Mercadolibre (MELI) Q2 2026 earnings call transcript

Hello, everyone. Good evening, and thank you for joining MERCADOLIBRE's conference call for the quarter ended June 30th, 2026. I'm Richard Cathcart, Senior Director of Investor Relations, and I'm joined this evening by Ariel Scharstein, our CEO, Martin de los Santos, our CFO, and Oswaldo Jimenez, President of FinTech. Tonight's format will be slightly different. I'll start by handing over to Martine for a few high-level opening remarks, and then we'll head straight into the Q&A.

Before we do that, I would like to remind you that management may make or refer to forward-looking statements and non-GAAP measures, so please refer to the disclaimer on screen, which is also available in our earnings materials on our Investor Relations website. Please note that this call is being recorded and a replay will be made available on our investor relations website as well.

With that, I'll pass the call over to Martin de los Santos, our CFO. Good afternoon, and thank you for joining us. MERCADOLIBRE delivered another strong quarter in Q2 2026. Net revenue surpassed $10 billion for the first time, growing 50% year on year. Income from operations was $683 million. With a margin of 6.7%, broadly in line with last quarter, and the result of a deliberate choice to continue prioritizing investment in long-term engagement, growth, and scale over near-term profitability.

Before turning to a few details on this quarter's results, I want to spend a few minutes on what we've learned one year on from the decision we took last year to lower the free shipping threshold in Brazil. In Brazil, items per buyer grew 19% year-on-year in Q2, despite the fact that we've been adding large numbers of new buyers, who typically start out purchasing far less than our average user.

That's a sign of changed behavior, not just a bigger audience. It shows existing users engaging more deeply with us, not simply more people showing up. Conversion in Brazil is up 1.1 percentage points year on year. And this wasn't an incremental gain, it was a step change, and it has proven sustainable for a full year. The ratio of daily to monthly active users has inflected too, with daily actives growing faster every single quarter. Since the free shipping threshold was lowered, and new buyer cohorts who joined after the change are a year on, purchasing more items across more categories, with higher retention than the cohorts that came before them. This is not an isolated case. Across our business, we see the same pattern.

Users who engage more deeply with us become dramatically more valuable. The clearest evidence is what we call ecosystemic users, those who use both our marketplace and Mercado Pago, not just one or the other. These users generate meaningfully more GMV, purchase across a much wider range of categories, and engage far more deeply with our fintech products. Most importantly, they are dramatically more profitable. Contribution profit per ecosystemic user is multiples of the sum of a marketplace only user and a fintech only user. That is why we keep investing the way we do. We are changing behavior and building habits we believe will drive this business's profitability for years to come.

With that strategic context in mind, I now would like to turn to three topics we believe are top of mind for investors, and where we think it is worth spending a few additional minutes.

First, our credit business. Our credit portfolio reached $16.4 billion in Q2, growing 75% year-on-year. We have achieved this growth alongside solid asset quality across the portfolio, which reflects our disciplined approach to risk management as we scale and the shift towards lower risk users in recent years. Our 15-90 day NPL in Q2 was 7.0% for the total portfolio and 4.6% for the credit card specifically, both close to historical lows. Nayyemol improved from 18% in Q1-2026 to 21% in Q2-2026, with gains in our three largest markets.

This includes Brazil, where spreads in our consumer portfolio recovered as provisions normalized. MPLs in Brazil were broadly stable year on year. These results are not coincidental. For example, they reflect the deliberate move-up market in our consumer and merchant credit portfolios, and the scaling of our credit card, which we only offer to lower-risk users. This is highly synergistic with our marketplace, where we have a large base of high-quality, engaged users to draw from as we continue to grow the book.

Second, a quick word on margins. This quarter's EBIT margin of 6.7% was down 550 basis points year-on-year as we continue to prioritize long-term strategic investments over short-term profitability. These investments are consistent with the areas of focus we have described in previous quarters. On a sequential basis, our margin was broadly stable. This is a function of stronger profitability in credit, particularly in the Brazil consumer portfolio, where provisions normalized after a spike in Q1. This was offset by margin compression in acquiring, primarily in Mexico, and incremental investments in commerce.

