MercadoLibre presentation; Stanford Graduate School of Business. March 2011


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MercadoLibre presentation; Stanford Graduate School of Business. March 2011

  1. MercadoLibre: the leading e-commerce ecosystem in Latin America<br />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<br />
  2. MELI’s origins are tied to Stanford GSB<br />First Steps<br /><ul><li>Spring of 1999: idea to build an online marketplace for Latin America, while doing my Stanford MBA
  3. Spring of 1999: drove visiting venture capitalist John Muse back to the airport, and pitched idea along the way.
  4. June 1999: MercadoLibreis founded.
  5. August 1999: first of our online auction services is launched in Argentina</li></ul>Early Challenges<br /><ul><li>Additional financing
  6. Finding the right people : GSB provides the network
  7. Quickly evolving competition
  8. De Remate going head to head with MercadoLibre in 3 markets.
  9. Local players such as Lokau in Brazil quickly expanding.
  10. Imminent entrance of U.S.-based Yahoo! and eBay?</li></ul>M E R C A D O L I B R E :   T H E   L E A D I N G   I N T E R N E T   E C O S Y S T E M   I N   L A T A M<br />1<br />
  11. What has happened since<br />MercadoLibre’s history<br />Acquired and<br />Acquired the operations of DeRemate that it didn’t own<br />Expandedbusiness model<br />Acquired Lokau<br />2005<br />1999<br />2000<br />2001<br />2002<br />2004<br />2006<br />2003<br />2007<br />2008<br />2009<br />M E R C A D O L I B R E :   T H E   L E A D I N G   I N T E R N E T   E C O S Y S T E M   I N   L A T A M<br />Break even. AcquiredDeRemate subs<br />Launched<br />227% netrevenues growth—regional leadership<br />eBay acquired19.5% of MLfor iBazar Brazil<br />IPOUS$333mm<br />Launched search advertising and web stores<br />Source: Company<br />2<br />
  12. Population, 2011E<br />Latin America has one of the best combinations of actual GDP and population size with expected growth rates<br />GDP and Population<br />GDP and Population<br />China<br />GDP CAGR 2009-2012<br />Central and Eastern Europe<br />Source: IMF. Figures in table are 2011 estimates<br />Asia ex Japan and China<br />Middle East and Africa<br />Latin America<br />M E R C A D O L I B R E :   T H E   L E A D I N G   I N T E R N E T   E C O S Y S T E M   I N   L A T A M<br />US<br />Western Europe<br />Japan<br />Source: IDM <br />3<br />
  13. Latin America is expected to post the highest internet users growth due to improving infrastructure and low penetration base<br />Selected infrastructure statistics by region (sorted by internet users growth rates)<br />Source: EIU databases, al numbers in millions, CAGR for estimates 2009-2012<br />Global broadband penetration per inhabitant %, 2009<br />Global internet penetration per inhabitant %, 2009<br />M E R C A D O L I B R E :   T H E   L E A D I N G   I N T E R N E T   E C O S Y S T E M   I N   L A T A M<br />Source: ITU, ICT Statistics<br />Source: ITU, ICT Statistics<br />4<br />
  14. Asia Pacific ex-Japan<br />…outpacing all other regions…<br />US<br />E-commerce growth<br />Current internet buyers, 2009E<br />Retail e-commerce volume CAGR 2009-2012<br />LatinAmerica<br />Central and EasternEurope<br />Asia Pacific ex Japan <br />WesternEurope<br />M E R C A D O L I B R E :   T H E   L E A D I N G   I N T E R N E T   E C O S Y S T E M   I N   L A T A M<br />USA<br />Japan<br />Source: IDM. Figures in table are 2009 estimates<br />5<br />
  15. MercadoLibrecovers almost all of Latin America<br />Countries of operation<br />Main Region Stats<br /><ul><li>Population covered: 499mm1
