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February 22, 2022

MercadoLibre, Inc. Reports Fourth Quarter 2021 Financial Results

Net Revenues of $2.1 billion, up 73.9% year-over-year on an FX neutral basis
$24.2 billion Total Payment Volume, up 72.8% year-over-year on an FX neutral basis
$8.0 billion Gross Merchandise Volume, up 32.2% year-over-year on an FX neutral basis

MONTEVIDEO, Uruguay, Feb. 22, 2022 (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 December 31, 2021.

Pedro Arnt, Chief Financial Officer of MercadoLibre, Inc., commented, “Last year presented us with challenges, and with those also came many more opportunities. With our teams’ resilience and focus on delivering on our strategic objectives, we have been able to overcome shifting pandemic lockdown measures, rising inflationary cost pressures and a highly competitive environment in the digital commerce space. The final outcome was a year with record results across the board, sustained strong growth in key business metrics and topline, and improving margins and operating income for a second consecutive year.”

Fourth Quarter 2021 Business Highlights

  • Considering our entire ecosystem, Unique active users reached 82.2 million.
  • Gross merchandise volume (“GMV”) grew to $8.0 billion, representing an increase of 21.2% in USD and 32.2% on an FX neutral basis.
  • Successful items sold reached 287.9 million, increasing by 25.5% year-over-year.
  • Live listings offered on MercadoLibre’s marketplace reached almost 300 million.
  • Mobile gross merchandise volume reached 75.5% of GMV.
  • Mercado Envios shipped 275.9 million items during the quarter, representing a 29.0% year-over-year increase. Managed network penetration was 89.5% in the fourth quarter.
  • Total payment volume (“TPV”) through Mercado Pago reached $24.2 billion, a year-over-year increase of 52.1% in USD and 72.8% on an FX neutral basis. Total payment transactions increased 56.1% year-over-year, totaling 1,028.9 million transactions for the quarter.
  • Off-platform TPV grew 75.1% year-over-year in USD and 96.5% year-over-year on an FX neutral basis, reaching $16.1 billion, while payment transactions reached 849.9 million, a year-over-year increase of 69.4%.
  • Acquiring TPV, which includes On-Platform, Online Payments, MPoS and QR payments, was $17.2 billion, growing 51.1% on an FX neutral basis.
  • Digital accounts TPV, which includes wallet payments, P2P transfers between Mercado Pago accounts and Cards transactions (debit, prepaid and credit), was $7.1 billion, growing 138.3% on an FX neutral basis.
  • Unique fintech active users reached 34.5 million.
  • Our asset management product, Mercado Fondo, has now over $1.2 billion under management and in the fourth quarter had 22.3 million users across Latin America.
  • Mercado Credito’s portfolio is now almost $1.7 billion, over 3x its size compared to the fourth quarter of 2020.

Fourth Quarter 2021 Financial Highlights

  • Fourth Quarter 2021 Financial Highlights
  • Net revenues for the fourth quarter were $2.1 billion, a year-over-year increase of 60.5% in USD and 73.9% on an FX neutral basis.
  • Commerce revenues increased 55.6% year-over-year in USD reaching $1,357.8 million, while Fintech revenues increased 70.1% year-over-year in USD reaching $773.0 million.
  • Gross profit was $853.2 million with a margin of 40.0%, compared to 36.8% in the fourth quarter of 2020.
  • Total operating expenses were $829.8 million, an increase of 61.4% year-over-year in USD. As a percentage of revenues, operating expenses were 38.9%, mostly in line with the 38.7% in the fourth quarter of 2020.
  • Income from operations was $23.3 million, compared to a loss of $25.1 million during the same period of the prior year. As a percentage of revenues, income from operations was 1.1%.
  • Interest income and other financial gains was $53.4 million, a 135.7% increase year-over-year. We incurred $53.7 million in interest expense and other financial losses this quarter, an 69.8% increase year-over-year.
  • We had foreign currency losses of $56.9 million, mainly related to higher foreign exchange losses 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 loss before income tax expense was $33.9 million, a 22.9% decrease from the $44.0 million net loss during the fourth quarter of 2020.
  • Income tax expense was $3.6 million, mainly as a result of income tax expense as a consequence of pre-tax gains in our Argentine segment offset by income tax benefit in our Brazilian segment related to higher deferred tax assets due to tax loss carry forwards.
  • Net loss was $46.1 million, resulting in net loss per share of $0.92.

