Credit Quality and Risk Management
Q: What's the overall message on credit quality?
A: Credit quality remains strong despite a shift in product mix. NIMAL compression is due to the growing share of credit card loans, which have lower initial revenues but are strategically important. Individual product portfolios show stable or improving NIMAL year-over-year, supporting accelerated credit growth. The credit book reached $4.9 billion, growing 51% year-over-year with strong profitability results. "

GMV Growth Drivers in Brazil
Q: What drove the strong GMV performance in Brazil?
A: GMV growth in Brazil accelerated to 36% year-over-year, driven by multiple factors including expanded selection, improved pricing competitiveness, enhanced shipping options, and increased use of fintech services like Buy Now Pay Later and credit cards. No single factor explains the growth; it's the compounded effect of 25 years of investment in Latin America. " "

Margin Outlook and Potential Headwinds
Q: Are there any headwinds that could impact margins ahead?
A: While the quarter showed strong net income growth of 100% year-over-year with a 10.5% margin, there was a 120 basis point contraction in EBIT margin due mainly to increased bad debt provisioning from accelerated credit origination. The company remains comfortable with this and continues to invest in strategic initiatives like fulfillment and free shipping. No changes are planned in investment strategy, but ongoing investments may pressure margins. "

Fintech Profitability and Expansion in Mexico
Q: How is the fintech business performing and what's the competitive edge in Mexico?
A: The fintech business is profitable in all three main countries—Argentina, Brazil, and Mexico. In Brazil and Mexico, profitability is driven mainly by fintech services like credit and acquiring. In Mexico, the company aims to become the #1 digital bank, leveraging a large user base from its marketplace and acquiring businesses. Competitive advantages include the synergy between marketplace, acquiring, and fintech services, which competitors lack. "

Impact of Brazil's Macro Environment
Q: How does Brazil's macro environment affect fintech expansion and spreads?
A: The company remains focused on expanding credit as long as credit models perform well and NPLs decline. Short loan durations provide flexibility to adjust to interest rate changes. Current credit spreads are healthy, but reaching more customers may require offering more competitive rates, potentially reducing spreads slightly but expanding the customer base. "

Market Share Gains
Q: How has market share progressed in main markets?
A: While specific market share numbers aren't disclosed, growth rates of 36% in Brazil and 30% in Mexico indicate that the company is gaining market share by outpacing overall market growth. "

Cross-Border Expansion Plans
Q: What are the ambitions for cross-border expansion with the Texas center?
A: The new Texas distribution center complements Mexican selection with U.S. products, especially where local options are limited or pricier. Early signs are positive with strong consumer engagement. The strategy may expand to multiple countries eventually, though it's too early to quantify. "

Implementation of AI Technologies
Q: How is AI being implemented in the ad business and recommendations?
A: The company is integrating AI and GenAI across various business units, enhancing recommendations, consolidating product reviews, improving image quality, and providing instant answers to customer inquiries. AI tools are also boosting developer productivity and improving customer support accuracy and efficiency. "

Benefits from Meli Más and Regulatory Changes
Q: How are Meli Más, MDD, and regulatory changes impacting the business?
A: Meli Más is driving higher user engagement, frequency, and GMV, with increasing adoption of MDD (Mercado Libre Delivery Day). The end of tax withholding requirements in Argentina will positively impact electronic payments once implemented. These developments are boosting overall user engagement and electronic payment adoption. "

Biggest Positive Surprise
Q: Which part of the business exceeded expectations recently?
A: The most significant surprise has been the continued market share gains in Brazil, outpacing the market for over a year. Additionally, a focused approach on fintech services has led to strong user growth and increased product usage in Brazil and Mexico. "