Q4 2023 MercadoLibre Inc Earnings Call

Operator: Before we go on to discuss our results for the fourth quarter of 2023, I remind you that management may make or refer to, and this presentation may contain, forward-looking statements and non-GAAP measures. Therefore, please refer to the disclaimer on the screen, which will also be available in our earnings materials on our investor relations website.

To discuss our results for the fourth quarter of 2023, I remind you that management may make or referred to in this presentation may contain forward looking statements unknown got measures simply.

First of all the screen, which will also be available.

Materials, I Dunno Investor Relations website.

Unnamed Speaker: With that, let's begin with a summary of our results. Hello everyone, I'm delighted to share that MercadoLibre delivered solid results in Q4, marking a strong conclusion to an outstanding year. Overall, 2023 highlighted the strength of our financial model and its future potential, as well as the powerful impact of compounding several years of investment in technology. For our commerce business, it was a year of accelerated growth and market share gains in most countries. We achieved this by continuing to make improvements in the value proposition to buyers and sellers in our marketplace. I would like to highlight three important initiatives that contributed to our success in commerce.

With that let's begin with a summary of our results.

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Speaker Change: While they're all 20 twenty-three highlighted the strength of our financial model and its future potential alcohol is a powerful impact.

Pounding of several years, probably the best friend the technology for a couple of business. He wasn't year of growth market share gains in most countries. We achieved this by continued to make improvements and the value proposition to buyers and sellers market place I would like to highlight three important initiatives that contributed to our success in commerce will continue.

Unnamed Speaker: We continue to invest in having the widest product performance in order to offer the best buying experience to consumers. A key contributor to this was the acceleration of our first-party business, particularly in Brazil, where it grew by 81% in 2023. We continue expanding our logistics network with record fulfillment penetration of almost 50%, which provides an improved user experience to our buyers. This results in faster shipping and fewer late deliveries, particularly around the Christmas season.

Speaker Change: To invest in having the widest brother performing in order to offer the best buy an experienced the consumers actually contributed to this what's the acceleration of the first part of the business, particularly in Brazil.

Speaker Change: Rule by 81% in 2023, we continue expanding our logistic network with record fulfillment penetration, almost 50%, which provided and improve that use that experience to our by us.

Speaker Change: This resulted eat faster shipping purely deliveries, particularly around the prison system allows business continues to deliver impressive results were in revenues at an accelerated pace.

Unnamed Speaker: Alas, the business continues to deliver impressive results, growing revenues at an accelerated pace. In 2023, we onboarded almost 50,000 new advertisers who appreciate the value of promoting their products on our parent regional platform. On the FinTech front, MercadoPago maintained strong momentum as users and merchants continue to adopt our services.

Speaker Change: The Internet twenty-three, we I'm bothered almost 50000, you advertisers while I appreciate the value of promoting their products on our panel regional platform on the feedback from Monica Bower mundane strong momentum sucess of merchants continue to adopt our services and acquiring business with a liberal solid growth in gain market share in most countries, where we are.

Unnamed Speaker: In the acquiring business, we deliver solid GDP growth and gain market share in most countries where we operate, both in online as well as in-store payments. We made improvements in approval rates and deployed new features that enabled us to move up the market, enhancing the value proposition to SMBs. In FinTech services, we have expanded our product offering and made improvements to the user experience. The increased engagement with our products resulted in MercadoPago achieving the milestone of surpassing for the first time 50 million active users in a single quarter. The credit business continues to be an important piece of our FinTech strategy, and it delivered another quarter of strong results with accelerated growth and solid strides as we continue to cautiously manage risk. In Q4, Meli delivered strong financial results. Revenues grew by 42%, accelerating both in FinTech as well as commerce due to the strong execution during the peak season and investments we made throughout the year. For the quarter, we delivered 13.4% average margin, excluding one-off expenses from previous years, as explained in the letter to shareholders.

Speaker Change: Break both in online that's what I have in store payments were made improvements brutal rape deployed new features that enable us to move up market enhancing the value proposition to us and be even text services, we haven't expanded upfront suffering and made improvements the user experience they increase engagement with our product. So it doesn't matter of color Bible achieving the mice.

Speaker Change: Son of surpassing for the first time.

Speaker Change: 50 million active users Singapore.

Speaker Change: This continues to be an important piece of our Fintechs Travis.

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Speaker Change: Just ruled by 42% accelerating both in Fintech commerce, it's a strong execution during the peak season and investments we've made throughout the year for the quarter with anywhere 13.4% margin. Excluding one offs expenses from previous years I've explained to shareholders. These represent Martin.

Unnamed Speaker: This represents margin improvement from Q4 of 2022 while we continue to invest in building a logistics infrastructure, supporting our MeliFi loyalty program, as well as expanding our credit card offering. Following our strong financial performance in 2023, it's a good time to reflect on the journey over the past six years. During that time frame, we multiplied our revenues by 10x while achieving significant improvements in profitability, culminating in nearly two billion dollars of operating income in 2023. In recent years, we have increased our investment in technology, which enabled us to launch multiple products and services and make significant improvements in user experience. We have grown our development team by more than 10,000 in the last three years alone and currently have 16,000 engineers who are constantly working to create the best experience for our users. We remain committed to our technology-led strategy in order to continue delivering sustainable results for Meli.

Speaker Change: Movement from Pew for 2022.

Speaker Change: We continue to invest.

Speaker Change: [noise] infrastructure support there are many five loyalty program as well as an expanding our credit cards offerings. One of our strong financial performance in 2023 is a good time to reflect on the journey over the past six years during that time frame, where most of data revenues by tenex without cheating significant improvement in profitability.

Speaker Change: I think in nearly 2 billion barrels of operating income in 2023 in recent years, we have increased our investment in technology, which enables us to launch your political products and services are making significant improvements and user experience. We have grown development team my more than 10000 in the last three years alone I'm currently have 16000 engineers.

Speaker Change: We are constantly working to create the best experience for users.

Speaker Change: Remain committed to our technology, let strategy in order to continue the liberating sustainable resolve formally we ended up 2024 with optimism about our our Roth opportunities and confidence.

Richard: We enter 2024 with optimism about our growth opportunities and confidence in our capacity to continue to execute on our strategy. Now, back to Richard to share some product initiatives for 2023. As a technology company with more than 15,000 developers, launching products and features is at the heart of our business as we continue to innovate. Innovation is about new products and businesses, but it's also about being attentive to and passionate about detail and solving multiple small customer pain points that compound into a great user experience. 2023 was no different.

Speaker Change: Paucity to continue to execute on a strategy now back to reach out to show some product initiatives from 2023.

Speaker Change: After the technology company with more than 15000 developers.

Speaker Change: And products and features is at the heart of all business as we continue to innovate.

Speaker Change: Innovation is about new products and businesses, but it's also about being attentive to and passionate about detailed and solving multiple small customer pinpoint compound into a great user experience.

Unnamed Speaker: We've launched several new products and services, such as the MeliMai Loyalty Program, Meli Delivery Day, credit cards for consumers in Mexico and businesses in Brazil, amongst many other things. In 2023, we considerably improved navigation in fashion, apparel, and sports, with standardized filters across brands and sellers. This enables consumers to find what they need more quickly. On product pages, users can also see the More Like This section to find similar items to a product that the user has clicked on, rather than simply going back to the search results.

Speaker Change: 2023, there's no difference between launched several new products and services such as the many minds loyalty program and.

Speaker Change: Every day credit cards for consumers and Mexican businesses in Brazil, amongst many others.

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Speaker Change: Rather than simply going back to the finish resolve this feature is pilot file two per cent intelligence.

Unnamed Speaker: This feature is powered by artificial intelligence. AI-based features are already an integral part of the Meli experience, with many innovations launched in 2023, including a summary of customer reviews on the product pages that concentrates the main feedback from buyers of that product. On beauty product pages, a summary of product functions and characteristics is automatically created to facilitate buyers' choices.

Speaker Change: AI based features.

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Unnamed Speaker: Push notifications of items left unpurchased in shopping carts are now highly personalized and remind users why they may have chosen to buy a particular product. We have also added an AI feature that helps sellers to respond to questions by preparing answers that sellers can send immediately or edit quickly. To deliver a better experience to our sellers, we launched a new version of the Seller Hub, where they can see all of the promotional campaigns available for them to participate in. A new pricing tool also enables sellers to easily compare prices with competitors and or similar products and receive insights and recommendations on how to boost sales. In 2023, we also relaunched our Ads Tech Stack, an automated buying platform for display ads accompanied by live reports and unique insight analysis.

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Unnamed Speaker: We enhanced our bidding algorithm for product ads and introduced new placements on search and product pages that give more visibility to sponsored products. Our brand ad solution was also launched as a mid-funnel campaign option to enhance consideration for brands. Our platform also now includes a feature for agencies to be able to manage different brands through the platform. Brands, sellers, and official stores can delegate certain products or even the whole assortment to a specific agency. The agencies are now available to manage all accounts delegated to them in one place.

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Speaker Change: The possibility of given so appetizers neutral custom audiences.

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Unnamed Speaker: And to expand the possibilities given to advertisers, a new tool called custom audiences was launched and later expanded, enabling advertisers to use filters to create an infinite combination of audiences for their companies. Finally, in advertising, ManyPlay was launched as an ad-based streaming platform. Through a revenue share model with studios, we were able to offer free content to our users across the region, enabling us to explore a new revenue stream for apps. In logistics, most of the technological improvements were behind the scenes and were crucial in helping us to maintain costs broadly stable as a percentage of GMV, whilst expanding fulfillment penetration. We optimized routes from the first to last mile, fulfillment-centered processes, and demand prediction. On the UX front, buyers are now notified that their package is being delivered and can follow it through their app.

