Welcome to MercadoLibre’s Q1 2008 earnings conference call. (Operator Instructions) At this time, I would like to turn the conference over to Pedro Arnt.

Welcome to MercadoLibre’s earnings release conference call for the quarter ended March 31, 2008. This conference call is also being broadcast over the Internet and is available through the Investor Relations section of our website. Before I hand the conference over to Marcos and Nicolas, I remind you that during today’s call, management may make forward-looking statements relating to such matters as continued growth prospects for the company, industry trends and product and technology initiatives. These statements are based on currently available information and our current assumptions, expectations and projections about future events. While we believe that our assumptions, expectations and projections are reasonable in view of the currently available information, you are cautioned not to place undue reliance on these forward-looking statements. Our actual results may differ materially from those discussed in this call for a variety of reasons, including those described in the forward-looking statements and risk factors sections of our 10-Q, 10-K and other filings with the Securities and Exchange Commission, which are also available on our Investor Relations website. With that, let me turn the call over to MercadoLibre’s CEO, Marcos Galperin.

I’d like to walk you through some of the highlights from the first quarter and then hand the call over to Nicolas, who will go into greater detail on our financial performance before we take your questions. Q1 of 2008 was another good quarter for MercadoLibre. Despite the fact that Easter fell during the first quarter of this year, we are off to a solid start to 2008. Our results continue to be driven by our very strong operational model and commitment to technical quality and reliability. Our market leadership position in Latin America as the number one online retail site in all of our major markets as ranked by comScore Media Metrix; the continued healthy expansion of Internet use and of broadband Internet access across the region; growth in consumer confidence and PC penetration rates among Latin America; generally strong growth throughout Latin American economies, including Brazil, which was recently granted investment grade status by Standard and Poor’s; and our long-term focus in our users, buyers, sellers and visitors: all these factors contributed to strong GMV and PCD growth. In addition, take rates continues to increase as our non-GMV related revenue streams, advertising and classifieds continue to grow very fast. For the first quarter, total net revenue was up 75% to $28.8 million over the first quarter last year, driven by strong performance from both our marketplace and payment businesses. We were also pleased that growth was solid across all countries in which we operate. Revenue for our marketplace business unit, which also includes classified and advertising, was $23.5 million, up 65% from the first quarter of 2007. This was led by solid growth in live listings, unique sellers, unique buyers and gross merchandise volume. In payment, revenue increased 137% to $5.4 million in the quarter. Generally MercadoPago continued…

Overall, Q1 was a very good quarter, in which we continued to deliver accelerating revenue growth. We achieved healthy gross margins and year-over-year economies of scale in our operating expenses, and therefore generated solid profitability. Specifically, net revenues grew 75% to $28.8 million. Gross profit margin was healthy at 79.1%. Income from operations was $6.5 million. Operating income margin expanded versus Q1 of last year to 22.7%, and net income was $2.1 million. Revenue growth was driven primarily by the addition of 1.6 million new confirmed registered users, bringing the total to 26.5 million, an acceleration to a 44% increase in marketplace gross merchandise volume to 450 million, an acceleration to a 96% increase in the total payment volume to $52 million, and an improvement in our consolidated take rates to 6.4% from 5.3% for Q1 of ‘07. You may recall that take rate is measured by revenues as a percentage of GMV. On a consolidated basis, the take rate has increased in part because payments have grown faster than the marketplace, that’s driving the average take rates upwards. In addition, we saw an increase in the marketplace segment take rate to 5.2% from 4.5% in Q1 last year, and an increase in the payment segment to 10.2% from 8.5% a year ago. The marketing take rate growth versus last year was driven primarily by upgrades to our sorting algorithm, changes in the pricing structure, and solid growth in classifieds and advertising. The payments take rate gains versus Q1 of ‘07 were driven mostly by the impact of 12 installments financing industrial. A 75% total year-over-year revenue growth in Q1 of 2008 represented a continued acceleration for the fifth quarter in a row. As the growth rate in Q4 of last year had been 74%, in Q3 72%, in Q2…

Analyst for Imran Khan – JP Morgan: On ad revenue, what was the ad revenue growth rate for the quarter, and are you seeing any improvements in conversions of listings with the roll out of Pago 3.0?

