Hello, everyone, and welcome to the Mercado Libre earnings conference call for the quarter ended September 30th, 2026. Thank you for joining us.

I'm Richard Cathcart, Investor Relations Senior Director at Mercado Libre. To begin today's call, Martín de los Santos, our CFO, will share a few opening remarks, after which we will begin our live Q&A session, which will also include Ariel Szarfsztejn, our CEO, and Osvaldo Giménez, President of Fintech.

Before we go into our results, I'd like to take a moment to highlight the launch of the MELI IR Assistant, available on our Investor Relations website. This is an AI tool that provides real-time answers to questions about our financial results, operations, and strategy, based on our public disclosures.

I invite you to explore it after today's call at investor.mercadolibre.com. As a reminder to participants on today's call, management may make or refer to forward-looking statements and non-GAAP measures, please refer to the disclaimer on screen and in our earnings materials that are available on our Investor Relations website.

Please note that this call is being recorded, and a replay will be made available on our IR website afterwards. With that, let's begin with a message from our CFO.

Good afternoon, and thank you for joining us. Mercado Libre delivered another quarter of strong growth, with net revenue and financial income up 41% year-on-year on an FX-neutral basis.

Growth was broad-based across businesses and countries, with Brazil standing out with the fastest growth rate. We're particularly pleased with Commerce in Brazil, where GMV growth remains strong at 36% year-on-year.

Users are shopping more frequently with us, which is exactly the habit our investments are designed to build. Before we lowered the free shipping threshold last year, items per buyer were growing at a single-digit pace.

In Q3 '26, they grew 16% year-on-year, still double digits, even after fully lapping the change. Fintech delivered another solid quarter with strong profitability.

Monthly active users grew 29%, assets under management 67%, and the credit portfolio 62%, while NPLs remained stable, despite a weaker credit environment in Brazil and Argentina. Turning to profitability, income from operations was $676 million, with a margin of 6.3%, down 40 basis points from last quarter.

Two factors drove this: higher net shipping costs and higher sales and marketing spending, as we continue to develop our affiliate program. These are deliberate investments.

They reflect the trade-off we described in the shareholder letter. We are investing part of today's margin to accelerate the shift of commerce and financial services online in Latin America, and to build lasting habits across our ecosystem.

Let me spend a few minutes on each of these two factors that compressed margins this quarter. Shipping was a net headwind of approximately 60 basis points versus last quarter, for four reasons.

The first is last year's decision to lower the free shipping threshold still working through. Buyers responded by purchasing more often and in smaller baskets, and that means less revenue per shipment.

We expected that, and the engagement numbers say it's doing what we wanted. The second is capacity.

We added almost 20% to our fulfillment square meters quarter-on-quarter ahead of peak. That cost lands before the volume does, a pattern we have seen many times since we started operating fulfillment almost 10 years ago.

This decision reflects our strong momentum and our confidence in future growth across the region. The third is higher energy prices, which raised transportation costs.

The fourth is temporary recruitment costs related to the expansion of our shipping network, which are booked in G&A. The first two are strategic choices: investment in a stronger value proposition that builds online buying habits, and investment in capacity to support the growth we see ahead.

The third is outside our control, and we manage around it through pricing and efficiency. The fourth is temporary.

While shipping compressed our margins in Q3, we're pleased that our network continues to become more efficient due to scale. Specifically in Brazil, despite the headwinds from new capacity and higher energy prices, cost per shipment on an FX-neutral basis declined 5% year-on-year and 14% since before we lowered the free shipping threshold.

In September, free shipments in the 19 to 79 reais range were variable contribution positive for the first time. The second source of margin compression was sales and marketing, which rose 40 basis points sequentially to 11.6% of net revenue, still within our range of recent years.

We calibrate this spend quarter by quarter, and in Q3, we decided to invest more in our affiliate program in Brazil to strengthen our presence on social media. Orders through the channel grew 240% year-on-year.

Consumers increasingly discover and buy products through creators and social media. In Brazil, more than 40% of social media users say finding products to buy is one of their main reasons for using these platforms, and we expect social commerce to keep gaining relevance across Latin America.

Since we started investing in affiliates last year, our network has grown to more than 12 million affiliates across the region. As more sellers and brands co-fund campaigns, we see a path to better economics for the program over time.

Based on performance, we calibrate affiliate spending, dialing it up or down as opportunities evolve across markets. In summary, these investments weighed on margins this quarter, but the underlying economics of our business continue to improve.

