Mercadolibre Inc

NASDAQ:MELI

Earnings Call Transcript 2023-Q1

[Operator]

Good day, and thank you for standing by Welcome to The MercadoLibre Earnings Conference Call. At this time all participants are in a listen-only mode. Due to some technical issues, we will begin this call with the Q&A segment. After the Q&A we will have the video available to play on this call. Thank you for your understanding.

[Operator]

So at this time, we will conduct the question-and-answer session, as I mentioned. [Operator Instructions]

Our first question comes from the line of Andrew Ruben from Morgan Stanley. Your line is now open.

[Andrew Ruben, Morgan Stanley]

Hey, great. Thanks very much for the question. I'm interested on the commerce take rate. It was a strong quarter we see the increase of about 50 bps for the seller final value fees about 60 bps on the shipping fees. I'm curious if you could dig in a bit further on both of those items. Was there any change in in your pricing policy? Was it mix, anything maybe on the contra revenue line just trying to understand what drove the take rate expansion would be helpful, thank you

[Operator]

One moment, please. Yes, Pedro, we can hear you now.

[Pedro Arnt, CFO]

Can you hear me now?

[Operator]

Yes, we can, Pedro.

[Pedro Arnt, CFO]

Sorry. So we were just encouraging everyone to please take a look at the video after we're done with Q&A. And apologize for the technical difficulty.

Andrew, it's a little bit of the three things you mentioned. So we have began or continued to selectively change shipping prices on select routes and zones in different markets. And so the net revenue from shipping has improved as a consequence of those pricing actions.

Mix has been a driver of improving final value fees, as there's some mix shift towards higher take rate categories. And typically at the beginning of the year in the first quarter, we also carry out selective pricing on seller fees across different geos in the marketplace.

[Andrew Ruben, Morgan Stanley]

Great, and as a quick follow up, you mentioned the pricing on select routes and zones in different markets. Is that more the core logistics fees or any change in how you've implemented some of the tests for fulfillment and warehousing specifically? Thanks again.

[Pedro Arnt, CFO]

Yeah, no. So this is driven more by passing on cost increases to transportation costs within our network, and less related to us beginning to ramp up the monetization on fulfillment. If anything, as I always said, the first sequential priority on fulfillment is to continue to drive incremental usage of the fulfillment service. We've seen some really solid pickup of fulfillment adoption throughout the first quarter, primarily in Brazil, exiting on a high note in terms of a historical high for Brazilian fulfillment penetration. So we continue to accomplish that first sequential goal.

The ramp up in monetization, we always said is probably the second one sequentially, once we've reached more Mexico like levels of fulfillment in the other markets. So the monetization improvements on logistics are not driven by incremental monetization on fulfillment services, but much more by price increases on transportation costs.

[Andrew Ruben, Morgan Stanley]

Great, it's very clear. Thank you.

[Operator]

Thank you, one moment while we prepare the next question. Our next question comes from Irma Sgarz from Goldman Sachs. Your line is now open.

[Irma Sgarz, Goldman Sachs]

Hi, thanks for taking my question. So the continued rise in your product and technology development expenses, leave relatively little doubt about your commitment to invest beyond innovation. But my question is other than adtech, are there any other specific new areas to which you're incrementally deploying more tech spend in 2023?

And then the second part to this question is, is related? I imagine you already use AI and machine learning across a number of products and functionalities. But with the advances, advances on these technologies over the last six months or so, are there any new areas of application and opportunities that you're particularly excited about and will they require either through the OpEx or the CapEx line, greater investment cycle into the future? Thank you.

[Pedro Arnt, CFO]

Hi, Irma. So on product development, a couple of important, I think, clarifications, yes, it continues to be the most significant line in terms of deleveraging. I think on super solid top line, when we look at margin expansion, we've been able to generate incremental margin across most of our cost lines. The two that haven't on a year-on-year basis are certain sales taxes, primarily in Brazil, and then 220 basis points from product development.

Bear in mind that the rate of incremental hiring has come down from about 4,000 engineers to 2,000. And so a significant portion of those 220 basis points are a consequence of the annual realisation of all the engineers that we hired last year, and not a continued acceleration in rate of engineers hirings. So for next year, we should begin to see a slowdown in the level of deleveraging from product development, unless we significantly ramp up hirings, again, which is currently not on the plans.

