MELI

As the Q2 earnings season comes to a close, it's time to take stock of this quarter's best and worst performers in the online marketplace industry, including MercadoLibre (NASDAQ:MELI) and its peers. Marketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission-paying sellers, generating flywheel scale effects that feed back into further customer acquisition. The 11 online marketplace stocks we track reported a satisfactory Q2. As a group, revenues beat analysts' consensus estimates by 1.9% while next quarter's revenue guidance was 1.8% below. Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 9.6% since the latest earnings results. Originally started as an online auction platform, MercadoLibre (NASDAQ:MELI) is a one-stop e-commerce marketplace and fintech platform in Latin America. MercadoLibre reported revenues of $10.17 billion, up 49.8% year on year. This print exceeded analysts' expectations by 4.5%. Overall, it was an exceptional quarter for the company with a solid beat of analysts' EBITDA estimates and impressive growth in its users. MercadoLibre scored the fastest revenue growth in the group. The company reported 89 million daily active users, up 25.4% year on year. Investor expectations, however, were likely higher than Wall Street's published projections, leaving some wishing for even better results (analysts' consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 1.6% since reporting and currently trades at $1,892. Read why we think that MercadoLibre is one of the best online marketplace stocks, our full report is free. Founded by a struggling amateur furniture maker Robert Kalin and his two friends, Etsy (NYSE:ETSY) is one of the world's largest online marketplaces, focusing on handmade or vintage items. Etsy reported revenues of $668.3 million, up 6.2% year on year, outperforming analysts' expectations by 3.4%. The business had an exceptional quarter with a solid beat of analysts' EBITDA estimates. Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 11% since reporting. It currently trades at $76.39. Is now the time to buy Etsy? Access our full analysis of the earnings results here, it's free. Founded by famous lawyer Robert Shapiro, LegalZoom (NASDAQ:LZ) offers online legal services and documentation assistance for individuals and businesses. LegalZoom reported revenues of $205.3 million, up 6.6% year on year, in line with analysts' expectations. It was a softer quarter as it posted revenue guidance for next quarter missing analysts' expectations significantly and EBITDA guidance for next quarter missing analysts' expectations significantly. As expected, the stock is down 25.3% since the results and currently trades at $6.05. Read our full analysis of LegalZoom's results here. Aiming to simplify a once complicated process, EverQuote (NASDAQ:EVER) is an online insurance marketplace where consumers can compare and purchase various types of insurance from different providers EverQuote reported revenues of $195.1 million, up 24.6% year on year. This result beat analysts' expectations by 2.6%. Overall, it was a strong quarter as it also recorded an impressive beat of analysts' EBITDA estimates. The stock is down 16.6% since reporting and currently trades at $20.11. Read our full, actionable report on EverQuote here, it's free. Founded in 2014, ACV Auctions (NYSE:ACVA) is an online auction marketplace for car dealers and wholesalers to buy and sell used cars. ACV Auctions reported revenues of $213.9 million, up 10.4% year on year. This print came in 0.6% below analysts' expectations. It was a slower quarter as it also produced EBITDA guidance for next quarter missing analysts' expectations significantly and full-year revenue guidance meeting analysts' expectations. ACV Auctions scored the highest full-year guidance raise of the whole group. The stock is up 43.7% since reporting and currently trades at $10.44. Read our full, actionable report on ACV Auctions here, it's free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market's biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market's primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market's dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Artisan Partners, an investment management company, released its third-quarter 2026 investor letter for the "Artisan Developing World Fund". The letter can be downloaded here. The Artisan Developing World Fund (Investor Class) returned 3.50% in the quarter ending September 30, 2026, outperforming the MSCI Emerging Markets Index's -0.37%. Since June 30, 2015, its cumulative returns have been 172.0% compared to the Index's 128.8%. The quarter saw heightened Middle Eastern conflict, leading to inflation pressures and a selloff in long-dated bonds across the US, Japan, and Europe. This climate pressured markets, particularly in Korea, where the MSCI Korea Index fell significantly before rebounding, while Brazil's market stood out with an 8.18% rise. India's economy appears resilient despite challenges, bolstered by reforms and foreign currency schemes, while consumer wealth is growing significantly. A handful of outsized winners—led by NVIDIA, MercadoLibre, Sea, Visa, and CrowdStrike—have significantly driven cumulative portfolio returns. To capture the sustained compounding of these market leaders while prioritizing portfolio permanence, the strategy expands diversification across correlation stocks to optimize stability through market volatility. Also, check the fund's top five holdings to see its best picks in 2026. In its Q3 2026 investor letter, the Artisan Developing World Fund highlighted Grab Holdings Limited (NASDAQ:GRAB). Grab Holdings Limited (NASDAQ:GRAB) is a Singapore-based technology company that offers a platform for a wide range of on-demand services. On October 07, 2026, Grab Holdings Limited (NASDAQ:GRAB) closed at $3.08, with a $12.56 billion market capitalization. Grab Holdings Limited (NASDAQ:GRAB) posted a 38.28% YTD pullback, trading within a 52-week range of $2.74 to 6.40. Artisan Developing World Fund stated the following regarding Grab Holdings Limited (NASDAQ:GRAB) in its Q3 2026 investor letter: "Bottom contributors to performance for the quarter included Southeast Asian mobility company Grab Holdings Limited (NASDAQ:GRAB). Grab Holdings declined due to a potential stake sale by Uber and the implementation of a commission cap on two-wheeler rides in Indonesia." Grab Holdings Limited (NASDAQ:GRAB) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 48 hedge fund portfolios held Grab Holdings Limited (NASDAQ:GRAB) at the end of the second quarter, which was 50 in the previous quarter.While we acknowledge the potential of Grab Holdings Limited (NASDAQ:GRAB) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. In another article, we discussed Grab Holdings Limited (NASDAQ:GRAB) and shared a list of best SPACs to invest in. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors. READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years. This article is originally published at Insider Monkey.

Chewy (NYSE:CHWY) primarily generates revenue by operating a comprehensive online retail platform that supplies an extensive variety of pet food, daily accessories, prescribed medications, and specialized wellness items directly to individual pet owners living all across the United States. It recently finalized the acquisition of a dedicated veterinary platform to introduce physical clinic locations and virtual care services, while several third-party pet food brands sold on its website were simultaneously recalled for potential bacterial contamination. MercadoLibre mainly earns revenue by operating a massive digital commerce marketplace, managing complex regional logistics networks, and offering various financial technology services, such as digital payment processing and consumer credit, to everyday users across Latin America. It recently completed the widespread regional rollout of a new artificial intelligence search architecture across multiple marketplace websites. At the same time, several external law firms announced targeted investigations into potential violations of federal securities laws by the organization. Revenue here refers to the data provider's standardized income-statement revenue line item, and consistently tracking this metric helps individual investors clearly understand the total volume of money flowing into a business before any normal operating expenses are finally deducted. Calendar quarter | Chewy Revenue | MercadoLibre Revenue Q3 2024 | $2.9 billion (quarter ended Oct. 27, 2024) | $5.3 billion (quarter ended Sept. 30, 2024) Q4 2024 | $3.2 billion (quarter ended Feb. 2, 2025) | $6.1 billion (quarter ended Dec. 31, 2024) Q1 2025 | $3.1 billion (quarter ended May 4, 2025) | $5.9 billion (quarter ended March 31, 2025) Q2 2025 | $3.1 billion (quarter ended Aug. 3, 2025) | $6.8 billion (quarter ended June 30, 2025) Q3 2025 | $3.1 billion (quarter ended Nov. 2, 2025) | $7.4 billion (quarter ended Sept. 30, 2025) Q4 2025 | $3.3 billion (quarter ended Feb. 1, 2026) | $8.8 billion (quarter ended Dec. 31, 2025) Q1 2026 | $3.3 billion (quarter ended May 3, 2026) | $8.8 billion (quarter ended March 31, 2026) Q2 2026 | $3.3 billion (quarter ended Aug. 2, 2026) | $10.2 billion (quarter ended June 30, 2026) Admittedly, if looking at the raw numbers, MercadoLibre is the obvious choice, as its revenue has risen fast over time. Nonetheless, the risk profile may put Chewy in a more favorable light. For one, Chewy is based in the U.S., and many American investors may feel more comfortable investing in a market they might understand better. Additionally, among the consumer discretionary stocks, Chewy's P/E ratio of 28 is well below the 48 P/E ratio of MercadoLibre. Furthermore, in the second quarter of 2026, MercadoLibre's net income fell 11% year over year despite 50% revenue growth over the same period. In comparison, Chewy's net income rose 29% year over year, while revenue increased only 7%, which may put risk-averse investors at ease. However, MercadoLibre's net income fell because it chose to sacrifice short-term profits in favor of bolstering its e-commerce and fintech businesses, a move that could pay off in the long term. Thus, if their risk tolerance permits, they are probably better off choosing MercadoLibre. Data source: Financial Modeling Prep. Data as of Sept. 21, 2026. Before you buy stock in Chewy, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Chewy wasn't one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $384,839!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,385,657!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of September 25, 2026. Will Healy has positions in MercadoLibre. The Motley Fool has positions in and recommends Chewy and MercadoLibre. The Motley Fool has a disclosure policy. Chewy vs. MercadoLibre: Steady Results vs. Rapid Revenue Growth was originally published by The Motley Fool

MercadoLibre has seen a sharp shift in sentiment over the past year, yet the longer term record still shows a solid gain. That gap between recent share price moves and the earnings power of the business raises a clear question about what investors are really paying for today. - The stock has risen 37.7% over the past 3 years, which puts a lot of weight on whether its profit engine can justify that kind of long haul return. - The company's model, which blends e-commerce with payments and credit services, can directly affect margins and how reliably earnings turn into cash. - Your read on MercadoLibre is one view; the desks covering it have another. See what analysts think MercadoLibre's shares could be worth. The issue now is whether MercadoLibre's current share price fairly reflects the earnings it is generating and what those profits may support over time. If you are weighing whether MercadoLibre's earnings justify its current price, it can help to benchmark against other candidates in the same conversation using 30 high quality undervalued stocks. The P/E ratio fits MercadoLibre because earnings remain a key anchor for a business that blends marketplace, payments and credit into one platform. On this measure, the stock trades on about 47.7x earnings, which is more than double the 18.0x industry average for multiline retail and also above the 21.0x peer group level. That kind of mark up means buyers are agreeing to pay a much higher price for each dollar of current profit than they would for a typical retailer or for similar companies. The tailored fair multiple, which adjusts for factors like MercadoLibre's growth profile, profitability, size and risks, sits below the current 47.7x P/E. This points to a setup where the shares screen as overvalued on this framework, because the market is attaching a richer label than the model suggests for these fundamentals. To judge whether that gap feels justified, you would need to weigh how durable the earnings base looks, how much cyclicality you see in e-commerce and credit, and how comfortable you are with concentration in Latin American markets. Explore the numbers behind MercadoLibre's P/E valuation. MercadoLibre's valuation puzzle illustrates the role of Simply Wall St Narratives, which sit on the Community page and describe what kind of future growth, profitability and earnings profile would need to unfold for the stock to appear meaningfully more expensive or cheaper than it does today. Each narrative links its figures to a specific view on how MercadoLibre's growth, margins and risk profile could change, giving you a clear reference point you can revisit as new information becomes available. Community views on MercadoLibre split between those who see a lot more upside and those who think expectations already look full. Bull case: 45% undervalued "MercadoLibre is the dominant e-commerce and fintech platform across Brazil, Mexico, and Argentina, Amazon and PayPal fused into one company..." Discover why this Narrative puts MercadoLibre at 45% undervalued. Bear case: roughly fairly valued "The rapid expansion of global and regional competitors such as Stripe, Adyen, PayPal, and new entrants like TikTok Shop and Temu is likely to erode MercadoLibre's market share in both e-commerce and fintech..." Explore why this Narrative puts MercadoLibre at roughly fairly valued. The next question is who is actually steering MercadoLibre, how their incentives are wired, and whether that pay structure pushes them toward the same outcomes you care about as a shareholder. See who runs MercadoLibre and how they are paid. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include MELI. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

