Good day and welcome to the Mercadolibre's second quarter 2008 earnings results conference call. Today's conference is being recorded. And at this time I would like to turn the conference over Mr. Pedro Arnt. Please go ahead sir.

Welcome everyone to Mercadolibre's earning release conference call for the quarter ended June 30th, 2008. The company management presenting today are Marcos Galperin, Chief Executive Officer and Nicolas Szekasy, Chief Financial Officer. This conference call is also being broadcast over the Internet and is available through the investor relations section of our Web site. Before hand over the conference over to Marcos and Nicolas, allow me to remind you that during the course of this conference call we will discuss some non-GAAP measures. Reconciliation of those measures to the nearest comparable GAAP measures can be found in our second quarter 2008 earnings press release available from our investor Relations Web site. In addition, 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 factor sections of our 10Q, 10K and other filings with the Securities & Exchange Commission which are also available on our Investor Relations Web site. Now, let me hand the floor over to Marcos.

Good afternoon. And thank you to all who have joined us today for this call. Over the course of the next few minutes, I'd like to walk you through some of the highlights from the second quarter and then hand the call over to Nicolas who will speak in greater detail about our financial performance. After that we will both be available for your questions. Let me start out by noting that we are more than satisfied with the results of our second quarter as we continued our strong positive momentum and bolster our market leadership position as a number online retail side in Latin America. Moreover, we are very pleased with the accelerating growth rates that our business delivered during the quarter that just ended. These rates are a result of our unwavering commitment to maintaining and it has been very high quality platform for our growing user base. Further, we continue to benefit from favorable market trends, namely, the rapid expansion of internet use, broadband internet access and PC penetration in Latin America. These factors combined with our strong operational model resulted in continued growth in gross merchandize volume and total payment volume as well as increased take rate and rapid growth in Advertising and Classified. For the second quarter total net revenue was up 81.7% to $34.5 million over the same quarter last year, driven by strong performance from both our Marketplaces and Payments businesses. Revenue for our Marketplace segment, which also includes classified and advertising, were $28.3 million, up 76% from the second quarter of 2007. This was led by solid growth in live listings, unique sellers, unique buyers, gross merchandise volume and ad sales. In Payments, revenue increased 113.4% to $6.2 million in the quarter. Continued increases in listing share, buyer adoption, and the benefits…

Thanks, Marcos. I would like to take the rest of this call before taking questions to go into more detail on our financial performance. Overall Q2 was a very good quarter in which we generated accelerating revenue growth, achieved healthy gross margins and delivered year-over-year economies of scale in our operating expenses, all of which resulted in solid bottom line growth. Specifically, net revenues grew 82% to $34.5 million. Gross profit margin was healthy at 80%, slightly above Q2 last year. Income from operations was $8.1 million, operating income margin 23.6%, and net income was $2.9 million. As Marcos mentioned earlier on during the call our results were impacted by $1.5 million in compensation expenses related to our acquisition of TuCarro. Excluding this compensation expense, income from operations was $9.7 million which represented a growth rate of 102% versus Q2 of '07, operating income margin was 28.1% and net income was 4.5 million resulting in non-GAAP EPS of $0.10 per diluted share. Revenue growth was driven primarily by the addition of 1.6 million new confirmed registered users bringing the total to 28.1 million users of Mercadolibre. An acceleration of growth yielding a 50% increase in Marketplace gross merchandise volumes to $515.5 million, and acceleration of growth yielding a 116% increase in the total Payment volume to $66.8 million, and an improvement in our consolidated take rate to 6.7% from 5.5% for Q2 of '07. As always we remind you that the take rate is a measured revenue as a percentage of GMV. On a consolidated basis, the take rate has increased in part because payments have grown faster than the marketplace, delivering additional revenues over GMC. In addition, we saw an increase in the Marketplace segment take rate to 5.5% from 4.7% in Q2 last year, offsetting the slight decrease…

(Operator instructions) And we'll go first to Imran Khan at JP Morgan.

