MercadoLibre (MELI) 4 Nov 222022 Q3 Earnings call transcript

Hello everyone, and welcome to the Mercado Libre earnings conference call for the quarter ended September 30, 2022. Thank you for joining us. I am Richard Cathcart, Investor Relations Officer for Mercado Libre. Today we will share our quarterly highlights on video, after which we will begin our live Q&A session with our Chief Financial Officer, Pedro Arnt and Chief Executive Officer of MercadoPago, Osvaldo Gimenez.

Before we go on to discuss our results of the third quarter of 2022, I remind you that management may make forward-looking statements relating to such matters as continued growth prospects for the company, industry trends, and product and technology initiatives. on projections information about based assumptions, our are and expectations, future statements currently and available current These events.

you the While expectations we these available forward-looking of reliance and assumptions, not information, currently projections are statements. place believe reasonable in on that undue are cautioned our to view

for in our and reasons, applicable year with Our described the including that, MercadoLibre the the XXXX actual Exchange let’s included opportunity in results of the to are Form risk I'm for key our which With XXXX, a call, the of our materially differ with everyone. conference available of share may statements factor filings those of from sections a XX-K of summary some on Securities those forward-looking quarter and XXst, any and our third begin December from results. this variety ended of and results. achievements website. other have investor messages to relations Hello Commission, Inc.’s pleased

QX annual During Fintech, towards to progress combination strong expansion. continued with Commerce a our growth deliver in for of and profit were targets we able

commitment Our while delivering once quarterly our cash million expanded XXX profit was contributing to profitable dollars, dilute costs of to operating ability and XX%, the to long-term of sustainable more scale, than XXXbps solid strong reflects our again. margin business, This generation performance operating to our growth. we as and

basis. challenges resilience macro-economic XX% show continues and physical FX-neutral commerce Our GMV to reopens, amidst growing retail as business on an fully with

X Mercado investments market across last product up managed contributors the improve the the Envios points and this significantly, levels, have network our as our a to over the multiple third XX major hit quarter, geographies penetration months. have the improvements in us Our is share percentage in to the in technology service also XX% Logistics both other across categories. and been over level business on years levels few gains consolidated across investments translating into last service enabled

accelerating. penetration a in our We We but of a increase GMV, are had the that and million the with first mark with steady our to triple-digit growth, unique our progressing billion improvements users improvements with increase series technology Off-platform its quarters. quarter dollars, tools, of Ads monetization, XXX%. Pago X.X% have small exceptional Fintech we growth of another Mercado active fourth of previous quarter, reaching roadmap strategy delivered a XX business Ads time. is TPV on XX achieved reaching surpassing of consecutive for

and and past this Chile strong our QR of reached growth, Banking in growing over risk Credito's to portfolio quarters rate slowed margin slower reflection billion, This in growth. we Account as than is did in Argentina. MPOS a business originations. a made in of management Mercado contribution $X.X Mexico a as and Brazil Our prioritization our at Digital solutions

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on and risks environment, are Our of website. review operating third prior growth A more we anticipated. our shareholder we us Relations lending reflected Brazil. Marketing our early expenses and profit significant is With which which to steps as G&A quarter quarter to in letter, reflection as versus has NPLs financial stable as a as a we operational detailed margin quarter, engineer on another reflect a weaker in that which expansion, mitigate took deliver our sales, of our to lines. margin of continue particularly on higher Product dilution available is cost and published results percentage to enabled expense invest COGS, focus business, is strong closed leveraging approach investments, well a gross short-term This & the the in of the & out in Sales scale results is growth financial to in of Development headcount, disciplined higher Investor the

user experience to improvements live is products deliver experience, I'll official videos to continued and This the segment, enhances it improved category. the mission they matters. hand where through the brands consumers this sales. of discovery to Richard search our fashion to of of to marketplace. and and details experience can apparel back services, the looking to to some can the products features our short in more earnings, Q&A experience brands. now new introduces element segments, user sellers, found In shopping We user browse turning that of commerce financial offered e-commerce product One democratize can stores, learn you the the and search sellers of to that today's shopping homepage through lifestyles When of different the the is access is for for of to This example be promote this the engagement, about key our we our products go thousands for purchase. and and on our MELI for Before channel experience. content, and helps and a section our enjoyable to by discover the are app, fashion latest a discovery marketing and experience updates

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As yet come. always, the is best to

go Instructions] Morgan Andrew Our comes with first Please from Ruben ahead. [Operator question Stanley.

