Hello everyone. And welcome to the MercadoLibre Earnings Conference Call for the Quarter Ended December 31, 2019. I am Federico Sandler, Investor Relations Officer for MercadoLibre. Our senior manager presenting today is Pedro Arnt, Chief Financial Officer. Additionally, Osvaldo Giménez, CEO of Mercado Pago will be available during today’s Q&A session. This conference call is also being broadcasted over the internet and is available through our investor relations section of our website. I remind you that management may make forward-looking statements relating to matters as continued growth prospects for the company, industry trends and product and technology initiatives. These statements are based on currently available information and our current assumptions, expectations and projections about future events. While we believe that our assumptions, expectations and projections are reasonable in view of the currently available information, you are cautioned not to place undue reliance on these forward-looking statements. Our actual results may differ materially from those discussed in this call, for a variety of reasons, including those described in the forward-looking statements and risk factors section of our 10-K and other filings with the Securities and Exchange Commission, which are available on our investor relations website. Finally, I would like to remind you that during the course of this conference call, we may discuss some non-GAAP measures. A reconciliation of those measures to the nearest comparable GAAP measures can be found in our fourth quarter 2019 earnings press release available on our investor relations website. Now, let me turn the call over to Pedro.

Hello everyone. And thank you for joining our fourth quarter 2019 earnings conference call. We´ve wrapped up another successful year with a strong fourth quarter. Our business continues to deliver solid growth across both the commerce and fintech divisions, with good execution across multiple regions, solidifying our position as a regional leader in the digital landscape. These results have been achieved in a context of social volatility, increasing competition, and mixed macroeconomic performance throughout our markets. All this highlights the immense opportunity still present as e-commerce and digital financial services continue to penetrate the economies of Latin American countries. As we have said over the years, we are still in the early stages of a long journey, and are as convinced as ever in the value creating potential of Mercado Libre in the years to come. With that brief intro, let’s begin with our fintech progress report for the quarter. On a consolidated basis, FX neutral total payment volume continued accelerating during the quarter to 98.5% year-on-year growth, while it also accelerated in all our main geographies. This was mostly driven by off-platform services, which accounted for 78% of total TPV growth. On-platform total payment volume in Argentina and Mexico also accelerated on a sequential basis, reaching 107.6% and 53.4% year-on-year growth on an FX neutral basis, respectively, leading to total on platform payment volume growth of 46% on an FX neutral basis. Off-marketplace total payment volume represented 54.7% of total TPV during the fourth quarter, and continued to grow triple digits on a consolidated basis, reaching FX neutral growth of 175.8% year-on-year. Let’s now break this growth story down by initiative, starting with our mPOS side of the business. The mPos business continues to make strides, as FX neutral TPV grew at 126% year-on-year on a consolidated basis during…

[Operator Instructions] Our first question comes from the line of Deepak Mathivanan of Barclays. Your line is open.

Hey guys. Thanks for taking the questions. Two questions from us. So, first, can you elaborate on the competitive landscape in Brazil, you have talked about lower ROIs in November and December. Is that due to seasonal promotions or a more sustained kind of competitive actively, maybe talk about elite trends in Jan in that context? And then is the growth rates that you are seeing currently in Brazil, a reasonable proxy for how we should expect due to manage the business going forward? Thank you.

Hi Deepak. So, let me take it in reverse order the first part. When we referred to the decision to invest less aggressively around seasonal campaigns because of ROI, that is in part a consequence of how aggressively traditional retailers invest around Q4 seasonal campaigns both for their online businesses and their offline businesses, which does change the ROI profile of investing at those points. So, I don’t think it’s one or the other. The ROI around the seasonal movements is very much driven by the level of investments of others. On general comparative trends, I think, like we have always said, I think to look at this as a zero-sum game is probably missing the bigger picture. This is still early stage. I think what we need to remain focused on are the initiatives we have put in place since the third quarter to see if we can reaccelerate growth in Brazil. I think we said last quarter and we reiterated in the tone of the remarks this quarter that although we are still growing above the market, we aspire to be able to trigger and find catalysts to grow at a faster clip than low 20s and that’s a lot of the stuff we are working on continue to focus on our logistics efforts, which are showing phenomenal results, although not necessarily flowing through the GMV, certainly flowing through to units cost, time of delivery and NPS. And then other areas we have been working on the launch of our one piece sales, private label, improvements and Net Promoter Scores as a consequence of a lot of the things we are doing. And then where GMV numbers and if and when they begin to react going forward we will have to cover that as we give you guys quarterly updates throughout the year. I think right now, we are confident with a lot of the initiatives, but clearly as you can see from the numbers and they are what they are they aren’t yet impacting in any acceleration versus prior quarter of Brazilian GMV.

