Hello, everyone, welcome to the MercadoLibre earnings conference call for the quarter ended March 31st, 2026. Thank you for joining us. I'm Richard Cathcart, MercadoLibre's Investor Relations Officer. Today, we will share our quarterly highlights on video, after which we will begin our live Q&A session with our management team. Before we go on to discuss our results for the first quarter of 2026, I remind you that management may make or refer to, and this presentation may contain, forward-looking statements and non-GAAP measures. Please refer to the disclaimer on screen, which will also be 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. With that, let's begin with a short message from our CFO.
Hello, everyone. Thank you for joining us. I'm pleased to report that MercadoLibre delivered another excellent quarter to start 2026, with net revenue up 49% year-over-year, our strongest growth rate since Q2 2022. This performance reflects the strategic investments we've made consistently over the past several quarters, which are bearing fruit with increasing clarity. Chief among them is our decision to lower the free shipping threshold in Brazil, which has proven to be a sustained growth engine across multiple quarters. By bringing more buyers into the ecosystem, we're strengthening network effects with higher purchase frequency, broader assortment, and a logistics network that becomes more efficient with every incremental package. As a result, Brazil delivered another standout quarter for commerce. GMV grew 38% year-over-year as items sold growth accelerated to 56%.
This is more than double the quarterly growth rate prior to lowering the free shipping threshold. Free shipping penetration reached a new record, and unit economics continued to improve, with cost per shipment down 17% year-over-year in local currency. In other words, higher demand is driving lower cost. Outside Brazil, we delivered solid growth in commerce and continued to gain share across key markets. In Mexico, GMV grew 28% year-over-year, while in Argentina, GMV grew by 41%. Chile remains strong with GMV also up 40% year-over-year, driven by higher free shipping penetration and faster deliveries. Fintech services momentum also remains strong, with solid growth across our core indicators. Mercado Pago monthly active users grew 29% year-over-year. AUM grew 77%, and our credit portfolio nearly doubled to $14.6 billion.
This highlights that engagement is both broadening and deepening as more users choose our ecosystem as their primary financial relationship, supporting our long-term objective of becoming Latin America's largest digital bank. We continue to invest in our credit card as a central pillar of this long-term objective, issuing 2.7 million credit cards this quarter. Credit card TPV grew 90% year-over-year, and monthly active users grew 68%. The credit card is an excellent example of fintech cross-sell occurring at scale as a meaningful share of cardholders were previously marketplace-only users and are now active fintech users. This reinforces the cross-sell flywheel and generates positive ecosystemic effects across engagement, usage, and retention. Growth of our credit portfolio is supported by disciplined underwriting and continuous enhancements to our models that are improving decision accuracy at scale.
This validation gives us strong conviction as we extend the playbook beyond Brazil, continuing to scale the credit card in Mexico and building from an earlier base in Argentina. Overall, Q1 2026 was an outstanding quarter of top-line growth, with revenue increasing 49% year-over-year. We delivered $611 million of income from operations, representing a 6.9% margin. The margin compression reflects our choice to invest in strategic initiatives, and the results of each investment reinforce our conviction that we're taking the right steps to build the largest and most engaged commerce and fintech platform in Latin America. Our investment decisions are guided by clear, observable evidence, and that evidence tells us that now is precisely the right moment to invest boldly in a market with significant multi-year growth runways ahead.
That is the foundation on which we are choosing to invest. We look ahead to the rest of 2026 with strong momentum and full conviction that the investments we're making today will compound into structural advantages that define this company in the years ahead. We appreciate your continued support, and with that, we'll open it up for questions.
The first question will come from Irma Sgarz with Goldman Sachs. Please go ahead.
Yes. Hi, thank you for the opportunity. I think a key question I'd like to ask is that on the shareholder letter you mentioned that you chose to set the dial at this level of the first quarter, and you point out quite explicitly that that was a deliberate investment decision. I think that's quite clear. However, you also mentioned that you allude to some incremental opportunities that you've been able to identify. Also you note that you don't expect this level to material change in the near term. I think my question is, could you just help us understand what perhaps changed from the fourth quarter that you reported in late February to now after the first quarter? What new opportunities have you identified to invest behind?
