MercadoLibre: the leading e-commerce ecosystem in Latin America

STRICTLY PRIVATE AND CONFIDENTIAL

Agenda

Introduction to MercadoLibre

Industry Overview

MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

MERCADOLIBRE

Four business units that create a powerful ecosystem that strives to enable ecommerce wherever it occurs
On platform
Marketplaces

MercadoLibre Transactional marketplace Classifieds marketplace Search results positioning

MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

Payments Advertising

MercadoClics Search advertising Display advertising

MercadoPago Payments processing Consumer finance

Off platform

Webstores

MercadoShops SaaS web stores On platform

MERCADOLIBRE

Off platform Both on and off platform

MercadoLibre timeline
MercadoLibres history

Acquired Tucarro.com and Tuinmueble.com

MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

Acquired Lokau

Expanded business model

Services, e-shops and user guides content

Acquired the operations of DeRemate that it didnt own

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Launched

eBay acquired 19.5% of ML for iBazar Brazil

227% net revenues growth regional leadership

Break even. Acquired DeRemate subs

IPO US$333mm

Launch search advertising and web stores

Source: Company

MERCADOLIBRE

Company currently has a market cap of roughly $2.2B

MELI stock performance since IPO

MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

Source: Bloomberg As of April 9 2010

MERCADOLIBRE

Marketplace: enabling buyers and sellers to transact

Transactional platform

Revenue Sources

Classifieds / Listing Search result positioning

74% of total company revenues during 2009

MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

Size and Growth

42.6mm registered users (37% 5-yr CAGR) US$2.7bn GMV (46% 5-yr CAGR)

35mm searches/weekday 100% on platform

Business Segment Characterization

95% fixed price (5% auction) 75% new items (20% used) Strength in both enterprise marketplace and C2C Infinite inventory Top notch search engine Back-ended pricing

Key Elements of Strategy

Expand into new verticals

Key Initiatives

Move towards back-ended pricing Focus on ever improving buyer experience

MERCADOLIBRE

MercadoLibres key metrics Marketplace

Successful items sold (mm) GMVe (US$mm)

8.0 5.1 5.6 5.8 6.0 6.9

8.6 516 590 652 524 521

791

787

4.6

450

MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

Marketplace revenue and take rate (US$mm; %)

Marketplace revenue (US$mm) Marketplace take rate

40 35 30 25 20 15 10 5 0

6.0% 37 28 23 32 26 26 31 35 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09

Source: company filings

MERCADOLIBRE

Payments: becoming the online payment standard

Payment processing

Revenue Sources

Financing
Merchant services

26% of total company revenues for 2009

MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

Size and Growth

US$382.5mm TPV (18% of GMV, 77% 5yr-CAGR) 3.1mm payments processed

Business Sector Characterization

Mainly on platform (today) 60% financed payments Recently launched off platform payments in Argentina and Brazil

Key Elements of Strategy

Increase penetration in marketplace (on platform) Merchant services: enable third party payments (off platform) Expand consumer credit offering

Platform enhancement (ease of use and efficiency)

Key Initiatives

Facilitate payment (direct payment solution)

Seamless integration into third party websites

MERCADOLIBRE

MercadoLibres key metrics Payments

Number of payment transactions (mm)
# transactions (mm) Number of transactions/ successful items sold 12%
1.0

TPV (US$bn)
TPV (US$bn)
Average ticket paid with MP US$

140 120 100 80 60 40 20 0 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09
52.3 81.5 66.8 55.3 53.2 79.6 113.9

135.8

180 160 140 120 100

1.0 0.8 0.6 0.4

MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

11% 10%

0.9 0.7 0.5 0.4 0.5 0.5 0.5

9% 8% 7% 6%

0.2 0.0 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09

4Q09

TPV/Number of transactions

MercadoPago revenue and TPV/GMVe (US$mm)

MP revenue (US$mm) TPV/GMVe

15

18% 16% 14% 13.5 14.9 12% 10% 8% 6% 4% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09