Finally, on cash flow. In Q2, we continue to see the underlying cash generation strength of the business. We generated $214 million in adjusted free cash flow for the quarter, even after absorbing higher capital expenditure of $441 million and investing $2.1 billion into the growth of our credit book. Our credit book continues to be very profitable, and it also plays a key role in engagement across the ecosystem.

It's this overall strength, strong cash generation, robust profitability, and a healthy balance sheet that gives us the confidence to keep investing at the pace we are. With that, we'll open it up for your questions.

Hi, I'm Martin here. How are you? Thank you for your question. I think the best way to answer your question is to look at sequential margins. As you can see, it's pretty much in line with Q1. There are two things moving in opposite directions there. The first one was an improvement in margins in the credit business, as we discussed on the letter. Last quarter there was a spike on provisions, a temporary spike. We explained that last quarter, and now it has come back to normal spreads, the very profitable business. So that contributed to margins. That was offset, and I will go in order of importance. It was offset by some investments that we have made in Brazil in commerce.

We discussed this in the previous quarterly call where we lower certain take rates to insert the verticals with our take rates and we offer discounts to consumers buying and paying with PICS. That was a strategic initiative that we did in Brazil. We have done that in the past and it has proven to have positive results, but it generated some margin compression. In addition to that, there was some margin compression on the acquiring business. Two things there. One is the fact that the devices have an increasing cost of devices because of higher cost of chips in the industry. So that's something that's there to stay. We will monitor that situation as well. And then there was a one-off charge because we, in Mexico, we restocked a significant volume in terms of devices.

And that's because we are growing very fast in Mexico. We see a big opportunity to continue growing. And as you know, as we sell those devices at a loss, we need to book the losses up front. So when we increase the stock, there's a one-off compression on margin. So that will, you know, compensate throughout the rest of the year. And the last point that you are addressing is the cost of the energy cost. We've seen some cost increases in terms of logistics because of energy costs. Some of them we pass on to our users and some we elected to absorb ourselves. So there is some margin compression. It's not significant, but there is slight margin compression there as well.

And building on Martin's comment regarding POS devices and not increasing the prices, that was driven by two things. On the one hand, the payback periods continue to be in line with what we expected, and therefore there was no need to do that. And also our competitors did not raise their prices, so it didn't make sense, given how fast we're growing and how fast we're gaining market share to raise our prices.

Hey, Andrew. Ariel here. Great to hear you. So, yeah, I think what we did in Brazil with day grades goes back to the basics of e-commerce, right? So when consumers are deciding where to shop, they are basically looking for the broadest selection at the best possible price with the fastest shipping and the best financing. And clearly, getting the right selection is a key part of our strategy. That's why we've been doing 1P. That's why we've been doing CBT. And that's why this quarter, as we did back in 2024 and 2025, we decided to lower seller day grades. We've already proven that lever, and we've consistently seen that every time we lower take rates, we get an acceleration in effective or successful sellers in our platform.

Clearly, given everything that we've been improving in terms of value proposition in Brazil, The trend of growth in successful sellers has accelerated over the last year, and particularly over the last quarter with the initiative that we just mentioned. In terms of unit economics and profitability coming from the acceleration of sellers, I would say there's nothing big to call out. So while there are some programs in order to get seller to scale and so on, there's nothing really affecting our margins on that one.

Hey, Bob. So I think it's too early to comment on the gamification initiatives and points. We've only rolled them out as an ABE for some time, so it's early to actually make a point. I would say the impact so far is positive. We see increased engagement coming from those users who do engage with the proposal but nothing to share On the bigger picture, I would say Agentik.

There are two big things we are doing in commerce with Agentik. On the one hand, it's improving our search through AI, and that's proving to have positive results, Both in terms of conversion rates in the marketplace, items sold, and so on, but also on our advertising platform, the more AI we deploy to search, the better context we provide, the better ads we are able to pick, choose, and display to our consumers, and the more CTR that we get from those ads, so higher revenue. On the second initiative, which is our shopping assistant, we are just A-B testing that one, so nothing to really share in terms of engagement and results, but we are very excited with the early results we are seeing on the shopping assistant, which is live for some consumers in the marketplace.