Thanks very the question. much Hi. for

this that Thank drivers any could due the but overall, factors performance focus be how moving on when metric credit see you Anything appreciated. to on think the origination, would day due what rate, this XXX and of loan you results strong Really and you. some the past and playing considering necessary the evolution be? the might cycle out? so, particularly do you around mentioned So, when the highly dynamics, past color end pieces, just

is Hi, This Andrew. Osvaldo.

we in in look to publically at I is loans and mostly second quarter the have and when we in we maybe Brazil quarter we the line offered, degradation expected total amount we of past the what terms to limit is see think did that receipts it this personal performing expected. some loans – been the why them due particularly the started with during basically fairly see when segments results, we see the of was of what we we that So, in perform. We expected We with in line dates. as

close don’t interest have – we start peaking to already but that believe probably still rates Brazil guidance, provide forward, too It’s are coming Going to early we Should next probably year. down. tell. to in or peaked close

Brazil Just the last week. President elected new

the conditions which that. in of we mind, to about Brazil to So degradation tell loans. start very were With early in personal concerned that expect still that will it’s we more macro country was improve the

all that expected. is working what think I to according So we

Very helpful. Osvaldo. Thanks,

for One next question. moment Thank our you.

Sgarz Our go next Sachs. with Irma question from ahead. Goldman Please comes

for Yes. my question. taking you Hi. Thank

as you but could light little of drove on was small, the a now ads quarter-over-quarter steady hoping increase as just X.X% what more out pointed you increase. correct you – it with So this reaching GMV I just bit shed was

that and loyalty I this second saw for the posted around even quick if going thoughts launch could wondering HQLs to to shifting new come perhaps for XXXX? once share a your latest feel already program off metrics forward. encouraging developing was quarters wondering engagement for a you again different if you’ve just perhaps question of much from just impact you I the with been user is, two-tiered around you that more have if growth So something an And or was the is you that

Great. Thanks, Irma.

have of on the the evolving quarter. and And is the of constantly product So, and come impact out end think advertising, new the product. roll towards those obviously this tools of of improving the I most

see in I more the quarter. the think we third quarters upcoming than entire should

and the that resources and the what of the we the strong out I we see demand that think come funnel from we despite third roll that as continue macro in but business there advertising the also given backdrop a we in an is is the very to invest to new upside end continue where there think conversion where have, solutions future. quarter towards advertising to that of is just tools the evolution along play we natural quarter out the for lot came our tools of

launching to of version towards loyalty, continue the of a work we In program. next loyalty terms

where I think that value is, most is LX. identified the we’ve of in

majority overwhelming have are The Level LX. way buying users not and of X users evolution towards users strong users of earned who a see to their continue We purchased LX.

better launching in And so, loyalty to version new more the positions be increasingly a be and quarters hope we subscription really with upcoming program model that benefits it the to more that a would of users level the will will But for the we a to to will build well. to that most of into probably where likely as offer purchase. continue that ability be majority highest continue earned we

our question. moment for you. next Thank One

Our from comes Macruz Please Itau. Thiago ahead. next go question from

Hi Well, for question of my taking regarding guys. cost Thanks MercadoPago’s is first funding. my question.

it year. process? you You maybe still combination some credit expect unique very question we your you reach you If competition. more it second have my spread little when XP your to to your from Should this at arguably to maybe Cup those the keeps the down is funding the is entering And go Black is to accelerate and upcoming similar have levels any it Thank a do you. of end been to to cost today? set, feel bringing World there say product this in alternatives that products consistently of Which of Friday, month? bit fair but aggressive lower become regarding way

