61.5 million Sold Items, up 41.0%, 52.1 million
Total Payment Transactions, up 63.3%
MercadoLibre, Inc. (Nasdaq:MELI) (http://www.mercadolibre.com),
Latin America's leading e-commerce technology company, today
reported financial results for the second quarter ended June 30,
2017.
Pedro Arnt, Chief Financial Officer of
MercadoLibre, Inc., commented, “This first half has marked the
initial stages of the deployment of our free shipping and loyalty
programs, meaningfully improving and deepening the already powerful
value proposition that we offer our buyers. We believe that our
sustained focus on consumer centered efforts such as these will
foster the ongoing switch from offline buying to online buying.
This in turn should serve as a catalyst for Mercado Libre´s
sustained growth, as we gain scale advantages and benefit from a
leadership position within an accelerating e-commerce market.”
Second Quarter 2017 Business
Highlights
- Gross Merchandise Volume continues to grow and reached $2,722.4
million, a 35.8% increase in USD and a 55.6 % increase on an FX
neutral basis.
- Items sold during the second quarter reached an all-time high
of 61.5 million units, a 41.0% year-over-year increase. Mexico was
the a highlight, as it accelerated for the seventh consecutive
quarter reaching a multi-year high of 95.4% year on year,
followed by Brazil which also accelerated unit growth to 56.5% year
on year versus the second quarter of 2016.
- Total payment transactions through Mercado Pago increased 63.3%
to 52.1 million year-over-year. Total payment volume processed over
$3 billion dollars, ending the quarter with $3,152.0 million, a
year-over-year growth of 73.5% in USD and 76.1% on an FX neutral
basis.
- Mercado Envíos shipped over 54% of all units sold on Mercado
Libre. Mexico was a highlight this quarter as unit shipped
increased 287% to 3.6 million units versus 1 million a year
ago.
- Leveraging Mercado Pago’s technology and Mercado Libre’s unique
marketplace data to score their merchant base´s creditworthiness,
the Company announced the launch of Mercado Crédito, an online
platform for lending and advancing cash to merchants in Brazil and
Argentina with encouraging results.
- During the second quarter, classifieds listings increased 114%
year-over-year to an all-time high of to 4.1 million.
- Mobile engagement continues to grow, representing 43% of our
GMV in the second quarter.
Second Quarter 2017 Financial
Highlights
- Net revenues for the second quarter were $316.5 million, a
year-over-year increase of 58.5% in USD and 64.7% on an FX neutral
basis.
- Marketplace revenues grew 73.7% in USD, and 85.2% on an FX
neutral basis, while non-marketplace revenues grew 38.7% in USD and
33.8% on an FX neutral basis compared to 41.3% last year in USD.
The main contributor for this deceleration is explained by our
contraction in shipping revenues due to our free shipping
initiatives in Brazil and Mexico.
- Gross profit for the second quarter of 2017 was $171.6 million
with a margin of 54.2%, compared to 63.3% in the second quarter of
2016. Most of the margin compression is as the result of an
increase in costs of providing free shipping in Mexico and
Brazil.
- The company adopted the DICOM floating exchange rate in
Venezuela as of June 1, 2017. As of such date, the DICOM Exchange
rate was 2640 BsF per U.S. dollar as compared to 709BsF per U.S
dollar using the SIMADI exchange at the end of the first quarter.
As a result, the company recorded a $24.8 million loss in the
quarter that includes: an impairment charge on long-lived assets of
$2.8 million and a forex loss of $22.0 million, which was partially
offset by deferred income tax gains of $3.2 million dollars.
- Total operating expenses were $141.5 million, up 50.4%
year-over-year. As a percentage of revenues, operating expenses
were 44.7% versus 47.1% in the second quarter of 2016.
- Income from operations was $30.0 million, down 6.7%
year-over-year. As a percentage of revenues, income from operations
was 9.5%, versus 16.1% during the same period in 2016.
- Interest income grew 32.5% year-over-year to $10.6
million.
- The company incurred $6.5 million dollars in financial expenses
in the second quarter of 2017.
- Net income before taxes was $12.4 million, down 56.0%
year-over-year.
- Income tax expense was $7.1 million during the second quarter,
yielding a blended tax rate for the period of 57.2%
- Net income as reported for the second quarter was $5.3 million
dollars, resulting in basic net income per share of 12 cents.
- Net cash provided by operating activities was $121.6 million.