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Speaker Change: We are able to offer free content, so I'll use them across the region.

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Speaker Change: With more personalized nation in the Mercado prior to laugh I'll sell a home page now prioritizes. The features that made sense most need on a day to day basis.

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Unnamed Speaker: And for sellers that adopt fulfillment, an enhanced tool to manage inventory brings more technology to the process, flagging products that need to be replenished, and how many units should be sent to us, amongst other things. At MercadoPago, we continue to innovate as we consolidate our position as one of the region's leading tin techs. In the acquiring business, the launch of the MercadoPago Tap brings a free POS option to merchants by turning their cell phones into a tool to receive payments via NFC technology. We also improved the pairing process of mobile POS devices with merchant cell phones and worked behind the scenes to reduce processing times, which had a positive impact on NPS and helped to improve the experience of merchants and buyers. With more personalization in the MercadoPago app, our seller homepage now prioritizes the features that merchants most need on a day-to-day basis.

Speaker Change: Founded our credit card also to Mexico.

Speaker Change: Talk to lots of our lives credit card solution in Brazil.

Speaker Change: User receives the credit limits are equivalent to the value of funds deposited into their accounts. These.

Speaker Change: These products to enable consumers to stop building a credit score and take advantage of the possibilities that a credit card.

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Speaker Change: Innovations in credit enabled us to start talking to you.

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Speaker Change: A new product enables them to walk the lodge, a longer duration loans and our app.

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Speaker Change: Just an account homepage combined with a nice teased features such as transfer credit limits investment physicians and insurance adapting to these this profile.

Unnamed Speaker: In fintech services, we continue to search for ways to facilitate financial inclusion. We expanded our credit card offer to Mexico and launched a large-scale collateralized credit card solution in Brazil, where the user receives a credit limit equivalent to the value of funds deposited into their account. These products enable consumers to start building a credit score and take advantage of the possibilities that a credit card brings for many for the first time ever.

Speaker Change: We have seen increased traffic to all of our teachers to the account product as a result.

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Speaker Change: Some reason that monthly activity on a personalised reports.

Speaker Change: Huntsman's-cup brings more information.

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Unnamed Speaker: Innovations in credit have enabled us to attract new users. For merchants, we now offer a business credit card using Open Finance to contribute to scoring. For consumers in our lower-risk cohorts, a new product enables them to opt for larger, longer-duration loans in our app, personalizing the loan to their needs and expanding the use cases of our credit product. As our product stack expands, we have focused on facilitating and simplifying navigation around all of the different products available on MercadoPago. Our digital account homepage combines the most used features, such as transfers, credit limits, investment positions, and insurance, adjusting to the user's profile. We have seen increased traffic to all of our key digital account products as a result. Digital account users in Brazil can now see a summary of their monthly activity in a personalized report, an enhancement that brings more information to the user about their finances.

Speaker Change: <unk> highlights new offerings that might be useful to the user such as all certificates of deposit and investment funds alongside credit products.

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Speaker Change: All of the innovations often primary color DVD Mark how to Fargo continued to have a decent intrinsic impact in Latin America by generating economic and financial inclusion for entrepreneurs and individuals.

Speaker Change: Report in partnership with Euromonitor shows up our Cuddled.

Speaker Change: The main source of income for 1.8 million families and the reason.

Speaker Change: 54% of uses in the region.

Speaker Change: But was the fifth digital payment method available too.

Speaker Change: This was just a snapshot of the innovations stood up and five and 2023 2024.

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Speaker Change: Thank you, ladies and gentlemen, if you'd like to ask a question. Please press star one one on your telephone again to ask a question. Please press star One line one moment for our first question.

Unnamed Speaker: The report also highlights new offerings that may be useful to the user, such as our certificates of deposit and investment funds, alongside credit products and our remunerated accounts. All of the innovations offered by MercadoLibre and MercadoPago continue to have a deep, intrinsic impact in Latin America by generating economic and financial inclusion for entrepreneurs and individuals. A recent report, in partnership with Euromonitor, shows that MercadoLibre is the main source of income for 1.8 million families in the region and that for 54% of users in the region, MercadoPago was the first digital payment method available to them.

Speaker Change: Our first question comes on line of Andrew Ruben Ah Morgan Stanley. Your line is open.

Andrew R. Ruben: Thanks, very much for the details and further question I'd like to dig in a bit on logistics network, we see that the net shipping fees and some of the shipping cause it looks like it was a bit more of a drag than in recent quarters. So I was wondering if you could help with what changed sequentially whether it was more.

Andrew R. Ruben: Seasonality or Thursday, and let's say sequential changing and investment areas, such as shipping campaigns or D. C build in the corner and then perhaps zooming out of date on the logistics network. How do you think about the state of the network, where you are for shipping speed shipping fees and how you think about the intensity and investment in those areas.

Unnamed Speaker: This was just a snapshot of the innovations delivered by our teams in 2023. In 2024, our users can expect even more, because, as always, at MercadoLibre, That's Digetico. Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star 1-1 on your telephone.

Andrew R. Ruben: For the year ahead versus twenty-three any color there would be very helpful. Thank you.

Andrew R. Ruben: Okay.

Operator: Again, to ask a question, please press star 1-1. One moment for our first question. Our first question comes from a lot of Andrew Ruben of Morgan Stanley. And thanks very much for the detail.

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Andrew R. Ruben: And for the question, I'd like to dig in a bit on the logistics network. We see that the net shipping fees and some of the shipping cogs look like it was a bit more of a drag than in recent quarters. So I was wondering if you could help with what changed sequentially, whether it was more seasonality, or if there's been, let's say, sequential changes in investment areas, such as shipping campaigns or DC builds in the quarter, and then perhaps zooming out a bit on the logistics network. How you think about the state of the network, where you are for shipping speed, shipping fees, and how you think about the intensity of investment in those areas for the Any color there would be very helpful.

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Unnamed Speaker: Thanks to last year, lower delay rates, more fulfillment penetration, particularly in Brazil, and more free shipping coming from MeliMai together with a network that has expanded over the year and particularly in Q3. So going to your specific question about margin compression or sequential margin compression, we also experienced some cost pressures during Q4 that you will see reverted in early Q1. And basically, those headwinds in Q4 come mainly for the following reasons.

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Unnamed Speaker: Number one, this is the first quarter in which MeliMai has been fully operational, and that means that we have increased the level of free shipping offered in Brazil and Mexico. As I think we've discussed before, MeliMai is a strategic and long-term investment that we think will continue increasing loyalty and driving incremental orders and GMB. So it's a conscious investment on our part. Second, I think the growth of 1P in our business, whose GNV was 50% higher, Q over Q in dollars, also acts as a headwind, basically because there are no sellers paying for shipping revenues, given that we are the sellers in the case of 1P. I think that going to point number three, in previous quarters, we flagged that some of the shipping gains in terms of sale rates were due to the negotiated postponement of cost increases from our suppliers after already having passed through higher prices to sellers at the start of the year, and those costs are now hitting our P&L as we were expecting. And on the fourth, I think Argentina also added some pressure as we decided not to fully pass inflation through to our prices on the Of course, then you have peak season, which is the biggest component of the sequential compression of shipping costs.

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Unnamed Speaker: There is a ramp-up in capacity to be able to meet demand coming from our buyers. There is also an increase in unit costs coming from labor hours and bands and truck drivers, et cetera. And that is the biggest component of the sequential compression, which you will probably see reverted in early Q1 2024. Finally, and just to wrap up on this first part of the question, it's also important to note that we were expecting most of these increases in cost, and that is one of the reasons why we decided to increase our flat fee, so the charge that we make to sellers when they sell items below the free shipping threshold. If you recall, we increased that fee in Brazil approximately in July or August and did the same in late Q3 in Mexico.

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Unnamed Speaker: And this is one of the levers we have used to manage our shipping P&L as well. And it's a good example of how we manage the profit and loss of the company in a consolidated manner and not on a line-by-line basis. So to your second part of the question, I think, as we've been saying many times, in the long run, there will be opportunities for us to continue monetizing our logistics network. But we are not desperate for that.

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Unnamed Speaker: We think long-term, not only in monetization but also in remaining competitive in terms of prices for our buyers and for our sellers, and we are conscious of how to execute around that opportunity. Very helpful color. Thank you. Thank you. One moment, please. Our next question comes from the line with Irma Sgarz, of Goldman Sachs in Holland. Hi, I hope you can hear me well. Connectivity has been a bit patchy. I have two very quick questions. Firstly, on Mexico, sequentially, the margin was a little bit lower in the fourth quarter, which is obviously to be expected given the seasonality, but 1p, I think, plays less of a role here. So I was wondering if you could just elaborate on the drivers here.

Speaker Change: Very helpful color. Thank you.

Speaker Change: Thank you one moment please.

Speaker Change: Our next question comes from Atlanta <unk>.

Goldman Sachs: Goldman Sachs. Your line is open.

Goldman Sachs: I hope you can chemobyl connectivity has been.

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Goldman Sachs: Very quick questions currently on Mexico sequentially as in Martin was a little bit lower into the fourth quarter, which is it sounds like it should.

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Irma Sgarz: I imagine some of the logistics capacity ramp-up has to do with that, but is there anything else that we should be mindful of? And then on the comments take rate, this builds a little bit on the early question, but we also noticed that there was a sequential decline quarter over quarter. And it is just basically sort of a reflection of, and I'm excluding one key here, but is that just mostly really a reflection of category mix and logistics, or is there anything else at play that we should, and revenues and shipping revenue dynamics that you just described that we should be mindful of, especially And maybe, sorry, if you can also add to that the influence that lower funding costs have on rates, which should be positive for the take rate, but I don't think we saw much of an effect if I'm not mistaken. So if you could just also speak to that. Thank you. Hey Irma, Ariel here again.

