Q1 2022 Mercadolibre Inc Earnings Call
[music] Hello.
And welcome to the medical leave it at earnings Conference call for the quarter ended March 31st 2022.
I am Lisa sure Investor Relations officer for Mankato, Neither the day, we will share our quarterly highlights on video after which he will begin our live Q&A session with our Chief Financial Officer, Digital Art, and Chief Executive Officer of Mercado Pago was volatile humanity.
I remind you that management may make forward looking statements relating to such matters as continued growth prospects for the company industry trends and product and technology initiatives.
These statements are based on currently available information and our current assumptions expectations and projections about future events.
While we believe that our assumptions expectations and projections are reasonable in view of the currently available information you are cautioned not to place undue reliance on these forward looking statements.
Our actual results may differ materially from those included in this conference call for a variety of reasons, including those described in the forward looking statements and risk factors section of our Form 10-K for the year ended December 31, 2021 and any of that currently but of inks other applicable filings with the Securities and Exchange Commission, which are.
Available on our Investor Relations website.
With that let's begin with a summary of our results.
[music] hi.
Hi, everyone I'm pleased to present some of the highlights and key messages regarding the performance in Q1 of 2022, we had a very strong start to the year setting a sound base for the challenging ramp up ahead of us in the coming quarters, our marketplace growth has remained consistent for.
Yet another quarter.
We reached almost $7.7 billion in gross merchandise volume growing nearly 32% on an FX neutral basis, and sustaining a two year CAGR above 70%.
With almost 40 million unique buyers in the quarter by your behavior remains sticky.
Total items per buyer continues to grow versus last year's pandemic impacted year.
We're confident that the depth of product and category mix on our marketplace and the quality of our seller base places us in a unique position to drive continued growth with solid monetization in commerce.
The services attached to our marketplace are also continuing to expand specifically the advertising business has been a consistent highlight in terms of growth and margin structure and has almost doubled in revenues year over year as we've improved our technology to serve ads throughout our platform.
<unk>.
We will continue to launch more features and channels behind this business.
We're also very encouraged by the performance of the Fintech business during this quarter.
Total payment volume surpassed $25 billion for the first time ever and has accelerated in both acquiring and in digital account TPG with important growth in overall fintech take rates.
We had almost 36 million unique active users in the Fintech segment growing across all of our geographies.
<unk> by higher engagement in wallet payments and the growth in credit users.
Our credit portfolio continues to deliver consistent profitable growth, while the credit books are performing to our expectations regarding our financial results. We've achieved a new record in terms of total revenues, even higher than the fourth quarter of last year with improvements in monetization in both commerce.
And Fintech, our gross margins have improved year over year with better operating leverage over our cost base and in line with our objective to grow profitably. We've sustained consolidated EBIT margins at similar levels to Q1 of last year, despite the tough comps.
Bottom line performance was equally strong delivering record net income for the first quarter are.
A more detailed customary commentary on the first quarter operational and financial highlights are now available in a management commentary letter to stakeholders, which we will now release to our Investor Relations website on the day of earnings.
And before initiating the live Q&A section of Tonight's earnings call. There are a few more highlights we want to share with you.
Mercado Libre continues to expand its ecosystem to offer its 140 million users solutions that simplify and improve their digital experience for buying and selling and to deliver on our mission to democratize access to E Commerce and financial services in Latin America.
Logistics operations are increasingly efficient not only due to scale, but also through the use of technology to optimize each step of the process.
Our fulfillment continues to grow driving more same day and next day delivery we.
We started the year of 2022 with 40% of the volume of deliveries by fulfillment and we already have 20 sites in operation.
Maui Places is also growing.
There are already more than 5800 spaces like this in Latin America, offering sellers, the ability to drop off and allowing customers to pick up and return packages in a very convenient manner Mercado credits how is an important catalysts of the Mercado Libre ecosystem.
10 million users already have an active credit line.
