SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 2, 2018 (November 1, 2018)
(Exact Name of Registrant as Specified in its Charter)
|(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)|
(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 (see General Instruction A.2. below):
|☐||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))|
|Item 2.02.||Results of Operations and Financial Condition.|
On November 1, 2018, MercadoLibre, Inc. (the “Company”) conducted a conference call with investors concerning its financial results for the fiscal quarter ended September 30, 2018. The Company also made an investor presentation available on its Investor Relations website, http://investor.mecadolibre.com.
A copy of the transcript of the conference call is attached hereto as Exhibit 99.1, and a copy of the presentation is attached hereto as Exhibit 99.2. The information disclosed under this Item 2.02, including Exhibits 99.1 and 99.2, shall be deemed furnished and not filed for purposes of the Securities Exchange Act of 1934, as amended.
Any statements in the exhibit attached herewith 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.
MercadoLibre, Inc. routinely posts important information for investors on its Investor Relations website, http://investor.mercadolibre.com. The Company uses this website as a means of disclosing material, non-public information and for complying with its disclosure obligations under Securities and Exchange Commission (“SEC”) Regulation FD (Fair Disclosure). Accordingly, investors should monitor MercadoLibre Inc.’s Investor Relations website, in addition to following the Company’s press releases, SEC filings, public conference calls and webcasts. The information contained on, or that may be accessed through, the Company’s website is not incorporated by reference into, and is not a part of, this report.
|99.1||MercadoLibre, Inc. November 1, 2018 Conference Call Transcript|
|99.2||MercadoLibre, Inc. Investor Presentation|
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.
Dated: November 2, 2018
|By:||/s/ Pedro Arnt|
|Title:||Chief Financial Officer|
Part II: Overview & Financial Results – Pedro Arnt
Hello everyone and thank you for joining the call. I am pleased to report another quarter of solid performance in our business. From a top line perspective, Gross Billings ascended to $463 million dollars, growing 25% in USD and 48,1% on an FX neutral basis. On a by country basis gross billings were even stronger in our main countries: 69% for Brazil, 83% for Argentina, and 84% for Mexico, all of these expressed on an FX neutral basis.
From a bottom line perspective, operating losses showed a 61% reduction versus last quarter, at $11 million dollars and break even EBITDA, as we have continued to make progress over the last three months in adjusting our operational and financial model for sustainable profitable growth, despite strong currency headwinds and additional adverse policy changes from carriers in Brazil.
Before I walk you through the highlights of the quarter, one comment on disclosure; you will notice that many of the metrics we had been sequentially updating in the past will not be covered in the prepared remarks today as they are now included in the accompanying presentation to the third quarter 2018 earnings script.
Lets begin with our fintech progress report, as it has become a growing area of focus for our organization. Quarterly TPV reached $4.6 billion dollars, a growth of 74% on an FX Neutral basis.
During the quarter, off platform TPV explained 80% of the total incremental TPV, as we increasingly focus our efforts on growing our O2O payments offering, successfully expanding the financial services we offer our merchants, and growing the markets we are currently in. During the month of September, for the first time ever not only Mercado Pago processed more total payment transactions off platform than on MELI’s marketplaces, but total payment transactions surpassed the hundred million mark in a single quarter. This is a testament to the strides we have made growing our fintech ecosystem.
This growth is driven in large part by our mPos business, which continues to fire on all cylinders. During the third quarter, and on a consolidated basis, FX neutral TPV from mPos grew 636% YoY. Going forward, we will remain focused on merchant sign-up as we look to continue growing the number of net new adds to our MPOS solution, which is already robust and forming a large and growing installed base of active merchants processing payments with us. We see this segment as a still underserved and large TAM, that is key to the distribution of most financial products in our fintech portfolio.
We are pleased with the progress in our mobile wallet initiative as well, which has reached an important milestone this quarter, crossing the 1 million monthly active payers mark in a single month. In line with that, active payers grew triple digits in Brazil, Argentina, and Mexico during the quarter. Through the MercadoPago wallet, an individual can set up our mobile wallet within minutes and be able to send peer-to-peer payments, top up his mobile device, pay for utilities, store money, and pay physical world merchants via our growing
QR payments network. As we continue to build greater ubiquity and add more usage cases to our two-sided network, TPV from the mobile wallet on an FX neutral basis is also growing triple digits year on year in Brazil, Argentina, and Mexico.