Taking a step back and picking up your point on engagement, I would say that we'll look at engagement with a broader view. So the bigger and the more engaging our marketplace becomes, the better chances we have of building the largest digital bank in Latin America. So the bigger the marketplace and the better the marketplace, the better our Mercado Pago application works. And conversely, the better Mercado Pago becomes, the more appealing our marketplace becomes to our users, too, basically because users find the best financing and payments alternative right at the place where they are already shopping.

And basically, we see very few companies anywhere in the world who operate at this intersection of commerce and fintech at the scale that we do it in Latin America, And that's really creating a unique flywheel that is very difficult to replicate for any other player across the region. So we are very satisfied, and that's why we've been so precise on highlighting engagement this quarter. We think this is a unique competitive advantage that we have, and basically it results that every single one of the investments that we have been making, I think both across commerce and fintech is playing on favor of making that flywheel turn faster and faster.

Hi, Marcelo. We are very excited with how the credit card in Argentina is going. As we know, we only started issuing cards three quarters ago, roughly around September last year, Last year, we have seen a lot of demand, and we are seeing significant adoption and use, and it's significant, for example, how much people are using the card to pay on the MERCADOLIBRE platforms. It's contributing to the amount of payments with MERCADOLIBRE INC's payments within the platform. It's still early to talk about payback periods because it's only nine months in the first cohort. However, we are glad to see that the payments are in line to what we expected when we started issuing the cards, so there have been no surprises there.

And even in an environment where some other financial institutions are concerned about the credit cycle in Argentina, we are very happy with the issues we have had in Argentina. We think that given our penetration in the market where the majority of the country use Mercado Pago every day or every month and every day, we have been able to cherry pick those users which we deem to be less risky. So in general, I would say we are very happy and that this strengthens both the marketplace and Mercado Pago and the presence of Mercado Pago has in Argentina.

Okay. Thank you very much.

Hi, Rodrigo. Yes, I can't think that so far we are not seeing any deceleration or deterioration of the credit booking in Brazil. If you look at NPLs, they are roughly in line to what they were a year ago, and NPLs are even better than they were last quarter. So, we are nearly bottoms of NPLs that we have had. So, we don't see any deterioration. I think that we have been very conservative in terms of whom we issue credits to. And with regards to what we expect for the future, I would say that we have been through a down credit cycle in the past in Brazil, and we have been through right now about adverse macro conditions in Argentina.

And in both cases, we have been cautious. And when we thought that we had to curtail the number of available lines or the lines of credit, we have done so. At this point, we are confident that the models are working better than we were in the past.

Just to add on Ozzy's comment, I think taking a step back, what you see in terms of credit and deterioration, it's actually the opposite. I mean, if you look across the region, across products, we are almost at our all-time low NPLs for every single product and region, and I think that's a testament to, A, our risk management policies and how we are able and we are prioritizing risk at the moment of issuance, and, B, the power of our technology, right? We are a tech company, and we've deployed lots of technology in underwriting, And the combination of the two has been vital for us to be successful.

Hi, Pedro. It's Martin here. How are you? We are, you know, as we described in the letter, I think the results of the lowering the free shipping threshold in Brazil after one year are amazing. I mean, we are seeing tremendous growth. If you look at items growing at 56%, they were growing 26 or half of that rate a year ago. Engagement with the platform is incredible in terms of, you know, the number that I'm most amazed is conversion. I mean, we have been growing significantly in terms of traffic, but on top of that, we grew our conversion by 1.1 point year on year. At the scale of MERCADOLIBRE, that's enormous in terms of volume. But also, you know, vibrancy and frequency on a platform, daily active users growing much faster than monthly active users.

