MercadoLibre(US:MELI)2025-08-04 22:00Financial Data and Key Metrics Changes - In Q2 2025, MercadoLibre reported revenues growing over 30% year on year, with record income from operations of $825 million [3][4] - The credit portfolio surpassed $9.3 billion, growing by 91% year on year, while the credit card business specifically grew by 118% year on year [5][44] Business Line Data and Key Metrics Changes - E-commerce GMV growth accelerated in June, particularly in Brazil, where items sold increased by 34% year on year [35] - Advertising revenue grew by 38% year on year, with off-platform ads showing strong early trends [4][47] Market Data and Key Metrics Changes - Monthly active users of Mercado Pago reached 68 million, reflecting rapid user growth and increasing engagement [5] - The integration with Google Manager was launched, positioning Mercado Ads as a strategic partner for brand-focused advertisers [4] Company Strategy and Development Direction - The company lowered the free shipping threshold in Brazil to enhance user engagement and attract new customers [4][36] - There is a focus on leveraging AI to improve marketing execution and ad spend efficiency [20][21] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term potential of the e-commerce platform, emphasizing the importance of free shipping in driving customer satisfaction and retention [37][80] - The company is optimistic about the credit business, with stable asset quality and a positive outlook on credit issuance [44][54] Other Important Information - The company has seen a significant increase in sales and marketing spend, up nearly 50% in U.S. dollar terms, attributed to high-profile campaigns [14][17] - The NPL ratio for the credit portfolio remains stable, with improvements in asset quality noted [43][44] Q&A Session Summary Question: Shipping changes and seller fees impact - Management explained that lowering seller fees has a positive impact on pricing and selection over time, smoothing the fee structure [10][11][12] Question: Sales and marketing spend - The increase in sales and marketing spend is a combination of ongoing user acquisition investments and specific high-profile campaigns [18][19] Question: Low ASP strategy compared to Shopee - Management believes they have the widest selection in Brazil and is encouraged by the traction from new sellers and listings [25][26] Question: Shipping strategy in other countries - Each market is different, and while they will evaluate the success of the Brazilian strategy, there are no commitments to replicate it in other countries [31][32] Question: GMV acceleration in Brazil - Management confirmed that GMV in Brazil accelerated following the free shipping campaign, with positive trends in traffic and buyer engagement [35][36] Question: Pricing impact on consumers - Most of the reduction in seller fees has been passed on to consumers, resulting in lower prices on the platform [42] Question: Credit quality and NPLs - NPLs have shown a slight increase in the over 90 days category, but overall asset quality remains strong, with a focus on improving credit models [43][44] Question: Advertising revenue growth - Advertising revenues grew significantly, with Argentina narrowing the gap with Brazil and Mexico due to improved macro conditions and team execution [47][48] Question: Credit card business profitability - The credit card business in Brazil is now breakeven, with expectations for future profitability as the business expands into Argentina [59][60] Question: Funding mix for credit portfolio - The company is shifting towards third-party funding for credit cards, which will impact the net interest margin in the future [63] Question: Infrastructure adaptation for lower ASP products - The company is focused on improving unit economics and believes that the long-term benefits of increased engagement will outweigh short-term profitability concerns [68][69]