In the third quarter, MercadoLibre’s profits increased by 6%

A push for free delivery in Brazil damaged margins but helped surpass revenue projections, while currency effects and decreased demand in Argentina caused e-commerce business MercadoLibre to post net income below analysts’ expectations on Wednesday.

Based in Uruguay and the most valuable firm in Latin America by market capitalization, MercadoLibre reported net income of $421 million for the July-September quarter, which was 6% higher than the previous year but less than the $481 million experts had predicted in an LSEG survey.

As sales as defined by Gross Merchandise Value (GMV) rose 35% in constant currency terms, the company’s net revenue, which runs the fintech Mercado Pago and an e-commerce platform in Latin America, jumped 39% to $7.4 billion, above analysts’ projections of $7.2 billion.

“We made investments in Brazil and we are already seeing the results of those investments,” Chief Financial Officer Martín de los Santos told Reuters.

In June, MercadoLibre lowered its free shipping threshold in Brazil, its main market, which helped achieve a 34% increase in GMV in the country and its highest growth in unique buyers since the beginning of 2021.

However, the initiative continued to affect profitability, with its operating margins, or EBIT margins, falling to 9.8%, the lowest level since the fourth quarter of 2023.

The loan portfolio of fintech Mercado Pago increased 83% year over year to $11 billion, primarily due to credit cards, but the 15- to 90-day default rate decreased from 7.8% to 6.8%.

Mercado Pago’s acquisition activities saw a 32% increase in overall payment volume, reaching $47.7 billion.