Our logistics network is more efficient, our credit card economics are better, we gained operating leverage in product development even as we invest more in AI, and we are building new channels to acquire and engage customers. We believe these are the foundations for stronger earnings power over time.

We remain focused on disciplined investment decisions that strengthen our competitive position and generate sustainable long-term returns. With that, we'll open it up for your questions.

Hi. Thanks very much for the question.

I wanted to dig in more on the social strategy, as you referenced it. I'm curious how big a part of the market you see social commerce being over time, and how MELI's right to win transfers in an environment where more shopping is social and you're competing against some with that direct social focus.

Then related to that, you framed the Brazil affiliates investment as tactical. I'm curious that framing as opposed to something more structural if the market's evolving in this manner.

Thank you.

Hey, Andrew. How are you?

Ariel here. Thanks for your question.

On the one hand, we can do as much as we can or want to design the way we want to capture demand, but in the end, we need to be where the demand and the attention is, and affiliate marketing is part of that playbook. There is some broader shift in how consumers discover and potentially buy some products.

Social media in general is becoming an additional channel for discovery, many times incremental. That happens whether we like it or not.

That's a bit on the framework and the way we are thinking about buying incremental transactions through affiliates. In general terms, we continue to think that organic traffic driven by frequency, by the very best value proposition coming from price, selection, the best shipping, and the best financing, will continue to be the majority of the volume in e-commerce in the future, but still, we need to be where the consumers are.

In that regards, building our network of affiliates and building a value proposition around that for consumers is part of our strategy in order to continue building what we think is the very best place to buy online in Latin America. Clearly, we see other social players growing in the region.

They are mostly focused on low-ticket items for certain categories. Our value proposition is a bit broader across categories, across price ranges.

On top of that, we have been building our own social capabilities for the last two years, and that's not only affiliates. It's also lives, it's also clips and videos within our infinite scroll, and so on.

We are sure that us combining those social capabilities with the assets that I was referring to before in terms of brand, in terms of selection, pricing, financing, and shipping put us in a unique position in order to capture the opportunity in commerce in LatAm, which combined with our ability to deploy our ecosystem in financial services, really gives us an edge to continue competing and continue gaining market share across the region.

If I can complement, Andrew, the mention regarding tactical is the intensity. This particular quarter, we intensified a little bit the investment, but it's a strategic initiative for us to develop this channel.

We have been doing it for several quarters now. As I mentioned, we have reached 12 million affiliate members of the affiliate program.

It's an area of investment that we will continue to pursue, and as we improve the unit economics, it should contribute to margins eventually.

Yes, hi. Thanks for the opportunity.

You very helpfully laid out the sources of pressure to logistics costs, but also the progress that you're making from an underlying basis and across cost to serve more broadly, and you also characterized in both your prepared remarks and just now in the answer, the step-up in affiliate marketing spend in Brazil tactical. With the overall top-line metrics and engagement KPIs also remaining so strong, and putting this all together, it does feel like the inflection point for margins should be coming within the line of sight here.

My question is are there any other potential new, larger investment buckets, perhaps of the size of what you did in Brazil in terms of lower ASPs, that you're looking to lean into, or perhaps a combination of a couple of different buckets that you're looking to lean more aggressively into from here? Just so this is a question around cadence of investment cycles.

Connected to that, perhaps as you think about moving to the next investment frontiers in e-commerce, I was hoping to just get an update on how you're thinking about the opportunity set in quick commerce specifically in Brazil, and whether we should think of that as more of a gradual effort, or one where the investment curve could steepen, and if so, what could trigger that decision? Thank you.

Hi, Irma. It's Martín here.

Thank you for your question. I think, for the most part, the areas of investments will continue to be similar to the ones that you have seen.

As we have other initiatives that we're pursuing at a smaller scale, and we can elaborate a little bit on dark stores and so on. The areas of investments will continue to be the same.

Our approach is the one that we have been describing over the past several quarters, where we have certain businesses that are growing very nicely that are delivering profits to our ecosystem, called advertising growing 58% year-on-year, a credit portfolio growing at 62% year-on-year, an acquiring business growing at 42% year-on-year. We're using some of those profitability to reinvest in other areas of the ecosystem.

The approach is to manage for the long term. We are not targeting a specific short-term margin target to have a short-term margin target, but we are convinced that it's the right way to go to capture the large opportunity in front of us.

