MercadoLibre, Inc. Reports Financial Results for Second Quarter 2009
BUENOS AIRES, Argentina, Aug. 5, 2009 (GLOBE NEWSWIRE) --
* Q2'09 revenue increases by 19% year-over-year to $40.9 million;
year-over-year growth in local currency increases by 42%
* Q2'09 net income increases by 127% year-over-year to $6.7 million
* Items sold during Q2-09 increase by 35% year-over-year to 6.9
million: fifth consecutive quarter of acceleration
MercadoLibre, Inc. (Nasdaq:MELI) (http://www.mercadolibre.com), Latin America's leading e-commerce technology company, today reported financial results for the second quarter ended June 30, 2009.
Marcos Galperin, President and Chief Executive Officer of MercadoLibre, Inc., commented, "We are delighted with the accelerating growth that we continue to experience in many facets of our business and in every country in which we operate, in particular with the strong performance of MercadoPago. As we look ahead, we are optimistic about our prospects for continued high rates of growth as consumers in Latin America increase their spending within an improving regional economic context and continue to rapidly expand their usage of the internet."
Second Quarter 2009 Financial Results Summary
MercadoLibre reported consolidated net revenues for the three months ended June 30, 2009 of $40.9 million, representing a year-over-year growth rate of 18.7% in US dollars and 41.6% in local currencies.
Marketplace revenue grew 9.5% to $31.0 million in the second quarter of 2009 from $28.3 million a year earlier, and Payments revenue grew 60.5% to $9.9 million from $6.2 million in the prior year quarter. Year-over-year revenue growth in both platforms was impacted by unfavorable currency exchange rates between local currencies and the U.S. dollar. When measured in local currencies, Marketplace revenue grew 29.2% and Payments 98.7%, when compared to the same quarter one year earlier. Strong revenue growth was primarily attributable to positive demand for MercadoLibre services. Items sold on MercadoLibre grew 34.8%, representing the fifth consecutive quarter in which the year over year growth of this metric has accelerated. Total payments transactions grew 42.2% when compared to the second quarter of 2008.
Second quarter 2009 gross profit margin was 79.0% when compared to 80.0% for the second quarter of 2008, as our lower gross margin Payments business grew from 17.9% to 24.2% of net revenues. Gross profit grew 17.2% to $32.3 million from $27.6 million in the prior year quarter.
Income from operations grew 52.3% to $12.4 million in the second quarter of 2009 compared to $8.1 million in the second quarter of 2008. Operating income margin for the second quarter of 2009 was 30.3%, an increase from 23.6% for the same period one year earlier.
The blended tax rate for the second quarter of 2009 fell to 19.8% as compared to a blended tax rate of 45.5% for the second quarter of 2008 as a consequence of improvements in the company's tax planning and other non-recurring items.
Foreign currency losses for the second quarter of 2009 were $1.3 million, as compared to a loss of $2.1 million for the prior year period. Foreign exchange losses were primarily a consequence of the depreciating local currency value, during the second quarter of 2009, of the U.S. dollar denominated assets held by our Brazilian subsidiary.
Net income for the three-month period ended June 30, 2009 was $6.7 million, representing an increase of 126.7% over the $2.9 million of net income for the same period of 2008. Net income for the second quarter 2009, measured in local currencies, grew 158.0% over the same period one year earlier. Net income margin was 16.3% for the quarter compared to 8.5% for the same quarter during 2008. Earnings, per share for the second quarter were $0.15 compared to $0.07 for the same quarter one year earlier.
The following table summarizes certain key performance metrics for the three months ended June 30, 2008 and 2009.