So, let’s see.

that saying structures cost funding of more in continue in of is CDDs. still down drive correct use are there renegotiation to the through You room to

points our cost of far segment the current where driver and that of quality funding. still derive in most by basis business of still the points hundreds most even so less we the For can basis will and that is we of be, of focus significant the the underwriting margins incremental participate we from or where think

pursue bring if in right you expanding our now. you longer and higher view, not credit up funding. It’s something we products, take penetrate look have funding. cost think roadmap. more priority and continue or lower a to I it’s of will the we for valid that more Windows as to of cost alternatives But short-term increasing segments to a what is that’s a look then spread term income lower then mid-term of

In more the in quarter XP into we do the terms fourth lean terms fourth of historically, of quarter, business. it

year the better to structure You overall think a XP a But in business that see the significantly last has year. quarters. had a with margin profitability prior was where margin that the than in see results fourth we structure. business lower combination I quarter last continue a it than And better of

ramp although the of be so, a to will last up is assume happened I don’t there will replicate that in And investment, encourage what what pace year. this investors year we

the quarter was year this better fourth last in be margin the than should think it I year.

prior performance. So from don’t extrapolate year

much. very you Thank

our next One you. for Thank moment question.

of ahead. America. question Please Our go next comes with Bob Ford from Bank

then, in is How you contribution margin we And you Thank you the top and besides penetration Can you. congratulations context, the the evening, how provide expect in the geographies? well that now opening outlook and ad some markets do that mentioned doing pickup in additional And how and maybe are you across any please? three X,XXX for that quarter. the for Pedro, as nearly please. evolve? Richard, describe off year the And good that places the Brazil? should numbers your to Richard, functionality balance one And remarks. Osvaldo drop on of

Hey, Bob.

business structure margin very the for is advertising It’s consistent across the geographies. high So business. margin fairly a

insipient There are geography. think highest how said is, XXs. high the rates we low rate. a far of in with or XXs, think I is business, I simply the very EBIT combination the the over geos. are. across do also period margins geographies vary any attach country XP there the multi-year adoption by we’ve Mexico but Attach X.X% executed at expect market dynamics overall growth we still and in and think of solid what that I general, the of But in we penetration, all of look with overall a it’s

be That Brazil, that? how makes from should with thinking And contribution sense. margin we respect then, to the about

On advertising?

contribution total a to the seem margin. dip It bit. just No, little

Okay. question. It the was second

A you incremental Brazil pace what that did top-line costs marketplace see in contribution margin. compression where that so, when into somewhat can but majority our Sorry, of continued to what of pass a growth take faster of pricing is combine have amount where we rates. reticence certain movement on by a interest unlike terms to the in have did generates investments impression with explain rate really that, than And that you revenue grow at you constrained compression. off-marketplace

I interest idea think we the if incremental it to and overall forward, is, add doesn’t margin. going one Brazilian the scale, environment through rate scale get be in don’t able market be natural a should just that also But expect we necessarily change forward. going to

sense. makes That

places on functions, then and so interesting. it’s And

adding a I very logistics think that had we’ve said potentially in our always role important notes network. places to

which if but ideally conversions. more look and But you the Returns began the a the So ATM drives rival for of network better pickup, of cash other percentage, out a that customer potential of we see example thesis satisfaction creation Argentina, the that places that returns. piece and and grow delivery in to is has terms importantly continue to also cash at in to the for machines.

Remember and as that we cangue all in we and Chile, these something small cash foot points mirror on as geographic it’s in make these can and to owners and cash out serving strong that in Argentina of that drive well. revenue So by seeing store execution would are across front incremental incremental the Brazil, in footprint. we look and points traffic have Mexico in

something return maybe there? try right wardrobe things like any things. other But of Those around area little a and testing fintech now, right on or types apparel, for functionality are you

yet. No, not

need I think on corner with to extra much stores. operational demands cautious small and we how overlay we be these shops

into of opportunities fronts. So these are we right now short-term, on move the logistics the is drop-off, to focus the through and wallets on And pickup, money network, store the biggest out two the digital which ability see your nodes returns.

much. Thank very you Understood.

