MercadoLibre (MELI) 1 Nov 232023 Q3 Earnings call transcript

Company Profile

Participants

Richard Cathcart	executive
Martin de Los Santos	executive
Andrew Ruben	analyst
Marcos Galperin	executive
Irma Sgarz	analyst
Marcelo Santos	analyst
Maria Infantozzi	analyst
Osvaldo Giménez	executive
Kaio Penso Da Prato	analyst
Scott Devitt	analyst
Ariel Szarfsztejn	executive
Robert Ford	analyst
Marvin Fong	analyst
Trevor Young	analyst
Geoffrey Elliott	analyst
Neha Agarwala	analyst
Joao Pedro Soares	analyst
Deepak Mathivanan	analyst

Call transcript

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Richard Cathcart

Hello, everyone, and welcome to the MercadoLibre Earnings Conference Call for the quarter ended September 30, 2023. Thank you for joining us. Richard Cathcart, Investor Relations Officer at MercadoLibre.

Today, we will share our quarterly highlights on video, after which we will begin our live Q&A session with our CEO, Marcos Galperin; Chief Financial Officer, Martin de los Santos; Fintech President Osvaldo Gimenez; and Commerce EVP, Ariel Szarfsztejn.

Before we go on to discuss our results for the third quarter of 2023, I remind you that management may make in this presentation may contain statements.

the our screen, Investor earnings to be will Relations refer in available materials please disclaimer which on also website. So on our

results. let's that, begin a of With with our summary

Martin de Los Santos

MercadoLibre's Hello, CFO. everyone. de I'm los Martin Santos,

been For those haven't as Member, since who of part Board of first a since team. at I as met XXXX, and Meli me, you have XXXX the management

forward August, of I For led the due look last X CFO. until position the years, in have meeting of when past many took the business I possible as you to I credit as course.

strong both was Mexico I'm their These year-on-year, [ with pleased quarter our to of geographies a from operations. record revenues. XX% an with attractive growth momentum my report fintech, above With show particularly successful total to a contribution first CFO. quarter in Brazil third around strong, and income great a combination also in revenues continues XX% again strong strong set revenue increased as posted countries With of a have profitability, growing performance in and while Meli's accelerated. to commerce across XXXX geographies, across ] X with results growth growth.

contributor discipline led margins expanding as once This strong growth, Income our fourth quarter, of with OpEx than growth, the to consecutive it. largest combined profit significant with portion business doubled and again. SG&A more business was dilution continues operations to cost representing the from scale. to year-on-year a the for Brazil

higher we technology. user the improvements, from through geographies where of conversions on sold promises, offered logistics experience we items During development better penetration with and QX, main XX% in in delivery growth especially improving front, the the saw GMV acceleration operate, higher continued X where [indiscernible] engagement This further and categories [indiscernible]. items reached of business, Commerce comes in we and

gains, Mexico. in As a buyers Brazil and a share million record result, XX market especially have we and of

TPV position in higher We saw off-platform we increased users comprehensive accelerated Pago, number Pago all financial provider. countries. Mercado a an At Mercado as and of as metrics main engagement service

accounts, and the people digital Mexico UX we better Brazil account using management in Argentina, the For improvements. particularly with excited in and and engagement, other the solutions from NPS more are asset remunerated about

the our In The solutions strong expectations levels. been Payments, online perform QX region. to for growth within healthy represented very highlights business has payment with the continues great across spread

originations As NPLs the particularly in in products. have saw we of Brazil, improving, our we accelerated all

for million issued we time. first cards and credit the [ surpassed QX, over TPV During X ] $X billion

continue such tap improve, models our consumers. credit the new best to of can underwriting we into larger coppers opportunities, lines to longer As as with offering durations

have we achieved rapid the growth, showing in more world-class in we provides continue future QX, to To give in opportunities. of a Overall, deliver confidence of model. invested combination these improvements, gains efficient results, economic that enables and in growth our structure. results technology investing experience These us user strength be that of to our scale cost a margin us terms

to let business news. get Richard now And with back me

Richard Cathcart

a Meli in proposition, increase Meli With audio and more as to we important program to Mas, value During engagement enhance have Mas, loyalty QX, MercadoLibre an ecosystem. a now our and awareness we content. with simpler benefits relaunched shipping loyalty with video premium our brand raise can step and compelling structure, which Meli's

