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    MELI
    Earnings call· Dec 2025(Q4 FY25)

    MERCADOLIBRE Q4 FY25 earnings call MELI

    Feb 24, 2026 Source

    Executive summary

    MercadoLibre Q4 FY25 – Strong Growth Across Ecosystem Driven by AI and Strategic Investments

    MercadoLibre concluded FY25 with robust operating trends, driven by accelerated commerce and rapid fintech adoption, increasingly supported by AI investments. The company deliberately invested in key growth areas like free shipping and credit card expansion, leading to significant top-line growth and market share gains, despite short-term margin compression. Management remains confident in these investments for long-term ecosystem strengthening and value creation in an underpenetrated region.

    Highlights

    5

    • Net revenues grew 45% year-over-year in Q4 FY25, marking the 28th consecutive quarter of over 30% growth.

    • GMV in Brazil and Mexico both grew an impressive 35% year-over-year, with sold items increasing 45% in Q4 FY25.

    • Advertising revenue accelerated to 67% growth, driven by AI-powered bidding algorithms and increased adoption.

    • Mercado Pago's credit portfolio nearly doubled year-over-year to $12.5 billion, with almost 3 million new credit cards issued in Q4 FY25.

    • Mercado Pago achieved leading Net Promoter Scores in Brazil, Mexico, Argentina, and Chile, reflecting strong user engagement.

    Concerns

    4

    • Income from operations grew 22% for the full year, reflecting margin compression due to strategic investments.

    • Margin impact from investments in shipping, 1P, cross-border, and credit card expansion resulted in a 5-6 percentage point pressure on overall margins.

    • Direct contribution margin in Argentina was down quarter-over-quarter due to fulfillment costs, bad debt provisions for new credit cards, and increased funding costs.

    • Early NPL ratio for consumer and merchant books increased slightly in Q4 FY25, though NIMALs improved due to pricing risk accordingly.

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Commerce - Brazil
    Growth driven by strategic investments to enhance value proposition, notably lowering the free shipping threshold, leading to higher purchase frequency and new buyers.
    GMV growth: 35% YoYSold items growth: 45% YoY
    		—35% (GMV), 45% (Sold Items)——
    Commerce - Mexico
    Value proposition generating traction, leading to strong GMV growth.
    GMV growth: 35% YoY
    		—35% (GMV)——
    Advertising
    Growth propelled by AI-powered bidding algorithms and automated campaign tools, driving higher adoption and share of advertisers' wallet.
    		—67%——
    Fintech - Acquiring (Brazil)
    AI tools helped identify high-value merchants faster, resulting in higher TPV per merchant and shortened payback periods.
    Acquiring TPV growth: 25%
    		—25% (TPV)——
    Fintech - Acquiring (Mexico)
    AI tools helped identify high-value merchants faster, resulting in higher TPV per merchant and shortened payback periods.
    Acquiring TPV growth: 50%
    		—50% (TPV)——
    Fintech - Overall
    Rapid adoption and structural expansion of fintech services, with Mercado Pago holding leading Net Promoter Scores in Brazil, Mexico, Argentina, and Chile.
    Monthly active users growth: close to 30% for 10 consecutive quarters
    		—close to 30% (MAU)——

    Operational metrics

    14
    Acquiring TPV growth - Brazil
    25%YoY
    Q4 FY25

    Aided by AI tools identifying high-value merchants.

    Acquiring TPV growth - Mexico
    50%YoY
    Q4 FY25

    Aided by AI tools identifying high-value merchants.

    Monthly active users (Fintech)
    close to 30%YoY
    Q4 FY25

    Consistent growth in fintech monthly active users.

    Margin impact from investments
    5-6
    Q4 FY25

    Impact on overall margins from investments in shipping, 1P, cross-border, and credit card expansion.

    Sales and marketing as % of sales (sequential)
    increased 60 bpsQoQ
    Q4 FY25

    Increase primarily due to expansion of the affiliate program.

    Sales and marketing as % of sales (range)
    11%-12%
    several years

    Historical range of investment in sales and marketing.

    Affiliate program growth (QoQ)
    almost doubledQoQ
    Q4 FY25 vs Q3 FY25

    Number of affiliates in Brazil.

    Affiliate program growth (YoY)
    6xYoY
    Q4 FY25 vs Q4 FY24

    Number of affiliates in Brazil.

    Credit card issuance
    1.5M
    Q2 FY25

    Total credit cards issued in the period.

    Credit card issuance
    2M
    Q3 FY25

    Total credit cards issued in the period.

    Credit card issuance
    nearly 3M
    Q4 FY25

    Total credit cards issued in the period, with acceleration in Mexico and Argentina.

    Consumer credit NIMAL
    30s-40s
    Q4 FY25

    Relatively high-margin business.

    Credit card NIMAL
    not positive on average
    Q4 FY25

    New credit card cohorts are not yet profitable on average, but older cohorts show positive trends.

    NMV paid with Mercado Pago products
    growing steadily
    Q4 FY25

    Increasing share of Net Merchandise Volume paid with Mercado Pago products, indicating strong synergy with the marketplace.

