It has been about a month since the last earnings report for MercadoLibre (MELI). Shares have lost about 13.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MercadoLibre due for a breakout? 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 catalysts.
MercadoLibre Q3 Earnings Miss Estimates, Revenues Rise Y/Y
MercadoLibre reported third-quarter 2025 earnings of $8.32 per share, which missed the Zacks Consensus Estimate by 11.77% but increased 6.26% year over year. Revenues rose 39.5% on a year-over-year basis (49% on an FX-neutral basis) to $7.41 billion. The top line surpassed the Zacks Consensus Estimate by 2.15%.
Total revenues were driven by robust growth across both commerce and fintech segments, which grew 33% and 49% year over year to $4.17 billion and $3.24 billion, respectively. In the commerce segment, strong momentum was evident, with Brazil and Mexico both posting 34% foreign exchange-neutral GMV growth and 42% items sold growth year over year. Argentina's commerce segment delivered exceptional GMV growth of 44% on a foreign exchange-neutral basis, while items sold increased 34% year over year.
Items sold grew 39.3% year over year to 635.2 million. Unique buyer growth was 26% year over year, with the number touching 76.8 million.
Fintech Monthly Active Users rose 29% year over year to 72.2 million. Engagement with Mercado Pago continued to strengthen, with Assets Under Management growing 89% year over year to $15.1 billion. The credit portfolio expanded 83.2% year over year to $11.02 billion, with total credit users surpassing 27 million.
Revenues from MELI's advertising services rose 56% year over year on a reported basis and 63% on a foreign exchange (FX)-neutral basis.
MELI’s shares have appreciated 35% on a year-to-date basis compared with the Internet-Commerce industry’s return of 12.1%.
MELI’s Q3 in Detail
Brazil: Net revenues in the third quarter reached $4.01 billion (54.1% of total revenues), up 37.6% year over year.
Mexico: The market generated revenues of $1.65 billion (22.3% of total revenues), which increased 44.2% year over year.
Argentina: Net revenues in the reported quarter were $1.44 billion (19.4% of total revenues), reflecting an increase of 39.5% year over year.
Other countries: The markets generated revenues of $308 million (4.2% of total revenues), representing growth of 39.4% on a year-over-year basis.
Key Metrics for MELI
Gross Merchandise Volume of $16.5 billion increased 28% year over year and 35% on a foreign exchange-neutral basis.
The number of successful items sold was 635.2 million, up 39% year over year, representing the highest growth rate since the first quarter of 2021.
Total Payment Volume rose 41% year over year and 54% on a foreign exchange-neutral basis to $71.2 billion. Acquiring Total Payment Volume, which includes payments processed outside the marketplace, grew 32% year over year to $47.7 billion.
Total payment transactions increased 37% year over year to 4 billion.
The credit portfolio reached $11.02 billion, growing 83.2% year over year. The portfolio composition consisted of 37.09% consumer lending, 43.58% credit card, 17.03% merchant lending and 2.3% asset-backed financing.
MercadoLibre’s Operating Details
In the third quarter, the gross margin contracted 260 basis points on a year-over-year basis to 43.3%.
Operating expenses were approximately $2.5 billion, which increased 32% year over year. As a percentage of revenues, the figure contracted 50 basis points year over year to 33.5% in the reported quarter.
The operating margin contracted 70 basis points from the year-ago period to 9.8%.
Net Interest Margin After Losses (NIMAL) declined 320 basis points year over year to 21%, primarily due to higher funding costs in Argentina. Asset quality remained stable with the 15-90 day non-performing loan ratio at 6.8%.
Balance Sheet of MELI
As of Sept. 30, 2025, cash and cash equivalents were $2.58 billion, down from $3.01 billion as of June 30, 2025.
Short-term investments were $3.72 billion as of Sept. 30, 2025. Net debt increased to $4.6 billion at the end of the quarter, reflecting additional funding for Mercado Pago operations.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -17.61% due to these changes.
VGM Scores
Currently, MercadoLibre has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock has a score of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, 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 ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
