SEC Filing | MercadoLibre, Inc.

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meli-20210331x10q

Table of Contents

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.

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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

Table of Contents

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.

Table of Contents

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.

Table of Contents

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.

‎

Table of Contents

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	—		—