The holiday quarter starts in about two weeks. And for e-commerce companies, it's the three months that matter most. Consider Shopify (NASDAQ:SHOP). The e-commerce software company earned $631 million of operating income in last year's fourth quarter -- 43% of its operating income for all of 2025. Amazon (NASDAQ:AMZN) and MercadoLibre (NASDAQ:MELI) lean on the season, too, though not nearly as hard. Notably, all three companies close their books on Dec. 31, so the December quarter is the fourth quarter for each. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Here's a closer look at all three stocks ahead of the season. Image source: Getty Images. Shopify's concentration isn't a one-off. The fourth quarter delivered 43% of the company's operating income in both 2025 ($631 million of $1.47 billion) and 2024 ($465 million of $1.08 billion). Not only is the holiday quarter the company's biggest for revenue (about 32% of 2025's total), but it's also the year's most profitable by a wide margin. Operating expenses don't rise with the holiday rush the way merchant sales do, so much of the season's extra gross profit can turn into operating income. And I think this year's setup looks even better. Second-quarter gross merchandise volume (the value of goods sold across the platform) rose 32% year over year, a fifth straight quarter of growth above 30%. Operating income climbed 68% to $488 million. In fact, profit growth has been accelerating: Operating income rose 37% in 2025, and it's rising much faster this year. For the third quarter, management guided for revenue growth in the low-thirties percentage range. The problem, however, is the stock's price. Shopify shares have pulled back sharply, from a 52-week high above $182 to about $130 as of this writing. Yet the stock still costs about 53 times what the company is expected to earn next year. The e-commerce giant still gets a seasonal lift. Fourth-quarter operating income of $25 billion last year was about 31% of the full-year total of $80 billion, a share almost unchanged from 2024. But Amazon's profit engine is increasingly its cloud computing business, Amazon Web Services, which doesn't depend on the shopping calendar. Profit growth is accelerating, too. Operating income rose 17% in 2025, then rose 43% to $27.5 billion in this year's second quarter. And for the third quarter, management guided for operating income of $22.5 billion to $26.5 billion, up from $17.4 billion a year earlier. Meanwhile, the company is stretching the season. This week, Amazon set its Prime Big Deal Days sale for Oct. 6 and 7, which could pull holiday spending into the quarter's first week. Shares trade near $248 as of this writing, or around 24 times Amazon's expected earnings per share for next year, the lowest price-to-earnings multiple of the three. The Latin American e-commerce and fintech company runs the holidays differently. Its fourth-quarter revenue jumped 45% year over year to $8.8 billion in 2025, the company's biggest quarter of the year. Yet income from operations of $889 million was only 28% of the 2025 total, down from a 31% share in 2024. That wasn't an accident. Management said it made "tactical investments to reinforce Mercado Libre as the primary destination for demand during peak season" -- in other words, it spent on free shipping, marketing, and credit cards to capture holiday shoppers. And the spending hasn't let up. Second-quarter revenue soared 50% year over year to $10.2 billion, while the operating margin narrowed to 6.7%, from 9% in the fourth quarter of 2025 (excluding a one-time tax credit in that quarter). Management is deliberately trading near-term margin for growth. MercadoLibre's stock trades at about 33 times the profit it's expected to produce next year. For a company growing revenue 50%, the price is arguably fair, if the spending eventually pays off. Ultimately, Amazon is my first pick. Its profits lean less on the season than Shopify's (the cloud earns all year), and its shares carry the lowest price-to-earnings multiple of the three. MercadoLibre is a close second. Margins may stay under pressure through the holidays (that's the plan, after all), but revenue growing 50% covers a lot of spending. I'd buy it, too, though I'd keep the position smaller. Shopify is the group's best pure holiday story, and the most concentrated payoff sits just ahead. The growth is exceptional, to be sure. But a price of about 53 times forward earnings already assumes years of quarters like these. Of course, a weak holiday season would hurt all three -- Shopify most of all. I would hold off on Shopify shares at this price. Before you buy stock in Shopify, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Shopify wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $420,109!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,303,689!* Now, it’s worth noting Stock Advisor’s total average return is 938% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of September 16, 2026. Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, MercadoLibre, and Shopify. The Motley Fool has a disclosure policy. The E-Commerce Stocks to Buy Before the Holiday Quarter was originally published by The Motley Fool

It has been about a month since the last earnings report for MercadoLibre (MELI). Shares have added about 8.8% in that time frame, outperforming the S&P 500. But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is MercadoLibre due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers. MercadoLibre reported second-quarter 2026 earnings of $9.19 per share, which beat the Zacks Consensus Estimate of $8.69 per share by 5.75% and declined 10.86% year over year from $10.31 per share in the year-ago quarter. Revenues rose 49.76% on a year-over-year basis (43% on a foreign-exchange-neutral basis) to $10.17 billion, surpassing the Zacks Consensus Estimate by 4.07%.Commerce and fintech revenues grew 50% and 49% year over year on a reported basis, respectively. Brazil delivered foreign-exchange-neutral GMV growth of 39% year over year, Mexico posted 26% amid tax reform headwinds, and Argentina delivered 38% against a challenging consumption environment. Advertising revenues rose 62% year over year on a foreign-exchange-neutral basis, with MELI surpassing a 10% share of Latin America's digital advertising market for the first time.MELI’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, with an average surprise of 107.32%. Brazil: Net revenues in the second quarter reached $5,530 million (54.39% of total revenues), up 59% year over year on a reported basis, aided by currency tailwinds, credit card portfolio expansion and robust advertising uptake. On a foreign exchange neutral basis, growth was 42%.Mexico: The market generated revenues of $2,337 million (22.98% of total revenues), increasing 55% year over year on a reported basis and 38% on a foreign exchange neutral basis. Growth continued to be tempered by the tax reform headwind flagged in the prior quarter, along with a softer macroeconomic environment.Argentina: Net revenues in the reported quarter were $1,839 million (18.09% of total revenues), reflecting an increase of 20% year over year on a reported basis, as currency movements acted as a headwind. On a foreign exchange neutral basis, growth was 48%.Other countries: These markets generated revenues of $463 million (4.55% of total revenues), representing growth of 63.03% on a year-over-year basis, with cross-border trade continuing to contribute meaningfully to assortment depth. Gross Merchandise Volume of $21.9 billion increased 44% year over year and 36% on a foreign exchange neutral basis.The number of successful items sold was 795 million, up 44.55% year over year. Unique buyer growth was 25.35% year over year, with the number reaching 89 million. Items sold per unique active buyer reached 8.9, growing 14% year over year, led by Brazil, where the metric grew 19% year over year.Fintech Monthly Active Users rose 29.41% year over year to 88 million. Assets Under Management grew 68% year over year to $23 billion, with AUM per user reaching $264, up 29% year over year. The credit portfolio expanded 75% year over year to $16.4 billion, with credit exposure per user in the consumer and credit card portfolios reaching $231 and $446, growing 34% and 20% year over year, respectively.Total Payment Volume rose 56% year over year and 56% on a foreign exchange neutral basis to $101 billion. Acquiring Total Payment Volume grew 44% year over year to $64.1 billion, with foreign exchange neutral growth of 42%.Total payment transactions increased 43.65% year over year to 5,181 million.The credit portfolio reached $16.4 billion, growing 75% year over year. The credit card issued 2.6 million new cards in the quarter, up from 1.6 million cards a year ago. Asset quality remained solid, with the 15 to 90 day non-performing loan ratio at 7% for the total portfolio and 4.6% for the credit card specifically, both close to historic lows. In the second quarter, gross margin contracted approximately 468 basis points on a year-over-year basis to 40.9%, primarily reflecting pricing and supply initiatives in Brazil, higher shipping costs and increased device costs in Acquiring, particularly in Mexico.Total operating expenses were $3,476 million, increasing 53.2% year over year. Income from operations declined 17% year over year to $683 million, with the operating margin contracting 550 basis points to 6.7%, as MELI continued to prioritize investment in free shipping, the credit card, first-party inventory, cross-border trade and user acquisition in Acquiring.Product development expenses scaled favorably from 8.4% of revenues in the second quarter of 2025 to 7.2% in the reported quarter, reflecting productivity gains from AI adoption across the engineering organization. AI investment grew roughly $80 million year over year in the quarter, split between cost of goods sold and product development.Net Interest Margin After Losses declined to 20.7% from 23% in the second quarter of 2025, driven primarily by a shift in mix toward the lower-spread credit card, which rose from 43% to 47% of the total portfolio. Credit card NIMAL compressed from breakeven in the year-ago quarter to negative 2.5%, reflecting the step-up in issuance rather than any deterioration in asset quality. As of June 30, 2026, cash and cash equivalents were $3,649 million, down slightly from $3.68 billion as of March 31, 2026.Short-term investments were $2,081 million as of June 30, 2026, compared to $1.97 billion as of March 31, 2026, an increase of 5.63%. Net debt increased to $6,425 million at the end of the quarter from $5.75 billion as of March 31, 2026, reflecting continued funding of Mercado Pago's credit operations, including $2.1 billion deployed into loan book growth during the quarter, partially offset by $560 million in fintech funding.Total loans receivable, net of allowances, stood at $11,996 million compared to $10.74 billion as of March 31, 2026, an increase of 11.72%. Adjusted free cash flow was $214 million, improving from negative $56 million in the first quarter of 2026, even after absorbing $441 million of capital expenditure, consistent with the seasonal normalization of cash generation following the first quarter's seasonal weakness. In the past month, investors have witnessed a downward trend in estimates revision. Currently, MercadoLibre has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a score of C on the value side, putting it in the middle 20% for value investors. Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, MercadoLibre has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report MercadoLibre, Inc. (MELI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Tyler Crowe, Travis Hoium, and Jon Quast discuss: MercadoLibre's rapid revenue growth and contracting margins. Has Unity Software finally turned the corner? The changing strategy for Celsius Holdings. Applovin's revenue continues to decelerate. To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » A full transcript is below. Before you buy stock in MercadoLibre, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and MercadoLibre wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $432,189!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,330,956!* Now, it’s worth noting Stock Advisor’s total average return is 967% — a market-crushing outperformance compared to 212% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 21, 2026. This podcast was recorded on Aug. 6, 2026. Tyler Crowe: Big earnings moves today on Motley Fool Hidden Gems Investing. Welcome to Motley Fool Hidden Gems Investing. I'm your host, Tyler Crowe. Today, I'm joined by longtime Fool contributors, Travis Hoium and Jon Quast. Travis is doing the full gamut this week with hosting and analyst duties. Travis Hoium: A lot of Travis time. Tyler Crowe: Burning the candle on both ends this week. I think today might be the busiest day when it comes to earnings out there. I think it's something like 530 companies. Obviously, we can't get to all of them. What we did before the show was look at No. 1, companies that are moving or their stocks are moving big time after earnings releases, and also, we want to pick companies that are either Motley Fool favorites of our members, or some of our analysts, and some of our personal favorites as well. We're going to start today with MercadoLibre. Shares are down about 7% after the company reported earnings. Across the board, they beat expectations, but one of the things that was noticeable was that earnings have declined for a couple of quarters. Jon Quast: Well, let's start with the top line there, Tyler. This is its fastest growth in the last four years. That's really saying something because this is a company that has averaged 50% quarterly growth over the last 10 years. Growth is so important when it comes to the stocks that we're investing in. It's not the only factor, but it is a very crucial factor when it comes to market-beating investments. Mercado Libre, as you look at what it has done over the long-term, this has to be near the top of investors' minds when it comes to creating a list of long-term compounders. Travis Hoium: That growth rate was 50% for this quarter, just to be clear. I think this is just the place that the market is in today. This was a phenomenal quarter from a growth perspective, but the downside is margins are down, and this is an explicit trade-off that management is making, saying, you know what? We're going to give people more perks. We're going to give sellers more perks to try to drive more revenue to the business. In theory, you're playing something like an Amazon game where once people get used to both shopping on your platform and also building a business on your platform from a seller side, that should be a phenomenal place to be. But they're giving up that profitability short-term. That's what investors are saying, there's a yin and a yang here going, revenue growth is great, but I'm not seeing the profitability. How much do I really want to pay for this stock? I think that's the reaction today, and it's not just MercadoLibre. This is happening across the market. You look at a company like Duolingo, also down big today, same trade-off that they're making, we're going for user growth. We're not going for profitability today, and shares are selling off. This is the challenge when you get to a relatively highly valued market is when you're starting to make those tradeoffs, you never know which one the market wants to see. Jon Quast: Well, Travis, if I could jump in there on that trade-off, you look at the lower threshold for free shipping that it chose to do in Brazil a while back. That is actually working when it comes to the Amazon game that you referenced. User growth is up over 20% when you look at that. Then also, I think really key, the ratio of daily users to monthly users is at its highest level ever. This is becoming more of a daily habit for MercadoLibre users in its key markets, and then also items per buyer in Brazil are up 19%. I think that is a really crucial data point because this is basically saying that MercadoLibre is becoming more of a go-to platform on a daily basis for more things. I think that's a habit-forming trend, and I think that it's directly a result of that free shipping decision. Travis Hoium: This is where you want to know what investor you are. If you are a Foolish investor with a capital F, you're looking at this, going, we want this company to be bigger long-term. This is a great discount if I have been looking at this stock, because you know what? That profitability, that's not the short-term answer that I want as an investor. I want that long-term growth. But if you're trying to guess what's going to happen quarter to quarter, you maybe got this wrong. That's where I think, stepping back and going, what do I really want from this company, and knowing that going into earnings is really important. Tyler Crowe: We brought up the Amazon conversation because comparisons are pretty easy. You look at this. It's a digital fintech, e-commerce platform as well. But one of the things I do think about because we're talking about profitability margins and things like that, and the comparison is always Amazon, I think it's fair to say that Amazon had a very long leash with the market in its growth phase, willing to overlook profitability for a very long time because it was like, it's growing. It's doing all these new things. It seems to be worth it. It was generating enough cash that could make those investments in other things. Then it found AWS, and that's when profitability really took off here. With MercadoLibre, we're at a point where it's making similar moves, where it's like, we're going to forgo profitability now, credit card perks, lowering the threshold for order value for free shipping, and things like that. It is running the playbook. One thing I'm curious, though, is, to have that much growth and then still see earnings declining, that's a pretty aggressive choice in that cost versus revenue growth paradigm. I do wonder is revenue growth almost too prioritize here? 50% growth is amazing. It's incredibly hard to sustain, and you're doing it in a declining earnings environment. I can't help but think that management is too focused on revenue growth here and maybe not growth with economic scale. Jon Quast: Well, Tyler, I push back on the wording here that you chose with foregoing profitability because I'd be inclined to agree with you here, but MercadoLibre is not in the red. In fact, it invested 2 billion in its credit portfolio. This is one area the business that the market is a little bit concerned about the riskiness of the portfolio, investing $2 billion into that credit portfolio and still free cash flow positive. I think that's a huge thing. It had nearly a 7% margin for income from operations. These are the free cash flow and the income from operations. These are two really important profitability metrics and still solidly in the black. Think about this. This is 50% growth, and this isn't tech, for the most part, this is actually people buying things on the platform. It is tech, but not in the same way that we're accustomed to with the strong growth rates in the market right now. This is a retail play, and that is so interesting to think about in the reverse. You pull back on some of this growth investment right now. What's the alternative? Better profitability to what end? Are we going to pay a dividend? Are we going to buy back stock? I'm not really sure where the money is used for the benefit of shareholders if we pull back on the growth. I think that it needs to keep the pedal to the metal. Tyler Crowe: Always a fascinating conversation, I'm sure that we're going to be having this next quarter when MercadoLibre reports earnings because this is always that push and pull that always happens. Coming up after the break, we're going to hit a stock that is doing much better, at least in the market reaction today, and it's Unity Software. ADVERTISEMENT: You just found out that your sales team is at risk of missing quota. Don't panic. Just ask Rippling AI. Since it's built on your real-time people and business data, Rippling AI can pull metrics from Rippling and Salesforce into a meeting-ready dashboard showing quota attainment, headcount plan, and monthly revenue to quota by region. In seconds, you'll see exactly what's behind your quota risk and fix it before it's missed. Question answered, action taken, crisis averted. When you have critical business questions that need answers, don't just file a ticket and wait weeks for an outdated report. Describe what you need and have Rippling AI build it instantly from your live people and business data, whether it's a dashboard with detailed charts or automated workflows with the right triggers, conditions, and approvals. 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If you're a long-term shareholder, this still has not worked out particularly well. It almost seems to me like they're just figuring out this business and, in particular, figuring out how to monetize the software that they've been making and the ad platform that they've been trying to build. Just as a point, where the mobile business in general is getting old and dodgy, it reminds me a little bit of the console business a decade ago. Consoles have just been in a steady decline over that period of time. I don't know. Are we still going to be excited about apps on an iPhone app store in 10 years from now, and that's really where Unity really dominates things. It's just so interesting to see that they have started to increase their revenue. The market is starting to react a little bit positively because they've gotten their stuff together. But it still trades for almost 10 times sales, and I just can't get my head around why I should be excited about this company long term. Jon Quast: Tyler, you pointed out four straight quarters of accelerating revenue growth. I just have to ask, is that good? Because MercadoLibre has four straight quarters of revenue growth, too. Really [inaudible] here today. Sorry, I just had to get that point in. But it is interesting to Travis' point, this is actually growing now with ads. There are two parts of the business, we have the create side of things, and I feel like what Unity is more known for. That game creation, that video creation software, and that's really plateaued here, only 5% growth in this quarter, all of this revenue growth coming from the Ads network, 63% growth in the revenue segment, and expecting an accelerating growth rate yet again in the upcoming quarter of roughly 70% growth. This is very interesting, a business shift is taking place. If you recall a few years ago when Unity really had problems, it was because the ads were suffering, and now it does seem like it's getting its act together there in that segment, but the create segment, is not really showing anything. Tyler Crowe: Management did put out a plan last quarter. They're going to shed some of those mobile publishing divisions, things like that. Some of its ad networks. They're like, This isn't working for us, there have been some deliberate changes. It does appear to be working. Guidance for the next quarter is actually even faster revenue growth than we saw this most recent quarter. Things are working, but to your point, Travis, this is a company that's been wandering the woods. They're starting to figure some stuff out, but there are also some macro challenges related to what the environment is for its users, the mobile game space. How can this company grapple with these challenges going forward and perhaps get back to not being down 80% for its long-term shareholders? Travis Hoium: I don't know that I have a great answer for this. I think this has been the frustrating thing watching Unity as a business. This is a piece of software that I started to learn a little bit, a handful of years ago when I was in the world of VR. This was the go-to thing. You had to use Unity. It was the best thing to use. That paradigm obviously didn't work out the way I think they hoped. But a lot of the changes that they made to the business and that are showing up now in the income statement are not really businesses that I want to be in as an investor. It's those slimy ads that you see when you're playing a game, or you maybe see your kids see. I know my son will come in and go, "Dad, can I download this game?" I'm like, This looks like a terrible game. It's just built to be able to serve you even more ads to try to get you to download more things. Guess what? Most of those things are coming from Unity. They're touting these developments, they're not the things that I want to invest in. The problem is the core problem for them is that they had a phenomenal platform game engine to be able to create these games, but they had no great way to monetize it. When you don't know how to make money on the thing that you do really well, that's just a really challenging place to be in as a business. Jon Quast: I wonder if that great platform that it did have is really the edge that it is being whittled away at by all the AI tooling that's out there. I know that it's implementing its own AI into its product, but at the same time, you just wonder, and then it does become an ads business, and to your point, is that where you want to be as an investor? You have to make that decision. Tyler, I think one of the challenging things here going forward is stock-based compensation, one thing that's near and dear to your heart, I know, but management here, clinking their champagne glasses, saying it was down at its lowest level at 14% of revenue for the quarter. That's still really high. If you look over the last five years, revenue trailing 12 months is up 89%, but revenue per share is only up 24%. A big part of that is the ongoing dilution. It's going to have to continue to deliver some incredible growth if it's going to continue to provide stock-based compensation at these levels. Right now, it is growing really well with the ads, but is that sustainable? We'll find out. Tyler Crowe: While we're on the topic of mobile gaming, coming up in the next segment, we're going to talk about AppLovin and Celsius Holdings, who are maybe not having the best day today. ADVERTISEMENT: This episode is brought to you by Accenture. 