Hello, everyone, and welcome to the MercadoLibre Earnings Conference Call for the quarter ended March 31, 2024. Thank you for joining us. I'm Richard Cathcart, MercadoLibre's Investor Relations Officer. Today, we will share our quarterly highlights on video, after which we will begin our live Q&A session with our management team. Before we go on to discuss our results for the first quarter of 2024, I remind you that management may make or refer to and this present may contain forward-looking statements and non-GAAP measures. So please refer to the disclaimer on screen, which will also be available in our earnings materials on our Investor Relations website. With that, let's begin with a summary of our results.

Hello, everyone. I'm pleased to report another quarter of solid results with excellent operational and financial performance in Brazil and Mexico. Both countries posted GMV growth, approximately 30% year-on-year as we carry over a strong momentum from Q4. This above market growth is being driven by several factors, to improvement of user experience we minimized as a highlight, our strategic investment in chip infrastructure, which are driving faster growth in specific target regions and a well-executed marketing campaign that is leveraging on the awareness we generated in Q4 around peak season. In addition, our advertising business continues to grow nicely and reached regular levels of GMV penetration in all of the markets where we operate. Mercado Pago also had a solid performance in Mexico and Brazil. Some of the highlights being the acquiring business growing at accelerated rate sequentially in both countries. We had a solid credit growth portfolio surpassing the $4.4 million and growing strongly from last year and a strong quarter for Mercado Pago credit card. We issued 1.5 million cars during this quarter. The TPV reached $1.9 billion, growing 133% from last year. In summary, in Q1, we delivered a strong operational performance in commerce and fintech both in Brazil and Mexico, which has offset the negative impact of a weak macro in Argentina, and the peso devaluation in the country. Before turning to our financial performance in more detail, I'd like to highlight that there are a couple of reporting updates that have taken effect in this quarter. Investors can find a summary of the impacts on our financials in this quarter, shareholders letter and a full reconciliation in our earnings presentation. My comments today will refer to the numbers that are comparable to the figures we reported in Q1 last year. Consolidated revenues grew at a fast pace on the back of the strong operational momentum that I mentioned earlier. Brazil and Mexico, had an outstanding quarter and the revenues growth was sufficient to offset the impact of headwinds in Argentina. Income from operations grew strongly year-on-year, once again, with margin expansion being driven by Mexico and Brazil. This reflects the combination of growth, scale and cost efficiency that drives operational leverage. And our long-term ambition is to continue delivering both growth and profit, and we are confident in our ability to achieve that. Net income grew at a faster pace than income from operation as lower FX losses in Argentina were partially offset by lower operational income in that country. Furthermore, the reporting updates I mentioned earlier, have a broadly neutral impact on net income. Overall, we are very pleased with the performance of the business in Q1 despite the headwind from Argentina. And this is a great way to kick off MercadoLibre's 25th anniversary. Now I'll pass over to Richard for more on the solid foundations we have built over the past 25 years, looking ahead for the next 25 years of MercadoLibre.

In 2024, MercadoLibre will celebrate its 25th anniversary. And we look back on the progress we've made in the merchandise, commerce and financial services in Latin America. Today, Meli is the leading technology company in the region and a major tech company globally, and is being recognized for its innovation, growth and impact in the region. In addition to business growth and impact, MercadoLibre has a consistent track record of generating shareholder value since our IPO in 2007. We look forward to the next 25 years with great confidence and optimism as we still see plenty of opportunities to continue to grow and fulfill our mission in a region that provides us with a large addressable market. In Latin America, e-commerce is far from mature and financial services are right for disruption. We are the leading e-commerce platform in the region, which has significant potential for growth from new buyer and higher frequency as engagement and penetration of retail rise. By building the fastest and most extensive delivery network in the region and by offering the widest assortment and the best UX, we have become a natural destination for buyers and sellers. This drives a uniquely powerful and self-reinforcing network effect as sellers invest to maximize their sales by capitalizing on our traffic, while buyers receive an ever-improving value prop, which drives more traffic and growth. We're also building one of the largest retail media platforms in the region, which leverages our extensive first-party data to offer advertisers unique audience targeting capabilities and complete full funnel strategy. We are challenging the status quo in financial services and by offering a wide array of easy-to-use services for individuals and merchants, large markets underserved by incumbents, we have become one of the region's leading fintechs. Our ecosystem is our competitor advantage in…