The greater their engagement on our platform the better we can score them for credit users can take loans through the app to make payments on the Mercado Pago checkout for when making a pik payments in Brazil the <unk>.
<unk> received the funds instantly. We are also creating an easy way to manage crypto currencies on our digital accounts in the first quarter of the launch the crypto wallet reached the Mark of 1 million users that are purchased or sold to crypto currencies, then they're kind of libre ecosystem is experiencing a peak of opera.
Asian growth in recent years and will continue to evolve in this complex environment clear priorities and agility will be essential to perform with excellence and to continue to innovate to do so we will also hire over 13000 employees in the region by the end of 2022.
Totaling a team of more than 43000 employees.
As always the best is yet to come.
Yeah.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question. Please press the pound key.
Please standby, while we compile the Q&A roster.
Our first question comes from Reuben.
Rubin with Morgan Stanley . Your line is now open.
Hi, Thanks, very much for that presentation, and our question and item I'd like to dig in a bit more I know theres a number of cost pressures in the backdrop, whether its oil or a rising interest rates I was hoping you could update us on your strategy of passing through these higher costs on the commerce side.
And any thoughts on elasticity when you make those moves thank you.
Hi, Andrew Thanks.
So we have been trying to pass on at least a portion of those costs to offset both increases in transportation costs through labor increases and and obviously oil cost and if you look at the management of the interest rate increases that have been.
Significant principally in Brazil over the last two three quarters I think we've done a good job of being able to offset a lot of that pressure through pricing.
And clearly the business continues to grow at a healthy clip. So we will continue to try to find the right balance of being able to push through.
Cost increases.
And finding the right mix of elasticity, so that we don't slow down the business more than what makes sense given how much opportunity still lays ahead of us.
Okay.
That's very helpful. Thank you.
Okay.
Thank you. Our next question comes from Scott.
<unk> with Goldman.
Goldman Sachs. Your line is open.
Yes, hi, thanks for taking my questions. So also on expenses when you think about the forward for the different lines and we've seen some moving parts here in the quarter, obviously with the build out of the credit book on the one hand side, but you're also in the release called out.
Sort of higher G&A and expenses around some of the investments that you're making when you think about the cadence of these investments going forward can you just talk us through a little bit of the puts and takes of different areas, where you're incrementally investing more specifically on the operational expense side.
And then if I may ask a second question you make an interesting point in the release about the next leg of fulfillment improvement being about technology to optimize the operations. So just curious if you could share. Some examples whether it's in warehousing of routing what youre implementing to just run your operations.
At an even higher level. Thank you.
Okay.
Yes.
Great.
Product development, primarily through the increase in engineers is the one of the three areas where potentially we continue to be very committed to investing behind that these are the kind of investments that then unlock all sorts of software development and product improvement that should.
Help us to sustain growth for many years in lunch all the different products, we have in mind.
Sales and marketing was showing operational leverage and ideally we can continue to deliver on that going forward and then G&A on a year on year basis didn't but I think thats. Another line, where we would strive to deliver operational leverage there going forward.
I think in general our our management of the P&L continues to be what it has been over the last few quarters of communication, which is we run a business that's growing very well and on top of that is a profitable business with a growing operational income profile, which I think in this.
Day and age is the right way to manage an e-commerce business and something that not many competitors necessarily can say so that we will continue to be the way, we're trying to manage the P&L.
In terms of where technology impact.
Our logistics operation I think in general everything we do at Mercado Libre tries to have technology at the core.
This is a combination of software to improve routing to optimize demand analytics to try to get more items into a parcel and also increased investments in automation and you look at most of our warehouses Cross Dock service centers, we continue to invest in improved.
Automation lay out to increase productivity and be able to continue to drive down cost, which we then some of that drops to our bottom line. Some of that allows us to afford an even more expensive free shipping program, but most importantly, we think is one of the biggest competitive advantages we have is the.
