Gentlemen, thank you for standing by. Welcome to MercadoLibre's First Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. If you require any further assistance, please press star zero. It is now my pleasure to introduce Investor Relations Officer, Lissa Schreurs. Hello, everyone, and welcome to the MercadoLibre earnings conference call for the quarter ended March 31st, 2021. I am Lissa Schreurs, Investor Relations Officer for MercadoLibre. Our Chief Financial Officer, Pedro Arnt, will be leading today's prepared remarks. Joining him on the line is Chief Executive Officer of Mercado Pago, Osvaldo Gimenez, who will be available during today's Q&A session. I remind you that management may make forward-looking statements relating to such matters as continued growth prospects for the company, industry trends, and product and technology initiatives. These statements are based on currently available information and our current assumptions, expectations, and projections about future events. While we believe that our assumptions, expectations, and projections are reasonable in view of the currently available information, you are cautioned not to place undue reliance on these forward-looking statements. Our actual results may differ materially from those included in this conference call for a variety of reasons, including those described in the forward-looking statements and risk factor sections of our Form 10-K for the year ended December 31st, 2020, Item 1A Risk Factors in Part Two of our Form 10-Q for the quarter ended March 31st, 2021, and any of MercadoLibre, Inc.'s other applicable filings with the Securities and Exchange Commission, which are available on our investor relations website. Now, let me turn the call over to Pedro. Hi, everyone. Welcome to our first quarter 2021 earnings call. Our financial results were once again marked by accelerating growth due to strong demand for e-commerce and fintech services within an improving but still challenging environment. While some key markets began to gradually open physical retail, in others, lockdowns were enforced in major cities towards the end of the quarter. Online consumption throughout remained strong, and we experienced favorable consumer trends as digital services' share of wallet continued to grow. Our solid quarterly performance illustrates our commitment to executing our long-term strategic priorities as we remain focused on our purpose democratizing access to commerce and money in Latin America, recognizing the important economic role we play in the countries where we operate. Let me start us off with the results from our commerce business in Q1. We generated triple-digit growth in items sold and maintained record levels of transactions per buyer quarter-on-quarter. This constituted a formidable level of engagement given seasonal differences between Q4 and Q1. Volume-wise, consolidated gross merchandise volume grew 114% year-over-year on an FX neutral basis. Across our geographies, all countries either maintained or posted higher growth rates compared to the fourth quarter of 2020. In Brazil, our largest market, we doubled items sold and nearly doubled GMV versus the prior year. In Mexico, we continue to accelerate our sequential growth in items sold and GMV. All other geographies showed positive trends in GMV growth as well, with Chile, in particular, increasing its share in our business substantially. Product diversification is becoming an increasingly important driver of growth to overlay on to our ever-improving delivery service levels and highly competitive pricing. To achieve this, we are focusing on both category and merchant type expansion. For example, during Q1, we made significant strides in amplifying our experience in consumer packaged goods. We established initial partnerships with traditional large food retailers in Mexico and Brazil and reached new record levels of inventory depth across categories. User experience in CPG is also benefiting from our logistics footprint. In Brazil, over half of CPG items are already being shipped from our own fulfillment centers, helping us improve user experience and deliver consumer expectations. On the merchant front, as you know, our marketplace is composed of a mix of small sellers and big brands, and we have been attracting more global and local household name brands across multiple verticals as we continue to strengthen our e-commerce ecosystem. In consumer electronics, for example, we have added partnerships with Panasonic, ASUS and Intelbras. While our CPG portfolio now includes stores by J.Macêdo and Mondelēz. As a result, approximately 20% of our marketplace sales are already coming from official stores, an increase of seven percentage points over the same quarter last year. Overall product depth also continues to improve, as live listings have reached almost 300 million listings this quarter, increasing versus the fourth quarter in all major geographies. Part of this increase was driven by the growth of unique sellers in our marketplace, with almost one million total sellers with successful sales during the quarter. We will continue to grow our already ample seller base, adding almost 200,000 new sellers to our marketplace this quarter. Before moving on to logistics, let me briefly address our growing loyalty program. We continue to expand our content offering while delivering great value in terms of new subscribers for our initial content partners, Disney+, Deezer, and HBO. More importantly, we are seeing strong signs of incremental engagement from user cohorts that purchase content through our loyalty program. Building on this initial success will be a growing focus for us. Let's now move on to developments relating to Mercado Envios, a primary contributor to our core business. During Q1, our logistics capabilities were a focal point of our operating strategy, reaching new company records in terms of reach, speed, scale, and cost. Our managed network reached a penetration of 80% on a consolidated basis, with Argentina, Brazil, and Mexico at 87%, 83%, and 79% respectively. Our expansion in Brazil was particularly