MELI Mercadolibre Inc - 10-K

ITEM 1A. RISK FACTORS

Summary of Risk Factors

Our business is subject to numerous risks. The following is a summary of the principal risks that we believe are material to our stockholders and prospective stockholders and that should be carefully considered when evaluating our Company, our business and prospects:

■ Our business depends on the continued growth of online commerce and digital financial services, the commercial and financial activity that our users generate on our platforms and the availability and reliability of the Internet in Latin America;

■ We operate in a highly competitive and evolving environment;

■ Any use of AI/ML technologies in our operations may present additional labor, legal, regulatory, and social risks, which could lead to additional costs and impact our competitive position;

■ We rely on third-party platforms, such as Google Play and Apple app stores, to access our Mercado Libre and Mercado Pago apps;

■ Our future success depends on our ability to expand and adapt our operations to meet rapidly changing industry and technology standards in a cost-effective and timely manner;

■ The markets in which we operate are rapidly evolving and we may not be able to maintain our profitability;

■ We may be liable for or experience reputational damage resulting from user default or the failure of our ecosystem services ;

■ Fraudulent activity by our users could negatively impact our operating results, brand and reputation and cause the use of services to decrease;

■ We are subject to consumer trends and could lose revenue if certain items become less popular or if we fail to meet customer demand;

■ Manufacturers may limit distribution of their products by distributors, prevent distributors from selling through us or encourage governments to limit e-commerce;

■ Our failure or the failure of our partners to manage Mercado Pago users’ funds properly could harm our business;

■ We rely on banks and investment funds that acquire Mercado Pago’s receivables and payment processors to fund transactions, and changes to card association fees, rules or practices may adversely affect our business;

■ The failure of the financial institutions with which we conduct business may have a material adverse effect on our business, operating results, and financial condition;

■ A rise in interest rates may negatively affect our Mercado Pago payment volume;

■ Changes in Mercado Pago’s funding mix and ticket mix could adversely affect Mercado Pago’s results;

■ Our lending solution exposes us to the credit risk of our merchants and consumers, among other risks;

■ We face significant risks related to the ongoing reliability of our logistics network and shipping service;

■ Failure to successfully operate our fulfillment network may also negatively affect our business;

■ Problems that affect our service providers could potentially adversely affect us as well;

■ If we are unable to compete effectively for advertising spend, or if our merchants reduce advertising spend, our business and results of operations could be materially harmed;

■ We may not realize benefits from recent or future strategic investments, acquisitions of businesses, technologies, services or products, despite their capital outlay and potential dilution to our stockholders;

■ We depend on key personnel, the loss of which could have a material adverse effect on us;

■ We may have inadequate business insurance coverage, which would require us to spend significant resources in the event of a disruption of our services or other contingency;

■ Our debt instruments contain restrictions that limit our flexibility in operating our business, and changes by any rating agency to our outlook or credit rating could negatively affect us;

■ We are exposed to the value of digital assets that may be subject to volatile market prices and unique risks of loss;

■ Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks;

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■ There are potential risks related to our cryptocurrency buy, hold and sell feature;

■ Natural disasters, climate change, geopolitical events, global health epidemics or pandemics, transportation disruptions and catastrophic events could materially adversely affect our financial performance;

■ We are subject to extensive government regulation and oversight. Failure to comply with existing and future rules and regulations in the jurisdictions in which we operate could adversely affect the operations of one or more of our businesses in those jurisdictions;

■ It may be difficult to enforce judgments rendered against us in U.S. courts;

■ We could face legal and financial liability upon the sale of items that infringe intellectual property rights of third parties and for information and material disseminated through our platforms;

■ We may not be able to adequately protect and enforce our intellectual property rights. We could potentially face claims alleging that our technologies infringe the property rights of others;

■ Any delay or problem with operating or upgrading our existing information technology infrastructure could cause a disruption in our business and adversely impact our financial results;

■ We are subject to security breaches, disruption and confidential data theft from our systems, which can adversely affect our reputation and business;

■ We may not be able to secure licenses for technologies on which we rely;

■ We face the risk of political and economic crises, instability, terrorism, civil strife, labor conflicts, expropriation, corruption and other risks of doing business in emerging markets;

■ Latin American governments have exercised and continue to exercise significant influence over the economies of the countries where we operate. This involvement, as well as political and economic conditions, could adversely affect our business;

■ Local currencies used in the conduct of our business are subject to depreciation, volatility and exchange controls;

■ Our transactions in Latin America may be impacted by the weaknesses of secure payment methods; and

■ Provisions of our certificate of incorporation and Delaware law could inhibit others from acquiring us, prevent a change of control, and may prevent efforts by our stockholders to change our management.

Set forth below is a full description of each of the risks that we believe are material to our stockholders and prospective stockholders. You should carefully consider the following factors in evaluating our Company, our properties and our business.

Risks related to our business and operations

Our business depends on the continued growth of online commerce and digital financial services, the commercial and financial activity that our users generate on our platforms and the availability and reliability of the Internet in Latin America

Online commerce and digital financial services are still a developing market in Latin America, with usage patterns continuing to evolve rapidly. A significant portion of our business is based on an Internet platform for commercial and financial transactions in which almost all activity depends on our users and is therefore largely outside of our control. For third-party sales, third party sellers decide independently which items they will list and their pricing and commercial policies. Our future revenues depend substantially on Latin American consumers’ and providers’ widespread acceptance and continued use of the Internet as a way to conduct commerce and to carry out specific financial transactions as well as on the reliability, affordability and speed of mobile data networks and fixed broadband infrastructure across the region. For us to grow our user base successfully, more consumers and providers must accept and use new ways of conducting business and exchanging information, including through mobile devices and digital financial tools. The price of personal computers and/or mobile devices and Internet access may limit our potential growth in certain areas or countries with low levels of Internet penetration and/or high levels of poverty, or where inflation and currency devaluations increase the cost of connectivity and hardware. Internet infrastructure in Latin America may not be able to support continued growth in the number of Internet users, their frequency of use or their bandwidth requirements, especially given the increasing data demands of video content, AI-driven services and logistics-tracking technologies.

Given that we operate in a business environment in Latin America that is different than the environment in which other companies providing e-commerce and digital financial services operate, including differences in connectivity costs, payment infrastructure, and logistics networks, the performance of such other companies is not an indication of our future financial performance. Availability, transaction speeds, acceptance, interest and use of the Internet across Latin America are all critical to our growth and services, as is continued access to reliable regional cloud infrastructure, payment networks and mobile platforms operated by third parties, and the occurrence of any one or more of the above challenges to Internet usage or disruptions in regional telecommunications, data centers or payment-processing networks could have a material adverse effect on our business.

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We operate in a highly competitive and evolving environment

The e-commerce and omnichannel retail, e-commerce services, fintech and digital content and electronic devices industries are still relatively new in Latin America, rapidly evolving, highly innovative and intensely competitive, and we expect competition to become more intense in the future. To compete successfully, we must accurately anticipate technological developments and deliver innovative, relevant and useful products and services in a timely manner. Our competitors may respond to new or emerging technologies and capabilities, including practical applications of AI/ML, as well as changes in customer requirements, faster and more effectively than we may, and they may also devote greater resources to the development, promotion, and sale of products and services.

Barriers to entry are relatively low, and our current offline and new digital competitors, including small businesses who want to create and promote their own stores or platforms, can easily launch new sites, mobile platforms or applications at relatively low costs using software that is commercially available, or partner with other e-commerce, search, advertising or social media companies. Users who purchase or sell goods and services through us have increasingly more options, and merchants also have more channels to reach consumers. Competitors may also be more narrowly focused on a particular type of goods and create a compelling community for those particular goods. In 2025, several new global and regional entrants, including rapidly expanding Asian e-commerce platforms, gained significant market share in Latin America through low-price strategies, direct-from-manufacturer supply chains and cross-border logistics models. These developments, together with the continued growth of omnichannel and local competitors, illustrate the highly competitive nature of the Latin American e-commerce and fintech markets, where barriers to entry remain low and users and merchants can easily switch or use multiple across competing platforms at the same time.

We have many competitors in different industries, ranging from large and established companies to emerging start-ups. Mercado Libre’s Marketplace currently competes with a number of companies operating throughout Latin America, including: traditional brick and mortar retailers, e-commerce and omnichannel retailers and vendors and distributors offering physical, digital and interactive media products; online sales, auction services and comparison shopping websites; social media platforms and online and app-based means of search engines for the purchase of goods and services; companies that provide e-commerce related services such as inventory, storage and supply chain management, fulfillment, advertising and payment processing; other small online service providers, including those that serve specialty markets; and business-to-consumer online commerce services. The emergence of new international players, particularly from Asia, further demonstrates that the markets in which we operate remain open and dynamic, although such entrants may exert additional pressure on pricing, marketing expenditures and logistics capabilities across the region. Mercado Pago competes with existing online and offline companies, including, among others: traditional banks and financial institutions; fintech companies (e.g., crowdfunding institutions, electronic payment providers), and other providers of financial services and payment methods, particularly credit, prepaid and debit cards, checks, money orders, and electronic bank deposits and transactions; payment networks that facilitate processing and aggregation of payments cards and retail networks; tokenized and contactless payment services, digital wallets, cryptocurrency wallets, QR code-based solutions and other payment solutions; international and local online payments services; the use of cash, which is often preferred in Latin America; offline funding alternatives such as cash deposit and money transfer services; peer to peer payments and electronic money remittances; and other point of sale terminals and devices or technologies installed at merchants’ sites.

Competitors with larger, more well-established and well-financed companies have greater resources, a longer history, greater brand recognition, more customers and better access to suppliers of critical inputs and products. This positioning allows our competitors to acquire, invest in or enter into commercial relationships with competing businesses, adopt more aggressive pricing, secure better terms from suppliers, make acquisitions and enter into other strategic arrangements, devote more resources to technology, marketing and promotional campaigns, infrastructure, fulfillment and payment solutions and continue to compete for users, advertisers, customers, and partners. These competitive advantages could be used to harm our competitive position through the adoption of restrictive covenants with suppliers, self-preferencing their product offerings, tying and bundling services and cross subsidizing. Competing services tied to established banks and other financial institutions may offer greater liquidity and create greater consumer confidence in the safety and efficacy of our competitors' services. Established banks and other financial institutions currently offer online payments, and those that do not yet provide such a service could quickly and easily develop it.

In many cases, companies that directly or indirectly compete with us provide Internet access and other services. Some of these providers may take measures that could degrade, disrupt, increase the cost of customers’ use of our services or advocate for government measures that could increase or change regulatory requirements that increase our costs, all of which could adversely affect our business and results of operations. Further, discrepancies in the enforcement of existing laws may enable our competitors to leverage such discrepancies in their favor, thereby affording them competitive advantages. Similarly, some of our competitors have been accused of anticompetitive business practices in other jurisdictions, which they can replicate in Latin American countries where antitrust authorities have not yet focused on such commercial practices and where we actively compete.

The global financial services and payments industry is continuously changing and increasingly subject to regulatory supervision and continued examination. Some of the payment services offered by our competitors operate at lower commission rates than Mercado Pago’s current rates, which has resulted in market pressures with respect to the commissions we charge for our Mercado Pago services. Moreover, establishing a financial services and payments solution entity in Latin America has proven to be difficult and resource intensive in terms of time and capital. Traditional banking and financial institutions in Latin America still have significant influence over sectoral regulators and have been relatively successful at influencing the enactment of new regulations that may hinder or restrict the overall success of fintech businesses by imposing unnecessary and cumbersome requirements or otherwise limiting their business models. This influence makes it harder to promote innovative payment solutions and policy changes to adapt regulation to an ever changing and fast growing innovative and disrupting industry. In addition, the development of contactless and near-field communication ("NFC") payments in Latin America has been influenced by global device manufacturers’ restrictions on third-party access to NFC technology. While recent regulatory developments in Brazil have begun to open access, most markets in the Latin American region remain limited in their access to such technology. These restrictions constrain our ability, and that of other local payment providers, to offer uniform tap-to-pay functionality across operating systems and devices, thereby affecting competition and innovation dynamics in mobile payments in the region.

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Any use of AI/ML technologies in our operations may present additional labor, legal, regulatory, and social risks, which could lead to additional costs and impact our competitive position

We are expanding our investment in AI/ML across the entire Company. This includes using generative AI and continuing to integrate AI capabilities into our products and services. While AI/ML can present significant benefits, it can also present risks and challenges to our business. Because AI/ML is a developing technology, legal frameworks for AI/ML governance are unsettled, quickly developing, and unpredictable. The use of AI/ML could lead to legal and regulatory investigations and enforcement actions, or may give rise to specific obligations, including required notices, consents and opt-outs, under various data privacy, protection and cybersecurity laws and regulations in a number of jurisdictions. Additionally, the integration of autonomous AI agents into our workflows introduces heightened risks related to unpredictable system behavior and reduced human oversight, which could lead to significant operational errors, cybersecurity vulnerabilities, or inaccuracies. Any failure to properly govern or control these autonomous agents could lead to regulatory non-compliance, potential legal liabilities and reputational harm arising from unauthorized or unintended agent actions. Some uses of AI/ML pose emerging ethical issues and present a number of risks that cannot be fully mitigated, including data sourcing, technology integration, bias in decision-making algorithms, discrimination or AI hallucinations, open source software issues, security challenges and the protection of personal privacy that could slow down or impair the adoption and acceptance of AI/ML. Moreover, the AI/ML and cloud computing ecosystem is characterized by high concentration in hardware and infrastructure supply, and our ability to scale certain AI/ML models may depend on the pricing and availability of computing resources provided by a small number of global vendors, which may limit our speed or cost efficiency relative to competitors. AI/ML technology and services are highly competitive, rapidly evolving, and require significant investment, including development and operational costs, to meet the changing needs and expectations of our existing users and attract new users. Our ability to deploy and leverage certain AI/ML technologies critical for our products and services and for our business strategy, and to enhance productivity across the organization, may depend on the availability and pricing of third-party equipment and technical infrastructure. Additionally, other companies may develop AI products and technologies that are similar or superior to our technologies or more cost-effective to deploy. Other companies may also have (or in the future may obtain) patents, copyrights or other proprietary rights that could prevent, limit, or interfere with our ability to make, use, or sell our own AI/ML products and services. We may not be able to compete effectively with our competitors and our strategy to integrate AI/ML technology into our products and services may also not be accepted by our customers or by other businesses in the marketplace. Furthermore, the non-deterministic nature of generative AI outputs may undermine the reliability and trustworthiness of our products and services, which may lead to customer dissatisfaction, brand or reputational harm or legal or regulatory liabilities. If the output from AI/ML in our products or services is deemed to be inaccurate or questionable, or if the use of AI/ML does not operate as anticipated or perform as promised, our business and reputation may be harmed. The integration of AI/ML may also expose us to risks regarding intellectual property ownership and license rights, particularly if any copyrighted material is embedded in training models. Any failure on our part to effectively and efficiently utilize AI/ML to enhance our operations or products and services may result in material impacts to our financial performance, financial results and overall business strategy.

We rely on third-party platforms, such as Google Play and Apple app stores, to access our Mercado Libre and Mercado Pago apps

Our Mercado Libre and Mercado Pago mobile applications depend on distribution through third-party app stores operated by global mobile operating system providers, primarily Apple’s App Store and Google Play. We are subject to the providers' standard developer terms and conditions, which they can modify unilaterally and with little notice. These terms govern the content, promotion, and distribution of apps and include requirements such as the mandatory use of the platform’s own payment processing system for certain digital goods and services, typically subject to commissions ranging from 15% to 30% of the transaction value, restrictions on informing users of alternative payment channels (anti-steering), and limitations on in-app distribution of digital goods or services that compete with the platform owner’s offerings. These commercial and technical restrictions may increase our operating costs, reduce pricing flexibility and limit our ability to deploy and monetize new digital products, including streaming, advertising and loyalty programs. They may also place us at a competitive disadvantage in connection with digital ecosystems that are vertically integrated and do not incur similar distribution or payment-processing fees. Additionally, regulatory and legal scrutiny of these practices has intensified globally. Recent enforcement actions in the European Union and Brazil have challenged app-store restrictions on payments, anti-steering clauses and access to NFC functionality. While the impact of these developments in Latin America remains uncertain, any future regulatory or contractual changes affecting app-store rules could alter our cost structure, distribution capabilities or competitive position. If changes to these terms or their enforcement disrupt the availability or functionality of our applications, or if we are unable to maintain effective distribution through these platforms, our business, results of operations and growth prospects could be materially affected.

Our future success depends on our ability to expand and adapt our operations to meet rapidly changing industry and technology standards in a cost-effective and timely manner

Rapid, significant and disruptive technological changes impact the industries in which we operate. Moreover, the effects of technological changes on our business are uncertain and depend on our access to global infrastructure and standards that we do not control. Our success depends on our ability to develop and incorporate new technologies and adapt to technological changes and evolving industry standards and interoperability requirements.

We plan to continue to expand our operations by expanding our services internationally and developing and promoting new and complementary services. We may have limited or no experience in our newer market segments, which can present new and difficult technology and regulatory challenges, including compliance with local data, payments and interoperability requirements. We may not succeed at expanding our operations in a cost-effective or timely manner, and our expansion efforts may not have the same or greater overall market acceptance as our current services, which could damage our reputation and diminish the value of our brands. Similarly, a lack of market acceptance of these services or our inability to generate satisfactory revenues from any expanded services to offset their cost could have a material adverse effect on our business, results of operations and financial condition.

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We must constantly add new hardware, update software, enhance and improve our billing and transaction systems, and add and train new engineering and other personnel to accommodate the increased use of our website, apps and the new products and features we regularly introduce. This upgrade process is expensive and the increasing complexity and enhancement of our website results in higher costs, and ultimately may not be successful. Our revenues depend on prompt and accurate billing processes. Failure to upgrade our technology, transaction-processing capabilities, features, transaction processing systems, security infrastructure, or network infrastructure to accommodate increased traffic or transaction volume, or the increased complexity of our website could materially harm our business and our ability to collect revenue. The successful operation of these systems depends in part on reliable access to computing capacity and third-party technology providers. Any disruption or failure in our IT systems or infrastructure, or those of our third-party providers, could result in system failures, delays or errors in our operations, which could harm our business and financial results.

We may also need to enter into relationships with various strategic partners, websites, cloud providers, other online service providers, shipping and logistics companies and other third parties necessary to our business. The increased complexity of managing multiple commercial relationships could lead to execution problems that can affect current and future revenues and operating margins, as well as our reputation. The expansion of our Mercado Pago and Mercado Envios businesses into new countries may also require a close commercial relationship with one or more local banks, regulators or other intermediaries, which may prevent, delay or limit the introductions of our services in such countries or subject us to differing interoperability and compliance standards. If our users have negative experiences with, or view unfavorably, any of the companies or partners with whom we have relationships, it could cause them to stop using our products and services and negatively impact our results of operations. In addition, changes in access terms, pricing or technical specifications imposed by global device, platform or cloud providers could influence our ability to innovate or deploy new services on a consistent basis across markets.

The markets in which we operate are rapidly evolving and we may not be able to maintain our profitability

As a result of the emerging nature and related volatility of the markets and economies in the countries in which we operate, ongoing inflationary and currency-exchange volatility in certain Latin American markets, and the entry of new global and regional competitors that exert pricing and margin pressure, the increased variety and mix of services and products that we offer, including technology and AI-driven initiatives with significant upfront investment requirements, and the rapidly evolving nature of our business, it is particularly difficult for us to forecast our revenues or earnings accurately. Our current and future expense levels are based largely on our investment plans and estimates of future revenues and are, to a large extent, fixed or committed to long-term technology, logistics and infrastructure programs that cannot be scaled down quickly. We may not be able to adjust spending in a timely manner to compensate for any unexpected revenue shortfall or cost increase driven by infrastructure, energy or compute-resource pricing. Accordingly, any significant shortfall in revenues relative to our planned expenditures may have an immediate adverse effect on our business, results of operations and financial condition and may be exacerbated by increased competitive intensity and macroeconomic uncertainty in our main markets.