Yes, let me first take the ad revenue question. Advertising revenues is part of our marketplace segment. We do not break that down. At the time of the IPO, we were producing specific numbers for advertising. At that time it was less than 1% of our revenues, but we can say that it has been growing faster than the rest of the marketplace segment, but we are not breaking down specifically the growth rate for that.

With respect to MercadoPago, we launched it in Argentina, which is the first time we launched it in a country that has the prior version of MercadoPago. The initial results are good, but it’s very early to draw conclusions. It’s a new product, it’s a beta product, I would say. We are working in fixing different bugs and to roll it out to the rest of the countries where we operate throughout the year.

Your next question comes from Bob Ford - Merrill Lynch.

Marcos, on Pago, I think I can get a sense for how power sellers are responding, but I’m curious as to how consumers are responding to the switch in the version.

As we were saying, initial results are good. We have the new version that buyers do not have to pay for using it, so obviously, good results from buyers in that sense. Now sellers have to pay for the cost. I think they understand the value of this. So, as I was saying, early, it’s a new product, it’s a beta product, but we believe it’s going to be fantastic for MercadoLibre in the medium-term and long-term, and we look forward to rolling it out to other markets.

And at these levels right now, do you think acceptance rates have stabilized among some of your power sellers, or are they still pushing back a little bit?

No, I think they have stabilized. Obviously, we have lots of leverage to drive adoption of MercadoPago amongst our power sellers and our sellers in general, particularly as we include, operate MercadoPago as one of the relevant items in our sorting algorithm. We are not doing that yet because, as we were saying, we want to make sure we have the product working in the right way before we start promoting it aggressively amongst our sellers.

Nico, maybe you can address, the full-year effective tax rate, at least your expectations, because it sounds like, when it comes to the [year 2], that something that’s not going to change, right?

Yes. As we said, the tax rate in Q1 was affected by the impact of some extraordinary expenses related to Tu Carro, plus some other U.S. based expenses which are not deductible. In addition to that, we have an impact on this [year 2 tax] in Mexico and from some ForEx losses in Venezuela that in the past, we could deduct, but not any more. So, figure, as we go forward, we estimate that the tax line in the P&L, as a percentage of pre-tax income, should be lower. Going forward in Q1, the tax rate in most of the countries where we operate is around 35% who are basically currently analyzing the impact of some of these new taxes and some of these new effects, and some of these expenses that are not tax deductible, and we will be re-evaluating our tax planning as a result of our current analysis. So that’s it basically.

But is it fair to say that, lower than the first quarter, but perhaps higher than the effective tax rate that we saw last year, which was around 33%, 32.8%, something like that?

We’re currently re-evaluating our tax planning as a result of some of these new indications and some of these new taxes. So, probably we can be more specific down the road once we have a clearer picture.

Can you give us a sense of what percentage of GMV right now is getting done on installments in Brazil?

So a fraction of our GMV is being paid through MercadoPago. If you look at our consolidated numbers, it’s roughly between 12% and 15%, I believe. And the majority of those payments in Brazil are being done through installments.

Q1, it was close to 12% penetration. TPV divided by GMV Q1 overall.

Your next question comes from Steve Weinstein - Pacific Crest.

When I look at the geographic breakdown you provide in the release, can you help us understand how the ad revenue would be allocated across the segments, is it reflective of the overall revenue mix of the company, or is it more weighted towards certain geographies now? Just quick scan the numbers it does look like Mexico is a lower-margin business for you relative to the other geographies. I’m wondering if you could just talk about what those factors are today and whether those are near term or for longer-term you think those could be issues?

