MERCADOLIBRE, INC. Pacific Crest 10th Annual Technology Leadership Conference

Transcription

1 S T R I C T L Y P R I V A T E A N D C O N F I D E N T I A L August 5 th, 2008 MERCADOLIBRE, INC. Pacific Crest 10th Annual Technology Leadership Conference

2 S T R I C T L Y P R I V A T E A N D C O N F I D E N T I A L This presentation contains forward-looking statements, including statements about business outlook and strategy, and statements about historical results that may suggest trends for our business. These statements are based on estimates and information available to us at the time of this presentation and are not guarantees of future performance. These statements are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside of our control. Actual results could differ materially from our current expectations as a result of many factors, including: continued growth of online commerce and Internet usage in Latin America; our ability to expand our operations and adapt to rapidly changing technologies; government regulation; litigation and legal liability; system interruptions or failures; our ability to attract and retain qualified personnel; consumer trends; security breaches and illegal uses of our services; competition; reliance on third-party service providers; enforcement of intellectual property rights; our ability to attract new customers, retain existing customers and increase revenues; seasonal fluctuations; and political, social and economic conditions in Latin America; our financial performance, including our net revenues, cost of revenues, operating expenses and ability to sustain profitability; our planned capital expenditures; our liquidity and working capital requirements; our ability to expand our customer base; our ability to expand our product and service offerings; our ability to develop additional related lines of business; our international expansion plans; our ability to secure adequate facility space; our ability to retain and hire necessary employees, including seasonal personnel, and appropriately staff our operations; the impact of seasonality on our business; our ability to remediate the material weaknesses and significant deficiencies in our internal control over financial reporting; our ability to stay abreast of modified or new laws applying to our business; and our spending of the net proceeds from this offering. You are cautioned not to put undo reliance on such forward-looking statements because actual results may vary significantly from those expressed or implied. We undertake no obligation, and expressly disclaim any obligation, to update or revise any forward-looking statements. These and other risks and uncertainties associated with our business are described in our filings with the U.S. Securities and Exchange Commission. This material was prepared solely for informational purposes and is not to be construed as giving investment advice. It has no regard to the specific investment objectives, financial situation or particular needs of any recipient. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. It should not be regarded by recipients as a substitute for the exercise of their own judgment. Any opinions expressed in this material are subject to change without notice. We are not under obligation to update or keep current the information contained herein. This material is intended solely for the use of persons who are market counterparties of intermediate customers (as detailed in the FSA Rules) and is only available to such persons. The information contained herein does not apply to, and should not be relied upon by private customers. Furthermore, you should consult with your own legal, regulatory, tax, business, investment, financial and accounting advisers to the extent that you deem it necessary, and make your own investment, hedging and trading decision (including decisions regarding the suitability of this Transaction) based upon your own judgment and advice from such advisers as you deem necessary and not upon any view expressed in this material.

3 A G E N D A Agenda Company Market Results Strategy 2

4 C O M P A N Y Investment Highlights Leading e-commerce player in Latin America Significant and growing market opportunity Region s GDP similar to China s, with one of the fastest internet growth rates Opportunity to invest in early stages of e-commerce growth Uniquely positioned company Online trading and payments leader in the region Synergistic businesses: Marketplace, Classifieds, Payments, Ad services Top-notch technology and world-class team World class technology and product, driving internet innovations Experienced management with proven local expertise Sizeable opportunity Consolidate current leadership and capture e-commerce growth Expand from existing position into new business segments 3

5 C O M P A N Y Business Model Complementary business segments Online commerce solutions platform Marketplaces Payments Transactional Marketplace (Core) Classifieds Marketplace (Classifieds) Advertising (Ad Sales) Payments Platform Consumer Financing 4

6 C O M P A N Y Geographic Reach Platforms in the 12 largest e-commerce markets in the region Mexico Q1 08 Revenue: $3.3M YoY: 35% % total: 11% Mexico Costa Rica Ecuador Panamá Perú Dominican Republic Colombia Venezuela Brazil Brazil Q1 08 Revenue: $16.4M YoY: 75% % total: 57% Others Q1 08 Revenue: $5.4M YoY: 140.5% % total: 19% Chile Uruguay Argentina Local operations Remote operations Argentina Q1 08 Revenue: $3.8M YoY: 58% % total: 13% 5

7 C O M P A N Y Competitive Position Leading e-commerce platform regionally and per market ComScore MMX Latin America Retail Total unique visitors (000s) Reach (%) Total Internet audience 60, MercadoLibre 27, BuscaPe 8, ebay 7, Apple 7, DeRemate 6, Amazon 5, Submarino 4, UOL Shopping 4, Dell 2, Hewlett Packard 1, ComScore MMX Mexico Retail Total unique visitors (000s) Reach (%) Total Internet audience 11, MercadoLibre 5, Apple 2, ebay 1, BuscaPe American Greetings Amazon Sites DeReto TuAviso Paguito TicketMaster ComScore MMX Brazil Retail Total unique visitors (000s) Reach (%) Total Internet audience 18, MercadoLibre 7, BuscaPe 4, Submarino 4, UOL Shopping 4, Americanas 3, Saraiva 1, ebay 1, Shoptime 1, Apple 1, Bondfaro 1, ComScore MMX Argentina Retail Total unique visitors (000s) Reach (%) Total Internet audience 8, MercadoLibre 4, DeRemate 2, BuscaPe 1, Mas Oportunidades 1, ebay 1, Amazon Apple Garbarino Ticketek Fravega

8 A G E N D A Agenda Company Market Results Strategy 7

9 M A R K E T Large Population Over 550 million people World population breakdown Latin America & Carribean 8.6% Middle East 2.9% U.S.A. + Canada 5.1% Africa 14.2% Oceania 0.5% Asia 56.6% Europe 12.1% Total = 6.6 billion Source: The World Bank 2008 estimated world population. 8