Okay. Thanks Pedro. Very helpful.

Thank you. Our next question comes from Mike Olson of Piper Sandler. Your line is open.

Hey. Good afternoon. Just one question for me, you mentioned it briefly, but could you talk about how you are thinking about weighing the balance between growth and profitability just across the Board in the coming quarters. Specifically, I guess, is there potential to drive leverage and maybe the marketplace business as you continue to invest in payments or how are you thinking about the mix there and then maybe more directly, should we expect the company to return to breakeven or operating profitability sometime in the next few quarters or four quarter to six quarters, or how would you think about that? Thanks.

Okay. With the usual clarification about us not guiding, let me walk you through some of our thought process and thanks for asking the question in terms of a matrix of decisions, because we look at the business first of all in different geographies, and obviously, our geographies are in different stages of development and have different level of scale. So larger geographies and more mature markets as you can see from how we try to manage the P&L in the fourth quarter. We are more focused on always prioritizing growth but greater focus also on sustainable P&Ls and you see that in Brazil, where the equilibrium between growth and profitability perhaps weighs more than other markets towards the bottomline. And then on top of that, there’s a second layer to the matrix which is our payments business and our retail business that are at very different stages of development, and obviously, we are seeing incredible results in many of our fintech initiatives and want to make sure that we continue to invest behind those. So it really is a geo-by-geo and product-by-product decision. I think in general terms as some of the larger markets and especially on the marketplace gain scale and gain a certain level of maturity. They begin to get a greater focus on bottomline management as well. I think if you look at some of the remarks towards the end that’s the phase we are in. And if we think of ‘20 versus ‘19 still growth is the most important thing, we also have to make sure that we are nimble to react to competitive scenarios, but there is greater focus on trying to start to drive some operational leverage from the size that a lot of these businesses already have.

Great. Thank you.

Thank you. Our next question comes from Edward Yruma of KeyBanc. Your line is open.

Hey. Good evening, and thanks for taking for the question. On the decision to start merchant discount rate, I guess what drove the decision in that market and how quickly do you think you can extend it to other markets. And as a follow up how does that change the profitability profile of the fintech’s product? Thank you.

Excuse me, can you please repeat the question.

Yeah. The question was in regards to charging discount rates in Argentina, I guess, how -- what drove the decision that you enter that market first, how quickly can you expand it and how does it changes the profitability of the fintech overall? Thank you.

Great. So let me take a stab at that. So we have always…

Sorry about that. Can you hear me now?

…making sure that once some of these businesses reached enough traction that we introduce a monetization model to it. In Argentina, clearly, was the first market where we launched the wallet in the QR network. It’s gained significant traction as we disclosed some numbers in the prepared remarks. And so we felt confident that it was the right time to launch a monetization model there. It’s important that that monetization model still make the wallet in the QR the most cost effective settlement for merchants so a lot of that pricing is driven in comparison to other payment networks but we felt it was time to start charging. The results so far are positive. We continue to see strong traction despite the 60 bps of MDR and it’s a first step towards improving the profitability of that business. I don’t think you should read into this as fintech will become immediately profitable. There’s still investment behind wallet. But it does validate I think the direction of this as something that even with the monetization model overlaid onto it still continues to work very well. And it also does guide our thinking in terms of other markets, so the expectation should be that as other markets reach a certain level of merchant acceptance and wallet user we will follow a similar path to Argentina and launch an initial level of monetization on top of that.

