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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 March 31, 2020

-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 May 4, 2020.

 

 


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 March 31, 2020 and December 31, 2019

1

Interim Condensed Consolidated Statements of Income for the three-month periods ended March 31, 2020 and 2019

2

Interim Condensed Consolidated Statements of Comprehensive Income for the three-month periods ended March 31, 2020 and 2019

3

Interim Condensed Consolidated Statements of Equity for the three-month periods ended March 31, 2020 and 2019

4

Interim Condensed Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2020 and 2019

5

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

6

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

33

Item 3 — Qualitative and Quantitative Disclosures About Market Risk

53

Item 4 — Controls and Procedures

57

PART II. OTHER INFORMATION

57

Item 1 — Legal Proceedings

57

Item 1A — Risk Factors

57

Item 6 — Exhibits

58

INDEX TO EXHIBITS

59

 

 


MercadoLibre, Inc.

Interim Condensed Consolidated Balance Sheets

As of March 31, 2020 and December 31, 2019

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

(Unaudited)

March 31,

December 31,

2020

2019

Assets

Current assets:

Cash and cash equivalents

$                    1,071,217

$                    1,384,740

Restricted cash and cash equivalents

194,166

66,684

Short-term investments (353,162 and 522,798 held in guarantee)

1,558,325

1,597,241

Accounts receivable, net

34,060

35,446

Credit cards receivable, net

366,803

379,969

Loans receivable, net

141,419

182,105

Prepaid expenses

35,294

45,309

Inventory

12,114

8,626

Other assets

96,876

88,736

Total current assets

3,510,274

3,788,856

Non-current assets:

Long-term investments

269,955

263,983

Loans receivable, net

6,879

6,439

Property and equipment, net

239,249

244,257

Operating lease right-of-use assets

183,534

200,449

Goodwill

82,283

87,609

Intangible assets, net

17,133

14,275

Deferred tax assets

102,296

117,582

Other assets

46,477

58,241

Total non-current assets

947,806

992,835

Total assets

$                    4,458,080

$                    4,781,691

Liabilities

Current liabilities:

Accounts payable and accrued expenses

$                       295,500

$                       372,309

Funds payable to customers

718,454

894,057

Salaries and social security payable

100,059

101,841

Taxes payable

46,394

60,247

Loans payable and other financial liabilities

316,508

186,138

Operating lease liabilities

23,025

23,259

Other liabilities

76,560

114,469

Total current liabilities

1,576,500

1,752,320

Non-current liabilities:

Salaries and social security payable

16,165

26,803

Loans payable and other financial liabilities

616,295

631,353

Operating lease liabilities

169,147

176,673

Deferred tax liabilities

98,048

99,952

Other liabilities

16,515

12,627

Total non-current liabilities

916,170

947,408

Total liabilities

$                    2,492,670

$                    2,699,728

Commitments and Contingencies (Note 9)

 

 

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

100,000 shares issued and outstanding at March 31, 2020 and December 31, 2019

$                         98,843

$                         98,843

Equity

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

49,709,955 shares issued and outstanding at March 31,

2020 and December 31, 2019

$                                50

$                                50

Additional paid-in capital

2,068,048

2,067,869

Treasury stock

(720)

(720)

Retained earnings

295,913

322,592

Accumulated other comprehensive loss

(496,724)

(406,671)

Total Equity

1,866,567

1,983,120

Total Liabilities, Redeemable convertible preferred stock and Equity

$                    4,458,080

$                    4,781,691

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 three-month periods ended March 31, 2020 and 2019

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

(Unaudited)

Three Months Ended March 31,

2020

2019

Net revenues

$                  652,091

$                  473,770

Cost of net revenues

(339,277)

(236,766)

Gross profit

312,814

237,004

Operating expenses:

Product and technology development

(73,435)

(52,369)

Sales and marketing

(206,507)

(130,676)

General and administrative

(62,566)

(43,820)

Total operating expenses

(342,508)

(226,865)

(Loss) income from operations

(29,694)

10,139

Other income (expenses):

Interest income and other financial gains

36,784

24,444

Interest expense and other financial losses

(23,584)

(15,559)

Foreign currency losses

(186)

(3,669)

Net (loss) income before income tax expense

(16,680)

15,355

Income tax expense

(4,429)

(3,491)

Net (loss) income

$                  (21,109)

$                    11,864

Three Months Ended March 31,

2020

2019

Basic EPS

Basic net (loss) income

Available to shareholders per common share

$                     (0.44)

$                       0.13

Weighted average of outstanding common shares

49,709,955

45,980,255

Diluted EPS

Diluted net (loss) income

Available to shareholders per common share

$                     (0.44)

$                       0.13

Weighted average of outstanding common shares

49,709,955

45,980,255

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 three-month periods ended March 31, 2020 and 2019

(In thousands of U.S. dollars)

(Unaudited)

Three Months Ended March 31,

2020

2019

Net (loss) income

$                 (21,109)

$                   11,864

Other comprehensive loss, net of income tax:

Currency translation adjustment

(94,597)

(294)

Unrealized gains on hedging activities

3,981

Unrealized net gains on available for sale investments

2,268

2,012

Less: Reclassification adjustment for gains from accumulated other comprehensive (loss) income

1,705

2,729

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

(90,053)

(1,011)

Total Comprehensive (loss) income

$               (111,162)

$                   10,853

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 three-month periods ended March 31, 2020 and 2019

(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, 2019

49,710

$

50

$

2,067,869

$

(720)

$

322,592

$

(406,671)

$

1,983,120

Changes in accounting standards

(4,570)

(4,570)

Balance as of December 31, 2019 Restated

49,710

$

50

$

2,067,869

$

(720)

$

318,022

$

(406,671)

$

1,978,550

Stock-based compensation — restricted shares issued

179

179

Net loss

(21,109)

(21,109)

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

(1,000)

(1,000)

Other comprehensive loss

(90,053)

(90,053)

Balance as of March 31, 2020

49,710

$

50

$

2,068,048

$

(720)

$

295,913

$

(496,724)

$

1,866,567

Accumulated

Additional

other

Common stock

paid-in

Retained

comprehensive

Total

Shares

Amount

capital

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

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

4


MercadoLibre, Inc.

Interim Condensed Consolidated Statements of Cash Flow

For the three-month periods ended March 31, 2020 and 2019

(In thousands of U.S. dollars)

(Unaudited)