MercadoLibre, Inc.

Hello everyone and welcome to the MercadoLibre earnings conference call for the quarter ended June 30th, 2025. Thank you for joining us. I am 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 second quarter of 2025, 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 be made available on our investor relations website as well. As we continue to evolve our communications with investors, we have decided to launch our quarterly product updates video after earnings, rather than together with our results call. So watch out for this coming to your inboxes in the weeks after our results disclosure. With that, let's begin with a short message from our CFO.

Hello, everyone. In Q2, MercadoLibre delivered another quarter of strong financial performance, with revenues growing over 30% year-on-year and record income from operations of $825 million. These results reflect the strength and consistency of our execution as we continue to invest with discipline to advance our long-term ambitions in commerce, fintech, and advertising. In Brazil, we lowered our free shipping threshold for the third time in five years as part of our objective of bringing offline retail online by removing frictions. This strategic initiative is attracting new users to our e-commerce platform, increasing engagement among existing buyers, and expanding our assortment. The enhanced value proposition resulted in accelerated GMB growth in June following the implementation of the new pricing. Mexico was another standout in Q2. GMB growth accelerated sharply and the number of items sold in the platform increased at the fastest pace in almost two years, driven by strong performance across both our 1P and cross-border businesses. advertising revenue grew 38% year-on-year. In Q2, we launched our integration with Google Manager, an important milestone in positioning Mercado Ads as a key strategic partner for brand-focused advertisers. ThinTech services continue to gain strong traction in Q2. Monthly active users of Mercado Pago reached 68 million, reflecting rapid user growth and increasing engagement across our ecosystem. Asset under management more than doubled year on year once again. Our credit portfolio surpassed $9.3 billion, growing by 91% year on year. We're also encouraged by the quality of our credit business, with NIMAL remaining broadly stable quarter over quarter and 50 to 98 MPLs falling below 7% for the first time since we began reporting the metric. Our credit card business continues to perform well in both Brazil and Mexico. Strong asset quality and ongoing enhancements to our credit models enabled us to issue 1.5 million new cards in Q2, We're also seeing consistent improvements in cohort profitability, with more than half of our portfolio in Brazil already being nine-mile positive. We are pleased with our performance in Q2, as the benefits of years of disciplined investments continue to compound. Engagement is rising across all areas of our ecosystem, reinforcing the strength of our platform and the long-term potential ahead. Thank you for your continued support.

in the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. Please limit yourselves to one question. If you have additional questions, you may rejoin the queue. Our first question today is from Andrew Rubin with Morgan Stanley. Please go ahead.