Great. And one quick follow-up if I may, you had some nice improvement in trend on the Brazilian credit business. I know you had some issues in charge-offs last quarter. I guess what drove the improvement and have you changed your under writing standards in that market? Thank you. Osvaldo Giménez: Hi. This is Osvaldo. So after having the -- after seeing an increase in the full rates in the prior quarter is what we did was remodeled and we used all of -- we did the new models on the one hand and that improved significantly the default rates in the new cohorts and also we made more efforts in -- more collection efforts. We strengthened the collections engines and collection team and both two things drove the increase in performance in grades in the fourth quarter.

Okay. Thanks so much.

Thank you our next question is comes from Andrew Ruben of Morgan Stanley. Your question please.

Hi. Thanks for taking the question. So it seems like you guys have made a pretty big push forward with Brazil logistics also the brand marketing and making a lot of progress there. I am just wondering how you think about the timing for payback on these initiatives. I know maybe during the peak Black Friday promotion period maybe it gets lost, but any signs of an uplift and an impact from these initiatives after we get past that Black Friday period? Thank you.

I think we need to separate both of those. The investments in logistics are certainly long-term investments and what I mean by long-term is not that we don’t see any lift. I think we are already beginning to see the different impact of everything we have done in logistics, cost per unit has been coming down, delivery lead times have been reducing and we do see flow through of all that in the Net Promoter Scores. We didn’t necessarily see over the last two quarters the subsequent acceleration in GMV, but there are lots of data points that we think are a reflection of all the network logistics build-out that’s occurred. Even the reacceleration in units is partially driven by improved logistics capability of boxes and lower cost on logistics. The marketing, I think, we said when we started the acceleration in spend that we were going to focus on creating brand marketing primarily for Pago, but also aggressively for the marketplace to communicate some of these new benefits and these new product features related to MELI. You did see in Q4, a slight tilt towards more MercadoPago than in Q3. So although the overall numbers didn’t moved slightly down, when you look at between payments and end marketplace, there is actually an uptick in brand investments for payments, where you are going to see the impact of all that in payment volume and wallet, and in some of the metrics we shared. And the marketing spend on market place primarily in Brazil was actually down quite a bit sequentially. It was up in Mexico, that’s usually one quarter behind in terms of sequencing and also in the earlier stage market. So the impact from the marketing, I would say, we still need to hold off on that and see whether all those brand investments on marketplace eventually can be another factor to accelerate GMV or not something that we saw this quarter in the case of Brazil, the remnant from the previous quarter. If you look at Mexican topline growth it was extremely strong. Again, how much of that attribute to logistics to marketing, not always that easy to isolate but Mexico did have very strong GMV in top line numbers.

Very helpful. Thank you.

Thank you. Our next question comes from Stephen Ju of Credit Suisse. Your line is open.

So, yeah, thank you. So can you talk about your efforts in the -- I guess the FMCG consumer packaged goods. I guess more that the everyday household goods categories. I recall there has been a push to do more in this segment a few years ago. But where are now in terms of this as a percentage of GMV at this point, and as a result, are you finding that this is helping you to have a more engaged buyer base with perhaps a faster purchase velocity. But also I think building on I guess your earlier comments about the logistics for it. You talk about the footprint expansion plans in 2020 in Brazil, and perhaps, the other regions particularly as you look down, or look to take down the dependency on the single carriers and ultimately where do you think that dependency could go to longer term? Thanks.

