Mercadolibre, Inc.
Feb 25, 2015

MercadoLibre, Inc. Reports Fourth Quarter and Full Year 2014 Financial Results

*Fourth Quarter Sold Items of 29.0 million, 101.3 million for Full Year

* Fourth Quarter Net Revenues of $161.4 million, growing 20% in USD despite currency headwinds

*Fourth Quarter Net Income of $34.2 million resulting in a $0.76 EPS.

BUENOS AIRES, Argentina, Feb. 25, 2015 (GLOBE NEWSWIRE) -- MercadoLibre, Inc. (Nasdaq:MELI) (http://www.mercadolibre.com), Latin America's leading e-commerce technology company, today reported financial results for the fourth quarter and fiscal year ended December 31, 2014.

Pedro Arnt, Chief Financial Officer of MercadoLibre, Inc., commented, "MercadoLibre's strong 2014 results are a reflection of the ongoing success of the enhanced marketplace model we are deploying. Facilitating e-commerce in 12 Latin American countries, we remain the leading operator in these markets and our core focus in the new year will continue to be guided by our strategic initiatives: driving payment and shipping solutions, increasing adoption of mobile commerce, attracting new brands and vendors, tailoring vertical solutions, while placing customer experience at the forefront of it all. We trust that if we execute on these fronts, our company will be in great shape for many years to come."

Full Year 2014 Business Highlights

Fourth Quarter 2014 Operational Highlights

Strong results across the business fueled by the execution of strategic initiatives:

Fourth Quarter 2014 Financial Highlights

(*) See note on "Non-GAAP Financial Measures"

Fourth Quarter 2014 Corporate Highlights

The following table summarizes certain key performance metrics for the three months ended December 31, 2014 and 2013.

Three months ended December 31, (in MM) 20142013%YoY %YoY Constant USD
Total confirmed registered users at the end of period 120.9 99.5 21.6% --
New confirmed registered users during the period 5.7 4.5 28.1% --
Gross merchandise volume $ 1,797.3 $ 2,138.9 -16.0% 85.0%
Items sold 29.0 22.8 27.2% --
Total payments volume $ 1,098.6 $ 746.0 47.3% 107.3%
Total payments transactions 14.2 9.0 58.2% --
         
The table above may not total due to rounding.        

Table of Year-on-Year Local Currency Revenue Growth Rates by Quarter

  YoY Growth rates at previous years exchange rates 
 Consolidated Net Revenues   
   Q4'13   Q1'14   Q2'14   Q3'14   Q4'14 
 Brazil  29% 30% 34% 49% 61%
 Argentina  69% 65% 76% 84% 98%
 Mexico  20% 9% 25% 23% 21%
 Venezuela  104% 116% 167% 220% 253%
 Others  15% 32% 53% 59% 61%
 Total 50%50%66%89%109%

Conference Call and Webcast

The Company will host a conference call and audio webcast on February 25, 2015 at 4:30 p.m. Eastern Time. The conference call may be accessed by dialing +(970) 315-0420 or +(877) 303-7209 (Conference ID 85416866) and requesting inclusion in the call for MercadoLibre. The live conference call can be accessed via audio webcast at the investor relations section of the Company's website, at http://investor.mercadolibre.com. An archive of the webcast will be available for one week following the conclusion of the conference call.

Definition of Selected Operational Metrics

Total confirmed registered users - Measure of the cumulative number of users who have registered on the MercadoLibre platform (including MercadoPago) and confirmed their registration. Since July '12, registration and confirmation take place in the same step of the registration flow.

New confirmed registered users - Measure of the number of new users who have registered on the MercadoLibre platform (including MercadoPago) and confirmed their registration. Since July'12, registration and confirmation take place in the same step of the registration flow.

Gross merchandise volume - Measure of the total U.S. dollar sum of all transactions completed through the MercadoLibre Marketplace, excluding motor vehicles, vessels, aircraft, real estate, and services.

Items sold - Measure of the number of items sold/purchased through the MercadoLibre Marketplace.

Total payment volume - Measure of total U.S. dollar sum of all transactions paid for using MercadoPago.

Total payment transactions - Measure of the number of all transactions completed using MercadoPago.

Operating margin - Defined as income from operations as a percentage of net revenues.

Blended tax rate - Defined as income and asset tax expense as a percentage of income before income and assets tax.