Key Performance Metrics
---------------------------------------------------------------------
Three Months ended June 30,
---------------------------------------------------------------------
(in millions) 2008 2009 % YoY
growth
---------------------------------------------------------------------
Total confirmed registered users at end
of period 28.1 37.8 34.4%
---------------------------------------------------------------------
New confirmed registered users during
period 1.6 2.1 33.3%
---------------------------------------------------------------------
Gross merchandise volume $515.5 $651.9 26.5%
---------------------------------------------------------------------
Successful items 5.1 6.9 34.8%
---------------------------------------------------------------------
Total payment volume $ 66.8 $ 79.6 19.1%
---------------------------------------------------------------------
Total payment transactions 0.5 0.7 42.2%
---------------------------------------------------------------------
Gross merchandise volume in local currencies grew 50.6% and total payments transactions grew 42.2% in local currencies year over year.
Conference Call and Webcast
MercadoLibre will host a conference call and audio webcast on August 5, 2009 at 4:30 p.m. Eastern Time. The conference call may be accessed by dialing (973) 935-8579 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
New confirmed registered users -- Measure of the number of new users who have registered on the MercadoLibre Marketplace and confirmed their registration.
Total confirmed registered users -- Measure of the cumulative number of users who have registered on the MercadoLibre Marketplace and confirmed their registration.
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 (Successful items) -- 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 paid for using MercadoPago.
Gross profit margin -- Defined as gross profit as a percentage of net revenues.
Operating margin -- Defined as income from operations as a percentage of net revenues.
Net Income margin -- Defined as net income as a percentage of net revenues.
Blended tax rate -- Defined as income and alternative income taxes plus deferred income tax as a percentage of pre-tax income.
Effective tax rate -- Defined as the provision for income taxes as a percentage of pre-tax income.
Local currency financial metric growth -- Calculated by applying the average 2008 monthly exchange rates for each month of the period during 2008 to the results during the corresponding months in 2009, so as to calculate what the growth would have been had exchange rates been the same throughout both periods.
About MercadoLibre
Founded in 1999 and headquartered in Buenos Aires, Argentina, 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 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 each country in which it operates according to metrics provided by comScore Networks.
MercadoLibre maintains a leadership position in 12 Latin American countries. The Company listed on Nasdaq (Nasdaq:MELI) following its initial public offering in 2007.
For more information about the company visit: http://investor.mercadolibre.com
Forward-Looking Statements
Any statements contained in this press release that are not statements of historical fact, including statements about the company's beliefs and expectations, are forward-looking statements and should be evaluated as such. Such forward-looking statements reflect, among other things, the company's current expectations, plans, projections and strategies, anticipated financial results, future events and financial trends affecting the company's business, all of which are subject to known or unknown risk and uncertainties that may cause the company's actual results to differ materially from those expressed or implied by these forward-looking statements, including general market conditions, adverse changes in the company's markets as well as those risks and uncertainties included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in the company's Annual Report on Form 10-K for the year ended December 31, 2008 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, which are on file with the SEC and is available on the SEC website at www.sec.gov. Additional information will also be set forth in the company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, which it expects to file with the SEC in August 2009. All information provided in this release and in the attachments is as of August 5, 2009 and MercadoLibre undertakes no duty to update this information.
Because of the risks, uncertainties and assumptions, investors should not place undue reliance on any forward-looking statements.