Quality of our logistics network and also our continued commitment to continue to drive cost out of it.
Thank you.
Thank you. Our next question comes from Rob Ford with Bank of America. Your line is open.
Hey, Thank you very much congratulations on the quarter.
Can you comment a little bit about the competitive responses to increases in terms of the reductions in terms or or or the pricing that you may have taken.
Yeah.
Okay.
Bob So look I think we're going to do what we think is right for the combination of our business and our consumers.
And I think we've been intelligent in the way, we've optimized pricing and optimized installments.
And again like I said in the earlier question. If you look at growth over the last few quarters combined with bottom line performance I think we've been able, especially on the financial piece to weather a very dramatic increase in interest rates.
Quite interesting if you look at take rates on the Fintech business. It does show how we have been activating the pricing levers to offset those increases in costs and yet TPB credit originations all of those businesses continued to deliver incredibly strong growth rates.
Even against.
An incredibly tough Q1 comp.
So I think our commitment is to try to continue to deliver that kind of performance as we did in this last quarter competitors will do what competitors will do I think that's not where we have to focus and not where we will focus.
Understood.
Been fascinated with your entry into the payroll services space can you talk a little bit about your initial pilots and how we should think about that scaling.
Well I think that we're still very very early on with regard to payroll. We're very excited about the opportunity in terms of the Bobby Moore Principality John .
Just really getting started with a pilot.
Come on yet.
Understood and then when it comes to putting multiple items into a single parcel Pedro.
Can you talk about the implications for for maybe delivery costs, but also centralizing more inventory and maybe further buildout of the word the warehouse network.
Yeah.
Okay.
Sure so clearly.
The ability to continue to drive more items per purchase.
Is one of the most critical drivers of continuing to lower cost.
Obviously, the centralization of inventory so continued adoption of fulfillment by melly combined with intelligent inventory location should help us improve even more on our ability to reduce split purchases, where we might be shipping one item from <unk>.
F C and another item in the same shopping cart from a different FC and that's a big focus for US right now and it should have a positive impact across most of our categories, but a more dramatic impact on higher items per basket categories, such as CPG.
Which in groceries, which long term is an important category for us so the better we can get at that.
The better the economics look in groceries and some of these categories and the faster we can accelerate there and obviously those are large share of consumer wallet categories in the region and also important for engagement and recurrence.
So it is an area of focus for the logistics team and something that we should be working on diligently through the remainder of the year to continue to improve our ability to increase items in a single box, leaving from a single FC.
Very helpful. Thank you very much and again congratulations.
Thank you. Our next question comes from Marcelo Santos with Jpmorgan. Your line is open.
Good evening. Thanks for taking my question. So I have two the first is if you could discuss the npls on the credit product how it behaves on a same product basis like on each portfolio and.
If you could attribute how much of the increase we saw sequentially to changes in the mix and how much the macro scenario and a second question. If you could comment on your efforts to increase logistic monetization what have you done so far and what's in store for the rest of the year. Thank you.
Okay.
Hello, Marcello with regards to Npls.
Ali I would say that it was a combination of factors we are very confident with how the business is evolving.
<unk> been a little increase in Npls, but it's mostly because we are growing the consumer business faster on the merchant business that we are pricing that risk already so the spreads have remained fairly constant we were.
There was nothing unexpected here and that is related to two factors.
So firstly is increase of the consumer volume.
Particularly we are doing more personal loans.
Buy now pay later and we know that's a little bit riskier unexpired higher and also is related to the increase of the size of the share of okay got it.
Glad volume, but I think that is going exactly as we expected.
Thank you.
Thank you.
Our next question comes sorry, sorry.
Sorry, sorry.
Sorry, there was a second part to the question.
Alright, so look in terms of note we were in terms of monetization of fulfillment.
It's still very much in the early phases today in terms of overall commerce revenues its insignificant its less than 1% and we have only really initiated most of the charges. So far for low rotating inventory that's not.
