MERCADOLIBRE INC

Previous wording

We are the largest online commerce and fintech ecosystem in Latin America based on unique visitors and orders processed, and our fintech platform is the leader in MAUs amongst fintech companies in Argentina, Chile and Mexico, and the second largest in Brazil. Mercado Libre's e-commerce platform is present in 18 countries (Argentina, Brazil, Mexico, Chile, Colombia, Peru, Uruguay, Venezuela, Bolivia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Honduras, Nicaragua, Panama, Paraguay and El Salvador) and our fintech platform, Mercado Pago, is present in 8 countries (Argentina, Brazil, Mexico, Chile, Colombia, Peru, Uruguay and Ecuador). Our ecosystem provides consumers and merchants with a complete portfolio of services to enable buying and selling online and the processing of payments online and offline, as well as offering a wide array of simple day-to-day financial services.

Current wording

Our e-commerce platform is the leader in the Latin America region based on GMV, and our fintech platform is the leader in MAUs amongst fintech companies in Argentina, Chile and Mexico, and the second largest in Brazil. Mercado Libre's e-commerce platform is present in 18 countries (Argentina, Brazil, Mexico, Chile, Colombia, Peru, Uruguay, Venezuela, Bolivia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Honduras, Nicaragua, Panama, Paraguay and El Salvador) and our fintech platform, Mercado Pago, is present in 8 countries (Argentina, Brazil, Mexico, Chile, Colombia, Peru, Uruguay and Ecuador). Our ecosystem provides consumers and merchants with a complete portfolio of services to enable buying and selling online, and the processing of payments online and offline, as well as offering a wide array of simple day-to-day financial services.

Previous wording

Our e-commerce platform provides buyers and sellers with a robust and safe environment that fosters the development of a large e-commerce community in Latin America, a region with a population of over 650 million people where penetration of e-commerce over total retail significantly lags benchmarks such as the United States of America ("U.S."), the U.K. and China. We believe that we offer world-class technological and commercial solutions that address the distinctive cultural and geographic challenges of operating a digital commerce platform in Latin America.

Current wording

Our e-commerce platform provides buyers and sellers with a robust and safe environment that fosters the development of a large e-commerce community in Latin America, a region with a population of over 650 million people where penetration of e-commerce over total retail significantly lags benchmarks such as the United States of America (“U.S.”), the United Kingdom (“U.K.”) and China. We believe that we offer world-class technological and commercial solutions that address the distinctive cultural and geographic challenges of operating a digital commerce platform in Latin America.

Previous wording

Our advertising platform, Mercado Ads, is another value-added service that we offer to sellers on our platform and brands both on- and off-platform. The platform enables sellers and brands to access the millions of consumers that browse and purchase on our Marketplace, as well as the first-party data that all of these engagements generate. This enables advertisers to target highly granular audiences. The products we offer are Product Ads (sponsored listings), Brands Ads (product carrousels), Display Ads (banners) and Video Ads, the last two of which we are able to offer inventory off-platform as well as on our own Marketplace and fintech platform.

Current wording

Our advertising platform, Mercado Ads, is another value-added service that we offer to sellers on our platform and brands both on- and off-platform. The platform enables sellers and brands to access the millions of consumers who browse and purchase on our Marketplace, as well as the first-party data that all of these engagements generate. This enables advertisers to target highly granular audiences. The products we offer are Product Ads (sponsored listings), Brands Ads (product carrousels), Display Ads (banners) and Video Ads, the last two of which we are able to offer inventory off-platform as well as on our own Marketplace and fintech platform.

Previous wording

Mercado Shops is a service we offer to sellers to complement their business on our Marketplace. It is a digital storefront solution that allows sellers to set up, manage and promote their own digital stores, whilst using Mercado Libre's logistics, advertising and payments services. In January 2025, we announced the migration of Mercado Shops to "Mi Página," which offers similar functionalities but is fully embedded within our Marketplace (without an external storefront). Mercado Shops will be discontinued as of December 31, 2025.

Current wording

Mercado Shops is a service we offer to sellers to complement their business on our Marketplace. It is a digital storefront solution that allows sellers to set up, manage and promote their own digital stores, whilst using Mercado Libre's logistics, advertising and payments services. In January 2025, we announced the migration of Mercado Shops to “Mi Página,” which offers similar functionalities but is fully embedded within our Marketplace (without an external storefront). Mercado Shops was discontinued as of December 31, 2025.

