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MERCADOLIBRE INC (MELI)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue and financial income rose to $7.41B (+39% YoY; +49% FX-neutral), while operating income was $724M (9.8% margin) and net income $421M (5.7% margin), marking the 27th consecutive quarter of >30% YoY growth .
  • Results vs consensus: revenue beat ($7.41B vs $7.21B*), but EPS missed ($8.32 vs $9.37*), with management citing larger FX losses from ARS devaluation and a higher tax rate as key drivers of slower net income growth .
  • Brazil’s free-shipping threshold reduction (R$79→R$19) drove acceleration: unique buyers +29% YoY, sold items +42% YoY, GMV +34% FX-neutral; unit shipping costs fell 8% QoQ in local currency .
  • Fintech momentum: MAUs reached 72M (+29% YoY), credit portfolio expanded 83% YoY to $11.0B with NIMAL 21.0% and stable 15–90 day NPL at 6.8% .
  • Management signaled continued disciplined investment to capture long-term growth (logistics, 1P, credit card, social commerce, Ads), accepting near-term margin pressure; catalysts include logistics scale, principality gains, and accelerating market share in Brazil and Mexico .

What Went Well and What Went Wrong

What Went Well

  • Brazil marketplace re-acceleration: unique buyers +29% YoY, sold items +42% YoY, FX-neutral GMV +34%; “record” conversion and retention; unit shipping costs down 8% QoQ in local currency due to slow-layer scaling .
  • Mexico strength: sold items +42% YoY, FX-neutral GMV +34%; lowest-ever fulfillment unit shipping cost in local currency; on-time deliveries and free shipping penetration reached record highs .
  • Fintech scaling with quality: MAUs 72M (+29% YoY), credit portfolio $11.0B (+83% YoY), NIMAL 21.0% (ex-Argentina compression <1 ppt), 15–90 day NPL stable at 6.8%; card cohorts >2 years profitable and ~50% of Brazil card portfolio now profitable .

What Went Wrong

  • EPS missed consensus as FX losses and a higher effective tax rate weighed on net income growth (+6% YoY), with ARS depreciation driving negative translation/FX losses that are non-deductible locally under US GAAP .
  • Argentina headwinds: slower growth through the quarter, higher funding costs impacting DC margin (-4–5 ppt YoY and QoQ); near-term consumption weakness in In-store and QR segments .
  • Margin compression from strategic reinvestment (free shipping expansion, 1P ramp, social commerce, credit growth), lowering DC margin in Brazil and pressuring consolidated operating margin vs prior quarters .

Financial Results

Quarterly Progression (Q1–Q3 2025)

MetricQ1 2025Q2 2025Q3 2025
Revenue & Financial Income ($USD Millions)$5,935 $6,790 $7,409
Operating Income ($USD Millions)$763 $825 $724
Operating Margin (%)12.9% 12.2% 9.8%
Net Income ($USD Millions)$494 $523 $421
Net Income Margin (%)8.3% 7.7% 5.7%
Diluted EPS ($USD)$9.74 $10.31 $8.32

Q3 2025 vs Prior Quarter and Prior Year

MetricQ3 2024Q2 2025Q3 2025
Revenue & Financial Income ($USD Millions)$5,312 $6,790 $7,409
Diluted EPS ($USD)$7.83 $10.31 $8.32

Segment Breakdown – Q3 2025

GeographyRevenue & Financial Income ($USD Millions)Direct Contribution ($USD Millions)Revenue & Financial Income Q3 2024 ($USD Millions)
Brazil$4,009 $475 $2,913
Mexico$1,651 $305 $1,145
Argentina$1,441 $572 $1,033
Other Countries$308 $43 $221
Total$7,409 $1,395 $5,312

KPIs and Operating Metrics

MetricQ1 2025Q2 2025Q3 2025
GMV ($USD Millions)$13,330 $15,258 $16,543
TPV ($USD Millions)$58,303 $64,602 $71,224
Acquiring TPV ($USD Millions)$40,317 $44,365 $47,712
Unique Active Buyers (Millions)67 71 77
Fintech MAUs (Millions)64 68 72
NIMAL (%)22.7% 23.0% 21.0%
Capital Expenditures ($USD Millions)$256 $287 $357

Estimates vs Actuals – Q3 2025

MetricConsensus*Actual# of Estimates*
Revenue ($USD)$7,206,708,450*$7,409,000,000 14*
Primary EPS ($USD)$9.369*$8.32 8*

Consensus values marked with * were retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company-level quantitative guidanceFY/quarterlyNot providedNot providedMaintained (no formal guidance)