We may be liable for or experience reputational damage resulting from user default or the failure of our ecosystem services

Our success depends largely upon sellers accurately representing and reliably delivering the listed goods and buyers paying the agreed purchase price. We have received in the past, and anticipate that we will receive in the future, complaints from users who did not receive the purchase price or the goods agreed to be exchanged, and regarding the quality or the partial or non-delivery of purchased items. While we can suspend the accounts of users who fail to fulfill their obligations to other users, we do not have the ability to force users to meet their obligations. Our Buyer Protection Program, which is generally available to all of our buyers, has been implemented to address those situations, subject to certain conditions. As we expand the coverage of our Buyer Protection Program, the number and amount of reimbursements may increase. Effective customer service requires significant personnel expense and investment in developing programs and technology infrastructure to help customer service representatives carry out their functions, which if not properly managed, could significantly impact our profitability.

In addition, failure to handle customer complaints effectively and negative publicity generated as a result of the fraudulent or deceptive conduct of any of our sellers could damage our reputation, diminish the value of our brands and negatively impact our results of operations.

The aforementioned risks are also applicable to the broad range of services offered through Mercado Pago, where we may also receive claims that our financial products or services—such as payments, transfers, fund settlements, loans, or cash advances—do not work properly or are not fulfilled on time. These services expose us to additional risks, such as failures or delays in the settlement or accreditation of funds, operational errors in transactions or transfers, claims related to unavailable balances, disputes over charges or refunds, as well as defaults on loans or cash advances granted to merchants / buyers.

Fraudulent activity by our users could negatively impact our operating results, brand and reputation and cause the use of services to decrease

We are subject to the risk of fraudulent activity by our users, including fraudulent and illicit sales, money laundering, bank fraud, fraud from means of payment entities, employee fraud, third parties providers' fraud and online securities fraud. Measures to detect and reduce the occurrence of fraudulent activities are complex and require continuous improvement, and there can be no assurance that we will be able to successfully and accurately detect, prevent or deter fraud, particularly new and continually evolving forms of fraud. As our business grows, the cost of remediating fraudulent activity, including customer reimbursements, may materially increase and could negatively affect our operating results. In addition, users’ fraudulent or potential illegal activities when using our platforms or payment solutions we offer could expose us to civil or criminal liability and could have a material adverse effect on our financial performance, our business or our reputation.

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We incur losses from claims of customers who did not authorize a purchase, from buyer fraud and from erroneous transmissions. Third parties have attempted, and will likely continue to attempt, to abuse access to and misuse our payments solution to commit fraud by, among other things, creating fictitious accounts using stolen or synthetic identities or personal information, making transactions with stolen financial instruments or fraudulently inducing users of our platforms into engaging in fraudulent transactions. Due to the digital nature of our payments services, third parties may perform abusive schemes or fraud attacks that are often difficult to detect and may reach a scale that would otherwise not be possible in physical transactions. Numerous and evolving fraud schemes and misuse of our payments service could subject us to significant costs and liabilities, require us to change our business practices, lead to loss of customer confidence in, or decreased use of, our products and services, damage our reputation and brands, and divert the attention of management from the operation of our business. In addition to the direct costs of such losses, if the losses are related to credit card transactions and become excessive, they could result in Mercado Pago losing the right to accept credit cards for payment, which could adversely affect our business.

We are subject to consumer trends and could lose revenue if certain items become less popular or if we fail to meet customer demand

Our future revenues depend on continued demand for the types of goods that we sell, that users list on the Mercado Libre Marketplace or that users pay for with Mercado Pago on or off the Mercado Libre Marketplace. Demand for our products and services can fluctuate significantly for many reasons, including due to perceived availability, consumer trends, the adoption of new technologies (such as AI-driven tools) that may bypass our marketplace search results, seasonality, promotions, product launches, defective products or unforeseeable events, such as in response to natural or man-made disasters, public health crises (including pandemics), extreme weather (including as a result of climate change), geopolitical events, or changes in or uncertainty about macro-economic conditions, which could impact the overall volume of transactions on our platforms. A decline in the demand for or popularity of certain items sold through the Mercado Libre Marketplace without an increase in demand for different items could result in reduced revenues.

Our ability to predict and adapt to changing tastes and preferences depends on many factors, including, but not limited to, obtaining accurate and relevant data on customer preferences, emphasizing relevant merchandise categories, effectively managing our inventory levels, and implementing competitive and effective pricing and promotion strategies. Although it is difficult to accurately forecast consumer trends and demand, we strive to predict these trends using the methods described above as overstocking or understocking products we sell could lead to lower sales, missed opportunities and excessive markdowns, any of which could have a material impact on our business and operating results or reputation. Failure to accurately forecast consumer trends and demand could significantly affect our revenue and our future growth.

Manufacturers may limit distribution of their products by distributors, prevent distributors from selling through us or encourage governments to limit e-commerce

Manufacturers may attempt to enforce minimum resale price maintenance arrangements to prevent distributors from selling on our websites or on the internet generally, or at prices that would make our site unattractive relative to other alternatives or may impose selective-distribution or platform-parity requirements that restrict authorized sellers from offering their products on open marketplaces such as ours. Such practices, if adopted broadly by manufacturers, could reduce the range of products offered online and thereby influence overall marketplace dynamics. Increased competition or anti-Internet distribution policies and new brand-control strategies, including algorithmic price monitoring or differentiated fulfillment incentives, could result in reduced operating margins, loss of market share and diminished value of our brand. In order to respond to changes in the competitive environment, we may, from time to time, make pricing, service or marketing decisions or acquisitions that may be controversial with and lead to dissatisfaction among some of our sellers, which could reduce activity on our websites and harm our profitability. In addition, regulatory authorities in several Latin American jurisdictions have begun to scrutinize vertical-distribution and online-channel restrictions, and any such investigations or enforcement trends could affect the way manufacturers and marketplaces interact in the region.

Our failure or the failure of our partners to manage Mercado Pago users’ funds properly could harm our business

Our ability to manage and account accurately for Mercado Pago users’ funds requires a high level of internal controls. As Mercado Pago continues to grow, we must strengthen our internal controls accordingly. Mercado Pago’s success requires significant consumer confidence in our ability to handle large and growing transaction volumes and amounts of customer funds. Any failure to maintain necessary controls or to properly manage customer funds could severely reduce customer use of Mercado Pago, and we could be found to be in violation of applicable laws and regulations, be subject to fines or other penalties or forced to cease providing this service.

Mercado Pago offers certain of its users the option to use the balances stored on their Mercado Pago digital accounts to invest in certain investment products including low-risk investment funds (money market fund equivalents). For the purposes of offering such intermediated investment functionality, in some cases, Mercado Pago has entered into diverse contractual relationships with third parties to serve as the managers of the investment funds and the facilitators of all associated investment services, including but not limited to the execution of investment orders. In such cases, the scope of Mercado Pago’s involvement in these services is generally strictly limited to (i) providing the technology infrastructure and processing charges and payments from users that use their balances held with Mercado Pago to invest, and (ii) sending the appropriate instructions to our investment partners. The third party providers have complete decision-making authority over the funds and their investment strategies. A disruption in our relationships with such third party providers or any of the services they provide to our users could adversely affect our customers’ confidence in our business. In addition, the value of the investments made by our users in the respective investment funds may fluctuate over time as a result of factors not in our control, such as market conditions and investment decisions made by our third party providers. If there is a disruption in the services provided by our third party providers or the investments made by our users otherwise decrease in value, our users may try to pursue claims or legal actions against us, which could affect our reputation and results of operations.

Any failure by us or by such third party providers to comply with financial and capital markets regulatory frameworks, or any deficiency in operational, technological, know-your-customer ("KYC"), suitability or anti-money laundering and counter-terrorism financing ("AML"/"CFT") controls in connection with these products, could result in regulatory investigations or sanctions, including fines, restrictions on activities, suspension or cancellation of authorizations, as well as civil claims by users, all of which could adversely affect our reputation, business and results of operations.

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We rely on banks and investment funds that acquire Mercado Pago’s receivables and payment processors to fund transactions, and changes to card association fees, rules or practices may adversely affect our business

Mercado Pago relies on banks, investment funds or payment processors to process the funding of Mercado Pago transactions and Mercado Libre Marketplace collections, and we must pay a fee for this service. From time to time, card associations may increase the interchange fees they charge for each transaction using one of their cards. Card processors have the right to pass on to us any increases in interchange fees or their own fees for processing. These increased fees increase the operating costs of Mercado Pago, reduce our profit margins from Mercado Pago operations and, to a lesser degree, affect the operating margins of the Mercado Libre Marketplace. We also offer Mercado Pago prepaid and debit cards in Brazil and Mexico, respectively (both under VISA brand), and prepaid cards in Argentina and Chile (both under MasterCard brand); and Mercado Pago credit cards in Brazil (under VISA brand), Mexico and Argentina (under MasterCard brand). If any of these companies were to be unwilling or unable to provide these services to us, or if they are willing to provide these services but at less favorable terms, our business and results of operations would be adversely affected.

We are also subject to, or required by processors to comply with, card association operating rules. The card associations and their member banks set and interpret the card rules. Some of those member banks compete with Mercado Pago. Card companies could adopt new operating rules or re-interpret existing rules that we or Mercado Pago’s processors may find difficult or even impossible to follow. As a result, we could lose our ability to provide Mercado Pago customers the option of using debit, prepaid or credit cards to fund their payments and MercadoLibre users the option to pay their fees using a debit, prepaid or credit card, which could be materially adverse to our business.

We could lose the right to accept credit cards or pay fines if card processors determine that users are using Mercado Pago to engage in illegal or “high risk” activities or if users generate a large amount of chargebacks. Accordingly, we are continually working to prevent “high risk” merchants from using Mercado Pago. Additionally, we may be unable to access financing in the credit and capital markets at reasonable rates to fund our Mercado Pago operations, and for that reason, our profitability and total payments volume could materially decline.

The failure of the financial institutions with which we conduct business may have a material adverse effect on our business, operating results, and financial condition

If the condition of the financial services industry deteriorates or becomes weakened for an extended period of time, any of the following factors could have a material adverse effect on our business, operating results, and financial condition:

■ Disruptions to the capital markets or the banking system may materially adversely affect the value of investments or bank deposits we currently consider safe, liquid or that provide a reasonable return, and we may be unable to find suitable alternative investments, which could result in lower interest income or longer investment horizons;

■ We may be required to increase the installment and financing fees we charge to customers for purchases made in installments or cease offering installment purchases altogether, each of which may result in a lower volume of transactions completed;

■ We may be unable to access financing in the credit and capital markets at reasonable rates. Due to the nature of our Mercado Pago and Mercado Libre Marketplace businesses, we generate high credit card receivables and consumer and merchant loans that from time to time we sell to financial institutions, and accordingly, lack of access to credit or significant changes to the terms of any existing credit, or bank liquidations could cause us to experience severe difficulties; and

■ The failure of financial institution counterparties to honor their obligations to us under credit instruments could jeopardize our ability to rely on and benefit from those instruments. Our ability to replace those instruments on the same or similar terms may be limited under difficult market conditions.

A rise in interest rates may negatively affect our Mercado Pago payment volume

We offer users the ability to pay for goods purchased in installments using Mercado Pago in some of the countries where we operate. In 2025 and 2024, installment payments represented 19.0% and 20.3%, respectively, of Mercado Pago’s total payment volume. To subsidize the cost of the installment payment feature, from time to time we pay interest to discount credit card receivables, securitize credit card receivables through trusts or finance Mercado Pago business through financial debt. In all of these cases, if interest rates increase, we may have to raise the installment fees we charge to users that would likely have a negative effect on Mercado Pago’s total payment volume.

Changes in Mercado Pago’s funding mix and ticket mix could adversely affect Mercado Pago’s results

Mercado Pago pays significant transaction fees when customers fund payment transactions using debit or credit cards or through unaffiliated third-party providers, nominal fees when customers fund transactions from their bank accounts, and no fees when customers fund transactions from an existing Mercado Pago account balance. Our financial performance remains highly sensitive to changes in the proportion of payments funded with credit cards, which we refer to as funding mix sensitivity. Customers may prefer to pay with credit cards rather than bank transfers for various reasons, including due to the ability to pay in installments, dispute charges (including chargebacks), earn rewards and defer payment, or due to a reluctance to provide bank account information to Mercado Pago. Certain costs and transaction fees that Mercado Pago pays in connection with specific payment methods are fixed on a per-transaction basis regardless of ticket size, while others vary by card network. We generally charge a fee calculated as a percentage of the transaction amount. As a result of these fixed cost dynamics, if we receive a larger percentage of low-ticket transactions or a greater volume of payments routed over higher-cost card networks, our profit margins may decline, and we may need to raise prices, which in turn could adversely affect transaction volumes.

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Our lending solution exposes us to the credit risk of our merchants and consumers, among other risks

Our lending solution is offered to certain merchants and consumers, and the financial success of this product depends on the effective management of the credit-related risk. We assess the credit risk of merchants and/or consumers seeking a loan based on an internally-developed risk model which, among other factors, may not accurately predict their creditworthiness due to inaccurate assumptions about the particular merchant and/or consumer or the economic environment or limited product history, among other aspects. The accuracy of the risk model and our ability to manage credit risk may also be affected by legal or regulatory changes (e.g., bankruptcy laws and minimum payment regulations), competitors’ actions, changes in consumer behavior, funding resources, changes in the economic environment, changes in regulation on interest rates and other factors.

A decline in economic, political, market, health and social conditions could impact our users as well, and their decisions could reduce the number of cards, accounts, and credit lines of their account holders, which ultimately impact our revenues. Any events or conditions that impair the functioning of the financial markets, tighten the credit market, or lead to a downgrade of our current credit rating could increase our future borrowing costs and impair our ability to access the capital and credit markets on favorable terms, which could affect our liquidity and capital resources, or significantly increase our cost of capital. Similar to other businesses with significant exposure to credit losses, we face the risk that our lending users may default on their payment obligations, making the receivables uncollectible and creating the risk of potential write-offs, which could negatively impact our liquidity. Any of these events could adversely affect our business and results of operation.

The funding and growth of our lending business are directly related to interest rates; a rise in interest rates may negatively affect our lending business and results of operations.

We face significant risks related to the ongoing reliability of our logistics network and shipping service

In certain countries where we operate, we offer users our Mercado Envios shipping service through integration with local carriers. We generally pay local carriers directly for their shipping costs, and separately decide the shipping costs paid by our customers. The decision to raise the shipping fees charged to users may have a negative effect on Mercado Envios’ shipping volume, and the decision not to do so may result in a decrease in the operating margins of our commerce operations.

We rely on a number of local carriers (through non-exclusivity agreements) to receive the inventories for our first-party business and on third parties to ship orders to customers. The unavailability of the services of local carriers in certain regions with high demand could negatively affect our ability to make shipping services available to our customers, which could in turn have a material adverse effect on our shipping service, operating results, and financial condition.

Failure to successfully operate our fulfillment network may also negatively affect our business

Through our logistics solution, Mercado Envios, we offer sellers on our platform fulfillment and temporary warehousing services, including maintaining inventories of third parties that sell products through our platform. We also use fulfillment and temporary warehousing services for our first-party business. As we continue to add fulfillment centers, our fulfillment network may become more complex, and the operation of such centers may present significant challenges, including organized crime and drug dealers operating in certain regions where we provide logistic solutions, increasing the complexity of tracking inventories and the operation of our fulfillment network. Our failure to accurately forecast customer demand, seller demand for storage, staffing and properly handle inventories and commercial relationships with third parties could result in excess or insufficient fulfillment capacity, service interruptions, an inability to optimize platform fulfillment or staffing, unexpected costs and may adversely affect our reputation or results of operations. Any supply chain constraint that affects us, our merchants or vendors could also adversely affect our ability to operate our fulfillment network effectively.

We offer to sellers our Fulfillment Protection Program for any damage or loss of seller’s inventories as a result of using our fulfillment network service, subject to certain conditions. We may in the future receive additional requests from sellers requesting reimbursement through this program or threatening legal action against us if we do not reimburse them, which could materially adversely affect our business and financial condition.

We continue to build new warehouses to manage the increasing demand of our logistics solution. These construction efforts are subject to a risk of delay as well as risks relating to the quality of the construction and regulatory requirements, which could increase our costs and negatively impact our ability to grow capacity in time to adequately meet demand.

Problems that affect our service providers could potentially adversely affect us as well

A number of parties provide services to us or to our users. These services include the hosting of our servers, shipping and the postal and payments infrastructures that allow users to deliver and pay for goods and services, in addition to paying their Mercado Libre Marketplace bills. Financial, regulatory, or other problems that might prevent these companies from providing services to us or our users could reduce the number of listings on our websites or make completing transactions on our ecosystem more difficult, which may harm our business. Any security breach at one of these companies could also affect our customers and harm our business.

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If we are unable to compete effectively for advertising spend, or if our merchants reduce advertising spend, our business and results of operations could be materially harmed

We have developed a growing advertising business on our platform. If we are unable to compete effectively for advertising spend, or if merchants reduce advertising spend due to adverse macroeconomic conditions or for other reasons, our business and results of operations could be materially harmed. Our ability to maintain or increase advertising revenue through our platform will depend on our ability to create more value for advertisers (such as increased numbers of users, increased transactions, enhanced monetization and stronger brand awareness) than our competitors. Some of our current and potential competitors have greater resources, larger customer bases and greater brand recognition in certain jurisdictions, particularly with respect to our newly launched products and services. Failing to provide superior value or deliver advertisements effectively and competitively could harm our reputation, financial condition and operating results. Changes to our advertising policies and data privacy practices, or those of other companies, may adversely affect the advertising revenues. In addition, the existence and development of technologies that block advertisements online or affect our ability to customize advertisements could harm our advertising business.

We may not realize benefits from recent or future strategic investments, acquisitions of businesses, technologies, services or products, despite their capital outlay and potential dilution to our stockholders

We intend to continue to enter into a wide array of potential strategic transactions, including strategic investments, acquiring businesses, technologies, services or products, as appropriate opportunities arise. We may not, however, be able to identify, negotiate or finance such future acquisitions successfully or at favorable valuations, or to effectively integrate these acquisitions with our current business. Strategic transactions may involve significant additional challenges, uncertainties and risks, including, but not limited to, unforeseen operating difficulties and expenditures, challenges of integrating new employees, systems, technologies, and business cultures; failure to develop the acquired business adequately; disruption of our ongoing operations and diversion of our management’s attention; inadequate data security, cybersecurity and operational and information technology resilience; failure to identify, or our underestimation of, commitments, liabilities, deficiencies and other risks associated with acquired businesses or assets; and potential exposure to new or increased regulatory oversight and uncertain or evolving legal, regulatory and compliance requirements; potential reputational risks that could arise from transactions with, or investments in, companies involved in new or developing businesses or industries, which may be subject to uncertain or evolving legal, regulatory and compliance requirements; failure of the transaction to advance our business strategy and of its anticipated benefits to materialize; potential impairment of goodwill or other acquisition-related intangible assets; and the potential for our acquisitions to result in dilutive issuances of our equity securities or significant additional debt. Strategic transactions may also heighten many of the risks described in this “Risk Factors” section.

Acquisitions could result in potentially dilutive issuances of equity securities, the incurrence of debt, contingent liabilities and/or amortization expenses related to intangible assets and impairment of goodwill, which could materially adversely affect our business, results of operations and financial condition. Any future acquisitions might require us to obtain additional equity or debt financing, which might not be available on favorable terms, or at all. If debt financing for potential future acquisitions is unavailable, we may determine to issue shares of our common stock or preferred stock in connection with such an acquisition, and any such issuance could result in the dilution of our common stock.

We depend on key personnel, the loss of which could have a material adverse effect on us

Our performance depends substantially on the continued services and on the performance of our senior management and other key personnel. Our ability to retain and motivate these and other officers and employees, as well as our ability to successfully transition key roles, is fundamental to our performance.

