Mercadolibre Inc Q3 FY2024 Earnings Call

Good evening, and welcome to MercadoLibre's Q3 2024 Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Richard Cathcart, Investor Relations Officer. Please go ahead.

Hello, everyone, and welcome to the MercadoLibre earnings conference call for the quarter ended September 30, 2024. Thank you for joining us. I'm Richard Cathcart, MercadoLibre's Investor Relations Officer. Today, we will share our quarterly highlights on video, after which we will begin our live Q&A session with our management team. Before we go on to discuss our results for the third quarter of 2024, I remind you that management may make or refer to, and this presentation may contain forward-looking statements and non-GAAP measures. So please refer to the disclaimer on screen, which will also be available in our earnings materials on our Investor Relations website. With that, let's begin with the summary of our results.

Hello, everyone. I am pleased to share that MercadoLibre had a later quarter of outstanding growth. We had an excellent quarter across all of our businesses and geographies. The strong performance was really consistent. With these results, we reinforced our position as the leading e-commerce and fintech platform in Latin America. Every time we invested in enhancing our customer experience, we have been rewarded with strong growth and improvements in our market position. In this quarter, we continued to make strategic investments in our platform, both in commerce and fintech, resulting in GMV growth of 34% year-on-year in Brazil and 27% in Mexico. This also resulted in market share gains in both countries. In Argentina, items sold grew by 16%, and we surpassed 60 million items sold on our platform, the highest ever volume. We continue to see improvements in the Argentinian market. We have added a record of almost 7 million new buyers to our platform, a number greater than what we experienced during the peak of the pandemic. Notably, the penetration of e-commerce in Latin America remains relatively low compared to more developed regions, with only 15% of commerce conducted online. So there’s plenty of room for continued growth. As the lead player in the region, we play a crucial role in driving more volume online and increasing e-commerce penetration. To support this, we continue to invest in our strategic initiatives, such as logistics and our loyalty program. In Q3, we opened six new fulfillment centers, five in Brazil and one in Mexico, which helped increase fulfillment penetration by 4.5 percentage points compared to a year ago. Having more volume shipped from our own fulfillment facilities offers a significantly better user experience for both buyers and sellers, featuring faster and more reliable delivery times. This improved conversion of volume also fosters further growth of the ecosystem. Investment in technology is also critical for bringing more business online by reducing buyer friction. Our advertising business remains a powerful profit engine for MercadoLibre and once again, we experienced a strong quarter despite the FX headwinds we faced in Mexico and Brazil. Most of our advertising volume comes from product ads, presenting tremendous opportunities for growth in display and video advertising where we are just beginning. In Fintech Services, the impressive growth of our user base and the rising engagement with our products indicate that more consumers are choosing Mercado Pago as their primary financial service provider. We continue to invest in our credit card offerings as it is a critical product for achieving principal status with our users. In Q3, we issued 1.5 million new credit cards, and credit card TPV grew by 166% year-on-year. As we see improvements in our risk models, we have accelerated the underwriting of credit, both for credit cards and consumer and merchant credits, resulting in a portfolio growth of 77% year-on-year. We recognize that the faster growth of our credit portfolio and the increased percentage of credit cards may place short-term pressure on NIMAL spreads. However, the stable NPLs we have observed, along with the earlier cohorts of credit cards becoming profitable, instills confidence in our investments. Now turning to our financial results, our strong operational KPIs translated into revenue growth of 35% year-on-year despite FX challenges in Mexico and Brazil. This Q3 performance is a testament to our team's exceptional execution and also highlights the numerous growth opportunities ahead for both our business and ecosystem. Our EBIT was $557 million with a 10.5% margin. Most of the margin compression from last year is attributed to our strategic initiatives and investments, which investors can find detailed information on in our shareholder letter. Net income rose by 11% year-on-year, reaching $397 million for the quarter, with lower EBIT partially offset by a reduction in our FX losses. As we complete our 25th anniversary, we continue to see tremendous growth prospects, in commerce, fintech, and now advertising. We have a clear vision for the future and are focused on long-term growth, profitability, and cash flow generation. I'll now share some examples of innovations we've implemented during the quarter, after which I'll turn it back to Richard.