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Speaker Change: Emma E. L. Here again, so on Mexico sequential compression I think you you you're on with some of your hypothesis relates to what I was explaining before so everything that I just.

Ariel: So on Mexico's sequential compression, I think you were spot on with some of your hypotheses, and it relates to what I was explaining before. So everything that I just described about operating in peak season with building capacity before the events and an increase in unit costs is actually more complex in Mexico for two reasons. On the one hand, in Mexico during Q4, we opened three fulfillment centers and one cross docking station, a big cross docking station. As we've been pointing out over the last few quarters, we have a capacity constraint there that we need to fix. And of course, whenever you open new warehouses such as these ones, the ramp-up process is a bit costly, and that's part of what happened during the quarter.

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Speaker Change: Our existing warehouses were operating at maximum capacity and that also with an extra pressure in beneficial at but D V D.

Speaker Change: <unk> operations so Indian.

Speaker Change: There's nothing that we were surprised about the we are managing.

Ariel: Secondly, our existing warehouses were operating at maximum capacity, and that also put extra pressure on terms of productivity for our fulfillment operations. So, in the end, there's nothing that we were surprised about. We are managing the cost and the performance of the network, but we think we are in good shape for the future, so no comments on the second part of the question about some things that you should expect or that we should call out there. Irma, it's Martin here.

Speaker Change: The.

Speaker Change: Cost four months of the network.

Speaker Change: But but we think we are in good shape for the future. So no comment on on the second part of the question on on some things that you should expect or that we should call out there.

Speaker Change: Nearby is amount of data.

Speaker Change: Regarding the funding costs being lower benefits.

Speaker Change: Benefit.

Speaker Change: Quite a business of course, we've got to lower the cost of funding for that operation So that should improve Nemo.

Speaker Change: And it also should help us on the on both sides.

Speaker Change: That's what I say, I say fintech side, because it lowers the cost of discounts and coupons those issue resolved improvements.

Martin: Regarding the funding cost being lower, it should benefit the credit business, of course, because it lowers the cost of funding for that operation. So that should improve NIMAL. And it should also help us on both the commerce side as well as the fintech side because it lowers the cost of discounting coupons. So that should result in improvements. Martin, probably you will see more of an impact with regard to the marketplace, where the fee we charge for including installments is fixed on the Fintech side of business. Many times, when the funding cost is lower, we end up passing some of those savings to consumers, and that is not as straightforward in the marketplace. Thank you, everyone.

Speaker Change: <unk>, probably you will see more of an impact do that too.

Speaker Change: In the marketplace.

Speaker Change: Four four including stolen is sixth on the on the side a visit quite a bit as many times when it's when it goes to the slower.

Speaker Change: I've seen some of those savings to consumers.

Speaker Change: State for them in the market place.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Thank you one moment please.

Rabbit: Our next question comes from a line of Rabbit for to make them American Your line is open.

Rabbit: Good evening, everybody and congratulations on the quarter.

Rabbit: Curious how should we think about this.

Rabbit: Transfer pricing.

Unnamed Speaker: Thank you. One moment, please. Our next question comes from the line of Robert Ford of Bank of America. Your line is open. Good evening, everybody, and congratulations on the quarter. I was curious, how should we think about service transfer pricing and the recurring tax impact on profitability? And when it comes to advertising, how should we think about ad penetration? and the receptiveness of the product stack with larger display advertisers now, now that they've had time to really understand the product and maybe build their budgets. And, Hi, Bob. I think you're referring to the withholding, the incremental withholding tax that we started booking this quarter, as we explained in the short-hold letter. I think if you... Obviously, it's a big charge, and this is the reason why we excluded it from the results to explain results because it generated a big distortion in Q4 results.

Rabbit: Tax impact on profitability.

Rabbit: And when it comes to advertising how should we think about dad penetration rates of 2024, and the receptiveness product stack with with larger display advertising now can I have the date that.

Rabbit: Two of the understand the product and it may be built their budgets.

Rabbit: Into this year.

Speaker Change: Hi, Bob <unk>.

Bob: So the with holding an incremental withheld in facts that do we got the <unk> quarter as we explain on this on the show how this letter I think if you obviously, it's a big charge. The reason why we excluded from the results cause to explain yourself because it generated a big distortion in queue for assault has to put it in perspective.

Rabbit: Charged of roughly $350 million only six per cent of that correspond to these particular quarter.

Rabbit: To look at <unk>.

Rabbit: <unk>.

Rabbit: I would say 20 million incremental costs per quarter will resolve for these incremental tax that we're gonna be okay.

Unnamed Speaker: Just to put in perspective, the full charge of roughly $350 million, only 6% of that corresponds to this particular quarter. The way to look at that is by roughly, I would say, $20 million in incremental cost per quarter will result for this incremental tax that we're going to be starting to provision from now on. To complement that, keep in mind that the $350 million one-off charge was fully funded because, throughout the last 10 years, we've been funding a judiciary account with those amounts. So in the event that we lose this case, we will continue disputing it.

Rabbit: Two two probation for marijuana.

Rabbit: To complement that keep in mind that at $350 million or one off Charles.

Rabbit: 40 funded throughout the last 10 years where funding.

Rabbit: Account with us.

Rabbit: [noise] amount so if in the event that will loose.

Speaker Change: Yeah, well, we'll continue disputing it.

Speaker Change: We live here without having a material.

Rabbit: As a result.

Rabbit: By the time I I think it's.

Rabbit: It's about $20 million per quarter.

Rabbit: Going forward.

Unnamed Speaker: In the event that we lose it, it will not have a material cash impact on our results. So, in summary, I think it's about $20 million per quarter. The impact going forward. This is Ariel.

Rabbit: Oh, please at Yale So going back to your question on advertising I think.

Rabbit: By saying that we are extremely pleased with the <unk>.

Ariel: So going back to your question on advertising, I think... Let's start by saying that we are extremely pleased with the ad results from the quarter. Our revenues grew 72% year-over-year on an FX-neutral basis. It's the seventh consecutive quarter going above 70%, and that's driven mainly by Brazil and Mexico.

Rabbit: Revenue to 72% you had over a year.

Rabbit: Macy's.

Rabbit: Yeah.

Rabbit: Seven.

Speaker Change: Thank you could quarter, owing about 70 per cent and that's driven mainly.

Speaker Change: But I feel in Mexico I think.

Speaker Change: We mentioned in our code the letter we are.

Ariel: I think, as we mentioned in our Charcoal letter, we added 53,000 new advertisers this year, and this is a great achievement and shows how strong the level of interest in our product is today, and we expect to build on that in the coming quarter. On sequential penetration, I think while ads continue to grow at a very fast pace, GMB accelerated at an even faster pace this quarter, and it is the case that ad revenue does not necessarily follow one-to-one the growth pattern of our GMB. Particularly during Q4, our GMB accelerated from 59% growth in Q3 to 79% in Q4. And it's worth maybe highlighting the case of Argentina, which represents 20% of our GMB but only around 10% of our ad revenue. And that's the main offender for sequential penetration.

Speaker Change: About the new Advertiser this year.

Speaker Change: He's a great achievement done unsure how strong they.

Rabbit: Of interest.

Rabbit: It is today.

Rabbit: Expect to build on that and becoming a quarter.

Rabbit: On on on the sequential penetration I think why not.

Rabbit: Rowe activity.

Rabbit: <unk> G M b accelerated at an even faster pace.

Rabbit: Quarter.

Rabbit: It is the gate that AD revenue not necessarily all of one one.

Rabbit: Pattern.

Rabbit: D M V I figured it'd be viewed in Q4 of <unk>.

Rabbit: But I'm, 59% growth in Q3 79.

Speaker Change: Thank you for.

Speaker Change: What if maybe highlighting the case of Argentina, which represent 20% of our b, but only around 10%.

Speaker Change: Percent of our revenue that's the main <unk> penetration.

Ariel: In such a high inflation context, the lack of stocks in the seller's hands incentivized some of the ad investments, and simultaneously... Advertisers were not necessarily updating their investment amounts together with their item prices. And for that, we have already deployed some features that automatically update ad budgets whenever there is an inflationary context in item prices. So, as I was saying before, we remain extremely confident in our product stack, and we see ample opportunities for growth in the coming years. Regarding display, it's been not so long for our current product format to be live, and we are going through the learning curve in terms of go-to-market strategies, as well as brands are still learning about branding possibilities in MercadoLibre. So, we believe in the product that we have, in the value proposition we are offering, and we use display ads as an awareness tool for one of the largest audiences in Latin America. But we need to be patient, and we think that we can continue building on the product we have to gain even more traction and make a display an even bigger business for MercadoLibre and for our sellers. A very helpful audio, thank you. Thank you. One moment, please. Our next question comes from the line of Kyle Prato. CBS, Shelana Smith.

Rabbit: Patrick Sky inflation context, you know the.

Rabbit: Lack of dogs.

Rabbit: D C and divide.

Rabbit: <unk> investments and similar venues Liam.

Rabbit: Advertisers wouldn't or not necessarily updating their investment amount would be.

Rabbit: <unk> item prices on for that we need already deployed.

Rabbit: Feature that automatically update.

Rabbit: Whenever they are.

Rabbit: Have you send an inflationary conflict.

Rabbit: <unk>.

Rabbit: So they.

Rabbit: They were saying before we remain extremely confident in our products back on we see ample opportunities most little in there I mean.

Rabbit: Yeah.

Rabbit: And the play.

Rabbit: It's been so long for our current.

Rabbit: <unk> relied on and we are going through the learning curve in terms of global market strategies.

Rabbit: Brian Sarah.

Rabbit: Learning about branding posteriorly BCE Macaroni bridge, so we believe in the product.

Rabbit: We got the value proposition we are offering.