shipping months XX other XX perks. users content [indiscernible]. Free and with access Deezer, BRL a gives above free amongst music from Mas to Meli world-class

website. content to and to of STAR+ users we Our includes library users service Disney+ access users Meli for discounts brand proposition a Mas to program. audio content where Gate the Lions building Max, complete think will Through special Paramount subscribe HBO the shop Deezer, and Mas music, day-to-day the apps able and becomes clearly bundle that Plus with basis. and Plus. the logo as a Meli clear Mas and throughout a Meli on the able to see value are of Users loyalty highlighted, enjoy with our be they offering us,

are shipping above on on user's and cap-free of our the the for The BRL day. to of delivery program. centers one versus in Meli threshold key XX, the standard Mas benefits BRL XX, shipping is Meli shipping product uses items fulfillment free chosen if the millions delivery of

the on eligible search for look they are recovery can see and for filter Mas Mas Meli rate, on products Meli items. they consumers As will products the logo that that

our all known day deliver As for the items to and still a above P&L. are threshold. same lower that packages. items receive for This delivery for the items they is whilst the for next-day experience if want week have the shipping if delivered new in Meli of solution option delivery discipline item willing option, to pay can or on free shipping enables with Users cost for threshold choose specific maintaining value their free the a us and they of loyalty users to quickly below great sell

a earn can and by access choose between their invoice. can from benefits, and card, subscribe all users MercadoLibre these of engaging their is with automatic easy inorganically To charge quick Meli's way [indiscernible] account, or monthly users ecosystem. a Subscribing or credit

users. different of charges. full shipping the to able the benefits types offer So for X the equivalent We're paid to X subscription just bundle accessible for is by of

who get offers quickly. the more earn by users users card our status reach enabling For the to membership, double with credit points, loyalty shopping Meli points to Mas MercadoLibre

a that because, complements as MercadoLibre marketing to at always, We're even program's raise to in best confident benefits proposition, more us yet value In is potential the long-term campaign August, we MercadoLibre, extensive bringing of initial users. come. Mas the the and launched awareness our confidence program, give to big Meli results

Operator

stand the time, a session. can by this roster. At you. Please Thank while we conduct we question-and-answer file [Operator Q&A Instructions] will

this Andrew from Ruben from first Stanley. our question And evening Morgan comes

Andrew Ruben

flowing for the period business. We've through advantage strength investments Welcome It's of Marcos, taking the again, of results. been lot Martin. Perhaps, your seen to today. joining a past year's of a

you're here, to still. from opportunities hear look next the to X excited about you that Meli see personally the most as years, over say, be X for I'd curious So you what

Marcos Galperin

Hey, Andrew. really months, business gaining lately XX are Good way has and gaining least, with and last very increasing happy to market been here. share the scale really the nicely, also Yes, at evolving growing we the margins. be

whether launch As and better whether hopefully et performing way also cetera. developers, our you a going obviously, control, and to are whether about ideas, know, provide or enable is service, That fraud things we enable guide, our us but many it in developers, in there AI. go quality us and exciting is developing don't on, in users gain scale it particularly, to innovative experience, or the efficiencies, customer prevention it is XX,XXX will

think that's key So the obviously, into. thing X years, next forward look looking a I to for

Operator

Our Irma from question Goldman next of Sachs. Sgarz comes

Irma Sgarz

Congratulations the on the results. you of also call. Marcos, joining taking advantage

the there incentivize watch gain the that risk growth And next do versus evolve team different investment any of the multiple across new in maybe this year maybe over the that question team, again, as or leadership at KPIs think looking compensation the feel go you asking or a investment taking? you important perhaps into these should for are the way, will to and more same KPIs basis? amount a exact maybe board you determine right to of you're incrementally If how from here, thinking slightly

Marcos Galperin

a compensate based key a dynamic long-term yearly retention to actually, business. -- obviously, very we quarterly not we or the results, a and on our program in our -- program. dynamic And in environment try myself very long-term obviously, is employees So even and X-year are

scope If you look ago, of at do things are in where we today, both the extremely years in terms MercadoLibre and of also but different we companies. that scale

is whether so that management is card X are a it's and overall strongly is into, we that the years our credit all I be fintech insurance across exist already in didn't And it's it whether geographies, a business, assets that in business. the business sizable to scale, under very of gained whether expect ago credit that next it our few our growing that and business has that a moving is relevance case years,

the is that in is which both have launch, are our an which we in them they our along gaining and as supported compensation new it's whether in Play, and and coming results which -- [ or obviously, there gain nice whether to are a operation our scope. Mercado So short And impact do, Clips really streaming will videos businesses they are advertising scale and traction. and KPIs, is our it of which expect ] really that obviously,

