Latin American e-commerce and fintech company MercadoLibre (NASDAQ: MELI) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 39.5% year on year to $7.41 billion. Its GAAP profit of $8.32 per share was 10.5% below analysts’ consensus estimates.

Is now the time to buy MELI? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

MercadoLibre’s third quarter results were met with a negative market reaction, as robust revenue growth was offset by a shortfall in GAAP earnings per share relative to analyst expectations. Management attributed the strong top-line increase to their ongoing investments across e-commerce and fintech, particularly noting the positive impact of a reduced free shipping threshold in Brazil on both gross merchandise volume (GMV) and user engagement. CFO Martin de Los Santos pointed to operational scale and improved buyer retention as key contributors, while also acknowledging that the increased marketing and logistics spend placed pressure on short-term margins.

Looking ahead, management emphasized their commitment to balancing growth investments with long-term profitability, highlighting continued expansion in logistics, product offerings, and fintech services. Management stated that strategic priorities include deeper penetration in underrepresented markets, further development of Mercado Pago’s credit products, and advancements in AI-driven customer tools. While management remains optimistic about scaling the business, they acknowledged ongoing macroeconomic uncertainty in Argentina and competitive pressures in Brazil could influence margin dynamics and the pace of future investment.

Key Insights from Management’s Remarks

Management attributed the quarter’s growth to higher transaction volumes from e-commerce and fintech, expanded user acquisition, and ongoing investment in logistics and marketing, while noting that increased spending compressed margins and led to EPS underperformance versus consensus.

• Brazil shipping threshold lowered: The reduction in the free shipping threshold in Brazil led to a surge in items sold, improved buyer conversion, and higher engagement, but also drove up logistics and promotional costs, weighing on contribution margins.
• User base expansion: MercadoLibre added 7.8 million new buyers across Latin America, with particularly strong growth among younger segments, thanks to expanded affiliate marketing and tailored value propositions in key markets.
• Fintech product momentum: Mercado Pago’s credit card and remunerated account offerings saw accelerated adoption, especially in Brazil and Mexico, supporting higher net promoter scores (NPS) and asset growth, though credit portfolio expansion required increased risk management investment.
• Argentina macro challenges: Despite resilient growth in Argentina, management cited that macroeconomic instability, higher funding costs, and election-related uncertainty produced slower GMV and TPV growth, placing pressure on EBIT margins.
• Logistics efficiency gains: Enhanced scale allowed for an 8% sequential reduction in Brazil’s unit shipping costs, achieved through better utilization of existing capacity and early-stage deployment of robotics and automation in fulfillment centers.

Drivers of Future Performance

MercadoLibre expects continued investment in logistics, product innovation, and fintech services to drive growth, while navigating margin pressures and market competition.

• Sustained logistics investment: Management plans to further invest in fulfillment capacity and robotics to support growing shipment volumes, aiming to maintain delivery speed and reliability as a core differentiator, especially in Brazil’s competitive market.
• Fintech scaling and credit quality: Mercado Pago will expand its credit card rollout and asset management offerings, focusing on maintaining credit quality as portfolios mature in Brazil and launch in Argentina, while leveraging low acquisition costs in Mexico’s expanding market.
• Margin and macro headwinds: Management acknowledged that ongoing marketing and shipping investments, along with economic volatility in Argentina, may continue to pressure short-term margins, but believe scale benefits and operational leverage will support improved profitability over time.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be watching (1) whether MercadoLibre’s logistics investments can continue to reduce shipping costs without sacrificing delivery speed, (2) the pace of fintech adoption and credit quality metrics as new products mature, and (3) performance in key markets like Argentina and Mexico amid shifting macroeconomic and competitive landscapes. Execution on AI-driven user engagement and further ecosystem integration will also be key milestones.

MercadoLibre currently trades at $2,265, down from $2,305 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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