MercadoLibre is a major driving force behind the shift from offline to online commerce and promoting financial inclusion in Latin America. Our continuous investment in value proposition, service levels, and user experience is key to sustaining this progress over the coming years. Today, we want to share a snapshot of some of those investments in innovations. In September, we launched the Meli Mas benefits package, which now includes cashback or extra installments on marketplace purchases and new fintech benefits. This means users can receive more in value than they pay for their subscription, making Meli Mas the smartest choice for our users. These fintech benefits encompass cashback on all purchases made using the Mercado Pago credit card and a higher yield on funds held in the remunerated accounts. Such benefits enhance the differentiation of our credit card and digital account offerings. Cashback is paid in the Meli dollar stable coin and deposited into users' Mercado Pago accounts where it can be held, sold, or used for marketplace purchases. We also introduced an additional tier within Meli Mas, providing a lower-priced plan that allows consumers to choose between two plans best suited for their needs. The essential plan features free shipping, cashback or extra installments on marketplace purchases, and all fintech benefits, while the total plan includes all benefits of the Essential plan plus extensive content and discounts on streaming services like Disney+ and Deezer. Meli Delivery Day remains a core component of our loyalty program. Its offering of free shipping on lower-value items increases purchase frequency and helps decrease our last-mile costs. To encourage multiple purchases for delivery with Meli Delivery Day, we've made the visibility of free shipping on lower-value items more pronounced to users. Several other initiatives designed to enhance the online purchasing journey were launched in Q3, contributing to our record number of new buyers, exceeding previous pandemic peaks. We continue to refine category-specific UX to propel offline retail online. In Auto Parts, we rolled out a new feature that allows buyers to schedule mechanic appointments to install purchased items, shipping directly to the mechanic. In the beauty category, technology was introduced enabling users to visualize makeup products on themselves via our app, addressing major barriers to online makeup purchases. To facilitate cross-category shopping, we unveiled new tools that suggest high-frequency categories for users based on their profiles, featuring shortcuts, special coupons, personalized landing pages, and push notifications. A crucial driver of converting offline retail online lies in shipping experiences, leading us to announce plans to more than double the number of fulfillment centers in Brazil by the end of 2025, with 11 new operations scheduled, five of which were added in Q3. These investments will expand the number of cities receiving same-day deliveries in Brazil by 40%, with 63% of these operations located outside São Paulo as we regionalize our network. Some of these will be metro fulfillment centers similar to our model introduced in Rio de Janeiro last year, targeting individual cities. This is just a glimpse of our recent innovations, and we have a robust pipeline of projects poised to solidify our standing as the preferred online shopping platform in Latin America because, as always at MercadoLibre, the best is yet to come.

We will now start the question-and-answer session with Martin de los Santos, CFO; Ariel Szarfsztejn, Commerce President; and Osvaldo Gimenez, Fintech President. Our first question comes from Irma Sgarz from Goldman Sachs. Please go ahead.

Yes. Hi. Thank you very much for the opportunity to ask a question. I'd like to ask about the credit card portfolio where we saw quite pronounced growth. There’s a two-fold element to my question. Firstly, what drove the incremental acceleration in the pace of quarter-over-quarter portfolio growth in the third quarter, specifically for the credit card, where you had been originating at a pretty stable pace over the last couple of quarters? I know the messaging generally has been positive, and there has been acceleration, but I was surprised to see that jump from one quarter to the next. Secondly, you emphasized that part of the NIMAL spread pressures were also from leaning into larger, longer duration loans to lower risk users across all your geographies. I was curious if you could expand on that: what it means for growth ahead, and if you're feeling more confident about your underwriting mechanisms, why wouldn’t that lead you to perhaps engage in slightly higher-risk classes where you may be initially seeding smaller loans but then ramping up over time as you become more confident with those new customers? Thank you.

Hi, Irma. Let me start with the second part of your question about NIMAL and then move back to credit cards. Regarding NIMAL, yes, the NIMAL spread this quarter was 15%, driven by three key factors. Firstly, the ramp-up of the credit card business, whose share in the portfolio rose from 25% a year ago to 39%. This lower spread product affected the overall NIMAL. Secondly, we are continuing to move up-market, which is a strategy we are very satisfied with, moving from the low end to the upper segment. This path involves longer durations and larger lines extended to lower-risk customers. These credits are very profitable but inherently have lower spreads compared to those offered to smaller, lower-income customers. Lastly, the accelerated growth of our portfolio means that initial proportions of provisions might be higher as we grow very rapidly. Despite this, I can say asset quality indicators are solid, including stable growth rates, with 15 and 90 days NPLs holding steady at 7.8%. Now on the first part of your question regarding credit cards, we are excited about how this business is evolving, especially in Brazil and Mexico. Brazil is a country where our credit card business has more maturity. The good news is that when we analyze cohorts from 2021 and 2022, they show positive variable contributions, with even some cohorts from early 2023 achieving a positive value of contributions. The fact that we are growing rapidly and that recent cohorts represent a significant portion of our total portfolio means that it impacts our returns and P&L in the current quarter. We are optimistic about how the product is developing, as all cohorts have shown profitability, and we also observe drivers that the increased penetration of credit cards offers, such as higher Net Promoter Scores, greater transaction rates for users having credit cards, both in the marketplace and off the marketplace, and an overall enhancement in customer ownership. Regarding the number of cards we are issuing, it's important to emphasize that we are also increasing the credit lines, thereby increasing TPV, which we believe is the more relevant metric.