We are very disciplined in the way we invest. We set our targets of both engagement as well as path to profitability on all of the investment areas that we have in front of us.

When we see that they are performing well, we pursue them. If they're not, we reiterate and in some cases, we stop them.

That's the playbook that we have been following. In the short term, I don't see significant new areas of investment.

We announced recently in this quarter in September expansion of our free shipping program in Argentina, mostly to our Meli+ users, so that could be an area of investment, but similar to what we have done in Brazil. I would say that there would not be a significant deviation to what you had seen.

Let me complement Martín, hey Irma, this is Ariel, with our views on quick commerce and proximity. Before jumping into the general concept, let me try to attack your potentially more relevant concern, which is economics.

We have not announced with Envios Agora any steep change in investments. We think that we can actually build a business that might be accretive to margins not far from today, but we are piloting and learning.

Having said that, let me give you my 30,000-feet view on that one. I think we have proven over and over that the better the speed, the better the conversion rates in our apps.

Particularly when thinking about quick commerce, speed matters more for some purchases than others. When someone needs something now, such as medicine, an essential, a gift, people have historically gone to a local store in order to get those items.

Fast delivery is the lever that we think can help us tackle that market segment, and we see proximity as a layer within our marketplace for items where buyers expect that speed. We are building that offering initially based on our existing capabilities: Flex, our marketplace, payments, Meli+, and the network of merchants.

That's basically what we are testing with Envios Agora: shipments from the seller doorstep into the buyer using our cloud of drivers, without committing to any incremental infrastructure. Our ambition continues to be the same: to be the destination for shopping online in Latin America, and this is another layer in the value prop that expands the shopping journey that we can serve.

Eventually, there are more models that we can test and learn in the future, but as of today, I would say there is no steep change or inflection point in our investment mindset behind quick commerce.

Thank you very much, and good evening, Ariel, Martín, Osvaldo, Richard. In your letter to shareholders, you mentioned the investment in developing habits, but it's really more than that, isn't it?

It's also about building a dominant and comprehensive value proposition and ecosystem. I'm curious: where do you think you are in that part of the journey, especially in things like low ASPs, which were somewhat disruptive, and lower-income groups, and social, and cross-border?

Is there a value prop for the merchant out there as well that we should be more mindful of? How are you thinking about the value prop for the supply side in comparison with your biggest competitors?

Thank you.

Hey, Bob. Let me try to address your question from a general view.

I think we see a great result, beyond what we were expecting, with the combination of all the investment levers that we have been pulling over the last, I would say, 18 months. Engagement has been going up from existing consumers.

Buying frequency has been going up. New buyers has been consistent in our commerce platform.

Payments, Mercado Pago, has been growing very, very rapidly. We see more people using Mercado Pago to save, to invest, and to pay across Latin America.

I would say our whole thesis beyond investing in order to build an ecosystem that can drive engagement and scale, which will, in the long run, drive efficiencies and maximize shareholder value, is actually evolving exactly how we thought about that. The second part of your question, which is merchant side of our value prop: I think we've made tremendous progress as well.

We have been growing successful sellers and successful listings at our fastest pace for many, many years, and that's because of two things: on the one hand, because we see demand growing in the platform, and basically merchants follow demand, but simultaneously because we have put in place some adjustments intake rate, in value proposition for those merchants to bring more selection into Mercado Libre. Overall, we are excited with the combination of demand flowing in, frequency increasing, and supply increasing at the same time.

Hi, good evening. Thanks for taking my question.

I wanted to ask a bit about credit. Far, you have been doing quite well on the metrics.

When we see countries like Brazil, we see deteriorating trends in the system. You are getting larger.

How are you seeing this going forward? I think the environment is getting a bit tougher.

Do you feel the need to step a bit on the brakes or on the MELI side so far so good, and you can keep a good speed? Thank you.

Hi, Marcelo. I'd say that so far so good.

We have seen very good results on the credit front across countries. I think you specifically asked about Brazil, I imagine, and I'd say that given the information we have and our discipline on risk management, we have been able to continue to grow, but also reducing risk at the margin basically.

We have been able to continue to grow across most segments. On the most risky segments, we have been a little bit more cautious.

What we're seeing is stability across products. Our 15 to 90 NPLs was 7%, stable both versus last quarter and a year ago.

We continue growing at 62%. Beyond Brazil, I'd say in Argentina, NPLs have improved across all products and are close to historical lows, despite weakness in the industry.

