Q3 2023 MercadoLibre Inc Earnings Call
Hello, everyone and.
[noise] welcome to them. According to your brain earnings conference call for the quarter ended September 30th 2000, I'm twenty-three. Thanks for joining us I'm, Richard tough cause Investor Relations officer call anybody.
Today, we will Cheryl quarterly highlights on video after which will begin our lives to a nice session with I'll see Michael Scalping, Chief Financial Officer Marching Delos Santos.
President Oswald with him and his comments EVP audio shop state.
Before we go on to discuss our results for the third quarter of 2023.
Mind, you that management May make this presentation may contain forward looking statements. So please refer to the disclaimer on screen, which will also be available you know any of the materials on our Investor Relations website [noise].
Without let's begin with a summary of our results.
[noise] Hello, everyone.
Mac how old are you with your folks.
You haven't met me I have been married since this happened on the planet.
Okay Board member.
12th of photography management team.
For the past seven years.
Ready to be Smith.
August when I took the bus he cannot see a phone.
I look forward to meeting many of you as possible in your car.
I'm pleased to report a strong set off with salt and my first quarter of fearful with a strong since April 3rd quarter across Europe.
Right continued to show.
Could be a combination of wrote Unpropertied already.
With a record and income from operations.
With strong momentum across the geography in both hallmark authentic malice revenue growth accelerated.
Around 40 per cent.
Two countries have again increase their contribution to talk like a rabbit.
The strong business growth combined with cost of discipline led to Opex and S. D. N. A dilution after business continues to scale Inc.
Income from upper age I'm more of a novel year on year for the four perfect with reporter with Margaret Pix suddenly and once again <unk>.
Raphael was allowed to contribute to our profit growth representing a portion of it.
Q3 in the Commerce business, we saw acceleration of the D. M V and I don't solve the world. The three main geography as well, we operate with higher items for Ryan.
He hired gives her engagement come from continue the program, especially in the logistic problems.
48% penetration.
Bear with any very promises improvement in comparison.
The development of categories and you think about it.
As a result, we have a record of 50 million buyer market share gains, especially in Brazil and Mexico.
I'd, rather have a bottle of platforms D V accelerated Taliban country.
Trying to increase the number of users and higher and gave some metrics akathisia Mac had a Bible African prehensile financial service provider.
[noise] accounts were particularly excited about our engagement.
With more people using the remunerated account, another asset management solutions, and Brazil, I'm not going to be.
I'm better M. P. S in Mexico from you actually can program.
In payments they highlight for you pretty have been online payment solution presented strong rope across the region.
Okay, great visits can be used to perform within our expectations very healthy spread level.
So I'm improving particularly in Brookfield.
Have accelerated originations feed off our product.
You can feel free we should all our 1 million credit cards, so fast $1 billion.
For the first time.
The writing mothers' continue to improve.
To the new opportunities offering lots of crazy life with longer duration.
<unk> a few months.
Oh, we're all in Q3, we achieved the combination of rapid growth skater game Ah marching improvement show in the front of our economic model cause.
These results will have invested in technology now provide a walk last you said experienced a naval thought it'd be more efficient and thus far cost structure.
These are solved give us confidence to continue investing in future rock up or do anything.
And now let me get back to reach out of the business.
Cheering Q3 are covered ebay relaunched loyalty program.
An important step to enhance the value proposition for the simplest structure more compelling shipping benefits and premium video and audio content.
With many mass we now have a friend in which we can invest to raise awareness and increase engagement with melodies ecosystem.
Many masks gives users access to a world class contemptible free shipping about 20, now and rise in 12 months of free music from visa amongst other pets <unk>.
Content bundled from any mouse uses includes Disney plus and stop plus a special discounts to subscribe to HBO, Max Paramount plus and the Lions Gate plus.
Through these uses are able to access a complete library of audio content to music.
Davis that we think users will be able to enjoy on a day to day basis.
Use a seat I'm, Andy Mouth's offering through I'll tell her up some website, where the value proposition becomes clear as they shop with us, but the mainly my slogan clearly highlighted building. The Brown is also loyalty program.
The shipping benefits are key to the program. Many mosques uses gap free shipping on millions of items above 29 Rae is basically a stomach free shipping threshold of 79 Rae is if the product is and one of our fulfillment Sanchez and chosen for delivery on the use of smelly delivery day.
