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MercadoLibre's Q1 Earnings Miss Estimates, Revenues Rise Y/Y
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Key Takeaways
MELI Q1 EPS fell 15.5% while revenues jumped 49% year over year to $8.85 billion.
MercadoLibre saw Brazil GMV growth accelerate after lowering its free shipping threshold.
MELI's credit portfolio surged 87% year over year as Mercado Pago user engagement strengthened.
MercadoLibre (MELI - Free Report) reported first-quarter 2026 earnings of $8.23 per share, which missed the Zacks Consensus Estimate by 6.26% and declined 15.5% year over year. Revenues rose 49% on a year-over-year basis (46% on a foreign exchange-neutral basis) to $8.85 billion, surpassing the Zacks Consensus Estimate by 4.85%.
Total revenues were driven by continued strength across commerce and fintech segments, which grew 47% and 51% year over year to $4.87 billion and $3.98 billion, respectively. In the commerce segment, Brazil delivered foreign exchange-neutral GMV growth of 38% year over year, accelerating meaningfully from prior quarters following the lowering of the free shipping threshold in 2025. Mexico posted foreign exchange-neutral GMV growth of 28% year over year, while Argentina delivered 41% foreign exchange-neutral GMV growth year over year. Brazil GMV growth has doubled from a high base in just nine months, with unique buyer growth accelerating to 32% year over year, the fastest pace in five years.
Revenues from MELI's advertising services rose 73% year over year on a reported U.S. dollar basis and 63% on a foreign exchange-neutral basis.
MercadoLibre, Inc. Price, Consensus and EPS Surprise
Brazil: Net revenues in the first quarter reached $4.77 billion (54% of total revenues), up 55% year over year, supported by accelerating GMV growth, credit card portfolio expansion and robust advertising uptake.
Mexico: The market generated revenues of $1.98 billion (22.3% of total revenues), increasing 62% year over year. Items sold growth of 34% was strong, though management noted that this year's tax reform created headwinds for small and medium-sized sellers, moderating sequential momentum in foreign exchange-neutral GMV growth.
Argentina: Net revenues in the reported quarter were $1.70 billion (19.2% of total revenues), reflecting an increase of 23% year over year. Foreign exchange-neutral GMV growth of 41% year over year on a high base demonstrates the continued strength of MELI's value proposition versus physical retail.
Other countries: These markets generated revenues of $397 million (4.5% of total revenues), representing growth of 59.1% on a year-over-year basis, with cross-border trade contributing meaningfully to assortment depth in markets such as Colombia and Peru.
Key Metrics for MELI
Gross Merchandise Volume of $19 billion increased 42% year over year and 36% on a foreign exchange-neutral basis.
The number of successful items sold was 721.7 million, up 46.6% year over year. Unique buyer growth was 26.3% year over year, with the number reaching 84.1 million. Items sold per unique active buyer reached 8.6, growing 16% year over year despite dilution from large new buyer cohorts.
Fintech Monthly Active Users rose 29% year over year to 82.9 million. Engagement with Mercado Pago continued to strengthen, with Assets Under Management growing 77% year over year to $19.9 billion. The credit portfolio expanded 87% year over year to $14.6 billion.
Total Payment Volume rose 50% year over year and 55% on a foreign exchange-neutral basis to $87.2 billion. Acquiring Total Payment Volume grew 39% year over year to $56 billion, with foreign exchange-neutral growth of 41% and continued market share gains across Brazil, Mexico, Argentina and Chile.
Total payment transactions increased 38.8% year over year to 4.64 billion.
The credit portfolio reached $14.6 billion, growing 87% year over year. The portfolio composition consisted of 37% consumer lending, 46% credit card, 16% merchant lending and 2% asset-backed financing. The credit card sub-portfolio more than doubled, growing 104% year over year to $6.6 billion, with 2.7 million cards issued in the quarter and 15-90 day NPL improving 80 basis points year over year. Asset quality across the broader portfolio remained solid, with the 15-90 day non-performing loan ratio at 8%, broadly stable year over year.
MercadoLibre’s Operating Details
In the first quarter, the gross margin contracted 300 basis points on a year-over-year basis to 43.7%, primarily driven by the lower free shipping threshold in Brazil and the rapid growth of the first-party business.
