MercadoLibre, Inc. Reports Financial Results for Third Quarter 2012
* Net Revenues in Q3'12 grew to 97.3 million, a 37.0% growth in local currencies, and a 19.2% growth in USD
* Items sold during Q3'12 increased by 22.4% year-over-year to 17.6 million
* Total payment transactions during Q3'12 increased by 64.7% year-over-year to 6.4 million
BUENOS AIRES, Argentina, Nov. 1, 2012 (GLOBE NEWSWIRE) -- MercadoLibre, Inc. (Nasdaq: MELI) (http://www.mercadolibre.com), Latin America's leading e-commerce technology company, today reported financial results for the third quarter ended September 30, 2012.
Marcos Galperin, President and Chief Executive Officer of MercadoLibre, Inc., commented, "We are pleased to see the business deliver 37% revenue growth in local currency, and in particular with the performance of our adjacent business units which now represent slightly more than 30% of our revenue. This growth rate is especially impressive, since this quarter marks the first anniversary of the launch of our new technology platform, and the subsequent acceleration it has brought about in our business. As a result of our investment and execution in the platform, today we are in a much better position to continue to innovate for our customers while we remain focused on building the most complete e-commerce ecosystem in the region, which we believe is still only a fraction of what it will become."
Financial Results Summary
MercadoLibre reported consolidated net revenues for the three months ended September 30, 2012 of $97.3 million, representing a year-over-year growth of 19.2% in USD, and 37.0% in local currencies.
For the three months ended September 30, 2012, gross merchandise volume grew 6.5% year-over-year to $1,436.4 million, while total payment volume grew 30.3% year-over-year to $480.1 million. In local currencies, gross merchandise volume grew 20.0% year-over-year, while payment volume grew 55.3% year-over-year.
Items sold on MercadoLibre during the third quarter 2012 increased 22.4% to 17.6 million, while total payments transactions through MercadoPago increased 64.7% to 6.4 million.
Gross profit for the third quarter of 2012 was $71.6 million, a 16.3% increase over the previous year quarter. Gross profit margin for the period was 73.6%, down from 75.4% during the third quarter of 2011, driven primarily by the growth in the lower margin payment business.
Total operating expenses during the third quarter 2012 were $37.9 million, a 19.8% increase over the previous year quarter. Total operating expenses as a percentage of net revenues for the third quarter of 2012 were 38.9%, compared to 38.7% for the same quarter one year earlier. Operating expenses as a percentage of revenues were primarily affected by increased compensation costs associated with hiring and retaining talent, principally for new development centers in Uruguay, Venezuela and the United States.
Income from operations for the third quarter 2012 was $33.7 million, representing a year-over-year growth of 12.5% in USD, and 26.6% in local currencies. Operating income margin for the period was 34.7%, down from 36.7% during the third quarter of 2011.
Net income before taxes was $36.0 million, an increase of 2.4% over the third quarter of 2011. The blended tax rate for the quarter was of 27.5%, as compared to 25.1% during the same quarter one year earlier, which had been benefited by a reversal of a $2.0 million tax valuation allowance in Brazil.
Net income for the three months ended September 30, 2012, decreased 0.9% year-over-year to $26.1 million, a local currency growth of 13.7%. Had there been no one-time tax benefit in the third quarter of last year, net income growth would have been 7.3% in US Dollars, and 23.1% in local currencies.
Net income margin was 26.8% for the third quarter of 2012, compared to 32.2% for the same period last year. Earnings per share for the third quarter of 2012 were $0.59 compared to $0.60 for the prior year quarter.
Free cash flow, defined as cash from operating activities less payment for the acquisition of property, equipment and intangible assets, was $21.9 million for the three months ended September 30, 2012, an increase of 13.8% over the third quarter of 2011.*
(*) See note on "Non-GAAP Financial Measures"
The following table summarizes certain key performance metrics for the three months ended September 30, 2012 and 2011.
|Three month ended September 30, (in MM)||2012||2011||%YoY||%YoY Constant USD|
|Total confirmed registered users at the end of period||77.2||62.0||24.5%||--|
|New confirmed registered users during the period||4.0||3.6||11.1%||--|
|Gross merchandise volume||$ 1,436.4||$ 1,348.3||6.5%||20.0%|
|Total payments volume||$ 480.1||$ 368.5||30.3%||55.3%|
|Total payments transactions||6.4||3.9||64.7%||--|
Table of Year-on-Year Local Currency Revenue Growth Rates by Quarter
|YoY Growth rates at previous years exchange rates|
|Consolidated Net Revenues|
Conference Call and Webcast
The Company will host a conference call and audio webcast on November 1, 2012 at 4:30 p.m. Eastern Time. The conference call may be accessed by dialing +(970) 315-0420 or +(877) 303-7209 (Conference ID 56623282) 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
Total confirmed registered users – Measure of the cumulative number of users who have registered on the MercadoLibre Marketplace and confirmed their registration.