Our future success also depends on our ability to identify, attract, hire, train, retain and motivate other highly skilled technical, managerial, marketing and customer service personnel. Competition for these personnel is intense, and we cannot assure you that we will be able to successfully attract and retain sufficiently qualified personnel. In addition, changes we make to our current and future work environments may not meet the needs or expectations of our employees or may be perceived as less favorable compared to other companies, which could adversely affect our ability to attract and retain qualified personnel. Failure to successfully hire, train, manage, and retain sufficient and qualified personnel to meet our needs, as well as successfully transition key roles can be inherently difficult to manage, strain our operations, increase payroll and other costs, and harm our business and reputation.

We may have inadequate business insurance coverage, which would require us to spend significant resources in the event of a disruption of our services or other contingency

Even though we have business insurance coverage to face major contingencies affecting our services and goods, it may be inadequate to compensate for our losses, its coverage may be limited, or the amount of our insurance may be less than the related loss or we may be unable to recover all or part of the insured amounts due to the financial condition or insolvency of our insurance providers. Any business disruption, litigation, system failure or natural or man-made disaster may cause us to incur substantial costs and divert resources, which could have a material adverse effect on our business, results of operation and financial condition.

Our debt instruments contain restrictions that limit our flexibility in operating our business, and changes by any rating agency to our outlook or credit rating could negatively affect us

The terms of our senior unsecured notes issued in January 2021 and December 2025, the revolving credit agreement and certain collateralized debt under securitization transactions contain, and any debt instruments we enter in the future may contain, covenants that restrict or could restrict, among other things, our business and operations. Failure to pay amounts due under a debt instrument or a breach of any of its covenants may result in the acceleration of the indebtedness (subject in certain cases to a grace or cure period). Moreover, any such acceleration and required repayment of, or default in respect of, any of our indebtedness could, in turn, constitute an event of default under other debt instruments, thereby resulting in the acceleration and required repayment of other indebtedness we may have. Any of these events could materially adversely affect our liquidity and financial condition.

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Additionally, our reliance on structured credit vehicles (special purpose entities used to securitize credit cards receivable or loans receivable) with a concentrated investor base exposes us to redemption, refinancing, and pricing risks; the loss or reduced participation of one or more key investors could constrain our funding capacity, increase our cost of capital, and require adjustments to our credit origination strategy.

In addition, changes by any rating agency to our outlook or credit rating could negatively affect the value of both our debt and equity securities and increase our borrowing costs. If our credit ratings are downgraded or other negative action by rating agencies is taken, the interest rates payable by us under our indebtedness may increase. In addition, any downgrades to our credit ratings may affect our ability to obtain additional financing in the future and the terms of any such financing. Any of these factors could adversely affect our financial condition and results of operations.

We are exposed to the value of digital assets that may be subject to volatile market prices and unique risks of loss

We have used a portion of our cash reserve to purchase financial assets or other alternative reserve assets that are exposed to the value of digital assets and we may continue acquiring and holding them from time to time in the future.

The prices of digital assets have been, and may continue to be, highly volatile, including as a result of various associated risks and uncertainties. For example, the prevalence of such assets is a relatively recent development, and their long-term adoption by investors, consumers and businesses is unpredictable. Moreover, these assets rely on technology for their creation, existence and transactional validation, and their decentralization may subject their integrity to the threat of malicious attacks and technological obsolescence. The status of such assets for a variety of regulatory purposes is unclear and may change in the future.

As digital assets, including Bitcoin, have grown in popularity and market size, there has been an increasing focus on the extent to which such digital assets can be used to launder the proceeds of illegal activities or fund criminal or terrorist activities and/or entities subject to sanctions regimes. If we are found to have engaged in transactions involving Bitcoin or other digital assets with persons that have used such digital assets to launder money or persons subject to sanctions, we may be subject to regulatory obligations, proceedings or other actions, and our further transactions or dealings in Bitcoin or other digital assets may be restricted or prohibited. The rapidly evolving regulatory landscape with respect to digital assets may subject us to additional costs, such as the implementation of additional and potentially costly controls or other actions.

As intangible assets without centralized issuers or governing bodies, digital assets have been, and may in the future be, subject to security breaches, cyberattacks or other malicious activities, as well as human errors or computer malfunctions, that may result in operational problems or the loss, compromise or destruction of, or our inability to access, cryptographic private keys needed to access such assets, which may be irreversible and could adversely affect the value of our digital assets and an investment in our Company. While we have taken reasonable measures to secure any digital assets, if such threats are realized or the measures or controls we implement to secure our digital assets fail, it could result in a partial or total misappropriation or loss of our digital assets, and our financial condition and operating results may be adversely affected.

Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks

We publish an annual integrated impact report, that describes, among others, our policies, practices and initiatives across a variety of environmental, social and governance (“ESG”) matters, including our contribution to socio-economic development, inclusion and financial education, human capital management and efforts to reduce our environmental impact. The implementation of these initiatives is complex and subject to contingencies, dependencies, and in certain cases, reliance on third-party verification and/or performance, and may require considerable investments. Further, these efforts may impose additional costs and expose us to new risks, including increased scrutiny from customers, regulators, investors and other stakeholders related to our ESG practices and disclosure. Stakeholder expectations regarding ESG matters continue to evolve and are becoming increasingly divergent among and within stakeholders. For example, some of our Marketplace customers may elect to reduce purchases from us if we are unable to verify that our performance and products meet the specifications of responsible sourcing programs. Investor advocacy groups, investment funds and institutional investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights. If we are targeted by those who disagree with our public positions on ESG issues, or if we do not otherwise successfully manage ESG-related expectations across investors and other stakeholders, it could erode stakeholder trust, impact our reputation, subject us to litigation or shareholder activism, which could adversely affect our business and reputation.

In addition, there can be no assurance that our current policies, practices, reporting frameworks and principles will be in compliance with any new environmental and social laws and regulations that may be promulgated in the U.S. and other jurisdictions. New government regulations or guidance could also result in new, curtailed or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, taxes, diligence and disclosure. The costs of changing any of our current practices to comply with any new legal and regulatory requirements in the U.S. and other jurisdictions in which we operate, which could result in differing or competing regulations and standards across these markets, may be substantial. Furthermore, industry and market practices may further develop to become even more robust than what is required under any new laws and regulations, and we may have to expend significant efforts and resources to keep up with market trends and stay competitive among our peers. Increased ESG related compliance costs for us as well as among Marketplace merchants and vendors and various other parties within our supply chain could result in increases to our overall operational costs.

Failure or perceived failure to adapt to achieve our goals or commitments, or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners and our stock price. Government, media or activist pressure to limit emissions could negatively impact consumers’ perceptions of our products and services, which could have a material adverse effect on our business, and the actions taken by governments and other actors to reduce emissions could impose costs that could materially affect our financial condition. In addition, our sustainability initiatives may be unsuccessful for a variety of reasons, including if we are unable to realize the expected benefits of new technologies or if we do not successfully plan or execute new strategies, which in turn could harm our business or damage our reputation.

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There are potential risks related to our cryptocurrency buy, hold and sell feature

There are potential risks to MercadoLibre in connection with a feature of our Mercado Pago services that gives customers the ability to access—through our Mercado Pago platform—digital-assets trading and custody services that are rendered by third parties, which allow users to buy, hold, sell and transfer certain global cryptocurrencies and stablecoins.

For our buy, hold and sell Mercado Pago feature, we rely on third party service providers to perform several functions in connection therewith. Such service providers (“SPs”) provide our customers digital-assets exchange services (whereby customers can buy and sell certain digital-assets) as well as digital-assets custody services. The SPs are also responsible for securing our customers’ digital-assets and protecting them from loss or theft. We, in turn, provide a platform that acts as an interface for our customers to access the SPs’ services. A disruption in our relationship with the SPs or in any of the services provided by them to users could adversely affect our customers’ confidence in our digital-assets offerings through the SPs and, by extension, our business.

Our SPs rely on computer software, hardware and telecommunications infrastructure and networking to provide services to our customers related to the token and digital-assets exchange and custody services. These computer-based services are subject to disruption, delay and/or failure, which could cause our users to lose access to our Mercado Pago platform or to the SPs’ services. Any such technical issues could negatively affect our customers’ confidence in the digital-assets offering.

In addition, the SPs maintain the cryptographic private keys that allow access to the digital accounts where our customers’ digital-assets are held in custody. While we have taken steps to make these offerings secure, digital assets in the custody of various other custodians have in the past been hacked or lost. In the event that those private keys are lost, destroyed, unable to be accessed or in any way compromised and no back up of such private keys exists, the SPs will not be able to access the digital-assets held on behalf of our customers in their custody. The SPs’ failure to safeguard the digital-assets owned by our customers may result in losses to our customers, which could adversely affect our customers’ confidence in digital-assets and negatively affect our business. In addition, the decentralized and pseudonymous nature of digital assets raises novel compliance risks and challenges; the SPs’ failure to maintain necessary controls or safeguard against improper transactions—for example, with sanctioned parties— due to process or control oversight could lead to regulatory penalties and reputational harm for the Company.

The market perception and regulatory environment concerning digital assets, including cryptocurrencies and stablecoins, are uncertain and evolving. Jurisdictions where we operate may enact legislation subjecting us to additional money transmitter or other regulations in connection with digital-assets exchange services or may require us to obtain licenses or regulatory authorizations in connection with these activities. Any changes to, or failure to comply with, these laws and regulations, or any laws or regulations affecting services that involve a partnership with a custodian and blockchain infrastructure providers, may negatively impact our ability to enable our customers to buy, hold and sell digital-assets in the future and may adversely affect our business.

Natural disasters, climate change, geopolitical events, global health epidemics or pandemics, transportation disruptions and catastrophic events could materially adversely affect our financial performance

The occurrence of one or more natural disasters, such as hurricanes, tropical storms, floods, fires, earthquakes, tsunamis, cyclones, typhoons; weather conditions such as major or extended winter storms, droughts and tornadoes, whether as a result of climate change or otherwise; geopolitical events (such as international trade disputes and the ongoing conflicts in Ukraine and the Middle East; global health epidemics or pandemics or other contagious outbreaks (such as COVID-19 and its variants); transportation disruptions that affect transportation and warehousing providers (for instance, labor disputes and work stoppages); and catastrophic events, such as war, civil unrest, terrorist attacks or other acts of violence, including active shooter situations, acts of vandalism or terrorism, labor or trade disputes, and similar events in countries in which we operate, in which our users are located, or in other areas of the world could adversely affect our operations and financial performance.

Such events could result (whether directly or indirectly) in physical damage to, or the complete loss of, one or more of our facilities, loss or spoilage of inventory, limits on our ability to receive the inventories of third parties efficiently and ship orders to customers, business interruption, the lack of an adequate work force in a market, the unavailability of our platforms to our users, changes in the purchasing patterns of consumers and in consumers’ disposable income, the temporary or long-term supply chain and logistics disruption, the disruption of critical infrastructure and communication systems, banking systems, utility services or energy availability.

Furthermore, the long-term impacts of climate change, whether involving physical risks (such as extreme weather conditions, drought, or rising sea levels) or transition risks (such as regulatory or technology changes) are expected to be widespread and unpredictable. Physical risk may result in: disruption of operations and distribution, as well as higher costs, due to increased frequency and intensity of severe storms, wildfires, high-speed wind, flooding, sea level rise, drought precipitation and rising mean temperatures; increased insurance premiums due to increased exposure to physical weather perils; and increased heat stress to our workforce and increased costs throughout operations, supply chain and distribution due to greater cooling needs. These events and their impacts could materially adversely affect our business.

Legal and Regulatory Risks

We are subject to extensive government regulation and oversight. Failure to comply with existing and future rules and regulations in the jurisdictions in which we operate could adversely affect the operations of one or more of our businesses in those jurisdictions

Our business is subject to the laws, rules, regulations and policies of the countries in which we operate, as well as the legal interpretation of such regulations by administrative bodies and the judiciary of those countries, including, but not limited to, those listed below. Further, because our services and products are available in a number of countries, certain foreign jurisdictions may claim that we are required to comply with their laws. The expansion of our business may also result in increased regulatory oversight and enforcement, as well as licensing requirements.

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Any changes to, enforcement of, failure, or perceived failure to comply with these regulations, or the enactment of new regulations and legislation, could result in lawsuits, civil or criminal penalties, or fines against the Company or its subsidiaries, forfeiture of significant assets, an outright or partial restriction on our operations, additional compliance and licensure requirements, an adverse impact on our business, results of operations or financial position, or may otherwise force us to change the way we or our users do business, which could adversely affect the operations and reputation of our businesses in those jurisdictions. We have been and we expect that we will continue to be involved in disputes or regulatory inquiries that arise in the ordinary course of business, the number and significance of which has increased as our business has expanded. The media, political and regulatory scrutiny that we may face could increase or amplify these risks.

Anticorruption

Our operations in most of the countries where we operate are subject to risks related to compliance with the U.S. Foreign Corrupt Practices Act (“FCPA”) and other applicable U.S. and other local laws prohibiting corrupt payments to government officials and other third parties.

To fulfill our commitment to the applicable regulations in a sustainable and effective manner and to prevent and control anyone in our ecosystem from making or offering improper payments or anything of value that could be perceived as a bribe, or that is intended to obtain an improper benefit or preferential treatment for us, we have an Anti Corruption Policy and a risk-based Anti-Corruption Program designed to prevent, detect and remedy acts of corruption.

Internet Services Regulation

There is uncertainty in many of the countries where we operate with respect to the liability of Internet service providers, the application of existing regulations to our business as they relate to, or the enactment of new regulations or legislation relating to, issues such as e-commerce, electronic or mobile payments, information requirements for Internet providers, data collection, data protection, data security, data localization, online privacy, cryptocurrencies, AI/ML (e.g. in relation to risk analysis) governing anti-money laundering, taxation, reporting obligations, consumer protection and businesses. This uncertainty could negatively affect our users’ perception and use of our services, and could result in significant expense if we have to defend cases in an unclear legal environment.

Privacy and Data Protection

We process significant amounts of personal data from users, employees, service providers and partners across multiple jurisdictions. Our ability to collect, use, store, and transfer such data lawfully is essential to our operations. Privacy and data protection laws continue to expand in scope and complexity worldwide, including in Latin America, where countries such as Brazil, Chile, Ecuador, Peru, Colombia, Mexico and Argentina have enacted or are considering stricter frameworks governing processing of personal data (including cross-border transfers of the same). Moreover, the interpretation and application of many existing or recently enacted privacy and data protection laws and regulations are uncertain and fluid, and it is possible that such laws and regulations may be interpreted or applied in a manner that is inconsistent with our existing data management practices or the features of our products and services. Any such new laws or regulations, any changes to existing laws and regulations and any such interpretation or application may affect demand for our products and services, impact our ability to effectively transfer data across borders in support of our business operations or increase the cost of providing our products and services. Complying with these varying and sometimes conflicting rules also requires continuous investment in governance, systems, and monitoring, and failure to do so could result in substantial fines, investigations or reputational harm.

We could also be required to fundamentally change our business activities and practices, or modify our products and services, which could have an adverse effect on our business. We expect to allocate significant additional resources to prevent security or privacy breaches and to address issues caused by any breaches. In the event of a personal data breach, we may be required to notify the relevant authorities (including the SEC, central banks and other regulators overseeing our fintech operations) and/or the affected individuals. Such mandatory disclosures could lead to negative publicity, damage our reputation, devalue our brands and may cause our current and prospective customers to lose confidence in the effectiveness of our privacy program and data security measures. The use of AI/ML, including potential inadvertent disclosure of confidential information or personal data, could also lead to legal and regulatory investigations and enforcement actions, as well as reputational harm or may give rise to specific obligations, including required notices, consents and opt-outs, under various data privacy, protection and cybersecurity laws and regulations in a number of jurisdictions.

Rapid technological developments—including the use of AI/ML and cloud computing—further increase compliance challenges. These technologies can derive or infer sensitive personal data and may be subject to emerging transparency, fairness, and accountability requirements. As we expand our use of AI/ML and automated decision-making, regulators in the region and globally are developing specific rules that may impose limits on high-risk AI systems, mandate algorithmic impact assessments, impose specific obligations (including required notices, consents and opt-outs), or require human oversight. Some of these measures could restrict or delay the deployment of AI-enabled products or increase compliance costs.

We expect that Latin American jurisdictions will adopt new AI and data governance regulations inspired by the EU AI Act and similar international models, potentially introducing stricter obligations on risk classification, data quality, and cross-border data management. Such developments may affect how we design, train, and deploy AI systems and manage user information. Divergent local requirements may also limit our ability to maintain unified global systems or practices.

Failure or perceived failure to comply with evolving privacy or AI obligations could result in regulatory enforcement, litigation, or loss of trust from users and partners. Even where we believe our practices are compliant, new interpretations or public scrutiny could lead to operational disruption and reputational damage. The financial and operational costs of remediation or adaptation to new standards may be material.

We remain committed to maintaining strong privacy and data protection standards, proactively monitoring legal developments, and embedding privacy and AI governance across our organization. However, given the speed of regulatory change and technological evolution, there can be no assurance that future obligations will not exceed our ability to adapt in a timely or cost-effective manner.

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Consumer Protection

Government and consumer protection agencies have in the past received complaints against us from users of our ecosystem. These complaints are small as a percentage of our total transactions, but they could become large in aggregate (absolute) numbers over time.

Taxation

As far as taxation and the digital economy is concerned, many taxing jurisdictions and international organizations are moving towards the implementation of changes to tax laws and policies in order to address so-called base erosion, profit shifting and other tax challenges arising from the digitalization of the economy. These changes in tax regimes may impact e-commerce and internet based companies, including reforms related to withholding regimes, corporate income taxation, indirect taxes and also to value-added taxes. In addition, the Organization for Economic Co-operation and Development reached agreement among various countries to implement a minimum 15% effective tax rate on certain multinational enterprises, commonly referred to as Pillar Two. Certain countries in which we operate are actively considering adopting parts of the Pillar Two framework. The governments of Spain and Brazil passed laws adopting the framework in December 2024. See "Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of operations - Income tax" for further information. We are continuing to evaluate the impact of these proposed legislative changes as new guidance becomes available. Legislative changes could impact our effective tax rate and tax liabilities.

In addition, Brazil is currently undergoing a tax reform to replace several local taxes with a dual VAT system. The new system will become effective in 2026 and will face a transitional period until 2033, with the progressive charging of the new taxes and the extinction of the ones currently in place, as well as the implementation of the split payment system. For additional information regarding this and other Brazilian tax reforms, please refer to Note 2 – Summary of significant accounting policies - Sales tax - Brazilian Tax Reform - Consumption taxation and Note 13 – Income taxes - Brazilian Tax Reform - Income tax.

Furthermore, we have a complex corporate structure, with entities that are subject to taxation in multiple jurisdictions, and the management of that structure and the transactions among our entities creates potential tax exposures for us in multiple jurisdictions, including the U.S. as well as the jurisdictions where our subsidiaries operate. Further, any changes to, suspension or revocation of, any tax incentive regimes or other tax benefits that we may receive, including tax benefits under the Argentina knowledge-based economy promotional regime and under the Brazilian social security contribution regime and ICMS (Imposto sobre Circulação de Mercadorias, Serviços de Transporte Interestadual, Intermunicipal e Comunicação) tax incentive benefits, could have a material adverse effect in our business, results of operation and financial position.

Competition

We may be subject to private claims, lawsuits, regulatory and government investigations, other proceedings and orders involving allegations that our actions may violate antitrust or competition laws, or otherwise constitute unfair competition. Regulations concerning competition and digital platforms continue to evolve in the jurisdictions where we operate, and authorities may examine a wide range of conduct, including data use, interoperability and commercial relationships with sellers, buyers or partners. In August 2025, the Mexican antitrust authority (Comisión Federal de Competencia Económica, now the Comisión Nacional Antimonopolio) concluded its proceeding regarding alleged barriers to competition in the e-commerce market in Mexico. The authority identified potential concerns related to the operation of Buy Box algorithms and the integration of logistics services by Amazon Mexico and Mercado Libre, however, no corrective measures were imposed and the proceeding was closed. Governments and other regulators in Latin America continue to monitor competition in digital markets and may initiate new reviews or inquiries in the future.

