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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 September 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)

WTC Free Zone

Dr. Luis Bonavita 1294, Of. 1733, Tower II

Montevideo, Uruguay, 11300

(Address of registrant’s principal executive offices) (Zip Code)

Pasaje Posta 4789, 6th Floor

Buenos Aires, Argentina, C1430EKG

(Former Address) (Zip Code)

(+598) 2927-2770

(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.

49,458,958 shares of the issuer’s common stock, $0.001 par value, outstanding as of November 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 September 30, 2021 and December 31, 2020

1

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

2

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

3

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

4

Interim Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 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

37

Item 3 — Qualitative and Quantitative Disclosures About Market Risk

61

Item 4 — Controls and Procedures

65

PART II. OTHER INFORMATION

66

Item 1 — Legal Proceedings

66

Item 1A — Risk Factors

66

Item 2 — Issuer Purchases of Equity Securities

66

Item 5 — Other information

67

Item 6 — Exhibits

68

INDEX TO EXHIBITS

68

 

 


MercadoLibre, Inc.

Interim Condensed Consolidated Balance Sheets

As of September 30, 2021 and December 31, 2020

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

(Unaudited)

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 - see Note 4)

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 (Note 9)

 

 

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

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 nine and three-month periods ended September 30, 2021 and 2020

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

(Unaudited)

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. See Note 11 to these unaudited interim condensed consolidated financial statements for further detail on 2028 Notes repurchase.

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

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 nine and three-month periods ended September 30, 2021 and 2020

(In thousands of U.S. dollars)

(Unaudited)

Nine Months Ended September 30,

Three Months Ended September 30,

2021

2020

2021

2020

Net income

$                 129,408

$                   49,873

$                   95,225

$                      15,035

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

Currency translation adjustment

(35,483)

(102,763)

(59,630)

(2,113)

Unrealized gains on hedging activities

5,839

5,550

6,210

572

Unrealized net losses on available for sale investments

(1,061)

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

(1,850)

5,627

(3,646)

1,548

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

(27,794)

(102,840)

(49,774)

(4,150)

Total Comprehensive income (loss)

$                 101,614

$                  (52,967)

$                   45,451

$                      10,885

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 nine and three-month periods ended September 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)