What was the prior growth rate for Brazil sellers before discounts? Is there a profit drag from new sellers, and do seller economics mature over time like buyer economics?

Ariel stated that lowering take rates consistently accelerates successful sellers. He confirmed no significant profit drag from new sellers, as programs are in place to help them scale, and that improving the value proposition in Brazil has accelerated seller growth. “We've already proven that lever, and we've consistently seen that every time we lower take rates, we get an acceleration in effective or successful sellers in our platform.”

Early read on gamification/points program in Brazil? Behavioral implications of agentic shopping pilot (search conversion, frequency, ad click-through)?

Ariel said it's too early for gamification, but early impact is positive. For agentic shopping, AI is improving search (positive for conversion and advertising platform CTR) and a shopping assistant is being A/B tested with exciting early results. He emphasized the unique Commerce and Fintech flywheel. “The more AI we deploy to search, the better context we provide, the better ads we are able to pick, choose and display to our consumers and the more CTR that we get from those ads, so higher revenue.”

Is there any deterioration in Brazil credit quality? What proactive measures are taken to protect against eventual deterioration?

Osvaldo confirmed no deterioration in Brazil credit book, with NPLs roughly in line with a year ago and even better than last quarter (near bottoms). He highlighted cautious credit issuance and past experience curtailing lines during downgrade cycles. Ariel added that NPLs are at all-time lows across the region, attributing it to risk management and technology. “I confirm that so far, we are not seeing any deceleration or deterioration of credit book in Brazil. If you look at NPLs, they are roughly in line to what they were a year ago, and they are even -- NPLs are even better than they were last quarter.”

MELI

MercadoLibre (MELI) Q2 FY26 earnings call: the analyst Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Discretionary· Aug 5, 2026

Source: earnings call transcript

Executive summary

MercadoLibre Q2 FY26 — Ecosystemic Engagement Drives Record Revenue and Credit Growth

MercadoLibre delivered a robust Q2 FY26, achieving record net revenue and significant growth in its credit portfolio, underpinned by a strategic focus on ecosystemic user engagement. Despite a year-over-year EBIT margin compression due to deliberate long-term investments in areas like free shipping and AI, the company demonstrated strong underlying cash generation and disciplined risk management in its expanding credit book. Management emphasized the unique flywheel effect of its integrated commerce and fintech ecosystem, driving sustained profitability and market leadership in Latin America.

Highlights

Net revenue surpassed $10 billion for the first time, growing 50% year-on-year.
Credit portfolio reached $16.4 billion, growing 75% year-on-year, with solid asset quality and NIMAL improving from 18% to 21%.
Adjusted free cash flow generated $214 million, even after absorbing $441 million in capex and $2.1 billion investment in the credit book.
AI investments showing strong ROI, with product development costs scaling from 8.4% to 7.2% of revenues year-on-year despite increased AI spend.
Cross-Border Trade (CBT) GMV grew approximately 60% year-over-year, with China fulfillment center volume up 170% quarter-over-quarter.

Concerns

EBIT margin of 6.7% was down 550 basis points year-on-year due to continued strategic investments.
Margin compression in the acquiring business was noted due to higher device costs (chip-related) and a one-off charge for restocking in Mexico.
Some logistics cost increases due to energy costs were partially absorbed by the company, leading to slight margin compression.
Mexico commerce experienced headwinds from tax reform, a weaker macroeconomic environment, and lower consumption during the World Cup.

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Company-wide Net revenue surpassed $10 billion for the first time. Operating income margin broadly in line with last quarter, reflecting a deliberate choice to prioritize investment over near-term profitability.	$10 billion	50%	—	6.7%
Credit Business (Fintech) Achieved growth alongside solid asset quality, reflecting disciplined risk management and a shift towards lower-risk users. NIMAL improved with gains in the three largest markets, including Brazil where provisions normalized. Credit portfolio: $16.4 billionCredit portfolio growth: 75% YoY15-90 day NPL (total portfolio): 7.0%15-90 day NPL (credit card): 4.6%NIMAL (Q2 2026): 21%NIMAL (Q1 2026): 18%	—	—	—	—
Brazil Commerce Strong engagement metrics one year after lowering the free shipping threshold. Daily active users growing faster than monthly active users. New buyer cohorts show higher retention. Items per buyer growth: 19% YoYConversion rate increase: 1.1 percentage points YoYFrequency of purchase increase: 20%	—	—	—	—
Cross-Border Trade (CBT) Triple-digit growth in Brazil and Argentina, above average growth in Mexico. China fulfillment center improving delivery speed and reducing cancellations. Sequential margin improvements due to scale. GMV growth: approximately 60% YoYChina fulfillment center volume growth: 170% QoQ	—	—	—	—

Risks & headwinds

EBIT margin compression due to strategic investments Q2 FY26

down 550 basis points year-on-year

Mitigation:Deliberate choice to prioritize investment in long-term engagement, growth, and scale over near-term profitability.