Coming back to Brazil, I would say that an important advantage is that the marketplace gives us information before we lend, and we see how users buy, how they pay, how they're using installments. This brings us high-quality users to Mercado Pago at a very low cost.

We can adjust very specifically by product, by risk cohort, by the size of the credit line, or by the duration. If we see signs of deterioration, either in the marketplace behavior or in credit repayments, we pull back.

Far, as I mentioned, has been very little, and mostly in Brazil. We will always prioritize risk management over growth, but we will pursue, I'd say, opportunities when we are comfortable with the risk.

Good evening, everyone. Just would like to double-click here on this topic about the credit in Brazil, just to understand if specifically in the quarter, you had any positive impact from the government's debt renegotiation program, Desenrola, if that quite helped during the quarter.

You mentioned during the letter a slight deterioration in NIMO for other products other than cards. If you just could give us a little bit more details here precisely what type of product, what type of country.

It would be very helpful. That's it.

Thank you, guys.

Hi, Rodrigo. Let me start with Desenrola.

We did participate in Desenrola in Brazil from the end of July until the end of the program. I'd say that during the period of the program, we also joined Serasa's discount campaign, Descontazo, and we ran along it.

I would say that overall, there was some positive impact this quarter because of that, but I'd say overall, it's small compared to the size of our portfolio. We have a $19 billion portfolio, the impact has been rather small compared to the portfolio.

Nonetheless, it's interesting, and we always like to participate, and it has a positive impact. Can you repeat the second part of the question, please?

Sure. You mentioned during the letter a slight deterioration in the NIMO of some products other than cards, [unclear] product that happened, and why, in which country, if you could just give a little bit more details here.

Thank you.

Yes, let me start with credit card. I'd say that we are happy with how credit card has been evolving.

Basically in Brazil, we are seeing improvement in existing cohorts, and now we have a larger base of mature and maturing cohorts, and we are also seeing strong unit economics in Mexico and Argentina. I'd say we are happy with how the business is developing across these markets.

Also obviously the pace of issuance matters, and we issued as many cards as we could this quarter. This was our record for us.

The faster we issue relative to the size of the mature book, the larger the near-term cost, even when the economics of each cohort are sound. I'd say this has been improving, and with regards to the other products, there's nothing has changed.

Overall, the change in NIMO is due to the change in the relative size of the products, with credit cards growing faster than merchant and consumer loans, but merchant and consumer loans continue to be super healthy.

If I share my complement, we don't see any deterioration on any other of the portfolios. If there is a slight compression of margins, it's because we lower interest rates that we charge to certain customers in Argentina because the spreads enabled us to do that.

We continue to see very healthy books in all of our portfolios in all of the countries where we operate.

Thank you for taking the question. I wanted to ask about some of the AI comments.

I believe you mentioned, internally, the investment was up $30 million sequentially. There's certainly benefits that you're seeing relative to search and customer support.

If you were to kind of carve that out in terms of flow-through to either contribution profit or operating profit, is it a positive contribution to the business today, or is that something that you see maybe happening over time as you adopt more open-source models and get the cost per token down? That's kind of one question internally.

Then externally, we've certainly got a lot more questions about agentic shopping, and it has seemingly showed up as a very small percentage of GMV for certain businesses, at least in the US. Just kind of curious where you stand on that opportunity.

Do you see it as a channel for maybe new lead generation for new customers? Are you having conversations with some of these third-party agents?

Would you be willing to let them open up and shop on the MELI platform? Thank you.

Hey, Josh. It's Martín here.

Thank you for your question. Indeed on the letter, we explained that we continue to invest behind AI.

As you mentioned, we increased the investment quarter-on-quarter by $30 million, and we continue to see very, very good results both consumer-facing as well as internal efficiencies. Consumer-facing, we mentioned the Mago, which is the AI agent on our fintech platform that continues to increase engagement with our users.

We see NPS improving because of Mago. We see better engagement with our platform, more of their funds coming to Mercado Pago, all positive signs because of that.

There are certain other initiatives that we mentioned on the letter where we can see the exact return on investment. For instance, we included an LLM on the search algorithm, and we can see through the incremental conversion and the click-through rate that we're seeing in those search results, we can see that the costs of the models are more than compensated by the incremental revenues that we're generating.

Customer experience for a couple of years now, we have seen significant scale because of AI, and obviously the productivity of our developers, which continue to increase. They are generating more code, testing better, getting fewer rollbacks, all the metrics that we measure are very effective in terms of productivity.