Total operating expenses were $3.25 billion, increasing 61.9% year over year. The operating margin contracted 600 basis points from the year-ago period to 6.9%, as MELI deliberately prioritized investment in free shipping, the credit card, first-party inventory, cross-border trade and fulfillment.
Product development expenses scaled favorably from 9.3% of revenues in the first quarter of 2025 to 7.9% in the first quarter of 2026, reflecting AI-driven productivity gains.
Net Interest Margin After Losses declined to 17.8% from 22.7% in the first quarter of 2025, with the year-over-year compression driven by the higher mix of the lower-spread credit card and some spread compression in Brazil's consumer portfolio due to longer loan terms and broader personal loan reach.
Balance Sheet of MELI
As of March 31, 2026, cash and cash equivalents were $3.68 billion, broadly flat compared to $3.67 billion as of Dec. 31, 2025.
Short-term investments were $1.97 billion as of March 31, 2026, compared to $2.63 billion as of Dec. 31, 2025. Net debt increased to $5.75 billion at the end of the quarter from $4.68 billion as of Dec. 31, 2025, with the increase reflecting continued funding of Mercado Pago's credit operations, including nearly $1.95 billion deployed into loan book growth during the quarter, partially offset by $658 million in fintech funding.
Total loans receivable, net of allowances, stood at $10.74 billion compared to $9.37 billion as of Dec. 31, 2025. Adjusted free cash flow was negative $56 million, declining from $763 million in the fourth quarter of 2025, consistent with the seasonal pattern of lower cash generation in the first quarter, partly attributable to payment of the long-term retention program and peak season supplier invoices carried over from the prior quarter.
MELI’s Zacks Rank & Stocks to Consider
Currently, MercadoLibre carries a Zacks Rank #5 (Strong Sell).
View the Zacks #1 Rank List
Image: Bigstock
MercadoLibre's Q1 Earnings Miss Estimates, Revenues Rise Y/Y
Key Takeaways
MercadoLibre (MELI - Free Report) reported first-quarter 2026 earnings of $8.23 per share, which missed the Zacks Consensus Estimate by 6.26% and declined 15.5% year over year. Revenues rose 49% on a year-over-year basis (46% on a foreign exchange-neutral basis) to $8.85 billion, surpassing the Zacks Consensus Estimate by 4.85%.
Total revenues were driven by continued strength across commerce and fintech segments, which grew 47% and 51% year over year to $4.87 billion and $3.98 billion, respectively. In the commerce segment, Brazil delivered foreign exchange-neutral GMV growth of 38% year over year, accelerating meaningfully from prior quarters following the lowering of the free shipping threshold in 2025. Mexico posted foreign exchange-neutral GMV growth of 28% year over year, while Argentina delivered 41% foreign exchange-neutral GMV growth year over year. Brazil GMV growth has doubled from a high base in just nine months, with unique buyer growth accelerating to 32% year over year, the fastest pace in five years.
Revenues from MELI's advertising services rose 73% year over year on a reported U.S. dollar basis and 63% on a foreign exchange-neutral basis.
MercadoLibre, Inc. Price, Consensus and EPS Surprise
MercadoLibre, Inc. price-consensus-eps-surprise-chart | MercadoLibre, Inc. Quote
MELI’s Q1 in Detail
Brazil: Net revenues in the first quarter reached $4.77 billion (54% of total revenues), up 55% year over year, supported by accelerating GMV growth, credit card portfolio expansion and robust advertising uptake.
Mexico: The market generated revenues of $1.98 billion (22.3% of total revenues), increasing 62% year over year. Items sold growth of 34% was strong, though management noted that this year's tax reform created headwinds for small and medium-sized sellers, moderating sequential momentum in foreign exchange-neutral GMV growth.
Argentina: Net revenues in the reported quarter were $1.70 billion (19.2% of total revenues), reflecting an increase of 23% year over year. Foreign exchange-neutral GMV growth of 41% year over year on a high base demonstrates the continued strength of MELI's value proposition versus physical retail.