This quarter also marked an important breakthrough in in the roll-out of new fintech products, as we launched our Asset Management feature in Argentina. Since its launch, we are enthused to see that asset management users have invested almost 20% of total stored balance, indicating good product market fit from the get go, and increasing our commitment to the regional roll out of this new product not only to individuals, but also to SMB’s that sell on our marketplaces.
We believe these results are indicative of the large market opportunity for this type of service. Unbanked or underbanked users typically struggle with savings products, as they usually do not have the know how to access more sophisticated options, and are generally offered less competitive yields on typical savings accounts. In essence, what makes our asset management product disruptive, is its ability to bring an inclusive and attractive wealth management product to individuals and SMB’s with minimal transaction costs and complexity. Today, if you are a small saver in Latin America there are few avenues to invest your money in, and that bodes incredibly well for us as we are uniquely positioned to change that as we scale out our asset management product.
Let’s now move to our marketplace business.
Our marketplace business continues to show great resiliency. We delivered solid rates of growth despite increasingly tougher comps and reductions in shipping subsidies we offer. On a consolidated basis, Gross Merchandise Volume reached $3 billion dollars, an FX neutral basis GMV growth of 28% year on year. Excluding Venezuela, FX neutral growth would have been an even stronger robust 38% year on year.
On a market by market basis, Mexico has consolidated as an engine of growth for our business. Since early 2017, we have grown the size of that business by a factor of roughly 2.5 times, as we leverage our depth and breath of selection, fast and free shipping value proposition, and aggressive customer acquisition investments to gain incremental share of wallet from our Mexican buyers. Consequently, Mexico has delivered 7 and 5 consecutive quarters of items growth and FX Neutral GMV above 65.0% YoY respectively. All this, at the same time that we continue to hold our leadership position in brand awareness and reach in Mexico.
Looking at our largest market, Brazil, our marketplace grew FX neutral GMV at 33% YoY, sustaining 12 consecutive quarters of FX neutral GMV growth above 30% YoY on the back of tougher two-year stack comparisons and shipping subsidy reductions we carried out in order to improve monetization rates and unit economics. This is an encouraging datapoint, as in Brazil, according to EBIT, e-commerce is calculated to be growing at roughly 15% YoY on an FX neutral basis, indicating we continue to gain share of overall e-commerce despite the deceleration in our business.
Still on Brazil, and as a result of launching the R$5 flat fee in July for items below R$120, and the restriction on all items worth less than R$6, units sold decelerated to 1% YoY. Although not optimal, this self inflicted deceleration in unit volume comes with the intended benefit of growing average ticket levels, that drive the improved economics for our free shipping program delivered during the quarter. Also important, despite the reduction in sales of low ticket items, GMV per unique buyer continues to grow at a healthy clip both in USD and local currency.
Further south, Argentina continues to maintain momentum both in FX neutral GMV and units sold growth, ascending to 49% YoY for both metrics, as our free shipping & loyalty program gains traction, despite challenging macro and currency trends during the quarter. On free shipping, we are pleased to report that within less than a year of launch of the program, almost 50% of our sales in Argentina are already done with free shipping.
Let’s now move on to our logistics progress report, another critical building block of our enhanced marketplace vision.
The adoption of our proprietary logistics network is making strides. Exiting the quarter over 15% of the shipments through MercadoEnvios was sent through it, rather than on our dropship network. As we continue to have greater control over the end-to-end shipping experience, we visibly eliminate friction, improve customer satisfaction, and consequently drive greater frequency of use and share of wallet.
Not only is the mix of shipments through our prop network growing, but the efficiency of that network is also improving. Over the last year, we have been able to shorten our lead times by almost 20% on a consolidated basis on our prop network. Brazil is the geography where we observed the greatest improvement as we shortened lead times by 1.9 days versus last year. Additionally we have also improved lead times in Mexico and Argentina, where we saw improvements of approximately 0.5 days in both countries.
