Ladies and gentlemen, thank you for standing by, and welcome to the MercadoLibre Q4 2021 Earnings Conference Call.

Hello everyone, and welcome to the Mercado Libre earnings conference call for the quarter ended December 31, 2021. I am Lissa Schreurs, Investor Relations Officer for Mercado Libre. Our Chief Financial Officer, Pedro Arnt, will be leading today’s prepared remarks. Joining him on the line is Chief Executive Officer of Mercado Pago, Osvaldo Giménez, who will be available during today’s Q&A session. I remind you that management may make forward-looking statements relating to such 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 included in this conference call, for a variety of reasons, including those described in the forward-looking statements and risk factor sections of our upcoming Form 10-K for the year ended December 31, 2021, and any of MercadoLibre Inc.’s other applicable filings with the Securities and Exchange Commission, which are available on our investor relations website. I will now turn the call over to Pedro.

Hello, everyone, and thanks for joining our earnings announcements this past quarter and the full year 2021. Before we delve into our Q4 performance and financial results, I'd like to begin by sharing some reflections on fiscal year 2021. Last year presented us with challenges, and with those also came many more opportunities. With our teams’ resilience and focus on delivering on our strategic objectives, we've been able to overcome shifting pandemic lockdown measures, rising inflationary cost pressures and a highly competitive environment in the digital commerce space. The final outcome was a year with record results across the board, sustained strong growth in key business metrics and top-line, and improving margins and operating income for a second consecutive year. In commerce, we had another very strong year, reaching $28.4 billion in gross merchandise volume, a full-year growth of over 48% in GMV on an FX-neutral basis. This represents an additional $7.4 billion over 2020’s GMV, positioning us well-ahead of our competitors in market share in the region for yet another year. More importantly, we saw a sustained shift in consumer behavior on our platform. Customer loyalty and retention are improving consistently and our clients are buying more with us. On average items per buyer were up by 17% on a year-over-year basis, growing over a strong 2020 baseline. Even with the reopening of physical stores, customers in Latin America have embraced shopping online, paving the way for further long-term growth in our region. We attribute this growing engagement and improving cohort behavior to our free shipping program that already delivers over 80% of GMV on our network at no cost to our buyers, continuous improvements in delivery speed, a robust buyer protection program and customer service, an enhanced loyalty program, and our increasingly wide assortment of products sold on…

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

Hi, thanks very much for the question. It was helpful to hear about the commitment towards growth with sustained operating leverage. I was curious if you could please zoom in a bit on how 2022 fits into this narrative, namely your incremental investment focus areas for the year. And conversely, any areas where you could see incremental expense leverage? Thank you.

Hi, Andrew, as you know, we don't guide. I think conceptually, we will continue to invest behind the key areas that are a part of our strategy, logistics, category expansion, the rollout of our different fintech products, our credit business, which we are very encouraged by. And as we've said, I think growth and making sure we're investing behind these many growth opportunities that still have significant run rate is our number one priority. Having said that, given the size of the business and the operational leverage that is still inherent in the business model, we enter a phase where we think we can continue to invest, maintain our focus on share gains and sustaining our leadership and yet still deliver modest yet consistent increase in earnings over a multiyear cycle. So you shouldn't see any departure from what you've been seeing in terms of the area of focus. We're pleased with the portfolio of services we have. We think it's ample and many of these are in the early stages and have significant room to grow. And even the more mature businesses where we see really strong capabilities to sustain and potentially even increase our leadership.

All very clear. Thank you.

Our next question comes from Irma Sgarz with Goldman Sachs.

Yes, hi. Thanks for taking my question. There was no direct mention of advertising revenues this quarter. I think there was maybe a comment about monetization. And I know it's still a small percentage of overall sales, but with a very strong organic traffic numbers, that you spoke to and the use engagement that you provided, it feels like 2022 could be a year where this is becoming overall more important. And I would imagine it's also accretive to the overall margin story that we're seeing play out. Could you just maybe talk a little bit about what you're seeing in terms of new developments on the advertising front? And what incremental maybe investments you're making?