10

5 5.4 0 6.2 8.5 7.4 6.4

9.9

Source: Company filings MERCADOLIBRE

MercadoClics and MercadoShops: completing the ecosystem

MercadoClics is still < 3% of revenues

Revenue Sources

CPC search platform similar to AdWords and sale of display ads

Starting from a small base showing very rapid growth Run rate of MercadoClics is already a multi-million dollar business Still being sold primarily among our top seller community Will eventually begin to sell MercadoClics to large retailers as well Focus on search advertising over display Use MercadoClics to capture share of wallet of large retailers Improve CPC on MercadoClics through better bidding engine and more advertisers Launch full version of MercadoShops in more countries

Size and Growth Business Sector Characterization Key Elements of Strategy

MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

Key Initiatives

Revenue Sources

MercadoShops has fixed pricing per monthly usage that gets credited back for marketplace fees Monetization mainly through MercadoPago Still in beta testing phase

Size and Growth Business Sector Characterization Key Elements of Strategy

Official launch probably H210

Focus on SMBs that are looking to launch their own online sales channel Many of these are already our customer base Use MercadoShops principally to distribute MercadoPago, cross list inventory on Marketplace Improve product and add functionalities as it rolls out Finalize beta testing of product Launch in all markets

Key Initiatives

MERCADOLIBRE

MercadoLibre covers almost all of Latin America

Countries of operation Main region stats Population covered: 494mm1 GDP covered: US$ 3,484bn1
Mexico Dominican Republic Venezuela
MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

Total retail market: US$477bn2 Total ecommerce retail market: US$16.3bn2 Total advertising market: US$33.4bn2

Panam Costa Rica Colombia Ecuador Brazil Peru

Main Meli stats 27.5 million unique visitors in Latin America 1.3bn pages viewed per month on average To come from company 11th largest global retail site, 1st Retail in LatAm

Chile

Uruguay

#1 Retail site in each of the markets 672mm search page views/month (2009 average)

Argentina

1ITU

for countries where MercadoLibre has operations, as of 2008 for all Latin American countries, 2009 estimates One year average (Nov. 2008 Oct. 2009)
2IDC,

MERCADOLIBRE

10

MercadoLibres is the most visited e-commerce site in Latin America and #11 globally
GlobalRetail web sites audience (January 2010)
Total unique visitors (000s) 1,237,448 259,866 244,658 119,801 99,928 53,861 43,788 43,487 37,023 35,315 34,833 32,196 Reach 100.0% 21.0% 19.8% 9.7% 8.1% 4.4% 3.5% 3.5% 3.0% 2.9% 2.8% 2.6%

1 2 3 4 5 6 7 8 9 10 11
MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

Total Internet audience eBay Amazon Sites Apple.com Alibaba.com Corporation Yahoo! Shopping Wal-Mart Hewlett Packard RAKUTEN.CO.JP Groupe PPR Otto Gruppe MercadoLibre

LatamRetail web sites audience (October 2009)

Total Internet audience MercadoLibre BuscaPe.com Inc. Lojas Americanas Amazon Sites Apple.com Worldwide Sites Dell AmericanGreetings Property UOL Shopping Hewlett Packard Bing Ciao Total unique visitors (000s) 93,402 27,459 12,245 8,916 7,542 5,781 2,903 2,900 2,812 2,694 2,299 Reach 100.0% 29.40 13.11 9.55 8.07 6.19 3.11 3.10 3.01 2.88 2.46

1 2 3 4 5 6 7 8 9 10

BrazilRetail web sites audience (October 2009)

Total Internet audience 1 Mercadolibre 2 Buscape 3 Americanas.com 4 Submarino 5 Qubarato 6 Uol shopping 7 Magazineluiza.com.br 8 Netshoes.com.br 9 Casasbahia.com.br 10 Bondfaro Source: ComScore Total unique visitors (000s) 32,385 10,646 5,618 5,430 5,386 3,801 2,774 2,133 2,070 2,042 2,003 Reach 100.0% 32.87 17.35 16.77 16.63 11.74 8.57 6.59 6.39 6.31 6.19