As consumers look for products homework huddling place they will see the amount of my slow guy on the products that are eligible and make them feel to that search falls madly in my side.
Than usual every option loyalty users can choose a specific day of the week to receive all of that package. It.
Solution enables us to sell and I live alone, probably why tennis greats experiments familiar with an armful, whilst maintaining cost discipline pan out.
Still have the option for same next day delivery, if they want their rights and delivered quickly if they're willing to pay for shipping on itunes, but like the free shipping threshold offer free for items above the threshold.
So access all of these benefits users can subscribe or in that way and organically by engaging with malice ecosystem.
Subscribing as quick and easy and users can choose between a credit card automatic charge from that Mark how the product of our account or a monthly invoice. So the subscription is accessible for different types of Jesus.
We're able to offer by the full benefits bundle suggests the equivalent of two to three page shipping charges for use those who earn points by shopping with my card on ebay to get know Malley mosque membership of credit card offers double point, enabling users to reach the loyalty states is full Craig's list.
In August we launched a big marketing campaign to raise awareness of the program and initial results give us confidence that many mass compliments our value proposition, bringing extensive benefits to even Walmart cuddle anybody uses.
We're confident in the programs longterm potential because I was always up my cuddly right. The best did you have to come.
Thank you at this time, we will conduct a question and answer session to ask a question you would need to press star one one on your telephone and wait for your name to be announced to withdraw your question simply press Star one.
One again.
Please stand by while we compile the Q and a roster.
[noise] and our first question. This evening comes from Andrew Ruben from Morgan Stanley Andrew Your line is open. Please go ahead.
Hi, Thanks, very much for the question and welcome again Martin.
Perhaps marcos taking advantage of you joining today.
Peering of strength for the business, we've seen a lot of that past years investment flowing through to results. So if you look from here say over the next three to five years I'd be curious to hear what the opportunities you see for Mali that you personally most excited about scale.
Mhm.
Hey, Andrew how are you good to be here, yes, we are really happy the way their business has been evolving the last.
24 months at least really growing very nicely gaining market share and Lady also gaining scale and increasing margins as you know we don't we don't guide, but there are many exciting things going on a particular, you're obviously, a I that hopefully will enable us to provide our youth.
So it's a better experience.
Enable us to launch innovative ideas and also scale and gain efficiencies, whether it <unk> customer service or whether it is drug prevention or whether it is in the way a hour developers 15000 developers you know go about.
Developing under performing quality control et cetera, So obviously.
Looking.
Forward for the next few years I think that's Ah Ah Ah Ah Ah.
<unk> keeping too to locate it too.
Great. Thanks.
Hello.
Our next question.
Of course of Goldman Sachs. Please go ahead.
Yes, hi, Thanks for taking my question congratulations on the results. Mark is also taking advantage of you joining the call if you're looking at the K P. I is that determine compensation across the.
The executive leadership team how do you think these will evolve from from here again thinking may be able to have a multiple year basis and asking that same question maybe.
Slightly different way are there any incremental K P. I used to watch for as you go into this next phase of growth and investment or is it.
That you are at the board feel should gain maybe perhaps more importance to incentivize the right amount of investment versus risk taking.
So.
We tried to compensate our myself basically.
Long term <unk>.
Or even you already.
Program, it's a six year.
Program and obviously, we are in a very dynamic.
Ireland.
Medical and you've got six years ago.
Both in terms of scale, but also in the scope of things that we do where we are today extremely different companies and I expect that to be the case in the next six years.
Tech.
We are moving.
<unk>.
That is already out.
Getting the right answer.
Assets under management that is growing so strongly across all of our geographies, whether it's our credit card visa.
Hello.
Very sides of the business or.
Our overall credits business. So obviously out their new businesses that are cutting alone that we expect them.
To gain scale and scope and as they do obviously, they will have and impacting our results and in our conversation.
Whether it is.
Which is Howard advertising supported streaming operation or whether it's clips whichever short videos.
Launch, which both of which are really getting a really nice structure. So obviously you know there are many things that we're doing and as the gain scale. They become important in terms of K P. Ice and also in terms of research on compensation I don't know if that answers your question.
