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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

-OR-

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 001-33647

MercadoLibre, Inc.

(Exact name of Registrant as specified in its Charter)

Delaware

 

98-0212790

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification Number)

Arias 3751, 7th Floor

Buenos Aires, Argentina, C1430CRG

(Address of registrant’s principal executive offices)

(+5411) 4640-8000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

MELI

  Nasdaq Global Select Market  

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.    Yes   x     No   ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer

x

Accelerated Filer

¨

Non-Accelerated Filer

¨  

Smaller Reporting Company

¨

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 ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

49,709,955 shares of the issuer’s common stock, $0.001 par value, outstanding as of October 28, 2019.

 

 


MERCADOLIBRE, INC.

INDEX TO FORM 10-Q

 

PART I. FINANCIAL INFORMATION

Item 1 — Unaudited Interim Condensed Consolidated Financial Statements

Interim Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018

1

Interim Condensed Consolidated Statements of Income for the nine and three-month periods ended September 30, 2019 and 2018

2

Interim Condensed Consolidated Statements of Comprehensive Income for the nine and three-month periods ended September 30, 2019 and 2018

3

Interim Condensed Consolidated Statements of Equity for the nine and three-month periods ended September 30, 2019 and 2018

4

Interim Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2019 and 2018

6

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

7

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

31

Item 3 — Qualitative and Quantitative Disclosures About Market Risk

53

Item 4 — Controls and Procedures

56

PART II. OTHER INFORMATION

57

Item 1 — Legal Proceedings

57

Item 1A — Risk Factors

57

Item 6 — Exhibits

57

INDEX TO EXHIBITS

58

 

 


MercadoLibre, Inc.

Interim Condensed Consolidated Balance Sheets

As of September 30, 2019 and December 31, 2018

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

(Unaudited)

September 30,

December 31,

2019

2018

Assets

Current assets:

Cash and cash equivalents

$                    1,419,934

$                       440,332

Restricted cash and cash equivalents

37,031

24,363

Short-term investments (371,572 and 284,317 held in guarantee)

1,726,189

461,541

Accounts receivable, net

35,791

35,153

Credit cards receivable, net

288,588

360,298

Loans receivable, net

176,074

95,778

Prepaid expenses

17,898

27,477

Inventory

10,132

4,612

Other assets

68,993

61,569

Total current assets

3,780,630

1,511,123

Non-current assets:

Long-term investments

3,595

276,136

Property and equipment, net

220,854

165,614

Operating lease right-of-use assets

175,022

Goodwill

86,114

88,883

Intangible assets, net

15,114

18,581

Deferred tax assets

108,551

141,438

Other assets

49,461

37,744

Total non-current assets

658,711

728,396

Total assets

$                    4,439,341

$                    2,239,519

Liabilities

Current liabilities:

Accounts payable and accrued expenses

$                       342,433

$                       266,759

Funds payable to customers

708,716

640,954

Salaries and social security payable

92,452

60,406

Taxes payable

39,230

31,058

Loans payable and other financial liabilities

108,908

132,949

Operating lease liabilities

17,441

Other liabilities

75,630

34,098

Total current liabilities

1,384,810

1,166,224

Non-current liabilities:

Salaries and social security payable

27,393

23,161

Loans payable and other financial liabilities

623,114

602,228

Operating lease liabilities

159,001

Deferred tax liabilities

96,925

91,698

Other liabilities

11,081

19,508

Total non-current liabilities

917,514

736,595

Total liabilities

$                    2,302,324

$                    1,902,819

Commitments and Contingencies (Note 7)

 

 

Redeemable convertible preferred stock, $0.001 par value, 40,000,000 shares

authorized, 100,000 shares issued and outstanding at September 30, 2019 (Note 10)

$                         98,843

$                                

Equity

Common stock, $0.001 par value, 110,000,000 shares authorized,

49,709,955 and 45,202,859 shares issued and outstanding at September 30,

2019 and December 31, 2018

$                                50

$                                45

Additional paid-in capital

2,075,693

224,800

Treasury stock

(720)

Retained earnings

377,590

503,432

Accumulated other comprehensive loss

(414,439)

(391,577)

Total Equity

2,038,174

336,700

Total Liabilities, Redeemable convertible preferred stock and Equity

$                    4,439,341

$                    2,239,519

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

1


MercadoLibre, Inc.