MERCADOLIBRE

11

 and one of the top internet destinations in the region

Latamtotal internet audience (October 2009)
Total Internet audience 1 Google sites 2 Microsoft sites 3 Yahoo! sites 4 Facebook.com 5 Wikimedia foundation sites 6 Terra - Telefonica 7 Mercadolibre 8 WordPress 9 Uol 10 Grupo Brasil Telecom Source: ComScore Total unique visitors (000s) 93,402 82,822 81,723 52,133 40,958 36,440 34,707 27,459 27,455 24,526 18,059 Reach 100.0% 88.67 87.50 55.82 43.85 39.01 37.16 29.40 29.39 26.26 19.34

MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

Braziltotal internet audience (October 2009)

Total Internet audience Google Sites Microsoft Sites UOL Yahoo! Sites Terra - Telefonica Grupo Brasil Telecom Organizacoes Globo Wikimedia Foundation Sites WordPress MercadoLibre Total unique visitors (000s) 32,385 27,180 25,976 21,758 18,162 18,062 17,661 17,559 11,241 10,971 10,646 Reach 100.0% 83.93 80.21 67.19 56.08 55.77 54.53 54.22 34.71 33.88 32.87

1 2 3 4 5 6 7 8 9 10

Source: ComScore

MERCADOLIBRE

12

MercadoLibres financial performance

Gross margin
Gross margin (US$mm) Margin
40.2 27.6 32.1 27.0 32.3 25.7

EBITDA
EBITDA (US$mm) Margin

MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

45 40 35 30 25 20 15 10 5 0

86%
38.7

25 20 15 20.0 10.5 7.6 12.6 12.0 7.7 13.4 18.8

50% 40% 30% 20% 10% 0% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09

82% 78%

22.8

10 74% 70% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 5 0

EBIT
EBIT (US$mm) Margin
17.9 19.0

Net income
Net income (US$mm) Margin
11.3 9.9 7.9 5.6 2.9 2.1 5.9 5.4 6.7

20 15
11.7 11.1 6.8 12.4

10
6.9

9.7

5 0 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09

40% 35% 30% 25% 20% 15% 10% 5% 0%

12 10 8 6 4 2 0

25% 20% 15% 10% 5%

4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09

Source: Company filings

MERCADOLIBRE

13

Agenda

Introduction to MercadoLibre

Industry Overview

MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

MERCADOLIBRE

14

Latin America has one of the best combinations of actual GDP and population size with expected growth rates
GDP and Population
Population, 2009E
Western Europe USA Japan
China

GDP and Population

GDP US$bn 16,728.5 14,126.4 4,436.8 4,311.0 3,751.8 3,663.8 3,307.3 3,215.6 Pop mm 399.6 306.5 127.1 1,788.3 580.4 1,139.1 404.1 1,338.6 GDP per capita US$ $41,865.4 $46,089.4 $34,914.1 $2,410.8 $6,464.6 $3,216.5 $8,183.8 $2,402.2

Asia ex Japan ex China Latin America Middle East and Africa

MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

GDP CAGR 2009-2012

Central and Eastern Europe

Central and Eastern Europe

China
Asia Middle East ex Japan and and Africa China

Source: IDM. Figures in table are 2009 estimates

Latin America

Western Europe

US

Japan

Source: IDM

MERCADOLIBRE

15

Consumer spending in the region is growing fast and new segments of the population are becoming first time consumers
Per capita consumer spending CAGR 2003-2008 (%) Loans to GDP, 2008 (%)
2003-2008 CAGR (%)

20.9% 17.5% 15.8% 15.5% 12.3%

1%
282%

4%

18%

17%

30%

27%

15%

9%

24%

124%

110% 74% 38% 30% 20% 15% 12%

7.2%
MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

Source: Planet retail

Source: MacData, EIU, J.P. Morgan

% of GDP from internal economy

Retail sales in 2008 (US$bn)

2003-2008 CAGR (%)

