MELI Mercado Libre 10-Q 2026-09-30 section summaries

Debt, securitization and liquidity

Loans payable and other financial liabilities rose materially between December 31, 2025 and September 30, 2026, alongside growth in collateralized funding used to support Mercado Pago’s credit business.

On September 14, 2026, MercadoLibre issued $1.000B principal amount of unsecured 2036 Notes, with a 5.850% fixed coupon and a September 14, 2036 maturity. Their September 30 carrying amount was $974M, reflecting $6M of capitalized issuance costs and a $21M debt discount. The company repaid $367M, including principal and interest, on the 2026 Sustainability Notes when they matured in January 2026.

The $400M revolving credit facility was undrawn at September 30, 2026; commitments may be increased by up to another $400M. Borrowings bear Term SOFR plus a rating-dependent margin (currently 1.00%) and are due by September 2028, with a possible extension to September 2029. An April 2026 amendment reduced the minimum share of company revenue represented by guarantors from 75% to 60%.

After quarter-end, on November 4, 2026, Brazilian subsidiaries entered into IFC loan agreements totaling $735M: $250M funded by IFC and $485M by participating institutions, with IFC as lender of record. No funds had been disbursed as of the report date; an initial disbursement was expected in November. Proceeds are intended to fund early settlement of credit-card receivables for micro, small and medium-sized businesses in Brazil’s Amazon Region. The loans bear six-month Term SOFR plus 1.05% and mature in a single payment after three years for B loans and five years for A loans; the parent guarantees them. Covenants include cross-acceleration and judgment-default provisions with a $200M threshold, and require prepayment following a change of control accompanied by a rating downgrade.

Securitization SPEs

MercadoLibre consolidates the SPEs because it directs their relevant activities and retains subordinated or equity interests that expose it to potential losses or benefits. Third-party investors generally have recourse only to pledged SPE assets; cash flows are restricted to debt service, with residual cash flows retained by the company.

These SPE balances include digital-wallet amounts eliminated on consolidation. Securitizations fund credit-card receivables and loans in Brazil, Argentina, Mexico and Chile, leaving the company exposed to credit performance through its retained interests. During 2026, amendments reduced spreads and/or extended maturities: a Brazilian SPE’s spread declined from 3.00% to 2.50% and maturity moved from April 2028 to March 2029. Fideicomiso 6189 changed from TIIE to TIIE de Fondeo, reduced its spread from 2.55% to 1.80%, and extended maturity from April 2027 to August 2029. Fideicomiso F/6203 extended to February 2031, and a Brazilian SPE extended to August 2030.

Leases

Remaining weighted-average terms were eight years for operating leases and two years for finance leases (three years at year-end 2025); discount rates were 10% and 14%, respectively. Fixed future payments were $4.311B for operating leases and $138M for finance leases. After imputed interest of $1.347B and $22M, respectively, recorded liabilities were $2.964B and $116M.

Derivatives and hedging

The company uses currency contracts to hedge forecast U.S.-dollar-linked expenses of Brazilian and Mexican subsidiaries, and swaps and futures to manage foreign-exchange and interest-rate exposure on debt and Brazilian consumer, merchant and asset-backed loan portfolios.

At September 30, derivative assets included $13M of current foreign-exchange contracts and interest-rate swap assets of $23M current and $24M non-current. Derivative liabilities included $75M of current fair-value-hedge cross-currency swaps, $23M of current cash-flow-hedge cross-currency swaps, $45M of current designated foreign-exchange contracts and $30M of current non-designated interest-rate swaps.

For the nine months ended September 30, 2026, cash-flow hedges recorded $107M of losses in OCI and reclassified $114M of losses from accumulated OCI; accumulated losses declined from $30M at December 31, 2025 to $23M at September 30, 2026. For the comparable 2025 period, $68M of losses were recognized and $15M reclassified, with accumulated losses of $48M at September 30, 2025.

Fair-value hedges of fixed-rate financial debt generated $79M of net losses in the first nine months of 2026 versus $78M in 2025; Q3 losses were $16M versus $29M. The hedged debt carrying amount increased to $666M from $486M. Fair-value hedges of fixed-rate loans receivable produced a $1M net loss for the first nine months of 2026 (less than $1M in 2025), while the hedged loan carrying amount rose to $656M from $185M. Non-designated derivatives produced a $10M net income-statement loss for the first nine months of 2026 versus $3M in 2025; Q3 losses were $2M and $3M, respectively.

Argentina subsidiaries changed their functional currency from Argentine pesos to U.S. dollars under U.S. GAAP due to hyperinflation; accordingly, U.S.-dollar commercial notes there have no recognized foreign-exchange risk for hedge-accounting purposes. Some interest-rate swaps hedging Brazilian subsidiary debt are not designated as accounting hedges.

MercadoLibre (MELI) — Q3 and nine months ended September 30, 2026

Consolidated results

Amounts in $ millions.