The following table summarizes certain key performance metrics for the twelve- and three-months periods ended December 31, 2021 and 2020.

                         
    Year Ended
December 31, (*)
    Three-month Periods Ended
December 31, (*)
(in millions)   2021   2020     2021 2020
                         
Unique active users     139.5     132.5     82.2     74.0
Gross merchandise volume   $ 28,350.9   $ 20,926.8   $ 7,956.7   $ 6,565.4
Number of successful items sold     1,014.3     719.3     287.9     229.4
Number of successful items shipped     962.3     649.2     275.9     214.0
Total payment volume   $ 77,371.1   $ 49,756.8   $ 24,244.2   $ 15,942.1
Total volume of payments on marketplace   $ 27,432.4   $ 19,951.4   $ 7,759.3   $ 6,336.0
Total payment transactions     3,254.5     1,914.5     1,028.9     659.3
Capital expenditures   $ 630.1   $ 254.1   $ 196.3   $ 87.3
Depreciation and amortization   $ 203.9   $ 105.0   $ 67.2   $ 32.6


(*) 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
Q4’20   Q1’21   Q2’21   Q3’21   Q4’21  
                     
Brazil 68 % 93 % 104 % 74 % 51 %
                     
Argentina 144 % 124 % 53 % 38 % 47 %
                     
Mexico 141 % 143 % 105 % 94 % 92 %
                     

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

                     
                     
Consolidated
Net Revenues
Q4’20   Q1’21   Q2’21   Q3’21   Q4’21  
                     
Brazil 120 % 139 % 101 % 69 % 61 %
                     
Argentina 229 % 223 % 112 % 83 % 84 %
                     
Mexico 155 % 148 % 76 % 76 % 96 %
                     

Conference Call and Webcast

The Company will host a conference call and audio webcast on February 22nd, 2022, at 4:30 p.m. Eastern Time. The conference call may be accessed by dialing (877) 303-7209 / (970) 315-0420 (Conference ID – 2894134 –) 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, first-party sales, 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 the upcoming Form 10-K for the year ended December 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.
Consolidated Balance Sheets
(In thousands of U.S. dollars, except par value)

       
  December 31,
    2021       2020  
Assets      
Current assets:      
Cash and cash equivalents $ 2,584,586     $ 1,856,394  
Restricted cash and cash equivalents   1,063,377       651,830  
Short-term investments (602,193 and 636,949 held in guarantee)   809,522       1,241,306  
Accounts receivable, net   98,193       49,691  
Credit cards receivable and other means of payments, net   1,839,389       863,073  
Loans receivable, net   1,199,059       385,036  
Prepaid expenses   40,426       28,378  
Inventories   253,077       118,140  
Other assets   287,350       152,959  
Total current assets   8,174,979       5,346,807  
Non-current assets:      
Long-term investments   88,598       166,111  
Loans receivable, net   61,011       16,619  
Property and equipment, net   807,367       391,684  
Operating lease right-of-use assets   461,175       303,214  
Goodwill   148,243       85,211  
Intangible assets, net   44,974       14,155  
Deferred tax assets   181,266       134,916  
Other assets   133,545       67,615  
Total non-current assets   1,926,179       1,179,525  
Total assets $ 10,101,158     $ 6,526,332  
       
Liabilities      
Current liabilities:      
Accounts payable and accrued expenses $ 1,035,860     $ 767,336  
Funds payable to customers   2,393,179       1,695,424  
Amounts payable due to credit and debit card transactions   336,863       37,671  
Salaries and social security payable   313,192       207,358  
Taxes payable   291,456       215,918  
Loans payable and other financial liabilities   1,285,416       548,393  
Operating lease liabilities   92,343       55,246  
Other liabilities   88,393       108,534  
Total current liabilities   5,836,702       3,635,880  
Non-current liabilities:      
Amounts payable due to credit and debit card transactions   3,893        
Salaries and social security payable   20,215       49,852  
Loans payable and other financial liabilities   2,233,255       860,876  
Operating lease liabilities   371,614       243,601  
Deferred tax liabilities   62,496       64,354  
Other liabilities   41,292       20,191  
Total non-current liabilities   2,732,765       1,238,874  
Total liabilities $ 8,569,467     $ 4,874,754  
       
