By Andre Romani
SAO PAULO, Aug 5 (Reuters) - MercadoLibre on Wednesday reported a third consecutive quarterly decline in profit, as heavier spending on free shipping and credit-card expansion weighed on margins, overshadowing record revenue and sending its shares lower in after-hours trading.
Shares of the Uruguay-based e-commerce and fintech company fell about 4.5% to roughly $1,835, after initially dropping as much as 9%.
MercadoLibre, which runs Latin America's largest online marketplace and the
Mercado Pago payments platform, posted net income of $466 million for the April-to-June quarter. That was down about 11% from a year earlier, but still ahead of the $433 million analysts had expected, according to an LSEG poll.
"Similar to last quarter, the market is focusing on the year-over-year decrease in net income," Morningstar analyst Michael Miller said in a report.
The profit slide was driven in part by higher free-shipping costs in Brazil, introduced from mid-2025, as well as provisions tied to the expansion of its credit-card business, Leandro Cuccioli, MercadoLibre's senior vice president of investor relations, told Reuters.
Revenue jumped 50% to a record $10.2 billion, its fastest growth rate in four years and well above analysts' estimate of $9.7 billion. Gross merchandise volume, a key measure of e-commerce sales, rose 36% on a foreign-exchange-neutral basis.
Operating income, or EBIT, fell about 17% to $683 million, though it still topped analysts' average forecast of $658 million. EBIT margin narrowed to 6.7%, from 12.2% a year earlier and 6.9% in the first quarter.
In recent quarters, MercadoLibre has delivered steadily rising revenue while profits and margins have come under pressure, as the company pours money into long-term bets including free shipping, credit cards and cross-border sales.
Cuccioli said those investments were gaining traction. The number of users active in both e-commerce and fintech rose 37% in the quarter, compared with growth of 20% to 30% a year earlier.
"This is the most valuable segment for us," Cuccioli said, adding that customers who use both sides of the business make more transactions and generate higher returns than those who use only one.
He said MercadoLibre was generating operating leverage, but was deliberately reinvesting those gains to strengthen the business, an approach unlikely to change in the near term.
Chief Executive Ariel Szarfsztejn told analysts the company would not make abrupt strategic shifts simply to preserve strong year-on-year growth, saying it remained focused on the strength of its customer offering.
MercadoLibre's credit portfolio reached about $16 billion, up 75% in dollar terms, driven by credit cards. Its 15-to-90-day delinquency rate was 7%, up 0.3 percentage point from a year earlier but down 1 percentage point from the first quarter.
Total payment volume in its acquiring business rose 42% year-on-year on a foreign-exchange-neutral basis.
(Reporting by Andre Romani; Editing by Natalia Siniawski, Kylie Madry and Stephen Coates)
