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00:00How are you? And talk to us a little bit about business.
00:02Thank you, Carol. Thank you for having me. It's a pleasure seeing you again.
00:07And as we mentioned yesterday on earnings report, we are very excited about the growth that we are delivering in
00:13all of our businesses.
00:14You mentioned advertising that has been held by AI growing at 70% year on year.
00:19Our e-commerce business, particularly in Brazil and Mexico, growing 35% year on year and growing market share.
00:27The same thing with Mercado Pago, our fintech platform, which is also growing very rapidly in a region where financial
00:35inclusion is very, very low.
00:36So the opportunities ahead are tremendous.
00:39And the results that we deliver in Q4 and 2025 makes us very, very excited, despite the fact that we
00:46are conscious that we're making investments that put some margin pressure in the short term.
00:50You have a great view of the consumer, given where you sell and what you sell.
00:55If you were to characterize consumers differently in different parts of the market, different parts of the world that you
01:00sell in, how would you characterize the consumer?
01:04I think if you compare the consumer behavior in Latin America relative to more developed countries, I think we're behind
01:11in terms of adoption of e-commerce.
01:13And this represents an opportunity to us.
01:17Penetration of e-commerce is only 15% in Latin America.
01:20It's half the penetration in the U.S.
01:22Also, there are some barriers to that.
01:24Payments, logistics, it's more complicated.
01:26So we have built our own logistic infrastructure.
01:29We build our own payment methods.
01:30So we have built a platform that is enabling people to move online.
01:34So I think those are the main difference.
01:36At the end of the day, we sell everything in Mercado Libre.
01:38And what we're doing is we're trying to move people online and create a market.
01:44So your sales did beat fourth quarter expectations.
01:47We were just talking about some of the numbers with you.
01:4845% year-on-year increase in net revenue, $8.8 billion, driven by customers taking advantage of free shipping
01:56perks and credit offerings.
01:57I am curious about these momentum drivers, whether they continue.
02:01And I'm really interested about the credit offerings.
02:04Does it show, Martine, strength of the consumer or a consumer who needs to be buying more on credit?
02:11Yeah, let me first talk about the growth opportunity that you mentioned.
02:15We deliver 45% year-on-year growth.
02:17But this is the 28th consecutive quarter in which we deliver more than 30% year-on-year growth in
02:23terms of revenue.
02:24So growth has been consistent.
02:25And when we look ahead of us, because of the large opportunity that we see in Latin America, it will
02:31continue to be there.
02:32And this is the reason why we are investing behind growth.
02:35And in terms of credits, Latin America is a market where it's very much underdeveloped in terms of perpetuation of
02:41credit.
02:42If you look at Mexico, for example, fewer than 15% of people have a credit card.
02:47So what we're doing is we're bringing products to them that will include them in the financial system.
02:53And they also help our ecosystem.
02:56Because when people pick up the credit card for the first time, they tend to buy more on MercadoLibre.
03:01So it is very synergistic.
03:02But at the end of the day, we're doing financial inclusion.
03:05And we have the objective of becoming the largest digital bank in Latin America.
03:09And we're working towards that.
03:11Martine, you mentioned when we were just a few moments ago the penetration in Latin America of e-commerce.
03:17And how it's half of what it is here in the United States.
03:20So there's a lot of opportunity.
03:22There's a lot of runway for your company.
03:25What's a good way to think about the progression over the next few years?
03:29Like, how does that increase in one year, three years, five years from now?
03:34What's a good goal for investors to have an understanding of?
03:36I think a couple of ways of looking at it.
03:39I think the penetration of e-commerce, there's no reason why you shouldn't reach the levels of China north of
03:4430%.
03:45So that's double the penetration that we have today.
03:47Also, if you look at the number of buyers, we have 120 million buyers in our platform in a ratio
03:53of 600 million.
03:55Of course, we're growing at 26% year-on-year, the number of users.
03:58But as we continue investing and improving the user experience, that should continue to deliver growth.
04:03So we see plenty of runway for growth ahead of us in commerce.
04:07And the same thing could be said about fintech.
04:09But when?