Commitments and contingencies      
Equity      
       
Common stock, $0.001 par value, 110,000,000 shares authorized,      
50,418,980 and 49,869,727 shares issued and outstanding at December 31,      
2021 and December 31, 2020 $ 50     $ 50  
Additional paid-in capital   2,439,345       1,860,502  
Treasury stock   (789,982 )     (54,805 )
Retained earnings   397,419       314,115  
Accumulated other comprehensive loss   (515,141 )     (468,284 )
Total Equity   1,531,691       1,651,578  
Total Liabilities and Equity $ 10,101,158     $ 6,526,332  

MercadoLibre, Inc.
Consolidated Statements of Income
For the twelve and three-month periods ended December 31, 2021 and 2020
(In thousands of U.S. dollars, except for share data)

               
  Year Ended December 31,   Three Months Ended December 31,
    2021       2020       2021       2020  
Net service revenues $ 6,149,270     $ 3,690,002     $ 1,782,732     $ 1,165,654  
Net product revenues   920,139       283,463       348,034       161,650  
Net revenues   7,069,409       3,973,465       2,130,766       1,327,304  
Cost of net revenues   (4,064,357 )     (2,264,255 )     (1,277,601 )     (838,270 )
Gross profit   3,005,052       1,709,210       853,165       489,034  
               
Operating expenses:              
Product and technology development   (590,328 )     (352,474 )     (179,637 )     (116,989 )
Sales and marketing   (1,509,493 )     (902,554 )     (502,704 )     (282,350 )
General and administrative   (464,528 )     (326,490 )     (147,508 )     (114,821 )
Total operating expenses   (2,564,349 )     (1,581,518 )     (829,849 )     (514,160 )
Income (loss) from operations   440,703       127,692       23,316       (25,126 )
               
Other income (expenses):              
Interest income and other financial gains   137,962       102,767       53,374       22,648  
Interest expense and other financial losses (*)   (228,704 )     (106,690 )     (53,678 )     (31,607 )
Foreign currency losses   (109,333 )     (42,454 )     (56,951 )     (9,930 )
Net income (loss) before income tax expense   240,628       81,315       (33,939 )     (44,015 )
               
Income tax expense   (148,802 )     (82,022 )     (3,643 )     (6,565 )
Equity in earnings of unconsolidated entity   (8,522 )           (8,522 )      
Net income (loss) $ 83,304     $ (707 )   $ (46,104 )   $ (50,580 )


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


               
  Year Ended December 31,   Three Months Ended December 31,
    2021     2020       2021       2020  
Basic EPS              
Basic net income (loss)              
Available to shareholders per common share $ 1.67   $ (0.08 )   $ (0.92 )   $ (1.02 )
Weighted average of outstanding common shares   49,802,993     49,740,407       49,926,533       49,820,185  
Diluted EPS              
Diluted net income (loss)              
Available to shareholders per common share $ 1.67   $ (0.08 )   $ (0.92 )   $ (1.02 )
Weighted average of outstanding common shares   49,802,993     49,740,407       49,926,533       49,820,185  
               

MercadoLibre, Inc.
Consolidated Statements of Cash Flows
For the twelve months ended December 31, 2021 and 2020