We also made meaningful advances in enhancing our dropship network in Argentina where we launched our MELI Flex logistics solution. This application will enable our sellers to adopt proprietary MELI technology and leverage their existing logistics relationships with small carriers to deliver products within hours in large metropolitan areas through our Mercado Envios proprietary logistics network.
One final update on delivery times, a key metric we use internally to gauge service levels. During the quarter, on a consolidated basis, the percentage of items delivered in 48 hours or less increased by 15 percentage points versus last year. Mexico leads the way with almost 80% of the volume being delivered in two days or less, while Argentina and Brazil also continued to improve their share of shipments delivered in that time window.
Having covered the solid operational KPI’s we delivered this quarter, let’s move on to financials where we have continued taking significant steps to balance our financial model as a result of the unforeseen changes in the cost structure of our logistics operation in Brazil. We feel we have made inroads in our trajectory towards profitability, despite
additional pressure during this quarter from unforeseen and large currency devaluations. Going forward we will continue to make changes in shipping subsidies and pricing as we see fit in order to achieve this goal.
On top of the solid growth gross billings growth during the quarter I mentioned at the opening, increased efficiencies in shipping subsidies also drove strong revenue growth on an FX neutral basis. Consolidated net revenues came in at $355 million dollars, accelerating on an FX neutral basis 14 percentage points sequentially, to 58% year on year . Just as with gross billings, on a by country basis net revenues were strong in our main countries: 56% for Brazil, 68% for Argentina, and 168% for Mexico, all of these also expressed on an FX neutral basis.
Gross profit ascended to $170 million dollars during the quarter, representing 48% of net revenues versus 58% in the third quarter of last year. The year on year margin deterioration is mainly due to the formulaic changes in revenues due to the implementation of ASC 606.
Additionally, net realizable value discounts on mPos devices, warehousing costs, and increasing costs of deploying our infrastructure on public clouds explain the gross margin compression. We have included a detailed breakdown, of these, and also the OPEX margin evolution I am about to cover in the slides that accompany this presentation.
Operating expenses totaled $181 million dollars, or 51% of revenues versus 49% of revenues during the third quarter of 2017. The contraction in OPEX margin is mainly explained by the revenue recognition changes due to the implementation of ASC 606.
The other drivers of the OPEX margin compression this quarter were attributed to buyer protection payouts, increased loan loss provisions from our credit portfolio, and incremental marketing costs as we invest behind promotional campaigns and online advertising.
As a result, as mentioned earlier, operating losses contracted by 61% versus last quarter to $11 million dollars despite higher free shipping penetration on a sequential basis, as we better optimize free shipping availability with better unit economics.
Below operating income we saw $15.9 million in financial expenses attributed for the most part to interest accrual on the convertible note we issued this quarter due 2028, and also working capital facilities we took in Argentina, Uruguay, and Chile. Interest income decreased 39.2% year on year to $8.6 million dollars due to the devaluation of the Argentine Peso and also lower float in Argentina.
Our forex line was positive $3.9 million as a consequence of a $5.1 million gain arising from the U.S. Dollar revaluation over our Argentine Peso net liability position in
Argentina, partially offset by a $1.3 million loss arising from the appreciation of the Mexican Peso over our U.S. Dollar net asset position in Mexico.
Consequently, net loss as reported for the third quarter was also lower versus last quarter, ascending to $10.1 million, resulting in basic net loss per share of $0.23 cents.
That wraps up my strategic review for the quarter. We remain convinced that a key measure of our success will be the value we generate over the long term to our shareholders. This value will come to fruition as a direct consequence of how quickly we solidify and extend our current leadership position in the region. The hurdles and threats we will face to achieve our long term vision are not minor: aggressive, ingenious and well-funded competitors; growth challenges and execution risk, and the need to deploy considerable investments to meet an expanding opportunity in multiple countries. However, not only online commerce and fintech is a huge underpenetrated market, but we feel good about what we have accomplished so far and are even more excited of what we will achieve as we move into 2019 and beyond.
Thank you very much. We can now take your questions.
INVESTOR PRESENTATION Third Quarter 2018 Results November 01, 2018
This presentation may make forward - looking statements relating to such matters as continued growth prospects for the company, industry trends and product and technology initiatives . These statements are based on currently available information and our current assumptions, expectations and projections about future events . While we believe that our assumptions, expectations and projections are reasonable in view of currently available information, you are cautioned not to place undue reliance on these forward - looking statements . Our actual results may differ materially from those included in this presentation, for a variety of reasons, including those described in the forward - looking statements and risk factor sections of our 10 - Q and other filings with the Securities and Exchange Commission, which are available on our investor relations website . (http : //investor . mercadolibre . com) A reconciliation of Non - GAAP measures to the nearest comparable GAAP measures can be found in our third quarter 2018 earnings press release available on our investor relations website . All of the information included in this presentation is updated as of September 30 th, 2018 . Except as may be required by applicable law, we assume no obligation to publicly update or revise our statements . Percentages have been calculated using whole amounts rather than rounded amounts . This may cause some figures not to total due to rounding . Safe Harbor
Third Quarter 2018 Operational & Financial Highlights us$3.0BN +28%LC YoY Total GMV us$4.6BN +70%LC YoY Total TPV 65.6% + 48%LC YoY GMV Shipped us$2.9BN +40%LC YoY Total TPV ON us$1.6BN +163%LC YoY Total TPV OFF 103.9MM +67% YOY Total TPN 83.5MM + 13% YoY Items Sold us$355.3MM +58%LC YoY Net Revenues
Third Quarter 2018 Overview 1. Quarterly Highlights 2. KPIs 3. Financial Metrics 4. Margin Structures
Third Quarter 2018 Overview 1. Quarterly Highlights 2. KPIs 3. Financial Metrics 4. Margin Structures
Financial Results • Gross Billings came in at $ 462 . 8 million dollars, growing 24 . 9 % YoY in USD and 48 . 1 % YoY on an FX Neutral basis, marking 18 th consecutive quarter of FX Neutral gross billings growth above 45 % YoY . • Gross billings was solid across main countries on an FX Neutral basis YoY : Brazil 68 . 6 % , Argentina 82 . 6 % , Mexico 83 . 7 % • In addition to the solid growth in Gross Billings, increased efficiencies in shipping subsidies also drove strong net revenue growth on an FX Neutral basis . Consolidated net revenues came in at $ 355 . 3 million dollars, accelerating on an FX Neutral basis 14 pp to 58 . 3 % YoY . • On a by country basis, net revenue growth was also strong in main countries YoY : Brazil 56 . 4 % , Argentina 67 . 8 % , Mexico 168 . 2 % • Gross Profit ascended to $ 169 . 7 million dollars, representing 47 . 8 % of revenues vs . 57 . 7 % LY . Most of the year on year margin compression is explained by hosting fees, mPos write - offs, & warehousing costs . • As reported operating expenses totaled $ 180 . 7 million dollars, or 50 . 9 % of revenues vs . 48 . 6 % LY . The YoY contraction is attributed to buyer protection payouts, increased loan loss provisions on our credit portfolio, and incremental marketing costs . • From a bottom line perspective operating losses showed a 61 . 0 % reduction versus last quarter to $ 11 . 0 million dollars or negative 3 . 1 % of revenues against negative $ 28 . 2 million in 2 Q . Additionally we have delivered positive EBITDA as we continue to optimize our financial model . • Consequently, net loss as reported for the third quarter was also lower versus last quarter, ascending to $ 10 . 1 million, resulting in basic net loss per share of $ 0 . 23 cents . Third Quarter 2018 Quarterly Highlights
