Prepared remarks
Hello, everyone, and welcome to the MercadoLibre Earnings Conference Call for the quarter ended March 31, 2026. Thank you for joining us. I'm Richard Cathcart, MercadoLibre's Investor Relations Officer. Today, we will share our quarterly highlights on video, after which we will begin our live Q&A session with our management team. Before we go on to discuss our results for the first quarter of 2026, I remind you that management may make or refer to, and this presentation may contain, forward-looking statements and non-GAAP measures. So please refer to the disclaimer on screen, which will also be 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. With that, let's begin with a short message from our CFO.
Hello, everyone. Thank you for joining us. I'm pleased to report that MercadoLibre delivered another excellent quarter to start 2026 with net revenue up 49% year-over-year, our strongest growth rate since Q2 2022. This performance reflects the strategic investments we've made consistently over the past several quarters, which are bearing fruit with increasing clarity. Chief among them is our decision to lower the free shipping threshold in Brazil, which has proven to be a sustained growth engine across multiple quarters. By bringing more buyers into the ecosystem, we're strengthening network effects with higher purchase frequency, broader assortment and a logistics network that becomes more efficient with every incremental package. As a result, Brazil delivered another standout quarter for commerce. GMV grew 38% year-over-year as items sold growth accelerated to 56%. This is more than double the quarterly growth rate prior to lowering the free shipping threshold.
Free shipping penetration reached a new record and unit economics continue to improve with cost per shipment down 17% year-over-year in local currency. In other words, higher demand is driving lower costs. Outside Brazil, we delivered solid growth in commerce and continue to gain share across key markets. In Mexico, GMV grew 28% year-over-year while in Argentina, GMV grew by 41%. Chile remains strong with GMV also up 40% year-over-year, driven by higher free shipping penetration and faster deliveries. Fintech services momentum also remains strong with solid growth across our core indicators. Mercado Pago monthly active users grew 29% year-over-year. Assets under management grew 77%, and our credit portfolio nearly doubled to $14.6 billion. This highlights that engagement is both broadening and deepening as more users choose our ecosystem as their primary financial relationship, supporting our long-term objective of becoming Latin America's largest digital bank.
We continue to invest in our credit card as a central pillar of this long-term objective, issuing 2.7 million credit cards this quarter. Credit card TPV grew 90% year-over-year and monthly active users grew 68%. The credit card is an excellent example of fintech cross-sell occurring at scale as a meaningful share of cardholders were previously marketplace-only users and are now active fintech users. This reinforces the cross-sell flywheel and generates positive ecosystemic effects across engagement, usage and retention. Growth of our credit portfolio is supported by disciplined underwriting and continuous enhancements to our models that are improving decision accuracy at scale. This validation gives us strong conviction as we extend the playbook beyond Brazil, continuing to scale the credit card in Mexico and building from an earlier base in Argentina. Overall, Q1 2026 was an outstanding quarter of top line growth with revenue increasing 49% year-over-year.
We delivered $611 million of income from operations, representing a 6.9% margin. The margin compression reflects our choice to invest in strategic initiatives and the results of each investment reinforce our conviction that we are taking the right steps to build the largest and most engaged commerce and fintech platform in Latin America. Our investment decisions are guided by clear observable evidence and that evidence tells us that now is precisely the right moment to invest boldly in a market with significant multiyear growth runways ahead. That is the foundation on which we are choosing to invest. We look ahead to the rest of 2026 with strong momentum and full conviction that the investments we're making today will compound into structural advantages that define this company in the years ahead. We appreciate your continued support. And with that, we'll open it up for questions.
Questions and answers
Operator: The following are instructions for participants. The first question will come from Irma Sgarz with Goldman Sachs.