We're getting more users are also buying on more verticals or becoming more engaged in different verticals within the ecosystem, buying more times, more frequency. In Brazil, frequency of purchase increased by 20% number of transactions, number of items per user. So all the metrics that we wanted to influence were there. Of course, like you said, comms become tougher, but we don't make investment decisions based on comms, obviously. We make them based on the merits of the areas where we're investing. We're making sure that those are strategic to our marketplace. They contribute to engagement and to growth, and they contribute to, you know, We are also strengthening our market position, our leadership position, to capture this long-term opportunity that we have in front of us.

Yeah, so just complementing Martin here. So, A, I would say that we've not seen a step change from one day to the other. The day will lower our free shipping threshold and then steady metrics in terms of engagement, conversion, and so on. And the different effects that we've seen across our marketplace have been consistently improving quarter after quarter.

And with that, you can see the numbers from Q2, right? The results from this quarter are already compared with a lot of the changes that we've implemented last year, and we're still growing very, very nicely. So picking up on Martin's point, we are not optimizing for growth. So it's not that we will be deploying one thing or the other in the future just for the sake of keeping growth high. We will just find whatever we think is needed in order to continue improving the value proposition for our consumers. Of course, there are things that we like and we might test and so on, but it's not that we are making a step change in investments or strategies just for the sake of compounding versus last year changes.

It is very clear.

Martin here. I think if you look at margin sequentially, as I mentioned before, the main driver of margin improvement was the improvement that we saw on the portfolio of consumer credits in Brazil. And in addition to that, we've seen some scale, very strong scale in terms of growth in Brazil that enable us to dilute fixed costs. As you've probably seen over the past several years, we have been diluting OPEX very nicely.

And in this particular quarter, we diluted OPEX by two and a half points quarter on quarter. So that's also contributing to. And we elected to reinvest that margin into other areas of the business, as I explained before. And I think the philosophy continues to be the same. I mean, we have some areas of the business that are delivering very strong profits and are growing very fast. If you look at our credit portfolio, we're at 75% year-on-year, our advertising business growing 70-plus percent year-on-year, the acquiring business as well. So we are continuing to deliver scale because of the growth that we are delivering consistently. So we are electing to reinvest in areas of the business, as we discussed before, lowering the free shipping threshold, 1P, CBT, and so on.

So that philosophy will continue to be the same. And going forward, we invest in a very disciplined manner. We have engagement and growth targets for each initiative that we take on. And more important than that, we have a clear path to profitability to those initiatives. And we measure against those, and we level, we graduate the intensity of investments based on those results.

So that's the first part of your question. Then you ask about AI. We are very excited about AI. I mean, obviously, we are investing more than a year ago. I think we invested about $80 million on AI this quarter compared to a year ago. But we are seeing very strong results. I mean, if you look at it, I mean, let me break it down in a couple of ways. Consumer facing, we have several initiatives that are paying out very nicely. I mean, we talked about the Mercado Pago, AI agent, the seller assistant on Mercado Libre, those continue to scale very nicely. This quarter we closed on the letter. The app orchestrator that is increasing the engagement with our users, you know, grew by 66% the usage of that tool.

That is a way to get more sellers to our advertising platform and is helping us to grow the advertising business by 73% year on year. I think Ari mentioned the AI tools that we deploy on our search engine in the five largest countries. And it important to mention that of course that increased the price the cost because we have to pay in a length now But when you put together the incremental volume that we sell plus the incremental conversion and advertising it more than pays the cost of that initiative So this initiative that has a positive return on that investment So that a good example of AI contributing to profits Then on the productivity side, I think in the past we talked about customer service.

For example, four years ago, we used to have 10,000 reps on customer service. Today, we have 7,000 reps, even though the business grew by 3x in that period of time. And that's because 90% of the interactions are done without a human participating on the issue. In product development, obviously, that's tremendous productivity gains. We have 20,000 developers that are using AI. A year ago, they were coding, they were helped by AI. Today, human written code is the exception. All of the code, the majority of the code is done by AI. And you can see that also flowing through our P&L. We have a product development scale from 8.4% of revenues to 7.2% of revenues year on year, even though it has this incremental cost of AI.

So we are very, very optimistic about it. We are seeing the results. We manage it with discipline. We are focusing on cost as well. You know, cost per token continues to come down. But we are seeing very positive results in terms of investment on AI and MERCADOLIBRE. Thank you.