0.49

0.46

22%

7%

15%

18%

16%

13%

474 305
0.16 0.16 0.11 0.10 0.06 0.02 0.02

71

68

48

44

Source: Planet retail Source: MacData, EIU, J.P. Morgan

MERCADOLIBRE

16

making Latin America a significant component of the largest consumer companies

% of revenues coming from Latin America of selected large listed consumer companies

Anheuser Busch Colgate-Palmolive Sabmiller Avon Casino Guichard

MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

40% 28% 25% 22% 21% 19% 18% 15% 15% 15% 13% 12% 12% 11% 11% 9% 8% 8%

Whirlpool Pirelli Cinemark Mattel Fiat Electrolux Carrefour Coca Cola Philip Morris Merck Pepsi Adidas Cadbury

Source: Bloomberg

MERCADOLIBRE

17

Latin America is expected to post the highest internet users growth due to improving infrastructure and low penetration base
Selected infrastructure statistics by region (sorted by internet users growth rates)
Wirelines Regions Latin America Asia Pacific ex China ex Japan China Eastern and Central Europe Western Europe Japan North America Number 87.6 184.6 239.9 22.2 148.6 44.0 137.5 CAGR (0.5)% 3.2% (2.4)% (4.2)% (5.9)% (9.9)% (14.5)% % Pop 16.1% 8.7% 18.2% 23.9% 31.5% 34.5% 41.5% Number 393.5 1,073.5 769.4 114.6 514.1 115.1 301.5 Wireless CAGR 6.1% 12.1% 8.9% 3.1% 3.4% 3.5% 5.3% % Pop 72.2% 50.7% 58.5% 123.3% 108.8% 90.3% 91.1% Number 150 229 265 41 320 123 325 PCs CAGR 11.2% 13.6% 10.8% 7.9% 5.2% 5.5% 2.6% % Pop 27.6% 10.8% 20.2% 43.7% 67.7% 96.6% 98.2% Number 33.3 46.5 104.4 12.9 116.1 37.9 96.2 Broadband CAGR 20.1% 17.3% 15.4% 11.6% 6.6% 10.6% 2.9% % Pop 6.1% 2.2% 7.9% 13.9% 24.6% 29.7% 29.1% Internet users Number 158.9 297.1 344.5 46.3 280.7 93.4 250.1 CAGR 20.3% 15.0% 11.8% 10.5% 3.9% 1.6% 1.2% % Pop 29.1% 14.0% 26.2% 49.8% 59.4% 73.2% 75.5%

Source: EIU databases, al numbers in millions, CAGR for estimates 2009-2012

MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

Global broadband penetration per habitant % (July 2009)

28% 29% 29% 29% 30% 16% 5% 7% 8% 8% 9% 19% 21%

Brazil Telebras to boost internet penetration

The Brazilian government has indicated it seeks to spread broadband Internet

services in the country through Telebras (resurrected Government telecom company)

This program would aim to add 20mm new broadband connections by 2014 Investments would be approximately R$15bn Broadband subscriptions would have affordable rates (would slash the service

prices by 70%), while ADSL modems would have prices reduced as well Source: Newsrun

Source: Research reports

Broadband penetration forecasts for Brazil

Broadband (Subscribers 000) 20,000 10,010 10,000 5.2% 0 2008 2009 2010E 2011E 2012E 2013E 6.3% 12,078 Penetration (per inhabitant) 16,086 17,973 19,816 15% 10.0% 10% 5% 0%

Brazils share of Latin America internet and e-commerce

Internet users e-commerce in Dollars Other LatAm countries 42%

14,141

Brazil 37% Other LatAm countries 63%

7.3%

8.3%

9.1%

Brazil 58%

Source: Research reports, does not reflect Governments recently discussed broadband plans