The next question comes from Andrew Ruben from Morgan Stanley. Please go ahead.

Hi. Thanks very much for the question. I'd like to delve a bit into the shipping investments, given the sizeable opening of five distribution centers in Brazil this quarter. Could you help provide some context on how long it typically takes for a distribution center to ramp up and reach productivity? Additionally, you mentioned the reach outside of Sao Paulo, but could you share if there are any incremental categories or capabilities these facilities will provide? Furthermore, recalling last year, you faced some network capacity constraints during the 4Q holiday season, how do you view the capacity compared to your demand expectations during this upcoming holiday season?

Hey, Andrew. Ariel here. As you noted, we've made significant strides in facilities for our fulfillment operations. Fulfillment leads to higher GMV due to better delivery promises, higher conversion rates, and stronger buyer and seller NPS. As we've mentioned before, we need to grow our fulfillment capacity driven by three main reasons: First, we need to prepare for anticipated future demand as we expect consistent growth in our marketplaces in Brazil and Mexico. Second, we need to accommodate ongoing increases in fulfillment penetration in Brazil. Last but not least, we are normalizing capacity needs in Mexico after operating under tight conditions. Overall, we are confident that the capacity expansion will not only meet the demands from our sellers and buyers but will also facilitate our growth across various regions. In terms of ramp-up and productivity, we are continually making strides to reduce this ramp-up time. While new fulfillment centers typically begin with lower utilization, they tend to increase over time. Initially, this may result in some cost pressures, but this capacity is crucial for our long-term growth and strategy in serving our users.

The next question comes from Robert Ford from Bank of America. Please go ahead.

Hi. Good evening. Thanks for taking my question. I wanted to inquire about the differences between the credit card experiences in Brazil and Mexico. Given that both markets are growing, could you highlight the NIMAL, NPL frequency, and any other relevant information?

Marcelo, I would highlight that when we launched the credit card in Brazil, we relied on the models we developed for consumer loans as it was our first attempt in this market. We've learned and iterated often, rolling out refined models roughly every six months. Therefore, when we launched in Mexico last year, we had more experience and reliability in our expectations, resulting in a significantly faster ramp-up in Mexico than we experienced in Brazil. Moreover, there are noticeable differences in the credit card market structure between both countries. Brazil has a higher penetration rate of credit cards than Mexico, indicating a substantial opportunity for growth in the Mexican market. However, there is less public information available regarding credit scoring for users in Mexico, necessitating reliance on internal data rather than third-party information. Additionally, there are differences in working capital requirements in both regions; transactions in Mexico are settled the following day, while in Brazil, it is after a 30-day period, thereby increasing working capital requirements in Mexico. Overall, those are the main differences.

The next question comes from Geoffrey Elliott from Autonomous. Please go ahead.

Hello. Thanks very much for taking the question. I wanted to revisit the investment you're making in fulfillment. You opened several fulfillment centers in Q3, with more expected by the end of 2025. Could you provide insights into how long this is likely to impact margins and profitability, as it has shown a significant effect compared to previous quarters?

Hi, Geoffrey. It’s Martin here. As mentioned earlier, we continue to invest in fulfillment centers in Brazil to enhance our fulfillment penetration and align it with similar levels seen in Mexico. Noting that while there may be some marginal pressures associated with fulfillment in this quarter, most of the compression was due to credit cards, as Osvaldo highlighted. We will continue to invest as usual, as we have for the past five years. Reviewing the margin pressure this quarter, we haven't experienced significant impacts due to fulfillment; rather, the bulk emerged from credit card operations. Over time, we usually offset short-term pressures with incremental volume, and we have observed productivity improvements. This quarter, our cost per shipment decreased year-on-year, despite an increase in fulfillment penetration, making it evident that, while there may be initial pressures with new facilities, we anticipate continued profitability.

