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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, 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.

49,776,613 shares of the issuer’s common stock, $0.001 par value, outstanding as of November 3, 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 September 30, 2020 and December 31, 2019

1

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

2

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

3

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

4

Interim Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 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

60

Item 4 — Controls and Procedures

63

PART II. OTHER INFORMATION

64

Item 1 — Legal Proceedings

64

Item 1A — Risk Factors

64

Item 6 — Exhibits

66

INDEX TO EXHIBITS

66

 

 


MercadoLibre, Inc.

Interim Condensed Consolidated Balance Sheets

As of September 30, 2020 and December 31, 2019

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

(Unaudited)

September 30,

December 31,

2020

2019

Assets

Current assets:

Cash and cash equivalents

$                       1,139,703

$                    1,384,740

Restricted cash and cash equivalents

484,426

66,684

Short-term investments (663,646 and 522,798 held in guarantee - see Note 4)

2,187,479

1,597,241

Accounts receivable, net

40,891

35,446

Credit cards receivable and other means of payments, net

660,402

379,969

Loans receivable, net

239,135

182,105

Prepaid expenses

28,387

45,309

Inventory

46,644

8,626

Other assets

96,824

88,736

Total current assets

4,923,891

3,788,856

Non-current assets:

Long-term investments

6,890

263,983

Loans receivable, net

15,073

6,439

Property and equipment, net

302,489

244,257

Operating lease right-of-use assets

225,345

200,449

Goodwill

79,064

87,609

Intangible assets, net

14,230

14,275

Deferred tax assets

125,012

117,582

Other assets

45,725

58,241

Total non-current assets

813,828

992,835

Total assets

$                       5,737,719

$                    4,781,691

Liabilities

Current liabilities:

Accounts payable and accrued expenses

$                          509,095

$                       372,309

Funds payable to customers

1,421,825

894,057

Salaries and social security payable

157,127

101,841

Taxes payable

212,729

60,247

Loans payable and other financial liabilities

618,164

186,138

Operating lease liabilities

39,620

23,259

Other liabilities

48,700

114,469

Total current liabilities

3,007,260

1,752,320

Non-current liabilities:

Salaries and social security payable

29,200

26,803

Loans payable and other financial liabilities

618,337

631,353

Operating lease liabilities

189,098

176,673

Deferred tax liabilities

72,061

99,952

Other liabilities

26,237

12,627

Total non-current liabilities

934,933

947,408

Total liabilities

$                       3,942,193

$                    2,699,728

Commitments and Contingencies (Note 9)

 

 

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

50,000 and 100,000 shares issued and outstanding at September 30, 2020 and December 31, 2019

$                            49,427

$                         98,843

Equity

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

49,776,613 and 49,709,955 shares issued and outstanding at September 30,

2020 and December 31, 2019

$                                   50

$                                50

Additional paid-in capital

1,930,984

2,067,869

Treasury stock

(40,391)

(720)

Retained earnings

364,967

322,592

Accumulated other comprehensive loss

(509,511)

(406,671)

Total Equity

1,746,099

1,983,120

Total Liabilities, Redeemable convertible preferred stock and Equity

$                       5,737,719

$                    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 nine and three-month periods ended September 30, 2020 and 2019

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

(Unaudited)

Nine Months Ended September 30,

Three Months Ended September 30,

2020

2019

2020

2019

Net revenues

$               2,646,161

$               1,622,043

$               1,115,701

$                  603,031

Cost of net revenues

(1,425,985)

(828,267)

(635,511)

(318,689)

Gross profit

1,220,176

793,776

480,190

284,342

Operating expenses:

Product and technology development

(235,485)

(165,787)

(88,796)

(59,495)

Sales and marketing

(620,204)

(564,271)

(229,621)

(252,903)

General and administrative

(211,669)

(147,992)

(78,699)

(53,869)

Total operating expenses

(1,067,358)

(878,050)

(397,116)

(366,267)

Income (loss) from operations

152,818

(84,274)

83,074

(81,925)

Other income (expenses):

Interest income and other financial gains

80,119

86,590

24,553

28,462

Interest expense and other financial losses

(75,083)

(44,689)

(24,522)

(14,451)

Foreign currency (losses) gains

(32,524)

(1,899)

(30,435)

987

Net income (loss) before income tax expense

125,330

(44,272)

52,670

(66,927)

Income tax expense

(75,457)

(73,729)

(37,635)

(79,155)

Net income (loss)

$                    49,873

$                (118,001)

$                    15,035

$                (146,082)

Nine Months Ended September 30,

Three Months Ended September 30,

2020

2019

2020

2019

Basic EPS

Basic net income (loss)

Available to shareholders per common share

$           0.94

$          (2.60)

$           0.28

$          (2.96)

Weighted average of outstanding common shares

49,713,621

48,350,165

49,720,854

49,710,723

Diluted EPS

Diluted net income (loss)

Available to shareholders per common share

$           0.94

$          (2.60)

$           0.28

$          (2.96)

Weighted average of outstanding common shares

49,713,621

48,350,165

49,720,854

49,710,723

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, 2020 and 2019

(In thousands of U.S. dollars)

(Unaudited)

Nine Months Ended September 30,

Three Months Ended September 30,

2020

2019

2020

2019

Net income (loss)

$                   49,873

$               (118,001)

$                   15,035

$                  (146,082)

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

Currency translation adjustment

(102,763)

(22,195)

(2,113)

(25,548)

Unrealized gains on hedging activities

5,550

572

Unrealized net gains (loss) on available for sale investments

2,062

(1,061)

(442)

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

5,627

2,729

1,548

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

(102,840)

(22,862)

(4,150)

(25,990)

Total Comprehensive (loss) income

$                 (52,967)

$               (140,863)

$                   10,885

$                  (172,072)

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, 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