Previous wording

Our lending solution is available in Argentina, Brazil, Mexico and Chile. We offer credits mostly to merchants and consumers that already form part of our user base, many of whom have historically been underserved or overlooked by financial institutions and therefore suffer from a lack of access to credit. Facilitating credit is a key service overlay that enables us to further strengthen the engagement and lock-in rate of our users, while also generating additional touchpoints and incentives to use Mercado Pago as an end-to-end financial solution.

Current wording

Our lending solution is available in Argentina, Brazil, Mexico and Chile. We offer loans mostly to merchants and consumers that already form part of our user base, many of whom have historically been underserved or overlooked by financial institutions and therefore suffer from a lack of access to credit. Facilitating credit is a key service overlay that enables us to further strengthen the engagement and lock-in rate of our users, while also generating additional touchpoints and incentives to use Mercado Pago as an end-to-end financial solution.

Previous wording

As an extension of our asset management and savings solutions for users, we launched a digital assets feature as part of the Mercado Pago account in Brazil, Mexico and Chile, in 2021, 2022 and 2023, respectively. This service allows our millions of users to purchase, hold and sell selected digital assets through our interface without leaving the Mercado Pago application, while a partner acts as the custodian and offers the blockchain infrastructure platform. This feature is available for all users through their Mercado Pago account. In 2024, in Brazil and Mexico we launched "Meli Dólar", a stablecoin that is pegged to the US dollar. Members of our loyalty program receive their cashback in Meli Dólar and all Mercado Pago users can buy, hold and sell the stablecoin without any fees.

Current wording

As an extension of our asset management and savings solutions for users, we launched a digital assets feature as part of the Mercado Pago account in Brazil, Mexico and Chile, in 2021, 2022 and 2023, respectively. This service allows our millions of users to purchase, hold and sell selected digital assets through our interface without leaving the Mercado Pago application, while a partner acts as the custodian and offers the blockchain infrastructure platform. This feature is available for all users through their Mercado Pago account. In 2024 and 2025 we launched “Meli Dólar,” a stablecoin that is pegged to the US dollar, in Brazil, Mexico and Chile. Members of our loyalty program receive their cashback in Meli Dólar and all Mercado Pago users can buy, hold and sell the stablecoin without any fees.

Previous wording

Our segment reporting is based on geography, which is the criterion our Management currently uses to evaluate our segment performance. Our geographic segments are Brazil, Mexico, Argentina and Other Countries (including Chile, Colombia, Costa Rica, Ecuador, Peru, Uruguay and the U.S.). Although we discuss long-term trends in our business, it is our policy not to provide earnings guidance in the traditional sense. We believe that uncertain conditions make the forecasting of near-term results difficult. Further, we seek to make decisions focused primarily on the long-term welfare of our Company and believe focusing on short-term earnings does not best serve the interests of our stockholders. We believe that execution of key strategic initiatives as well as our expectations for long-term growth in our markets will best create stockholder value. A long-term focus may make it more difficult for industry analysts and the market to evaluate the value of our Company, which could reduce the value of our common stock or permit competitors with short-term tactics to grow more rapidly than us. We, therefore, encourage potential investors to consider this strategy before making an investment in our common stock.

Current wording

Our segment reporting is based on geography, which is the criterion our Management currently uses to evaluate our segment performance. Our geographic segments are Brazil, Mexico, Argentina and Other Countries (including Bermuda, Chile, China, Colombia, Costa Rica, Ecuador, Peru, Uruguay and the U.S.). Although we discuss long-term trends in our business, it is our policy not to provide earnings guidance in the traditional sense. We believe that uncertain conditions make the forecasting of near-term results difficult. Further, we seek to make decisions focused primarily on the long-term welfare of our Company and believe focusing on short-term earnings does not best serve the interests of our stockholders. We believe that execution of key strategic initiatives as well as our expectations for long-term growth in our markets will best create stockholder value. A long-term focus may make it more difficult for industry analysts and the market to evaluate the value of our Company, which could reduce the value of our common stock or permit competitors with short-term tactics to grow more rapidly than us. We, therefore, encourage potential investors to consider this strategy before making an investment in our common stock.