Private claims have been and may continue to be brought against us in the future for potential breaches of antitrust or competition law and/or unfair competition. Contractual agreements and/or our business practices with buyers, sellers, financial partners or other companies could give rise to regulatory action, antitrust investigations or litigation in the jurisdictions where we operate. Such claims and investigations, even if without foundation, typically are very expensive to defend, involve negative publicity and substantial diversion of our management's time and effort, and could result in significant judgments against us or in commitments, remedies or modifications to our business practices. They could also lead to additional compliance costs or adjustments to certain aspects of our operations. Competition authorities in several Latin American jurisdictions continue to cooperate and exchange information on digital-market issues, which may lead to simultaneous or coordinated reviews of similar matters.

Banking, Money Transmission and Domestic or Cross-Border Electronic Funds Transfer

A number of jurisdictions where we operate have enacted legislation regulating money deposits, transmitters, lending activity and/or electronic payments or funds transfers. We are subject to regulation in Brazil, Argentina, Mexico, Chile, Peru, Colombia and Uruguay, that require or would require us to obtain licenses or regulatory authorizations to operate certain services provided by Mercado Pago and that would subject us to additional regulatory requirements. As an authorized or licensed payment services provider, electronic money institution, lender, issuer of credit, debit or prepaid card, acquirer and/or money transmitter in certain jurisdictions where we operate, we are subject to, among other requirements, restrictions with respect to the investment of customer funds, reporting requirements and inspection by regulatory agencies.

Any changes to, or failure to comply with, money services laws or regulations or any tax regulations, or if we engage in an unauthorized banking or financial business, could result in liability, inability to continue doing business with residents of certain countries and changes to our business or regulatory status. Any of these changes could result in making the service less attractive to users, decreasing the speed of trade on the Mercado Libre Marketplace, increasing our financial costs or change our financial model, which would further harm our business and results of operations. Even if we are not required to change our Mercado Pago business, we could be required to obtain licenses or regulatory approvals.

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Anti-Money Laundering

We are subject to anti-money laundering laws and regulations that prohibit, among other things, involvement in receiving and/or transferring the proceeds of criminal activities and impose obligations to identify the users and request certain information and documentation that, in certain circumstances, must be shared with regulators or government institutions. Because laws and regulations differ in each of the jurisdictions where we operate, as we roll out and adapt our business in other countries, additional verification and reporting requirements could apply. These regulations’ requirements, as well as any future regulation and any additional restrictions, could raise our costs significantly and reduce the attractiveness of the Company if failure to comply with anti-money laundering laws results in significant criminal and civil lawsuits, penalties, and forfeiture of significant assets.

Sanctions

As a U.S-incorporated entity, MercadoLibre is subject to U.S. sanctions administered by the Office of Foreign Assets Control (“OFAC”). MercadoLibre’s non-U.S. subsidiaries are required to comply not only with local but also with U.S. sanctions in the same way that MercadoLibre is required to do so. OFAC has the authority to impose civil penalties for violations of U.S. sanctions, and the U.S. Department of Justice is authorized to bring criminal actions against persons that willfully violate U.S. sanctions. Compliance with United Nations sanctions is also mandatory under local law in the jurisdictions where MercadoLibre operates. Failure to comply with any such obligations could result in significant criminal and civil penalties, in addition to reputational and operational consequences.

Shipping

A number of jurisdictions where we operate have enacted legislation regulating shipping services. If we fail to comply with shipping services laws or regulations, or if we engage in an unauthorized shipping business, we could be subject to liability, required to cease doing business with residents of certain countries, or to change our business practices or to become a postal entity. Any change to our Mercado Envios business practices that makes the service less attractive to customers or prohibits its use by residents of a particular jurisdiction could decrease the speed of trade on the Mercado Libre Marketplace, which would further harm our business. Even if we are not required to change our Mercado Envios business practices, we or our service providers could be required to obtain licenses or regulatory approvals, which could be a very expensive and time consuming process, and we cannot assure that we would be able to obtain them in a timely manner or at all.

Sale, Storage and/or Transportation of Goods and Services

Laws specifying the scope of liability of providers of online services for the activities of their users through their online service are currently unsettled in most of the Latin American countries where we operate. This regulatory uncertainty may lead us to engage in administrative and judicial proceedings to dispute claims for fraudulent activities committed by sellers, vendors or third-party carriers and losses incurred by buyers when purchasing items through our platform, which may give rise to high litigation or settlement costs and other liabilities, including reputational harm.

Our policies prohibit the sale, storage and/or transport of certain items (both on our platform and/or in our fulfillment centers and/or through third party carriers providing services to users of Mercado Libre) and we have implemented various actions to monitor and remove unlawful goods and services from our marketplace, which we continually work to improve.

However, we are aware that certain goods, such as alcohol, tobacco, firearms, protected animal species, adult material, medication, drugs and other goods that may be subject to regulation by local or national authorities of various jurisdictions have been traded by users on the Mercado Libre Marketplace in complete infringement to our policies, bypassing our various security efforts and measures, to go undetected. We have at times been—and may continue to be—subject to fines for certain users’ sales of products that have not been approved or infringe laws dictated by the applicable government. We are also aware that certain goods expressly excluded from our shipping services pursuant to our policies were stored in our fulfillment centers and/or delivered through third-party carriers providing services to our users.

We cannot provide any assurances that we will successfully avoid civil or criminal liability for unlawful activities that our users, service providers or third-party carriers carry out when using our services in the future. If we suffer potential liability for any unlawful activities of our users, service providers or third-party carriers, including as a result of damages to individuals or assets, we may need to implement additional measures to reduce our exposure to this liability, which may require, among other things, that we spend substantial resources and/or discontinue certain service offerings. Any costs that we incur as a result of this liability or asserted liability could have a material adverse effect on our business, results of operations and financial condition.

It may be difficult to enforce judgments rendered against us in U.S. courts

Although we are a Delaware corporation, our subsidiaries and most of our assets are located outside of the U.S. Furthermore, most of our directors, officers, and some advisors and experts named in this report reside outside the U.S. As a result, it may not be possible to effect service of process within the U.S. upon these persons. Moreover, uncertainty exists as to whether courts outside of the U.S. would recognize or enforce judgments rendered against us, our subsidiaries, or the above mentioned persons in U.S. courts and predicated on the civil liability provisions of U.S. federal securities laws. In addition, any original or enforcement action in a court outside the U.S. will be subject to compliance with procedural requirements under applicable local law, including the condition that the judgment does not violate the public policy of the applicable jurisdiction.

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Intellectual Property Risks

We could face legal and financial liability upon the sale of items that infringe intellectual property rights of third parties and for information and material disseminated through our platforms

We have received in the past, and anticipate that we will receive in the future, complaints alleging that certain items listed or sold through the Mercado Libre Marketplace or Mercado Shops or using Mercado Pago, or delivered by Mercado Envios infringe third-party copyrights, trademarks and/or other IP rights. Content owners and other IP owners have been active in asserting their rights against online companies, including us. Our user policy prohibits any content or sale of goods that may infringe third-party IP rights and we may, proactively, or at the request of any IP owner who enrolls in our notice and takedown mechanism, the brand protection program, remove listings based on violations of our policies, as well as sanction any user who infringes third-party IP rights.

Despite these measures and our efforts to combat IP infringement, we are not able to prevent all misappropriation, violation or infringement of IP rights—and some IP owners may consider our efforts insufficient. Mercado Libre was included on the United States Trade Representative’s Notorious Markets List for 2020 and also on the European Commission’s 2020 Counterfeit and Piracy Watch List. Although we were removed from both watchlists in 2022, and we have not been included since then, it is possible that we may continue to be nominated or included in these and/or any other similar watchlists. We have also received, and anticipate that we may continue to receive, legal claims from content and IP owners alleging violations of their IP rights and also from users affected by listing takedowns and account restrictions, which could result in substantial monetary damages awards, penalties or costly injunctions against us, as well as adversely affect our reputation. It is also possible that new laws and regulations may be adopted with respect to intermediary liability or mandatory out-of-court procedures to resolve any disputes related to intermediary liability that could have a material adverse effect on our operations.

It is also possible that third parties could bring claims against us for defamation, libel, invasion of privacy, negligence, or other theories based on the nature and content of the materials disseminated through our platforms, particularly by our users. If we are held liable or potentially liable for information carried on or disseminated through our platforms, we may have to pay monetary damages, be subject to enforcement actions, injunctions, fines or penalties, and it may have an adverse impact on our business model, including our level of exposure to liability. Any measures we may need to implement to reduce that exposure may involve spending substantial resources and/or discontinuing certain services, which could have a material adverse effect on our business, results of operations and financial condition. In addition, public attention to liability issues, lawsuits and legislative proposals could have an adverse impact on our business model and reputation, and—consequently—on our business results.

We may not be able to adequately protect and enforce our intellectual property rights. We could potentially face claims alleging that our technologies infringe the property rights of others

Our IP rights are pivotal to our continued growth and success. These rights are safeguarded through a combination of copyright, trademark, patent, trade secret laws, and contractual measures. With the rapid expansion of our business in recent years, we have witnessed a concurrent rise in infringement on our IP rights, notably on social media platforms. This includes issues such as unauthorized domain name registrations, deceptive apps and counterfeit or fraudulent websites. While we have undertaken measures to defend our IP rights, there is no guarantee that these actions, or any future efforts, will effectively deter misappropriation, safeguard against the dilution of our trademarks, or prevent third parties from creating similar or competing technologies.

Our trademark portfolio is owned by MercadoLibre, Inc. and its subsidiaries. There are no material intellectual property assets jointly owned with any third party. The most valuable intellectual property owned by us is the “Mercado” trademark family portfolio, namely, Mercado Libre and Mercado Pago, among others, and related domain names ("TLDs" and "ccTLDs"), as well as our proprietary software.

We pursue the registration of our IP and other intangible assets in each country where we operate. However, we may not have sufficient protection or such protection might not be granted to us by the appropriate regulatory authority in every country where our services are available online. Thus, our ability to protect our brands and our products and services against third-party infringers may be compromised and we could face claims by third-party IP owners. Any claims relating to these issues, whether meritorious or not, could cause us to enter into costly litigation or settlements, potentially including royalty arrangements, awards of monetary damages or orders limiting our ability to sell our products and services. We may also be required to enter into licensing agreements, which may be on terms that are unfavorable to us and some of the licenses may be not be available to us at all. If any of these claims against us are successful, we may also have to modify some of our brand identifiers and/or domain names in certain countries or stop offering certain features, functionalities, products or services in certain jurisdictions. Any of these circumstances could divert the attention of management and adversely affect our business, results of operations and financial situation.

We have licensed in the past, and expect that we may license in the future, certain of our proprietary rights, such as trademarks or copyrighted material, to third parties. Though our license agreements contain customary restrictions on our licensees, and we exercise oversight over our licensees’ use of our IP, our licensees may take actions that could affect the value of our proprietary rights or reputation, which could have a material adverse effect on our business, results of operations and financial condition. Further, many of our agreements with our customers and partners, the terms of which often survive termination or expiration of the applicable agreement, require us to defend such parties against certain intellectual property infringement claims and indemnify them for damages and losses arising from certain intellectual property infringement claims against them, which have in the past resulted, and could in the future result, in increased costs for defending such claims or significant damages if there is an adverse ruling in any such claims. These defense costs and indemnity payments could materially and adversely affect our results of operations, financial condition, business and prospects. Such customers and partners may also discontinue the use of our products and services as a result of injunctions or otherwise, which could result in loss of revenue and adversely affect our business.

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Some of our know-how or technology is not patented or patentable and may constitute trade secrets. To protect our trade secrets, we have a policy of requiring our employees, consultants, advisors and other collaborators who contribute to our material intellectual property to enter into confidentiality agreements. We also rely on customary contractual protections with our suppliers and customers, and we implement security measures intended to protect our trade secrets, know-how and other proprietary information. However, no assurances can be given that those contracts will not be breached. Further, those contracts and arrangements may be ineffective in protecting our trade secrets or confidential information and may not prevent unauthorized disclosure.

The integration of AI tools into our products and services presents significant IP challenges. Determining IP ownership for AI-generated content remains ambiguous in some jurisdictions, which may potentially lead to infringement claims by third parties. AI tools might also unintentionally access or use third party IP or generate outputs which may contain or be substantially similar to third-party material protected by intellectual property rights, including patents, copyrights or trademarks, heightening our exposure to IP disputes. Using third-party AI tools raises concerns about the origin of content, which may lead to IP infringements that could inadvertently implicate us. Inventions or works of authorship created through the use of AI/ML may be based or rely on, or contain, materials that were used in the training of such AI/ML technologies and which are identical or similar to third-party intellectual property, which could further limit our ability to obtain intellectual property protection in such inventions or works of authorship. Moreover, there is a risk that an employee may input confidential information, including material non-public information, trade secrets or personal identifiable information, into AI/ML applications, resulting in such information becoming accessible by third parties, including our competitors. As AI tools continue to evolve, ensuring protection against IP infringement and avoiding risks related to leaks of confidential information becomes progressively more challenging. Such challenges could also affect our consumers’ and the public’s perception of our Company.

Our Company extensively utilizes open source software (“OSS”), presenting significant intellectual property challenges. We have established the OSPO (Open Source Program Office) to oversee OSS compliance, contribute to open source project development, and implement company-wide OSS usage policies. Despite the implementation of OSPO, we cannot guarantee that all of our employees accurately use and integrate OSS tools. As a result, given the high level of OSS consumption in our Company, we cannot guarantee that our use of OSS software will not inadvertently infringe upon third-party intellectual property rights or fully comply with pertinent OSS licenses. In addition, we cannot guarantee that our employees will not disclose any Company software to the open source software community. From time to time, companies that use OSS have faced claims challenging the use of OSS and/or demanding compliance with open source license terms. We could be subject to suits by parties claiming non-compliance with open source licensing terms. Moreover, these licenses may subject us to certain unfavorable conditions, including requirements that we offer our products that incorporate, are based on or that link to OSS for no cost, that we make publicly available the source code for any of our proprietary software that we create based upon, or that incorporates, links to or otherwise uses the OSS, or that we license such software under the terms of the particular open source license.

Additionally, the AI/ML technologies in our product offerings and operations may be trained on data sets that include open source software or may draw from sources that might subject our AI/ML technologies to certain license restrictions or other obligations. While we monitor and control the use of open source software in our products and services, and we try to ensure that no open source software is used in such a way to require us to subject our proprietary software to open source licensing terms (including to disclose the source code to third parties), there can be no guarantee that such use could not inadvertently occur. Further, use of open source AI/ML technologies poses additional risks relating to the underlying training data sets, including an increased risk in intellectual property infringement or non-compliance with open source license terms as a result of such training data sets potentially derived from data sourced without permission or outside the scope of the underlying open source license, as well as challenges in asserting copyright ownership on new code (resulting output) generated from AI/ML technologies. Use of open source software may also give rise to security risks, including due to lack of proper maintenance and support for such open source software. Any of the foregoing could harm our intellectual property rights and materially and adversely affect our operations, financial condition, business and prospects.

As our Company’s business grows and our reliance on OSS and AI tools increases, the potential risk of facing IP claims becomes more pronounced. Addressing these infringement claims can be costly, time-consuming, and could significantly impact our business, operational results, financial health and reputation.

Cybersecurity and Technology Risks

Any delay or problem with operating or upgrading our existing information technology infrastructure could cause a disruption in our business and adversely impact our financial results

Our ability to operate our business on a day-to-day basis largely depends on the efficient operation of our information technology infrastructure and our cloud providers, the largest of which are Amazon Web Services and Google Cloud Platform. We have been and continue to be susceptible to hacks into our systems or other security breaches by unauthorized third parties. We are also susceptible to errors in connection with any systems upgrade or migration to a different hardware or software system, errors or incidents of our cloud providers, bugs or other problems for any of the software we use, either developed in-house or provided by third parties. Security breaches, regulatory requirements, national security prohibitions or other developments that might prevent these third parties from providing services to us or our users could harm our business.

Our systems and our information technology infrastructure are vulnerable to damage or interruption from natural or man-made disasters, power loss, computer viruses, telecommunication and other operational failures, ransomware attacks or any other kind of denial of service related attacks, physical or electronic break-ins, sabotage, intentional acts of vandalism, terrorism, public health crises (including pandemics), extreme weather (including as a result of climate change) and similar events. The public cloud providers we use could also decide to close their facilities or be required to suspend the provision of services.

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Any steps that we may take to upgrade and improve the stability and efficiency of our information technology may not be sufficient to avoid defects or disruptions in our technology infrastructure, which could cause a disruption in our business and adversely impact our financial results. Our systems are not fully redundant and our disaster recovery planning may not be sufficient. We do not have insurance coverage to compensate for any related losses. Any errors, defects, disruptions, interruptions, delays or cessation of service could result in significant disruptions to our business that could ultimately be more expensive, time consuming and resource-intensive than anticipated. We have experienced and will likely continue to experience defects or disruptions in our technology infrastructure, including system interruptions and delays that make our site and services unavailable or slow to respond for periods of time, which could adversely impact our ability to process transactions on our sites, apps or fulfill shipments, which could reduce our revenue, violate applicable regulations, adversely affect our reputation with or result in the loss of users and negatively impact our financial results.

We are subject to security breaches, disruption and confidential data theft from our systems, which can adversely affect our reputation and business

A significant risk to our business lies both in the secure transmission of confidential information over public networks and in the continuity of our operations, given our heavy reliance on technology. We rely on encryption, authentication, data protection, infrastructure and application security hardening, monitoring and response measures to safeguard our systems and securely transmit confidential information. However, advances in computing capabilities, new discoveries in cryptography or other unforeseen events may compromise the technology we use to protect customer transaction data. There is no assurance that the security measures we have put in place will be effective in every case, and our response process to incidents may not be adequate, may fail to accurately assess the severity of an incident, may not be fast enough to prevent, detect and report or limit harm or may fail to sufficiently remediate an incident. Failures and breaches in security could result in a negative impact for us and for our customers, adversely affecting our and our customers’ businesses, assets, revenues, brands and reputations, disrupting our operations and resulting in penalties, fines, litigation, regulatory proceedings, regulatory investigations, remediation efforts, indemnification expenditures, increased insurance premiums, reputational harm, negative publicity, lost revenues and/or other potential liabilities, in each case depending on the nature of the information disclosed.

The techniques employed to gain unauthorized, improper or illegal access to our systems, data, or customers' data—such as disabling or degrading services or sabotaging systems—are constantly evolving. These techniques have become increasingly complex and sophisticated, can be challenging to detect quickly and are often not recognized until actively deployed against a target. Also, the development and proliferation of AI/ML in addition to other related technologies, may increase our exposure to cyber-attacks and other cybersecurity risks by providing third parties with enhanced capabilities to breach our systems, and may require us to spend additional resources to further strengthen our defenses against such threat. While we may not initially assess some of these issues as material and may address them promptly, there is no guarantee that such incidents will not result in significant legal, financial or reputational harm, including government inquiries, enforcement actions, litigation and negative publicity.

Unauthorized parties have, and may continue to, attempt to gain access to our systems or facilities through various means, including hacking into our systems or those of our customers, partners or vendors. They may also attempt to fraudulently induce our employees, customers, partners, vendors or other system users to disclose usernames, passwords, payment card information or other sensitive data. Such information could then be used to access our information technology systems or those of our third-party partners. Our users have been, and will likely continue to be, targeted by fraudulent “spoof” and “phishing” emails that appear to originate from Mercado Libre, Mercado Pago or another user of our services. These emails direct recipients to fake websites operated by malicious actors or falsely claim that a payment was credited by Mercado Pago, requesting that the recipient send a product or confidential information, such as passwords.