Rabbit: Lay out with an awareness tool for one of the largest audience in.

Rabbit: In Latin America.

Rabbit: To be patient with.

Rabbit: Thing that we can continue building on the product.

Rabbit: To gain even more fraction.

Rabbit: And make a display.

Rabbit: <unk> your business going over my color leave it on for.

Rabbit: Federer.

Speaker Change: Not very helpful. Thank you so much.

Speaker Change: Thank you one moment please.

Speaker Change: Our next question comes from the lineup Kyle.

Kyle Prato: Pardon me, Kyle. Thank you. Hey, good evening, thanks for the opportunity. So I have one question on the credit portfolio, please. I saw your origination was much higher this quarter, and you mentioned that your own credit card is one of the most used on your platform, I think among the five most used. So I just would like to have a sense about how much of this origination is coming from the credit card, and how are you seeing the contributions specifically of the credit card in your GMV today? In other words, what is the level of GMV penetration today versus one year ago?

Kyle: Have you B S. Your line is open.

Kyle: Pardon me can I ask what do you think.

Kyle: Okay.

Kyle: Good evening, thanks for the <unk>. So I have one question on the grid sports.

Kyle: I saw your original nationwide much higher this clutter and you mentioned that your own credit card is one of the bowls to use it.

Kyle: In New York Blatchford.

Kyle: Besides most to use it so I just would like to have a sense about how much of the <unk> from the credit card.

Kyle: How're you have seen the contributions fish species pretty off the credit card in your <unk>.

Kyle: <unk>, what's the level of option defenestration today versus one year ago, and finally, what makes you.

Unnamed Speaker: And finally, what makes you comfortable with the credit card origination today? Because we have already seen some spike in short-term GMPLs, which is attributed to this product. Thank you. Hi Caio.

Kyle: Great confusion nation to be.

Kyle: Because we already see some spiky Trojans nepl's, which is <unk>.

Speaker Change: Thank you.

Unnamed Speaker: Let me start at the end, and then I'll go back to the first questions. With regard to what makes us more comfortable, we first launched credit cards in Brazil three years ago, and we have been iterating the models we use to score credit. We have done many iterations, several every year, and each iteration we do, we get better results. We saw the credit situation overall in Brazil worsen a year and a half ago, two years ago, so we were more cautious. And now, throughout last year, we started feeling more and more comfortable, and we have been increasing the amount of origination in Brazil. And also, we launched our credit card in Mexico, and we've been, I would say, aggressive in rolling it out.

Speaker Change: Hi carrier, let me start by the end and then I'll go back to the questions with regards to what makes us more comfortable.

Speaker Change: Was launched credit cards in Brazil for years ago, and we have been iterating.

Speaker Change: <unk>, we used to score grades we have done many iterations <unk> every year.

Kyle: The reason, we do we get better results. Please so the.

Kyle: Delusional early Brasil Watson, a year and a half ago two years ago. So we were more cautious and now throughout last year we.

Kyle: Started feeling more and more comfort level and we have been increasing the amount of origination in Brazil, and also we launch a credit card in Mexico, and it would be and I would say aggressive.

Unnamed Speaker: When we look at, as we say in the shareholder letters, when we look at total payment volume for our credit card, year over year, it has grown well above 100%. So we have been aggressive with regard to that. In terms of the portfolio, there has been high origination. We have not disclosed the origination amount, but we have disclosed the... The total portfolio, and you can see how the chunk coming from the credit card is growing and has reached 1.2 billion, which is nearly 100% growth versus a year ago. And on top of that... and Anand Kapoor

Kyle: Pulling it up when we look at as we say in the show hold the lettuce and we look at total payment ammonium for a credit card.

Kyle: Over a year it has grown.

Kyle: Hundred percent, so we have been aggressively.

Kyle: To that.

Kyle: When it comes with a portfolio that there has been.

Kyle: <unk>, we have not disclosed they originated amount, but we have disclosed.

Kyle:

Kyle: The total portfolio and you can see how the the junk coming from the credit card is growing.

Kyle: 1.2 billion, which is.

Kyle: 100%.

Kyle: Growth versus a year ago.

Kyle: And on top of that.

Kyle:

Kyle: And on top of that.

Unnamed Speaker: I'll tell you that. [inaudible] is growing in. Exactly the way we expected it to grow. We are expanding in the lower segments and also starting to have a little more traction in the higher segments. And the penetration we see in the marketplace is growing in Brazil and in Mexico. And most importantly, when we look at the total penetration of credit in the marketplace, which includes our consumer loans and our credit cards, it is growing significantly. So it's not that we are cannibalizing consumer loans with a credit card, which probably has a lower profitability per transaction, but rather, we are adding to that number. Okay, thank you. Can you share the level of penetration nowadays in your prep stuff?

Kyle: I would say that.

Kyle: The credit card.

Kyle: Rowan.

Kyle: <unk>.

Kyle: Exactly the way we expect it to grow we are expanding in the lower segments and also studying to have more traction in the highest segments and the penetration we see in the marketplace is growing in Brazil, and Mexico and most importantly, when we look at the total penetration of credits in the marketplace, which ads for consumer loans.

Kyle: Credit card is going to significantly so it's not that we are cannibalizing consumer loans with a credit card <unk>, which one is probably.

Kyle: Lower profitability pronounce sexual but rather that we are adding to that number.

Speaker Change: Okay can you shed the level of penetration nowadays.

Kyle: <unk>.

Unnamed Speaker: We have not disclosed the precise level, but we can disclose that this is the largest means of payment we have today in Mexico. Okay, thank you very much. Credit, I mean, no, not total payments of all of the credit books available; our own credit and credit card is the largest one. Thank you. One moment, please. Our next question comes from the line of Maria Infanto. Your line is open. Pardon me, Maria Clara and five... Hello everyone, good evening.

Kyle: Okay.

Kyle: It is I'll tell you. This is we have not disclosed.

Kyle: Precise level when we can disclose that this is the largest means of payment we have today in new Mexico.

Speaker Change: Okay. Thank you very much.

Speaker Change: Great I mean, no no to the payment of all of the cables available our own credit.

Speaker Change: Credit card is the largest one.

Speaker Change: Thank you one moment please.

Speaker Change: Our next question comes from Atlanta Maria.

Speaker Change:

Maria: Your line is open.

Maria: Pardon me Maria Clara and Sciences.

Maria Infanto: Thanks for taking my question. In the release, you mentioned that you achieved better profitability trends despite the seasonality of the business in the fourth quarter. So can you please give us more granularity on how the contribution margin of the business has been evolving lately? Do you feel that the accelerated growth of the category has been allowing you to have better negotiating terms with suppliers? And how do you feel about the growth potential of the channel going forward? How far are we from reaching an optimum profitability level in the division? Thank you. Hi Marie, thank you for your question.

Maria: Hello good.

Maria Clara: Good evening thanks for.

Speaker Change: So I would like <unk>, <unk> <unk> <unk> <unk> <unk> <unk>.

Speaker Change: Alrighty.

Speaker Change: So can you please repeat that.

Speaker Change: Anyway.

Speaker Change: <unk> checking evolving lately that.

Speaker Change: Daphne Acclimated grill.

Speaker Change: <unk>.

Speaker Change: You had better Nick.

Speaker Change: <unk> thanks supplier.

Speaker Change: And how do you feel about <unk> off the channel going forward.

Speaker Change: Finally, reaching.

Speaker Change: <unk> and <unk>.

Speaker Change: Identity.

Speaker Change: Thank you.

Speaker Change: I'm already thank you for your question Yeah.

Unnamed Speaker: Yeah, we have made significant progress in the 1B business throughout the year, and we feel that we are on a much more sustainable footing today than we were maybe a year ago. As you say, we made improvements on margins. We look at our product purchase margin, and it has improved a few percentage points in 2023. And we expect to continue improving that. That gave us confidence to grow our business, and we did grow it in Q4 by 60% year-on-year in dollars and 85% in... Thank you.

Speaker Change: Yeah, we have made significant progress and there won't be business throughout the year and we feel that we are in a much more sustainable footing today that we were a year ago, a year ago I should say, we made improvements on marches will look at our product purchase Mazda has improved a few percentage points 2023, and we expect to continue.

Speaker Change: Proving that.

Speaker Change:

Speaker Change: That gave us confidence to grow our business.

Speaker Change: Need to grow it in queue for a 60 per cent.

Speaker Change: Dollars and 85 perfect.

Speaker Change: And local currency taken advantage of a let me see the big season.

Unnamed Speaker: One way of looking at the 1P business; obviously, we don't share the actual profitability of the business, but I can give you some guidance in terms of how we're doing. If you were to look at the 1P business now, it is profitable before considering fixed costs and including all variable costs, that is, shipping as well as financing. So one way to look at it is the more volume we have, the better we dilute the fixed cost of that business. So we are at a point where we feel that we can scale the business and should start to contribute to reducing the deficits that we have in terms of area. Finally, we think we have plenty of room to continue to attach more advertising to that business, and that creates a big opportunity to continue improving the profitability of 1P. Ariel here, just to complement Martin.

Speaker Change: Have them when feed in Mexico ask where that Black Friday, So we are making significant progress.

Speaker Change: As I mentioned we.

Speaker Change: One way of looking at the one previous ethics, obviously, we don't share of actual perfect day of everybody that I can give you some guidance because of how how're you doing if you would work to look at the <unk> now.

Speaker Change: Now it is profitable before taking before considering fixed costs, including all body I will cost of shipping financing so wild.

Speaker Change: Way to look at the more volume, we have better without that fixed cost of that business. So we are at a point, where you feel that we can scale the business I should.

Speaker Change: <unk> to lower the deficit that we're having tons of.

Speaker Change: Finally, we think we have plenty of room to continue to attach more advertising into our business.

