Martin de los Santos - Head, Investor Relations Pedro Arnt - Chief Financial Officer Osvaldo Gimenez - Executive Vice President, Payments.

Gene Munster - Piper Jaffray Vera Rossi - Goldman Sachs Ross Sandler - Deutsche Bank Mark Miller - William Blair Marcelo Santos - JP Morgan Chad Bartley - Pacific Crest.

Good day, ladies and gentlemen. And welcome to MercadoLibre Second Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to introduce your host for today’s conference Martin de los Santos. Please go ahead..

Hello, everyone. And welcome to MercadoLibre earnings conference call for the quarter ended June 30, 2014. I am Martin de los Santos, Head of Investor Relations for MercadoLibre.

Our senior management presenting today is Pedro Arnt, Chief Financial Officer; additionally, Osvaldo Gimenez, Executive Vice President of Payments 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 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 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 in 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 first quarter 2014 earnings press release available on our Investor Relations website. Now, let me turn the call over to Pedro..

Thanks, Martin. Good afternoon. And welcome, everyone, to MercadoLibre second quarter 2014 earnings call. We are pleased to provide an update on the company’s operational and financial progress for the second quarter of 2014.

We made solid progress on all fronts over the last three months, growing our business on the basis of the substantial upgrades we are bringing our users as we integrate payment and shipping into their buying and selling behaviors.

As we introduced new formats for the sale of specific products and brands, and as we perfect the user experience that we offer buyers across all screens. We are increasingly delivering a shopping experience, that integrate all aspects of our ecosystem and the added value to our users translate to solid business performance.

Let me start by giving you a quick snapshot of key metrics in areas of progress for the period. Reviewing key ‘14 versus ‘13 quarterly metrics for the second quarter, registered users continued growing pass the 100 million marker, now at 109.6 million registered users, up 21.5% year-on-year. Successful items grew 18%, reaching 23.6 million items sold.

Gross merchandise volume surpassed $1.8 billion, up 67% in local currencies and up 22% in local currencies when we exclude Venezuela. Total payment transactions grew 40% to $10.3 million. Total payment volume grew 77% in local currencies, growing to $785 million. Revenue growth in local currencies came in at 66% year-on-year.

Excluding our Venezuelan operations, revenue growth in local currencies came in at 47% year-on-year. Additionally, during the quarter we made significant progress across our strategic initiatives. Mobile sales reached 16% of gross merchandise volume.

MercadoEnvios almost doubled its unit shipped approaching a combined 3 million in Brazil and Argentina, and our mall initiative continue to trend well as in the first quarter. This helped vertical categories gain share of volume from consumer electronics as we on boarded brands to the mall at a faster pace then in the first quarter of the year.

By the end of June, we had 226 official stores, that’s 141 more stores than last quarter.

What this illustrates is that we continue working diligently to deliver on all our stated goals, advancing on our roadmap to offer the best online shopping experience in our region by combing the assets of our ecosystem into a comprehensive trading platform for buyers and sellers. We are uniquely positioned to deliver on this.

Already providing the deepest selection across multiple product categories, we are also stretching across brand and merchant segments, delivering seamless payments and convenient shipping, both becoming the norm on MercadoLibre at a fast pace and all the while delivering solid improvements to the customer service we offer.

As previewed a moment ago shipping is making strides, penetrating our GMVe at rates that exceed our expectations. Shipping units grew an impressive 91% quarter-on-quarter, reaching 8% of sold items in Argentina and 25% of sold items in Brazil. Payments also keep outpacing marketplace growth.

Our 40% year-on-year growth in payment transactions accelerated for its 36% last quarter and results from great momentum across all our MercadoPago country operations, Brazil leading the way robustly with its own number of transaction also accelerating to 42% year-on-year.

Totaled payment volume in local currencies accelerated across the Board on our platform. Total payment volume grew 82% year-on-year in local currencies versus 65% in the prior quarter.

Off our platform total payment volume grew 61% year-on-year in local currencies versus 59% in the prior quarter, while our off platform technology posted significant advances, better check outflows and new solutions for merchant partners.

No doubt MercadoPago is a key facilitator for future e-commerce growth on and beyond our platform, and as it continues to expand at a faster pace than overall e-commerce, we’re paving the way for higher transaction quality and frequency going forward.