Thank you. At this time, we will conduct a question-and-answer session. [Operator Instructions] Joining us for the Q&A are Martin Delos Santos, CFO; Osvaldo Gimenez, FinTech President; and Ariel Szarfsztejn, Commerce President.

[Operator Instructions] Our first question comes from Andrew Ruben with Morgan Stanley.

Congratulations on the 25 years. It's helpful on the table you provide in the release that breaks down the peso-denominated and non-peso EBIT. Just thinking about the Argentina business, the units down 5%. It didn't strike us as a major decline, but you had a big hit on EBIT. So was hoping you could walk us through the situation during the quarter where you had mismatch between revenue and costs? And perhaps if you could, even how the business evolved on a month-over-month basis within given how fast moving the Argentina macro situation has been?

Andrew, this is Martin. Yes. As you know, we -- in Argentina, we faced -- 2 things happened. The devaluation of Argentina, which reduced the size of our business. And as you know, Argentina is high margin -- EBIT margin business operation. And then we have the macro situation that obviously puts some pressure in terms of consumption. We've seen reduced volume and demand even though, as you know, we manage a marketplace, which is very resilient to this type of situation. So I think we outperformed the consumption in general in the country, but we did suffer some loss of volume in Argentina in the commerce side of the business. In terms of cost mismatch, I think we saw some inflation in terms of our shipping cost in Argentina. There was some pressure on that line of our P&L. And then to wrap up the situation in the country. On the fintech side, the business performed extremely well. We continue to have a very strong brand in Argentina. Assets under management growing 64% year-on-year. We doubled the number of users of our investment products. The acquiring business in Argentina growing 300% more than inflation and then active users also growing at 31% year-on-year. So overall, I think that's what you can -- you see in terms of operating income. And then when you go below operating income, as the double effect -- exchange rate situation in Argentina has been normalizing. We see significantly lower FX losses in Argentina. So that's compensated in the net income line of the P&L. So overall, I would say that Argentina was a headwind in terms of EBIT, partially compensated at the net income level because of the lower FX and lower taxes that we paid this quarter in Argentina. But obviously, we had an extraordinary quarter in Brazil and Mexico that I'm sure we'll go in more detail later on the call.

Our next question comes from Bob Ford with Bank of America.

Happy anniversary, and congratulations on a great quarter. Can you quantify the impact from the shift of Easter on the marketplace as well as Pago and Brazil and Mexico? And then in Argentina, what percent of GMV is done by sellers with less than 10,000 [indiscernible] per month? And how much would that -- would the proposed tax cuts represent to those smaller sellers in terms of GMV. And what do you need before you're willing to turn the key on interoperability in Argentina in terms of economics, security or any other issues?

Bob, it's Martin here. Let me take the first part. I think you were asking about the effect of Easter on our volume. But as you know, we always see a reduced volume on those days because typically, in our countries, it's 4 consecutive holiday days. I mean this quarter, in particular, was a little bit stronger because last year, Easter fell on Q2 and this year fell in Q1. So if you look at the numbers for March, there were affected by those 4 days. So there was a little bit of loss of volume, which will eventually reverse next quarter because the opposite happens that will play in favor of April probably. So that's in terms of the...

5% is that fair, given the -- is that what we should think about it?

