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Interview with Mercado Libre Senior Vice President Leandro Cuccioli
00:23:10
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- [00:05]
Leandro Cuccioli
We have a very solid business and we've had a solid business in periods of high inflation, of low inflation, etc. Because as long as you have great price, great convenience, the fastest shipping people will buy from you.
- [00:22]
Matt Greer
That was Mercado Libre senior Vice president Leandro Cuccioli. I'm Motley fool producer Matt Grier. Now, MercadoLibre is a leader in the E commerce and E payments business. It's Latin America's largest company by market cap and is often referred to as the Amazon of Latin America. Motley fool analyst Asit Sharma recently talked with Cuccioli about opportunity, volatility and the business of Mercado Liberty.
- [00:52]
Asit Sharma
Hello, fools. I'm Asit Sharma, senior analyst and lead advisor at the Motley Fool. My guest today is Leandro Cuccioli. He's senior Vice President of corporate development strategy, sustainability and Investor Relations at Latin American e commerce giant Mercado Libre. Leandro holds an MBA from Stanford University and he was previously head of consumer services and social infrastructure investments at British International Investment, the UK's impact investor and development finance institution. Today we're going to discuss MercadoLibre's third quarter 2025 results, as well as broader operational and strategic topics that are essential to understanding this dynamic business. Leandro, welcome to the Motley Fool.
- [01:36]
Leandro Cuccioli
Thank you, Asit. It's great to be here. Wonderful.
- [01:39]
Asit Sharma
So I know you wanted to start off the conversation with a nod to the incredible streak of growth that MercadoLibri has thrown off. So I'll let you dive right in with this 30% growth rate that we've seen for so many quarters.
- [01:54]
Leandro Cuccioli
Yeah, and you're right, we think we are the only company in the world that has sustained 27 consecutive quarters of revenue growth, about 30%, in this case, 39% for the third quarter of 2025. And I think it's testament to the big opportunity that we see in the region. Right. That probably you have discussed with us in the past. When you look at Brazil or Mexico or Argentina, our three main geograph, you see gmb, or the gross volume of merchandise transacting our platform growing well above 30%, ship items growing and more than 42% in Brazil. So that means that a lot of people are still coming online to buy, sometimes for the first time. In Brazil, we had 29% growth in unique buyers. So that's at the scale of Mercado Libre with more than 100 million unique buyers in the last 12 months, is quite unique, I think, in the world to have 29% more folks coming to buy online. And the same can be said on the fintech side because it's a region that unfortunately in the past hadn't had the access to financial services that probably in developed markets people are used to now. Right? So here in Mexico, 15% of the people have a credit card. It's insane, right? Only 15%. So that explains why Mercado Pago, our fintech side of the business continues to grow. Also here users at a clip of around 30% reaching 72 million monthly active users. And that's payments, savings, credit and everything that you need for a modern life, right? So we're very excited about the third quarter, but moreover we're very excited about the opportunity ahead.
- [03:43]
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- [04:10]
Asit Sharma
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- [04:15]
I think it's interesting for those who haven't followed MercadoLibre to see these long streaks of consecutive growth and understand that the market itself still is relatively immature. So put you on the spot right off the bat thinking about both the E commerce side and the fintech side. How long can Mercado Libre sustain this growth rate? At what point do you go to being, let's say a 20 to 30% grower on that top line?