notable, and we are also pleased with our progress in Colombia and Chile, which demonstrate our speed in execution. We have now reached 63% and 53% penetration of items shipped through our managed network in those markets, respectively. We view this as a remarkable progress, considering we began implementing our managed network operation in Colombia and Chile only a little over a year ago at the height of the COVID-19 pandemic outbreak. Regarding our fulfillment operations, on a consolidated basis, we now have over 32% of all items sold on our platform originating in our fulfillment centers. This is driven mainly by expansions in Brazil, Argentina, and other countries in the Andean region. While Mexico maintains the leading position with 60% of items being fulfilled by MercadoLibre, but stable in penetration sequentially. During Q1, we shipped over 208 million items, and for the third consecutive quarter, registered a year-over-year growth above 130% in shipments. Our lead times per shipment set a new record for speed. We significantly improved the share of same-day and next-day delivery in every single country, even while sustaining high levels of growth in total items shipped. Overall, 74% of all volume was delivered in less than 48 hours, a notable 21 percentage point improvement versus a year ago. These results were driven by the sustained expansion of our logistics network. We recently started operating two new fulfillment centers, one in Santa Catarina, Brazil, and another near Monterrey in Mexico. New service centers were also added to our network in Brazil. Simultaneously, our same-day logistics solution gained greater participation in Brazil, Colombia, and Chile. This advances our objective of increasing fast deliveries within major urban centers, and we are now operating deliveries during weekends as well. As you can see, the Mercado Envíos team is operating at an outstanding pace while unlocking greater levels of efficiency within our network. Additionally, recognizing that free shipping is an attractive value proposition for our customers, in March, we reduced our free shipping threshold to BRL 79 in Brazil. This delivers several benefits. First, we now have an even more comprehensive free shipping program for buyers in the region, a key differentiating factor for MercadoLibre. Second, we expect to cover a greater portion of our GMV in items that ship for free. We strongly believe that these developments within our logistics services will be drivers of sustained improvements in customer satisfaction and experience. Finally, on a related matter, we are also proud of our ecological conservation initiative, Regenera América, following the issuance of our sustainability bond earlier this year. Integrating sustainable practices that complement our logistics operations and get us closer to carbon neutrality is a growing part of our strategy to positively contribute towards stopping climate change over time. I'll now address the fintech side of the business, a critical lever within our ecosystem to democratize money and access to financial services. For the first quarter, Mercado Pago total payment volume reached $14.7 billion on a consolidated basis, growing almost 130% year-over-year on an FX neutral basis. This represented a total of 630 million transactions for Q1 at a growth rate of 117% compared to the same quarter last year. On platform payments volume grew by 119% on a consolidated basis, largely driven by the strong performance of the commerce business in Brazil. For our off-platform payments, TPV grew by 136% compared to Q1 2020. We are continuing to successfully build our network of active collectors and payers. On the collector side, we have over 11 million off-platform merchants on a consolidated basis, with almost 7 million in Brazil alone. Additionally, during Q1, we reached almost 35 million off-platform unique payers during the quarter. I'll now detail the various segments of our off-platform payments business, starting with Point, our point of sale offering. Point was resilient throughout the lockdown. Despite reduced physical retail volume, Point payment volume grew 90% on an FX neutral basis, setting new volume records in Brazil, Mexico and Argentina. New device sales reached almost 1 million units with strong growth in Mexico. POS sales in Mexico benefited from the launch of our top of the line device geared towards larger merchants, where we improved our value proposition by distributing debit cards to Point device holders as well. On the flip side, POS sales in Brazil were challenged by increased restrictions on mobility as well as seasonality, resulting in 650,000 new merchant POS sales this quarter, a very solid number, but down from previous quarters despite the record high volume processed through POSs in Brazil. Online payments grew 139% year-over-year on an FX neutral basis. Underlying this growth are two opposing trends. On one hand, we continue expanding our services to online merchants and SMEs, establishing ourselves as a payment solution of choice for many new online businesses. During the quarter, we maintained our small, mid, and larger sized merchant acquisition productivity with no indication of volatility in seller churn. On the other hand, long tail sellers that boosted activity during the peak of lockdowns in the region have decreased in volume as economies open and also driven by seasonality. To complete the review of our portfolio of financial services, let me address the growing number of financial solutions for payers offered through our digital wallet. Total payment volume associated with the wallet on a consolidated basis was $2.9 billion. This represents a deceleration to 192% year-over-year on an FX neutral basis. The slowdown was driven by Brazil and Argentina, where diminished government financial aid this quarter negatively impacted growth in total payers on the wallet while less marketing spend as a percentage of wallet TPV reduced user growth but improved profitability. Although we are pleased to see nearly 3x FX neutral growth in wallet payments volume, our ultimate goal