In terms of areas of of investment, it really is across the board. We see our product and our technology as a competitive advantage. And those engineers are really split across the multiple different products and services that we are either building out or improving constantly. So they're fairly evenly distributed among the existing businesses you're well aware of.

In terms of AI, I think as most companies, we do see some very relevant, short to midterm positive impact in terms of engineering productivity. And we are also increasing the amount of work being done on what elements of the consumer facing experiences we can deploy AI on. I think the focus right now is on some of the more obvious use cases, improving and streamlining customer service and interactions with reps, improving workflows for reps, through AI assisted workflow tools, and then deploying AI to help a better search and discovery in terms of better finding products on our website, and better understanding specific -- specifications of products, where existing LLM are quite efficient.

And then beyond that, I think there's a lot of work going on. And we hope to come up with other innovative forms of AI that we can place into the consumer facing experience, but the ones I just mentioned are the ones that we're currently working on the most.

[Irma Sgarz, Goldman Sachs]

Great, thanks very much.

[Operator]

Thank you. Please stand by while we prepare the next question. Our next question comes from Marcelo Santos from JPMorgan. Your line is now open.

[Marcelo Santos, JPMorgan]

Hi, good evening. Thanks for taking my question. I wanted to ask about the improved logistic economics you mentioned in the release. This is mostly because of pricing that you pass to or are you experiencing also benefits of scale or more efficiency like cost based improved economics? Thank you.

[Pedro Arnt, CFO]

Yeah, so it's not just driven by price increases. We continue to see improvements in terms of productivity across different portions of our network. So it's a combination of pricing and scale increases --in scale benefits.

[Marcelo Santos, JPMorgan]

Perfect Thank you.

[Operator]

Thank you. One moment, please while we prepare our next question. Great. Our next question is from Thiago Macruz from Itau BBA. Your line is now open.

[Thiago Macruz, Itau]

Thanks guys. And thank you for taking my question. And congrats on a great quarter. You've mentioned that the warranty be operation has reached a turning point in this Q1. Can you shed some light on the main differences that you're seeing the economics of the business today? And also, you're generating plenty of cash? Would it make sense to invest that more and accelerate the consolidation of the market chiefly in Brazil, where we now see a somewhat softer competitive environment? Thanks, guys.

[Pedro Arnt, CFO]

Great. So I think as we signaled over the past few quarters, we had slowed down the first party business, in large part because we had grown it initially very fast. And there was a significant amount of internal operations that we wanted to be able to fix, which would allow us to then reaccelerate that business with a healthy margin structure, and much better internal operations.

What you're beginning to see now are the initial phases of that turnaround. So we feel a lot more confident in how that business is being run, we're beginning to see margin improvements across different product lines in 1P, and hence you're seeing some of the acceleration. And going forward, if we continue to see these positive trends, you should continue to see the 1P business accelerating growth going forward, which should give us some interesting benefits across the categories where 1P can be an important competitive factor.

On your point of investing even more aggressively to consolidate market share, I think if you look at our 1P results, and you look at certain things like marketing spend certain couponing efforts, investment behind the logistics network, you will see that we did lean into the market, especially in Brazil, where there is more market share up for grabs short term.

The return on those investments was a very strong acceleration in top-line, which actually meant that margin wise, it was contributed from dollar perspective. So we do feel that we are investing more aggressively to try to more rapidly strengthen our leadership position. And we do see that reflected in market share numbers.

Investing even more probably gets us into areas where the return on those incremental investments don't make as much sense, thinking long term. And so I think we continue to manage the P&L in an aggressive way, striving first and foremost for market share gains and above market growth. But at the same time understanding that at the scale we have, we want that incremental market share to come in a way that's profitable. And that continues to be the way that we're managing those incremental investments across different markets.

[Thiago Macruz, Itau]

Makes sense. Thank you very much.

[Operator]

Thank you. One moment, please while we compile our next question. Our next question is from Pedro Pinto from BBI. Your line is now open.

[Pedro Pinto, BBI]

Thank you, everybody for taking the question. I would like to hear from you. Addition of e-commerce across regions. As long as market share gains in Mexico in Brazil seems to be in good shape. Do you think it's time to increase focus in other regions such as Chile? So basically, I would like to know what are do you think of timing and may deliverables very strong?