Payments – MercadoPago • MercadoPago had a stellar quarter once again accelerating growth and scale . During the month of September, for the first time ever not only MP processed more total payment transactions off platform that on MELI’s marketplaces, but total payment transactions surpassed the one hundred million mark in a single quarter . • TPV off Mercado Libre represented over 1 / 3 of total payment volume during the quarter vs . less than 1 / 4 a year ago, and explained 80 . 0 % of the total incremental TPV growth as we focus on growing our O 2 O initiatives . • On a consolidated basis, mPos TPV is growing at 636 . 0 % YoY and quickly gaining share in off platform . • During Q 3 , Wallet reached 1 million active payers in a single month . Active payers grew triple digits YoY in Argentina, Brazil, and Mexico . • LC TPV from wallet growing at a fast clip in Argentina (+ 475 . 0 % YoY) and also in Brazil (+ 126 . 0 % YoY) . • Launched QR in store payments network in Brazil during the quarter as we continue to expand our efforts in building ubiquity and adding more usage cases to our two - sided network . • Rolled out Asset Management product in Argentina for individuals with encouraging results . Since its launch, asset management users have invested almost 20 . 0 % of MercadoPago stored balances in Argentina . Third Quarter 2018 Quarterly Highlights
Marketplace • Marketplace business continues to show great resiliency in spite of increasingly difficult comps . On a consolidated basis FX Neutral GMV grew 27 . 9 % YoY, while if we exclude Venezuela from last year FX Neutral GMV grew at a solid 37 . 7 % YoY . • Mexico is consolidating as an engine of growth for the business, delivering 7 and 5 consecutive quarters of items growth and FX Neutral GMV above 65 . 0 % YoY respectively . Additionally, since early 2017 the size of the business has grown by a factor of 2 . 5 x as we leverage our depth and breath of selection, fast and free shipping value proposition and aggressive customer acquisition investments . • Brazil sustained 12 consecutive quarters of GMV growth above 30 . 0 % YoY in Brazil on an FX Neutral basis despite tougher two - year stack comparisons, shipping subsidy reductions and the launch of R $ 5 flat fee in July for items below R $ 120 free shipping threshold . • As a result of launching R $ 5 flat fee rollout in July for items below R $ 120 and removal of all listings under R $ 6 , successful items growth in Brazil decelerated to 1 . 5 % YoY . However, ASP in Brazil growing sequentially & YoY as we shift incentives and subsidies to purchase higher ticket items, and improve monetization and overall unit economics . • Despite challenging macro and currency trends during the quarter, Argentina maintained momentum both in successful items and FX Neutral GMV growing 49 . 4 % YoY and 48 . 9 % respectively as our free shipping program continues to gain traction and reached almost 50 . 0 % of sales . Third Quarter 2018 Quarterly Highlights
Logistics - MercadoEnvíos • The adoption of our proprietary logistics network is making strides with over 15 % of the shipments through MercadoEnvios was sent through it during the quarter . • Shortened lead times by almost 20 % on a consolidated basis over the last year . Brazil is the geography where we observed the greatest improvement as we shortened lead times by 1 . 9 days versus last year . • Improving lead times in Mexico and Argentina as well, by approximately 0 . 5 days in both countries . • On our dropship network we have seen important advances during the quarter as we launched our MELI Flex solution in Argentina . This application will allow our sellers to leverage our technology and use their existing logistics relationships to deliver goods within hours in large metropolitan areas through our MercadoEnvíos proprietary logistics network . • During the quarter, on a consolidated basis ~ 40 . 0 % of items sold were being delivered in 48 hours or less . Mexico leads the way with almost 80 . 0 % of the volume being delivered in two days or less, while Argentina and Brazil continued to improve their share of shipments in that time window . Third Quarter 2018 Quarterly Highlights
