MercadoLibre, Inc. Reports Second Quarter 2021 Financial Results

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Net Revenues of $1.7 billion, up 102.6% year-over-year on an FX neutral basis
$17.5 billion Total Payment Volume, up 72% year-over-year on an FX neutral basis
$7.0 billion Gross Merchandise Volume, up 46% year-over-year on an FX neutral basis

BUENOS AIRES, Argentina, Aug. 04, 2021 (GLOBE NEWSWIRE) -- MercadoLibre, Inc. (Nasdaq: MELI) (http://www.mercadolibre.com), Latin America’s leading e-commerce technology company, today reported financial results for the quarter ended June 30, 2021.

Pedro Arnt, Chief Financial Officer of MercadoLibre, Inc., commented, “I am pleased to announce that the team here at MercadoLibre delivered another quarter of strong growth in our commerce and fintech businesses in Q2 2021, achieving record levels in both volume and revenues. This strong performance builds on the solid first quarter we had this year. We believe that our business is showing tremendous momentum despite immense volatility in our key markets due to the frequent closing of physical retail across Latin America. I am proud to see the consistent execution of our plans while prioritizing innovation, speed of execution and user experience, all elements that are at the core of our corporate DNA.”

Second Quarter 2021 Business Highlights

  • Unique active users grew by 47.4% year-over-year, reaching 75.9 million.
  • Gross merchandise volume (“GMV”) grew to $7.0 billion, representing an increase of 39.2% in USD and 46.1% on an FX neutral basis.
  • Successful items sold reached 244.6 million, increasing by 37.0% year-over-year.
  • Live listings offered on MercadoLibre’s marketplace reached 319.1 million.
  • Mobile gross merchandise volume grew by 218.2% year-over-year on an FX neutral basis, reaching 73.4% of GMV.
  • Mercado Envios shipped 230.5 million items during the quarter, representing a 46.4% year-over-year increase.
  • Total payment volume (“TPV”) through
    Mercado Pago surpassed $17.5 billion, a year-over-year increase of 56.3% in USD and 72.2% on an FX neutral basis. Total payment transactions increased 80.3% year-over-year, totaling 729.9 million transactions for the quarter.
  • Off-platform TPV grew 70.5% year-over-year in USD and 93.5% year-over-year on a FX neutral basis, reaching $10.3 billion, while payment transactions reached 566.0 million, a year-over-year increase of 101.6%.
  • Online Payments TPV grew 67.2% year-over-year on an FX neutral basis.
  • MPOS accelerated TPV growth, reaching 93.7% year-over-year growth on an FX neutral basis.
  • Mobile Wallet TPV grew 106.5% year-over-year on an FX neutral basis.
  • Our asset management product,
    Mercado Fondo, has over $810 million under management and approximately 19.3 million users across Latin America.
  • Mercado Credito’s portfolio is now over $ 800 million, almost 5x its size compared to the second quarter of 2020.

Second Quarter 2021 Financial Highlights

  • Net revenues for the second quarter were $1.7 billion, a year-over-year increase of 93.9% in USD and 102.6% on an FX neutral basis.
  • Commerce revenues increased 96.4% year-over-year in USD reaching $1,142.3 million, while Fintech revenues increased 88.9% year-over-year in USD reaching $560.4 million.
  • Gross profit was $753.9 million with a margin of 44.3%, compared to 48.6% in the second quarter of 2020.
  • Total operating expenses were $587.8 million, an increase of 79.3% year-over-year in USD. As a percentage of revenues, operating expenses were 34.5%, compared to 37.3% during the second quarter of 2020.
  • Income from operations was $166.2 million, compared to $99.4 million during the prior year. As a percentage of revenues, income from operations was 9.8%.
  • Interest income was $24.2 million, a 28.7% increase year-over-year. We incurred $39.3 million in interest and financial expenses this quarter, a 45.8% increase year-over-year.
  • We had foreign currency losses of $12.1 million, mainly attributable to our own common stock acquisition in the Argentine market at a price that reflects the additional cost of accessing US dollars through an indirect mechanism due to restrictions imposed by the Argentine government for buying US dollars at the official exchange rate.
  • Net income before income tax expense was $138.9 million, a 55.5% increase from the $89.3 million during the second quarter of 2020.
  • Income tax expense was $70.7 million, mainly as a result of higher income tax expense in Argentina as a consequence of higher pre-tax gain in our Argentine segment in 2021 and higher income tax expense due to withholding tax on dividends from our Argentine subsidiary.
  • Net income was $68.2 million, resulting in net income per share of $1.37.

