UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________

Form 8-K
_____________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): May 9, 2018  

MercadoLibre, Inc.
(Exact Name of Registrant as Specified in Charter)

Delaware001-3364798-0212790
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification Number)

 

Arias 3751, 7th Floor, Buenos Aires, Argentina C1430CRG
(Address of Principal Executive Offices) (Zip Code)

011-54-11-4640-8000
(Registrant's telephone number, including area code)


(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 [ ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 [ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 [ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 [ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [   ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

 
 

Item 2.02. Results of Operations and Financial Condition.

On May 9, 2018, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

Exhibit 99.1. Press release dated May 9, 2018


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 MercadoLibre, Inc.
   
  
Date: May 9, 2018By: /s/ PEDRO ARNT        
  PEDRO ARNT
  Chief Financial Officer
  

EdgarFiling

EXHIBIT 99.1

MercadoLibre, Inc. Reports First Quarter Financial Results

80.1 million Sold Items, up 50.6%, the third consecutive quarter above 50%

74.3 million Total Payment Transactions, up 68.5%

Net Revenues of $321.0 million, up 30.1% on an FX neutral basis, after changes in accounting standards

BUENOS AIRES, Argentina, May 09, 2018 (GLOBE NEWSWIRE) -- MercadoLibre, Inc. (Nasdaq:MELI) (http://www.mercadolibre.com), Latin America's leading e-commerce technology company, today reported financial results for the first quarter ended March 31, 2018.

Pedro Arnt, Chief Financial Officer of MercadoLibre, Inc., commented, “We are as excited as we have ever been about growing our businesses. We will continue to drive the success of our company through building on our market position as a leading innovator in Latin America, and leveraging our regional breadth, trusted brand, and increasing installed base of engaged users.  Going forward, executing on our business plan will continue to be our first order of priority. We will strive to maintain ourselves as a leading ecommerce and payments platforms in the region, while delivering a sustainable financial model that finds the right balance between earnings and investing in innovation to deliver benefits for our users. By following this path, we believe that we will deliver long-term shareholder value through an increasingly attractive business model.”

First Quarter 2018 Business Highlights

Adoption of ASC 606

  In millions
  
                 
 Q1 2017 Q2 2017 Q3 2017 Q4 2017  
As reported$   273.9  $   316.5  $  370.7  $   437.0   
    
          
 In millions
  
                  
 Q1 2017 Q2 2017 Q3 2017 Q4 2017  
Adjustments (Decrease)$  (4.3) $  (32.6) $  (65.7) $  (78.9)  
          
          
 In millions
 As
reported
(in
millions)

                   
 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018
As recast$  269.7  $  283.9  $  304.9  $  358.1  $  321.0
                   

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

 Gross billing (1) (in millions)
 Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018
Brazil$159.8 $180.0 $229.5 $262.1 $276.3 
Argentina 71.4  88.0  91.3  108.7  106.1 
Mexico 15.5  20.2  22.6  28.2  29.4 
Venezuela 14.4  14.2  9.8  16.0   
Others 12.8  14.1  17.5  22.0  21.7 
Total$273.9 $316.5 $370.7 $437.0 $433.5 
      
 Free shipping paid by Mercado Libre (2) (in millions)
 Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018
Brazil  $(22.9)$(52.9)$(64.8)$(92.1)
Argentina         (4.1)
Mexico (4.2) (9.4) (11.1) (10.4) (12.3)
Venezuela          
Others (0.1) (0.3) (1.7) (3.7) (3.9)
Total$(4.3)$(32.6)$(65.7)$(78.9)$(112.5)
      
 Net revenues as recast (in millions)Net
revenues as
reported (in
millions)
 Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018
Brazil$159.8 $157.2 $176.6 $197.3 $184.2 
Argentina 71.4  88.0  91.3  108.7  101.9 
Mexico 11.3  10.8  11.5  17.7  17.1 
Venezuela 14.4  14.2  9.8  16.0   
Others 12.8  13.8  15.8  18.4  17.8 
Total$269.7 $283.9 $304.9 $358.1 $321.0 


  
 Gross billing growth
  Q1 2017   Q2 2017   Q3 2017   Q4 2017   Q1 2018
Brazil106.1% 75.0% 75.2% 82.5% 72.9%
Argentina48.1% 30.0% 30.5% 42.3% 48.6%
Mexico39.8% 76.3% 91.4% 135.5% 89.2%
Venezuela18.9% 90.1% 41.6% 49.0%  
Others47.8% 39.1% 56.9% 61.9% 69.6%

(1) Total accrued fees, commissions, interest, and other sales received from users

(2) Prior to the adoption of ASC 606, this amount was presented as a component of cost of net revenues.

