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MercadoLibre, Inc. Reports First Quarter 2019 Financial Results

May 2, 2019 4:01 PM

Net Revenues of $473.8 million, up 92.9% on an FX neutral basis

$5.6 billion Total Payment Volume, up 82.5% on an FX neutral basis

$3.1 billion Gross Merchandise Volume, up 26.6% on an FX neutral basis

BUENOS AIRES, Argentina, May 02, 2019 (GLOBE NEWSWIRE) -- MercadoLibre, Inc. (Nasdaq: MELI) (http://www.mercadolibre.com), Latin America’s leading e-commerce technology company, today reported financial results for the quarter ended March 31, 2019.

Pedro Arnt, Chief Financial Officer of MercadoLibre, Inc., commented, “I am very pleased with the results we delivered this quarter. It is encouraging to enter the new year with continued momentum in our business and to see our strategy delivering on multiple fronts in a sustainable manner. Our Marketplace business showed great resiliency, our Payments business is gaining traction in its online to offline efforts, and our Shipping efforts continue growing the size of our managed network. From a financial perspective, the 1Q’19 was a very strong quarter, as net revenues accelerated to 92.9% YoY growth on an FX neutral basis.”

First Quarter 2019 Business Highlights1

1 Percentages have been calculated using whole amounts rather than rounded amounts.

The tables below present our gross billing and amounts paid by us in connection with our free shipping service.

The Company presents net revenue net of amounts paid in connection with the Company’s free shipping initiative, when the Company acts as an agent, rather than including these amounts in the cost of net sales, as previously recorded. For the three-month period ended March 31, 2019 the Company incurred $74.0 million of shipping subsidies that have been netted from revenues.

In Millions (*)
Q1 2019 Q1 2018
Brazil$358.6 $276.3
GrossArgentina$103.0 $106.1
BillingsMexico$61.2 $29.4
Others$25.0 $21.8
Total$547.8 $433.5

In Millions (*)
Q1 2019 Q1 2018
Brazil$ (56.2) $ (92.1)
Free ShippingArgentina$ (9.2) $ (4.1)
service costMexico$ (6.6) $ (12.3)
Others$ (2.0) $ (3.9)
Total$ (74.0) $ (112.5)

In Millions (*)
Q1 2019 Q4 2018
Brazil$302.4 $184.2
NetArgentina$93.8 $101.9
RevenuesMexico$54.6 $17.1
Others$23.0 $17.8
Total$473.8 $321.0

*The table above may not total due to rounding.

First Quarter 2019 Financial Highlights

The following table summarizes certain key performance metrics for the three months ended March 31, 2019 and 2018.

Three-month Periods Ended March 31, (*)
(in millions) 20192018
Number of confirmed registered users at end of period 280.1 223.1
Number of confirmed new registered users during period 12.3 11.2
Gross merchandise volume $ 3,087.8 $ 3,126.4
Number of successful items sold 82.8 80.1
Number of successful items shipped 62.4 52.5
Total payment volume $ 5,639.1 $ 4,175.3
Total volume of payments on Marketplace $ 2,896.1 $ 2,809.5
Total payment transactions 143.9 74.3
Unique buyers 18.8 17.0
Unique sellers 4.2 5.0
Capital expenditures $ 33.0 $ 23.0
Depreciation and amortization $ 15.7 $ 11.1

(*) Figures have been expressed using rounding amounts. Growth calculations using this table may not total due to rounding.

Table of Year-over-year USD Revenue Growth Rates by Quarter

Consolidated Net Revenues Q1’18 Q2’18 Q3’18 Q4’18 Q1’19
Brazil 15% 25% 25% 34% 64 %
Argentina 43% 14% (8)% (16)% (8)%
Mexico 51% 62% 152% 157 % 220%

Table of Year-over-year Local Currency Revenue Growth Rates by Quarter

Consolidated Net Revenues Q1’18 Q2’18 Q3’18 Q4’18 Q1’19
Brazil 19% 40% 56% 58% 91%
Argentina 80% 68% 68% 77% 83%
Mexico 39% 71% 168% 170% 227%

Conference Call and Webcast

The Company will host a conference call and audio webcast on May 2nd, 2019 at 4:30 p.m. Eastern Time. The conference call may be accessed by dialing (877) 303-7209 / (970) 315-0420 (Conference ID 2466479) and requesting inclusion in the call for MercadoLibre. The live conference call can be accessed via audio webcast at the investor relations section of the Company's website, at http://investor.mercadolibre.com. An archive of the webcast will be available for one week following the conclusion of the conference call.

