Good day. Thank you for standing by. Welcome to the MercadoLibre Earnings Conference Call. At this time, all participants are in a listen-only mode. Due to some technical issues, we will begin this call with the Q&A segment. After the Q&A, we will have the video available to play on this call. Thank you for your understanding. At this time, we will conduct the question-and-answer session as I mentioned. Please limit your question to one per person. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment, please, while we compile the Q&A roster. Our first question comes from the line of Andrew Ruben from Morgan Stanley. Your line is now open. Hey. Great. Thanks very much for the question. I'm interested on the commerce take rate. It was a strong quarter. We see the increase of about 50 basis points for the seller final value fees, about 60 basis points on the shipping fees. I'm curious if you could dig in a bit further on both of those items. Was there any change in your pricing policy? Was it mix? Anything maybe on the contra revenue line? Just trying to understand what drove the take rate expansion would be helpful. Thank you. One moment, please. Yes, Pedro, we can hear you now. Can you hear me now? Yes, we can, Pedro. Sorry. We were just encouraging everyone to please take a look at the video after we're done with Q&A and apologize for the technical difficulty. Andrew, it's a little bit of the three things you mentioned. We have began or continued to selectively change shipping prices on select routes and zones in different markets. The net revenue from shipping has improved as a consequence of those pricing actions. Mix has been a driver of improving final value fees as there's some mix shift towards higher take rate categories. Typically, at the beginning of the year in the Q1, we also carry out selective pricing on seller fees across different geos in the marketplace. Great. As a quick follow-up, you mentioned the pricing on select routes and zones in different markets. Is that more the core logistics fees or any change in how you've implemented some of the tests for fulfillment and warehousing specifically? Thanks again. No. This is driven more by passing on cost increases to transportation costs within our network and less related to us beginning to ramp up the monetization on fulfillment. If anything, as I always said, the first sequential priority on fulfillment is to continue to drive incremental usage of the fulfillment service. We've seen some really solid pickup of fulfillment adoption throughout the Q1, primarily in Brazil, exiting on a high note in terms of a historical high for Brazilian fulfillment penetration. We continue to accomplish that first sequential goal. The ramp-up in monetization, we always said, is probably the second one sequentially once we've reached more Mexico-like levels of fulfillment in the other markets. The monetization improvements on logistics are not driven by incremental monetization on fulfillment services, but much more by price increases on transportation costs. Great. It's very clear. Thanks again. Thank you. One moment while we prepare the next question. Our next question comes from Irma Sgarz from Goldman Sachs. Your line is now open. Yes. Hi. Thanks for taking my question. The continued rise in your product and technology development expenses leave relatively little doubt about your commitment to invest behind innovation. My question is, other than edtech, are there any other specific new areas towards which you're incrementally deploying more tech spend in 2023? The second part to this question is related. I imagine you already use AI and machine learning across a number of products and functionalities. With the advances on these technologies over the last six months or so, are there any new areas of application and opportunity that you're particularly excited about? Will they require either through the OpEx or the CapEx line, greater investment cycle into the future? Thank you. Hi, Irma. On product development, a couple of important, I think, clarifications. Yes, it continues to be the most significant line in terms of deleveraging. I think on super solid top line, when we look at margin expansion, we've been able to generate incremental margin across most of our cost lines. The two that haven't on a year-on-year basis are certain sales taxes, primarily in Brazil, and then 220 basis points from product development. Bear in mind that the rate of incremental hiring has come down from about 4,000 engineers to 2,000. A significant portion of those 220 basis points are a consequence of the annualization of all the engineers that we hired last year, and not a continued acceleration in rate of engineers hirings. For next year, we should begin to see a slowdown in the level of deleveraging from product development unless we significantly ramp up hirings again, which is currently not on the plans. In terms of areas of investment, it really is across the board. We see our product and our technology as a competitive advantage, and those engineers are really split across the multiple different products and services that we are either building out or improving constantly. They're fairly evenly distributed among the existing businesses you're well aware of. In terms of AI, I think as most companies, we do see some very relevant short to mid-term positive impact in terms of engineering productivity. We are also increasing the amount of work being done on what elements of the consumer-facing experiences we can deploy AI on. I think the focus right now is on some of the more obvious use cases, improving and streamlining customer service and interactions with reps, improving workflows for reps through AI-assisted workflow tools, and then deploying AI to help better search and discovery in terms of better