I we're answers obviously, KPIs of terms also they and there your that they in of results if become Irma. important are don't scale, terms gain many know doing. And things So in and that question, compensation. as

Operator

question with next JPMorgan. Santos our comes And Marcelo from

Marcelo Santos

And the you give It previous was margin. this the I print in wanted one, from discuss you above were very growth. improved a things might you back to one. quarter. that in the quarter, that indicating had the profitability and But reinvest previous actually to bit a strong some previous

I to allowed happen the grow forward? that just this to how new this the margins to to trade-off see have going something and wanted So you happened point. same time. not do understand improvement came? that wanted I at so what the and on element And There's touch trade-off you

Martin de Los Santos

Yes. It's Martin here.

during businesses would margin In of reaching fact, say and of of in I improvement. last EBITDA the from marketplace we profitability, did was quarter that advertising performed improvements, to also well but most acquiring quarter coming extremely business, the great biggest particular that as countries particularly XP order, XX% have to the well a terms XX%. margin margin as business, the quarter, also in credit the the contributor the contributed business, that

we a part most improved Mexico points by our at are manage points also, country where look we discipline. We gained scale, significant And year-on-year, Brazil, of come we year-on-year. costs, we percentage gaining which as the and did, lot obviously we X of of scale percentage and from able dilute to by with improvement growing were we XX by country,

behind industry make that need we investment Having that we look our where we the We that, to investing think prospects have main at operate -- business. of an have business, in long-term in to are said of goal. we sure continue a been which is that we the opportunities we the lot

invest penetration. So percentage X [indiscernible] we'll continue points we to logistics where increased in

also, Mas, quarter, Meli invested we launched the program. in promote loyalty new to the this as brand particular we We behind

Chile and countries invest in Colombia. We like to smaller continue

team a have of developers our and we're product. own product on build investing to continue our that We XX,XXX

target particular share, margin target, because in So was because improved margins, Brazil good for term. managing grew, long the quarter, again, a business the also but a we managing to we're market gained but only quarter the in But Mexico. this are we -- we we not not and particular very

Operator

Clara comes BBA. with Maria Infantozzi And question from Itau the next

Maria Infantozzi

start Brazil. I'd a like to credit the in business bit about

products quality consumer shift duration that Can elaborate credit of mentioned longer we Brazil? here. You been just in accelerated concession expect the penetration the Should in have of a evolution you far, the that? you credit And you so new Meli's receiving please? those cohorts, in please the on how strategy

Osvaldo Giménez

increase increase the so seeing And seeing, originations. of to -- also Yes, and, continue an as we we and spreads we far, And pace pace pace we business our the we are of in results we to mentioned, happy with in issuing Brazil. therefore, increased we're consumer we in there. Brazil saw credit the confident cards are have in of accelerate are the felt the origination

better we results and we solutions. create are credit are seeing same reason, we have better the every and time by the [indiscernible] how scoring we For encouraged

Operator

UBS. And it Kaio Prato with comes from

Kaio Penso Da Prato

question My also on business, the is FinTech please.

the of financial of the provider mentioned be strategy, of presentation users. main importance your to the choice during card credit You the

you in see So a principal Pago of digital in question this, unique you out Mercado Thank almost FinTech the please? have million future, XX my percentage you share. light how is, achieve users, And you of much think do account that principality as If can nowadays? clients how many you. your of some can

Osvaldo Giménez

And one users country look which over our continues Kaio, of that particularly and we given not continuous and near credit we which in credit our all triple products and user more key also we X, credit in the with in say, cards. in in I'd but and the we a component Brazil, products digits our of these credit to and of country, that is are management, consumer availability, Argentina, under growing asset a increase What of together amount have principal. when the disclosed, using disclosed more portfolio where not of have launch, in Brazil is Mexico at digits what is is we seeing a the of only are are, of a in be past have our becoming principality. the users triple this case,

going the right all direction. are in So metrics of the

we generated debit both disclosed is card. one credit measure. a a card and never other But principality by a TPV The have

Kaio Penso Da Prato

on just in Okay. could change P&L your credit be also only further And origination follow seeing the your credit credit And what the of the business. up, but in terms increased not Brazil appetite about you last question in discussion card framework terms on the to of impact for side, my cards How nowadays? card? on impact in of potential the are

Unknown Executive

Sure, Kaio.