In the second quarter, we also kept developing our mobile and vertical capabilities, aware that a superlative online shopping experience must be customized by type of product and by type of screen.

Our marketplace is adapting very well new verticals, as they kept gaining share of volume and as we diversify away from consumer’s electronics, while on the apparel front, we on-boarded new brands which by now include the likes of Reef, Prince, New Balance, Swatch, Puma and many more.

When it comes to mobile, this quarter’s downloads of our native app continue to grow at a fast clip, while we also made significant improvements to our web mobile experience positing usability upgrades as we integrated buyer and registration flows on those screens, which also proved good for business, accelerating mobile web registrations and generating more purchases per registered user.

These innovations brought total mobile registrations to a record 31% of all new user sign-ups in June. We also kept promoting our open platform, making our services increasing accessible to third parties. These are, for example, developers building e-commerce tools or first-party retailer’s whishing to integrate their ERP systems with our platforms.

We are also having increasing frequent interactions with third-party integrators that offer their services directly to brands and retailers.

By partnering with these integrators, be their credit facilitators, billing engines, marketing engines or e-builders of online store fronts for named brands, we are generating a useful network and a bridge to large retail. Our open platform brought 27% of our new paid listings in June. At this time last year that contribution was 5%.

We look forward to the continued growth of this initiative. Again, all these takes place while we redouble our efforts to provide world-class customer experience. In addition to devoting ample resources via dedicated staff and technology we also track our progress and the results are promising.

Our net promoter score increased by over 10 percentage point year-on-year during the second quarter.

At the core of all these initiatives we’ve just covered is a commitment to a constant process of innovation and interrogation that allows us to understand our users more and more as we go, transforming their experience for the better and raising the bar in terms of quality and breadth of services in this nascent but rapidly growing e-commerce space.

This commitment allows us to deepen our penetration in an e-commerce market that is growing, spanning new product categories, new services and new business models. Now let me make some comments on the corporate finance front.

During April, we completed the acquisition of Portalinmobiliario a real estate classified site with online market leadership in Chile and a strong brand presence, which will compliment our own in Mexico. In both cases, we see interesting sales and distribution capabilities that we can leverage across our entire ecosystem.

Along with this strategic value point, we have added on a respected team of 161 employees bringing MercadoLibre’s total to over 2,300. In June, MercadoLibre successfully strengthened it’s basically with the completed issuance of $330 million in convertible notes maturing in 2019.

A currently constructive market context for this type of issuances allowed us to achieve the most favorable end of the price terms, a 2.25 coupon and a 37.5% conversion premium. The proceeds will allow us to take on future growth opportunities.

We see the digital ecosystem in Latin America really coming of age and we are confident there will be interesting M&A opportunities over the next five years. This added cash gives us greater flexibility to move quickly when opportunities arise.

Moving on to our financial results for the second quarter, let me begin by reminding you that as of May 16th, the company adopted the SICAD 2 exchange rate in Venezuela, as reported in a press release on that date.

The move confirms our commitment to full transparency having been one of the earliest corporate issuers to adopt this exchange rate, which also reduces our overall financial exposure to the Venezuelan market. During the second quarter, the SICAD 2 rate traded within a tight range around 50 Bolivars per U.S.

dollar, considerably more devalued than our previously employed SICAD 1 rate, which was approximately 11 Bolivars to the dollar in the first quarter. As a result, Venezuela’s share of our total business has been reduced considerably, also mitigating Venezuela macro impact on our results going forward.

Let me remind you also of the unusual items impacting the quarter all related to the adoption of the SICAD 2 exchange rate in Venezuela.

During the quarter we’ve taken a one-time hit of $57.4 million which includes, a $49.5 million impairment on our long-lived fixed assets, primarily commercial real estate we own and either use or rent, we measured at the SICAD 2 exchange rate.

A forex loss of $16.5 million resulting from the devaluation of our local currency net monetary assets in Venezuela, a deferred income tax gain of $8.6 million derived from the loss on foreign exchange related to the revaluation of U.S. dollar denominated liabilities during the quarter.

This covers the one-timers associated with the transition in exchange rate mechanisms in Venezuela. Additionally, our business in Venezuela was also affected by the impact of re-measuring our Venezuela P&L at SICAD 2.