Our information technology systems and infrastructure, including our source code, as well as those of third parties with whom we collaborate, have been—and may continue to be—vulnerable to cyberattacks and security breaches. Unauthorized parties may gain access to customers' personal or proprietary information, including credit and debit card data stored on or accessible through these systems. This access could also disrupt our business operations, including financial, e-commerce and logistics services.

Furthermore, our security measures may be compromised due to human error, misconduct, system malfunctions, vulnerabilities or other irregularities. Efforts to address undesirable activities on our platform may also increase the risk of retaliatory attacks.

Additionally, remediation efforts may not be successful and could result in interruptions, delays or cessation of service, unfavorable publicity, damage to our reputation, customer allegations of breach-of-contract, possible litigation, and loss of existing or potential customers that may impede our sales or other critical functions.

While we maintain certain insurance policies, we do not carry insurance that reimburses us for losses caused by security breaches. Some of our systems have experienced past security breaches that did not have a material adverse effect on our operating results or reputation. However, there is no assurance that future breaches will have a similar outcome. We cannot guarantee that our security measures will prevent breaches or that the failure to prevent such incidents will not materially affect our business, operations, financial condition or reputation. Moreover, any network or data security breaches involving companies we acquire, our customers, partners or vendors—including service providers—could result in similar negative consequences.

We may not be able to secure licenses for technologies on which we rely

We rely on certain technologies that we license from third parties that supply key database technology, operating systems and specific hardware components for our services. We cannot assure you that these technology licenses will continue to be available to us on commercially reasonable terms, or at all. If we were not able to make use of this technology, we would need to obtain substitute technology that may be of lower quality or performance standards or be obtained at greater cost, which could materially adversely affect our business, results of operations and financial condition. Although we generally have been able to renew or extend the terms of contractual arrangements with these service providers on acceptable terms, we cannot assure you that we will continue to be able to do so in the future.

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Risks related to doing business in Latin America

We face the risk of political and economic crises, instability, terrorism, civil strife, labor conflicts, expropriation, corruption and other risks of doing business in emerging markets

We conduct our operations in emerging market countries in Latin America, which have historically experienced uneven periods of economic growth, as well as recession, periods of high inflation and economic instability. There has been increased violence, crime, social and political turmoil and unrest in some of these countries, which could result in disruptions to our operations or present risks to our employees. These developments, as well as other economic and political developments in these countries, including future economic changes or crises (such as inflation, currency devaluation or recession), government deadlock, social and political turmoil and unrest, changes in laws and regulations, labor conflicts, expropriation or nationalization of property, and exchange controls could impact our operations or the market value of our common stock and have a material adverse effect on our business, financial condition and results of operations.

We also have operations and deal with government entities and financial institutions in countries in Latin America known to experience corruption. Our activities in these countries create the risk of unauthorized payments or offers of payments by our employees, contractors or agents that could be in violation of various laws including the FCPA, even though these parties are not always subject to our control. Our existing safeguards and any future improvements may prove to be less than effective, and our employees, contractors or agents may engage in conduct for which we may be held responsible. Violations of the FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our reputation and business. Further, to the extent corruption, bribery and similar practices continue to exist in the region, international investor perception of the region could be negatively affected, which could in turn negatively affect our business, financial condition and results of operations.

Our employees in Brazil and some of our employees in Argentina, Mexico, Chile and Uruguay are currently represented by a labor union, and employees in other Latin American countries may eventually become unionized. We may incur increased payroll costs or reduced flexibility under labor regulations if unionization in other countries were to occur, any of which may negatively impact our business. In addition, we could be affected by conflicts between unions which claim representation of our employees that could generate additional payroll costs and labor conflicts.

Although economic and political conditions may differ from one country to another, we cannot assure you that events in one country alone will not adversely affect our business, financial condition or the market value of our common stock.

Latin American governments have exercised and continue to exercise significant influence over the economies of the countries where we operate. This involvement, as well as political and economic conditions, could adversely affect our business

Governments in Latin America frequently intervene in the economies of their respective countries and occasionally make significant changes in policy and regulations. Governmental actions to control inflation and other policies and regulations have often involved, among other measures, price controls, currency devaluations, export duties, capital controls and limits on imports. Our business, financial condition, results of operations and prospects may be adversely affected by changes in government policies or regulations, including such factors as: exchange rates and exchange control policies; inflation rates; interest rates; tariff and inflation control policies; price control policies; import duties and restrictions; liquidity of domestic capital and lending markets; electricity rationing; tax policies, including royalty, tax increases and retroactive tax claims; and other political, diplomatic, social and economic developments in or affecting the countries where we operate.

Reduced foreign investment in any of the countries where we operate may have a negative impact on such country’s economy, affecting interest rates and the ability of companies such as ours to access financial markets.

Local currencies used in the conduct of our business are subject to depreciation, volatility and exchange controls

Most Latin American countries have historically experienced, and may continue to experience in the future, high rates of inflation, which could lead to further government intervention in the economy, including the introduction of government policies that could adversely affect our results of operations. Brazil, Argentina and Mexico, which together accounted for 95.6% and 95.7% of our net revenues and financial income for 2025 and 2024, respectively, have experienced volatility and significant devaluations in the past. For the year ended December 31, 2025, the inflation rate in Brazil, Argentina and Mexico was 4.3%, 31.5% and 3.7%, respectively. Since July 1, 2018, we have classified our Argentine operations as highly inflationary in accordance with U.S. GAAP, and use the U.S. dollar as the functional currency of our Argentine subsidiaries for purposes of reporting our financial statements. Argentina’s annual inflation rate for the years ended December 31, 2025, 2024 and 2023 was 31.5%, 117.8% and 211.4%, respectively, and Argentina’s official exchange rate against the U.S. dollar increased 41.0%, 27.7% and 356.3%, respectively.

The depreciation of local currencies creates inflationary pressures that may have an adverse effect on our results of operations, including affecting our ability to adjust the price of our services sufficiently to offset the effects of inflation on our cost structures and generally restricting access to the international capital markets. A high inflationary environment could also have negative effects on the level of economic activity, employment and may adversely affect our business and results of operations. On the other hand, the appreciation of local currencies against the U.S. dollar may lead to the deterioration of public accounts and the balance of payments of the countries where we operate, and may reduce export growth in those countries.

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Because we conduct our business outside the U.S. and receive almost all of our revenues and financial income in currencies other than the U.S. dollar, but report our results in U.S. dollars, we face exposure to adverse movements in currency exchange rates. The results of operations in the countries where we operate are exposed to foreign exchange rate fluctuations as our financial results are translated from the applicable local currency into U.S. dollars upon consolidation. If the U.S. dollar weakens against foreign currencies, as has occurred in some years, the translation of these foreign-currency-denominated transactions will result in increased net revenues and financial income, operating expenses, and net income. Similarly, our net revenues and financial income, operating expenses, and net income will decrease if the U.S. dollar strengthens against the foreign currencies of countries in which we operate. For the year ended December 31, 2025, 52.6% of our net revenues and financial income was denominated in Brazilian Real, 22.4% in Mexican Pesos and 20.6% in Argentine Pesos. Certain of our subsidiaries may be subject to exchange control regulations that might restrict their ability to convert local currencies into U.S. dollars. Brazilian law provides that whenever there is a serious imbalance in Brazil’s balance of payments or reason to foresee a serious imbalance, the Brazilian government may impose temporary restrictions on the remittance to foreign investors of the proceeds of their investments in Brazil.

In recent years, extensive exchange controls implemented by the Argentine government have controlled and restricted the ability of companies and individuals to exchange Argentine Pesos for foreign currencies and their ability to remit foreign currency out of Argentina. An entity’s authorization request to the CBA to access the official exchange market to make foreign currency payments may be denied depending on the circumstances. As a result of these exchange controls, markets in Argentina have developed trading mechanisms to access U.S. dollars locally or outside Argentina.

Regulations issued by the current Argentine government have partially decreased exchange controls; however, there can be no assurance that the CBA or other government agencies will not subsequently increase controls or restrictions, make modifications to these regulations or establish more severe restrictions on currency exchange, which could affect the ability to make payments to foreign creditors or providers and dividend payments to foreign shareholders. These exchange controls and restrictions have in the past materially adversely affect the business, financial condition and results of operations of our Argentine subsidiaries and their ability to comply with their foreign currency obligations, and could significantly impact our ability to receive cash from our Argentine subsidiaries and our ability to meet our obligations, each of which could have a material adverse effect on our Company.

Our transactions in Latin America may be impacted by the weaknesses of secure payment methods

Consumers and merchants in Latin America can be held fully liable for credit card and other losses due to third-party fraud. As secure methods of payment for digital transactions have not been widely adopted in Latin America, both consumers and merchants generally have a relatively low confidence level in the integrity of these transactions. Unless consumer fraud laws in Latin American countries are modified to protect merchants and consumers, and until secure, integrated online payment processing methods are fully implemented across the region, our ability to generate revenues may be limited, which could have a material adverse effect on our Company. In addition, while banks and other financial institutions in Latin America have generally granted merchants the right to process online transactions, adjustments to the fraud and risk management processes of these banks and financial institutions, including due to concerns about credit card fraud, may negatively impact our payments approval rates.

Risks related to our shares

Provisions of our certificate of incorporation and Delaware law could inhibit others from acquiring us, prevent a change of control, and may prevent efforts by our stockholders to change our management

Certain provisions of our certificate of incorporation and by-laws may inhibit a change of control that our board of directors does not approve or changes in the composition of our board of directors, which could result in the entrenchment of current management and may delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of our stockholders.

These provisions include: i) advance notice requirements for stockholder proposals and director nominations; ii) a staggered board of directors; iii) limitations on the ability of stockholders to remove directors other than for cause; iv) limitations on the ability of stockholders to own and/or exercise voting power over 20% of our common stock; v) limitations on the ability of stockholders to amend, alter or repeal our by-laws; vi) the inability of stockholders to act by written consent; vii) the authority of the board of directors to adopt a stockholder rights plan; viii) the authority of the board of directors to issue, without stockholder approval, preferred stock with any terms that the board of directors determines and additional shares of our common stock; and ix) limitations on the ability of certain stockholders to enter into certain business combinations with us, as provided under Section 203 of the Delaware General Corporation Law.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of our operations in conjunction with our audited consolidated financial statements and the notes to those statements included elsewhere in this report. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled “Risk Factors” and elsewhere in this report.

The discussion and analysis of our financial condition and results of operations has been organized to present the following:

■ a brief overview of our Company;

■ a review of our critical accounting policies and estimates;

■ a discussion of our principal trends and results of operations for the years ended December 31, 2025, 2024 and 2023;

■ a discussion of the principal factors that influence our results of operations, financial condition and liquidity;

■ a discussion of our liquidity and capital resources and a discussion of our capital expenditures;

■ a description of our key performance indicators; and

■ a description of our non-GAAP financial measures.

For discussion on results from 2024 compared to 2023, please refer to “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2024.

Certain monetary amounts included elsewhere in this document have been subject to rounding adjustments. Accordingly, figures shown as totals and percentages in certain tables may not be the arithmetic aggregation of the figures that precede them.

Business Overview

Our e-commerce platform is the leader in the Latin America region based on GMV, and our fintech platform is the leader in MAUs amongst fintech companies in Argentina, Chile and Mexico, and the second largest in Brazil. Mercado Libre's e-commerce platform is present in 18 countries (Argentina, Brazil, Mexico, Chile, Colombia, Peru, Uruguay, Venezuela, Bolivia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Honduras, Nicaragua, Panama, Paraguay and El Salvador) and our fintech platform, Mercado Pago, is present in 8 countries (Argentina, Brazil, Mexico, Chile, Colombia, Peru, Uruguay and Ecuador). Our ecosystem provides consumers and merchants with a complete portfolio of services to enable buying and selling online, and the processing of payments online and offline, as well as offering a wide array of simple day-to-day financial services.

We offer our users an ecosystem of integrated e-commerce and digital financial services, which includes: the Mercado Libre Marketplace, the Mercado Pago fintech platform, the Mercado Envios logistics service, the Mercado Ads solution and the Mercado Libre Classifieds service.

Our e-commerce platform provides buyers and sellers with a robust and safe environment that fosters the development of a large e-commerce community in Latin America, a region with a population of over 650 million people where penetration of e-commerce over total retail significantly lags benchmarks such as the United States of America (“U.S.”), the United Kingdom (“U.K.”) and China. We believe that we offer world-class technological and commercial solutions that address the distinctive cultural and geographic challenges of operating a digital commerce platform in Latin America.

The Mercado Libre Marketplace is a user-friendly online commerce platform that can be accessed through our mobile app or website. Third-party sellers (“3P”) account for most of the GMV transacted on the Marketplace. We complement this by selling directly to consumers on a first-party basis (“1P”) in selected categories where we can enhance price competitiveness and assortment; this accounts for less than 10% of GMV. The Marketplace has an extensive assortment of products, with a wide range of categories including consumer electronics, apparel and beauty, home goods, automotive accessories, toys, books and entertainment and consumer packaged goods. We also have a selection of international products available, primarily from sellers in China and the U.S., through our cross-border trade (“CBT”) operations. Our users can also list vehicles, properties and services they are looking to sell via Mercado Libre Classifieds. These listings differ from our Marketplace listings because we charge placing fees only, not final value fees.

Mercado Envios is a logistics solution that is one of the value-added services that we offer to our sellers and buyers on our platform. The logistics services we offer are an integral and crucial part of our value proposition as they reduce friction between buyers and sellers, allow us to have greater control over the full user experience and enable faster deliveries at a more competitive cost than would otherwise be available with third-party carriers. Sellers that use Mercado Envios are eligible to access shipping subsidies that enable free or discounted shipping for consumers that buy sellers’ goods on our Marketplace. Our logistics network is built around fulfillment centers (which accounts for more than half of shipments) where sellers place their inventory in our warehouses, and cross-docking, where we collect items sold from sellers directly or via a network of thousands of partner stores (“MELI Places”) where sellers drop off sold items that need to be fed into our logistics network. MELI Places are also enabled for pick up of items purchased and processing of returns. Our transportation network includes dedicated aircraft, trucks and thousands of last-mile delivery vans, the vast majority of which are owned and operated by our third-party carriers.

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Our advertising platform, Mercado Ads, is another value-added service that we offer to sellers on our platform and brands both on- and off-platform. The platform enables sellers and brands to access the millions of consumers who browse and purchase on our Marketplace, as well as the first-party data that all of these engagements generate. This enables advertisers to target highly granular audiences. The products we offer are Product Ads (sponsored listings), Brands Ads (product carrousels), Display Ads (banners) and Video Ads, the last two of which we are able to offer inventory off-platform as well as on our own Marketplace and fintech platform.

Mercado Shops is a service we offer to sellers to complement their business on our Marketplace. It is a digital storefront solution that allows sellers to set up, manage and promote their own digital stores, whilst using Mercado Libre's logistics, advertising and payments services. In January 2025, we announced the migration of Mercado Shops to “Mi Página,” which offers similar functionalities but is fully embedded within our Marketplace (without an external storefront). Mercado Shops was discontinued as of December 31, 2025.

Mercado Pago was initially designed to facilitate transactions on Mercado Libre’s Marketplace by providing a mechanism that allowed our users to securely, easily and promptly send and receive payments. This brought trust to the merchant-consumer relationship. In the countries in which Mercado Pago operates, it processes and settles all transactions on our Marketplace.

Beyond facilitating Marketplace transactions, over the years we have expanded our array of Mercado Pago services to third parties outside Mercado Libre’s Marketplace. We began first by satisfying the growing demand for online-based payment solutions by providing merchants the necessary digital payment infrastructure for e-commerce to flourish in Latin America.

Our lending solution is available in Argentina, Brazil, Mexico and Chile. We offer loans mostly to merchants and consumers that already form part of our user base, many of whom have historically been underserved or overlooked by financial institutions and therefore suffer from a lack of access to credit. Facilitating credit is a key service overlay that enables us to further strengthen the engagement and lock-in rate of our users, while also generating additional touchpoints and incentives to use Mercado Pago as an end-to-end financial solution.

Our asset management product, which is available in Argentina, Brazil, Mexico and Chile, is a critical pillar of our financial services offering that enables us to compete with large banks. This product offers remuneration on balances held in the Mercado Pago digital account that is greater than traditional checking and savings accounts. This enables our users to earn a return with funds remaining available for withdrawal or to make payments without their funds being tied up in a time deposit.

As an extension of our asset management and savings solutions for users, we launched a digital assets feature as part of the Mercado Pago account in Brazil, Mexico and Chile, in 2021, 2022 and 2023, respectively. This service allows our millions of users to purchase, hold and sell selected digital assets through our interface without leaving the Mercado Pago application, while a partner acts as the custodian and offers the blockchain infrastructure platform. This feature is available for all users through their Mercado Pago account. In 2024 and 2025 we launched “Meli Dólar,” a stablecoin that is pegged to the US dollar, in Brazil, Mexico and Chile. Members of our loyalty program receive their cashback in Meli Dólar and all Mercado Pago users can buy, hold and sell the stablecoin without any fees.

Reporting Segments and Geographic Information

Our segment reporting is based on geography, which is the criterion our Management currently uses to evaluate our segment performance. Our geographic segments are Brazil, Mexico, Argentina and Other Countries (including Bermuda, Chile, China, Colombia, Costa Rica, Ecuador, Peru, Uruguay and the U.S.). Although we discuss long-term trends in our business, it is our policy not to provide earnings guidance in the traditional sense. We believe that uncertain conditions make the forecasting of near-term results difficult. Further, we seek to make decisions focused primarily on the long-term welfare of our Company and believe focusing on short-term earnings does not best serve the interests of our stockholders. We believe that execution of key strategic initiatives as well as our expectations for long-term growth in our markets will best create stockholder value. A long-term focus may make it more difficult for industry analysts and the market to evaluate the value of our Company, which could reduce the value of our common stock or permit competitors with short-term tactics to grow more rapidly than us. We, therefore, encourage potential investors to consider this strategy before making an investment in our common stock.

The following table sets forth the percentage of our consolidated net revenues and financial income by segment for the years ended December 31, 2025, 2024 and 2023:

Year Ended December 31,

(% of total consolidated net revenues and financial income)

Brazil

Mexico

Argentina

Other countries

(1) Recast for consistency with the current presentation due to the change in the presentation of certain financial results. Please refer to Note 2 – Summary of significant accounting policies - Change in the presentation of certain financial results and reclassification of 2023 results to our audited consolidated financial statements for further details.

Net revenues and financial income for the year ended December 31, 2025 as compared to the year ended December 31, 2024 are described in “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of operations— Net revenues and financial income.

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Critical Accounting Policies and Estimates

The preparation of our audited consolidated financial statements and related notes requires us to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We have based our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management has discussed the development, selection and disclosure of these estimates with our audit committee and our board of directors. Actual results may differ from these estimates under different assumptions or conditions.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements. We believe that the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of our audited consolidated financial statements. You should read the following descriptions of critical accounting policies, judgments and estimates in conjunction with our audited consolidated financial statements and the notes thereto and other disclosures included in this report.

For an analysis of our Critical Accounting Policies and Estimates please refer to Note 2 – Summary of significant accounting policies to our audited consolidated financial statements included elsewhere in this report.