Consolidated balance sheets
---------------------------
June 30, December 31,
2009 2008
------------- -------------
Assets (Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 19,374,901 $ 17,474,112
Short-term investments 28,647,386 31,639,400
Accounts receivable, net 4,508,072 3,856,392
Funds receivable from customers 1,922,470 2,322,416
Prepaid expenses 526,628 426,869
Deferred tax assets 6,970,127 1,628,871
Other assets 2,448,059 2,953,164
------------- -------------
Total current assets 64,397,643 60,301,224
Non-current assets:
Long-term investments 22,402,035 9,218,153
Property and equipment, net 6,402,482 5,940,160
Goodwill and intangible assets, net 74,488,034 72,911,546
Deferred tax assets 2,556,092 14,270
Other assets 12,973,426 8,353,396
------------- -------------
Total non-current assets 118,822,069 96,437,525
Total assets $ 183,219,712 $ 156,738,749
------------- -------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued
expenses $ 15,275,161 $ 16,941,173
Funds payable to customers 22,475,574 14,727,891
Social security payable 5,544,684 4,387,943
Taxes payable 10,661,070 4,989,704
Loans payable and other financial
liabilities 15,465,001 14,963,421
Provisions 470,137 299,753
------------------------------
Total current liabilities 69,891,627 56,309,885
Non-current liabilities:
Social security payable 642,161 339,854
Loans payable -- 3,050,061
Deferred tax liabilities 4,922,046 2,556,120
Other liabilities 1,335,901 1,058,848
------------- -------------
Total non-current liabilities 6,900,108 7,004,883
Total liabilities $ 76,791,735 $ 63,314,768
------------- -------------
Commitments and contingencies
Shareholders' equity:
Common stock, $0.001 par value,
110,000,000 shares authorized,
44,089,117 and 44,070,367 shares
issued and outstanding at June
30, 2009 and December 31, 2008,
respectively 44,089 44,071
Additional paid-in capital 120,104,599 119,807,007
Accumulated deficit (3,481,301) (15,552,256)
Accumulated other comprehensive
loss (10,239,410) (10,874,841)
------------- -------------
Total shareholders' equity 106,427,977 93,423,981
------------- -------------
Total liabilities and
shareholders' equity $ 183,219,712 $ 156,738,749
------------- -------------
Consolidated statements of income
---------------------------------
Six Months Ended June 30, Three Months Ended June 30,
2009 2008 2009 2008
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
Net revenues $ 73,224,300 $ 63,312,238 $ 40,901,799 $ 34,471,508
Cost of net
revenues (15,229,463) (12,921,182) (8,595,477) (6,901,503)
------------ ------------ ------------ ------------
Gross profit 57,994,837 50,391,056 32,306,322 27,570,005
Operating
expenses:
Product and
technology
development (5,720,625) (3,473,893) (3,087,206) (1,730,780)
Sales and
marketing (20,293,461) (19,480,049) (10,077,284) (10,265,389)
General and
administ-
rative (12,800,984) (10,827,171) (6,729,609) (5,879,569)
Compensation
Cost related
to
acquisitions -- (1,919,870) -- (1,546,397)
------------ ------------ ------------ ------------
Total
operating
expenses (38,815,070) (35,700,983) (19,894,099) (19,422,135)
------------ ------------ ------------ ------------
Income from
operations 19,179,767 14,690,073 12,412,223 8,147,870
------------ ------------ ------------ ------------
Other income
(expenses):
Interest income
and other
financial
gains 1,531,837 1,019,929 602,174 270,576
Interest
expense and
other
financial
charges (5,844,773) (2,321,147) (3,334,589) (958,348)
Foreign
currency gain/
(loss) 529,213 (3,041,354) (1,346,273) (2,052,638)
Other income,
net -- 2,285 -- 2,285
------------ ------------ ------------ ------------
Net income
before income/
asset tax
expense 15,396,044 10,349,786 8,333,535 5,409,745
------------ ------------ ------------ ------------
Income/asset
tax expense (3,325,089) (5,335,014) (1,653,756) (2,462,650)
------------ ------------ ------------ ------------
Net income $ 12,070,955 $ 5,014,772 $ 6,679,779 $ 2,947,095
============ ============ ============ ============
