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Mercado Libre

Invest, don’t harvest, From 2025

We believe the right response is not to harvest – it is to invest
Mercado Libre’s first quarter 2026 letter

Invest, don’t harvest

Mercado Libre’s revenue passed $10 billion in a quarter for the first time in the three months to June 2026, up 50% on the year before. Its operating margin was 6.7%, down from 10.1% at the end of 2025. It says the fall is deliberate, and that it is spending the difference on shipping, credit, and loyalty, which it expects to pay back.

001

Commerce

  1. 1Free shipping. Ship free in Brazil on orders from R$19, down from R$79.
  2. 2First-party sales. Sell more directly to customers, with more automation and more categories.
  3. 3Cross-border. Grow the China to Latin America corridor with a fulfilled-from-China model.

  1. Items sold in Brazil grew 56% in the first quarter of 2026, up from 45% in the fourth quarter of 2025.

  2. The cost of shipping each item fell 17% on the year before.

  3. First-party sales reached $5 billion over twelve months, up 69%.

  4. Cross-border sales grew 68% without the effect of exchange rates.

Revenue growth rose as the operating margin fell

Revenue growth has risen for three quarters while the operating margin has fallen. Mercado Libre estimated that its strategic investments took 5 to 6 percentage points off the margin in the fourth quarter of 2025, and that it does not solve for short-term margin.

10%20%30%40%50%45%10.1%Q4 202549%6.9%Q1 202650%6.7%Q2 2026
  • Revenue growth on the year before
  • Operating margin
  • Sources,,

Q4 2025 margin was 9.0% without one-time tax credits.

Free shipping from R$19

In Brazil Mercado Libre lowered the order value that ships free from R$79 to R$19. More of every order now qualifies, and each shipment costs the company more than it did.

R$19R$0R$20R$40R$60R$80R$100Free shipping
Items sold in Brazil
Growth rose from 45% to 56% between the fourth quarter of 2025 and the first of 2026.
Cost of each shipment
Shipping cost for each item fell 17% on the year before.
Conversion
1.1 percentage points higher a year on, in the second quarter of 2026.

The credit portfolio grew 75% in a year

Mercado Pago lends to customers of the marketplace, and the portfolio is growing faster than the rest of the company, though more slowly each time. The net interest margin after losses was 22.4% for 2025 and 20.7% in the second quarter of 2026.,

$12.5bnEnd of 2025Up 90% on the year$14.6bnQ1 2026Up 87% on the year>$16bnQ2 2026Up 75% on the year

One coin is $500 million.,,

  1. Say what the strategy costs, in the units you report.

    Mercado Libre estimated that the lower shipping threshold, cross-border trade, first-party sales, and the credit card took 5 to 6 percentage points off its operating margin in the fourth quarter of 2025. We recommend putting the cost of the plan in the same measure as the result, so a fall in the number is expected and not a surprise.

  2. Hold each investment to a condition, not a budget.

    The company requires every investment to show a clear path to positive direct contribution under conservative assumptions, while saying it does not solve for short-term margin. We recommend gating each initiative on the condition it must meet, and saying what the condition is.

  3. Plan the parts to depend on each other.

    Cheaper shipping, a credit card, and a loyalty programme are described as one system in which each raises the value of the others. We recommend choosing initiatives that reinforce each other, and following the one number they share, here how much customers use.

Sources

  1. 1. MercadoLibre, Inc. (2026). Second quarter 2026 financial results. Form 8-K, exhibit 99.1, 5 August 2026. sec.gov
  2. 2. MercadoLibre, Inc. (2026). First quarter 2026 financial results. Form 8-K, exhibit 99.1, 7 May 2026. sec.gov
  3. 3. MercadoLibre, Inc. (2026). Fourth quarter and full year 2025 financial results. Form 8-K, exhibit 99.1, 24 February 2026. sec.gov

Headwater is not connected with MercadoLibre, Inc. Mercado Libre, Mercado Pago, and MELI+ are trade marks of their owners. Updated 28 September 2026.

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