Gently utilizing capacity in the warehouses and only over the last few months have we launched.
Utilization rental space, so actually having to pay to use our fulfillment centers. So we will try to keep you posted over the next few quarters, what the reception to that by merchants is whether it's having any negative effect on incremental adoption of fulfillment or not so far the chart.
<unk> for poorly managed inventory have been very positive because they help reduce.
Low rotating inventory in the warehouses and as you can see fulfillment percentages, although somewhat flat, it's not driven by this it's driven by other factors. So that's been working very well and we will now have to see what the impact of the introduction of.
The rental for using fulfillment so the fulfillment by Melly service fee will be again very early for that.
Thank you Pedro.
Thank you.
And the next question comes from the line of Cairo Plateau with UBS. Your line is open.
Hello, everyone. Good night. Thank you for asking the question. So my question is related to Mercado quad solution as well so I just.
Try to understand what gave you gives you confidence that you can continue to grow the portfolio, even though we see signs of anybody else increasing today and just would like to better understand about their risk models. If you believe you have an advantage you've actually saw their syntax because I'll show a marketplace data that.
Helps you on the underwriting or any other reason and finally I would like to understand as well. If you are increasing rates charge. It in the credit business because of higher fluctuates you mapped out as well. Thank you.
Yeah.
So look.
What gives us confidence is simply looking at performance so far.
Don't want to get into any forward looking comments on how the credit business will perform if we look at what we've done so far in a tough environment, we've been able to continuously grow originations in the size of the book at a good pace and as those volatile just walked you through.
The significantly the largest portion of the increase in Npls are a consequence of product mix and only a smaller portion of the NPL increases are.
<unk> driven by.
Improvement in existing products, so less than a third of the NPL dis improvement.
We continue to believe that the data we have on consumers that touch points with consumers. The collections operations, we felt our competitive advantages that help our underwriting, but notwithstanding I think we need to continue to deliver on that.
And continue to grow the books in line with our confidence in our underwriting and then we'll see what happens going forward, but so far all the signs continue to be positive and executing to plan.
And on that today.
Named products, which are larger loans online.
Offline and consumer grades in each of the three countries, Argentina, Brazil, and Mexico, All those line segments are profitable.
We remain confident that will continue.
The profit dollars going forward and this has been an environment an environment with this illegal alessio has increased from 275% to $12 per ton.
Okay.
Okay.
Yes. Thank you just a follow up in terms of this quarter's rate that's what I'd like to understand the question are you also increasing the charges because what is increasing in Saudi grid.
Okay.
Yeah.
So certainly we are but again remember that given the segments, where we lend.
Performance of the credit books because of the spreads is the more relevant driver versus incremental points in terms of cost of capital. So the answer to your question is yes.
But really the most significant driver to sustain the profitability and the performance of the books continues to be the quality of the underwriting.
Yeah.
Okay, great. Thank you very much.
Thank you.
Next question comes from Deepak, Matt Bannon with Wolfe Research Your line is open.
Great. Thanks for taking the questions. So first panel can you.
Provide a little bit more color on the GM, we growth during the quarter you guys are compounding at a pretty healthy pace on top of very tough comps, maybe elaborate a little bit on how.
How the cohorts that came in during the 2020 are behaving in terms of the spend and what are their spend levels you see in the initial transaction levels of some of the new customers and then the second question obviously many companies.
In our coverage universe, and certainly much more broadly are revisiting their capital allocation decisions in the face of tough capital markets and then also a weak macro environment. You guys. Obviously have a lot of growth opportunities ahead, what is the kind of thought process in terms of balancing between an uncertain macro environment in the future.
And then also your capital allocation needs. Thank you.
Okay.
Sure. Thanks, Deepak so.
If you look at the two year.
CAGR as we continue to deliver very consistent growth.