Free cash flow, defined as cash from operating activities less
payment for the acquisition of property, equipment, intangible
assets, advances for property and equipment net of financial
liabilities and payment for acquired businesses net of cash
acquired, was $99.8 million. *
- Excluding the impact of the Venezuelan write-offs that occurred
during the second quarter of 2016 and 2017, total operating
expenses would have been $138.7 million, or 43.8% of net revenues
versus 40.3% in last year’s second quarter. Net income would have
been $26.9 million dollars, a margin of 8.5%, and earnings per
share of 61 cents, vs 16.4% and 74 cents a year ago respectively*.
(*) See note on “Non-GAAP Financial
Measures”
Second Quarter 2017 Corporate
Highlights
- On July 31, 2017, the Board of Directors approved a quarterly
cash dividend of $0.150 per share on our outstanding shares
of common stock. This quarterly dividend is payable on October 16,
2017 to stockholders of record as of the close of business on
September 30, 2017.
The following table summarizes certain key performance
metrics for the three months ended June 30, 2017 and
2016.
|
|
Three months ended June
30, (in MM) |
|
|
|
2016 |
|
|
2017 |
|
%YoY |
|
%YoY Local
Currency |
Total confirmed
registered users at the end of period |
|
|
158.6 |
|
|
191.2 |
|
20.6 |
% |
|
|
New confirmed
registered users during the period |
|
|
7.0 |
|
|
9.0 |
|
27.3 |
% |
|
|
Gross merchandise
volume |
|
$ |
2,004.7 |
|
$ |
2,722.4 |
|
35.8 |
% |
|
55.6 |
% |
Number of successful
items sold |
|
|
43.7 |
|
|
61.5 |
|
41.0 |
% |
|
|
Number of successful
items shipped |
|
|
20.3 |
|
|
33.4 |
|
64.7 |
% |
|
|
Total payment
volume |
|
$ |
1,816.9 |
|
$ |
3,152.0 |
|
73.5 |
% |
|
76.1 |
% |
Total volume of
payments on marketplace |
|
$ |
1,335.4 |
|
$ |
2,201.6 |
|
64.9 |
% |
|
|
Tota payments
transactions |
|
$ |
31.9 |
|
$ |
52.1 |
|
63.3 |
% |
|
|
Unique Buyers |
|
|
11.9 |
|
|
14.6 |
|
23.4 |
% |
|
|
Unique Sellers |
|
|
3.7 |
|
|
4.2 |
|
14.2 |
% |
|
|
(*) The table above may not total due to rounding.
Table of Year-on-Year Local Currency Revenue Growth
Rates by Quarter
|
|
YoY Growth
rates |
Consolidated Net Revenues
|
|
|
|
|
|
|
|
|
Q2'16 |
|
Q3'16 |
|
Q4'16 |
|
Q1'17 |
|
Q2'17 |
Brazil |
|
61 |
% |
|
62 |
% |
|
64 |
% |
|
66 |
% |
|
60 |
% |
Argentina |
|
89 |
% |
|
68 |
% |
|
60 |
% |
|
58 |
% |
|
44 |
% |
Mexico |
|
35 |
% |
|
36 |
% |
|
29 |
% |
|
55 |
% |
|
80 |
% |
Venezuela |
|
185 |
% |
|
152 |
% |
|
199 |
% |
|
291 |
% |
|
353 |
% |
Others |
|
30 |
% |
|
33 |
% |
|
42 |
% |
|
36 |
% |
|
34 |
% |
Total |
|
73 |
% |
|
66 |
% |
|
68 |
% |
|
79 |
% |
|
65 |
% |
Table of Year-on-Year USD Revenue Growth Rates by
Quarter
|
|
YoY Growth
rates |
Consolidated Net
Revenues |
|
|
|
|
|
|
|
|
Q2'16 |
|
Q3'16 |
|
Q4'16 |
|
Q1'17 |
|
Q2'17 |
Brazil |
|
41 |
% |
|
76 |
% |
|
92 |
% |
|
106 |
% |
|
75 |
% |
Argentina |
|
19 |
% |
|
4 |
% |
|
4 |
% |
|
48 |
% |
|
30 |
% |
Mexico |
|
15 |
% |
|
19 |
% |
|
8 |
% |
|
40 |
% |
|
76 |
% |
Venezuela |
|
31 |
% |
|
-22 |
% |
|
-10 |
% |
|
19 |
% |
|
90 |
% |
Others |
|
14 |
% |
|
33 |
% |
|
46 |
% |
|
47 |
% |
|
39 |
% |
Total |
|
29 |
% |
|
37 |
% |
|
42 |
% |
|
74 |
% |
|
59 |
% |
Conference Call and Webcast
The Company will host a conference call and audio webcast on
August 3rd, 2017 at 4:30 p.m. Eastern Time. The conference call may
be accessed by dialing +(970) 315-0420 or +(877) 303-7209
(Conference ID 58231198) and requesting inclusion in the call for
Mercado Libre. 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
MetricsBlended tax rate – Defined as income and asset tax
expense as a percentage of income before income and assets tax.
Free Cash Flow – Defined as cash flows from operating activities
less payment and advances for the acquisition of property,
equipment, intangible assets net of financial liabilities and
payment for acquired business net of cash acquired.
Foreign Exchange (“FX”) Neutral – Calculated by using the
average monthly exchange rate of each month of 2016 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 Mercado Libre
Marketplace, excluding motor vehicles, vessels, aircraft, real
estate, and services.
Total payment transactions – Measure of the number of all
transactions completed using Mercado Pago.
Total volume of payments on marketplace - Measure of the total
U.S. dollar sum of all marketplace transactions paid for using
Mercado Pago, excluding shipping and financing fees.
Total payment volume – Measure of total U.S. dollar sum of all
transactions paid for using Mercado Pago.
Items sold – Measure of the number of items sold/purchased
through the Mercado Libre Marketplace.
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 Mercado Libre platform (including
Mercado Pago) and confirmed their registration. Since July’12,
registration and confirmation take place in the same step of the
registration flow.
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 Mercado Libre platform
(including Mercado Pago) and confirmed their registration. Since
July ’12, registration and confirmation take place in the same step
of the registration flow.
Unique Buyers – New or existing buyers with at least one
purchase made in the period.
Unique Sellers – New or existing sellers with at least one sale
made in the period.
About Mercado Libre
Founded in 1999, Mercado Libre is Latin America's leading
e-commerce technology company. Through its primary platforms,
Mercado Libre.com and Mercado Pago.com, it provides solutions to
individuals and companies buying, selling, advertising, and paying
for goods and services online.
Mercado Libre.com serves millions of users and creates a market
for a wide variety of goods and services in an easy, safe and
efficient way. The site is among the top 50 in the world in terms
of page views and is the leading retail platform in unique visitors
in the major countries in which it operates according to metrics
provided by comScore Networks. 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 Mercado Libre, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=4193
Consolidated balance sheets |
(In thousands of U.S. dollars, except par
value) |
|
|
|
|
June 30, |
|
December 31, |
|
|
|
2017 |
|
2016 |
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
|
|
$ |
382,791 |
|
|
$ |
234,140 |
|
Short-term investments |
|
|
|
206,165 |
|
|
|
253,321 |
|
Accounts
receivable, net |
|
|
|
24,733 |
|
|
|
25,435 |
|
Credit
cards receivables, net |
|
|
|
265,212 |
|
|
|
307,904 |
|
Loans
receivable, net |
|
|
|
25,290 |
|
|
|
6,283 |
|
Prepaid
expenses |
|
|
|
9,570 |
|
|
|
15,060 |
|
Inventory |
|
|
|
1,034 |
|
|
|
1,103 |
|
Other
assets |
|
|
|
43,390 |
|
|
|
26,215 |
|
Total
current assets |
|
|
|
958,185 |
|
|
|
869,461 |
|
Non-current
assets: |
|
|
|
|
|
Long-term
investments |
|
|
|
186,322 |
|
|
|
153,803 |
|
Property
and equipment, net |
|
|
|
130,594 |
|
|
|
124,261 |
|
Goodwill |
|
|
|
94,118 |
|
|
|
91,797 |
|
Intangible assets, net |
|
|
|
25,359 |
|
|
|
26,277 |
|
Deferred
tax assets |
|
|
|
58,065 |
|
|
|
45,017 |
|
Other
assets |
|
|
|
58,795 |
|
|
|
56,819 |
|
Total
non-current assets |
|
|
|
553,253 |
|
|
|
497,974 |
|
Total
assets |
|
|
$ |
1,511,438 |
|
|
$ |
1,367,435 |
|
Liabilities and Equity |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable and accrued expenses |
|
|
$ |
154,423 |
|
|
$ |
105,106 |
|
Funds
payable to customers |
|
|
|
425,609 |
|
|
|
370,693 |
|
Salaries
and social security payable |
|
|
|
47,512 |
|
|
|
48,898 |
|
Taxes
payable |
|
|
|
22,084 |
|
|
|
27,338 |
|
Loans
payable and other financial liabilities |
|
|
|
18,240 |
|
|
|
11,583 |
|
Other
liabilities |
|
|
|
1,545 |
|
|
|
6,359 |
|
Dividends
payable |
|
|
|
6,624 |
|
|
|
6,624 |
|
Total
current liabilities |
|
|
|
676,037 |
|
|
|
576,601 |
|
Non-current
liabilities: |
|
|
|
|
|
Salaries
and social security payable |
|
|
|
19,179 |
|
|
|
16,173 |
|
Loans
payable and other financial liabilities |
|
|
|
306,706 |
|
|
|
301,940 |
|
Deferred
tax liabilities |
|
|
|
37,696 |
|
|
|
34,059 |
|
Other
liabilities |
|
|
|
12,805 |
|
|
|
9,808 |
|
Total
non-current liabilities |
|
|
|
376,386 |
|
|
|
361,980 |
|
Total
liabilities |
|
|
$ |
1,052,423 |
|
|
$ |
938,581 |
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
|
|
|
Common
stock, $0.001 par value, 110,000,000 shares authorized, |
|
|
|
|
|
44,157,364 shares issued and outstanding at June 30, |
|
|
|
|
|
2017
and December 31, 2016, respectively |
|
|
$ |
44 |
|
|
$ |
44 |
|
Additional paid-in capital |
|
|
|
137,982 |
|
|
|
137,982 |
|
Retained
earnings |
|
|
|
591,227 |
|
|
|
550,641 |
|
Accumulated other comprehensive loss |
|
|
|
(270,238 |
) |
|
|
(259,813 |
) |
Total
Equity |
|
|
|
459,015 |
|
|
|
428,854 |
|
Total
Liabilities and Equity |
|
|
$ |
1,511,438 |
|
|
$ |
1,367,435 |
|
Consolidated
statements of cash flows |
|
|
|
|
(In thousands
of U.S. dollars, except par value) |
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
Cash flows from
operations: |
|
|
|
|
Net
income |
|
$ |
53,834 |
|
|
$ |
46,105 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Unrealized Devaluation Loss, net |
|
|
25,502 |
|
|
|
5,162 |
|
Impairment of Long-Lived Assets |
|
|
2,837 |
|
|
|
13,717 |
|
Depreciation and amortization |
|
|
19,083 |
|
|
|
13,178 |
|
Accrued
interest |
|
|
(10,930 |
) |
|
|
(7,918 |
) |
Non cash
interest and convertible bonds amortization of debt discount
and amortization of debt issuance costs |
|
|
4,798 |
|
|
|
4,705 |
|
LTRP
accrued compensation |
|
|
22,068 |
|
|
|
10,126 |
|
Deferred
income taxes |
|
|
(10,451 |
) |
|
|
(1,981 |
) |
Changes
in assets and liabilities: |
|
|
|
|
Accounts
receivable |
|
|
(5,165 |
) |
|
|
(2,833 |
) |
Credit
Card Receivables |
|
|
34,161 |
|
|
|
(78,334 |
) |
Prepaid
expenses |
|
|
5,462 |
|
|
|
9 |
|
Inventory |
|
|
102 |
|
|
|
(637 |
) |
Other
assets |
|
|
(22,074 |
) |
|
|
(7,704 |
) |
Accounts
payable and accrued expenses |
|
|
33,633 |
|
|
|
(15,133 |
) |
Funds
payable to customers |
|
|
63,164 |
|
|
|
59,309 |
|
Other
liabilities |
|
|
(498 |
) |
|
|
(566 |
) |
Interest
received from investments |
|
|
10,788 |
|
|
|
7,650 |
|
Net cash
provided by operating activities |
|
|
226,314 |
|
|
|
44,855 |
|
Cash flows from
investing activities: |
|
|
|
|
Purchase
of investments |
|
|
(2,186,528 |
) |
|
|
(1,559,095 |
) |
Proceeds
from sale and maturity of investments |
|
|
2,200,172 |
|
|
|
1,565,336 |
|
Payment
for acquired businesses, net of cash acquired |
|
|
— |
|
|
|
(7,284 |
) |
Purchases
of intangible assets |
|
|
(74 |
) |
|
|
(49 |
) |
Advance
for property and equipment |
|
|
(8,351 |
) |
|
|
(4,963 |
) |
Changes
in principal of loans receivable, net |
|
|
(20,143 |
) |
|
|
— |
|
Purchases
of property and equipment |
|
|
(26,147 |
) |
|
|
(32,590 |
) |
Net cash
used in investing activities |
|
|
(41,071 |
) |
|
|
(38,645 |
) |
Cash flows from
financing activities: |
|
|
|
|
Proceeds
from loans payable and other financial liabilities |
|
|
7,800 |
|
|
|
— |
|
Payments
on loans payable and other financing liabilities |
|
|
(2,969 |
) |
|
|
(6,299 |
) |
Dividends
paid |
|
|
(13,247 |
) |
|
|
(11,172 |
) |
Net cash used in
financing activities |
|
|
(8,416 |
) |
|
|
(17,471 |
) |
Effect of
exchange rate changes on cash and cash equivalents |
|
|
(28,176 |
) |
|
|
(11,604 |
) |
Net increase (decrease)
in cash and cash equivalents |
|
|
148,651 |
|
|
|
(22,865 |
) |
Cash and cash
equivalents, beginning of the period |
|
$ |
234,140 |
|
|
$ |
166,881 |
|
Cash and cash
equivalents, end of the period |
|
$ |
382,791 |
|
|
$ |
144,016 |
|
Consolidated statements of income |
(In thousands of U.S. dollars, except for share
data) |
|
|
|
|
Six Months Ended June 30 |
|
Three Months
Ended June 30, |
|
|
2017 |
|
2016 |
|
|
2017 |
|
|
|
2016 |
|
Net
revenues |
|
$ |
590,455 |
|
|
$ |
357,274 |
|
|
$ |
316,529 |
|
|
$ |
199,644 |
|
Cost of net
revenues |
|
|
(250,045 |
) |
|
|
(128,794 |
) |
|
|
(144,975 |
) |
|
|
(73,346 |
) |
Gross
profit |
|
|
340,410 |
|
|
|
228,480 |
|
|
|
171,554 |
|
|
|
126,298 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Product and technology development |
|
|
(60,639 |
) |
|
|
(46,157 |
) |
|
|
(30,338 |
) |
|
|
(24,216 |
) |
Sales and marketing |
|
|
(123,786 |
) |
|
|
(68,020 |
) |
|
|
(76,856 |
) |
|
|
(35,337 |
) |
General and administrative |
|
|
(59,808 |
) |
|
|
(37,910 |
) |
|
|
(31,498 |
) |
|
|
(20,841 |
) |
Impairment of Long-Lived Assets |
|
|
(2,837 |
) |
|
|
(13,717 |
) |
|
|
(2,837 |
) |
|
|
(13,717 |
) |
Total operating expenses |
|
|
(247,070 |
) |
|
|
(165,804 |
) |
|
|
(141,529 |
) |
|
|
(94,111 |
) |
Income from
operations |
|
|
93,340 |
|
|
|
62,676 |
|
|
|
30,025 |
|
|
|
32,187 |
|
|
|
|
|
|
|
|
|
|
Other
income (expenses): |
|
|
|
|
|
|
|
|
Interest income and other financial gains |
|
|
22,820 |
|
|
|
15,300 |
|
|
|
10,663 |
|
|
|
8,049 |
|
Interest expense and other financial losses |
|
|
(12,977 |
) |
|
|
(12,315 |
) |
|
|
(6,506 |
) |
|
|
(6,631 |
) |
Foreign currency losses |
|
|
(21,097 |
) |
|
|
(240 |
) |
|
|
(21,760 |
) |
|
|
(5,387 |
) |
Net income
before income tax expense |
|
|
82,086 |
|
|
|
65,421 |
|
|
|
12,422 |
|
|
|
28,218 |
|
|
|
|
|
|
|
|
|
|
Income tax
expense |
|
|
(28,252 |
) |
|
|
(19,316 |
) |
|
|
(7,106 |
) |
|
|
(12,360 |
) |
Net
income |
|
$ |
53,834 |
|
|
$ |
46,105 |
|
|
$ |
5,316 |
|
|
$ |
15,858 |
|
|
|
Six Months Ended June 30 |
|
Three Months Ended June
30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Basic EPS |
|
|
|
|
|
|
|
Basic net income |
|
|
|
|
|
|
|
Available to shareholders per common share |
$ |
1.22 |
|
$ |
1.04 |
|
$ |
0.12 |
|
$ |
0.36 |
Weighted average of outstanding common shares |
|
44,157,364 |
|
|
44,157,151 |
|
|
44,157,364 |
|
|
44,157,341 |
Diluted EPS |
|
|
|
|
|
|
|
Diluted net income |
|
|
|
|
|
|
|
Available to shareholders per common share |
$ |
1.22 |
|
$ |
1.04 |
|
$ |
0.12 |
|
$ |
0.36 |
Weighted average of outstanding common shares |
|
44,157,364 |
|
|
44,157,151 |
|
|
44,157,364 |
|
|
44,157,341 |
|
|
|
|
|
|
|
|
Cash Dividends declared (per share) |
|
0.150 |
|
|
0.150 |
|
|
0.150 |
|
|
0.150 |
Financial results of reporting segments |
|
|
Three Months Ended June 30, 2017 |
|
Brazil |
|
Argentina |
|
Mexico |
|
Venezuela |
|
Other Countries |
|
Total |
|
(In thousands) |
Net revenues |
$ |
180,n |
|
|
$ |
87,992 |
|
|
$ |
20,185 |
|
|
$ |
14,181 |
|
|
$ |
14,107 |
|
|
$ |
316,529 |
|
Direct costs |
(120,112 |
) |
|
|
(49,697 |
) |
|
|
(42,802 |
) |
|
|
(5,708 |
) |
|
|
(12,908 |
) |
|
|
(231,227 |
) |
Impairment of
Long-lived Assets |
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,837 |
) |
|
|
- |
|
|
|
(2,837 |
) |
Direct
contribution |
59,952 |
|
|
|
38,295 |
|
|
|
(22,617 |
) |
|
|
5,636 |
|
|
|
1,199 |
|
|
|
82,465 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses and indirect costs of net revenues |
|
|
|
|
|
|
|
|
|
|
|
(52,440 |
) |
Income from
operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
30,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income and other financial gains |
|
|
|
|
|
|
|
|
|
|
|
|
|
10,663 |
|
Interest
expense and other financial losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,506 |
) |
Foreign
currency losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
(21,760 |
) |
Net income before
income tax expense |
|
|
|
|
|
|
|
|
$ |
12,422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2016 |
|
|
|
|
|
|
|
Brazil |
|
Argentina |
|
Mexico |
|
Venezuela |
|
Other Countries |
|
Total |
|
|
|
|
|
|
|
(In thousands) |
Net
revenues |
|
$ |
102,889 |
|
|
$ |
67,701 |
|
|
$ |
11,452 |
|
|
$ |
7,461 |
|
|
$ |
10,141 |
|
|
$ |
199,644 |
|
Direct
costs |
|
|
(61,462 |
) |
|
|
(38,446 |
) |
|
|
(9,200 |
) |
|
|
(4,094 |
) |
|
|
(7,138 |
) |
|
|
(120,340 |
) |
Impairment
of Long-lived Assets |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(13,717 |
) |
|
|
- |
|
|
|
(13,717 |
) |
Direct
contribution |
|
|
41,427 |
|
|
|
29,255 |
|
|
|
2,252 |
|
|
|
(10,350 |
) |
|
|
3,003 |
|
|
|
65,587 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses and indirect costs of net revenues |
|
|
|
|
|
|
|
|
|
|
(33,400 |
) |
Income from
operations |
|
|
|
|
|
|
|
|
|
|
|
|
32,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income and other financial gains |
|
|
|
|
|
|
|
|
|
|
|
|
8,049 |
|
Interest expense and other financial losses |
|
|
|
|
|
|
|
|
|
|
|
|
(6,631 |
) |
Foreign currency losses |
|
|
|
|
|
|
|
|
|
|
|
|
(5,387 |
) |
Net income
before income tax expense |
|
|
|
|
|
|
|
|
|
|
|
$ |
28,218 |
|
Non-GAAP Financial Measures
To supplement our consolidated financial
statements presented in accordance with U.S. GAAP, we use free cash
flows and foreign exchange (“FX”) neutral measures as non-GAAP
measures.
These non-GAAP measures 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, these
non-GAAP measures are 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.
These non-GAAP financial measures should only be used to evaluate
our results of operations in conjunction with the most comparable
U.S. GAAP financial measures.
Reconciliation of these non-GAAP financial
measures to the most comparable U.S. GAAP financial measures can be
found in the tables included in this quarterly report.
Non-GAAP financial measures are provided to
enhance investors’ overall understanding of our current financial
performance. Specifically, we believe that free cash flow provides
useful information to both management and investors by excluding
payments for the acquisition of property and equipment net of
financial liabilities, of intangible assets and of acquired
businesses net of cash acquired, that may not be indicative of our
core operating results. In addition, we report free cash flows to
investors because we believe that the inclusion of this measure
provides consistency in our financial reporting.
Free cash flow represents cash from operating
activities less payment and advances for the acquisition of
property and equipment, intangible assets and acquired businesses
net of cash acquired. We consider free cash flow to be a liquidity
measure that provides useful information to management and
investors about the amount of cash generated by our operations
after the purchases of property and equipment, of intangible assets
and of acquired businesses net of cash acquired. A limitation of
the utility of free cash flow as a measure of financial performance
is that it does not represent the total increase or decrease in our
cash balance for the period.
The following table shows a reconciliation of
Operating Cash Flows to Free Cash Flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six-month Periods Ended |
|
Three-month Periods Ended |
|
|
|
|
June 30, |
|
June 30, |
(In millions) |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash provided by
Operating Activities |
|
|
|
$ |
226.3 |
|
|
$ |
44.9 |
|
|
$ |
121.6 |
|
|
$ |
56.7 |
|
Payment for acquired
business, net of cash acquired |
|
|
|
|
- |
|
|
|
(7.3 |
) |
|
|
- |
|
|
|
(5.5 |
) |
Advance for property
and equipment |
|
|
|
|
(8.4 |
) |
|
|
(5.0 |
) |
|
|
(5.8 |
) |
|
|
(4.1 |
) |
Purchase of intangible
assets |
|
|
|
|
(0.1 |
) |
|
|
(0.0 |
) |
|
|
(0.1 |
) |
|
|
(0.0 |
) |
Purchase of property
and equipment |
|
|
|
|
(26.1 |
) |
|
|
(32.6 |
) |
|
|
(15.9 |
) |
|
|
(18.0 |
) |
Free cash flow |
|
|
|
|
191.7 |
|
|
|
(0.0 |
) |
|
|
99.8 |
|
|
|
29.1 |
|
(*) The table above may not total due to rounding.
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 these non-GAAP measures 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 2016 and
applying them to the corresponding months in 2017, 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, these measures do 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 periods ended June 30, 2017:
|
|
Three-months Periods Ended June 30,
(*) |
|
|
As reported |
|
FX Neutral Measures |
(In millions, except percentages) |
|
2017 |
|
2016 |
|
Percentage Change |
|
2017 |
|
2016 |
|
Percentage Change |
|
|
(Unaudited) |
|
|
|
(Unaudited) |
|
|
Net revenues |
|
$ |
316.5 |
|
|
$ |
199.6 |
|
|
58.5 |
% |
|
$ |
328.8 |
|
|
$ |
199.6 |
|
|
64.7 |
% |
Cost of net
revenues |
|
|
(145.0 |
) |
|
|
(73.3 |
) |
|
97.7 |
% |
|
|
(145.2 |
) |
|
|
(73.3 |
) |
|
98.0 |
% |
Gross profit |
|
|
171.6 |
|
|
|
126.3 |
|
|
35.8 |
% |
|
|
183.6 |
|
|
|
126.3 |
|
|
45.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
(138.7 |
) |
|
|
(80.4 |
) |
|
72.5 |
% |
|
|
(144.4 |
) |
|
|
(80.4 |
) |
|
79.6 |
% |
Impairment of
Long-Lived Assets |
|
|
(2.8 |
) |
|
|
(13.7 |
) |
|
-79.3 |
% |
|
|
(2.8 |
) |
|
|
(13.7 |
) |
|
-79.3 |
% |
Total operating
expenses |
|
|
(141.5 |
) |
|
|
(94.1 |
) |
|
50.4 |
% |
|
|
(147.2 |
) |
|
|
(94.1 |
) |
|
56.4 |
% |
Income from
operations |
|
|
30.0 |
|
|
|
32.2 |
|
|
-6.7 |
% |
|
|
36.4 |
|
|
|
32.2 |
|
|
13.1 |
% |
(*) The table above may not total due to
rounding.
Moreover, the Company presents adjusted net
income before income tax, adjusted income tax, adjusted net income,
adjusted blended tax rate and adjusted earnings per share (the
“Venezuela adjusted measures”) because it believes they provide
useful information to both management and investors by excluding
the foreign exchange loss attributable to the devaluation in
Venezuela and the corresponding impairment of long-lived assets.
The company believes that investors may use these non-GAAP
Venezuela adjusted measures to analyze the financial performance
without the impact of factors that may not be indicative of the
ordinary course of our business. The Company reports Venezuela
adjusted measures to investors because they provide consistency in
the Company’s financial reporting and because they provide useful
information to management and investors about what our
corresponding GAAP measures would have been if the foreign exchange
loss in Venezuela and the corresponding impairment of long-lived
assets had not occurred. A limitation of the utility of Venezuela
adjusted measures as measures of financial performance is that
these measures do not represent the total foreign exchange effect
in our Income Statement for the six and three-month
periods ended June 30, 2017 and 2016:
|
Six-months periods ended (*) |
|
Three-months periods ended (*) |
|
June 30, 2017 |
|
June 30, 2016 |
|
June 30, 2017 |
|
June 30, 2016 |
Net
income before income tax expense |
$ |
82.1 |
|
|
$ |
65.4 |
|
|
$ |
12.4 |
|
|
$ |
28.2 |
|
|
Devaluation loss in Venezuela |
|
22.9 |
|
|
|
7.2 |
|
|
|
22.0 |
|
|
|
4.9 |
|
|
Impairment of long-lived assets in Venezuela |
|
2.8 |
|
|
|
13.7 |
|
|
|
2.8 |
|
|
|
13.7 |
|
|
Adjusted
Net income before income tax expense |
$ |
107.8 |
|
|
$ |
86.3 |
|
|
$ |
37.2 |
|
|
$ |
46.8 |
|
|
Income
tax expense |
$ |
(28.3 |
) |
|
$ |
(19.3 |
) |
|
$ |
(7.1 |
) |
|
$ |
(12.4 |
) |
|
Income
tax effect on devaluation loss in Venezuela |
|
(3.5 |
) |
|
|
(4.8 |
) |
|
|
(3.2 |
) |
|
|
(1.7 |
) |
(1) |
Adjusted
Income tax |
$ |
(31.8 |
) |
|
$ |
(24.1 |
) |
|
$ |
(10.3 |
) |
|
$ |
(14.1 |
) |
|
Net
Income |
$ |
53.8 |
|
|
$ |
46.1 |
|
|
$ |
5.3 |
|
|
$ |
15.9 |
|
|
Devaluation loss in Venezuela |
|
22.9 |
|
|
|
7.2 |
|
|
|
22.0 |
|
|
|
4.9 |
|
|
Impairment of long-lived assets in Venezuela |
|
2.8 |
|
|
|
13.7 |
|
|
|
2.8 |
|
|
|
13.7 |
|
|
Income
tax effect on devaluation loss in Venezuela |
|
(3.5 |
) |
|
|
(4.8 |
) |
|
|
(3.2 |
) |
|
|
(1.7 |
) |
(1) |
Adjusted
Net Income |
$ |
76.1 |
|
|
$ |
62.2 |
|
|
$ |
26.9 |
|
|
$ |
32.7 |
|
|
Weighted
average of outstanding common shares |
|
44,157,364 |
|
|
|
44,157,151 |
|
|
|
44,157,364 |
|
|
|
44,157,341 |
|
|
Adjusted
Earnings per share |
$ |
1.72 |
|
|
$ |
1.41 |
|
|
$ |
0.61 |
|
|
$ |
0.74 |
|
|
Adjusted
Blended Tax Rate (2) |
|
29.4 |
% |
|
|
27.9 |
% |
|
|
27.6 |
% |
|
|
30.1 |
% |
|
(*) Stated in millions of U.S. dollars, except for
share data. The table above may not total due to rounding.
(1) Deferred income tax charge related to the
Venezuela devaluation under local tax norms.
(2) Adjusted Income and asset tax over
Adjusted Net income before income / asset tax expense.
CONTACT:
MercadoLibre, Inc,
Investor Relations
investor@mercadolibre,com
http://investor,mercadolibre,com
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