Margin compression in acquiring business Q2 FY26

roughly half of that was from acquiring (in Mexico)

Mitigation:Higher cost of devices due to chip costs (there to stay, will monitor); one-off charge for restocking in Mexico (will compensate throughout the rest of the year); not increasing prices due to consistent payback periods and competitive landscape.

Increased logistics costs Q2 FY26

some cost increases

Mitigation:Some costs passed on to users, some absorbed by the company.

Mexico commerce headwinds Q2 FY26

tax reform headwind, weaker macroeconomic environment, lower consumption during the World Cup

Mitigation:Continued market share gains, structural growth opportunity in the country, ecosystemic flywheel (Fintech + e-commerce) driving digitalization. Remains optimistic for long-term earnings power despite near-term challenges.

Credit cycle deterioration in Brazil H2 FY26 and FY27

investors are quite concerned about the potential deterioration during the second half of the year and 2027

Mitigation:No deterioration observed so far (NPLs near historical lows), cautious credit issuance, experience from past downgrade cycles, technology for underwriting.

What to watch in Q3 FY26

EBIT margin trajectory

next quarter

Current 6.7%

Target Stability or improvement, given offsetting factors

Why it matters

Management's stated philosophy is to balance investment with profitability; monitoring if credit profitability continues to offset investment costs.

This quarter's EBIT margin of 6.7% was down 550 basis points year-on-year as we continue to prioritize long-term strategic investments over short-term profitability. On a sequential basis, our margin was broadly stable.

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Q&A highlights

Why was there more gross margin compression than expected, specifically regarding memory costs, shipping costs, and the ability to pass these through to consumers? Were these headwinds factored into prior margin expectations?

Martin explained sequential margins were stable due to credit business improvement offsetting investments in Brazil Commerce (lower take rates, PIX discounts), acquiring business compression (higher device costs due to chips, one-off Mexico restocking), and some absorbed energy-related logistics costs. Osvaldo added that POS device prices weren't raised due to consistent payback periods and competitive landscape.

“It was offset by some investments that we have made in Brazil in Commerce. We discussed this in the previous quarterly call, where we lowered certain take rates to -- in certain verticals, we lowered take rates, and we offered discounts to consumers buying and paying with PIX.”

asked by Irma Sgarz · answered by Martin de Los Santos

2 min read 6 chapters

Detailed narrative

Ecosystemic User Strategy

MercadoLibre is prioritizing investments to foster "ecosystemic users" who engage with both Marketplace and Mercado Pago. These users generate significantly more GMV, purchase across more categories, engage deeper with Fintech, and are dramatically more profitable, with contribution profit multiples higher than single-platform users.

The growth rate of these ecosystemic users is the highest among all user types, increasing 37% year-on-year, underscoring the strategic importance of this integrated approach.

Credit Business Performance and Asset Quality

The credit portfolio expanded to $16.4 billion, growing 75% year-on-year, while maintaining solid asset quality. The 15- to 90-day NPL was 7.0% for the total portfolio and 4.6% for credit cards specifically, both close to historical lows. NIMAL improved from 18% in Q1 FY26 to 21% in Q2 FY26, driven by gains in the three largest markets, particularly Brazil, where consumer portfolio provisions normalized after a Q1 spike.

This reflects a deliberate move upmarket and disciplined risk management.

Margin Management and Strategic Investments

Q2 EBIT margin stood at 6.7%, a 550 basis point decrease year-on-year, attributed to strategic long-term investments over short-term profitability. Sequentially, the margin remained broadly stable, as improved credit profitability (especially in Brazil) offset margin compression in the acquiring business (due to higher device costs and a one-off Mexico restocking charge) and incremental investments in Commerce (such as lower take rates and PIX discounts in Brazil).

The company continues to reinvest profits from fast-growing segments into strategic initiatives with clear paths to profitability.

Impact of Brazil Free Shipping Threshold

One year after implementing a lower free shipping threshold in Brazil, the initiative has yielded significant positive results. Items per buyer grew 19% year-on-year, conversion increased by 1.1 percentage points year-on-year, and the ratio of daily to monthly active users inflected positively.

New buyer cohorts who joined after the change show higher retention and purchase across more categories, demonstrating a sustainable step change in user behavior and engagement.

AI Investment and Productivity Gains

MercadoLibre increased its AI investment by approximately $80 million this quarter compared to a year ago, reporting strong results and positive ROI. AI is enhancing search capabilities, leading to improved conversion rates and higher ad click-through rates. It has also driven significant productivity gains, with customer service interactions handled without human intervention reaching 90% and product development costs scaling from 8.4% to 7.2% of revenues year-on-year, despite the increased AI spend.

Cross-Border Trade (CBT) Expansion and Efficiency

Cross-Border Trade (CBT) GMV grew approximately 60% year-over-year, with triple-digit growth observed in Brazil and Argentina, and above-average growth in Mexico. Volume from the China fulfillment center surged 170% quarter-over-quarter, significantly improving delivery speed and reducing cancellations, which positively impacts Net Promoter Scores. The company is also seeing sequential improvements in CBT unit economics, driven by scale and a continuous learning curve.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.