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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

-OR-

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission file number 001-33647

MercadoLibre, Inc.

(Exact name of Registrant as specified in its Charter)

Delaware

 

98-0212790

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification Number)

Pasaje Posta 4789, 6th Floor

Buenos Aires, Argentina, C1430EKG

(Address of registrant’s principal executive offices)

(+5411) 4640-8000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

MELI

  Nasdaq Global Select Market  

2.375% Sustainability Notes due 2026

MELI26

The Nasdaq Stock Market LLC

3.125% Notes due 2031

MELI31

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes   x     No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

x

Accelerated filer

¨

Non-accelerated filer

¨  

Smaller reporting company

¨

Emerging growth company

¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

49,852,319 shares of the issuer’s common stock, $0.001 par value, outstanding as of May 4, 2021.

 


MERCADOLIBRE, INC.

INDEX TO FORM 10-Q

 

PART I. FINANCIAL INFORMATION

Item 1 — Unaudited Interim Condensed Consolidated Financial Statements

Interim Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020

1

Interim Condensed Consolidated Statements of Income for the three-month periods ended March 31, 2021 and 2020

2

Interim Condensed Consolidated Statements of Comprehensive Income for the three-month periods ended March 31, 2021 and 2020

3

Interim Condensed Consolidated Statements of Equity for the three-month periods ended March 31, 2021 and 2020

4

Interim Condensed Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2021 and 2020

5

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

6

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

31

Item 3 — Qualitative and Quantitative Disclosures About Market Risk

52

Item 4 — Controls and Procedures

55

PART II. OTHER INFORMATION

56

Item 1 — Legal Proceedings

56

Item 1A — Risk Factors

56

Item 2 — Issuer Purchases of Equity Securities

57

Item 6 — Exhibits

58

INDEX TO EXHIBITS

58

 

 


MercadoLibre, Inc.

Interim Condensed Consolidated Balance Sheets

As of March 31, 2021 and December 31, 2020

(In thousands of U.S. dollars, except par value)

(Unaudited)

March 31,

December 31,

2021

2020

Assets

Current assets:

Cash and cash equivalents

$                          862,720

$                    1,856,394

Restricted cash and cash equivalents

325,636

651,830

Short-term investments (634,067 and 636,949 held in guarantee - see Note 4)

980,076

1,241,306

Accounts receivable, net

64,815

49,691

Credit cards receivable and other means of payments, net

883,670

863,073

Loans receivable, net

416,600

385,036

Prepaid expenses

43,291

28,378

Inventory

131,460

118,140

Other assets

191,923

152,959

Total current assets

3,900,191

5,346,807

Non-current assets:

Long-term investments

175,601

166,111

Loans receivable, net

18,849

16,619

Property and equipment, net

458,640

391,684

Operating lease right-of-use assets

345,313

303,214

Goodwill

82,830

85,211

Intangible assets, net

20,271

14,155

Deferred tax assets

124,272

134,916

Other assets

71,888

67,615

Total non-current assets

1,297,664

1,179,525

Total assets

$                       5,197,855

$                    6,526,332

Liabilities

Current liabilities:

Accounts payable and accrued expenses

$                          612,206

$                       767,336

Funds payable to customers and amounts due to merchants

1,527,971

1,733,095

Salaries and social security payable

193,166

207,358

Taxes payable

240,167

215,918

Loans payable and other financial liabilities

514,540

548,393

Operating lease liabilities

67,264

55,246

Other liabilities

49,635

108,534

Total current liabilities

3,204,949

3,635,880

Non-current liabilities:

Salaries and social security payable

20,695

49,852

Loans payable and other financial liabilities

1,659,898

860,876

Operating lease liabilities

277,264

243,601

Deferred tax liabilities

41,233

64,354

Other liabilities

24,220

20,191

Total non-current liabilities

2,023,310

1,238,874

Total liabilities

$                       5,228,259

$                    4,874,754

Commitments and Contingencies (Note 9)

 

 

Equity

Common stock, $0.001 par value, 110,000,000 shares authorized,

49,852,319 and 49,869,727 shares issued and outstanding at March 31,

2021 and December 31, 2020

$                                   50

$                                50

Additional paid-in capital

275,632

1,860,502

Treasury stock

(80,126)

(54,805)

Retained earnings

280,103

314,115

Accumulated other comprehensive loss

(506,063)

(468,284)

Total Equity

(30,404)

1,651,578

Total Liabilities and Equity

$                       5,197,855

$                    6,526,332

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

1


MercadoLibre, Inc.