Whether this, sort of this margin level that we saw in the first quarter, again, I know that you don't provide guidance, but, is that roughly the right level that we should think about for the remainder of 2026? Thank you so much.
Hi, Irma. It's Martin here. Let me start with the end. I think the investment philosophy hasn't changed. In fact, we decided to invest behind the initiative, similar initiatives that we have been investing over the past several quarters. What we have seen, and we try to be very explicit about that on the letter this quarter, are the results of those investments. We're seeing very good results in terms of our credit card portfolio. As we mentioned, all the cohorts in Brazil continues to improve and become profitable. The repayment periods in both Brazil and Mexico are also improving. That gives us more confidence to continue investing and investing boldly in terms of growing our credit card portfolio, and now we're also launching it in Argentina. The same could be said on the commerce side.
We continue to expand our fulfillment infrastructure in order to keep up with growth of our business. We expanded and we probably invested a little bit more boldly in CVT. We see a huge opportunity on CVT, as well as 1P, and we're investing behind that. Then if you compare year-over-year, we continue to expand our free shipping offering, which is a critical component of our value proposition. I would say that for the most part, we did not change anything in terms of the investment philosophy. We have seen very strong results on those investments. As we always said, we're not trying to optimize short-term margins. What we're doing is we're investing for the long term, we will continue to invest boldly in those initiatives.
The next question will come from Andrew Ruben with Morgan Stanley. Please go ahead.
Hi. Great. Thanks for the additional color on the investments within the release. One other item I'd like to understand more about was the Brazil seller promotions you announced in recent months, lowering take rates for competitively priced sellers in certain price points. I'd like to understand what drove the decision and when you're thinking about allocating price investment dollars, how you balance that between seller investments versus buyer initiatives such as free shipping and maybe to the extent it relates to Irma Sgarz's question, if these seller promotions represented any area of change in your philosophy or approach over the past few months. Thank you.
Hey, Andrew. Ariel here. Let me walk you through what we have done regarding take rates in Brazil for everyone to have the full picture. Basically, we lowered take rates in some categories, in some specific price ranges. This is not a platform-wide take rate cut. It's a targeted investments where we see the greatest opportunity, and by opportunity, I mean both elasticity of demand and elasticity of supply. Basically, all the discounts that we're providing to merchants are conditional on sellers maintaining a competitive pricing on their listings in MercadoLibre. Why is it that we're doing this? This is probably the most important part of the answer.
If you go back, a few years, we started lowering take rates back in 2024, targeting specific ranges and categories. If you look at results since then, unique buyers have grown 62%. GMV has grown even faster. The number of live listings in our platform and the effective sellers have hit record high even after a few years of much slower growth. Engagement and frequency in the platform continue to increase at an excellent rate. Basically, the last take rate reduction are a function of the results that we have already proven and we've seen over the last 18 months.
If you were to take a step back in the last 12 months, going to the second part of your question on whether we are doing this for merchants or investing for buyers. Over the last 12 months, we have lowered the free shipping threshold to BRL 19. We have expanded free and fast shipping in Meli+. We have expanded our affiliate program. We continue to build the best and most reliable logistics network across Latin America. Clearly, all those investments compounded generate tremendous volume and tremendous value for our merchants. We want to make sure that those investments, which benefit sellers directly, are translating in the best possible prices for our buyers in the platform.
Basically, this is another piece of a complex puzzle of initiatives that we are putting together in order to drive engagement and create the very best value proposition for users in MercadoLibre.
Let me just complement those investments that Ari mentioned regarding lowering shipping take rate to merchants were implemented towards the end of Q1. They did not flow through our P&L in Q1. They will flow through in Q2.
The next question will come from Bob Ford with Bank of America. Please go ahead.
Hey, good evening, everybody, and thanks for taking my question. You know, in the press release, you mentioned a 30-point NPS gap with incumbent banks. Can you talk a little bit about your NPS rank across the marketplaces and what you think you need to do to replicate that NPS leadership with respect to marketplaces and maybe specifically in Brazil?