finding products on our website and better understanding specific specifications of products where existing LLMs are quite efficient. Beyond that, I think there's a lot of work going on, and we hope to come up with other innovative forms of AI that we can place into the consumer-facing experience. The ones I just mentioned are the ones that we're currently working on the most. Great. Thanks very much. Thank you. Please stand by while we prepare the next question. Our next question comes from Marcelo Santos from JP Morgan. Your line is now open. Hi. Good evening. Thanks for taking my question. I wanted to ask about the improved logistic economics you mentioned in the release. Is this mostly because of pricing that you passed to, or are you experiencing also, benefits of scale, more efficiency, like cost-based, improved economics? Thank you. Yeah. It's not just driven by price increases. We continue to see improvements, in terms of productivity across different portions of our network. It's a combination of pricing and scale increases and scale benefits. Perfect. Thank you. Thank you. One moment, please, while we prepare our next question. Great. Our next question is from Thiago Macruz from Itaú BBA. Your line is now open. Thanks, guys. Thank you for taking my question, and congrats on a great quarter. You've mentioned that the 1P operation has reached a turning point in this Q1. Can you shed some light on the main differences that you're seeing the economics of the business today? Also, you're generating plenty of cash. Would it make sense to invest a tad more and accelerate the consolidation of the market, chiefly in Brazil, where we now see a somewhat softer competitive environment? Thank you, guys. Great. I think as we signaled over the past few quarters, we had slowed down the first-party business, in large part because we had grown it initially very fast and there was a significant amount of internal operations that we wanted to be able to fix, which would allow us to re-accelerate that business with a healthy margin structure and much better internal operations. What you're beginning to see now are the initial phases of that turnaround. We feel a lot more confident in how that business is being run. We're beginning to see margin improvements across different product lines in 1P, hence you're seeing some of the acceleration. Going forward, if we continue to see these positive trends, you should continue to see the 1P business accelerating growth going forward, which should give us some interesting benefits across the categories where 1P can be an important competitive factor. On your point of investing even more aggressively to consolidate market share, I think if you look at our 1P results and you look at certain things like marketing spend, certain couponing efforts, investment behind the logistics network, you will see that we did lean into the market, especially in Brazil, where there is more market share up for grabs short-term. The return on those investments was a very strong acceleration in top line, which actually meant that margin wise, it was contributive from a dollar perspective. We do feel that we are investing more aggressively to try to more rapidly strengthen our leadership position, and we do see that reflected in market share numbers. Investing even more probably gets us into areas where the return on those incremental investments don't make as much sense, thinking long-term. I think we continue to manage the P&L in an aggressive way, striving first and foremost for market share gains and above market growth. At the same time, understanding that at the scale we have, we want that incremental market share to come in a way that's profitable. That continues to be the way that we're managing those incremental investments across different markets. Makes sense, David. Thank you very much. Thank you. One moment, please, while we compile our next question. Our next question is from Pedro Pinto from BBI. Your line is now open. Thank you, guys, for taking my question. I would like to hear from you, your ambition on commerce business across the regions. As long as market share gains in Mexico and Brazil seems to be in good shape, do you think it's time to increase focus in other regions such as Chile? Basically, I would like to know what are the intended timing and main deliverables in this front. Great question. I think we continue to see a very attractive mid-term opportunity in the Andean markets, Chile, Colombia, Peru. Chile has some very tough comps based on macro issues in the previous years. A lot of money was put into consumer pockets that went in large into consumption. That means that the rate of acceleration in Chile has been significantly down and even negative over the last few quarters. We're beginning to see that turn around. GMV growth was already slightly positive this quarter, and revenue growth rebounded and was much more positive than in previous quarters. We're confident that Chile should continue that turnaround and that improvement. Chile, not so long ago, was one of our fastest-growing markets throughout the pandemic. We think that once the comp issues are behind us, there's a lot of potential from that market. Peru is still quite small for us. We are increasing our customer acquisition and marketing spend there this year versus prior years. Nothing that dramatically impacts the consolidated P&L, but for the size of that market, that is a significant ramp-up in marketing spend over last year. Hopefully we see enough returns on that then we can continue to double down on Peru. Colombia is potentially the market that's been most challenging for us. I think in general, that's true for all of e-commerce, but we still see that as an attractive market. Eventually, I think we will try to figure that out. I