Great. So the FMCG category or the CPG categories I think are beginning to show some interesting signs especially in Mexico. It’s basically growing at 2x year-on-year in terms of units in that category in Mexico. It’s still small-ish in the mid-single digits Argentina as well, but growing incredibly well and slowly beginning to become more and more relevant. There’s still a lot of work we need to do there in terms of both the user experience, but also sourcing of products. We began in Mexico to mix marketplace inventory with 1p inventory in CPG as well, which makes us more competitive and gives us more control over the category. So, I would say that still not as large as we aspire it to become and it is a high frequency category as you indicate, but definitely showing signs of life in Mexico where we started now in the process of replicating that to Argentina and Brazil that are, I would say, a phase behind where Mexico is. On logistics footprint rollout, incremental warehouses in Brazil I think we have signaled in the past probably two more for the next quarters one in the north, one in the south. But there’s a myriad of last mile hubs and saltation centers that are getting rolled out both in Brazil and Mexico. We gave an indication in the prepared remarks at the pace at which we are adding these last mile nodes to the network and we really are beginning to see positive signs in terms of cost coming down and lead times accelerating. I think a secondary benefit of this which is the one you are alluding to is that it also gives us the ability to rely less and less on any single carrier because as we control the network and the nodes in the network, we can switch carriers on and off. I think the end game solution here is not necessarily to not use any single carrier even when we think of the state run carrier for many, many routes they are very cost efficient. But really what’s important here is to not depend on any one single carrier. So I think if we think long-term, we would like to -- we would aspire to be able to still use carriers that are cost efficient, but to be able to switch away from them if need to be, and I think, we continue to progress very positively in that direction.

Thank you.

Thank you. Our next question comes from Marcelo Santos of JP Morgan. Please go ahead.

Hi. Good evening. Thanks for taking my question. Two questions actually. On the monetization of the wall that is in Argentina. I was looking at the Brazilian website and it also shows that you are charging a fee, I think, is almost 1% for money coming from the wallet account and then there are different fees for their credit card. So could you talk a bit about the introduction of these fees in Brazil. Is this broad based or I was just looking because I answered maybe testing screeners you know and then not everybody’s been charged. And my feeling was that the Argentina wallet was way more advanced, so whatever your like rational will introduce this in Brazil and what to expect in this layout? And the second question would be about potential China disruption, for sure you self-clearing the term or how your business till that time. But perhaps a lot of your sellers who sourced from China, so how do you expect to see any impact from China and how could you think about the potential size of your exposure with that? Those are two questions. Osvaldo Giménez: Hi, Marcelo. This is Osvaldo. So, with regards to valet, yes, as you were saying in Argentina, we started to charge product money way later. The one difference when Brazil is in Brazil you were giving away for free credit card transactions too and those have a higher MDR. So what we are doing now is we started to dodge the flat fee of 1% regardless of the payment method and we see that is similar to what our competitors are doing. So we are comfortable with that decision. But it’s at a very early stage we are just starting to do it, and of course, when we have a large work done, who are doing a deal with us we can give them special conditions for a few months and we expect the 1% to be the standard rate in Brazil.

Let me try to China that one. I think there’s two impacts from China. The first one is our cross-border trade business. So our actual efforts to directly source global merchants are a strong component of that is in China. We now have commercial offices in China. That business is still small with a lot of potential. The market where it’s gained the most traction is Mexico where it represents about 5% of GMV that is done directly through our CBT product, a very large number of that from China. So that probably will be affected, but small direct impact given that it’s still mid-single digits of GMV. I think the indirect impact you allude to, I don’t know the answer to that. I don’t think we have quantified or attempted to quantify what the potential impact could be.

Okay. Thank you very much.

Thank you. Our next question comes from Gustavo Oliveira of UBS. Your question please.

Hi, Pedro. Thank you for taking my question. I was actually quite surprised to see that the reduction in free shipping surface costs of $56.8 million in the quarter that was particularly well below my expectations for Brazil. I think Mexico as a percentage of cross-billings is more or like stable. And you also mentioned in your prepared remarks that the gross margin was actually affected by incentives to foster adoption of our fulfillment centers. Could you please help to clarify, maybe there was some a shift in investments from deadline from free shipping costs to the COGS line and, and whether this is something that we should refer as going forward. And what the deadline on the free shipping itself was actually important, an important driver for Mexico in terms of GMV, and therefore, you could reverse that back to, to cost owners. So just to clarify that that how you are locating your investment in shipping?