Allowance for doubtful accounts

For loans receivable that share similar risk characteristics such as product type, country, unpaid installments, days delinquent, and other relevant factors, we estimate the lifetime expected credit loss allowance based on a collective assessment. The same methodology is applied for the measurement of the current expected credit losses (“CECL”) for the exposure to off balance sheet unused agreed loan commitment on credit cards portfolio. The lifetime expected credit losses is determined by applying probability of default and loss given default models to monthly projected exposures, then discounting these cash flows to present value using the portfolio’s loans interest rate, estimated as a weighted average of the original effective interest rate of all the loans that conform to the portfolio segment. The probability of default is an estimation of the likelihood that a loan receivable will default over a given time horizon. For most of the products, probability of default models (“PDs”) are estimated using a survival methodology; these PDs are constructed using individual default information through time, taking into account the expected future delinquency rate (forward-looking models) using three probability-weighted macroeconomic scenarios (base, optimistic and pessimistic) following the increased complexity and possible outcomes of the global, regional and domestic macroeconomic performance, so that the models include macroeconomic outlook or projections and recent performance. With this model, we estimate marginal monthly default probabilities for each delinquency bucket, type of product and country. Each marginal monthly probability of default represents a different possible scenario of default. However, for new products with limited historical information such as asset backed loans, we estimate PDs using roll rates/transition, until sufficient history is available to migrate to fully empirical approaches. The exposure at default is equal to the receivables’ expected outstanding principal, interest and other allowable balances. We estimate the exposure at default that the portfolio of loans would have in each possible moment of default, meaning for each possible scenario mentioned above. For credit cards loans we estimate an amortization pattern based on historical information. Also, for Brazil credit cards loans, we use, as applicable, a one month credit conversion factor (“CCF”) estimated according to terms and conditions, considering the increase in the volume of credit cards portfolio. The loss given default (“LGD”) is the percentage of the exposure at default that is not recoverable. The LGD is estimated using work-out and Chainladder approaches. This percentage depends on days past due, type of product and country, and is estimated by measuring an average of historical recovery rates from defaulted credits. For asset-backed products, since there is almost no information to apply either a work-out or Chainladder approach, we use the Basel III guidelines for credit risk management. The measurement of the CECL is based on probability-weighted scenarios (probability of default for each month), in view of past events, current conditions and adjustments to reflect the reasonable and supportable forecast of future economic conditions. When Management considers that it is needed, we use an expert credit judgment overlay to reflect factors not captured in the results produced by the CECL model. Considering a hypothetical increase in the probability of default of 10%, we would have recognized an increase in our allowance for doubtful accounts for loans receivable and off-balance sheet unused agreed loan commitment on credit cards portfolio of approximately $99 million.

We believe that the accounting estimate related to allowance for doubtful accounts on loans receivable is a critical accounting estimate because it requires Management to make complex assumptions and scenarios to estimate the CECL.

Contingencies

In connection with certain pending litigation and other claims, we have estimated the range of probable loss and provided for such losses through charges to our consolidated statements of income. These estimates are based on our assessment of the facts and circumstances and historical information related to actions filed against the Company at each balance sheet date and are subject to change based upon new information and future events.

From time to time, we are involved in disputes that arise in the ordinary course of business. We are currently involved in certain proceedings as discussed in “Item 3—Legal Proceedings,” and in Note 14 – Commitments and Contingencies to our audited consolidated financial statements. We believe that we have meritorious defenses to the claims against us, and we will defend ourselves accordingly. However, even if successful, our defense could be costly and could divert Management’s time. If the plaintiffs were to prevail on certain claims, we might be forced to pay material damages or modify our business practices. Any of these consequences could materially harm our business and could have a material adverse impact on our financial position, results of operations or cash flows.

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Income taxes

We are required to recognize a provision for income taxes based upon taxable income and temporary differences between the book and tax bases of our assets and liabilities for each of the tax jurisdictions in which we operate. This process requires a calculation of taxes payable under currently enacted tax laws in each jurisdiction and an analysis of temporary differences between the book and tax bases of our assets and liabilities, including various accruals, allowances, depreciation and amortization. The tax effect of these temporary differences and the estimated tax benefit from our tax net operating losses are reported as deferred tax assets and liabilities in our consolidated balance sheets. We also assess the likelihood that our net deferred tax assets will be realized from future taxable income. To the extent we believe that it is more likely than not that some portion or all of our deferred tax assets will not be realized, we establish a valuation allowance. As far we establish a valuation allowance or change the allowance in a period, we reflect the change with a corresponding increase or decrease in our “Income tax expense” line in our consolidated statements of income. Please refer to Note 2 – Summary of significant accounting policies and Note 13 – Income taxes to our audited consolidated financial statements for additional information regarding income tax.

Results of operations

Principal trends in results of operations

The information included in this section sets forth, for the years presented, certain data from our consolidated statements of income. This information should be read in conjunction with our audited consolidated financial statements and the notes to those statements included elsewhere in this report.

Net revenues and financial income

We disaggregate revenues into four geographical reporting segments. Within each of our segments, the services we provide and the products we sell generally fall into two distinct revenue streams: “Commerce” and “Fintech.”

Commerce revenues are mainly generated from:

■ marketplace fees that include final value fees and flat fees. Final value fees represent a percentage of the sale value that is charged to the seller once an item is successfully sold and flat fees represent a fixed charge for certain transactions below a certain merchandise value;

■ first party sales, which are generated when control of the good is transferred, upon delivery to our customers;

■ shipping fees, which are generated when an item is delivered through our shipping service. When we act as an agent, revenues derived from the shipping services are recognized at the time the transaction is successfully concluded for third-party sales, and presented net of the transportation costs charged by third-party carriers. When we act as principal, revenues derived from shipping services are recognized upon delivery of the good to the customer, and presented on a gross basis. In addition, the Company generates storage fees, which are charged to the seller for the utilization of the Company’s fulfillment facilities;

■ ad sales fees due to advertising services provided to sellers, vendors, brands and others, through product searches (product ads and brand ads) and display formats (including video ads and display programmatic), which are recognized based on the number of clicks and impressions, respectively;

■ classifieds fees due to offerings in vehicles, real estate and services, which are charged to sellers who opt to give their listings greater exposure throughout our websites;

■ subscription fees associated with MELI+ memberships and third party digital content subscriptions; and

■ fees from other ancillary businesses.

Fintech revenues and financial income are attributable to:

■ commissions representing a percentage of the payment volume processed that are charged to sellers in connection with off-Marketplace platform transactions;

■ commissions from additional fees we charge when a buyer elects to pay in installments through our Mercado Pago platform, for transactions that occur either on or off our Marketplace platform;

■ interest, cash advances and fees from credit cards, merchant, consumer and asset-backed loans granted under our lending solution;

■ revenues from our asset management product;

■ interest earned on investments as part of Mercado Pago activities, including those required due to fintech regulations, net of interest gains passed through to our Brazilian users in connection with our asset management product;

■ commissions that we charge from transactions carried out with Mercado Pago credit and debit cards;

■ revenues from the sale of mobile points of sale products;

■ revenues from insurtech fees;

■ commissions from additional fees we charge when our sellers elect to withdraw cash; and

■ fees from other ancillary services.

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Although we also process payments on the Marketplace, we do not charge sellers an added commission for this service, as it is already included in the Marketplace final value fee that we charge.

The functional currency for each country’s operations is the country’s local currency, except for Argentina, where the functional currency is the U.S. dollar due to Argentina’s status as a highly inflationary economy. Our net revenues and financial income are generated in multiple foreign currencies and then translated into U.S. dollars at the average monthly exchange rate. Please refer to Note 2 – Summary of significant accounting policies to our audited consolidated financial statements for further detail on foreign currency translation.

We have a highly fragmented customer revenue base given the large numbers of sellers and buyers who use our platforms. For the years ended December 31, 2025, 2024 and 2023, no single customer accounted for more than 5.0% of our net revenues and financial income.

Our net revenues and financial income grew during the year 2025, boosted by the growth of credit originations from our lending solution, an increase in total payment volume and fees due to payment in installments in our Mercado Pago platform, and the growth in gross merchandise volume.

The following table summarizes our consolidated net revenues and financial income for the years ended December 31, 2025, 2024 and 2023:

Year Ended December 31,

Change from 2024 to 2025

Year Ended December 31,

Change from 2023 to 2024

in Dollars

in Dollars

(In millions, except percentages)

(In millions, except percentages)

Net revenues and financial income

(1) Recast for consistency with the current presentation due to the change in the presentation of certain financial results. Please refer to Note 2 – Summary of significant accounting policies - Change in the presentation of certain financial results and reclassification of 2023 results to our audited consolidated financial statements for further details.

The following table summarizes our consolidated net revenues and financial income by revenue stream and geographic segment for the years ended December 31, 2025, 2024 and 2023:

Consolidated net revenues and financial income

Year Ended December 31,

Change from 2024 to 2025

Year Ended December 31,

Change from 2023 to 2024

in Dollars

in Dollars

(In millions, except percentages)

(In millions, except percentages)

Brazil

Commerce

Fintech

Mexico

Commerce

Fintech

Argentina

Commerce

Fintech

Other countries

Commerce

Fintech

Consolidated

Commerce

Fintech

Total

(1) Recast for consistency with the current presentation due to the change in the presentation of certain financial results. Please refer to Note 2 – Summary of significant accounting policies - Change in the presentation of certain financial results and reclassification of 2023 results to our audited consolidated financial statements for further details.

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See Note 8 – Segments of our audited consolidated financial statements for further information regarding our net revenues and financial income disaggregated by similar products and services for the years ended December 31, 2025, 2024 and 2023.

Our Commerce revenues grew $4,135 million, or 34.0%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024. This increase in Commerce revenues was primarily attributable to:

■ an increase of $2,674 million in Commerce services revenues mainly related to a 26.4% increase in gross merchandise volume and higher flat fee contributions for low gross merchandise volume transactions. Shipping carrier costs, which are netted against revenues, decreased $42 million, from $1,021 million for the year ended December 31, 2024 to $979 million for the year ended December 31, 2025, mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent during the first quarter of 2025; and

■ an increase of $1,461 million in our revenues from Commerce products sales, mainly in Brazil, Mexico and Argentina.

Our Fintech revenues grew 46.2%, from $8,618 million for the year ended December 31, 2024, to $12,599 million for the year ended December 31, 2025. This increase is mainly generated by:

■ an increase of $2,258 million in our Credits revenues, mainly as a consequence of higher originations.

■ an increase of $1,716 million in our revenues from Financial services and income, mainly related to our off-platform transactional fees and financing transactions, as a result of a 41.3% increase in our total payment volume.

Brazil

Commerce revenues in Brazil increased 30.5% in the year ended December 31, 2025 as compared to 2024. This increase was generated by an increase of $1,164 million in our Commerce services revenues and an increase of $982 million in our revenues from Commerce products sales. Fintech revenues grew by 37.8%, a $1,649 million increase, during the year ended December 31, 2025 as compared to 2024, mainly driven by an increase of $1,236 million in our Credits revenues and an increase of $413 million in our revenues from Financial services and income.

Mexico

Commerce revenues in Mexico increased 36.2% in the year ended December 31, 2025 as compared to 2024. This increase was generated by an increase of $824 million in our Commerce services revenues and an increase of $289 million in our revenues from Commerce products sales. Fintech revenues grew 43.8%, a $698 million increase, during the year ended December 31, 2025 as compared to 2024, mainly driven by an increase of $361 million in our Credits revenues and an increase of $331 million in our revenues from Financial services and income.

Argentina

Commerce revenues in Argentina increased 44.6% in the year ended December 31, 2025, as compared to 2024. This increase was generated by an increase of $515 million in our Commerce services revenues and an increase of $112 million in our revenues from Commerce products sales. Fintech revenues grew 62.9%, a $1,517 million increase, during the year ended December 31, 2025 as compared to 2024, mainly driven by an increase of $861 million in our revenues from Financial services and income and an increase of $656 million in our Credits revenues.

The following table sets forth our total net revenues and financial income and the sequential quarterly growth of these net revenues and financial income for the periods described below:

Quarter Ended

March 31,

June 30,

September 30,

December 31,

(In millions, except percentages)

Net revenues and financial income

Percent change from prior quarter

Net revenues and financial income

Percent change from prior quarter

Net revenues and financial income

Percent change from prior quarter

(1) Recast for consistency with the current presentation due to the change in the presentation of certain financial results. Please refer to Note 2 – Summary of significant accounting policies - Change in the presentation of certain financial results and reclassification of 2023 results to our audited consolidated financial statements for further details.

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The following table sets forth the growth in net revenues and financial income in local currencies, for the years ended December 31, 2025 and 2024 as compared to the same periods in 2024 and 2023, respectively:

Changes from

(% of revenue growth in Local Currency)

Brazil

Mexico

Argentina (3)

Other countries

Total consolidated

(1) The local currency revenue growth was calculated by using the average monthly exchange rates for each month during 2024 and applying them to the corresponding months in 2025, so as to calculate what our financial results would have been had exchange rates remained stable from one year to the next. See also the “Non-GAAP Measures of Financial Performance” section for details on FX neutral measures.

(2) The local currency revenue growth was calculated by using the average monthly exchange rates for each month during 2023 and applying them to the corresponding months in 2024, so as to calculate what our financial results would have been had exchange rates remained stable from one year to the next. See also the “Non-GAAP Measures of Financial Performance” section for details on FX neutral measures.

(3) For the year ended December 31, 2025 and 2023, the average inter-annual inflation rate in our Argentine segment of 44.5% and 127.9%, respectively, was higher than the average inter-annual increase of Argentina’s official exchange rate against U.S. dollar of 35.4% and 120.0%, respectively, while for the year ended December 31, 2024, the average inter-annual inflation rate in our Argentine segment of 236.8%, was lower than the average inter-annual increase of Argentina’s official exchange rate against U.S. dollar of 240.5%. See also "Item 1A. Risk Factors - Risks related to doing business in Latin America - Local currencies used in the conduct of our business are subject to depreciation, volatility and exchange controls."

Cost of net revenues and financial expenses

Cost of net revenues and financial expenses primarily includes shipping operation costs (including warehousing costs), carrier and other operating costs, cost of goods sold, collection fees, sales taxes, funding costs related to our fintech business, fraud prevention expenses, hosting and site operation fees, certain tax withholding related to export duties, compensation for customer support personnel and depreciation and amortization. The following table presents cost of net revenues and financial expenses for the years indicated:

Year Ended December 31,

Change from 2024 to 2025

Year Ended December 31,

Change from 2023 to 2024

in Dollars

in Dollars

(In millions, except percentages)

(In millions, except percentages)

Cost of net revenues and financial expenses

As a percentage of net revenues and financial income

(1) Recast for consistency with the current presentation due to the change in the presentation of certain financial results. Please refer to Note 2 – Summary of significant accounting policies - Change in the presentation of certain financial results and reclassification of 2023 results to our audited consolidated financial statements for further details.

For the year ended December 31, 2025 as compared to the year ended December 31, 2024, the increase in cost of net revenues and financial expenses was primarily attributable to a: i) $1,912 million increase in shipping operating and carrier costs; ii) $1,166 million increase in cost of sales of goods mainly in Brazil, Mexico and Argentina; iii) $533 million increase in collection fees, across all of our main segments, as a result of the higher total payment volume of Mercado Pago in those countries; iv) $523 million increase in other fintech costs mainly related to higher funding costs of Mercado Pago; v) $418 million increase in sales taxes; and vi) $210 million increase in hosting and site operation fees.

Our subsidiaries in Brazil, Argentina and Colombia are subject to certain taxes on revenues, which are classified as a cost of net revenues and financial expenses. These taxes represented 6.2%, 6.6% and 7.7% of net revenues and financial income for the years ended December 31, 2025, 2024 and 2023, respectively.

Gross profit margins

Our gross profit margin is defined as total net revenues and financial income minus total cost of net revenues and financial expenses, as a percentage of net revenues and financial income.

Our cost structure is directly affected by the level of operations of our services, and our strategic plan on gross profit is built on factors such as an ample liquidity to fund expenses and investments and a cost-effective capital structure.

For the years ended December 31, 2025 and 2024, our gross profit margins were 44.5% and 46.1%, respectively. The decrease in our gross profit margin resulted mainly due to the reduction of our free shipping threshold in Brazil, together with an increase in our cost of sales of goods and funding costs related to our fintech business, as a percentage of net revenues and financial income, partially offset by a decrease of our collection fees and sales taxes, as a percentage of net revenues and financial income.

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In the future, our gross profit margin could continue declining if we maintain the growth of our sales of goods business, which has a lower pure product margin, due to marketing initiatives or building up our logistics network and if we fail to maintain an appropriate relationship between our cost of revenue structure and our net revenues and financial income trend.

Product and technology development expenses

Our product and technology development related expenses consist primarily of compensation for our engineering and web-development staff (including long term retention program compensation), depreciation and amortization expenses related to product and technology development, certain tax withholding related to export duties, telecommunications costs and payments to third-party suppliers who provide technology maintenance services to us. The following table presents product and technology development expenses for the years indicated:

Year Ended December 31,

Change from 2024 to 2025

Year Ended December 31,

Change from 2023 to 2024

in Dollars

in Dollars

(In millions, except percentages)

(In millions, except percentages)

Product and technology development

As a percentage of net revenues and financial income

For the year ended December 31, 2025, the increase in product and technology development expenses as compared to the year ended December 31, 2024, was primarily attributable to: i) a $182 million increase in salaries and wages mainly related to the increase of 11% in our product and technology development headcount and increases in amounts accrued under the LTRPs; ii) a $113 million increase in technology maintenance expenses; and iii) a $52 million increase in other product and technology development expenses mainly related to higher tax withholding in connection with intercompany export services billing duties.

We believe that product and technology development is one of our key competitive advantages and we intend to continue to invest in hiring engineers to meet the increasingly sophisticated product expectations of our customer base.

Sales and marketing expenses

Our sales and marketing expenses consist primarily of costs related to marketing our platforms through online and offline advertising and agreements with portals, search engines and other sales expenses related to strategic marketing initiatives, charges related to our buyer protection program, the salaries of employees involved in these activities (including long term retention program compensation), chargebacks related to our Mercado Pago operations, branding initiatives, marketing activities for our users and depreciation and amortization expenses.

We enter into agreements with portals, search engines, social networks, ad networks and other sites in order to attract Internet users to the Mercado Libre Marketplace and convert them into registered users and active traders on our platform.

We also work intensively on attracting, developing and growing our seller community through our customer support efforts. We have dedicated professionals in most of our operations that work with sellers through trade show participation, seminars and meetings to provide them with important tools and skills to become effective sellers on our platform.

The following table presents sales and marketing expenses for the years indicated:

Year Ended December 31,

Change from 2024 to 2025

Year Ended December 31,

Change from 2023 to 2024

in Dollars

in Dollars

(In millions, except percentages)

(In millions, except percentages)

Sales and marketing

As a percentage of net revenues and financial income

For the year ended December 31, 2025, the increase in sales and marketing expenses as compared to the year ended December 31, 2024 was primarily attributable to a: i) $637 million increase in online and offline marketing expenses across all of our main segments; ii) $147 million increase in our buyer protection program expenses; and iii) $131 million increase in salaries and wages mainly related to the increase of 55% in our sales and marketing headcount and increases in amounts accrued under the LTRPs.

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Provision for doubtful accounts

Provision for doubtful accounts consists of the current expected credit losses on our financial assets, mainly loans receivable. The following table presents provision for doubtful accounts expenses for the years indicated:

Year Ended December 31,

Change from 2024 to 2025

Year Ended December 31,

Change from 2023 to 2024

in Dollars

in Dollars

(In millions, except percentages)

(In millions, except percentages)

Provision for doubtful accounts

As a percentage of net revenues and financial income

For the year ended December 31, 2025, as compared to the year ended December 31, 2024, the provision for doubtful accounts increased by $1,233 million mainly due to the increase in originations growth at 61% (mainly related to the credit card, consumer and merchant products).