To complement, Geoffrey, it’s essential to note that not every new warehouse we open is a 100 square meter facility. A few quarters back, we announced the introduction of our first metro fulfillment center in Rio de Janeiro. This quarter, we opened two metro fulfillment centers, and in the future, we may launch more of them, which will entail different operational profiles, investment requirements, and unit economics.

The next question comes from Jamie Friedman from Susquehanna. Please go ahead.

Hi. Thank you for taking my question. I wanted to ask about Slide 19 regarding the margin bridge and specifically about the bad debt call-out. I'm wondering if this reflects the fail-first approach in new originations, or if there is something underlying the credit quality that may differ from your previous models?

Hi, Jamie. How are you? To address the last part of your question, we maintain great confidence in both our credit quality and predictive models. This confidence is precisely why, as Osvaldo detailed, we are accelerating credit origination. Therefore, the metrics you mentioned are not responsible for the 3.4 percentage point compression you've highlighted. The situation here is that we increased our portfolio by roughly $1 billion quarter-on-quarter, with a year-on-year increase of 72%. As Osvaldo stated, when the portfolio grows quickly as it did this quarter, we're compelled to provide upfront provisions for anticipated losses. This is true not only for credit cards but also for consumer and merchant credits, which are profitable segments. However, with rapid growth comes the upfront provisioning, resulting in temporary bad debt influences. This is not an indication of declining portfolio performance. Our NPLs are under control, and our accelerating origination reflects our confidence in our credit processes across all products and markets.

The next question comes from Craig Maurer from FT Partners. Please go ahead.

Yeah. Hi. Thanks for taking the questions. I'd like you to separate the margin compression associated with one-time setup costs of new facilities from the ongoing operational costs of those facilities. Additionally, I noted that the ad penetration rate remained flat quarter-over-quarter; could you discuss your expectations for penetration into the fourth quarter and possibly next year?

Hi, Craig. How are you? It’s Martin here. We typically do not disclose specifics regarding margin compression attributable to setup versus ongoing costs in fulfillment. However, if you refer to our disclosures in the investor letter, you will see that the impact of our investments in fulfillment contributed to less than one percentage point of compression. This aligns with our past trend. While we invest more during periods of high fulfillment capacity upgrades, this is a common practice. More important than the immediate impacts of these investments is the future growth potential they enable, which we remain very optimistic about.

To address your question about advertising, we are pleased with this quarter’s performance, achieving an 86% increase in FX neutral and a 37% increase in U.S. dollars. We reached 2% of revenues over GMV in this quarter, marking an increase of 0.3 percentage points year-over-year, with record high ad penetration in Brazil and Mexico. We are excited about ad revenue growth outpacing GMV growth. We see vast potential in our advertising business as we continue to refine our technology and product offerings across all stages of advertising. However, growth will never be linear, and we're cautious of seasonality, FX effects, and other factors. Nevertheless, we feel optimistic about our long-term trajectory and have observed strong results from our efforts.

The next question comes from Deepak Mathivanan from Cantor Fitzgerald. Please go ahead.

Hey, guys. Thanks for taking the question. Regarding the ramp-up in credit cards, can you provide some historical cohort insights on how it is likely to drive volume growth in either e-commerce or fintech over the next few quarters? Additionally, any specifics about customer behavior post-issuance of credit cards in terms of benefits to e-commerce and processing would be appreciated. Lastly, could you clarify the NIMAL difference between various products, specifically how it compares between credit cards and consumer credit, as I would like to model future headwinds more accurately. Thank you.

Hello, Deepak. Regarding the impact of credit cards on our users and ecosystem, those users with access to credit cards begin utilizing them, particularly those who express satisfaction with MercadoLibre and Mercado Pago. These users engage with our products more frequently, resulting in increased purchases on the marketplace. Users with access to multiple product offerings tend to show higher increase in engagement. Particularly noteworthy is that those leveraging credit cards also engage with our credits. We observe that credit cards significantly enhance engagement rates. In terms of penetration of payment methods within the marketplace, we note a growing trend; the consumer loan penetration in Mexico had the highest levels we’ve seen. With that context, the penetration influences our profitability as we continue gaining market share through our credit products. We'll maintain our growth in card issuance and credit lines. We're optimistic about this trajectory.