I that not discussed is think is time this Brazil. So this first the -- in that

are I being the discussed. things many think are There is jury still that out.

on One early. the the And a probably [indiscernible] some of cap limiting [indiscernible] for the is to different potential interest-free affected. key putting one we Other each how probably is affect is of and one them are on third ways, able to is very Brazil a those We having limit would have details, interchange we rates. much rates. interest cap is consumption interest degree not a driver that probably in that believe should tell. still that us in or Until

Operator

with Our Wedbush. comes Scott from next question Devitt

Scott Devitt

billion different XXXX, approaching gross this now. Maybe profit. back in is, $X spin Xx was like a $X.X first revenue like billion questions. X had over question, a the which I like levels little doing you're And in business, those on Marcos, a

you else, comps at So yet XXXX. the to in the growth and and through almost were and growing growing that comping unprecedented, are pandemic, similar the back everything where rates you're it's

about think like and more a payments? just over or Latin benefits in because kind components the of pace. kind pandemic Just how like because question. that transpired you things gotten at like how big, times the first uniquely build has can were frame e-commerce of about e-commerce to business X think America relative think a So growing and so improvements of fast you drivers of are market what's experience the that benefited how the versus last how as having in the if you curious, the years, that faster the the of I'm like shipping other of mainstream of you may company-specific and with markets this have ecosystem broader business this That's the so keeps of

the longer if didn't more have missed I you talk about thinking second the the didn't about a if talk I But you amount. then the Thank advertising And business one, you. in can absolute -- could the just may that's about bit just I ad trending see quarter. term. you're business it. how and how

Marcos Galperin

you, Okay. Thank Scott.

So XXXX once in yes, COVID COVID, for The doubled during years, We a at Latin at to e-commerce technology, world, done think, we general, think a healthy of rate America. XXXX. good money XXXX happened happy in I got prior normal. and were of time, mostly same and thing parts unlike right during the basically grow region to lot in We But X obviously, the companies. We to the lot efforts in was, had place. happened other so the life very We had what that resumed the invested to than happened. around that continue very in a very more on able world, us those benefit, when other of about we players We're right that. things.

Disney grew cards and the power ecosystem, scale, and the features we in through on being we of when then, content functionalities Mas, this another Meli partnership another we it's it's since add recently, And is Mercado Financing or products one our and it's with very providers being ecosystem to Clips. them. strong, whether whether one. great Play or distributing And of plays, that and other being our obviously, to credit advertising are whether content more the the one, continue insurance all

So region we have strengthens unique is functionalities we in and I we think have brands. continue add the the pretty to and scale. part of a products the And lot And that and world, a features around other. have each and something created we and --

few And X strong we importantly, sheet, a rate we back. As is size we have healthy, mentioned, our and balance a very more you very the still had we years times are growth and continue innovating, in you give in the more and next not and continue can XX next Ariel X focusing to to years X continue intend the then investing quarters. advertising. to background on X And

Ariel Szarfsztejn

Ariel Scott, here.

So grow major no well. XX% in quarter to ads consecutive quarter. sixth strategy. for grew continue in the with We above revenue this changes

feedback ads from promoting but seeing be from as traction the our the We sellers, specifically growth, other we product and more with segments different Product well. more main of brands. and our continue to self-service segments and driver solutions sellers advertising continues improving are of to

of we highlighting the as case a had Overall, penetration but it's a of quarter of think percentage with Argentina. of ads I worth X.X% GMV,

be Argentina market So advertising our of were effects, the in also fact makes there penetration. Argentina effect of some from saying if you demand that structural equation, context, even in advertising a X%. of lower growth, other penetration worth out our has take of and lower to dynamics, Argentina a the in talks close structurally, because advertisers the would that out GMV follow given more it And if roughly and up to having for GMV, harder inflation to bit you were it's factor of to

Operator

of Our next question Byun Melissa ] America. comes [ from with Bank

Robert Ford

day? delivery you coming we Paulo then on of that distribution where more now you or much It as GMV And stabilize faster move where before is a GMV is were location? Meli percent a from the what delivered to from And Sao that be markets Brazilian expect on may forward? distant sending being have a do Brazil How now of Bob actually the and Congratulations center within quarter. Ford. or you growth shipping

