MercadoLibre, Inc.

Hello, everyone, and welcome to the MercadoLibre earnings conference call for the quarter ended December 31st, 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 will begin our live Q&A session with our management team. Before we go on to discuss our results for the fourth quarter of 2025, I remind you that management may make or refer to and this presentation may contain forward-looking statements and non-gap 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 also. With that, let's begin with a short message from our CFO.

Good evening everyone and thank you for joining us. I'm pleased to report that we ended 2025 with robust operating trends that reinforced the strength of the MercadoLibre ecosystem. Our relentless focus on customer experience translated directly into strong financial performance with fourth quarter net revenues growth of 45% year-over-year. Our performance is supported by two primary growth drivers, the acceleration of our commerce business and the rapid adoption and structural expansion of our fintech services. Crucially, both of these are increasingly supported by the tangible impact of our investments in artificial intelligence. Turning to commerce, in Brazil, our largest market, GMV, grew an impressive 35% year-over-year, alongside a 45% increase in sold items. This acceleration is the result of our strategic investments to enhance the value proposition, most notably the decision to lower the free shipping threshold. More free shipping is driving higher purchase frequency and bringing new buyers into the ecosystem. This volume is translating directly into efficiency. Our logistics network absorb the increase in volumes while driving productivity gains, proving our ability to scale effectively. Our value proposition is generating traction in Mexico too, where its GMV also grew 35%. Across our ecosystem, we are seeing clear evidence that our investments in artificial intelligence are accelerating revenue. In advertising, AI is powering our bidding algorithms and automated campaign tools are generating better returns for sellers. This improved performance is driving higher adoption and capturing a larger share of advertisers' wallet, propelling the business to grow 67%. AEI is also transforming the effectiveness of our acquiring sales force. In Brazil, these tools helped identify high-value merchants faster, resulting in higher TPV per merchant and shortened payback periods. This contributed to acquiring TPV growing 25% in Brazil and 50% in Mexico. Our Mercado Pago AI assistant is solving 87% of interactions without the need of human support. Millions of users already adopt this conversational tool to manage their credit card, make transfers and understand their credit offerings. In fintech services, we reached a historic milestone. Mercado Pago now holds the leading net promoter score in Brazil, Mexico, Argentina and Chile. Monthly active users are growing close to 30% for 10 consecutive quarters. Our credit portfolio nearly doubled year over year to $12.5 billion, including almost 3 million new credit cards issued in Q4 alone. Assets under management are close to $19 billion, growing at 78% year-over-year. This is helping us to increase principality amongst our users. Regarding our financial performance, our revenue's full-year growth was an impressive 39%. Income from operations grew 22% for the full year. The margin compression reflects our decision to invest in the areas of the business with the greatest long-term growth opportunity, especially shipping and credit card expansion. We remain confident these investments strengthen our ecosystem, deepen our competitive advantages, and expand the long-term growth runway in a region where both e-commerce and financial services remain meaningfully underpenetrated. We enter 2026 in a position of strength. All our business units are growing at a fast pace, demonstrating that these investments are already generating results and unlocking long-term value. We are as excited as always with the opportunities ahead. And now, we open up to your questions.

We will now begin 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 yourself to one question. If you have additional questions, you may re-enter the queue. Our first question today is from Andrew Rubin with Morgan Stanley. Please go ahead.