MercadoLibre, Inc. Reports First Quarter 2021 Financial Results

Wednesday, 05. May 2021 23:30

Net Revenues of $1.4 billion, up 158.4% year-over-year on an FX neutral basis
$14.7 billion Total Payment Volume, up 129.2% year-over-year on an FX neutral basis
$6.1 billion Gross Merchandise Volume, up 114.3% year-over-year on an FX neutral basis

BUENOS AIRES, Argentina, May 05, 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 March 31, 2021.

Pedro Arnt, Chief Financial Officer of MercadoLibre, Inc., commented, Our financial results were once again marked by accelerated growth due to strong demand for e-commerce and FinTech services within an improving but still challenging environment. Online consumption remained strong and we experienced favorable consumer trends. Online consumption throughout remained strong and we experienced favorable consumer trends as digital services share of wallet continue to grow. Our solid quarterly performance illustrates our commitment to executing our long-term strategic priorities as we remain focused on our purpose of democratizing access to commerce and money in Latin America, recognizing the important economic role we play in the countries where we operate.

First Quarter 2021 Business Highlights

  • Unique active users grew by 61.6% year-over-year, reaching 69.8 million.
  • Gross merchandise volume (“GMV”) grew to $6.1 billion, representing an increase of 77.4% in USD and 114.3% on an FX neutral basis.
  • Successful items sold reached 222.0 million, increasing by 110.2% year-over-year.
  • Live listings offered on MercadoLibre’s marketplace reached 299.5 million.
  • Mobile gross merchandise volume grew by 215.7% year-over-year on an FX neutral basis, reaching 72.9% of GMV.
  • Mercado Envios shipped 208.1 million items during the quarter, representing a 130.7% year-over-year increase.
  • Total payment volume (“TPV”) through Mercado Pago reached $14.7 billion, a year-over-year increase of 81.8% in USD and 129.2% on an FX neutral basis. Total payment transactions increased 116.7% year-over-year, totaling 630.1 million transactions for the quarter.
  • Off-platform TPV grew 82.5% year-over-year in USD and 136.4% year-over-year on a FX neutral basis, reaching $8.5 billion, while payment transactions reached 478.9 million, a year-over-year increase of 120.4%.
  • Online Payments TPV grew 138.8% year-over-year on an FX neutral basis.
  • MPOS continued its recovery towards pre-COVID levels, reaching 90.2% year-over-year growth on an FX neutral basis.
  • Mobile Wallet delivered $2.9 billion in Total Payment Volume on a consolidated basis, leading to a 192.0% year-over-year growth on an FX neutral basis.
  • Our asset management product, Mercado Fondo, has over $650 million under management and almost 16.0 million users across Latin America.
  • Mercado Credito’s portfolio grew to $576 million, more than doubling its size compared to the first quarter of 2020.

First Quarter 2021 Financial Highlights

  • Net revenues for the first quarter were $1.4 billion, a year-over-year increase of 111.4% in USD and 158.4% on an FX neutral basis.
  • Commerce revenues increased 139.2% year-over-year in USD reaching $910.6 million, while Fintech revenues increased 72.4% year-over-year in USD reaching $467.8 million.
  • Gross profit was $591.4 million with a margin of 42.9%, compared to 48.0% in the first quarter of 2020.
  • Total operating expenses were $500.5 million, an increase of 46% year-over-year in USD. As a percentage of revenues, operating expenses were 36.3%, compared to 52.5% during the first quarter of 2020.
  • Income from operations was $90.8 million, compared to a loss of $29.7 million during the prior year. As a percentage of revenues, income from operations was 6.6%.
  • Interest income was $25.1 million, a 31.8% decrease year-over-year, as a result of lower interest rates as a consequence of the pandemic and lower float in our U.S. investments, mainly offset by higher interest income in Argentina due to higher float.
  • We incurred $91.3 million in interest and financial expenses this quarter, mostly attributable to the convertible debt repurchase transaction.
  • We had foreign currency losses of $15.1 million, mainly attributable to the additional cost of accessing US dollars through an indirect mechanism in Argentina due to restrictions imposed by Argentine government for buying US dollars at the official exchange rate.
  • Net income before taxes was $9.5 million, up from a loss of $16.7 million during the first quarter of 2020.
  • Income tax expense was $43.5 million, driven by higher income tax expense in Argentina and Brazil as a consequence of higher pre-tax gain in our Argentine and Brazilian segment in 2021 and an increase in our withholding tax on dividends.
  • Net loss was $34.0 million, resulting in net loss per share of $0.68.
  • As part of our treasury strategy this quarter we purchased $7.8 million in bitcoin, a digital asset that we are disclosing within our indefinite-lived intangible assets.

The following table summarizes certain key performance metrics for the three months periods ended March 31, 2021 and 2020.

       
    Three-month Periods Ended
March 31, (*)
(in millions)   20212020
         
Unique active users   69.8    43.2 
Gross merchandise volume  $6,057.2   $3,414.1 
Number of successful items sold   222.0    105.7 
Number of successful items shipped  208.1   90.2 
Total payment volume  $14,717.7   $8,094.5 
Total volume of payments on marketplace  $5,840.0   $3,203.3 
Total payment transactions  630.1   290.7 
Capital expenditures  $112.7   $53.5 
Depreciation and amortization  $38.4   $21.6 

(*) 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  Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 
             
Brazil  31%37%57%68%93%
             
Argentina  42%110%145%144%124%
             
Mexico  74%96%111%141%143%
             

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

             
             
Consolidated Net Revenues  Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 
             
Brazil  55%87%112%120%139%
             
Argentina  123%224%260%229%223%
             
Mexico  81%138%140%155%148%
             

Conference Call and Webcast

The Company will host a conference call and audio webcast on May 5th, 2021 at 5:30 p.m. Eastern Time. The conference call may be accessed by dialing (877) 303-7209 / (970) 315-0420 (Conference ID – 3258507 –) 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 2019 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.

