How MELI (MercadoLibre) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a Latin American e-commerce and fintech leader like MELI (formerly MercadoLibre) makes money is essential for investors and anyone interested in the business of digital commerce and financial technology. In this post, we break down MELI's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick MELI Overview

MercadoLibre (MELI) operates the largest online commerce and payments ecosystem in Latin America. Its business model centers on two main pillars:
- Commerce: Online marketplace, logistics, advertising, and related services.
- Fintech: Digital payments, credit, insurance, and financial services via MercadoPago.

Revenue comes from transaction fees, advertising, shipping, payment processing, and financial products. The company segments its operations into Total Commerce Revenue and Total Fintech Revenue, each driving distinct growth and profitability dynamics.

Revenue Breakdown

• Total Revenue (Q3 2025): $7.41B (+39.5% YoY)
  • Total Commerce Revenue: $4.17B (56.3% of total, +33.0% YoY)
  • Total Fintech Revenue: $3.24B (43.7% of total, +48.9% YoY)
  • Growth is powered by expanding e-commerce adoption, robust payment volumes, and fintech innovation.

Gross Profit and Margins

• Gross Profit: $3.21B (43.3% gross margin)
  • Cost of Revenue: $4.20B (+46.2% YoY)
  • MELI maintains robust margins due to its scalable digital business model and operational efficiencies in logistics and payments.
• Most costs come from fulfillment/logistics, payment processing, and technology infrastructure.

Operating Income and Expenses

• Operating Income: $724M (+30.0% YoY, 9.8% margin)
• Operating Expenses: $2.49B (+32.0% YoY)
  • R&D: $567M (+12.5% YoY, 7.7% of revenue) — Focused on platform innovation, AI, and fintech product development.
  • SG&A: $563M (flat YoY, 7.6% of revenue) — Includes sales, general, and administrative costs, reflecting disciplined cost control.
  • MELI continues to prioritize innovation and invest in growth while maintaining efficiency in core operations.

Net Income

• Pre-Tax Income: $241M (-53.7% YoY, 3.3% margin)
• Income Tax: [Data not disclosed for Q3 2025]
• Net Income: $421M (+6.0% YoY, 5.7% net margin)
• MELI converts a moderate portion of sales into profit due to its scalable platform and pricing power, despite increased costs and investments.

What Drives MELI's Money Machine?

• Commerce Marketplace: 56%+ of revenue comes from online marketplace transactions, shipping, and advertising.
• Fintech Payment Volume: MercadoPago processed billions in payments, driving 43.7% of total revenue with 48.9% YoY growth.
• Strategic R&D Investment: $567M in Q3 2025, fueling innovation in AI, logistics, and financial products.
• Future Growth Areas: Credit, insurance, and new fintech products are expanding rapidly, though not yet profitable at scale.

Visualizing MELI's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially R&D and SG&A) taking the largest chunk.
• Even after significant investments in technology and expansion, 5.7% of revenue drops to the bottom line.

Key Takeaways

• MELI's money comes overwhelmingly from commerce transactions and fintech payment services
• High gross and net margins illustrate the power of MELI's scalable, digital platform business model
• Heavy investment in R&D and product innovation, balanced by efficiency in operating costs
• Ongoing growth is driven by e-commerce adoption, fintech expansion, and platform innovation

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FAQ About MELI's Income Statement

1. What is the main source of MELI's revenue in 2025?

MELI generates over 56% of its revenue from commerce marketplace transactions, including sales, shipping, and advertising. The remaining 44% comes from fintech services via MercadoPago, which is growing rapidly.

2. How profitable is MELI in Q3 2025?

MELI reported net income of $421M in Q3 2025, with a net margin of approximately 5.7%, reflecting moderate profitability driven by strong gross margins and disciplined cost management.

3. What are the largest expense categories for MELI?

The biggest expenses on MELI's income statement are operating expenses, particularly Research & Development (R&D) at $567M and Sales, General & Administrative (SG&A) at $563M in Q3 2025. R&D investment focuses on platform innovation and fintech expansion.

4. Why does Fintech operate at a loss?

Fintech, despite generating $3.24B in revenue, posted an operating loss in Q3 2025 due to aggressive investments in credit, insurance, and new financial products. MELI believes these will drive long-term growth—even if the division is unprofitable today.

5. How does MELI's effective tax rate compare to previous years?

MELI's effective tax rate in Q3 2025 was not disclosed in the latest filing. Historically, MELI has benefited from international structuring and tax benefits from share-based compensation, resulting in a moderate effective tax rate.