Six Months Ended Three Months Ended
June 30, June 30,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Basic EPS
Basic net income per
common share $ 0.27 $ 0.11 $ 0.15 $ 0.07
========== ========== ========== ==========
Weighted average
shares 44,074,462 44,238,146 44,078,235 44,238,166
========== ========== ========== ==========
Diluted EPS
Diluted net income
per common share $ 0.27 $ 0.11 $ 0.15 $ 0.07
========== ========== ========== ==========
Weighted average
shares 44,127,208 44,367,846 44,132,204 44,369,317
========== ========== ========== ==========
Consolidated statements of cash flows
-------------------------------------
Six Months Ended June 30,
---------------------------
2009 2008
------------ ------------
(Unaudited)
Cash flows from operations:
Net income $ 12,070,955 $ 5,014,772
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 1,945,382 1,520,702
Interest expense 345,224 --
Unrealized gains on investments (486,059) (870,406)
Stock-based compensation expense -
stock options 871 2,447
Stock-based compensation expense -
restricted shares 121,646 46,329
LTRP accrued compensation 1,352,977 --
Deferred income taxes 369,375 193,619
Changes in assets and liabilities,
excluding the effect of acquisitions:
Accounts receivable (1,275,237) 324,660
Funds receivable from customers 627,999 (3,463,772)
Prepaid expenses (102,699) (546,196)
Other assets (3,740,274) 295,528
Accounts payable and accrued
expenses (2,880,613) 3,241,464
Funds payable to customers 4,905,107 1,175,341
Provisions 194,718 (390,673)
Deferred tax liabilities (175,236) --
Other liabilities (592,641) 23,779
------------ ------------
Net cash provided by operating
activities 12,681,495 6,567,594
------------ ------------
Cash flows from investing activities:
Purchase of investments (37,897,661) (39,085,208)
Proceeds from sale and maturity of
investments 32,231,451 60,732,449
Payment for businesses acquired, net
of cash acquired -- (16,824,065)
Purchase of intangible assets (953,164) (59,098)
Purchases of property and equipment (2,182,358) (2,675,365)
------------ ------------
Net cash (used in) provided by
investing activities (8,801,732) 2,088,713
------------ ------------
Cash flows from financing activities:
Decrease in short term debt (3,193,705) (7,630,307)
Loans received -- 5,958
Stock options exercised 4,004 62,854
------------ ------------
Net cash used in financing activities (3,189,701) (7,561,495)
------------ ------------
Effect of exchange rate changes
on cash and cash equivalents 1,210,727 902,037
------------ ------------
Net increase in cash and cash
equivalents 1,900,789 1,996,849
Cash and cash equivalents, beginning
of the period 17,474,112 15,677,407
------------ ------------
Cash and cash equivalents, end of
the period $ 19,374,901 $ 17,674,256
------------ ------------
Condensed Consolidated Statements of Cash Flows
-----------------------------------------------
Six Months Ended June 30,
2009 2008
------------ ------------
(Unaudited)
Supplemental cash flow information:
Cash paid for interest $ 5,005,815 $ 1,736,062
Cash paid for income taxes $ 3,453,738 $ 4,145,532
Acquisition of Classified Media Group:
Cash and cash equivalents $ -- $ 554,739
Accounts receivable -- 56,613
Other current assets -- 904,791
Non current assets -- 365,190
------------ ------------
Total assets acquired -- 1,881,333
------------ ------------
Accounts payable and accrued expenses -- 69,516
Taxes payable -- 459,462
Social security payable -- 243,141
Non current liabilities -- 14,000
Provisions -- 408,336
------------ ------------
Total liabilities assumed -- 1,194,455
------------ ------------
Net assets acquired -- 686,878
------------ ------------
Goodwill -- 13,037,504
Trademarks -- 5,622,188
Deferred Income Tax on Trademarks -- (1,967,766)
------------ ------------
Total purchase price -- 17,378,804
------------ ------------
Cash and cash equivalents acquired -- (554,739)
------------ ------------
Payment for businesses acquired, net