During the second quarter the first half of the period was re-measured at the SICAD 1 rate of roughly 10 Bolivars to the $1, while the second half was re-measured at the SICAD 2, leaving the weighted average exchange rate for the quarter at approximately 18 Bolivars to the $1.

The third quarter will be the first quarter where SICAD 2 which currently remains close to 50 Bolivars to the $1 will apply from start to finish. Therefore, all things equal, this implies further quarter-on-quarter FX headwinds in Venezuela assuming the weighted average exchange rate remains at current levels.

Summarizing, we believe Venezuela share of our business is more accurately reflected at SICAD 2 and we have already been able to access the FX market at this rate, converting Bolivars to dollars on a limited basis.

With those clarifications out of the way, I’ll now call out our consolidated financial highlights also providing pro forma values where they apply to better illustrate our performance excluding the one-timers just discussed. Net revenues were $131.8 million, 66% growth in local currencies and 18% growth dollars.

Excluding Venezuela, net revenues grew 47% in local currencies and 22% in dollars. Income from operations was negative $5.9 million. Excluding the one-off impairment charge due to the Venezuelan devaluation income from operations would have been $43.6 million, up 23% from $35.4 million in the second quarter of last year.

Net income before income and asset tax expenses was negative $19.1 million. Excluding the one-off impairment and forex loss due to the Venezuelan devaluation, it would have been $46.9 million, 15% higher than in Q2 of 2013. Net income was negative $25.6 million, but would have been $31.8 million excluding the impairment.

Forex and tax effects of the Venezuelan devaluation, up 5.9% from $30 million in the second quarter of 2013. All this resulting in earnings per share that were negative $0.58 for the quarter, excluding the impacts of the Venezuelan devaluation, earnings per share for the quarter would have been $0.72.

Analyzing our topline growth for the quarter, consolidated revenues accelerated their year-on-year growth in U.S. dollars and in local currencies. This happened despite a deceleration in sold items, which we anticipated as Latin America along with the rest of the world paused to enjoy the World Cup and also as we faced Easter calendar headwinds.

Revenues derived specifically from our marketplace accelerated in local currencies in each of our top four countries and also on a consolidated basis, as better monetization offset slower growth in sold units.

Brazil, for example, sold items slow their year-on-year growth by 4 percentage point due to the World Cup to 21% with local currency marketplace revenues accelerating to 33% on the basis of monetization improvement.

Turning to non-marketplace revenues, this grew 49% year-on-year in local currencies with clear acceleration on a consolidated basis and also in each of our top four countries.

The main contributions to this growth came in order of revenues from financing revenues, sustaining growth above 40% year-on-year in local currencies for the third consecutive quarter driven by growth both on and off platform.

MercadoPago processing revenues grew 62% in local currencies driven by the solid growth of payments volume outside our platform. Advertising revenues though small component of non-marketplace revenues also growing very well.

Finally, the acquisition of Portalinmobiliario provided a boost to growth in classified revenues, which was 39% year-on-year in local currencies. Overall, our total net revenues accelerated to 66% year-over-year growth in local currencies, also accelerating the 47% year-on-year, excluding Venezuela.

In addition, each of the major countries where we operate showed accelerating year-on-year growth in local currencies in their consolidated revenues, which were, 34% for Brazil, 76% for Argentina, 25% for Mexico and 167% for Venezuela. Moving down our P&L, gross profit grew 18% year-over-year in the second quarter to $95.5 million.

Gross profit margin was 72.4% of revenues versus 72.3% in the second quarter of last year and 72.7% in the first quarter of 2014. 139 basis points of margin contraction due to growth in MercadoPago were offset by scale in certain sales taxes, customer experience and fraud prevention, leaving gross margins practically unchanged versus last year.

Operating expenses for the period totaled $101.4 million or $51.9 million excluding the one-off impairment charge from our Venezuela devaluation, which would imply a 14% apples-to-apples growth versus last year.

Excluding this impairment charge, operating expenses would have been 39.4% of revenue in the second quarter versus 40.7% in the same quarter last year and 43.2% in the first quarter of this year. Let me breakdown OpEx for you line item by line item.