Hey, Danny. This is Ariel. So the affiliate channel is actually scaling very, very nicely and becoming more efficiently simultaneously. So we think it's actually working. The affiliate G&B share grew across every market in Q2, including Mexico, where we dialed down some of the couponing that we were deploying in the past. So buyer quality is also a very important metric that we look at when we are evaluating the program. Affiliate buyers show materially higher platform retention than non-affiliate buyers. So the channel is not only driving one-time purchases, it's also acquiring users who come back later to our platform, and that's really exciting as well. So this is exactly what we wanted to achieve when we launched and accelerated the investments in Affiliate back in Q2 2025.

And here on, we can see that unique economics and sales and marketing as a percentage of sales are broadly flat, but simultaneously we are making a lot of progress in the product, in engagement, in the number of affiliates, and so on. So we're happy. Economics are improving. Seller co-founding for affiliate is growing. So extremely excited and positive on the outlook for different markets.

Hi, Craig. With regards to acquiring margin in Mexico, it was mostly related to both increasing the amount of devices we bought, increasing inventory, As we sell the devices at a loss, whenever we buy inventory, we need to book the loss up forward. And the rest was driven by, as you mentioned, the increase in the memory chip's cost.

So I would say the majority of the compression in Mexico are related to those two issues and not to a decision to lower our prices, which we did not.

Hey, Craig. So on Mexico commerce and demand dynamics, I would say, yes, the tax reform that we explained last quarter is definitely a headwind to our growth. And that together with some headwind coming from a weaker macroeconomic environment and the even lower consumption during the World Cup definitely pay some toll to our growth. But still, if you see our numbers, our growth rate was pretty robust. We continued gaining market share year over year, and we even gained more than our main competitor. And also when you compare our performance with traditional retailers, you can see how the structural growth opportunity in the country is playing to our favor, right? So the market is growing. We are a large slice, and physical retail is clearly being challenged by e-commerce.

Just to wrap up, I would say Mexico is perhaps the market where our ecosystem could play out the most in our favor in the long run because of the lack of access to financial services and Mercado Pagos positioning as the leading digital bank and the leading fintech acquiring. I think we're driving digitalization in the country, and that's pushing the flywheel, which is strengthening both fintech and e-commerce.

So we remain optimistic with the market, although we do see near-term challenges, which were a bit deeper in June and July with the World Cup. There's nothing that is actually impacting the huge secular trend of growth and opportunity that we see in Mexico, and more importantly, the long-term earnings power that we find in that market.

Thank you for your question. Let me just clarify the product development scale that you're seeing, that I mentioned before, one point year on year.

Most of that doesn't come from AI, just to be clear, okay? We have been scaling product development for many years now, and that trend continues as we become more productive and more efficient in the way we manage our product development. What I tried to explain is that even though we include the majority of the AI costs within that line, that line continues to scale, just to be clear. Then when we look at the AI investment that we're making, we can see the productivity gains throughout our workforce. We can see certain initiatives where we can measure the actual return on investment. The example to that was customer service or the initiative on AI applied to search.

And there are initiatives where we're experimenting. But we are very optimistic. We think that given the way we manage technology, the data that we have, and the position that we have as a technology company, we should be able to take this new technology and scale it. And it will help us significantly to scale our revenue generation. Plus, it will make us a lot more efficient in the way we manage our business.

So let me take one step back on AI to make just one complementary comment to Martin. So although we care about the bill and we proactively manage every single cost lever in order to make it more efficient, I think strategically we think of AI as an opportunity, an accelerator of our wide, bigger opportunity for our business and less as a cost line to optimize, right? So AI is accelerating the secular shift that we already are trying to capture. Discovery is becoming more personalized. Transactions are becoming more frictionless. Credit becomes more tailored to any given consumer. We can underwrite better, and so on. And we are convinced that the 27 years of proprietary data that we have accumulated across commerce, payments, credit, logistics, position ourselves in a good place in order to capture the opportunity that AI is bringing.