Other countries: These markets generated revenues of $397 million (4.5% of total revenues), representing growth of 59.1% on a year-over-year basis, with cross-border trade contributing meaningfully to assortment depth in markets such as Colombia and Peru.
Key Metrics for MELI
Gross Merchandise Volume of $19 billion increased 42% year over year and 36% on a foreign exchange-neutral basis.
The number of successful items sold was 721.7 million, up 46.6% year over year. Unique buyer growth was 26.3% year over year, with the number reaching 84.1 million. Items sold per unique active buyer reached 8.6, growing 16% year over year despite dilution from large new buyer cohorts.
Fintech Monthly Active Users rose 29% year over year to 82.9 million. Engagement with Mercado Pago continued to strengthen, with Assets Under Management growing 77% year over year to $19.9 billion. The credit portfolio expanded 87% year over year to $14.6 billion.
Total Payment Volume rose 50% year over year and 55% on a foreign exchange-neutral basis to $87.2 billion. Acquiring Total Payment Volume grew 39% year over year to $56 billion, with foreign exchange-neutral growth of 41% and continued market share gains across Brazil, Mexico, Argentina and Chile.
Total payment transactions increased 38.8% year over year to 4.64 billion.
The credit portfolio reached $14.6 billion, growing 87% year over year. The portfolio composition consisted of 37% consumer lending, 46% credit card, 16% merchant lending and 2% asset-backed financing. The credit card sub-portfolio more than doubled, growing 104% year over year to $6.6 billion, with 2.7 million cards issued in the quarter and 15-90 day NPL improving 80 basis points year over year. Asset quality across the broader portfolio remained solid, with the 15-90 day non-performing loan ratio at 8%, broadly stable year over year.
MercadoLibre’s Operating Details
In the first quarter, the gross margin contracted 300 basis points on a year-over-year basis to 43.7%, primarily driven by the lower free shipping threshold in Brazil and the rapid growth of the first-party business.
Total operating expenses were $3.25 billion, increasing 61.9% year over year. The operating margin contracted 600 basis points from the year-ago period to 6.9%, as MELI deliberately prioritized investment in free shipping, the credit card, first-party inventory, cross-border trade and fulfillment.
Product development expenses scaled favorably from 9.3% of revenues in the first quarter of 2025 to 7.9% in the first quarter of 2026, reflecting AI-driven productivity gains.
Net Interest Margin After Losses declined to 17.8% from 22.7% in the first quarter of 2025, with the year-over-year compression driven by the higher mix of the lower-spread credit card and some spread compression in Brazil's consumer portfolio due to longer loan terms and broader personal loan reach.
Balance Sheet of MELI
As of March 31, 2026, cash and cash equivalents were $3.68 billion, broadly flat compared to $3.67 billion as of Dec. 31, 2025.
Short-term investments were $1.97 billion as of March 31, 2026, compared to $2.63 billion as of Dec. 31, 2025. Net debt increased to $5.75 billion at the end of the quarter from $4.68 billion as of Dec. 31, 2025, with the increase reflecting continued funding of Mercado Pago's credit operations, including nearly $1.95 billion deployed into loan book growth during the quarter, partially offset by $658 million in fintech funding.
Total loans receivable, net of allowances, stood at $10.74 billion compared to $9.37 billion as of Dec. 31, 2025. Adjusted free cash flow was negative $56 million, declining from $763 million in the fourth quarter of 2025, consistent with the seasonal pattern of lower cash generation in the first quarter, partly attributable to payment of the long-term retention program and peak season supplier invoices carried over from the prior quarter.
MELI’s Zacks Rank & Stocks to Consider
Currently, MercadoLibre carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the broader Zacks Retail-Wholesale sector are FGI Industries (FGI - Free Report) , Dillard’s (DDS - Free Report) and Canada Goose (GOOS - Free Report) . FGI Industries sports a Zacks Rank #1 (Strong Buy) at present, while Dillard’s and Canada Goose carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
FGI Industries is set to report first-quarter 2026 results on May 12. FGI shares have increased 17% year to date.
Dillard’s is set to report first-quarter fiscal 2027 results on May 21. DDS shares have declined 8.8% year to date.
Canada Goose is set to report fourth-quarter 2026 results on May 20. GOOS shares have declined 7.9% year to date.