Yeah, I think I think that's partly onto that thank you.
Thank you.
Standby for our next question.
And our next question comes from Marcello Santos with J P. Morgan Marcello. Your line is open. Please go ahead.
Good evening, Thanks for taking my question I wanted to discuss it.
It was a very strong print that you had this quarter above the previous one.
You're indicating that you might give some back.
But.
Things you prefer reproduce quarter, so I want to.
What happened so that.
Came and how do you see this tradeoff going forward, there's something new element that allow the tradeoff not to happen and you too.
I'll have Martin at the same time I just wanted to touch on this point.
In fact with he's having a great time.
[noise] ability in Britain 18 per cent margin coming from airport last quarter of 16.
I would say that.
Most of the businesses and countries.
During the border.
Three three b marketplace.
<unk> Margaret improvements, but also the acquiring business decorated visa square.
Business.
I also contributed to an improvement.
My country my country, most of improvement come from Brazil.
<unk>, 12% this year on year in Mexico, six percentage points a year on year.
Also we are gaining skate by growing as we did.
Significant scale.
Two.
Part of our costs, which was obviously my next with a lot of discipline having.
Having said that will have the best thing behind our business, which is the main thing that we aren't.
We operate in an industry, where we have a lot of messing opportunities are we need we need to make sure that we continue to look at the long term prospects of a business. So we've got to invest in logistics.
Six per cent. This point that completed my graduation, we also have these particular quarter.
We bested behind the brand.
Promote that you know you have to program.
There's one other countries like Columbia.
Alright.
15000 developers continue.
Continue to build our product.
So again, we're managing their business not to a particular target margin target monitoring for the long term.
Very good weather.
Because we proved demarches, but also because we grew market share and participate in Brazil and Mexico.
Thank you very much.
Standby for our next question.
And the next question comes from Maria Clara infant Cozy with each how BBA Maria Clara. Your line is open. Please go ahead.
Hello.
<unk> <unk> <unk>.
<unk> <unk> <unk>.
<unk>.
Okay. My project here can you please elaborate on that.
<unk>.
Credit confessional strategy and <unk> and.
Hello.
Alrighty.
Sweet Thank you.
Hi, Maria Yes.
We mentioned.
So and increased in in in this branch will see me in Brazil, and therefore felt confident to increase the base of origination Nicholas who might be severe.
<unk> so far.
Happy with the research what I've seen that will continue to accelerate the pace of origin agents and we have also increase the base of pay cuts in Brazil for the same reason we are encouraged.
<unk>, we we I've seen and how every time, we we create.
We have.
Better and better and better.
Better solutions.
Perfect. Thank you stomach.
Standby for our next question.
And it comes from Kyle <unk> with U S U B S.
Your line is open. Please go ahead.
Good evening. Thank you.
My question. My question is also.
Please.
Nations during the presentation.
The credit card.
The main financial provider of choice of your user so.
My question is.
You're almost 50 medium.
How many clients C.
<unk> nowadays.
Have some percentage of.
You can share and how much do you think you can.
You too thank.
Thank you.
Tell you we have not disclosed in the past by Principality, what we have disclosed on this continues to be the case.
When we look at all of our users you know given country, particularly in Brazil, which is the one country, where we have more of our our our credit portfolio.
And I'm one of the <unk>.
Bugs lunch, but we're seeing is it continues increase in the amount of products or use those are are are using and and in the availability not only of consumer grades, but also of credit cards and these two together with acid under management Quiches grow in near Triple digits in Brazil, and Mexico on over to <unk>.
<unk> in Argentina are I'd say.
Component of use of becoming principal so all of the matrix are going in the right direction <unk> TPB generated both by a credit card and a debit card, but we have never did these closed principality measure.
Okay. Thank you very much and just to follow up.
Question Q.
On the credit card business.
How are you seeing discussion about the change.
Credit cards nowadays.
Could be the input on your site not only can the location b.
Iannelli, but also in terms of your appetite.
Credit card.
Thank you.
Sure I think that.
The first time that this is discussed in Brazil, I think that the.
The jury is still out there are many things that that that are being discussed went up the enemies, having a potential gap when he says wait another.
Another one is probably limited to some degree but <unk>.
Just the free weights and the third one is probably put in a cap on data change each of those would affect us.
