MercadoLibre(MELI)2025-02-21 00:38Financial Data and Key Metrics Changes - In 2024, MercadoLibre achieved 1 billion in free cash flow, demonstrating the ability to drive profitable growth while investing in long-term strategic objectives [13] - The company reported a 74% year-on-year increase in its credit portfolio, indicating strong growth in this segment [34] Business Line Data and Key Metrics Changes - The marketplace surpassed 100 million unique buyers and the fintech platform reached over 60 million monthly active users for the first time, reflecting significant user growth [9] - In Argentina, items sold grew by 18% in Q4, a recovery from a tough first half of the year, and the fintech credit book quadrupled year-on-year [39] Market Data and Key Metrics Changes - MercadoLibre's key top-line metrics, including GMV and acquiring TPV, outpaced the market in Brazil, Mexico, and Argentina, driving significant market share gains [8] - The company noted a 29% year-on-year increase in items shipped, contributing to improved logistics efficiency [18] Company Strategy and Development Direction - The long-term growth strategy is based on low e-commerce penetration in the region, the opportunity to offer better financial products, and the digitalization of cash [13] - Investments in logistics infrastructure and credit card offerings are central to the company's ambition of becoming the largest digital bank in Latin America [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future opportunities, particularly in Argentina, where economic recovery signals are strong [40] - The company remains cautious about credit issuance in Brazil due to rising interest rates but is comfortable with the current risk levels [30][32] Other Important Information - The company invested approximately 3 billion in its fintech business during 2024 [119] - The introduction of the MELI dollar, a stablecoin, and new investment options in Brazil, Mexico, Argentina, and Chile are part of the fintech expansion strategy [24] Q&A Session Summary Question: Credit portfolio risk appetite amid rising interest rates in Brazil - Management noted no signs of deterioration in the credit portfolio, with the lowest first payment default recorded in December [30] - Measures have been taken to reduce risk, including tightening payback periods and reducing micro card issuance [31][32] Question: Tailwinds and headwinds for margins in Argentina - Management is optimistic about Argentina's economic growth, with a strong recovery in item sales and a quadrupled credit book [39][40] - Long-term margin improvement is expected as the company continues to grow and capture market share [42] Question: Progress on opening new warehouses - The company opened two new warehouses in Q4 to support peak season demand and plans to continue expanding capacity [50] Question: Competition in low ASP items - Sales of low ticket items are growing at par or faster than the average, supported by improved user experience and features [51] Question: Measures to reduce credit risk in Brazil - Management is tightening payback periods and limiting card issuance to riskier segments to manage credit risk [57] Question: Trends in NIMAL and profitability of credit card book - NIMAL decreased year-on-year due to a higher share of credit cards, but profitability is improving as older cohorts mature [59][60] Question: Expectations for credit card investments and wallet funding - The company is being more restrictive in issuing cards to riskier segments while expanding limits for existing customers [66][69] Question: Impact of reducing micro cards on GMV growth - Management does not expect significant impact on GMV growth from reducing micro card issuance [72] Question: Advertising growth and future targets - The company is focused on building relationships with brands and expanding advertising inventory, with expectations for long-term growth [81][84] Question: Utilization levels of new fulfillment centers - The logistics network performed well in Q4, with productivity improvements aligning with demand [89] Question: Modeling provisions for future growth - Historical portfolios are performing better, but sequential growth in new portfolios may pressure provisions [92][94] Question: Drivers of e-commerce acceleration and user behavior - User behavior is changing positively, with growth in essentials and improved value propositions driving increased frequency of purchases [100]