Sales and marketing grew 27% year-over-year to $26.5 million or 20.1% of revenues versus 18.6% for the same period last year.

This growth represents a loss of 151 basis points of margin primarily from 222 basis points of higher charge back costs and 120 basis points of additional online customer acquisition costs, which were partially offset by offline marketing scale since we did not renew the offline marketing campaign that was in full force during the second quarter of last year.

Product development expenses grew 20% to $11.7 million, representing 8.9% of revenues in the second quarter versus 8.7% in the same period last year and 10.6% in the first quarter of 2014. G&A decreased 9% year-over-year to $13.7 million, representing 10.4% of revenues versus 13.4% a year ago and 13.2% in the first quarter of 2014.

Year-on-year scale was driven by salaries and wages accounting for 279 basis points of improvement, 134 of which came from long-term retention plan costs. Finally, also included in OpEx was the aforementioned one-time charge of $49.5 million for impairment on our long-lived fixed assets re-measured at the SICAD 2 exchange rate. For U.S.

GAAP in hyper-inflation economies such as Venezuela, this charge does not qualify as an extraordinary item and does not go below EBIT. As a result, operating income for the quarter was negative $5.9 million or negative 4.5% of revenues.

However, excluding the one-time impairment charge, operating income would have been $43.6 million or 33.1% of revenues versus 31.6% in the second quarter of 2013 and 29.5% last quarter. I’d like to note that currency is a relevant driver for scale excluding the one-time impairment charge.

Of the 150 basis points improvement in EBIT margin year-on-year, approximately 180 basis points can be attributed to the devaluation of the Argentine Peso.

The low operating income, we benefited from $3.6 million of interest income, up 62% year-on-year, thanks to higher interest rates on larger amounts invested versus the prior year quarter in which we realized certain losses on our portfolio. In our Forex line, we saw a $60 million loss versus a $3.6 million gain in the second quarter last year.

The adoption of SICAD 2 in Venezuela generates an FX loss of $16.5 million, which was partially offset by a small net increase in the value of our other foreign exchange holdings.

These effects led to a net income before taxes of negative $19.1 million, which would have been positive $46.9 million excluding the impairment charge and forex loss resulting from the Venezuelan devaluation. That is 15.1% above last years second quarter. Income tax expense was $6.5 million during the second quarter.

However, as they did with the switch to SICAD 1 last quarter, U.S. dollar liabilities on Venezuelan’s balance sheet appreciated further this quarter, resulting in losses recognized under Venezuelan GAAP for a one-off tax benefit of $8.6 million.

Excluding the devaluations impact on G&A, forex and taxes the blended tax rate for the quarter would have been 32.2%. Net income came in at negative $25.6 million or negative 19.4% of revenues during the second quarter, resulting in basic net income per common share of negative $0.58.

Excluding the impairment charge foreign exchange loss and income tax effect resulting from Venezuela devaluation, net income would have been $31.8 million a margin of 24.1% and then EPS of $0.72. Purchase of property equipment and intangible assets and acquired businesses net of cash acquired during the quarter totaled $41.6 million.

For the period ended June, 2014, this resulted in free cash flow, defined as cash from operating activities less payment for the acquisition of property equipment intangible assets and acquired businesses, net of cash acquired of $18.7 million versus negative $6.2 million last year.

Cash, short-term investments and long-term investments at the end of the quarter totaled $542.9 million. Wrapping up, we declared our quarterly dividend of $7.3 million, or $16.6 per share payable on October 15, 2014 to shareholders of record as of the close of business on September 30, 2014.

This concludes my review of the business for the second quarter. Summarizing what we’ve seen, the company shows strong business drivers as we keep integrating key value components into our ecosystem, making them part of the core shopping experience that we offer. Our suite of services is working well together.

And this is gradually improving the ease and convenience of buying and selling on MercadoLibre. As can be seen, our growing value proposition to users also clearly translates to the growth of our business and its financial health.

I look forward to keeping you updated as we keep perfecting our entire platform to capture the huge opportunity implied in our regions budding e-commerce landscape. Thanks. And with that, we’ll take your questions..

(Operator Instructions) Our first question will come from Gene Munster from Piper Jaffray. Please go ahead..

Good afternoon, and congratulations. Couple of questions, first is that you mentioned that World Cup impact what it had on the entire quarter.