10 M A R K E T Significant Economies GDP of the region ranks as 3 rd largest, ahead of China GDP (US$ billions) $14,195 $4,867 $3,997 $3,941 $3,653 $2,843 $2,833 $2,330 $1,699 $1,622 U.S. Japan Latin America China Germany France U.K. Italy Russia Spain Source: The World Bank 2008 estimated GDP per country. 9

11 M A R K E T Growing Internet User Base Already large and growing rapidly Internet users and % penetration Internet users (millions) % Penetration 5 year CAGR % % % % % 14.7% % 9.1% % 4.0% % 15.0% 10.0% 5.0% 0.0% Source: Internetworldstats.com as of March 31,

12 M A R K E T North America Oceania Europe Latin America Asia Chile Argentina Uruguay Peru Brazil Mexico Venezuela Colombia Ecuador Continued Internet Growth Despite rapid growth, there is continued upside potential Internet penetration by region and country Internet penetration 1 by region Internet penetration 1 by country 71% 43% 40% 57% 32% 43% 26% 22% 22% 20% 22% 14% 15% 11% 1 Penetration defined as internet users divided by total population Source: Internetworldstats.com as of March 31,

13 M A R K E T Increasing Broadband Adoption Further enhancing prospects for e-commerce growth Broadband households in select countries in Latin America Broad band households (millions) 30 5 year CAGR % Source: IDC, e-marketer, company analysis 12

14 A G E N D A Agenda Company Market Results Strategy 13

15 R E S U L T S Continued Increase in Our User Base Accumulated confirmed registered users (millions and % YoY) CRU(millions) Q1 YoY Growth 35% Q1'07 Q1'08 14

16 R E S U L T S Strong Marketplace Volume Growth Gross merchandise volume, excluding classifieds ($ millions and % YoY) GMVe ($ millions) 1,600 1,511 1,400 1,200 1,075 1, Q1 YoY Growth 44% Q1 07 Q

17 R E S U L T S Payments Growing Even More Rapidly Total payments volume ($ millions and % YoY) TPV(millions) Q1 YoY Growth 97% Q1 07 Q

18 R E S U L T S Revenues Growth Accelerating Net revenues ($ millions and % YoY) Net Revenues ($ millions) Q1 YoY Growth 75% Q1 07 Q

19 R E S U L T S Sustained Improvements in Take Rate Take rate (Net revenues as % of GMVe and % YoY in bps) Take rate (%) 7.0% 6.4% 6.0% 5.0% 4.0% 3.0% 3.1% 3.4% 4.2% 4.6% 4.8% 5.6% 5.3% 2.0% 1.0% 0.0% Q1 07 Q

20 R E S U L T S High Gross Profit Margins Gross profit ($ millions and % Revenues) Gross profit ($ millions) % Net revenues % 60 81% 80% 78% 77% 79% 90% 80% 50 78% 70% 40 61% % 50% Q1 07 Q % 30% 20% 10% 0% 19

21 R E S U L T S Significant Operating Leverage Operating expenses ($ millions and Total operating expenses as % Revenues) Operating expenses($ millions) % Net revenues % % 250% 200% % 104% 75% 66% 53% 56% 150% 100% 50% Q 07 1Q 08 0% G&A S&M % Revenues 20

22 R E S U L T S Generating Healthy Margin Expansion Income from operations ($ millions and % Revenues) Operating income ($ millions) % Net revenues % 200% % -24% 0.8 3% % 25% Q1 YoY Growth 118% % 150% 100% 50% 0% % Q1 07 Q % 21

23 R E S U L T S Improving Net Income Net Income($ millions and % Revenues) Net Income ($ millions) % 8 200% % % % 1.1 2% 11% Q1 YoY Growth 108% Q1 07 Q % 150% 100% 50% 0% -50% -100% 22

24 A G E N D A Agenda Company Market Results Growth Strategy 23

25 G R O W T H S T R A T E G Y Strategy for Growth Key drivers for growth going forward 24

26 G R O W T H S T R A T E G Y Core Marketplace Growth Strategy Key drivers for growth going forward Product enhancements Improved search Social shopping Catalogue navigation Improved interface Category Expansion Grow non-electronics Apparel Lifestyle Home Other categories New listing formats Back-end fee formats Simplified listing flow Improve buying 25

27 G R O W T H S T R A T E G Y Payments Growth Strategy Key drivers for growth going forward % Adoption 12% Increase Adoption 2X take rate impact Currently at 12% Shift to seller pay MP 3.0 launch Improved financing Consumer Credit Offered through CC Developing in-house Through partner Transfer credit risk Off Platform Payments Large opportunity Retain share of wallet Live in Argentina, Chile and Colombia 26

28 G R O W T H S T R A T E G Y Classifieds Growth Strategy Key drivers for growth going forward New Platforms Launched Motors Site Developing RE site Scaling sales force Integrate TuCarro Cross listings Pricing initiatives SEO & SEM Enter other countries M&A Complement growth Similar TuCarro Small privately held 27

29 G R O W T H S T R A T E G Y Oceania Asia North America Europe Latin America Ad Sales Growth Strategy Key drivers for growth going forward 12% 10% 8% 6% 4% 2% 0% % Ad spend online Sell Inventory on MELI Very recent efforts 4 th largest site region 47 th largest globally Sell CPC Keywords Attract large retailers Leverage current SMB Zero search results Currently w/ GOOG Marketing Services On line ad spend growing in region Leverage know how Manage client budget Currently pilot mode 28

30 C O N C L U S I O N Wrapping Up Large market Strong secular trend: internet growth Undisputed regional leader Strong business model Uniquely positioned to capture opportunity 29

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