Now the way to see it through the P&L, I think a good example to that is the fact that we continue to scale our product development line even though we have that $100 million incremental spending year-over-year. When you put the cost of our developers plus the cost of AI, we continue to scale.

This particular quarter, we scaled 70 basis points relative to last year, we are very comfortable with the investments that we're making, and we believe we can leverage AI, being a technology company, we can leverage AI by creating better products and by becoming more efficient and doing more, better things faster and cheaper with the same team that we have today within MELI.

Let me build on this last comment of Martín and take the question on agentic shopping. We clearly see agentic shopping as an opportunity to accelerate the structural shift from offline retail into online retail.

Specifically, the way we're thinking about this is not necessarily by integrating ourselves to third parties, right? We continue to look at what's globally happening, trying to learn, and we are always ready to get new things and adapt.

For now, we have decided not to provide our inventory to any external platform. Our priority is still to build the best agentic experience inside Mercado Libre, taking advantage of the 27 years of first-party data that we have, our unique combination of selection, pricing, logistics, financing, loyalty, and so on.

E-commerce is much more than just search and find. Trust is built further down the funnel through all the key variables that I was just mentioning, and that's exactly what we excel at, right?

We think that we can combine our strengths with an agentic experience within Mercado Libre, and with that, we believe that we will be able to sustain the high levels of direct traffic to our app or our properties through that asset that we are building. Today, our own agent is already available to a small portion of our user base in our three largest markets.

Results are early but promising. It's too early to share.

I'm sure we will do so in the future. Our agentic experience is now a reality, and it's not just an idea.

Taking a step back, the same way I started, I think the broader point is that AI is accelerating the shift from offline retail into online, and our organization, with our technology DNA, is very well-positioned to fully take advantage of the power of AI in order to fulfill our mission.

Great. Hey, guys.

Thanks for taking the question. Ariel, first, with the Brazil elections now behind us, can you talk about whether MELI's strategic priorities have changed at all in any capacity?

Is it continuation of the same, or are there any new priorities you need focus, perhaps more focused on affordability or cross-border or any others? Then maybe one for Martín: you've improved the value prop of the loyalty program meaningfully in many of your key markets.

Can you talk about what are some of the other ways you can kind of continue to drive penetration for loyalty in the next, say, two to three years? Also maybe share some color on how loyalty members compare versus non-members in terms of frequency, profit, or maybe other KPIs?

Thank you so much.

Hey, Deepak. It's Ariel here.

I will not try to get into predicting Brazilian macroeconomics and dynamics, but let me say that I don't think these elections actually changed the future of Mercado Libre materially. We've gone in the last 27 years through governments with many political inclinations, and here we are.

In that sense, across many elections and many governments, the secular opportunities in commerce and in fintech have outweighed and outlasted politics dynamics, and we expect that to continue to be the case. With that, our focus remains on the same thing, which is capturing the shifts that are happening structurally in the industries where we operate, building a resilient business that users want to return to, and the opportunities remain the same, and we are going to put all of our efforts and focus in capturing them.

In terms of loyalty, we have seen significant progress in terms of our loyalty program. We have seen acceleration in terms of the number of users that enroll into the program, obviously as we improve the value prop.

Last year, we made a big improvement in the value prop when we lowered the free shipping threshold, and that resulted in significant increase in number of users in Brazil. We recently announced an improvement in Argentina, where we expanded the free shipping offering for our loyalty members, and that also resulted in increased number of members.

I think if you step back and you look at our loyalty program, the big difference that we have is the ability because we operate in an ecosystem, the ability to provide benefits on both sides of the ecosystem. If you're a member of the loyalty program, you get faster and free shipping, but also you get better remuneration on your deposits, better interest rates on some of your loans, and better offers on your marketplace, and so on.

That's the critical competitive advantage that we have. As we mentioned on the letter, when we look at users that operate on both sides of the ecosystem, what we call them ecosystemic users, those users are a lot more engaged with our platform.

They tend to buy more on Mercado Libre, they tend to bring more money to the Mercado Pago platform, and they're a lot more profitable to us. The loyalty program is a critical tool for us to continue to creating more ecosystemic users by bringing users from the marketplace into Mercado Pago, and vice versa.

Very optimistic about it and making great progress in that front.

Hi. Thank you for taking my question.

First, on the payment side of the business, you're showing very strong volume growth, but if I look at the yield for the payment acquiring business, there seems to a bit compression that you're seeing sequentially. Could you shed some light on the trend that we should expect for the take rate for the payment business?