I think a key question I'd like to ask is that on the shareholder letter, you mentioned that you chose to set the dial at this level of the first quarter, and you point out quite explicitly that there was a deliberate investment decision. I think that's quite clear. However, you also mentioned that there were some incremental opportunities that you've been able to identify. And also, you note that you don't expect this level to materially change in the near term. So I think my question is, could you just help us understand what perhaps changed from the fourth quarter that you reported in late February to now, after the first quarter? What new opportunities have you identified to invest behind? And whether this sort of margin level that we saw in the first quarter — again, I know you don't provide guidance — but is that roughly the right level that we should think about for the remainder of 2026?
It's Martín here. Let me start with the end. I think the investment philosophy hasn't changed. In fact, we decided to invest behind initiatives similar to those that we have been investing in over the past several quarters. What we have seen, and we tried to be very explicit about that in the letter this quarter, is that as a result of those investments, we're seeing very good results in terms of our credit card portfolio. As we mentioned, all the cohorts in Brazil continue to improve and become profitable. The repayment periods in both Brazil and Mexico are also improving. So that gives us more confidence to continue investing and investing boldly in terms of growing our credit card portfolio, and now we're also launching it in Argentina. The same could be said on the commerce side: we continue to expand our fulfillment infrastructure in order to keep up with the growth of our business.
We probably invested a little more boldly in CVT. We see a huge opportunity in CVT as well as 1P, and we're investing behind that. And then, if you compare year-over-year, we continue to expand our free shipping offering, which is a critical component of our value proposition. So I would say that for the most part, we did not change anything in terms of the investment philosophy. We have seen very strong results on those investments. As we always said, we're not trying to optimize short-term margins. What we're doing is investing for the long term. So we will continue to invest boldly in those initiatives.
The next question will come from Andrew Ruben with Morgan Stanley.
Great. And thanks for the additional color on the investments within the release. One other item I'd like to understand more about was the Brazil seller promotions you announced in recent months, lowering take rates for competitively priced sellers in certain price points. So I'd like to understand what drove the decision? And when you're thinking about allocating price investment dollars, how do you balance that between seller investments versus buyer initiatives such as free shipping? And maybe to the extent it relates to Irma's question, if these seller promotions represented any area of change in your philosophy or approach over the past few months?
Andrew, Ariel here. Let me walk you through what we have done regarding take rates in Brazil for everyone to have the full picture. Basically, we lowered take rates in some categories and in some specific price ranges. This is not a platform-wide take rate cut. It's a targeted investment where we see the greatest opportunity. And by opportunity, I mean both elasticity of demand and elasticity of supply. All the discounts that we are providing to merchants are conditional on sellers maintaining competitive pricing on their listings in Mercado Libre. So why are we doing this? We started lowering take rates back in 2024, targeting specific ranges and categories. If you look at results since then, unique buyers have grown 62%. GMV has grown even faster. The number of live listings on our platform and the effective sellers have hit record highs even after a few years of much slower growth. Engagement and frequency in the platform continue to increase at an excellent rate.
So basically, the last take rate reductions are a function of the results that we have already proven and we've seen over the last 18 months. If you step back to the last 12 months and address whether we are doing these for merchants or investing for buyers: over the last 12 months, we have lowered the free shipping threshold to BRL 19. We have expanded free and fast shipping in many miles. We have expanded our affiliate program. We continue to build the best and most reliable logistics network across Latin America. Clearly, all those investments compounded generate tremendous volume and value for our merchants. We want to make sure that those investments, which benefit sellers directly, translate into the best possible prices for our buyers on the platform. So this is another piece of a complex puzzle of initiatives that we are putting together in order to drive engagement and create the very best value proposition for users in MercadoLibre.
To complement, the investments that Ari mentioned regarding lowering take rates to merchants were implemented towards the end of Q1, so they did not flow through our P&L in Q1. They will flow through in Q2.
The next question will come from Bob Ford with Bank of America.
In the press release, you mentioned a 30-point NPS gap with incumbent banks. Can you talk a little bit about your NPS rank across the marketplaces? And what you think you need to do to replicate that NPS leadership with respect to marketplaces and maybe specifically in Brazil?