Third Quarter 2018 Overview 1. Quarterly Highlights 2. KPIs 3. Financial Metrics 4. Margin Structures
Brazil Gross Merchandise Volume & Items Sold Tougher comps, R$ 5 flat fee launched in July for items below R$ 120 and the removal of listings below R$ 6 affected Items growth. However, LC GMV maintained momentum as we incentivize higher ticket purchases LC GMV Evolution per Quarter Items Evolution per Quarter (M) 63% 71% 71% 44% 33% 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 3Q17 4Q17 1Q18 2Q18 3Q18 LC YoY Growth 68% 68% 68% 43% 1% 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 3Q17 4Q17 1Q18 2Q18 3Q18 Sold Items YoY Growth
Seven consecutive quarters of items and LC GMV growth above 65.0% YoY as we continue to improve assortment, and leverage our fast and free shipping value proposition to our Mexican buyers LC GMV Evolution per Quarter Items Evolution per Quarter (M) 76% 91% 77% 73% 68% -0.1 0.1 0.3 0.5 0.7 0.9 1.1 1.3 1.5 3Q17 4Q17 1Q18 2Q18 3Q18 LC YoY Growth 128% 126% 106% 91% 71% -0.1 0.1 0.3 0.5 0.7 0.9 1.1 1.3 1.5 3Q17 4Q17 1Q18 2Q18 3Q18 Sold Items YoY Growth Mexico Gross Merchandise Volume & Items Sold
LC GMV Evolution per Quarter Items Evolution per Quarter (M) 39% 59% 53% 57% 49% 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 3Q17 4Q17 1Q18 2Q18 3Q18 LC YoY Growth Free Shipping Launch 25% 46% 44% 54% 49% 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 3Q17 4Q17 1Q18 2Q18 3Q18 Sold Items YoY Growth Free Shipping Launch Argentina Gross Merchandise Volume & Items Sold Maintaining High Growth Rates as free shipping and loyalty programs continue to gain traction reaching almost 50.0% of marketplace sales
Shift to lower ticket purchases affected LC GMV, although continuing to drive high items growth LC GMV Evolution per Quarter Items Evolution per Quarter (M) • Others includes : Chile ; Colombia; Bolivia; Costa Rica; Ecuador; El Salvador; Guatemala; Honduras; Paraguay; Nicaragua; Panama; Paraguay; Peru; Republica Dominicana ; Uruguay 17% 38% 48% 46% 8% 0% 10% 20% 30% 40% 50% 60% 70% 3Q17 4Q17 1Q18 2Q18 3Q18 LC YoY Growth Free Shipping Launch 48% 60% 62% 66% 64% 0% 10% 20% 30% 40% 50% 60% 70% 3Q17 4Q17 1Q18 2Q18 3Q18 Sold Items YoY Growth Free Shipping Launch Other Geos Gross Merchandise Volume & Items Sold
Successful Items per Unique Buyer Accelerating Engagement Across the Region beyond Brazil due to t ougher comps, flat fee impact and the removal of listings below R$ 6 4.8 5.8 6.3 4.4 5.4 5.1 4.7 5.2 4.3 0 1 2 3 4 5 6 7 3Q17 2Q18 3Q18 3Q17 2Q18 3Q18 3Q17 2Q18 3Q18 31 % - 10% 16% 2.4 3.0 4.6 2.7 3.3 5.0 3.4 3.9 4.0 0 1 2 3 4 5 6 7 3Q18 2Q18 3Q18 3Q17 2Q18 3Q18 3Q17 2Q18 3Q18 91% 16% 87% Average Items per Unique Buyer
Consolidated Items Sold Solid Growth in Items Sold * Excluding Venezuela **Free Sold Items as a % of Sold Items Shipped Items Sold Evolution per Quarter (M) 74.2 81.2 80.2 85.4 83.5 68.7 83.5 56% 57% 51% 39% 13% 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17* 3Q18 Sold Items Growth YoY As Reported
Consolidated GMV FX Neutral GMV Maintaining Momentum * Excluding Venezuela **Free Sold Items as a % of Sold Items Shipped USD GMV Evolution per Quarter $ 3,075 $ 3,618 $ 3,126 $ 3,135 $ 2,995 $ 2,858 $ 2,995 94% 132% 43% 36% 28% 0 0.2 0.4 0.6 0.8 1 1.2 1.4 0 500 1000 1500 2000 2500 3000 3500 4000 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17* 3Q18 GMV LC YoY Growth As Reported