Can you talk about how Brazil and Argentina were trending before the World Cup actually started? And then separately, can you talk a little bit about the unit growth number versus the overall local currency GMV growth and trying to understand how unit growth dipped a little bit but yet local currency growth accelerated? Thanks..

Sorry, Gene so just recapping the first question is a World Cup question. I think what we’re disclosing is the overall impact as we said in the prepared remarks. That impact was somewhat accentuated in Brazil but the reality is that Columbia, Mexico, Argentina are all countries that have a similar impact.

And also did fairly well in the tournament as well as Chile. I want to make sure I don’t forget anyone here. And then as we’ve just mentioned, the additional headwind was also the way that the calendar played out in April vis-à-vis the previous year because of Easter vacation holidays.

So we had a certain level of limited tailwinds on the front-end of the quarter and the back end of the quarter..

Okay. So let me ask you this way, going into World Cup -- overall local currency growth was 66%.

Going into the World Cup, was it -- can you give us what the growth rate was for those or just a rough number, was it 76%, was it 4% higher obviously it was a -- must have been a higher number than 66%, correct?.

Yeah. So again, I don’t know the number of the top of my head. What I do know is April was somewhat lower because of the calendar. May was the month where the business picked up and was probably somewhat above that, so closer to 70 and then again somewhat slowed down by the World Cup for June. The impact is going to be significant June.

You’re going to have something hovering around the 70 mark..

Okay. That’s helpful to get kind of a normalized growth rate. And then separately on the unit growth….

Yeah, so the spread between unit which decelerated on a consolidated basis and then the business which delivered accelerating local currency revenues across pretty much most business units in countries, couple of impacts there. First of all, the non-marketplace business units performed well in the quarter.

Payments had another strong quarter during Q2 after strength in Q1. And then also the marketplace business hits the improved monetization as we’ve been able to better monetize GMVe through a combination of better insertion fees, improved adoption, there were some pricing elements.

So that essentially explains why we have a business that’s accelerating revenue in local currencies throughout all of the countries.

So even when we parse out the more inflationary countries, we’re seeing that same strength across the non-inflationary countries as well as both marketplace monetization improved and the non-marketplace businesses performed quite well..

Okay. That’s helpful. Thank you. Congrats..

Next question comes from Vera Rossi from Goldman Sachs. Please go ahead..

Thank you. I have a question on Venezuela. What was the percentage of revenues in local currency that the company generated prior to May 16 and after May 16 when the currencies went from 11 to 50? Thank you..

Okay. So remember that this a quarter where Venezuela is not full quarter accounted for SICAD 2. The numbers in terms of reported are roughly from 16% a year ago, so Q2 ‘13 Venezuela was 16% of the business, Q1, ‘14 Venezuela in terms of percentage of revenues was 17%.

This quarters Venezuela was down to 12.5% in dollars that should continue to go down as we move into the next quarter and the SICAD II rate applies for the fourth quarter..

Okay. I think I was not very clear on my question and I apologize for that. I would like to know in local currency so assuming the Bolivars, how much of the revenue the company generate in local currency prior to May 16 and after May 16 in Bolivars? What was the distribution in local currency in Venezuela not in the company.

So I want to know about the country, specifically?.

Vera, I’m sorry, I’m not sure I’m understanding your question.

You want to know in Bolivars what percentage of the Venezuelan business of the company?.

We can talk offline.

But I would like -- what I would to know as you go in the full quarter of second quarter, how much of the revenues were generated in the first part of the quarter, just in Venezuela? So if you generate 100 Bolivars, how much was before May 16 and after May 16 of the 100 Bolivars, assuming your revenues are only 100 Bolivars?.

Okay. Great. So I think I got it, Vera. Let me give you three directional numbers that hopefully will help you get to where you’re trying to get at. The Bolivars for April were roughly -- I’m going to give you ballpark numbers, were roughly 80 million. Bolívar revenues for May were roughly 110 million and for June were also roughly 110 million.

So I am rounding somewhat but that gives us a sense of the cadence of bolívar revenues for the three months in the quarter..

Okay. Thank you..

Thank you. And our next question comes from Ross Sandler from Deutsche Bank. Please go ahead..