Net income margin - Defined as net income as a percentage of net revenues.

Free Cash Flow - Defined as cash flows from operating activities less property, equipment, intangible assets and payment for acquired business net of cash acquired.

Local Currency Growth Rates - Calculated by using the average monthly exchange rate for each month during the previous year and applying it to the corresponding month in the current year, so as to calculate what the growth would have been had exchange rates been the same throughout both periods.

Excluding Venezuela - Given the current currency distortions and hyperinflation present in Venezuela, the Company's growth data disclosed above excludes the impact of the results of operations from its Venezuelan subsidiaries. The disclosure of this data enables investors to evaluate the company's operating performance from period to period without the distortions caused by Venezuela's hyperinflation and foreign exchange policies.

About MercadoLibre

Founded in 1999, MercadoLibre is Latin America's leading e-commerce technology company. Through its primary platforms, MercadoLibre.com and MercadoPago.com, it provides solutions to individuals and companies buying, selling, advertising, and paying for goods and services online.

MercadoLibre.com serves millions of users and creates a market for a wide variety of goods and services in an easy, safe and efficient way. The site is among the top 50 in the world in terms of page views and is the leading retail platform in unique visitors in the major countries in which it operates according to metrics provided by comScore Networks.  The Company is listed on NASDAQ (Nasdaq:MELI) following its initial public offering in 2007.

For more information about the Company visit: http://investor.mercadolibre.com.

The MercadoLibre, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4193

     
Consolidated balance sheets    
 December 31,December 31,
 20142013
Assets    
Current assets:    
Cash and cash equivalents $ 223,144,226 $ 140,285,104
Short-term investments 148,809,539 76,593,214
Accounts receivable, net 46,672,495 25,884,260
Credit cards receivables, net 85,162,276 52,045,851
Prepaid expenses 3,457,693 3,836,081
Deferred tax assets 11,519,522 16,030,880
Other assets 13,984,467 11,488,845
Total current assets 532,750,218 326,164,235
Non-current assets:    
Long-term investments 205,265,042 45,719,737
Property and equipment, net 91,544,836 131,371,909
Goodwill 68,828,504 55,101,218
Intangible assets, net 23,171,349 6,591,585
Deferred tax assets 21,553,696 3,014,905
Other assets 23,734,090 24,399,184
Total non-current assets 434,097,517 266,198,538
     
Total assets $ 966,847,735 $ 592,362,773
     
Liabilities and Equity    
Current liabilities:    
Accounts payable and accrued expenses $ 58,005,734 $ 34,405,333
Funds payable to customers 165,033,797 129,038,663
Salaries and social security payable 28,777,045 23,182,811
Taxes payable 26,012,849 17,854,110
Loans payable and other financial liabilities 1,641,646 13,370,823
Deferred tax liabilities 1,644,706 --
Other liabilities  4,176,830 --
Dividends payable 7,329,546 6,313,869
Total current liabilities 292,622,153 224,165,609
Non-current liabilities:    
Salaries and social security payable 11,326,318 9,185,269
Loans payable and other financial liabilities 282,184,331 2,489,819
Deferred tax liabilities 18,745,855 5,339,359
Other liabilities  6,180,668 3,699,109
Total non-current liabilities 318,437,172 20,713,556
Total liabilities $ 611,059,325 $ 244,879,165
     
Commitments and contingencies    
Redeemable noncontrolling interest $ -- $ 4,000,000
Equity:    
Common stock, $0.001 par value, 110,000,000 shares authorized, 44,154,572 and 44,153,473 shares issued and outstanding at December 31, 2014 and December 31, 2013, respectively $ 44,154 $ 44,153
Additional paid-in capital 137,644,989 121,562,193
Treasury stock -- (1,012,216)
Retained earnings  353,173,098  310,345,448
Accumulated other comprehensive loss (135,073,831) (87,455,970)
Total Equity  355,788,410 343,483,608
     
Total Liabilities, Redeemable Noncontrolling Interest and Equity $ 966,847,735 $ 592,362,773
           
           
Consolidated statements of income          
 Year Ended December 31,Three Months Ended December 31,
 20142013201220142013
   (Unaudited)
Net revenues $ 556,536,002 $ 472,594,709 $ 373,601,494 $ 161,369,648 $ 134,630,171
Cost of net revenues (158,978,001) (130,076,879) (98,085,644) (47,665,120) (36,205,508)
Gross profit 397,558,001 342,517,830 275,515,850 113,704,528 98,424,663
           
