MercadoLibre Inc

Q2 2026 headline results: strong growth, margin intentionally pressured - Net revenue >$10B for first time, +50% YoY. - Operating income $683M, EBIT margin 6.7% (about -550 bps YoY), management says this is due to continued investment in long-term engagement and scale rather than short-term profitability. - Seq. margin broadly stable vs Q1, implying margin pressure is *not worsening materially* quarter to quarter.

Brazil “free shipping threshold” impact after 1 year: engagement + conversion step-change - Management highlighted that lowering the Brazil free-shipping threshold has shown sustained behavior change over a full year (not a one-off). - Items per buyer +19% YoY in Q2 even as new buyer cohorts add volume (new users buy less initially, so this is a strong sign of *existing-user improvement*). - Conversion +1.1 percentage points YoY in Brazil; described as a step change that remained sustainable for a full year. - Daily vs monthly active mix improved with daily actives growing faster every quarter since the change. - Frequency rising: management cited ~+20% increase in purchase frequency (items/transactions per user).

Credit business: fast growth with low-to-near-low NPLs, but investors should watch cycle risk - Credit portfolio $16.4B, +75% YoY. - 15–90 day NPL: 7.0% total and 4.6% for credit cards (both near historical lows). - NIMAL improved from 18% (Q1) to 21% (Q2); management credits market/portfolio shift to lower-risk users and Brazil spreads normalization after a Q1 provision spike. - Brazil credit cycle concern (investor question): management stated no deterioration so far, NPLs “roughly in line YoY” and better than last quarter, with risk controls (including tightening/curtailing lines when needed). - Surprising nuance: management suggested product-level NPLs are near all-time lows across regions/products, emphasizing underwriting + tech-driven selection—yet some investors flagged mixed signals between short-term vs longer-term delinquency timing (not fully resolved in the excerpt).