is more ambitious than primarily payments. Our strategy is to transition from being primarily a digital payments platform to a principal financial services provider. To accomplish this, we are beginning to better balance the investment required for growing the number of payers in our ecosystem with investments in driving higher levels of adoption of our multiple financial services, thus setting the foundation for product diversification towards a more balanced and sustainable revenue and profit mix between payment, credit, insurance, and savings tech offerings. To advance this objective of broadening our service offerings within the wallet, we made important product development steps during Q1. On the insurance front, we saw consistent acceleration in our extended warranty product in Brazil, Argentina, and Mexico, with solid multi-quarter sequential improvements in sales attach rates. We also expanded the rollout of theft and damage insurance in Brazil for cell phones, a service that we can cross-sell within our marketplace. Regarding our proprietary cards, we issued 3.8 million more cards this quarter, 2.6 million of those in Brazil. The advantage of these recently rolled out cards is that they can be enabled as hybrid debit and credit cards, and they will be our platform to grow our revolving credit product in the coming months. Our asset management services within the Wallet are another example of growth in added financial services, having added over 770,000 new users with invested funds in their Wallet accounts during Q1, for a total of over 15 million investment accounts with positive balances. Finally, incoming deposits into our digital account have increased such that payers with account money have doubled compared to Q1 of last year, potentially confirming the increased intention to engage with the financial services provided in our Wallet beyond mainly payments. Consequently, we reached 14 million active Wallet users during Q1, similar in number to Q4, while seeing growth in per user engagement as payers are increasing the frequency and value of transactions consistently over time, as well as solid growth in adoption of incremental financial services in the Wallet, as I have just described above, service by service. We are still in the early days of our journey of becoming a principal provider of financial services through the Wallet, and the initial results are very encouraging. Finally, I'll provide a performance update from Mercado Crédito. In Q1, our portfolio surpassed $575 million, more than doubling our volume versus the same quarter the previous year. During the quarter, we originated over $582 million, and our consumer credit portfolio continues to drive growth in all geographies. This growth has come with increases in NPLs. Specifically, we've seen NPLs increase among a particular segment of users who have found it difficult to service small loans once government financial aid subsidies were removed. Upon observing this at the beginning of the year, we incorporated these new conditions into our credit scoring models in a timely manner, thus exiting the quarter with improving performance on NPLs. Consequently, notwithstanding this quarterly increase in bad debt in the Brazilian consumer credit books, we remain confident that we will be able to continue growing credit originations with sustained profitability going forward. Let me now move on to a review of our financial progress for the first quarter. I'll begin with consolidated net revenues. We began 2021 booking the highest net revenue growth rate over the last five quarters. Having reached almost $1.4 billion in revenue, we grew 111% in U.S. dollars and 158% on an FX neutral basis. At the country level, on an FX neutral basis, Argentina once again grew above the 200% mark. Mexico nearly grew 150%. We were encouraged by our Q1 net revenue growth in Brazil of 139%, surpassing the growth rates of previous quarters. Gross profit in Q1 was $591 million at a margin of 43%, decreasing from the 48% recorded in Q1 of 2020, but increasing 6 percentage points sequentially. This trend is explained by our growth and expansion of investments which support our long-term strategy. Over the past 12 months, we've expanded our 1P business, booking product costs in our COGS line. In addition, as we continue to roll out our own shipping network and have built more fulfillment centers, shipping operation costs have increased as a proportion of cost over net revenues. For greater detail, and as we do every quarter, we've included a detailed breakdown of these margin effects in the slides accompanying this presentation, along with the OpEx margin evolution as well. We see efficiencies and scale reflected in our operating expenses compared to last year. Operating expenses were $500 million in Q1, and we have sustained improved operating leverage. OpEx as a% of revenues improved 17 percentage points year-over-year, decreasing from 53% to 36% this year. Between our new sustained net revenue growth and continued investments in developing our brand, user base, and logistics capabilities, we reached Q1 of 2021 with positive EBIT dollars compared to a loss in Q1 of last year. Moving down the P&L, the company incurred $91 million in financial expenses this quarter, turning a very strong EBIT quarter into the red. The main driver of this is non-recurring. We recorded a $49 million charge related to our convertible debt re-purchase transaction. We also increased year-over-year tax payments from increased earnings in multiple geographies. This quarter, we also have a foreign exchange loss of a little over $15 million, primarily from share repurchases carry forward in Argentina at the blue-chip swap rate. Interest income was $25 million, a 32% decrease year-over-year, resulting from lower interest rates on investments versus the first quarter of 2020. Ultimately, Q1 closed with a net loss of $34 million after tax, yet with an improved net income margin of almost one percentage point compared to last year, and more importantly, a return to profitability if excluding one-off charges. To wrap up, I'll note that we've gotten off to a great start to 2021. Our top-line growth is very solid, and we have successfully executed our plans to drive incremental EBIT through our financial model. We are still facing trying times in Latin America as the COVID-19 pandemic remains present. We remain immensely grateful to our almost 19,000 employees and collaborators for their continuous commitment to provide financial inclusion and democratization of commerce while keeping us safe and thriving. As has been the case over the past 12 months, we will keep building towards our goals, elbow to elbow with our community of users throughout Latin America. Thanks everyone for joining this quarterly conference call, and we look forward to keeping you updated on our progress in a few months. With that, we can now take your questions. Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Our first question comes from the line of Andrew Ruben with Morgan Stanley. Hi. Thanks very much for taking the question, and congratulations on the results. My question is on Wallet. The color's very helpful and the strategy is clear, and it seems like some less focus on TPV and active payers as the markers of progress. My question is, what metrics are you looking at internally, and what would you suggest investors look at to judge the success and traction of the Wallet initiatives more broadly? Hi, Andrew Ruben. How are you? Thanks for that question. We continue to look at TPV and active payers. It's a metric we keep a close look at. What has happened, I would say in the last two quarters, is on the one hand, government aids, which have been last year a step function in growth, slowed down or disappeared mostly in both Brazil and Argentina, on the one hand. On the other hand, we also saw that since there were lockdowns in several of the countries where we operate, we decided to invest less aggressively on the marketing side to acquire new users. We decided to save those marketing dollars for later in the year when we hope these countries will be open. On the other hand, I would say more and more we are looking beyond just wallets and toward becoming a more comprehensive financial services platform. We have been also focusing more on, for example, debit cards in Brazil, and now we have just launched credit cards in Brazil, so that we have a more significant share in total financial spend of our users. That has been the focus recently. Thank you. Our next question comes from the line of Bob Ford with Bank of America. Hey, thank you, and again, congratulations on the quarter. Just a couple of questions. How are you thinking about your dual app structure these days? Would combining the two help drive greater wallet activation, frequency, and more efficient wallet funding? Is the cost and speed and size too high a price to pay given the technology base that the consumer has? I recall you beginning to accept Bitcoin some time ago in the marketplace, and now the treasury move and facilitating real estate transactions in Bitcoin. Can you buy Bitcoin with ARS? How are you thinking about the use of Bitcoin, both in general terms and as possibly a store of value for your wallet users? Great, Bob. Thanks. First of all, on the app structure, I think going back to the previous question and to the increased focus on widespread financial services distribution, if you think about that as the ultimate goal and how do we move towards principality in financial services for our users, implied in that is that a lot of the payments functionality should expand. I think there's a lot in the pipeline in terms of incremental financial services features and products. Trying to cram all that in into a single UX is not the direction we're going. Having said that, if you look at the numbers, we have around 60 million users on the commerce side that we increasingly cross-sell and try to get them to also download the financial services Pago app. There are bare-bones payments functionalities in the yellow commerce app. Increasingly, we will try to drive those users over to the financial services app through cross-linkages through promotions, and that's where we are aggressively focused on expanding the amount of financial services that they use from us. At the end of the day, if you look at long-term, the real potential in fintech goes way beyond payments and into the distribution of the other forms of financial services, credit, insurance, asset management, savings, all the products we have and we're now focused on growing. Understood. The crypto question is an interesting one. The crypto positions that our treasury has been purchasing are not usage of ours. This is US dollars that we are purchasing crypto with. I think this has multiple objectives. One of them is we've always been long-term thinkers, and we believe this is a good use of long-term store value for our treasury at the right amounts and at the prudent amounts. It's also us making sure that we are quickly moving up the learning curve in terms of understanding crypto and making sure that opportunities that we are sure will arise, we are able to move into them and have good understanding of what's going on. This is not a way to purchase or store value of Argentine currency. That's not what we're doing here. I think as a company, we are excited with opportunities that probably will emerge in the fintech world around crypto, and we want to make sure that we are learning and well-versed or as much as we can. That's, I think, one of the reasons we're doing this from treasury and also other parts of the company. Great. Thank you very much. Thank you. Our next question comes from the line of Irma Sgarz with Goldman Sachs. Yes. Hi. Good evening. In your marketing expense line, you had an increase after a couple of quarters of sort of having a relatively flatlined expenses given the environment. What campaigns, channels, and geographies would you just call out? Was it more commerce, so than fintech? It sounded like it from your prepared remarks, just wanted to follow up and get a little bit more detail. Connected to that in the product and develop