May 5, 2020, 4:02 p.m. EDT

MercadoLibre, Inc. Reports First Quarter 2020 Financial Results

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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, 2019, "Item 1A-Risk Factors" in Part II of our Form 10-Q for the quarter ended March 31, 2020, 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,
                                                                                                    2020                2019
        Assets
        Current assets:
        Cash and cash equivalents                                                               $   1,071,217      $    1,384,740
        Restricted cash and cash equivalents                                                        194,166             66,684
        Short-term investments (353,162 and 522,798 held in guarantee)                              1,558,325           1,597,241
        Accounts receivable, net                                                                    34,060              35,446
        Credit cards receivable, net                                                                366,803             379,969
        Loans receivable, net                                                                       141,419             182,105
        Prepaid expenses                                                                            35,294              45,309
        Inventory                                                                                   12,114              8,626
        Other assets                                                                                96,876              88,736
        Total current assets                                                                        3,510,274           3,788,856
        Non-current assets:
        Long-term investments                                                                       269,955             263,983
        Loans receivable, net                                                                       6,879               6,439
        Property and equipment, net                                                                 239,249             244,257
        Operating lease right-of-use assets                                                         183,534             200,449
        Goodwill                                                                                    82,283              87,609
        Intangible assets, net                                                                      17,133              14,275
        Deferred tax assets                                                                         102,296             117,582
        Other assets                                                                                46,477              58,241
        Total non-current assets                                                                    947,806             992,835
        Total assets                                                                            $   4,458,080      $    4,781,691
        Liabilities
        Current liabilities:
        Accounts payable and accrued expenses                                                   $   295,500        $    372,309
        Funds payable to customers                                                                  718,454             894,057
        Salaries and social security payable                                                        100,059             101,841
        Taxes payable                                                                               46,394              60,247
        Loans payable and other financial liabilities                                               316,508             186,138
        Operating lease liabilities                                                                 23,025              23,259
        Other liabilities                                                                           76,560              114,469
        Total current liabilities                                                                   1,576,500           1,752,320
        Non-current liabilities:
        Salaries and social security payable                                                        16,165              26,803
        Loans payable and other financial liabilities                                               616,295             631,353
        Operating lease liabilities                                                                 169,147             176,673
        Deferred tax liabilities                                                                    98,048              99,952
        Other liabilities                                                                           16,515              12,627
        Total non-current liabilities                                                               916,170             947,408
        Total liabilities                                                                       $   2,492,670      $    2,699,728
        Commitments and Contingencies
        Redeemable convertible preferred stock, $0.001 par value, 40,000,000 shares authorized,
        100,000 shares issued and outstanding at March 31, 2020 and December 31, 2019           $   98,843         $    98,843
        Equity
        Common stock, $0.001 par value, 110,000,000 shares authorized,
        49,709,955 shares issued and outstanding at March 31,
        2020 and December 31, 2019                                                              $   50             $    50
        Additional paid-in capital                                                                  2,068,048           2,067,869
        Treasury stock                                                                              (720      )         (720      )
        Retained earnings                                                                           295,913             322,592
        Accumulated other comprehensive loss                                                        (496,724  )         (406,671  )
        Total Equity                                                                                1,866,567           1,983,120
        Total Liabilities, Redeemable convertible preferred stock and Equity                    $   4,458,080      $    4,781,691
        


MercadoLibre, Inc.

Consolidated Statements of Income

For the three-month periods ended March 31, 2020 and 2019

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







        
                                                     Three Months Ended March 31,
                                                          2020                2019
        Net revenues                                 $    652,091        $    473,770
        Cost of net revenues                              (339,277 )          (236,766 )
        Gross profit                                      312,814             237,004
        Operating expenses:
        Product and technology development                (73,435  )          (52,369  )
        Sales and marketing                               (206,507 )          (130,676 )
        General and administrative                        (62,566  )          (43,820  )
        Total operating expenses                          (342,508 )          (226,865 )
        (Loss) income from operations                     (29,694  )          10,139
        Other income (expenses):
        Interest income and other financial gains         36,784              24,444
        Interest expense and other financial losses       (23,584  )          (15,559  )
        Foreign currency losses                           (186     )          (3,669   )
        Net (loss) income before income tax expense       (16,680  )          15,355
        Income tax expense                                (4,429   )          (3,491   )
        Net (loss) income                            $    (21,109  )     $    11,864
        








        
                                                       Three Months Ended March 31,
                                                            2020                  2019
        Basic EPS
        Basic net (loss) income
        Available to shareholders per common share     $    (0.44      )     $    0.13
        Weighted average of outstanding common shares       49,709,955            45,980,255
        Diluted EPS
        Diluted net (loss) income
        Available to shareholders per common share     $    (0.44      )     $    0.13
        Weighted average of outstanding common shares       49,709,955            45,980,255
        


MercadoLibre, Inc.

