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November 4, 2021

MercadoLibre, Inc. Reports Third Quarter 2021 Financial Results

Net Revenues of $1.9 billion, up 72.9% year-over-year on an FX neutral basis
$20.9 billion Total Payment Volume, up 59.0% year-over-year on an FX neutral basis
$7.3 billion Gross Merchandise Volume, up 29.7% year-over-year on an FX neutral basis

BUENOS AIRES, Argentina, Nov. 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 September 30, 2021.

Pedro Arnt, Chief Financial Officer of MercadoLibre, Inc., commented, “As a result of what we believe to be these lasting contributions to financial inclusion and the democratization of commerce through an improved experience for our users, our volume growth rates continue to demonstrate a solid trajectory over the long term. We have once again reached new records in gross merchandise volume, payment volumes and credit portfolio size; which demonstrates resilience and strength across all parts of our ecosystem. Moreover, we see our engagement and satisfaction improving sequentially for both commerce and fintech services, which is particularly encouraging given the user base expansion that we have driven over the last year.”

Third Quarter 2021 Business Highlights

  • Considering our entire ecosystem, Unique active users reached 78.7 million.
  • Gross merchandise volume (“GMV”) grew to $7.3 billion, representing an increase of 23.9% in USD and 29.7% on an FX neutral basis.
  • Successful items sold reached 259.8 million, increasing by 26.3% year-over-year.
  • Live listings offered on MercadoLibre’s marketplace reached 335.1 million.
  • Mobile gross merchandise volume reached 74.1% of GMV.
  • Mercado Envios shipped 247.8 million items during the quarter, representing a 32.1% year-over-year increase.
  • Total payment volume (“TPV”) through Mercado Pago almost topped $20.9 billion, a year-over-year increase of 43.9% in USD and 59.0% on an FX neutral basis. Total payment transactions increased 54.7% year-over-year, totaling 865.7 million transactions for the quarter.
  • Off-platform TPV grew 59.0% year-over-year in USD and 78.8% year-over-year on a FX neutral basis, reaching $13.4 billion, while payment transactions reached 697.4 million, a year-over-year increase of 67.3%.
  • We are offering a more robust breakdown of our total payments volume, including Acquiring TPV and Digital Account TPV.
  • Acquiring TPV, which includes On-Platform, Online Payments, MPoS and QR payments, was $15.4 billion, growing 45.5% 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 $5.5 billion, growing 101.1% on an FX neutral basis.
  • Our asset management product, Mercado Fondo, has now almost $919 million under management and approximately 20.7 million users across Latin America.
  • Mercado Credito’s portfolio is now over $ 1.1 billion, almost 4x its size compared to the third quarter of 2020

Third Quarter 2021 Financial Highlights

  • Net revenues for the third quarter were $1.9 billion, a year-over-year increase of 66.5% in USD and 72.9% on an FX neutral basis.
  • Commerce revenues increased 69.0% year-over-year in USD reaching $1,224.7 million, while Fintech revenues increased 61.7% year-over-year in USD reaching $632.8 million.
  • Gross profit was $806.6 million with a margin of 43.4%, compared to 43.0% in the third quarter of 2020.
  • Total operating expenses were $646.2 million, an increase of 62.7% year-over-year in USD. As a percentage of revenues, operating expenses were 34.8%, compared to 35.6% during the third quarter of 2020.
  • Income from operations was $160.4 million, compared to $83.1 million during the prior year. As a percentage of revenues, income from operations was 8.6%.
  • Interest income and other financial gains was $35.4 million, a 44.0% increase year-over-year. We incurred $44.4 million in interest expense and other financial losses this quarter, an 81.0% increase year-over-year.
  • We had foreign currency losses of $25.2 million, mainly attributable to a general deterioration in FX currencies of our 3 key geographies.
  • During the quarter, our Argentine subsidiary was approved as eligible under the knowledge-based economy promotional regime the tax benefits granted under the promotional regime are retroactive to January 2020 and will also apply to our future results. For more details, please see our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.
  • Net income before income tax expense was $126.1 million, a 139.5% increase from the $52.7 million during the third quarter of 2020.
  • Income tax expense was $30.9 million, mainly as a result of higher income tax expense in Brazil due to higher pre-tax gain in Brazil this quarter, partially offset by an income tax benefit in Argentina related to the approval of our Argentine subsidiary’s application for eligibility pursuant to the knowledge-based economy promotional regime.
  • Net income was $95.2 million, resulting in net income per share of $1.92

The following table summarizes certain key performance metrics for the nine and three-month periods ended September 30, 2021 and 2020.