Thank moment you. next our question. for One

Please comes from Marcelo question with next Our go Santos JPMorgan. ahead.

my for two. Good have thanks evening, I question. taking

the modality? has woes second kind And around regarding logistic is there? It’s fulfillment. The first penetration performance been regarding a are been the What of monetization. What XX% for is your the has this while. – regarding

a fulfillment. quarters start way color So you you’d think or Thank said experiment in the much. How to has you ago, couple been some some I monetization going? very Maybe to give differentiate geographically or that you can general?

Marcelo, thank you.

Brazil fulfilled MELI to other to of continue adoption markets. in aspire across So by we drive and greater

you made up being invested we've warehouses if in of adoption fulfilled about percentage And and us added MercadoLibre fulfillment was it the X actually as higher So of in have evolution being percentage Chile QX scale to in well. a infrastructure allows purchases QX, positive. added look through We from on the at three of and us. that to points orders and Brazil,

penetration. trend So highest Mexico all over from higher to our and towards will we a centers the It's fulfilled has two-thirds believe other always continue been of number. markets and the grow fulfillment orders

of send performance. centers. see merchants We for more and to more to it kind these for we improve having continue attractive we have should the fulfillment are terms more sellers in end here. it's make to right is. the there not trying double to the and inventory out act continue inventory to eventually removing when try also Simultaneously, all help us, turn easier what But And of of experience this carry sending to and to explains to things our state inventory the

the a sales. generates added by That cost disincentive see to on low only us conversion helps monetization but way, inventory, they than in more improved P&L. still until usage offset lift in that obviously That monetization timid. turning and is introduced for of centers. fulfillment inventory our our it on send simply the have We very a not is But merchants

of we potential talking that's be. a than So its closer are something million $XX to long-term monetization quarter could what

slow fairly still adoption both monetization, fulfillment. but trying more because importantly of to continuing out to are we carry the it's So grow of introduction the

very Thank you. you Thank much. Perfect.

moment for you. Thank One next question. the

from from Our Credit go next Stephen Ju comes question Suisse. Please ahead.

you. Thank Okay.

So, hi advertising on Pedro, the business. I guess a question follow-up

about So what what you think ad there? sounds units ad the I that search like driving as units. talked growth are about sponsored principal display

them much how others will you sellers? to but to own, their and some sophisticated also, need behalf you very ad think heavy some and lifting run may So, your do need be on on campaigns do of understand will of how more Because help.

talk driving you be of can the their So, you about behalf? Thanks. may some advancements automation with on

Great.

still, the the So, majority monetization of vast ads. on is product

as So identified they the the but middle insertion within listings interspersed listing, that are appear results a are a of search sponsored sponsored result. search in of

products the and growing have advertising ways of begin to the themselves that the come or still where the already a either uptick terms lot brands are display on promote network. capabilities of other with revenue and even complex of of from. to smaller their directly want merchants in improved work by merchants We sales and monetization to base or larger that's more see can selling from But part that a

that conversion in rates. invested of that clearly sophisticated You merchants we are many from terms of merchants, have still that China We more them at and many in of per the dollars very see are see look the when we correct to use curve. learning of merchants, especially from advertising saying much Asia coming smaller help listing cross-border that the the a

we and to the them level of be have the will that local product to And time. Latin segment the tools the it also and matter in merchant working been and case a for of improved over to comfort also abilities construction rollouts that, automation, audiences gain use far capabilities combination we've MercadoLibre audiences. advertising larger in American a which those of the of the simply tailored is what we by able better education and and ability In will generate reporting merchant which the with base, more time, more and to is improved half back the also within work reporting really to were quarter base, and larger be on greater of largest lot and a merchants. merchants, patience capabilities the and over So having of this brands as cross-border of recent see around was

an larger results the few in hopefully, So on seeing average and question, of spend to see I our next we'll advertisers these over as increasing platform. of earlier by quarters answered some begin brands their that the