technology expense line. Obviously, altogether, we're seeing a lot of leverage in expenses, but that expense line was also up quite strongly in the first quarter and to a lesser extent now. When you think about the breakdown of your product and technology development expenses now for 2021 compared to, let's say, 2018, 2019, where have the main shifts taken place? Thank you. Great, Irma. On sales and marketing, if you look at the sequential evolution, it was actually seasonally up Q4 to Q3, then it is up Q1 to Q4 again. That increase is not driven by actual customer acquisition, brand programmatic couponing, it is driven by two other elements within that. One of them is the buyer protection program. As TPV grows and also as we have more and more fulfillment blueprint items fulfilled by us, we have a larger coverage and guarantee promise. Those numbers are up. That is the biggest driver of the sequential increase. The other one, as is disclosed in the financial statements in greater detail, is incremental bad debt on the credit book, that is also because revenues and originations are growing extremely well. There's a matching revenue growth from that increase in bad debt, which are the loan loss provisions on the credit book. The actual underlying branding and customer acquisition costs are down sequentially as one would expect from seasonality. Product development, I think, continues to be an area of strong investment for us in absolute dollars. It continues to scale year-over-year from a margin perspective, and the single biggest line item there obviously is headcount. We have a lot of development and a lot of product features on our roadmap, and so we're aggressively trying to ramp up our engineering team. We're looking to almost more than double actually our engineering teams over last year. We're convinced that that's the right place to be investing long term. I think the combination of significant growth in absolute terms, but still scaling from a margin perspective is a good combination for a tech company. We can continue to invest aggressively in growing the engineering talent pool but still deliver margin expansion. Great. Thank you. Thank you. Our next question comes from the line of Ravi Jain with HSBC. Hello, afternoon. Just quick two questions. First, I think on e-commerce. Could you give maybe some color around purchase frequency and retention rates, particularly about the cohort that came onto your platform in the last two, three quarters? I'm trying to figure out how do we look at normalization of growth once you start comping the tougher ones next few quarters. The second one, probably a little bit more on the fintech, just following up on a couple of previous questions. You mentioned that you have lowered the marketing spend and the incremental financial services is what is going to drive. Maybe some color on what are the important features that you think will drive incremental adoption from here. What will take it from 14 million users to a number like, say, couple of fold from there? We've seen recent salary portability. Is it that? Is it credit? Some color on what you think would drive adoption would be super helpful. Thank you. Okay, great. Let me start with the first one. I think on the cohort number, I don't have it off the top of my head. Obviously, there's a seasonal adaptation if we look at Q4 to Q1 cohorts, but nothing worrying in the cohort analysis. I think if anything, when we look at the growth of our businesses once we started comping with the COVID-19 last year quarter, over the last few weeks, we obviously will see a deceleration in the headline growth rate, but sequential evolution continues to be pretty solid across most markets. We need to continue to closely monitor this. I think as we roll into May and June, in some markets, the comps get progressively more difficult. So far, when we look at the sequential evolution of growth week on week and month on month, there certainly seems to be a good amount of purchases that have moved online throughout the pandemic and that are staying online. Now, bear in mind also that a lot of our geographies have gone back into lockdown, that also, I think, affects demand patterns. We might have to look at this over a longer period into Q2 and Q3. So far, I would say encouraging results in terms of how much online purchasing has remained online. Going to the fintech question, Ravi, I'd say that there are several features that we have been building or we are building to increase engagement with our wallet. Some of them are how users can use Mercado Pago to pay in new ways. We launched a couple of quarters ago our debit card. An interesting thing about the debit card is that any Mercado Pago user in Brazil has a virtual debit card. Whenever they have funds in Mercado Pago, they are able to generate a credit card number and use that to pay online anywhere, and if they want, they can ask for a plastic, but they cannot pay it online. We will continue to increase the amount of credit lines we offer those users for them to have an extra reason to choose us, to drive the credit use. Combining those two things, we just launched our credit card in Brazil. The cards we had launched previously, debit ones, are hybrid cards, and we can add credit functionality on top of those, and we have started to do that in April. Whenever we get an user who has both a debit card already with them and also a good score with us, we will be able to offer them a credit line on the same plastic. We are working on expanding our savings and investment products. So far, the only product we offer is a money market in Brazil, Argentina, and Mexico, and the plan for this year is to expand the investment offerings that we have in Brazil. We will continue to grow our insurance products. Far, extended warranty and theft and damage are the two products we have available, the second one only in Brazil, and we are finding new ways to increase adoption of both products. There are a few other things that are coming that we have not yet disclosed, but basically, the idea here is to increase the cross-sell