Good day, and welcome to the MercadoLibre First Quarter Earnings Conference Call. [Operator instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to MercadoLibre’s management. Please go ahead.

Hello, everyone, and welcome to the MercadoLibre earnings conference call for the quarter ended March 31, 2012. My name is Alex de Aboitiz, and I am the Head of Investor Relations for Mercadolibre. Our senior manager presenting today is Pedro Arnt, Chief Financial Officer. Additionally, Marcos Galperín, Chief Executive Officer, and Osvaldo Gimenez, Senior Vice President of MercadoPago will be available during today’s Q&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 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 10-K and other filings with the Securities and Exchange Commission, which are available on our investor relations website. Now, let me turn the call over to Pedro.

Thank you, Alex, and hello, and welcome to everybody. Before I jump into a recap on the results of our most recent quarter, I’d like provide you with an update on our current efforts, as they relate to our ongoing strategy, and as new initiatives gain speed in our quickly evolving e-commerce market. A little under two years ago now we set out on an ambitious agenda that involved re-writing our entire platform architecture to make it more flexible, open, and adaptable to new technologies. We made this decision knowing that it was of strategic importance not only for the optimization of our existing business, but also to allow us to better respond to new challenges and opportunities that our ecosystem faces in the rapidly changing and evolving landscape we operate in. Today, as we re-cap how 2012 has started, it’s important that we point out that we are pleased with how we have been executing against the strategy we outlined. Our new world platform, as we have called it, already makes it easier for us to advance on the ambitious product and service roadmap we have set out, enabling parallel improvements and a faster pace of innovation across our different business units. Not only has this allowed us to pick up our pace of innovation, but it has also enabled us to start thinking ahead and making up for lost ground as we make our initial forays into mobile-commerce, social commerce, verticalization of our category offerings, expansion of our payments platforms and improvements in our customer service levels and more. This quarter and most of this year will be about continuing to build on the solid groundwork of our New World project, advancing on key improvements to the user experience across our marketplaces, payments, advertising and shops services. We…

[Operator Instructions] We have a question from the line of Steve Ju with Credit Suisse.

So as you think about some of your medium to longer term strategic initiatives, you called out mobile earlier, but I’m wondering if you can give us an update on your shipping and fulfillment offers? And I know it’s early days on mobile, but any sort of observations you can share with us in terms of transaction velocity or ASPs of the user base right now? Thank you.

Steve, this is Marcos. So with respect to our strategic initiatives, mobile, as Pedro mentioned in his prepared remarks, we’re making great progress during Q1, and also during Q2, we’re seeing accelerating growth both in transactions and in GMV, and we’re very pleased with the results, and we have a roadmap of continuous product improvement. So we’re very satisfied with the progress thus far, and expect to continue making progress in this front. With respect social also as Pedro mentioned, it’s an important strategic area where we’re making different experiments, particularly more recently in Q2 we have done some very interesting integration. In Argentina, where we’re seeing some very interesting metrics, but mostly in activity not as much in transactions, but we’re very happy with the initial results we’re getting there. And verticalization as Pedro mentioned, it’s also a key strategic area for us, we made some progress in Q1, which continues in Q2. And with respect to shipping, we continue to work strongly in this front, but still in the back-end, so nothing that we can show in the front-end. So we will be announcing this when we have concrete things to show in the front-end.

And any sort of color on whether user behavior on mobile, is there faster velocity in terms of transaction at a higher or lower ASPs, anything to that effect?

No, the type of ASPs is quite similar, maybe a little bit lower, but very, very similar.

And our next question is from the line of Gene Munster with Piper Jaffrey.

Maybe you could talk a little bit about, you mentioned new world earlier, and maybe one or two things you talked a minute ago about shipping, but one or two things that you think will be impactful, that we can really -- and investors can really wrap their head around. And maybe talk a little bit about when we might see that kind of in a mall [ph], I know you don’t want to really commit to a specific time, but is this first half of 2013, back half of 2013 or any sort of thoughts on that? And then second, Pedro, if you can just talk a little bit about just the GMV, your perspective, I know in your prepared remarks you did on GMV growth of 45%, I think from the Street it was a little bit higher, obviously you don’t give guidance, but how we should think about that number? Thanks.

All right. So, Gene, in terms of impact of new world initiatives, we tried to give some color, and Marcos just went over those, what we think are the most interesting long-term items that we’re working on. Obviously, some of those might take time to actually have significant impact on the P&L, but I think we believe strongly that, once they hit strive, they can be very significant; verticalization of categories mobile improvements in our customer service offering. And I think in terms of the more specific short-term stock, as we’ve always said, new world platform has allowed us to iterate on a much more constant and efficient rate on the overall platform. And so there are small tweaks that at times have bigger or smaller impact, hard to predict, but the pace of the innovation and the pace of work within the company I think is significantly more rapid than it was two years ago. I think also in the prepared remarks, we point out that there is a lot of work that’s now being done on the payments back-end, and hopefully we will emerge from that with a very, very solid payments product both in deeper integration on the marketplace, and in advancing on making payments through MercadoPago compulsory on the platform over the long run, but also in the off-platform business, but it does give most of the areas where we’re placing the most focus now. In terms of GMV growth, as we’ve said, we don’t issue guidance. I think what we’ve always said is the e-commerce market in the region seems to be growing depending on the market anywhere between the mid-20s to low-30s, in most of these markets our growth rate is above that. So I think we continue to be very satisfied with the fact that we believe we are still market share gainers, and that’s really what we strive for to continue the sustained rates of growth that are above the rate of growth of e-commerce market.

