MercadoLibre Inc (NASDAQ:MELI), Latin American e-commerce giant, stock rose 0.17% (As on August 5, 11:17:53 AM UTC-4, Source: Google Finance) after the company missed analysts’ estimates for second-quarter net profit and core earnings, as increased free shipping in Brazil drove sales up but also hit margins. The company reported net income of $523 million for the quarter through the end of June, down 1.5% year-on-year and below the $596 million expected by analysts in an LSEG poll. In early June, MercadoLibre cut the threshold for purchases eligible for free shipping in Brazil, after also lowering shipping costs for companies and users selling on its platform in May, amid fierce competition in the country’s e-commerce segment. Brazil, the firm’s main market, together with Mexico helped MercadoLibre to increase total items sold by 31% in the quarter, the fastest pace year-on-year since mid-2021. However, that also hurt margins.

Net revenue of $6.8 billion was up 34% year-on-year, beating the estimate of $6.7 billion, with sales measured by gross merchandise value rising 37% on a forex-neutral basis. Earnings before interest and taxes (EBIT) reached a record high of $825 million, but also missed the $869 million forecast. The EBIT margin stood at 12.2%, down from 14.3% a year earlier. The CFO said that among the main impacts on margins were investments in free shipping and related marketing, and growth in its so-called 1P business, which sells directly to customers. The firm’s fintech arm grew its credit portfolio by 91% to $9.3 billion, while the 15-to-90-day default ratio fell 1.5 percentage point to 6.7%, the lowest since it started to release the figure seven years ago

Moreover, Argentina had another exceptional quarter in Q2’25. Unique buyer growth exceeded 30% YoY for the second consecutive quarter. Items sold rose 46% YoY, showing robust growth versus Q2’24. This supported FX-neutral GMV growth of 75% YoY in Q2’25. Mexico delivered an excellent performance in Q2’25. Items sold grew 36% YoY – the fastest pace in nearly two years – driving FXneutral GMV growth to accelerate to 32% YoY. Fulfillment penetration in Mexico exceeded 75% for the first time, supported by the opening of new facilities that expanded capacity available to sellers. The r 1P business continues to scale rapidly across the region. Quarterly GMV surpassed $1bn for the first time in Q2’25 after growing 103% YoY on an FX-neutral basis.