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| So going back to your question on advertising, I think, start by saying that we are extremely pleased with the ad result from the quarter |
| As we mentioned, we are super excited with the result of the quarter that we're closing a great 2023 |
| I’m delighted to share that MercadoLibre delivered solid results in Q4 marking a strong conclusion and outstanding year |
| Overall, 2023 highlighted their strength of our financial model and it’s future potential as well as a powerful impact of compounding of several years of investment in technology |
| For our commerce business it was a year of accelerated growth and market share gains in most countries |
| We achieved this but continued to make improvements and the value proposition to buyers and sellers in our marketplace |
| The profitability has continued to be good |
| And when you look at the combined volume we are loaning to consumers, adding the consumer loans to the credit cards that business has also been growing nicely |
| A key contributor to this was the acceleration of our first-party business, particularly in Brazil, where it grew by 81% in 2023 |
| We continued expanding our logistic network with record fulfillment penetration of almost 50%, which provided an improved user experience to our buyers |
| We look at our product purchase margin has improved a few percentage points in 2023, and we expect to continue improving that |
| Our ads business continues to deliver impressive results, growing revenues at an accelerated pace |
| On the Fintech front, Mercado Pago maintained strong momentum as users and merchants continued to adopt our services |
| In acquiring business, we delivered solid TPV growth and gained market share in most countries where we operate, both in online as well as in-store payments |
| We made improvements in approval rates and deployed new features that enabled us to move up market, enhancing the value proposition to SMBs |
| That gave us confidence to grow our business, and we did grow it in Q4 by 60% year-on-year in dollars and 85% in local currency, taking advantage of the obviously the peak season that we had in Mexico as well as Black Friday |
| Finally, we think we have plenty of room to continue to attach more advertising into that business, and that creates a big opportunity to continue improving profitability of 1P |
| The credit business continues to be an important piece of our Fintech strategy, and it delivered another quarter of strong results with accelerated growth and solid spreads as we continue to cautiously manage risks |
| During Q4, Meli delivered strong financial results |
| Revenues grew by 42%, accelerating both in Fintech as well as commerce due to the strong execution during the peak season and investments we made throughout the year |
| So while we don't have a specific target regarding 1P penetration for the future, we are encouraged by the progress we've made in terms of profitability, in terms of supplier relationships and operating processes |
| Despite that, we have been able to increase our net interest margin after losses and also decrease NPLs, which have pierced 30% for the first time in quite some time |
| Following our strong financial performance in 2023 it’s a good time to reflect on the journey over the past six years |
| And the more confident we feel about that, the more confident, the more probability that we could scale in the future, and the bigger we get, the more benefits of scale we will capture, as Martin was saying just before |
| What we're seeing today is an inflation that in Q4 and even today has peaked and is higher than it was, and that is a further incentive, and we have seen that for people to bring money from their bank into the Mercado Pago account, which is currently remunerating 80% year-on-year, and it's a huge advantage versus zero at most banks |
| We saw a pickup in volume, both in terms of GMB and item sold, which increased 12% in Q3 and accelerated to 21% in Q4 |
| So, as I was saying before, we remain extremely confident in our product stack, and we see ample opportunities for growth in the coming years |
| I think as we mentioned in our shareholder letter, we added 53,000 new advertisers this year, and this is a great achievement and shows how strong the level of interest in our product is today, and we expect to build on that in the coming quarter |
| We also improved the pairing process of mobile POS devices with merchants' cell phones and worked behind the scenes to reduce processing times, which had a positive impact on NPS and helped to improve the experience of merchants and buyers |
| Yes, we have made significant progress in the 1P business throughout the year, and we feel that we are a much more sustainable footing today than we were a year ago |
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| And that also puts an extra pressure in terms of productivity for our fulfillment operations |
| Second, I think the growth of 1P in our business, who’s GMB was 50% higher quarter-over-quarter in dollars also acts as a headwind basically because there are no sellers paying for shipping revenues given that we are the sellers in the case of 1P |
| We saw the credit situation overall in Brazil worsened a year and a half ago, two years ago |
| And on the fourth, I think Argentina also added some pressure as we decided not to fully pass inflation through to our prices on the spot in an environment with accelerated inflation and a lot of uncertainty in the market |
| We don't have yet a credit card in Argentina, and we have been more cautious throughout the fourth quarter, even before the elections, knowing that there could be an evaluation and there could be increased NPLs |
| Firstly, on Mexico, sequentially the margin was a little bit lower into the fourth quarter, which is obviously to be expected given the seasonality |
| So although there was pressure on the margin, the incremental negative impact on EBIT due to 1P was only $20 million during the Q [ph] |
| So going to your specific question about margin compression or sequential margin compression, we also experienced some cost pressures during Q4 that you will see reverted in early Q1 |
| As we've been pointing out over the last few quarters, we have a capacity constraint there that we need to fix |
| We saw a slowdown of those volumes |
| We see that the net shipping fees and some of the shipping costs looks like it was a bit more of a drag than in recent quarters |
| Since we take the portfolios at the end of the quarter, the devaluation happened throughout December and the forwarded loans portfolio we're showing in Argentina is devalued already |
| Connectivity has been a bit patchy |
| I think if you, obviously, it's a big charge, and this is the reason why we excluded from the results, to explain results, because it generated a big distortion in Q4 results |
| And basically those headwinds in Q4 come mainly for the following reasons |
| Q4 in particular is a quarter with seasonality in terms of lower margins because of investments that we make in commerce, particularly behind the special events of Black Friday and Blue Wednesday |
| The first one, I would say, with regard to the credit card loans, they have been falling |
| But is there anything else that we should be mindful of? And then on the commerce take rate, this builds a little bit on the earlier question, but we also noticed that there was a sequential decline quarter-over-quarter |
| Any thought about how you should think about that going forward? And then second question, just to touch again on the credit portfolio, the consumer loan balance fell a little bit quarter-by-quarter |
| Where we've been more cautious is on the Fintech services side of the business on issuing credit |
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