Definition of Selected Operational Metrics

Gross Billings – Total accrued fees, commissions, interest, and other sales received from users.

Foreign Exchange (“FX”) Neutral – Calculated by using the average monthly exchange rate of each month of 2018 and applying it to the corresponding months in the current year, so as to calculate what the results would have been had exchange rates remained constant. Intercompany allocations are excluded from this calculation. These calculations do not include any other macroeconomic effect such as local currency inflation effects or any price adjustment to compensate local currency inflation or devaluations.

Gross merchandise volume – Measure of the total U.S. dollar sum of all transactions completed through the MercadoLibre Marketplace, excluding Classifieds transactions.

Total payment transactions – Measure of the number of all transactions paid for using MercadoPago.

Total volume of payments on marketplace – Measure of the total U.S. dollar sum of all marketplace transactions paid for using MercadoPago, excluding shipping and financing fees.

Total payment volume – Measure of total U.S. dollar sum of all transactions paid for using MercadoPago, including marketplace and non-marketplace transactions.

Enhanced Marketplace – Revenues from the Enhanced Marketplace service, include the final value fees and shipping fees charged to the Company’s customers.

Items sold – Measure of the number of items that were sold/purchased through the MercadoLibre Marketplace, excluding Classifieds items.

Items shipped – Measure of the number of items that were shipped through our shipping service.

Local Currency Growth Rates – Refer to FX Neutral definition.

Net income margin – Defined as net income as a percentage of net revenues.

New confirmed registered users – Measure of the number of new users who have registered on the MercadoLibre Marketplace and confirmed their registration, excluding Classifieds users.

Operating margin – Defined as income from operations as a percentage of net revenues.

Total confirmed registered users – Measure of the cumulative number of users who have registered on the MercadoLibre Marketplace and confirmed their registration, excluding Classifieds users.

Unique Buyers – New or existing users with at least one purchase made in the period, including Classifieds users.

Unique Sellers – New or existing users with at least one new listing in the period, including Classifieds users.

About Mercado Libre

Founded in 1999, Mercado Libre is the largest online commerce ecosystem in Latin America, serving as an integrated regional platform and as a provider of the necessary online and technology- based tools that allow businesses and individuals to trade products and services in the region. The Company enables commerce through its marketplace platform (including online classifieds for motor vehicles, vessels, aircraft, services and real estate), which allows users to buy and sell in most of Latin America.

The Company is listed on NASDAQ (Nasdaq: MELI) following its initial public offering in 2007.

For more information about the Company visit: http://investor.mercadolibre.com.

The MercadoLibre, Inc. logo is available at https://resource.globenewswire.com/Resource/Download/6ab227b7-693f-4b17-b80c-552ae45c76bf?size=0

Forward-Looking Statements

Any statements herein regarding MercadoLibre, Inc. that are not historical or current facts are forward-looking statements. These forward-looking statements convey MercadoLibre, Inc.’s current expectations or forecasts of future events. Forward-looking statements regarding MercadoLibre, Inc. involve known and unknown risks, uncertainties and other factors that may cause MercadoLibre, Inc.’s actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Certain of these risks and uncertainties are described in the “Risk Factors,” “Forward-Looking Statements” and “Cautionary Note Regarding Forward-Looking Statements” sections of MercadoLibre, Inc.’s annual report on Form 10-K for the year ended December 31, 2018, and any of MercadoLibre, Inc.’s other applicable filings with the Securities and Exchange Commission. Unless required by law, MercadoLibre, Inc. undertakes no obligation to publicly update or revise any forward-looking statements to reflect circumstances or events after the date hereof.

MercadoLibre, Inc.Consolidated Balance Sheets(In thousands of U.S. dollars, except par value)