Hey, Bob. We are at record high NPS across every single market. In e-commerce, we feel pretty comfortable with the competitive position in terms of customer satisfaction in every single market where we operate. If you were to compare our NPS with traditional retail, which is kind of the similar example to traditional banks, you would see a huge gap. We are satisfied with all the progress we've made and the continuous improvement in such a metric across Brazil, Mexico, Argentina, Chile, and so on.
The next question will come from Marcelo Santos with JP Morgan. Please go ahead.
Hi, good evening. Thank you for taking my question. I wanted to discuss a bit the Brazil NIMAL compression. You mentioned that one-third of the provisions came from higher provisions in Brazil. Is that part of the up-market move? Like you say, you're taking longer loans. Just wanted to understand what kind of products you are going to take this, what kind of risk these products come, and how far you are in this move. That will be the question. Thank you.
Hi, Marcelo. Yes, as you mentioned, and as we mentioned in the call, a big part of that is related to higher mix of credit cards, which have a significantly smaller NIMAL, and because they are still immature cohorts in the portfolio. Then we are taking heavy provisions in Brazil, and that is related, on the one hand, to extending the average term of our loans. We used to have loans typically on average of 5 months, and that has moved to 8 months.
Also we are expanding the reach on our personal loans portfolio, and that is in part what you mentioned, is we are reaching out to customers who had a line of credit in the past, they were not taking it, so we are lowering the spread to see if we entice them to start trying our personal loan products. Also reaching out to segments where they are either more risky or we, where we have to work with smaller spreads. It has been a deliberate decision to reach out to further segments to continue accelerating growth. I'll add to that asset quality remains quite stable and reflects how well the models are working and in general, how the underwriting process is working.
The next question will come from Rodrigo Gastim with Itaú BBA. Please go ahead.
Yeah, good evening, everyone. I'd just like to turn the discussion here to Argentina and the credit book in Argentina. If you could discuss a little bit about the potential acceleration in the credit book in the country, or give some idea of the growth recently of the credit book in Argentina, specifically for the card book, which has been quite new, but we felt you quite enthusiastic with this initiative. And also share with us some early signs of the profitability of the credit card in Argentina, the NIMAL or the maturation of the cohorts, how it's behaving. It would be very helpful. Thank you, guys.
Hi, Rodrigo. Let me start with credits, and I move on to credit card. I would say that in general, the 15-90 NPL in Argentina has improved sequentially. When we look at the market, we see that some banks are having worsening NPLs, that has not been our case. I think that the reason for that is that we have several advantages, is that we are issuing loans with very short durations relative to the banks, and we have a very nimble approach to pricing those loans. We have high levels of principality in Argentina. Lots of our users use their Mercado Pago account every day. We have very sophisticated underwriting models. I think that our portfolio has proved to be very resilient in Argentina.
With regards to the credit card, we just started issuing cards in August, September of last year, we are excited with the evolution. Given the, I would say, the ubiquity of Mercado Pago, we have been able to reach out to those clients which we deem to be less risky, that has enabled us to be aggressive in the number of cards we are issuing. Still it's early to tell how quickly those cards will repay themselves, we are seeing initial impression as is that the cohort in Argentina is very similar to our first steps in Brazil. We are happy with how they are evolving.
The next question will come from Josh Beck with Raymond James. Please go ahead.
Yes. Thank you for taking the question. Sounds like unit costs were down, I believe 17% year-over-year. I assume a lot of this has to do with better utilization of idle capacity. As we look, you know, later into this year and next, how do you kind of think about maybe the next step down in terms of unit costs? Just quickly on gen AI, we've heard, you know, a number of the U.S. players speak to really embedded gen AI experiences within their own e-commerce platform, driving better conversion, bigger baskets. Just curious if there's any early learnings in that area for you. Thank you.
Hey, Josh, Ariel here. Indeed we are very pleased with the results on shipping costs. 17% reduction year-over-year, farther accelerating from the 11% reduction we saw in Q4, even while absorbing 56% volume growth in the same period. Basically the improvements are coming from 3 main things. A, volume and volume density, more shipments allow us to dilute fixed costs across the network, while also ramping up facilities to utilization levels far more quickly. That combined with new tech features also allow us to improve shipments per route in both last mile and line haul.