Good morning. Led Polenshe – JP Morgan: Yes. Hi. This is Led Polenshe [ph] calling in for Imran who is traveling. Thank you very much for taking our question. One question is it seems like we saw acceleration both in GMV and TPV growth in the second quarter. And I was wondering if you could talk about what the key drivers of that were and whether you think these factors are sustainable or if there is anything that was more of a one-time nature? And then my second question is if you could give any data points about how the rollout of the new version of Mercado Pago has gone. You know, has it had any impact on TPV or an auction metric? Thank you very much.

Hi. The reason was based on the increase in the growth rate of the successful items or number of transactions that we process. The GMV grew off of that, acceleration in successful item. We also are seeing and have been seeing for sometime an increase in average selling prices. As users become more used to trading online, and therefore, are willing to purchase more expensive item. Also, a penetration of Mercado Pago, that is typically used for higher ASP transaction growth. We also see an increase in ASP. And finally, currency appreciations have also helped in U.S. dollar GMV. We have success for sometimes, e-commerce and broadband, in general, are growing at a 30% to 50% rate across the region and thus rate of growth that we expect our core business to continue growing for the next several years.

(Operator instructions) And we will go to Robert Ford with Merrill Lynch. Robert Ford – Merrill Lynch: Hey, good afternoon, everybody. I also noticed that there seem to be a big ramp up in classified. And I was wondering if you can give us an example of what you are doing to drive – to drive gains there?

Hi, Bob. Yes. Classified is growing very nicely for us. In our core marketplace, we launched our new platform for motors, sometime ago, it’s driving excellent results. Listings have been growing very nicely. Services has also grown very nicely for us across all the various platforms. We continue to focus more than what we had done in the past in driving dealers to our platform. So, overall, I think our core product offering and the marketing activities that we are doing are providing excellent results. Obviously, in addition to that, TuCarro acquisition has been a very good acquisition for us. The integration is working very well. We are combining their offline marketing knowledge and their brand, their knowledge and relationship with dealers in Columbia, and Venezuela with our online marketing skills and our technology platform skills and that combination seems to be working very well. Also, culturally, both companies are – have a lot in common. They are also e-commerce pioneer in the region. So we are very happy with the acquisition of which initial results we are seeing there. Robert Ford – Merrill Lynch: Thank you. And then lastly I had a question with respect to the foreign exchange losses, Nicole touched on, Venezuela and (inaudible) the market. But I was curious given the outlook for Venezuela, and the difficulty in repatriating profitability, is this the kind of level that we should look for in the second half of the year as well, Nicole?

In terms of the ForEx loss line which was around $2 million this quarter, approximately half of that was the result of transfers of funds outside of Venezuela, and the other half was the result of cash balances that other subsidiaries that are present in Argentina, have in U.S. dollars, and as a result of the weakening of the U.S. dollar, we had to accrue a loss for those cash reserves in Q2. We had similar impact in the last couple of quarters, but not as material as this one. This is the result of our treasury policy that we have had for many, many years of transferring all of the excess cash balances that we have in the subsidiaries, convert them into U.S. dollars and transfer them to the U.S. and given that later or the latest developments of the U.S. dollar relative to other currencies has not paid [ph] as well. Robert Ford – Merrill Lynch: Great. Thank you very much.

And we'll go next to Steve Weinstein of Pacific Crest. Steve Weinstein – Pacific Crest: Great. Thank you very much for taking my question. Just a couple things (inaudible) understand this little better. So you had some acceleration in GMV. Can you say (inaudible) – what were the impacts of currency on that? Did it still accelerate on a currency control basis? Also was there any other factor like any particular market or anything that you did that would drive that acceleration? You know, how should we think about that sustainable? And then also the difference between Marketplace revenue growth that GMV is, is still pretty substantial. Can you help us understand how much more that is ad revenues improving versus you changing your fee structure or the growth in the classified? Just understand those components a little bit better and help us understand the sustainability of that trend.

