MercadoLibre, Inc.

Hello, everyone, and welcome to the MercadoLibre earnings conference call for the quarter ended September 30th, 2025. 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'll begin our live Q&A session with our management team. Before we go on to discuss our results for the third 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 IR website as well. Our quarterly product updates video will now be released after earnings instead of alongside our conference 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. This quarter, we continue to invest to capture the immense growth opportunities that are ahead of us in commerce and fintech. We are exceptionally well positioned to drive financial inclusion at the offline to online retail shift in Latin America. Revenues grew by 39% year on year, marking the 27th consecutive quarter of growth above 30%. Our consistent top-line growth comes as a result of the investments we have made across our ecosystem. The recent reduction in the free shipping threshold in Brazil has already delivered strong results with both GMV and items sold accelerating in the quarter. We also saw a strong growth in buyers with improved conversion rates, retention and frequency of purchase. Sellers are also benefiting from the increase in demand that the lower threshold is generating. More sellers are coming to our platform and the number of listings has increased sharply in the R$19 to R$79 price range. Higher transaction volumes helped us reduce unit shipping costs in Brazil by 8%, with slow deliveries enabling us to leverage on the unused capacity. Brand preference scores reached new record highs across the region, helped by our marketing investments and free shipping policies. We had a great quarter in Mexico with GMV growth accelerating and unit shipping costs in fulfillment continued to fall. Mercado Pago had a stellar quarter. Monthly active users growth accelerated as our NPS reshaped. hit record highs in Brazil. This is the result of continued efforts to deliver the best value proposition to our users through UX improvements, our credit card, and remunerated account products. This strong growth in asset under management and credit portfolio reflect the potential of Mercado Pago. Our credit card, which plays a key role in NPS and principality, is growing very rapidly driven by higher usage and share of wallet. We have grown our loan portfolio without compromising credit quality. All-time low first paying defaults and more credit cards are reaching maturity. In Argentina, growth of GMV, buyers and TPV remained resilient in Q3, but trends slowed through the quarter due to the challenging macro backdrop. This impacts not only growth, but also pressures our EBIT margin. Despite the headwind, Argentina continues to be a very profitable market with strong long-term growth perspectives. Operating income of $724 million grew by 30% year-on-year. This demonstrates our ability to balance growth, investments, and profitability, and the power of scale, which should continue to play in our favor. in free shipping, logistics, 1P, and credit card continue to deliver strong top line growth while putting some margin pressure. At the same time, this growth has enabled us to scale key OPEX lines such as product development and G&A expenses. We will continue to invest with discipline, focusing on the long-term potential and scale of our ecosystem. Thank you for your continued support. We will now move on to Q&A.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, we ask that you please pick up your handset before pressing the keys. If at any time your question has been addressed, you would like to withdraw your question, please press star then two. We do ask that you please limit yourself to one question. If you have a second question, you may reenter the queue. At this time, we will pause momentarily to assemble our roster. And today's first question comes from Andrew Rubin with Morgan Stanley. Please go ahead.