New confirmed registered users – Measure of the number of new users who have registered on the Mercado Libre Marketplace and confirmed their registration, excluding Classifieds users.

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

    
 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) 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   
    
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 

MercadoLibre, Inc.
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)

    
 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.


    
 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 
    

MercadoLibre, Inc.
Consolidated Statements of Cash Flows
For the three months ended March 31, 2021 and 2020

    
 Three Months Ended March 31,
 2021 2020
Cash flows from operations:   
Net loss$                 (34,012) $                 (21,109)
Adjustments to reconcile net loss to net cash used in operating activities:   
Unrealized devaluation loss, net 24,772   18,505 
Depreciation and amortization 38,416   21,550 
Accrued interest (4,045)  (22,352)
Non cash interest, convertible notes amortization of debt discount and amortization of debt issuance costs and other charges 34,137   (3,632)
Bad debt charges 83,829   24,419 
Financial results on derivative instruments (18,989)  (16,767)
Stock-based compensation expense — restricted shares 178   179 
LTRP accrued compensation 22,916   15,664 
Deferred income taxes 3,988   (4,199)
Changes in assets and liabilities:   
Accounts receivable 21,064   19,748 
Credit cards receivables and other means of payments (62,274)  (33,303)
Prepaid expenses (15,218)  8,560 
Inventory (18,958)  (5,272)
Other assets (34,882)  (5,796)
Payables and accrued expenses (143,763)  (43,101)
Funds payable to customers and amounts due to merchants (106,866)  (21,344)
Other liabilities (62,768)  (32,206)
Interest received from investments 9,478   14,805 
Net cash used in operating activities (262,997)  (85,651)
Cash flows from investing activities:   
Purchase of investments (2,415,091)  (1,323,631)
Proceeds from sale and maturity of investments 2,588,681   1,249,960 
Receipts from settlements of derivative instruments 1,585   3,668 
Payment for acquired businesses, net of cash acquired    (7,561)
Payment from settlements of derivative instruments (3,897)   
Purchases of intangible assets (7,805)  (93)
Changes in principal of loans receivable, net (148,734)  (27,250)
Purchases of property and equipment (112,672)  (45,175)
Net cash used in investing activities (97,933)  (150,082)
Cash flows from financing activities:   
Proceeds from loans payable and other financial liabilities 1,839,617   749,617 
Payments on loans payable and other financial liabilities (704,307)  (593,497)
Payments on repurchase of the 2028 Notes (1,865,076)   
Payment of finance lease obligations (3,863)  (564)
Purchase of convertible note capped call (100,769)   
Dividends paid of preferred stock    (1,000)
Common Stock repurchased (25,321)   
Net cash (used in) provided by financing activities (859,719)  154,556 
Effect of exchange rate changes on cash, cash equivalents, restricted cash and cash equivalents (99,219)  (104,864)
Net decrease in cash, cash equivalents, restricted cash and cash equivalents (1,319,868)  (186,041)
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$             1,188,356  $             1,265,383 

Financial results of reporting segments

           
  Three Months Ended March 31, 2021
  Brazil Argentina Mexico Other Countries Total
  (In thousands)
Net revenues $                        768,723  $                        297,236  $                        230,497  $                          81,985  $                     1,378,441 
Direct costs  (618,037)  (188,969)  (220,906)  (64,310)  (1,092,222)
Direct contribution  150,686   108,267   9,591   17,675   286,219 
           
Operating expenses and indirect costs of net revenues          (195,375)
Income from operations          90,844 
           
Other income (expenses):          
Interest income and other financial gains          25,071 
Interest expense and other financial losses          (91,289)
Foreign currency losses          (15,089)
Net income before income tax expense         $                            9,537  


           
           
  Three Months Ended March 31, 2020
  Brazil Argentina Mexico Other Countries Total
  (In thousands)
Net revenues $                        397,447  $                        132,875  $                          94,753  $                          27,016  $                        652,091 
Direct costs  (322,628)  (101,025)  (114,762)  (27,604)  (566,019)
Direct contribution  74,819   31,850   (20,009)  (588)  86,072 
           
Operating expenses and indirect costs of net revenues          (115,766)
Loss from operations          (29,694)
           
Other income (expenses):          
Interest income and other financial gains          36,784 
Interest expense and other financial losses          (23,584)
Foreign currency losses          (186)
Net loss before income tax expense         $                       (16,680)

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 March 31, 2021:

             
  Three-month Periods Ended
March 31, (*)
  As reported FX Neutral Measures As reported  
(In millions, except percentages)  2021   2020  Percentage Change  2021   2020  Percentage Change
Net revenues $                               1,378.4  $                        652.1  111.4% $                        1,684.9  $                        652.1  158.4%
Cost of net revenues  (787.1)  (339.3) 132.0%  (951.4)  (339.3) 180.4%
Gross profit  591.4   312.8  89.1%  733.5   312.8  134.5%
             
Operating expenses  (500.5)  (342.5) 46.1%  (623.7)  (342.5) 82.1%
Income (Loss) from operations  90.8   (29.7) 405.9%  109.8   (29.7) 469.5%

(*) 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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