Mercadolibre, Inc.
MERCADOLIBRE INC (Form: 8-K, Received: 05/04/2017 17:02:51)
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________

Form 8-K
_____________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): May 4, 2017  

MercadoLibre, Inc.
(Exact Name of Registrant as Specified in Charter)

Delaware 001-33647 98-0212790
(State or Other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer Identification Number)

 

Arias 3751, 7th Floor, Buenos Aires, Argentina C1430CRG
(Address of Principal Executive Offices) (Zip Code)

011-54-11-4640-8000
(Registrant's telephone number, including area code)


(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

  [ ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
  [ ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
  [ ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
  [ ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). 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. [   ]

 
 

Item 2.02. Results of Operations and Financial Condition.

On May 4, 2017, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

Exhibit 99.1. Press release dated May 4, 2017


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

  MercadoLibre, Inc.
     
   
Date: May 4, 2017 By:  /s/ PEDRO ARNT        
    PEDRO ARNT
    Chief Financial Officer
   

EXHIBIT 99.1

MercadoLibre, Inc. Reports First Quarter Financial Results

53.2 million Sold Items, up 38.6%, 44.1 million Total Payment Transactions, up 60.1%

Net Revenues of $273.9 million, growing 73.8% in USD, 78.9% on an FX neutral basis

Net Income of $48.5 million, resulting in EPS of $1.10.

BUENOS AIRES, Argentina, May 04, 2017 (GLOBE NEWSWIRE) -- MercadoLibre, Inc. (Nasdaq:MELI) (http://www.mercadolibre.com), Latin America's leading e-commerce technology company, today reported financial results for the first quarter ended March 31, 2017.

Pedro Arnt, Chief Financial Officer of MercadoLibre, Inc., commented, “We’ve kicked off the year with a strong first quarter, sustaining the momentum from 2016, which was one of the best years in history for us. The consistent pace of execution this quarter is a direct reflection of our relentless drive to deliver disruptive technology solutions to our users across platforms, devices, and countries where we operate. We remain focused on transforming commerce and financial services through product innovation, fostering entrepreneurship and delivering best in class user experiences, and thus cementing our leadership position in technology, online payments, and ecommerce throughout Latin America.”

First Quarter 2017 Business Highlights

First Quarter 2017 Financial Highlights

 (*) See note on “Non-GAAP Financial Measures”

The following table summarizes certain key performance metrics for the three months ended March 31, 2017 and 2016.  

      Three months ended March 31, (in MM)    
      2016   2017   %YoY     %YoY Local
Currency
 
 
   Total confirmed registered users at the end of period    151.5   182.2 20.3 % -    
   New confirmed registered users during the period    6.9   8.1 17.1 % -    
   Gross merchandise volume  $   1,781.1 $   2,334.0 31.0 % 61.4 %  
   Number of successful items sold    38.3   53.2 38.6 % -    
   Number of successful items shipped    17.2   27.3 58.7 %    
   Total payment volume  $   1,376.1 $   2,601.0 89.0 % 81.3 %  
   Total volume of payments on marketplace  $   1,012.4 $   1,825.8 80.3 %    
   Total payment transactions    27.5   44.1 60.1 % -    
   Unique Buyers    11.0   13.3 20.3 %    
   Unique Sellers    3.6   4.1 14.3 %    
             

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

      YoY Growth rates    
    Consolidated Net Revenues              
      Q1'16     Q2'16     Q3'16     Q4'16     Q1'17    
   Brazil  54 % 61 % 62 % 64 % 66 %  
   Argentina  71 % 89 % 68 % 60 % 58 %  
   Mexico  42 % 35 % 36 % 29 % 55 %  
   Venezuela  249 % 185 % 152 % 199 % 291 %  
   Others  19 % 30 % 33 % 42 % 36 %  
   Total  75 % 73 % 66 % 68 % 79 %  
               