Speaker Change: That creates every opportunity to continue improving profitability of Plumpy.

Speaker Change: Sure just to compliment.

Ariel: So we continue to think that 1P is strategic in order for us to sustain our competitive position, to gain market share, and, more importantly, to satisfy customer demands through better selection and price competitiveness. Therefore, we continue to be strategic in deciding which categories and products we serve with 1P, while simultaneously optimizing our consolidated P&L. So while we don't have a specific target regarding 1P penetration for the future, we are encouraged by the progress we've made in terms of profitability, in terms of supplier relationships, and operating processes. And the more confident we feel about that, the more confident, the more probability that we could scale 1P.

Speaker Change: So we continue to bank at one B E D. G in order for us to sustain our competitive position to gain market share and more importantly.

Speaker Change: To satisfy customer demand.

Speaker Change: Through better selection and price competitiveness. So so we continue to weaken repeating in deciding exciting story, which categories and product.

Speaker Change: With one be Wednesday won't valiantly optimizing.

Speaker Change: Our consolidated DNN, when we don't have a specific target regarding won't be penetration for the future.

Speaker Change: We are encouraged by by the Peronist we've made.

Speaker Change: In terms of profitability in terms of relationships on operating processes and the more confident with bill.

Speaker Change: About dot com.

Speaker Change: <unk>.

Speaker Change: Priority.

Ariel: In the future, and the bigger we get, the more benefits of scale we will capture, as Martin was saying just before. Having said that, there is seasonality in terms of category demand and the role that 1P plays in the different categories. Consumer electronics was a high demand category during the big season, and it's one category where 1P plays an even more strategic role for us. So to wrap up, we have many initiatives in place to continue improving our retail business, both in terms of economics, as well as in terms of selection, price management, and supplier relationships, and we'll continue to work on that.

Speaker Change: Could scale in the future.

Speaker Change: We get the more benefits of screen and we will capture.

Speaker Change: And we'll see just before having said that <unk> got bigger in demand on the road that won't be late.

Speaker Change: In the economic debate on east approximately consumer electronics was a guy.

Speaker Change: Category <unk>.

Speaker Change: One category, where it went deeply even more at the growling.

Speaker Change: So to wrap up we have many initiatives in place to continue improving our retail business. Both in terms of economics in terms of the electron price management.

Speaker Change: Right relationship will continue to work on that.

Unnamed Speaker: Very clear. Thank you. Thank you. One moment, please.

Speaker Change: Perfect. Thank.

Speaker Change: Thank you.

Speaker Change: Thank you one moment please.

Trevor Young: Our next question comes from the line of Trevor Young of Barclays, on the line of... Great, thanks. First one, just to build on the earlier question on advertising, can you remind us where we are in terms of penetration on a geographic basis? I think, based on your earlier comments, advertising may be remaining softer in Argentina and perhaps stronger in Mexico and Brazil.

Speaker Change: And next question comes in a line of Trevor Young of Barclays. Your line is open.

Trevor Young: Great. Thanks first one just to build on the earlier question on advertising can you remind us where we are in terms of penetration on a geographic basis take to your earlier comments advertising, maybe remaining soccer in Argentina, and perhaps stronger in Mexico, and Brazil, just any numbers to help kind of frame the progression.

Ariel: Just any numbers to help kind of frame the progression there, particularly as the GMB growth in Argentina is probably optically making that ad penetration look weaker. And then, secondly, in Argentina, items growth was accelerating for the second straight quarter, up 22%, I think. How much of that is related to kind of the worsening inflation dynamic in that market and more of that pull-forward of consumption versus maybe some improvement in consumer demand? And I just appreciate that you don't give any guidance, but at a high level, do you think that degree of unit growth is durable? Thank you. Hey Trevor, Ariel here.

Trevor Young: Particularly the G M b growth in Argentina is probably optically, making that AD penetration look weaker.

Trevor Young: And then secondly in Argentina items growth accelerating for the second straight quarter up 22 per cent I think uhm, how much of that is related to the worsening inflation dynamic in that market and more about pull forward a consumption versus maybe some improvement in consumer demand and just appreciate that you don't give any guidance, but at a high level do you think that degree of unit.

Trevor Young: Growth is durable thank you.

Ariel: I think we don't disclose specific numbers in terms of penetration by country, but we have shared that while the overall revenue penetration as a percentage of GMB was 1.6% in Q4, if you were to exclude Argentina from that equation, you would get something like 1.9%. So Argentina is definitely a big detractor in terms of measuring ad revenue as a percentage of GMB. On the successful items sold that you mentioned in Argentina, it's just like you said; we saw the first half of the year where items were flat year-on-year, mainly because of the recession that we faced in the first half of 2023. Then, in the second half, as the government put more money in people's pockets, we saw a pick-up in volume, both in terms of GMB and items sold, which increased 12% in Q And that part of that is inflation, it's like advanced purchases ahead of... You know, expected devaluation towards the end of the year, which eventually happened in December with the new government, and towards the second half of December, we saw a slowdown of those volumes, but that's correct, your assumption about our consumption. Great, thank you both. Thank you. One moment.

Trevor Young: <unk>.

Speaker Change: I think we don't.

Speaker Change: Specific numbers in terms of penetration by country, but we sure that when you overall.

Speaker Change: Revenue.

Speaker Change: <unk> was 1.6%.

Speaker Change: Q for a viewer to exclude Argentina from from that equation, you would get something like one nine so.

Speaker Change: It's definitely a big the attractor incentives measuring at revenue experts, maybe you've given me.

Speaker Change: Yeah, they're successful items items sold that you mentioned it Argentina.

Speaker Change: Like you said you know we saw the first half of a year were items were flat year on year, mainly because of the.

Speaker Change: Procession that we face for the first half of 223.

Speaker Change: The second half with everyone I put more money in People's pockets.

Speaker Change: So I pick up in volume both in terms of GMB and I consult which increased 12% in Q3 accelerated 21 in Q4, and that's part of that these inflation a tech I advanced purchases.

Speaker Change: Okay.

Speaker Change: Expect that devaluation through us.

Speaker Change: The end of it yeah, which eventually happen in December with a new government.

Speaker Change: Second half of December so slow down.

Speaker Change: But that's that's correct, that's what I'm talking about.

Speaker Change: Our consumption.

Speaker Change: Great. Thank you both.

Speaker Change: Thank you one moment please.

Unnamed Speaker: Our next question comes from the line of George Soros, a city, a line of... Hi, thank you. Yeah, just one more question on my end. I just wanted to get, I'm just trying to understand the different moving parts for the operating profit margin thinking about 2024. I think you mentioned that we should see some reversion in terms of the logistics cost pressure in the first quarter. And, of course, we have structural growth, the 1P business, of course. Thank you.

Speaker Change: Our next question comes from Atlanta, Georgia.

Speaker Change: Getting your line is open.

Speaker Change: Alright. Thank you yeah, just just one more one question on my end I just wanted to get.

Speaker Change:

Speaker Change: Try to understand the difference.

Speaker Change: Moving parts.

Speaker Change: For the operating profit margin thinking about 2024.

Speaker Change: I I think that we should see some reversion in terms of.

Speaker Change: Which is cost pressure, writing the first quarter.

Speaker Change: Of course, we have a structural growth <unk> business of course.

Speaker Change: Affected by and actually there's gonna be seasonality, but.

Speaker Change: On its own a year, we should see an increase in furniture.

Speaker Change: So I just want to I don't understand you <unk> just to take into consideration that you're growing.

Speaker Change: Gave me your credit portfolio within credit card, which should come with would increase provisions so.

Unnamed Speaker: Thank you, Joao, for your question. First of all, I will discuss margins. Let me verify that all the numbers that we'll be discussing contemplate the adjustment for the $351 million in one-offs. Given the size of it, we felt that it was easier to explain by taking those one-offs out and obviously including the appropriate cost corresponding to this particular quarter. I would say that if you look at margins on a year-on-year basis, excluding the one-off that I mentioned before, we improve margins by 270 basis points because of expanding the business and basically growing the business and diluting our fixed costs while, at the same time, we continue to invest in many growth opportunities. One of them is credit cards, as you mentioned, but also fulfillment and several other things that we're doing at the company This is something that we plan to continue.

Speaker Change: It's.

Speaker Change: I don't want to see forward looking statements, but just trying to understand what should we have in mind for different moving parts for your operating profit margin. Thank you.

Speaker Change: That gives you already have question.

Speaker Change: Oh, well I'll always discuss a margin let me verify that all the numbers are will be discussing contemplating the desk in front of 351 medium bonus of one offs.

Speaker Change: We found out about the issue too.

Speaker Change: Plain and taking those.

Speaker Change: That one off out obviously, including the appropriate.

Speaker Change: Corresponded respect about our quarter.

Speaker Change: Tell you that if you look at the margins on a year on year basis.

Speaker Change: One off that I mentioned before we improved marches by 270 basis point.

Speaker Change: Because of expanding the business.

Speaker Change: Basically growing the business and diluting our fixed costs.

Speaker Change: At the same time, we continue to invest behind and many growth opportunities. One of them is credit card that you mentioned, but also fulfillment.

Speaker Change: And several other things that we're doing a private company.

Speaker Change: It is something that we plan to continue with things that we provide a basis is <unk> very nicely in the long term I will continue to focus on managing cost very efficiently and as we continue to erode the visa we should be able to continue skating longterm.

Unnamed Speaker: We think that we run a business that should scale very nicely in the long term, and we'll continue to focus on managing costs very efficiently. And as we continue to grow the business, we should be able to continue to scale in the long term. Q4, in particular, is a quarter with seasonality in terms of lower margins because of the investments that we make in commerce, particularly behind the special events of Black Friday and Bloomfield. Furthermore, during Q4, we intensified certain investments, as Ari mentioned before, such as fulfillment, 1P, and free shipping. If you were to look at the sequential compressions of margins, we have roughly four-and-a-half points of compression in margins.