                         
     Nine-month Periods Ended
September 30, (*)
     Three-month Periods Ended
September 30, (*)
(in millions)    2021   2020     2021 2020
                             
Unique active users      224.5      112.5      78.7      76.1
Gross merchandise volume    $ 20,394.2    $ 14,361.4    $ 7,314.4    $ 5,902.4
Number of successful items sold      726.5      489.9      259.8      205.7
Number of successful items shipped     686.4     435.2     247.8     187.6
Total payment volume    $ 53,126.9    $ 33,814.8    $ 20,879.8    $ 14,506.0
Total volume of payments on marketplace    $ 19,673.1    $ 13,615.4    $ 7,058.0    $ 5,648.9
Total payment transactions     2,225.6     1,255.2     865.7     559.7
Capital expenditures    $ 433.9    $ 166.8    $ 171.0    $ 65.0
Depreciation and amortization    $ 136.8    $ 72.4    $ 52.3    $ 28.2

(*) 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
  Q3’20   Q4’20   Q1’21   Q2’21   Q3’21  
                       
Brazil   57 % 68 % 93 % 104 % 74 %
                       
Argentina   145 % 144 % 124 % 53 % 38 %
                       
Mexico   111 % 141 % 143 % 105 % 94 %
                       

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

                       
                       
Consolidated
Net Revenues
  Q3’20   Q4’20   Q1’21   Q2’21   Q3’21  
                       
Brazil   112 % 120 % 139 % 101 % 69 %
                       
Argentina   260 % 229 % 223 % 112 % 83 %
                       
Mexico   140 % 155 % 148 % 76 % 76 %
                       

Conference Call and Webcast

The Company will host a conference call and audio webcast on November 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 – 7238308 –) 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)

       
  September 30,   December 31,
  2021   2020
Assets      
Current assets:      
Cash and cash equivalents $ 987,213     $ 1,856,394  
Restricted cash and cash equivalents   435,348       651,830  
Short-term investments (739,176 and 636,949 held in guarantee)   1,041,868       1,241,306  
Accounts receivable, net   70,542       49,691  
Credit cards receivable and other means of payments, net   1,428,454       863,073  
Loans receivable, net   772,753       385,036  
Prepaid expenses   52,337       28,378  
Inventory   226,694       118,140  
Other assets   267,912       152,959  
Total current assets   5,283,121       5,346,807  
Non-current assets:      
Long-term investments   38,027       166,111  
Loans receivable, net   31,184       16,619  
Property and equipment, net   702,528       391,684  
Operating lease right-of-use assets   389,806       303,214  
Goodwill   80,949       85,211  
Intangible assets, net   30,709       14,155  
Deferred tax assets   127,508       134,916  
Other assets   116,185       67,615  
Total non-current assets   1,516,896       1,179,525  
Total assets $ 6,800,017     $ 6,526,332  
Liabilities      
Current liabilities:      
Accounts payable and accrued expenses $ 906,393     $ 767,336  
Funds payable to customers and amounts due to merchants   1,987,083       1,733,095  
Salaries and social security payable   277,489       207,358  
Taxes payable   196,561       215,918  
Loans payable and other financial liabilities   765,135       548,393  
Operating lease liabilities   83,677       55,246  
Other liabilities   70,193       108,534  
Total current liabilities   4,286,531       3,635,880  
Non-current liabilities:      
Salaries and social security payable   22,691       49,852  
Loans payable and other financial liabilities   1,970,393       860,876  
Operating lease liabilities   307,333       243,601  
Deferred tax liabilities   54,951       64,354  
Other liabilities   35,142       20,191  
Total non-current liabilities   2,390,510       1,238,874  
Total liabilities $ 6,677,041     $ 4,874,754  
       