- [04:44]
Leandro Cuccioli
Look, I mean time will tell, right? I mean in terms. But of course growth over time needs to converge. But in the short, short term what we see asset is that you see penetration of E commerce in Latin America in the mid teens, right? I mean compared to probably 30 in the US and Europe, 40, 50% of e commerce penetration in China. So the market can be two, three times larger. We are taking of that market on a marginal basis In Latam, probably 2/3 of that market of that growth, right? So when you see that on average a customer in Mercado Livre shops nine times a year and in developed markets similar platforms are around 50. You see this kind of huge gap still. I mean I know we're big, right? And people say well how much bigger you can be, but we're still probably 5% of the retail market in Latin America. Right. Mercado Libre, imagine a retailer that has 5% of market share. So there is huge potential on that side. And I would say on the side of fintech, if you look at any market share of what we hold, but not only us, take the other fintechs as well. We're still a fraction of the big banks in latam. One thing that Latin America still has is that very concentrated deposit and credit on a handful of banks. So if you take Brazil, probably 10 years ago, it was 80% of the credit and the loans and the deposits in, in five banks now it's 60%. But if you take a developed market, it would be around 45. But if you take Mexico, you're still at 80%, right, in five banks. And if you take us probably you have single digit market share in credit cards, single market share in deposits, et cetera. So there is huge room for growth. Right. So I don't see in the next quarters to come the trajectory changing dramatically over time. Of course. Right. I mean, you cannot grow 30% forever. But it's amazing that, you know, we still grow at startup rates even today because the market is so huge. And I think that is something that people need to realize that, you know, it's very early. Right.
- [06:57]
Asit Sharma
You've got the concentrated banking and deposits as targets and you also have such a large population still of unbanked customers or young customers that are coming online with their first experiences in digital payments, with credit cards and the like. I wanted to shift just for a moment and I promised myself I'm not going to make this about Argentina. But I know many of those who again aren't as familiar with Mercado Libre might not understand the experience that this business has with volatility in the region. But it is a big market. So if we could take just a couple of minutes to discuss the change that's underway there, recent events, and how MercadoLibre deals with volatility in these big markets that make up the brunt of net income and, and also revenue growth in the region.
- [07:48]
Leandro Cuccioli
Yeah, so we were born out of volatility, I think, right? I mean, 1999, Argentina, August, that's when Marcos Galperin started the business. And right off the bat, the bubble burst and Argentina, that was the core market, defaulted into 2001. So I think that over the last 26 years, Mercado Libre in Latin America, I mean, if you are going to be in Latin America over time, you need to understand that, you know, things will become Volatile from time to time, to put it in a. In a nice way. In the case of Argentina, we have an amazing business, right? If you took at, you know, Mercado Pago, more than 60% of the population uses Mercado Pago in a daily basis to buy stuff, right? I mean, the QR code has become the pervasive method there, like in China, right.
- [08:35]
Asit Sharma
I'm seeing that in India too. By the way, we were chatting before we taped. I was just there, a lot of QR code payments with paytm, et cetera. So we're seeing this in developing economies.
- [08:44]
Leandro Cuccioli
The same, I think I've been several times to India and you see some kind of the same movement of cash being replaced at a very fast speed, even disappearing. Mercado Libre, also from the Mercado Libre side, from the marketplace, has been the leading company in Argentina for a long time with a system that the brand equity, the perception of the consumer is so ingrained and almost it has defined the category, right? So just search it in. Mercado Libre would be the first thing that you tell your kids when they are looking for something, right? It becomes the destination, right? And the same with Mercado Pago. Now we've seen the country going through different phases, right? We are coming from a period of very high inflation at the end of 23. And then this administration that started at the end of 23 has brought inflation down quite significantly and that has created a big adjustment in the economy. So we navigated a difficult Q1 of 24 in which for the first time we had negative ship items growth in history. There was a huge recession and adjustment in Argentina in Q1 24, but then from Q2, and we actually published that from Q2 24, we started to see a marked improvement. It's not unheard of that when you lower inflation so much, the real purchasing power of people improves. So credit returns and all those other things. Our credit book in Argentina quadrupled over a year from a very low base. But that means that if you have good macroeconomic stability, then it's easier to conduct business. And that's what we've been seeing, right? We've seen Argentina performing very well for us. Now, what I always tell investors is we don't know what's going to happen, right? We never know. We have a very solid business and we've had a solid business in periods of high inflation, of low inflation, et cetera, because as long as you have great price, great convenience, the fastest shipping people will buy from you. Now we're very optimistic in the short term that if things continue to be in this way, the market can be much, much bigger than what it is today. So it can be a huge market, but we don't control what we don't control. So we try to play with the cars that we're given.