The following table summarizes certain key performance metrics for the six and three months periods ended June 30, 2021 and 2020.

                         
    Six-month Periods Ended
June 30, 		    Three-month Periods Ended
June 30,
(in millions)(*)   2021   2020     2021 2020
                         
Unique active users     98.0     65.5     75.9     51.5
Gross merchandise volume   $ 13,079.8   $ 8,459.0   $ 7,022.6   $ 5,044.8
Number of successful items sold     466.6     284.2     244.6     178.5
Number of successful items shipped     438.6     247.7     230.5     157.5
Total payment volume   $ 32,247.1   $ 19,308.8   $ 17,529.4   $ 11,214.3
Total volume of payments on marketplace   $ 12,615.2   $ 7,966.5   $ 6,775.2   $ 4,763.2
Total payment transactions     1,360.0     695.5     729.9     404.8
Capital expenditures   $ 262.8   $ 101.9   $ 150.2   $ 48.4
Depreciation and amortization   $ 84.5   $ 44.2   $ 46.1   $ 22.7

(*) Figures have been calculated using rounded amounts. Growth calculations based on this table may not total due to rounding.

Year-over-year USD Revenue Growth Rates by Quarter

                       
                       
Consolidated
Net Revenues		   Q2’20   Q3’20   Q4’20   Q1’21   Q2’21  
                       
Brazil   37 % 57 % 68 % 93 % 104 %
                       
Argentina   110 % 145 % 144 % 124 % 53 %
                       
Mexico   96 % 111 % 141 % 143 % 105 %
                       

Year-over-year Local Currency Revenue Growth Rates by Quarter

                       
                       
Consolidated
Net Revenues		   Q2’20   Q3’20   Q4’20   Q1’21   Q2’21  
                       
Brazil   87 % 112 % 120 % 139 % 101 %
                       
Argentina   224 % 260 % 229 % 223 % 112 %
                       
Mexico   138 % 140 % 155 % 148 % 76 %
                       

Conference Call and Webcast

The Company will host a conference call and audio webcast on August 4th, 2021 at 4:30 p.m. Eastern Time. The conference call may be accessed by dialing (877) 303-7209 / (970) 315-0420 (Conference ID – 8869655 –) 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

Unique Active User – New or existing user who performed at least one of the following actions during the reported period: (1) made one purchase, or reservation, or asked one question on MercadoLibre Marketplace or Classified Marketplace (2) maintained an active listing on MercadoLibre Marketplace or Classified Marketplace (3) maintained an active account in Mercado Shops (4) made a payment, money transfer, collection and/or advance using
Mercado Pago (5) maintained an outstanding credit line through
Mercado Credito or (6) maintained a balance of more than $5 invested in a
Mercado Fondo asset management account.

Foreign Exchange (“FX”) Neutral – Calculated by using the average monthly exchange rate of each month of 2020 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 Classifieds transactions.

Total payment transactions – Measure of the number of all transactions paid for using
Mercado Pago.

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

Total payment volume – Measure of total U.S. dollar sum of all transactions paid for using
Mercado Pago, including marketplace and non-marketplace transactions.

MPOS – Mobile point-of-sale is a dedicated wireless device that performs the functions of a cash register or electronic point-of-sale terminal wirelessly.

Commerce – Revenues from core marketplace fees, shipping fees, sale of goods, ad sales, classified fees and other ancillary services.

Fintech – Revenues includes fees from off-platform transactions, financing fees, interest earned from merchant and consumer credits and sale of MPOS.

Successful items sold – Measure of the number of items that were sold/purchased through the Mercado Libre Marketplace, excluding Classifieds items.

Successful 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.

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

About MercadoLibre

Founded in 1999, MercadoLibre is the largest online commerce ecosystem in Latin America, serving as an integrated regional platform and as a provider of the necessary digital and technology-based tools that allow businesses and individuals to trade products and services in the region. The Company enables commerce through its marketplace platform which allows users to buy and sell in most of Latin America.