Consolidated Live Listings Live Listings Evolution Driving Consistent Growth in Supply & Assortment * Excluding Venezuela Live Listings Evolution per Quarter (M) $ 111 $ 119 $ 133 $ 155 $ 168 $ 101 $ 168 52% 55% 51% 56% 59% 0.46 0.48 0.5 0.52 0.54 0.56 0.58 0.6 0 20 40 60 80 100 120 140 160 180 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17* 3Q18 Live Listings YoY Growth As Reported
MercadoPago On Marketplace Payments growth affected by tougher comps, OFF Platform Payments TPV growing at triple digits reaching a multi - year high of 160 % YoY growth Consolidated TPV ON Consolidated TPV OFF 82% 85% 62% 49% 40% 83% 81% 89% 89% 91% 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 3Q17 4Q17 1Q18 2Q18 3Q18 LC YoY Growth MP ON Marketplace Penetration 108% 128% 127% 142% 163% 24% 26% 27% 32% 36% 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 3Q17 4Q17 1Q18 2Q18 3Q18 LC YoY Growth TPV OFF Penetration* *TPV OFF as a % of Total TPV
MercadoCredito Record credits originations, credit portfolio in USD affected by Argentina FX headwinds Merchant & Consumer Credits Portfolio *TPV OFF as a % of Total TPV Merchant Credits Originations $52 $73 $122 $112 $91 0 20 40 60 80 100 120 3Q17 4Q17 1Q18 2Q18 3Q18 Loans Receivable 12 7 11 12 24 0.0 5.0 10.0 15.0 20.0 25.0 3Q17 4Q17 1Q18 2Q18 3Q18 # Credits (M)
Third Quarter 2018 Overview 1. Quarterly Highights 2. KPIs 3. Financial Metrics 4. Margin Structures
FASB ASC 606 Pro Forma *As Recast **As Reported
Consolidated Net Revenues $305 $358 $321 $335 $355 $295 $355 $(66) $(79) $(112) $(97) $(108) $(66) $(108) 32% 45% 19% 18% 17% -200.0% -100.0% 0.0% 100.0% -120 -70 -20 30 80 130 180 230 280 330 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17** 3Q18 Net Revenues Shipping USD YoY Growth Revenues per Quarter (M) * Balances are adjusted to the adoption of ASC 606 ** Excluding Venezuela As Reported *
Net Revenues by Country LC Revenue Growth * Balances are adjusted to the adoption of ASC 606 ** Excluding Venezuela 68% 40% 71% 56% 44% 51% 68% 56% 168% 43% 58% 64% 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 Arg Bra Mex Others MELI MELI** 2Q18 3Q18 As Reported *
Consolidated Non - Marketplace Net Revenues Revenues per Quarter (M) * Balances are adjusted to the adoption of ASC 606 ** Excluding Venezuela $ 124 $ 160 $ 180 $ 179 $ 175 $ 123 $ 175 28% 50% 96% 72% 41% 0 0.2 0.4 0.6 0.8 1 1.2 0 20 40 60 80 100 120 140 160 180 200 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17** 3Q18 USD (M) USD YoY Growth As Reported *
Consolidated Non - Marketplace Revenues Breakdown Payments Revenues (M) * Balances are adjusted to the adoption of ASC 606 ** Excluding Venezuela Other Non - Marketplace Revenues (M) $ 32 $ 36 $ 36 $ 35 $ 31 $ 31 $ 31 - 28% - 19% 34% 22% - 2% -0.4 -0.3 -0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5 28 29 30 31 32 33 34 35 36 37 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17** 3Q18 USD (M) USD YoY Growth USD YoY Growth $ 92 $ 124 $ 145 $ 144 $ 144 76% 99% 122% 92% 56% 0 0.2 0.4 0.6 0.8 1 1.2 1.4 0 20 40 60 80 100 120 140 160 3Q17 4Q17 1Q18 2Q18 3Q18 USD (M) USD YoY Growth
Q3 2018 Gross Margin vs. Last Year For comparative purposes , OPEX as a percentage of Gross Billings representen 39.0% this quarter vs 40.0% LY * Others includes : Cost of mPos sales (72 bps), Debit and Credit Taxes (45 bps), net realizable value discounts on mPos devices ( - 674 bps) and other COGS (154 bps) 57.7% 47.8% 0.1% 0.2% 2.0% 0.0% 0.4% 1.2% 6.0% 0.0% LY CX + S&W FP Fraud Prevention D&A Hosting Billing Costs Collection Fees Sales Taxes Others Actual
Q3 2018 EBIT Margin vs. Last Year 9.0% - 3.1% 9.9 % 1.0% 2.7 % 1.5 % 0.0% 0.4 % 1.1 % 0.3% 2.0 % LY COGS Marketing BPP Bad Debt Chargebacks Other S&M PD G&A S&W Actual 2,8%
Q3 2018 Net Income Margin vs. Last Year 9.1% - 2.8% 2,2% 2,2% 2,3% 9.9% 0.6% 4,1% LY COGS Opex Interest Income Financial Expenses Forex & Other Tax Actual
INVESTOR PRESENTATION Third Quarter 2018 Results Th ank You