Interim Condensed Consolidated Statements of Income

For the nine and three-month periods ended September 30, 2019 and 2018

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

(Unaudited)

Nine Months Ended September 30,

Three Months Ended September 30,

2019

2018

2019

2018

Net revenues

$               1,622,043

$               1,011,634

$                  603,031

$                  355,281

Cost of net revenues

(828,267)

(519,410)

(318,689)

(185,563)

Gross profit

793,776

492,224

284,342

169,718

Operating expenses:

Product and technology development

(165,787)

(107,311)

(59,495)

(35,478)

Sales and marketing

(564,271)

(342,382)

(252,903)

(110,443)

General and administrative

(147,992)

(111,195)

(53,869)

(34,800)

Total operating expenses

(878,050)

(560,888)

(366,267)

(180,721)

Loss from operations

(84,274)

(68,664)

(81,925)

(11,003)

Other income (expenses):

Interest income and other financial gains

86,590

27,746

28,462

8,636

Interest expense and other financial losses

(44,689)

(39,805)

(14,451)

(15,869)

Foreign currency (losses) gains

(1,899)

22,102

987

3,924

Net loss before income tax (loss) gain

(44,272)

(58,621)

(66,927)

(14,312)

Income tax (loss) gain

(73,729)

24,372

(79,155)

4,234

Net loss

$                (118,001)

$                  (34,249)

$                (146,082)

$                  (10,078)

Nine Months Ended September 30,

Three Months Ended September 30,

2019

2018

2019

2018

Basic EPS

Basic net loss

Available to shareholders per common share

$                     (2.60)

$                     (0.77)

$                     (2.96)

$                     (0.23)

Weighted average of outstanding common shares

48,350,165

44,302,724

49,710,723

44,588,704

Diluted EPS

Diluted net loss

Available to shareholders per common share

$                     (2.60)

$                     (0.77)

$                     (2.96)

$                     (0.23)

Weighted average of outstanding common shares

48,350,165

44,302,724

49,710,723

44,588,704

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 

2


MercadoLibre, Inc.

Interim Condensed Consolidated Statements of Comprehensive Income

For the nine and three-month periods ended September 30, 2019 and 2018

(In thousands of U.S. dollars)

(Unaudited)

Nine Months Ended September 30,

Three Months Ended September 30,

2019

2018

2019

2018

Net loss

$                (118,001)

$                  (34,249)

$                (146,082)

$                    (10,078)

Other comprehensive loss, net of income tax (loss) gain:

Currency translation adjustment

(22,195)

(101,980)

(25,548)

550

Unrealized gains on hedging activities

2,406

1,494

Unrealized net gains on available for sale investments

2,062

142

(442)

77

Less: Reclassification adjustment for gains from accumulated other comprehensive income

2,729

3,497

1,779

Net change in accumulated other comprehensive loss, net of income tax (loss) gain

(22,862)

(102,929)

(25,990)

342

Total Comprehensive loss

$                (140,863)

$                (137,178)

$                (172,072)

$                      (9,736)

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 


3


MercadoLibre, Inc.

Interim Condensed Consolidated Statements of Equity

For the nine and three-month periods ended September 30, 2019 and 2018

(In thousands of U.S. dollars)

(Unaudited)

Accumulated

Additional

other

Common stock

paid-in

Treasury

Retained

comprehensive

Total

Shares

Amount

capital

Stock

Earnings

loss

Equity

Balance as of December 31, 2018

45,203

$

45

$

224,800

$

$

503,432

$

(391,577)

$

336,700

Common Stock issued

4,116

4

1,866,496

1,866,500

Exercise of convertible notes

2

2

Unwind Capped Call

3

3

Net income

11,864

11,864

Amortization of Preferred Stock discount

5,841

(5,841)

Other comprehensive loss

(1,011)

(1,011)

Balance as of March 31, 2019

49,319

$

49

$

2,097,142

$

$

509,455

$

(392,588)

$

2,214,058

Transaction Costs

715

715

Exercise of convertible notes

2

2

Capped Call

(88,362)

(88,362)

Redeemable convertible preferred stock dividend distribution ($9.99 per share)

(1,000)

(1,000)

Net income

16,217

16,217

Other comprehensive income