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): November 1, 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 November 1, 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 November 1, 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: November 2, 2018By: /s/ PEDRO ARNT        
  PEDRO ARNT
  Chief Financial Officer
  

EdgarFiling

EXHIBIT 99.1

MercadoLibre, Inc. Reports Third Quarter 2018 Financial Results

83.5 million Items Sold, up 12.5%,

103.9 million Total Payment Transactions, up 66.7%

Net Revenues of $355.3 million, up 58.3% on an FX neutral basis

BUENOS AIRES, Argentina, Nov. 01, 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 quarter ended September 30, 2018.

Pedro Arnt, Chief Financial Officer of MercadoLibre, Inc., commented, “I am pleased to report another quarter of solid performance in our business, across our key business units. During the quarter we have: strengthened our online-to-offline payments offering, successfully expanded the financial services portfolio, once again confirmed the great resiliency of our marketplace business, and made important strides with the development of our proprietary logistics network. All this has translated into a strong top line growth, as gross billings grew 48% on an FX neutral basis year over year. And, from a bottom line perspective, operating losses showed a 61% reduction versus last quarter as we delivered break even EBITDA during Q3.”

Third Quarter 2018 Business Highlights1

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

Adoption of ASC 606

     
 In Millions
Gross YTD 2017*  YTD 2018**  Q3 2017*  Q3 2018** 
Billings$  961.1$  1,328.3$  370.7$  462.8
     
 In Millions
Adjustments YTD 2017*  YTD 2018**  Q3 2017*  Q3 2018** 
(Decrease)$  102.6$  316.7$  65.7$  107.6
     
 In Millions
Net YTD 2017*  YTD 2018**  Q3 2017*  Q3 2018** 
Revenues$  858.5$  1,011.6$  304.9$  355.3
     

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

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

      
 In Millions
   YTD 2017  YTD 2018  Q3 2017  Q3 2018 
Gross
Billings
Brazil$569.3$855.8$229.5$309.0
Argentina$250.7$303.1$91.3$91.2
Mexico$58.3$99.8$22.6$39.1
Venezuela$38.3$-$9.8$-
Others$44.5$69.7$17.5$23.6
      
 In Millions
   YTD 2017  YTD 2018  Q3 2017  Q3 2018 
Adjustments
(Decrease)
Brazil$75.8$254.9$52.9$88.2
Argentina$-$17.3$-$7.5
Mexico$24.7$36.3$11.1$10.1
Venezuela$-$-$-$-
Others$2.1$8.2$1.7$1.8
      
 In Millions
   YTD 2017*  YTD 2018**  Q3 2017*  Q3 2018** 
Net
Revenues
Brazil$493.5$600.8$176.6$220.8
Argentina$250.7$285.8$91.3$83.7
Mexico$33.6$63.6$11.5$29.0
Venezuela$38.3$-$9.8$-
Others$42.3$61.5$15.8$21.8
      

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

Third Quarter 2018 Financial Highlights

The following table summarizes certain key performance metrics for the three months ended September 30th, 2018 and 2017.

             
  Nine-months Periods Ended Three-month Periods Ended
   September 30,   September 30,
(in millions)*  2018
  2017 (**)  2018 2017 (**)
             
Number of confirmed registered users at end of period  248.9  201.2  248.9  201.2
Number of confirmed new registered users during period  36.7  27.0  14.0  10.0
Gross merchandise volume $9,271.8 $8,131.6 $2,995.2 $3,075.3
Number of successful items sold  249.1  188.9  83.5  74.2
Number of successful items shipped  159.6  102.4  54.3  41.7
Total payment volume $13,153.8 $9,388.9 $4,552.4 $3,667.1
Total volume of payments on marketplace $8,324.1 $6,620.3 $2,720.3 $2,592.9
Total payment transactions  263.7  158.2  103.9  62.3
Unique buyers  33.1  27.6  17.9  16.3
Unique sellers  12.9  8.7  4.3  4.6
Capital expenditures $72.1 $52.1 $25.3 $17.5
Depreciation and amortization $33.9 $30.0 $11.3 $10.9
             

