Good day, ladies and gentlemen, and welcome to the MercadoLibre Second Quarter 20 14 Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Martin Delos Santos.
Please go ahead.
Hello, everyone, and welcome to the MercadoLibre earnings conference Call for the quarter ended June 30, 2014. I'm Martin De Los Santos, the Head of Investor Relations for MercadoLibre. Our senior management presenting today is Pedro Arndt, Chief Financial Officer. Additionally, Osvaldo Jimenez, Executive Vice President of Payment, will be available during today's Q and A session. This conference call is also being broadcast over the Internet and is available through the Investor Relations section of our website.
I remind you that management might 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 might differ materially from those discussed in this call for a variety of reasons, including those described in the forward looking statements and risk factors sections of our 10 ks and other filings with the Securities and Exchange Commissions, which are available on our Investor Relations website. Finally, I would like to remind you that during the course of this conference call, we might discuss some non GAAP measures.
A reconciliation of those measures to the nearest comparable GAAP measures can be found in our Q2 2014 earnings press release available on our Investor Relations website. Now, I will turn the call over to Pedro.
Thanks, Martin. Good afternoon, and welcome, everyone, to MercadoLibre's Q2 2014 earnings call. We're pleased to provide an update on the company's operational and financial progress for the Q2 of 2014. We made solid progress on all fronts over the last 3 months, growing our business on the basis of the substantial upgrades we are bringing our users as we integrate payments and shipping into their buying and selling behaviors, as we introduce new formats for the sale of specific products and brands and as we perfect the user experience that we offer buyers across all screens. We are increasingly delivering a shopping experience that integrates all aspects of our Let me start by giving you a quick snapshot of key metrics and areas of progress for the period.
Reviewing key 14 versus 13 quarterly metrics for the 2nd quarter, registered users continued growing past the 100,000,000 marker, now at 109,600,000 registered users, up 21.5% year on year. Successful items grew 18% reaching 23,600,000 items sold. Gross merchandise volume surpassed $1,800,000,000 up 67% in local currencies and up 22% in local currencies when we exclude Venezuela. Total payment transactions grew 40% to $10,300,000 Total payment volume grew 77% in local currencies, growing to $785,000,000 Revenue growth in local currencies came in at 66% year on year. Excluding our Venezuelan operations, revenue growth in across our strategic initiatives.
Mobile sales reached 16% of gross merchandise volume. Mercado and Vios almost doubled its units shipped approaching a combined 3,000,000 in Brazil and Argentina and our mall initiative continued to trend well as in the Q1. This helped vertical categories gain share of volume from consumer electronics as we on boarded brands to the mall at a faster pace than in the Q1 of the year. By the end of June, we had 226 official stores. That's 141 more stores than last quarter.
What this illustrates is that we continue working diligently to deliver on all our stated goals, advancing on our roadmap to offer the best online shopping experience in our region by combining the assets of our ecosystem into a comprehensive trading platform for buyers and sellers. We are uniquely positioned to deliver on this, Already providing the deepest selection across multiple product categories, we are also stretching across brand and merchant segments, delivering seamless payments and convenient shipping, both becoming the norm on MercadoLibre at a fast pace and all the while delivering solid improvements to the customer service we offer. As previewed a moment ago, shipping is making strides, penetrating our GMV at rates that exceed our expectations. Shipping units grew an impressive 91% quarter on quarter reaching 8% of sold items in Argentina and 25% of sold items in Brazil. Payments also keep outpacing marketplace growth.
Our 40% year on year growth in payment transactions accelerated versus 36% last quarter and results from great momentum across all our MercadoPablo country operations. Brazil leading the way robustly with its own number of transactions also accelerating to 42% year on year. Total payment volume in local currencies accelerated across the board on our platform. Total payment volume grew 82% year on year in local currencies versus 65% in the prior quarter. Of our platform, total payment volume grew 61% year on year in local currencies versus 59% in the prior quarter, while our off platform technology posted significant advances, better checkout flows and new solutions for merchant partners.