don't think it's a matter at this point of investing more. We actually have a P&L in Colombia that is not profitable and that receives the right amount of investment. It's more a matter of waiting for the market to mature a little bit and for us to continue to improve on execution and product rollouts so that we can see better results coming out of that market. Perfect. Thank you. Just one moment while we compile the next question. Our next question comes from Geoffrey Elliott from Autonomous Research. Your line is now open. Hello. Thanks very much for taking the question. What I wanted to ask. On the credit side, it looks like the IMAL is down quite a bit sequentially. I know in the slides you mentioned an element of seasonality around bad debt. If we look at the bad debt provisions, they're a bit higher than Q4, but quite a bit lower than Q2 and Q3 when the IMAL was higher. Can you help us understand a bit better what's going on there? Are there some mix shifts? Has pricing changed? Is it about funding cost? What's driven that down, and how should we think about it going forward? Thank you. Hi, Geoffrey. Yes, IMAL is down from what I think was an exceptional high Q4. Still 39% for the quarter. I think it came down for a combination of things. On the one hand, we had slightly lower revenue. You know, the Q4 typically is a quarter where we see a higher participation of merchant credits, and it usually comes down the Q1. Also in the Q1, we increased the issuing of credit cards, which initially you book the losses initially, but then most of the volume does not generate revenues because it gets paid in full. That brings down a little bit IMAL. Also, as you book the bad losses initially, that also increases the bad debt. And finally, as the portfolio grows in the quarter, it is the third thing that impacts the change in the portfolio that impacts IMAL. That's why it came down. We're still comfortable with the 39% volume. You mentioned accelerating in credit cards. What have you seen that's given you confidence to do that? How, you know, how much more potential is there to continue to ramp up growth in cards? We felt comfortable. We're always looking at cohorts and at growth rates, and we felt comfortable that I would say in the second half of the Q1, we were comfortable that we're willing to issue more cards. We should significantly more cards in the Q1 than we did in the Q4 of last year. We'll see how conditions remain, but so far we are comfortable with the role we've seen and with the latest segment of cards we have issued. Great. Thanks very much. Thank you. We just wanna do a really quick reminder before our next question. You can ask a question by pressing star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. At this time, I'm going to prepare the next question. Hi, Jamie Friedman from Susquehanna International Group, your line is now open. One moment, please. All right. Thank you for your patience. We will be queuing our next question. Deepak Mathivanan, your call is now open from Wolfe Research. Great. Thanks for taking the questions. Pedro, first question. Ads penetration gains were a little bit lower than we expected. I understand there is some lumpiness to it, can you talk about the product roadmap in 2023 and kind of the efforts to accelerate the penetration? Second question, can you talk about the drivers of the credit book growth, particularly on the consumer side? What signals are you seeing in the market to enabling, you know, growing the book? Is there kind of like a level for IMAL margins that we can expect you to hold as you sort of, you know, lean in and grow the book again? Thank you so much. Great. On advertising, the business continues to grow very nicely. It grew at 62% year-on-year, which is very much in line with the growth rate over the past three quarters. This is dollar growth, momentum is still quite strong. GMV did accelerate this quarter versus prior quarter, that makes it a tougher comp for the ad business, given that we're dividing revenue by GMV on the penetration metric. If GMV growth had been similar to prior quarter, we would have had a 10 basis point increase Q-on-Q in advertising penetration or something along those lines. Potentially, bear in mind that Q1 is also seasonally less of a season for advertisers to invest as aggressively as in Q4. The rollover on a sequential basis from a Q4 to a Q1 is not necessarily one where we should see. Significant penetration gains. Finally, a lot of the technology that's being launched over the last few quarters, as we've been saying, potentially takes some time before it gets fully adopted by advertisers. The next few quarters, we would expect to see increases once again in penetration, given that we'd like to see advertising revenues outpacing GMV growth. If you look at the year-on-year penetration gains to strip out seasonality, those continue to be quite encouraging. Deepak, with regards to credit, we felt comfortable increasing origination, mostly in Argentina and Mexico. Mostly, I would say Mexico and Argentina in that order, are to a lower degree in Brazil. The reason was that we always continue having control groups and seeing if those are profitable. We thought there was profitability. I was willing to take more risk and expand the number of consumers we're reaching out to in Mexico and Argentina, and we did so. In the case of Brazil, it was mostly the increase in origination was in the credit card business towards the second half of the quarter. In terms of merchant credits, it has remained stable from the prior quarter, mostly. You had a follow-up question regarding IMAL. I'm not sure I got that one. Yeah, I think I can jump in here. Yeah. Look, Deepak, I think there is a growing number of credit products out there that could affect credit. I think