To the first question, importantly, successful license accelerated this quarter. So that was a positive on the GMV acceleration as well. Specifically, the impact from ForEx was 11% of incremental GMV relative to what it would have been if the exchange rates had been the same as of Q2 of '07. And the impact for revenues was exactly at the same as for GMV, 11% higher. In terms of the other question what is creating the gap between GMV growth and Marketplace growth. It's a combination of factors. Clearly, the growth in advertising revenues and classified is part of that. And also, some of the reshufflings in our pricing structure would be a component. So it's a mixture of several little factors. Steve Weinstein – Pacific Crest: Thank you.

And our next question comes from Steven Dew with RBC Capital Markets. Steven Dew – RBC Capital Markets: Good afternoon, guys. Can you go over what kind of fee structure changes you have relative to the Marketplaces and what direction you will take that in the future? Any specifically around insertion fee and a final value fees. And second, what is your CapEx outlook now for the balance of the year? Thanks.

Yes. In terms of operating what we have been doing on an ongoing basis has been recalibrating what we had and trying to shift more of our revenue base towards final value fees unless coming from insertion fees. So that is something that we have been doing on a constant basis. And that has resulted in a very significant increase of our total listings. So that's with respect to the revenues. With respect to the CapEx, the expectation that we have is that it should be less or around 5% of revenues and that has not changed. Steven Dew – RBC Capital Markets: As you saw the listings probably acceleration from the fee structure changing, is it safe to assume the conversion rates went down a little bit?

Yes. Conversion rates went down a bit. Yes.

Again, that's not really the way that we look at, at this necessarily. If through free insertions are very low, insertions, we can bring back to the platform significant amount of incremental listings that generate incremental GMV and incremental revenues, we are not so focused on the conversion there. We believe that through our sorting algorithm, we can still provide a great buyer experience for our users, amidst a much larger supply and a much larger inventory offering.

To complement that, historically, we have been a very strong in the fixed price listings under newly things – new items being listed. So, we have a high component of multiple item listings, retailers use our platform, and therefore, conversion rate is not a variable that we truck that closely. Steven Dew – RBC Capital Markets: And while we are on the sort ranking algorithm, I remember you guys were talking about maybe there is going to advertising component, I guess, key word search, type of advertising of components of that, is that still in the book? Is that still in the work there, any sort of update you can give us there?

Yes. Historically, we have been very successful in putting buyers and sellers together. On the seller side, particularly, small and medium size sellers that is, small retailers that is our platform. But we haven't been that successful at sustainably retaining large sellers on our platform as they typically like to sell from their own platform. But they are very interested on our traffic. We are the fourth largest destination as a site in Latin America and we are by far the largest e-commerce destination site in terms of traffic. So, we believe that there is a possibility for us to intelligently sell some of this traffic to large retailers in terms of advertising revenues. Steven Dew – RBC Capital Markets: Thank you. I will get back in the queue.

And we will go next to Bradovich [ph] at Stifel Nicolaus. Bradovich – Stifel Nicolaus: Hi, thank you. First, I just wanted to see if you could update us on, you had mentioned in the past, looking for an outside vendor to provide capital on the financing side of your business it doesn't seem like you've done at this point in time and I was wondering the progress there. And then separately, you mentioned this $1.1 million expense in the second half and I apologize you were cutting out when you were mentioning that, I'm wondering is that stock-based compensation non cash and if so, which lines it will flow through in income statement? Thanks.

Yes. In terms of the financing a partner, it is – what we are seeking is someone they can help us upgrade what we currently have and what we have had for the last several years since we launched at Mercado Pago to offer consumer financing, so, it's capital but also know-how and supporting in that area. We are working on that. This is something that is not (inaudible) to us, because we are working with the third parties and we are making progress, but there is nothing specific to announce at this time. And with respect to – the other question was on the TuCarro compensation cost or on the retention plan? Bradovich – Stifel Nicolaus: I'm sorry. I just I heard a $1.1 million expense to go through the second half.