of cash acquired $ -- $ 16,824,065
------------ ------------
The following tables summarize the financial results of our reporting
segments
---------------------------------------------------------------------
Six Months Ended June 30, 2009
---------------------------------------------------
Marketplaces
---------------------------------------------------
Brazil Argentina Mexico Venezuela
------------ ----------- ----------- -----------
Net revenues $ 22,481,733 $10,514,908 $ 6,176,350 $13,667,627
Direct costs (14,233,003) (4,438,834) (3,664,417) (7,099,420)
------------ ----------- ----------- -----------
Direct
contribution 8,248,730 6,076,074 2,511,933 6,568,207
Operating
expenses and
indirect costs
of net revenues
Income from
operations
Other income (expenses):
Interest income
and other
financial gains
Interest expense
and other
financial
results
Foreign currency
gain
Other income, net
Net income before
income/
asset tax expense
Six Months Ended June 30, 2009
------------------------------------------------------
Marketplaces
--------------------------
Other
Countries Total Payments Consolidated
------------ ------------ ------------ ------------
Net revenues $ 4,123,864 $ 56,964,482 $ 16,259,818 $ 73,224,300
Direct costs (2,086,917) (31,522,591) (9,513,003) (41,035,594)
------------ ------------ ------------ ------------
Direct
contribution 2,036,947 25,441,891 6,746,815 32,188,706
Operating
expenses and
indirect costs
of net
revenues (13,008,939)
------------
Income from
operations 19,179,767
------------
Other income (expenses):
Interest income
and other financial
gains 1,531,837
Interest expense
and other financial
results (5,844,773)
Foreign currency gain 529,213
Other income, net --
------------
Net income before income/
asset tax expense $ 15,396,044
============
Six Months Ended June 30, 2008
---------------------------------------------------
Marketplaces
---------------------------------------------------
Brazil Argentina Mexico Venezuela
------------ ------------ ------------ ------------
Net revenues $ 25,524,974 $ 7,778,392 $ 6,048,665 $ 9,469,128
Direct costs (15,923,765) (3,872,243) (4,207,424) (6,042,306)
------------ ------------ ------------ ------------
Direct
contribution 9,601,209 3,906,149 1,841,241 3,426,822
Operating expenses
and indirect costs
of net revenues
Income from
operations
Other income (expenses):
Interest income and
other financial gains
Interest expense and
other financial results
Foreign currency loss
Other income, net
Net income before income/
asset tax expense
Six Months Ended June 30, 2008
---------------------------------------------------
Marketplaces
-------------------------
Other
Countries Total Payments Consolidated
------------ ------------ ------------ ------------
Net revenues $ 2,969,921 $ 51,791,080 $ 11,521,158 $ 63,312,238
Direct costs (712,692) (30,758,430) (7,793,776) (38,552,206)
------------ ------------ ------------ ------------
Direct
contribution 2,257,229 21,032,650 3,727,382 24,760,032
Operating expenses and
indirect costs of
net revenues (10,069,959)
------------
Income from operations 14,690,073
------------
Other income (expenses):
Interest income and
other financial gains 1,019,929
Interest expense and
other financial results (2,321,147)
Foreign currency loss (3,041,354)
Other income, net 2,285
------------
Net income before income/
asset tax expense $ 10,349,786
============
Three Months Ended June 30, 2009
--------------------------------------------------
Marketplaces
--------------------------------------------------
Brazil Argentina Mexico Venezuela
----------- ----------- ----------- -----------
Net revenues $12,603,535 $ 5,549,031 $ 3,307,428 $ 7,301,806
Direct costs (7,627,345) (2,262,079) (1,867,422) (3,443,905)
----------- ----------- ----------- -----------
Direct
contribution 4,976,190 3,286,952 1,440,006 3,857,901
Operating expenses and
indirect costs of net
revenues
Income from operations
Other income (expenses):
Interest income
