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 models (“PDs”) are estimated using a survival methodology; these PDs are constructed using individual information through time, taking into account the expected future rate (forward-looking models) using three probability-weighted macroeconomic scenarios (base, 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 probabilities for each bucket, type of product and country. Each marginal monthly probability of represents a different possible scenario of . 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 is equal to the receivables’ expected outstanding principal, interest and other allowable balances. We estimate the exposure at that the portfolio of loans would have in each possible moment of , 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 given (“LGD”) is the percentage of the exposure at 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 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 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 of 10%, we would have recognized an increase in our allowance for 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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