Table of Year-on-Year USD Revenue Growth Rates by Quarter

    YoY Growth rates    
  Consolidated Net Revenues              
    Q1'16     Q2'16     Q3'16     Q4'16     Q1'17    
 Brazil  13 % 41 % 76 % 92 % 106 %  
 Argentina  2 % 19 % 4 % 4 % 48 %  
 Mexico  18 % 15 % 19 % 8 % 40 %  
 Venezuela  -13 % 31 % -22 % -10 % 19 %  
 Others  -1 % 14 % 33 % 46 % 47 %  
 Total  6 % 29 % 37 % 42 % 74 %  
             

Conference Call and Webcast

The Company will host a conference call and audio webcast on May 4, 2017 at 4:30 p.m. Eastern Time. The conference call may be accessed by dialing +(970) 315-0420 or +(877) 303-7209 (Conference ID 11441757) and requesting inclusion in the call for Mercado Libre. 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

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

Free Cash Flow – Defined as cash flows from operating activities less payment and advances for the acquisition of property, equipment, intangible assets net of financial liabilities and payment for acquired business net of cash acquired.

Foreign Exchange (“FX”) Neutral – Calculated by using the average monthly exchange rate of each month of 2016 and applying it to the corresponding months in the current year, so as to calculate what the results would have been had exchange rates remained constant. Intercompany allocations are excluded from this calculation. These calculations do not include any other macroeconomic effect such as local currency inflation effects or any price adjustment to compensate local currency inflation or devaluations.

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

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

Total volume of payments on marketplace - Measure of the total U.S. dollar sum of all marketplace transactions paid for using MercadoPago, excluding shipping and financing fees.

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

Items sold  – Measure of the number of items sold/purchased through the Mercado Libre Marketplace.

Items shipped-  Measure of the number of items that were shipped through our shipping service.

Local Currency Growth Rates – Refer to FX Neutral definition.

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

New confirmed registered users – Measure of the number of new users who have registered on the Mercado Libre platform (including Mercado Pago) and confirmed their registration. Since July’12, registration and confirmation take place in the same step of the registration flow.

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

Total confirmed registered users – Measure of the cumulative number of users who have registered on the Mercado Libre platform (including Mercado Pago) and confirmed their registration. Since July ’12, registration and confirmation take place in the same step of the registration flow.

Unique Buyers – New or existing buyers with at least one purchase made in the period.

Unique Sellers – New or existing sellers with at least one sale made in the period.

About Mercado Libre

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

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

 
Consolidated balance sheets
(In thousands of U.S. dollars, except par value)      
  March 31,   December 31,
    2017       2016  
Assets      
Current assets:      
Cash and cash equivalents $  301,388     $  234,140  
Short-term investments    265,165        253,321  
Accounts receivable, net    24,097        25,435  
Credit cards receivables, net    300,612        307,904  
Loans receivable, net    11,380        6,283  
Prepaid expenses    14,846        15,060  
Inventory    432        1,103  
Other assets    28,472        26,215  
Total current assets    946,392        869,461  
Non-current assets:      
Long-term investments    170,352        153,803  
Property and equipment, net    131,968        124,261  
Goodwill    95,849        91,797  
Intangible assets, net    26,227        26,277  
Deferred tax assets    51,441        45,017  
Other assets    61,417        56,819  
Total non-current assets    537,254        497,974  
Total assets $  1,483,646     $  1,367,435  
Liabilities and Equity      
Current liabilities:      
Accounts payable and accrued expenses $  108,507     $  105,106  
Funds payable to customers    396,487        370,693  
Salaries and social security payable    73,342        48,898  
Taxes payable    30,668        27,338  
Loans payable and other financial liabilities    16,430        11,583  
Other liabilities    5,606        6,359  
Dividends payable    6,624        6,624  
Total current liabilities    637,664        576,601  
Non-current liabilities:      
Salaries and social security payable    12,498        16,173  
Loans payable and other financial liabilities    304,534        301,940  
Deferred tax liabilities    36,830        34,059  
Other liabilities    9,876        9,808  
Total non-current liabilities    363,738        361,980  
Total liabilities $  1,001,402     $  938,581  
       
­      
       
Common stock, $0.001 par value, 110,000,000 shares authorized,      
  44,157,364 shares issued and outstanding at March 31,      
2017 and December 31, 2016, respectively $  44     $  44  
Additional paid-in capital    137,982        137,982  
Retained earnings    592,535        550,641  
Accumulated other comprehensive loss    (248,317 )      (259,813 )
Total Equity    482,244        428,854  
Total Liabilities and Equity $  1,483,646     $  1,367,435  