[Pedro Arnt, CFO]

Yeah, great question. I think we continue to see a very attractive midterm opportunity in the Andean markets, Chile, Colombia, Peru. Chile has some very tough comps based on macro issues. In the previous years, a lot of money was put into consumer pockets that went in large into consumption. And so that means that the rate of acceleration in Chile has been significantly down and even negative over the last few quarters. And we're beginning to see that beginning to turn around. GMV growth was already slightly positive this quarter, and revenue growth rebounded and was much more positive than in previous quarters.

So we're confident that Chile should continue that turnaround and that improvement Chile not so long ago was one of our fastest-growing markets throughout the pandemic. And so we think that once the comp issues are behind us, there's a lot of potential from that market.

Peru is still quite small for us, we are increasing our customer acquisition and marketing spend there this year versus prior years, nothing that dramatically impact the consolidated P&L. But for the size of that market, that is a significant ramp-up in marketing spend over last year.

And hopefully, we see enough returns on that, but then we can continue to double down on Peru. And Colombia is potentially the market that's been most challenging for us. I think in general, that's true for all of e-commerce, but we still see that as an attractive market. And eventually, I think we will try to figure that out. I don't think it's a matter at this point of investing more. We actually have a P&L in Colombia that is not profitable, and that receives the right amount of investment. It's more a matter of waiting for the market to mature a little bit and for us to continue to improve on execution and product rollouts so that we can see better results coming out of that market.

[Pedro Pinto, BBI]

Okay. Thank you.

[Operator]

Just one moment while we compile the next question. Our next question comes from Geoffrey Elliott from Autonomous. Your line is now open.

[Geoffrey Elliott, Autonomous Research]

Hello, thanks for taking the question. Wanted to ask one on the credit side. It looks like the IMAL is down quite a bit sequentially. And I know in the slides, you mentioned an element of seasonality around bad debt. But if we look at the bad debt, provisions, they're a bit higher than 4Q, but quite a bit lower than 2Q and 3Q when the IMAL was higher. So can you help us understand a bit better what's going on there? Is that a mix shift is pricing change? Is it about funding cost? What's driven that down? And how should we think about it going forward? Thank you.

[Osvaldo Gimenez, President, Fintech]

Hi, Jeffrey. Yes, IMAL is down from what I think was an exceptional high quarter, still 39% for the quarter. And I think it was -- came down for a combination of things. On the one hand, we had slightly lower revenue the fourth quarter typically is a quarter where we see a higher participation of merchant credits and it usually comes down in the first quarter.

Also in the first quarter, we increased the issuing credit cards, which initially there, you book the losses initially, but then most of the volume does not generate revenues because it gets paid in full. And that brings down a little bit IMAL also as you book the losses initially, that also increases the bad debt. And finally, as the portfolio rose in the quarter, is the third thing that impacts the change in the portfolio that impacts IMAL. That's why it came down. We're still comfortable with the 39% volume.

[Geoffrey Elliott, Autonomous Research]

And you mentioned accelerating in credit cards. What have you seen that given you confidence to do that? And how how much more potential is that to continue to ramp up growth in costs.

[Osvaldo Gimenez, President, Fintech]

We felt confident, we're always looking at cohorts and flow rates, and we felt comfortable that towards the -- I would say, in the second half of the first quarter, we were comfortable that we're willing to issue more cards so we should significantly more cards in the first quarter than we did in the fourth quarter of last year. And we'll see how conditions remain. But so far, we are comfortable with the rollway that we're seeing and with the latest segment of comps we have issued.

[Geoffrey Elliott, Autonomous Research]

Great, thanks very much.

[Operator]

Thank you. [Operator Instructions] And Jamie Friedman from Susquehanna International Group. Your line is now open. All right, thank you for your patience. We will be queuing our next question. Deepak Mathivanan, your call is now open from Wolfe Research.

[Deepak Mathivanan, Wolfe Research]

Great, thanks for taking questions. Great. Pedro, first question, as penetration gains were a little bit lower than we expected. I understand there is some lumpiness to it. But can you talk about the product road map in 2023 and kind of the efforts to accelerate the penetration.

And then second question, can you talk about the drivers of the credit book growth, particularly on the consumer side. What signals are you seeing in the market to enabling growing the book? And is there kind of like a level for IMAL merchants that we can expect you to hold as you sort of lean in and grow the book again. Thanks so much.

[Pedro Arnt, CFO]

Great. So on advertising, the business continues to grow very nicely. It grew at 62% year-on-year, which is very much in line with the growth rate over the past three quarters. This is dollar growth. So momentum is still quite strong.