  16. GDP covered: US$ 4,179bn1
  17. Total retail market: US$477bn2
  18. Total ecommerce retail market: US$16.3bn2
  19. Total advertising market: US$33.4bn2</li></ul>Mexico<br />Dominican Republic<br />Venezuela<br />Panamá<br />Costa Rica<br />Main Internet Indicators<br />Colombia<br /><ul><li>178 million internet users
  20. Internet Penetration: 36%
  21. Broadband subscriptions: 32 million
  22. e-commerce over GDP: 0.39%</li></ul>Ecuador<br />Brazil<br />Peru<br />M E R C A D O L I B R E :   T H E   L E A D I N G   I N T E R N E T   E C O S Y S T E M   I N   L A T A M<br />Main MeliStats<br />Chile<br /><ul><li>31.8 million unique visitors in Latin America³
  23. 1.7bn pages viewed per month on average4
  24. 11th largest global retail site, 1st Retail in LatAm
  25. #1 Retail site in each of the markets
  26. ~50mm search page views /weekday </li></ul>Uruguay<br />Argentina<br />1ITU for countries where MercadoLibre has operations, as of 2009<br />2IDC, for all Latin American countries, 2009 estimates<br />³Comscore, November 2010<br />4Comscore, One year average (Nov. 2009 – Nov. 2010)<br />6<br />
  27. MercadoLibre’s is the most visited e-commerce site in Latin America and #11 globally…<br />Global–Retail web sites audience<br />Latam–Retail web sites audience<br />M E R C A D O L I B R E :   T H E   L E A D I N G   I N T E R N E T   E C O S Y S T E M   I N   L A T A M<br />Brazil–Retail web sites audience<br />Source: ComScore. All figures Q4’10 except global retail Q1’10<br />7<br />
  28. … and one of the top internet destinations in the region<br />Latam–total internet audience<br />Source: ComScore<br />Brazil–total internet audience<br />M E R C A D O L I B R E :   T H E   L E A D I N G   I N T E R N E T   E C O S Y S T E M   I N   L A T A M<br />Source: ComScore. All figures Q4’10.<br />8<br />
  29. Four business units that create a powerful ecosystem<br />Marketplaces<br /> On platform<br />MercadoLibre<br /><ul><li> Transactional marketplace
  30. Classifieds marketplace
  31. Search results positioning</li></ul>Payments<br />Advertising<br />MercadoPago<br /><ul><li>Payments processing
  32. Consumer finance</li></ul>MercadoClics<br /><ul><li> Search advertising
  33. Display advertising</li></ul>M E R C A D O L I B R E :   T H E   L E A D I N G   I N T E R N E T   E C O S Y S T E M   I N   L A T A M<br /> Off platform<br />Webstores<br />MercadoShops<br /><ul><li>SaaS web stores</li></ul> On platform<br /> Off platform<br />9<br /> Both on and off platform<br />
  34. Marketplace: enabling buyers and sellers to transact<br />Revenue Sources<br /><ul><li>Transactional platform
  35. Classifieds / Listing
  36. Search result positioning</li></ul>Size and Growth<br /><ul><li>52.9mm registered users (34% 5-yr CAGR)
  37. US$3.4bn GMV (41% 5-yr CAGR) during 2010
  38. ~50mm search page views /weekday </li></ul>Business Characteristics<br /><ul><li>96% fixed price (4% auction)
  39. 75% new items
  40. Strength in both B2C and C2C segments</li></ul>M E R C A D O L I B R E :   T H E   L E A D I N G   I N T E R N E T   E C O S Y S T E M   I N   L A T A M<br />Key Elements of Value Proposition<br /><ul><li>Depth of selection available
  41. Most affordable prices
  42. Fluidity of user experience</li></ul>Key Initiatives<br /><ul><li>Expand into new product categories
  43. Move towards more back-ended pricing
  44. Focus on continuously improving buyer experience</li></ul>10<br />