04:10Like, if you were to give a timeline for when that would happen, when would different Latin American markets reach
04:16what China has experienced?
04:19I think it's hard to put a timeline.
04:21I mean, we've seen a lot of acceleration since the pandemic in terms of penetration of e-commerce.
04:25I mean, if we continue on trend, I think we should be able to get to the levels where China
04:29or the U.S. are today, maybe five to seven years.
04:32But then we should continue to increase our penetration of growth going forward.
04:36Hey, one of the things I want to go back to, and I think you touched on this, but it's
04:41part of why we're seeing a negative stock reaction.
04:43And that is the substantial investments that you guys are making in e-commerce and the fintech unit.
04:49And I'll say that it's necessary.
04:51You've got to make these investments in order to bring about future growth.
04:53So, on that, because investors are questioning it, certainly in the trade today, Martín, how should we think about the
05:01run rate here?
05:03Yeah, let me give you an example to make it more tangible what we're doing, right?
05:06We know our free shipping threshold in Brazil, and that was not the first time that we did it.
05:11We did it several times since 2017.
05:14And that's a way to enable more people to come online.
05:17You know, shipping cost is one of the main frictions for people to come online.
05:20So, when we did that, we did put pressure on margins in the short term, and we're conscious of that.
05:25But we have also seen very important metrics in terms of growth.
05:29You know, increased number of users.
05:30We accelerated items sold from 26% year-on-year to 46%.
05:35We see more users coming to the platform with more engagement.
05:38They tend to buy more things on MercadoLibre.
05:40So, all the metrics are pointing in the right direction.
05:43And this is the way to go, in particular, if you consider the relatively early stages of development
05:49of e-commerce in Latin America.
05:51So, we think, again, when we try to optimize long-term margins as opposed to short-term margins,
05:57and we're very confident that the investments that we're doing in commerce, in this case,
06:00will help them achieve that goal.
06:02But will it be a drag on margins for a couple more quarters?
06:06Like, do you have a good feel on how long that continues to be maybe an issue?
06:11Because obviously, investors see it as an issue today.
06:14Yeah, of course.
06:14I have been consistent to the market, saying that our main objective is to capture the
06:18large opportunity ahead of us, and we will not hesitate to invest to capture that opportunity.
06:24We have a long-term record of investment with cautious and very prudently, and we are
06:30expecting returns on those investments, but in the long term.
06:33So, if we see more opportunities to invest in 1P, cross-border trade, expanding the free
06:40shipping offering, the credit card, we will continue to do so, because we think it's the
06:44right way to go in terms of expanding and maintaining a leadership position in both commerce and fintech.
06:50Well, on that, marketing expenses, they rise when you're trying to increase demand.
06:55And if you think about churn or, like, if you reach a new customer, the cost of acquisition of that
07:01customer,
07:03how long does that customer stick around after using the service, and how do you make sure that you don't
07:08have to
07:08keep spending to entice them to come in?
07:12That's a great question.
07:13This particular quarter of last year, actually, we increased the level of investment in advertising,
07:18and the cohorts that we incorporated in 2025 perform a lot better than the previous cohorts,
07:24because they come and they find an ecosystem that works better, that has more free shipping,
07:28better financing alternatives, better assortments.
07:30So, all the metrics that we measure in terms of retention and engagement of users that come
07:36through our advertising investments are improving year-over-year, and that gives us confidence
07:40to increase investments like we did in this particular year.
07:45I don't know if this is a crazy question, but we just want to ask you before we wrap up.
07:49You talked about this earlier on the call today.
07:51Well, what's been going on in Mexico, and, you know, the taking out of the cartel chief,
07:57and what, I guess, you know, we kind of continue to watch this.
08:00Disruptions at airports.
08:01Exactly.
08:02Is any of that, are you seeing that show up in any way in terms of consumers from Mexico?
08:08Well, obviously, we are, you know, monitoring the situation very closely to make sure that
08:12our employees and our customers and farmers are safe, given the recent events.
08:18We have not seen any disturbance on events, but we're monitoring the situation and close
08:23contact with authorities to make sure that we don't get any disruption.
08:26Thank you very much.
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