Previous wording

For loans receivable that share similar risk characteristics such as product type, country, unpaid installments, days delinquent, and other relevant factors, we estimate the lifetime expected credit loss allowance based on a collective assessment. The same methodology is applied for the measurement of the current expected credit losses (“CECL”) for the exposure to off balance sheet unused agreed loan commitment on credit cards portfolio. The lifetime expected credit losses is determined by applying probability of default and loss given default models to monthly projected exposures, then discounting these cash flows to present value using the portfolio’s loans interest rate, estimated as a weighted average of the original effective interest rate of all the loans that conform to the portfolio segment. The probability of default is an estimation of the likelihood that a loan receivable will default over a given time horizon. For most of the products, probability of default models (“PDs”) are estimated using a survival methodology; these PDs are constructed using individual default information through time, taking into account the expected future delinquency rate (forward-looking models) using three probability-weighted macroeconomic scenarios (base, optimistic and pessimistic) following the increased complexity and possible outcomes of the global, regional and domestic macroeconomic performance, so that the models include macroeconomic outlook or projections and recent performance. With this model, we estimate marginal monthly default probabilities for each delinquency bucket, type of product and country. Each marginal monthly probability of default represents a different possible scenario of default. However, for new products with limited historical information such as asset-backed loans, we use a work-out approach for the estimation of the PD. The exposure at default is equal to the receivables’ expected outstanding principal, interest and other allowable balances. We estimate the exposure at default that the portfolio of loans would have in each possible moment of default, meaning for each possible scenario mentioned above. For credit cards loans we estimate an amortization scheme based on historical information. Also, for Brazil credit cards loans, we use, as applicable, a one month credit conversion factor (“CCF”) estimated according to terms and conditions, considering the increase in the volume of credit cards portfolio. The loss given default (“LGD”) is the percentage of the exposure at default that is not recoverable. The LGD is estimated using work-out and Chainladder approaches. This percentage depends on days past due, type of product and country, and is estimated by measuring an average of historical recovery rates from defaulted credits. For asset-backed products, since there is almost no information to apply either a work-out or Chainladder approach, we use the Basel III guidelines for credit risk management. The measurement of the CE…

Excerpt shortened here; the source contains the full paragraph.

Current wording

For loans receivable that share similar risk characteristics such as product type, country, unpaid installments, days delinquent, and other relevant factors, we estimate the lifetime expected credit loss allowance based on a collective assessment. The same methodology is applied for the measurement of the current expected credit losses (“CECL”) for the exposure to off balance sheet unused agreed loan commitment on credit cards portfolio. The lifetime expected credit losses is determined by applying probability of default and loss given default models to monthly projected exposures, then discounting these cash flows to present value using the portfolio’s loans interest rate, estimated as a weighted average of the original effective interest rate of all the loans that conform to the portfolio segment. The probability of default is an estimation of the likelihood that a loan receivable will default over a given time horizon. For most of the products, probability of default models (“PDs”) are estimated using a survival methodology; these PDs are constructed using individual default information through time, taking into account the expected future delinquency rate (forward-looking models) using three probability-weighted macroeconomic scenarios (base, optimistic and pessimistic) following the increased complexity and possible outcomes of the global, regional and domestic macroeconomic performance, so that the models include macroeconomic outlook or projections and recent performance. With this model, we estimate marginal monthly default probabilities for each delinquency bucket, type of product and country. Each marginal monthly probability of default represents a different possible scenario of default. However, for new products with limited historical information such as asset backed loans, we estimate PDs using roll rates/transition, until sufficient history is available to migrate to fully empirical approaches. The exposure at default is equal to the receivables’ expected outstanding principal, interest and other allowable balances. We estimate the exposure at default that the portfolio of loans would have in each possible moment of default, meaning for each possible scenario mentioned above. For credit cards loans we estimate an amortization pattern based on historical information. Also, for Brazil credit cards loans, we use, as applicable, a one month credit conversion factor (“CCF”) estimated according to terms and conditions, considering the increase in the volume of credit cards portfolio. The loss given default (“LGD”) is the percentage of the exposure at default that is not recoverable. The LGD is estimated using work-out and Chainladder approaches. This percentage depends on days past due, type of product and country, and is estimated by measuring an average of historical recovery rates from defaulted credits. For asset-backed products, since there is almost no information to apply either a work-out or Chainladder approach, we use the Basel…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

We believe that the accounting estimate related to allowance for doubtful accounts on loans receivable a critical accounting estimate because it requires Management to make complex assumptions and scenarios to estimate the CECL.