among products and to increase the engagement. You mentioned salary portability and WhatsApp integration. Those are two things that we have rolled out recently. Still too early to have results of those, but what we want to achieve is to gain principality in the use of the Mercado Pago account. Thank you so much. It's helpful. Thank you. Our next question comes from the line of Marcelo Santos with JP Morgan. Hi. Hello. Thanks for taking my questions. I have two. The first is on margins. I want to touch a bit on the question that Irma did. I wanted to understand a little bit better. You saw a big improvement in margin year-over-year because of lower marketing. You also mentioned that you saved a bit on marketing dollars in the fintech because there was a lockdown, so you didn't want to spend the money now. We saw this very high margin. Is this margin that is kind of a little bit boosted because you invest less in marketing and we should see a normalization of this marketing, or this could be seen as a normal level that you are having? Just that's the first question. The second question, my perception was that the revenue was very strong, like the monetization was very strong. Could you please comment if there was anything positively impacting monetization, either on fintech or on the e-commerce? Thank you. Great. Look, I think the margin improvements sequentially are driven by more factors than only marketing, but marketing is a significant one. Marketing tends to have somewhat of a seasonal outlay. Obviously towards the end of the year shopping season, the margin compresses somewhat. In Q1, I think this year, as we said, was one of marketing pullback. I don't think you should expect this kind of margin leverage, but I don't think you should assume numbers similar to Q4 of last year either. I think we do look to drive year-on-year leverage off of the marketing expenses, and given how fast our revenue base is growing, we can do that while at the same time being extremely competitive in the absolute number of dollars that we're deploying versus the prior year. There were also improvements, this is bleeding over to your second question. There were a lot of operational efficiencies on shipping costs. Some of those are COGS, but also some of those are more efficient contra revenues. I remind you that some of our transportation costs are contra revs, and as that got more efficient into Q1, that's helped revenue growth. When we look at cost per shipment, those have been coming down sequentially across the board in almost all geographies. That's also, I think, a consequence of good operational efficiency from the logistics team and also the benefits of scale. We've also seen a return to more mix shift on payments of credit card over debit. Debit was very prevalent throughout a lot of the government aid usage, and credit has better monetization than debit. That's reverted back to levels closer to where we were prior to Q3, and that's also helped improve take rate. Perfect. Thank you. Thanks a lot. Thank you. Our next question comes from the line of Stephen Ju with Credit Suisse. All right, thank you. Pedro, I think you've been looking to add CPG, as a more meaningful part of the consumer offering for some time now. Is there anything you can add there in terms of what the increase in this percentage has done for hopefully greater velocity of purchase and hence as an output, maybe, customer lifetime value? Second, I think you've been looking to onboard some lower ASP items from sellers in Asia, perhaps with a faster delivery and service offering versus the competition. Can you give us an update on how that initiative is going? Thank you. Great. CPG, there is some initial data that points to better engagement and performance across non-CPG categories from users that purchase CPG. We are beginning to see data that proves out, I think, the thesis of getting involved in high-frequency CPG categories, that it does help lifetime values across other categories. Now, bear in mind that, and especially in the early years of the rollout of the CPG product, that obviously does come at a cost, right. Even though lifetime values are improving, the incremental CPG sales are done at a much lower margin than other categories until that business reaches scale, and becomes a much better margin business. I think we continue to focus on growing that and expanding that, and you will see a lot of innovation on our CPG and supermarket front like you have over the past few quarters. We've already announced a couple of high-profile deals with very large retailers across the region to help them move more sales through our CPG channels, supermarkets. This is obviously a very large TAM category with very high frequency, and one that the data we are seeing, I think, is leading us in the direction of continuing to build this out, going forward. CBT, solid growth, very consistent. We continue to build out more and more sourcing capabilities in Asia. We now have feet in the ground there. We're seeing very strong impact of that in Mexico, for example, where it's relevant. We're also beginning to now focus on sourcing more and more North American merchants because we're seeing good results as we improve products and features, and users are better able to find cross-border listings and offerings on our site. Again, I think that's another part of our long-term vision, is to turn global supply local for our consumers across Latin America, and we will do that by continuing to expand our sourcing efforts both in Asia but also in North America. Thank you. Thank you. Our next question comes from the line of Thiago Macruz with Itaú. Hi, guys. Well, we continue to see a massive active user growth, yearly users. You're even above competition even though you're the market leader by a mile. I was wondering if you had to list in order of importance, the top three endogenous factors that are supporting Brazil, what would you list? What would you say? Thank you. Sorry. We just want to make sure we got your question. It cut off a little bit. Can you repeat the back end of the question, please? Absolutely. I