Which for US is a sign that unlike other E. Commerce markets are players that have given back a significant portion of what was gained during the pandemic.
Mentally purchases for our consumers seem to have been very sticky.
When we look at cohort behavior or engagement behavior in general.
It's up a little versus last year. So there hasnt been a deterioration in engagement levels or cohort behavior, we haven't seen a continuation of the incremental.
Engagement from new cohorts, either so it's been slightly above flattish, which again in the context of dramatic reopening of physical retails. We think is very very strong performance.
In terms of capital allocation, along similar lines I think we.
We are in a privileged position of running a high growth E. Commerce business that is a market leader and yet also is able to deliver profits.
Incremental profits.
So we're not at a point, where we are changing our capital allocation.
As I answered earlier on the margin question, we will continue to invest in engineers, we will continue to invest in capacity for our fulfillment network. We believe that those generate long term competitive advantages, we might even see some rationalization in the market over the next few years, which could position us to capture even more.
Of the incremental consumer spend that moves online Latin America is still early stage. So there's a lot of incremental spend that will move online over the next few years and we want to make sure that we continue to take a long term view on all of that at the same time, we continue to strive to generate operational.
Leverage where it makes sense sales and marketing G&A, you've seen us rationalize very very significantly the amount of couponing and discounting spent on our fintech business and all of that is what leads to the incremental operating income that we've delivered this quarter versus.
As many previous quarters, and so I think that management of the P&L commitment to invest where we need to invest for the long term is still the same and we really are not reassessing capital allocation should conditions change obviously, we will move quickly, but that's not where we're at so far.
Got it okay. Thanks Pedro.
Thank you.
Our next question comes from Jamie Friedman with Susquehanna. Your line is open.
Hi, congratulations on the results I just wanted to ask kind of a combination of slide nine and slide 17.
On slide nine you showed.
Our growth of the off platform.
And.
So this is a T. P V off marketplace, I mean, and that is now up to 68% a year.
Total up 103%.
So Pedro when you think about the impact of that on the take rates.
Like does off platform has inherently different take rates and everything else and then related to that in terms of the 65 basis points of increase in your Fintech take rate I realize you decompose that between credit and other if you could help us a little bit to think about pricing I think it's a fair question.
Why is that Fintech take rate up to that degree. Thank you.
Okay.
Okay.
Yeah.
So I'll, let us all know answer that's a great question.
In general <unk>.
Off marketplace TPB today is driven significantly and so is the acceleration by.
The not the acquiring business, but the processing business a lot of that is on the back of our wallet. Some of that is because our wallet in a way as a natural hedge to reopening as is our Pos business and so as economies have reopened we've seen those businesses step in with strong acceleration in growth.
The wallet business is not a business that has a higher take rate mix then.
The TPB average so the strong improvements in take rate are explained by what is volatile will walk you through right now those have been mostly related to the increase in revenues on the overall.
Mark I'll pile.
Mark up our revenue separately.
And therefore, I would say we have been able to maintain basically the same section of the revenues of that increase.
Increased component of learnings and a few other things, but mostly has been really quite revenues on top of what we're already doing.
Our portfolio has grown cluster television over the last year.
Got it thank you I'll jump back in the queue.
Thank you.
Our next question comes from Marvin Fong from <unk>. Your line is open.
Great. Thanks for taking my questions and congratulations on the quarter two questions I would like to follow up on what you are saying about the great performance in the wallet and in particular, the 100% plus growth in QR payments folks should we view that.
Primarily driven by the reopening or were there other factors that play.
Who are to drive the acceleration in QR and my second question is just on Argentina, We don't talk about it much but it looks like it had a nice step up on the E Commerce side.
Both in terms of units sold in <unk> on a two year basis anything to call out there that youre doing in Argentina that you can then apply to your to your other geographies. Thanks.
Thank you.
Well Marvin Yeah, I would say that.