Current wording

We believe that the accounting estimate related to allowance for doubtful accounts on loans receivable is a critical accounting estimate because it requires Management to make complex assumptions and scenarios to estimate the CECL.

Previous wording

From time to time, we are involved in disputes that arise in the ordinary course of business. We are currently involved in certain legal proceedings as discussed in “Item 3—Legal Proceedings,” and in Note 16 – Commitments and Contingencies to our audited consolidated financial statements. We believe that we have meritorious defenses to the claims against us, and we will defend ourselves accordingly. However, even if successful, our defense could be costly and could divert Management’s time. If the plaintiffs were to prevail on certain claims, we might be forced to pay material damages or modify our business practices. Any of these consequences could materially harm our business and could have a material adverse impact on our financial position, results of operations or cash flows.

Current wording

From time to time, we are involved in disputes that arise in the ordinary course of business. We are currently involved in certain proceedings as discussed in “Item 3—Legal Proceedings,” and in Note 14 – Commitments and Contingencies to our audited consolidated financial statements. We believe that we have meritorious defenses to the claims against us, and we will defend ourselves accordingly. However, even if successful, our defense could be costly and could divert Management’s time. If the plaintiffs were to prevail on certain claims, we might be forced to pay material damages or modify our business practices. Any of these consequences could materially harm our business and could have a material adverse impact on our financial position, results of operations or cash flows.

Previous wording

The information include in this section sets forth, for the years presented, certain data from our consolidated statements of income. This information should be read in conjunction with our audited consolidated financial statements and the notes to those statements included elsewhere in this report.

Current wording

The information included in this section sets forth, for the years presented, certain data from our consolidated statements of income. This information should be read in conjunction with our audited consolidated financial statements and the notes to those statements included elsewhere in this report.

Previous wording

■shipping fees, which are generated when a buyer elects to receive an item through our shipping service, net of the third-party carrier costs (when we act as an agent). When the Company acts as principal, revenues derived from shipping services are recognized upon delivery of the good to the customer, and presented on a gross basis. In addition, the Company generates storage fees, which are charged to the seller for the utilization of the Company’s fulfillment facilities;

Current wording

■shipping fees, which are generated when an item is delivered through our shipping service. When we act as an agent, revenues derived from the shipping services are recognized at the time the transaction is successfully concluded for third-party sales, and presented net of the transportation costs charged by third-party carriers. When we act as principal, revenues derived from shipping services are recognized upon delivery of the good to the customer, and presented on a gross basis. In addition, the Company generates storage fees, which are charged to the seller for the utilization of the Company’s fulfillment facilities;

Previous wording

■ad sales fees due to advertising services provided to sellers, vendors, brands and others, through performance products (product ads and brand ads) and display formats, which are recognized based on the number of clicks and impressions, respectively;

Current wording

■ad sales fees due to advertising services provided to sellers, vendors, brands and others, through product searches (product ads and brand ads) and display formats (including video ads and display programmatic), which are recognized based on the number of clicks and impressions, respectively;

Previous wording

■classifieds fees due to offerings in vehicles, real estate and services, which are charged to sellers who opt to give their listings greater exposure throughout our websites; and

Current wording

■classifieds fees due to offerings in vehicles, real estate and services, which are charged to sellers who opt to give their listings greater exposure throughout our websites;

Previous wording

■interest, cash advances and fees from credit cards, merchant and consumer loans granted under our lending solution;

Current wording

■interest, cash advances and fees from credit cards, merchant, consumer and asset-backed loans granted under our lending solution;

Previous wording

Our net revenues and financial income grew during the year 2024, boosted by an increase in the share of shipping services where we act as principal, as opposed to agent, the growth of our gross merchandise volume, our lending solution originations and our total payment volume.

Current wording

Our net revenues and financial income grew during the year 2025, boosted by the growth of credit originations from our lending solution, an increase in total payment volume and fees due to payment in installments in our Mercado Pago platform, and the growth in gross merchandise volume.