Interim Condensed Consolidated Statements of Income

For the three-month periods ended March 31, 2021 and 2020

(In thousands of U.S. dollars, except for share data)

(Unaudited)

Three Months Ended March 31,

2021

2020

Net service revenues

$              1,230,904

$                 639,892

Net product revenues

147,537

12,199

Net revenues

1,378,441

652,091

Cost of net revenues

(787,064)

(339,277)

Gross profit

591,377

312,814

Operating expenses:

Product and technology development

(126,035)

(73,435)

Sales and marketing

(288,159)

(206,507)

General and administrative

(86,339)

(62,566)

Total operating expenses

(500,533)

(342,508)

Income (loss) from operations

90,844

(29,694)

Other income (expenses):

Interest income and other financial gains

25,071

36,784

Interest expense and other financial losses (*)

(91,289)

(23,584)

Foreign currency losses

(15,089)

(186)

Net income (loss) before income tax expense

9,537

(16,680)

Income tax expense

(43,549)

(4,429)

Net loss

$                  (34,012)

$                  (21,109)

(*)

Includes $49,247 thousands of loss on debt extinguishment and premium related to the 2028 Notes repurchase. See Note 11 to these unaudited interim condensed consolidated financial statements for further detail on 2028 Notes repurchase.   

Three Months Ended March 31,

2021

2020

Basic EPS

Basic net loss

Available to shareholders per common share

$                     (0.68)

$                     (0.44)

Weighted average of outstanding common shares

49,867,625

49,709,955

Diluted EPS

Diluted net loss

Available to shareholders per common share

$                     (0.68)

$                     (0.44)

Weighted average of outstanding common shares

49,867,625

49,709,955

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 

2


MercadoLibre, Inc.

Interim Condensed Consolidated Statements of Comprehensive Income

For the three-month periods ended March 31, 2021 and 2020

(In thousands of U.S. dollars)

(Unaudited)

Three Months Ended March 31,

2021

2020

Net loss

$                 (34,012)

$                 (21,109)

Other comprehensive loss, net of income tax:

Currency translation adjustment

(41,869)

(94,597)

Unrealized gains on hedging activities

3,670

3,981

Unrealized net gains on available for sale investments

2,268

Less: Reclassification adjustment for gains from accumulated other comprehensive loss

(420)

1,705

Net change in accumulated other comprehensive loss, net of income tax

(37,779)

(90,053)

Total Comprehensive loss

$                 (71,791)

$               (111,162)

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 


3


MercadoLibre, Inc.

Interim Condensed Consolidated Statements of Equity

For the three-month periods ended March 31, 2021 and 2020

(In thousands of U.S. dollars)

(Unaudited)

Accumulated

Additional

other

Common stock

paid-in

Treasury

Retained

comprehensive

Total

Shares

Amount

capital

Stock

Earnings

loss

Equity(*)

Balance as of December 31, 2020

49,870

$

50

$

1,860,502

$

(54,805)

$

314,115

$

(468,284)

$

1,651,578

Stock-based compensation — restricted shares issued

178

178

Capped Call

(100,769)

(100,769)

Repurchase of 2028 Notes Conversion Option

(1,484,279)

(1,484,279)

Common Stock repurchased

(18)

(25,321)

(25,321)

Net loss

(34,012)

(34,012)

Other comprehensive loss

(37,779)

(37,779)

Balance as of March 31, 2021

49,852

$

50

$

275,632

$

(80,126)

$

280,103

$

(506,063)

$

(30,404)

(*) The Total Equity of the Company as of March 31, 2021 decreased from $1,651,578 thousands to $(30,404) thousands, mainly, due to the impact of 2028 Notes repurchased. See Note 11 to these unaudited interim condensed consolidated financial statements for further detail on 2028 Notes repurchase transaction.

Accumulated

Additional

other

Common stock

paid-in

Treasury

Retained

comprehensive

Total

Shares

Amount

capital

Stock

Earnings

loss

Equity

Balance as of December 31, 2019

49,710

$

50

$

2,067,869

$

(720)

$

322,592

$

(406,671)

$

1,983,120

Changes in accounting standards

(4,570)

(4,570)

Balance as of December 31, 2019 Restated

49,710

$

50

$

2,067,869

$

(720)

$

318,022

$

(406,671)

$

1,978,550

Stock-based compensation — restricted shares issued

179

179

Net loss

(21,109)

(21,109)

Redeemable convertible preferred stock dividend distribution ($9.99 per share)