Yes. So, basically, the board has recently approved a long-term compensation plan. $2.3 million overall. $2.5, we had some payable tax rate. It's going to be payable, 50% cash, 50% stock. It accrues – we invest over time. So for the first year divesting will be 17% payable next year. The accounting accrual however is going to be 46% this year. Bradovich – Stifel Nicolaus: And so half of that is cash, is a cash expense and operating expenses.

All of these will be an operating expense. 46% of this will be an operating expense in 2008. And 50% – of 17% of this will be cash expense next year for this specific plan that was approved for 2008. Bradovich – Stifel Nicolaus: Thanks.

And we will go next to Sandy Braun at Gilder Gagnon. Sandy Braun – Gilder Gagnon: Hi, thank you. I was just wondering if you could give us a little detail on your roll out of Mercado Pago 3.0 perhaps country by country, how is this implemented so far, the countries of habit, What's the usage is like, how the sellers feel about the cost, and if you could just top of that the schedule for countries that don't have it yet within that few quarters? Thanks.

So Mercado Pago 3.0 is available in Chile, Columbia and more recently in Argentina. Chile and Columbia were too smaller markets where we initially tested this version. Argentina is the first larger market where we rolled it out. And in Argentina, we have under much larger number of transactions we have encountered some instabilities in the back end and we have made a lot of progress in the last several months in facing this instabilities. The product is working well. It has been very well received by sellers and buyers, but we want to make very sure that it's up to the level where we wanted to be before rolling it out particularly to Brazil, where the 2.0 version is really driving. So, we continue with our plan to roll out Mercado Pago 3.0 to the remaining countries where we don't have it today. But we are not committing to any date. Sandy Braun – Gilder Gagnon: Can you talk about the potential impact for 3.0 in Brazil (inaudible) I heard talk about I imagine before that 2.0 is looking very well, and that one seems to be happy with that. Can you just talk about what the potential is for an increase with 3.0? Do you think it's necessary to improve the business there?

Absolutely. We are currently overall Mercado Pago has a penetration of roughly 13% of our gross merchandize volume. We believe this could be significantly higher with a version where the buyer doesn't have to pay an additional cost to use Mercado Pago. And we also believe there is a huge opportunity for an efficient and scalable and safe payment system outside of our platform. So we believe the opportunity is really big and we believe that Brazil that is by far the most sophisticated and advanced e-commerce market in the region is where the opportunities are biggest. Sandy Braun – Gilder Gagnon: And last, I believe this in the past perhaps you wouldn't to – you were going to introduce in Brazil during whether to be the Christmas season there can you just explain on that, is there are other times are you just absolutely will not roll it out?

We will not commit to any date. Sandy Braun – Gilder Gagnon: Thank you.

Thank you.

And we will take a follow-up from Steven Dew with RBC Capital Markets. Steven Dew – RBC Capital Markets: Hey, guys. Sorry if you run over this before, what tax rate should we be using for the balance of the year? And any changes to be a competitive landscape that should noted in any of your operating tax rate [ph]? Thanks.

Yes. For 2008, we expect blended tax rate above 40% for the full year. Steven Dew – RBC Capital Markets: For the Full year?

Yes.

In terms of the competitive landscape, nothing, we haven't noticed anything in particular. This is an evolving landscape, but we feel very comfortable with the progress we have been making and the position we currently have.

And there are no more questions at this time. I would like to turn the call back over to management for any additional or closing remarks.

So thank you to everyone who has attended this evening. We look forward to our next earnings call where we will once again share with you an update of our business. And I think with that we can wrap up.

Thank you. Bye-bye.

And that does conclude today's conference. We appreciate your participation and you may now disconnect.