Okay. Perfect. Some good questions. First of all, just to give you a sense of the consumer side to all this, okay? So I will give you guys a sense of what percentage of GMV is still sold at no shipping cost to the consumer, okay? So, in Brazil that number was at 55% versus 64% the prior year Q4. So that’s about 9 percentage points less of GMV coverage from fully free shipping that’s probably going to be discounted shipping now. That’s what accounts for a large part of the savings in the free shipping program. If you look at that number for Mexico, it’s actually pretty stable year-over-year. So one element of the decrease in contra revenues from free shipping is simply the optimization of the amount of free shipping given out and we have done a lot of optimization over the prior four quarters. The second element that you allude to is the other piece to this story, which is as more and more of shipping is done from our fulfillment centers, depending on the contractual relationship with the carriers. And I am -- it’s going to get a bit technical here, but we can take it off line if you want. And depending on whether the contract allows us to deem ourselves as a principal or an agent of the transportation some of those costs become COGS. Hence part of the gross margin compression is from what used to be contra revenues and now become shipping costs. The bigger gross margin compression is simply the actual cost of operating the warehouses and the growth of our fulfillment network, but there is some of this that goes from contra revenue to COGS.

Okay. That’s very clear. Perhaps I get more details with the IR team later on. But I have just another question in Mexico and in Argentina you actually had a much higher GMV growth in the quarter than in Brazil. And in your prepared remarks you actually mentioned that you were able to place the seasonality a bit, I don’t know if it’s a bit better than in Brazil or perhaps with a better ROI that you otherwise you would have played in Brazil for more aggressive. What can you learn from the experience you are seeing in Argentina and Mexico, it’s -- those are the countries where you also have a higher 1p business, a larger 1p business that in Brazil as well or at the most if there is any other specific reason for your better performance in these country that could allow you to bring this best practice to Brazil to help you out there?

Yeah. So, I don’t think it’s a matter of better practices or better execution. That’s always part of the story, but I think it’s something else. I think if you look at the flipside to the Mexico case for example is the margin structure. So I think the way we looked at the Black Friday and the seasonal campaigns for Mexico is it’s a smaller market than Brazil at earlier stage of Internet penetration and so we are still willing to be extremely aggressive and chase perhaps lower ROIs because we are still trying to build out that market. So what you have there is a ramp up in marketing spend, Q-on-Q as a percentage of revenue and a very strong acceleration in revenue. When you switch over to Brazil and alluding back to a comment I made earlier that’s a market where I think the balance between growth and bottomline is somewhat more balanced, sorry for the repetition. So in a larger market like Brazil, I think, the expectation of the marketplace business is not so much focused on growth at any cost, but growth at reasonable cost and what you saw in Brazil is flattish GMV growth year-on-year, but an improvement in margin structure for the marketplace just because it’s a larger market and we expect to start driving operational leverage there. So I don’t think it’s so much a matter of learnings to apply from one to the other. It’s simply how we manage those businesses in different phases and at different sizes.

Just final one on that one, does the 1P make a difference, I mean, I think, you mentioned the consumer electronics investments in 1P in Brazil, you already have that more developed in other countries I suppose.

Yeah. So, sorry, I forgot that and I think that’s also a good point. So 1P gives whoever is retailing greater control over pricing and that is a very relevant factor during peak season or discounts or holiday moments. So we try to offset that with certain discounts and tariffs reductions to sellers to try to incentivize them to be very aggressive on pricing. But certainly it’s just a carriage to try to influence our pricing versus markets where we have 1p capability where we can actually set price and just determine what to do on gross margin. So, yes, we would argue that as our 1p business grows, it will give us an incremental tool that we don’t have today to compete around peak holiday season campaigns.

Thank you, Pedro. Thank you very much.

Thank you. Our next question comes from Marvin Fong of BTIG. Your question please.