was just wondering, if you had to list the most important factors that are supporting your active user growth in Brazil, endogenous ones, what would it be? Sure. First of all, I think clearly on the commerce side, there has been significant uplift in consumers purchasing online and engaging with our platform, initially driven by the pandemic. I think for MELI, the fact that so many users were driven to our platform in the early days of the pandemic and realized that the logistics capabilities we had built out over the previous years really were incredibly efficient, both in terms of the expansiveness of free shipping, but also service levels, were fantastic for us. I think had this happened two or three years earlier, where our logistics build-out had not been where it was, we would have had a very different capability to retain a lot of these new cohorts of users. I think clearly pandemic-driven initial trial, or users who had lapsed and then returned to the platform and realized that the overall user experience was dramatically different from either what they anticipated or what they had experienced in the past, has been a very important driver of growth. We see that also with the evolution of net promoter scores and the fact that despite the huge surge in volume, our delivery times have consistently improved sequentially quarter-on-quarter, and the amount of free shipping has expanded. You might have realized in Q1, we lowered the threshold for free shipping in Brazil to 79 reais. Really, MELI has by far the most expansive free shipping program, I think, of online retailers in Brazil. On the fintech side of the business, I would say that drivers have been a little bit different in each of the verticals. If you want, online payments have been sort of in sync with the marketplace, where the shift towards e-commerce has benefited the merchant services business. Somehow countercyclical has been mPOS, where we saw a little bit of a slowdown when there was less foot traffic to stores. I would say that our shift upmarket enabled us to re-accelerate growth in the last couple of quarters. That has been significant in terms of TPV. I think we have already discussed wallet. Thanks, guys. Thank you very much. Thank you. Our next question comes from the line of Soomit Datta with New Street Research. Hi, guys. two quick questions, please. One on commerce and one on fintech. Just on the commerce side, do you mind giving us, please, an update on what you're seeing, specifically on the competitive side from Shopee? There's been quite a bit of noise about their presence in the Brazilian market, potential to expand into Mexico. I just wondered, that kind of seemed to coincide with the drop in free shipping to BRL 79. I wondered, was that a response to the competition or was that just part of the ongoing business kind of thinking? Next, please, just on fintech. Sorry to go back to the wallet again. I just wanted to double-check. My sort of sense was always, get usability on the wallet and use the wallet to then layer on financial services. Should we now be thinking actually that the model's shifted slightly, and actually, yes, we'll look to sell financial services, but maybe it'll be more focused outside of the wallet going forward? Thank you. Great. We don't comment on specific competitors. I think as a whole, given the size of the opportunity of commerce and fintech in Latin America, the fastest-growing e-commerce region in the world right now, obviously there will be competitors. We've always tried to observe and learn from our competitors. If things that they are doing better we can replicate, we will replicate. No, we didn't lower free shipping as a response to a specific competitor. We've done that across the board in different geographies. We've been doing that consistently over time. The vision has always been that as we gain efficiencies from scale and from operational efficiency, we will allow some of those improvements to drop to the bottom line, and we will return some of those to our consumers in the form of more free shipping, which generates a tremendous flywheel. I think the combination of logistics efficiency and free shipping that we have today across the region is really unrivaled at the regional level. Continuing to add wallet users is a very important part of the strategy. We're not trying to say that that's not the case. The wallet continues to be a fundamental distribution channel as our payments to attract users to then cross-sell other financial services. What we're trying to say here is that massively acquiring wallet users, if then you are not also investing and focusing in cross-selling other financial services, is not really the long-term strategic blueprint that we've set for ourselves. We need to increasingly find the balance between, yes, acquiring as many users as we can, as fast as we can, but also making sure that those users we are acquiring are interested and we are able to cross-sell other services to us. I think Andrew Ruben's question at the beginning, in a way, encapsulates the way we're managing the business. Which is number of payers as a KPI is probably still very important if we can also deliver on number of users of asset management, number of users of credit, number of users of InsurTech, and the other products that are obviously the higher margin products and the more interesting from the long run. Wallet users is still core to our strategy, but increasingly more balanced with also consistent cross-selling into that user base of the other better margin financial products. That's very clear. Thank you. Thank you. Our next question comes from the line of Deepak Mathivanan with Wolfe Research. Hey, guys. Thanks for taking the questions. Just a couple of quick ones. Sorry if they were asked already, been jumping around a couple of calls. Pedro, can you talk about how big the first-party business was on e-commerce during one Q? What do you expect it to reach for the rest of the year? Is the margin profile of 1P at a place where you want it to be, or is there opportunities to improve that as