- [11:04]
Asit Sharma
Crazy side question. Are you all keeping an eye on the development of quantum computation as a possible solution for route optimization?
- [11:14]
Leandro Cuccioli
Well, more than one eye, probably two. Yes, we are quantum computing. We spend a lot of time in China and we see the team, Jessica came from there, the shipping team, and quantum computing and robotics are areas in which we are extremely invested in terms of understanding, following adopting. There is a potential in the next few years of radical changes in productivity. And I think for us is how much of that with the realities of the region, we adapt, we tropicalize in a way at the right pace, but we're very excited about those things. And I think again, I can only see that allowing players like us to have more resources to keep removing the frictions to mean more people to the market. So I'm very optimistic on that side.
- [12:10]
Asit Sharma
Leandro, I want to move on to the second removal of friction that you mentioned. But before we do, I'm sure you're interested in user interface design and user experience. So my question to you is, what's the last purchase that you made on the MercadoLibre platform?
- [12:28]
Leandro Cuccioli
I'm doing my motorcycle license test in Mexico this week. And you need to test by doing some exercises in which you need to go through cones. I bought some cones, like those cones that you see in the street to practice. And I got them this week and they were 138 pesos, which you divide by kind of 20, you know, got it, you know, $10, you know, whatever, say $9. And I got that. You know, I could get them the next day for 51 pesos or wait until Tuesday. That was my free delivery day in a slow way. And that's the way I chose. So, you know, you see an example there of how this works in practice. You know, it was 51 pesos. I could have paid it, but then, you know, in three days you get it for free, you know, and them on Tuesday, I need to practice tomorrow morning because tomorrow is a test. So wish me luck.
- [13:24]
Asit Sharma
Well, good luck. But you're in Mexico City, right?
- [13:26]
Leandro Cuccioli
I am in Mexico City, yeah.
- [13:28]
Asit Sharma
So, I mean, there are certain streets you could have chosen, certain streets you could have chosen instead of buying the cones, right?
- [13:34]
Leandro Cuccioli
Yeah. I will not tell you I've been driving my bike without a license because that would not be right.
- [13:39]
Asit Sharma
So, Leandro, as we wrap up here, I have two questions for you. So one on strategy and one on culture. The first is when you think from where you sit, how the organization is going to create value over the long term, over a very long term time horizon. I'm curious in your eyes, what activity or investment is going to create the greatest yield for MercadoLibre? As we look a little bit past.
- [14:04]
Leandro Cuccioli
The medium term Look, I think MercadoLibre will create value for its stakeholders if it continues to be at the center of the life of its users. You can only claim if there is a profit pool in the industry. Your claim to those profits will be. You will have a right to claim those profits if you continue to be at that center of being that point of search, being that point of engagement with your financial products, with your products and services. If you are that gateway we have fought so hard to become. I can only see a tremendous amount of value being created because you can only see those markets developing tenfold or twenty fold is what they are today. But you need to be at the center of it. The moment that you lose that center, your claim to those profits diminish. It's not that they're going to disappear, but you will need probably to spend more to claim those more acquisition costs, et cetera. You don't have the same claim. I can't think of another thing that is not what we are doing in terms of removing those frictions in the real world, extending credit and logistics, et cetera. I cannot think of a better tool to continue to be in the center of that ring that continue to do this. And of course, we couldn't finish this without throwing AI into the picture because what it brings is that it speeds up the removal of the frictions. The more AI I have in my underwriting of credit, probably the better I am and judging, you know, how to price that risk. So there you go. The more AI I have, I have a more efficient network, as you said, and then, you know, I can lower the cost of shipping and I can lower the threshold. Right. The more AI I have win for.
- [15:59]
Asit Sharma
You and win for the customer.