GMV did accelerate this quarter versus prior quarter. So that makes it a tougher comp for the ad business given that we're dividing revenue by GMV on the penetration metric. If GMV growth had been similar to prior quarter, we would have had a 10 basis point increase Q-on-Q in advertising penetration or something along those lines.

And then potentially, bear in mind that Q1 is also seasonally less of a season for advertisers to invest as aggressively as in Q4. So the rollover on a sequential basis from Q4 to Q1 is not necessarily one where we should see significant penetration gains.

And then finally, a lot of the technology that's being launched over the last few quarters, as we've been saying, potentially takes some time before it gets fully adopted by advertisers. And so the next few quarters, we would expect to see increases once again in penetration, given that we'd like to see advertising revenues outpacing GMV growth.

Finally, if you look at the year-on-year penetration gains to strip out seasonality, those continue to be quite, quite encouraging.

[Osvaldo Gimenez, President, Fintech]

Deepak, with regards to credit, we saw -- we feel comfortable increasing origination mostly in Argentina and Mexico, mostly, I'd say, Mexico and Argentina in that order are to a lower degree in Brazil. And the reason was that we always continue having control groups and seeing if those are profitable, and we thought there was profitability. I was willing to take more risk and expand the number of consumers we're reaching out to in Mexico and Argentina, and we did so. And the case of Brazil, it was mostly the increase in origination was in the credit card business towards the second half of the quarter.

And in terms of merchant credits, it has remained stable from the quarter mostly. And you had a final question regarding IMAL. I'm not sure I got that one.

[Pedro Arnt, CFO]

Yeah. Look, Deepak, I think there is a growing number of credit products out there that could affect credit. So I think we're not giving any kind of directionality on where we think the interest margin after losses might trend. We'll report those back to you guys on a quarter-per-quarter basis.

Also because as we begin to see, as Osvaldo was just saying, an improvement in credit conditions in the credit cycle that potentially encourages us to start opening the spigot again in originations. And even within customer segments, we could see lower margin segments that when you risk adjust are actually very attractive to move into and will generate incremental dollars from credit, but won't necessarily be incremental in terms of IMAL.

So we'll keep you guys posted as this moves forward. I think the books are still very, very young. And you could see potential volatility in margin structures because of segment and product mix shifts that might occur going forward.

[Deepak Mathivanan, Wolfe Research]

Thanks so much, Pedro.

[Operator]

Thank you. And one moment while we prepare the next question. Our next question comes from Stephen Ju from Credit Suisse. Your line is now open.

[Stephen Ju, Credit Suisse]

Thank you, Pedro. So the Argentina unit growth has reverted back positive, but it's still a little bit unusual to see that number in the single digits. So I get that we can't grow high double digits forever. But can we talk about what you may be seeing from either a cyclical or a secular perspective that might be moving that growth around?

And second, that you probably seen the -- one of the mobile operating system owners release a savings account product, then I think it was able to gather a pretty large sum of deposits immediately on the release. So you're already pretty well on your way with the credit products, but does this event directional pro greater urgency on the asset management product development for you? Thanks.

[Pedro Arnt, CFO]

Stephen, thanks. Argentina, I would attribute the weakness in that business primarily to very volatile macro conditions. You're correct. I think it's a business that we've historically seen it perform well even in weaker macro as generally is the case for MELI. I think over the past few quarters, currency restrictions have made difficult to import goods.

So I don't see anything structural there. Argentina still has a level of e-commerce penetration of retail that is lower than Brazil, for example. It's a market where we have probably the strongest market share and is far from saturation. So that should be an attractive market for us mid and long term. And we will just have to navigate through the short-term volatility.

Bear in mind that also because structurally, it's a less competitive market. It's also a market where we are more focused on profitability than growth. And if you look at the bottom line results coming out of Argentina, those are still extremely, extremely strong.

[Osvaldo Gimenez, President, Fintech]

And then with regards to how do you call it, to the virtual account that offers a return. It's -- I would say it's very similar to what we have been offering for the last four or five years in all of our top three markets. And what has happened recently is with interest rates going up. There's a -- clearly, there's an incentive to do money out of savings accounts from banks, which usually pay and into money market accounts. And the ones we offer in each of the market has the advantage that they have instant availability and returns vary with local interest rates. But in Brazil, it's in the order of 13% in Argentina, given the incredibly high rates, it's in the order of 69% and in Mexico, it's in line with -- 6% or 5%.