(*) Figures have been expressed using rounding amounts. Growth calculations using this table may not total due to rounding.
(**) Data for 2017 includes Venezuelan metrics. Please refer to Note 2 of our unaudited interim condensed consolidated financial statements for additional details

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

   Year-over-year Growth rates
    
Consolidated Net Revenues  Q3’17Q4’17Q1’18Q2’18Q3’18
        
Brazil  35%37%15%25%25%
        
Argentina  30%42%43%14%(8)%
        
Mexico  (3)%48%51%62%152%
        

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

   Year-over-year Growth rates
       
Consolidated Net Revenues  Q3’17Q4’17Q1’18Q2’18Q3’18
        
Brazil  31%35%19%40%56%
        
Argentina  51%62%80%68%68%
        
Mexico  (7)%41%39%71%168%
        

Conference Call and Webcast

The Company will host a conference call and audio webcast on Nov 1st, 2018 at 4:30 p.m. Eastern Time. The conference call may be accessed by dialing (877) 303-7209 / (970) 315-0420 (Conference ID 3879789) and requesting inclusion in the call for MercadoLibre. The live conference call can be accessed via audio webcast at the investor relations section of the Company's website, at http://investor.mercadolibre.com. An archive of the webcast will be available for one week following the conclusion of the conference call.

Definition of Selected Operational Metrics

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

Foreign Exchange (“FX”) Neutral – Calculated by using the average monthly exchange rate of each month of 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 MercadoLibre Marketplace, excluding Classifieds transactions.

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

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

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

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

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

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

Local Currency Growth Rates – Refer to FX Neutral definition.

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

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

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

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

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

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

About MercadoLibre

Founded in 1999, MercadoLibre is Latin America's leading e-commerce technology company. Through its primary platforms, MercadoLibre.com and MercadoPago.com, it provides solutions to individuals and companies buying, selling, advertising, and paying for goods and services online.

MercadoLibre.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 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, 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 statements of income
(In thousands of U.S. dollars, except for share data)
         
  Nine Months Ended September 30, Three Months Ended September 30,
  2018 2017 2018 2017
Net revenues $1,011,634  $858,479  $355,281  $304,921 
Cost of net revenues $(519,410) $(342,241) $(185,563) $(129,094)
Gross profit $492,224  $516,238  $169,718  $175,827 
Operating expenses:        
Product and technology development $(107,311) $(93,019) $(35,478) $(32,380)
Sales and marketing $(342,382) $(207,925) $(110,443) $(84,139)
General and administrative $(111,195) $(91,575) $(34,800) $(31,766)
Impairment of Long-Lived Assets    $(2,837)      
Total operating expenses $(560,888) $(395,356) $(180,721) $(148,285)
(Loss) income from operations $(68,664) $120,882  $(11,003) $27,542 
         
Other income (expenses):        
Interest income and other financial gains $27,746  $37,020  $8,636  $14,200 
Interest expense and other financial losses $(39,805) $(19,686) $(15,869) $(6,709)
Foreign currency gains (losses) $22,102  $(19,475) $3,924  $1,622 
Net (loss) income before income tax gain (expense) $(58,621) $118,741  $(14,312) $36,655 
         
Income tax gain (expense) $24,372  $(37,241) $4,234  $(8,989)
Net (loss) income $(34,249) $81,500  $(10,078) $27,666 
         
  Nine Months Ended September 30, Three Months Ended September 30,
  2018 2017 2018 2017
Basic EPS        
Basic net (loss) income        
Available to shareholders per common share $(0.77) $1.85  $( 0.23) $0.63 
Weighted average of outstanding common shares $44,302,724  $44,157,364  $44,588,704  $44,157,364 
Diluted EPS        
Diluted net (loss) income        
Available to shareholders per common share $( 0.77) $1.85  $( 0.23) $0.63 
Weighted average of outstanding common shares $44,302,724  $44,157,364  $44,588,704  $44,157,364 
         