B, our slow shipping network, and this a key lever that allows us to take advantage of the idle capacity both in fulfillment and cross-docking, in order to ship items at a marginally lower cost whenever there's space available in our value chain. C, there were lots of work in terms of deployment of operational and technological improvements that did change and improve productivity across every node of our network. Very pleased with that. There's a commentary that we left there in the letter that shares a bit more on the story. Variable contribution per shipment for the items between 79 and 17, 18, 19 and 79 BRL has improved materially since we launched our free shipping program in June.
Several brackets within that range are already breaking even. We are positive with this. This is the same type of trajectory that we saw when we launched our initial free shipping program back in 2016. I would say this case was even faster, the improvement. Looking forward, I would say that we expect the direction of travel in unit shipping costs to continue to be downwards, but this is not going to be linear, right? We will be adding more capacity for sure, given the growth rates that we are having, and clearly some of the incremental gains may take a longer time to achieve. We are confident on the trajectory that we'll continue to see.
In terms of gen AI and impact, I think it's worth highlighting the fact that we deployed LLMs in Search, in Commerce for the first time this quarter. Basically that is live in Brazil, Mexico and Argentina. Now we are using this technology to better understand users' intent, combining both knowledge on the user behind the query and better interpretation of the query itself. The impact is basically very visible across the funnel. We have higher conversions as buyers find what they are looking for much faster. We have better ad returns as our search also improves the quality of the results that our ad tech stack is generating. We have higher stronger engagement from our users as the discover experience actually improves.
Clearly this is one of the contributors to the great performance we had this quarter. This is one piece in a much more broad gen AI strategy for the marketplace, and we are very happy with the results that we've seen so far.
The next question will come from Danniela Eiger with XP. Please go ahead.
Hi, thanks for taking my question. I have a quick one here. I would just like to know how you guys are seeing the potential work scale revision in Brazil, as well as higher oil prices becoming additional cost challenges to be dealt with in the short term. Thank you.
We've seen in the first quarter, we didn't see any change in terms of energy costs. We are seeing some parts of our logistics passing on some increases in cost because of energies. In the second quarter, beginning a couple of the last month or so, we are passing most of those to consumers. For the most part, we don't expect a significant impact on our results because of that so far. Obviously monitoring the situation closely, but it's something that we need to, you know, go month by month. So far, we haven't seen any impact on our P&L because of that. In terms of labor costs, I think we were the same thing. I mean, we for the most part, we obviously were increasing our labor mostly on logistics.
We adjust our logistic cost based on labor costs, once, twice a year, I would say, in Brazil. That's not a major issue for us and hasn't impacted our performance.
The next question will come from Geoffrey Elliott with Autonomous. Please go ahead.
Hello, thanks very much for taking the question. There's some interesting language in the looking ahead statement where you talk about margins and you say you can dial them up, you can dial them down. We've chosen where to set the dial. We do not anticipate this changing materially in the near term. It's unusual for you to give that near-term clarity. What has prompted that? What could cause it to change? You know, what unforeseen circumstance could cause margins to be lower or to be higher in the near term? Thank you.
Hi, it's Martin here. Basically, what we're trying to explain on the letter is the fact that the margins are a consequence of our investment posture.
We can dial in, you know, up or down the investment intensity based on the results that we're seeing on the different channels, different tracks which we're investing. In this particular quarter, as you saw, we are accelerating the offering of credit cards. You know, our credit book, credit card book is growing more than 100% year on year. We're also accelerating CVT and 1P, and we continue to offer more free shipping. We're investing on both commerce and fintech, and based on the investments that we're making is the, you know, margin that we're delivering. As I said earlier, we are not optimizing for short-term margin. We're making investments based on the results that we're seeing, and the results are very positive.