First Quarter 2018 Financial Highlights

 The following table summarizes certain key performance metrics for the three months ended March 31th, 2018 and 2017.

        
    Three-month Periods Ended
March 31,
(in millions)   20182017
        
Number of confirmed registered users at end of period   223.1  182.2
Number of confirmed new registered users during period   11.2  8.1
Gross merchandise volume  $3,126.4 $2,334.0
Number of successful items sold   80.1  53.2
Number of successful items shipped   52.5  27.3
Total payment volume  $4,175.3 $2,601.0
Total volume of payments on marketplace  $3,036.9 $1,825.8
Total payment transactions   74.3  44.1
Unique buyers   17.0  13.3
Unique sellers   5.0  4.1
Capital expenditures  $23.0 $12.8
Depreciation and amortization  $11.1 $9.0
        

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

   YoY Growth rates 
     
Consolidated Net Revenues  Q1’17 Q2’17 Q3’17 Q4’17  Q1’18*  
Brazil  106% 53% 35% 37% 15%  
Argentina  48% 30% 30% 42% 43%  
Mexico  2% (6)% (3)% 48% 51%  

*Reflecting impact of ASC 606 adoption.

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

                
   YoY Growth
rates
              
Consolidated Net Revenues  Q1’17Q2’17 Q3’17 Q4’17 Q1’18*       
Brazil  66%40% 31% 35% 19%     
Argentina  58%44% 51% 62% 80%     
Mexico  15%(3)% (7)% 41% 39%     

*Reflecting impact of ASC 606 adoption.

Conference Call and Webcast

The Company will host a conference call and audio webcast on May 9th, 2018 at 4:30 p.m. Eastern Time. The conference call may be accessed by dialing +(970) 315-0420 or +(877) 303-7209 (Conference ID 9396246) 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 Metrics

Gross Billing - Total accrued fees, commissions, interest, and other sales-related payments received from users.

Foreign Exchange (“FX”) Neutral – Calculated by using the average monthly exchange rate of each month of 2017 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 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.

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 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

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, 2017, 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.

Consolidated balance sheets
(In thousands of U.S. dollars, except par value)

    
    
 March 31, December 31,
  2018   2017 
Assets   
Current assets:   
Cash and cash equivalents$350,411  $388,260 
Short-term investments 159,446   209,432 
Accounts receivable, net 29,914   28,168 
Credit cards receivables, net 530,185   521,130 
Loans receivable, net 122,328   73,409 
Prepaid expenses 21,862   5,864 
Inventory 3,362   2,549 
Other assets 68,052   58,107 
Total current assets 1,285,560   1,286,919 
Non-current assets:   
Long-term investments 33,410   34,720 
Property and equipment, net 122,859   114,837 
Goodwill 93,714   92,279 
Intangible assets, net 22,392   23,174 
Deferred tax assets 93,708   57,324 
Other assets 68,044   63,934 
Total non-current assets 434,127   386,268 
Total assets$1,719,687  $1,673,187 
Liabilities and Equity   
Current liabilities:   
Accounts payable and accrued expenses$228,318  $221,095 
Funds payable to customers 592,923   583,107 
Salaries and social security payable 97,769   65,053 
Taxes payable 28,306   32,150 
Loans payable and other financial liabilities 134,466   56,325 
Other liabilities 4,069   3,678 
Dividends payable    6,624 
Total current liabilities 1,085,851   968,032 
Non-current liabilities:   
Salaries and social security payable 19,500   25,002 
Loans payable and other financial liabilities 314,953   312,089 
Deferred tax liabilities 25,542   23,819 
Other liabilities 20,974   18,466 
Total non-current liabilities 380,969   379,376 
Total liabilities$1,466,820  $1,347,408 
    
Equity:   
    
Common stock, $0.001 par value, 110,000,000 shares authorized,   
44,157,364 shares issued and outstanding at March 31,   
2018 and December 31, 2017$44  $44 
Additional paid-in capital 24,969   70,661 
Retained earnings 527,098   537,925 
Accumulated other comprehensive loss (299,244)  (282,851)
Total Equity 252,867   325,779 
Total Liabilities and Equity$1,719,687  $1,673,187 
        

Consolidated statements of cash flows
(In thousands of U.S. dollars, except par value)