Consolidated Statement of Cash Flows

For the three months ended March 31, 2020 and 2019







        
                                                                                                                                      Three Months Ended March 31,
                                                                                                                                           2020                  2019
        Cash flows from operations:
        Net (loss) income                                                                                                             $    (21,109    )     $    11,864
        Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
        Unrealized devaluation loss, net                                                                                                   18,505                1,886
        Depreciation and amortization                                                                                                      21,550                15,694
        Accrued interest                                                                                                                   (22,352    )          (8,699     )
        Non cash interest, convertible notes amortization of debt discount and amortization of debt issuance costs and other charges       20,787                3,018
        Financial results on derivative instruments                                                                                        (16,767    )          --
        Stock-based compensation expense -- restricted shares                                                                              179                   --
        LTRP accrued compensation                                                                                                          15,664                13,441
        Deferred income taxes                                                                                                              (4,199     )          (14,456    )
        Changes in assets and liabilities:
        Accounts receivable                                                                                                                19,748                337
        Credit card receivables                                                                                                            (33,303    )          35,893
        Prepaid expenses                                                                                                                   8,560                 3,316
        Inventory                                                                                                                          (5,272     )          1,652
        Other assets                                                                                                                       (5,796     )          (5,085     )
        Payables and accrued expenses                                                                                                      (43,101    )          (491       )
        Funds payable to customers                                                                                                         (21,344    )          63,730
        Other liabilities                                                                                                                  (32,206    )          12,735
        Interest received from investments                                                                                                 14,805                3,536
        Net cash (used in) provided by operating activities                                                                                (85,651    )          138,371
        Cash flows from investing activities:
        Purchase of investments                                                                                                            (1,323,631 )          (1,624,226 )
        Proceeds from sale and maturity of investments                                                                                     1,249,960             439,712
        Receipts from settlements of derivative instruments                                                                                3,668                 --
        Payment for acquired businesses, net of cash acquired                                                                              (7,561     )          --
        Purchases of intangible assets                                                                                                     (93        )          (34        )
        Changes in principal of loans receivable, net                                                                                      (27,250    )          (42,609    )
        Purchases of property and equipment                                                                                                (45,175    )          (32,928    )
        Net cash used in investing activities                                                                                              (150,082   )          (1,260,085 )
        Cash flows from financing activities:
        Proceeds from loans payable and other financial liabilities                                                                        749,617               33,977
        Payments on loans payable and other financing liabilities                                                                          (593,497   )          (23,816    )
        Payment of finance lease obligations                                                                                               (564       )          (662       )
        Dividends paid of preferred stock                                                                                                  (1,000     )          --
        Proceeds from issuance of convertible redeemable preferred stock, net                                                              --                    98,688
        Proceeds from issuance of common stock, net                                                                                        --                    1,866,500
        Net cash provided by financing activities                                                                                          154,556               1,974,687
        Effect of exchange rate changes on cash, cash equivalents, restricted cash and cash equivalents                                    (104,864   )          (11,407    )
        Net (decrease) increase in cash, cash equivalents, restricted cash and cash equivalents                                            (186,041   )          841,566
        Cash, cash equivalents, restricted cash and cash equivalents, beginning of the period                                         $    1,451,424        $    464,695
        Cash, cash equivalents, restricted cash and cash equivalents, end of the period                                               $    1,265,383        $    1,306,261
        


Financial results of reporting segments







        
                                                               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  )
        








        
                                                               Three Months Ended March 31, 2019
                                                               Brazil          Argentina        Mexico         Other Countries  Total
                                                               (In thousands)
        Net revenues                                           $  302,384      $   93,776       $  54,561      $     23,049     $ 473,770
        Direct costs                                              (225,343 )       (67,492 )       (65,585 )         (20,447 )    (378,867 )
        Direct contribution                                       77,041           26,284          (11,024 )         2,602        94,903
        Operating expenses and indirect costs of net revenues                                                                     (84,764  )
        Income from operations                                                                                                    10,139
        Other income (expenses):
        Interest income and other financial gains                                                                                 24,444
        Interest expense and other financial losses                                                                               (15,559  )
        Foreign currency losses                                                                                                   (3,669   )
        Net income before income tax expense                                                                                    $ 15,355
        


Non-GAAP Financial Measures

To supplement our consolidated financial statements presented in accordance with U.S. GAAP, we use foreign exchange ("FX") neutral measures.

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.

Reconciliation of this non-GAAP financial measure to the most comparable U.S. GAAP financial measures can be found in the tables included in this quarterly report.

The Company believes that reconciliation of FX neutral measures to the most directly comparable GAAP measure provides investors an overall understanding of our current financial performance and its prospects for the future. Specifically, we believe this non-GAAP measure 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 2019 and applying them to the corresponding months in 2020, 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, this measure does 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-month period ended March 31, 2020:







        
                                           Three-month Periods Ended
                                           March 31, (*)
                                           As reported                                FX Neutral Measures  As reported
        (In millions, except percentages)    2020        2019      Percentage Change         2020              2019        Percentage Change
                                           (Unaudited)                                (Unaudited)
        Net revenues                       $ 652.1     $ 473.8     37.6     %         $      807.7         $   473.8       70.5     %
        Cost of net revenues                 (339.3 )    (236.8 )  43.3     %                (422.4 )          (236.8 )    78.4     %
        Gross profit                         312.8       237.0     32.0     %                385.3             237.0       62.6     %
        Operating expenses                   (342.5 )    (226.9 )  51.0     %                (463.5 )          (226.9 )    104.3    %
        (Loss) Income from operations        (29.7  )    10.1      -392.9   %                (78.3  )          10.1        -871.5   %
        


(*) 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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