Okay, ladies and gentlemen, welcome to the MecradoLibre third quarter earnings conference call. At this time all participants are in listen-only mode. Later we will hold a question-and-answer session and instructions on how to participate will follow at that time. (Operator Instructions). As a reminder, this call is being recorded. I would now like to turn the conference over to Alex de Aboitiz, please go ahead. Alex de Aboitiz – Head of IR: Hello, everyone and welcome to the MercadoLibre earnings conference call for the quarter ended September 30th, 2012. My name is Alex de Aboutiz and I am the head of investor relations for MercadoLibre. Our senior manager presenting today is Pedro Arnt, Chief Financial Officer. Additionally, Marco Galperin, Chief Executive officer and Osvaldo Gimenez, Executive 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 relation section of our website. I remind you that manners relating to such matters is continued growth prospects of 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 section 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. Pedro Arnt – CFO: Thanks, Alex, and good afternoon to all of…

(Operator Instructions). Our first question is from Nat Brogadir from Stifel Nicolaus, your line is open, please go ahead.

Two questions from me quickly, when I do some back-of-the-envelope math, is it possible that our marketplace revenue was down on a year-over-year basis or flat-ish? And secondly, just looking at the consensus number for 4Q, your organic growth rates, it seems like there is some expectations for re-acceleration from the 37% growth in 3Q, you know, is that expectation correct or should people expect the tough comparisons that continue into 4Q? Thanks a lot. Pedro Arnt – CFO: So, first of all, none of our business units had negative growth in dollars or in local currencies. The core marketplace, excluding classifieds and advertising continued to grow year over year in dollars and more than that in local currencies, since obviously Forex continues to be a headwind. In terms of the next quarter, as you know we typically don’t guide and so we will be more than willing to go over those numbers once we report Q4.

Could you give, you know, if marketplace is revenue, could you give some color if it was up double digit percentages? I am just looking at the payments revenue is up 60%, you know that implies you know, just modest growth in the marketplace revenue line if I am backing up payments, so just some color there would be helpful. Pedro Arnt – CFO: Yeah so you have the financials for the marketplace business in the financials. In dollars, marketplace, as reported, grew 16%, so that’s certainly double digits. Even if you were to back into the core marketplace excluding classified and advertising, we are still talking double digits, in dollars obviously more than that in local currencies.

Okay.

Thank you, our next question in queue is from Bob Horn of Merrill Lynch. Your line is open, please go ahead. Bob Horn – Merrill Lynch: For your Brazilian GMV growth please, in local currency? Pedro Arnt – CFO: Yeah Bob, hi. So we haven’t been disclosing local currency GMV by country for a few quarters now. I think the indication of the question you are trying to get at is to get a sense of relative growth among the different markets. I think one way to look at this is if you look at unit growth, which strips out a lot of the foreign currency stuff and puts the different markets on equal footing, you know, our three largest markets and all of our markets except for one of them are growing very close to the overall corporate average for unit growth, so in the low 20’s, and Brazil is included within that. Bob Horn – Merrill Lynch: Okay, that is fine, and then when you look at the, maybe the early experiences right now that you have with the management API, can you talk a little bit about the number of sellers you have that are piloting the API and you know, what is it doing in terms of the conversion rates that they are seeing or the increase in listings you are getting from those sellers? Pedro Arnt – CFO: Great, so as I mentioned we had the first developer conference yesterday, it was extremely successful, we had a packed audience, but this was obviously very, very early days. We’ve seen hundreds of thousands of listing being listed via the API since yesterday, many of those are classifieds from classified integrators, so in terms of how the technology is holding up and the first attempt by third…

Thank you, our next question in queue is from Gene Munster of Piper Jaffray, your line is open. Gene Munster – Piper Jaffray: You said 37% local currency, but the business was driven outside of the core marketplace and that accounted for 31% of revenue outside of the core market, my first question was what was the 31%, what is that compared to maybe last quarter and last year, and second is from a big picture we think about how the business is going to evolve in this year of three more quarters of tough comps, should we generally think about a little bit more growth from some of these other things, whether it be payments or advertising and mobile, versus traditional marketplace, and then a follow up question to that. Pedro Arnt – CFO: Yeah. So year over year evolution of the newer businesses grew, I would say roughly four percentage points in terms of mix versus last year. Going forward, these newer businesses obviously have tremendous potential, they are growing from a smaller base in the case of payments we have always said there is tremendous opportunity and a very large addressable market. So if we continue to execute well, I think it is very likely that those businesses can continue to gain share of revenues. Notwithstanding, the marketplace I think continues to perform well once we take into consideration the tough comps, and as has been the history going back, there are certain quarters where maybe the marketplace is outperforming the adjacent business and quarters where the opposite occurs. Then in terms of the comps and going forward, again I think it will make more sense for us to address future quarters once we have actually released numbers around those. Gene Munster – Piper Jaffray: Yes, on…