No doubt, MercadoPago is a key facilitator for future e commerce growth on and beyond our platform. And as it continues to expand at a faster pace than overall e commerce, we are paving the way for higher quality and frequency going forward. In the Q2, we also kept developing our mobile and vertical capabilities, aware that a superlative online shopping experience must be customized by type of product and by type of screen. Our marketplace is adapting very well to new verticals as they kept gaining share of volume and as diversify away from consumers electronics, while on the apparel front, we on boarded new brands, which by now include the likes of Reef, Prince, New Balance, Swatch, Puma and many more. When it comes to mobile, this quarter's downloads of our native app continued to grow at a fast clip, while we also made significant improvements to our web mobile experience posting usability upgrades as we integrated buyer and registration flows on those screens, which also proved good for business, accelerating mobile web web registrations and generating more purchases per registered user.
These innovations brought total mobile registrations to a record 31% of all new user sign ups in June. We also kept promoting our open platform, making our services increasingly accessible to 3rd parties. These are, for example, developers building e commerce tools or first party retailers wishing to integrate their ERP systems with our platforms. We are also having increasingly frequent interactions with 3rd party integrators that offer their services directly to brands and retailers. By partnering with these integrators, be they credit facilitators, billing engines, marketing engines or e builders of online storefronts for name brands, we are generating a useful network and a bridge to large retail.
Our open platform brought 27% of our new paid listings in June. At this time last year, that contribution was 5%. We look forward to the continued growth of this initiative. Again, all this takes place while we redouble our efforts to provide world class customer experience. In addition to devoting ample resources via dedicated SaaS and technology, we also track our progress and the results are promising.
Our net promoter score increased by over 10 percentage points year on year during the Q2. At the core of all these initiatives we've just covered is a commitment to a constant process of innovation and integration that allows us to understand our users more and more as we go, transforming their experience for the better and raising the bar in terms of quality and breadth of services in this nascent, but rapidly growing space. This commitment allows us to deepen our penetration in an ecommerce market that is growing, spanning new product categories, new services and new business models. Now let me make some comments on the corporate finance front. During April, we completed the acquisition of Portali Movilario, a real estate classified site with online market leadership in Chile and a strong brand presence, which will complement our owned in Mexico.
In both cases, we see interesting sales and distribution capabilities that we can leverage across our entire ecosystem. Along with these strategic value points, we've added on a respected team of 161 employees bringing MercadoLibre's total to over 2,300. In June, MercadoLibre successfully strengthened its balance sheet with the completed issuance of $330,000,000 in convertible notes maturing in 2019. A currently constructive market context for this type of issuance allowed us to achieve the most favorable end of the pricing terms, a 2.25 coupon and a 37.5 percent conversion premium. The proceeds will allow us to take on future growth opportunities.
We see the digital ecosystem in Latin America really coming of age and we are confident there will be interesting M and A opportunities over the next 5 years. This added cash gives us greater flexibility to move quickly when opportunities arise. Moving on to our financial results for the Q2. Let me begin by reminding you that as of May 16, the company adopted the CCAD II exchange rate in Venezuela as reported in a press release on that date. The move confirms our commitment to full transparency, having been one of the earliest corporate issuers to adopt this exchange rate, which also reduces our overall financial exposure to the Venezuelan market.
During the Q2, the CCAT II rate traded within a tight range around 50 bolivars per U. S. Dollar, considerably more devalued than our previously employed cCADE-one rate, which was approximately 11 bolivars to the dollar in the first quarter. As a result, Venezuela's share of our total business has been reduced considerably, also mitigating Venezuela macro impact on our results going forward. Let me remind you also of the unusual items impacting the quarter, all related to the adoption of the CCAD-two exchange rate in Venezuela.
During the quarter, we've taken a one time hit of $57,400,000 which includes a $49,500,000 impairment on our long lived fixed assets, primarily commercial real estate we own and either use or rent, we measured at the CCAD-two exchange rate. A ForEx loss of $16,500,000 resulting from the devaluation of our local currency net monetary assets in Venezuela a deferred income tax gain of $8,600,000 derived from the loss on foreign exchange related to the revaluation of U. S. Dollar denominated liabilities during the quarter. This covers the one timers associated with the transition in exchange rate mechanisms in Venezuela.