Yeah, Irma. So thanks. We continue to see a very, very significant opportunity in the advertising business. It's a high-margin business with gross margins above 70%. As we grow our first-party business and as we get into new product categories, such as consumables that have very large advertisers, we're seeing some really interesting work in combination with those advertisers, along with our 1P business, but also behind the marketplace. The advertising business as a percentage of GMV has crossed the 1% mark, which for us is the first big milestone in a multiyear trajectory that we think, could deliver multiple times that. And then we see really good progress so far in a fast growing, high margin business that's very, very synergistic with what we're doing on the marketplace. And also, we began to now integrate some advertising placements and advertising features into the payments app and some of our payments products as well. So we will report in the future when we think it makes sense, but it's yet another very encouraging business that is performing well and that we will continue to add engineering talent and innovate on because there's a lot of potential there.

All right. Thank you.

Our next question comes from Thiago Macruz with Itaú.

Hi, guys. Thanks for taking my question. You guys seem to be at the very beginning of our monetization trend of your e-commerce business. And I wonder if you could give us some feedback on the initial reaction of sellers to your first attempt to charge for your fulfillment services chiefly in Mexico, in Brazil? And if I may, on the credit side of the equation, we already see some NPL deterioration for banks exposed to lower-income clientele chiefly in Brazil. We're not seeing that for you guys. Is that a case to be made that your credit business in Brazil is more exposed to higher income clientele? Can you discuss that with us? Thank you.

So starting with monetization on logistics. We haven't seen any negative impact of this. Our logistics network as it's consistently driven better delivery times, better conversions, therefore, for merchants, I think justifies initiating monetization. Having said that, I think it's still early, so let's keep tracking that and see how the monetization efforts progress throughout the year. So far so good. And if you look at the Mexican business, you'll see that Mexico delivered in the first quarter -- fourth quarter, one of its best direct contribution margins in this multiyear investment cycle we've been in, in Mexico. That's a consequence of many factors of that improving P&L as it continues to execute towards profitability. But one piece of that is the better overall economics on the logistics business, and charging is a piece within that. So, so far so good. Osvaldo Giménez: With regards to credit, we have continued to see improvements in NPLs. Our clients, our users tend to be middle to lower income. So we are happy with how we have been improving our risk models and monitoring how much risk we think.

Yes. I think just a quick conceptual complement there. At the end of the day, the reason that we think there is so much potential in the credit business, is directly linked to our ability to underwrite credit for segments of the population that historically have been very difficult to underwrite for either because of cost to serve or the actual underwriting capability. Again, we need to continue to monitor this. It's early stage. But everything we've seen so far makes us very encouraged in the capabilities we've built in-house to be able to serve that very large portion of the Latin American population that has historically been starved for credit.

Fantastic, guys. Thank you.

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

Hey, Pedro, Osvaldo, Lissa. Thanks for taking my question and congratulations on all the operating strides. In the presentation, there is a mention of the strong scale up in the credit card business. Can you put some numbers around that in terms of the Brazilian credit card base today, average credit limits, the take-up of those limits and bad debt trends in that product? And are those card balances reflected in the loan book numbers that you gave earlier, Pedro?

Let me go from back to fourth, Bob. Yes, they are part of the books that we disclosed. Roughly, 17% of the credit on the balance sheet is from the very nascent credit card business. It's very early, Bob. We're scaling it well, hence the mention. As you know, MELI as a whole, is a phenomenal distribution platform. But let's wait a few more quarters. This is a very new product. It's in one country, and then we can begin to give more disclosure and visibility. So far, everything we've seen is a part of our enthusiasm with our ability to efficiently underwrite credit and serve credit. So, so far, so good. but that's one of the newest products within the credit portfolio. So again, another case of something that has enormous potential, but let's cautiously and diligently build that out and keep you guys posted on how it's performing. Osvaldo Giménez: And we don't provide any numbers. Probably, the other thing I want to add is that, we are very excited with how people who have a credit card are showing increased engagements with our platforms and also increased Net Promoter Scores.

And is it fair to say, Pedro, that you're starting off with relatively low limits and being very prudent in terms of the way you're moving forward? Because you really don't see this in the Pago kind of user numbers, whether it's unique users or frequency? Osvaldo Giménez: That's correct. We're starting with low limits and we will increase them afterwards.

Okay. And then my second question, I'll make this the last one, is if you could comment, please, on the Mexico City mass transit deal, right? I just wanted to confirm that it's exclusive as well as the reported transaction fee, which seemed a little bit high relative to what I would have expected. And I was just hoping -- or hoping to get a little bit of color around the service commitments that you're making? Are you required to make to win that that base of business? Osvaldo Giménez: Yes, we are very excited with the transaction. And there are roughly 10 million daily passengers in Mexico City, and they will be able to top-up their cards using our app or even using our POSs, we believe it's a tremendous deal. The economics also are reasonable and it would be profitable, and it will allow us to significantly increase, we believe the number of active users in the city.