March 31, December 31,
2019 2018
Assets
Current assets:
Cash and cash equivalents$ 1,295,886 $ 440,332
Restricted cash and cash equivalents 10,375 24,363
Short-term investments (238,029 and 284,317 held in guarantee) 1,648,457 461,541
Accounts receivable, net 34,524 35,153
Credit cards receivable, net 308,468 360,298
Loans receivable, net 134,640 95,778
Prepaid expenses 24,132 27,477
Inventory 3,003 4,612
Other assets 60,968 61,569
Total current assets 3,520,453 1,511,123
Non-current assets:
Long-term investments 275,432 276,136
Property and equipment, net 188,956 165,614
Operating lease right-of-use assets 153,499 —
Goodwill 89,827 88,883
Intangible assets, net 17,683 18,581
Deferred tax assets 160,846 141,438
Other assets 41,464 37,744
Total non-current assets 927,707 728,396
Total assets$ 4,448,160 $ 2,239,519
Liabilities
Current liabilities:
Accounts payable and accrued expenses$ 246,767 $ 266,759
Funds payable to customers 680,746 640,954
Salaries and social security payable 76,123 60,406
Taxes payable 34,414 31,058
Loans payable and other financial liabilities 141,162 132,949
Operating lease liabilities 12,585 —
Other liabilities 56,418 34,098
Total current liabilities 1,248,215 1,166,224
Non-current liabilities:
Salaries and social security payable 31,827 23,161
Loans payable and other financial liabilities 602,061 602,228
Operating lease liabilities 143,047 —
Deferred tax liabilities 97,006 91,698
Other liabilities 13,258 19,508
Total non-current liabilities 887,199 736,595
Total liabilities$ 2,135,414 $ 1,902,819
Redeemable convertible preferred stock, $0.001 par value, 40,000,000 shares
authorized, 100,000 shares issued and outstanding at March 31, 2019 (Note 10)$ 98,688 $ —
Equity
Common stock, $0.001 par value, 110,000,000 shares authorized,
49,318,498 and 45,202,859 shares issued and outstanding at March 31,
2019 and December 31, 2018$ 49 $ 45
Additional paid-in capital 2,097,142 224,800
Retained earnings 509,455 503,432
Accumulated other comprehensive loss (392,588) (391,577)
Total Equity 2,214,058 336,700
Total Liabilities, Redeemable convertible preferred stock and Equity$ 4,448,160 $ 2,239,519

MercadoLibre, Inc.Consolidated Statements of IncomeFor the three months ended March 31, 2019 and 2018(In thousands of U.S. dollars, except for share data)

Three Months Ended March 31,
2019 2018
Net revenues $ 473,770 $ 320,976
Cost of net revenues (236,766) (158,218)
Gross profit 237,004 162,758
Operating expenses:
Product and technology development (52,369) (38,396)
Sales and marketing (130,676) (110,723)
General and administrative (43,820) (43,058)
Total operating expenses (226,865) (192,177)
Income (loss) from operations 10,139 (29,419)
Other income (expenses):
Interest income and other financial gains 24,444 9,195
Interest expense and other financial losses (15,559) (10,734)
Foreign currency (losses) gains (3,669) 5,601
Net income (loss) before income tax (expense) gain 15,355 (25,357)
Income tax (expense) gain (3,491) 12,438
Net income (loss) $ 11,864 $ (12,919)

Three Months Ended March 31,
2019 2018
Basic EPS
Basic net income (loss)
Available to shareholders per common share $ 0.13 $ (0.29)
Weighted average of outstanding common shares 45,980,255 44,157,364
Diluted EPS
Diluted net income (loss)
Available to shareholders per common share $ 0.13 $ (0.29)
Weighted average of outstanding common shares 45,980,255 44,157,364

MercadoLibre, Inc.Consolidated Statement of Cash FlowsFor the three months ended March 31, 2019 and 2018

Three Months Ended March 31,
2019 2018
Cash flows from operations:
Net income (loss) $ 11,864 $ (12,919)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Unrealized devaluation loss, net 1,886 —
Depreciation and amortization 15,694 11,084
Accrued interest (8,699) (4,447)
Non cash interest and convertible notes amortization of debt discount and amortization of debt issuance costs 3,018 7,063
LTRP accrued compensation 13,441 15,737
Deferred income taxes (14,456) (30,601)
Changes in assets and liabilities:
Accounts receivable 337 (9,347)
Credit card receivables 35,893 (33,870)
Prepaid expenses 3,316 (16,164)
Inventory 1,652 (872)
Other assets (5,085) (13,009)
Accounts payable and accrued expenses (491) 22,773
Funds payable to customers 63,730 20,613
Other liabilities 12,735 3,041
Interest received from investments 3,536 3,912
Net cash provided by (used in) operating activities 138,371 (37,006)
Cash flows from investing activities:
Purchase of investments (1,624,226) (632,734)
Proceeds from sale and maturity of investments 439,712 683,909
Purchases of intangible assets (34) (97)
Advance for property and equipment — (3,390)
Changes in principal of loans receivable, net (42,609) (52,243)
Purchases of property and equipment (32,928) (19,542)
Net cash used in investing activities (1,260,085) (24,097)
Cash flows from financing activities:
Purchase of convertible note capped call — (45,692)
Proceeds from loans payable and other financial liabilities 33,977 80,925
Payments on loans payable and other financing liabilities (23,816) (4,583)
Payment of finance lease obligations (662) —
Dividends paid — (6,624)
Proceeds from issuance of convertible redeemable preferred stock, net 98,688 —
Proceeds from issuance of common stock, net 1,866,500 —
Net cash provided by financing activities 1,974,687 24,026
Effect of exchange rate changes on cash, cash equivalents, restricted cash and cash equivalents (11,407) (772)
Net increase (decrease) in cash, cash equivalents, restricted cash and cash equivalents 841,566 (37,849)
Cash, cash equivalents, restricted cash and cash equivalents, beginning of the period $ 464,695 $ 388,260
Cash, cash equivalents, restricted cash and cash equivalents, end of the period $ 1,306,261 $ 350,411