AI and your of you use And Thank you. then search can product lastly, risk in discuss plays? recommendations

Ariel Szarfsztejn

this Ariel. for Bob, your is Thanks questions.

logistics I think say based would grow you more on don't more we your geographic first disclose in highlighted questions. methods. X data But typically and on both or even the that I we segments demand have to of segmentations trying are

of do proactive a more to that capitals So gain from today in cities Brazil market fulfillment That demand our regions we the coming do in that trying being our is concentrate are areas increased share where demand. traction are and we away our the underrepresented. means market far main share of share of from some Still big and center. see

happens super early Day. Kind of days. Delivery It's same Meli still with thing

So to not in Brazil on I launch Mexico. data in and or say it's traction, gaining not do of Mas many Meli regard. much that But shared to course, data by be I the that aided slowly want of

more, more way the and to Meli So seeing a as Day actively we consumers packages. are Delivery choosing the receive

terms question we mean on into that. we effort AI in are of and AI. Last solutions of search, a putting building working around lot I are

have saying, looking uses have demand don't but we we the the much of to think so far, happy and progress efficiency. search, as as disclose Marcos MercadoLibre that buy and AI for much box with answers, consumer to we're copilot at I broad and range said our to now, reviews, for be And boost developer. We're but yet. products, of questions was not

Osvaldo Giménez

and a case long with have AI, use for both in outcome, have, many pretty time been And much fraud in X transactions using that, they every instances, because building clear credit day are for fraud for of of we Both or either not prevention on scoring. now ideal and are many, millions years, a fraud prevention, which the of terms fraud. we AI cases

we models that build have really built on we with fraud very the can right the a the with has credits, have and variables, our also strong predicted and scoring that model been -- have AI. credit best-in-class leveraging knowledge given been building experience So And prevention. we

Robert Ford

you bit gets costs? materially data you of of still bit of terms up, Ariel, too seeing larger a where then, comment in and seems a you densities sense, lot Osvaldo. little -- it improved like just Makes follow choosing processing just in shipping lakes, Or day, discuss? more terms do can It a faster speeds, is with to LLMs, And the it or early sophisticated average materially have are consumers improvements to little a improvements delivery better.

Ariel Szarfsztejn

Yes.

it So early discuss. I is to think

some operations we in some early. seeing the operate, shipment fact our believe and efficiencies I distribution, of advantage We we in driven I by consolidate are when too our density of take it's can think idleness that or

expect, shared. not the for but would again, behind So to be early numbers that. this, I'm sorry direction in details say variables I moving we many but are the to share too that

Operator

our And from Fong with comes Marvin question BTIG. next

Marvin Fong

on quarter. like X-part ask maybe Congratulations to on great a the cross-border. question I'd

also I grew [ you think Mexico, in shareholder think country, recently Timo letter strong I adoption. only very strongly interesting your which the is entered is So cited there, some ] because seeing

just the how market it cross-border for the Timo's So entry actually that growing is kind ] evolving? Mexico you in see could Is pie of everybody. [ discuss you

an question relative is, inform have this the other but you? is And mix -- I very presents the how And your second penetrate part I understand or that might the question. of one then as Brazil, for cross-border to your your strategy in opportunity low, GMV

Unknown Executive

Marvin. Thanks,

I'd the first and So details before going say into foremost.

XX last years, with been all the always competing world. players from over we've the Over

They we particular, get of progress social be making active in into May, marketing We've app sense, entrants [ trying app. spending ] a are money Timo get to in seem users. been less. on Mexico, a directed to downloads monthly a download media, We've their them to in pie seen lot of on seen in more Latin and to having trying has America. used consumers, new or So

monitoring between our that is data business that suggests the overlap and that closely. But there other one with bigger cross-border We a platforms. obviously are

the acceleration across are by strong has to items categories in ranges. Unit business all as really meantime of on, to of been those focusing continues board, and the XX%. perform well, some players including ASP Our growth the sold shown where

to payments, logistics, provide And shipping our which us I say, particularly which allow our untouched, competitive would advantages enables and fast financing us attractive to users. remain deliver to

the remains end, same. the playbook So our in

our faster sellers, now cross-border brands, months our until in delivery, Mas, MercadoLibre are was more more we think financing, the not lower investing we Meli capabilities. items, up case continue shipping X ago. own more assortment, in more improving we also free trade on strengthening which also while ticket offering We And with continue through business also

the Moving Brazil. into the question, second part which of is

new. I think too Remesa still [ Conforme ] is

to So hard say. it's

applied weeks We got just the accepted We a back. few program. have

So much But trust not combination confident, for I so to and to share. will differentiate financing, strong buyer as remain the versus fast of that a local continue MercadoLibre Mexico, we brand, saying, deliveries, payments was our other companies.