Okay. So this is like fuel that we are applying to an organization that is already wired into technology and into the idea of using every single technological lever out there in order to make the most. In parallel, I would say to Martin's point, AI is definitely contributing to cost efficiency. 2026 is probably the first year in many, many years in which we are not growing our engineering team, and that's also coming from the fact that AI is driving developer productivity up consistently.

And, George, going to your question on credit cards, you asked about our older portfolios and cohorts, and basically what we continue to see, mostly in Brazil, which is the one market where we started first, is that each cohort typically reaches NIMA or NIMA break-even after 12 to 18 months. That has been pretty consistent, and then we continue improving profitability.

So what we are doing now as we accelerate issuance is basically invest more. That's why you see some compression on the NEMA of the CodeCard portfolio between last year and this year. It was nearly break-even a year ago, a minus 2.5% now. But that is driven mostly by the fact that we were able to accelerate the speed of issuance. A year ago, we issued 1.6 million cards in the quarter, and this quarter we issued 2.6 million cards in Brazil. And therefore, we are confident that we are investing, and it's the payback. We have certainty about the payback we will get. And beyond the payback in the card itself, what we are seeing is that whenever we issue cards, we see a lift in net promoter scores from those users.

They are more likely to be ecosystemic users and to have higher engagement and higher profitability in the platform. And also, it's one of the key contributors to us becoming basically a gaining principality with those users as a key indicator for becoming one of the largest digital banks in the region. So, we are excited with how the credit card is evolving in Brazil. And on top of that, I would say that what we're seeing in Mexico is that paybacks are even better than in Brazil because the economics of the industry works better than in Brazil. And it's still early to tell about Argentina, but the initial impression is also very, very, very good, as we were saying just a few minutes ago.

Thank you.

Thank you One second please In general, I would say our NEMALs are super healthy. MPLs are at the lowest point for 15 to 90 days. When it comes to 90 days, I would say that there are a few things to keep in mind. In general, this metric mixes all products, so you're not seeing one specific product, and so the signal is not so clear. And it moves basically up and down to some degree, depending on how fast we are growing. When we originate the lot, the ratio improves automatically, and when we slow down, it deteriorates a little bit. And so part of what is happening is that there was a change at the pace we were issuing at the end of last year, and some early years borrowers defaulted a little bit higher than we expected, but then there was a slowdown at the pace we were issuing that product because of that deterioration.

And so you see a little bit of a jump in the over 90 days. But it's not something that I would be concerned about. Again, that is a very small number. And the other bucket, the 15 to 90 days, is significantly more relevant in terms of profitability.

If I may compliment also, keep in mind that some of the products that are growing very fast now are relatively short-term duration. And those products tend to have higher NPLs because, remember, the good payers get out of the portfolio fairly quickly. And the default does stay for 360 days. So there might be also some distortion because of that.

But again, as Osvaldo mentioned, nothing to worry about. Our margins continue to be, the health of the portfolio continues to be very profitable. So I wouldn't put a big issue, make a big issue out of it.

I will say that both on the acquiring and credit business, there is no There is no significant impact by a little bit of a change in the rates in Brazil. Typically, the market, our competitors, and ourselves adjust those rates depending on what's happening with the policy rates. There is marginal improvements in the credit you have already issued because you price them with a higher rate, but it's really, I would say, marginal. But once we get to the new standard, basically, we adjust prices. There is probably a little bit more of an impact on the marketplace because typically we don't adjust so frequently the parcel of the prices on the marketplace. So on the margin, that is an improvement to the tech rate in the marketplace.

Right. The marketplace typically when interest rates come down, we improve a little bit margins, and when they go up, we lose margins because we don't adjust, you know, every single time the rates change.

Hi, it's Martin here. Thanks for your question. Regarding ecosystemic users, we wanted to make sure that it's clear to the market. The fact that we have a two-sided ecosystem, you know, generates this opportunity to bring users that are active on both platforms, and we wanted to give some color to the market regarding the importance of that, right? When we see an ecosystem user has 70% more GMV on the marketplace and 90% more TPV, double the asset under management. So very much engaged, and that results in better profitability.