Hi. Thank you for taking my questions. Most have been asked, but just on the growth in collectors up 67% it look like, can you I just talk about the acquisition process for collectors, do you that it’s driven more by your branding efforts or field sales force and just talk about that. And do you have a sense of what the total number of collection sites possible in Brazil and Argentina is? Thanks. Osvaldo Giménez: Hi. In regards to collectors efforts, we are driving it in three different ways. On one hand we are doing one-on-one deals with what we call lighthouses which are the very large companies such as McDonalds or Burger King or Starbucks or supermarket chains and so on. Those don’t add a lot in terms of number of collectors but they do add in terms of feasibility and number of sites. Then we have -- if you want a more targeted strategy in specific neighborhoods in each of the cities we would target and then we have sales force which address these areas of the city and bring in lots of spots and usually we do those at the time as providing discounts to consumers in those regions. And the third one is more marketing driven and it’s more if you want viral and it’s people who learn about MercadoPago and I am excited about it and start trying to collect on your own. Those provide them but the vast majority in terms of collection point and usually the lower amount of transactions. And I’d say, in terms of, I don’t want to give any idea what is the total number of collectors. It’s in the millions of -- tens of millions. But I think it’s too early to tell how viral this will be.

Great. Thank you. And if I could just do one follow up if your Mercado Puntos loyalty program you mentioned back could you just elaborate a little more on how that might look and how that’s going to roll out, are you going to roll it out across all your three main geographies right away or phase that in one after the other. Could you help us understand the timing of that? Thank you very much.

So the loyalty program we think is a very important component of what we need to build out over the next few years and so we are certainly not thinking yet for any specific geography. There’s always some sequencing that’s more a consequence of product development and coding than strategy. But the idea really is to be able to have the loyalty program at least in the big three markets being rolled out as close to each other as possible. The first step on this is to make sure that we include payments and marketplace which is what we began to do under a single loyalty program and where the benefits are also cross-platform. So you can use discounts on the marketplace, you could also use discounts on coupons to pay on QR networks and that was the couponing central that we mentioned in the prepared remarks. This is early stage, but we think that this is a key differentiating factor given that we probably have the most complete ecosystem in the region and even in any of the specific countries right now of both a very large retail business, but also a very large payments and fintech business.

Terrific. Thank you. Thank you both.

Thank you. Our next question comes from Irma Sgarz of Goldman Sachs. Your line is open.

Yes. Thank you for taking my question. So just going back to the growth that you are seeing to an earlier question in terms of building on the collectors side, but looking at the active payers side in the wallet you obviously saw some tremendous growth there. Could you just speak a little bit about the acquisition channels there, is that just being driven sort of partly by merchant acceptance or your marketing campaigns and are there any acquisition channels that you are leaning into a little bit more and what do you generally see in terms of just the cost of maintaining that customer or that active payer within your environment. Because there is obviously quite a bit of competition in the early stage in the market, but just for us to understand a little bit of where you are in that investment cycle? Thank you.

Hi, Irma. Yes. On the payers side, I would say, it’s a combination of factors on the one hand it is a growth in merchant acceptance mostly acceptance with these merchants with both lighthouses which provide lots of visibility. And beyond that there are things we are doing is discounts to the consumers when the first time they do a given transaction or we have a discount center where we provide discounts immediately from merchants and we are able to geo locate the consumer and provide merchants are close to them and those are starting to be funded, initially there were 100% funded in MercadoLibre and now they are partially under my MercadoLibre and in some proportion by merchants. And with regard to the evolution of the cost of a decision, I would say, in Argentina, where we are a year and a half into QR code payments. We have been able to drive down that cost as a percentage of TPV and I planned to continue doing so. And in the case of Brazil and Mexico, I’d say, we are earlier on and so far we have not yet focused on driving these guns down, but it’s something that we will do as we move forward.

Yeah. One quick follow up if I may. When you -- we think about the monetization that you have started in Argentina now or starting off in Brazil. Should we still continue to think that most of that is just being put back to drive frequency and customer acquisition and loyalty or should we start already at this stage seeing that dropdown to the bottomline? Thank you.

We are in our different… Osvaldo Giménez: Go ahead, Pedro.