we're not giving any kind of directionality on where we think the interest margin after losses might trend. We'll report those back to you guys on a quarter per quarter basis. Also because as we begin to see, as Osvaldo was just saying, an improvement in credit conditions and the credit cycle, that potentially encourages us to start opening the spigot again in originations. Even within customer segments, we could see lower margin segments that when you risk adjust, are actually very attractive to move into and will generate incremental dollars from credit, but won't necessarily be incremental in terms of IMAL. We'll keep you guys posted as this moves forward. I think the books are still very, very young and you could see potential volatility in margin structures because of segment and product mix shifts that might occur going forward. No, that's fair. Thank you so much, Pedro. Thank you. One moment while we prepare the next question. Our next question comes from Stephen Ju from Credit Suisse. Your line is now open. Thank you. Hi, Pedro. The Argentina unit growth has reverted back positive, but it's still a little bit unusual to see that number in the single digits. You know, I get that we can't grow high double digits forever, but can we talk about what you may be seeing from either a cyclical or a secular perspective that might be moving that growth around? Second, you know, no doubt you've probably seen the, you know, one of the mobile operating system owners release a savings account product, and I think it was able to gather a pretty large sum of deposits, you know, immediately on the release. You know, you're already pretty well on your way with the credit products, but, you know, does this event, you know, directionally prompt greater urgency on the asset management product development for you? Thanks. Stephen, thanks. Argentina, I would attribute the weakness in that business primarily to very volatile macro conditions. You're correct, I think it's a business that we've historically seen it perform well, even in weaker macro, as generally is the case for MELI. I think over the past few quarters, currency restrictions have made it difficult to import goods, so I don't see anything structural there. Argentina still has a level of e-commerce penetration of retail that is lower than Brazil, for example. It's a market where we have probably the strongest market share and is far from saturation. That should be an attractive market for us mid and long term, and we will just have to navigate through the short-term volatility. Bear in mind that also because structurally it's a less competitive market, it's also a market where we are more focused on profitability than growth. If you look at the bottom line results coming out of Argentina, those are still extremely strong. Then with regards to the virtual account that offers a return, it's I would say it's very similar to what we have been offering for the last four or five years in all of our top three markets. What has happened recently is with interest rates going up. Clearly, there's an incentive to move money out of savings accounts from banks which usually pay zero and into money market accounts. The ones we offer in each of the markets has the advantage that they have instant availability. Returns vary with local interest rates, but in Brazil, it's in the order of 13%. In Argentina, given the incredibly high rates, it's in the order of 69%. In Mexico, it's in line with. It's in the order of 6% or 5%. What we have seen is a significant increase in assets under management, which is growing over 100% year-over-year, and we believe that this flow is likely to continue. I believe that this is a product, the one the launch and the one we have, that has a huge opportunity given that banks continue to pay zero or very close to zero in most cases in Latin America in saving accounts. Thank you. Thank you. One moment please, while we prepare our next question. Our next question comes from Neha Agarwala, from HSBC. Your line is now open. Hi, thank you for taking my question. I gather that you are more open to accelerating gradually the pace of 1P. What impact should we see for coming from that in terms of margin costs, take rate, anything that you can express about that would be very helpful, the impact of the 1P acceleration. My second question is on the credit business. There was a bit of acceleration in terms of credit origination. I understand it's mostly from Mexico and Argentina, should we see a continued ex-acceleration in the coming quarters as things are stabilizing in Brazil? Would you still remain vigilant and kind of maintain originations and grow selectively for the rest of the year? Thank you so much. On 1P, the 1P business has been improving its margin structure across pretty much all categories, continues to have a lower margin than the rest of our businesses. To be more precise, it continues to be negative in terms of EBIT margin. A growth in the 1P business now should be instrumental in strengthening categories where we under index in having a better selection for our consumers, which are all long-term positive. It should help us continue to gain scale within 1P purchasing and logistics, which should continue to improve the margins within 1P until eventually turning positive, short term, they're detrimental on margins. In terms of take rate, it's the opposite story. Obviously, there we book the full revenue base, it's a catalyst of accelerating revenue and improving take rates. All in, we believe 1P is going to be critical for long-term success in certain specific categories. We think that it's very positive news that we're beginning to pick that business up again in terms of growth rates, given that we feel more comfortable about the user experience and the margin trajectory that