Thank you, our next question in queue is from Ross Sandler of Deutsche Bank, your line is open, please go ahead. Ross Sandler (Connor) – Deutsche Bank: Hi guys, this is Connor, I am calling in for Ross, a couple of questions for you. My first question is, I am hoping you guys can characterize the environment in Argentina right now in terms of consumer demand, are you seeing any drop off from macro-related issues at this point? My second question is now that Amazon is officially started to hire specifically for their warehouse personnel in Brazil, I am wondering if you guys can speak more formally about any strategic priorities that have moved up to better prepare for when they enter the market? Thank you. Pedro Arnt – CFO: Right, so Argentina, I mean to your specific question around demand and what we are seeing in terms of consumer consumption, still continues to be an economy that is somewhat driven by consumer consumption, there is an electoral year next year, so I think it is in the governments best interest to try to continue to hold consumer demand high. So we haven’t seen any negative impact from that. The challenges in Argentina are more around the overall environment to repatriate funds, but as we have always said, we feel that given the limitations that are never great, we feel pretty comfortable with our ability to manage that and also as we have always said, Argentina is a country where we do think there are strategic assets where we can deploy cash that is generated in Argentina to the benefit of the overall company. Marcos Galperín – CEO: With respect to competition, as you know we use to competing, we have been competing intensely, for the last 13 years and we expect to continue doing so for the foreseeable future. We are operating in a market that we consider very attractive that we believe has strong secular trends that favor this market, therefore, it is also seen by other players and it is going to continue attracting competition. What we have always done and has worked for us was the [inaudible] to look at every competitor, try to learn as much as we can from each one of them, and then focus intensely on what we need to do and doing it the right way. So we continue to, we will continue to do that, and without really having much to say in particular with respect to any competitor at any given point in time.

Thank you, our next question is from Marcelo Santos of JP Morgan, your line is open. Marcelo Santos – JP Morgan: Two questions, the first question is about the fraud issues that you are facing with MercadoPago. If you could please comment if you are improving on that front, if there is much room to improve, have you already turned to the normal levels of fraud or do you have some room to gain there? The second question is about verticalization, I just wanted you to talk a little bit about how that has developed because I think in previous quarters it was going a little bit slow but now it seems that the speed increased up there so if you could talk a little bit about lessons learned? Pedro Arnt – CFO: I’m sorry, could you repeat the second question? We caught the back half of it but not the beginning. Marcelo Santos – JP Morgan: Sure, just on the verticalization initiative, in previous quarter it looked like it was still slowly developing but now it looks like it has sped up a lot. So I just wanted you to comment about lessons learned, how things have developed, give a little bit more color, please? Pedro Arnt – CFO: Yes, so let me start with verticaliztion, and Osvoldo can take the one on loss pervasions from fraud. So verticalization efforts have continued and I think we have been fairly consistent, we have continued to expand the number of apparel vertical categories where we are rolling out some of the new features for verticalization. We are also preparing a new vertical category to launch which will be auto parts, a lot of that is still in the back end work on that category. So I think the important thing here…