That’s good perspective. And just back to the new world, in terms of the timing, and I think you mentioned four initiatives there, and it’s kind of a continuation, so is this kind of a building momentum or could we see a point carrying the back half of 2013, where you would think that we could see some re-acceleration and some growth at that point as these initiatives are kind of well in place?

Again, I think being consistent with what we said all along, I think it’s important to understand that the comps gets progressively more difficult this year, given the phenomenal industrial results of the new world launch last year. We always have new initiatives that are rolling out, very difficult to be able to tell in advance what the impact of those are, so we’ll keep you posted as the year develops, but impossible to comment any specific type of number at this point.

And our next question is from the line of Mark Miller with William Blair.

Pedro, you called out with Pago, the initiatives being more focused on the long-term and more back-end in nature and less innovation on the consumer facing initiatives. Can you, I guess, walk us through the transition you see in this business, maybe through the rest of the year, is there going to be an acceleration in terms of customer facing initiatives? And then the downtime you experienced in March, you said it was fully fixed by April, was that by the end of the month, should we expect that there is still some slower revenues in Pago as a result this quarter or was that early in the quarter? Thanks. Osvaldo Giménez: Mark, this is Osvaldo. In terms of the initiatives discussed during most of Q1, where we worked on was, first on accelerating integration from [indiscernible]. And particularly regarding whether it’s related to the payment flow, so that users are able to pay totally in a new world platform, and we will complete that part of the migration during this quarter. And then, we also worked on the migration from an old gateway to a new world gateway. We already completed that migration, and by way we have some of the backlog generated by the end of February, and beginning of March, so we have already ironed out most of those. So we are happy that we’ll probably get in today. And finally, the last point is the migration in our [indiscernible] both scoring tools and CRM tools will be migrated to the Salesforce. Again there is a lot of -- generated most of the backlog by the end of February, beginning of March, that we will solve and the numbers we’re getting in April are better than before the migrations. And going forward, I’d say it’s struggling this quarter, but mostly after these migrations have concluded, I think next quarter, we’ll be focusing more on front-end improvement in order to improve the user experience, and we’re happy -- we [indiscernible] with the back-end.

And then unplanned downtime, you highlighted in March. Is that negative smaller than in the second quarter than it was in the first quarter? Osvaldo Giménez: Yes, yes. It was, the unplanned downtime was impact both on the front end, it was very short on the front-end, but also when we migrate to the CRM in the [indiscernible] faced some downtime in the back-end tools, which made the process of approving some payments slower than they usually are, but this is working fine today.

Okay. And my other question was on the 2.4 million, Pedro, that you highlighted in terms of the chargebacks, and could you just discuss what’s happening there with the fraud loss and to what extent do we anticipate higher cost to continue versus this being a one-time event?

The most important point to highlight there is that fraud losses on credit card transactions, the driver there is TPV, not revenue. So that’s an expense line that won't necessarily scale, because the underlying driver is our total payment volume, which is growing at a significantly faster pace than our revenue, fortunately. I think more importantly, we feel confident that our fraud models are improving and are adapting as they are intended to, and we should drive down the chargeback related to fraud loss as a percentage of TPV down going forward. Historically, they’ve been lower than where they are today, and we think that through continued execution, we can drive them to levels where they were at previously. So that should also improve the cost line that we expensed on chargebacks over the last two or three quarters.

And our next question is from the line of Marcelo Santos with JPMorgan.

I’ve 2 questions mostly related to Brazil. I wanted to know, what’s the impact that you have been seeing from the decline in the interest rates, in Brazil, you have competitively become more aggressive, do you think you lose competitiveness with the decline? And relates to that my second question, I wanted you to just comment a little bit on Brazilian growth, which have decelerated a bit in terms both revenues and item sold. Is this related to the interest rates or is there any specific thing you could mention here?

So I think, typically, we begin to get most of our development need out to Brazilian e-commerce around this time as some of the large retailers report their online numbers. The numbers we’ve saw yesterday from Nova indicate that we continue to grow at a faster pace than their online properties. Let's see what happens as we gather other data points. But similar to the answer we gave Gene, I think, although there was some deceleration the business continues to grow above market and at a rate that we are very comfortable with. In terms of financing, I think if anything reaching the overall financing environment from a competitive perspective become more rational over the last three, four quarters and I think that sustained throughout the first quarter. So I don’t think our level of competitiveness around the financing offer has necessarily disimproved over where it was a year ago, but if anything, it’s probably slightly better. The payments business, I think it was more impacted on a seasonal basis by the fact that generally consumers tend to buy a lot more on financing during the fourth quarter and by some of the migration operational issues that we mentioned in addition to currency headwinds. Osvaldo Giménez: On Pedro's comments, I mean we grew successful items in Brazil, 43% year-on-year and GMV local currency 38% year-on-year. We’re pretty pleased with those growth rates.

Thank you. This concludes the Q&A portion of today’s conference call. Thank you for your participation in the MercadoLibre first quarter earnings conference call. This does conclude the program, and you may now disconnect. Thank you and have a wonderful day.