Revenue growth was strong but moderated sequentially: Q3 revenue increased 45.1% year over year, while sequential growth slowed to 6% from 15% in Q2. Higher lending originations, first-party sales, GMV and TPV drove growth. On an FX-neutral basis, revenue grew 40.8% in Q3 and 42.9% in 9M, below reported growth; FX-neutral operating income fell 4.0% in Q3 and 10.7% in 9M. The company’s FX-neutral measure applies 2025 monthly average rates and does not adjust for other macroeconomic effects, including inflation or pricing responses.

Costs grew faster than revenue, reducing gross margin to 40.8% in Q3 from 43.3%, and to 41.7% in 9M from 45.1%. Higher shipping and carrier costs, cost of goods sold, and credit-loss provisions were important pressures; lower sales taxes as a share of revenue partly offset them. Management cautioned that further first-party growth, logistics expansion or costs not keeping pace with revenue could continue to weigh on gross margin.

Revenue streams and geographic segments

Amounts in $ millions; segment contribution is the company’s direct-contribution measure.

Q3 segment revenue grew 49.7% in Brazil, 47.1% in Mexico, 26.1% in Argentina and 63.1% in Other Countries. Total direct-contribution margin declined to 13.8% from 18.8%; Brazil and Argentina direct contribution declined in 9M despite revenue growth. Segment costs rose 54.1% in Q3 and 60.5% in 9M. Brazil, Mexico and Argentina generated 54.4%, 54.0% and 23.1% 9M revenue growth, respectively.

*9M amounts are shown where 9M growth differed from Q3 growth by at least 3 percentage points. Commerce and Fintech 9M growth overall was 48.2% and 47.4%, respectively; Fintech’s Q3 growth was 42.5%. Revenue growth reflected strong GMV and TPV, though currency movements affected reported results: consolidated local-currency growth was 40.8% in Q3 and 42.9% in 9M.

Expenses, credit and profitability

Sales and marketing expense rose 49.1% in Q3 to $1,243 million from $833 million and 53.7% in 9M to $3,356 million from $2,183 million. Marketing, buyer protection and staffing contributed; sales and marketing headcount grew 35% in Q3 and 27% in 9M. Product and technology expense increased 31.4% in Q3 to $745 million from $567 million and 29.0% in 9M to $2,173 million from $1,685 million, with technology maintenance and AI among the drivers.

Provision for doubtful accounts rose 64.6% in Q3 to $1,342 million from $815 million and 83.2% in 9M to $3,862 million from $2,108 million, mainly as credit-card, consumer and merchant-credit originations expanded 70% and 77%, respectively. The provision reached 12.5% of revenue in Q3 (11.0% prior year) and 13.0% in 9M (10.5%). Management expects continued investment in credit expansion and marketing, which may pressure margins. NIMAL, the annualized credit-revenue measure after funding costs and provisions relative to average gross loans, was 20.1% in Q3 and 19.7% in 9M, versus 21.0% and 22.0%.

Operating metrics

*9M figures included where growth differed from Q3 by at least 3 percentage points. Marketplace operations span 18 countries; Mercado Pago operates in eight. Logistics supports delivery speed and user experience, with fulfillment centers handling more than half of shipments. Mercado Ads monetizes platform audiences, while Mercado Pago has expanded into merchant processing, lending, asset management and digital assets.

Cash flow, liquidity and debt

Amounts in $ millions.

Operating cash flow benefited from increased customer funds payable ($3.816B), noncash adjustments ($3.643B), card-transaction payables ($1.648B) and other payables/accrued expenses ($1.612B), partly offset by higher receivables. Investing outflow included $6.212B net lending activity and $1.215B in property, equipment and other capital investment. Adjusted free cash flow, a non-GAAP measure, fell to $443 million from $718 million, reflecting lending growth, investment and restricted funds. Management cautions it is only a partial view of liquidity.

At September 30, cash and cash equivalents plus short-term investments totaled $6.902B, excluding $473 million of restricted investments. Non-U.S. subsidiaries held $20.609B, or 88.1%, of consolidated cash, restricted cash and investments. Total debt under the company’s net-debt definition was $16.154B, versus $11.392B at December 2025; net debt was $8.028B versus $4.682B. The company issued $1.000B aggregate principal of 5.850% unsecured notes due 2036 in September. It repaid $367 million of principal and interest on notes that matured in January 2026. An $800 million revolving credit commitment was also available. Management expects cash, short-term investments, operating cash generation and credit-card receivable sales to support operations and planned technology and logistics investment.

Regulation and other context

Brazil’s VASP authorization framework and eFX rules create new requirements for crypto and cross-border payment activities; a Mercado Pago subsidiary applied for crypto-intermediation and custody authorization in July 2026. Argentina implemented new PSP security and AML requirements and a prudential framework for a registered clearing and settlement agent. Chile and Uruguay granted Mercado Pago additional payments-related approvals. The company says it does not provide traditional earnings guidance, favoring long-term decisions; it also notes this may make near-term results harder for investors to assess. No single customer represented more than 5% of revenue.