Financial results of reporting segments

Three Months Ended March 31, 2019
Brazil Argentina Mexico Other Countries Total
(In thousands)
Net revenues $ 302,384 $ 93,776 $ 54,561 $ 23,049 $ 473,770
Direct costs (225,343) (67,492) (65,585) (20,447) (378,867)
Direct contribution 77,041 26,284 (11,024) 2,602 94,903
Operating expenses and indirect costs of net revenues (84,764)
Income from operations 10,139
Other income (expenses):
Interest income and other financial gains 24,444
Interest expense and other financial losses (15,559)
Foreign currency losses (3,669)
Net income before income tax expense $ 15,355

Three Months Ended March 31, 2018
Brazil Argentina Mexico Other Countries Total
(In thousands)
Net revenues $ 184,155 $ 101,939 $ 17,065 $ 17,817 $ 320,976
Direct costs (176,980) (57,295) (26,323) (17,272) (277,870)
Direct contribution 7,175 44,644 (9,258) 545 43,106
Operating expenses and indirect costs of net revenues (72,525)
Loss from operations (29,419)
Other income (expenses):
Interest income and other financial gains 9,195
Interest expense and other financial losses (10,734)
Foreign currency gains 5,601
Net loss before income tax gains $ (25,357)

Non-GAAP Financial Measures

To supplement our consolidated financial statements presented in accordance with U.S. GAAP, we use foreign exchange (“FX”) neutral measures.

This non-GAAP measure should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP and may be different from non-GAAP measures used by other companies. In addition, this non-GAAP measure is not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with U.S. GAAP. This non-GAAP financial measure should only be used to evaluate our results of operations in conjunction with the most comparable U.S. GAAP financial measures.

Reconciliation of this non-GAAP financial measure to the most comparable U.S. GAAP financial measures can be found in the tables included in this quarterly report.

The Company believes that reconciliation of FX neutral measures to the most directly comparable GAAP measure provides investors an overall understanding of our current financial performance and its prospects for the future. Specifically, we believe this non-GAAP measure provide useful information to both management and investors by excluding the foreign currency exchange rate impact that may not be indicative of our core operating results and business outlook.

The FX neutral measures were calculated by using the average monthly exchange rates for each month during 2018 and applying them to the corresponding months in 2019, so as to calculate what our results would have been had exchange rates remained stable from one year to the next. The table below excludes intercompany allocation FX effects. Finally, this measure does not include any other macroeconomic effect such as local currency inflation effects, the impact on impairment calculations or any price adjustment to compensate local currency inflation or devaluations.

The following table sets forth the FX neutral measures related to our reported results of the operations for the three-month period ended March 31, 2019:

Three-month Periods Ended March 31, (*)
As reported FX Neutral Measures As reported
(In millions, except percentages) 2019 2018 Percentage Change 2019 2018 Percentage Change
(Unaudited) (Unaudited)
Net revenues $ 473.8 $ 321.0 47.6% $ 619.2 $ 321.0 92.9%
Cost of net revenues (236.8) (158.2) 49.6% (317.1) (158.2) 100.4%
Gross profit 237.0 162.8 45.6% 302.2 162.8 85.7%
Operating expenses (226.9) (192.2) 18.1% (332.9) (192.2) 73.3%
Income (Loss) from operations 10.1 (29.4) -134.5% (30.8) (29.4) 4.6%

(*) The table above may not total due to rounding.

CONTACT: MercadoLibre, Inc.

Investor Relations

[email protected]

http://investor.mercadolibre.com

MercadoLibre, Inc. Logo

Source: MercadoLibre, Inc.

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