 
Consolidated statements of cash flows
(In thousands of U.S. dollars, except par value)
         
    Three Months Ended March 31,
      2017       2016  
     
Cash flows from operations:        
Net income   $  48,518     $  30,247  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:        
Depreciation and amortization     9,003        6,252  
Accrued interest      (5,679 )      (3,877 )
Non cash interest and convertible bonds amortization of debt discount and amortization of debt issuance costs      4,226        4,431  
LTRP accrued compensation      9,176        3,190  
Deferred income taxes      (2,798 )      (1,896 )
Changes in assets and liabilities:        
   Accounts receivable       (1,305 )      (22,920 )
   Credit Card Receivables      15,583        (62,544 )
   Prepaid expenses      347        (1,387 )
   Inventory      727        (158 )
   Other assets      (4,472 )      (6,738 )
   Accounts payable and accrued expenses      13,364        14,376  
   Funds payable to customers      13,929        23,684  
   Other liabilities      123        1,152  
Interest received from investments      4,015        4,386  
Net cash provided by (used in) operating activities      104,757        (11,802 )
Cash flows from investing activities:        
Purchase of investments      (897,589 )      (641,259 )
Proceeds from sale and maturity of investments      876,040        659,309  
Payment for acquired businesses, net of cash acquired            (1,838 )
Purchases of intangible assets      (17 )      (11 )
Advance for property and equipment      (2,505 )      (872 )
Changes in principal of loans receivable, net      (4,808 )      —  
Purchases of property and equipment      (10,268 )      (14,552 )
Net cash (used in) provided by investing activities      (39,147 )      777  
Cash flows from financing activities:        
Proceeds from loans payable and other financial liabilities      4,290        —  
Payments on loans payable and other financing liabilities      (2,875 )      (661 )
Dividends paid      (6,624 )      (4,548 )
Net cash used in financing activities      (5,209 )      (5,209 )
Effect of exchange rate changes on cash and cash equivalents      6,847        (5,762 )
Net increase (decrease) in cash and cash equivalents      67,248        (21,996 )
Cash and cash equivalents, beginning of the period      234,140        166,881  
Cash and cash equivalents, end of the period   $ 301,388     $  144,885  



   
Consolidated statements of income  
(In thousands of U.S. dollars, except for share data)  
           
    Three Months Ended March 31,  
      2017       2016    
Net revenues   $  273,926     $  157,630    
Cost of net revenues      (105,070 )      (55,448 )  
Gross profit      168,856        102,182    
Operating expenses:          
Product and technology development      (30,302 )      (21,941 )  
Sales and marketing      (46,931 )      (32,683 )  
General and administrative      (28,309 )      (17,069 )  
Total operating expenses      (105,542 )      (71,693 )  
Income from operations      63,314        30,489    
           
Other income (expenses):          
Interest income and other financial gains      12,157        7,251    
Interest expense and other financial losses      (6,471 )      (5,684 )  
Foreign currency gains      663        5,147    
Net income before income tax expense      69,663        37,203    
           
Income tax expense      (21,145 )      (6,956 )  
Net income   $  48,518     $  30,247    


           
    Three Months Ended March 31,
      2017     2016  
Basic EPS          
Basic net income          
Shareholders per common share   $  1.10   $  0.68  
Weighted average of outstanding common shares      44,157,364      44,156,961  
Diluted EPS          
Diluted net income          
Shareholders per common share   $  1.10   $  0.68  
Weighted average of outstanding common shares      44,157,364      44,156,961  
           
Cash Dividends declared (per share)     0.150     0.150  

Financial results of reporting segments

                         
                         
    Three Months Ended March 31, 2017
    Brazil   Argentina   Mexico   Venezuela   Other Countries   Total
    (In thousands)
Net revenues   $  159,781     $  71,392     $  15,536     $  14,397     $  12,820     $  273,926  
Direct costs     (87,037 )     (45,066 )     (16,841 )     (6,551 )     (9,739 )     (165,234 )
Direct contribution     72,744       26,326       (1,305 )     7,846       3,081       108,692  
                         