And Pago its an exclusive contracts, right, two years, is that correct? Osvaldo Giménez: Exclusive. That's correct, yes. Yes.

Great. Thank you.

The next question comes from Marcelo Santos with JPMorgan.

Hello, thanks for taking my question. The first question is regarding the new pricing fintech that you mentioned starting 2022. How much do you think this could offset the increase in interest rates? And could you give a bit more detail on how this will impact different products that you have? This is the first question. And the second question is, more how PIX helping the QR code payments? I couldn't understand that very well. Thank you. Osvaldo Giménez: Marcelo, with regards to PIX, what we are seeing is I think there are -- there's a different effect online and offline and then offline also a different effect in the long tail and with large merchants. Let's start with online. We are very excited with the with the PIX line because mostly, there was really no debit cards online in Brazil. And so this is, we believe, incremental volume, and we are seeing not only on MercadoLibre, but also on merchant services and it already represents double digits of the PPV we are seeing in merchant services. So we are very excited with PIX there. With regard to offline, I'd say, in the long tail, what we're seeing is, in some cases, it's the same merchants who have an MPoS device who are using PIX and in some cases, probably some merchants are switching and instead of using a POS device, they does rely on PIX. It's the usability is not great because in most cases, they are typing in either the mobile phone or the e-mail information to make a PIX transfer rather than scanning and QR code, but we are seeing that it's taking some traction. And furthermore, what PIX is allowing us is reaching out to large merchants. For example, we are working with Burger King over the CNA, and they are using Mercado Pago to collect PIX and this is a small portion of their revenues of land, because mostly its hard to cash, but we are excited with how it is growing and it is allowing to reach these merchants.

Great. On the pricing piece, Marcelo, a couple of thoughts. So the first one, if you look at the presentation and you look at fintech take rates, you'll see that despite the compression because of interest rates, the growth of the credit business, the fact that we did adjust some prices in December on the parcelado spoon jurus [ph]. So the interest bearing purchases by consumers, we had already started to adjust pricing, offset a lot of the take rate compression. So I think we've been less hit than others. Second piece, as we rolled into 2020, we've also began to adjust prices on installment purchases on the parcelado sen jurus [ph] off marketplace. And, therefore, we are passing on a lot of the incremental interest rates to merchants who then can decide how much of that to eventually pass on to their consumers because it's the free installment product. We've done this also understanding what competitive movements have been -- and that's why we took our time and decided to not move too quickly in the fourth quarter, understanding that we had some interesting revenue streams that were allowing us to offset some of the compression. So going forward, I think that's what's happening, right? There's clearly an environment of higher interest rates, primarily in Brazil, we think that's probably here to stay for some time, and we've intelligently adjusted pricing. On the marketplace, where as we had said in the last earnings call, we were going to hold steady during the shopping season and absorb a lot of those incremental costs. And you will see that in some of the commerce take rate evolution Q-on-Q. As December has finished and we rolled into 2022, we've also began to adjust pricing on the marketplace. We've done it in a more, I would say, surgical way where it hasn't simply been raising prices. A lot of that has been a more intelligent installment engine that will allow different lengths of installments depending on product profile, requirement of credit on that product and conversion rates, but that allows us to offset some of the interest rate spread compression by offering less lengthy credit on products where that doesn't have such an impact on demand elasticity. So that should also be something that helps us offset the spread compressions from the rising interest rates on the commerce business throughout the year?

Perfect, Pedro, Osvaldo. Thank you very much.

Our next question comes from Kaio Prato with UBS Bank.

Hi, everyone. Thank you for taking my questions. So my question is related to Mercado credit solution. So we saw that the credit portfolio and revenues continues to increase steadily. While among this environment of higher policy rates, we have been seeing some announcements made by the company, as you mentioned during this call, such as higher prepayment rates for MPS business in Brazil. So having said that, my question is related to the level of interest rates that you are charging to consumers today, I would like to understand if you are increasing rates for new originations because of this environment of higher rates as well, or as we are starting to see better trend in terms of NPLs, we could start to see some interest rate normalization, both for consumers and measurements going forward?