Bob, we are at record high NPS across every single market. In e-commerce, we feel pretty comfortable with the competitive position in terms of customer satisfaction in every single market where we operate. If you compare our NPS with traditional retail, which is similar to traditional banks, you would see a huge gap. We are satisfied with all the progress we've made and the continuous improvement in this metric across Brazil, Mexico, Argentina, Chile and so on.
The next question will come from Marcelo Santos with JPMorgan.
I wanted to discuss a bit the Brazil NIM compression. You mentioned that one-third of the provisions came from higher provisions in Brazil. Is that part of the upmarket move, like you say you're taking longer loans? I just wanted to understand what kind of products you are growing that take this, what kind of risk these products carry? And how far you are in this move?
Marcelo, yes, as you mentioned, and as we mentioned on the call, a big part of that is related to a higher mix of credit cards, which have a significantly smaller NIM because they are still immature cohorts in the portfolio. We are taking provisions in Brazil, which is related, on the one hand, to extending the average term of our loans. We used to have loans typically averaging 5 months, and that has moved to 8 months. We are also expanding the reach of our personal loans portfolio. We are reaching out to customers who had a line of credit in the past and were not taking it. So we are lowering the spread to see if we entice them to start trying our personal loan products, and also reaching out to segments that are either more risky or where we have to work with smaller spreads. It has been a deliberate decision to reach further segments to continue accelerating growth. But asset quality remains quite stable and reflects how well the models and underwriting processes are working.
The next question will come from Rodrigo Gastim with Itaú BBA.
I'd just like to turn the discussion to Argentina and the credit book in Argentina. Could you discuss a little bit about the potential acceleration in the credit book in the country or give us some idea of the recent growth of the credit book in Argentina, specifically for the card book, which has been quite new? You sound quite enthusiastic about this initiative. Also share with us some early signs of the profitability of the credit card in Argentina, the maturity of the cohort, how it's behaving. That would be very helpful.
Rodrigo, let me start with credit and then move on to the credit card. In general, the 15-90 NPL in Argentina has improved sequentially. When we look at the market, some banks are having worsening NPLs, but that has not been our case. I think the reason is that we are issuing loans with very short durations relative to the banks, we have a very nimble approach to pricing those loans, and we have high levels of principal activity in Argentina. Many of our users use their Mercado Pago account every day, and we have very sophisticated underwriting models. So our portfolio has proved to be very resilient in Argentina. Regarding the credit card, we just started issuing cards in August/September of last year, and we are excited with the evolution. Given the ubiquity of Mercado Pago, we have been able to reach out to clients we deem less risky, which has enabled us to be aggressive in the number of cards we are issuing. It's still early to tell how quickly those cards will repay themselves, but first impressions are that the cohort in Argentina is very similar to our first steps in Brazil. So we are happy with how they are evolving.
The next question will come from Josh Beck with Raymond James.
It sounds like unit costs were down, I believe, 17% year-over-year. I assume a lot of this has to do with better utilization of idle capacity. As we look later into this year and next, how do you think about the next step down in terms of unit costs? And then just quickly on agentic experiences: we've heard a number of U.S. players speak to really embedded agentic experiences within their own e-commerce platforms, driving better conversion and bigger baskets. Just curious if there's any early learnings in that area for you.
Josh, Ariel here. We are very pleased with the results on shipping costs: a 17% reduction year-over-year, further accelerating from the 11% reduction we saw in Q4, even while absorbing 56% volume growth in the same period. The improvements come from three main things: (a) volume and volume density — more shipments allow us to dilute fixed costs across the network while ramping up facilities to higher utilization levels more quickly, and new tech features allow us to improve shipments per route in both last mile and line haul; (b) our slow shipping network, which is a key lever that allows us to take advantage of idle capacity, both in fulfillment and cross-docking, to ship items at marginally lower cost whenever there's space available in our value chain; and (c) work deploying operational and technological improvements that improved productivity across every node of our network. We're very pleased.