you. Thank

question. Thank you. for One our moment next

BTIG. Our next Please question comes with from ahead. Fong Marvin go

on as recent users I users, for well Thank my and percentage you best as XX this of memory. terms the in new quarter, question A taking growth think absolute Great. for Fintech in million the question. is the quarter achieving

general pretty towards on Just any Argentina in higher decline you Commerce? think question, dollars. U.S. drove compared things trends the in just improvement? Or to mix even particular then note a Fintech also usage? category that's this significantly could that the was but second in Is did think margins. contribution of do rate? increased comment Fintech And a you Brazil, Argentina on more drove because you adoption is it I it higher higher-margin just that and What

we our so has the Hi, mostly users to per and to much all giving the or would past, for utilities use the our been decreased pretty with doing Fintech in and top users our the wallet. we this products, decreased try where quarter, or second using offering with their I we year discounts particularly incentives say been Marvin, We were stopped have In we people to a of QR codes that. pay first quarter. incentives that regards more phones mobile

and principality, our product it's I flows. use we say try organic, would different amount seeing larger the come possible that focus having growth has the cases and And and are increasing engagement, now. more mostly so the been on users And increasing of

at to level we're and Argentina, would Chile. products are in to roll to Brazil doing and we we Mexico mostly continue more now new say that, and focus going a do only In products rolling countries, the it's out starting out I And different services. given today terms continue to is of what that in

to for room there's So with these growth. rollouts us and continue this

is, Sure. In already in the yes, Argentina, there. reached Fintech in margin markets an we is higher business In also the scale general participation increase other there's Argentina, than in we've what that see from Fintech. given

will interesting slightly terms the ideally breakeven or digital already I of in because actually markets that the structure. the time and inflation, one businesses the it dilute so in costs scale. kind And of positive think some evolve over in way also margin as That's grow back those high-level gain to is account wallet growth, of are other then, data and by point greater there on ability for us, shows of is a that's that Argentina interesting general. burned

there of level of at well. than and expenses are denominated gross growth in local the direct cost given a of currencies is higher that a both So, currency local rate level, contribution mostly dilution also a much amount revenues significant profit the as

terrific and That’s color. Thanks, Pedro. Osvaldo

One our question. you. for moment next Thank

Research. Please question comes ahead. with Wolfe Our Deepak go Mathivanan from next

question. Thanks the for taking Great.

Brazil, the many segment? so you given much. total profitability maybe sort and we through the think profitability give over in a coming at any e-commerce any color do Pedro, question, strategy on you in be months first, to kind recent then aware over XX advertising how about next obviously, next months? anticipate XX, of? the in maybe can e-commerce changes of monetization the that of the high you And So logistics Thank should operational level, contribution With business maybe second some us areas the current political XX on in changes from climate of should markets, we sort or scaling

Great.

any governments. the to first answer is political in in derived change the question No So change no. from strategy

and XX-plus multiple the Presidents years parties, has and I governing think over the has of ideological changes in throughout thrived and through lean business our entire strategy. our changed gone never region past that's

digital I inform payment and think that our across the region. need digital users for enormous strategy exists commerce and the our

we foremost, fintech growth the believe the e-commerce side periods. incremental have, engines the the and terms in EBIT on commerce At first growth on that we to that of for that's and gains I story different that we're the MPOS manage the be, in financial think and the upcoming given can advertising, continues business, P&L some trying combine continued But delivering the fintech and leadership market we with be to both hold credit, least incremental and model. way and scale profit whether over the found our businesses, the side, consistently aspiration the we position. that share

moment our One for you. question. Thank next

next question Please Our from Kaio comes go UBS. Prato with ahead.