Great. So look, if you look at the aggregate numbers, the actual implied APRs in the consumer book in Brazil are down sequentially into the fourth quarter. Now you have to be careful because there are multiple products and multiple segments that we're expanding into. And so you really need to be able to look at this at a more segregated level, which we don't necessarily disclose. But all in all, I think what we're seeing is longer legacy cohorts, better understanding of older cohorts and also newer products with different risk profile and therefore, lower APRs. So it's not like we've simply adjusted APRs up across the board to reflect the changing macro environment. I think the complexity of the underwriting models and the overall diversity of the books has really been a big part of why we continue to be able to grow the business significantly and have seen an actual improvement in NPLs over the last few quarters.

Okay. Thanks.

Our next question comes from Marvin Fong with BTIG.

Great. Thank you for taking my questions and congratulations on the quarter. Two questions, if I could. Just first, I guess, a high-level question. Just we're seeing several competitors with marketplaces acquire more and more local sellers, Brazil-based sellers in that country. Just wondering if you could comment on your strategy there? What is it about the MercadoLibre marketplace that will keep local sellers allocating their inventory to your fulfillment centers? Is it -- is it a matter of your speed of delivery and fulfillment capabilities, or is there some pricing component? Just your thoughts there would be great? And then a second question on lending. You mentioned how you're leveraging your proprietary platform. And I'm just curious if you could comment just how the launch of open banking is affecting that? Do you feel like open banking really isn't helping you expand the credit book and you're just going to primarily leverage your own data to make your credit decisions for both consumers and merchants? Thanks.

Great. So, first of all, I think we continue to focus primarily on ourselves and what we can offer our merchant base and even more importantly, our consumer base. Merchants will probably trial and test multiple marketplaces. At the end of the day, the determinant factor is where consumers are buying and why consumers are opting for one platform over the other. When we look at the MercadoLibre value proposition for consumers, we are very confident that it is significantly improving from an already solid base. So the combination of widespread selection across a growing number of product categories that allow us to service more and more the overall needs of households. Our best-in-class probably, if you look at it regionally, logistics network that continues to lower cost and increase delivery speeds and amount of inventory delivered within 24 hours. The widest and most available free shipping program where over roughly 80% of volume is free shipping to the consumer. A loyalty program with expanding benefits, a very, very strong value proposition now in terms of content distribution of premium content. Subscriptions to the highest level of our loyalty program are growing very nicely, which shows that Latin American consumers as they see the offering and the loyalty program are increasingly willing to pay to reach that Level 6 even before their behavior on MELI gets them there for free. And then the overlay with all the fintech offerings. So our ability to extend credit in different formats, whether it's the MELI credit card now that gives you longer duration installments on the marketplace, if it's personal loans, if it's buy now, pay later type products, is also a strong advantage because the visibility we have to that consumer and the way we can score him more efficiently. So, going…

Thank you so much. Thank you both and congratulations.

Our next question comes from Trevor Young with Barclays.

Great. Thanks. Two, if I may. First, you saw a nice reacceleration in unique wallet payers and the strongest net adds in quite some time. Can you help us understand what drove that reacceleration? Was it the crypto rollout or something else? And then second question, on the consumer credit side, could you comment on average loan size and delinquency rates for loans originated within marketplace app versus the Mercado Pago app? Is there any notable difference as you mix shift more originations to the Pogo app? Thanks. Osvaldo Giménez: Hi Trevor, let me start with the first one regarding unique wallet payers. I think we have seen strong trends in all three countries. Particularly in Argentina, we have seen a reacceleration towards the end of last year. But also, we have seen strong numbers coming from both Brazil and Mexico. Crypto definitely is another net positive, but it's still early. We only launched crypto in mid-December. So there's very little effort in the fourth quarter coming from crypto. With regards to the second question, I'd say that increasingly, what we are seeing is a shift -- actually no shift, but as we rolled out lending in the Mercado Pago app that has been gaining share. And in some countries, it already represents over 50% of the personal loans we give, all the consumer loans that we give. So far, we have not seen a very significant profile between one and the other, yellow app loans and blue app loans, although we do have this concern that you have that -- our team delivered more risky because it's money that the users can withdraw from an ATM or from their bank account, I not necessarily buy something with it. However, so far, we have not seen very different numbers.