As we said before we don’t break that down but there is no reason why it shouldn’t follow the same patterns as revenues in general. So, our view of this is that it should be very, very similar in terms of how revenues break down overall. In terms of Mexico, it’s somewhere between Brazil that has the advantages of scale and therefore margins are better there and Argentina that has about the same size of Mexico, but has a lower cost structure in general. Costs in Argentina are lower than in Mexico, labor costs in particular. So in some ways, Mexico is in the middle of a larger country and a country with a lower cost basis. As the business grows, we would love to see that it scales similarly to what we have seen in Brazil, and eventually, all detail will be converging to what we have in Brazil.

Your next question comes from Ricardo Fernandez - Banco Itau.

Looking at GMV, it grew a little bit shy of 44% year-over-year in U.S. dollar terms, which, if you assume, the breakdown for Brazil would be some 15% less that in local currency, which is not as good as probably the market leader in, we’ll call it, e-retail. The question I have then is are you noticing a, we’ll call it, a slow-up in terms of transactions in local currencies for whatever reason, or is this completely in line with your numbers?

With respect to our growth rate in Brazil, revenues grew 54% year-on-year, and GMV overall grew 44%. We were saying we had overall 3 percentage points quarter-over-quarter growth due to currency. So, I would say, overall, we are satisfied with our growth. Local currency, average selling prices have increased everywhere. And so overall, we are very satisfied with our growth rate this quarter everywhere, and obviously Brazil is a very large part of our business and is the key driver to our overall growth rate.

ASPs have grown in part due to currency, but also and importantly, as Marcos was saying, we saw this in every country, as users have become more comfortable over time using the Internet, buying over the Internet. They have shifted to higher ticket items. And also in our case MercadoPago has grown in penetration. The MercadoPago ASP is higher than the non-MercadoPago ASP, so that has also driven prices for us in general.

The question is on general merchandising volume in looking at it more like; we call it a retailer, although you’re not. In my opinion, it seems to me that you’re beginning to fall behind in terms of total merchandise moved on your website versus the B2W websites. And even perhaps some of the other ones like Sativa, which was much smaller, but they’re seeing much faster, RAYI growth rates. I just wonder if this is something that you expected or is it something like you’re trying to improve, just quick comment on that.

Overall, we focus on our growth rates. In general, large retailers, medium retailers and small retailers we view them as clients, not as competitors. What we do is put together buyers and sellers within our platform, or, increasingly, outside of our platform, as a marketplace, not as a retailer. And therefore what we do is we focus on our growth rates. We are satisfied with our growth rates everywhere. We’re satisfied with our growth rates in Brazil. We are as a marketplace by far the site with the largest traction and visitors and people coming over to buy. And, we will continue to focus on our buyers, our sellers, our visitors, and in trying to help all of them succeed doing e-commerce, these include the large retailers in Brazil and everywhere in Latin America.

Typically, when you look at the revenues from retailers, they include financing a business in there. In our case, our payments business, our payments revenues, which is largely driven by Brazil, it’s segmented and it’s showing separately that, as we said, have grown 137% year-over-year in Q1 ‘08.

Your next question comes from Tim Boyd - American Technology.

Could you comment at all on the breakdown, your other country segment of the marketplace revenue the pretty big acceleration in year-over-year growth I don’t know if you can give us any color on which countries that are growing the fastest? And as a second question, if you could comment at all about the progress with rolling out MercadoPago 3.0 in Brazil, can you give us a conservative estimate of when you think that will be complete?

Yes, the others segment is broken down into some larger countries for us, such as Venezuela, Colombia, Chile, and then a bunch of medium-sized countries, and then some other operations that we launched later on in Central America and the Caribbean in which we still don’t even charge. So, the service there is offered for free, and we see that going forward as an additional opportunity for portfolio growth here. So these are mostly countries that are smaller and less matured relative to Brazil, Mexico or Argentina. So, we expect there to see a stronger growth and also there we don’t have a full pricing spectrum even in some of the other countries and we have some more pricing opportunities so it’s also part of the equation.

Is it safe to say that the larger of these less mature countries are contributing the most growth at this point?

Yes. I think that’s fair to say that.

