# MELI Q4 2025 Review: Revenue Surges +45% but Margin Compression Drives EPS Miss; Stock -9%

**Reported:** February 24, 2026 | **Earnings Call:** February 26, 2026 | **Tearsheet Date:** March 12, 2026

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## THE DASHBOARD

| Metric | Actual | YoY % | vs. Consensus |
|---|---|---|---|
| Net Revenue | $8.76B | +44.6% | Beat ~+10% vs. ~$7.97–8.49B est. |
| Diluted EPS | $11.03 | -13%+ YoY | Miss ~-5% to -9% vs. $11.57–$12.09 est. |
| Operating Income | $889M | -25.2% | Miss — margin 10.1% vs. 13.5% prior year |
| Net Income | $559M | ~-13% YoY | Miss vs. ~$640M+ implied |
| GMV | $19.9B | +37% | Beat |
| TPV (Mercado Pago) | $83.7B | +42.1% | Beat |
| Unique Active Buyers | 80M+ | +23.9% | Beat — first time crossing 80M |
| Credit Portfolio | $12.5B | ~+90% | Beat |

*Note: EPS consensus varied significantly by source (AlphaStreet $9.30, Zacks $11.77, others $11.57–$12.09). Direction is consistent: revenue beat, EPS missed.*

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## EXECUTIVE SUMMARY

- **Revenue beat, margin miss.** Revenue +45% YoY to $8.76B significantly outpaced estimates, but operating margin collapsed from 13.5% to 10.1% (-340 bps), with management attributing ~500–600 bps of compression to deliberate investments in free shipping thresholds, cross-border trade, first-party (1P) retail, and credit card expansion. This is a "paying for growth on purpose" quarter.

- **Commerce inflection: 80M buyers crossed.** Unique active buyers surpassed 80M for the first time (+16M YoY), items sold grew ~45% in Brazil and Mexico, and logistics absorbed +41% YoY shipment volume while achieving 75% next-48-hour delivery. GMV reached $19.9B (+37% USD).

- **Credit at scale, NPLs at record lows.** The credit portfolio nearly doubled to $12.5B; credit card portfolio grew +114% YoY to $5.7B with ~3M new cards issued in Q4. Credit card NPL hit an all-time low of 4.4%, offsetting analyst concerns around early delinquency upticks. NIMAL held at 23%.

- **Stock -9.25% post-earnings.** MELI fell from ~$1,922 to ~$1,745 on February 25, 2026. The sell-off concentrated on operating margin deterioration despite consensus acknowledgment that investment-driven compression is temporary. 23 of 26 covering analysts maintain Buy/Strong Buy ratings.

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## GUIDANCE & OUTLOOK

MercadoLibre does **not** provide formal numerical guidance for revenue or EPS.

**Management commentary:**
- Company "enters 2026 in a position of strength with all business units growing at a fast pace"
- Investment cycle (free shipping, 1P, cross-border, credit) expected to **continue compressing margins ~500–600 bps near-term** before normalizing
- Mexico and Argentina named as priority growth markets for fintech acquiring TPV and credit card penetration
- AI cited as accelerating commerce recommendation quality and merchant acquisition in fintech

**Analyst consensus estimates post-earnings:**
- Q1 2026 EPS: ~$10.58–$11.15 (next report ~May 6, 2026)
- FY 2026 Revenue: +17.3% YoY
- FY 2026 EPS: +23.1–23.2% YoY (bull cases model >50% EPS growth as investment cycle abates)
- 12-month consensus price target: $2,803–$2,848 (~41% upside from post-earnings close)

**Macro:** No significant FX or macro headwinds flagged beyond Argentina normalization. Brazil and Mexico remain core growth engines. FX-neutral GMV growth broadly outpaces reported USD growth.

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## SEGMENT PERFORMANCE

### Commerce (Mercado Libre)

| Market | GMV Growth (FX-Neutral) | Items Sold Growth |
|---|---|---|
| Brazil | +35% | +45% |
| Mexico | +35% | +45% |
| Argentina | +42% | +36% |

- Items sold per unique active buyer: 9 items (+15.4% YoY) — signals improved engagement and retention
- Logistics (Mercado Envios): 75% of shipments delivered within 48 hours; unit shipping costs declined YoY in Brazil, Mexico, Chile, and Colombia despite +41% volume growth
- Record market share gains in e-commerce in both Brazil and Mexico in FY 2025
- 1P retail and cross-border investments currently dilutive to margin but driving buyer acquisition

### Fintech (Mercado Pago)

| Market | Acquiring TPV Growth (FX-Neutral) |
|---|---|
| Brazil | +25% |
| Mexico | +50% |

- **FY 2025 TPV:** $278B (+41% YoY); **FY 2025 TPN:** 15.5B transactions
- **Fintech MAU:** ~77.9–78M (+27–28% YoY; ~30% growth sustained for 10 consecutive quarters)
- **AUM:** ~$19B (+78% YoY)
- **Credit card NPL:** 4.4% — all-time low
- **NIMAL:** 23%
- **New credit cards issued in Q4:** ~3M
- Early delinquency uptick noted but management characterized as within risk tolerance

### Full Year 2025 Summary
- **FY Revenue:** $28.9B (+39.1% YoY) — 28th consecutive quarter of >30% growth
- **FY Operating Income:** +22% YoY; margin 11.1% (-1.6 pp YoY)
- **FY Net Income:** ~$2.0B; margin 6.9% (-2.3 pp YoY)
- **FY Free Cash Flow:** $10.8B (+52.6% YoY) — significantly outpacing net income growth

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## CAPITAL ALLOCATION & BALANCE SHEET

| Item | Value |
|---|---|
| Cash & Short-Term Investments | $6.3B |
| Long-Term Debt | $9.1–$9.2B |
| Total Assets | $42.7B |
| Shareholders' Equity | $6.7B |
| Debt-to-Equity Ratio | ~134.7% |

- **Share buybacks:** Minimal — ~$1.0M executed in FY 2025. No material repurchase program active or announced.
- **Dividends:** None.
- **Capital deployment:** Management prioritizing reinvestment in commerce infrastructure, fintech credit growth, and logistics density over return of capital. FCF generation ($10.8B) substantially exceeds net income — suggesting strong underlying cash conversion.

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## ANALYST TAKEAWAY

Margin compression is deliberate and investment-driven, not structural deterioration — with 80M+ active buyers, $12.5B credit portfolio at record-low NPLs, and $10.8B FCF, the thesis of Latin America's dominant commerce-fintech flywheel remains intact; the risk is whether investors sustain patience through a prolonged investment cycle that management has signaled will continue into at least H1 2026, creating near-term multiple pressure at the current ~37x forward P/E.

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*Sources: BusinessWire, Motley Fool Transcript, Seeking Alpha, 24/7 Wall St., IndexBox, Tickeron, Yahoo Finance/Zacks, Nasdaq, AlphaStreet, Level Headed Investing.*