General and administrative expenses

Our general and administrative expenses consist primarily of salaries for management and administrative staff, compensation of non-employee directors, long term retention program compensation, expenses for legal, audit and other professional services, contingencies, insurance expenses, office space rental expenses, changes in the fair value of digital assets, travel and business expenses, as well as depreciation and amortization expenses. Our general and administrative expenses include the costs of the following areas: general management, finance, treasury, internal audit, administration, accounting, tax, legal and human resources. The following table presents general and administrative expenses for the years indicated:

Year Ended December 31,

Change from 2024 to 2025

Year Ended December 31,

Change from 2023 to 2024

in Dollars

in Dollars

(In millions, except percentages)

(In millions, except percentages)

General and administrative

As a percentage of net revenues and financial income

For the year ended December 31, 2025, the increase in general and administrative expenses as compared to the year ended December 31, 2024 was primarily attributable to: i) a $75 million increase in salaries and wages, mainly related to the increase of 12% in general and administrative headcount and increases in amounts accrued under the LTRPs; and ii) a $32 million increase in other general and administrative expenses mainly related to higher tax withholding in connection with intercompany export services billing duties.

Operating income margins

Our operating income margin is defined as income from operations as a percentage of net revenues and financial income.

Our operating income margin is affected by our operating expenses structure, which mainly consists of our employees’ salaries, our sales and marketing expenses related to those activities we incurred to promote our services, provision for doubtful accounts mainly related to our loans receivable portfolio and product and technology development expenses, among other operating expenses. As we continue to grow and focus on expanding our leadership in the region, we will continue to invest in product and technology development, and sales and marketing in order to promote our services and capture long-term business opportunities. As a result, we may experience decreases in our operating income margins.

For the year ended December 31, 2025, as compared to the year ended December 31, 2024, our operating margin decreased from a margin of 12.7% to a margin of 11.1%.

This decrease is mainly explained by the reduction of our free shipping threshold in Brazil, together with an increase in provision of doubtful accounts, driven by the expansion of our credit card portfolio, and cost of net revenues and financial expenses, as a percentage of net revenues and financial income, partially offset by a decrease in product and technology development and general and administrative expenses, as a percentage of net revenues and financial income.

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Other income (expenses), net

Other income (expenses), net consists primarily of interest income derived from our investments and cash equivalents, interest expense and other financial charges related to financial liabilities not related to Mercado Pago’s operations, and foreign currency gains or losses. The following table presents Other income (expenses), net for the years indicated:

Year Ended December 31,

Change from 2024 to 2025

Year Ended December 31,

Change from 2023 to 2024

in Dollars

in Dollars

(In millions, except percentages)

(In millions, except percentages)

Other income (expenses), net

As a percentage of net revenues and financial income

(1) Recast for consistency with the current presentation due to the change in the presentation of certain financial results. Please refer to Note 2 – Summary of significant accounting policies - Change in the presentation of certain financial results and reclassification of 2023 results to our audited consolidated financial statements for further details.

For the year ended December 31, 2025, the increase in other expenses, net as compared to the year ended December 31, 2024 was primarily attributable to $155 million of higher foreign exchange losses mainly due to our Argentine (higher foreign exchange losses of $254 million), Uruguayan and Spanish subsidiaries, partially offset by foreign exchange gains from our Brazilian and Mexican subsidiaries.

Income tax

We are subject to federal and state income tax in the United States, as well as foreign taxes in the multiple jurisdictions where we operate. Our tax obligations consist of current and deferred income taxes incurred in these jurisdictions. We account for income taxes following the liability method of accounting. A valuation allowance is recorded when, based on the available evidence, it is more likely than not that all or a portion of our deferred tax assets will not be realized. Therefore, our income tax expense consists of taxes currently payable, if any (given that in certain jurisdictions we still have net operating loss carry-forwards), plus the change in our deferred tax assets and liabilities during each period.

The following table summarizes the composition of our income taxes for the years ended December 31, 2025, 2024 and 2023:

Year Ended December 31,

(In millions)

Current:

Non-U.S.

Deferred:

Non-U.S.

Income tax expense

The following table presents income tax expense for the years indicated:

Year Ended December 31,

Change from 2024 to 2025

Year Ended December 31,

Change from 2023 to 2024

in Dollars

in Dollars

(In millions, except percentages)

(In millions, except percentages)

Income tax expense

As a percentage of net revenues and financial income

During the year ended December 31, 2025 as compared to the year ended December 31, 2024, income tax expense increased mainly as a result of higher income tax expense in Argentina due to higher taxable income and lower deductions related to tax inflation adjustments and higher income tax expense in Mexico related to higher taxable income. This increase was partially offset by income tax gains in Brazil in 2025 mainly driven by the increase in deferred tax assets in that segment.

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Our effective tax rate is defined as income tax expense as a percentage of net income before income tax expense.

The following table summarizes the changes in our effective tax rate for the years ended December 31, 2025, 2024 and 2023:

Year Ended December 31,

Effective tax rate

Our effective tax rate for the year ended December 31, 2025 as compared to 2024, increased largely as a result of lower deductions related to tax inflation adjustments in Argentina.

Deferred Income Tax

The following table summarizes the composition of our deferred tax assets, before the valuation allowance, as of December 31, 2025 and 2024:

December 31,

December 31,

Deferred tax assets

(In millions, except percentages)

(In millions, except percentages)

Brazil

Mexico

Argentina

Other countries

Total

As of December 31, 2025 and 2024 our deferred tax assets, were comprised mainly of i) allowance for doubtful accounts representing 33.1% and 25.7% of our total deferred tax assets, respectively; ii) U.S. foreign tax credits representing 29.3% and 36.6% of our total deferred tax assets, respectively; and (iii) provisions representing 19.9% and 21.4% of our total deferred tax assets, respectively.

The following table summarizes the composition of our deferred tax assets from loss carryforwards as of December 31, 2025 and 2024:

December 31,

December 31,

Loss carryforwards

(In millions, except percentages)

(In millions, except percentages)

Brazil

Argentina

Mexico

Other countries

Total

We also assess the likelihood that our net deferred tax assets will be realized from future taxable income. To the extent we believe that it is more likely than not that some portion or the total deferred tax assets will not be realized, we establish a valuation allowance.

As of December 31, 2025 and 2024, our valuation allowance amounted to $764 million and $584 million, respectively.

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The following table summarizes the composition of our valuation allowance as of December 31, 2025 and 2024:

December 31,

December 31,

Valuation Allowance

(In millions, except percentages)

(In millions, except percentages)

Mexico

Argentina

Other countries

Total

Our valuation allowance is based on our assessment that it is more likely than not that the deferred tax asset will not be realized. The fluctuations in the valuation allowance will depend on the capacity of each country’s operations to generate taxable income or our execution of future tax planning strategies that allow us to use the aforementioned deferred tax assets. To the extent we establish a valuation allowance or change the allowance in a period, we reflect the change with a corresponding increase or decrease in our tax provision in our consolidated statements of income.

Our future effective tax rates could be adversely affected by earnings being lower than anticipated in countries where we have lower statutory rates and higher than anticipated in countries where we have higher statutory rates, by changes in the valuations of our deferred tax assets or liabilities, or by changes or interpretations in tax laws, regulations or accounting principles.

Pillar Two

The Organization for Economic Co-operation and Development ("OECD")/G20 Inclusive Framework on Base Erosion and Profit Shifting published the Pillar Two model rules designed to address the tax challenges arising from the digitalization of the global economy. The Global Anti-Base Erosion Model Rules (GLoBE Rules or Pillar Two model rules) apply to multinational enterprises with revenue in excess of EUR 750 million per their consolidated financial statements, which seeks to achieve the establishment of a global minimum taxation of 15%.

While the framework for the GLoBE Rules is global, the rules would be implemented through legislation enacted in jurisdictions that adopt the rules. The GloBE Rules have been passed by legislatures in Spain, Uruguay and Brazil effective for fiscal years starting on or after December 31, 2023 in Spain and effective for fiscal years starting on or after December 31, 2024 in Brazil and Uruguay. For the year ended December 31, 2025, there is no tax charge accrued in connection with the GloBE Rules.

In January 2026, the OECD/G20 Inclusive Framework approved the Side-by-Side (SbS) package, applicable for fiscal years starting on or after January 1, 2026. This package is expected to exclude U.S. parented groups from the application of the IIR (“Income Inclusion Rule”) and UTPR (“Undertaxed Profits Rule”), but not from the QDMTT (“Qualified Domestic Minimum Top-Up Tax”). While these measures have not yet been enacted into domestic legislation, their adoption by relevant jurisdictions is expected during the next months.

Segment information

See Note 8 – Segments of our audited consolidated financial statements for detailed description about our reporting segments.

Year Ended December 31, 2025

Brazil

Mexico

Argentina

Other Countries

Total

(In millions, except for percentages)

Net revenues and financial income

Total segment costs

Direct contribution

Direct contribution margin

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Year Ended December 31, 2024

Brazil

Mexico

Argentina

Other Countries

Total

(In millions, except for percentages)

Net revenues and financial income

Total segment costs

Direct contribution

Direct contribution margin

Change from the Year Ended December 31, 2024 to December 31, 2025

Brazil

Mexico

Argentina

Other Countries

Total

Net revenues and financial income

in U.S. Dollars

Total segment costs

in U.S. Dollars

Direct contribution

in U.S. Dollars

Year Ended December 31, 2024

Brazil

Mexico

Argentina

Other Countries

Total

(In millions, except for percentages)

Net revenues and financial income

Total segment costs

Direct contribution

Direct contribution margin

Year Ended December 31, 2023 (1)

Brazil

Mexico

Argentina

Other Countries

Total

(In millions, except for percentages)

Net revenues and financial income

Total segment costs

Direct contribution

Direct contribution margin

(1) Recast for consistency with the current presentation due to the change in the presentation of certain financial results. Please refer to Note 2 – Summary of significant accounting policies - Change in the presentation of certain financial results and reclassification of 2023 results to our audited consolidated financial statements for further details.

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Change from the Year Ended December 31, 2023 to December 31, 2024

Brazil

Mexico

Argentina

Other Countries

Total

Net revenues and financial income

in U.S. Dollars

Total segment costs

in U.S. Dollars

Direct contribution

in U.S. Dollars

Net revenues and financial income

Net revenues and financial income for the years ended December 31, 2025, 2024 and 2023 are described above in “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Net revenues and financial income”.

Segment costs

Brazil

For the year ended December 31, 2025, as compared to 2024, segment costs increased mainly driven by a: i) $2,535 million increase in cost of net revenues and financial expenses, mainly attributable to an increase in shipping operating and carrier costs, cost of goods sold as a consequence of an increase in first-party sales, other fintech costs mainly related to higher funding costs of Mercado Pago, sales taxes, collection fees as a consequence of the higher transactions volume of our Mercado Pago business and hosting and site operation fees; ii) $873 million increase in provision for doubtful accounts mainly related to our credit card, consumer and merchant credits product growth; and iii) $577 million increase in sales and marketing expenses mainly due to an increase in online and offline marketing expenses and buyer protection program expenses, salaries and wages and chargebacks.

Mexico

For the year ended December 31, 2025, as compared to 2024, segment costs increased mainly driven by a: i) $1,104 million increase in cost of net revenues and financial expenses, mainly attributable to increases in shipping operating and carrier costs, cost of goods sold as a consequence of an increase in first-party sales, collection fees due to higher Mercado Pago penetration, other fintech costs mainly related to higher funding costs in connection with the growth of our lending business and hosting and site operation fees; ii) $183 million increase in sales and marketing expenses mainly due to an increase in online and offline marketing expenses, buyer protection program expenses and salaries and wages; and iii) $179 million increase in provision for doubtful accounts mainly related to our credit card and consumer product business growth.

Argentina

For the year ended December 31, 2025, as compared to 2024, segment costs increased mainly driven by a: i) $940 million increase in cost of net revenues and financial expenses driven by an increase in shipping operating and carrier costs, collection fees due to higher Mercado Pago penetration, other fintech costs mostly related to higher funding cost due to the growth of our lending business, sales taxes and cost of goods sold as a consequence of an increase in first-party sales; ii) $182 million increase in provision for doubtful accounts mainly related to our consumer product growth; and iii) $132 million increase in sales and marketing expenses mainly due to an increase in online and offline marketing expenses, buyer protection program expenses, chargebacks and salaries and wages.

Liquidity and Capital Resources

Our main cash requirement has been working capital to fund Mercado Pago financing operations and our lending business. We also require cash for capital expenditures related to technology infrastructure, software applications, office space, business acquisitions, to build out our logistics capacity and to make interest payments on our loans payable and other financial liabilities.

We have funded Mercado Pago mainly by selling credit card receivables and through credit lines. Additionally, we have financed our Mercado Pago and lending businesses through the securitization of credit card receivables and certain loans through SPEs created in Brazil, Mexico, Chile and Argentina and sales of loans receivable in Mexico and Argentina. Moreover, we obtained funding in Brazil through deposit certificates, financial bills, commercial notes and loans from banks, in Argentina mainly through secured lines of credit and issuing debt securities, and in Mexico, Chile and Uruguay through loans from banks and secured lines of credit. Finally, we entered into a revolving credit agreement which provides a $800 million credit commitment. Refer to Note 16 – Loans payable and other financial liabilities and Note 19 – Securitization transactions of our audited consolidated financial statements for further detail.

We have committed to contract minimum amounts of certain services such as cloud platform and other technology services, logistics services and leases. In addition, we have unconditional purchase obligations related to capital expenditures. Please refer to Note 14 – Commitments and Contingencies of our audited consolidated financial statements for further detail on purchase commitments.

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We and certain financial institutions participate in a supplier finance program (“SFP”) that enables certain of our suppliers, at their own election, to request the payment of their invoices to the financial institutions earlier than the terms stated in our payment policy. Refer to Note 4 – Balance sheet components - Supplier finance programs of our audited consolidated financial statements for further detail.

As of December 31, 2025, our main source of liquidity was $5,284 million of cash and cash equivalents and short-term investments, which excludes $1,015 million investments mainly related to the Central Bank of Brazil Mandatory Guarantee, and consists of cash generated from operations and proceeds from loans.

As of December 31, 2025, cash and cash equivalents, restricted cash and cash equivalents and investments of our non-U.S. subsidiaries amounted to $16,282 million, or 90.8% of our consolidated cash and cash equivalents, restricted cash and cash equivalents and investments, and our cash and cash equivalents, restricted cash and cash equivalents and investments held outside U.S. amounted to 80.2% of our consolidated cash and cash equivalents, restricted cash and cash equivalents and investments. Our non-U.S. dollar-denominated cash and investments are located primarily in Brazil, Mexico and Argentina.

The following table presents our cash flows from operating activities, investing activities and financing activities for the years ended December 31, 2025, 2024 and 2023:

Year Ended December 31,

(In millions)

Net cash provided by (used in):

Operating activities

Investing activities

Financing activities

Effect of exchange rates on cash and cash equivalents, restricted cash and cash equivalents

Net increase in cash, cash equivalents, restricted cash and cash equivalents

Net cash provided by operating activities

Cash provided by operating activities consists of net income adjusted for certain non-cash items, and the effect of changes in working capital and other activities:

Year Ended December 31,

Change from 2024 to 2025

in Dollars

(In millions, except percentages)

Net Cash provided by:

Operating activities

Net cash provided by operating activities during the year ended December 31, 2025, resulted primarily from adjustments to net income related to non-cash items of $3,612 million, our net income of $1,997 million, an increase of $5,341 million in funds payable to customers, a $1,592 million increase in amounts payable due to credit and debit card transactions and an increase of $1,487 million in payables and accrued expenses which were partially offset by a $1,508 million increase in receivables and an increase of $491 million in other assets. The $4,198 million increase in the net cash provided by operating activities in the year ended December 31, 2025, as compared to 2024, is mainly explained by the $1,736 million higher increase in funds payable to customers, the $1,179 million lower increase in receivables and the $1,025 million increase in the adjustments to net income related to non-cash items.

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Net cash used in investing activities

Year Ended December 31,

Change from 2024 to 2025

in Dollars

(In millions, except percentages)

Net Cash used in:

Investing activities

Net cash used in investing activities in the year ended December 31, 2025 resulted mainly from the use of $6,659 million related to changes in loans receivable due to loans granted under our lending solution net of collections and $1,343 million in the investment of property and equipment (mainly related to our shipping network and information technology assets), intangibles assets and intangibles assets at fair value, partially offset by a cash inflow of $1,836 million related to the net sale and maturity of investments. The $2,108 million decrease in net cash used in investing activities in year ended December 31, 2025, as compared to 2024, is mainly explained by $4,584 million variation in cash flows from investments ($1,836 million of cash inflows from net sales or maturity of investments for the year ended December 31, 2025, compared to $2,748 million of cash outflows from net purchases in the same period in 2024), partially offset by the $1,971 million increase in our loans receivables due to loans granted under our lending solution net of collections and the $483 million increase in the investment of property and equipment (mainly related to our shipping network and information technology assets), intangibles assets and intangibles assets at fair value.

Net cash provided by financing activities

Year Ended December 31,

Change from 2024 to 2025

in Dollars

(In millions, except percentages)

Net Cash provided by:

Financing activities

For the year ended December 31, 2025, our net cash provided by financing activities was primarily derived from the $2,962 million provided by net loans payables and other financing liabilities, partially offset by a $57 million used for the payments of finance lease obligations. The $945 million increase in net cash provided by financing activities in year ended December 31, 2025, as compared to 2024, is mainly explained by the $951 million increase in net loans payables and other financing liabilities.

Debt

Debt Securities Guaranteed by Subsidiaries

On January 14, 2021, we issued $400 million aggregate principal amount of 2.375% Sustainability Notes due 2026 (the “2026 Sustainability Notes”) and $700 million aggregate principal amount of 3.125% Notes due 2031 (the “2031 Notes”). The payment of principal, premium, if any, interest, and all other amounts in respect of each of the 2026 Sustainability Notes and the 2031 Notes, is fully and unconditionally guaranteed (the “Subsidiary Guarantees”), jointly and severally, on an unsecured basis, by certain of our subsidiaries (the “Subsidiary Guarantors”). The initial Subsidiary Guarantors were MercadoLibre S.R.L., Ibazar.com Atividades de Internet Ltda., eBazar.com.br Ltda., Mercado Envios Servicos de Logistica Ltda., Mercado Pago Instituição de Pagamento Ltda. (formerly known as “MercadoPago.com Representações Ltda.”), MercadoLibre Chile Ltda., MercadoLibre, S.A. de C.V., Institución de Fondos de Pago Electrónico (formerly known as “MercadoLibre, S. de R.L. de C.V.”), DeRemate.com de México, S. de R.L. de C.V. and MercadoLibre Colombia Ltda. On October 27, 2021, MercadoLibre, S.A. de C.V., Institución de Fondos de Pago Electrónico became an excluded subsidiary pursuant to the terms of the 2026 Sustainability Notes and the 2031 Notes and it was released from its Subsidiary Guaranty. On October 27, 2021, MP Agregador, S. de R.L. de C.V. became a Subsidiary Guarantor under the 2026 Sustainability Notes and the 2031 Notes. On July 1 and October 1, 2022, Ibazar.com Atividades de Internet Ltda. and Mercado Envios Servicos de Logistica Ltda. were merged into eBazar.com.br Ltda, respectively. On May 2, 2025, as a result of the spin-off of DeRemate.com de México, S. de R.L. de C.V. completed in January 2025 (the “DeRemate Spinoff”), MPFS, S. de R.L. de C.V. became a Subsidiary Guarantor under the 2026 Sustainability Notes and the 2031 Notes.

Additionally, on December 9, 2025, we issued $750 million aggregate principal amount of 4.900% Notes due 2033 (the “2033 Notes” and together with the 2031 Notes, the "Notes”), the payment of principal, interest, and all other amounts in respect of the 2033 Notes, is fully and unconditionally guaranteed, jointly and severally, on an unsecured basis, by the Subsidiary Guarantors mentioned above.

We pay interest on the 2026 Sustainability Notes and the 2031 Notes on January 14 and July 14 of each year, beginning on July 14, 2021. The 2026 Sustainability Notes matured on January 14, 2026, and the 2031 Notes will mature on January 14, 2031. We pay interest on the 2033 Notes semi-annually interest in arrears on January 15 and July 15 of each year, commencing on July 15, 2026.