We [indiscernible] the month-by-month numbers. But I'd say in March, we probably lost 5 or 6 percentage points in that particular month. We'll see what happens in April when we announce Q2. Osvaldo Giménez: Bob, let me answer the part of the interoperate to question in Argentina. So as you know, we built a QR code network that is extremely successful in Argentina, and a few years back, we were required to interoperate in account-to-account transactions, which we have been doing for a few years -- 2 or 3 years now, and that is working very well. And now what -- there's a mandate that we need to also interoperate for credit card transactions which are a minor part of our transactions in Argentina and the majority are account to account. So this is a minor part of that volume is credit card transactions. And the way we built the network is there was not a -- when we built it a few years back, there was not a standard for critical transactions. We do those transactions in a way with our process as online payment transactions. And so to be able to interoperate, we need 2 things. On the one hand, there's a technical requirement that those transactions need to be tokenized for the network to be secure. And on the other hand, is we need to agree on commercial terms with the counterparties, which are likely to be -- will be banks and other wallets. We are in that process. We have -- already on our side, we are able to process tokenized transactions, but we have not yet received those. And meanwhile, we are negotiating with the banks about if there will be some sort of interchange or fee for the wallets involved in these interoperable transactions.

Bob, I think to answer your last question regarding Argentina, obviously, we are observing and analyzing the reform that's going on right now to see what the impact would be on our merchants. And then the number of merchants, I think you are referring to smaller merchants is a number that we don't disclose specifically.

Our next question comes from Marcelo Santos with JPMorgan.

I wanted to ask you about the profitability of Argentina. There was a very steep decline in the EBIT contribution of Argentina versus what you reported last year. I just wanted to understand, is this kind of a new ongoing level, a new level for Argentina, given this new currency reality? Or was there something more like one-off in this quarter that could be reversed in the next couple of quarters? Just because Today, Argentina is the way you disclose almost the same profitability as the rest, why it used to be much more profitable? So I just wanted to understand that. Thank you.

Martin here, Marcelo. Thank you for your question. I think we mentioned before, Argentina had some tough macro situation. The devaluation also didn't help because when you look at the revenue books of Argentina, because of the devaluation by definition, strong relative to the other countries. Also had some tough macro and demand issues that affected, in particular, the commerce side of the business. But then also Brazil and Mexico grew extraordinarily high -- sorry, high rate. Just to put it in perspective, the EBIT of Argentina decreased year-on-year, as you mentioned, but the EBIT outside of Argentina grew by 185 percentage points. So almost double the EBIT coming from other countries. So as a result of that, you can see the current -- the share of EBIT coming from Argentina now is at 19% compared to a year ago, that was about 60%. So I think Argentina, again, the devaluation is behind us that we see macro effect in Q1, and we'll have to see how the rest of the year plays out. But again, we think that in terms of the EBIT contribution it's a little bit normalized for the other reasons that I mentioned earlier today. That as we have the exchange rate higher than it used to be with the devaluation is more normalized because of its lower FX losses, but on a net income level, the variance is not so high, okay? So I will focus a lot more on net income as the main metric to evaluate the results of MercadoLibre. As we have been saying in the past, we were mentioning there was a little bit of a distortion in the EBIT because of the FX in Argentina now is behind. So I think in terms of the FX distortion, I could say that it's something that is a new normal, and now we have numbers that are more normalized in terms of EBIT results.

And your next question comes from Irma Sgarz with Goldman Sachs.

I'd like to ask about Meli Más and logistics. Thank you for the use for commentary in the shareholder letter. Now as you get further into the rollout of the Meli Más program. Where are you in terms of logistics network efficiency gains from the uplift to overall volume and units per shipment? And are the costs from greater free shipping subsidies that you provide there now more than offset or -- by those efficiencies? Or will that take more time as you adjust the flow of the network and the overall engagement still rises. I'd also be curious if there's any notable differences in take-up and engagement with that program between Brazil and Mexico.