Thanks guys. Just got a couple of questions. First was, can you-- could you help us -- you mentioned that you guys aren’t doing the offline ad campaign. So I’m trying to reconcile the 27% year-on-year growth, which are realized in dollars and not quite apples-to-apples. And so the marketing would be 17% or 18% unit growth.

With advertising growing at a much slower rate in units or faster, can you just give us some color on how much adverting contributed to that sales and marketing growth? And then second question is just, how does the pace of business in Brazil look now that we’re fully clear the World Cup, if you can give us some color there.

And then last one, assuming the bigger brick-and-mortar retailers in Brazil are getting a little bit more aggressive with marketplace strategies. Do you view B2W Inc., NovoaPontocom is viable marketplace competitors or not? Thanks..

Okay. So the first question is on what’s happening with sales and marketing leverage, essentially if we could give a little bit more visibility into that? There are about 150 roughly basis points of margin contraction on the sales and marketing line, that is not mainly driven by customer acquisition.

We did not do TV as you pointed out a lot of that money was reinvested online.

What’s driving some of that delevrage is essentially charge-backs where last year quarter we had a very slow number because of a one-off and also we’ve had a little bit more fraud loss provisions for charge-backs this quarter, both versus last year and versus previous quarter. And there has also been some increase in bad debt levels.

So it’s not driven by increases in customer acquisition. That one is only slightly up. And then in terms of the competitive landscape, I think as we always say the opportunity is huge. The Brazilian market has always been and will continue to be competitive.

And if we continue to focus on our strategy, our plan, improving both buying and selling experience through our ecosystem, we think that the business will continue to grow for many, many years. Yes there are viable competitors. Our focus is primarily on what we need to do to continue to grow for as long as we can..

Okay.

And lastly just on unit growth post the World Cup, if it’s possible?.

Yeah I think probably for this quarter, we should wait until we actual report it..

Okay. Thanks guys..

Thank you. And our next question comes from Mark Miller from William Blair. Please go ahead..

Hi, good afternoon everyone.

I’d like to get a sense for how the assortment is changing with the mall initiative and verticalization efforts? So I guess first off on the sales mix, can you give us a sense of how that’s changed outside of consumer electronics? And is there a way to encapsulate the size of the assortment and how that changes and how much of that is coming from the large stores?.

Mark, can you just repeat the last part of the question? I got the first part..

Yeah, the number sounds impressive in terms of the number of large stores that you brought on.

I am trying to understand how meaningful that is in terms of the selection you are offering to consumers -- additional point of perspective would be how large is that relative to where you see the business opportunity?.

Okay, great. So first of all in terms of mix we’ve continued to see a decline in the overall share coming from consumer electronics. It declined by roughly another slightly over 1%. So we are continuing to see the shift towards some of these newer categories and away from consumer electronics.

And then in terms of how relevant it is right now, we’re seeing really strong progress in terms of on-boarding brands. We are seeing improvements in the mall product. But there is still significant work to be done. This isn’t a material amount of our GMVe, its still small. We are very pleased with this, but it’s definitely the very initial steps.

I think once brands converts that gives us greater creditability to go speak to more brands and more branded retailers. And hopefully we’ll continue to see good traction there but it still very early. So as a percentage of overall GMVe coming from official stores that’s still very low..

Okay.

On the new user acquisition front there was a nice jump in the quarter, is that due to the efficiency of your marketing or your particularly on mobile or what cause the jump, Pedro, is there anything that one-off about that or do you anticipate continued acceleration of new users?.

Yeah. So when we look at the cadence of additional new users for the quarter, it did accelerate versus Q1. We added about 4.7 million new users. That’s not very distinct to previous quarters. So it’s in line with some quarters we’ve had in the past.

It’s good to see that accelerating again versus somewhat soft Q1 that is driven by improvements Q-on-Q in the efficiency of marketing spend. We’re getting a lot better with mobile registration and mobile integration. So we’re converting mobile traffic into better registrations.

But I wouldn’t necessarily say that it’s a huge difference to certain quarters we’ve delivered in the past..

Okay. Final question for me on the acquisition opportunities you’re looking at. Could you just highlight what your criteria are for acquisitions and in fact, you’re doing this now, does this suggest that we could see something in the near term or is it just really to give you flexibility further out? Thanks..