Interest expense and
other financial results
Foreign exchange
Other income, net
Net income before income/
asset tax expense
Three Months Ended June 30, 2009
---------------------------------------------------
Marketplaces
-------------------------
Other
Countries Total Payments Consolidated
------------ ------------ ------------ ------------
Net revenues $ 2,248,761 $ 31,010,561 $ 9,891,238 $ 40,901,799
Direct costs (1,088,572) (16,289,323) (5,431,797) (21,721,120)
------------ ------------ ------------ ------------
Direct
contribution 1,160,189 14,721,238 4,459,441 19,180,679
Operating expenses and
indirect costs of net
revenues (6,768,456)
------------
Income from operations 12,412,223
------------
Other income (expenses):
Interest income 602,174
Interest expense and
other financial results (3,334,589)
Foreign exchange (1,346,273)
Other income, net --
------------
Net income before income/
asset tax expense $ 8,333,535
============
Three Months Ended June 30, 2008
--------------------------------------------------
Marketplaces
--------------------------------------------------
Brazil Argentina Mexico Venezuela
----------- ----------- ----------- -----------
Net revenues $13,649,406 $ 4,252,040 $ 3,108,820 $ 5,711,196
Direct costs (8,397,321) (2,020,438) (2,158,256) (3,426,231)
----------- ----------- ----------- -----------
Direct
contribution 5,252,085 2,231,602 950,564 2,284,965
Operating expenses and
indirect costs of net
revenues
Income from operations
Other income (expenses):
Interest income
Interest expense and other
financial results
Foreign exchange
Other income, net
Net income before income/
asset tax expense
Three Months Ended June 30, 2008
---------------------------------------------------
Marketplaces
-------------------------
Other
Countries Total Payments Consolidated
------------ ------------ ------------ ------------
Net revenues $ 1,588,960 $ 28,310,422 $ 6,161,086 $ 34,471,508
Direct costs (196,418) (16,198,664) (4,110,109) (20,308,773)
------------ ------------ ------------ ------------
Direct
contribution 1,392,542 12,111,758 2,050,977 14,162,735
Operating expenses and
indirect costs of net
revenues (6,014,865)
Income from operations 8,147,870
-----------
Other income (expenses):
Interest income 270,576
Interest expense and other
financial results (958,348)
Foreign exchange (2,052,638)
Other income, net 2,285
Net income before income/ -----------
asset tax expense $ 5,409,745
===========
Non-GAAP Measures of Financial Performance
This press release may include certain non-GAAP financial measures as defined under Securities and Exchange Commission (SEC) Rules to supplement the company's consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP.
These measures are not in accordance with, or an alternative to, measures 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 MercadoLibre's results of operations as the corresponding GAAP measures.
Reconciliation to the most comparable GAAP measure of all non-GAAP financial measures included in this press release can be found in the tables included at the end of this press release.
These non-GAAP measures are provided to enhance investors overall understanding of the company's current financial performance. Specifically, the company believes the non-GAAP measures provide useful information to both management and investors by excluding certain compensation expenses and unusual foreign currency effects that may not be indicative of its core operating results, thereby enhancing an investor's ability to make period over period comparisons of the company's results. The company believes the inclusion of these non-GAAP measures provides an element of consistency in the company's financial reporting and uses these measures in internal budgets and models and in determining executive compensation benchmarks.
MercadoLibre defines non-GAAP free cash flow as non-GAAP net cash provided by operating activities less property, plant and equipment investments and intangible assets.