Additionally, our business in Venezuela was also affected by the impact of remeasuring our Venezuelan P and L at CCAD II. During the second quarter, the first half of the period was remeasured at the CCAD-one rate of roughly 10 bolivars to the dollar, while the second half was remeasured at the CCAD-two rate, leaving the weighted average exchange rate for the quarter at approximately 18 bolivars to the dollar. The Q3 will be the Q1 where CCAT II, which currently remains close to 50 believers to the dollar will apply from start to finish. Therefore, all things equal, this implies further quarter on quarter FX headwinds in Venezuela, assuming the weighted average exchange rate remains at current levels. Summarizing, we believe Venezuela's share of our business is more accurately reflected at CCAT II and we have already been able to access the FX market at this rate, converting bolivars to dollars on a limited basis.
With those clarifications out of the way, I'll now call out our consolidated financial highlights also providing pro form a values where they apply to better illustrate our performance excluding the one timers just discussed. Net revenues were $131,800,000 66% growth in local currencies and 18% growth in dollars. Excluding Venezuela, net revenues grew 47% in local currencies and 22% in dollars. Income from operations was negative 5,900,000 dollars Excluding the one off impairment charge due to the Venezuelan devaluation, income from operations would have been $43,600,000 up 23% from $35,400,000 in the Q2 of last year. Net income before income and asset tax expenses was negative $19,100,000 Excluding the one off impairment and ForEx loss due to the Venezuelan devaluation, it would have been $46,900,000 15% higher than in Q2 of 2013.
Net income was negative $25,600,000 but would have been $31,800,000 excluding the impairment. ForEx and tax effects of the Venezuelan devaluation, up 5.9% from $30,000,000 in the Q2 of 2013. All this resulting in earnings per share that were negative $0.58 for the quarter. Excluding the impact of the Venezuelan devaluation, earnings per share for the quarter would have been 0.72 $2 Analyzing our top line growth for the quarter, consolidated revenues accelerated their year on year growth in U. S.
Dollars and in local currencies. This happened despite a deceleration in sold items, which we anticipated as Latin America along with the rest of the world paused to enjoy the World Cup and also as we faced Easter calendar headwinds. Revenues derived specifically from our marketplace offset slower growth in sold units. Brazil, for example, saw sold items slow their year on year growth by 4 percentage points due to the World Cup to 21% with local currency marketplace revenues accelerating to 33% on the basis of monetization improvements. Turning to non marketplace revenues, These grew 49% year on year in local currencies with clear acceleration on a consolidated basis and also in each of our top 4 countries.
The main contributions to this growth came in order of relevance from financing revenues sustaining growth above 40% year on year in local currencies for the 3rd consecutive quarter, driven by growth both on and off platform. MercadoPago processing revenues grew 62% in local currencies, driven by the solid growth of payments volume outside our platform. Advertising revenues, though a small component of non marketplace revenues, also growing very well. And finally, the acquisition of Portali Movilario provided a boost to growth in classifieds revenues, which was 39% year on year in local currencies. Overall, our total net revenues accelerated to 66% year over year growth in local currencies, also accelerating to 47% year on year excluding Venezuela.
In addition, each of the major countries where we operate showed accelerating year on year growth in local currencies in their consolidated revenues, which were 34% for Brazil, 76% for Argentina, 25% for Mexico and 167% for Venezuela. Moving down our P and L, gross profit grew 18% year over year in the 2nd quarter to 95,500,000 dollars Gross profit margin was 72.4 percent of revenues versus 72.3% in the Q2 of last year and 72.7% in the Q1 of 2014. 139 basis points of margin contraction due to growth in MercadoPago were offset by scale in certain sales Operating expenses for the period totaled $101,400,000 or $51,900,000 excluding the one off impairment charge from our Venezuela devaluation, which would imply a 14% apples to apples growth versus last year. Excluding this impairment charge, operating expenses would have been 39 0.4% of revenue in the 2nd quarter versus 40.7% in the same quarter last year and 43.2% in the Q1 of this year. Let me break down OpEx for you line item by line item.