And will new we doing so, be regulation simultaneously, capabilities in as compete the Brazil if in allows to in and we able it continue Mexico, to are in building cross-border Chile as Colombia. today

Marvin Fong

question. my just bigger follow-up, a And picture

some terms in some think and just whatnot? you the could wrote very more in think the on what's it what broader users. economy was active was it there. And you of more from quarter just elaborate shareholder just was So it driving component curious I fintech acquiring that? I Was a would strong Or initiatives? color love letter, beyond you do internal

Osvaldo Giménez

So there are I think several contributing to that. factors

in which users we recent those inflation in spike countries. been doing well. it XX%. Mexico the of close Argentina, account risk-free In on of Brazil, our Brazil One to is [indiscernible] in in very rate, each around XXX%. remunerated in it's and rate given interest and is has Argentina XX%; the What both depends what pay is In around our

banks move Mercado out days, of into after move XX which pay and savings gives or their money accounts, incentive [indiscernible] this to Pago. So X pay only with a huge users

driver. I that part think the been has of

in Another Mexico, not and the think, in would driver, have given part been, as in we offering that that this case, increased saying, -- we mostly, of I I been case say the has we're in so of environment. where it's the availability and were in giving credits rate of Argentina, Brazil out, cautious

Operator

question our Young with And Trevor comes from next Barclays.

Trevor Young

Great.

expected? can here question, there Mas as that ramping X that X update be give initial terms Is first second counts last just on an are but color helpful. the months, will you've me? then subscription over over -- you number the X where I you you share on can years, in gradual Meli in monetization? would or plans, update of the On us quarters it any is of we logistics indicated be excuse And subscriber any a few realize

Martin de Los Santos

Martin for here. Thanks questions, all your

I think it's early too to tell.

launched program As a months Ari mentioned before, few ago. this we

We terms Day, it's too as in are program with of well Meli as but seeing share early good adoption. numbers engagement the with to the Delivery

coming be share I -- information. think But we in we the the Ari? about will quarters, we'll more excited program. are

Ariel Szarfsztejn

Yes, Trevor.

total on QX shipping, have results offset and to fulfillment think I has have pull we monetizing us and that that XXXX. shipping higher higher the headwinds results over of to year-to-date some broadly show our in So logistics that able from been helped levers inflation the we in shipping environment our net keep our costs rates penetration GMV stable in

shipping But efficiency, we net think et focusing of Brazil. to our productivity, scale in costs cetera. our fulfillment by want incentivize to opportunities more plenty that also use on improve still to we mean particularly we solutions, have I sellers benefits,

the as are there not future said, to But so. do a do to all, monetize to So we have rush that. potential is in specifically we decide in always we fulfillment, in if

of we We And are imply what with always happy monetization we mindful prices and might are competition. P&L consumer are the for in managing way our general.

Operator

next Elliott with comes our question Autonomous. from And Geoffrey

Geoffrey Elliott

merchant, for how what fintech a the a take down some to publicly you're rest clearly, POS bit. there services Brazil, Can the less that us, touch beneficial And the MDRs prices the traded POS is that business were you off-line cheaper just couple remind What for they pricing wanted but a like fraction of in it with charging. rolled looks, competitors, that are Meli? synergy the off-line there? years of out of obviously, of saw stock the that it fit the rates you, ago. We I you were terms is looks business on little in does

is And then really make is time years, Does focus? to business make keep over still the you're become thinking for into be what maybe doesn't X smaller that something out Or sense how fit could of that time? or it over doing? if rest to XX you're sense it to years, that going a

Osvaldo Giménez

in-store Mercado fintech We offline. merchants the of business charge to the Pago part business, our see POS with offering. a We big allow as

Some are we been and very a say, way, profitable profitability very solution able to and continue larger I'd business our small in merchants, quarter. have we are provide throughout been some And are POS the in, The even behind do has SMBs, merchants. this good very to so. some

we -- to We as move make changes some seen have some have upmarket.