The Notes rank equally in right of payment with all of the Company’s other existing and future senior unsecured debt obligations. Each Subsidiary Guarantee will rank equally in right of payment with all of the Subsidiary Guarantor’s other existing and future senior unsecured debt obligations, except for statutory priorities under applicable local law.

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Each Subsidiary Guarantee will be limited to the maximum amount that would not render the Subsidiary Guarantor’s obligations subject to avoidance under applicable fraudulent conveyance provisions of applicable law. By virtue of this limitation, a Subsidiary Guarantor’s obligation under its Subsidiary Guarantee could be significantly less than amounts payable with respect to the Notes, or a Subsidiary Guarantor may have effectively no obligation under its Subsidiary Guarantee.

Under the indenture governing the Notes, the Subsidiary Guarantee of a Subsidiary Guarantor will terminate upon: (i) the sale, exchange, disposition or other transfer (including by way of consolidation or merger) of the Subsidiary Guarantor or the sale or disposition of all or substantially all the assets of the Subsidiary Guarantor (other than to the Company or a Subsidiary) otherwise permitted by the indenture, (ii) satisfaction of the requirements for legal or covenant defeasance or discharge of the Notes, (iii) the release or discharge of the guarantee by such Subsidiary Guarantor of the Triggering Indebtedness (as defined in the applicable indenture) or the repayment of the Triggering Indebtedness, in each case, that resulted in the obligation of such Subsidiary to become a Subsidiary Guarantor, provided that in no event shall the Subsidiary Guarantee of an Initial Subsidiary Guarantor terminate pursuant to this provision, or (iv) such Subsidiary Guarantor becoming an Excluded Subsidiary (as defined in the applicable indenture) or ceasing to be a Subsidiary.

We may, at our option, redeem or purchase the 2031 Notes, in whole or in part, at any time prior to October 14, 2030 (the date that is three months prior to the maturity of the 2031 Notes) and for the 2033 Notes, in whole or in part at any time or from time to time prior to November 15, 2032 (two months prior to their maturity date of the 2033 Notes), in each case, by paying 100% of the principal amount of such Notes so redeemed plus the applicable “make-whole” amount and accrued and unpaid interest and additional amounts, if any. We may, at our option, redeem the 2031 Notes on October 14, 2030 or at any time thereafter and the 2033 Notes on November 15, 2032 or at any time thereafter, in each case at the redemption price of 100% of the principal amount of such Notes so redeemed plus accrued and unpaid interest and additional amounts, if any. If we experience certain change of control triggering events, we may be required to offer to purchase the Notes at 101% of their principal amount plus any accrued and unpaid interest thereon through the purchase date.

During 2025, we repurchased $13 million in principal amount of the outstanding 2031 Notes. The total amount paid amounted to $12 million. During 2024, we repurchased $27 million and $81 million in principal amount of the outstanding 2026 Sustainability Notes and 2031 Notes, respectively. The total amount paid during 2024 for those repurchases amounted to $98 million. In January 2026, we repaid the total outstanding amount of principal and interest of the 2026 Sustainability Notes equaling $367 million.

See Note 16 – Loans payable and other financial liabilities of our audited consolidated financial statements for additional detail.

We are presenting the following summarized financial information for the issuer and the Subsidiary Guarantors (together, the “Obligor Group”) pursuant to Rule 13-01 of Regulation S-X, Guarantors and Issuers of Guaranteed Securities Registered or Being Registered. For purposes of the following summarized financial information, transactions between the Company and the Subsidiary Guarantors, presented on a combined basis, have been eliminated. Financial information for the non-guarantor subsidiaries, and any investment in a non-guarantor subsidiary by the Company or by any Subsidiary Guarantor, have been excluded. Amounts due from, due to and transactions with the non-guarantor subsidiaries and other related parties, as applicable, have been separately presented in footnotes.

Summarized balance sheet information for the Obligor Group as of December 31, 2025 and 2024 is provided in the table below:

December 31,

(In millions)

Current assets (1) (2)

Non-current assets (3)

Current Liabilities (4)

Non-current Liabilities

(1) Includes restricted cash and cash equivalents of $8,259 million and $940 million and foreign government debt securities (Central Bank of Brazil mandatory guarantee) of $860 million and $3,417 million as of December 31, 2025 and 2024, respectively.

(2) Includes Current assets with non-guarantor subsidiaries of $1,439 million and $2,520 million as of December 31, 2025 and 2024, respectively.

(3) Includes Non-current assets with non-guarantor subsidiaries of $289 million and $152 million as of December 31, 2025 and 2024, respectively.

(4) Includes Current liabilities with non-guarantor subsidiaries of $2,417 million and $2,749 million as of December 31, 2025 and 2024, respectively.

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Summarized statement of income information for the Obligor Group for the year ended December 31, 2025 is provided in the table below:

Year Ended

December 31,

(In millions)

Net Revenues and financial income (1)

Gross Profit (2)

Income from operations (3)

Net income (4)

(1) Includes Net revenues and financial income from transactions with non-guarantor subsidiaries of $451 million for the year ended December 31, 2025.

(2) Includes charges from transactions with non-guarantor subsidiaries of $778 million for the year ended December 31, 2025.

(3) In addition to the charges included in Gross profit, Income from operations includes charges from transactions with non-guarantor subsidiaries of $538 million for the year ended December 31, 2025.

(4) Includes other income/(expense) from transactions with non-guarantor subsidiaries of $73 million for the year ended December 31, 2025.

Cash Dividends

Our board of directors suspended the payment of dividends on our common stock as of the first quarter of 2018 after reviewing our capital allocation process and concluding that we have multiple investment opportunities that should generate greater returns to shareholders through investing capital into the business as compared to paying dividends. Any future determination as to the declaration of dividends on our common stock will be made at the discretion of our board of directors and will depend on our earnings, operating and financial condition, capital requirements and other factors deemed relevant by our board of directors, including the applicable requirements of the Delaware General Corporation Law.

Capital expenditures

Our capital expenditures comprised of our investments in property and equipment (such as certain assets used in our fulfillment centers) and intangible assets (excluding digital assets) for the years ended December 31, 2025 and 2024 amounted to $1,327 million and $860 million, respectively.

During the year ended December 31, 2025, we invested $411 million in information and technology assets in Brazil, Argentina and Mexico, and $778 million in our Brazilian and Mexican shipping premises and offices.

We are continually increasing our level of investment in hardware and software licenses necessary to improve and update our platform’s technology and computer software developed internally. We anticipate continued investments in capital expenditures related to information technology and logistics network capacity in the future as we strive to maintain our position in the Latin American e-commerce and fintech market.

We believe that our existing cash and cash equivalents, including the sale of credit card receivables, short-term investments and cash generated from operations, will be sufficient to fund our operating activities, property and equipment expenditures and to pay or repay obligations in the foreseeable future.

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Other Data

The following table includes eight key performance indicators, which are calculated as defined in the footnotes to the table. We continuously address the adequacy of our key performance indicators based on the growth and ever-changing nature of our business. Each of these indicators provides a different measure of the level of activity on our ecosystem, which we use to monitor the performance of the business.

Year Ended December 31, (1)

(In millions, except percentages)

Fintech monthly active users (2)

Unique active buyers (3)

Gross merchandise volume (4)

Number of items sold (5)

Total payment volume (6)

Acquiring total payments volume (7)

Total payment transactions (8)

NIMAL (9)

Capital expenditures

Depreciation and amortization

(1) Figures have been calculated using rounded amounts. Growth calculations based on this table may not total due to rounding. As of December 31, 2024, we no longer disclose the key performance indicator "Number of items shipped." Management believes that "Number of items shipped," as a complementary disclosure to "items sold," no longer provides useful information to investors to better understand our business. Following years of investment, our logistics network currently ships almost all items sold. As such, the two performance metrics, "Number of items sold" and "Number of items shipped," have converged so we no longer see a benefit for investors in disclosing both.

(2) As of January 1, 2024, we have replaced “Unique Active Users” with “Fintech monthly active users” and “Unique active buyers” as our main indicators of our Fintech and Commerce revenue lines. Management believes that the significant growth of our Fintech business merits a standalone metric to more precisely measure its footprint and user base growth and to make the best strategic decisions for the development of the Fintech business. Fintech monthly active users is defined as Fintech payers and/or collectors as of December 31, 2025, that, during the last month of the reporting period, performed at least one of the following actions during such month: 1) made a debit or credit card payment, 2) made a QR code payment, 3) made an off-platform online payment using our checkout or link of payment solutions while logged in to our Mercado Pago fintech platform, 4) made an investment or employed any of our savings solutions, 5) purchased an insurance policy, 6) took out a loan through our lending solution, or 7) received the payment from a sale or transaction either on or off marketplace.

(3) As described above, as of January 1, 2024, unique active buyers is the main performance indicator of our Commerce revenue line. Management believes that monitoring the Commerce business growth through a standalone metric enables us to better understand user behavior over each period and make strategic decisions to improve the Commerce business. Unique active buyers is defined as users that have performed at least one purchase on the Mercado Libre Marketplace during the reported period. From the second quarter of 2025 onwards, we have included food delivery transactions in the current indicator.

(4) Total U.S. dollar sum of all transactions completed through the Mercado Libre Marketplace, excluding Classifieds transactions. From the second quarter of 2025 onwards, we have included food delivery transactions in the current indicator.

(5) Number of items that were sold/purchased through the Mercado Libre Marketplace, excluding Classifieds items. From the second quarter of 2025 onwards, we have included food delivery transactions in the current indicator.

(6) Total U.S. dollar sum of all transactions paid for using Mercado Pago, including marketplace and non-marketplace transactions, excluding peer-to-peer transactions. As of January 1, 2024, we no longer include peer-to-peer transactions in our TPV in accordance with the metrics and underlying criteria used by our Mercado Pago team, which Management then employs to make strategic decisions. Consequently, total payment volume for the year ended December 31, 2023, has been recast to exclude peer-to-peer transactions.

(7) As of January 1, 2024, we have replaced “Total volume of payment on marketplace” with “Acquiring total payment volume.” Total volume of payment on marketplace was limited to the total U.S. dollar sum of all marketplace transactions paid for using Mercado Pago, and thus was a relevant and representative metric when the off-platform payment processor business was managed as a payment processor with a digital account. In light of the significant growth of our Fintech businesses and our payment processing and settling services, Management believes that Acquiring TPV, which also takes into account non-marketplace transactions paid for using Mercado Pago, results in a more representative measure of our physical and online payment processing solutions in any given period. Acquiring TPV is defined as total U.S. dollar sum of all transactions settled using our Mercado Pago and Mercado Pago's payment processing and settling services in marketplace and non-marketplace transactions and consist of the following transactions volume: 1) point of sale payment volume, 2) commerce payment volume through our Mercado Libre Marketplace, 3) online payment volume through our checkout or link payment solution for merchants, and 4) QR code payment volume.

(8) Number of all transactions paid for using Mercado Pago, excluding peer-to-peer transactions. As of January 1, 2024 we no longer include peer-to-peer transactions in our total payment transactions in accordance with the metric and understanding criteria used by our Mercado Pago team, which Management then employs to make strategic decisions. Consequently, total payment volume for the year ended December 31, 2023, has been recast to exclude peer-to-per transactions.

(9) Net interest margins after losses (“NIMAL”) represents the annualized ratio between the total credits revenues (excluding the results of sale of loans receivables) less funding costs and provision for doubtful accounts for the year (excluding the results of sale of loans receivables) and total average gross loans receivable for the year. Management uses NIMAL to monitor how effective our pricing is and managing the credit products relative to their risk and setting targets. Accordingly, Management is of the opinion that NIMAL provides useful information to investors and others related to our risk appetite through the different periods and shows how we effectively prices risk.

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Non-GAAP Measures of Financial Performance

To supplement our audited consolidated financial statements presented in accordance with U.S. GAAP, we present earnings before interest income and other financial gains, net, interest expense and other financial losses, foreign currency losses, net, income tax expense, depreciation and amortization and equity in earnings of unconsolidated entity (“Adjusted EBITDA”), net debt, foreign exchange (“FX”) neutral measures and Adjusted free cash flow and Net increase (decrease) in available cash, investments and digital assets as non-GAAP measures. Reconciliation of these non-GAAP financial measures to the most comparable U.S. GAAP financial measures can be found in the tables below.

These non-GAAP measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with U.S. GAAP. These non-GAAP financial measures should only be used to evaluate our results of operations in conjunction with the most comparable U.S. GAAP financial measures.

We believe that reconciliation of these non-GAAP measures to the most directly comparable GAAP measure provides investors an overall understanding of our current financial performance and its prospects for the future.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that represents our net income, adjusted to eliminate the effect of depreciation and amortization charges, interest income and other financial gains, interest expense and other financial losses, foreign currency losses, net, income tax expense and equity in earnings of an unconsolidated entity. We have included this non-GAAP financial measure because it is used by our Management to evaluate our operating performance and trends, make strategic decisions and the calculation of leverage ratios. Accordingly, we believe this measure provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our Management. In addition, it provides a useful measure for period-to-period comparisons of our business, as it removes the effect of certain items.

The following table presents a reconciliation of net income to Adjusted EBITDA for the years indicated:

Years Ended December 31,

(In millions)

Net income

Adjustments:

Depreciation and amortization

Interest income and other financial gains, net

Interest expense and other financial losses

Foreign currency losses, net

Income tax expense

Equity in earnings of unconsolidated entity

Adjusted EBITDA

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Net debt

We define net debt as total debt which includes current and non-current loans payable and other financial liabilities and current and non-current operating lease liabilities, less cash and cash equivalents (excluding cash and cash equivalents restricted due to management restriction policies) and digital assets, short-term investments and long-term investments, excluding time deposits, foreign debt securities and foreign government debt securities restricted and held in guarantee, securitization transactions and equity securities held at cost. We have included this non-GAAP financial measure because it is used by our Management to analyze our current leverage ratios and set targets to be met, which will also impact other components of the Company’s balance sheet, cash flows and income statement. Accordingly, we believe this measure provides useful information to investors and other market participants in showing the evolution of the Company’s indebtedness and its capability of repayment as a means to, alongside other measures, monitor our leverage based on widely-used measures.

The following table presents a reconciliation of net debt for each of the years indicated:

December 31,

(In millions)

Current Loans payable and other financial liabilities

Non-current Loans payable and other financial liabilities

Current Operating lease liabilities

Non-current Operating lease liabilities

Total debt

Less:

Cash and cash equivalents and digital assets (1)

Short-term investments (2)

Long-term investments (3)

Net debt

(1) Includes cash and cash equivalents (excluding cash and cash equivalents restricted due to management restriction policies) and digital assets. Figures as of December 31, 2024 were recast for consistency with the current presentation due to the changes explained in "Adjusted free cash flow".

(2) Excludes time deposits, foreign debt securities and foreign government debt securities restricted and held in guarantee.

(3) Excludes foreign government debt securities restricted, investments held in VIEs as a consequence of securitization transactions and equity securities held at cost.

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FX neutral

We believe that FX neutral measures provide useful information to both Management and investors by excluding the foreign currency exchange rate impact that may not be indicative of our core operating results and business outlook.

The FX neutral measures were calculated by using the average monthly exchange rates for each month during 2024 and applying them to the corresponding months in 2025, so as to calculate what our results would have been had exchange rates remained stable from one year to the next. The comparative FX neutral measures were calculated by using the average monthly exchange rates for each month during 2023 and applying them to the corresponding months in 2024. The table below excludes intercompany allocation FX effects. Finally, these measures do not include any other macroeconomic effect such as local currency inflation effects, the impact on impairment calculations or any price adjustment to compensate local currency inflation or devaluations.

The following table sets forth the FX neutral measures related to our reported results of the operations for years ended December 31, 2025, 2024 and 2023:

Year Ended December 31,

As reported

Percentage Change

FX Neutral Measures

As reported

Percentage Change

(In millions, except percentages)

(In millions, except percentages)

Net revenues and financial income

Cost of net revenues and financial expenses

Gross profit

Operating expenses

Income from operations

Year Ended December 31,

As reported

As recast (1)

Percentage Change

FX Neutral Measures

As recast (1)

Percentage Change

(In millions, except percentages)

(In millions, except percentages)

Net revenues and financial income

Cost of net revenues and financial expenses

Gross profit

Operating expenses

Income from operations

(1) Recast for consistency with the current presentation due to the change in the presentation of certain financial results. Please refer to Note 2 – Summary of significant accounting policies - Change in the presentation of certain financial results and reclassification of 2023 results - to our audited consolidated financial statements for further details.

See Note 2 – Summary of significant accounting policies – Foreign currency translation – Argentine currency status and macroeconomic outlook and Argentine exchange regulations of our audited consolidated financial statements for further detail on the currency status and the exchange regulations of our Argentine segment.

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Adjusted free cash flow and Net increase (decrease) in available cash, investments and digital assets

Adjusted free cash flow

Adjusted free cash flow represents cash from operating activities less the increase (decrease) in cash and cash equivalents and investments related to customer funds due to regulatory requirements and other restrictions and equity securities held at cost, investments in property and equipment and intangible assets, changes in loans receivable, net and net proceeds from/payments on loans payable and other financial liabilities related to our Fintech solutions, since we consider those liabilities as the working capital of the Fintech activities. From the second quarter of 2025 onwards, we have also included increase (decrease) in cash and cash equivalents and investments restricted due to management restriction policies and digital assets as an adjustment in the calculation of our adjusted free cash flow. We consider adjusted free cash flow to be a measure of liquidity generation that provides useful information to management and investors since it shows how much cash the Company generates with its core activities that can be used for discretionary purposes and to repay its corporate and/or commerce debt. A limitation of the utility of adjusted free cash flow as a measure of liquidity generation is that it is a partial representation of the total increase or decrease in our available cash, investments and digital assets balance for the year. Therefore, we believe it is important to view the adjusted free cash flow measure only as a complement to our entire consolidated statements of cash flows.

Net increase (decrease) in available cash, investments and digital assets

Net increase (decrease) in available cash, investments and digital assets (from the second quarter of 2025 onwards, our available funds include digital asset holdings) represents adjusted free cash flow less net proceeds from/payments on loans payable and other financial liabilities, related to our Commerce and corporate activities, payments of finance lease obligations, other investing and/or financing activities not considered above and the effect of exchange rates changes on available cash and investments. We consider Net increase (decrease) in available cash, investments and digital assets to be a measure of liquidity availability that provides useful information to management and investors after netting out all other debt and corporate payments and activities from the adjusted free cash flow.

The following table shows a reconciliation of Net cash provided by operating activities to Adjusted free cash flow and Net increase in available cash, investments and digital assets:

Year Ended December 31,

(In millions)

Net cash provided by operating activities ("CFO")

Adjustments to reconcile CFO to Adjusted free cash flow (1)

Increase in cash and cash equivalents and investments related to customer funds due to regulatory requirements and other restrictions (including management restriction policies) and equity securities held at cost

Investments in property and equipment and intangible assets

Changes in loans receivable, net

Proceeds from loans payable and other financial liabilities related to our Fintech solutions, net

Adjusted free cash flow

Proceeds from/Payments on loans payable and other financial liabilities, related to our Commerce and Corporate activities, net

Other investing and/or financing activities

Effect of exchange rate changes on available cash and investments

Net increase in available cash, investments and digital assets

Available cash, investments and digital assets (2) , at the beginning of the year

Available cash, investments and digital assets (2) , at the end of the year

Net cash used in investing activities

Net cash provided by (used in) financing activities

(1) Includes accrued interest and financial income net of interest received from available and restricted investments, and results on digital assets.

(2) Includes cash and cash equivalents (excluding cash and cash equivalents restricted due to management restriction policies), short-term investments (excluding time deposits, foreign debt securities and foreign government debt securities restricted and held in guarantee) and long-term investments (excluding foreign government debt securities restricted, investments held in VIEs as a consequence of securitization transactions and equity securities held at cost) and digital assets.

(3) Recast for consistency with the current presentation due to the changes explained above.

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