       
  Year Ended December 31,
    2021       2020  
Cash flows from operations:      
Net income (loss) $ 83,304     $ (707 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:      
Equity in earnings of unconsolidated entity   8,522        
Unrealized devaluation loss, net   90,629       89,329  
Impairment of digital assets   8,647        
Depreciation and amortization   203,942       104,992  
Accrued interest income   (35,880 )     (45,593 )
Non cash interest, convertible notes amortization of debt discount and amortization of debt issuance costs and other charges   86,038       15,033  
Bad debt charges   435,314       132,944  
Financial results on derivative instruments   429       (1,935 )
Settlement of the call option   (10,674 )      
Stock-based compensation expense - restricted shares   755       730  
Sale of fixed assets and intangible assets         3,814  
LTRP accrued compensation   88,698       129,575  
Deferred income taxes   (29,481 )     (70,315 )
Changes in assets and liabilities:      
Accounts receivable   (26,331 )     12,069  
Credit cards receivable and other means of payments   (1,062,794 )     (521,979 )
Prepaid expenses   (12,715 )     16,204  
Inventories   (142,382 )     (106,981 )
Other assets   (174,682 )     (113,819 )
Payables and accrued expenses   379,767       584,281  
Funds payable to customers   808,754       900,513  
Amounts payable due to credit and debit card transactions   309,078       37,126  
Other liabilities   (79,007 )     (34,586 )
Interest received from investments   35,112       51,857  
Net cash provided by operating activities   965,043       1,182,552  
Cash flows from investing activities:      
Purchase of investments   (7,370,742 )     (5,199,875 )
Proceeds from sale and maturity of investments   7,800,545       5,532,463  
Payment for acquired businesses, net of cash acquired   (50,615 )     (6,937 )
Capital contributions in joint ventures   (5,113 )      
Receipts from settlements of derivative instruments   6,345       17,779  
Payment from settlements of derivative instruments   (19,747 )     (4,136 )
Receipts from the sale of fixed assets and intangible assets         274  
Purchases of intangible assets   (36,567 )     (93 )
Changes in principal loans receivable, net   (1,347,710 )     (344,608 )
Purchases of property and equipment   (572,929 )     (247,048 )
Net cash used in investing activities   (1,596,533 )     (252,181 )
Cash flows from financing activities:      
Purchase of convertible note capped calls   (100,769 )     (306,789 )
Excercise of Convertible Notes   (3,137 )      
Payments on repurchase of the 2028 Notes   (1,865,076 )      
Unwind of convertible note capped calls   396,739        
Proceeds from loans payable and other financial liabilities   9,261,703       2,396,717  
Payments on loans payable and other financing liabilities   (6,781,612 )     (1,785,272 )
Payment of finance lease obligations   (16,524 )     (4,949 )
Common Stock repurchased   (485,886 )     (54,085 )
Dividends paid of preferred stock         (3,356 )
Proceeds from issuance of common stock, net   1,519,545        
Net cash provided by financing activities   1,924,983       242,266  
Effect of exchange rate changes on cash, cash equivalents, restricted cash and cash equivalents   (153,754 )     (115,837 )
Net increase in cash, cash equivalents, restricted cash and cash equivalents   1,139,739       1,056,800  
Cash, cash equivalents, restricted cash and cash equivalents, beginning of the year   2,508,224       1,451,424  
Cash, cash equivalents, restricted cash and cash equivalents, end of the year $ 3,647,963     $ 2,508,224  

Financial results of reporting segments

                   
                   
  Three Months Ended December 31, 2021
                   
  Brazil   Argentina   Mexico   Other Countries   Total
                   
Net revenues $ 1,127,152     $ 474,617     $ 392,289     $ 136,708     $ 2,130,766  
Direct costs   (1,063,045 )     (323,591 )     (371,770 )     (133,072 )     (1,891,478 )
Direct contribution   64,107       151,026       20,519       3,636       239,288  
                   
Operating expenses and indirect costs of net revenues                   (215,972 )
Income from operations                   23,316  
                   
Other income (expenses):                  
Interest income and other financial gains                   53,374  
Interest expense and other financial losses                   (53,678 )
Foreign currency losses                   (56,951 )
Net Loss before income tax expense                 $ (33,939 )
                   


                   
                   
  Three Months Ended December 31, 2020
                   
  Brazil   Argentina   Mexico   Other Countries   Total
                   
Net revenues $ 720,575     $ 323,451     $ 204,088     $ 79,190     $ 1,327,304  
Direct costs   (617,055 )     (242,855 )     (215,793 )     (70,676 )     (1,146,379 )
Direct contribution   103,520       80,596       (11,705 )     8,514       180,925  
                   
Operating expenses and indirect costs of net revenues                   (206,051 )
Loss from operations                   (25,126 )
                   
Other income (expenses):                  
Interest income and other financial gains                   22,648  
Interest expense and other financial losses                   (31,607 )
Foreign currency losses                   (9,930 )
Net loss before income tax expense                 $ (44,015 )
                   
                   

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 December 31, 2021:

                         
    Three-month Periods Ended
December 31, (*)
    As reported   FX Neutral Measures   As reported    
(In millions, except percentages)     2021       2020     Percentage
Change
    2021       2020     Percentage
Change
Net revenues   $ 2,130.8     $ 1,327.3     60.5 %   $ 2,308.8     $ 1,327.3     73.9 %
Cost of net revenues     (1,277.6 )     (838.3 )   52.4 %     (1,372.5 )     (838.3 )   63.7 %
Gross profit     853.2       489.0     74.5 %     936.3       489.0     91.5 %
                         
Operating expenses     (829.8 )     (514.2 )   61.4 %     (897.0 )     (514.2 )   74.5 %
Income (loss) from operations     23.3       (25.1 )   192.8 %     39.2       (25.1 )   256.2 %


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

CONTACT: MercadoLibre, Inc.

Investor Relations

investor@mercadolibre.com

http://investor.mercadolibre.com


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