Operating expenses and indirect costs of net revenues                     (45,378 )
Income from operations                         63,314  
                         
Other income (expenses):                        
  Interest income and other financial gains                     12,157  
  Interest expense and other financial losses                     (6,471 )
Foreign currency gains                         663  
Net income before income tax expense                   $  69,663  


                                     
                Three Months Ended March 31, 2016
                Brazil   Argentina   Mexico   Venezuela   Other Countries   Total
                (In thousands)
Net revenues   $ 77,535     $ 48,201     $ 11,116     $ 12,105     $ 8,673     $ 157,630  
Direct costs     (50,287 )     (27,757 )     (9,438 )     (5,134 )     (6,201 )     (98,817 )
Direct contribution     27,248       20,444       1,678       6,971       2,472       58,813  
                                     
Operating expenses and indirect costs of net revenues                         (28,324 )
Income from operations                         30,489  
                                     
Other income (expenses):                        
  Interest income and other financial gains                         7,251  
  Interest expense and other financial losses                         (5,684 )
  Foreign currency gains                         5,147  
Net income before income tax expense                       $ 37,203  

Non-GAAP Financial Measures

To supplement our consolidated financial statements presented in accordance with U.S. GAAP, we use free cash flows and foreign exchange (“FX”) neutral measures 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 U.S. 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 U.S. GAAP. These non-GAAP financial measures should only be used to evaluate our results of operations in conjunction with the most comparable U.S. GAAP financial measures.

Reconciliation of these non-GAAP financial measures to the most comparable U.S. GAAP financial measures can be found in the tables included in this annual report.

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 and equipment net of financial liabilities, 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 and advances for the acquisition of property and equipment net of the related financial liabilities, 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 purchases of property and 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.

The following table shows a reconciliation of Operating Cash Flows to Free Cash Flows:

             
      Three-month Periods Ended
        March 31,
(In millions)         2017       2016  
             
Net Cash provided by (used in) Operating Activities       $  104.8     $  (11.8 )
Payment for acquired business, net of cash acquired          -        (1.8 )
Advance for property and equipment          (2.5 )      (0.9 )
Purchase of intangible assets          (0.0 )      (0.0 )
Purchase of property and equipment          (10.3 )      (14.6 )
Free cash flow          92.0        (29.1 )

(*) The table above may not total due to rounding.

The Company believes that reconciliation of FX neutral measures to the most directly comparable GAAP measure provides investors an overall understanding of our current financial performance and its prospects for the future. Specifically, we believe these non-GAAP measures provide useful information to both management and investors by excluding the foreign currency exchange rate impact that may not be indicative of our core operating results and business outlook.

The FX neutral measures were calculated by using the average monthly exchange rates for each month during 2016 and applying them to the corresponding months in 2017, so as to calculate what our results would have been had exchange rates remained stable from one year to the next. The table below excludes intercompany allocation FX effects. Finally, these measures do not include any other macroeconomic effect such as local currency inflation effects, the impact on impairment calculations or any price adjustment to compensate local currency inflation or devaluations.

The following table sets forth the FX neutral measures related to our reported results of the operations for the three-month periods ended March 31, 2017:

                         
    Three-months Periods Ended
March 31, (*)
    As reported   FX Neutral Measures
(In millions, except percentages)     2017       2016     Percentage
Change
    2017       2016     Percentage
Change
    (Unaudited)       (Unaudited)    
Net revenues   $  273.9     $  157.6     73.8 %   $  282.0     $  157.6     78.9 %
Cost of net revenues      (105.1 )      (55.4 )   89.5 %      (102.6 )      (55.4 )   85.1 %
Gross profit      168.9        102.2     65.3 %      179.4        102.2     75.5 %
                         
Total operating expenses      (105.5 )      (71.7 )   47.2 %      (107.8 )      (71.7 )   50.4 %
Income from operations      63.3        30.5     107.7 %      71.5        30.5     134.6 %

 (*) The table above may not total due to rounding.

CONTACT: MercadoLibre, Inc,
Investor Relations
investor@mercadolibre,com
http://investor.mercadolibre.com