When you look at, you know, revenue growing at 49%, which is the highest rate of growth over the past four years, that's one example of, you know, our investments performing very, very well. I think what we tried to say there is that we will continue to invest the discipline in the similar areas that we're investing today. If we see opportunities and we see results of those investments performing according to plan, we will continue to invest and we will not shy away from it. We'll, again, we will not try to optimize shorter margins. We're looking at a big opportunity ahead of us. We wanna make sure that we capture that opportunity as opposed to just focus on short-term margins.
Let me complement that, Martin. On the fintech side, and you mentioned credit cards, definitely we see this as a huge opportunity. The better we get at improving our models and allows us to issue even more credit cards, always within the same payback period we set as target. The better we are at improving those models, the more we are willing to invest because we know how predictable the payback period is.
Yeah. The flip side would be if we wanted to improve margins in the short term, it would be fairly easy for us to slow down certain investments, but we don't think it's the right way to go, given the large opportunity that we have in front of us for both commerce and fintech.
The next question will come from Craig Maurer with FT Partners. Please go ahead.
Yes, hi. Thanks. I wanted to dig in a little bit further on the decision to both go longer duration and to expand the credit box when it comes to the credit card in Brazil and personal loans in Brazil. You know, with the price of oil up, and you know, I'm just curious what gave you the confidence to make those changes now, and really lean in versus what was already a fast growth rate. Just wanna make sure I understand how you balance the risk reward here.
Craig, let me try to split the question. I would say that on the credit card side, we are very comfortable with the repayments we are seeing. The repayments are very similar to the what we were seeing before. The impact the credit card has on provisions and the NIML is mostly given that is gaining share in terms of the total credit book. Now, when it comes to personal loans, and that's where we extended the duration, that was a purpose. Basically, our duration was fairly small. It was only 5 months, and it was very profitable. It continues to be very profitable, less so than a year ago, but it continues to be fairly profitable.
Given that we are growing well and it's profitable, we wanted to reach out to segments where we believe we can make money, even if on the margin, the spread we make is smaller than with the segments we were already serving. And entice, again, those segments which sometimes are not willing to take a credit before to start taking them. Again, we can change the periods at which we lend at any point in time, but we wanted to experiment with this, and this confirmed that we could do this in a profitable way.
I would say that we continue to monitor or manage our credit book very cautiously. If you look at the NPLs, despite the macro conditions that you described, continue to be fairly stable in all of the countries where we operate, including Brazil.
The next question will come from João Soares with Citi. Please go ahead. Mr. Soares, your line is open. We'll move on to our next question. That will come from Lucas Alves Lastino with Santander. Please go ahead.
Good evening. Thanks for taking my question. Regarding the credit portfolio, it's clear that you are increasing exposure to credit cards, but also accelerating in consumer and merchant loans, which I believe require higher provisioning at the time the credit is released, both to the nature of the credit and also the longer durations, so it may explain a big part of the NIML reduction. Does it make sense? Combined to it, those category of credits have lower spreads than credit cards, but accrue interest over the full balance, contrary to credit cards that you depend on users to delay payments. If my understanding is right, is it fair to assume that this static NIML is much lower than it could reach over time as you start collecting interest and even potentially reverting provision on this balance?
Hi, Lucas. In general, the spreads in consumer and merchant books are better than those on the credit card, because again, on the credit card, we have to Well, all of the potential lines we have as provisions. Initially we take a loss whenever we issue a credit card, and then only after some time do we start making money on those cards we issued in the past. I would say that what contributes to an increase, a lowered NIMAL and a higher provision is mostly, first, two-thirds of it is coming from the increase in the proportion of credit cards.
When with regards to the loans, yes, increasing the duration make us take larger provisions, and we also assume a larger early repayment risk, and that is part of the equation of moving toward longer durations. We expect that with time and as we regulate and we already understand better how repayments will work, we will able to again expand the spread in those loans, in those personal loans in Brazil.
I just to complement, the consumer loan portfolio in Brazil, which is the only one that Osvaldo was referring to, continues to be a very profitable operation. It has double-digit margins. It is a little bit less profitable than it was a year ago, just to clarify that. We continue to perform very, very well.
Yes. Merchant loans, which were the last one we mentioned, have very healthy spread. Probably the highest spreads of all the products as of now today.