Sales and marketing grew 27% year over year to $26,500,000 or 20.1 percent of revenues versus 18.6% for the same period last year. This growth represents a loss of 151 basis points of margin, primarily from 2 22 basis points of higher chargeback costs and 120 basis points of additional online customer acquisition costs, which were partially offset by offline marketing scale since we did not renew the offline marketing campaign that was in full force during the Q2 of last year. Product development expenses grew 20% to 11,700,000 dollars representing 8.9 percent of revenues in the 2nd quarter versus 8.7% in the same period last year and 10.6% in the Q1 of 2014. G and A decreased 9% year over year to $13,700,000 representing 10.4 percent of revenues versus 13.4% a year ago and 13.2% in the Q1 of 2014. Year on year scale was driven by salaries and wages accounting for 279 basis points of improvement, 134 of which came from long term retention plan costs.
Finally, also included in OpEx was the aforementioned one time charge of $49,500,000 for impairment on our long lived assets remeasured at the CCAT II exchange rate. Per U. S. GAAP, in hyperinflation economies such as Venezuela, this charge does not qualify as an extraordinary item and does not go below EBIT. As a result, operating income for the quarter was negative $5,900,000 or negative 4.5 percent of revenues.
However, excluding the one time impairment charge, operating income would have been $43,600,000 or 30 I'd like to note that currency is a relevant driver for scale excluding the one time impairment charge. Of the 150 basis points improvement in EBIT margin year on year, approximately 180 basis points can be attributed to the devaluation of the Argentine peso. Below operating income, we benefited from $3,600,000 of interest income, up 62% year on year, thanks to higher interest rates on larger amounts invested versus the prior year quarter in which we realized certain losses on our portfolio. In our ForEx line, we saw a $16,000,000 loss versus a $3,600,000 gain in the Q2 last year. The adoption of CCAD II in Venezuela generates an FX loss of $16,500,000 which was partially offset by a small net increase in the value of our other foreign exchange holdings.
These effects led to a net income before taxes of negative $19,100,000 which would have been positive $46,900,000 excluding the impairment charge and ForEx loss resulting from the Venezuelan devaluation. That is 15.1% above last year's Q2. Income tax expense was $6,500,000 during the Q2. However, as they did with the switch to CCAD-one last quarter, U. S.
Dollar liabilities on Venezuelan's balance sheet appreciated further this quarter, resulting in losses recognized under Venezuelan GAAP for a one off tax benefit of $8,600,000 Excluding the devaluation's impact on G and A, ForEx and taxes, the blended tax rate for the quarter would have been 32.2%. Net income came in at negative $25,600,000 or negative 19.4 percent of revenues during the 2nd quarter, resulting in basic net income per common share of negative $0.58 Excluding the impairment charge, foreign exchange loss and income tax effect resulting from Venezuela's devaluation, net income would have been $31,800,000 a margin of 24.1% and an EPS of $0.72 Purchase of property, equipment and intangible assets and acquired businesses net of cash acquired during the quarter totaled $41,600,000 For the period ended June 2014, this resulted in free cash flow defined as cash from operating activities less payment for the acquisition of property equipment intangible assets and acquired businesses net of cash acquired of $18,700,000 versus negative $6,200,000 last year. Cash, short term investments and long term investments at the end of the quarter totaled $542,900,000 Wrapping up, we declared our quarterly dividend of $7,300,000 or $0.166 per share payable on October 15, 2014 to shareholders of record as of the close of business on September 30, 2014.
This concludes my review of the business for the Q2. Summarizing what we've seen, the company shows strong business drivers as we keep integrating key value components into our ecosystem, making them part of the core shopping experience that we offer. Our suite of services is working well together and this is gradually improving the ease and convenience of buying and selling on MercadoLibre. As can be seen, our growing value proposition to users also clearly translates to the growth of our business and its financial health. I look forward to keeping you updated as we keep perfecting our entire platform to capture the huge opportunity implied in our region's budding e commerce landscape.
Thanks. And with that, we'll take your questions.
Our first question will come from Gene Musner from Piper Jaffray. Please go ahead.