I think on the second question, we don't really disclose any data on the differentiating profiles of credit on marketplace versus off-marketplace. The comments in the prepared remarks, I think, aimed at disclosing how our credit business is not any longer primarily an on-marketplace credit business. But it's actually a credit business that can aspire to the entire TAM away from the MELI marketplace. If you look at the size of our credit book and the potential size of the credit book, you'll see it's still a drop in the ocean in what the overall demand for credit is among these consumer segments that we're operating in. So the size of the addressable market is enormous. And I would even venture to argue that it can accommodate for many quality players without affecting the growth of any of them. So this is far from a zero-sum game once we move into the open Mercado Pago app and away from marketplace consumers. And obviously, on the marketplace, we have significant advantages over any other credit offering, whether that be through a credit card. So I think that's what we were trying to disclose how much of the credit origination already occurs away from marketplace and how that sets us up for significant long-term growth. We don't give any granularity on how those consumer profiles or books defer.

Great. Thank you both.

Our next question comes from Deepak Mathivanan with Wolfe Research.

Great. Thanks for taking the questions. Just a couple of ones. So first, Pedro, a large portion of the volume is already on one day and two day in our shipping windows. Where do you aim to take these service levels maybe in the next like 12 to 24 months? I mean I'm asking is because shipping and career cost is still delevering gross margins. But curious how we should think about the growth in these expenses? And then another question on the credit business. Clearly, you're integrating these into various products. But how should we kind of think about the sustainability of this in the next few quarters? Do you think whether any external factors like tightening credit maybe for cash advances and some of the other places outside of your platform that's helping it, or like you said, it's just still kind of like an early innings for you? Osvaldo Giménez: Deepak, so let's start with the second question with regard to credit. I think that despite the tightening environment, I think that we are seeing improving NPLs, and we are comfortable, we'll continue growing the business. What we have been doing is increasing the part of the portfolio, which is securitized or funded by third parties at the beginning of last year that was roughly 25%. And by the end of the year, it was more like 45%. So our share of the portfolio is diminishing, but we are comfortable that we can continue growing all of the credit products.

So Deepak, a couple of things. If you look at annualized gross profit evolution, so first point here is, yes, you do see compression. But when we actually look at the shipping piece, we see some interesting improvements in margin structure, despite the significant improvements you mentioned in terms of percentage of total shipments delivered same day and next day. So we're at nearly 30% same day, another 31% next day, which is really very, very solid execution on the network, and that's for the entire region. Individual markets are even stronger than that. And shipping costs when we compare to Q4 of last year actually scaled positively. A lot of the gross margin pressure you see is coming more from the scale-up and the build-out of the 1P business and a few other line items. So very encouraged with shipping. I think we continue to look to follow that same pattern. How can we continue to drive faster shipping? We're seeing some really, really interesting results from our crowd-sourced shipping solutions that we've launched in Brazil and Mexico recently. So I wouldn't attribute the gross margin pressure entirely to the evolution of shipping that actually, if we look at Q4 of last year to Q4 of this year, scaled, despite the improvements in delivery times.

Thank you. Our next question comes from Richard Cathcart with Bradesco.

Hi guys, good evening. Thanks for taking the questions. So, just a question here on direct costs in Brazil. If we look at kind of quarter-on-quarter was a pretty large increase in direct costs in Brazil. So, perhaps you could just give us a little bit of information about what was exactly driving that and whether it was more on the COGS or in the SG&A or a combination of the two? Thank you.

Yes. So Brazil has, I think, I've mentioned some of them in the previous question, but just to give you greater detail. If you look at the evolution of the Brazilian P&L, first of all, if you just look at cost, you will see an increase in the provisions for bad debt from the credit book. Now, remember that, that's more than offset by credit revenues. So, in terms of net contribution at the EBIT level and net income level, the credit books are positive, but they do generate significant increase in sales and marketing year-on-year because of how much the credit books have grown. Second factor there is the first-party business. That has grown a lot versus prior year. But even sequentially, when you get into Q4, typically, we lean into the 1P business more aggressively during the holiday season, and that business is still subscale and therefore, drives a lot of margin compression. And then the third area that we continue to invest aggressively in and also generates some of the compression is the Q4 promotional season. So just if you compare it to Q3, there's clearly incremental marketing spend during Q4. That makes for the fourth quarter a seasonally weaker quarter than the prior three. And those three items explain most of the sequential compression in margins at a Brazil level, but also at an aggregate level.