Is there any particular geography where higher growth is leading to a bit of margin compression? My second question is slightly related to asset quality.

We've seen some slowdown in the growth for the consumer unsecured portfolio, and I understand you're growing the credit cards on the other hand. Are you strategically a bit more comfortable with growth in the merchant side of the business rather than unsecured personal loans in any specific market, or if that's a strategic shift that you think could be better for asset quality given the trends in Brazil and Argentina in general?

Any color on that would be very helpful.

Hi, Neha. I'd say that the main change was there used to be some margin pressure in the last quarter, and that was driven mostly by an increase in POS devices driven by an increase in memory costs.

I'd say the main change from last quarter to this one is a reversal of the temporary POS device restocking effect that weighted last quarter, particularly in Mexico. Last quarter, we have on the one hand had a larger inventory following strong device sales and higher prices for memory chips, and so what we're doing is prices continue to be high, but we have stopped building an inventory up front, basically.

We have enough of an inventory. Now this effect has therefore eased in this quarter.

That doesn't mean that the device cost pressure has disappeared. We continue to manage the procurement and inventory while investing in merchant acquisition.

Let me complement Osvaldo with one comment on take rates, particularly for acquiring Argentina. I would say we are very comfortable with the take rate and margin trajectory for any given segment in acquiring in Argentina and in general out there.

Then there is an issue with speed of growth of each segment, right? You can see changes in the overall margin or take rate of our acquiring business depending on how fast we manage to move upmarket or to grow our existing user base, but there is nothing to call out there concerning us, and nothing to mention on the expected trajectory of the margin for that business.

From a P&L perspective, it's a business that is growing very rapidly, 42% year-on-year, and even though take rates are coming down because of move upmarket, continue to deliver very healthy profit margins, as Osvaldo mentioned.

Then I think the second question was regarding both merchant lending and consumer lending and whether we are more comfortable with merchant lending. We, in general, have more leverage with merchant lending, but we are, I think, nowadays equally comfortable with both.

With merchant lending, when we have two different kinds of merchants: those who are selling online or selling on the marketplace, and there it's easy to collect because we can enforce the collection through their sales in the marketplace. Now when it comes to POS merchants, they usually, mostly in Brazil, have more than one device, and therefore they can switch provider, and so it is as important to be able to score them in a good way as it is with consumers.

I'd say in both cases, we are as equally comfortable, and we are seeing good dynamics in both markets.

Hi. I wanted to return back to the operating margin.

You called out a number of drivers that weighed on the margin in the quarter, and look, I was wondering if any of those are going to necessarily reverse or are these costs that are going to be in the model until we grow over them next year? Any help there would be great because the margin is clearly what continues to weigh on sentiment around the stock.

Thanks.

Hi, it's Martín here. Thank you for your question.

Let me go a little bit deeper into the margin compression that we're seeing quarter-on-quarter that might help you identify what's going on, in particular on shipping. On the shipping part of the business, we had a compression of roughly call it 60 basis points, okay?

40 basis points are on on on opex and and 20 basis points on sorry, 40 basis points are on COGS and 20 on opex, okay? For the most part, the shipping con- contraction was because of expansion of our footprint, logistics footprint.

We do this every third quarter moving into peak season on the fourth quarter. This particular year, we increased our capacity quarter-on-quarter by 20%.

Given the size of our logistics infrastructure, it's a lot, compared to a year ago, where we grew it by only 10%. There's a significant growth in in in in our footprint, and that creates some headwind in terms of cost in this particular quarter.

That, we expect that part of that to come back in Q4. We also saw some increases on fuel costs, on energy costs.

We pass some of those to our consumers through on pricing, but not all of them, there's some pressure there that we expect that to remain. Then, on the other hand, we had 40 basis points of investment on affiliate.

As we mentioned earlier, affiliate is an area where we are planning to continue to invest. This particular quarter, we increased our level of investment by 40 basis points compared to last quarter.

If you look at on a broader perspective, the sales and marketing line of our P&L, we are operating within the range of 11% to 12%, which is a range that we have operated for the past several years. Hope that helps you understand the moving parts in this particular quarter.

Let me complement Martín with a high-level strategic view on margin trajectory. I think for the last 18 months, we've said the same thing in every one of these calls: we're investing because the opportunity in front of us is large, and because deeper engagement is what builds a durable leadership position in this market.