Previous wording

Our Commerce revenues grew $3,958 million, or 48.3%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023. This increase in Commerce revenues was primarily attributable to:

Current wording

Our Commerce revenues grew $4,135 million, or 34.0%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024. This increase in Commerce revenues was primarily attributable to:

Previous wording

■(i) an increase of $3,322 million in Commerce services revenues mainly related to a 15.0% increase in gross merchandise volume and (ii) higher flat fee contributions for low gross merchandise volume transactions. Shipping carrier costs, which are netted against revenues, decreased $1,441 million, from $2,462 million for the year ended December 31, 2023 to $1,021 million for the year ended December 31, 2024, mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent; and

Current wording

■an increase of $2,674 million in Commerce services revenues mainly related to a 26.4% increase in gross merchandise volume and higher flat fee contributions for low gross merchandise volume transactions. Shipping carrier costs, which are netted against revenues, decreased $42 million, from $1,021 million for the year ended December 31, 2024 to $979 million for the year ended December 31, 2025, mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent during the first quarter of 2025; and

Previous wording

■an increase of $636 million in our revenues from Commerce products sales, mainly in Brazil and Mexico.

Current wording

■an increase of $1,461 million in our revenues from Commerce products sales, mainly in Brazil, Mexico and Argentina.

Previous wording

Our Fintech revenues grew 24.8%, from $6,906 million for the year ended December 31, 2023, to $8,618 million for the year ended December 31, 2024. This increase is mainly generated by:

Current wording

Our Fintech revenues grew 46.2%, from $8,618 million for the year ended December 31, 2024, to $12,599 million for the year ended December 31, 2025. This increase is mainly generated by:

Previous wording

■an increase of $1,054 million in our Credits revenues, mainly as a consequence of higher originations.

Current wording

■an increase of $2,258 million in our Credits revenues, mainly as a consequence of higher originations.

Previous wording

■an increase of $645 million in our revenues from Financial services and income, mainly related to a 34.0% increase in our total payment volume, partially offset by a decrease of financial income as a result of lower interest rates mainly in Argentina; and

Current wording

■an increase of $1,716 million in our revenues from Financial services and income, mainly related to our off-platform transactional fees and financing transactions, as a result of a 41.3% increase in our total payment volume.

Previous wording

Commerce revenues in Brazil increased 56.0% in the year ended December 31, 2024 as compared to 2023. This increase was generated by an increase of $2,040 million in our Commerce services revenues mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent, and an increase of $486 million in our revenues from Commerce products sales. Fintech revenues grew by 32.0%, a $1,059 million increase, during the year ended December 31, 2024 as compared to 2023, mainly driven by an increase of $767 million in our Credits revenues and an increase of $280 million in our revenues from Financial services and income.

Current wording

Commerce revenues in Brazil increased 30.5% in the year ended December 31, 2025 as compared to 2024. This increase was generated by an increase of $1,164 million in our Commerce services revenues and an increase of $982 million in our revenues from Commerce products sales. Fintech revenues grew by 37.8%, a $1,649 million increase, during the year ended December 31, 2025 as compared to 2024, mainly driven by an increase of $1,236 million in our Credits revenues and an increase of $413 million in our revenues from Financial services and income.

Previous wording

(3) For the year ended December 31, 2024, 2023 and 2022, the average inter-annual inflation rate in our Argentine segment was 236.8%, 127.9% and 70.7%, respectively. See also "Item 1A. Risk Factors - Risks related to doing business in Latin America - Local currencies used in the conduct of our business are subject to depreciation, volatility and exchange controls".

Current wording

(3) For the year ended December 31, 2025 and 2023, the average inter-annual inflation rate in our Argentine segment of 44.5% and 127.9%, respectively, was higher than the average inter-annual increase of Argentina’s official exchange rate against U.S. dollar of 35.4% and 120.0%, respectively, while for the year ended December 31, 2024, the average inter-annual inflation rate in our Argentine segment of 236.8%, was lower than the average inter-annual increase of Argentina’s official exchange rate against U.S. dollar of 240.5%. See also "Item 1A. Risk Factors - Risks related to doing business in Latin America - Local currencies used in the conduct of our business are subject to depreciation, volatility and exchange controls."

