Mercado Libre, Inc.'s Third Quarter 2019 financial results are in

January 27, 2020
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MercadoLibre, Inc., Latin American leading e-commerce technology company, has reported financial results for the quarter ended September 30, 2019.

Net Revenues of $603.0 million, up 90.5% YoY on an FX neutral basis; $7.6 billion Total Payment Volume, up 94.5% YoY on an FX neutral basis; $3.6 billion Gross Merchandise Volume, up 36.8% YoY on an FX neutral basis.

Pedro Arnt, Chief Financial Officer of MercadoLibre, Inc., commented:

"We continue to make significant inroads in our key strategic initiatives and reached important milestones this quarter both in FinTech and logistics. As we move into the fourth quarter and 2020, we will continue to focus on delivering an ever-improving user experience, adding functionalities to our user base and leveraging our ecosystem’s unique competitive advantages.”

Third Quarter 2019 Business Highlights1

  • Total payment volume (“TPV”) through Mercado Pago reached $7.6 billion, a year-over-year increase of 66.2% in USD and 94.5% on an FX neutral basis. Total payment transactions increased 118.5% year-over-year, totaling 227.0 million transactions for the quarter.
  • Mercado Pago delivered successful execution in off-platform payments (online and offline) through merchant services, mobile point-of-sale (“MPOS”) devices and its mobile wallet business. On a consolidated basis, off-platform TPV grew 140.4% year-over-year in USD and 189.6% on an FX neutral basis.
  • For the first time ever, quarterly off-platform TPV surpassed on-platform TPV, reaching almost $4.0 billion in transactions and 158.3 million payments.
  • Our MPOS business continues to be one of the fastest growing non-marketplace business units. On a consolidated basis, MPOS TPV grew 141.2% year-over-year on an FX neutral basis.
  • Mobile wallet reached almost $1.0 billion in transactions on a consolidated basis. Our mobile wallet consumer base grew by 34.9% compared to the second quarter, reaching 6.1 million active payers during the quarter. TPV from mobile wallet in Argentina, Brazil and Mexico continues to grow by triple digits year-over-year.
  • Our asset management product, Mercado Fondo, is available in Argentina and Brazil, where we offer our entire suite of FinTech solutions: MPOS devices, QR code in-store payments, mobile wallet and asset management. Mercado Fondo has invested over 80% and 50% of customer funds in Mercado Pago in Brazil and Argentina, respectively.
  • Gross merchandise volume (“GMV”) increased, again surpassing the $3 billion mark and reaching $3.6 billion, representing a 21.6% and 36.8% increase in USD and on an FX neutral basis, respectively.
  • Items sold reached 98.0 million, growing 17.3% year-over-year.
  • Unique buyers numbers continue to accelerate, growing 25.7% year-over-year versus 20.8% in the second quarter.
  • Live listings offered on MercadoLibre’s marketplace reached 243.0 million, a 44.5% year-over-year increase.
  • Mobile gross merchandise volume grew 32.4% year-over-year on an FX neutral basis, reaching 65.4% of GMV.
  • Items shipped through Mercado Envios reached 81.2 million, a 47.5% year-over-year increase, driven primarily by optimizations in our free shipping program.

             1 Percentages have been calculated using whole amounts rather than rounded amounts.

The tables below present our gross billings and amounts paid by us in connection with our free shipping service.

The Company presents net revenues net of amounts paid in connection with the Company’s free shipping initiative, when the Company acts as an agent, rather than including these amounts in the cost of net sales, as previously recorded. For the three-month period ended September 30, 2019 the Company incurred $69.9 million of shipping subsidies that have been netted from revenues.

       
   In Millions (*)
    Q3 2019   Q3 2018
 Brazil$441.9 $309.0
GrossArgentina$125.2 $91.2
BillingsMexico$77.9 $39.1
 Others$27.9 $23.6
 Total$672.9 $462.8

 

       
   In Millions (*)
    Q3 2019   Q3 2018
 Brazil$ (51.9) $ (88.2)
Free ShippingArgentina$ (9.0) $ (7.5)
service costMexico$ (6.6) $ (10.1)
 Others$ (2.4) $ (1.8)
 Total$ (69.9) $ (107.6)

 

       
       
   In Millions (*)
    Q3 2019   Q3 2018
 Brazil$389.9 $220.8
NetArgentina$116.2 $83.7
RevenuesMexico$71.4 $29.0
 Others$25.5 $21.8
 Total$603.0 $355.3

*The tables above may not total due to rounding.