we will be able to deliver going forward in our 1P operation. In terms of credit originations, I would say that our credit models, one of the most important things they do is to sort users in terms of increased risk. These models are, I'll say, very well calibrated. Whenever in a given cohort we are seeing that we have good results, we're willing to go to the next one. Beyond that, what we have been doing is keep control groups whenever we want to start giving loans to a segment we're not giving loans in the past. Whenever we see there's profitability in that group, we're willing to expand that segment. That has happened already and is going on now with Argentina and Mexico. It is not yet the case in Brazil. Whenever we see that profitability starts to improve in those control groups, we'll be more willing to originate credit faster in Brazil. Understood. Thank you so much. Thank you. One moment while we prepare our next question. Our next question comes from Robert Ford from Bank of America. Your line is now open. Thank you and, congratulations on the quarter. Pedro, can you discuss your trends in terms of items per box coming from the distribution centers across your various markets? As you enable, you know, the drop-off returns in your places or agencies, you know, how is that driving new category trial and GMV growth versus areas without those return services? Thank you. Rob, items per order has had a very gradual trend up as fulfillment penetration continues to grow and as we get better at co-locating inventory. The numbers have not been significant or material. It's been very, very slightly steeping up into the right. I think as we continue to grow fulfillment penetration, and like I said, we exited Q1 on a record high for Brazil. Hopefully, that allows to drive that number up. We're also going to be innovating significantly on network design on certain options for consumers at checkout that will allow them to bundle purchases into single deliveries or bundle greater numbers of delivery slots, which should also help us drive up items per order, lower cost, and to be able to give some of those cost improvements back to the consumers who select that slower option. In terms of greater category trial as a consequence of offering better return options, I'll need to be in debt with you on the answer to that. We do see an improved return experience, and we do see increases in returns on the part of consumers, which are helping our NPS, but I haven't seen the data that allows us to cross-reference that to incremental category growth. I don't know the answer to your question. No worries. Thanks. Thanks again, and congratulations on the quarter. Thank you. One moment, please, while we prepare our next question. Our next question comes from Trevor Young from Barclays. Your line is now open. Okay, great. Just first one, dovetailing on that last one, innovating on the network design and so forth. It looks like CapEx is down Q-on-Q and it's below trend in recent quarters. Was there anything like timing related there? Should we expect that to rebound later in the year as maybe you make some of those investments in innovating on the network design? Second question on market share gains in Brazil, did that come from certain categories where competitors are maybe seeding some share, or was it more broad-based than that? Thank you. The CapEx improvements do have an element of phasing. There were certain investments in logistics that we initially had budgeted for the Q1 that have been pushed back into second, third, and Q4. There is an element of phasing to that slowdown in CapEx. Our CapEx trajectory also will be somewhat volatile as new warehouses and new nodes come into play in different markets at different times, depending on the specific network rollouts across the multiple geographies where we're scaling out MELI Logistics. Specifically, Q1 did have phasing elements, and the shipping related CapEx came in quite low, below $50 million for the quarter. On market share gains, they've been consistent across multiple categories. I do think that as we said, those share gains in part are because we leaned into the specific change in market structure and the relative balance sheet weakness of certain market participants. A lot of that is coming from share that's being given up by other players, but it was fairly distributed across all categories. When we look at category per category market share, we're seeing ourselves as market share gainers across most categories. That's very helpful. Thanks. Thank you. One moment for our last question. All right. Our last question comes from Jamie Friedman from Susquehanna International Group. Your line is now open. Hi. thank you for sneaking me back in. Pedro Osvaldo, I wanted to ask in terms of the IMAL progression, I know you called out the typical Q4- Q1 seasonality. Can you remind us how to think about IMAL? I know you don't give guidance, but how to think about IMAL typical seasonality, say, into Q2? Then a follow-up. Hi, Jamie. I'd say that probably there's more seasonality in the Q4, given that we usually give more loans to merchants in the Q4 than I would say there's any specific seasonality in general going from quarter to quarter. I think it will be, as we mentioned before, more related to what happens to the portfolio, how fast we decide to grow in each of the segments and each of the markets, and then obviously at how delinquencies evolve. Okay, thanks for that. If I could just ask a high-level question about the regulatory environment, especially in Brazil, especially apropos of credit, Crédito and Mercado Pago. How would you describe it? You know, is it benign? Is the coast clear? Historically, the government's been very supportive, I think, of incubating fintechs. Has that changed, or how would you