MercadoLibre Earnings Miss as Profit Falls 12.5% Despite Strong Revenue Growth

MercadoLibre reported a 12.5% drop in quarterly profit, missing Wall Street expectations, as increased investments in credit expansion and logistics weighed on margins. The Latin American e-commerce and fintech giant, headquartered in Uruguay, posted net income of $559 million for the October-to-December quarter, below analysts’ projections of $587 million, according to LSEG data.

Despite the earnings miss, MercadoLibre’s revenue surged 45% year-over-year to $8.8 billion, surpassing the $8.5 billion forecast. Strong performance in Brazil and Mexico played a key role, with gross merchandise value (GMV) in those markets rising 35% on a currency-neutral basis. The company’s stock fell more than 6% in after-hours trading, reversing earlier gains as investors reacted to margin pressure.

Operating income, or earnings before interest and taxes (EBIT), climbed 8% to $889 million, close to analyst estimates. However, the EBIT margin narrowed to 10.1% from 13.5% a year earlier, reflecting higher spending. According to Senior Vice President of Investor Relations Leandro Cuccioli, the decline in profitability was driven by strategic investments aimed at long-term growth. These include issuing more credit cards, expanding free shipping programs, and increasing first-party (1P) sales, where the company sells products directly to consumers.

MercadoLibre’s credit portfolio jumped 90% year-over-year to $12.5 billion. The 15-to-90-day delinquency rate edged up slightly to 7.6%, compared with 7.4% last year. Meanwhile, total payment volume processed through Mercado Pago’s acquiring business grew about 40%, highlighting continued fintech expansion.

Investors remain focused on how quickly margins can recover as the company accelerates spending. Cuccioli emphasized that e-commerce penetration in Latin America is still in its early stages, suggesting significant long-term growth potential.

Operations in Venezuela remain largely unchanged and are not currently material to overall performance, though the market could regain importance in the future.