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Tyler Crowe: Two groups of shareholders that probably aren't having as good a time today as Unity Technologies or Celsius Holdings, and AppLovin. Two stocks are both down double digits today, and, while both of them posted relatively decent revenue growth, some of them didn't exactly meet expectations. I gave you assignments for each of them. Travis, you did Celsius, Jon, you did AppLovin. Travis, what did you see in the Celsius report? Travis Hoium: Celsius isn't in such an interesting spot right now because the results were fine, but that's not really what the market was looking for. Revenue was up 11% in the quarter, but you dig underneath that, 21% growth at Alani Nu. That's the company that they bought. I completed that acquisition about a year ago. Now, you're lapping those easier comps. Might remember a couple of quarters ago, you'd see, oh my gosh, 100% growth. That was actually because of that Alani Nu acquisition, and then the Celsius brand is actually down 12% in this quarter. This is showing sure, that the portfolio is doing OK. But the entire space, this energy space, maybe it's like alternatives to traditional soda drinks, is just getting really, really competitive. I know that a handful of years ago, Jon talked about Celsius before we even had it here in Minnesota. Once we started getting it, now suddenly Celsius is everywhere. Well, now I go down those same aisles, and there are a dozen other brands. It's not just Celsius. This isn't a world where Monster and Red Bull dominated everything for what? Two decades. Now, you're getting it's easier and easier to bring up these brands, these co-packers that Celsius was actually grown up on. Remember, they did not own their own manufacturing facilities. They had other companies manufacture their products, and they were just a brand in a sales business. Well, everybody else can just copy that. That's something that we've seen more and more in this space. That's a real challenge. Now, you're going from, is it a growth stock, or is it a value stock, 16 times forward earnings? It's maybe getting close to that value territory, but I don't know, investors just don't seem to know what to think about the company's future. Tyler Crowe: Anecdotally speaking. I live overseas. I've mentioned a couple of times on the show, and when I go to the aisle, I see Red Bull, but other than that, there is no other American comparable. At the same time, there are still 20 different brands. Again, this is an intensely competitive industry where the barriers to entry aren't exactly the hardest in the world. As I mentioned too, Jon, I assigned you to AppLovin. I would say the growth numbers were similar to Unity, but the market did not react nearly as well. Jon Quast: Yes, and it's interesting that you bring up Unity, because at this point, they are more directly competitive than maybe they've been in the past because Unity is growing with the ad network. Really, that's what AppLovin is, same business here. Mobile gaming is the main focus, and that's where they display their ads. That's where they generate their revenue. Up 53% this quarter. That's really good growth, but it is behind what Unity posted. That is worth noting. Also, revenue growth is accelerating, to be fair. It had over 70% growth this time last year. It's also guiding for 47% growth in the upcoming third quarter, so 53% to 47%. It's still really great growth. One of the things I want to point out here is that existing customers' their spend has gone up 28% since the end of last year. That's actually a really meaningful data point, I think, is that the customers who are using them are now spending more than they were to me, that signals that they're getting a return here and are willing to increase that spend. I think that is good. But to be fair, the growth rate is slowing down, so I get it. Trading at 20 times forward earnings, growing at over 40%, profits are growing faster than revenue. You're looking at a 66% net profit margin. I think this is getting a little bit interesting here. Travis Hoium: I also thought it was hilarious that it came up on the conference call that they should change their name. This is one of the most strangely named companies in the market. It does sound like from the movie McLovin I can't get that out of my head every time I hear the company. Sometimes name changes are positive, and interestingly, it's actually being brought up by investors. Jon Quast: The analysts there are mentioning maybe we should change it to MAX, and that is the name of its ad product. To point out, I think another thing investors are responding to negatively today is that it updates its MAX models, its AI models, from time to time. Each time it has done that in the past, it has seen a jump in its revenue growth rate, and this time, releasing the new model still means great growth, but not seeing that uplift right away. I think that's a little bit concerning for investors, especially in light of Unity's results, it's like man, did they not make the right changes that they need to make? I think it just puts a question mark on it. CEO is saying, "We're not changing from AppLovin. We are AppLovin." Tyler Crowe: Stick to your guns. But hey, look, I think the biggest takeaway that we have from this quarter, it wasn't just today's earnings. We've seen this across pretty much the entire earnings season so far. The market seems very demanding right now. We have companies that are posting incredible growth and still getting double-digit declines. Whether that continues, who knows? We seem to be in a very volatile individual stock time. But you know what? That's just how it is with long-term investing. Try to stay the course and plow through when we have all these volatile earnings times, even when the business is doing pretty good. Always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provide for informational purposes only. To see our full advertising disclosure, please check out our show notes. Thanks to producer Dan Boyd and the rest of The Motley team, were Jon, Travis, and myself. Thanks for listening, and we'll chat again soon. Jon Quast has positions in Celsius Holdings, Duolingo, and MercadoLibre. Travis Hoium has positions in Duolingo, MercadoLibre, and Unity Software. Tyler Crowe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Duolingo, MercadoLibre, Monster Beverage, Salesforce, and Unity Software. The Motley Fool recommends Celsius Holdings. The Motley Fool has a disclosure policy. The Wild Swings of Earnings Season Continue was originally published by The Motley Fool

Image source: The Motley Fool. Wednesday, Aug. 5, 2026, at 5 p.m. ET Senior Director of Investor Relations - Richard Cathcart Chief Executive Officer - Ariel Szarfsztejn Chief Financial Officer - Martin de los Santos President of Fintech - Osvaldo Gimenez Richard Cathcart: Hello, everyone. Good evening, and thank you for joining MercadoLibre's conference call for the quarter ended June 30, 2026. I'm Richard Cathcart, Senior Director of Investor Relations. And I'm joined this evening by Ariel Szarfsztejn, our CEO; Martin de los Santos, our CFO; and Osvaldo Gimenez, President of Fintech. Tonight's format will be slightly different. I'll start by handing over to Martin for a few high-level opening remarks, and then we'll head straight into the Q&A. Before we do that, I would like to remind you that management may make or refer to forward-looking statements and non-GAAP measures. So please refer to the disclaimer on screen, which is also available in our earnings materials on our Investor Relations website. Please note that this call is being recorded, and a replay will be made available on our Investor Relations website as well. With that, I'll pass the call over to Martin de los Santos, our CFO. Martin de Los Santos: Good afternoon, and thank you for joining us. MercadoLibre delivered another strong quarter in Q2 2026. Net revenue surpassed $10 billion for the first time, growing 50% year-on-year. Income from operations was $683 million, with a margin of 6.7%, broadly in line with last quarter and the result of a deliberate choice to continue prioritizing investment in long-term engagement, growth and scale over near-term profitability. Before turning to a few details on this quarter's results, I want to spend a few minutes on what we've learned 1 year on from the decision we took last year to lower the free shipping threshold in Brazil. In Brazil, items per buyer grew 19% year-on-year in Q2 despite the fact that we've been adding large numbers of new buyers, who typically start out purchasing far less than an average user. That's a sign of change behavior, not just a bigger audience. It shows existing users engaging more deeply with us, not simply more people showing up. Conversion in Brazil is up 1.1 percentage points year-on-year. And this wasn't an incremental gain. It was a step change, and it has proven sustainable for a full year. The ratio of daily to monthly active users has inflected too, with daily actives growing faster every single quarter since the free shipping threshold was lowered and new buyer cohorts who joined after the change are a year on, purchasing more items across more categories with higher retention than the cohorts that came before them. This is not an isolated case. Across our business, we see the same pattern. Users who engage more deeply with us become dramatically more valuable. The clearest evidence is what we call ecosystemic users, those who use both our Marketplace and Mercado Pago, not just one or the other. These users generate meaningfully more GMV, purchase across a much wider range of categories and engage far more deeply with our Fintech products. Most importantly, they are dramatically more profitable. Contribution profit per ecosystemic user is multiples of the sum of a Marketplace-only user and a Fintech-only user. That is why we keep investing the way we do. We are changing behavior and building habits we believe will drive this business' profitability for years to come. With that strategic context in mind, I now would like to turn to 3 topics we believe are top of mind for investors and where we think it is worth spending a few additional minutes. First, our credit business. Our credit portfolio reached $16.4 billion in Q2, growing 75% year-on-year. We have achieved this growth alongside solid asset quality across the portfolio, which reflects our disciplined approach to risk management as we scale and the shift towards lower-risk users in recent years. Our 15- to 90-day NPL in Q2 was 7.0% for the total portfolio and 4.6% for the credit card specifically, both close to historical lows. NIMAL improved from 18% in Q1 2026 to 21% in Q2 2026, with gains in our 3 largest markets. This includes Brazil, where spreads in our consumer portfolio recovered as provisions normalized. NPLs in Brazil were broadly stable year-on-year. These results are not coincidental. They reflect the deliberate move up market in our consumer and merchant credit portfolios and the scaling of our credit card, which we only offer to lower-risk users. This is highly synergistic with our Marketplace, where we have a large base of high-quality engaged users to draw from as we continue to grow the book. Second, a quick word on margins. This quarter's EBIT margin of 6.7% was down 550 basis points year-on-year as