Good everyone. the have for Thanks questions. Credito, two Mercado regarding side Hello I here evening. please. my on

So that you But XX a on we coverage, of the expanded you or business overall credit see actually your a reduced margins it XX basis. we can on days. if quarter-over-quarter if in take actually look days your provision look

the short-term terms of next an beginning around in you ratio not, increase we the total in a as the a if provisions the or matter a should could is increase expect just towards wondering second your only one again coverage quarters, about the to year next should the And portfolio So see – percentage year end going order is of the bit little and lower in talk this we more of of of your provision origination? coverage forward. origination. If if in appetite

If you or are originating what October you. going well? not already the more during forward, as and is Thank strategy

due. portfolio. broken quarter there's XX clearly X when disclose past two-thirds, Hi much you basically, days due XX we that how -- provisioned those can and are days all in you more past we loans And current of in XX due our or the due it's days our pretty but past and Kaio, of that XX% of to see at past the are are shareholder is letter, down information provisioning that, look between that and days XX% over over X XX this

we been our I in conservative So that think very have provisions.

be. to continue We

provision that. as to We The average a debt, our regards about a increase and the loans you conservative. us early bad have originations duration keeping NPLs year, related With the But next same is we in see remain and of bad having year. and very very, provide books been to an months in down know, we related to the and for mostly way using guidance. have mostly you full year-end two to it's slowing

of we So is done that, not should reduce when far, we but happen. reverse that have on as origination. we're volume conditions guidance And improve, giving the what we see will

very you Thank much. Okay.

for next Thank you. moment our question. One

next with Please Autonomous. Our from go Elliott ahead. comes question Geoffrey

third question. hello. very again. what when ramp and in much topic mean Hi, expected. the things the you during Thanks cliff. of describe line you can like up taking the you of off quarter, sound with trends I credit way it's It for doesn't this fell a originations On kind

So stopping back is to credit ramping macro What it now more side? you up? Is do it something need is would there? to your profit Is get on see the see to it What you need portfolio? you in something what from on that origination.

in kept them later. hand, on were segments saw The where stopped we better loans good we a who wise we the the the news profitable. little stopped And we on – believe segments. and buy and during we personal lower quarter control for where have did a because pay still groups ranked Those not what is decision. Geoffrey, we those that them decision So offering XX we right those during offering took loans that we been so not other but both bit were continue third -- we those where quarter, buy second end those last we to that high was continue in one but offering that now now users we pay personal and up, the we the we And them later. loans. hindsight loans basically, offering hand, were not profitable. groups offering stopped were have And This of scored the ranking, that

we decision. think that again. So be I took segments now able see continue groups. terms in we wise When offering up a ramp improving, we And loans will control to those we conditions of

healthy very We're add MercadoLibre to view years. build credit we've portfolio credit constructed maximize the if think a is sustainable And with to XX,XXX here, looking can the and over X the next the foot I and of long-term size not XX book we're or X always a way over a I quarters. business looking

we comfortable accelerate unless we've underwriting would that And to are make right credit thought to sure from we time so pressure start accelerating the think very that originations quality put any the that don't when it's we the and the the said organization of down that they under slow that beginning I merited again.

So to we continue will I it think conservative fashion. in manage that

them Fujikis you. and loans, through the start allow How consumer loans loans. that a made the that doing as would you merchant Thank Fujiki it and also to channel? as soon way the one And buy well originating funding auto could of that

Not the sure understood I fully question.

one there the a offering loans. of in change was few Fujikis the your of hold allow auto to So memorandum last weeks to it improved in

auto going be see going was behind How Fujiki we are holding your was, What originated? to to question that the change? So loans they are soon?

auto loans Okay, was the question.