There's been an acceleration in the use of their wallet early part of that is related to reopen as across all countries basically we're competing with the first quarter with some low downs last year.
Nonetheless, we believe it could have been a significant upgrade cycle.
All of last year, we never grew at this pace two.
200% year on year.
Lindsey has happened we have grown a lot in Argentina really our world has taken a lot of traction on is pretty much everywhere in Argentina, but we have also seen significant growth both in Brazil.
Mexico.
That's happening multi countries.
Yeah.
And Argentina, So certainly it's shown acceleration in units and acceleration in <unk>.
I would say that it's good to see Argentina rebounding. If you look at the previous two quarters that business, which has historically been very strong because of tough comps and other things had delivered somewhat sluggish growth and we're seeing it come back to I think the kind of growth that we expect from that business. So it's.
Good news it was a strong performance, but I think it's also fair to acknowledge that it's coming off of two previous coupe Qs that were fairly easy.
To accelerate growth given that they were clearly among most of our G O some of the sluggish growth.
Great. Thanks, guys appreciate it.
Thank you.
Next question comes from Stephen Ju with Credit Suisse. Your line is open.
Okay. Thanks, guys, So hi, Pedro.
So I guess kind of taking a step back and looking at it from 30000 feet.
The relationship that you guys have with the merchant and the nature of what Youre selling them has expanded pretty significantly over the year as well. So you provided them with the traffic and the transactions and then you helped enable payments and you know youre, helping to provide delivery and logistics services and now you are increasingly providing them with work.
<unk> capital. So this is a pretty significant suite of services you're providing.
Your merchant clientele, so, but I think in the past you've talked about wanting to provide folks with an e-commerce platform services. So.
Where are you in bringing all of their services together Holistically and then e-commerce in a box type service.
Yeah.
Okay.
Yeah.
So I think increasingly when you look at the different pieces that we've built logistics payments credit.
Even the relaunched shops front end plus the integration with the marketplace. So that you can drive multichannel.
Operations each one of those now is probably scaled.
And we've built enough capabilities that we can start considering becoming more aggressive they are in terms of bundling it altogether or in different combinations, and then offering that to merchants away from the marketplace.
So and then if you think of advertising as an overlay on top of that to assist merchants to drive traffic to their shop store or back into their Mercado Libre.
Listings, it really becomes a very powerful combination that when you look at many of our competitors that offer each one of these services on a standalone basis, whether that the payments processing or credit or marketplace or storefront or just an advertising platform. We believe that.
The ecosystem approach is a really really powerful way to sell these different services. So clearly this is something that we're doing work on its part of our strategy and we will keep you guys appraised on this as these product to take more and more form you already see live.
Pago clients that have an integrated shipping offering and obviously mercado shops has an integrated shipping offering to many of these clients. So these things are already being piloted in market and we will have to iterate and see how we improve on those products and then go into <unk>.
Full deployment mode sometime in the future.
Okay. Thank you.
Thank you.
To ask a question Thats Star one our next question comes from Trevor Young with Barclays. Your line is open.
Great. Thanks.
Just looking back at last year, nearly doubled head count and a big piece of that came on your R&D organization can you just tell us how you feel staffing levels now kind of going forward into this year are there any pockets, where you expect to have kind of outsized investment or should we expect headcount growth to maybe slow here and more close.
On your revenue growth.
Yeah. So.
Like I said before I think the engineering head count commitment remains unwavering.
I think as in most product focused technology companies. The biggest bottleneck is the number of engineers that you have that are able to push code and build products and so we want to be we want to continue to be aggressive in growing that team.
I think when we've looked at the moment Mali has sputtered and growth it's been the moments, where we've run up against more engineering bottlenecks and the moments where we've grown the most is when we've had.
Enough output capacity in terms of code and product build out to continue to innovate and launch and cater to all the needs of our consumers. So we're not going to I think waiver on the commitment to continue to grow the engineering talent pool I think all other areas.