Cash Dividends declared (per share)    $0.45     $0.15 
                 

 

 
Consolidated balance sheets
(In thousands of U.S. dollars, except par value)
    
 September 30, December 31,
 2018 2017
Assets   
Current assets:   
Cash and cash equivalents$1,028,579  $388,260 
Restricted cash and cash equivalents$49,151    
Short-term investments$67,041  $209,432 
Accounts receivable, net$27,141  $28,168 
Credit cards receivables, net$266,461  $521,130 
Loans receivable, net$90,827  $73,409 
Prepaid expenses$11,013  $5,864 
Inventory$7,395  $2,549 
Other assets$54,071  $58,107 
Total current assets$1,601,679  $1,286,919 
Non-current assets:   
Long-term investments$2,823  $34,720 
Property and equipment, net$138,417  $114,837 
Goodwill$88,650  $92,279 
Intangible assets, net$18,719  $23,174 
Deferred tax assets$125,521  $57,324 
Other assets$42,542  $63,934 
Total non-current assets$416,672  $386,268 
Total assets$2,018,351  $1,673,187 
Liabilities and Equity   
Current liabilities:   
Accounts payable and accrued expenses$230,999  $221,095 
Funds payable to customers$525,089  $583,107 
Salaries and social security payable$57,372  $65,053 
Taxes payable$22,740  $32,150 
Loans payable and other financial liabilities$141,502  $56,325 
Other liabilities$11,830  $3,678 
Dividends payable   $6,624 
Total current liabilities$989,532  $968,032 
Non-current liabilities:   
Salaries and social security payable$23,389  $25,002 
Loans payable and other financial liabilities$554,830  $312,089 
Deferred tax liabilities$92,322  $23,819 
Other liabilities$16,526  $18,466 
Total non-current liabilities$687,067  $379,376 
Total liabilities$1,676,599  $1,347,408 
    
Equity:   
    
Common stock, $0.001 par value, 110,000,000 shares authorized,   
45,201,662 and 44,157,364 shares issued and outstanding at September 30,   
2018 and December 31, 2017$45  $44 
Additional paid-in capital$221,719  $70,661 
Retained earnings$505,768  $537,925 
Accumulated other comprehensive loss$(385,780) $(282,851)
Total Equity$341,752  $325,779 
Total Liabilities and Equity$2,018,351  $1,673,187 
        

 

 
Consolidated statements of cash flows
(In thousands of U.S. dollars, except par value)
     