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 https://resource.globenewswire.com/Resource/Download/6ab227b7-693f-4b17-b80c-552ae45c76bf?size=0

Forward-Looking Statements

Any statements herein regarding MercadoLibre, Inc. that are not historical or current facts are forward-looking statements. These forward-looking statements convey MercadoLibre, Inc.’s current expectations or forecasts of future events. Forward-looking statements regarding MercadoLibre, Inc. involve known and unknown risks, uncertainties and other factors that may cause MercadoLibre, Inc.’s actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Certain of these risks and uncertainties are described in the “Risk Factors,” “Forward-Looking Statements” and “Cautionary Note Regarding Forward-Looking Statements” sections of MercadoLibre, Inc.’s annual report on Form 10-K for the year ended December 31, 2020, “Item 1A-Risk Factors” in Part II of our Form 10-Q for the quarter ended March 31, 2021 and any of MercadoLibre, Inc.’s other applicable filings with the Securities and Exchange Commission. Unless required by law, MercadoLibre, Inc. undertakes no obligation to publicly update or revise any forward-looking statements to reflect circumstances or events after the date hereof.

MercadoLibre, Inc.
Interim Condensed Consolidated Balance Sheets
(In thousands of U.S. dollars, except par value)

       
  June 30,   December 31,
    2021       2020  
Assets      
Current assets:      
Cash and cash equivalents $ 1,069,909     $ 1,856,394  
Restricted cash and cash equivalents   361,180       651,830  
Short-term investments (707,885 and 636,949 held in guarantee)   898,367       1,241,306  
Accounts receivable, net   69,844       49,691  
Credit cards receivable and other means of payments, net   1,189,802       863,073  
Loans receivable, net   547,183       385,036  
Prepaid expenses   58,143       28,378  
Inventory   169,449       118,140  
Other assets   203,774       152,959  
Total current assets   4,567,651       5,346,807  
Non-current assets:      
Long-term investments   181,411       166,111  
Loans receivable, net   23,269       16,619  
Property and equipment, net   618,997       391,684  
Operating lease right-of-use assets   396,253       303,214  
Goodwill   85,165       85,211  
Intangible assets, net   23,894       14,155  
Deferred tax assets   132,618       134,916  
Other assets   113,436       67,615  
Total non-current assets   1,575,043       1,179,525  
Total assets $ 6,142,694     $ 6,526,332  
Liabilities      
Current liabilities:      
Accounts payable and accrued expenses $ 857,622     $ 767,336  
Funds payable to customers and amounts due to merchants   1,839,209       1,733,095  
Salaries and social security payable   204,174       207,358  
Taxes payable   232,090       215,918  
Loans payable and other financial liabilities   579,786       548,393  
Operating lease liabilities   80,597       55,246  
Other liabilities   75,812       108,534  
Total current liabilities   3,869,290       3,635,880  
Non-current liabilities:      
Salaries and social security payable   18,929       49,852  
Loans payable and other financial liabilities   1,788,481       860,876  
Operating lease liabilities   313,479       243,601  
Deferred tax liabilities   48,529       64,354  
Other liabilities   22,956       20,191  
Total non-current liabilities   2,192,374       1,238,874  
Total liabilities $ 6,061,664     $ 4,874,754  
       
Commitments and Contingencies      
       
Equity      
       
Common stock, $0.001 par value, 110,000,000 shares authorized,      
49,711,650 and 49,869,727 shares issued and outstanding at June 30,      
2021 and December 31, 2020 $ 50     $ 50  
Additional paid-in capital   455,206       1,860,502  
Treasury stock   (276,220 )     (54,805 )
Retained earnings   348,298       314,115  
Accumulated other comprehensive loss   (446,304 )     (468,284 )
Total Equity   81,030       1,651,578  
Total Liabilities and Equity $ 6,142,694     $ 6,526,332  

MercadoLibre, Inc.
Interim Condensed Consolidated Statements of Income
For the six and three-month periods ended June 30, 2021 and 2020
(In thousands of U.S. dollars, except for share data)