Commitments and Contingencies      
       
Equity      
       
Common stock, $0.001 par value, 110,000,000 shares authorized,      
49,458,958 and 49,869,727 shares issued and outstanding at September 30,      
2021 and December 31, 2020 $ 49     $ 50  
Additional paid-in capital   919,584       1,860,502  
Treasury stock   (744,102 )     (54,805 )
Retained earnings   443,523       314,115  
Accumulated other comprehensive loss   (496,078 )     (468,284 )
Total Equity   122,976       1,651,578  
Total Liabilities and Equity $ 6,800,017     $ 6,526,332  


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

                 
    Nine Months Ended September 30,   Three Months Ended September 30,
      2021       2020       2021       2020  
Net service revenues   $               4,366,538     $               2,524,348     $               1,630,914     $               1,038,574  
Net product revenues     572,105       121,813       226,538       77,127  
Net revenues     4,938,643       2,646,161       1,857,452       1,115,701  
Cost of net revenues     (2,786,756 )     (1,425,985 )     (1,050,862 )     (635,511 )
Gross profit     2,151,887       1,220,176       806,590       480,190  
Operating expenses:                
Product and technology development     (410,691 )     (235,485 )     (137,671 )     (88,796 )
Sales and marketing     (1,006,789 )     (620,204 )     (385,523 )     (229,621 )
General and administrative     (317,020 )     (211,669 )     (123,018 )     (78,699 )
Total operating expenses     (1,734,500 )     (1,067,358 )     (646,212 )     (397,116 )
Income from operations     417,387       152,818       160,378       83,074  
                 
Other income (expenses):                
Interest income and other financial gains     84,588       80,119       35,352       24,553  
Interest expense and other financial losses (*)     (175,026 )     (75,083 )     (44,395 )     (24,522 )
Foreign currency losses     (52,382 )     (32,524 )     (25,202 )     (30,435 )
Net income before income tax expense     274,567       125,330       126,133       52,670  
                 
Income tax expense     (145,159 )     (75,457 )     (30,908 )     (37,635 )
Net income   $                  129,408     $                    49,873     $                    95,225     $                    15,035  


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


                 
    Nine Months Ended September 30,   Three Months Ended September 30,
      2021     2020     2021     2020
Basic EPS                
Basic net income                
Available to shareholders per common share   $                       2.60   $                       0.94   $                       1.92   $                       0.28
Weighted average of outstanding common shares     49,761,360     49,713,621     49,597,157     49,720,854
Diluted EPS                
Diluted net income                
Available to shareholders per common share   $                       2.60   $                       0.94   $                       1.92   $                       0.28
Weighted average of outstanding common shares     49,761,360     49,713,621     49,597,157     49,720,854
                 