No. I was going to build on those of all those previous answer. I think when we look at the level of discounting per map or the percentage of total transactions that required a discount or the average percentage discount on a transaction and when we look at that for Brazil and for Argentina, we are actually seeing improvements in efficiencies over the last few quarters. So we are getting smarter at discounting and we are also needing to discount less to generate transactionality which are both very positive trends. The offset of that to your question going forward, should we see that drop to the bottomline is that we would like to see acceleration in maps and the growing base of total maps, so that even at more efficient numbers per maps, you could see the total number grow and that was our point about wallet and especially because we are seeing positive signs is something that I think we are very willing to continue to invest behind even as we introduce a monetization model to that.

Very clear. Thanks.

Thank you. Our next question comes from the line of John Colantuoni of Jefferies. Your line is open.

Thanks for taking my question. Turning to a recent commercial agreement with PayPal. Can you discuss how you hope the agreement plays into your new customer acquisition, increasing conversion and overall user engagement across MELI’s overall marketplace? Thanks.

Hi, John. We are very excited about agreement with PayPal. We believe that it will enable our payers to buy at many sites where -- without needing to PayPal account likewise it will enable many PayPal users to buy MercadoLibre. So I think it will be complementary. I think that how I see it though is I expect it to drive extra volume more than necessarily adding more consumers or payers. We are very excited and we believe that it can be a significant driver of cross-border transactions and where we see lots of unexplored potential.

Thanks so much.

Thank you. Our next question comes from Kunal Madhukar of Deutsche Bank. Your line is open.

Hi. Thanks for taking my questions. A few if I may, some quick ones. One on the collector side, impressive numbers, everything in millions or billions generally. But when you think of like a common consumer, how much of their average daily spend or average monthly spend is around these collectors or wherever you have an agreement with? And then on the payer side, how much of your active buyers on MercadoLibre are active payers also? And then a quick one on China and not like on the cross-border trade, but like most of the products and all of them, the products in consumer electronics and what have you, are essentially made in China. If the volume, if the manufacturing volume itself decreases or if the shipping volume declines, how does that affect sales in general and how would you kind of look at like next couple of quarters, if there is there is a continued decline in either manufacturing or shipping volume? Thanks.

So let me walk backward from the third one. Like I said before, I think, we haven’t really done any significant work around trying to quantify a potential slowdown in China or increased problems from either Coronavirus or whatever. I think you are accurate in saying that a lot of the consumer electronics that are sold globally have a Chinese manufacturing base that we just don’t know the answer to that question. And in terms of the collectors, I think, just to be very straightforward. In terms of overall daily usage or share of family wallets and our product is still immaterial. I think it’s showing extremely strong target traction and we are pleased to see frequency growing in each one of the markets. But it’s still very, very early stage. So it’s not a significant portion of anyone’s overall behavior. And in part because we still need to continue to build out the merchandise. Although, the merchant base is very solid like Osvaldo said in the millions already. It’s just not widespread enough, so that I could use my digital wallet to pay everywhere I go. We aspire to continue to build that interoperability or business development deals could accelerate that, but we are not there yet. And in terms of cross-sell or overlays, I think, we actually see that as an opportunity, when you look at the payers of our marketplace that use the MercadoPago wallet, there’s still significant room to grow the cross-sell there, so just to give you directionally a notion of this. But I don’t think we disclosed a number in the past, but, but there’s still a lot of room to still sell our wallet capabilities to marketplace users and we think the loyalty program could be a very strong catalyst for that.

Thanks Pedro. A quick follow up if I may, when you think of like, Apple Pay and we have seen a lot of like, a lot of merchants starting to accept Apple Pay and Google Pay here in the U.S. using NFC. How prevalent do you think that is right now or how aggressive are Apple Pay and Google Pay in terms of in Latin America? Osvaldo Giménez: Kunal, I will say that, at this stage, for sure in Argentina your copayment is significantly more popular than NFC. And I would say, in general, the large networks, Visa, Mastercard are only now introducing NFC to Latin America. So I think that our growth to have a very, a faster growth than what we see in NFC. So far we have not seen any traction from either Google Pay or Apple Pay in LatAM.

Thank you.