well? The second question, can you provide some color on April trends on e-commerce? Obviously, the COVID situation in LatAm is very volatile. What are you seeing in terms of relative consumer behavior, maybe in countries where vaccination rates are over-indexing with respect to the average? Thank you. Hi, Deepak. Thanks. Look, we've improved disclosure on 1P, and you now have 1P revenues broken out in the P&L as a revenue line. It was slightly below $150 million, you'll have that now consistently, as the rule requires. Margin-wise, there is ample room for margin improvement in the 1P business going forward. This is still a relatively small business where there are improvements in pure product margins as we drive more purchasing scale, and also significant improvements as we become more efficient in the operation overall. I would say that we are investing in this business now, and that the margin structure, the way it looks today, is not at all where we envision and are confident we can get it to look into next year and beyond. Very quickly, I touched upon this already. I think in general, we still need to be cautious and wait. The comps get progressively more difficult in some markets into May and June. So far, in general, I think the trends we've seen for most markets are encouraging. We continue to see sequential growth in our business in line with what we had been seeing at the beginning of the year. Even if the year-on-year growth rates decline, the sequential increases, which is really what you should be looking at, have not indicated in any way that consumers are massively moving back offline as soon as they can. I think we've offered enough of a compelling value proposition that a lot of that demand seems to be sticking. Like I said before, also bear in mind that lockdowns have been extended or reinstated in many of our markets. That also is still impacting demand patterns. Got it. That's very helpful. Thanks, Pedro. Thank you. Our next question comes from the line of Jamie Friedman with Susquehanna. Hi, Pedro, Osvaldo. Pedro, in your prepared remarks, I thought you had said something to the effect that you had seen a slowdown in some volumes in the long-tail sellers as economies reopened. I may have misheard you, but if that's the case, could you elaborate on that one? Then I'll just ask the other one up front. In a previous answer, Pedro, you mentioned sourcing more North American merchants, and I'm just wondering, is that where PayPal comes in, or am I thinking about that the wrong way? Hi, Jamie. With regard to the long tail, what we had seen last year was that there were many lockdowns. Many small retailers, they were using payment links mostly related to deliveries. As there was a greater opening of the economy in Latin America, some of that volume slowed down. Beyond that, we continue to see very strong growth in long tail in POS. It was mostly in the online payment business related to payment links because of deliveries. My remarks on sourcing North American merchants is not related to PayPal. We have seen better results and good product development and user experience in our cross-border efforts. Those efforts so far had primarily focused on sourcing product from Asian merchants. We believe that there is significant inventory in North America that's attractive to users throughout Latin America and not necessarily available. We're moving into that second pocket of global inventory that we think is interesting for our user base throughout Latin America by sourcing directly ourselves and having feet on the street in the U.S. and Canada. No, this doesn't refer to any specific initiative with PayPal. Got it. Thank you. I'll drop back in the queue. Thank you. Your next question comes from the line of Marvin Fong with BTIG. Yes. Hi. Thanks for taking my questions. Just two quick ones on fintech. I just wanted to follow up on the 11 million collector number. I was reviewing the notes from last quarter. I think you guys said it was 6 million in the fourth quarter. Just want to check to see if that was correct, and if so, what explains the pretty dramatic increase in collectors. Just potentially, in general, could you just comment on how your trends are going in terms of adding collectors to the ecosystem? My next question, just on the credit portfolio, the amount outstanding didn't seem to increase as much at quarter end as we saw last quarter, even though originations was actually greater, still above $500 million. The question is, are we seeing any change in sort of the dynamics with borrowers paying back? Anything to call out there? That'd be great to provide some insight there. Thank you. Great. On collectors, let me just briefly recap the sequencing for you. 11 million is the number of collectors off the MELI marketplace. We exclude MELI merchants to give you a number of users that are merchants receiving payments through us, or P2P people receiving payments. That number is up about 77% year-on-year. If we look at Q4, which is seasonally very strong, it was actually higher than 11 million. It was closer, slightly below 12 million. Again, nearly 80% growth year-on-year, but sequentially as expected due to seasonality down. I'm not sure what the 6 million number could be. Maybe it's another data point. With regard to the credit portfolio, if I got the question right, it was the relation between the growth in terms of originations and in terms of growth in overall credit portfolio. Originations grew in the quarter 10% sequentially quarter-on-quarter. There were $527 million in the last quarter and $582 million this quarter. The overall credit portfolio grew 16% from $452 million-$526 million. In general, the duration of our portfolio is pretty short, mostly because a big part of that is consumer loans, which typically are for four months. The growth of quarter-on-quarter of origination is pretty much in line with the growth in the overall credit portfolio. Great. Thank you for clarifying that, both of you. Appreciate it. Thank you. This concludes today's earnings call. 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