Thank you, our next question is from Dan Su of Morningstar, your line is open. Dan Su – Morningstar : Regarding shipping, so can you please update us on the progress that the company has made in terms of integrated payment and the shipping? Specifically can you talk about participation among sellers for this program and any patterns in terms of product category, average ticket size, or where the sellers are located? Then, is it fair to say that the shipping volume for this program is fairly concentrated to a few large metro areas, or is it actually quite spread out? Then I have another question, thank you. Pedro Arnt – CFO: I think the most important characterization here is that it continues to be very early days, so volumes are still insignificant in material in terms of overall volume, but we continue to on-board new sellers and more importantly also, the product has more features and more flexibility so that it now enables sellers who want to combine their existing shipping capabilities that they already run on their own websites with what we are trying to do on MercadoLibre, that has become available so that should help us pick up the pace of adoption for the shipping solution. In terms of traffic patterns, ASPs, again, I think the volume set is too small and it would be a mistake to try to drive any conclusions from that. Dan Su – Morningstar : Thanks. The other question is, can you talk about where the cash on the balance sheet is located right now and please talk about the priorities in terms of capital allocation in the near future? Thank you. Pedro Arnt – CFO: Yeah so I think the first thing in answering that is we need to differentiate, think of the cash on the balance sheet in two large buckets. One is funds payable to MercadoPago accounts, in other words Pago stored balance. That, which is about maybe 30%, slightly less that 30% than the cash equivalents and investments on the balance sheet, are obviously located in country, because what we want to do is match the funds payable to the customer with our cash reserve. The remainder of the cash or cash equivalents, which are actually the corporate balance sheet, are by in large in the US in US bank accounts in dollar denominated instruments. We have depending on the specific date and quarter, anywhere between 20 to 30 million dollars in Brazil, in Brazilian Ray eyes and that is a bit of a yield play. Then obviously because of cash restrictions, there are slightly more than 25 million dollars in Venezuela held in [inaudible]. We don’t typically comment on any pending tactics investments, I think as we have always said, the balance sheet is enough we feel to carry out our strategic investments and we continue to be committed to our dividend policy. Dan Su – Morningstar : Thank you.

Thank you, our next question is from Phil Bowers of Credit Suisse, your line is open, please go ahead. Phil Bowers – Credit Suisse: I just had a question about the take rate, I wanted to know what drove the take rate increases year over year and this quarter? Was it mainly the increase of MercadoPago, or is there something else I am missing? Thank you. Pedro Arnt – CFO: So I briefly covered this in the earnings call. The growth in the newer businesses be that MercadoPago off platform processing, the financing business, the classified businesses have obviously been accretive to take rate, since those businesses have grown faster than GNV. Additionally, if you were to look just at the core marketplace take rates, those have also gone up, in a very ballpark figure of about 20 basis points, driven in part by final value fee pricing and in part by placement fees that have grown at a faster pace than GNV as well. Phil Bowers – Credit Suisse: Thanks.

Thank you, our next question is from Scott Devitt of Morgan Stanley. Your line is open. Scott Devitt – Morgan Stanley: Can you talk about your ability to raise prices and the plan for that? Pedro Arnt – CFO: I think that continues to remain unchanged, you know if you look at our take rates, they continue to be lower than US equivalents. If you look at the core marketplace take rate, I would say significantly lower, and we think that is the right way to manage the business for now. Continue to focus on growth and market share and not necessarily on maximizing short term monetization. Implicit in that answer is that we think there is pricing power in the model, but now hurry to drive that pricing power. We have always said that as payment deduction continues to grow, there is an increasing cost that we are incurring, you can see that in our declining gross margins, so one way to offset some of that gross margin compression is pricing, but not necessarily have any pricing on value fee planned for the remainder of the year. Scott Devitt – Morgan Stanley: Thanks.

Thank you. Our next question in queue is from Mark Miller of William Blair, your line is open, please go ahead. Mark Miller – William Blair: Good afternoon, I was wondering why the installment purchases went up in the quarter given that the growth in Brazil slowed, and how significant was the impact on margins overall? Pedro Arnt – CFO: Yeah, so the biggest driver of increased financing revenues is obviously that we are processing a lot more payments volume. So a greater number of our transactions are flowing through MercadoPago, and that allows us to offer the credit offering. So Pago penetration is a significant driver of increased financing. Additionally, spreads have also improved somewhat, so that also helps the take rate on the financing. I don’t remember what the second part of the question was, sorry. Mark Miller – William Blair: You said that the level of purchases on installment went up, so I was trying to understand what was driving that? Pedro Arnt – CFO: Yeah sorry, so it is essentially what I said, but the more payments we are processing through Pago, the more our base of volume that we can cross sell the financing on is, and therefore that drives the growth in the financing business. Mark Miller – William Blair: Okay great, and then can you clarify the comments you made about bad debt? I think you said it was coming down but then I thought you said the fraud experience was worse than the second quarter but better than the first, can you tie those two together? Pedro Arnt – CFO: Yeah so bad debt typically we refer to as marketplace bad debt, so sellers who have sold items on the marketplace and who those accounts go delinquent, those ratios have been coming…

Thank you. With that I am showing no further questions, ladies and gentlemen thank you for your participation in today’s conference.