Hi, it’s Martin here. We don’t disclose specific NIMAL spreads by country or product, but I can share that consumer credits and personal loans typically exhibit the highest margins, followed by merchant credits, which also possess relatively high margins. As we shift our focus up-market, we anticipate reaching users with lower risk profiles, requiring us to charge lower interest rates, which results in reduced spreads; although, the incremental volume remains beneficial. The credit card spread is currently neutral or marginally negative. However, we see that older cohorts are beginning to show positive trends, instilling confidence that increased portfolio volumes, aligned with healthy products, will yield profitability.

The next question comes from Neha Agarwala from HSBC. Please go ahead.

Hi. Can you hear me? I'm interested in the breakdown of credit card usage both on-platform and off-platform, specifically in Brazil and Mexico. Additionally, what percentage of your credit card portfolio resides in Brazil versus Mexico? Moreover, regarding the software business, could you clarify if the software launched in Brazil's acquiring space is developed in-house or if you're collaborating with software providers? What is your ambition in this regard? Are you seeking organic growth, M&A, or partnerships?

Regarding credit card usage on both platforms, I can share that, generally, the majority of our volume in both Brazil and Mexico comes from off-platform transactions. Over 60% of the volume in each country is generated off-platform. We incentivize on-platform usage, and while we see positive signals in those areas, the credit card has achieved top-of-wallet status for many users. Regarding the software side, this is an important aspect of our acquiring strategy. We are primarily building these solutions in-house, as we haven't pursued many acquisitions in this space, opting instead for internal development. To further elaborate, we aim to develop many capabilities, including inventory management and invoicing tools to support small and medium-sized businesses. This effort is shifting toward becoming a crucial part of their operational framework, helping them leverage multiple financial products seamlessly.

The next question comes from Robert Ford from Bank of America. Please go ahead.

Hi, Martin, Ariel, Osvaldo. Thanks for taking my question. Can you discuss the adoption rate of Meli Mas in Brazil and Mexico? More specifically, how do consumer behavior patterns change after subscribing to the marketplace, and do you see any early indications of incremental consumer engagement? Additionally, how does Meli Mas affect Blue funding?

Hi, Bob. How are you? As you know, we launched changes to our loyalty program this quarter, introducing two tiers: one priced at $2, which includes the traditional free shipping benefits and now fintech benefits like cashbacks on both marketplace and external credit card purchases. Another tier is the previous Meli Mas total plan, which offers all previous benefits plus content from Disney. Specific numbers regarding the loyalty program remain proprietary; however, we have seen positive adoption rates. Users engaging with the new, lower-priced tier display increased interactions with our platform and improved conversion rates with their purchases. Although it's early to report exact numbers, we're excited about these changes.

The next question comes from Joao Suarez from Citibank. Please go ahead.

Thank you. I have two questions. Firstly, regarding Brazil's credit environment, it appears that October saw a modest rise in households carrying debt, with interest rates climbing to 11.25%. While you seem confident about maintaining origination levels, what are your thoughts on how the macroeconomic factors might impact your strategy? Secondly, going back to the discussion on Brazil and Mexico, I still don’t understand how much Mexico is growing compared to Brazil. Could you clarify?

Hi, yes. It’s Martin here. You're correct in noting the increase in interest rates in Brazil. We observe similar trends across our operating countries. However, regarding our credit business, the ability to predict defaults plays a more vital role in our financial structure than minor fluctuations in interest rates. This is a fundamental aspect of our cost structure. As emphasized, we are accelerating due to our confidence in predictive models and reaching lower-risk segments. Overall, macroeconomic shifts have less influence on product performance than the accuracy of our predictive capabilities.

On the second part, we do not disclose specific figures comparing the two countries. However, I can infer that credit card issuance in Mexico is currently proceeding at a quicker rate than what we initially observed in Brazil, driven by our enhanced understanding in developing credit card models.

The next question comes from Josh Beck from Raymond James. Please go ahead.

Yes. Thanks for taking the question. I wanted to inquire about your fulfillment center ambitions; you mentioned five in Brazil and one in Mexico. Is this part of a multi-year investment cycle? Additionally, as your fulfillment centers grow denser, what kinds of benefits are you seeing regarding cost-to-serve and shorter delivery windows?