     
  Three Months Ended March 31,
   2018   2017 
   
Cash flows from operations:    
Net (loss) income $(12,919) $48,518 
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:    
Depreciation and amortization  11,084   9,003 
Accrued interest  (4,447)  (5,679)
Non cash interest and convertible notes amortization of debt discount and amortization of debt issuance costs  7,063   4,226 
LTRP accrued compensation  15,737   9,176 
Deferred income taxes  (30,601)  (2,798)
Changes in assets and liabilities:    
Accounts receivable  (9,347)  (1,305)
Credit Card Receivables  (33,870)  15,583 
Prepaid expenses  (16,164)  347 
Inventory  (872)  727 
Other assets  (13,009)  (4,472)
Accounts payable and accrued expenses  22,773   13,364 
Funds payable to customers  20,613   13,929 
Other liabilities  3,041   123 
Interest received from investments  3,912   4,015 
Net cash (used in) provided by operating activities  (37,006)  104,757 
Cash flows from investing activities:    
Purchase of investments  (632,734)  (897,589)
Proceeds from sale and maturity of investments  683,909   876,040 
Purchases of intangible assets  (97)  (17)
Advance for property and equipment  (3,390)  (2,505)
Changes in principal of loans receivable, net  (52,243)  (4,808)
Purchases of property and equipment  (19,542)  (10,268)
Net cash used in investing activities  (24,097)  (39,147)
Cash flows from financing activities:    
Proceeds from loans payable and other financial liabilities  80,925   4,290 
Payments on loans payable and other financing liabilities  (4,583)  (2,875)
Dividends paid  (6,624)  (6,624)
Purchase of convertible note capped call  (45,692)   
Net cash provided by (used in) financing activities  24,026   (5,209)
Effect of exchange rate changes on cash and cash equivalents  (772)  6,847 
Net (decrease) increase in cash and cash equivalents  (37,849)  67,248 
Cash and cash equivalents, beginning of the period $388,260  $234,140 
Cash and cash equivalents, end of the period $350,411  $301,388 
         


Consolidated statements of income 
(In thousands of U.S. dollars, except for share data)

  Three Months Ended March 31, 
   2018   2017  
Net revenues $320,976  $269,675  
Cost of net revenues  (158,218)  (100,819) 
Gross profit  162,758   168,856  
Operating expenses:     
Product and technology development  (38,396)  (30,302) 
Sales and marketing  (110,723)  (46,931) 
General and administrative  (43,058)  (28,309) 
Total operating expenses  (192,177)  (105,542) 
(Loss) income from operations  (29,419)  63,314  
      
Other income (expenses):     
Interest income and other financial gains  9,195   12,157  
Interest expense and other financial losses  (10,734)  (6,471) 
Foreign currency gains  5,601   663  
Net (loss) income before income tax gain (expense)  (25,357)  69,663  
      
Income tax gain (expense)  12,438   (21,145) 
Net (loss) income $(12,919) $48,518  


      
  Three Months Ended March 31,
 
   2018   2017 
Basic EPS     
Basic net (loss) income     
Available to shareholders per common share $(0.29) $1.10 
Weighted average of outstanding common shares  44,157,364   44,157,364 
Diluted EPS     
Diluted net (loss) income     
Available to shareholders per common share $(0.29) $1.10 
Weighted average of outstanding common shares  44,157,364   44,157,364 
      
Cash Dividends declared (per share)     0.150 
         

Financial results of reporting segments

            
  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 expense          $(25,357)
              


  Three Months Ended March 31, 2017
  Brazil Argentina Mexico Venezuela Other Countries Total
  (In thousands)
Net revenues $159,781  $71,392  $11,326  $14,397  $12,779  $269,675 
Direct costs  (87,037)  (45,066)  (12,631)  (6,551)  (9,697)  (160,982)
Direct contribution  72,744   26,326   (1,305)  7,846   3,082   108,693 
             
Operating expenses and indirect costs of net revenues            (45,379)
Income from operations            63,314 
             
Other income (expenses):            
Interest income and other financial gains            12,157 
Interest expense and other financial losses            (6,471)
Foreign currency gains            663 
Net income before income tax expense           $69,663 
               

Non-GAAP Financial Measures

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

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 2017 and applying them to the corresponding months in 2018, 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 periods ended March 31, 2018:

             
  Three-month Periods Ended
March 31, (*)
  As reported FX Neutral Measures
(In millions, except percentages)  2018   2017  Percentage
Change
  2018   2017  Percentage
Change
  (Unaudited)   (Unaudited)  
Net revenues $321.0  $269.7  19.0% $350.8  $269.7  30.1%
Cost of net revenues  (158.2)  (100.8) 56.9%  (170.2)  (100.8) 68.8%
Gross profit  162.8   168.9  -3.6%  180.6   168.9  6.9%
             
Operating expenses  (192.2)  (105.5) 82.1%  (212.7)  (105.5) 101.5%
Loss / Income from operations  (29.4)  63.3  -146.5%  (32.2)  63.3  -150.8%

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

CONTACT: MercadoLibre, Inc.

Investor Relations
investor@mercadolibre.com

http://investor.mercadolibre.com