we continue to prioritize long-term strategic investments over short-term profitability. These investments are consistent with the areas of focus we have described in previous quarters. On a sequential basis, our margin was broadly stable. This is a function of stronger profitability in credit, particularly in the Brazil consumer portfolio, where provisions normalized after a spike in Q1. This was offset by margin compression in acquiring, primarily in Mexico and incremental investments in Commerce. Finally, on cash flow. In Q2, we continue to see the underlying cash generation strength of the business. We generated $214 million in adjusted free cash flow for the quarter, even after absorbing higher capital expenditure of $441 million and investing $2.1 billion into the growth of our credit book. Our credit book continues to be very profitable, and it also plays a key role in engagement across the ecosystem. It's this overall strength, strong cash generation, robust profitability and a healthy balance sheet that gives us the confidence to keep investing at the pace we are. With that, we'll open it up for your questions. Operator: The first question comes from Irma Sgarz with Goldman Sachs. Irma Sgarz: Thanks also for all the detail in the shareholder letter on the engagement metrics across the ecosystem, very interesting detail that you provided there. However, I'll just be obliged to ask you about margin for one second. There was a bit more quarter-over-quarter gross margin compression than we had perhaps expected. So thank you for also laying out the sources that drove this in the shareholder letter. Now when I think through each of those, the first one, I think, was well mapped. The second and the third one felt a little bit more incrementally new. So my question would be somewhat twofold. Firstly, how much scope do you see to adjust pricing to pass these cost pressures through to consumers? I think there's some in acquiring, there's some related to memory costs, but you also do mention higher shipping costs that weren't fully offset by revenue. So I was wondering if that's gas prices or other pressures in the network and whether you saw scope to pass that through to customers? And then secondly, whether those 2 incremental headwinds, either in net nature or magnitude were something that you were already factoring in when you last spoke to us in early May and you had sort of suggested that you were expecting a similar margin level consistent with 1Q. Martin de Los Santos: Irma, it's Martin here. Thank you for your question. I think the best way to answer your question is to look at sequential margins. As you can see, it's pretty much in line with Q1, but there are 2 things moving in opposite directions there. The first one was an improvement in margins in the credit business, as we discussed on the letter. Last quarter, there was a spike on provisions. It was a temporary spike. We explained that last quarter, and now it has come back to normal spreads with a very profitable business. So that contributed to margins. That was offset, and I will go in order of importance. It was offset by some investments that we have made in Brazil in Commerce. We discussed this in the previous quarterly call, where we lowered certain take rates to -- in certain verticals, we lowered take rates, and we offered discounts to consumers buying and paying with PIX. That was a strategic initiative that we did in Brazil. We have done that in the past, and it has proven to have positive results, but it generated some margin compression. In addition to that, there was some margin compression on the acquiring business. Two things there. One is the fact that the devices have an increase in cost of devices because of higher cost of chips in the industry. So that's something that's there to stay, and we will monitor that situation as well. And then there was a one-off charge because we -- in Mexico, we restocked a significant volume in terms of devices. And that's because we are growing very fast in Mexico. We see a big opportunity to continue growing. And as you know, as we sell those devices at a loss, we need to book the losses upfront. So when we increase the stock, there's a one-off compression on margin. So that will compensate throughout the rest of the year. And the last point I think you're addressing is the cost of -- the energy cost. We've seen some cost increases in terms of logistics because of energy costs. Some of them we pass on to our users and some we elected to absorb ourselves. So there is some margin compression. It's not significant, but there's a slight margin compression there as well. Osvaldo Giménez: And building on Martin's comment regarding POS devices and us not increasing the prices, that was driven by 2 things. On the one hand, the payback periods continue to be in line with what we expected, and therefore, there was no need to do that. And also our competitors did not raise their prices. So it didn't make sense given how fast we're growing and how fast we're gaining market share to raise our prices. Operator: The next question comes from Andrew Ruben with Morgan Stanley. Andrew Ruben: I'm interested in some dynamics around Brazil seller growth. You mentioned the acceleration to 29%. I don't think you've mentioned that one before, so just to level set what that was growing before the select discounts. And more fundamentally, is there a profit drag from these new sellers? Maybe they were more likely to take up your promotions or maybe something structural about the new seller mix? And really, what I'm trying to understand here, is there an element of maturation on your platform where a new seller starts to sell more over time, the seller economics change over time, the way we think about buyer economics? Again, I think that was a new call out the growth. So I'd like to understand how that plays in. Ariel Szarfsztejn: Andrew, Ariel here. Great to hear you. So yes, I think what we did in Brazil with take rates goes back to the basics of e-commerce, right? So when consumers are deciding where to shop, they are basically looking for the broadest selection at the best possible price with the fastest shipping and the best financing. And clearly, getting the right selection is a key part of our strategy. That's why we've been doing 1P. That's why we've been doing CBT. And that's why this quarter, as we did back in 2024 and 2025, we decided to lower seller take rates. We've already proven that lever, and we've consistently seen that every time we lower take rates, we get an acceleration in effective or successful sellers in our platform. Clearly, given everything that we've been improving in terms of value proposition in Brazil, the trend of growth in successful sellers has accelerated over the last year and particularly over the last quarter with the initiative that we just mentioned. In terms of unit economics and profitability coming from the acceleration of sellers, I would say there's nothing big to call out. So while there are some programs in order to get sellers to scale and so on, there's nothing really affecting our margins on that one. Operator: The next question comes from Bob Ford with Bank of America. Robert Ford: Ariel, in the letter to shareholders and in the comments, you touched on some very compelling engagement and ecosystemic behaviors. What's your early read on your new gamification and points program in Brazil? And could you also touch on some of the behavioral implications from your agentic shopping pilot in terms of search conversion, frequency, ad click-through rates and your ability to promote more ecosystemic behavior from the engagement that you get agentically? Ariel Szarfsztejn: Bob, so I think it's too early to comment on the gamification initiatives and points. We've only rolled them out as an A/B for some time. So it's early to actually make a point. I would say the impact so far is positive. We see increased engagement coming from those users who do engage with the proposal, but nothing to share. On the bigger picture, I would say, agentic, there are 2 big things we're doing in Commerce with agentic. On the one hand is improving our search through AI, and that's proving to have positive results, both in terms of conversion rates, in the Marketplace, items sold and so on, but also on our advertising platform, the more AI we deploy to search, the better context we provide, the better ads we are able to pick, choose and display to our consumers and the more CTR that we get from those ads, so higher revenue. On the second initiative, which is our shopping assistant, we are just A/B testing that one. So nothing to really share in terms of engagement and results, but we are very excited with the early results we are seeing on the shopping assistant, which is on live for some consumers in the Marketplace. Taking a step back and picking up your point on engagement, I would say that we look at engagement from -- with a broader view. So the bigger and the more engaging our Marketplace become, the better chances we have of building the largest digital bank in Latin America. So the bigger the Marketplace and the better the Marketplace, the better our Mercado Pago application works. And conversely, the better Mercado Pago becomes, the more appealing our Marketplace becomes to our users, too, basically because users find the best financing and payments alternative right at the place where they are already shopping. And basically, we see very few companies anywhere in the world who operate at this intersection of Commerce and Fintech at the scale that we do it in Latin America. And that's really creating a unique flywheel that is very difficult to replicate for any other player across the region. So we are very satisfied, and that's why we've been so precise on highlighting engagement this quarter. We think this is a unique competitive advantage that we have. And basically, the results that every single one of the investments that we have been making both across Commerce and Fintech is playing on favor of making that flywheel turn faster and faster. Operator: The next question comes from Marcelo Santos with JPMorgan. Marcelo Santos: Could you discuss a bit how the ramp-up of credit card in Argentina is going? Are you happy with the early results? Is it progressing well? Just anything would be great. Osvaldo Giménez: Marcelo, we are very excited with how the credit card in Argentina is going. As we know, we only started issuing cards 3 quarters ago, roughly around September last year. And we have seen a lot of demand, and we are seeing significant adoption and use and it's significant, for example, how much people are using the card to pay on the MercadoLibre platform. It's contributing to the amount of payments with Mercado Pago means of payments within the platform. Still early to talk about payback periods because it's only 9 months in the first cohort. However, we are glad to see that the payments are in line to what we expected when we started issuing the cards. So there have been no surprises there. And even in an environment where some other financial institutions are concerned about the credit cycle in Argentina, we are very happy with the issues we have had in Argentina. We think that given our penetration in the market where the majority of the country use Mercado Pago every day or every month and every day, we have been able to cherrypick those users, which we deem to be less risky. So in general, I would say we are very happy and that this strengthens both the Marketplace and Mercado Pago and the presence that Mercado Pago has in Argentina. Operator: The next question comes from Rodrigo Gastim with Itaú BBA. Rodrigo Gastim: Just a quick question here on the credit cycle in Brazil. Investors are quite concerned about the potential deterioration during the second half of the year and 2027. So just trying to understand here 2 parts of my question. So number one, if you understand that so far, so good. In other words, when you look at most of the products at the NPL of these products, so far, no important deterioration or signs of deterioration. That's the first part. And the second one is, what can you guys proactively do to protect yourselves from an eventual deterioration in the credit cycle, something that you cannot control. So what you were doing here? That would be my question. Osvaldo Giménez: Rodrigo, yes, I confirm that so far, we are not seeing any deceleration or deterioration of credit book in Brazil. If you look at NPLs, they are roughly in line to what they were a year ago, and they are even -- NPLs are even better than they were last quarter. So they are, I would say, nearly bottoms of NPLs that we have had. So we don't see any deterioration. I think that we have been very, I would say, conservative in terms of whom we issue credits to. And with regards to what we expect for the future, I would say that we have been through a downgrade cycle in the past in Brazil, and we have been through -- we are right now about adverse macro conditions in Argentina. And in both cases, we have been cautious. And when we