Ariel Szarfsztejn: Hi, Neha. This is Ariel. So 1P grew 58% year-over-year on a consolidated basis. If you were to look at this by country, Brazil actually grew considerably more than this. So the way we think about it is that 1P remains a strategic priority for us. We see this as a key lever to compete and gain market share in certain categories, consumer electronics being one of the clearest probably examples of that. We are very happy with the transformation of our 1P business over the last 12 months. We’ve had major improvements in our ability to manage pricing, promotions, stocks with the help of technology. We have also seen significant improvements in the way we connect and relate with suppliers and the way we negotiate with them. We think that all these progress are structural gains that will put the business on strong footing for long-term growth and market share gains. So we remain optimistic and keep investing behind that business.
Osvaldo Gimenez: Neha, and with regards to NPLs in Mexico, let me split that in two. On the merchant side, NPLs have remained very flat. The spreads are very healthy. So very good results. And we have been able to increase origination. And then on the consumer side, actually, they have increased a little bit, but by design. What happened is our spreads are very healthy we decided to take a little bit more risk and to increase the amount of origination, and that usually comes with slightly higher NPLs. But those have been priced in, in the rates we are offering. So spreads continue to be super healthy in Mexico. And that was part of the strategy, to grow faster, even though NPLs may increase, it’s priced in already.
Neha Agarwala: Perfect. If I can follow up on the 1P. Could you give us some numbers regarding the penetration as a percentage of GMV, where it was at the end of last year where it is now currently, just to get an understanding of the pace of growth? Thank you so much. .
Osvaldo Gimenez: Yes. So penetration keeps improving, increasing, particularly in Brazil, we’re in the low or mid-single digits, around 3% or 4% penetration. Again, we are extremely happy with the progress that we’ve made so far, and we’ll keep investing in growing the business, while continue also improving our profitability, which has been the case this quarter.
Operator: Stand by for our next question. And it comes from João Soares with Citi. João, your line is open. Please go ahead.
João Soares: Thank you. Hi, everybody. I have two questions here. One, the first one, I just wanted to hear a little bit about Black Friday preparations. We’ve been hearing a lot of news how excited the company is, and maybe talk a little bit about any expectations in terms of the winning categories here. So any granularity in terms of our expectations? And the second question is talking a little bit about the 1P, just to follow up on that. In regards to profitability, how that — you talked about in the press release about improving profitability. So just wanted to hear a little bit about where we are right now and where do you think we could be? I know the company doesn’t guide, but any qualitative message on this would be appreciated. Thank you.
Ariel Szarfsztejn: Yes. Thanks, João. This is Ariel. So Black Friday penetration keeps us busy for sure. We are extremely excited with the way our company has been performing, and we think and are expecting to have a great big season. All of our teams, commercial, marketing, shipping, they are all preparing the work has to continue with the inertia that we had this quarter and this year and having a great event, both in Black Friday, Christmas, et cetera. We know this is a relevant moment for our consumers, and we want to be there satisfy their needs. Regarding profitability, as I was mentioning before, we see very strong profitability improvements, particularly in Brazil. I think we are getting smarter in the way we buy. So having better negotiations, which give us better terms.
We are getting better at managing inventory. So our days of stock are getting better and hence, our working capital as well. We are getting also smarter in the way we price the items we sell. And we are also working a lot in taxation efficiency, which is key to compete in Brazil. So again, we are moving and pulling all the levers as to make this a strategic and profitable business for the company. We are yet not there, but we’ll continue to be working in that direction.
João Soares: Perfect, Ariel. Thanks.
Operator: [Operator Instructions] Our next question, that comes from Deepak Mathivanan from Wolfe Research. Deepak, your line is open. Please go ahead.
Deepak Mathivanan: Great. Thank you so much. Hi, guys. A couple of questions. So first, can you give some additional color on the improved loyalty program? What are you seeing in the early days in terms of frequency, average spend compared to a non-member from the program. I know it’s in early stages, but any color there would be great. And then the second one, the Central Bank interest rate is coming down in Brazil consistently. We just saw another cut today. Can you remind us the implications of this to your business on profitability? I guess, I mean we can wait for the Q to see the financing revenues. But wondering if there is a way you can help us the benefits to EBIT from the dynamic in last few months. Thank you so much.
Ariel Szarfsztejn: Hi, Deepak, Ariel here. So we don’t disclose specific data on Melimise yet. But I would say, on the one hand, our old loyalty program, L6, already generated an increase in frequency and GMV per buyer whenever they decided to subscribe our program. We are seeing the same or an even better trend with the new subscribers who are joining our MELI Mas program and also with the existing subscribers who are getting used to the new benefits and the new value proposition of our program. So in general terms, we are excited with the engagement that we see in the platform. Again, too early to be seen. Communications has just started. Our product keeps evolving. So we have many, many things to continue working on as to make customers even more aware of all the benefits and the way they can interact with that program. So, excited, but I don’t know, hopefully, we’ll be able to share more details in the next call.
Osvaldo Gimenez: And with regards to interest rates coming down in Brazil. It tends to be good for us. for, I’d say, for several reasons. Mostly on the marketplace where interest rates are lower, we tend to see more transactions on those transactions where we charge our interest rate. And then for what we offer as [indiscernible] then the price tends to be — the cost tends to be lower for us, so profitability improves. And then on the fintech side, I would say it’s also positive but closer to neutral because many times what happens is competitive pressures make that we have to pass those savings to merchants. That has been the case when rates increase and will probably be the case as we decrease. So overall, it’s positive for us.
Operator: Our last question comes from [William Wang] with Susquehanna International. William, your line is open. Please go ahead.
Unidentified Analyst: Hi, guys. Thanks so much for squeezing me in here at the last minute. I just wanted to quickly ask on credit. So last quarter, I think there were comments about expanding lending into mid-risk segments, no higher risk segments just yet. So I just wanted to ask what were you seeing there? Were there any surprises or adjustments that you encountered?
