MercadoLibre profit misses on logistics spending, revenue tops estimates

By Reuters News21:38 (UTC), 4 November 2026 Updated

By Andre Romani

SAO PAULO, Nov 4 (Reuters) - MercadoLibre MELI.O reported third-quarter net profit below market estimates on Wednesday, as heavier spending to expand logistics capacity ahead of the peak holiday shopping season weighed on margins.

Shares in the company fell some 8% in extended trading following the results, to around $1,600 each.

The Latin American e-commerce and fintech company posted net income of $448 million for the July-September period, missing the $476 million analysts expected, according to LSEG data.

Still, profit rose about 6% from a year earlier, returning to growth after three consecutive quarterly declines.

"The quarter when you are building capacity, you don't have the revenues yet, so you have the cost," Chief Financial Officer Martin de los Santos told Reuters. "That creates some margin compression that you make up the following quarter."

CAPACITY EXPANSION SQUEEZES MARGINS

MercadoLibre said it increased fulfillment capacity by about 20% from the previous quarter, compared with 10% in the same period last year, as it prepared for major promotional events including Black Friday.

That pushed operating margin down to 6.3% from nearly 10% a year earlier, and below the 7% expected by analysts tracked by LSEG.

De los Santos said margins were also hurt by the higher cost of free shipping, particularly following expansions in Argentina and Brazil, as well as increased marketing spending in Brazil. Rising fuel prices also lifted costs, prompting the company to raise shipping fees for merchants, he said.

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BRAZIL DRIVES REVENUE BEAT

Revenue, however, beat expectations. Net revenue and financial income rose 45% to $10.75 billion, topping the $10.66 billion analyst consensus, with Brazil leading growth.

The tension between faster growth and lower margins has defined MercadoLibre's recent results, as management has prioritized investment to defend its leadership in Latin America's fast-growing online commerce and digital payments markets.

Shares are down about 13% this year, after surging nearly 140% between 2023 and 2025.

"Our investments are working. We are delivering tremendous growth, a lot of engagement, people are buying more frequently," de los Santos said. "We continue to be very optimistic about the long-term margin trajectory."

At fintech arm Mercado Pago, the credit portfolio grew 62% from a year earlier, though that pace slowed from recent quarters. De los Santos said the company had become "a bit more conservative" in originating new loans in Brazil and Argentina amid a "very complex credit cycle" in both markets.