Welcome, ladies and gentlemen to the MercadoLibre’s Second Quarter 2013 Earnings Conference Call. At this time, all participants are in a listen-only mode. (Operator Instructions) And as a reminder, this call is being recorded. I would now like to turn the conference over to Martin de Los Santos. Please go ahead.

Hello, everyone, and welcome to MercadoLibre earnings conference call for the quarter ended June 30, 2013. My name is Martin de Los Santos, and I am the Head of Investor Relations for MercadoLibre. Our senior management presenting today is Pedro Arnt, Chief Financial Officer. Additionally, Marcos Galperín, Chief Executive Officer 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 sections 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 our currently available information and our current assumptions, expectations, and projections about the 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 those 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-K 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 may discuss some non-GAAP measures. A reconciliation of those measures to the nearest comparable GAAP measures can be found in our second quarter 2013 earnings press release available on our Investor Relations website. Now, let me turn the call over to Pedro.

Thanks Martin. Good afternoon everyone, and as always thanks for joining us. I’d like to start today by providing an overview of the solid progress we made during the quarter resulting from a set of well-defined and executed initiatives along different aspects of our ecosystem. Marketplace sold item acceleration for the second consecutive quarter combined with the strong results across the board suggest that the current investment in the product cycle around these initiatives is returning positive results. Furthermore as these initiatives continue to come together, we are increasingly able to deliver what we have said is our primary objective a continuously improving trading experience for our users that consequently generates further growth for our business. I will update you on the specifics I have seen the most progress during the quarter. But first let’s take a look at some of our key metrics showing the results these initiatives are having on our business. During the second quarter 4.5 million new users registered on our site, growing our base of registered users 23% year-on-year. Items sold grew 27% reaching $20.1 million and we believe increasing our market share of the overall units shipped via e-commerce in Latin America. Our number of payment transactions grew 35% to $7.4 million. Our gross merchandised volume was $1.7 billion growing 33% and total payment volume reached $578 million growing 40% in U.S. dollars. Bear in mind that we achieved these U.S. dollar growth rates despite currency headwinds during the quarter. In local currencies gross merchandise volume grew 45% and total payments volume grew 54% both year-on-year in the second quarter. These results illustrate the vibrancy of the business driven by constant optimization on our part and the positive impact of secured trends that continue to favor us strongly. This combination has allowed us to…

Thank you. (Operator Instructions) And our first question in queue is from Jordan Rohan of Stifel Nicolaus. Your line is open. Jordan Rohan – Stifel Nicolaus: Such a nice quarter guys. I do have a question about the $3.6 million currency gain, you said it’s from holding U.S. dollars, but you report your earnings in U.S. dollars, could you remind me how this creates a gain when reported in U.S. dollars or perhaps what I might not be understanding about this? Thank you so much. Marcos Galperín: Hi, Jordan. So, essentially, the U.S. dollar holdings of our local subsidiaries generate gains in the local P&Ls that then get consolidated in the consolidated reported numbers. So, it’s the re-measurement that flows through the local P&Ls and then gets consolidated back into dollars. Jordan Rohan – Stifel Nicolaus: And that will be different than if you had held the currency at the corporate level. Marcos Galperín: That’s correct. So, if the currency is held that the corporate level, there is no dropdown to the local P&Ls before consolidating. Jordan Rohan – Stifel Nicolaus: Well, we should probably consider this a non-recurring one-time carrying in back it out from our estimates, right? Marcos Galperín: No, all of our local subsidiaries have U.S. assets whether because they haven’t paid dividends or they have assets that are U.S. dollar denominated. So, this actually happens on a quarterly basis. The distribution between U.S. dollar assets and local currency assets we try to manage in the most prudent way. So, we don’t hold local currencies on the balance sheet beyond what our local currency obligations are. So, all of our local subsidiaries have always had U.S. dollar reserves that generate gains when the dollar appreciates, but that also generates losses when the dollar depreciates. So, this can swing in either direction, but it’s definitely recurring. Jordan Rohan – Stifel Nicolaus: Okay, thank you very much. And I get most of that.

Thank you. Our next question in queue is from Ross Sandler of Deutsche Bank. Your line is open. Please go ahead. Ross Sandler – Deutsche Bank: Thanks guys. Couple of questions. Pedro, can you just give us some additional color around the unit growth acceleration, which categories and which regions are responsible for that acceleration? And then second question is I understand the rationale for the free cash flow being negative given the property purchases, but just from cash flow from operations, it isn’t really growing year-on-year despite obviously revenue growth and EBITDA growth. And it looks like it’s mostly from credit card receivables being more of a down drop this year. So, can you just give us a little color on what’s driving that? And then the last question sorry for being so longwinded here is there has been a lot of scrutiny publicly in the press around the financial reporting given the hyperinflation in the region, I know this is just par for the course, but if you were to report your 45% local currency GMV growth under the kind of everyday FX rates, what would that look like in the quarter? Thanks guys.