Operating expenses:          
Product and technology development (53,599,639) (40,888,139) (28,626,880) (16,027,166) (9,670,938)
Sales and marketing  (111,627,304) (90,484,296) (72,002,954) (33,400,004) (23,147,365)
General and administrative (62,364,509) (57,606,340) (45,228,145) (19,040,984) (13,487,284)
Impairment of Long-Lived Assets (49,495,686) -- -- -- --
Total operating expenses  (277,087,138) (188,978,775) (145,857,979) (68,468,154) (46,305,587)
Income from operations 120,470,863 153,539,055 129,657,871 45,236,374 52,119,076
           
Other income (expenses):          
Interest income and other financial gains 15,335,853 10,668,593 11,877,375 4,366,406 2,295,481
Interest expense and other financial losses (11,659,356) (2,355,929) (1,138,379) (4,940,897) (976,413)
Foreign currency (loss) / gain (2,351,539) 1,258,476 11,597 5,299,482 2,331,729
Other losses net  -- (751) (190,938) -- 43,806
Net income before income / asset tax expense  121,795,821 163,109,444 140,217,526 49,961,365 55,813,679
           
Income / asset tax expense (49,143,050) (45,583,181) (38,871,379) (15,800,037) (14,977,714)
Net income $ 72,652,771 $ 117,526,263 $ 101,346,147 $ 34,161,328 $ 40,835,965
           
Less: Net Income attributable to Redeemable          
           Noncontrolling Interest 72,220 18,825 98,849 16,212 72,037
Net income attributable to MercadoLibre, Inc. shareholders $ 72,580,551 $ 117,507,438 $ 101,247,298 $ 34,145,116 $ 40,763,928
           
           
 Year Ended December 31,Three Months Ended December 31,
 20142013201220142013
   (Unaudited)
Basic EPS          
Basic net income attributable to MercadoLibre, Inc.          
Shareholders per common share $ 1.63 $ 2.66 $ 2.30 $ 0.76 $ 0.66
           
Weighted average of outstanding common shares 44,153,884 44,152,600 44,147,861 44,154,412 44,152,933
           
           
Diluted EPS          
Diluted net income attributable to MercadoLibre, Inc.          
Shareholders per common share $ 1.63 $ 2.66 $ 2.30 $ 0.76 $ 0.66
           
Weighted average of outstanding common shares 44,153,884 44,152,600 44,149,838 44,154,412 44,152,933
           
           
Cash Dividends declared 0.664 0.572 0.436 0.166 0.143
       
       
Consolidated statements of cash flows      
 Year Ended December 31,
 201420132012
   
Cash flows from operations:      
Net income attributable to MercadoLibre, Inc. Shareholders  $ 72,580,551 $ 117,507,438 $ 101,247,298
Adjustments to reconcile net income to net cash provided by operating activities:      
Net income attributable to Redeemable Noncontrolling Interest  72,220 18,825 98,849
Net Devaluation Loss in Venezuela and Argentina  13,808,146 6,420,929 --
Impairment of Long-Lived Assets  49,495,686 -- --
Depreciation and amortization  16,946,897 11,878,565 8,959,293
Accrued interest  (9,028,868) (9,882,991) (7,630,203)
Convertible bonds accrued interest and amortization of debt discount  7,874,295 -- --
LTRP accrued compensation   11,851,615  11,645,077  4,442,822
Deferred income taxes  (20,236,973) (7,847,513) (492,362)
Changes in assets and liabilities:      
Accounts receivable   (36,119,868) (22,764,177) (8,651,951)
Credit Card Receivables  (45,520,887) (27,315,403) (15,570,142)
Prepaid expenses  (157,324) (2,074,543) (898,959)
Other assets  (5,981,661) (23,127,493) (5,809,218)
Accounts payable and accrued expenses  68,780,586 26,037,488 18,061,683
Funds payable to customers  61,072,045 47,557,504 39,889,201
Other liabilities  1,675,258 2,986,452 1,153,610
Interest received from investments  9,681,566 11,473,203 5,091,468
Net cash provided by operating activities  196,793,284  142,513,361  139,891,389
Cash flows from investing activities:      
Purchase of investments  (2,577,130,038) (1,135,940,553) (539,355,434)
Proceeds from sale and maturity of investments  2,330,835,825 1,174,789,615 472,871,652
Payment for acquired businesses, net of cash acquired  (36,814,136) (3,423,439) --
Payment of remaining amount from business acquisition  (4,000,000) -- --
Purchases of intangible assets  (856,948) (458,804) (1,390,654)
Purchases of property and equipment  (34,425,957) (113,755,566) (16,747,746)
Net cash used in investing activities   (322,391,254)  (78,788,747)  (84,622,182)
Cash flows from financing activities:      
Funds received from the issuance of convertible notes  330,000,000 -- --
Transaction costs from the issuance of convertible notes  (8,083,625) -- --
Purchase of convertible note capped call  (19,668,000) -- --
Loans payable and other financial liabilities  --  31,453,613 --
Payments on loans payable and other financial liabilities  (7,704,636) (15,936,551) --
Dividends paid  (28,302,507) (23,754,005) (17,968,004)
Repurchase of Common Stock  (1,944,307) (1,012,225) --
Stock options exercised  --  3,020 5,700
Net cash provided by (used in) financing activities   264,296,925  (9,246,148)  (17,962,304)
Effect of exchange rate changes on cash and cash equivalents  (55,839,833) (15,682,364) (3,199,578)
Net increase in cash and cash equivalents  82,859,122 38,796,102 34,107,325
Cash and cash equivalents, beginning of the year  140,285,104 101,489,002 67,381,677
       