Speaker Change: Foreign particularly to coordinate with seasonality in terms of lower margins because of investments that we're making progress.

Speaker Change: Behind a a special events of Black Friday <unk>.

Speaker Change: Are there more during <unk> intensifies, how can investments.

Speaker Change: <unk> before.

Speaker Change: Fulfillment, one b I'm pretty shipping thank.

Speaker Change: If you were to look at the sequential a compression of Martin we have.

Speaker Change: Roughly.

Speaker Change: For around half points of complacency margin.

Unnamed Speaker: That compression comes mainly from... 1P and shipping, which affects our cost of goods sold. In terms of a... Our 1P business, two-thirds of the compression comes from the 1P business, as Ari mentioned. The revenues of 1P grew from 9% to 12% of total revenues.

Speaker Change: That compares archive mainly from.

Speaker Change: One b and shipping which affects our cost of goods sold.

Speaker Change: In terms of.

Speaker Change: R. <unk> two thirds of the congressional crossover lumpy with one Bbss Ivy Madison.

Speaker Change: Lumpy grew from 9% to 12% of total revenues forgotten about disclosures and asked you know won't be a different marching structured after therapy.

Unnamed Speaker: You can see that in our disclosures. And as you know, 1P has a different margin structure than 3P because almost 100% of the GMB is booked as revenues compared to just the take rate of the 3P business. So although there was pressure on the margin, the incremental negative impact on EBIT due to 1P was only $20 million during the Q. On the other hand, we generated more than $220 million in incremental GMB from 1P, which resulted in market share gains of almost 10 percentage points in the consumer electronics category, as Ari was mentioning before. The other part of the compression comes from... shipping. As Ari mentioned, there is a seasonality factor in shipping during Q4, which comes with higher costs associated with peak seasons.

Speaker Change: Almost 100 per cent of a G. M. B his book best revenues compared to just that they rate of the three b B Sir.

Speaker Change: I was doing the west pressure on the margin the incremental negative impact on.

Unnamed Speaker: <unk> was only $20 million to you in the queue.

Speaker Change: On the other hand, we generated more than 220 media, but increments at G. M b from lumpy, which resolve that the market share gains up almost 10%. This morning, a consumer electronics February.

Speaker Change: <unk> is there any reform.

Speaker Change: Part of the compression I've gone from <unk>.

Speaker Change: <unk>.

Speaker Change: <unk> basically, especially this analogy factor and shipping during Q for.

Speaker Change: Which comes with higher costs associated with Big system is happiness, and we expect this trend to revert back to normal and following quarters.

Unnamed Speaker: This happened this quarter, and we expect this trend to revert back to normal the following quarter. And then finally, investments that we're making, which we have been flagging to the market over the last few quarters, investments in a value proposition, which includes the launch of more fulfillment centers. We launched three, and implemented three new fulfillment centers this quarter. The increased adoption of many mice, which resulted in higher levels of free shipping. When you put all those together, that explains the compression that you see quarter on quarter.

Unnamed Speaker: And then finally investments that we're making and we're having today.

Unnamed Speaker: Over the last few quarters.

Unnamed Speaker: The market investments.

Speaker Change: Proposition, which include and lounging of Morphophonemics centers, we announced three we endeavor.

Speaker Change: <unk> they increase adoption.

Speaker Change: Which are supposed to be a higher level.

Unnamed Speaker: Shipping when you put all those together.

Speaker Change: <unk> Ah compression that you'll see.

Unnamed Speaker: Water.

Speaker Change: Let me let me.

Unnamed Speaker: Let me add to that your question regarding the credit portfolio and provisions. Throughout this year, we have been able to expand our credit portfolio and, furthermore, gain share in credit cards. And despite that, we have been able to increase our net interest margin after losses and also decrease NPLs, which have crossed 30% for the first time in quite some time. Again, we don't guide, but we are confident with how the credit business is evolving. Perfect, thank you. Thank you, one moment please. Our next question comes from the line of Deepak Mathivanan of Wolf Research. Your line is now open.

Unnamed Speaker: Add to that question regarding glared portfolio I'm provisions.

Deepak Mathivanan: D C. As we have been able to expand our credit portfolio and Furthermore, gainshare in credit cards and despite that we have been able to increase our net interest margin after losses and also decrease.

Speaker Change: Mpl's, which have peers.

Speaker Change: Percent for the first time in quite some time so.

Speaker Change: Again, we don't guide by the way.

Speaker Change: Confident would how the business is evolving.

Speaker Change: Perfect. Thank you so much.

Speaker Change: Thank you one moment please.

Speaker Change: And next question comes from a line of Deepak Matthew <unk>.

Deepak Mathivanan: Research Your line is open.

Deepak Mathivanan: Hey guys, thanks for taking the questions. And I apologize if this was asked already, but one big picture question and then kind of one tactical one. So if you think about logistics, what are the big initiatives for 2024, maybe with respect to, you know, expanding the fulfillment centers or the middle mile and last mile operations? How should we think about the CapEx levels as we kind of progress through the year? And then second one on competition, you know, e-commerce players from China have cost pretty significant, you know, shifts and moved into the US, you know, and it is anticipated in several long-term markets. Can you share any color on your thoughts and how you're positioning the business for any sort of potential competitive intensity growth? Thanks so much. Hey, Deepak. How are you?

Deepak Mathivanan: Hey, guys. Thanks for taking the question and I apologize. If this was asked already but one big pick your question and then kind of one tactical one what would you say if you think about the logistics what are the big initiatives for 2024, maybe with respect to expanding the fulfillment centers are the middle mile and last time.

Deepak Mathivanan: Operations, how should we think about the capex levels as we kind of progress through the air and then the second one on competition E. Commerce players from China have cost pretty significant sheds and moved into the U S and it is anticipated in several Latin mortgage can you share any color on.

Deepak Mathivanan: Your thoughts and Javier positioning the business for any sort of like a potential competitive and density growling. Thank you so much.

Speaker Change: Maybe but how are you.

Unnamed Speaker: So in terms of logistics, I think, I mean, we don't guide and, you know, we don't disclose future numbers in terms of performance, etc. But just to reiterate what I said and Martin tried to explain, so most of the sequential compression on logistics was coming from peak season costs, which have been reverting during early Q1. So that's important. Having said that, we have many, many projects on hand to execute during 2024, none of which we think should drastically change the way we manage our P&L. We will invest in faster delivery. We will continue investing in slower delivery simultaneously. We will continue testing more automation and robotics as we have been doing so over the last few years.

Unnamed Speaker: So in terms of logistics.

Unnamed Speaker: I think I mean, we we don't guide and you know we don't disclose future number for example performer adjust.

Speaker Change: Just to read that.

Unnamed Speaker: I tried to explain the most of the sequential compression on logistics was coming from the sixties on call, which.

Speaker Change: Mean revamping.

Unnamed Speaker: During enemy Q1 so.

Unnamed Speaker: So.

Unnamed Speaker: What's important having said that we have many many project.

Unnamed Speaker: On can directly contributing 2000 towards the border none of which we think should drastically changed the way we manage our ENN, we would invest in Boston deliveries. We will continue investing is lower deliveries will dinius Lee we will continue testing more automation and robotic.

Speaker Change: We have been doing so.

Unnamed Speaker: We will continue working with our technology team. We have thousands of developers fully dedicated to improving the processes and the experience of our customers with logistics and the way we operate inside our warehouses and processing stations. So all in all, we will focus on becoming more efficient, serving our customers better, improving our delivery promises and execution, and supporting the business of the marketplace with more categories and better service. Regarding the Asian competition, I'd say we've seen TEMU, in particular, more present in Mexico over the last few months.

Speaker Change: <unk>, we will continue working with our technology demoed thousands of developers fully dedicated to improving.

Unnamed Speaker: Processes and the <unk>.

Unnamed Speaker: Of our customers with logistics on the way we operate.

Unnamed Speaker: Our warehouses.

Unnamed Speaker: <unk> so all in all we will focus in becoming more efficient.

Unnamed Speaker: Serving our customers better improving our delivery.

Speaker Change: Let me see.

Unnamed Speaker: <unk>.

Unnamed Speaker: And to support the business of the marketplace with Monica priorities and better Saturday.

Unnamed Speaker: We got to being.

Unnamed Speaker: The Asian.

Unnamed Speaker: Petition.

Unnamed Speaker: I'd say we've seen.

Unnamed Speaker: Demoing particular, more pressing in Mexico, or the last few months, but.

Unnamed Speaker: But still, as you can see from our results, we grew 32% year-over-year in items sold in Mexico. So we are extremely pleased with how we are executing in the countries. All categories in Mexico are showing good year-over-year GMB growth.

Unnamed Speaker: As you can see from our results, we grew to 32% year over year items for the Mexico. So.

Unnamed Speaker: We are extremely pleased with how we are executing the countries all categories and Mexico are showing good year over year growth.

Unnamed Speaker: While we see some of the Asian players focused on apparel and home and mostly focused on low ASP items, we see our growth in those segments as extremely healthy. So, in the end, we are confident that our competitive advantages, particularly logistics and payment, remain strong. We have a unique logistics network. We have a unique buy now, pay later and credit card offering in Brazil, in Mexico, etc., which we think will continue helping us drive our business and our market share gains in those markets. So, to wrap up, in the past several years, we have been successful in competing against Asian players who were executing strategies similar to the ones that current players are executing. We expect to continue doing so in the future, building on our strengths and successfully competing against whoever is operating in each of the markets where we operate. Just on your question on CapEx, obviously, we don't guide future expenditures, but this year, 2023, was roughly $500 million invested in CapEx, which was fully funded with our own cash flow generation.

