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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 June 30, 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.

49,711,650 shares of the issuer’s common stock, $0.001 par value, outstanding as of August 3, 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 June 30, 2021 and December 31, 2020

1

Interim Condensed Consolidated Statements of Income for the six and three-month periods ended June 30, 2021 and 2020

2

Interim Condensed Consolidated Statements of Comprehensive Income for the six and three-month periods ended June 30, 2021 and 2020

3

Interim Condensed Consolidated Statements of Equity for the six and three-month periods ended June 30, 2021 and 2020

4

Interim Condensed Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2021 and 2020

6

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

7

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

36

Item 3 — Qualitative and Quantitative Disclosures About Market Risk

59

Item 4 — Controls and Procedures

62

PART II. OTHER INFORMATION

63

Item 1 — Legal Proceedings

63

Item 1A — Risk Factors

63

Item 2 — Issuer Purchases of Equity Securities

64

Item 6 — Exhibits

65

INDEX TO EXHIBITS

65

 

 


MercadoLibre, Inc.

Interim Condensed Consolidated Balance Sheets

As of June 30, 2021 and December 31, 2020

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

(Unaudited)

June 30,

December 31,

2021

2020

Assets

Current assets:

Cash and cash equivalents

$                       1,069,909

$                    1,856,394

Restricted cash and cash equivalents

361,180

651,830

Short-term investments (707,885 and 636,949 held in guarantee - see Note 4)

898,367

1,241,306

Accounts receivable, net

69,844

49,691

Credit cards receivable and other means of payments, net

1,189,802

863,073

Loans receivable, net

547,183

385,036

Prepaid expenses

58,143

28,378

Inventory

169,449

118,140

Other assets

203,774

152,959

Total current assets

4,567,651

5,346,807

Non-current assets:

Long-term investments

181,411

166,111

Loans receivable, net

23,269

16,619

Property and equipment, net

618,997

391,684

Operating lease right-of-use assets

396,253

303,214

Goodwill

85,165

85,211

Intangible assets, net

23,894

14,155

Deferred tax assets

132,618

134,916

Other assets

113,436

67,615

Total non-current assets

1,575,043

1,179,525

Total assets

$                       6,142,694

$                    6,526,332

Liabilities

Current liabilities:

Accounts payable and accrued expenses

$                          857,622

$                       767,336

Funds payable to customers and amounts due to merchants

1,839,209

1,733,095

Salaries and social security payable

204,174

207,358

Taxes payable

232,090

215,918

Loans payable and other financial liabilities

579,786

548,393

Operating lease liabilities

80,597

55,246

Other liabilities

75,812

108,534

Total current liabilities

3,869,290

3,635,880

Non-current liabilities:

Salaries and social security payable

18,929

49,852

Loans payable and other financial liabilities

1,788,481

860,876

Operating lease liabilities

313,479

243,601

Deferred tax liabilities

48,529

64,354

Other liabilities

22,956

20,191

Total non-current liabilities

2,192,374

1,238,874

Total liabilities

$                       6,061,664

$                    4,874,754

Commitments and Contingencies (Note 9)

 

 

Equity

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

49,711,650 and 49,869,727 shares issued and outstanding at June 30,

2021 and December 31, 2020

$                                   50

$                                50

Additional paid-in capital

455,206

1,860,502

Treasury stock

(276,220)

(54,805)

Retained earnings

348,298

314,115

Accumulated other comprehensive loss

(446,304)

(468,284)

Total Equity

81,030

1,651,578

Total Liabilities and Equity

$                       6,142,694

$                    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 six and three-month periods ended June 30, 2021 and 2020

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

(Unaudited)

Six Months Ended June 30,

Three Months Ended June 30,

2021

2020

2021

2020

Net service revenues

$              2,735,624

$              1,485,774

$              1,504,720

$                 845,882

Net product revenues

345,567

44,686

198,030

32,487

Net revenues

3,081,191

1,530,460

1,702,750

878,369

Cost of net revenues

(1,735,894)

(790,474)

(948,830)

(451,197)

Gross profit

1,345,297

739,986

753,920

427,172

Operating expenses:

Product and technology development

(273,020)

(146,689)

(146,985)

(73,254)

Sales and marketing

(621,266)

(390,583)

(333,107)

(184,076)

General and administrative

(194,002)

(132,970)

(107,663)

(70,404)

Total operating expenses

(1,088,288)

(670,242)

(587,755)

(327,734)

Income from operations

257,009

69,744

166,165

99,438

Other income (expenses):

Interest income and other financial gains

49,236

55,566

24,165

18,782

Interest expense and other financial losses (*)

(130,631)

(50,561)

(39,342)

(26,977)

Foreign currency losses

(27,180)

(2,089)

(12,091)

(1,903)

Net income before income tax expense

148,434

72,660

138,897

89,340

Income tax expense

(114,251)

(37,822)

(70,702)

(33,393)

Net income

$                   34,183

$                   34,838

$                   68,195

$                   55,947

(*)

Includes $49,247 thousands of loss on debt extinguishment and premium related to the 2028 Notes repurchase recognized in January 2021. See Note 11 to these unaudited interim condensed consolidated financial statements for further detail on 2028 Notes repurchase.

Six Months Ended June 30,

Three Months Ended June 30,

2021

2020

2021

2020

Basic EPS

Basic net income

Available to shareholders per common share

$                      0.69

$                      0.66

$                      1.37

$                      1.11

Weighted average of outstanding common shares

49,844,823

49,709,964

49,822,272

49,709,973

Diluted EPS

Diluted net income

Available to shareholders per common share

$                      0.69

$                      0.66

$                      1.37

$                      1.11

Weighted average of outstanding common shares

49,844,823

49,709,964

49,822,272

49,709,973

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 six and three-month periods ended June 30, 2021 and 2020

(In thousands of U.S. dollars)

(Unaudited)

Six Months Ended June 30,

Three Months Ended June 30,

2021

2020

2021

2020

Net income

$                   34,183

$                   34,838

$                   68,195

$                      55,947

Other comprehensive income (loss), net of income tax:

Currency translation adjustment

24,147

(100,650)

66,016

(6,052)

Unrealized (losses) gains on hedging activities

(371)

4,978

(4,041)

997

Unrealized net gains (losses) on available for sale investments

1,061

(1,207)

Less: Reclassification adjustment for gains from accumulated other comprehensive income (loss)

1,796

4,079

2,216

2,375

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

21,980

(98,690)

59,759

(8,637)

Total Comprehensive income (loss)

$                   56,163

$                  (63,852)

$                 127,954

$                      47,310

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 six and three-month periods ended June 30, 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

$