Good afternoon and congratulations. A couple of questions. First is that you mentioned the World Cup impact what it had on the entire quarter. Can you talk about how Brazil and Argentina were trending before the World Cup actually started? And then separately, can you talk a little bit about the unit growth number versus the overall local currency GMV growth?
And trying to understand how unit growth dipped a little bit, but yet local currency growth accelerated?
Thanks.
Sorry, Gene. So just recapping, the first question is a World Cup question. I think what we're disclosing is the overall impact as we said in the prepared remarks. That impact was somewhat accentuated in Brazil, but the reality is that Colombia, Mexico, Argentina are all countries that have a similar impact and also did fairly well in the tournament as well as Chile. I want to make sure I don't forget anyone here.
And then as we've just mentioned, the additional headwind was also the way that the calendar played out in April visavishe previous year because of Easter vacation holidays. So we had a certain level of limited tailwinds on the front end of the quarter and the back end of the quarter.
Okay. So let me ask you this way, is that going into the World Cup, overall local currency growth was 66%. Going into the World Cup, was it can you give us what the growth rate was for those or just a rough number? Was it 76%? Was it 76%?
Was it the 4% higher? It obviously was a must have been a higher number than 66%, correct?
Yes. So again, I don't know the number off the top of my head. What I do know is April was somewhat lower because of the calendar. May was a month where the business picked up and was probably somewhat above that, so closer to 70. And then again, somewhat slowed down by the World Cup for June.
The impact isn't going to be significant June. You're going to have something hovering around the 70% mark.
Okay. That's helpful to get kind of a normalized growth rate. And then separately on the unit growth?
Yes. So the spread between units, which decelerated on a consolidated basis and then the business which delivered accelerating local currency revenues across pretty much most business units and countries. Couple of impacts there. First of all, the non marketplace business units performed well in the quarter. Payments had another strong quarter during Q2 after strength in Q1.
And then also the marketplace business did see improved better insertion fees, better insertion fees, improved adoption. There were some pricing elements. So that essentially explains why we have a business that's accelerating revenue in local currencies throughout all of the countries. So even when we parse out the more inflationary countries, we're seeing that same strength across the noninflationary countries as well as both marketplace monetization improved and the non marketplace businesses performed quite well.
Okay. That's helpful. Thank you and congrats.
Next question comes from Barbara Rosy from Goldman Sachs. Please go ahead.
Thank you. I have a question on Venezuela. What was the percentage of revenues in local currency that the company generate prior to May 16 and after May 16 when the currency went to from 11 to 50? Thank you.
Okay. So remember that this is a quarter where Venezuela is not full quarter accounted for at CCAD 2. The numbers in terms of reported are roughly from 16% a year ago. So Q2, 2013 Venezuela was 16% of the business. Q1, 2014 Venezuela in terms of percentage of revenues was 17%.
This quarter Venezuela was down to 12.5% in dollars. That should continue to go down as we move into the next quarter and the CCAD II rate applies for the full quarter.
Okay. I think I was not very clear on my question and I apologize for that. I would like to know in local currency, so assuming the believers, how much of the revenues the company generate in local currency prior to May 16 and after May 16? So in bolivir's, what was the distribution in local currency in Venezuela, not in the company? So I want to know about the country specifically.
Vera, I'm sorry. I'm not sure I'm understanding your question. You want to know in bolivars, what percentage of the Venezuelan business?
We can talk offline, but I would like what I would like to know, as you go in the full quarter of Q2, how much of the revenues were generated in the 1st part of the quarter just in Venezuela? So if you generate 100 believers, how much was before May 16 after May 16 of the 100 believers, assuming your revenues are only 100 believers?
Okay, great. So I think I got it. Vera, let me give you 3 directional numbers that hopefully will help you get to where you're trying to get at. The bolivars for April were roughly I'm going to give you a ballpark numbers were roughly $80,000,000 Bolivar revenues for May were roughly $110,000,000 dollars and for June, we're also roughly $110,000,000 So I'm rounding somewhat, but that gives you a sense of the cadence of Bolivar revenues for the 3 months in the quarter.
Okay. Thank you.
Thank you. And our next question comes from Ross Sandler from Deutsche Bank. Please go ahead.