thought that we had to curtail the number of available lines or the lines of credit, we have done so. At this point, we are confident that NIMALs are working better than were in the past. Ariel Szarfsztejn: Just to add on Osi's comments, I think taking a step back, what you see in terms of credit and deterioration, it's actually the opposite. I mean if you look at across the region, across products, we are almost at our all-time low NPLs for every single product and region. And I think that's a testament to, a, our risk management policies and how we are able and we are prioritizing risk at the moment of issuance; and b, the power of our technology, right? We are a tech company, and we've deployed lots of technology in underwriting and the combination of the 2 has been vital for us to be successful. Operator: The next question comes from Pedro Pinto with Bradesco BBI. Pedro Pinto: My question is about now that we completed 1 year since the implementation of the lower free shipping threshold in Brazil, which has been pretty effective in GMV acceleration in Brazil. Very clearly, mentioned in the letter. Now the comps get tougher, would you guys plan additional investments to continue consolidating the market? What would be the next frontier for Brazil commerce at this point? I don't know if it's quick commerce, social commerce, pharmacy category. What should we expect as a priority strategy-wise for Brazil commerce from this point onwards for momentum to persist? Martin de Los Santos: Pedro, it's Martin here. We are -- as we described in the letter, I think the results of the lowering the free shipping threshold in Brazil after 1 year are amazing. I mean we are seeing tremendous growth. If you look at items growing at 56%, they were growing 26% or half of that rate a year ago. Engagement with the platform is incredible in terms of -- the number that among most amazing is conversion. I mean we have been growing significantly in terms of traffic. But on top of that, we grew our conversion by 1.1 points year-on-year. At the scale of MercadoLibre, that's enormous in terms of volume. But also vibrancy and frequency on our platform, daily active users growing much faster than monthly active users. We're getting more users are also buying on more verticals or becoming more engaged in different verticals within the ecosystem, buying more times with more frequency. In Brazil, frequency of purchase increased by 20% number of transactions or number of items per user. So all the metrics that we wanted to influence were there. Of course, like you said, comps become tougher, but we don't make investment decisions based on comps, obviously. We make them based on the merits of the areas where we're investing. We're making sure that those are strategic to our marketplace. They contribute to engagement and to growth, and they contribute to strengthening our market position, our leadership position to capture this long-term opportunity that we have in front of us. Ariel Szarfsztejn: Yes. So just complementing Martin here. So a, I would say that we've not seen a step change from one day to the other day. We lowered our free shipping threshold and then steady metrics in terms of engagement conversion and so on. The different effects that we've seen across our Marketplace has been consistently improving quarter after quarter. And with that, you can see the numbers from Q2, right? The results from this quarter already compare with most of the -- a lot of the changes that we've implemented last year, and we're still growing very, very nicely. So picking up on Martin's point, we are not optimizing for growth. So it's not that we will be deploying one thing or the other in the future just for the sake of keeping growth high. We will just find whatever we think is needed in order to continue improving the value proposition for our consumers. Of course, there are things that we like and we might test and so on, but it's not that we are making a step change in investments or strategies just for the sake of compounding versus last year changes. Operator: The next question comes from Deepak Mathivanan with Cantor Fitzgerald. Deepak Mathivanan: Just wanted to follow up on EBIT margin. EBIT margin came in pretty much as you anticipated sequentially in 2Q. It does seem like some of the investments were offset by improvements in NIMAL on the consumer credit side. Can you comment about the sustainability of margins at these levels in the second half? Are you committed to making trade-off if potentially operating environment somewhat changes and becomes unfavorable? And then perhaps a related one on AI cost. You rolled out Claude to employees last quarter. Can you talk about the usage and how the spend is ramping? What are some of the ways you're seeing benefit in the early days? Martin de Los Santos: It's Martin here. I think if you look at margin sequentially, as I mentioned before, the main driver of margin improvement was the improvement that we saw on the portfolio of consumer credits in Brazil. And in addition to that, we've seen some scale -- very strong scale in terms of growth in Brazil that enabled us to dilute fixed cost. As you've probably seen over the past several years, we have been diluting OpEx very nicely. And in this particular quarter, we diluted OpEx by 2.5 points quarter-on-quarter. So that's also contributing to. And we elected to reinvest that margin into other areas of the business, as I explained before. And I think the philosophy continues to be the same. I mean we -- we'll have some areas of the business that are delivering very strong profits and are growing very fast. If you look at our credit portfolio growing at 75% year-on-year, our advertising business growing 70-plus percent year-on-year, the acquiring business as well, we are continuing to deliver scale because of the growth that we are delivering consistently. So we are electing to reinvest in areas of the business, as we discussed before, lowering the free shipping threshold, 1P, CBT and so on. So that philosophy will continue to be the same going forward. We invest in a very disciplined manner. We have engagement and growth targets for each initiative that we take on. And more important than that, we have a clear path to profitability to those initiatives and we measure against those, and we lever and we graduate the intensity of investments based on those results. So that's the first part of your question. Then you asked about AI. We are very excited about AI. I mean, obviously, we are investing more than a year ago. I think we invested about $80 million on AI this quarter compared to a year ago, but we are seeing very strong results. I mean if you look at it -- I mean, let me break it down in a couple of ways. Consumer-facing, we have several initiatives that are paying out very nicely. I mean we talked about the Mercado Pago AI agent, the Seller Assistant on MercadoLibre, those continue to scale very nicely. In this quarter, we disclosed in the letter, the ad orchestrator that is increasing the engagement with our users grew by 66% the usage of that tool. That is a way to get more sellers to our advertising platform and is helping us to grow the advertising business by 73% year-on-year. We -- I think Ari mentioned, the AI tools that we deploy on our search engine in the 5 largest countries. And it's important to mention that -- of course, that increased the price, the cost because we had to pay LLMs now. But when you put together the incremental volume that we sold plus the incremental conversion and advertising, it more than pays the cost of that initiative. So it's an initiative that has a positive return on that investment. So that's a good example of AI contributing to profits. Then on the productivity side, I think in the past, we talked about customer service. As an example, 4 years ago, we used to have 10,000 reps on customer service. Today, we have 7,000 reps, even though the business grew by 3x during that period of time. And that's because 90% of the interactions are done without a human participating on the issue. In product development, obviously, that's tremendous productivity gains. We have 20,000 developers that are using AI. A year ago, they were coding -- they were helped by AI. Today, human written code is the exception. All of the code, the majority of the code is done by AI. And you can see that also flowing through our P&L. Product development scale from 8.4% of revenues to 7.2% of revenues year-on-year, even though it has this incremental cost of AI within it. So we are very, very optimistic about it. We are seeing the results. We manage it with discipline. We are focusing on costs as well. Cost per token continues to come down, but we're seeing very positive results in terms of investments on AI and MercadoLibre. Operator: The next question comes from Danniela Eiger with XP. Danniela Eiger: I'd just like to hear a little bit more about how you're seeing your affiliates program, what you're doing to scale it, current gaps that you see? And if you can expect any heavier investments in this front going forward? Ariel Szarfsztejn: Dany, this is Ariel. So the affiliate channel is actually scaling very, very nicely and becoming more efficiently simultaneously. So we think it's actually working. The affiliate GMV share grew across every market in Q2, including Mexico, where we dialed down some of the couponing that we are deploying in the past. So buyer quality is also a very important metric that we look at when we are evaluating the program. Affiliate buyers show materially higher platform retention than non-affiliate buyers. So the channel is not only driving onetime purchases, it's also acquiring users who come back later to our platform and that's really exciting as well. So this is exactly what we wanted to achieve when we launched and accelerated the investments in affiliate back in Q2 2025. And year on, we can see that unit economics and sales and marketing as a percentage of sales are broadly flat. But simultaneously, we are making a lot of progress in the product, in the engagement, in the number of affiliates and so on. So we're happy. Economics are improving. Seller co-funding for affiliate is growing. So extremely excited and positive on the outlook for the different markets. Operator: The next question comes from Craig Maurer with FT Partners. Craig Maurer: I wanted to just ask quickly about Mexico. 2 points. In terms of direct contribution margin compressing for Mexico, roughly half of that was from acquiring. How much of that was the device cost pressure related to memory chip inflation that will eventually grow over versus deliberate customer acquisition cost investment? And second, in terms of GMV decelerating with the tax reform headwind, is that headwind fully in the run rate now in -- was it fully in the run rate in second quarter? That would be helpful to know as we think about modeling the back half of the year. Osvaldo Giménez: Craig, with regards to acquiring margin in Mexico, it was mostly related to both increasing the amount of devices we bought, increasing inventory as we sell the devices at a loss. Whenever we buy inventory, we need to book the loss up forward. And the rest was driven by, as you mentioned, the increase in the memory chips cost. So I'd say the majority of the compression in Mexico are related to those 2 issues and not to a decision to lower our cost, which we did not -- our prices, which we did not. Martin de Los Santos: Craig, so on Mexico commerce and demand dynamics, I would say, yes, the tax reform that we explained last quarter is definitely a headwind to our growth. And that, together with some headwinds coming from a weaker macroeconomic environment and the even lower consumption during the World Cup definitely pay some toll to our growth. But still, if you see our numbers, our growth rate was pretty robust. We continued gaining market share year-over-year, and we even gained more than our main competitor. And also when you compare our performance with traditional retailers, you can see how the structural growth opportunity in the country is playing to our favor, right? So the market is growing. We are a large slice and physical retail is clearly being challenged by e-commerce. Just to wrap up, I would say Mexico is perhaps the market where our ecosystem could play out the most in our favor in the long run because of the lack of access to financial services and Mercado Pago's positioning as the leading digital bank and the leading Fintech acquiring. I think we are driving digitalization in the country, and that's pushing the flywheel, which is strengthening both Fintech and e-commerce. So we remain optimistic with the market, although we do see near-term challenges, which were a bit deeper in June and July with the World Cup. There's nothing that is actually impacting the huge secular trend of growth and opportunity that we see in Mexico and more importantly, the long-term earnings power that we find in that market. Operator: The next question comes from Josh Beck with Raymond James. Josh Beck: I wanted to go back to