MercadoLibre, Inc. Q2 FY2025 earnings call

• In Brazil, lowered free shipping threshold third time in 5 years to bring offline retail online, boosting user engagement and GMV. - Mexico saw sharp GMV growth, with 1P and cross-border businesses, and launched integration with Google Manager for Mercado Ads. - FinTech: Mercado Pago monthly active users at 68 million, credit portfolio grew 91% y-o-y, credit cards issued 1.5 million new cards, NIMAL stable, and NPLs below 7% for 50-90 days. - Advertising: Grew 38% y-o-y, Argentina narrowing ad revenue gap via macro conditions and team execution, and AI leveraged to improve marketing and ad spend efficiency.

In Q2, MercadoLibre saw revenues grow over 30% y-o-y with record income from operations of $825 million. In Brazil, lowering the free shipping threshold attracted new users and increased GMV growth in June. Mexico had sharp GMV growth, with 1P and cross-border businesses driving performance, and advertising revenue up 38% y-o-y. FinTech services had 68 million monthly active users on Mercado Pago, assets under management doubled, credit portfolio surpassed $9.3 billion (91% y-o-y growth), and credit cards issued 1.5 million new cards. Advertising revenue grew 38% y-o-y, with Argentina narrowing the ad revenue gap with Brazil and Mexico.

Management looks forward to presenting Q3 results in October. Continued investment in commerce, fintech, and advertising to advance long-term ambitions. Expect ongoing growth as investments compound.

• Macroeconomic conditions could impact consumer spending and credit quality. - Uncertainties in AI integration and its full operational impact. - Fluctuations in NPLs, though management is satisfied with current trends.

Q: Congratulations on CEO transition, curious on shipping changes and seller fees.

A: Lowering fees smoothed the take rate cliff, leading to price reductions and more selections, with positive early results.

Q: About higher sales and marketing spend.

A: Due to campaigns in Mercado Pago, commerce initiatives, and paid advertising, with AI expected to enhance efficiency.

Q: On low ASP selection vs Shopee.

A: MercadoLibre has widest selection in Brazil, seeing traction in low ASP listings, with positive seller reaction.

Q: Applying shipping strategy to other countries.

A: Each market is different; evaluation ongoing but no immediate plans.

Q: Commerce pricing pass-through and NPLs.

A: Most fee reductions passed to prices; NPLs showing sequential reduction in 15-90 days, profitability improving.

Q: Advertising and Argentina ad revenue.

A: Ads grew 38%, Argentina narrowing gap via macro and team execution; AI used in ad optimization.

Q: Credit card NIMAL and Argentina credit.

A: Brazil credit card NIMAL breakeven, Argentina portfolio growing but market conditions monitored; reserve requirement changes impact payments to users.

Q: Infrastructure adaptation for low ASPs.

A: Long-term view on unit economics, expecting net positive P&L with scale and productivity gains.

Q: Credit card issuance and consumer spending.

A: Confident in credit card growth with improved models, monitoring market conditions but comfortable with current performance.