Cash and cash equivalents, end of the year  $ 223,144,226  $ 140,285,104  $ 101,489,002
             
             
Financial results of reporting segments            
 Year Ended December 31, 2014
 BrazilArgentinaMexicoVenezuelaOther CountriesTotal
             
Net revenues $ 273,638,197 $150,667,541 $ 37,668,802 $ 58,025,886 $ 36,535,576 $ 556,536,002
Direct costs (158,412,078) (81,273,193) (24,067,532) (16,584,667) (20,163,263) (300,500,733)
Impairment of Long-lived Assets -- -- -- (49,495,686) -- (49,495,686)
Direct contribution 115,226,119 69,394,348 13,601,270 (8,054,467) 16,372,313 206,539,583
             
Operating expenses and indirect costs of net revenues           (86,068,720)
Income from operations           120,470,863
             
Other income (expenses):            
Interest income and other financial gains           15,335,853
Interest expense and other financial losses           (11,659,356)
Foreign currency loss           (2,351,539)
Other gains, net           --
Net income before income / asset tax expense           $ 121,795,821
             
             
 Year Ended December 31, 2013
 BrazilArgentinaMexicoVenezuelaOther CountriesTotal
             
Net revenues $ 206,394,480 $122,123,347 $ 32,843,482 $ 84,572,485 $ 26,660,915 $ 472,594,709
Direct costs (119,422,924) (66,492,770) (18,558,010) (29,578,762) (12,339,112) (246,391,578)
Direct contribution 86,971,556 55,630,577 14,285,472 54,993,723 14,321,803 226,203,131
             
Operating expenses and indirect costs of net revenues           (72,664,076)
Income from operations           153,539,055
             
Other income (expenses):            
Interest income and other financial gains           10,668,593
Interest expense and other financial losses           (2,355,929)
Foreign currency gains           1,258,476
Other losses, net           (751)
Net income before income / asset tax expense            163,109,444
             
             
 Year Ended December 31, 2012
 BrazilArgentinaMexicoVenezuelaOther CountriesTotal
             
Net revenues $ 179,639,592 $ 88,513,640 $ 26,987,130 $ 54,676,170 $ 23,784,962 $ 373,601,494
Direct costs (104,501,652) (41,841,587) (14,912,375) (17,768,989) (11,458,627) (190,483,230)
Direct contribution 75,137,940 46,672,053 12,074,755 36,907,181 12,326,335 183,118,264
             
Operating expenses and indirect costs of net revenues           (53,460,393)
Income from operations           129,657,871
             
Other income (expenses):            
Interest income and other financial gains           11,877,375
Interest expense and other financial losses           (1,138,379)
Foreign currency gain           11,597
Other losses, net           (190,938)
Net income before income / asset tax expense           $ 140,217,526
   
 Three Months Ended December 31, 2014
 BrazilArgentinaMexicoVenezuelaOther CountriesTotal
             