                 
    Six Months Ended June 30,   Three Months Ended June 30,
      2021       2020       2021       2020  
Net service revenues   $ 2,735,624     $ 1,485,774     $ 1,504,720     $ 845,882  
Net product revenues     345,567       44,686       198,030       32,487  
Net revenues     3,081,191       1,530,460       1,702,750       878,369  
Cost of net revenues     (1,735,894 )     (790,474 )     (948,830 )     (451,197 )
Gross profit     1,345,297       739,986       753,920       427,172  
Operating expenses:                
Product and technology development     (273,020 )     (146,689 )     (146,985 )     (73,254 )
Sales and marketing     (621,266 )     (390,583 )     (333,107 )     (184,076 )
General and administrative     (194,002 )     (132,970 )     (107,663 )     (70,404 )
Total operating expenses     (1,088,288 )     (670,242 )     (587,755 )     (327,734 )
Income from operations     257,009       69,744       166,165       99,438  
                 
Other income (expenses):                
Interest income and other financial gains     49,236       55,566       24,165       18,782  
Interest expense and other financial losses (*)     (130,631 )     (50,561 )     (39,342 )     (26,977 )
Foreign currency losses     (27,180 )     (2,089 )     (12,091 )     (1,903 )
Net income before income tax expense     148,434       72,660       138,897       89,340  
                 
Income tax expense     (114,251 )     (37,822 )     (70,702 )     (33,393 )
Net income   $ 34,183     $ 34,838     $ 68,195     $ 55,947  

(*) Includes $49,247 thousands of loss on debt extinguishment and premium related to the 2028 Notes repurchase recognized in January 2021.

                 
    Six Months Ended June 30,   Three Months Ended June 30,
      2021     2020     2021     2020
Basic EPS                
Basic net income                
Available to shareholders per common share   $ 0.69   $ 0.66   $ 1.37   $ 1.11
Weighted average of outstanding common shares     49,844,823     49,709,964     49,822,272     49,709,973
Diluted EPS                
Diluted net income                
Available to shareholders per common share   $ 0.69   $ 0.66   $ 1.37   $ 1.11
Weighted average of outstanding common shares     49,844,823     49,709,964     49,822,272     49,709,973
                 

MercadoLibre, Inc.
Interim Condensed Consolidated Statements of Cash Flows
For the six months ended June 30, 2021 and 2020

       
  Six Months Ended June 30,
    2021       2020  
   
Cash flows from operations:      
Net income $ 34,183     $ 34,838  
Adjustments to reconcile net income to net cash (used in) provided by operating activities:      
Unrealized devaluation loss, net   45,046       29,348  
Impairment of digital assets   7,175       —  
Depreciation and amortization   84,525       44,202  
Accrued interest   (9,395 )     (28,933 )
Non cash interest, convertible notes amortization of debt discount and amortization of debt issuance costs and other charges   48,053       11,932  
Bad debt charges   165,999       63,636  
Financial results on derivative instruments   10,799       (21,826 )
Stock-based compensation expense — restricted shares   357       366  
LTRP accrued compensation   50,925       51,907  
Deferred income taxes   16,411       (31,145 )
Changes in assets and liabilities:      
Accounts receivable   (30,010 )     23,147  
Credit cards receivables and other means of payments   (301,289 )     (343,229 )
Prepaid expenses   (29,497 )     20,807  
Inventory   (47,125 )     (14,270 )
Other assets   (91,488 )     (6,965 )
Payables and accrued expenses   10,364       170,100  
Funds payable to customers and amounts due to merchants   83,233       606,307  
Other liabilities   (64,072 )     (73,134 )
Interest received from investments   14,847       27,597  
Net cash (used in) provided by operating activities   (959 )     564,685  
Cash flows from investing activities:      
Purchase of investments   (5,207,862 )     (2,326,013 )
Proceeds from sale and maturity of investments   5,574,560       1,910,311  
Receipts from settlements of derivative instruments   3,570       8,624  
Payment for acquired businesses, net of cash acquired   —       (6,937 )
Payment for settlements of derivative instruments   (11,141 )     —  
Purchases of intangible assets   (19,543 )     (87 )
Changes in principal of loans receivable, net   (333,363 )     (39,092 )
Purchases of property and equipment   (262,780 )     (94,834 )
Net cash used in investing activities   (256,559 )     (548,028 )
Cash flows from financing activities:      
Proceeds from loans payable and other financial liabilities   3,502,009       1,781,040  
Payments on loans payable and other financial liabilities   (2,239,681 )     (1,353,658 )
Payments on repurchase of the 2028 Notes   (1,865,076 )     —  
Payment of finance lease obligations   (9,117 )     (1,064 )
Purchase of convertible note capped call   (100,769 )     (104,095 )
Unwind of convertible note capped call   102,382       —  
Common Stock repurchased   (141,963 )     (720 )
Exercise of Convertible Notes   (3,137 )     —  
Dividends paid of preferred stock   —       (2,000 )
Net cash (used in) provided by financing activities   (755,352 )     319,503  
Effect of exchange rate changes on cash, cash equivalents, restricted cash and cash equivalents   (64,265 )     (124,226 )
Net (decrease) increase in cash, cash equivalents, restricted cash and cash equivalents   (1,077,135 )     211,934  
Cash, cash equivalents, restricted cash and cash equivalents, beginning of the period $ 2,508,224     $ 1,451,424  
Cash, cash equivalents, restricted cash and cash equivalents, end of the period $ 1,431,089     $ 1,663,358  