Previous wording

Cost of net revenues and financial expenses primarily includes shipping operation costs (including warehousing costs), carrier and other operating costs, cost of goods sold, collection fees, sales taxes, funding costs related to our lending solution and Mercado Pago business, fraud prevention expenses, hosting and site operation fees, certain tax withholding related to export duties, compensation for customer support personnel and depreciation and amortization. The following table presents cost of net revenues and financial expenses for the years indicated:

Current wording

Cost of net revenues and financial expenses primarily includes shipping operation costs (including warehousing costs), carrier and other operating costs, cost of goods sold, collection fees, sales taxes, funding costs related to our fintech business, fraud prevention expenses, hosting and site operation fees, certain tax withholding related to export duties, compensation for customer support personnel and depreciation and amortization. The following table presents cost of net revenues and financial expenses for the years indicated:

Previous wording

For the year ended December 31, 2024 as compared to the year ended December 31, 2023, the increase in cost of net revenues and financial expenses was primarily attributable to a: i) $2,542 million increase in shipping operating and carrier costs mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent; ii) $474 million increase in cost of sales of goods mainly in Brazil and Mexico, partially offset by a decrease in Argentina; iii) $341 million increase in collection fees, which was mainly attributable to our Brazilian and Mexican operations as a result of growth of total payment volume of Mercado Pago in those countries; iv) $202 million increase in sales taxes; and v) $109 million increase in hosting and site operation fees.

Current wording

For the year ended December 31, 2025 as compared to the year ended December 31, 2024, the increase in cost of net revenues and financial expenses was primarily attributable to a: i) $1,912 million increase in shipping operating and carrier costs; ii) $1,166 million increase in cost of sales of goods mainly in Brazil, Mexico and Argentina; iii) $533 million increase in collection fees, across all of our main segments, as a result of the higher total payment volume of Mercado Pago in those countries; iv) $523 million increase in other fintech costs mainly related to higher funding costs of Mercado Pago; v) $418 million increase in sales taxes; and vi) $210 million increase in hosting and site operation fees.

Previous wording

Our subsidiaries in Brazil, Argentina and Colombia are subject to certain taxes on revenues, which are classified as a cost of net revenues and financial expenses. These taxes represented 6.6%, 7.7% and 7.5% of net revenues and financial income for the years ended December 31, 2024, 2023 and 2022, respectively.

Current wording

Our subsidiaries in Brazil, Argentina and Colombia are subject to certain taxes on revenues, which are classified as a cost of net revenues and financial expenses. These taxes represented 6.2%, 6.6% and 7.7% of net revenues and financial income for the years ended December 31, 2025, 2024 and 2023, respectively.

Previous wording

For the years ended December 31, 2024 and 2023, our gross profit margins were 46.1% and 50.2%, respectively. The decrease in our gross profit margin resulted primarily from an increase in our shipping operating and carrier costs, as a percentage of net revenues and financial income mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent, partially offset by a decrease of our other fintech costs, sales taxes and collection fees, as a percentage of net revenues and financial income.

Current wording

For the years ended December 31, 2025 and 2024, our gross profit margins were 44.5% and 46.1%, respectively. The decrease in our gross profit margin resulted mainly due to the reduction of our free shipping threshold in Brazil, together with an increase in our cost of sales of goods and funding costs related to our fintech business, as a percentage of net revenues and financial income, partially offset by a decrease of our collection fees and sales taxes, as a percentage of net revenues and financial income.

Previous wording

In the future, our gross profit margin could continue declining if we maintain the growth of our sales of goods business, which has a lower pure product margin, building up our logistics network and if we fail to maintain an appropriate relationship between our cost of revenue structure and our net revenues and financial income trend.

Current wording

In the future, our gross profit margin could continue declining if we maintain the growth of our sales of goods business, which has a lower pure product margin, due to marketing initiatives or building up our logistics network and if we fail to maintain an appropriate relationship between our cost of revenue structure and our net revenues and financial income trend.