Source: OECD, IDC, CISCO and research reports

MERCADOLIBRE

18

Internet access has grown significantly as computer affordability has increased

Latin America PCs that use Internet
PC use Internet (mm) % growth

150 31.1% 100 64.5 49.6 50

MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

134.2 30.2% 23.9% 80.0 23.3% 116.8 98.7 18.3% 14.9%

35% 30% 25% 20% 15% 10% 5%

37.8

0 2006
Source: IDC and Research reports

0% 2007 2008 2009E 2010E 2011E 2012E

Computer prices declining in Brazil

Price per unit

PCs more affordable on higher wages in Brazil

Minimum wages necessary to buy a Positivo Informtica computer

US$/unit

R$/unit

4,000
12.4X

3,000 2,000

2,981 1,733 1,486 967 597 611 1,292 592 1,140 586 1,131 615
2003 2004 2005 2006 2007 2008 6.7X 5.0X 3.7X 3.0X 2.7X

1,000 0 2003

2004

2005

2006

2007

2008
Source: Positivo Informtica, Bloomberg and J.P. Morgan estimates

Source: Bloomberg and J.P. Morgan estimates

MERCADOLIBRE

19

making millions of Latin internet users among the most engaged in the world
Total online hours per visitor in a month Internet users by country (mm)

68 27 228 26
MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

360

68 24 23 22 22 19 8 18 8 15 11 8 28

20

20

Source: ComScore (September 2009)

Source: company

MERCADOLIBRE

20

Latin American e-commerce is growing fast

Latin America e-commerce (on-line retail) US$bn e-consumers in Latin America (mm)

35.7 29.6 23.9 16.3 9.2

MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

53.1 44.9 36.9 28.6 20.8 14.8 10.6

11.9

5.7

2009E

2010E

2011E

2012E

2006

2007

2008

2009E

2010E

2011E

Source: IDC

Source: IDC

e-commerce as % of total retail sales (2008)

Internet buyers as a % of Internet users

Western Europe
South Korea UK US Germany Japan Brazil Spain Argentina Canada Mexico China 1.5% 0.8% 0.8% 0.7% 0.4% 0.2% 2.3% 3.9% 3.2% 5.6% 7.8%

66% 60% 49% 27% 26% 23% 20%

USA Japan China Central and Eastern Europe Asia Pacific (ex Japan ex China) Latin America

Global average: 2.3%

Source: IDM

Source: Euromonitors, eBit Webshopper and ComScore

MERCADOLIBRE

21

2012E

2006

2007

2008

Asia Pacific ex-Japan

outpacing all other regions

E-commerce growth

US

Current internet buyers, 2009E

35%
Latin America Central and Eastern Europe

Retail e-commerce volume CAGR 2009-2012

30%

MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

25%
Asia Pacific ex Japan

20%
Western Europe

15%

10%

USA

5%

Japan

0% 0% 5% 10% 15% Internet buyers CAGR 20092012 20% 25%

Source: IDM. Figures in table are 2009 estimates

MERCADOLIBRE

22

Advertisement: internet ad spend in the region is still an untapped opportunity with huge potential
Global advertising spending evolution (US$ B)
Total non Internet advertising spending Total Internet advertising % of total Internet advertising vs total advertising 107 93 14% 79 61 53 69 13% 40 11% 8% 6% 9% 10% 588 608 610 595 615 645 677

Internet as % of Total Ad spending (2010E)

14.9% 13.4%

12.3% 7.7% 6.6% 5.5% 2.8%

Western Europe
MERCADOLIBRE: THE LEADING INTERNET ECOSYSTEM IN LATAM

Japan

United States

2006
Source: IDC

2007

2008

2009

2010

2011

2012
Source: IDC

Asia Pacific (excluding Japan)

Latam

Central and Eastern Europe

Middle East and Africa

2006
Latam advertising spending evolution (US$ B)
Total non Internet advertising spending Total Internet advertising 3 3 2 1 28 30 31 33 36 40
Print 23% TV 53% Classified 14% Display 33%

2012
Latam advertising spending breakdown
All Advertising Except Internet Other 6% Internet Advertising Other 5% Keyword 34%

Direct Mail 11%

Rich Media 14%

24

Radio 7%

2006
Source: IDC

2007

2008

2009

2010

2011

2012

2012 Total = US$39,626bn Source: IDC

2012 Total = US$3,475bn

MERCADOLIBRE

23

STRICTLY PRIVATE AND CONFIDENTIAL

Agenda

MERCADOLIBRE

24