Net revenues $ 79,628,413 $ 48,485,977 $ 10,364,916 $ 12,841,608 $ 10,048,734 $ 161,369,648
Direct costs (46,883,787) (26,358,985) (7,102,151) (3,462,985) (5,636,156) (89,444,064)
Direct contribution 32,744,626 22,126,992 3,262,765 9,378,623 4,412,578 71,925,584
             
Operating expenses and indirect costs of net revenues           (26,689,210)
Income from operations           45,236,374
             
Other income (expenses):            
Interest income and other financial gains           4,366,406
Interest expense and other financial losses           (4,940,897)
Foreign currency gains           5,299,482
Other gains, net           --
Net income before income / asset tax expense           $ 49,961,365
             
             
 Three Months Ended December 31, 2013
 BrazilArgentinaMexicoVenezuelaOther CountriesTotal
             
Net revenues $ 55,249,748 $ 34,362,444 $ 9,086,505 $ 28,877,100 $ 7,054,374 $ 134,630,171
Direct costs (30,193,588) (18,427,699) (4,207,763) (9,169,908) (3,391,509) (65,390,467)
Direct contribution 25,056,160 15,934,744 4,878,743 19,707,192 3,662,865 69,239,704
             
Operating expenses and indirect costs of net revenues           (17,120,628)
Income from operations           52,119,076
             
Other income (expenses):            
Interest income and other financial gains           2,295,481
Interest expense and other financial losses           (976,413)
Foreign currency gains           2,331,729
Other gains, net           43,806
Net income before income / asset tax expense           $ 55,813,679

Non-GAAP Financial Measures

To supplement our interim condensed consolidated financial statements presented in accordance with generally accepted accounting principles in the United States (U.S. GAAP), we use free cash flows, adjusted net income before income / asset tax, adjusted income / asset tax, adjusted net income, adjusted blended tax rate and adjusted earnings per share as non-GAAP measures.

These non-GAAP measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. These non-GAAP financial measures should only be used to evaluate our results of operations in conjunction with the most comparable GAAP financial measures.

Reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures can be found in the tables included in this press release.

Non-GAAP financial measures are provided to enhance investors' overall understanding of our current financial performance. Specifically, we believe that free cash flow provides useful information to both management and investors by excluding payments for the acquisition of property, equipment, of intangible assets and of acquired businesses net of cash acquired, that may not be indicative of our core operating results. In addition, we report free cash flows to investors because we believe that the inclusion of this measure provides consistency in our financial reporting.

Free cash flow represents cash from operating activities less payment for the acquisition of property, equipment and intangible assets and acquired businesses net of cash acquired. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our operations after the purchase of property, equipment, of intangible assets and of acquired businesses net of cash acquired. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in our cash balance for the period.

Reconciliation of Operating Cash Flows to Free Cash Flows:

 Three Months Ended December 31,
 20142013
     
     
Net Cash provided by Operating Activities  $ 58.4  $ 19.7
     
Payment for acquired businesses, net of cash acquired   (8.7)  -- 
     
Purchase of intangible assets  (0.3)  (0.5)
     
Purchases of property and equipment  (10.0)  (37.9)
     
Free cash flows  $ 39.4  $ (18.7)
     
The table above may not total due to rounding.    

Venezuelan segment - Recent developments

In February 2015, the Venezuelan government announced the unification of the SICAD 1 and SICAD 2 foreign exchange systems into SICAD, at an initial public foreign exchange price of 12 Bolivares Fuertes ("BsF") per USD. Additionally, it created the "Sistema Marginal de Divisas -SIMADI", a new foreign exchange market, in which the foreign exchange rate should be published daily by the Central Bank of Venezuela. The first foreign exchange rate was published on February 12, 2015 at 170.039 BsF per USD. The Company is assessing the implications of these new Venezuelan foreign exchange regulations and any other that may be established, to determine whether they will have any effect on the accounting of the financial position and results of operations in Venezuela in 2015. In order to assist investors in their understanding of the impact of a hypothetical Venezuelan devaluation, the Form 10-K will include a foreign currency sensitivity analysis of the Direct Contribution margin considering an exchange rate of 170 BsF per USD for the full year 2014, and the one-time re-measurement charges that could be expected, simulating a hypothetical devaluation in the near end of 2014.

CONTACT: MercadoLibre, Inc.

         Investor Relations

         investor@mercadolibre.com

         http://investor.mercadolibre.com