Thank you. Our next question comes from Ravi Jain of HSBC. Your line is open.

Hi. Thank you for taking my questions. The first one on Logistics you mentioned you have opened a lot of drop-off clients and you are also doing fulfillment. As you scaled your managed network, how do you think that as the mix between fulfillment and cross-docking, and which one would give you the bigger competitive advantage over time? And the second one is just a follow up on the loyalty program, you mentioned that you are integrating the Pago wallet into the program. Should we also expect this to help you manage your investments into the wallet a little better, should we expect them to future the P&L investment on wallet to kind of improve? Thank you.

Let me take the fulfillment one. So when we look at the relative user experience and even the preferred I think fulfillment solution for us, certainly fulfillment is better than cross-docking, because it eliminates the first mile altogether and so that accelerates lead times, drives down cost, gives us greater control and even greater lock in of the merchant because he’s sending inventory to us. So fulfillment is for most merchants and for most products the one we would like to push more aggressively and I think Mexico is a very good example of what we would like to be able to emulate everywhere. Mexico already north of 40% of all sales are done from fulfillment. So long-term we would like to see that continue to grow and a higher percentage of fulfillment. We don’t necessarily control all that. Cross-docking has a role to play either in the inventory that we don’t want to hold, because it doesn’t turn fast enough or it has any specific complexity or for smaller merchants were maybe sending inventory to us doesn’t make sense. What the end game makes is we don’t know. We would like to push fulfillment as much as possible and we have, we have seen very strong success in Mexico and some really good traction in Brazil over the last quarter or so. Brazil had been somewhat flat in single digits for a while and Brazil has really been accelerating and it’s already in double digits in the teens for the quarterly average of the last quarter. Osvaldo Giménez: And with regard to loyalty, and that it will be able, enable us to improve our, our P&L wallet, I would say, yes, in two different ways. On the one hand, we will be able -- we will -- we are starting giving an incentive in point rather than cash for people to use the wallet, so it should be -- we should be able to maintain a user base, we had an incentive that is more efficient to us because people will use the QR code payment in order to gain more points. And on the other hand and part of the loyalty program is the discount central product. Here what we are able to do is to start sharing cost of acquiring consumers with merchants. And we have started already in Argentina in the past we used to pay 100% of the discounts and now a percentage of the discounts has been paid by merchants. So as we roll that out to Brazil and Mexico as cash cost continues to grow in those countries, we will -- we hope we will be able to share efforts with merchants there too.

That’s very helpful. One last one if I may. Could you give us an idea approximately how much of your GMV’s consumer electronics maybe in Brazil are consolidated just to get an idea?

Sure. One second just so that we make sure we have the latest data. It’s consolidated high-30s, low-40s. If you look at CE widely defined as most electronics.

Thank you so much.

Thank you. Our next question comes from John Coffey of Susquehanna. Your line is open.

Hi. Thank you for taking my call. When it comes to GMV, I saw that in Brazil they had -- there’s a very modest deceleration. Do you -- how do you feel about this accelerating in the future, is this possible and if so will be the vehicles which you would have accelerate?

Great. So, I guess, it comes full circle on the questions. We continue to grow slightly above market. We would like to see Brazil going faster than what it grew and we think there are a series of levers that we have already been working on that potentially could serve as catalysts for this. We are seeing improvements in Net Promoter Scores. We are focusing on categories where our market share typically under indexes our overall market share. We have had some good success with one of the ones we focused on Q3, which was television sets. So we are replicating a lot of that playbook to a growing number of categories. As we mentioned in some of the earlier questions, as we grow out our 1p and private label offerings, those should also allow us to be more aggressive on the pricing front which could allow things to reaccelerate. And then again this is a tech play, so at the end of the day we truly believe that the best user experience wins and it’s not a matter of who is spending more marketing dollars or who is deeply discounting products over longer periods of time. So again the numbers have been what they have been for the last few quarters. We continue to focus on making sure that we are innovating on behalf of our consumers, and hopefully, we can see that accelerate in the future.

Okay. Thank you.

Thank you. Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.