terms strategy. Some of that in what go-to-market saw our changing we of is related to

we attract cases, said. other larger hand, per merchant lower higher lower on because is get get see too, fees. good As offer rate But for device. the the TPV we some But us because fees, higher we it's activation and what it's as better what they we do merchants, is you for -- in we processing

per not margin of So terms of TPV, a in necessarily on getting we're a but lower sold. margin device top we're larger margin getting

so And I this continues think very that to for good be us.

we're and on device. encouraged -- seeing, of changes are again, have been front, this add go-to-market I'd strategy, making very the by terms changing we to beyond results say quarter, pricing our that terms TPV the we per of activation POS some I'd in in in and

Geoffrey Elliott

is with that? the synergy the this business of POS with where operation, machine the rest And

Osvaldo Giménez

So we say, are offering, on would sides. I X

through is one the sell they hand, On they offline, POS. through MercadoLibre sell the online, they many sell merchants,

through of having there's Mercado synergy to Pago So sales much coming them. pretty there in their all . a

some and other able are merchants, individuals, of hand, in we to cross-sell and to them different the offer products cases, are basically. them many to more products banking On these

invest where and the credit them. offering we in process them device them they [indiscernible]. giving only So -- offer them it's we're a not giving the We're we're

started run. the credit individuals to they have business them a offer based card We to on

banking And and we're them. many our offering solution, to products of between the of the is so banking we really are all a offer. There's rest part of there products synergy good

Operator

Agarwala next our comes with HSBC. question And from Neha

Neha Agarwala

Congratulations on the quarter. strong

questions. quick X Just

Could business. gradual delinquencies. Despite uptick Mexico that little my the you is XP not a going about maybe is us explain loan question . And acceleration, forward? is to in is talked an on credit doing for vision bit second we that XP pickup early the the of in First, on in the the where And acceleration well. quality. There is the year what some coming earlier business, some How was going? the as growth, from?

delinquencies could So that in early about how be helpful. the little a portfolio about is very the bit performing, if you talk would Mexico and

Ariel Szarfsztejn

This is Ariel.

on XP XX% So year-over-year grew a consolidated basis.

were at to look Brazil you considerably If this. by more this actually than grew country,

way of about consumer in clearest market the a us. categories, We it for XP compete as think to examples that. certain gain priority lever strategic we see this being the share one remains a probably of is that electronics and key So

stocks business the We We've happy of promotions, technology. over the with are of major with last transformation the XP manage our pricing, in very our had help improvements to ability XX months.

suppliers We have market that negotiate and structural share the significant We all gains we footing way growth gains. the with progress long-term and connect and will also way seen the think that business we relate improvements put on in with for them. are these strong

business. that behind investing keep and optimistic remain we So

Osvaldo Giménez

Neha, and that split with let in me to in regards Mexico, X. NPLs

NPLs merchant the The side, remained very On are very flat. spreads healthy. have

we to good very origination. results. been increase So have And able

little But little higher priced side, been take have spreads that healthy NPLs. increase with in, they more risk a bit consumer those increased actually, we and the to happened decided and design. by very the origination, on is have but of we are rates the usually offering. in amount bit, our to a What then comes And are slightly

though priced Mexico. even NPLs strategy, may continue was spreads in And be part increase, of to healthy So to super faster, it's in the that already. grow

Neha Agarwala

numbers can understanding just get growth? percentage where of on Perfect. a year where it of to currently, it up the regarding XP. give If some the is pace now penetration last much. Thank as was at I GMV, the end so of the an of us you follow Could you

Ariel Szarfsztejn

Yes.

So also Brazil, X% penetration penetration. keeps the profitability, our made improving we'll while which improving, the growing progress particularly in we this Again, X% happy increasing, far, continue digits, around has are extremely the low or with we're that quarter. in so the mid-single we've been and investing case keep business, or in

Operator

comes with from Citi. And Stand Joao next question. for by our it Soares

Joao Pedro Soares

the talk a questions the of X terms is, I excited the maybe One, a of expectations bit Friday any a and bit company lot in just been have news one, We've here. wanted Black preparations. little categories how I winning hear little first about about to hearing here.

expectations? So in any terms of granularity our

little follow XP, profitability, bit in to that. the about the second profitability. question the improving how press talking talked just you In to is on about And up about -- a regards that release

qualitative know So message where just company think wanted are right to we on be this any appreciated. the now could hear would do but bit a be? you we guide, doesn't little where I and about