Yeah. One added on the registered user number that’s also relevant is that some of that increase is also driven by the acquisition of Portalinmobiliario. So that did bring in some additional users.

We’re still seeing efficiencies in terms of the mobile and marketing acquisition but some of that was also non-organic from the Portalinmobiliario acquisition.

In terms of use of proceeds from the raise, I think we’ve been pretty consistent in saying that this was driven more by market timing and market conditions and a long-term vision that as the ecosystem in the region continues to grow, interesting M&A opportunities will come up.

And the added cash gives us the flexibility to be able to move quickly when the opportunity arises. But not necessarily anything that we had in the pipeline right now nor are there any letters of intent outstanding..

Okay. Thanks. Nice results..

Comes from Marcelo Santos from JP Morgan. Please go ahead..

Hi, good afternoon. Thanks for taking the question. If you could you mentioned in the prepared remarks that the new marketplace business performed particularly well in most geographies.

If you could provide an update on the classifieds front, am I understanding that you pointed out the financial revenues were particularly good but what about classifieds? Was there an improvement from the previous quarters and what’s the outlook here? Thank you..

Yes, so the classifieds business which is a business that we continue to be very long term positive about. Over the previous quarters had seen a slowdown in growth rates. We did some acceleration there again, the classifieds marketplace definitely picked up its local currency year-on-year growths.

Again that is partially driven by non-organic growth from the acquisition. If we were to look at it organically it would have been growing more in line with what we saw in the first quarter. So part of that strength also comes from the portalinmobiliario acquisition which definitely helped the classifieds business..

Okay. And second question, you mentioned that there were some pricing changes that helped the result.

Did you increase acreage in the countries like -- increase some fees in the countries, if you could give more information on that, that would be great?.

So towards the end of the quarter, so June there were some increases in the commissions that we charge in some of the countries. There was also some increasing to the caps that we place on final value fees per item. So there were some pricing events in more than one country, primarily in June.

Additionally monetization improved -- additionally monetization also improved not from pricing, but from improvements in adoption of placement fees and improvements in the overall monetization of the marketplace platform..

Okay. Great. Thank you..

Next question will come from Chad Bartley from Pacific Crest. Please go ahead..

Great, thank you. So two questions, just trying to better understand the strength in the quarter.

First you highlighted many different drivers and initiatives, but was there one in particular that stood out that really can’t afford disproportionate amount of the growth in the quarter? And then second in general, was there something fundamental or structural that changed in the business that drove the inflection and acceleration that we saw? Thanks..

Yeah. So let me start with the second question. I wouldn’t say there have been any structural changes quarter-on-quarter or any step function changes in the e-commerce dynamics. I think as we’ve always said we are innovating on a lot of fronts across the platform.

Shipping, as we gave some data really showed tremendous growth in adoption during the quarter. If you think about it, we are exiting the quarter in Brazil, doing 25% of our sold units through the MercadoEnvios platform, that number was much closer to zero a year ago. So great traction there.

That overall drives better purchasing, purchasing of higher more expensive items, that’s one of the drivers that helping monetization across the platform, but there are also many others. And then in terms of the non-marketplace, I’d say there is no structural change there either.

We have continued to see two quarters where the payments business has accelerated consecutively after being somewhat soft in the back half of last year. It improved in Q1 and improved once again in the second quarter both on platform but also off platform.

And so that’s probably been the most significant driver within the non-marketplace category of improved financial results has been MercadoPago..

And if I could ask another question and thank you. Just real quick, sorry, if I miss this.

Did you disclose the revenue contribution from the acquisition or what organic growth was or anything to help us on that?.

Yeah. So we -- the revenue contribution per quarter of the classified business is roughly $3 million of the acquisition -- of the acquired companies..

Okay.

So $3 million was the contribution in the quarter and its going to be fairly steady at that level?.

Well, we’d hope to see that growing, but this quarter was about $3 million..

Great. Thank you, Pedro..

Okay. Great. So we were hoping that some one on the service provider side will close the quarter -- the call but I think we don’t have any other questions. So thanks everyone and we look forward to updating you again in the next quarter..

Ladies and gentlemen, this does conclude today’s program. You may all disconnect. Everyone have a great day..