    Industry KPIs

    9
    MetricValueDetails
    GMV35%%
    Gross order volume45%%
    Segment revenue mix45%%
    Ai cloud revenue backlog87%%
    Regional market performancerecord levels
    Fintech consumer credit book$12.5BUSD
    Advertising revenue take rate67%%
    Fulfillment shipping cost economics11%%
    Operating income EBIT and adjusted EBITDA22%%

    Risks & headwinds

    4
    Margin compression from strategic investments

    5-6 percentage points impact on overall margins

    Mitigation: These are deliberate investments for long-term growth, market share gains, and improved user experience, with management confident in the long-term margin trajectory.

    Argentina direct contribution margin compressionQ4 FY25

    Down quarter-over-quarter

    Mitigation: Attributed to increased fulfillment costs, bad debt provisions for new credit cards, and higher funding costs. Management is comfortable with the risk-adjusted profitability and was cautious with credit growth during macro instability.

    Slight increase in early NPLs for consumer and merchant booksQ4 FY25

    Early NPLs increased slightly in Q4 FY25, though credit card NPL fell to 4.4%

    Mitigation: NIMALs (Net Interest Margin After Losses) improved, indicating calculated risk-taking with appropriate pricing. Management is comfortable with the amount of risk taken.

    Agentic commerce disintermediationLong-term

    Potential for external agentic systems to disintermediate client engagement, impacting ad monetization.

    Mitigation: MercadoLibre is building its own agentic experience within its platform, leveraging first-party data, focusing on end-to-end customer experience, and views external agentic commerce as an incremental advertising opportunity for its ad tech stack.

    Q&A highlights

    6

    Where are the 5-6 percentage point margin impact investments (shipping, 1P, cross-border, credit card) in their cycle? Are they at peak intensity or is it an elongated cycle?

    Martin de Los Santos clarified the 5-6 point impact was to quantify pressure from deliberate investments. He noted individual businesses (CBT, 1P, credit card) are improving profitability as they scale, but the overall shift towards these faster-growing, initially less profitable areas creates pressure. He expressed confidence in the investments for long-term growth and user experience, citing record NPS.

    “We are not trying to optimize short-term margin. We manage the business for long term -- from a long-term perspective, we believe these investments are creating a foundation for future growth, and we remain confident in our long-term margin trajectory.”

    asked by Andrew Ruben · answered by Martin de Los Santos

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Investment Philosophy

    MercadoLibre's management emphasized a deliberate strategy of investing in long-term growth opportunities, even if it leads to short-term margin compression. Key investment areas include lowering free shipping thresholds, expanding 1P logistics, cross-border trade (CBT), and credit card expansion, which collectively impacted margins by 5-6 percentage points. These investments are seen as foundational for future growth, market share gains, and improved user experience, as evidenced by record Net Promoter Scores.

    02

    AI Integration Across Ecosystem

    Artificial intelligence is a critical accelerator for MercadoLibre's businesses. In advertising, AI powers bidding algorithms and campaign tools, driving 67% growth. For Mercado Pago, AI tools helped identify high-value merchants, boosting acquiring TPV growth, and the AI assistant handles 87% of user interactions, with future plans for cross-selling and proactive personal banking features. A seller assistant, also AI-powered, advises on 20% of GMV, improving listings and seller reputation.

    03

    Commerce Business Acceleration

    The commerce segment demonstrated strong acceleration, with GMV in Brazil and Mexico growing 35% year-over-year, and sold items increasing 45% in Q4 FY25. This was largely attributed to strategic decisions like lowering the free shipping threshold, which led to higher purchase frequency, new buyer acquisition, and improved retention rates. The logistics network absorbed increased volumes while achieving productivity gains, including an 11% decline in unit costs in Brazil.

    04

    Fintech Expansion and Profitability

    Mercado Pago reached a historic milestone, leading Net Promoter Scores in Brazil, Mexico, Argentina, and Chile. The credit portfolio nearly doubled year-over-year to $12.5 billion, with almost 3 million new credit cards issued in Q4 FY25. While new credit card cohorts are not yet profitable on average, older cohorts in Brazil (over 2 years) are NIMAL positive, indicating a path to profitability as the portfolio matures. The company is actively integrating credit card offers into the marketplace checkout.

    05

    Agentic Commerce Strategy

    MercadoLibre is actively developing its own "agentic experience" within its platform, leveraging first-party data for personalized search, recommendations, and discovery. Management believes that providing the best end-to-end experience, including logistics, selection, pricing, and customer support, will be key to retaining market share against external agentic systems. They also see agentic commerce as potentially accelerating the shift from offline to online retail and creating incremental advertising revenue opportunities.

    06

    Argentina Market Dynamics

    The direct contribution margin in Argentina experienced some compression quarter-over-quarter, primarily due to increased fulfillment costs from new centers, provisions for bad debt related to the recently launched credit card, and higher year-on-year funding costs. Despite this, Argentina remains the highest profitability market in terms of margins, and the company was more cautious with credit growth in Q4 due to macro instability around elections.

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