We Sorry, pick that. on I apologize. didn't up

risk experience. few models. we to we So, are sure to next the going over take We the build the out product, time test we our user make out quarters build the

the product, we're It don't So still data out that of fit is segments are building in. that, process and ramp-up any should product credit move the of market gathering we for the one auto that expect loans. run, building rapid multiple testing experience, the a models. the over one we the It's segment into. long be But user interested of in

material quarters. few next something will in be the So way that any over it's not

much answers. Perfect. Thank Thanks those you. very for

Thank question. you. for One our moment next

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

that environment given Is the like, one that the better underwriting book, products, Thank products some purpose? – is give the is are on card a unsecured you say, your taking across And current some Congratulations grow Hi, you're looking unsecured secured credit light question. you quarter-on-quarter. light the throw how On you that on could geographies. credit us the thank the compensate on your the models so you performed on you are for on secured are kind have seeing? side? my the in results. lending much. collateralized the so consumer to -- where and I Has verticals, down to cautious where merchant different duration noticed lending growth for loans. merchant you're book other also loan being second across of looking performed than and products, one for loans geography has that the lending Or the across expectation your the slow new versus the the gone there

start to part with products. geographies the first say that would let with and regards – different I the me different

and the merchant have in say three we again, was Brazilian more would most two profitability higher higher where think, pressure products, mostly to of that And categories quarter. I numbers mostly that we But and became saw for the So and we we and the or geographies improved with probably, with in online margins – IMAL three regard loans. were loans, in, I restrictive X consumer main are those our split quarter. our that loans, the all profitable which and in-store is during and then compensated took consumers, Argentina. each on

we also So seen. Mexico. in improved, are merchant and of sorry, we On that, that the both happy Brazil have margins top with results

let This of On collateralized is lending. separate. me down credit cards or the lending, other slowing consequence secured just not unsecured a

any and a more serves wallet and more grow of businesses adoption in not it MELI think of one needs that to revenue delivering beauties of growth financial is order stream. grow margin and are the solely it credit our usage that volume to is driver a the us in for Credit under institution pressure transactional sales but is I we we're expansion. undue business not because continue our to as business core and a

pace And my going so to previous that answer. allows us back to ourselves

credit our past we're loans. Collateralized cards are would into that the have slow get because within been view we segments to are in having down secured think mentioned of the what future. road don't unsecured. one the the talked loans. Those more that attractive always auto about I product been product be. is So payroll alternative. all have in map We've But those loans, things We lending

being Eventually, margins which, happening now, expanded get auto there, the headwinds. profitable the be unsecured lending Others to right the as continue not very and despite are those a but we'll actually businesses, in consequence what's product. of some built ideas. just loan like of macro are So by the way

Perfect. passing on have? for passing I done for higher your the Or you products the cost that, can loans? you initiative the quarter even perception largely have been on repricing prices funding that just with the are the or risk If on third you loan follow-up lend in higher raising

been has in of aspects. So, performance. so off deterioration segments, in yes, increase certain a has yes, But we an an in in anticipation for lower mid-risk actually APRs increase many the those in performance credit price And there segments. been anticipation weakening as there a risk turn the consequence of of

should And in we quarter largely as should you expect you to well? do continue that you're where the Or be? fourth think

about Thank the think early fourth still report the talk I when quarter. fourth quarter. in we quarter you. It's the let's

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profitability medium margin as The That's the low at changes, the should one, sustainable? run? your mentioned – -- this Pedro, XX you long see my question. – I ad low high this in this currently first Can first How margin expect margin. XXs, XXs EBIT of we business is business mean, we

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and probably revenue margins GMV, those somewhat. to as so that the could investments accelerate compress implies of we those the base try And penetration that

still to give a growth, incredibly indication overall this is think incredibly margin that throwing at by just low you assume compression. actually and attractive we ramp-up accretive high see and you expect research is even as that some most in development out resources to think business. give accelerate to clear we the investment it could to XXs I to and an XXs margins of and But that it's growth, I fair a engineers, accelerate if more

where revenue guide picture. said But reviewing over because these businesses and strategy are negative time, profitable are continue to tactics, we not There should we our less can between going sure strategically that that be confidence with don't we've What streams constantly and ones have in and we revenue to to many that to of are where critical. margins. I think think the you're into they're believe is invest of streams, wait grow we potentially newer we differentiate no revenue that, or have made portfolio we bigger give changes others EBIT streams aggressively we will we right, up. but