Third Quarter 2019 Financial Highlights

  • Net revenues for the third quarter were $603.0 million, a year-over-year increase of 69.7% in USD and 90.5% on an FX neutral basis.
  • Enhanced marketplace revenues increased 70.9% year-over-year in USD and 123.9% on an FX neutral basis, while non-marketplace revenues increased 68.6% year-over-year in USD and 120.8% on an FX neutral basis.
  • Gross profit was $284.3 million with a margin of 47.2%, compared to 47.8% in the third quarter of 2018.
  • Total operating expenses were $366.3 million, an increase of 102.7% year-over-year in USD. As a percentage of revenues, operating expenses were 60.7%, compared to 50.9% during the third quarter of 2018. Of the 848 bps of margin compression in operating expenses, 689 bps were the result of an increase in marketing and branding investments and 194 bps were the result of an increase in bad debt from our credits business in Brazil.
  • Our marketing expenses alone increased $51.3 million QoQ during the quarter. The vast majority, $46.2M incremental dollars QoQ were deployed to branding initiatives allocating 60% behind Marketplace and 39% behind Payments.
  • Loss from operations was $81.9 million, compared to a loss of $11.0 million during the third quarter of 2018. As a percentage of revenues, the loss from operations reached 13.6%.
  • Interest income was $28.5 million, a 229.5% increase year-over-year, as a result of the proceeds of the 2028 Convertible Notes and equity offering in 2019, which generated more invested volume and interest gain, and  higher float in Brazil and Argentina.
  • The Company incurred $14.5 million in financial expenses this quarter, mainly attributable to interest expense related to the 2028 Convertible Notes and financial guarantees in Argentina.
  • Foreign exchange gain this quarter was $1.0 million, as a result of the strengthening of the U.S. dollar over our Argentine Peso net liability position in Argentina during the third quarter of 2019.
  • Net loss before taxes was $66.9 million, up from a loss of $14.3 million during the third quarter of 2018.
  • Income tax loss was $79.2 million, mainly as a result of valuation allowances accounted for on certain deferred tax assets in Mexico and Colombia.
  • Net loss was $146.1 million, resulting in basic net loss per share of $2.96, due not only to the increased investment in marketing, but also a valuation allowance on deferred tax assets in Mexico and Colombia which accounted for $91.5 million and $7.2 million, respectively.
  • Operating cash flow was $206.9 million. Net increase in cash, cash equivalents, restricted cash and cash equivalents was $328.6 million, driven by higher proceeds from operating activities and lower proceeds used in investing activities.

The following table summarizes certain key performance metrics for the nine and three months periods ended September 30, 2019 and 2018.

            
  Nine-month Periods Ended
 September 30,(*)
  Three-month Periods Ended
 September 30,(*)
(in millions) 20192018  20192018
            
Number of confirmed registered users at end of period   306.0   248.9    306.0    248.9 
Number of confirmed new registered users during period   38.6   36.7    13.8    14.0 
Gross merchandise volume $ 10,126.1 $ 9,271.8  $ 3,640.7  $ 2,995.2 
Number of successful items sold   269.4   249.1    98.0    83.5 
Number of successful items shipped   214.3   159.6    81.2    54.3 
Total payment volume $ 19,721.7 $ 13,153.8  $ 7,565.2  $ 4,552.4 
Total volume of payments on marketplace $ 9,393.7 $ 8,324.1  $ 3,377.6  $ 2,720.3 
Total payment transactions   552.5   263.7    227.0    103.9 
Unique buyers   36.9   31.5    22.4    17.9 
Unique sellers   9.2   8.9    4.4    4.3 
Capital expenditures $ 100.8 $ 72.1  $ 29.4  $ 25.3 
Depreciation and amortization $ 52.5 $ 33.9  $ 19.5  $ 11.3 

(*) 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 Q3’18  Q4’18 Q1’19 Q2’19 Q3’19 
             
Brazil 25 % 34 %64 %74%77%
             
Argentina (8) % (16) %(8) %14%39%
             
Mexico 152 % 157 %220 %267%146%
             

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

             
Consolidated Net Revenues Q3’18  Q4’18 Q1’19 Q2’19 Q3’19 
             
Brazil 56% 58%91%89%77%
             
Argentina 68% 77%83%115%119%
             
Mexico 168% 170%227%261%153%

SOURCE MercadoLibre, Inc.

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