In this press release MercadoLibre also includes each of income from operations, net income, earnings per basic and diluted share, blended and effective tax rates and certain margin percentages for the quarter ended June 30, 2009 after excluding (or adding back) the following charges required by GAAP:
* Compensation Costs Related to Acquisitions: This amount relates to the purchase price of the shares of CMG and its subsidiaries. Under EITF 95-8 "Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination", we have recognized a contingent consideration paid to former shareholders as compensation for services. As of June 30, 2008 the year to date total accrued compensation costs amounted to $1.9 million. The following tables show a reconciliation of this exclusion from the GAAP measures to the non-GAAP measures. * Long term retention plan compensation: On August 8, 2008, the Board of Directors approved a long-term employee retention program (the 2008 LTRP) for certain executives based on 2008 performance that will be payable 50% in cash and 50% in MercadoLibre common stock, in addition to their annual salary and bonus. Payments will be made during the first quarter on an annual basis according to the following vesting schedule: year 1 (2009): 17%, year 2 (2010): 22%, year 3 (2011): 27%, year 4 (2012): 34%. * On June 10, 2009 the Board of Directors approved a long-term employee retention (the 2009 LTRP) program for certain executives based on 2009 performance. If earned, payments to eligible employees under the 2009 LTRP will be in addition to payments of base salary and cash bonus, if earned, made to these employees. In order to receive an award under the 2009 LTRP, each eligible employee must satisfy the performance conditions established by the board of directors for him or her. If these conditions are satisfied, the eligible employee will, subject to his or her continued employment as of each applicable payment date, receive the full amount of his 2009 LTRP bonus, payable as follows: -- the eligible employee will receive a fixed cash payment equal to 6.25% of his or her 2009 LTRP bonus once a year for a period of eight y years starting in 2010 (the "Fixed Payment"); and -- on each date the company pays the Fixed Payment to an eligible employee, he or she will also receive a cash payment (the "Variable Payment") equal to the product of (i) 6.25% of the applicable 2009 LTRP bonus and (ii) the quotient of (a) divided by (b), where (a), the numerator, equals the Applicable Year Stock Price (as defined below) and (b), the denominator, equals the 2008 Stock Price, defined as $13.81, which was the average closing price of the Company's common stock on the NASDAQ Global Market during the final 60 trading days of 2008. The "Applicable Year Stock Price" shall equal the average closing price of the Company's common stock on the NASDAQ Global Market during the final 60 trading days of the year preceding the applicable payment date.
For the 2008 LTRP and the Variable Payment of the 2009 LTRP, the US GAAP compensation cost is recognized in accordance with the graded-vesting attribution method and is accrued up to each payment day. For the Fixed Payment of the 2009 LTRP, the compensation cost is recognized in a straight-line basis. The non-GAAP measures were calculated with the cost for each year being accrued in the full fiscal year immediately preceding the payment date according to the same payment schedule in which 22% of the cost of the 2008 LTRP plan vests during the year ended December 31 2009, and 12.5% of the cost of the 2009 LTRP vests during the year ended December 31, 2009. The following tables show a reconciliation of this cost from the GAAP measures to the non-GAAP measures.
Venezuelan foreign currency re-measurement effect: This amount relates to re-measurement of assets and liabilities in U.S. dollars in the Venezuelan statutory Financial Statements. Based on paragraph 27 of FAS 52 "Foreign Currency Translation", the Venezuelan subsidiaries have re-measured the assets and liabilities outstanding at June 30, 2009 in U.S. dollar balances at the parallel exchange rate and translated them to the official exchange rate. The following tables exclude the foreign currency re-measurement effect generated from applying different exchange rates in order to facilitate comparisons to other quarters, or year to date figures, and to highlight this exchange rate matter.
The following provide a reconciliation of certain Non-GAAP financial measures to the most comparable GAAP financial measures.