There is commentary in the letter that shares more of the story. Variable contribution per shipment for items between BRL 19 and BRL 79 has improved materially since we launched our free shipping program in June and several brackets within that range are already breaking even. We are positive on this trajectory; it's similar to what we saw when we launched our initial free shipping program back in 2016, and in this case the improvement was even faster. Looking forward, we expect unit shipping costs to continue trending downwards, but the improvement won't be linear. We'll be adding more capacity given our growth rates, so some incremental gains may take longer. Regarding agentic experiences and AI, it's worth highlighting that we deployed large language models in search in commerce for the first time this quarter. That is live in Brazil, Mexico and Argentina. We are using this technology to better understand users' intent, combining knowledge about the user behind the query with better interpretation of the query itself.
The impact is visible across the funnel: higher conversions as buyers find what they're looking for faster; better ad returns as our search improves result quality for our ad tech stack; stronger engagement as the discovery experience improves. This is one contributor to the great performance we had this quarter and is part of a broader Gen AI strategy for the marketplace. We are very happy with the results so far.
The next question will come from Danniela Eiger with XP.
I have a quick one. How are you seeing potential wage inflation in Brazil, as well as higher oil prices becoming additional cost challenges to be dealt with in the short term?
I think in the first quarter we didn't see any change in terms of energy costs. We are seeing some parts of our logistics pass on some increases in costs because of energy in the second quarter, beginning a couple of the last months or so, and we are passing most of those to consumers. For the most part, we don't expect a significant impact on our results because of that so far. We're monitoring the situation closely, month by month. Regarding labor costs, the same applies: we are increasing labor mostly in logistics, and we adjust our logistic costs based on labor costs roughly twice a year in Brazil. So that's not a major issue and has not impacted our performance materially.
The next question will come from Geoffrey Elliott with Autonomous.
There's some interesting language in the looking ahead statement where you talk about margins and you say you can dial them up, you can dial them down. You've chosen where to set the dial, and you do not anticipate this changing materially in the near term. It's unusual for you to give that near-term clarity. What has prompted that? And then what could cause it to change? What unforeseen circumstance could cause margins to be lower or higher in the near term?
It's Martín here. Basically, what we're trying to explain in the letter is that margins are a consequence of our investment posture, and we can dial the investment intensity up or down based on the results that we're seeing in different channels or tracks where we're investing. In this particular quarter, we are accelerating the offering of credit cards — our credit card book is growing more than 100% year-on-year. We're also accelerating CVT and 1P, and we continue to offer more free shipping. So we're investing in both commerce and fintech. The investments we're making drive the margin we are delivering. As I said earlier, we are not optimizing for short-term margin. We are making investments based on outcomes, and the results are very positive. Revenue growing at 49% — the highest growth rate in four years — is one example of our investments performing very well. We will continue to invest disciplinedly in similar areas. If we see opportunities and results performing according to plan, we'll continue to invest. I won't shy away from it. The flip side is that if we wanted to improve margins in the short term, it would be fairly easy for us to slow down certain investments, but we don't think that's the right way given the large opportunity ahead for both commerce and fintech.
Let me complement Martín on the fintech side. Credit cards are a huge opportunity. The better we get at improving our models, the more we can issue credit cards while keeping the payback periods within our targets. So the better we are at improving those models, the more we're willing to invest because we know how predictable the payback period is.
And again, if we wanted to improve margins in the short term, slowing investments would get us there, but we believe investing is the right approach to capture the long-term opportunity.
The next question will come from Craig Maurer with FT Partners.
I wanted to dig in a little further on the decision to both go longer duration and to expand the credit box when it comes to the credit card in Brazil and personal loans in Brazil. With the price of oil up, I'm curious what gave you the confidence to make those changes now and really lean in versus what was already a fast growth rate. How do you balance the risk/reward here?