So what we have seen is a significant increase in asset under management, which is growing over 100% year-over-year, and we believe that this flow is likely to continue. And so I believe that this is a product, the launch and the one we have that has a huge opportunity given that banks continue to pay zero over close to zero in most cases in Latin America in accounts.

[Stephen Ju, Credit Suisse]

Thank you.

[Operator]

Thank you. One while we prepare our next question. Our next question comes from Neha Agarwala from HSBC. Your line is now open.

[Neha Agarwala, HSBC]

Hi, thank you or taking my question. I gathered that you are more open to accelerating gradually the pace of 1P. What impact should we see coming from that in terms of margin costs take rate? Anything that you can express about that, that would be very helpful. The impact of the 1P acceleration.

And my second question is on the credit business. There was a bit of acceleration in terms of credit origination. I understand it's mostly from Mexico and Argentina. But should we see a continued acceleration in the coming quarters as things are stabilizing in Brazil? Or would you still remain resilient and kind of maintain originations and grow selectively for the rest of the year? Thank you so much.

[Pedro Arnt, CFO]

So on 1P, the 1P business has been improving its margin structure across pretty much all categories, but continues to have a lower margin than the rest of our businesses. To be more precise, it continues to be negative in terms of EBIT margin. So a growth in the 1P business now should be instrumental in strengthening categories where we under-index in having a better selection for our consumers which are all long-term positive. It should help us continue to gain scale within 1P purchasing and logistics, which should continue to improve the margins within 1P until eventually turning positive, but short term, they're detrimental on margins.

In terms of take rate, it's the opposite story. Obviously, there, we book the full revenue base, and so it's a catalyst of accelerating revenue and improving take rates. But again, all in, we believe 1P is going to be critical for long-term success in certain specific categories. And so we think that it's very positive news that we're beginning to pick that business up again in terms of growth rates, given that we feel more comfortable about the user experience and the margin trajectory that we will be able to deliver going forward in our 1P operation.

[Osvaldo Gimenez, President, Fintech]

In terms of credit originations, I would say that our credit models, one of the most important things they do is to sort users in terms of increased risk. And so small sale I'd say, very well calibrated. And so whenever in a given cohort, we are seeing that we have good results, we're willing to go to the next one. But beyond that, what we have been doing is keep control groups whenever they want to start giving loans to a segment we are not giving loans in the past. And whenever we see there's profitability in that group, we are willing to expand that segment.

That has happened already is going on now with Argentina and Mexico. It is not yet the case in Brazil. Whenever we see that profitability starts to improve in those control rooms will be more willing to originate trade faster in Brazil.

[Neha Agarwala, HSBC]

Understood. Thank you so much.

[Operator]

Thank you. One moment while we prepare next question. Our next question comes from Robert Ford from Bank of America. Your line is now open.

[Robert Ford, Bank of America Merrill Lynch]

Thank you. And congratulations on the quarter. Pedro, can you discuss trends in terms of items per box coming from the distribution centers across your various markets? And as you enable the drop-off returns in your places or agencies, how is that driving new category trial and GMV growth versus areas without those return services. Thank you.

[Pedro Arnt, CFO]

Bob, items per order has had a very gradual trend up as fulfillment penetration continues to grow and as we get better at co-locating inventory, but the numbers have not been significant or material. It's been very, very slightly steeping up and to the right.

So I think as we continue to grow fulfillment penetration, like I said, we exited Q1 on a record high for Brazil. Hopefully, that allows to drive that number up. We're also going to be innovating significantly on network design on certain options for consumers at checkout that will allow them to bundle purchases into single deliveries or bundle greater numbers of delivery slots which should also help us drive up items per order, lower cost and to be able to give some of those cost improvements back to the consumers who select that slower option.

In terms of greater category trial as a consequence of offering better return options. I'll need to be in debt with you on the answer to that. We do see an improved return experience, and we do see increases in returns on the part of consumers, which are helping our NPS but I haven't seen the data that allows us to cross reference that to incremental category growth. So I don't know the answer to your question.

[Robert Ford, Bank of America Merrill Lynch]

No worries. Thanks, again. And congratulations on the quarter.

[Operator]

Thank you. One moment please while we prepare our next question. Our next question comes from Trevor Young from Barclays. Your line is now open.