Foreign-exchange risk

MercadoLibre has significant operating exposure to the Brazilian Real, Mexican Peso, Argentine Peso, Colombian Peso and Chilean Peso. Currency movements can affect revenue, costs, intercompany balances, and the reported value of assets and liabilities. Forward contracts and cross-currency swaps reduce, but do not eliminate, this exposure. Most subsidiaries use their local currency as functional currency; Argentine subsidiaries use the U.S. dollar because Argentina is highly inflationary.

At September 30, 2026, foreign-currency-denominated balances included:

Treasury policy transfers most excess local-currency cash into U.S.-dollar accounts in the United States and uses derivatives. Consolidated foreign-currency losses were $72M in Q3 2026 and $111M in 9M 2026.

Consolidated currency sensitivity

For 9M 2026, the filing presents the following hypothetical results under a 10% appreciation or depreciation of subsidiaries’ local currencies against the U.S. dollar:

The company attributes the net-income sensitivity primarily to currency movements’ effects on operating income.

Country-level scenarios show different channels of exposure. A hypothetical 10% Brazilian Real depreciation at September 30, 2026 would reduce reported Brazilian subsidiary local-currency net assets by approximately $503M through OCI and produce an approximately $5M foreign-currency loss on non-functional-currency net liabilities. The equivalent Mexican Peso depreciation would reduce Mexican subsidiary net assets by approximately $320M through OCI and produce an approximately $98M loss on non-functional-currency net liabilities. A comparable Argentine Peso depreciation scenario would produce an approximately $70M foreign-exchange loss on non-functional-currency net assets.

Argentina has been treated as highly inflationary since July 1, 2018, with the U.S. dollar as functional currency; consequently, no Argentine currency-translation effect has been recorded in OCI since then. Argentine inflation was 23.6% in 9M 2026, compared with 22.0% in 9M 2025. The official exchange rate was ARS 1,517.00 per U.S. dollar at September 30, 2026, versus ARS 1,455.00 at December 31, 2025. The official rate increased 4.3% in 9M 2026, compared with 33.7% in 9M 2025. The 9M average rate rose 22.2%, from ARS 1,180.4 per U.S. dollar in 2025 to ARS 1,442.6 in 2026.

Interest-rate risk

Rate movements affect financing costs for credit-card receivables and funding for Mercado Pago, lending and logistics, as well as interest income and investment values. At September 30, 2026, net credit-card receivables and other means of payment were $9.200B, while lending receivables, net of allowance, were $13.040B. The company used Brazilian loan-portfolio futures with $804M notional to hedge interest-rate exposure.

Fixed-rate investments may lose fair value if rates rise; floating-rate investments may earn less if rates fall. A hypothetical 100-basis-point increase in rates would have increased the 9M 2026 income-statement charge by approximately $63M: $56M in cost of net revenues and financial expenses, and $7M in interest expense and other financial losses.

Equity-price-linked employee obligations

The 2021–2026 Long Term Retention Programs provide eligible employees cash awards over as many as six years. Payments vary with MercadoLibre’s share price and are subject to continued-employment requirements. At September 30, 2026, the outstanding variable-payment obligation had a contractual fair value of $641M, including an accrued liability of $113M. Its disclosed sensitivity ranged from $384M with a 40% share-price decline to $897M with a 40% increase, compared with $641M at the static share price of $1,739.56.

As of September 30, 2026, MELI’s CEO and CFO concluded that disclosure controls and procedures were effective. No changes in internal control over financial reporting during the three months ended September 30, 2026 materially affected, or were reasonably likely to materially affect, internal control over financial reporting.

As of September 30, 2026, MercadoLibre reported no material changes to the risk factors disclosed in its 2025 Form 10-K.

IFC financing

On November 4, 2026, Mercado Livre Brasil Ltda. and Mercado Pago Instituição de Pagamento Ltda. entered into senior unsecured loan agreements with the International Finance Corporation (IFC) totaling $735 million, allocated equally between the two borrowers. The facility consists of $250 million of IFC-funded A loans and $485 million funded by participating financial institutions, with IFC acting as lender of record. The Company fully and unconditionally guarantees the borrowers’ obligations on an unsecured basis.

Borrowers may prepay with at least 30 days’ notice; partial prepayments must be at least $50 million. Voluntary prepayments carry a premium that ranges from 0.50% when at least five years remain to 0% when one year or less remains, plus potential unwinding costs. Covenants include limitations on liens, mergers, and sale-and-leaseback transactions generally consistent with the 2036 Notes indenture, as well as reporting and ESG requirements. Cross-acceleration and judgment defaults have a $200 million threshold. A change of control accompanied by a rating downgrade requires prepayment, and IFC may accelerate the loans following an event of default.

Trading arrangements

During Q3 2026, no Company directors or officers adopted or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement.