MercadoLibre, Inc. (Nasdaq: MELI) (http://www.mercadolibre.com),
Latin America’s leading e-commerce technology company, today
reported financial results for the quarter ended June 30, 2022.
To our Shareholders
The second quarter of 2022 marked another
quarter of records for Mercado Libre: TPV, GMV, Credit Portfolio,
Revenues, and EBIT are among the KPIs that have hit historical
marks. This size and scale places us in a unique position to
differentiate our value propositions to serve merchants and engage
users towards greater adoption of our ecosystem of ecommerce and
digital financial solutions. Over the last year, we have targeted
strategic growth opportunities that consolidate our competitive
advantage, while managing for profitability and increasing cash
generation. We believe this combination of sustained growth, market
leadership, scale advantages, ecosystemic approach, and increasing
profitability and cash generation presents our global stakeholders
with a compelling investment thesis grounded on an attractive
business profile and managed by a team with an established track
record. Our second quarter results further demonstrate this.
Commerce
Our commerce business continues to grow
significantly, despite oscillations in year-over-year growth rates
due to the tough comparison base from last year. Total gross
merchandise volume (GMV) reached an all-time high, with over $8.5
billion dollars, growing almost 22% in U.S. dollars and over 26% on
an FX-neutral basis, similar to pre-pandemic rates yet over a much
higher total base. Argentina and Brazil posted strong growth in
dollars and local currency, with U.S dollar growth rates of 33% and
28%, and FX-neutral growth rates, 66% and 19% respectively, growing
the unique buyer base in each country and sustaining user behavior
in terms of items per buyer. Mexico was a highlight in terms of GMV
growth this quarter with nearly 30% in USD and FX-neutral growth,
accelerating after the first quarter and adding more unique buyers.
Overall, we reached 40.8 million unique buyers in the second
quarter, breaking the record we achieved during the peak shopping
season of 2021’s fourth quarter.
We attribute the consistent growth of our
commerce platform to our ability to offer a wide assortment of
products while delivering a high-quality experience for our
customers. We are seeing local and worldwide signs of online retail
slowdown due to the normalization of mobility triggering shifts and
constraints in consumer spending. However, our commerce platform is
showing resilience. Our business caters to several shopping
missions due to our diverse product offerings, with categories that
span auto parts and accessories, home decorations, consumer
electronics, apparel and beauty, toys and entertainment, and
groceries, among others. We have invested in continuous
improvements to our user experience, including the fast and free
shipping offer for three-quarters of our GMV and a better
navigation and search interface catered to more category-specific
dynamics. These investments have proven to drive stickiness with
our users as we see sequential improvements in shopping conversion
rates. Our average user bought almost seven items with us in this
quarter, and our most loyal users have bought a multiple of that.
Overall, we sold over 275 million items this quarter, and are
growing in our three main segments: Argentina, Brazil and
Mexico.
We also have deployed improvements to our
apparel and beauty categories, facilitating the search for trends,
specific products and official stores. Combined with improvements
in navigation filters and the expansion of Meli Places enabled for
reverse logistics, we now deliver a better user experience for our
apparel and beauty buyers. To bring awareness to this new
experience, we had important events throughout the second quarter
such as Meli Trends, Beauty Festival, Big Brands Festival and Hot
Sale, all of which were helpful in boosting GMV for these
categories. The Hot Sale in Mexico delivered record GMV sales for a
single day, sustaining positive direct contribution during the
promotional period and driving further fulfillment penetration.
Our advertising service has been an increasingly
relevant tool to boost conversion rates and accelerate our
monetization flywheel. In the second quarter, we had a significant
increase in the number of total daily advertisers on our platform
in all geographies, combined with the consistent increase in the
number of total ad clicks, which grew over 50% year-over-year on
aggregate. We are focused on deploying better tools for online
sellers to access, manage and optimize their advertising spend on
our platform, supporting them with more awareness, education and
new ad formats to execute their campaigns. These achievements
already generate an important contribution to our ecosystem, but we
believe that we are still in the early days of our advertising
business. There are several more important milestones in our
technological roadmap that will unlock further sustainable
growth.
As we continue to invest for growth, we have
also made tactical adjustments to our operations that align with
the current macroeconomic outlook, while preserving our long-term
strategy. Such adjustments are focused on prioritizing
opportunities where we can manage our cash conversion cycles more
efficiently and where we can better deliver sustainable unit
economics, while taking a more patient approach to less profitable
areas that still have the potential to drive long-term
differentiation. Under that scope, we have selected a more moderate
approach to the investment intensity for growing volumes for
groceries and the first-party retail assortment. We have
implemented initiatives to accelerate our path towards
profitability in both categories by focusing on price management
and purchasing capabilities, implementing a higher free shipping
threshold for supermarket shopping carts, as well as determining
stricter inventory guardrails.