Thanks guys. I just had a couple of questions. First was Pedro, could you help us you mentioned that you guys aren't doing the offline ad campaign. So I'm trying to reconcile the 27% year on year growth, which I realize is in dollars, so not quite apples to apples in sales and marketing with the 17% or 18% unit growth. Was advertising growing at a much slower rate than units or faster?
Can you just give us some color on how much advertising contributed to that sales and marketing growth? And then second question is just how does the pace of business in Brazil look now that we're fully clear of the World Cup, if you can give us some color there? And then last one, some of the bigger brick and mortar retailers in Brazil are getting a little bit more aggressive with marketplace strategies. So you view P2W and Novo Pointe to come as viable marketplace competitors or not?
Thanks. Great. So the first question is on what's happening with sales and marketing leverage essentially, if we could give a little bit more visibility into that. There are about 150 roughly basis points of margin contraction on the sales and marketing line. That is not mainly driven by customer acquisition.
We did not do TV as you point out. A lot of that money was reinvested online. What's driving some of that deleverage is essentially chargebacks, where last year quarter we had a very low number because of a one off. And also we've had a little bit more fraud loss provisions for chargebacks this quarter, both versus last year and versus previous quarter. And there's also been some increase in bad debt levels.
So it's not driven by increases in customer acquisition. That one's only slightly up. And then in terms of the competitive landscape, I think as we always say, the opportunity is huge. The Brazilian market has always been and will continue to be competitive. And if we continue to focus on our strategy, our plan, improving both buying and selling experience through our ecosystem, We think that the business will continue to grow for many, many years.
Yes, there are viable competitors. Our focus is primarily on what we need to do to continue to grow for as long as we can.
Okay. And last one was just unit growth, personal income, if
possible? Yes. I think probably for this quarter, we should wait until we actually report it.
Okay. Thanks guys.
Thank you. And our next question comes from Mark Miller from William Blair. Please go ahead.
Hi, good afternoon everyone. I'd like to get
a sense for how the assortment is changing with the mall initiative and the verticalization efforts. So I guess first off on the sales mix, can you give us a sense of how that's changed outside of consumer electronics? And is there a way to encapsulate the size of the assortment and how that changes? And how much of that is
Mark, can you just repeat the last part of the question? I got the first part.
Yes. The numbers sound impressive in terms of the number of large stores that you've on. I'm trying to understand how meaningful that is in terms of the selection you're offering to consumers. And I mean, opportunity?
Okay, great. So first of all, in terms of mix, we've continued to see a decline in the overall share coming from consumer electronics. It declined by roughly another slightly over 1%. So we are continuing to see the shift towards some of these newer categories and away from consumer electronics. And then in terms of how relevant it is right now, we're seeing really strong progress in terms of onboarding brands.
We're seeing improvements in the mall product, but there's still significant work to be done. This isn't a material convert, that gives us greater credibility to go speak to more brands and more brands that gives us greater credibility to go speak to more brands and more branded retailers. And hopefully, we'll continue to see good traction there, but it's still very early. So as a percentage of overall GMV coming from official stores that's still very low.
Okay. On the new user acquisition front, there was a nice jump in the quarter. Is that due to the efficiency of your marketing or particularly on mobile or what caused the jump this period? Is there anything that's one off about that? Or do you anticipate a continued acceleration of
new users?
Yes. So when we look at the cadence of additional new users for the quarter, it did accelerate versus Q1. We added about 4,700,000 new users. That's not very distinct to previous quarters. So it's in line with some quarters we've had in the past.
It's good to see that accelerating again versus a somewhat soft Q1. That is driven by improvements Q on Q in the efficiency of marketing spend. We're getting a lot better with mobile registration and mobile integration. So we're converting mobile traffic into better registrations. But I wouldn't necessarily say that it's a huge difference to certain quarters we've delivered in the past.
Okay. Final question for me on acquisition opportunities you're looking at. Can you just highlight what your criteria are for acquisitions? And the fact that you're doing this now, does this suggest that we could see something in the near term? Or is this just really to give you flexibility further out?
Thanks.
