MercadoLibre's sales grow 45 percent as free shipping trims its margin

What happened

MercadoLibre, the Latin American marketplace and payments company, reported net revenue and financial income of $10.75 billion for the third quarter on Wednesday 4 November, up 45 percent from a year earlier. ^{[1, 2]}

Income from operations was $676 million, against $724 million a year earlier, a margin of 6.3 percent. Net income was $448 million, against $421 million, helped by a lower tax rate and smaller currency losses, the company said. Its quarterly report on Form 10-Q followed on Thursday 5 November. ^{[1, 3]}

Why it matters

The company says it is choosing growth over margin: it is 'investing part of today's margin' to move Latin American shopping and banking online. Operating income was 6 percent lower than a year earlier while revenue grew by almost half. ^{[1, 3]}

Free shipping and warehouses

The margin was 40 basis points, hundredths of a percentage point, below the second quarter, the company said. It named more free shipping and smaller orders, higher energy prices, and fulfillment space almost 20 percent larger than a quarter earlier. It also spent more on affiliate marketing in Brazil, which means paying outside promoters for the sales they bring in. ^{[1, 4]}

Since Brazil's free shipping threshold was lowered, the net shipping margin has narrowed by about 200 basis points of merchandise volume, the letter said. Cost per shipment in Brazil was 5 percent lower than a year earlier in local currency. ^[1]

Commerce, Mercado Pago and credit

Commerce brought in $6.14 billion and fintech, the Mercado Pago side, $4.61 billion, according to the quarterly report. Excluding currency effects, commerce revenue grew 41 percent and fintech 40 percent. Mercado Pago had 93 million monthly active users, up 29 percent. ^{[1, 3]}

The credit portfolio reached $17.9 billion, up 62 percent. The provision for doubtful accounts, the charge set aside for expected loan losses, was $1.34 billion against $815 million, which the 10-Q tied mainly to loan originations growing 70 percent. Loans 15 to 90 days late were 7.0 percent of the portfolio, broadly stable, the company said. ^{[1, 2, 3]}

Brazil, Mexico and Argentina

Brazil brought in $6.0 billion of revenue, up 50 percent in dollars and 41 percent excluding currency effects. Mexico was up 47 percent in dollars and Argentina 26 percent, or 42 percent excluding currency effects, the company said. ^{[1, 3]}

In Mexico, merchandise volume grew 21 percent excluding currency effects, which the company tied to a tax reform and weaker consumption. In Argentina, it extended free shipping on lower-priced items for its MELI+ members in September. ^[1]

What settles it next

The annual report on Form 10-K for 2026 is due within 60 days of the year's end for a large accelerated filer, which the company is: by Monday 1 March 2027, by the desk's count. The company said Netflix will join its connected television advertising offering from early 2027. ^{[3, 5, 1]}

Who it reaches

MercadoLibre (MELI) is direct: the revenue, the credit book and the shipping costs are its own, as its results letter and 10-Q report them. ^{[1, 3]}