Within our shipping services, our focus remains
on improving delivery times and driving cost efficiencies
throughout our network. Over the last few months, there have been
significant developments to reduce delivery times for incremental
cities and neighborhoods as we create faster connections between
nodes of the network. One example is the expansion of MELI Air, our
partnership with aircraft carriers so that we have dedicated planes
for our Mercado Envios operation, allowing us to deliver within two
days in most large cities and capitals in the north and northeast
regions of Brazil. Another example is the MELI Places network for
package pick-up and drop-off. This network is currently present in
five countries and leverages a total of 6500 activated stores, more
than 5000 of which are now enabled to accept returns, improving our
service offering for reverse logistics.
As our managed network matures, we are balancing
the incremental growth of network nodes with operational
efficiency. This year we have started to observe some cost
inflation pressure on transportation services due to rising fuel
costs. As such, our efforts to optimize the density of our routes
and create processes for better productivity in our warehouses are
more important. The last mile delivery costs improved with the
deployment of MELI Extra, our crowd-sourced shipping solution that
rolled out in Brazil and Mexico, which partially offset
transportation cost inflation effects. Within our fulfillment
centers, which currently carry nearly 40% of our volumes, we have
management tools and price incentives designed for sellers to
adjust inventory levels to adequately match product turnover rates,
which have already seen some rationalization on inventory depth in
the fulfillment centers. Efforts like these add to our cost
discipline on managing warehouse space, and our shipping operation
costs figures in the second quarter reflect our sequential
improvements as a percentage of gross merchandise volume. We are
confident that our shipping services will continue to be a driving
force in the adoption of online commerce and a core differentiator
of our services. Therefore, our shipping network remains a key area
of investment for continuous expansion in order to reach more
merchants and buyers with a distinguished logistics solution.
Fintech
We are encouraged by our consistently growing
volumes and revenues for our fintech business, accelerating and
achieving several new records in the second quarter this year.
The payments processing and acquiring business
delivered a total payment volume of over $30 billion dollars,
growing 72% in on a USD basis and 84% on an FX-neutral basis. For
Acquiring TPV, we reached $20.8 billion dollars, with main growth
contributions from the MPOS business and QR payments. The MPOS
business continues to add new devices to its installed base and
device sales are still above one million devices per quarter. QR
payments are growing significantly both in Argentina and in Brazil,
a positive sign that wallet usage has seen increased adoption.
Importantly, after having adjusted financing fees to merchants in
Brazil to reflect higher interest rates at the start of the year,
overall monetization for financing services has largely stabilized
sequentially and year-over-year, with no marked impacts on seller
churn.
The Mercado Pago Digital Account also shows
signs of growth and higher engagement with the extension of more
financial services, a clearer brand positioning communicated in new
marketing campaigns, and continuous iterations to improve the user
interface. Digital account TPV reached $9.4 billion dollars in the
second quarter, growing 167% on a USD basis and 189% on an
FX-neutral basis. The 38.2 million unique fintech active users have
increased their transactions on wallet payments and transfers, QR
and card usage, and more users have taken on credit loans through
our platform. The asset management and savings features continue to
attract more users and drive further engagement, with total assets
under management increasing almost 30% year-over-year and growing
sequentially across all three geographies. In Mexico, we were
granted the IFPE license to operate our fintech products, which
creates further opportunities to promote payment flows through
cards and remittances. This represents a more robust product stack,
and we are now confident that our users can consider us a fully
digital bank, solving more than just their payment needs.
Of all the financial services we offer, the most
notable for users and merchants is access to credit. Our Credit
business closed the second quarter with a portfolio of $2.7 billion
dollars, of which about 55% were consumer loans and 20% was the
credit card book. The book expanded over 230% year-over-year and
added 272 million in loans sequentially, and has remained a
significant contributor to operating margin expansion for our
ecosystem (details on the evolution of interest margin in our
Credit business can be found in the earnings release
presentation).
The credit business has historically operated
with annualized interest margins after provision for doubtful
accounts (IMALs) of over 30% for the total portfolio, reaching
almost 34% in the second quarter, up from the nearly 24% in the
first quarter, which was exceptionally low because of higher
provision for doubtful accounts associated with the credit card
ramp up. At the current rates, we delivered $529 million dollars in
credit revenues in the second quarter, and consequently, $225
million dollars in IMAL.
This is still a growing business, and there has
been some deceleration in the pace of new credit originations this
quarter, particularly from the slowdown in new credit card issuance
as we evolve the scoring models. With relatively slower
originations at the margin, the previous cohorts accelerate their
aging into past dues, leading to a higher non-performing loan (NPL)
ratio of 31.4% this quarter, growing mainly in the over 90 day
cohorts, while the 1-90 day NPLs remain at 13.2%, similar to
previous quarters. These levels of non-performing loans are well
provisioned and reflected in the consistently high and profitable
IMAL spreads. The allowance for doubtful accounts coverage ratios
were over 170% in the second quarter for loans over 90 days past
due, which is above the industry average.