overall characterize the regulatory, you know, environment in Brazil relative to fintech? I'd say that in general, Brazil has been the one country where the central bank and the government has been the most pro-competition and really, I would say, encouraging both banks and fintechs to compete on equal footing. Most of the regulations we have seen in the past has been around that. Pix has been probably the most successful example, but there have been more recent impacts, such as the caps on interchange fees lately on prepaid cards. I would say it has always been pro-consumer and pro-competition. I think that they have been very pragmatic and practical. If we have pointed out that some of the things we were proposing were not practical, I think we at least we have felt heard. Okay, perfect. Thank you for the context. Thank you. As I mentioned, that was our last question. As we prepare to play a video, which you can access on the company IR website, I would now like to turn it back to Pedro Arnt, MercadoLibre's Chief Financial Officer, for closing remarks. Thank you, everyone. Incredibly strong start to the year. Top line ahead of our expectations. Very strong margin evolution. We're really pleased with how the business has gotten off to the start of the year. We're going to continue to invest throughout the remaining quarters in the year to continue to gain customer preference, expand market share if we execute well, and hopefully we'll see the kind of response from our users and consumers from all the hard work going on here at MELI as we did in the Q1. Apologies on the technical difficulty with the video. We do encourage you to take a look at it. It has some interesting product detail on the advertising product that I know has been, the target of a lot of the questions on how we're improving the stack. That should be up and available for you to take a look at, and we do encourage you to do so, and we look forward to speaking with you again when we report the next quarter. Great. Hello, everyone, welcome to the MercadoLibre Earnings Conference Call for the quarter ended March 31st, 2023. Thank you for joining us. I'm Richard Cathcart, Investor Relations Officer at MercadoLibre. Today, we will share our quarterly highlights on video, after which we'll begin our live Q&A session with our Chief Financial Officer, Pedro Arnt, and Chief Executive Officer of Mercado Pago, Osvaldo Gimenez. Before we go on to discuss our results for the Q1 of 2023, I remind you that management may make, this presentation may contain, forward-looking statements. Please refer to the disclaimer on screen, which will also be available in our earnings materials on our investor relations website and our Form 10-K for the year ended 2022. With that, let's begin with a summary of our results. Hello, everyone. I'm pleased to share the key messages around MercadoLibre's performance during the Q1 of 2023. Our businesses continued to deliver strong growth with solid momentum in GMV and TPV. This quarter, we also hit a significant milestone in unique active users, which surpassed 100 million across our ecosystem for the first time. In commerce, unique buyer growth accelerated in all geographies, and this helped drive an acceleration of items sold and of FX neutral GMV growth in our three largest geographies, and also on a consolidated basis. Moreover, this acceleration translated into market share gains, particularly in Brazil, our largest market. Commerce revenues continued to grow rapidly on the back of faster GMV growth as well as higher monetization. This is all a consequence of a well-executed value proposition across geographies, which also resulted in take rate expansion. This higher take rate was driven primarily by shipping fees, ad revenues, and minor price increases we carried out to offset rising costs. On the fintech business, strong results were also delivered once again, especially driven by off-platform TPV growth that more than doubled versus the prior year on an FX neutral basis. We see similar trends as in 2022 in both the digital account and our acquiring businesses. On the credit side, Mercado Crédito delivered another solid quarter of profitability. We continue to be cautious about the risk that we take on, and in that context, the portfolio size was similar to the prior quarter and still focused on lower risk cohorts. Non-performing loans are at comfortable levels, therefore, and as a result, the business has maintained a high margin. Consequently, these trends in the fintech business lines led to another quarter of rapid revenue growth there, albeit at a somewhat slower rate than the previous quarter as we lap last year's sharp growth in credit revenue. When looking at bottom line performance, the Q1 of 2023, we once again delivered operating leverage on strong revenue growth, which resulted in profit expansion with margins well ahead of the Q1 of last year. During Q1, we've reached quarterly income from operations, accompanied by strong generation of cash flow from operations. This shows our commitment to delivering operational efficiency as our businesses grow at above market rates and continue to gain scale. Dilution of G&A expenses and a positive mix shift towards higher margin revenue streams, accompanied by growing advertising and net logistics revenues drove this margin expansion. At the same time, we've continued to invest heavily in technology as we look to build our competitive advantages for the years to come. In summary, we've gotten off to a great start to the year. We've even been able to surpass our targeted levels for combined growth and profitability. Richard will now share some more detailed business news with you. Thank you. We continue to innovate and invest to build the technology and capabilities that will strengthen our competitive