------------------------ ------------------------
Six Months Ended Three Months Ended
June 30, June 30,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Net income $12,070,955 $ 5,014,772 $ 6,679,779 $ 2,947,095
Long term
retention plan
compensation net
of tax effect 280,057 -- 158,407 --
Venezuelan
foreign currency
re-measurement
effect (2,494,032) -- (1,446,108) --
Compensation cost
related to
acquisitions -- 1,919,870 -- 1,546,397
------------------------ ------------------------
Non-GAAP net
income $ 9,856,980 $ 6,934,642 $ 5,392,078 $ 4,493,492
------------------------ ------------------------
----------- ----------- ----------- -----------
Basic net income
per common
share: $ 0.27 $ 0.11 $ 0.15 $ 0.07
----------- ----------- ----------- -----------
Non-GAAP basic
net income per
common share: $ 0.22 $ 0.16 $ 0.12 $ 0.10
----------- ----------- ----------- -----------
Shares used in
basic net income
per share
calculation: 44,074,462 44,238,146 44,078,235 44,238,166
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Diluted net
income per
common share $ 0.27 $ 0.11 $ 0.15 $ 0.07
----------- ----------- ----------- -----------
Non-GAAP diluted
net income per
common share: $ 0.22 $ 0.16 $ 0.12 $ 0.10
----------- ----------- ----------- -----------
Shares used in
diluted net
income per share
calculation: 44,127,208 44,367,846 44,132,204 44,369,317
----------- ----------- ----------- -----------
------------------------ ------------------------
Six Months Ended Three Months Ended
June 30, June 30,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Income and asset
tax expense $ 3,325,089 $ 5,335,014 $ 1,653,756 $ 2,462,650
Income taxes
related with
long term
retention plan
compensation 123,651 -- 97,087 --
Income taxes
related with
Venezuelan
foreign currency
effects (1,284,804) -- (744,963) --
----------- ----------- ----------- -----------
Non-GAAP income
and asset tax
expense $ 2,163,935 $ 5,335,014 $ 1,005,880 $ 2,462,650
----------- ----------- ----------- -----------
Income before
income taxes $15,396,044 $10,349,786 $ 8,333,535 $ 5,409,745
Long term
retention plan
compensation 403,707 -- 255,494 --
Venezuelan
foreign currency
re-measurement
effect (3,778,836) -- (2,191,072) --
Compensation cost
related to
acquisitions -- 1,919,870 -- 1,546,397
------------------------ ------------------------
Non-GAAP income
before income
taxes $12,020,915 $12,269,656 $ 6,397,957 $ 6,956,142
------------------------ ------------------------
--------------------------------------------------
Blended tax
rate(1) 21.6% 51.5% 19.8% 45.5%
--------------------------------------------------
Non-GAAP Blended
tax rate(1) 18.0% 43.5% 15.7% 35.4%
--------------------------------------------------
--------------------------------------------------
Effective tax
rate(2)(3) 19.1% 41.7% 20.0% 34.8%
--------------------------------------------------
Non-GAAP
Effective tax
rate(2)(3) 24.6% 35.2% 26.2% 27.7%
--------------------------------------------------
1 - Blended tax rate defined as income and asset tax expense as a
percentage of income before income and asset tax.
2 - Effective income tax rate defined as the provision for income
taxes as a percentage of income before income tax.
3 - The effective tax rate does not include the effect of the Mexican
Tax call Impuesto Empresarial a Tasa Unica (IETU).
------------------------ ------------------------
Six Months Ended Three Months Ended
June 30, June 30,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
-------------------------------------------- ------------------------
Net revenue $73,224,300 $63,312,238 $40,901,798 $34,471,508
-------------------------------------------- ------------------------
GAAP
Net Income $12,070,955 $ 5,014,772 $ 6,679,779 $ 2,947,095
Earnings per share
(basic) $ 0.27 $ 0.11 $ 0.15 $ 0.07
Earnings per share
(diluted) $ 0.27 $ 0.11 $ 0.15 $ 0.07
-------------------------------------------- ------------------------
Non-GAAP
Net Income $ 9,856,980 $ 6,934,642 $ 5,392,078 $ 4,493,492
Earnings per share
(basic) $ 0.22 $ 0.16 $ 0.12 $ 0.10
Earnings per share
(diluted) $ 0.22 $ 0.16 $ 0.12 $ 0.10
CONTACT: MercadoLibre, Inc.
Investor Relations contact:
Pedro Arnt
+54 (11) 5352 8000
investor@mercadolibre.com
Media Relations contact:
Lorena Diaz Quijano
+54 (11) 5352 8026
lorena.diazquijano@mercadolibre.com
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