Still very early until we have the details we are not able to <unk>, we believe that <unk> driver.
In Brazil.
Probably that.
That should limit how much of that is affected.
Okay. Thank you very much.
Standby.
Our next question comes from Scott debit with Wedbush Scott. Your line is open. Please go ahead.
I had two questions maybe a different spin on the first question, which is.
Marcos back in 2019. This is like a little over 2 billion dollar revenue business doing like 1.1 billion in gross profit.
You're approaching like seven times, there's levels now so.
You know, it's true the pandemic and copying the cops and everything else, it's almost unprecedented.
<unk> you're growing at rates that are you know.
Similar to where you're growing back in 2019, some I'm curious.
As you think about like what's transpired over the last four years and if you can kind of frame how you think about.
Mainstream ecommerce because of the pandemic and how that May have benefited a market like Latin America uniquely relative to other markets versus you know drive resent the business that we're more company specific like improvements in e-commerce experienced because of faster shipping times and things like that are the benefits of having a broader.
<unk> system with payments, just how you'd think of you know the <unk>.
Components or the Gulf of how this business has gotten so big so fast and just keeps growing at this pace. That's kind of the first question and then the second one if you could just talk a bit more about the advertising.
<unk> I I didn't I may have missed it I didn't see the absolute amount, but if you can just talk about how that's training and how you're thinking about the AD business longer term. Thank you.
Okay. Thank you Scott so yeah, obviously COVID-19 <unk>.
Right around the world very good for ecommerce companies.
The same thing happened in Latin America.
Basically doubled during COVID-19 during those two years 2021.
20 2020.
But unlike what happened in other parts of the World, We continued to grill very healthy right.
<unk> <unk>.
<unk> two normal we're very happy about that we think that we had done prior to 2019.
Things, we had invested a lot of.
<unk>, mostly technology Ah so COVID-19 got us.
At the right time, and the right place, we were able to benefit I think more than other players in the region when that happened.
Since then when we.
Brewing scale, obviously that day.
The power of the ecosystem is is very strong and and we continued to add.
Features and functionality some products to do these ecosystem advertising being one of them financing on the credit cards being another one insurance being another one.
More recently, all the content place, whether it's health partnership with Disney another.
Great content providers that we are distributing through a <unk> knife or or whether it's.
Medical play or whether it's our clips. So so we continued to add features and functionality some products and brands.
I think I think we have we have.
Something that is a pretty unique in the region around the world on each part.
Strike sent to the other and we have a lot of scale as you as you mentioned, where seven seven times the size we had a.
A few years back.
And more importantly, our growth rate. These state very healthy and we have a very strong balance sheet.
To continue.
Innovating continue investing I'll continue focusing in the next five to 10 years and up in the next.
Three to four quarters and then.
It can give you more background on advertising.
He's got here.
So I'll continue to grow.
We we grew up over 70%.
The square for the sixth consecutive quarter with no major changes in your strategy, we continue improving our product with feedback from advertising I'm promoting our solutions to different segments.
Of settlers I'm brands.
That's continues to be the main driver of growth specifically, they said service sellers, but we are seeing more and more direction from other segments Aswell.
What kind of quote are with 1.7 per cent of penetration of a percentage of G. M. B, but I think it's worth highlighting the case of Argentina, So structurally even market dynamics, Argentina has a low.
Sure.
<unk>.
Two factor in day out of the fact that a inflation makes it even.
To follow up our <unk> and also the.
The fact of having a bit lower demand from advertising in Argentina, because of structural context off you know.
Dogs on.
Fixed.
It's one thing that you if you were to take out Argentina.
Penetration of advertising.
B would be roughly at close to two per cent.
Thank you both.
Great quarter.
Our next question.
From Melissa <unk> with Bank of America. Melissa Your line is open go ahead.
Alright.
Keep up for it [noise], but could it could even be a pretty congratulations on the quarter and thank you for taking my questions.
Yeah, how much of the Brazilian GMP growth is coming from markets, where you now have a distribution center and faster shipping with in Brazil, where where before you were sending that from Sao paolo or or a more distant location and.
And then 1% of G M B.
Being delivered on a melee delivery day, and where do you expect that to stabilize as we move forward and then lastly can you discuss your use of AI and search product recommendations and risk place. Thank you.