We have accepted a lower margin to do that, and I think we've been open on that regards. Our investments are working, which is a very important thing.

Users are buying more often, transacting and saving more with Mercado Pago, and we are gaining market share in every major market in both commerce and fintech. We are being disciplined about it.

We are investing only where we see the economics work, and adjusting where they don't work. We're also very mindful of risk, which you can see in the evolution of our NPLs, which are close to record lows in every single country and product.

A most engaged user base at scale and a deeper ecosystem penetration is what builds earning power over time. This is the approach we believe will maximize long-term cash flow and shareholder value.

[unclear] Good evening, [unclear] thanks for taking [unclear] the question. I want to touch on [unclear] logistics [unclear] capacity [unclear] economics.

[unclear] Fulfillment square meters increased almost [unclear] 20% quarter-over-quarter ahead of peak season, creating pressure [unclear] in both gross margin and G&A. How quickly [unclear] do you expect that capacity to be filled, and should [unclear] the associated costs largely dilute in 2027, or does the current growth outlook require another similarly large capacity step-up next year?

[unclear] Thanks again.

Sorry to stop you.

You want to give it another try, Lucas?

Okay. Why don't we move to the next questions, and then we can take Lucas at the end?

Hello, good evening. Thanks for the opportunity.

I would like to double-check two information on credit, please, in Brazil. First is to confirm that you are already reducing the pace of growth given the current landscape, just to understand if this is right.

Second, if you can share with us if it's possible to share the nominal impact from the Desenrola to your numbers just to understand what would be the recurring level of provisions or NIMO. Lastly, on credit, you mentioned about the NIMO pressure coming from lower rates in Argentina, just trying to understand what is the stage of this today.

We have been noticing the banks reducing rates as well, and this seems to be a trend now. Just wondering if we could see further pressure on NIMO coming from that in the coming quarters as well.

Thank you.

Hi, Caio. Let me try to address all of those points.

Let me start with Desenrola. As I mentioned, it's fairly small, it's not a relevant number, we have not disclosed it, and I think it's very relevant, doesn't really move the needle.

I think the third question was regarding NIMO and if there could be some pressure from Argentina. I'd say that is not the case.

In the case of Argentina, as interest rates have been coming down throughout the year, and we had reflected some of those lower rates in general interest rates in the lower rates we charge to our users. That has not created a compression in our spreads.

Our spreads in Argentina continue to be very healthy. I'd say the change in NIMO is mostly related to change in mix by credit cards growing faster than the rest of the credit book.

Now, I think the first one was regarding the speed of growth, and there I would say we have been a little bit more cautious in Brazil. In the last quarters, I would say, we have been a little bit more cautious, but this has been marginal.

This has been specific to those segments that were more risky. We have been able to continue growing at a fast pace, but we have been more cautious on those segments that would be more risky because we were aware of what we have seen in the market, both in Argentina and in Brazil, with some of our competitors and rest of the industry.

Again, our spread has continued to be very healthy, but on the margin, we have been being a little more cautious. In general, what we do is this: we like to seize every growth opportunity we think profitable, but we always put risk management ahead of growth.

Thank you. Can you hear me better now?

Yes, we can. Go ahead, please.

Okay. Thanks for that.

Sorry for the confusion. I wanted to touch on Argentina's exposure to cross-border competition.

Since the country has historically carried structurally higher margins than the rest of the business, as the market normalizes, competition increases, and the operating environment becomes more similar to your other markets, how should we think about the sustainability of that margin premium? Are these structural reasons Argentina should remain more profitable, or should we expect profitability to gradually converge toward the rest of the region?

If I may, just another point in logistics capacity and economics: fulfillment square meters increased almost 20% quarter-over-quarter ahead of peak season, creating pressure in both gross margin and G&A. How quickly do you expect that capacity to be filled, and should the associated costs largely dilute in '27, or does the current growth outlook require another similarly large capacity step-up next year?

Thanks again.

Hey, Lucas. Ariel here.

Let me try to answer the question a bit differently to how you asked, given that we don't give forward-looking statements on where margin trajectory is going to be. I think we have a unique position in Argentina.

On the one hand, Mercado Pago is the primary financial institution for many, many, many Argentinians. On the other hand, e-commerce market share for us continues to be very high.

Although some of the Asian competitors out there have gained some market share at the beginning of this year and the end of last year, we've seen the situation a bit more stable, and we are very bullish on our ability to continue improving our value proposition, removing frictions in the marketplace for consumers to continue choosing Mercado Libre as the primary destination for shopping and for financial services in the country. We'll see what happens to margin in the future.