advantages and support our growth and profitability for the years to come. The development of Mercado Pago continues to play an important role in our growth. We have developed and launched several new products and services over the last two years to position Mercado Pago as a provider of a full suite of financial services to our users. During the Q1 of 2023, we took another important step by launching a marketing campaign in Brazil to raise awareness of this value proposition and Mercado Pago's ability to serve all of our users' day-to-day financial needs. The campaign highlights the direct connection between MercadoLibre and Mercado Pago and leverages the awareness of and trust in our yellow world to promote our blue world fintech business. These campaigns reach millions of users both offline and online, they show the strength and synergy of our ecosystem. Mercado Ads continues to be a major area of investment for us across geographies as we develop the products and technologies needed to provide a world-class solution to our advertisers. Today, we want to share an update of what we have achieved so far and the many improvements still to come. MercadoLibre served millions of unique buyers in the Q1 of 2023, with 7 out of 10 searches being unbranded. This gives our advertisers an opportunity to position their brands, promote their products, and increase their sales with our proprietary solutions. Mercado Ads currently offers solutions that serve the needs of advertisers in different stages of the customer journey for full funnel strategies for branding and performance. At the top of the funnel, we have our display solution that can be seen on our marketplace home and category pages, and also in the Mercado Pago app, generating awareness and creating brand value. In the last few months, we completely rebuilt our display solution. Now our advertisers can influence the entire customer journey, including high impact placements, especially for the consideration stage. In Q1 2023, we launched our programmatic platform. Brands and agencies now have an automated display buying platform that leverages one of our main assets, our unparalleled first-party data. The depth and granularity of our data let us build unique targeting capabilities, accurate real-time bidding models, live reports, and unique insights analysis. Further down the funnel, we have our performance advertising solution focused on helping sellers to increase their products' visibility in the search results and product pages. The media buying process is an auction based on sophisticated algorithms, which takes into consideration the price the seller is willing to pay per click and also the ad's relevance. This enables us to guarantee a good experience to both the buyer and the seller and accomplishes the value proposition of increasing the chance of converting a click into a sale. With Product Ads, sellers can boost their products into the top positions in the search results and also on the product page details in carousels. More placements of carousels are being released, such as the new carousel with products only based on top-of-mind brands. This shows how we continue to innovate even in our most advanced ads product. As part of the search advertising products, we're now developing a new product called Brand Ads, which is being tested with specific brands. This product focuses on the consideration stage of the funnel to help users discover new products, and the format is based on keyword targeting. It also provides context to a brand to present its storytelling of a category with a group of products in the top position of the search results. Our priority is always to find the best balance between return on investment for the seller, product relevance for the buyer, and monetization for MercadoLibre. Behind all of these products, there is a robust tech stack that enables a seamless experience for consumers and advertisers. This is where a lot of work has been done behind the scenes over the last 12 months. We offer our sellers an Ad Console where they can create, manage, and optimize their campaigns for each of Mercado Ads products and stages of the funnel while analyzing real-time reports to track results and improve campaigns. Behind the scenes, our Ad Server works to target ads to the right audience, optimize pricing, and determine the placement of each listing. This is done considering several factors, including the quality and price of the product, the seller's reputation, and the budget and expected return of those sellers willing to advertise their products. Within seconds, this process creates a specific combination of listings, including sponsored and organic content, which optimizes for conversion and GMV. On top of that, our ads measurement technology works to bring real-time metrics to advertisers and guarantee the attribution of the results to the right ads product. We still have an extensive roadmap ahead to improve the insights given to our advertisers. With the development of these products and technologies, we have the first version of a complete ad tech stack that strengthens our ability to develop our ads business and offer a world-class experience to advertising agencies, brands, and other sellers on Latin America's largest e-commerce platform. We still have more work to do as much of the technology has been recently launched, so we're engaging with brands and advertising agencies to understand their feedback and incorporate it into the technology. We continue to accelerate investment in ads technology, and this leaves us optimistic about the business's long-term potential to drive growth and profitability. This is yet another example that, as always at MercadoLibre, the best is yet to come. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Have a great day.