Let me split the question. On the credit card side, we are comfortable with the repayments we are seeing; repayments are similar to what we saw before. The impact the credit card has on provisions and NIM is mostly because the card is gaining share in the total credit book. Regarding personal loans, which is where we extended duration, that was deliberate. Our previous duration was fairly small — about five months on average — and it was very profitable. It continues to be profitable, less so than a year ago, but fully profitable. Given the strong growth and profitability, we wanted to reach segments where we believe we can make money even if the spread is smaller than the segments we were already serving. Some segments we were not willing to serve before, and we decided to experiment. This has confirmed that we can do this profitably.
We continue to monitor and manage our credit book cautiously. If you look at NPLs, despite the macro conditions described, they continue to be fairly stable in all countries where we operate, including Brazil.
The next question will come from Lucas Alves Lastino with Santander.
Also regarding the credit portfolio, it's clear that you're increasing exposure to credit cards, but also accelerating in consumer and merchant loans, which I believe require higher provisioning at the time the credit is released, both due to the nature of the credit and the longer durations. So it may explain a big part of the NIM reduction. Does that make sense? Combined with this, those categories of credit have lower spreads than credit cards, but accrue interest over the full balance compared to credit cards where you depend on users to delay payments. If my understanding is right, is it fair to assume that this static NIM is much lower than it could reach over time as you start collecting interest and potentially reverting provisions on this balance?
Lucas, in general, the spreads in consumer and merchant books are better than those on credit cards because on the credit card we have to book all potential lines as provisions. So initially we take a loss whenever we issue a credit card, and only after some time do we start making money on those cards we issued in the past. What contributes to lower NIM and higher provisions is mostly: two-thirds comes from the increase in the proportion of credit cards, and the rest is related to Brazil extending loan durations and expanding the reach of our personal loan portfolio. Increasing duration makes us take larger provisions, and we also assume larger early repayment risk. That's part of the equation of moving to longer durations. We expect that over time, as we better understand repayments, we will be able to expand spreads on those personal loans in Brazil.
To complement, the consumer loan portfolio in Brazil continues to be a very profitable operation with double-digit margins. It's a little less profitable than a year ago, but it continues to perform very well.
And merchant loans have very healthy spreads — probably the highest spread of all products today.
The next question will come from Neha Agarwala with HSBC.
I wanted to go back on the provisions question. The cost of risk increased quite substantially this quarter; it's now around 37% as per my calculation. Could you zoom in on which particular loan segment or any particular region led to this increase in cost of risk? Do you see it as a one-off? Or should we expect closer to 37%-38% as a going rate for cost of risk as you continue growing the credit business? Second, there's a lot of discussion about payroll loans in Brazil, which are less risky but offer a good alternative to personal loans. Is that something you would contemplate entering in the Brazilian market?
Neha, regarding provisions this quarter, there's a chart in our investor presentation that shows a waterfall of margin compression. There are four points of margin compression because of bad debt and provisions. This is something that has been happening for some time: our credit book grows faster than revenue — the credit book grew 87% year-over-year while MercadoLibre revenue grew 49% — and as we issue new loans we must provision for the full expected loss. When we accelerate growth, we need to provision more. Two-thirds of the margin compression comes from that; it's natural. The credit business is very profitable and accretive to overall margin. One-third of the compression comes from the consumer credit book in Brazil. It's profitable, but less profitable than a year ago, and that generates some compression. There's no other major change except for Brazil. We are excited about the performance of credit cards, which continue to improve quarter after quarter, and consumer and merchant bases remain profitable businesses as they have been for many years.
Regarding payroll loans, we have seen a significant increase in payroll loans in Brazil and we are about to launch private payroll loans. We have already integrated with the government and will launch the product soon.
The next question will come from Deepak Mathivanan with Cantor Fitzgerald.