  Nine Months Ended September 30,
  2018 2017
         
Cash flows from operations:    
Net (loss) income $( 34,249) $81,500 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:    
Unrealized devaluation loss, net $9,262  $28,463 
Impairment of Long-Lived Assets    $2,837 
Depreciation and amortization $33,861  $29,953 
Accrued interest $( 11,258) $( 16,391)
Non cash interest and convertible notes amortization of debt discount and amortization of debt issuance costs $18,386  $9,234 
LTRP accrued compensation $27,706  $28,734 
Deferred income taxes $( 75,275) $( 14,769)
Changes in assets and liabilities:    
Accounts receivable $( 14,891) $( 13,380)
Credit card receivables $121,896  $( 113,514)
Prepaid expenses $( 6,810) $6,800 
Inventory $( 6,015) $( 1,172)
Other assets $( 17,463) $( 31,528)
Accounts payable and accrued expenses $50,979  $71,794 
Funds payable to customers $82,909  $151,635 
Other liabilities $6,077  $3,703 
Interest received from investments $10,986  $18,490 
Net cash provided by operating activities $196,101  $242,389 
Cash flows from investing activities:    
Purchase of investments $( 1,814,416) $( 3,180,633)
Proceeds from sale and maturity of investments $1,964,480  $3,371,543 
Payment for acquired businesses, net of cash acquired $( 2,281)   
Purchases of intangible assets $( 217) $( 84)
Advance for property and equipment $( 4,426) $( 12,777)
Changes in principal of loans receivable, net $( 55,860) $( 46,951)
Purchases of property and equipment $( 65,133) $( 39,280)
Net cash provided by investing activities $22,147  $91,818 
Cash flows from financing activities:    
Funds received from the issuance of convertible notes $880,000    
Transaction costs from the issuance of convertible notes $( 16,264)   
Purchase of convertible note capped call $( 137,476) $( 67,308)
Unwind of convertible note capped call $121,703    
Payments on convertible notes $( 348,123)   
Proceeds from loans payable and other financial liabilities $156,075  $13,153 
Payments on loans payable and other financing liabilities $( 78,705) $( 4,304)
Dividends paid $( 6,624) $( 19,871)
Net cash provided by (used in) financing activities $570,586  $( 78,330)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and cash equivalents $( 99,364) $( 28,819)
Net increase in cash, cash equivalents and restricted cash equivalents $689,470  $227,058 
Cash, cash equivalents and restricted cash  equivalents, beginning of the period $388,260  $234,140 
Cash, cash equivalents and restricted cash equivalents, end of the period $1,077,730  $461,198 
         

Financial results of reporting segments

            
  Three Months Ended September 30, 2018
  Brazil Argentina Mexico  Other Countries Total
  (In thousands)
Net revenues $ 220,828 $ 83,714 $ 28,962  $ 21,777 $ 355,281 
Direct costs  (190,172 (60,409 (35,229  (18,822 (304,632
Direct contribution (loss)  30,656  23,305  (6,267  2,955  50,649 
            
Operating expenses and indirect costs of net revenues           (61,652
Loss from operations           (11,003
            
Other income (expenses):           
Interest income and other financial gains           8,636 
Interest expense and other financial losses           (15,869
Foreign currency gains           3,924 
Net loss before income tax gain          $ (14,312)
            

 

              
  Three Months Ended September 30, 2017 
  Brazil Argentina Mexico Venezuela Other Countries Total 
  (In thousands) 
Net revenues $ 176,575 $ 91,308 $ 11,489 $ 9,751 $ 15,798 $ 304,921 
Direct costs  (129,958 (56,210 (24,923 (4,582 (12,684 (228,357)
Direct contribution (loss)  46,617  35,098  (13,434 5,169  3,114  76,564 
              
Operating expenses and indirect costs of net revenues            (49,022)
Income from operations            27,542 
              
Other income (expenses):             
Interest income and other financial gains            14,200 
Interest expense and other financial losses            (6,709)
Foreign currency gains            1,622 
Net income before income tax expense           $ 36,655  
                    

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 period ended September 30, 2018:

             
  Three-month Periods Ended
September 30, (*)
  As reported FX Neutral Measures
(In millions, except percentages) 2018 2017 Percentage
Change
 2018 2017 Percentage
Change
  (Unaudited)   (Unaudited)  
Net revenues $355.3 $304.9 16.5% $482.6 $304.9 58.3%
Cost of net revenues  (185.6 (129.143.7%  (254.3 (129.197.0%
Gross profit  169.7  175.8 -3.5%  228.3  175.8 29.8%
             
Operating expenses  (180.7 -148.3 21.9%  (254.0 (148.371.3%
(Loss) / Income from operations  (11.0 27.5 -140.0%  (25.7 27.5 -193.4%
                   

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

CONTACT:

MercadoLibre, Inc.
Investor Relations
investor@mercadolibre.com
http://investor.mercadolibre.com

A PDF accompanying this announcement is available at http://resource.globenewswire.com/Resource/Download/89a2c73c-e351-409e-a9bd-8474b13c6109