MercadoLibre beats estimates but shares dip on margin concerns

Investing.com -- MercadoLibre Inc (NASDAQ: MELI) reported second quarter earnings that exceeded analyst expectations, but shares slipped 3% in after-hours trading Wednesday as investors weighed margin compression against strong revenue growth.

The Latin American e-commerce and fintech company posted adjusted earnings per share of $9.19, beating the analyst consensus of $8.75 by $0.44. Revenue reached $10.17 billion, surpassing the $9.66 billion estimate and representing a 50% increase YoY from $6.78 billion in the second quarter of 2025.

Income from operations declined 17% YoY to $683 million, with operating margin compressing 550 basis points to 6.7%. The company attributed the margin pressure to deliberate investments in its value proposition, including pricing initiatives in Brazil and higher user acquisition costs in Mexico’s acquiring business.

"Mercado Libre delivered another quarter of exceptional growth in Q2’26, sustaining the strong momentum we saw at the start of the year," the company stated in its shareholder letter. "Net revenue and financial income grew 50% YoY – the fastest pace in four years."

Gross merchandise volume increased 44% YoY to $21.9 billion, while total payment volume surged 56% to $101 billion. The company’s fintech segment reached 88 million monthly active users, up from 68 million in the prior year period.

Brazil continued to drive growth, with FX-neutral revenue increasing 42% YoY. The company said engagement metrics strengthened following its decision to lower the free shipping threshold a year ago, with items per buyer rising 14% YoY and 19% in Brazil specifically.

The credit portfolio expanded 75% YoY to surpass $16 billion, though consolidated NIMAL compressed 230 basis points to 20.7%, primarily due to a shift toward lower-spread credit cards. The company issued 2.6 million new credit cards in the quarter, up from 1.6 million in the prior year period.

Net income totaled $466 million, down 11% YoY, with a margin of 4.6%. The company generated adjusted free cash flow of $214 million after $441 million in capital expenditures and $2.1 billion invested in credit portfolio expansion.

MercadoLibre highlighted that ecosystemic users, those engaging with both its marketplace and Mercado Pago, grew 37% YoY and demonstrated significantly higher engagement and profitability than single-platform users.

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