Ariel Szarfsztejn

Yes. is Ariel. This

us sure. Black for So keeps penetration busy Friday

the We expecting are are and has great our season. we performing, big extremely think with a company excited have and to been way

inertia and shipping, All of great all Black commercial, had and marketing, has the having this to the continue event, teams, Friday, Christmas, year with our this a in cetera. are both that we they work quarter et preparing

a we is this their there want satisfy relevant know to our We moment to needs. consumers, be and for

I we profitability improvements, was before, strong very see as Brazil. profitability, Regarding particularly mentioning in

way getting buy. are the smarter we think we I in

So having better negotiations, which give us terms. better

getting are managing better at inventory. We

working of better days and our as capital are getting our So well. hence, stock

are smarter the a in we We we in working compete which to also getting also price way sell. Brazil. taxation And are key is we items the in lot efficiency,

and are this all levers company. a profitable the we the for again, pulling to make So as business and strategic moving

be are in not but that we'll We yet continue to there, working direction.

Operator

that next Instructions] Research. question, Our from Deepak from [Operator Wolfe Mathivanan comes

Deepak Mathivanan

A couple of questions.

in early are be additional loyalty the know in nonmember color average So I color spend it's What of great. days the frequency, any a seeing compared improved give in first, there can the you program. some from you would stages, on early to but program? terms

down of for Q us so few you wait Brazil help second much. the financing interest a another can in the the just you can Thank we you the to remind the dynamic But way your to benefits us from one, is Bank implications mean profitability? rate Can business guess, coming cut I the consistently. I the saw Central to this on in And today. then We EBIT months. there last see wondering if the revenues. is

Ariel Szarfsztejn

Deepak, Ariel here.

disclose on buyer the increase per program. whenever would our data specific we generated subscribe hand, decided to frequency loyalty So old say, yet. But they an Meli LX, and GMV Mas in our on program, already I don't to one

are also an same who are benefits We or our with even our the with new Meli better trend new who of Mas getting the program. and the existing joining proposition the are subscribers to seeing the used program and subscribers new value

general seen. excited has we the just in be started. terms, that to the platform. engagement So see early in are Again, Communications too we with

Our evolving. product keeps

make to many aware all customers more as with things on many, working the interact benefits and even that continue have we they of to way So the can program.

I So, able next in call. know, don't to details be hopefully, excited, but the we'll share more

Osvaldo Giménez

offer for transactions interest our then profitability charge reasons. what down I'd to in regards tends Brazil. on be say, lower, we the several interest to then for, for with marketplace see the good the interest on [indiscernible] be rates where transactions tends -- we us, price rate. tends us. be to coming to tend more those where And rates for we are It cost Mostly as And improves. for so to lower

have That closer case I the pass to side, happens pressures make would savings those And decrease. positive rates be fintech then increase the that will neutral probably to to we say on also we has merchants. competitive the been many what and when is it's because as case times but

positive us. it's overall, for So

Operator

William Our Susquehanna Kang from last question comes with International. ] [

Unknown Analyst

credit. at Thanks just quickly I for minute. wanted ask so to much squeezing on me here the last in

about I mid-risk So last just were yet. quarter, segments, risk lending think comments segments expanding no higher into there

ask So Were adjustments you were to encountered? there seeing any surprises what I you that there? or wanted just

Osvaldo Giménez

Actually, exactly we're that is what doing.

and We the on originations both in consumer Brazil, credit increasing card credit have side been side. the on

more probably ago, credit, up is, year became then we we what's more -- some credit, to consumer until restrictive. the degree, a happening are On we remember, were issuing

portfolio. in don't the as and segment. said, this impact of are So are total up, But into mid-risk you the we see terms expanding, originations yet you

And and on mid-risk addressing have card more where models. and the more offering, our also cards this third that's to also able parties incorporating been into we -- credit our front, we by by issuing expand from information are segment

Operator

it And to now the this question-and-answer I Officer back like for Santos, concludes Chief to de MercadoLibre. Martin session. turn los Financial would

Martin de Los Santos

to back with to I'm night. year fourth forward Thanks, looking questions. everybody, reporting next results. for you quarter your our Good

Operator

today's participation and does program, in you the Thank conference. now This may for disconnect. your conclude you

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