The next question will come from Neha Agarwala with HSBC. Please go ahead.
Hi. Thank you for taking my question. I'd like to go back on the provisions question. The cost of risk increased quite substantially this quarter. It's now around 37% as per my calculation. Could you zoom in on which particular loan segment or any particular region that might have led to this increase in cost of risk? Do you see it as a one-off or do you see closer to 37%-38% as a, as a going rate for cost of risk as you continue growing the credit business? Second question is, there's a lot of discussion about payroll loans in Brazil, which are less risky, but gives a good alternative to personal loans. Is that something that you would contemplate entering into for Brazilian market? Thank you so much.
Hi, Neha. It's Martin here. Let me take the first part of your question regarding the provisions this quarter. You're probably looking at there's a chart on our investor presentation where we show a waterfall in terms of margin compression, and there's four points of margin compression because of bad debt or because of the provisions. This is something that's been happening for quite some time. The fact that our credit book grows at a faster pace than revenues, you know, credit book grows at 87% year-over-year, and our revenues for MercadoLibre growth at 49%, that generates margin compression. Okay. The reason for that is because as we issue any new loan, we have to provision for the full amount of expected loss of that loan. When we accelerate growth, we need to provision more.
2/3 of the margin compression comes from that. That's natural. That's something that we have seen over time. In fact, if you look at the credit business, because it's so profitable, it is actually accretive to margins to overall MELI. The 1/3 of a compression that you see on that waterfall comes from the consumer credit book in Brazil that, as we mentioned earlier, it is profitable, but it's less profitable than it was a year ago, and that generates that compression. There's no really a change in terms of, except for Brazil, there's no change in terms of the performance. We continue to be very excited about the performance of the credit cards, which has continued to improve quarter after quarter, the performance of the older cohorts.
Consumer and the merchant grades are very profitable business as they have been for many years now.
Regarding the second part of the question regarding payroll loans, basically, we have seen a significant increase in Brazil of payroll loans, and we are about to launch the private payroll loans. We have already integrated with the government and we will launch the product soon.
The next question will come from Deepak Mathivanan with Cantor Fitzgerald. Please go ahead.
Great. 2 questions, please. First, can you talk about the competitive intensity in Brazil? Amazon has made several changes recently. Are you seeing any impact on the seller side or supply on the platform at this time? Second 1 for Martín de los Santos. Can I go back to the EBIT question Irma Sgarz asked and try a little bit differently? There are obviously seasonal headwinds in 1Q from credit business, you know, that partly eases off through the year. Are you now ramping investments in certain areas that's incremental, you know, that the seasonal effects are somewhat masked, and we should expect EBIT margin for the year to be around 1Q levels? Any additional color you can provide there would be super helpful. Thank you so much.
Hey, Deepak. Ariel here. Let me take some time to address the first point on competitive intensity. Brazil is one of the most attractive e-commerce markets in the world, it's natural that it's getting more and more intense and as that has been the case for many years. While competition is intense, I would highlight a couple of things about the way we are thinking about this and perhaps this might be a bit different from how the market is thinking.
First, we thrive in competitive environments, right? Competition makes us stronger. It pushes us to evolve, to continue innovating, that's exactly what we have been doing over the last few years. Actually, for 26 years, it's been doing for the last few years as well. Every single engagement metric you look in MercadoLibre Brazil is strengthening, frequency, multiple, category shopping, retention. All those are structural gains in our value proposition. Those are not short-term gains or growth that we are buying. Once again, satisfied with that as we are satisfied with reaching new records of MPS that really show how strong our value proposition is in the country. Our conversion rate in Brazil has increased 1 percentage point year-over-year. That's huge increase.
When you think about conversions, all this feeds into the rapid growth that we are delivering, the record market shares. We have never been in a stronger position on that regards. The second point that I would highlight is that this competitive intensity is also having a positive impact in the market as a whole by bringing new consumers from the offline world into the online world, and we feel we are very much equipped to offer all those consumers the opportunity to buy in MercadoLibre. The pie is increasing at a faster pace than it was before, and we are taking an even larger slice of that pie.