Irma, Martin here. Yes, we have seen very good adoption of Meli Más both in terms of adopting the MELI Delivery Day for those members that -- those users are enrolled into the Meli Más program. But also, we have seen incremental engagement and volume on our platform. So the results that we are expecting in terms of growth driven by Meli Más, we are seeing them there. And we are super excited with those results. Obviously, that increases a little bit the cost of our shipping operations. We estimate that year-on-year, have the number here to share with you. It does put some pressure on margin. I think it adds 20 basis points as a percentage of GMV of course, but it's more than compensated value -- incremental value that we're generating through Meli Más. And then in terms of your first part of the question, optimization, we think we are still at very early stages of optimizing Meli Más. Remember, Meli Más comes with MELI Delivery Day, which is day in a week that the user chooses to get their products. So as we continue to scale the Meli Más, we will be able to lower cost of shipping by optimizing the way we group certain products and the way we optimize the delivery cost of getting the products to our users. So it's early stages, but very optimistic and very encouraged by the results of engagement and adoption so far.

Yes. That's very exciting. And may I just ask about also the reacceleration in TPV growth in Brazil. You highlighted new devices and -- and we know that you've been shifting up a market, but I was hoping to just get a bit more detail on the drivers of this acceleration and the direction of the incremental margin that comes attached to the revenues on this? Osvaldo Giménez: So there were 2 components to the acceleration of TPV in Brazil. I would say the most relevant one -- the more relevant one is online payment. We have been able to -- I think there are several quarters in a row now where we have been able to accelerate the growth of online payments in Brazil, mostly by adding several larger merchants, big merchants and increasing the share of wallet we do with them. And there are several drivers for this, but definitely better performance and better approval rates. We are very encouraged by how we see these operations continuing. And then on the point-of-sale business, as we mentioned in prior calls, we have been changing a go-to-market strategy, and that is having a good effect, and we are seeing that business growing at an accelerated rate on a quarter-on-quarter basis. So both -- mostly online payments, but also to some degree, the point-of-sale business are accelerating in Brazil.

And just to complement that, in terms of monetization, as we disclosed on the investor presentation, you can see that we continue to increase the cross-selling of credit to our acquiring users. So that continues to improve the profitability of that business.

[Operator Instructions] Our next question comes from Geoffrey Elliott with Autonomous.

The change in Mercado Envios from agent to principal, the accounting impacts of that are all very clear. So thank you for that. But from a business point of view, what was the objective there? What does this mean in practice for the -- what does it mean in practice on the business side? And why you're doing it? Why you made this change in terms of conditions.

Geoffrey, this is Ariel here. So we see the process on the opposite. So over the last 4 or 5 years, we've been switching from operating purely with national post offices and carriers across Latin America into building our own logistics network. And basically, that process has already occurred. So -- what we've done now is adjusted our terms and conditions, bearing ourselves the responsibility for the execution, which is something we've been already doing. So there's nothing new in terms of the way we operate. I think that process has occurred already, and we are just now adjusting contractually and formally the way we've been operating for quite some time.

Okay. So it sort of reflects kind of you taking the risk rather than a national postal service taking the risk?

Say that again?

So essentially, you're taking the risk on the shipping rather than the national postal service in the different countries, and that's why you've made this change.

We already had the risk. So this is what we've been doing since we launched our own last mile operation in 2019, since which have been taking over warehouses operations, our line costs, et cetera, et cetera. So nothing new, no risk profile changes. Right now, it's just formalizing something that has been happening already.

I would say that there's no change operationally. There's no incremental risk. This is just an accounting adjustment that we make. And it reflects better the way the business is running.

Our next question comes from Neha Agarwala with HSBC.

Just quickly on the credit business. We saw a continued decline in the 90-day NPL, but there was an increase in the early delinquency, which you mentioned is partly because of the shift in the mix of business cohorts. Could you please elaborate on that as to why they the early delinquencies have increased? And what do you mean by a shift to riskier cohorts. Thank you so much. Osvaldo Giménez: So there were 2 components to the increase in early delinquencies. On the one hand, as you mentioned, we have been taking more risk going to riskier segments. And the reason we are doing that is because our models are better at forecasting risk and rightly evaluating the risk of each user. And therefore, we are also pricing this accordingly. And so even though there are higher NPL, these credits have been priced with an adequate spread. So it's not a source of concern there. And the other factor that happened was the last week of March, the last week of the quarter ended with 4 days that were either weekend or holidays. And therefore, collections were typically lower than typical. Because in the last 4 days of the month, there was an invoice that we had been due in those days that was passed over to the following months, and there was a small effect for the fact that -- Good Friday and Good Thursday were the last 2 nonworking days of the month.

