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    MELI
    Earnings call· Mar 2026(Q1 FY26)

    MERCADOLIBRE Q1 FY26 earnings call MELI

    May 7, 2026 Source

    Executive summary

    MercadoLibre Q1 FY26 — Strong Revenue Growth Driven by Strategic Investments

    MercadoLibre delivered strong top-line growth in Q1 FY26, driven by strategic investments across its commerce and fintech ecosystems. These deliberate investments, particularly in free shipping and credit card expansion, have led to significant user engagement and market share gains. While this strategy resulted in margin compression for the quarter, management remains committed to these initiatives, viewing them as crucial for long-term value creation and capturing the substantial market opportunity in Latin America.

    Highlights

    5

    • Net revenue increased 49% year-over-year, marking the strongest growth rate since Q2 2022.

    • Brazil GMV grew 38% year-over-year, with items sold accelerating to 56% growth.

    • Mercado Pago monthly active users grew 29% YoY, AUM grew 77%, and the credit portfolio nearly doubled to $14.6 billion.

    • Credit card TPV grew 90% year-over-year, with monthly active users up 68% and 2.7 million cards issued this quarter.

    • Unit shipping costs decreased 17% year-over-year in local currency, absorbing 56% volume growth.

    Concerns

    3

    • Income from operations margin compressed to 6.9% due to deliberate strategic investments.

    • NIM compression and higher provisions primarily due to an increased mix of credit cards and longer loan durations in Brazil.

    • Potential for higher oil prices to increase logistics costs, though most are currently being passed to consumers.

    Guidance & targets

    2
    CategoryTargetConfidence
    Operating Margin
    not materially change
    high materiality
    Medium
    Unit Shipping Costs
    continue to be downwards
    medium materiality
    Medium

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Brazil Commerce
    GMV growth driven by lowering the free shipping threshold, more than doubling the quarterly growth rate prior to the change.
    Items sold growth: 56% YoYFree shipping penetration: record high
    		—38%——
    Mexico Commerce
    GMV growth.
    		—28%——
    Argentina Commerce
    GMV growth.
    		—41%——
    Chile Commerce
    GMV growth driven by higher free shipping penetration and faster deliveries.
    		—40%——

    Operational metrics

    14
    Income from operations margin
    6.9%
    Q1 FY26

    Reflects strategic investment choices.

    Credit card TPV growth
    90%YoY
    Q1 FY26

    Strong growth in Total Payment Volume for credit cards.

    Credit card monthly active users growth
    68%YoY
    Q1 FY26

    Growth in monthly active users for credit cards.

    Credit cards issued
    2.7 million
    Q1 FY26

    Number of credit cards issued during the quarter.

    Unit shipping cost reduction
    17%YoY
    Q1 FY26

    Reduction in cost per shipment, absorbing 56% volume growth.

    Volume growth absorbed by logistics
    56%
    Q1 FY26

    Volume growth handled by the logistics network during the period of unit cost reduction.

    Free shipping threshold
    BRL 19
    Q1 FY26

    Current free shipping threshold in Brazil.

    Variable contribution per shipment (BRL 19-79 items)
    improved materially
    Q1 FY26

    Improvement since the launch of the free shipping program in June, with some ranges now breaking even.

    Average term of personal loans
    8 monthsup from 5 months
    Q1 FY26

    Deliberate extension of loan duration to expand reach.

    15-90 NPL
    improved sequentiallysequential
    Q1 FY26

    Non-performing loan ratio in Argentina showed sequential improvement.

    Conversion rate
    1 percentage pointYoY increase
    Q1 FY26

    Significant increase in conversion rate in Brazil.

    Bad debt provisions impact on margin
    4 points
    Q1 FY26

    Impact on overall margin compression due to provisions for bad debt.

    Credit book growth
    87%YoY
    Q1 FY26

    Growth rate of the overall credit book.

    MercadoLibre revenue growth
    49%YoY
    Q1 FY26

    Overall MercadoLibre net revenue growth.