and margin household has steep carry we of potentially and that we terms structures the the structures, for is priority. we Others seeing effort reaccelerate results as spend we we losses margin there so strong as can there, something possible. So improve accelerate can where to like there's areas the example, been as as a one improve for category and think That's we're supermarket, time, in again. largest that as certain good not to a that wait can have us quickly

two the the see are for and strategic XXXX. fronts, unchanged this of network, and logistics headcount towards EBIT engineering We there. are remained we'll That's aggressively continued be we to negative their the last which we salaries transmit that we this rollout also comfortable slowing quarters. So the said invest and where few strategy X,XXX that product year growth. I'm and video, on our the down had wages I adding in continue end engineers imperative, But then in of think And out some Tactically we've hasn't we're still changed number called that planned businesses that market, is last that year. very the to same development that takeaway other here the we've are a don't trying there and invest. to our over

increasing generation think striving market for can the we that gains being growth we we deliver. deliver to on share model while our I reiterative, we're to annual So again, EBIT that That's an for aspire and also think continue financial business.

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recession-resistant that would a geographies. the be look render maybe good half periods? than in we drop towards then, would to features Awesome. off can back certain it downturn, and or about towards Thanks XXXX how spend did for the you the extent and a Argentina, month 'XX see saw was of And all would taking regarding appropriate constructive wondering least the it are fairly Brazil, gains. XXXX Mexico? about it of demographics cadence there buyer during geos, helpful at question. towards the some on guess quarter? great Any macro or the to the an If that to market among color to It I last business sort see comments of think today just we I'm sounds less Or the these Brazil health in or like as those share ongoing analog? of the more we're key be

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from breadth So been of the of conditions, to down trade macro do the reverse in marketplace continuing to Historically, offer while our can We've think ability has that business but order. in a shop take resilient. consumers let never because said those countercyclical, tougher me us. we selection have that

to changed Now at we today significantly, it retail have wouldn't to because did see need overall not versus of happens. just see when try that's extrapolate overall what what retail, we look what retail, MELI I to or you even XXXX, XXXX XXXX online linearly represents that happens. and XXXX, percentage to in the

it's and the QX importantly, again, period really in still and come early about. peak your to More part about question, the first of is

significant at is quarter elsewhere, this any report. spend are full country consumer don't most weakening. point in where of level February. see So we'll But significant But the and But across indications the we'll weakening to in what potentially nothing the have any the we some far. far call geos, address to Again, fourth see when so in quarter out nothing seeing full of of so happens. through reconvene to February. we we Argentina go we'll

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next with from Jefferies. question go John comes Please Colantuoni Our ahead.

question. Thanks checking my is for Hi,this for Chris in taking John.

Thank again, marketplace share those what has Can gaining you continue forward? think gains the to past outperformance? about impactful what then kind you gives going of in the share over you. are Brazil been you confidence talk your So most drivers the ability And year. just that business' in of

We've been investing behind this business XX for over years.

only availability what on payment. the the call look we increased increasingly to most think begin XPLs experience. I of control the think and that on output experience. of innovation users in marketplace, nearly data, dramatically an we logistics last MELI market deliveries through of our consolidated that's of years, of quality we XX% unparalleled the Brazil, a more all logistics, done see are we of have is in with credit, of part really, is at most the gains but Brazil, you if And we Obviously, it's pace see today that, on at our quantity tech also lot our not category a the that's that that user categories. look network two verticalized reflection if better team overlay in basis to network the in gotten management experience and share a experiences. a We've category a I Pago that expanded of the We've and differentiator so and over selection. our across a the routing ease critical

are I think six the been of benefits we years. five, past now carrying we've the out investments reaping again, over that So

Great. Thanks so much.

at it closing I remarks. MercadoLibre's like am I'd now turn to to time. questions showing Pedro, back no this CFO, further for

fourth team peak Thanks, quarter the and MELI everyone. whole questions. for big the We, moving the Thanks have season. a into up, coming

until We we So, said, when in over to the fourth speak be bye-bye, then, and go back again work able to everyone. like February. quarter forward we you and for to we'll look us

conference. your program. Thank concludes participation This you in today's the for

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