Okay, good. So, three questions, the first question units saw discoloration, I think we disclosed that one of the most positive data points on the queue was the strength of our Brazilian market inflation is obviously our largest business, and we just called out the Brazilian growth rate of 33% in units sold for the quarter. In terms of the other markets, the strength I would say across the board, we haven’t disclosed any of the other number and don’t do that, but in general, I would say, Brazil driving the acceleration, but no one is lagging behind significantly. So, that’s the first one. And probably the most significant metric and I’ll jump to your third question, because that’s the one that strips out a lot of these currency-related issues and average ticket-related issues. I think your question that was what’s the impact of inflation on the business? And I think anyone can give that number in back about fairly easily. You have the revenue growth per country in both local currency in U.S. dollars and you can adjust the lead inflationary countries for 20% to 30% inflation in Argentina and Venezuela, all the other countries are single-digit inflation so not as significant. Again, this has usually been the case. We run a commission based business. And so as cost of living in this countries escalate, and there is inflation we capture that immediately in the business model. In terms, I think you were referring also to parallel or illegal exchange rates, particularly in Venezuela, where the spread between the official rate and the parallel rate is most significant. That’s also an additional driver of inflation don’t have the number here, and what the alternative reporting would be simply, because that’s an illegal currency rate. I think important to stress…

Thank you. Our next question in queue is from Gene Munster of Piper Jaffray. Your line is open. Please go ahead. Gene Munster – Piper Jaffray: Congratulations. If you could talk a little bit about the back half of the year and some of the comps that get progressively easier, I know you don’t give guidance beyond this quarter, but how should we – is there any reason to think that, that shouldn’t make it easier for the business in the back half of the year? Does that have a measurable impact? And then second is if you could go through take rate, was the decrease due to a slowdown in smaller business lines including payments or class side or was it the fact that GMV accelerated? Thanks.

I’ll take the second question mainly because we don’t guide it. So, yes, it’s fact the comps get easier in the back half of the year. That’s probably the only comment we’ll make on that. In terms of take rate, first of all, yes, the acceleration in GMV which is the denominator and that equation always has an impact on take rate. Additionally, just to give some more color on that, as I mentioned we did see a slowdown in some of the marketplace revenue streams classified as primarily motors and real estate. They grow at a slower pace than GMV adding financing revenues from the consumer credit business. So, those two also drag down take rate, because they are running less than GMV. And then additionally, within the core marketplace, there is some country mix dislocation as countries with lower take rates have faster growth rate, then for example, Brazil which has the highest take rate. And additionally, we continue to see very strong success from our premium model, where we offer certain free listings to attract new sellers and then eventually up-sell to those sellers. As a consequence of that, free listings as a percentage of overall GMV has gone up and since we don’t immediately monetize those sales, because those listings are fully free and have no final value or insertion fees that also drove core take rate down somewhat in addition to the country mix shift. The great thing about those listings one is they have been instrumental in capturing additional sellers and additional selection to the site. So, despite being somewhat of a drag on short-term take rate, we are actually extremely pleased with that premium component that we have been adding to the business model. Gene Munster – Piper Jaffray: Great, thank you.

Thank you. Our next question in queue is from Marcelo Santos of JPMorgan. Marcelo Santos – JPMorgan: Good evening. I have a question about Brazil actually two. First, I’d like to just turn a little bit better the new items the change unique that you’re facing in Brazil, which you had declining revenues but you had increasing item growth or direct on the center – what kind items you’re attracting and how the mix is changing. But that’s quite remarkable because there was devaluation in the currency and even though this took place it looks like that average selling price declined. So, I want to understand a little bit more about that. And second is financing revenues what has been taking place why are they declining despite Pago remaining stronger? So, those are my two questions?

Great questions. So, the first one in terms of mix shift, we gave some color during the prepared comments. We are seeing extremely strong growth in some of the newer categories that we began to pursue over the last and I would say 12 months to 18 months. I called out that year then home and garden, auto parts, toys and games, apparel and fashion. Some of those even growing twice as fast as the average, those are lower ASP categories. So, that’s I think a significant part of the story as we become less and less dependent on consumer electronics that also helps us in moments of devaluation, because more and more of those categories are actually locally produced and don’t have underlying dollar costs. In terms of decline in ASP again it’s mainly driven by category mix into these new more ASP categories. But also in this what will serve as Italian to the financing business the higher ASP items within consumer electronics that are more dependent on financing and also decreased our overall share of sales. And so we are selling more in new categories and for this quarter at least also sold lower ASP items within the consumer electronics category. And then in terms of financing what we saw just to put in perspective was a slight deceleration, so there isn’t really much of a business trend to look at here. The takeaway declined driven by financing revenues is in the low-single digits. So, it’s not very significant. If anything I would say financing is mostly driven by our Brazilian business. And when you look at payment adoption it grew, but it grew less year-over-year than the previous quarter. And so that also generates less growth in GPV that’s available to cross sell the financing. But again significantly lower growth rates than GMV and I wouldn’t look into a trend around this issue. Marcelo Santos – JPMorgan: Okay, thank you very much.