We will look to grow head count significantly less than rather than revenue growth. There are inflationary pressures in terms of salaries and wages I think the battle for talent is heating up throughout Latin America. So it will be as diligent as we can in terms of managing salaries and wages, but again, we need to make sure that we're not trying to.
Drive too much operational leverage short term and sacrificing on continuing to have the best human capital in the region, which is our objective so.
Again, we'll do what's right there, but it's an area that we believe investing behind particularly engineers and the product development organization.
That's really helpful. Thanks, Pedro and just a quick follow up on AD revenue I think in the video you mentioned that it nearly doubled year on year is now up over 1% penetration I believe can you just unpack.
What the lift is there on gross margin or EBIT I didn't see in the bridge and then remind us where you think that penetration rate as a percentage of GMB you can go over time. Thank you.
Okay.
Yeah. So the more we build product and technology here, we are again and we improve the <unk> codes for our merchants the quality of the platform that we serve the more we believe in the long term potential of that business to grow significantly.
So nope publicly stated long term goal I think certainly it can be a lot more than 1% of <unk> and we will continue to strive to deliver significant growth there both in absolute terms, but also as a percentage of <unk> and of course <unk> should also continue to grow for many years to come.
In terms of the impact I think we've gone on record, saying that it's an extremely high margin business. It runs at.
And over 70% EBIT margin today, and so a lot of those incremental revenues.
Really have a very very good flow through to the operating income line more so than most of our other business units, which also makes it a very attractive opportunity. So it should be one of the big drivers of take rate increases over the next few years and certainly have incremental operating income.
Thank you.
Our next question comes from submit data with New Street Research. Your line is open.
Hi, guys. Thanks for the question.
Fintech and focusing on Brazil for a second please.
First of all are you seeing any.
Impact of picks a toll from debit volumes and the long tail I take it the acquirer of volumes look very healthy this quarter, but I just wondered whether.
Within the mix you are beginning to see any impact from that.
And then secondly, I think you recently launched.
Installment.
Buy now pay later scheme over picks as well.
Beginning to see a few of those in the market in Brazil, what are your expectations for that product can you give any.
Initial feedback on how that's going thanks.
Okay.
So I mean.
Okay, Yeah, so largely the FERC regarding the first question with.
With debit volume.
The affected by Big I would say marginal at this stage fully what we're seeing is very very small individuals.
Who in the past Hollywood by.
Yes.
On Mpls, maybe they don't need to do it because they get used to they used to get a few payments per month and by David.
They're able to get those two things that is really the very very small long tail. So I don't think its affecting our numbers necessarily.
And if I may just a quick follow up I mean is that expected to cannibalize.
On credit cards do you think at all or is it just going to kind of sit alongside it.
Thanks.
I think it will be more.
More of a different segment typically.
Most of the target of our of our buy now pay later Marie consumers are consumers, who either don't have a credit card or they.
They they have pop up there the credit limit and that's why they are willing to pay extra charge.
For a buy now pay later remember as opposed to some players in the U S and Latin America with cash for that because interest rates are higher so if you have a.
Balance available I'm going to have a credit card.
Typically you will still use your credit card, but this expands the market for financing at the point of sale.
Got it that's very clear thank you.
Thank you.
And at this time I am showing no further questions at this time I'd like to hand, the conference back over to Pedro Arent CFO for closing remarks.
Thank you thanks, everyone for assisting we hope the new format has made the initial remarks more engaging certainly shorter just a reminder to everyone. The traditional management comment that you've grown accustomed to is still available it's now simply.
In a form of a letter that we posted on the IR website, rather than having to hear me voiceover were quite pleased with the video format. It gives us more time for Q&A as well. So hopefully we'll repeat that next quarter and we look forward to speaking again in three months with an update on the full first half of the year.
Thank you.
Ladies and gentlemen. This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.
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Yeah.
Yeah.
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Yes.
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