Credit is an important piece of our ecosystemic
offering for merchants and users, not only facilitating more
transactions within our platform, but also deepening the
relationship we have with our fintech active users. There are some
key characteristics in our model that give us confidence that we
can continue to prudently grow the credit book while appropriately
managing risk. First, the business model is highly atomized - on
the consumer side, we are offering consumer credit to nearly 10
million users with an average exposure of $150 dollars per
individual. Second, the loans are short in duration, which means we
can constantly adjust our risk assessment and user scoring models
to determine the price and risk appetite of the next loan based on
recent user behavior, which we can gauge quickly through data
collected on our platform’s several touchpoints. Finally, the
credit books are managed on granular sub segments to observe risk
and default trends for similar groups, and these models are
constantly retrained to reflect past learnings of default triggers.
In the current context, our models and our team’s experience inform
our decision to keep growing the credit book, albeit at a slower
pace to mitigate potential macroeconomic risk while sustaining our
average margin ratios. We have secured extensions in our
third-party funding structure to help fund the growth of the credit
book sustainably, and we count on a diversified funding approach,
mixing external securitization facilities with retail funding, in
the form of our own certificates of deposits issuance in Brazil and
the credit book profits to fund our future growth.
Financial Results
Net revenues reached a new quarterly record,
with almost $2.6 billion dollars, growing 53% in U.S. dollars and
57% on an FX-neutral basis. Total commerce revenues reached $1.4
billion dollars, growing 23% on a U.S. dollar basis, consequent to
the expansion of our total gross merchandise volume and especially
to the acceleration of growth in commerce revenues in Mexico. The
advertising business has also grown, reaching 1.2% of gross
merchandise volume penetration this quarter, contributing to growth
in commerce take rates year-over-year and to overall profitability.
Fintech revenues have surpassed the billion dollar mark for the
first time ever and grew 113% year-over-year on a U.S. dollar
basis, a true testament to the importance of our fintech business
within our ecosystem.
Due to the consistent growth from our credit
book and the magnitude it represents in our business, we will begin
to offer a more granular disclosure of our revenue breakdowns in
our financial statements. Credit revenues alone reached $529
million dollars this quarter, a key contributor to achieving the
billion dollar milestone in total fintech revenues. The payments
acquiring products and services were still the largest contributors
to fintech revenues, reaching $664 million dollars. Fintech take
rates, excluding credit revenues, have remained largely stable
year-over-year, with minor oscillations in our total transactional
fees revenue as a result of the changing mix in total payment
volume sources, shifting more towards QR payments as our digital
wallet accelerated its user engagement.
Gross profit margins improved for the second
consecutive quarter, reaching 49.4% with almost $1.3 billion
dollars, compared to 44.3% last year. The consistent results in our
top line are generating scale for our cost base, diluting costs for
shipping operations, payment processing fees, first-party product
costs, customer service operations and fraud prevention
investments. Shipping operational costs as a percentage of total
revenue continues to decline, and improves sequentially as a
percentage of GMV.
Total operating expenses represented 39.8% of
revenues in the quarter, up from 34.5% last year, but improving
sequentially from 41.5%. The main driver of the higher expense rate
was an increase in provisions for doubtful accounts year-on-year
related to the growth of the credit business. The credit book as a
whole remains profitable and is improving its net income margin
after losses sequentially. Total operating expenses as a percentage
of revenues, excluding the provisions for doubtful accounts, have
improved compared to last year, reaching 28.1%, compared to 29.7%.
While the spending on salaries and wages has increased
year-over-year, especially in product development, we have
delivered efficiencies in our marketing and sales expenses,
extracting a higher return on investment for every dollar
spent.
Consequently, our operating margin for the
quarter was 9.6%, similar to last year’s 9.8% and improving
sequentially from 6.2%. We delivered $250 million dollars in income
from operations this quarter, an all-time quarterly record for
us.
The foreign currency losses in the quarter were
$60 million dollars, or 2.3% of revenues. These FX losses were
primarily a consequence of our acquiring shares of our common stock
in the Argentine market and paying for them in Argentine pesos at a
price that reflects the additional cost of accessing U.S. dollars
through an indirect mechanism, due to the restrictions imposed by
the Argentine government for buying U.S. dollars at the official
exchange rate in Argentina. In addition, the Brazilian Real and
Mexican peso depreciated during the second quarter of 2022.
Interest expenses were 2.8% of net revenues,
similar to prior quarters, and partially offset by the interest
income of 1.8% of revenues in the quarter, mostly generated in
Brazil.