Put them on a table.
Thanks for for your questions I think we don't.
Disclosed demands and data based on geographic segmentations or or even logistics methods, but I would say more and more.
Trying to grow on both of the segments that you liked.
In your first two questions. So we are being proactive in trying to gain traction and Mac and cheese in some of the regions.
Market share today represent you that that means that we do see increased demand coming from.
From from our fulfillment Santana steal the main copied that's in cities of old, but I still do concentrate a big fear.
Aw I Wanna be mind.
Kind of the same thing happens with many that anybody day it feels super early days so not many.
Data are not much data to be sure that we got it but I I I I I I do want to say that it's H, it's slowly gaining traction of course aided by the.
The lunch of many mice imbecile, Mexico, so more and more we are seeing consume actively choosing data.
US as a way to receive data packages last.
Last question in terms of AI on on on search. We are we are working on that I mean, putting a note on my foot into building solutions around.
I think we don't have much to disclose as of now but search reviews questions answered by books on on Prozac C X medical who were saying copilot, but we're looking at the broad range of Auc's format.
Boost consumer demand.
You'll be said yet.
Building on that we have been using a I for a long time now for many many years, both in terms of fraud prevention and quite scoring.
Both Theresa is.
Pretty much use cases squeeze R. I D L for AI, because we have in the case of prevention millions of transactions every day, and we didn't care outcome, either fraud or not fraud. So with the right variables. We can <unk> predict uhm have really best in class for prevention.
Uhm with that with the knowledge and and and given the experience. We have been building upgrades. We have also been build R. R. R.
Laws leverage in the AI.
It makes a lotta sense I saw the one it seems like within the larger data lakes faster processing speeds more sophisticated all of them.
Gets better and then just to just to follow up can you comment a little bit in terms of.
Where you do have you know the <unk>.
Consumers choosing until every day.
Are you seeing you know materially improvements or materially improved densities and.
And improvements in terms of average shipping costs or is it still a little bit too early to to discuss.
So I think it <unk>, we are seeing some efficiencies in our operations driven by the fact that we can consolidate shipment and take advantage of some of our.
When when we operate.
A scale in or or density and distribution I believe it's too early so.
Again, I'm sorry for these bad button.
Many details to be sure I would say.
Moving to indict actions.
I'd actually that we expect but too early to share numbers behind that.
Understood. Thank you very much.
Thank you and our next question comes from Martin Fong with B T. I G. Martin Your line is open. Please go ahead.
Good evening, Thanks for taking my questions and congratulations on the on the great quota I'd like to ask maybe a two part question on cross border. So in Mexico, I think you're you're a shareholder letter sided you.
Very strongly there which is interesting because I think teemu only recently.
Entered the country is also seeing some strong adoption. So could you just kind of discuss.
You know how you see.
Across the border market in Mexico.
<unk> is it that you move entry is actually growing the pie for everybody and and the second part of the question is you know how might this.
Inform your strategy in Brazil, as I understand your your cross border.
Penetrate or mixed relative to your G. M V is very low but that presents an opportunity for Ya and then I have a.
One other question.
Okay.
Thanks, Marvin so I'd say before going into the details first and foremost what what are the last 24 years, we've been all the way to competing with player from all over the world. So in a sense. We are used to having a new entrants trying to get it by all of Latin America.
We've seen table get a into Mexico in particular in may more or less.
We've seen them, making progress downloads on monthly active users they seem to be spending a lot of money on marketing on social media consumers.
Trying to download it up we are obviously monitoring.
<unk> closely but but our data suggest that.
There is a bit of overlap between data business.
One with either across platforms.
In the meantime continues to perform really well have thrown by the expiration of items sold to.
38%.
Ah unit growth has been strong across the border including.
Some of those playoffs are focusing on an old ASB ranges and our competitive advantages remain untouched I would say, particularly logistics, which enables us do they live at a fast fast shipping and payments, which allow us to.
To provide attractive financing two two hour hour you, Sir so Indian our labeled remains the same we continue strengthening our business with more sellers more branch Saddam and more financing.
While we also continue investing in improving our own cross border trade paper.
And also through many mass we think.
Also now offering free shipping or lower ticket items, which was not the case in medical ebay up until two months ago.
