MercadoLibre, Inc.

Hello, everyone, and welcome to the MercadoLibre earnings conference call for the quarter ended December 31st, 2024. Thank you for joining us. I'm Richard Cathcart, MercadoLibre's investor relations officer. Today we will share our quarterly highlights on video, after which we will begin our live Q&A session with our management team. Before we go on to discuss our results of the fourth quarter of 2024, I remind you that management may make or refer to, and this presentation may contain, forward-looking statements and non-GAAP measures. So please refer to the disclaimer on screen, which will also be available in our earnings materials on our investor relations website. Please note that this call is being recorded and a replay will also be available on our investor relations website. Before passing on to Martin, I would like to highlight that our new investor relations website is now live. Investors can find new content, including a deep dive on our ecosystem, our institutional presentation, and our management podcasts. Investors can also walk through the user experience of our apps through a series of animations. Plus, you'll find our events calendar, our results archive, and our impact documents. For those of you that aren't signed up to receive our alerts, please do so by going to the site at investor.mccordalybrae.com. With that, let's begin with a short message from our CFO.

Hello everyone, 2024 was another remarkable year for MercadoLibre. Our key top line metrics, GMV, acquiring TPV, credit portfolio and asset under management outpaced the market in Brazil, Mexico and Argentina, driving significant market share gains and highlighting our position as the leading e-commerce and fintech player in Latin America. Improvements in our value proposition enabled us to surpass 100 million unique buyers in our marketplace and 60 million monthly active users in our fintech platform for the first time. This milestone reflects the trust and loyalty of our users in our ecosystem, and it also highlights the success of the investments and growth we have been making over the past few years. During 2024, we continued investing in our logistic infrastructure, which is a critical enabler that reduces friction and attracts more users to online commerce. We opened new fulfillment centers and expanded our free shipping offering. This resulted in a record-breaking number of new buyers coming to our marketplace. Another important area of investment was our credit cards. In 2024, we issued 5.9 million new cards and more than doubled our portfolio. Having a solid credit card offering is critical to our ambition of becoming the largest digital bank in Latin America and leveraging our unique competitive advantages in underwriting and distribution. So, we'll continue investing in our platform to capture these opportunities, even if sometimes they put short-term pressure on margins. As we see older cohorts of credit cards becoming profitable, as the accuracy of our risk models improves, we are confident we are in the right track. These investments are central to our ability to continue delivering outstanding results and building a business with much greater scale in the long run. Even after 25 years of growth, we continue to see a large opportunity ahead of us. The pillars of our long-term growth strategy are based on the relatively low penetration of e-commerce in our region, a huge opportunity to offer better financial products to large segments of the population that have been underserved by traditional banks, and the digitalization of cash for merchants and individuals. We are pleased with this year's financial results, achieving $21 billion in revenue and generating over $1 billion in free cash flow. This demonstrates our ability to drive profitable growth while continuing to invest in our long-term strategic objectives. As we enter 2025, we are more optimistic than ever about the opportunities that lie ahead. Now, I'll hand it back to Richard to share more details on some of the innovations that made these results possible.

As we conclude MercadoLibre's 25th anniversary year, we reflect on another year characterized by innovation throughout our ecosystem, as we develop technology to build the best commerce and fintech user experience in Latin America, all within a unique ecosystem. One of our top focus areas is developing a world class purchasing experience for each of our verticals. We are removing specific frictions in each category. This goes from virtual try on for makeup to enabling users to schedule a change of tires within the buying flow and have those tires shipped directly to the mechanic and enabling sellers to offer bulk discounts to buyers. In fashion, we standardized filters and sizes and enabled a better returns experience whereby users can exchange their purchase for a different size at one of the thousands of Melu places across the region. In supermarkets, we launched Full Super, a new storefront page that allows better navigation on subcategories within groceries. Users can more easily put multiple items of the same product in their baskets directly from their search results. They can also easily add items purchased in their previous shops to their cart and they can see the progress that they're making to reaching the free shipping threshold for the grocery category. We are also deploying technology to improve efficiency in our logistics operations. In 2024, we reached record levels of productivity in all geographies and a record number of shipments per route. Gains of scale on the back of a 29% year-on-year increase in items shipped also helped cost per package in local currency to either decline year-on-year or rise below inflation in our major geographies. There are no silver bullets when it comes to driving logistics efficiency. Instead, our focus is on dozens of small incremental gains that compound over time. Examples of this include grouping initiatives that increase the number of items per delivery, a new shelving system in our fulfillment centers that improves productivity whilst reducing capex, and continuous improvements in all of our routing algorithms. We are also investing to improve our value proposition for sellers. In 2024, we implemented several key tools, which include My Page, where sellers can customize their space on MercadoLibre, group publications, and create their own product carousels. They can also engage directly with potential buyers, who are now able to follow their favorite stores. Sellers can generate coupons and create ads to specifically target this audience. The dynamic pricing tool is a feature that automates price adjustments for listings based on internal and external competitiveness within established limits, thereby enhancing sellers' market positioning. The growing size, frequency, and engagement of our marketplace user base also enables us to improve the value proposition of Mercado Pago. It enables us to better understand those users, which helps us to offer them credit lines and cross-sell other fintech services. In 2024, we were able to ramp up our credit card offering by better selecting users and increasing credit limits after years of tests. We also made it easier for pre-approved users to pick up a card whilst making a purchase on the marketplace. And we also offered special buying conditions for cardholders during peak season, with 18 installments for high ASP items available only to Mercado Pago cardholders. To complement the great value prop of the credit card, users can also access attractive returns on deposits in Brazil, Mexico, Argentina and Chile, as well as new investment options. We recently launched the MeliDollar, a stablecoin that users can buy, hold and sell in our app, and specific tax-free investment products called LCI and LCA in Brazil, with investments starting from just 100 reais. Improvements in UX and value proposition have also been key in our acquiring business. This year we focused on improving the processing time for payments on our POS devices through technology. As a result, we have seen higher MPS. Our value prop is complemented by an ecosystemic offer that includes credit cards and loans to merchants, where we're able to use open finance to better score and increase limits. Both of these help to increase merchant retention. At the heart of our innovation is a dedicated team of more than 18,000 engineers and a tech-centric culture. This allows us to enhance productivity, to quickly respond to market opportunities and to remain ahead of our competitors. By innovating, we strengthen our leadership in the region. This will continue to be our focus in 2025 and beyond, and it underpins our confidence that the best is yet to come.