Finally, we delivered a net income of $123
million dollars, at a 4.7% margin, up from 4.0% last year. Coupled
with the strong performance in operating profit, we had a
significant improvement in cash generation from our operations in
the second quarter, closing with a much better overall cash
position compared to the first quarter. Both commerce and fintech
businesses contributed to the cash generation as we improved the
working capital cycles in our first-party retail business and in
discounting receivables for our financing operations.
Progressing Our Mission in
2022
We delivered record results during the second
quarter by focusing on execution, managing cash closely and
continuing to invest in strategic initiatives that build our
competitive advantage over time. As we improve our service levels
for merchants and consumers with these investments, our users
continue to engage with our ecosystem more frequently, both on the
fintech and ecommerce sides. Our loyalty program grew strongly
during the second quarter, with millions of subscribers,
contributing to higher engagement in our ecosystem. By connecting
Mercado Libre and Mercado Pago, bringing more benefits for Level 6
users, the program generates more engagement, retention, frequency
and GMV. Our ecosystem is powerful, even during challenging times,
delivering improvements across our different geographies and
business units.
We believe that Mercado Libre is well positioned
for the years to come, as we continue to execute with excellence,
seek growth and invest strategically. Our team is deeply engaged in
our mission to democratize ecommerce and financial services in
Latin America as we continue to grow.
On behalf of our management team, we appreciate
the continued interest of our investors and stakeholders in
tracking our developments and are looking forward to providing more
updates on our performance in future quarters. The best is yet to
come.
The following table summarizes certain
key performance metrics for the six and three-month periods ended
June 30, 2022 and 2021.
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Six Months EndedJune 30, (*) |
|
|
Three Months EndedJune 30,
(*) |
(in millions) |
|
2022 |
|
2021 |
|
|
2022 |
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Unique active users |
|
|
107 |
|
|
98 |
|
|
84 |
|
|
76 |
Gross merchandise volume |
|
$ |
16,216 |
|
$ |
13,080 |
|
$ |
8,551 |
|
$ |
7,023 |
Number of successful items
sold |
|
|
542 |
|
|
467 |
|
|
275 |
|
|
245 |
Number of successful items
shipped |
|
|
518 |
|
|
439 |
|
|
264 |
|
|
231 |
Total payment volume |
|
$ |
55,513 |
|
$ |
32,247 |
|
$ |
30,194 |
|
$ |
17,529 |
Total volume of payments on
marketplace |
|
$ |
15,803 |
|
$ |
12,615 |
|
$ |
8,351 |
|
$ |
6,775 |
Total payment
transactions |
|
|
2,353 |
|
|
1,360 |
|
|
1,262 |
|
|
730 |
Capital expenditures |
|
$ |
237 |
|
$ |
263 |
|
$ |
100 |
|
$ |
150 |
Depreciation and
amortization |
|
$ |
184 |
|
$ |
85 |
|
$ |
100 |
|
$ |
46 |
(*) Figures have been calculated using rounded
amounts. Growth calculations based on this table may not total due
to rounding.
Year-over-year USD Revenue Growth Rates
by Quarter
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Consolidated
NetRevenues |
|
Q2’21 |
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Q3’21 |
|
Q4’21 |
|
Q1’22 |
|
Q2’22 |
|
|
|
|
|
|
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|
|
|
|
|
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Brazil |
|
104 |
% |
74 |
% |
51 |
% |
63 |
% |
53 |
% |
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|
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|
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|
|
Argentina |
|
53 |
% |
38 |
% |
47 |
% |
74 |
% |
62 |
% |
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|
|
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|
|
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|
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Mexico |
|
105 |
% |
94 |
% |
92 |
% |
58 |
% |
65 |
% |
Year-over-year Local Currency Revenue
Growth Rates by Quarter
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Consolidated NetRevenues |
|
Q2’21 |
|
Q3’21 |
|
Q4’21 |
|
Q1’22 |
|
Q2’22 |
|
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|
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|
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Brazil |
|
101 |
% |
69 |
% |
61 |
% |
55 |
% |
42 |
% |
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|
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|
|
|
|
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Argentina |
|
112 |
% |
83 |
% |
84 |
% |
110 |
% |
104 |
% |
|
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|
|
|
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Mexico |
|
76 |
% |
76 |
% |
96 |
% |
59 |
% |
66 |
% |
Conference Call and Webcast
The Company will host an earnings video as well
as a conference call and audio webcast for any questions that
investors may have on August 3rd, 2022, at 4:30 p.m. Eastern Time.
To participate in our conference call, investors, analysts, and the
market in general may access the following link at
https://register.vevent.com/register/BI30b1eabf322f421f94ad46269bc416e2
to be provided with the dial-in number and personal pin code to
join the conference call. Access to our video webcast and the live
audio will be available in 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
Unique Active User – New or existing user who
performed at least one of the following actions during the reported
period: (1) made one purchase, or reservation, or asked one
question on MercadoLibre Marketplace or Classified Marketplace (2)
maintained an active listing on MercadoLibre Marketplace or
Classified Marketplace (3) maintained an active account in Mercado
Shops (4) made a payment, money transfer, collection and/or advance
using Mercado Pago (5) maintained an outstanding credit line
through Mercado Credito or (6) maintained a balance of more than $5
invested in a Mercado Fondo asset management account.
Unique Fintech User – Users who engage in at
least one of the following services within the quarter: wallet
payments online, in app or in store; transfers; withdrawals;
consumer or merchant credit borrowers; card users; fintech sellers;
and fintech active products such as asset management and insurtech
users.
Foreign Exchange (“FX”) Neutral – Calculated by
using the average monthly exchange rate of each month of 2021 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 Classifieds transactions.
Total payment transactions – Measure of the
number of all transactions paid for 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,
including marketplace and non-marketplace transactions.
MPOS – Mobile point-of-sale is a dedicated
wireless device that performs the functions of a cash register or
electronic point-of-sale terminal wirelessly.
Commerce – Revenues from core marketplace fees,
shipping fees, first-party sales, ad sales, classified fees and
other ancillary services.
Fintech – Revenues includes fees from
off-platform transactions, financing fees, interest earned from
merchant and consumer credits and sale of MPOS.
Successful items sold – Measure of the number of
items that were sold/purchased through the Mercado Libre
Marketplace, excluding Classifieds items.
Successful 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.
Operating margin – Defined as income from
operations as a percentage of net revenues.
IMAL (Interest Margins After Losses) – IMAL is
the spread between credit revenues and the expenses associated with
provisions for doubtful accounts, and usually expressed as a
percentage of the outstanding portfolio.
About MercadoLibre
Founded in 1999, MercadoLibre is the largest
online commerce ecosystem in Latin America, serving as an
integrated regional platform and as a provider of the necessary
digital 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 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, 2021, 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.Interim Condensed
Consolidated Balance Sheets(In millions of
U.S. dollars, except par value) (Unaudited)
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June 30, |
|
December 31, |
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|
2022 |
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|
2021 |
|
Assets |
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Current assets: |
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Cash and cash equivalents |
|
$ |
1,329 |
|
|
$ |
2,585 |
|
Restricted cash and cash equivalents |
|
|
924 |
|
|
|
1,063 |
|
Short-term investments ($748 and $602 held in guarantee) |
|
|
1,645 |
|
|
|
810 |
|
Accounts receivable, net |
|
|
102 |
|
|
|
98 |
|
Credit card receivables and other means of payments, net |
|
|
2,501 |
|
|
|
1,839 |
|
Loans receivable, net of allowances of $807and $408 |
|
|
1,790 |
|
|
|
1,199 |
|
Prepaid expenses |
|
|
77 |
|
|
|
40 |
|
Inventories |
|
|
183 |
|
|
|
253 |
|
Other assets |
|
|
312 |
|
|
|
288 |
|
Total current assets |
|
|
8,863 |
|
|
|
8,175 |
|
Non-current assets: |
|
|
|
|
Long-term investments |
|
|
456 |
|
|
|
89 |
|
Loans receivable, net of allowances of $35 and $27 |
|
|
55 |
|
|
|
61 |
|
Property and equipment, net |
|
|
932 |
|
|
|
807 |
|
Operating lease right-of-use assets |
|
|
525 |
|
|
|
461 |
|
Goodwill |
|
|
149 |
|
|
|
148 |
|
Intangible assets, net |
|
|
31 |
|
|
|
45 |
|
Deferred tax assets |
|
|
248 |
|
|
|
181 |
|
Other assets |
|
|
188 |
|
|
|
134 |
|
Total non-current assets |
|
|
2,584 |
|
|
|
1,926 |
|
Total assets |
|
$ |
11,447 |
|
|
$ |
10,101 |
|
Liabilities |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
1,131 |
|
|
$ |
1,036 |
|
Funds payable to customers |
|
|
2,528 |
|
|
|
2,393 |
|
Amounts payable due to credit and debit card transactions |
|
|
433 |
|
|
|
337 |
|
Salaries and social security payable |
|
|
273 |
|
|
|
313 |
|
Taxes payable |
|
|
327 |
|
|
|
291 |
|
Loans payable and other financial liabilities |
|
|
1,925 |
|
|
|
1,285 |
|
Operating lease liabilities |
|
|
108 |
|
|
|
92 |
|
Other liabilities |
|
|
98 |
|
|
|
90 |
|
Total current liabilities |
|
|
6,823 |
|
|
|
5,837 |
|
Non-current liabilities: |
|
|
|
|
Amounts payable due to credit and debit card transactions |
|
|
4 |
|
|
|
4 |
|
Salaries and social security payable |
|
|
4 |
|
|
|
20 |
|
Taxes payable |
|
|
20 |
|
|
|
— |
|
Loans payable and other financial liabilities |
|
|
2,515 |
|
|
|
2,233 |
|
Operating lease liabilities |
|
|
420 |
|
|
|
372 |
|
Deferred tax liabilities |
|
|
32 |
|
|
|
62 |
|
Other liabilities |
|
|
49 |
|
|
|
42 |
|
Total non-current liabilities |
|
|
3,044 |
|
|
|
2,733 |
|
Total liabilities |
|
$ |
9,867 |
|
|
$ |
8,570 |
|
Commitments and
Contingencies |
|
|
|
|
Equity |
|
|
|
|
Common stock, $0.001 par value, 110,000,000 shares authorized,
50,338,275 and 50,418,980 shares issued and outstanding at June
30,2022 and December 31, 2021 |
|
$ |
— |
|
|
$ |
— |
|
Additional paid-in capital |
|
|
2,308 |
|
|
|
2,439 |
|
Treasury stock |
|
|
(858 |
) |
|
|
(790 |
) |
Retained earnings |
|
|
619 |
|
|
|
397 |
|
Accumulated other comprehensive loss |
|
|
(489 |
) |
|
|
(515 |
) |
Total Equity |
|
|
1,580 |
|
|
|
1,531 |
|
Total Liabilities and Equity |
|
$ |
11,447 |
|
|
$ |
10,101 |
|
MercadoLibre, Inc.Interim Condensed
Consolidated Statements of IncomeFor six and
three-month periods ended June 30, 2022 and
2021(In millions of U.S. dollars, except for share
data) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30 |
|
Three Months Ended June 30 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net service revenues |
|
$ |
4,329 |
|
|
$ |
2,735 |
|
|
$ |
2,332 |
|
|
$ |
1,505 |
|
Net product revenues |
|
|
516 |
|
|
|
346 |
|
|
|
265 |
|
|
|
198 |
|
Net revenues |
|
|
4,845 |
|
|
|
3,081 |
|
|
|
2,597 |
|
|
|
1,703 |
|
Cost of net revenues |
|
|
(2,488 |
) |
|
|
(1,736 |
) |
|
|
(1,313 |
) |
|
|
(949 |
) |
Gross profit |
|
|
2,357 |
|
|
|
1,345 |
|
|
|
1,284 |
|
|
|
754 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Product and technology development |
|
|
(496 |
) |
|
|
(273 |
) |
|
|
(262 |
) |
|
|
(147 |
) |
Sales and marketing |
|
|
(583 |
) |
|
|
(455 |
) |
|
|
(296 |
) |
|
|
(251 |
) |
Provision for doubtful accounts |
|
|
(557 |
) |
|
|
(166 |
) |
|
|
(303 |
) |
|
|
(82 |
) |
General and administrative |
|
|
(332 |
) |
|
|
(194 |
) |
|
|
(173 |
) |
|
|
(108 |
) |
Total operating expenses |
|
|
(1,968 |
) |
|
|
(1,088 |
) |
|
|
(1,034 |
) |
|
|
(588 |
) |
Income from operations |
|
|
389 |
|
|
|
257 |
|
|
|
250 |
|
|
|
166 |
|
|
|
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
|
|
Interest income and other financial gains |
|
|
77 |
|
|
|
49 |
|
|
|
46 |
|
|
|
24 |
|
Interest expense and other financial losses (*) |
|
|
(129 |
) |
|
|
(131 |
) |
|
|
(73 |
) |
|
|
(40 |
) |
Foreign currency losses, net |
|
|
(63 |
) |
|
|
(27 |
) |
|
|
(60 |
) |
|
|
(12 |
) |
Net income before income tax
expense |
|
|
274 |
|
|
|
148 |
|
|
|
163 |
|
|
|
138 |
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
(85 |
) |
|
|
(114 |
) |
|
|
(39 |
) |
|
|
(70 |
) |
Equity in earnings of
unconsolidated entity |
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
Net income |
|
$ |
188 |
|
|
$ |
34 |
|
|
$ |
123 |
|
|
$ |
68 |
|
(*) |
Includes $49 million of loss on debt extinguishment and
premium related to the 2028 Notes repurchase recognized in
January 2021. |
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30 |
|
Three Months Ended June 30 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Basic
EPS |
|
|
|
|
|
|
|
|
Basic net income |
|
|
|
|
|
|
|
|
Available to shareholders per common share |
|
$ |
3.73 |
|
|
$ |
0.69 |
|
|
$ |
2.43 |
|
|
$ |
1.37 |
|
Weighted average of outstanding common shares |
|
|
50,386,519 |
|
|
|
49,844,823 |
|
|
|
50,364,529 |
|
|
|
49,822,272 |
|
Diluted
EPS |
|
|
|
|
|
|
|
|
Diluted net income |
|
|
|
|
|
|
|
|
Available to shareholders per common share |
|
$ |
3.73 |
|
|
$ |
0.69 |
|
|
$ |
2.43 |
|
|
$ |
1.37 |
|
Weighted average of outstanding common shares |
|
|
50,386,519 |
|
|
|
49,844,823 |
|
|
|
50,364,529 |
|
|
|
49,822,272 |
|
|
|
|
|
|
|
|
|
|
MercadoLibre, Inc.Interim Condensed
Consolidated Statements of Cash FlowsFor the
six-month periods ended June 30, 2022 and 2021 (In millions of U.S.
dollars) (Unaudited)
|
|
|
|
|
|
|
Six Months Ended June 30 |
|
|
|
2022 |
|
|
|
2021 |
|
Cash flows from
operations: |
|
|
|
|
Net income |
|
$ |
188 |
|
|
$ |
34 |
|
Adjustments to reconcile net income to net cash provided by (used
in) operating activities: |
|
|
|
|
Unrealized devaluation loss, net |
|
|
134 |
|
|
|
45 |
|
Impairment of digital assets |
|
|
11 |
|
|
|
7 |
|
Depreciation and amortization |
|
|
184 |
|
|
|
85 |
|
Accrued interest |
|
|
(65 |
) |
|
|
(9 |
) |
Non cash interest, convertible notes amortization of debt discount
and amortization of debt issuance costs and other charges |
|
|
155 |
|
|
|
48 |
|
Provision for doubtful accounts |
|
|
557 |
|
|
|
166 |
|
Financial results on derivative instruments |
|
|
22 |
|
|
|
11 |
|
LTRP accrued compensation |
|
|
35 |
|
|
|
51 |
|
Deferred income taxes |
|
|
(67 |
) |
|
|
16 |
|
Changes in assets and liabilities: |
|
|
|
|
Accounts receivable |
|
|
(32 |
) |
|
|
(30 |
) |
Credit card receivables and other means of
payments |
|
|
(642 |
) |
|
|
(301 |
) |
Prepaid expenses |
|
|
(36 |
) |
|
|
(29 |
) |
Inventories |
|
|
81 |
|
|
|
(47 |
) |
Other assets |
|
|
(81 |
) |
|
|
(92 |
) |
Payables and accrued expenses |
|
|
32 |
|
|
|
10 |
|
Funds payable to customers |
|
|
119 |
|
|
|
71 |
|
Amounts payable due to credit and debit card
transactions |
|
|
80 |
|
|
|
12 |
|
Other liabilities |
|
|
(55 |
) |
|
|
(64 |
) |
Interest received from investments |
|
|
54 |
|
|
|
15 |
|
Net cash provided by (used in) operating activities |
|
|
674 |
|
|
|
(1 |
) |
Cash flows from investing
activities: |
|
|
|
|
Purchase of investments |
|
|
(6,190 |
) |
|
|
(5,208 |
) |
Proceeds from sale and maturity of investments |
|
|
5,043 |
|
|
|
5,575 |
|
Receipts from settlements of derivative instruments |
|
|
— |
|
|
|
4 |
|
Payment for settlements of derivative instruments |
|
|
(7 |
) |
|
|
(11 |
) |
Purchases of intangible assets |
|
|
(1 |
) |
|
|
(20 |
) |
Changes in principal of loans receivable, net |
|
|
(1,170 |
) |
|
|
(333 |
) |
Purchases of property and equipment |
|
|
(236 |
) |
|
|
(263 |
) |
Net cash used in investing activities |
|
|
(2,561 |
) |
|
|
(256 |
) |
Cash flows from financing
activities: |
|
|
|
|
Proceeds from loans payable and other financial liabilities |
|
|
7,315 |
|
|
|
3,502 |
|
Payments on loans payable and other financial liabilities |
|
|
(6,646 |
) |
|
|
(2,240 |
) |
Payments on repurchase of the 2028 Notes |
|
|
— |
|
|
|
(1,865 |
) |
Payment of finance lease obligations |
|
|
(9 |
) |
|
|
(9 |
) |
Purchase of convertible note capped call |
|
|
— |
|
|
|
(101 |
) |
Unwind of convertible note capped call |
|
|
— |
|
|
|
102 |
|
Common Stock repurchased |
|
|
(74 |
) |
|
|
(142 |
) |
Exercise of Convertible Notes |
|
|
— |
|
|
|
(3 |
) |
Net cash provided by (used in) financing activities |
|
|
586 |
|
|
|
(756 |
) |
Effect of exchange rate
changes on cash, cash equivalents, restricted cash and cash
equivalents |
|
|
(94 |
) |
|
|
(64 |
) |
Net decrease in cash, cash
equivalents, restricted cash and cash equivalents |
|
|
(1,395 |
) |
|
|
(1,077 |
) |
Cash, cash equivalents,
restricted cash and cash equivalents, beginning of the period |
|
$ |
3,648 |
|
|
$ |
2,508 |
|
Cash, cash equivalents,
restricted cash and cash equivalents, end of the period |
|
$ |
2,253 |
|
|
$ |
1,431 |
|
Financial results of reporting
segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2022 |
|
|
|
Brazil |
|
Argentina |
|
Mexico |
|
Other Countries |
|
Total |
|
|
|
(In millions) |
Net revenues |
|
$ |
1,451 |
|
|
$ |
594 |
|
|
$ |