    Industry KPIs

    6
    MetricValueDetails
    GMV38%%
    Gross order volume56%%
    Segment revenue mix49%%
    Fintech consumer credit book$14.6BUSD
    Fulfillment shipping cost economics17%%
    Operating income EBIT and adjusted EBITDA$611MUSD

    Product announcements

    2
    ProductTypeDetails
    Private Payroll Loanslaunch
    LLMs in Search (Commerce)launch

    Risks & headwinds

    3
    Margin Compression from InvestmentsNear term (remainder of 2026)

    Income from operations margin at 6.9% in Q1 FY26.

    Mitigation: Management views this as a deliberate choice to maximize long-term cash flow and capture market opportunity, expecting higher margins over time as investments mature.

    NIM Compression and Higher ProvisionsOngoing

    4 points of margin compression from bad debt provisions.

    Mitigation: Disciplined underwriting, continuous model enhancements, and belief that these investments in credit cards and longer-duration personal loans will become profitable over time.

    Higher Oil Prices / Energy CostsShort term (beginning Q2 FY26)

    Some increases in logistics costs due to energy in Q2 FY26.

    Mitigation: Monitoring the situation closely and passing most of these increased costs to consumers.

    Q&A highlights

    6

    Clarification on the company's investment philosophy and whether the Q1 margin level should be expected for the remainder of 2026, given the deliberate investment decisions.

    Martin de Los Santos stated that the investment philosophy hasn't changed, focusing on long-term growth over short-term margins. Investments in credit cards, fulfillment, CBT, 1P, and free shipping are yielding strong results, validating the strategy. He reiterated that they are not optimizing for short-term margins and will continue bold investments, not expecting the margin level to materially change in the near term.

    “We're not trying to optimize short-term margins. We're trying to -- what we're doing is we're investing for the long term. So we will continue to invest boldly in those initiatives.”

    asked by Irma Sgarz · answered by Martin de Los Santos

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Investment Philosophy

    MercadoLibre maintains a consistent investment philosophy, prioritizing long-term growth over short-term margin optimization. Management highlighted that investments in credit cards, fulfillment infrastructure, cross-border trade (CBT), first-party (1P) operations, and free shipping are yielding strong results. This approach, which has been in place for several quarters, is seen as crucial for building the largest and most engaged commerce and fintech platform in Latin America.

    02

    Brazil Commerce Performance

    Brazil delivered a standout quarter for commerce, with GMV growing 38% year-over-year and items sold accelerating to 56% growth. This performance is largely attributed to the strategic decision to lower the free shipping threshold, which has proven to be a sustained growth engine. The increased buyer engagement has strengthened network effects, leading to higher purchase frequency and a more efficient logistics network.

    03

    Fintech Ecosystem Expansion

    Mercado Pago's fintech services demonstrated strong momentum, with monthly active users growing 29% year-over-year and assets under management (AUM) increasing by 77%. The credit portfolio nearly doubled to $14.6 billion, driven significantly by the credit card program. The company issued 2.7 million credit cards this quarter, with credit card TPV growing 90% year-over-year and monthly active users up 68%, indicating successful cross-sell from marketplace users.

    04

    Logistics Efficiency Gains

    Despite absorbing 56% volume growth, unit shipping costs decreased by 17% year-over-year in local currency, accelerating from the 11% reduction in Q4. These improvements are attributed to increased volume density, better utilization of the slow shipping network, and technological advancements. The variable contribution per shipment for items within the BRL 19 to BRL 79 free shipping range has materially improved, with several brackets already breaking even.

    05

    Credit Portfolio Management and Asset Quality

    The company is deliberately extending the average term of personal loans from 5 to 8 months and expanding its reach to new customer segments, accepting smaller spreads to accelerate growth. Despite these changes and broader macro conditions, asset quality remains stable, with 15-90 NPL in Argentina improving sequentially. This stability is credited to disciplined underwriting and continuous enhancements to their credit models.

    06

    Competitive Landscape and Market Share

    MercadoLibre acknowledges the intense competitive environment in Brazil, one of the world's most attractive e-commerce markets. However, the company thrives in this setting, continuously innovating and strengthening its value proposition. It reported record-high NPS across all markets and a 1 percentage point increase in conversion rate in Brazil, indicating strong competitive positioning and continued market share gains.

    AI-generated summary of the company’s earnings call. Not investment advice.