MercadoLibre, Inc.

EBIT question, Irma asked and try a little bit differently. There are obviously seasonal headwinds in 1Q from credit business, you know, that partly eases off through the year. But are you now ramping investments in certain areas that's incremental, you know, that the seasonal effects are somewhat masked and we should expect EBIT margin for the year to be around 1Q levels? Any additional color you can provide that would be super helpful. Thank you so much.

Hey, Deepak. Ariel here. So let me take some time to address the first point on competitive intensity. So Brazil is one of the most attractive e-commerce markets in the world, so it's natural that it's getting more and more intense, as that has been the case for many years. While competition is intense, I would highlight a couple of things about the way we are thinking. about this, and perhaps this might be a bit different from how the market is thinking. So first, we thrive in competitive environments, right? Competition makes us stronger. It pushes us to evolve, to continue innovating, and that's exactly what we have been doing over the last few years, actually for 26 years, but it's been doing for the last few years as well. Every single engagement metric you look in MercadoLibre Brasil is strengthening frequency, multiple category shopping, retention. So all those are structural gains in our value proposition. Those are not short-term gains or growth that we are buying. So, once again, satisfied with that, as we are satisfied with reaching new records of MPS that really show how strong our value proposition is in the country. Our conversion rate in Brazil has increased one percentage point year over year. That's a huge increase when you think about conversions. And all these feeds into the rapid growth that we are delivering, the record market shares, So we have never been in a stronger position on that regard. The second point that I would highlight is that this competitive intensity is also having a positive impact in the market as a whole by bringing new consumers from the offline world into the online world, and we feel we are very much equipped to offer all those consumers the opportunity to buy in MercadoLibre. So the pie is increasing at a faster pace than it was before, and we are taking an even larger slice of that pie. Regarding the impact on what others are doing, our numbers speak for themselves, right? Our supply continues to grow. Our GMB continues to grow. Our successful items sold are accelerating. Our retention is improving. So we are basically comfortable and confident with the competitive position that we have, and we will continue to execute behind it.

It's Martin here. With regards to margins, as you know, we rather not talk about margins on a quarterly basis and what we're looking at. Let me say that in Q1, we decided to invest, we decided to level the intensity of our investment based on the performance of the different investments. I think on the shareholders' letter, we tried to go deeper into those results. As you can see, we're seeing very positive results in all of our investments, in the credit card, 1P, CBT, or a free shipping offering and so on. So we will continue to invest behind those initiatives. It might be some others like Ariel mentioned, some incremental investments that we're doing on our marketplace, particularly in Brazil. We have to see how energy costs play out. I don't see a big impact on that, but we need to monitor that situation. So I would say that The philosophy will continue to be the same. We will look at the investments, we will look at the results of investments, and we will invest behind our ecosystem to capture the opportunity in front of us. Again, we're not managing the business to a particular margin level. We feel very optimistic and comfortable about the level that we deliver this quarter, and we will continue to monitor the investment opportunities throughout the years to see where we position and the level of intensity that we continue to deliver in those different tracks.