[Trevor Young, Barclays]

Okay. Great. Just first one, dovetailing on that last one, innovating on the network design and so forth. It looks like CapEx is down Q-on-Q and it's below trend in recent quarters. Was there anything like timing related there? And should we expect that to rebound later in the year as maybe make some of those investments in innovating on the network design.

And then second question on market share gains in Brazil. Did that come from certain categories where competitors are maybe seeding some share? Or was it more broad-based than that? Thank you.

[Pedro Arnt, CFO]

Yeah. So the CapEx improvements do have an element of phasing there were certain investments in logistics that we initially had budgeted for the first quarter that had been pushed back into second, third and fourth quarter. So there is an element of phasing to that slowdown in CapEx. Our CapEx trajectory also will be somewhat volatile as new warehouses and new nodes come into play in different markets at different times depending on the specific network rollouts across the multiple geographies where we're scaling out MELI Logistics.

But specifically, Q1 did have phasing elements and the shipping related CapEx came in quite low, below $50 million for the quarter.

On market share gains, they've been consistent across multiple categories. I do think that, as we said, those share gains in part are because we leaned into the specific change in market structure and the relative balance sheet weakness of certain market participants. So a lot of that is coming from share that's being given up by other players, but it was fairly distributed across all categories.

So when we look at category per category market share, we're seeing ourselves as market share gainers across most categories.

[Trevor Young, Barclays]

That's very helpful. Thanks.

[Operator]

Thank you. One moment for our last question. Our last question comes from Jamie Friedman from Susquehanna International Group. Your line is now open.

[James Friedman, Susquehanna Financial Group]

Hi. Thank you for stepping back in. So Pedro, Oswaldo, I wanted to ask in terms of the IMAL progression. I know you called out the typical Q4 to Q1 seasonality. Can you remind us how to think about IMAL, I know you don't give guidance, but how do you think about IMAL typical seasonality, say, into Q2? And as a follow up.

[Osvaldo Gimenez, President, Fintech]

Jamie. I'd say that probably there's more seasonality in the fourth quarter. Given that we usually give more loans to merchants in the fourth quarter. Then I would say there's any specific seasonality in general going from quarter-to-quarter. I think it will be, as we mentioned before, more related to what happens to the portfolio faster decide to growth in the segments and each of the markets. And then obviously, how delinquencies evolved.

[James Friedman, Susquehanna Financial Group]

Okay. And then if I could just ask a high-level question about the regulatory environment, especially in Brazil, especially apropos of credit Credito and Mercado Pago. How would you describe it? Is it benign? Is the coast clear? Historically, the government has been very supportive, I think, of incubating Fintechs. Has that changed? Or how would you overall characterize the regulatory environment in Brazil relative to Fintech.

[Osvaldo Gimenez, President, Fintech]

I'd say that, in general, Brazil has been the one country where the Central Bank and the government has been the most pro competition and really, I would say, encouraging both banks and fintechs to compete on equal footing. And so most of the regulations we have seen in the past has been around that. PIX has been probably the most successful example, but there have been more recent impacts such as the caps on interchange fees lately on prepaid cards.

So I would say it has always been pro consumer and pro competition. I think that -- they have been very pragmatic and practical whenever we have pointed out that some of the things that we're posing were not practical. I think at least we have heard.

[James Friedman, Susquehanna Financial Group]

Okay, perfect. Thank you for the content.

[Operator]

Thank you. As I mentioned, that was our last question, as we prepare to play a video, which you can access on the company IR website. I would now like to turn it back to Pedro Arnt, MercadoLibre's Chief Financial Officer for closing remarks.

[Pedro Arnt, CFO]

Thank you, everyone. So incredibly strong start to the year, top line ahead of our expectations, very strong margin evolution. We're really pleased with how the business has gotten off to the start of the year. We're going to continue to invest throughout the remaining quarters in the year to continue to gain customer preference expand market share if we execute well. And hopefully, we'll see the kind of response from our users and consumers from all the hard work going on here at MELI as we did in the first quarter.

Apologies on the technical difficulty with the video. We do encourage you to take a look at it. It has some interesting product detail on the advertising product that I know has been the target of a lot of the questions on how we're improving the stack. So that should be up and available for you to take a look at, and we do encourage you to do so. And we look forward to speaking with you again when we report the next quarter.