If I can ask another question, when I look at your average interest rate, and this is excluding the increase in provisions, there has been a drop of about 800 basis points quarter-on-quarter on the average interest rate for your loan book. I understand part of that is probably driven by the expansion in the credit card portfolio. But given the fact that you're moving into riskier cohorts, which are priced accordingly, why such a sharp decline quarter-on-quarter?

It's Martin here. I think -- well, firstly, when we compare year-on-year, the NIMAL margins, I think is what you're referring to is improving despite the fact that we have a larger share of credit cards, which, as you know, is lower NIMAL product. On a sequential basis, typically Q1 -- actually, let's put the way, Q4 tends to be a good quarter for credits because of a very strong collections because of the 13 months in the quarter and the year. So Q4 is a good month for collection. Q3 is seasonally a lower month for collections. So that's normal. It's something that is expected, in addition to 2 other things happening. Speed in terms of growth of our credit card portfolio is also contributing to that and also the fact that we accelerated originations of other products, and that generates more provisions upfront. Remember, we provision 100% of the losses upfront when we originate. So we have a Q like Q1, where we accelerated sequentially originations, that tends to put pressure on margin. Like Osvaldo mentioned, there's nothing to worry about. We continue to have very strong EBIT margin animal margin at 31.5 percentage points. So it's something that is under control and as expected.

Your outlook on the credit business changed or modified slightly in the last month given that we are now looking at probably a higher for longer kind of rate scenario in both Brazil and Mexico.

Sorry, Neha, could you repeat the question, please?

With your outlook in terms of picking up in originations in both Brazil and Mexico, has that changed over the last month given that we are probably now looking for a higher for longer rate scenario in both countries?

No, it hasn't. We continue to have the same strategy as we have in the past, which is to continue to cautiously increase our credit book as we feel more confident in terms of our underwriting capabilities, as Osvaldo mentioned. And then also, we are focusing a lot on growing our credit card, which is a critical product for or fintech strategy because it has all -- many benefits in addition to the credit card, users that pick on -- start using the credit card, use most of our other fintech products to bring their salaries into our account. They might take a loan, they might get insurance, and start using the debit card and so on. So it's an important part of our strategy. Osvaldo Giménez: With regards to interest rates being a little bit higher, expectations then being higher -- as I -- relatively very small factor when compared to the spreads we have.

Just to complement that, the fact that our loans are typically short maturity allow us to adjust very rapidly to changing interest environment. So...

Our next question comes from Maria Clara Infantozzi with Itaú BBA.

I wanted to explore the potential of monetization of logistics services ahead given that you showed consistent improvement in the average speed of delivery and also accelerated penetration for another quarter. So does the company intend to start being more vocal on charging for the procurement services. How far are we from such a scenario?

Maria Clara, Ariel here. Thanks for your question. I think there's no change in strategy for us. As we've been saying over the last few quarters, we know that there's an opportunity in the long run to increase our monetization on our shipping infrastructure. For now, we remain focused on a, capturing the most out of the efficiencies potential that we have, which means continue driving productivity gains and reducing costs; b, I would say, getting sellers to operate with our network, particularly continue improving our fulfillment penetration, which has been going up consistently and three, being disciplined regarding passing through inflation increases. But we know we have another lever for the longer term as to continue monetizing. We just don't think it's the right time.

Our next question comes from Marvin Fong with BTIG.