Regarding the impact on what others are doing, our numbers speak for themselves, right? Our supply continues to grow, our GMV continues to grow, our successful items sold accelerating, our retention is improving. We are basically comfortable and confident with the competitive position that we have, and we will continue to execute behind it.
If I start in here with regards to margins, as you know, we rather not talk about margins on a quarterly basis and forward-looking. Let me say that in Q1, we decided to invest, you know, the level of intensity of our investment based on the performance of the different investments. I think on the shareholders letter, we tried to go deeper into those results. As you can see, we're seeing very positive results in all of our investments, in the credit card, 1P, CVT, our free shipping offering, and so on. We will continue to invest behind those initiatives. It might be some others, like Ariel mentioned, some incremental investments that we're doing on our marketplace, in particular in Brazil. We have to see how energy costs play out.
I don't see a big impact on that. We need to monitor that situation. I would say that the philosophy will continue to be the same. We will look at the investments, we will look at the results of investments, and we will invest behind our ecosystem to capture the opportunity in front of us. Again, we're not managing the business to a particular margin level. We feel very optimistic and comfortable about the level that we deliver this quarter, and we will continue to monitor the investment opportunities throughout the year to see where we position and the level of intensity that we'll continue to deliver in those different tracks.
The next question will come from Kaio Prato with UBS. Please go ahead.
Hi, guys. Good evening. Thanks for the opportunity. I have a follow-up on your credit book, please. I think we are seeing some deterioration on the asset quality given these higher provisions and NPLs and the lower level of NIMAL. Having said that, I would like to hear from you about your renegotiation strategy, how it is evolving over time, and if this higher duration of loans that you mentioned is related to any kind of renegotiation as well or not. Second, just to see if I understand, at this environment, should we expect the same pace of credit card issuance in Brazil, or should we see some slowdown? Finally, if this is the new recurrent level of NIMAL going forward or actually could be lower as you continue to expand in credit cards. Thank you.
Here we go. Kaio, with regards to NIMAL, when you look at it on a quarter-by-quarter evolution, there is some seasonality to in Q1, when typically we have lower NIMAL in Q1, but it's I would say it's normal to see the sequential compression that you see in the results. When it comes to year-on-year evolution, as we mentioned, a big part of that is the higher mix of credit cards, and the rest is more related to Brazil and both extending the average in terms of loans and expanding the reach of our personal loans portfolio. We have not seen any change in renegotiations.
What we do see when we extend the duration is that more people are willing to prepay their loans, so the revenues of the interest we end up collecting of that loan is shorter just because in that case, the duration was not extended as we expected in the first place. We are not seeing any impact of that in the quality or the type of renegotiations we are doing.
This concludes our question and answer session. I would like to turn the conference back over to Mr. Martin de los Santos for any closing remarks. Please go ahead.
Thanks. First, I would like to thank everybody for joining the call. I would like to close with some comments regarding our investment philosophy, and we will try to go deeper into that in our quarterly letter to shareholders. We at MercadoLibre are facing a once in a generation opportunity. Both Fintech and Commerce have tremendous runway ahead in Latin America, and we are in the best position to capture this large opportunity. For that, we choose to invest behind our ecosystem. As we mentioned throughout the call, we're investing in Fintech and scaling our credit card portfolio, which is helping us bring, you know, millions of people to our Mercado Pago platform. In Commerce, we continue to grow our free shipping offering. We are expanding our logistics, and we are investing behind our 1P and CVT operations.
Obviously, those investments are putting some short-term pressure on margins. They are delivering tremendous, you know, results. We're seeing those investments working. We continue to gain market share in all of the business that we operate, in all of the countries where we operate. Engagement and NPS are at record levels. We have generated tremendous growth and scale. Proof to that is the 49% year-on-year growth that we deliver in Q1, which is the highest in the last four years. We are aware that that generates margin pressure. We think that this is the right way to go, and we are as confident as ever that the choices that we're making today will maximize long-term cash flow and will lead us to significant higher margins over time. With that, I would like to close the call.
Thank you again, all of you for joining. Please reach out to the IR team if you have any further questions. Good night.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.