastest pace since 2020, at twice the rate of 2019 in percentage points added annually.
• The company anticipates that lower cost per shipment will eventually reduce shipping costs as a percentage of GMV and revenue as scale grows and productivity rises.
• The partnership with Netflix for connected TV advertising is scheduled to launch in early 2027.
• Management expects the mix effects from lower-priced items and increased shipment frequency to diminish over time as consumer behavior settles.

Business Segments and Product Lines:

• Brazil: FX-neutral GMV grew 36% YoY; sold items grew 45%. Daily active users grew faster than monthly active users. Items per buyer grew 16% YoY.
• Argentina: FX-neutral GMV grew 40% YoY; items sold grew 19%. Free shipping penetration reached levels similar to Brazil and Mexico. Purchase frequency hit a record high in September.
• Mexico: FX-neutral GMV grew 21% YoY; items sold grew 25%. Unique active buyer growth remained stable at 21%.
• Advertising: Revenue grew 51% YoY on an FX-neutral basis (58% in USD). The AI advisor now manages campaigns for 56,000 sellers. Engage+ is live across six sites.
• Fintech: Reached 93 million monthly active users (MAUs), up 29% YoY. Credit portfolio reached almost $18 billion, up 62% YoY.
• Credit Card: The credit card portfolio now accounts for 47% of the total credit portfolio, up from 44% a year ago.
• Acquiring: TPV grew 40% YoY on an FX-neutral basis (31% in Brazil, 43% in Mexico, 55% in Argentina). Instore payments remain the fastest-growing channel in Mexico.
• Merchant Services: Launched "Cuenta de Negocios" in Mexico in August, already available in Brazil. Merchant portfolio grew 15% quarter-over-quarter.
• Logistics: Robotics are now live in Mexico and Brazil, delivering 70% productivity gains in picking operations. Cost per shipment in Brazil was 5% lower YoY in local currency.
• AI Investment: AI investment grew by almost $30 million quarter-over-quarter. Mago, the Fintech AI assistant, held 19 million conversations in September.

Market and Competitive Landscape:

• MercadoLibre gained market share in all three largest markets (Brazil, Mexico, and Argentina) in both Commerce and Fintech.
• In Brazil, the company outperforms every competitor on Net Promoter Score (NPS) in Fintech.
• In Mexico, MercadoLibre is the largest digital bank by active users with over 18 million MAUs.
• In Argentina, almost 80% of the adult population is a Mercado Pago active user.
• The competitive environment remains intense but stable.
• Ecosystemic users (those who shop and bank) grew 33% YoY, faster than any other segment, and generate 70% more GMV, 90% more TPV, and 3-4x higher average revenue per user compared to single-vertical users.

Risks and Challenges:

• Shipping margin compressed by approximately 200 basis points as a percentage of GMV since Q1 2025 due to lower revenue per shipment from free shipping and lower average order values, as well as higher energy prices and network expansion costs.
• Sales and marketing spend increased 40 basis points quarter-over-quarter to 11.6% of net revenue due to a tactical decision to increase affiliate marketing spend in Brazil.
• The credit card portfolio carries near-term costs as new cohorts mature, with the 2026 cohort currently in an early, loss-making phase.
• Industry-wide weakness in Argentina and Brazil presents a backdrop for credit risk, though asset quality remains robust.
• New fulfillment capacity adds costs before volume fills the network, causing non-linear progress in cost reduction.

Management Commentary and Tone:

• Management described the quarter as "strong growth" with all key engagement signals moving in the right direction.
• The tone emphasizes a strategic trade-off: investing part of today's margin to accelerate the shift of Latin America's commerce and financial services online and build long-term habits.
• Management stated, "The habits we are building are worth more than the margin we are forgoing in the short term to build them."
• The company highlighted that the "best is coming" for MercadoLibre and Latin America, citing structural drivers of profitability improving.
• Management noted that cost per shipment is where they have the most control and expects it to lower over time through scale and productivity.

Other Key Points:

• In September, the company successfully concluded its second investment-grade bond issue, raising $1 billion.
• The company invested $2.1 billion in the expansion of its credit portfolio, partially offset by $1.5 billion of fintech funding.
• A partnership with Netflix was announced in October to join Disney, Roku, and HBO Max on the connected TV offering starting early 2027.
• The number of sorters and robots in the logistics network has more than doubled over the last 12 months.
• AI has freed up almost 20% of hours worked in the Finance department.
• The 13 Metro fulfillment centers opened over the last 12 months have brought inventory closer to demand-dense areas.
• The company operates an affiliate program at scale with a growing share of campaigns co-funded by sellers.