Previous wording

For the year ended December 31, 2024, the increase in product and technology development expenses as compared to the year ended December 31, 2023, was primarily attributable to a: i) $181 million increase in salaries and wages mainly related to the increase of 17% in our product and technology development headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; and ii) $37 million increase in depreciation and amortization expenses mainly related to capitalized information and technology assets. This increase was partially offset by a $148 million decrease in other product and technology development expenses mainly related to a one-off charge recorded during the year ended December 31, 2023, due to the risk of losing the case became probable in certain disputed amounts regarding withholding income tax contingencies in Brazil, partially offset by higher tax withholding in connection with intercompany export services billing duties.

Current wording

For the year ended December 31, 2025, the increase in product and technology development expenses as compared to the year ended December 31, 2024, was primarily attributable to: i) a $182 million increase in salaries and wages mainly related to the increase of 11% in our product and technology development headcount and increases in amounts accrued under the LTRPs; ii) a $113 million increase in technology maintenance expenses; and iii) a $52 million increase in other product and technology development expenses mainly related to higher tax withholding in connection with intercompany export services billing duties.

Previous wording

For the year ended December 31, 2024, the increase in sales and marketing expenses as compared to the year ended December 31, 2023 was primarily attributable to a: i) $266 million increase in online and offline marketing expenses mainly in Brazil and Mexico; ii) $57 million increase in chargebacks; iii) $55 million increase in our buyer protection program expense; and iv) $38 million increase in salaries and wages mainly related to the increase of 15% in our sales and marketing headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price.

Current wording

For the year ended December 31, 2025, the increase in sales and marketing expenses as compared to the year ended December 31, 2024 was primarily attributable to a: i) $637 million increase in online and offline marketing expenses across all of our main segments; ii) $147 million increase in our buyer protection program expenses; and iii) $131 million increase in salaries and wages mainly related to the increase of 55% in our sales and marketing headcount and increases in amounts accrued under the LTRPs.

Previous wording

For the year ended December 31, 2024, as compared to the year ended December 31, 2023, the provision for doubtful accounts increased by $808 million mainly due to the increase in originations growth at 75% (mainly related to the credit card), resulting in an increase in the average balance of the loans receivable portfolio of 62.8%.

Current wording

For the year ended December 31, 2025, as compared to the year ended December 31, 2024, the provision for doubtful accounts increased by $1,233 million mainly due to the increase in originations growth at 61% (mainly related to the credit card, consumer and merchant products).

Previous wording

Our general and administrative expenses consist primarily of salaries for management and administrative staff, compensation of non-employee directors, long term retention program compensation, expenses for legal, audit and other professional services, contingencies, insurance expenses, office space rental expenses, changes in the fair value (for the years ended December 31, 2024 and 2023) and impairment (for the year ended December 31, 2022) of digital assets, travel and business expenses, as well as depreciation and amortization expenses. Our general and administrative expenses include the costs of the following areas: general management, finance, treasury, internal audit, administration, accounting, tax, legal and human resources. The following table presents general and administrative expenses for the years indicated:

Current wording

Our general and administrative expenses consist primarily of salaries for management and administrative staff, compensation of non-employee directors, long term retention program compensation, expenses for legal, audit and other professional services, contingencies, insurance expenses, office space rental expenses, changes in the fair value of digital assets, travel and business expenses, as well as depreciation and amortization expenses. Our general and administrative expenses include the costs of the following areas: general management, finance, treasury, internal audit, administration, accounting, tax, legal and human resources. The following table presents general and administrative expenses for the years indicated:

Previous wording

For the year ended December 31, 2024, the increase in general and administrative expenses as compared to the year ended December 31, 2023 was primarily attributable to a: i) $72 million increase in contingencies; ii) $61 million increase in salaries and wages, mainly related to the increase of 17% in general and administrative headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; and iii) $33 million increase in other general and administrative expenses mainly related to higher tax withholding in connection with intercompany export services billing duties.

Current wording

For the year ended December 31, 2025, the increase in general and administrative expenses as compared to the year ended December 31, 2024 was primarily attributable to: i) a $75 million increase in salaries and wages, mainly related to the increase of 12% in general and administrative headcount and increases in amounts accrued under the LTRPs; and ii) a $32 million increase in other general and administrative expenses mainly related to higher tax withholding in connection with intercompany export services billing duties.