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

         
    Nine Months Ended September 30,
      2021       2020  
     
Cash flows from operations:        
Net income   $                  129,408     $                    49,873  
Adjustments to reconcile net income to net cash provided by operating activities:        
Unrealized devaluation loss, net     67,119       59,471  
Impairment of digital assets     7,741        
Depreciation and amortization     136,761       72,436  
Accrued interest     (20,714 )     (37,550 )
Non cash interest, convertible notes amortization of debt discount and amortization of debt issuance costs and other charges     60,550       15,001  
Bad debt charges     271,332       79,491  
Financial results on derivative instruments     872       (26,535 )
Stock-based compensation expense — restricted shares     538       548  
LTRP accrued compensation     83,972       75,142  
Sale of fixed assets and intangible assets           3,814  
Deferred income taxes     18,383       (58,485 )
Changes in assets and liabilities:        
Accounts receivable     (7,206 )     51,250  
Credit cards receivables and other means of payments     (616,595 )     (351,397 )
Prepaid expenses     (24,312 )     15,627  
Inventory     (113,692 )     (40,322 )
Other assets     (147,897 )     (18,240 )
Payables and accrued expenses     127,044       357,804  
Funds payable to customers and amounts due to merchants     331,873       711,987  
Other liabilities     (63,373 )     (69,829 )
Interest received from investments     22,543       35,909  
Net cash provided by operating activities     264,347       925,995  
Cash flows from investing activities:        
Purchase of investments     (6,499,127 )     (3,600,715 )
Proceeds from sale and maturity of investments     6,798,408       3,081,643  
Receipts from settlements of derivative instruments     3,598       17,779  
Capital contributions in joint ventures     (5,113 )      
Payment for acquired businesses, net of cash acquired           (6,937 )
Receipts from the sale of fixed assets and intangible assets           274  
Payment for settlements of derivative instruments     (19,620 )      
Purchases of intangible assets     (29,211 )     (93 )
Changes in principal of loans receivable, net     (711,699 )     (170,284 )
Purchases of property and equipment     (424,646 )     (159,797 )
Net cash used in investing activities     (887,410 )     (838,130 )
Cash flows from financing activities:        
Proceeds from loans payable and other financial liabilities     6,056,090       1,890,156  
Payments on loans payable and other financial liabilities     (4,365,252 )     (1,415,845 )
Payments on repurchase of the 2028 Notes     (1,865,076 )      
Payment of finance lease obligations     (12,612 )     (2,499 )
Purchase of convertible note capped call     (100,769 )     (186,777 )
Unwind of convertible note capped call     396,739        
Common Stock repurchased     (440,005 )     (39,671 )
Exercise of Convertible Notes     (3,137 )      
Dividends paid of preferred stock           (3,000 )
Net cash (used in) provided by financing activities     (334,022 )     242,364  
Effect of exchange rate changes on cash, cash equivalents, restricted cash and cash equivalents     (128,578 )     (157,524 )
Net (decrease) increase in cash, cash equivalents, restricted cash and cash equivalents     (1,085,663 )     172,705  
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   $               1,422,561     $               1,624,129  


Financial results of reporting segments

                         
      Three Months Ended September 30, 2021
      Brazil   Argentina   Mexico     Other Countries   Total
      (In thousands)
Net revenues   $ 1,062,620     $ 393,109     $ 291,496       $ 110,227     $ 1,857,452  
Direct costs     (831,656 )     (253,069 )     (284,751 )       (91,886 )     (1,461,362 )
Direct contribution     230,964       140,040       6,745         18,341       396,090  
                         
Operating expenses and indirect costs of net revenues                       (235,712 )
Income from operations                       160,378  
                         
Other income (expenses):                      
  Interest income and other financial gains                       35,352  
  Interest expense and other financial losses                       (44,395 )
  Foreign currency losses                       (25,202 )
Net income before income tax expense                     $ 126,133  
                         


                         
      Three Months Ended September 30, 2020
      Brazil   Argentina   Mexico     Other Countries   Total
      (In thousands)
Net revenues   $ 610,721     $ 284,746     $ 150,382       $ 69,852     $ 1,115,701  
Direct costs     (501,544 )     (193,373 )     (144,914 )       (53,212 )     (893,043 )
Direct contribution     109,177       91,373       5,468         16,640       222,658  
                         
Operating expenses and indirect costs of net revenues                       (139,584 )
Income from operations                       83,074  
                         
Other income (expenses):                      
  Interest income and other financial gains                       24,553  
  Interest expense and other financial losses                       (24,522 )
  Foreign currency losses                       (30,435 )
Net income before income tax expense                     $ 52,670  


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 September 30, 2021:

                         
    Three-month Periods Ended
September 30, (*)
    As reported   FX Neutral Measures   As reported    
(In millions, except percentages)     2021       2020     Percentage Change     2021       2020     Percentage Change
    (Unaudited)       (Unaudited)    
Net revenues   $                                1,857.5     $                      1,115.7     66.5 %   $                         1,929.1     $                      1,115.7     72.9 %
Cost of net revenues     (1,050.9 )     (635.5 )   65.4 %     (1,076.3 )     (635.5 )   69.4 %
Gross profit     806.6       480.2     68.0 %     852.8       480.2     77.6 %
                         
Operating expenses     (646.2 )     (397.1 )   62.7 %     (664.9 )     (397.1 )   67.4 %
Income from operations     160.4       83.1     93.1 %     187.9       83.1     126.2 %

(*) 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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