Unnamed Speaker: When we see some of the Asian players focused on a bottle and home on and most people on low.

Unnamed Speaker: We see out of our growth in those segments extremely healthy.

Unnamed Speaker: So in the end, we are confident that our competitive advantages.

Unnamed Speaker: <unk> on payments remained from.

Unnamed Speaker: We have a unique logistics network, we have a unique bye.

Unnamed Speaker: Buy now pay later on today offering.

Unnamed Speaker: In Mexico, et cetera, which we think we will continue helping us and drive our business and our market share gains.

Unnamed Speaker: Those markets so wrap up.

Unnamed Speaker: In the past dividend, yes, we have been successful in competing against Asian player.

Unnamed Speaker: We're executing strategy similar to the one that's currently executing so we expect to continue doing so in the future building on our strength on successfully competing against whoever is operating in each of the market where we are.

Speaker Change: On your question on Capex I, usually we Don guide future expenditure about trying.

Unnamed Speaker: May 23, with roughly 500 members methadone Capex, which was what do you find it went out with our own Castro generation.

Unnamed Speaker: Okay, thank you so much. Thank you. One moment, please. Our next question comes from the line of Marcelo Santos of J.P. Morgan. Pardon me, Marcelo Santos, Yolanda...

Speaker Change: Okay. Thank you so much.

Marcelo Santos: Thank you one moment please.

Marcelo Santos: Our next question comes from Atlanta, Marcello Santos of J P. Morgan Your line is open.

Marcelo Santos: Alrighty Marcello Santos your line is open.

Marcelo Santos: Thank you. Sorry for having to ask you that. Thanks for taking my questions. My first question is about Nelly Maas.

Marcelo Santos: Alright, thank you.

Marcelo Santos: Oh, Thanks for taking my question. My first question is about lollipops.

Marcelo Santos: 90 miles or.

Unnamed Speaker: Is Nelly Maas negative in terms of P&L? I understand it has recurring benefits and has a lot of loyalty benefits, but when you think about the P&L impact, is it negative now and should it remain negative in the future? That's the first question. And the second question is, did you also see seasonal, peak costs last year, or was something that you had higher this year because you were running at fewer capacities? Thank you. One moment, please.

Marcelo Santos: Next negative.

Unnamed Speaker: Now I understand has recruited benefit.

Unnamed Speaker: Benefits, but when you think about the P N as in fact magnitude now and should be treated.

Unnamed Speaker: Future.

Unnamed Speaker: That's.

Unnamed Speaker: And the second question is did you also see the season.

Unnamed Speaker: <unk> cost less.

Unnamed Speaker: Something that you had stronger.

Speaker Change: <unk>. Thank you.

Speaker Change: Thank you one moment please.

Operator: All right. Thank you for your question. Yeah. The first part of the question... There are many mice.

Unnamed Speaker: Alright.

Speaker Change: Thank you for your question.

Operator: Okay.

Speaker Change: The first part of the question.

Operator: Two.

Unnamed Speaker: We don't look at many mice as an individual TNL. We look at this as a way to generate incrementality in our marketplace. So you break it down between content. Content is basically cost neutral because we pass on the benefits that we get. Basically, the cost that we pay for the content, we pass it on to our consumers. And then the shipping, obviously, we provide more free shipping, but that generates incremental volume. Then, in turn, they should finance that operation.

Speaker Change: <unk>, Okay, sorry, yeah minimized.

Unnamed Speaker: We don't look at many miles on it as an individual P&L will look at this as a way to generate income mentality in our in our marketplace. So you break it down between content companies basically cost neutral because we pass on the benefits that we get basically the cost that we pay for content with basket onto our consumer.

Unnamed Speaker: And then the shipping obviously will provide more free shipping that that generates incremental volume.

Unnamed Speaker: In times should.

Unnamed Speaker: In the short term, we are investing in this initiative because we're also investing in advertising, but it shouldn't be looked at as an individual PNL and more so as part of the critical part of our strategy for commerce. And then regarding the peak season, if we saw a particular peak, a special peak in terms of cost, yeah, probably this quarter, the incrementality of cost due to the peak season was a little bit higher than we saw last year. But again, as Ari mentioned, this is something that will revert in the following quarters. And I was expected to have a peak, an incremental cost during peak season.

Unnamed Speaker: That operation in the short term, we are investing behind this initiative because I'd also investing in advertising, but it shouldn't be looked at as an individual P&L marsala spot a critical part of our strategy for commerce.

Unnamed Speaker: And then regarding the big see some if we saw a particular.

Unnamed Speaker: Special peak in terms of course, yeah, probably this quarter.

Unnamed Speaker: The Incrementality of cost you, two pixies, and what's a little bit higher than we saw last year.

Unnamed Speaker: But again are you mentioned is something that.

Unnamed Speaker: With regard in.

Unnamed Speaker: Quarters.

Unnamed Speaker: And I don't expect it to have a peek.

Unnamed Speaker: Thank you very much. Thank you. One moment, please. Our next question comes from the line of Sumit Datta of New Street Research, a line of... Hi there, yeah, thanks very much for taking the question. Just one at this stage, please.

Unnamed Speaker: Incremental costs during peak season.

Sumit Datta: Thank you very much.

Sumit Datta: Thank you one moment please.

Sumit Datta: Our next question comes from the line of submit data New Street reset your line is open.

Sumit Datta: Oh, hi, there yeah. Thanks, very much for taking the questions just one at this stage clean or.

Sumit Datta: On Argentina and the fintech business, as we kind of contemplate entering a recessionary environment in Argentina, how should we think about the fintech business? I mean, the e-commerce business is a bit more logical to me in that sort of environment in terms of thinking about consumer demand, et cetera, units sold. But just on the fintech side, it's not clear to me kind of what the drivers will be exactly under that scenario. So if you could kind of help me with that, that would be great. I have said, let me try to...

Sumit Datta: <unk> <unk>.

Sumit Datta: Texas and us.

Sumit Datta: We kind of <unk>.

Sumit Datta: Simply entering in a recessionary environment.

Sumit Datta: And Tina how how should we think about the same Texas must be I mean the.

Sumit Datta: E Commerce business is a bit more kind of logical to me and that sort of environment in terms of thinking about <unk> [noise].

Sumit Datta: Et cetera unit, so, but just on the tech side is not clear to me kind of what the drive is will be exactly under that scenario. So if you could kind of helped me with that that'd be great. Thanks.

Unnamed Speaker: Thank you very much. Independent of whether there being a recession or not, obviously, volumes are impacted, but we are growing so much by gaining share, and the impact tends to be, or could be smaller. Let us not get into what will happen in the future, but it's a business that people still continue to sell and process payments, so what can vary a little bit is basically the growth rate, but no more than that. Where we've been more cautious is on the tech services side of the business, issuing credit. We don't have a credit card yet in Argentina, and we have been more cautious throughout the fourth quarter, even before the elections, knowing that there could be an evaluation and there could be increased NPLs. And that's why we were already more cautious towards the end of last year, and most of the volume growth you saw is coming from Mexico and Brazil and not from Argentina. And then we'll see what happens with the other fintech service products.

Sumit Datta: Mmm I hope said to.

Sumit Datta: Let me try to to.

Unnamed Speaker: Split the questions between the different businesses, we have with regards to acquiring I'd say to visit that also is very much.

Unnamed Speaker: Dependent of there'll be an artificial no obviously the Williams are impacted by were growing so much by gaining sure.

Unnamed Speaker: And to be.

Unnamed Speaker: Would be smaller.

Unnamed Speaker: That does not get into.

Unnamed Speaker: In the future but.

Unnamed Speaker: That people still continue to sell out and process payments will look I'm very little Betis is kelly the growth rate, but no more than that.

Unnamed Speaker: Be more cautious is Sunday on the on the services side of the visit on issuing credit.

Unnamed Speaker: Have you had a credit card and and and Dina and we'd be more cautious throughout the fourth quarter, even before the elections.

Unnamed Speaker: That could via the valuation and there could be increased.

Unnamed Speaker: And that's why we were already more closures towards the end of last year and most of the volume growth you saw it coming from Mexico, and Brazil and not from Argentina.

Unnamed Speaker: And then we'll see what happens with the other service programs, what we're seeing today is.

Unnamed Speaker: What we're seeing today is inflation that, in Q4 and even today, has peaked and is higher than it was, and that is a further incentive, and we have seen that, for people to bring money from their bank into the MercadoPau account, which is currently rewarding 80% year-on-year, and it's a huge advantage versus zero at most banks. So we saw throughout the fourth quarter an increase in asset management. You don't see that in total numbers because of the evaluation at the end of the year, but in local currency, we grew assets in our account by 6x year-over-year. So I would say that I'm comfortable with the impact we saw towards the end of last year. We cannot predict what will happen in the future. We don't forecast what will happen in the present.

Unnamed Speaker: And inflation.

Unnamed Speaker: That in queue for uneven today is.

Unnamed Speaker: Is higher than it was and that is further incentive that we have seen that for people to bring money from their bank into the <unk> account, which is currently a remnant 18, 80% year on year and is a huge advantage worth zoo at most banks. So we so throughout the fourth quarter an increase in the accident management you are going to.

Unnamed Speaker: See that in total numbers because the evaluation at the end of the year, but in local currency. We grew assets in your account by six eggs in over a year, so I would say that and comfort.

Unnamed Speaker: Comfortable with the impact we so towards the end of last year, we cannot predict what.

Unnamed Speaker: With the forecast what will happen in the future and if I may complement the a great business and that was the drina convenience to have the lowest mpls compared to all other markets and continues to be extremely profitable.

Unnamed Speaker: And if I may add, the credit business in Argentina continues to have the lowest NPL compared to all other markets, and it continues to be extremely profitable in terms of Nimaos. Great, thank you. Thank you. One moment, please.