Perfect Pedro. Okay. Thanks very much.

Our next question comes from Stephen Ju with Credit Suisse.

Okay. Thank you. So, Pedro, I think in your prepared remarks, you talked about units per buyer continuing to improve year-over-year. And maybe this is cutting things a little bit too fine, but can you talk about the behavior of your newly onboarded users versus existing users? And where you are getting most of this bump in transaction velocity from? And secondarily, now that Envios is handling the vast majority of shipped units. The optimistic me wants to start thinking about what you might do to combine deliveries over time to take down the shipping costs even further. So, you saw this with other global operators used to ship you one order per box. And over time, you start to get multiple orders in the same box. So, how far away do you think you are in terms of getting such a move implemented? Do you need greater order density to get that done? Thanks.

Thanks Steve. Great question. So, look, we don't share cohort analysis. We did -- we do show and you can back into the math right, the buyer frequency for the first time ever in the fourth quarter of 2021 surpassed seven purchases per buyer in the quarter. That's up from almost a whole one unit less per buyer per quarter a year ago. So even within two pandemic influenced years, I would say this one less so because reopenings are much more widespread. And the successful items per buyer are up quite nicely versus fourth quarter of last year. Implicit in that is that there isn't any material change in cohort behavior that's worth disclosing. Second piece on Envios, I don't want to get ahead of myself, but I think your readout is accurate. We are now very focused on interface and products that will help us drive larger baskets. That comes with tweaks to the interface, probably with certain monetization incentives for users to place more items into a basket. And it also requires that we get very good at where we route inventory from given the growing number of warehouses that we have that split inventory. But that will be a significant focus during this year. And hopefully, we can see results in terms of greater items per order.

Thank you.

Our next question comes from Ed Yruma with KeyBanc.

Hi guys. Thanks for squeezing me in. Just two quick ones for me. I guess, first on the NPLs. Obviously, some nice improvement quarter-on-quarter there. But bad debt expense is still higher. I guess, do those overtime converge, i.e., bad debt expense comes down as NPL comes down? Was there some kind of expensing that allowed you to pull the NPLs down? And then as a follow-up, just Pedro, on your prepared comments, you talked about kind of earnings, modest earnings growth. Are you talking about margin or earnings dollars? Thank you. Hello?

Yeah. No, we're here. Sorry, we were just caucusing on your first question. So I'll tackle the second one first. Yeah. So look, at the end of the day -- first of all, certainly, we would like to manage the financial model for incremental EBIT power in dollars and earnings per share. To accomplish that, I think it would be ideal if we can drive enough operational leverage in the financial model, so that also means modest margin gains. Now we're operating across multiple product lines with significant and different competitors across many of these in many different regions. And because we don't give specific guidance, I want to be cautious. What we're saying here is there's a strong commitment on our part to increase our earnings capacity given the size and scale of our business. We believe that there are continuous operational efficiencies that if we focus on, we can deliver that growing earnings power. If that also means margin increases consistently over a multiyear period, excellent. But the first order of priority is to secure that we're increasing our earning power, whether that comes through margin increases or potentially flat or down margin. But given the scale of our top line, that still means incremental EBIT dollars and net income dollars, then I think that still accomplishes the overarching goal that we're shooting for. Osvaldo Giménez: With regards to NPLs and bad debt provisions, the numbers are still high at 24%. But you have to bear in mind that the duration of our loans is pretty short, typically consumer loans having a duration of three months. So in the denominator, the portfolio we have is rather short. However, the bad debt stayed there for a year. Now when it comes to bad debt provision, I think it's mostly related to the credit card business, which has been growing very fast. Since we only started that business six months ago, we don't still have enough track record and are being cautious in the provision of potential bad debt.

Got it. So just I'm clear, there wasn't any change in how you classify nonperforming? Because I think you changed it a couple of quarters ago. So that treatment is still the same as how you had previously treated it?

Right. So we've only changed it once, and we haven't changed that again.

Thank you.

And this concludes the Q&A portion of today's call. I'd like to turn the call back over to our host for any closing remarks.

Great. Thanks, everyone. A lot of great questions. We apologize we weren't able to get to everyone, but we'll make sure to cycle back. And we look forward to being able to speak again in a few months and report the beginning of the year that we are very enthused about and where a lot is going on at MELI. So we will speak again in three months. Thank you.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.