428 |
|
|
$ |
124 |
|
|
$ |
2,597 |
|
Direct costs |
|
|
(1,198 |
) |
|
|
(372 |
) |
|
|
(363 |
) |
|
|
(117 |
) |
|
|
(2,050 |
) |
Direct
contribution |
|
|
253 |
|
|
|
222 |
|
|
|
65 |
|
|
|
7 |
|
|
|
547 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
and indirect costs of net revenues |
|
|
|
|
|
|
|
|
|
|
(297 |
) |
Income from
operations |
|
|
|
|
|
|
|
|
|
|
250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses): |
|
|
|
|
|
|
|
|
|
|
|
Interest income and other
financial gains |
|
|
|
|
|
|
|
|
|
|
46 |
|
|
Interest expense and other
financial losses |
|
|
|
|
|
|
|
|
|
|
(73 |
) |
|
Foreign currency losses,
net |
|
|
|
|
|
|
|
|
|
|
(60 |
) |
Net income before
income tax expense |
|
|
|
|
|
|
|
|
|
$ |
163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2021 |
|
|
|
Brazil |
|
Argentina |
|
Mexico |
|
Other Countries |
|
Total |
|
|
|
(In millions) |
Net revenues |
|
$ |
951 |
|
|
$ |
366 |
|
|
$ |
259 |
|
|
$ |
127 |
|
|
$ |
1,703 |
|
Direct costs |
|
|
(721 |
) |
|
|
(232 |
) |
|
|
(261 |
) |
|
|
(92 |
) |
|
|
(1,306 |
) |
Direct
contribution |
|
|
230 |
|
|
|
134 |
|
|
|
(2 |
) |
|
|
35 |
|
|
|
397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
and indirect costs of net revenues |
|
|
|
|
|
|
|
|
|
|
(231 |
) |
Income from
operations |
|
|
|
|
|
|
|
|
|
|
166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses): |
|
|
|
|
|
|
|
|
|
|
|
Interest income and other
financial gains |
|
|
|
|
|
|
|
|
|
|
24 |
|
|
Interest expense and other
financial losses |
|
|
|
|
|
|
|
|
|
|
(40 |
) |
|
Foreign currency losses,
net |
|
|
|
|
|
|
|
|
|
|
(12 |
) |
Net income before
income tax expense |
|
|
|
|
|
|
|
|
|
$ |
138 |
|
Non-GAAP Financial Measures
To supplement our condensed consolidated
financial statements presented in accordance with U.S. GAAP, we
present foreign exchange (“FX”) neutral measures as a non-GAAP
measure. Reconciliation of this non-GAAP financial measure to the
most comparable U.S. GAAP financial measure can be found in the
tables below.
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.
We provide this non-GAAP financial measure to
enhance overall understanding of our current financial performance
and its prospects for the future, and we understand that this
measure provides useful information to both Management and
investors. In particular, we believe that FX neutral 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 2021 and
applying them to the corresponding months in 2022, 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 period ended June 30, 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedJune 30, |
|
|
As reported |
|
FX Neutral Measures |
|
As reported |
|
|
(In millions, except percentages) |
|
|
2022 |
|
|
|
2021 |
|
|
Percentage Change |
|
|
2022 |
|
|
|
2021 |
|
|
Percentage Change |
|
|
(Unaudited) |
|
|
|
(Unaudited) |
|
|
Net revenues |
|
$ |
2,597 |
|
|
$ |
1,703 |
|
|
52.5 |
% |
|
$ |
2,666 |
|
|
$ |
1,703 |
|
|
56.5 |
% |
Cost of net revenues |
|
|
(1,313 |
) |
|
|
(949 |
) |
|
38.4 |
% |
|
|
(1,344 |
) |
|
|
(949 |
) |
|
41.6 |
% |
Gross profit |
|
|
1,284 |
|
|
|
754 |
|
|
70.3 |
% |
|
|
1,322 |
|
|
|
754 |
|
|
75.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
(1,034 |
) |
|
|
(588 |
) |
|
75.9 |
% |
|
|
(1,072 |
) |
|
|
(588 |
) |
|
82.3 |
% |
Income from operations |
|
$ |
250 |
|
|
$ |
166 |
|
|
50.6 |
% |
|
$ |
250 |
|
|
$ |
166 |
|
|
50.6 |
% |
CONTACT: MercadoLibre, Inc.
Investor Relations
investor@mercadolibre.com
http://investor.mercadolibre.com
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