Moving into the second part of the question, which is <unk> I think <unk>. It's a steal at two new so it's got to say we have applied to it.
We got up to accept it just a few weeks back so.
Not so much to fear, but we remain confident as I was saying, what Mexico that the combination of fast deliveries local payments on financing.
Ryan.
We'll continue to the finish the eight <unk> <unk> other companies and simultaneously venue regulation allow so we will continue building capabilities ought to be able to compete in <unk> in Brazil.
Doing it.
In Mexico and Chile.
Yeah.
Terrific and just my follow up.
Picture a question I think it was a very strong corner in terms of mmm acquiring more often tech active users and I was just curious you know.
Beyond that you wrote in the shower a letter could you elaborate on what's driving that with it.
More internal initiatives or do you think it with some component just from.
The broader economy and.
And whatnot, so just middlescence color there. Thank you very much.
So.
I think there are several factors contributing to that one of those is R rated account <unk>, both in Argentina, and Brazil, which is doing very well.
<unk> why do we pay our usage depends on.
The risk free rate this in each of the countries in Brazil is around 13% in Mexico and 10%.
Dinah given recent spike in inflation at any interest rate has been close to 100 per cent.
So this gives users a huge incentive to move out of banks.
<unk>, we're only pay after 30 days.
Money into Mark how about I think that has been part of the driver.
Part of the driver I think has been so we're saying they increase the increased availability and offering upgrades.
<unk>.
In that case I would say, it's mostly in the case of in Brazil.
Mexico Nutso in Argentina, where we have been cautious given these right environment.
Thank you very much appreciate your color.
And our next question comes from Trevor Young with Barclays.
Trevor go ahead.
Great. Thanks on the melee my subscription plans is there any color that you can share an initial subscriber counts here in the first 422 or three months excuse me is that wrapping as you expected and then second question can you give us an update on where we are in terms of logistics monetization realize you've indicated it'll be <unk>.
A little over a number of years, but just any update over the last few quarters would be helpful. Thank you.
For your preference might have been here I think it's too early to tell us.
Mentioned before we Lounged this program a few months ago.
Litigation with a program.
But it's too early to to share of numbers that option I think in the coming quarters, where we will be sharing morning.
Information.
The program.
<unk>.
Yeah, so on monetizing shipping I think I'll <unk> <unk>.
<unk>. So it showed that we have been naval 2.2 upset stomach the headwinds that we have and shipping from.
Right in the logistics environment.
Penetration that helped us keep our total net shipping cost over G. M. B Bradley stable in 2023, I mean, we still think that we have plenty of opportunities to improve our net tripping costs by focusing on D V D efficiency.
Scale benefits et cetera, but we also want to incentivise Marcellus to use our fulfillment solutions, particularly in <unk>. So we know daddy's potential to monetize fulfillment specifically in the future if we decide to do so.
We have always said we are not in a rush to do that we we are always mindful of what monetization might imply for consumer prices on competition.
With the way we are managing our P N L.
In in general.
That's helpful. Thank you both.
Thank you and our next question comes from Jeffrey element Elliot with autonomous Jeffrey Your line is open. Please go ahead.
Oh Hello, Thanks, very much for taking my question I wanted to touch on the offline P. O S business in Brazil. It it looks like Fintech services take right square down a little bit we sold the U rolled out some pricing that that is.
Is.
Cheaper for the for the mentioned, but clearly mm less beneficial for you. It looks in terms of the M. D. All set you're challenging and the the publicly traded competitors. Obviously, the salt prices are a fraction of what they were a coupla years ago.
Can you just remind us how does not offline P. O S business fit with the rest of <unk> what is the the synergy there and then you know if you're if you're thinking out.
Five years 10 years, how how's that gonna fit in to the rest of what you're doing does it does it feel really make sense to that business to be <unk>.
So is it something that could become smaller over time or maybe it doesn't make sense to keep over time. Thank you.
<unk> <unk>, we see that is B O S visit the east or business us.
A big part of our synthetic offering we.
March 10th two two charged with mckell about online offline.
Some are various more modems are some of our smb's and even some of our larger merchant uhm and we have been able to provide the solution.
I'd say in a very profitable weight and and we continue to do so.