- [16:01]
Leandro Cuccioli
Exactly. The more AI I have, I can, you know, give the customer a better experience of what he or she is searching or what he or she needs, you know, in a conversational manner and in a way that I almost can predict what comes next. Making your life even easier. Right. So I think AI needs to be factored into there as an engine of all these things, including the front office and the back office of the business. But at the end of the day, it ends being a means to an end to get products and services to the right folk at the right price with the right promise of delivery and giving that person the right means of payment and credit.
- [16:46]
I cannot think of something that is more inclusive than that over time. So if we do that and if we continue doing that, we're going to be at the center of the ring. If we stop doing that or we don't do it that well, then we're going to lose the center of the ring.
- [17:00]
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- [18:15]
Asit Sharma
We've talked a lot in this conversation about being in touch with the customer, the customer's needs, persistence in investing, an eye towards innovation, understanding markets. There's one thread that that sort of draws all this together and that is Mercado Libre's culture. It's something that management has talked about continuously over the years and I was curious from your perspective where you sit again, what is special about this culture? What to you stands out? What would you like to see as you move forward, preserved in that culture to help Mercado Libre keep generating the success that it has enjoyed.
- [18:54]
Leandro Cuccioli
Oh boy, it's so hard to talk about culture because very quickly you can get into a very fluffy territory, right? I think the most important thing that probably Marcos Galperin created is a notion of trust in the team, among themselves, right? So the Mercado Libre culture is defined by a lot of trust. Trusting what you are doing.
- [19:18]
Is well intentioned and you have the same goals that I have. And in that way, if you fail, I'll support you, right? So I will not punish the failure. We will learn from it. You know, we're going to be honest about it, but we're going to try it again, right? And again and again and again. So that is so important because that persistence that you talked about of, you know, iterating until you get it right, you're going to fail a lot. You're going to make a lot of mistakes and we make a lot of mistakes. But if you punish those mistakes, if there is that culture of that mistake may limit your career, et cetera, you start to get all these dances around things that mean that decision making becomes polluted, that decision making is not crisp, it's not clean. And I think that what really stands melee aside, is that that decision making process is very clean, it's very upfront, it's very honest about the disagreements because the disagreements are about what we're trying to do is not a judgment on you. Because I trust that you believe that I'm good at what I do, you trust me. But we may be disagreeing about a particular strategy which is every day happens, right? So I think that that trust that is so precious, it's the thing to preserve over time. And that's the challenge, right? You bring new people. How you keep that over time, I don't know. I mean, if you ask me, is the main risk that any company has that at certain point, it's not that you lose it from one day to the other. It's like society, culture doesn't change like that, right? But then you look back two generations ago and say, well, that was very different, right, when that happened. And I think you need to be very vigilant. And the way to be very vigilant is hiring the right people, promoting the right people, firing the people that probably don't stick to the culture. And there's no silver bullet. But you need to be paranoid that that is a very fragile thing, like in any relationship and it can deviate off course very rapidly. So I would say people in the leadership of this company are obsessed about that because they realize that it's not the number of boxes that we have, the number of warehouses, or how many credit cards we issue. If you don't have that ingredient, then you start making the wrong calls, particularly the tough ones.
- [21:43]
Asit Sharma
That resonates with me. Our organization is also trying to move forward, move fast. We're also very AI Centric, and I think there's a lot of trust at the Motley Fool. I loved your answer. I think it was the opposite of fluff.
- [21:56]
Leandro Cuccioli
Yeah, I tried. I tried.
- [22:00]
Asit Sharma
Leandro Cuccioli, thank you so much for your time. This is a fascinating conversation. I so much appreciate your thoughtful answers. And I hope. I hope you'll join us again soon for another conversation.
- [22:10]
Leandro Cuccioli
Anytime, anytime. Thank you very much for having me.
- [22:16]
Matt Greer
As always. People on the program may have interest in the stocks they talk about. And the Motley fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only.
- [22:33]
Asit Sharma
Only.
- [22:34]
Matt Greer
To see our full advertising disclosure, please check out our show notes. For the Motley fool money team, I'm Matt Greer. Thanks for listening, and we will see you tomorrow.