Unnamed Speaker: So.

Speaker Change: Great. Thank you.

Speaker Change: Thank you one moment.

Nia Agarwala: Our next question comes from Nia Agarwala of HSBC. Your line is open. Hi, thank you for taking my question. A quick one: I noticed that the ticket size for your credit card loans across the segments has been coming down. Is this a conscious decision?

Speaker Change: Our next question comes on line of <unk>.

Nia Agarwala: HSBC Your line is open.

Nia Agarwala: Alright. Thank you for taking my question a quick one I know this is a ticket size sorry, okay, <unk> I'm trying to segment.

Nia Agarwala: The man coming up is this a conscious decision is this.

Unnamed Speaker: Or is this a trend based on the demand that you're seeing from your clients? And any color on the credit uptake in Mexico? What kind of products are working in Mexico?

Unnamed Speaker: Based on the demand <unk> from your client and any kind of.

Nia Agarwala: Uptake in Mexico, what kind of products working in Mexico.

Unnamed Speaker: How is the response to the credit card? That would be very helpful. Thank you so much. Let me start with the first part of the question and then... Yeah. I'll take on the second one. The first one, I would say, with regard to the credit card loans, they have been falling. It has totally been a conscious decision.

Speaker Change: Okay got that would be very helpful. Thank you so much.

Unnamed Speaker: Let me start with the first part of the question and then.

Unnamed Speaker: Yeah.

Unnamed Speaker: On the second one the first one I would say with regard to the credit card loans. We have been fall any has been totally being a conscious decision. What it would have been doing is reaching out tomorrow consumers, who who didn't know how the credit card in the past.

Unnamed Speaker: What we have been doing is reaching out to more consumers who did not have a credit card in the past with micro lines, where we say that they're typically 100 or 200 reais lines, so they're really small lines, and also with what we call warranted cards, where we ask people to deposit 100 or 200 or 300 reais into their account and offer a card that is warranted by that amount. So definitely, that has been part of our strategy in order to be, for many of these people, the first time they get a credit card. And with regard to, you mentioned the great uptake in Mexico, I would say that. Basically, we have been growing a lot. First, the credit card, which is the latest product we launched and has been quite a successful launch. And when you look at the combined volume we are loaning to consumers, adding the consumer loans to the credit cards, that business has also been growing nicely. Just in terms of the acid quality trends that you are seeing in Mexico.

Unnamed Speaker: Micro lines, when we say that it's typically mohammed or 200 re eyes.

Unnamed Speaker: So it really small lines and also with what we call warranty cards were we ask people to to deposit handle 200, 300 re I think the account and offered a card that is guaranteed by the amount so differently and that has been part of a tragedy in order to be for many of these people the first time.

Unnamed Speaker: Get a credit card.

Unnamed Speaker: Yeah.

Unnamed Speaker: And with regards to you mentioned, great uptick in Mexico, I would say that.

Speaker Change: Kelly, we have been growing a lot.

Unnamed Speaker: First the credit card, which is the latest probably will launch.

Unnamed Speaker: It's been quite successful lunch and when you look at the combined volume we are learning to consumers, adding the consumer loans to the glucose <unk>.

Unnamed Speaker: Business has also been growing nicely.

Unnamed Speaker: Alright.

Speaker Change: I could tell you 10 that Eli.

Unnamed Speaker: Sorry, could you repeat the question, please? Asset quality trends for your consumer lending and credit card book in Mexico. Is it better than Brazil?

Unnamed Speaker: Pickles.

Speaker Change: Oh I'm, sorry could you repeat the question please.

Unnamed Speaker: <unk>.

Unnamed Speaker: That book.

Unnamed Speaker: Better than Nick.

Unnamed Speaker: Has it been improving, or are you cautious there? Thank you. It has remained fairly stable, and profitability has continued to be good.

Unnamed Speaker: Has it been building question day.

Speaker Change: Thank you.

Unnamed Speaker: It has been re mailed from the table.

Unnamed Speaker: The profitability has it has continued to be good.

Unnamed Speaker: Thank you so much. Thank you. Our next question comes from the line of Martin Fong of BTIG. Your line is open. Excuse me. Did you say Martin Fong?

Speaker Change: Thank you so much.

Marvin Fong: Thank you one moment please.

Marvin Fong: Our next question comes from the line of <unk>.

Marvin Fong: <unk> and your line is open.

Marvin Fong: Excuse me did you say smartphones.

Marvin Fong: You put out there. But thanks for taking my question. Two, if I may.

Marvin Fong: Put out there, but thanks for taking my question.

Marvin Fong: Two if I may April 1st.

Unnamed Speaker: First, I think maybe you touched on this earlier, but the FinTech take rate, I think there was some compression there, part of which was related to financing costs. And, you know, in prior quarters, we had thought that perhaps the take rate would fall kind of in step with your funding costs. So, you know, you see some spread compression there, and any thoughts about, you know, how you should think about that going forward? And then second question, just to touch again on the credit portfolio, the consumer loan balance fell a little bit quarter over quarter. So was that a function of what you were saying about Argentina and pausing there, or was it some currency issues or any kind of highlight there?

Marvin Fong: I think maybe you touched on this earlier, but the the <unk> the.

Unnamed Speaker: <unk> take right I think there was some question there Paula which was related to financing costumes.

Unnamed Speaker: And prior quarters.

Unnamed Speaker: You know we had we had thought that perhaps.

Unnamed Speaker: But take rate would fall kind of in step with.

Unnamed Speaker: With no funding hospital.

Unnamed Speaker: Spread compression there and.

Unnamed Speaker: Any any thoughts about you know how I should think about that going forward and then someone question just the touch again on the on the credit credit portfolio. The the consumer loan balance up sell a little bit quarter over quarter, what was that without a function of what you were saying about Argentina and Paul thing there was some currency.

Unnamed Speaker: Issues or or any kind of.

Unnamed Speaker: Is it sort of you're focusing more on credit cards, and maybe the consumer book won't have as much growth for the time being? I would say on the FinTech takeaways, part of the impact is a larger portion of our credit book coming from credit cards, which have a portion of those loans that are interest-bearing are lower than in the other kinds of loans that have some impact on that. Also, on the other part of the FinTech business, when you look at our acquiring business, as we move into SMBs, they typically have a slightly lower take rate out of it with significantly larger volumes. I would say that those have an impact on the overall take rate. And the second one you mentioned, if I understood correctly, was there an impact on the credit portfolio because of the Argentina devaluation, right? Um, I was it's sort of a part of the question. I was just noticing the consumer loans kind of fell very, very slightly quarter over quarter, and I was, hypothesizing that perhaps there might be some currency impact or just, is there something else behind it? Yeah, there was some impact for two reasons.

Unnamed Speaker: Highlight there is it is it sort of.

Unnamed Speaker: Because they want a credit card and consumer book won't have as much cool.

Unnamed Speaker: Thanks.

Unnamed Speaker: I would say that syntactic type rates are part of the impact is.

Unnamed Speaker: Larger portion of our grade book coming from credit cards could have.

Unnamed Speaker: The portion of those loans that are interest bearing are lower than in the other kinds of loans that has some impact to that also on the other on the.

Unnamed Speaker: The other part of the <unk> business when you look at Ah.

Unnamed Speaker: Client basis, as we move into Smb's, they typically have lower lower decorate with.

Unnamed Speaker: Significantly larger volume, let's say those are two totally to impact in the house.

Unnamed Speaker: The impact on the overall deadweight.

Unnamed Speaker: The second one you mentioned if I got it right was the worst.

Unnamed Speaker: And impacting the great portfolio because of the Argentina devaluation rent.

Unnamed Speaker:

Unnamed Speaker: It's sort of all part of the question I was just noticing the consumer loan kind of fell very slightly.

Unnamed Speaker: Slightly quarter over quarter.

Unnamed Speaker: And I was.

Unnamed Speaker: Hypothesize that.

Unnamed Speaker: That might be some kind of impact but just.

Unnamed Speaker: Or is there something else behind that.

Unnamed Speaker: Yeah, there was some impact for two reasons. The first one is.

Unnamed Speaker: And the first one is that in the fourth quarter before the elections, we were more conservative in issuing credit in Argentina. And the second one is more direct, which is the currency devaluation. Since we take the portfolios at the end of the quarter, the devaluation happened throughout December. And therefore, the loans portfolio we're showing in Argentina is devalued already.

Unnamed Speaker: Fourth quarter before the elections, we were more concerned about aviation credits in Argentina, and the second one is more direct which is.

Unnamed Speaker: Devaluation since we take the portfolios on the end of the quarter.

Unnamed Speaker: With a unusual happened throughout December and therefore, the loans portfolio virtual in Argentina devalued already.

Unnamed Speaker: Okay, understood. Thanks so much. Thank you. Well, thank you, everybody. As we mentioned, we are super excited with the result of the quarter, and we're closing a great 2023, and we look forward to seeing you when we present the results for Q1 of 2024.

Speaker Change: [noise], Okay I understood. Thanks, so much.

Speaker Change: Thank you I'm showing no further question at this time and I'm, just trying to call back over to Martin.

Speaker Change: C F L for any closing remarks.

Unnamed Speaker: Wow. Thank you everybody I think we mentioned we're super excited with the result of the quarter with closing a great 2023, and we look forward to seeing you when we per cent of the result of.

Unnamed Speaker: Thank you very much. Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now go. Have a great day. Thank you for watching!

Speaker Change: You want in Australia twenty-four thank you very much.

Speaker Change: Ladies and gentlemen, this does conclude today's conference. Thank you I'll participate you may now disconnect have a great day.

Unnamed Speaker: Okay.

Unnamed Speaker: [music].