Thank you. Our next question in queue is from Dan Su of Morningstar. Your line is open. Dan Su – Morgningstar: Good afternoon. Thanks for taking my questions. I have a couple of questions regarding the mobile business. First off, you mentioned just now that mobile accounts for about double digit percentage of GMV. Can you talk about the trends in mobile traffic growth and mobile conversion relative to your traditional PC traffic conversion? And the second question is could you talk about is there is any differences in terms of product categories being researched average purchase and the payment methods used on the mobile internet versus the traditional PC channel. And if you can talk across that major geographies Brazil, Argentina etcetera that will be very helpful? Thank you. Marcos Galperín: Hello, this is Marcos with respect to mobile as Pedro commented in the prepared remarks it continues to grow steadily quarter-after-quarter reaching 10% of our volume and higher percentage of traffic. Mobile it seems to complement desktop users, therefore we see incremental transactions coming from mobile during the weekends and after office hours. And with respect to average selling price typically mobile transactions have a higher average selling price than desktop transactions. And with respect to payment methods we have incorporated MercadoPago in this mobile check out in the countries where you could so far we are increasingly seeing increased usage of MercadoPago for settlement mechanism in those countries. Dan Su – Morgningstar: Thank you very much.

Thank you. Our next question in queue is from Chad Bartley of Pacific Crest. Your line is open. Chad Bartley – Pacific Crest: Hi, thanks very much. I apologize if I have missed some information on this but two questions. Can you give us any color or any sort of sense of the percent of listings that are free or maybe how that’s changed over the recent quarters. And then also in the past you’ve given us some information on non-marketplace revenue. I think you’ve broken that out as a percent of revenue and also how fast it’s grown, can you give us any information around Q2 trends?

Alright. So, prelisting just to recap this strategy here very quickly, essentially we allow users who are new users or who do not have large volumes to sell up to a limited number of listings in the fully free option as a way to acquire new users. So, the overall percentage is obviously kept in control by us. In terms of percentage of GMV this is still in the single digits, so it’s not significant, but it had certainly have been trending upwards for the last few quarters. As a percentage of overall listings its higher than that, so we’ve been able to capture more and more selection as a consequence of the free listings. Now because these listings by definition appear last on sorting algorithms, their conversions are obviously worse than any of the paid listing and that’s why they represent a larger portion of total listings then they do a successful listings in GMV. I don’t think we disclosed specific trends or specific data but single digits of GMV more than that of listings and with very positive traction over the last few quarters. The second part of the question was the non-marketplace businesses. So I would say in general very much in line with marketplace revenue growth, it’s slightly up in terms of percentage, so growing a very small fraction mover than the marketplace year-on-year I think in part mainly driven the fact that in some of our larger markets, marketplace continues to accelerate in terms of GMV and successful items driving strong revenue metrics. So, Q2 of 2012 non-marketplace represented about 30.3% of the business and Q3 2013 so this quarter 30.5%, so a 20 basis point increase in mix shift away from marketplace. Chad Bartley – Pacific Crest: Thank you very much.

Thank you. And our next question in queue is from Stephen Ju of Credit Suisse. Your line is open. Stephen Ju – Credit Suisse: Congrats, so Pedro I recall you mentioned the prospects of increasing the takeaway on the last two conference calls, but it seems like your backing up that move given the volume acceleration. Where do you stand now and another 4.5 million users added in the quarter as absolute number of users accelerated again some I recall you mentioned shortening up the user sign up path, that’s accounting for the acceleration is that still the case with another optimization move and where are most of this users being added that’s the regional mix reflects your current revenue mix or was it stronger in one particular region versus another? Thanks.

Sure. So, let me takeaway, I think the comments you’re probably alluding to is we have said over the past few quarters that we haven’t really increased core marketplace final value fees in some of our key markets like Brazil for I would say many years now. And so the seasons that we believe that there will be room in the future for takeaway increases if we think that’s the right decision to make, it’s still intact. Now, we have always said all along that we’re managing this for the long-term and that we’re trying to grow the business and grow revenues driven by underlying unit growth and GMV growth and TPV growth and not so much by pricing and so we continue to not increase final value fee prices in most of our major markets and we think that’s a good strategy. It generates additional barriers to entry and this continues to be extremely only stages of e-commerce and the region and we like keeping pressures low as long as the business and the P&L continue to be as healthy as it’s been. In terms of the acceleration in users, I did mention that we did our branded advertising campaign again just to reiterate the prepared remarks. I think the true measure of success for us is the branded campaign is continuing to see MercadoLibre is the top of mind e-commerce brand in the region and the service that carry out and others carry out, but we do noticed also that it has had immediate impact in driving increased traffic and subsequently also increased new users to the site and that probably explains some of the strength in the marketplace business so the branded advertising despite being more of a long-term brand initiative does help to a certain extend quarterly results.

Thank you. And with that, I’m showing no further questions in queue. I’d like to thank everyone for your questions and for joining today’s MercadoLibre’s second quarter 2013 earnings conference. You may now disconnect. Have a great day.