Note: Management provided qualitative “Looking ahead” commentary but no formal quantitative guidance ranges for revenue, margins, OpEx, OI&E, tax rate, or segments .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Logistics cost and speedFulfillment unit cost declined YoY in local currency across BR/MX/CL; >60% fulfillment penetration in BR; strategy to offer both slow, low-cost and fastest options Brazil unit shipping cost down 8% QoQ in local currency; absorbed +28% QoQ shipments with service levels intact; continued robotics deployment Improving cost curve and scalable capacity
Free shipping policy (Brazil)Threshold reduced to R$19 for all buyers in June; initial acceleration in items sold and GMV Strong acceleration in buyers, items sold, FXN GMV; record conversion/retention; slow layer scale reduced shipping revenue but improved conversion Driving flywheel and share gains
Ads/MediaAds +50% FXN in Q1; Mercado Play TV app launch; Q2 Ads acceleration (+59% FXN), Google Ad Manager/AdMob integration Display & Video near triple-digit growth; FXN Ads +63%; expanding off-ecosystem inventory (Roku/HBO partnerships) Broadening inventory and monetization
AI initiatives— (no explicit AI focus)AI-powered search with infinite scroll; Verdi AI platform in CRM for merchants in Q2 Q3: Agentic AI assistants for sellers and Mercado Pago users; focus on building agentic experiences in-house
Fintech principalityFintech MAUs +31% YoY Q1; +30% YoY Q2; marketing to expand reach and AUM Principality up +11 ppts YoY in Brazil and +2 ppts in Mexico; definition: ≥50% of client income through Pago; pursuing bank license in MX to enable salary deposits Strengthening engagement and cross-sell
Argentina macro/FXQ1: recovery and stabilization; strong FXN growth; Q2: higher FX losses and normalized tax rate due to ARS devaluation Q3: growth resilient but slowed; higher funding costs; FX losses and higher tax rate pressured net income Near-term headwinds; long-term optimism
1P assortment strategyQ2: 1P FXN GMV >$1B, +103% YoY; used to fill gaps in price/selection (e.g., consumer electronics) Q3: 1P grew rapidly; Casas Bahia partnership to bolster heavy/bulky categories Scaling targeted categories and supplier synergies
Acquiring market shareSustained FXN TPV growth across geographies; selective on Pix margins in BR BR acquiring +28% YoY (in FXN terms +45% YoY prior data); share gains across BR/MX/AR/CL Continued share gains and product expansion

Management Commentary

  • “We are not managing the business for short-term margin. We are managing for long-term value creation… we will not hesitate to invest behind growth opportunities, even if it puts some short-term margin pressure.” — Martín de los Santos, CFO .
  • “The lowering of the cost of shipping in Brazil is 8% QoQ in local currency… extraordinary volume is helping us dilute fixed costs and leverage spare capacity” — Martín de los Santos, CFO .
  • “This quarter… revenues grew by 39% year on year, marking the 27th consecutive quarter of growth above 30%” — Management .
  • “Agentic AI… we launched our seller assistant… and our first AI assistant in fintech to help users with tasks like making or scheduling transfers” — Management .
  • “Cohorts older than two years are profitable… nearly 50% of Brazil credit card TPV is already profitable” — Management .

Q&A Highlights

  • Argentina outlook and funding costs: Management expects reduced volatility post-elections; despite Q3 slowdown and higher funding costs, remains long-term optimistic; AR reported 39% USD revenue growth and 97% local FX-neutral growth .
  • Logistics efficiency and automation: Unit shipping cost -8% QoQ in BR; scale diluting fixed costs; expanding robotics for productivity in put-away, picking, packing .
  • Margin investment vs market share: Willing to sustain near-term compression to accelerate growth; record NPS and conversion in BR support strategy .
  • Credit card profitability trajectory: Cohorts >2 years profitable; ~50% of Brazil portfolio profitable; Mexico cohorts lag given later start; Argentina card launched late Q3, too early for metrics .
  • Acquiring share gains: Growing faster than industry in BR; renewed go-to-market driving acceleration; similar share gains in MX, AR, CL .

Estimates Context

  • Revenue beat and EPS miss: Actual revenue $7.41B vs $7.21B* consensus; EPS $8.32 vs $9.37* consensus; miss attributable to larger FX losses from ARS depreciation and higher tax rate under US GAAP (non-deductible locally), slowing net income vs operating income growth .
  • Estimate implications: Models should reflect sustained top-line acceleration from BR/MX commerce and fintech, but incorporate FX loss sensitivity to ARS and ongoing disciplined investment (free shipping, 1P, Ads, social commerce) that could temper near-term operating margin recovery .

Consensus values marked with * were retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue momentum remains robust with structural share gains in Brazil and Mexico; near-term margin compression is a deliberate trade for long-term scale and engagement .
  • EPS miss was primarily driven by FX/tax effects rather than core operations; operating engine remains strong with 30% YoY operating income growth .
  • Logistics scale is a competitive moat: absorbing +28% QoQ shipments in BR while reducing unit shipping costs 8% QoQ; expect continued efficiency gains from slow layer and robotics .
  • Fintech is deepening principality and profitability: MAUs 72M, stable NPLs, and maturing card cohorts (Brazil ~50% profitable), supporting medium-term margin tailwinds as newer cohorts mature .
  • Ads expansion (Display/Video, off-ecosystem inventory) and 1P partnerships (e.g., Casas Bahia) are broadening monetization and category penetration, reinforcing the commerce flywheel .
  • Argentina is a swing factor: resilient growth but funding cost and FX/tax volatility can impact reported EPS; long-term opportunity remains significant .
  • Trading setup: positive revenue surprise and strong operating trends vs EPS miss from FX/tax; focus on BR demand durability post-threshold change, holiday Q4 logistics execution, and AR FX dynamics into prints .