the AI costs because I think you've shared a little bit more than we've generally heard on the earnings calls. So I think you said the cost of tokens was up $80 million year-over-year, but you're saving, I think, almost 1% maybe of revenues in terms of product development. So it certainly seems like if you just look at those 2 dimensions that it's already quite ROI positive. So I'm just kind of curious, like as we look forward, could this be a trend that continues and maybe provides kind of more ROI and benefit to the P&L.? So that's kind of one question on the AI costs. The other one is on the credit card NIMAL, the breakdown you gave on kind of credit card versus other was very helpful. I'm just curious, maybe if you were to double-click on the most mature credit card portfolios, maybe what they look like and how we should maybe kind of think about the evolution of the credit card NIMAL in the years ahead. Martin de Los Santos: Thank you for your question. Let me just clarify the product development scale that you're seeing that I mentioned before, I think it was 1 point year-on-year. Most of that doesn't come from AI, just to be clear, okay? We have been scaling product development for many years now, and that trend continues as we become more productive and more efficient in the way we manage our product development. What I tried to explain is that even though we include the majority of the AI cost within that line, that line continues to scale, just to be clear. Then when we look at the AI investment that we're making, we can see the productivity gains throughout our workforce. We can see certain initiatives where we can measure the actual return on investment. The example of that was customer service or the initiative on AI applied to search and there are initiatives where we're experimenting. But we are very optimistic. We think that given the way we manage technology, the data that we have and the position that we have as a technology company, we should be able to take this new technology and scale it and will help us significantly to scale our revenue generation, plus it will make us a lot more efficient in the way we manage our business. Ariel Szarfsztejn: So let me take one step back on AI to make just one complementary comment to Martin. So although we care about the bill and we proactively manage every single cost lever in order to make it more efficient, I think strategically, we think of AI as an opportunity and accelerator of our wide, bigger opportunity for our business and less as a cost line to optimize, right? So AI is accelerating the secular shift that we already are trying to capture. Discovery is becoming more personalized. Transactions are becoming more frictionless. Credit becomes more tailored to any given consumer. We can underwrite better and so on. And we are convinced that the 27 years of proprietary data that we have accumulated across commerce, payments, credit, logistics position ourselves in a good place in order to capture the opportunity that AI is bringing. So this is like a fuel that we are applying to an organization that is already wired into technology and into the idea of using every single lever -- technological lever out there in order to make the most. In parallel, I would say, to Martin's point, AI is definitely contributing to cost efficiency. 2026 is probably the first year in many, many years in which we are not growing our engineering team, and that's also because -- that's also coming from the fact that AI is driving developer productivity up consistently. Osvaldo Giménez: And Josh, going to your question on credit cards, you asked about our older portfolios and cohorts. And basically, what we continue to see mostly in Brazil, which is the one market where we started first, is that each cohort typically reaches NIMAL breakeven after 12 to 18 months. That has been pretty consistent and then the continued improving profitability. So what we are doing now as we accelerate issuance is basically invest more. That's why you see some compression on the NIMAL of the credit card portfolio between last year and this year. It was nearly breakeven a year ago and minus 2.5% now. But that is driven mostly by the fact that we were able to accelerate the speed of issuance. A year ago, we issued 1.6 million cards in the quarter. And this quarter, we issued 2.6 million cards in Brazil. And therefore, we are confident that we are investing and it's the payback we have certainty about the payback we will get. And beyond the payback in the card itself, what we are seeing is that whenever we issue cards, we see a lift in Net Promoter Scores from those users. They are more likely to be ecosystemic users and to have higher engagement and higher profitability in the platform. And also it's one of the key contributors to us becoming basically gaining principality with those users as a key indicator for becoming one of the largest digital banks in the region. So we are excited with how the credit card is evolving in Brazil. And on top of that, I would say that what we're seeing in Mexico is that paybacks are even better than in Brazil because the economics of the industry works better than in Brazil. And it's still early to tell about Argentina, but the initial impression is also very, very good as we were saying just a few minutes ago. Operator: The next question comes from Kaio Prato with UBS. Kaio Penso Da Prato: I have one question, please. It's more a follow-up on the credit side. I would like to double-click on the asset quality of your credit book, please. We saw definitely an improvement in provisioning levels this quarter with the cost of risk reducing Q-on-Q. We saw good trends on the short-term NPLs as well. But on the other side, as your duration is short, it's quite tricky to look only to the short-term NPL in our view. So actually, at the same time, the 90-day NPL had quite a meaningful deterioration this quarter. So my question is, how should we read that? If this improvement in cost of risk was much more seasonal and it should be higher sequentially? And how would you describe your group appetite towards the second half of the year, especially in Brazil as well? Osvaldo Giménez: One second, please. In general, Kaio, I would say our NIMALs are super healthy. NPLs are at the lowest point for 15 to 90 days. When it comes to 90 days, I would say that there are a few things to keep in mind. In general, this metric mixes all products. So you're not seeing one specific product. And so the signal is not so clear. And it moves basically up and down to some degree depending on how fast we are growing. When we originate the loan, the ratio improves automatically. And when we slow down, it deteriorates a little bit. And so part of what is happening is that there was a change at the pace we were issuing at the end of last year and some early years borrowers defaulted a little bit higher than we expected. But then there was a slowdown at the pace we were issuing that product because of that deterioration. And so you see a little bit of a jump in the over 90 days. But it's not something that I would be concerned about. Again, that is a very small number. And the other bucket, the 15 to 90 days, is significantly more relevant in terms of profitability. Martin de Los Santos: If I may complement also, keep in mind that some of the products that are growing very fast now are relatively short-term duration. And those products tend to have higher NPLs because remember, the good payers get out of the portfolio fairly quickly and the defaulters stay for 360 days. So there might be also some distortion because of that. But again, as Osvaldo mentioned, nothing to worry about. Our margins continue to be -- the health of the portfolio continues to be very profitable. So I wouldn't put a big issue -- make a big issue out of it. Operator: The next question comes from Neha Agarwala with HSBC. Neha Agarwala: Could we talk about a bit of impact from the lower policy rates expected in Brazil for your different business segments? What kind of impact can we expect from lower rates? Osvaldo Giménez: Neha, I would say that both on the acquiring and credit business, there is no significant impact by a little bit of a change in the rates in Brazil. Typically, the market, our competitors and ourselves adjust those rates depending on what's happening with the policy rates. There is marginal improvements in the credit you have already issued because you price them with a higher rate, but it's really, I would say, marginal. But once we get to the new standard, basically, we adjust prices. There is probably a little bit more of an impact on the Marketplace because typically, we don't adjust so frequently the parcelada sem juro prices on the Marketplace. So on the margin, that is an improvement to the take rate in the Marketplace. Martin de Los Santos: Right. The Marketplace, typically, when interest rates come down, we improve a little bit margins. And when they go up, we lose margins because we don't adjust every single time the rates change. Operator: The next question comes from Marvin Fong with BTIG. Marvin Fong: Great. I apologize if these were asked before jumping between calls here. But I appreciate all the great information you provided about ecosystemic users. I just would love some additional color without being too specific, but could you give us an idea of what percentage of your users in Brazil or perhaps across your entire marketplace are in ecosystemic users. Would just love to get an idea of how much future growth is possible there? And then second question, just on cross-border, could you just kind of update us on your strategy there to improve the profitability and cost efficiency of that product? I know you have the facility in China that you opened up. How much is that being utilized? And might you open additional facilities in low-cost regions? Martin de Los Santos: It's Martin here. Thanks for your question. Regarding ecosystemic users, we wanted to make sure that it's clear to the market, the fact that we have a 2-sided ecosystem generates this opportunity to bring users that are active on both platforms. And we wanted to give some color to the market regarding the importance of that, right? When we see an ecosystemic user has 70% more GMV on the Marketplace and 90% more TPV, double the assets under management. So very much engaged, and that results in better profitability. We also mentioned that the growth -- the rate of growth of those type of users is the highest of any kind of users. I think it's growing 37% year-on-year. But we don't disclose the actual share of users. We just want to make sure that it's clear that those are important users to us, growing very fast. And a lot of the investments that we're making are aiming to get more of the users, both on the Commerce side and the Fintech side to become ecosystemic users. Ariel Szarfsztejn: Marvin, so on cross-border trade, we are extremely satisfied with the trajectory we're seeing. CBT GMV is growing approximately at 60% year-over-year with triple-digit growth in Brazil, Argentina and other markets and above average growth in Mexico, our largest market for CBT by far. More interestingly, the volume coming from our Chinese fulfillment center is growing 170% quarter-over-quarter. So basically, we built the capacity, and we see that the volume is following. And basically, with CBT, we're providing a better service and more choice to our consumers, right? So CBT is adding more selection at attractive prices and users always want to get that. And the more supply we get, the more demand we get. And with that demand, our platform becomes more attractive in order to get more supply. So positive on that effect. And simultaneously, the warehouse in China has enabled us to improve delivery speed, reduce cancellation, which is also driving NPS positively and pushing retention and repurchase up. Simultaneously, on unit economics, which is another dimension that you asked for, we continue to see sequential improvements in our margins, and that has been consistent for a few quarters now. And basically, it's driven by the combination of scale, which is helping us dilute some of our costs, but also going through the learning curve that is allowing us to tackle every dimension of the business to really get to understand what the levers are in order to make it work. So as I was saying at the beginning, very satisfied, encouraged, but still early days for CBT, and we have many things to continue doing. Operator: The next question comes from João Soares with Citi. Joao Pedro Soares: I just wanted to double-click on the credit card profitability trajectory. And I appreciate the color on the NIMAL by credit product. It's really helpful. So I think it's still not clear to me where this -- I know, Osi, you're still in a significant card issuance phase. But given the level where it is right now, above $7 billion, and of course, the yields, the spreads on this product should be extremely robust right now. So is it fair to say that we are reaching a level where we could expect a profitability