I'm sure we'll have time to discuss that, but there's no particular comment that I can bring in order to answer more specifically the question on margin trajectory.

There was a second part of the question that we wanted to address, if you could remind us what it was, please.

It was about logistics capacity and economics as you increased almost 20% quarter-over-quarter fulfillment square meters ahead of peak season. How quickly do you expect that capacity to be filled, and should the associated costs largely dilute in '27, or does the current growth outlook require another similarly large capacity step-up next year?

Let me first say that when you see an increase in capacity in this particular case, which was 20%, as I mentioned earlier, much larger than before, is not only for peak season, which is going to happen this quarter, but also for the future growth that we see in that market. We are optimistic about people moving online and growth remaining there.

In terms of the speed at which that capacity fills up, it depends, obviously there will be a step-up function in Q4, but then over time, it will continue to fill up, and that obviously helps in terms of unit economics. As we'll continue to invest in new facilities throughout the year, maybe not at the pace that we are growing in Q3 because of peak season, but every quarter, we do increase capacity to keep up with the growth of the market.

Remember, we are growing in Brazil north of 40% items shipped for the past five quarters. If you can imagine that requires a lot of capacity to be put into place.

Over time, each new capacity, as it fills up, obviously improves unit economics, but then you have new ones coming into place in the following quarters.

Hi, Ariel, Martín. Thanks for taking the question.

Most of the topics I wanted to discuss were already answered, but maybe it would be very helpful if you could share what are your thoughts on the 6x1 workweek schedule approved in Brazil recently? The labor journey is expected to change, and I would like to know what is the expected impact on your logistics costs for 2027 maybe, and how much of it can automation offset, or maybe your thoughts on this topic, please.

Pedro, Ariel here. In Brazil, the standard work schedule has been six days on, one day off, up to 44 hours a week, and that has been the case for many years.

As a constitutional amendment approved in October moves the country to five days on, two days off, and shortens the legal workweek from 44 hours into 40, with no salary adjustments, and clearly the impact that we'll see is in our logistics force. I think you are asking about the 5-to-2 specifically, and I would say the following: in August, before this approval, we proactively reorganized our logistics operation in Brazil to a 5-to-2 schedule, 5 days on 5 days on, 2 days off, with the same 44 hours weekly work.

We did that because it lets us fit our working hours better with the demand flowing through our fulfillment centers and service centers, with less idle time, a lower and lower spending on staff transportation and meals, and we actually expect that to improve turnover over time. Because of this, we don't actually expect any material cost impact of that shift in the future, and we are optimistic about that.

On the second change in the country, we are preparing for the next stages where the working week will be gradually reduced. I think it's a bit early on that regards.

Clearly, we need the hours in order to process all the demand that is flowing through our network, which in the end will mean that we will need more employees in our logistics operation. I think the scheduling efficiencies from the 5-to-2 will help absorb part of the change from the 40 to 42 change, and also the natural turnover in our workforce will give us some flexibility to test different comp schemes in the future as well.

Not much more to say. Time will tell how we adapt to this, but this does not change our strategy or our ambition in Brazil.

We continue to work in finding efficiencies, automating our warehouses, and capturing the benefits coming from scale. I'm sure next quarter, we will be able to share more details on what happened.

Maybe to complement on automation, still at a relatively low scale, but we tripled the automation investments or the volume that we're automating within our fulfillment infrastructure, primarily in Brazil, but also in Mexico.

Thank you. The most important thing in this quarter's results is the following: our users are doing more with us, and it is costing us less to serve each of them.

Those two factors together are at the heart of how we think about this business. Engagement builds scale, scale makes us more efficient, and efficiency gives us the flexibility to create capabilities to better serve our users in the future.

Our investments are clearly paying off. We continue to gain market share.

We continue to bring in more customers, and frequency and engagement with our platforms are reaching new levels. Mercado Libre is extending its leadership as the go-to destination for shopping in Latin America.

Mercado Pago is getting closer to its objective of becoming the region's largest digital financial services provider in the region. The opportunity ahead of us is huge in commerce and in fintech, and we are convinced that our strategy is the best way to generate shareholder returns in the long run.

We continue to be disciplined, we continue to be mindful of risk, and we continue to be bold as well. Thanks all for joining, and we are looking forward to engaging with you in the coming days.