We also mentioned that the rate of growth of those type of users is the highest of any kind of users. I think it's going 37% year on year, but we don't disclose the actual share of users. We just want to make sure that it's clear that those are important users to us, growing very fast. And a lot of the investments that we're making are aiming to get more of the users, both of the commerce side and the fintech side, to become ecosystemic users.

Hey, Marvin. So on cross-border trade, we are extremely satisfied with the trajectory we're seeing. In the meantime, CBT GMB is growing approximately at 60% year-over-year with triple-digit growth in Brazil, Argentina, and other markets, and above average growth in Mexico, our largest market for CBT by far. More interestingly, the volume coming from our Chinese fulfillment center is growing 170% quarter-over-quarter. So basically, we built the capacity and we see that the volume is following. And basically, with CBT, we're providing a better service and more choice to our consumers, right? So CBT is adding more selection and attractive prices, and users always want to get that. And, you know, the more supply we get, the more demand we get, and with that demand, our platform becomes more attractive in order to get more supply.

So positive on that effect. And simultaneously, the warehouse in China has enabled us to improve delivery speed, reduce cancellation, which is also driving NPS positively and pushing retention and repurchase up. Simultaneously, on unit economics, which is another dimension that you asked for, we continue to see sequential improvements in our margins, and that has been consistent for a few quarters now. And basically, it's driven by the combination of scale, which is helping us dilute some of our costs, but also going through the learning curve that is allowing us to tackle every dimension of the business to really get to understand what the levers are in order to make it work. So, as I was saying at the beginning, very satisfied, encouraged, but still early days for CBT, and we have many things to continue doing.

Hi, Joe. As we mentioned, we are super excited with how the credit card is evolving, and we continue to see the same patterns as before in terms of reaching profitability for each given cohort. And now, when it comes to your question regarding reaching a turning point, I think that is mostly related with the history of the size of each cohort, basically. We have been accelerating the pace of issuance. So if we were to look at cohorts that are older than three years, those are rather small parts of the portfolio.

And the majority of the portfolio has been issued, I would say, in the last two years. And that's why we need more time for the average of the portfolio to mature. As we are confident of how we are issuing, we have been able to accelerate the pace of issuance, and that in some way slows down the average maturity of the portfolio. So I'd say mostly a combination of how fast we continue to issue and then how each portfolio evolves.

Maybe just if you step back, I think it's important to realize the traditional importance of a credit card, right? The profitability that you're seeing on the letter is only the credit card, but as we mentioned also on the letter, people who use the credit card have two to three times more chances of becoming ecosystemic. They tend to buy more on MERCADOLIBRE, tend to bring more of their financial life into MERCADOLIBRE. So the credit card on itself has a clear path to profitability, as Oswaldo mentioned. But on top of that, and probably more important than that, is in a strategic product, both for MERCADOLIBRE as well as MERCADOLIBRE. So just on the side of that.

So I want to take this opportunity and go back to one of the things I was saying at the beginning of the call. We are building something quite unique globally, an ecosystem of commerce and financial services that compounds on itself. The bigger and the more engaging our marketplace becomes, the better our chances of building the largest digital bank in Latin America, and the bigger that our advertising business will become.

And simultaneously, the better Mercado Pago becomes, the more appealing our marketplace becomes too for our consumers. MERCADOLIBRE and MERCADOLIBRE have become a daily habit for Latin Americans across the region, but the opportunity that we have ahead of us is even bigger. These are not two businesses running in parallel. This is one flywheel each side making the other one more valuable. As we said in the letter, we invest in it carefully with discipline, and only when we see that the economics are working, if we get that flywheel right, The result is structurally higher engagement, loyalty, and scale, and that is what will maximize our long-term profitability.

So the underlying philosophy with which we are operating has not changed in almost three decades. Investing in eliminating friction in what deepens user engagement and letting it compound, Our conviction in this approach, the evidence supporting it, and the ecosystem behind it are all stronger than they have ever been. We are convinced that this is the right way to create the very best long-term proposition for our consumers, and through this to maximize shareholder value in the long run as well. Thank you very much, and looking forward to connecting with you in the next quarter.