Hey, Josh, Ariel here. To address the first part, there’s no new multi-year cycle or change in strategy. We’ve consistently stated our commitment to continue building the necessary capacity to respond to expected future demand, while also increasing fulfillment penetration in Brazil and normalizing capacity in Mexico after past constraints. This is not a change of direction, but a continuation of our strategy. Addressing the second part, we indeed benefit significantly from geographic expansions, not just by opening warehouses in major capitals but by regionalizing our strategy as well. This enables us to deliver faster to our customers, which we anticipate will lead to enhanced retention rates from our consumer base. While different fulfillment centers come with different unit economics, we've opted not to disclose specific figures. However, we stand firm on our long-term investments aimed at satisfying users' needs.

To add, these are standard business investments. This quarter, whilst we opened six fulfillment centers, our logistics capex was $120 million—higher than previous quarters—yet remains relatively stable as a percentage of revenue compared to earlier periods. This isn't an investment cycle but standard business initiatives.

Our next question is a follow-up from Geoffrey Elliott from Autonomous. Please go ahead.

Hello. Thanks for taking the follow-up question. I seek clarification on one matter: there was a note stating that G&A expenses increased by 1.1 percentage points year-on-year, of which 0.8 percentage points were due to a non-recurring expense associated with customer refunds for prior periods. What transpired? Why refund customers for prior periods?

Hi, it's Martin here. As you noted, the 1.1 compression on margin is related to G&A. Most of that is indeed due to a non-recurring expense in this quarter related to refunds issued to fintech users from prior years. We made a decision to change our consumer and merchant credit products in Brazil, allowing for refunds to users for prepayment made shortly before the actual due date. While these refunds are typically minor—averaging around $4 per user—they reflect our commitment to fairness. Since we are implementing this going forward, we opted to also reimburse customers for prior payments to ensure equitable treatment.

The next question comes from Rodrigo Gastim from IBBA. Please go ahead.

Yeah. Thank you, guys. I have two questions about the loyalty program. First, are you experiencing any margin pressure from the adjustments made to the loyalty program following its recent re-launch this quarter? How much are you investing in this initiative? Second, what are the key differences in terms of unit economics between the Essential plan and the Total plan just launched? I am keen to understand how you perceive these two programs economically.

Hi. It’s Martin here. Your inquiry centers around potential margin pressure from the loyalty program. We launched all the benefits recently, so they’re only just beginning to ramp up. We are reallocating marketing budgets toward the loyalty program instead of expecting significant pressure on margins. The loyalty program’s premise is to generate incremental volume that compensates for the investments made. Regarding unit economics, while we don’t disclose detailed metrics, the Total plan involves substantial costs associated with content fees, notably for Disney. In contrast, the Essential subscription provides the same benefits within our ecosystem, thus having lower costs without additional content fees. This means while revenues from subscriptions help sustain benefits, the Essential plan generally maintains better margin metrics than the Total plan.

The next question is a follow-up from Jamie Friedman from Susquehanna. Please go ahead.

Hi, I would like to elaborate on marketplace conditions in Argentina. In your presentation, you mentioned Argentina's significant improvement driven by growth initiatives and consumer trends. Can you please provide additional context on the market environment in Argentina?

Hey, Jamie. Ariel here. As highlighted in our presentation, we observe improvement in growth rates and the overall health of our business in Argentina. This positive shift stems not only from enhanced general consumer behavior and favorable macroeconomic conditions but also due to our strategic performance. We persistently work on enhancing our user experience through product assortment improvements, reducing friction, and offering attractive options for buyers and sellers while preserving profitability. In general, we are optimistic about the developments in the country, noting strong demand and satisfaction with the turnaround we've experienced over the last few months.

Additionally, we are experiencing positive momentum in Argentina's fintech sector. With decreasing interest rates, NPLs under control, and attractive spreads for our credit products, we are also accelerating our credit offerings in the region, signaling a strong market outlook.

There are no further questions in the queue. This concludes our question-and-answer session. I'd like to turn the conference back over to Martin de los Santos for any closing remarks.

Thanks, everyone, for joining the call tonight. We had another strong quarter with impressive results and significant growth across our business. As previously mentioned, we invested heavily in credits, which is a key strategic initiative, alongside logistics, vital for driving online volume. MercadoLibre is excellently positioned to take advantage of upcoming growth opportunities, and we are committed to investing behind these with discipline, focusing on long-term and sustainable profitable growth. Finally, I would like to take a moment to remember Mario Vasquez, who passed away a couple of months ago. He served on our board for 17 years and left a profound impact on all of us who had the chance to work with him during those years. He will be greatly missed. We will now close the call; thank you for joining.

This concludes today's conference. Thank you for your attendance. You may now disconnect.