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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 June 30, 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 August 7, 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 June 30, 2020 and December 31, 2019

1

Interim Condensed Consolidated Statements of Income for the six and three-month periods ended June 30, 2020 and 2019

2

Interim Condensed Consolidated Statements of Comprehensive Income for the six and three-month periods ended June 30, 2020 and 2019

3

Interim Condensed Consolidated Statements of Equity for the six and three-month periods ended June 30, 2020 and 2019

4

Interim Condensed Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2020 and 2019

6

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

7

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

36

Item 3 — Qualitative and Quantitative Disclosures About Market Risk

59

Item 4 — Controls and Procedures

62

PART II. OTHER INFORMATION

63

Item 1 — Legal Proceedings

63

Item 1A — Risk Factors

63

Item 6 — Exhibits

63

INDEX TO EXHIBITS

64

 

 


MercadoLibre, Inc.

Interim Condensed Consolidated Balance Sheets

As of June 30, 2020 and December 31, 2019

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

(Unaudited)

June 30,

December 31,

2020

2019

Assets

Current assets:

Cash and cash equivalents

$                       1,169,550

$                    1,384,740

Restricted cash and cash equivalents

493,808

66,684

Short-term investments (530,660 and 522,798 held in guarantee)

2,124,872

1,597,241

Accounts receivable, net

42,423

35,446

Credit cards receivable and other means of payment, net

646,739

379,969

Loans receivable, net

139,148

182,105

Prepaid expenses

23,141

45,309

Inventory

20,831

8,626

Other assets

94,042

88,736

Total current assets

4,754,554

3,788,856

Non-current assets:

Long-term investments

5,790

263,983

Loans receivable, net

5,055

6,439

Property and equipment, net

263,041

244,257

Operating lease right-of-use assets

186,851

200,449

Goodwill

81,799

87,609

Intangible assets, net

15,942

14,275

Deferred tax assets

93,897

117,582

Other assets

45,807

58,241

Total non-current assets

698,182

992,835

Total assets

$                       5,452,736

$                    4,781,691

Liabilities

Current liabilities:

Accounts payable and accrued expenses

$                          417,759

$                       372,309

Funds payable to customers

1,324,605

894,057

Salaries and social security payable

114,944

101,841

Taxes payable

141,226

60,247

Loans payable and other financial liabilities

591,683

186,138

Operating lease liabilities

25,113

23,259

Other liabilities

44,449

114,469

Total current liabilities

2,659,779

1,752,320

Non-current liabilities:

Salaries and social security payable

25,279

26,803

Loans payable and other financial liabilities

610,899

631,353

Operating lease liabilities

168,589

176,673

Deferred tax liabilities

65,273

99,952

Other liabilities

15,825

12,627

Total non-current liabilities

885,865

947,408

Total liabilities

$                       3,545,644

$                    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 June 30, 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 June 30,

2020 and December 31, 2019

$                                   50

$                                50

Additional paid-in capital

1,964,140

2,067,869

Treasury stock

(1,440)

(720)

Retained earnings

350,860

322,592

Accumulated other comprehensive loss

(505,361)

(406,671)

Total Equity

1,808,249

1,983,120

Total Liabilities, Redeemable convertible preferred stock and Equity

$                       5,452,736

$                    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 six and three-month periods ended June 30, 2020 and 2019

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

(Unaudited)

Six Months Ended June 30,

Three Months Ended June 30,

2020

2019

2020

2019

Net revenues

$               1,530,460

$               1,019,012

$                  878,369

$                  545,242

Cost of net revenues

(790,474)

(509,578)

(451,197)

(272,812)

Gross profit

739,986

509,434

427,172

272,430

Operating expenses:

Product and technology development

(146,689)

(106,292)

(73,254)

(53,923)

Sales and marketing

(390,583)

(311,368)

(184,076)

(180,692)

General and administrative

(132,970)

(94,123)

(70,404)

(50,303)

Total operating expenses

(670,242)

(511,783)

(327,734)

(284,918)

Income (loss) from operations

69,744

(2,349)

99,438

(12,488)

Other income (expenses):

Interest income and other financial gains

55,566

58,128

18,782

33,684

Interest expense and other financial losses

(50,561)

(30,238)

(26,977)

(14,679)

Foreign currency (losses) gains

(2,089)

(2,886)

(1,903)

783

Net income before income tax (expense) gain

72,660

22,655

89,340

7,300

Income tax (expense) gain

(37,822)

5,426

(33,393)

8,917

Net income

$                    34,838

$                    28,081

$                    55,947

$                    16,217

Six Months Ended June 30,

Three Months Ended June 30,

2020

2019

2020

2019

Basic EPS

Basic net income

Available to shareholders per common share

$                       0.66

$                       0.45

$                       1.11

$                       0.31

Weighted average of outstanding common shares

49,709,964

47,658,610

49,709,973

49,318,522

Diluted EPS

Diluted net income

Available to shareholders per common share

$                       0.66

$                       0.45

$                       1.11

$                       0.31

Weighted average of outstanding common shares

49,709,964

47,658,610

49,709,973

49,318,522

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 six and three-month periods ended June 30, 2020 and 2019

(In thousands of U.S. dollars)

(Unaudited)

Six Months Ended June 30,

Three Months Ended June 30,

2020

2019

2020

2019

Net income

$                   34,838

$                   28,081

$                   55,947

$                      16,217

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

Currency translation adjustment

(100,650)

3,353

(6,052)

3,647

Unrealized gains on hedging activities

4,978

997

Unrealized net gains (loss) on available for sale investments

1,061

2,504

(1,207)

492

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

4,079

2,729

2,375

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

(98,690)

3,128

(8,637)

4,139

Total Comprehensive (loss) income

$                 (63,852)

$                   31,209

$                   47,310

$                      20,356

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 six and three-month periods ended June 30, 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

Stock-based compensation — restricted shares issued

1

187

187

Common Stock repurchased

(1)