Previous wording

Our operating income margin is affected by our operating expenses structure, which mainly consists of our employees’ salaries, our sales and marketing expenses related to those activities we incurred to promote our services, provision for doubtful accounts mainly related to our loans receivable portfolio and product and technology development expenses, among other operating expenses. As we continue to grow and focus on expanding our leadership in the region, we will continue to invest in product and technology development, sales and marketing and human resources in order to promote our services and capture long-term business opportunities. As a result, we may experience decreases in our operating income margins.

Current wording

Our operating income margin is affected by our operating expenses structure, which mainly consists of our employees’ salaries, our sales and marketing expenses related to those activities we incurred to promote our services, provision for doubtful accounts mainly related to our loans receivable portfolio and product and technology development expenses, among other operating expenses. As we continue to grow and focus on expanding our leadership in the region, we will continue to invest in product and technology development, and sales and marketing in order to promote our services and capture long-term business opportunities. As a result, we may experience decreases in our operating income margins.

Previous wording

For the year ended December 31, 2024, as compared to the year ended December 31, 2023, our operating margin decreased from a margin of 14.6% to a margin of 12.7%. This decrease was mainly explained by an increase in cost of net revenues and financial expenses as a percentage of net revenues and financial income, mainly due to an increase in the share of shipping services where we act as principal as opposed to agent, and provision of doubtful accounts, as a percentage of net revenues and financial income. This was partially offset by a decrease in product and technology development expenses as a percentage of net revenues and financial income, mainly related to the one-off charge recorded in 2023, because the risk of losing the case became probable in certain disputed amounts regarding withholding income tax contingencies in Brazil.

Current wording

For the year ended December 31, 2025, as compared to the year ended December 31, 2024, our operating margin decreased from a margin of 12.7% to a margin of 11.1%.

Previous wording

Other income (expenses), net consists primarily of interest income derived from our investments and cash equivalents and, interest expense and other financial charges related to financial liabilities not related to Mercado Pago’s operations, and foreign currency gains or losses. The following table presents Other income (expenses), net for the years indicated:

Current wording

Other income (expenses), net consists primarily of interest income derived from our investments and cash equivalents, interest expense and other financial charges related to financial liabilities not related to Mercado Pago’s operations, and foreign currency gains or losses. The following table presents Other income (expenses), net for the years indicated:

Previous wording

As of December 31, 2024 and 2023 our deferred tax assets, were comprised mainly of i) U.S. foreign tax credits representing 36.6% and 27.3% of our total deferred tax assets, respectively; ii) allowance for doubtful accounts representing 25.7% and 21.0% of our total deferred tax assets, respectively; and (iii) provisions representing 21.4% and 24.7% of our total deferred tax assets, respectively.

Current wording

As of December 31, 2025 and 2024 our deferred tax assets, were comprised mainly of i) allowance for doubtful accounts representing 33.1% and 25.7% of our total deferred tax assets, respectively; ii) U.S. foreign tax credits representing 29.3% and 36.6% of our total deferred tax assets, respectively; and (iii) provisions representing 19.9% and 21.4% of our total deferred tax assets, respectively.

Previous wording

As of December 31, 2024 and 2023, our valuation allowance amounted to $584 million and $374 million, respectively.

Current wording

As of December 31, 2025 and 2024, our valuation allowance amounted to $764 million and $584 million, respectively.

Previous wording

While the framework for the GLoBE Rules is global, the rules would be implemented through legislation enacted in jurisdictions that adopt the rules. The GloBE Rules have been passed by legislatures in Spain and Brazil in December 2024 effective for fiscal years starting on or after December 31, 2023 in Spain and effective from January 1, 2025 in Brazil. Spain is the only jurisdiction where we have incorporated entities that have adopted the GLoBE Rules for the 2024 fiscal year. According to our estimate there is no tax charge to be accrued in connection with the GloBE Rules for the year ended December 31, 2024.

Current wording

While the framework for the GLoBE Rules is global, the rules would be implemented through legislation enacted in jurisdictions that adopt the rules. The GloBE Rules have been passed by legislatures in Spain, Uruguay and Brazil effective for fiscal years starting on or after December 31, 2023 in Spain and effective for fiscal years starting on or after December 31, 2024 in Brazil and Uruguay. For the year ended December 31, 2025, there is no tax charge accrued in connection with the GloBE Rules.