inflection? I think any color in terms of where you're seeing this and whether there's room to even accelerate more. So any color regarding where we should start seeing the -- maybe the NII and NIMALs for this product in the next couple of years would be extremely helpful. Just the curve, right, in the strategy. Osvaldo Giménez: João, as we mentioned, we are super excited with how the credit card is evolving, and we continue to see the same patterns as before in terms of reaching profitability for each given cohort. Now when it comes to your question regarding reaching a turning point, I think that is mostly related with the history of the size of each cohort basically. We have been accelerating the pace of issuance. So if you were to look at cohorts that are older than 3 years, those are rather small part of the portfolio. And the majority of the portfolio has been issued, I would say, in the last 2 years. And that's why we need to need more time for the average of the portfolio to mature. As we are confident of how we are issuing, we have been able to accelerate the pace of issuance and that in some way slows down the average maturity of the portfolio. So I'd say it's mostly a combination of how fast we continue to issue and then how each portfolio evolves. Martin de Los Santos: And maybe just to -- if you step back, I think it's important to realize the strategic importance of the credit card, right? It's not the profitability that you're seeing on the letter, it's only the credit card. But as we mentioned also on the letter, people who use the credit card has 2 to 3x more chances of becoming ecosystemic. So they tend to buy more on MercadoLibre, tend to bring more of their financial life into Mercado Pago. So the credit card on itself has a clear path to profitability, as Osvaldo mentioned. But on top of that, and probably more important than that is a strategic product, both for Mercado Pago as well as MercadoLibre. So just lose sight of that. Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Ariel Szarfsztejn for any closing remarks. Please go ahead. Ariel Szarfsztejn: So I want to take this opportunity and go back to one of the things I was saying at the beginning of the call. We are building something quite unique globally, an ecosystem of commerce and financial services that compounds on itself. The bigger and the more engaging our Marketplace become, the better our chances of building the largest digital bank in Latin America and the bigger that the -- our advertising business we will become. And simultaneously, the better Mercado Pago becomes the more appealing, our Marketplace becomes to for our consumers. MercadoLibre and Mercado Pago have become a daily habit for Latin Americans across the region, but the opportunity that we have ahead of us is even bigger. These are not 2 businesses running in parallel. This is one flywheel each side making the other one more valuable. As we said in the letter, we invest in it carefully with discipline. And only when we see that the economics are working, if we get that flywheel right, the result is structurally higher engagement, loyalty and scale and that is what will maximize our long-term profitability. So the underlying philosophy with which we are operating have not changed in almost 3 decades, investing in eliminating friction in what deepens user engagement and letting it compound. Our conviction in this approach, the evidence supporting it and the ecosystem behind it are all stronger than they have ever been. We are convinced that this is the right way to create the very best long-term proposition for our consumers and through this to maximize shareholder value in the long run as well. Thank you very much, and looking forward to connecting with you in the next quarter. Operator: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day. Before you buy stock in MercadoLibre, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and MercadoLibre wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 12, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends MercadoLibre. The Motley Fool has a disclosure policy. MercadoLibre (MELI) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Make better investment decisions with Simply Wall St's easy, visual tools that give you a competitive edge. MercadoLibre stock has pulled back over the past year, yet the current price near US$1,820 sits between two conflicting valuation reads, with a Discounted Cash Flow (DCF) intrinsic value estimate suggesting meaningful upside while market based multiples point to a richer profile. Shares are up about 36.9% over the past three years, which still leaves longer term holders in positive territory despite more recent weakness. The company’s rapid expansion in Latin American e commerce and fintech can support higher cash flow expectations, but heavier spending and pressure on margins may limit how much investors are willing to pay for that growth. The broader checks produce a mixed picture, with MercadoLibre screening as attractively priced on some metrics yet expensive on others, reflected in a value score of 3 out of 6. The issue now is whether the current market price already reflects the growth story at MercadoLibre or if the intrinsic value estimate still points to enough upside to interest investors focused on valuation. Find out why MercadoLibre's -22.6% return over the last year is lagging behind its peers. The Discounted Cash Flow (DCF) model estimates what MercadoLibre might be worth today based on the cash it is expected to generate in the future. Using a 2 Stage Free Cash Flow to Equity approach and latest twelve month free cash flow of about $12.5b, the model assumes that cash flows continue to grow from this base and arrive at an estimated intrinsic value of about $3,477 per share. Against the current share price near $1,820, this implies MercadoLibre screens as roughly 47.6% undervalued on a cash flow basis. The recent report of quarterly revenue above $10b, alongside heavier spending that pressures margins, helps explain why the market price may still sit well below the DCF estimate. For investors who put more weight on cash generation than on near term profit compression, the gap between the DCF value and the market price is likely to stand out. On this DCF view, MercadoLibre stock currently appears undervalued relative to the cash flows analysts expect it to produce. Our Discounted Cash Flow (DCF) analysis suggests MercadoLibre is undervalued by 47.6%. Track this in your watchlist or portfolio, or discover 52 more high quality undervalued stocks. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for MercadoLibre. The P/E ratio suits MercadoLibre because earnings remain a key yardstick for how the market is pricing its mix of e commerce and fintech businesses. On this measure, MercadoLibre trades at about 49.5x earnings, which is more than double the Multiline Retail industry average of 20.2x and also well above the peer group average of 24.2x. The valuation framework used here suggests a fair P/E closer to 40.1x given MercadoLibre’s profile. The current multiple still sits materially higher, which implies investors are paying a premium over what this model indicates for the company’s growth, margins and risks, even after the recent pullback in the share price. On P/E, MercadoLibre stock screens as overvalued compared with both its tailored fair ratio and typical peers. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives pick up where the MercadoLibre valuation gap leaves off by spelling out which growth, margin and earnings paths would need to occur for the stock to be worth materially more or less than today’s price. Each narrative ties a fair value to a specific mix of potential catalysts and risks so you can track over time which version of MercadoLibre’s story is actually unfolding on the Community page. The community is split on MercadoLibre, with one camp leaning into the ecosystem upside while the other focuses on a tougher competitive and margin setup. Bull case: 18% undervalued Read the full Bull Case to see why MercadoLibre could be undervalued Bear case: roughly fairly valued Read the full Bear Case to see why MercadoLibre could be overvalued Do you think there's more to the story for MercadoLibre? Head over to our Community to see what others are saying! MercadoLibre sits between a Discounted Cash Flow (DCF) view that points to meaningful intrinsic value upside and a market multiple view that still flags the stock as overvalued on earnings. That split comes down to what you trust more: the longer term cash generation story or the current P/E premium that reflects strong growth expectations and sentiment. With broader checks looking mixed, the key question is whether MercadoLibre can sustain margins and cash flow strong enough to close the gap between its intrinsic value estimate and the price investors are currently willing to pay. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include MELI. Have feedback on this article? Concerned about the content? Get in touch with us directly. 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MercadoLibre (NASDAQ: MELI) nailed it on the top line this week. Latin America's leading e-commerce and fintech provider saw its net revenue surge 50% to $10.2 billion for the second quarter, its first time delivering 11-figure top-line results. Here are just some of the neat things about its blowout performance: Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » This is MercadoLibre's headiest top-line jump for any quarter in four years. It has delivered 30 consecutive quarters of at least 30% year-over-year gains. With revenue growth accelerating for the second consecutive year, this is practically a lock to become the eighth straight year of at least 37% annual top-line growth. Unfortunately for MercadoLibre and its investors, the market always dives beneath the surface before declaring that the water is fine. Bottom-line results, while better than expected, were rough. The stock responded by sliding as much as 8% on Thursday before settling for a 5% decline by the close. Zoom out a little bit, and the market's response to the mixed financial results doesn't seem so bad. MercadoLibre stock was a little lower a month ago and a lot lower two months ago. However, zoom out some more, and MercadoLibre is a market laggard that has declined by more than 20% over the past year. This is where investors can see the stock's weakness as a buying opportunity, as long as they fully understand why the Latin American bellwether has failed to keep pace with the broader market's ascent. MercadoLibre's growth is impressive, but it's literally paying for that speed on the bottom line. MercadoLibre's namesake e-commerce business continues to post healthy top-line growth. Its Mercado Pago payment platform is also showing no signs of slowing. However, the push to expand its credit card and loan offerings has increased its credit portfolio by 75% over the past year. This may prove to be a smart move in the long run, but in the short run, it increases the company's credit risk and results in a near-term spike in loss provisions. This isn't the only thing weighing on the bottom line. Brazil remains competitive on the e-commerce front, with foreign players offering cutthroat promotions and low minimums to qualify for free shipping. MercadoLibre has decided to play along so it doesn't cede its dominant market position. This is another case of short-term pain for long-term gain. Its operating margin of 6.7% for the quarter is the lowest that it's been in four years. Its net income margin of 4.7% is its worst performance since late 2023. Because profitability is going the wrong way, the valuation argument gets muddy. The mud is your opportunity. The purple line is MercadoLibre's stock over the past three years. It was riding higher before its slide over the past year. The orange line -- aligned with the second column on the right -- shows the company's forward earnings multiple. It's near a multiyear low, with analysts projecting a return to earnings growth next year. It's easy to see why MercadoLibre has rattled the faith of investors bent on emphasizing near-term profitability. I'm still bullish on the classic growth stock, and see the historically low valuation as a great time to make a long-term investment in MercadoLibre. Before you buy stock in MercadoLibre, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and MercadoLibre wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $397,405!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,344,091!* Now, it’s worth noting Stock Advisor’s total average return is 953% — a market-crushing outperformance compared to 214% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 7, 2026. Rick Munarriz has positions in MercadoLibre. The Motley Fool has positions in and recommends MercadoLibre. The Motley Fool has a disclosure policy. MercadoLibre Quarterly Revenue Just Topped $10 Billion for the First Time. Is the Post-Earnings Sell-Off a Gift for Long-Term Investors? was originally published by The Motley Fool