Financial results of reporting segments

                         
      Three Months Ended June, 2021
      Brazil   Argentina   Mexico     Other Countries   Total
      (In thousands)
Net revenues   $ 951,090     $ 366,065     $ 258,076       $ 127,519     $ 1,702,750  
Direct costs     (720,470 )     (232,176 )     (261,424 )       (91,258 )     (1,305,328 )
Direct contribution     230,620       133,889       (3,348 )       36,261       397,422  
                         
Operating expenses and indirect costs of net revenues                       (231,257 )
Income from operations                       166,165  
                         
Other income (expenses):                      
  Interest income and other financial gains                       24,165  
  Interest expense and other financial losses                       (39,342 )
  Foreign currency losses                       (12,091 )
Net income before income tax expense                     $ 138,897  
                         

                         
      Three Months Ended June 30, 2020
      Brazil   Argentina   Mexico     Other Countries   Total
      (In thousands)
Net revenues   $ 465,298     $ 239,204     $ 125,950       $ 47,917     $ 878,369  
Direct costs     (324,754 )     (171,408 )     (110,553 )       (34,943 )     (641,658 )
Direct contribution     140,544       67,796       15,397         12,974       236,711  
                         
Operating expenses and indirect costs of net revenues                       (137,273 )
Income from operations                       99,438  
                         
Other income (expenses):                      
  Interest income and other financial gains                       18,782  
  Interest expense and other financial losses                       (26,977 )
  Foreign currency losses                       (1,903 )
Net income before income tax expense                     $ 89,340  

Non-GAAP Financial Measures

To supplement our audited consolidated financial statements presented in accordance with U.S. GAAP, we present foreign exchange (“FX”) neutral measures as a non-GAAP measure. Reconciliation of this non-GAAP financial measure to the most comparable U.S. GAAP financial measure can be found in the tables below.

This non-GAAP measure 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, this non-GAAP measure is 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. This non-GAAP financial measure should only be used to evaluate our results of operations in conjunction with the most comparable U.S. GAAP financial measures.

We provide this non-GAAP financial measure to enhance overall understanding of our current financial performance and its prospects for the future, and we understand that this measure provides useful information to both Management and investors. In particular, we believe that FX neutral 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 2020 and applying them to the corresponding months in 2021, 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-months period ended June 30, 2021:

                         
    Three-month Periods Ended
June 30, (*)
    As reported   FX Neutral Measures   As reported    
(In millions, except percentages)     2021       2020     Percentage
Change		     2021       2020     Percentage
Change
    (Unaudited)   (Unaudited)
Net revenues   $ 1,702.7     $ 878.4     93.9 %   $ 1,780.0     $ 878.4     102.6 %
Cost of net revenues     (948.8 )     (451.2 )   110.3 %     (980.3 )     (451.2 )   117.3 %
Gross profit     753.9       427.2     76.5 %     799.7       427.2     87.2 %
                         
Operating expenses     (587.8 )     (327.7 )   79.3 %     (625.6 )     (327.7 )   90.9 %
Income from operations     166.2       99.4     67.1 %     174.1       99.4     75.1 %

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

CONTACT: MercadoLibre, Inc.

Investor Relations

[email protected]

http://investor.mercadolibre.com

 

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Source: MercadoLibre, Inc.