  45. MercadoLibre’s key metrics –Marketplace<br />GMVe (US$mm)<br />Successful items sold (mm)<br />CAGR 2002 – 2020: 52.1%<br />CAGR 2002 – 2010: 67,4%<br />New Paid Listings (mm)<br />Registered Users (mm)<br />M E R C A D O L I B R E :   T H E   L E A D I N G   I N T E R N E T   E C O S Y S T E M   I N   L A T A M<br />CAGR 2002 – 2010: 33.6%<br />CAGR 2003 – 2010: 44,6%<br />Source: company filings<br />11<br />
  46. Payments: becoming an online payment standard<br />Revenue Sources<br /><ul><li>Off platform payment processing
  47. Financing made available for both on and off platform purchases</li></ul>Size and Growth<br /><ul><li>US$697.5mm TPV (20% of GMV, 79% 5yr-CAGR) in 2010
  48. 6.7mm payments processed during 2010
  49. Over 1,200 off platform merchants</li></ul>Business Characteristics<br /><ul><li>Mainly on platform (today); recently launched off platform payments in Argentina and Brazil
  50. 55% financed payments
  51. Average processed transaction of US$98</li></ul>M E R C A D O L I B R E :   T H E   L E A D I N G   I N T E R N E T   E C O S Y S T E M   I N   L A T A M<br />Key Elements of Value Proposition<br /><ul><li>Security of on-line payments
  52. Fluidity of user experience / ease of integration
  53. Low cost to merchants due to scale</li></ul>Key Initiatives<br /><ul><li>Increase penetration in marketplace (on platform)
  54. Merchant services: enable third party payments (off platform)
  55. Expand consumer credit offering</li></ul>12<br />
  56. MercadoLibre’s key metrics –Payments<br />Number of payment transactions (mm)<br />TPV (US$bn)<br />Number of transactions/successful items sold<br />Average ticket paid with MP2US$<br /># transactions (mm)<br />TPV (US$bn)<br />CAGR 2005-2010: 78.5%<br />CAGR 2005-2010: 82.4%<br />2TPV/Number of transactions<br />MercadoPago penetration (TPV/GMVe)<br />Adoption3<br />M E R C A D O L I B R E :   T H E   L E A D I N G   I N T E R N E T   E C O S Y S T E M   I N   L A T A M<br />3 Share of Live Listing at the end of the period in MP countries<br />Source: Company filings<br />13<br />
  57. MercadoClics and MercadoShops: completing the ecosystem<br /><ul><li>CPC search platform similar to AdWords and sale of display ads
  58. Offers buyers access to inventory from branded retailers that complement listings on platform
  59. Offers advertisers >32mm unique monthly visitors and their purchase intent
  60. Marks a focus on search advertising over display while capturing share of wallet of large retailers
  61. Starting from a small base showing very rapid growth: > 11,000 advertisers / month, 19% QoQ
  62. 713mm Ads / month, 11% QoQ
  63. >30mm ad impressions / quarter, 13% QoQ
  64. Average CPC at $0.11 </li></ul>MercadoClics Key Characteristics<br />MercadoShopsKey Characteristics<br /><ul><li>Most customers are SMBs looking to launch their own online sales channel
  65. MercadoShops has fixed pricing per monthly usage that gets credited back in marketplace fees
  66. Monetization mainly through MercadoPago
  67. Deeply integrated with MercadoPago, Marketplace and MercadoClics
  68. Low cost SaaSweb-stores: average cost of premium shop USD30/month
  69. Over 5,000 active shops already after official launch in H2’10</li></ul>M E R C A D O L I B R E :   T H E   L E A D I N G   I N T E R N E T   E C O S Y S T E M   I N   L A T A M<br />14<br />
  70. Robust Financial Performance<br />Gross Profit <br />Net Revenues<br />Margin<br />Gross Profit (US$mm)<br />Margin<br />EBITDA (US$mm)<br />Net Revenues (US$mm)<br />CAGR 2005-2010: 50.4%<br />CAGR 2005-2010: 50.3%<br />CAGR 2005-2010: 101.6%<br />EBITDA <br />Net income <br />M E R C A D O L I B R E :   T H E   L E A D I N G   I N T E R N E T   E C O S Y S T E M   I N   L A T A M<br />Net income (US$mm)<br />Margin<br />CAGR 2005-2010: 88.5%<br />Source: Company filings<br />15<br />