Congratulations on 25 years. So a couple of questions. I'd like to get a little more detail on origination side. I believe it was about the same growth rate as last quarter in dollar terms. But just curious if how much Argentina factored into that. So perhaps you can give us some detail by country. Like how originations performed, did accelerate versus last quarter? And then second question, just on MELI Delivery Days. I believe you gave us some disclosure about how many of your shipments are generated by that channel. Just curious if you could give us an idea, is that all a significant money favor for you guys? Or is it really just designed to kind of lower stress on the network, but it's not particularly saving on cost. And additionally, just maybe some idea of where that percentage can go over time? Osvaldo Giménez: And Marvin, in terms of origination, most of the acceleration is coming from Brazil, where we are very comfortable with how our models are performing, and we see increased demand for loans. In Argentina, we continue to be cautious. We have accelerated versus last quarter -- we have grown versus last quarter, but we are at a rate which is significantly low -- in dollar terms, significantly lower than what it was prior to the elections. And in Mexico, we are growing on a year-on-year basis, but the origination was similar to that of prior quarter.

And I would add to that, that we had a devaluation in the middle. So that also affects the growth rates in Argentina when you compare year-on-year basis. But we'll continue to have a very healthy book in Argentina is probably the lowest NPLs [indiscernible], but we are cautious, as Osvaldo mentioned.

Marvin, Ariel here. Regarding MELI Delivery Day, I think for the first time in our investor presentation, we have provided you with some details on slow shipment share. So you can see that -- more than 5% of our shipments were delivered with a slow method. Most of which is coming from MELI Delivery Day, which basically means that we saw a good adoption of MDD whenever buyers were using the Meli Más offering to get free shipping in low ASP items. To your question on economics, I think we are seeing savings coming from that delivery model as more and more, we can consolidate items in the same box and the same delivery route, but still, we think that there's ample room for the program to continue scaling and driving costs down even more through more density in routes, more items per box or even incremental transactions that could be delivered in the same delivery as well. So good progress so far. We are excited with the results that we've seen, but the opportunity there is also relevant.

Our next question comes from Craig Mauer with FT Partners.

Happy anniversary. I wanted to ask about the ad penetration rate that moved up from 1.6% to 1.9%. Was this related to the GMV coming down Argentina? Or was this an actual improvement in adoption?

Ariel here again. So we had a very strong quarter in ad. As you said, penetration went up 30 basis points Q-on-Q and revenues grew 64% in dollars year-over-year, almost 100% in constant currency. I think the increase in penetration is definitely not coming only from Argentina. We saw a consistent increase in penetration across every country and Mexico actually presented the highest growth, both in terms of dollars and in terms of revenues as a percentage of GMV. So overall, excited what happened this quarter and more importantly, convinced that the opportunity we have in front of us remains to be big, and we have many levers to continue capturing that.

Can you just remind if there's any seasonality in that number that we should be watching out for?

No, we don't think there's a specific reason on seasonality. We made several product improvements, both in terms of the algorithms that we use for the bidding processes, we made changes in our placements in our sales results. So many moving parts that did help us get some acceleration there.

And our next question comes from Kaio Prato with UBS.

Good evening. Hello, everyone. Thanks for the opportunity for questions. I have 2 here on my side, please. First, 2 questions on the fintech, okay. First, on the accounting reclassification that you made this quarter, if you could explain the rationale behind this change and why did you decide to do this now? And the second is related to Mexico. If you could please help us understand the strategy behind the Fintech business there, specifically on the banking business. Is your plan is to compete with the fintechs that are growing there or if this should be much more financial for the marketplace business. Because looking to the financial [indiscernible] there, seeing they're not having a banking license to make the business much more difficult than in Brazil, for instance. You need some partners public for investment, lending. I just would like to understand you view on this and if you are planning any [indiscernible] through your license there as well?