It’s just on Pago 3.0 and rolling it out in Brazil. Can you just give us just a conservative, an estimate that you feel comfortable with in terms of when you believe that will be complete?

Yes, we want to complete the process in Argentina. The expectation is ‘08. But we don’t have a specific day that we can communicate at this point.

Your next question comes from Stephen Ju - Royal Bank of Canada.

I am looking at the number of successful items sold and it seems to be decelerating, but the average ticket is coming up to compensate and drive GMV accelerations. So can you give us some more color in terms of what’s driving this? Is it a shift of consumer behavior, or is seller adoption in, perhaps, the lower ticket non-consumer electronics categories a bit slower than you would have expected?

So, successful items have been decelerating during ‘07, we believe largely as a consequence of the new sorting algorithm we introduced during Q1 of ‘07. That vanished those transactions, those successful items that were not successfully being converted into final value fees being paid. Our sellers learned and modified their behavior throughout the year. We believe this had an impact in decelerating successful items and it didn’t have a similar impact in revenues. In Q1 of ‘08, as expected, this effect started to disappear, and the growth rate of successful items stabilized relative to Q4. We would expect the growth of successful items going forward to resemble the growth of broadband and e-commerce growth in the region.

Your next question comes from Vick Kumar - South Coast Partners.

I just wanted to get a better sense for what drove the marketplace take rate and specifically, were there changes made in pricing or sorting algorithms in Q1 of this year versus Q4 ‘07?

We did significant changes throughout Q1 of last year. So we have seen all of last year the effect and some of the effect in Q1 of this year and that’s the largest chunk of that project. But we have also been doing some upgrades as we went along. We have also been doing some recalibrations in our pricing structures throughout last year and we continued doing that in Q1 of this year. In Q1 of ‘08, we had some marginal price increases. And on top of that, classifieds and advertising have been growing faster than the core marketplace and those also drove the take rate expansion in Q1 of this year versus Q1 of last year.

Probably the change in pricing, the direction where we’re going is lowering the fixed cost, that is insertion fees, and increasing the variable cost, that is the costs that are tied to a successful transaction.

But what drove the quarter-over-quarter increase from Q4 ‘07 to Q1, since most of those changes are already implemented?

It’s some recalibration, as we said, in prices, and price increases, although marginal, in Q1 of this year and a strong performance in classifieds and advertising even relative to before.

Your last question comes from Peter Lyons - Oscar Gruss.

If you could address the impact of the removal of the CPMS tax in Brazil, how that affects any of these transactions? How it affects your costs? And also, if you could give me a sense on the currency effect for your operating expenses? You mentioned with regards to the revenues. I’m curious, in general terms, what you saw as the effect on your OpEx.

Yes, on the removal of the CPMS tax, there was an increase in another tax, which, I think it’s the IOF, and both effects compensated other, basically. And so there hasn’t been a significant impact one way or the other.

You mentioned in your opening remarks about the impact on revenues from currency fluctuations. If you could address the same type of impact on OpEx due to currency fluctuation?

It was approximately two percentage points more expensive in Q4 relative to if you use the exchange rate of Q4 of last year.

So 2% more expensive quarter-over-quarter?

Yes. And when we talked about revenues, we were also doing the same calculation, Q1 ‘08 revenues using the Q4 ‘07 exchange rates.

Also, in general terms, do you notice a seasonality effect in the first quarter, particularly in Brazil, things might slow down or how do you see any impact from seasonality?

Yes, we have quite a strong negative seasonality in Q1. It’s the summer in the Southern Hemisphere. So that affects Brazil mostly, but also some of our other operations. We also have Carnival in Brazil in February that takes basically one week where business is very soft. So normally, you will see that Q1 is our softest quarter and Q4 is our strongest quarter. Particularly, this year Easter, which is a softer week for us, fell in Q1 and last year it had fell in Q2. So that also affected our year-over-year comparisons this year.

And it appears there are no further questions at this time.

Once again, thank you everyone for attending and we hope to hear from you again in next quarter’s release. Thank you very much.