Two questions, please. First, can you talk about competitive intensity in Brazil? Amazon has made several changes recently. Are you seeing any impact on the seller side or supply on the platform at this time? Second, for Martín: going back to the EBIT question Irma asked, there are seasonal headwinds in Q1 from the credit business that partly ease off through the year. But are you now ramping investments in certain areas that are incremental and might mask the seasonal effects? Should we expect EBIT margin for the year to be around Q1 levels?
Deepak, Brazil is one of the most attractive e-commerce markets in the world, so it's natural competition intensifies. We thrive in competitive environments — competition pushes us to evolve and innovate. Every engagement metric in MercadoLibre Brazil is strengthening: frequency, multi-category shopping, retention. These are structural gains, not short-term growth we're buying. We're reaching new records of NPS and conversion rate in Brazil has increased one percentage point year-over-year, which is a huge increase in conversions. That feeds into rapid growth and record market share. Competition is also expanding the overall market by bringing new offline consumers online, and we are well equipped to serve those consumers. Our supply continues to grow, GMV and successful items sold are accelerating, and retention is improving. We are confident in our competitive position and will continue to execute.
Deepak, we generally don't discuss quarterly-forward margins. In Q1, we chose the level of investment intensity based on performance of different investments. The shareholder letter provides more detail. We're seeing very positive results: credit cards, 1P, CVT, free shipping. We'll continue to invest behind these initiatives. There may be incremental investments, such as in our marketplace in Brazil. We need to monitor energy costs, but I don't see a big impact so far. The philosophy will continue: we will evaluate investments and their results, and invest to capture the opportunity. We're not managing to a particular margin level. We feel comfortable with the level delivered this quarter and will monitor opportunities through the year.
The next question will come from Kaio Prato with UBS.
I have a follow-up on your credit book. It seems we're seeing some deterioration in asset quality given higher provisions, NPLs and the lower level of NIM. I'd like to hear about your renegotiation strategy: how is this evolving? Is the higher duration of loans related to renegotiations? Second, should we expect the same pace of credit card issuance in Brazil, or should we see some slowdown? Finally, is this the new recurrent level of NIM going forward or could it be lower as you continue to expand in credit cards?
Kaio, regarding NIM, there is seasonality quarter-to-quarter and Q1 typically sees lower NIM, so the sequential compression you observe is normal. Year-on-year, much of the change is due to the higher mix of credit cards; the rest relates to Brazil extending average loan durations and expanding personal loans. We have not seen a change in renegotiations. When we extended duration, we observed more people prepaying loans, which shortens the realized duration and the interest we collect. But we are not seeing an impact on renegotiation behavior or a change in the quality of negotiations we're doing.
This concludes our question-and-answer session. I will now turn the conference back over to Mr. Martín de los Santos for any closing remarks.
Thanks. First, I would like to thank everybody for joining the call. I would like to close with some comments regarding our investment philosophy, which we will go deeper into in our quarterly letter to shareholders. MercadoLibre is facing a once-in-a-generation opportunity. Both fintech and commerce have tremendous runways ahead in Latin America, and we are in the best position to capture this opportunity. For that reason, we choose to invest behind our ecosystem. As mentioned throughout the call, we're investing in fintech and scaling our credit card portfolio, which is helping us bring millions of people to Mercado Pago. In commerce, we continue to grow our free shipping offering, expand our logistics, and invest behind our 1P and CVT operations. These investments put some short-term pressure on margins but are delivering tremendous results. We've seen these investments work: we continue to gain market share in all businesses and countries where we operate.
Engagement and NPS are at record levels, and we have generated tremendous growth and scale. Proof of that is the 49% year-over-year growth we delivered in Q1, the highest in the last four years. We are aware this generates margin pressure, but we think this is the right path, and we are confident the choices we're making today will maximize long-term cash flow and lead to significantly higher margins over time. With that, I would like to close the call. Thank you again for joining, and please reach out to the IR team if you have any further questions. Good night.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.