Martin here. In terms of the reporting update, as we explained in the investor letter, what we did is basically, in the past, we had the interest income and cost from the whole operation below EBIT as we -- the Mercado Pago business evolved from being a wallet to being more of a digital banking business, A lot of the business was the float that we had on that particular operation, which we brought above within EBIT right now. So we now recognize the interest that we generated as revenue and the cost that we generate as cost of goods sold. And that's better reflection, better reporting in terms of the nature of our business. And in fact, this is the way we have been managing our business for quite a while. So I think this is an improvement in terms of disclosures and this is the reason why we did this at this point. Osvaldo Giménez: Building on Martin's comment, definitely the time value of money has been an integral part of how we price our fintech services. Everything we do from acquiring from when we pay sellers and even more so now with a larger offering in terms of fintech services. So we believe that this reflects better how we look at the business and how this business is really a financial business. . With regard to the second question about Mexico and our strategy, our strategy is to be the largest fintech in Mexico. We will offer a full-fledged solution of products from -- acquired on the one hand, to fintech services on the other one. There, we -- for a long time now, we have been able to offer our wallet. And on top of that, we have been doing quite for several years and America for several years. Last year ago -- 3 quarters ago, we launched our credit card, which is growing very, very strongly, and we work together with a third party to offer remunerated account, which is basically a money market. But money is available 24/7 in the Mercado Pago account. So we have a full offering, and we believe there's a huge opportunity that Mexico right now is going through a transformation similar to the one -- the market underwent in Brazil in the last 5, 7 or 10 years where our financial inclusion will increase a lot. With access to pay, we increased a lot, and we have a huge opportunity to be the leaders in this market.

Okay. This is clear. Any plans for a potential upgrade in your license in Mexico?

Yes. Today, we are working with the Mexico license that we are able to do what we have to do. We regularly reevaluate whether in the future, we might need license. And if so, once we do anything, we will let you know.

Our next question comes from Jamie Friedman with Susquehanna International Group.

I wanted to ask a question about Argentina. So it looked like FX-neutral growth in Argentina came in slower than inflation. And I think in your prepared remarks, attributed that to reduced consumer demand. So I'm just trying to gauge that. Is that trend something that you are contemplating to continue? Because in the past, the pattern has been that Argentina revenue would consistently outgrow inflation. So is this a new reality that we need to consider?

Martin here. I think we can talk about this quarter in which we saw a recession in Argentina slowdown in consumption, as you clearly mentioned, growth was high in nominal terms, but below inflation. And in fact, in dollar terms, was also decreased from last year. As we are monitoring the situation in the country, and we'll deal with the macro situation as it goes within the year. But as I mentioned earlier, we operate a marketplace that is very resilient to these type of situations. We have seen [indiscernible] past not in Argentina, but in other markets and we'll come out strong. We have a very strong brand, and we'll continue to manage the country as it is on the fintech side of the business. As I mentioned earlier, we are performing extremely well in Argentina, given the market conditions. On the commerce side, we are outperforming the general retail industry. Osvaldo Giménez: Let me complement on the fintech side. I'd say we have seen some deceleration in the point-of-sale business. However, the QR code, the wallet continues to grow very strongly and above inflation, and we have been cautious on the credit side. And...

And then if I could just follow up, switching gears on the Slide 18, and I apologize if you answered this, but I might have missed it. But the gross margin compression of 3.9% related to the change in shipping conditions, terms and conditions, what was that about?

Yes. I think that's the fact that the margin is decreased because we have higher rates. So what we try to do in that space is try to explain, to try to normalize the change that we include to better understand the results of this quarter. So because we had roughly $300 million more revenues that we will have had not made this change, that effectively increases the denominator. So that reduces the margin, and this is what we adjusted there.

This concludes the question-and-answer session. I would now like to turn it back to Martin de los Santos, CFO.

Thanks, everybody, for joining. As we mentioned, we are very excited about the first quarter of our 25th year, particularly with the results that we saw in Mexico and Brazil, which we saw tremendous growth, both in terms of fintech and commerce with also improving profitability. As we mentioned, the EBIT margin of Brazil and Mexico combined doubled year-on-year and that's the result of the commerce business doing very well in terms of ads, shipping efficiencies, business that continues to improve profitability. And then the fintech business in Brazil and Mexico is also thriving, growing credit portfolio, growing very nicely and improving profitability as well as acquiring business performing extremely well. And then as we continue to grow, we also gain operational leverage that is going through our P&L. As we mentioned on the bottom line in terms of net income, very strong net income growth year-on-year. So again, very excited about the results and looking forward to talking to you next quarter.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.