Profitability behind up <unk> has been very good throughout the quarter, we have seen uhm uhm.
To make some changes as we move up market. Some of that is related to what are you. So in terms of changing that I'd go to market strategy.
As we attract larger merchants.
Cases, what we do is we offer lower processing fees, but we get on the other hand, it is better for them.
Because they get lower fees as you said, but it's good for us too, but because we square receive higher activation right.
P V point advice, so not necessarily work.
Lower margin in terms of of the marginal.
T V, but we're getting a larger margin, they're partly by salt.
And so I think.
That that this continues to be very good for us I'd say I would add to that on a b a restaurant in this quarter, we have been changing making some changes beyond pricing in terms of I'll go to market strategy and we are very encouraged but the reset square feet again in terms of of activation MTB report a device.
And the send the Jeep with the rest of the business with with this P. O S machine Uhm operation, where where is that.
So we we are afraid.
I'll tell ya.
Two sides on the one hand is <unk> <unk> <unk> <unk> <unk> <unk>. So this as soon as your dad and Kevin pretty much all of their sales coming through Michaela pilot to them and on the other hand many of these of these.
<unk> in some cases or any videos and we're able to cross sell different products to them.
<unk> banking products to them as he got it. So we offer them is not only is not only the the the device were given them in the process, we're giving them we're offering Democrat it.
The best thing point that I wanted to add up the the we have started to offer them a credit card to the video is based on the busy they run and so really is part of our banking solution and there are many <unk> good synergy between all of the rest of the banking products we offer.
Great. Thanks very much.
Thank you and our next question comes from Nihon Agarawala with H S. B C. Yeah.
You're a line is open. Please go ahead.
Well, sometimes John Carter.
<unk> correct.
How about some explanation graduate activation in your life.
How's that going.
Credit card.
Could you.
Good luck with that.
The <unk> <unk>, maybe Mexico.
Talk about the.
About how the poor Mexicans.
Mexico's performing that'd be very helpful. Thank you so much.
Yeah.
The side of Yale. So one P grew 58 per cent theater, where are you at all.
Consolidated basis, if you were to look at these my country, but I feel actually grew.
Conceded considerably more Dundee so we would think about it is that won't be remains the strategic priority for us we see this as a key lever to compete in gain market share.
<unk> being one of the clearest examples of that we are very happy we did that information about a lumpy business over the last 12 months, we've got major improvements.
To manage pricing promotions stocks with the help of technology. We have also seen a significant improvement in the way, we connect and relate with suppliers and the way we negotiate with them. We think that the oldest progress at a structural gains that will put the business on strunk booting for long.
Term growth and market share gains. So we we remain optimistic and keep investing behind that business.
And with regards to Npls in Mexico that misplead that in due on the northern side M. P. S have remained very flat.
Spread a very healthy so.
Good results and and we have been able to increase origination and then on the consumer side actually.
It was a little bit but by design what happened is our our our spreads are very healthy. So it is decided to take a little more risk and to increase the amount of origination and then usually comes with.
Slightly higher M. P S, but those heavy price dean in the rates. We are offering so spreads continues to be super healthy in Mexico and that was part of the strategy to grow faster, even though MPS got may increase it is priced in already.
Yes, I can.
That number.
Meditation at G.
G M D.
Cause now.
Get an understanding of the visa card. Thank you so much.
Yeah, so penetration keeps improving increasing purely mercil wearing the low.
Or mid single digits around three or 4% penetration.
We we are extremely happy with the protests that we've made so far to in order to keep investing in growing the business. While we continue also improving our profitability, which has been the case the square.
Standby for our next question.
And it comes from is Wow Suarez with city as well. Your line is open. Please go ahead.
Thank you Hey, everybody I have two questions here one the first one I just want to hear a little bit about black Friday preparations.
That would've been hearing a lot of news.
How excited the company is maybe.
Maybe talk a little bit about any any expectation that wouldn't category here, Sir and granularity in terms of expectations. In the second question is talking a little bit about the one P. Just to follow up on that.
The profitability, how that you talked about.
<unk> <unk> <unk>.
Proving practical already so just wondering here and what about where we are right now and what do you think we could we could I know your company doesn't guide but.
It's a message on this will be I appreciate it. Thank you.
Yeah. Thanks.
