Key Takeaways
- Revenue grew 49% year-over-year to $8.8 billion, beating analyst estimates.
- Net income fell 15.6% to $417 million due to heavy investment spending.
- Brazil operations drove growth with a 56% increase in items sold.
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Mercado Libre revenue surges 49% but profit dips on spending
Mercado Libre Inc. (NASDAQ: MELI) reported first-quarter revenue of $8.8 billion, a 49% year-over-year increase that marked its fastest growth in nearly four years.
"Q1'26 was another exceptional quarter for Mercado Libre, extending the momentum we built through 2025," Mercado Libre CFO Martín de los Santos, said. "We are investing boldly to transform how hundreds of millions of Latin Americans shop, pay and access financial services."
The revenue figure surpassed analyst consensus estimates of around $8.4 billion. However, net income of $417 million represented a 15.6% decrease from the prior year and missed expectations as the company ramped up spending.
The results highlight the company's strategy of prioritizing market share expansion over short-term profits. Shares were volatile in after-hours trading as investors weighed the strong top-line growth against the pressure on margins from strategic investments in logistics, credit, and free shipping subsidies.
The e-commerce giant's commerce business generated $5 billion in revenue, up 47% in US dollars, with Gross Merchandise Value (GMV) hitting $19.0 billion. The number of items sold surged 47% to 722 million, driven by accelerating growth in Brazil where a lower free shipping threshold introduced in 2025 continued to pay dividends. Items sold in Brazil jumped 56% year-over-year.
Mercado Pago, the company's fintech arm, saw net revenue climb 51% to $4.0 billion. The unit reached 83 million monthly active users, a 29% increase. Its credit portfolio expanded significantly, growing 87% year-over-year to $14.6 billion, which included the issuance of 2.7 million new credit cards during the quarter.
This aggressive expansion in credit and logistics, while fueling top-line growth, came at a cost. Elevated investments, coupled with intense competition from rivals like Amazon (AMZN) in Brazil and Mexico and Sea Limited's (SE) Shopee, contributed to the decline in profitability.
The strong revenue growth signals management's investment strategy is capturing significant market share across Latin America. Investors will now watch the second-quarter results, due in August, for signs of whether the company can translate its user and volume growth into improved profitability.
This article is for informational purposes only and does not constitute investment advice.
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