One added point on the registered user number that's also relevant is that some of that increase is also driven by the acquisition of Portale Mobiliario. So that did bring in some additional users. We're still seeing efficiencies in terms of the mobile and marketing acquisition, but some of that was also non organic from the Portali Mobile Audio acquisition. In terms of use of proceeds from the raise, I think we've been pretty consistent in saying that this was driven more by market timing and market conditions and a long term vision that as the ecosystem in the region continues to grow, interesting M and A opportunities will come up. And the added cash gives us the flexibility to be able to move quickly when the opportunity arises, but not necessarily anything that we have in the pipeline right now nor are there any letters of intent outstanding.
Thanks. Nice results.
We'll come from Marcelo Casantos from JPMorgan. Please go ahead.
Hi, good afternoon. Thanks for taking the question. If you could you mentioned in the prepared remarks that the non marketplace business performed particularly well in most geographies. If you could provide an update on the classifieds classifieds front. My understanding is that you pointed out that the financial revenues were particularly good.
But what about classifieds? Was there an improvement from the previous quarters? And what's the outlook here? Thank you.
Yes. So the Classifieds business, which is a business that we continue to be very long term positive about over the previous quarters had seen a slowdown in growth rates. We did see some acceleration there again. The classifieds marketplace definitely picked up its local currency year on year growth. Again, that is partially driven by non organic growth from the acquisition.
If we were to look at it organically, it would have been growing more in line with what we saw in the Q1. So part of that strength also comes from the Portale Mobineria acquisition, which definitely helped the classifieds business.
Okay. And second question, you mentioned that there were some pricing changes that helped the result. Where did you increase take rates in the countries like increase some fees in the countries? If you could give more information on that would be great.
So towards the end of the quarter, so June, there were some increases in the commissions that we charge in some of the countries. There was also some increasing to the caps that we place on final value fees per item. So there were some pricing events in more than one country, primarily in June. Additionally monetization improved and additionally monetization also improved not from pricing, but from improvements in adoption of placement fees and improvements in the overall monetization of the marketplace platform.
Okay, great. Thank you.
Next question will come from Chad Bartley from Pacific Crest. Please go ahead.
Great. Thank you. So two questions. Just trying to better understand the strength in the quarter. First, you highlighted many different drivers and initiatives, but was there one in particular that stood out that really accounted for a disproportionate amount of the growth in the quarter?
And then second, in general, was there something fundamental or structural that changed in the business that drove the inflection and the acceleration that we saw?
Thanks.
Yes. So let me start with the second question. I wouldn't say there have been any structural changes quarter on quarter or any step function changes in the e commerce dynamic. I think as we've always said, we are innovating on a lot of fronts across the platform. Shipping, as we gave some data, really showed tremendous growth in adoption during the quarter.
If you think about it, we're exiting the quarter in Brazil, doing 25 percent of our sold units through the Mercado imbios platform. That number was much closer to 0 a year ago. So great traction there. That overall drives better purchasing, purchasing of higher more expensive items. That's one of the drivers that's helping monetization across the platform, but there are also many others.
And then in terms of the non marketplace, I'd say there's no structural change there either. We have continued to see 2 quarters where the payments business has accelerated consecutively after being somewhat soft in the back half of last year. It improved in Q1 and improved once again in the second quarter, both on platform, but also off platform. And so that's probably been the most significant driver within the non marketplace category of improved financial results has been MercadoPago.
And then could I ask another question then? Thank you. Just real quick, sorry if I missed this. Did you disclose the revenue contribution from the acquisition or what organic growth was or anything to help us on that?
Yes. So we the revenue contribution per quarter of the classified business is roughly $3,000,000 of the acquisition of the acquired company.
Okay. So $3,000,000 was the contribution in the quarter and it's going to be fairly steady
at that level?
Well, we'd hope to see that growing, but this quarter was about $3,000,000 Great.
Thank you,
Pedro.
Okay, great. So we were hoping that someone on the service provider side would close the quarter the call, but I think we don't have any other questions. So thanks
Ladies and gentlemen, this does conclude today's program. You may all disconnect. Everyone have a great day.