<unk>, you said, Yale so black Friday penetration.
It keeps us busy for sure we are extremely excited with the way.
He has been performing on we think and are expecting to have a great big see Sun all about themes commercial marketing shipping you gotta all preparing they they'd walk us to continue with.
That we've got this quarter on this year and I'm, having a great event, both in Black Friday Christmas.
We know this is a relevant moment, what our consumers and we want to be there to satisfy.
Needs.
Regarding profitability.
As I was mentioning before we see very strong profitability improvement, particularly <unk> I think we are getting smarter in the way we buy so having better negotiations, which gave us better terms, we're getting better at managing inventory. So what date of stock are are are are getting.
Better on the hands that were working capital Aswell, we're getting also smarter in the way we price the items. We we we sell and we are also working a lot in taxation efficiency, which is a key to compete imbecile. So again, we are we are moving I'm pulling all the levers are still make.
D a strategic and profitable business at fault for the company, we ought to yet.
We will continue to be working in that direction.
Perfect. Thanks.
As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.
You stand by for our next question that comes from Deepak <unk> from Ah Wolfe Research deep.
Deepak Your line is open. Please go ahead.
Great. Thank you so much hey, guys a couple of questions. So first can I get some additional color on the input loyalty program. What are you seeing in the early days in terms of frequency average spend compared to a non member from the program I know, it's an early stages, but any color that would be great and then the second one and the the central Bank interest rate is coming down in Brazil consist.
Gently we just saw another cut today can you remind us the implications of this to your business Unprofitability I guess I mean, we can wait for the queue to see the financing revenues, but I'm wondering if there is a way you can help us the benefits do either from the dynamic you know in the last few months. Thank you so much.
Hey, Dipak ordeal here.
So we we don't disclose specific data on many mice, yet, but I would say on the one hand.
Oh loyalty program L. Six already Janet ATM, an increase in frequency on G M b per buyer.
Whenever they decided to subscribe.
Two hour program, we are seeing the same or uneven better train with the new subscribers, who are joining our many mice.
And also with the existing subscribers, we gotta get who are getting used to the new benefits and the new value proposition.
All of our program. So general terms. We are we are excited with the engagement that we see in the platform again too early to be seen communications has just started our product keeps evolving. So we have many many things to continue working on us to make our customers even more aware of all the <unk>.
Benefits on on the way they can interact with the program. So excited by but I don't know hopefully, we'll be able to share more details in the in the next one.
And with regards to interest rates coming down in Brazil, It seems to be good <unk> good for us.
I'd say for for several reasons, mostly on the marketplace, where it is.
Ah lower within to see more transactions on those the essentials will be charged an interest rate and therefore, what we offer is <unk> then the the prize tend to be tends to be the cost will be lower for us so profitability in Bruce and then on the on the Fintech side I'd say is it's also positive closer.
Two neutral because many times what happens is competitive pressures makes that we have to pass those savings to 222 merchant that has been the case when when rates in Greece, and we probably will you be the case.
So overall is positive for us.
Okay, we have that much.
Our last question comes from William paying with Susquehanna International.
William Your line is open. Please go ahead.
Hi, guys. Thanks, so much for sleeping in her at the last minute I just wanted to quickly ask on credit. So last quarter. I think there were comments about expanding lending into mid risk segments, no higher risk segments, just yet so I just wanted to ask you know.
What were you seeing there were there any surprises or adjustments that you encountered thank you.
Actually that is exactly what what we're doing we have been increasing or <unk> in Brazil, both on the consumer side and on the on the credit card side when the consumer grade probably what's happening is to some degree.
Remember up until a year ago, where where is your mortgage than we came more more restrictive. So you don't get to see the the these impact in terms of the total portfolio button.
Originations are are up and we are expanding that you said it into the mid risk segment and also on the great upfront, we have been able to expand that offering them. That's where we are <unk> by bike also by addressing these these myths risk segment and incorporating more information.
<unk> models.
And this concludes the question and answer session.
I would like to turn it back now to Martine de Los Santos Chief Financial Officer for Mercado Libre.
Thanks, everybody for your questions I'm looking forward to reporting back to you next year with our fourth quarter results.
The 19th.
Thank you for your participation in today's conference. This does conclude the program and you may now disconnect.
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