New confirmed registered users – Measure of the number of new users who have registered on the MercadoLibre platform (including MercadoPago) and confirmed their registration.
Gross merchandise volume – Measure of the total U.S. dollar sum of all transactions completed through the MercadoLibre Marketplace, excluding motor vehicles, vessels, aircraft, real estate, and services.
Items sold – Measure of the number of items sold/purchased through the MercadoLibre Marketplace.
Total payment volume – Measure of total U.S. dollar sum of all transactions paid for using MercadoPago.
Total payment transactions – Measure of the number of all payment completed transactions using MercadoPago.
Operating margin – Defined as income from operations as a percentage of net revenues.
Blended tax rate – Defined as income and asset tax expense as a percentage of income before income and asset tax.
Net income margin – Defined as net income as a percentage of net revenues.
Free Cash Flow – Defined as cash flows from operating activities less property, equipment and intangible asset.
Local Currency Growth Rates – Calculated by using the average monthly exchange rate for each month during the previous year and applying it to the corresponding month in the current year, so as to calculate what the growth would have been had exchange rates been the same throughout both periods.
Founded in 1999, MercadoLibre is Latin America's leading e-commerce technology company. Through its primary platforms, MercadoLibre.com and MercadoPago.com, it provides solutions to individuals and companies buying, selling, advertising, and paying for goods and services online.
MercadoLibre.com serves millions of users and creates a market for a wide variety of goods and services in an easy, safe and efficient way. The site is among the top 50 in the world in terms of page views and is the leading retail platform in unique visitors in the major countries in which it operates according to metrics provided by comScore Networks. 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 http://www.globenewswire.com/newsroom/prs/?pkgid=4193
|Consolidated balance sheets|
|Cash and cash equivalents||$ 98,171,852||$ 67,381,677|
|Accounts receivable, net||16,447,126||16,815,087|
|Credits Cards Receivables||39,799,359||23,855,689|
|Deferred tax assets||10,655,188||9,131,638|
|Total current assets||254,911,722||200,245,555|
|Property and equipment, net||35,217,386||30,877,719|
|Intangible assets, net||7,535,276||6,494,857|
|Deferred tax assets||6,137,545||6,491,646|
|Total non-current assets||175,712,830||155,685,881|
|Total assets||$ 430,624,552||$ 355,931,436|
|Liabilities and Equity|
|Accounts payable and accrued expenses||$ 24,298,361||$ 20,251,313|
|Funds payable to customers||83,559,610||69,216,185|
|Salaries and social security payable||18,022,393||13,525,293|
|Loans payable and other financial liabilities||124,753||146,194|
|Total current liabilities||143,416,022||118,303,525|
|Salaries and social security payable||4,139,830||3,844,172|
|Loans payable and other financial liabilities||74,937||136,227|
|Deferred tax liabilities||8,367,423||8,670,606|
|Total non-current liabilities||15,102,774||14,448,895|
|Total liabilities||$ 158,518,796||$ 132,752,420|
|Commitments and contingencies (Note 7)|
|Redeemable noncontrolling interest||$ 4,000,000||$ 4,000,000|
|Common stock, $0.001 par value, 110,000,000 shares authorized, 44,150,920 and 44,142,020 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively||$ 44,151||$ 44,142|
|Additional paid-in capital||120,468,759||120,452,032|
|Accumulated other comprehensive loss||(45,075,427)||(37,043,346)|
|Total liabilities, redeemable noncontrolling interest and equity||$ 430,624,552||$ 355,931,436|
|Consolidated statements of income|
|Nine Months Ended September 30,||Three Months Ended September 30,|
|Net revenues||$ 269,846,848||$ 212,465,972||$ 97,266,784||$ 81,628,144|
|Cost of net revenues||(70,682,782)||(51,331,295)||(25,693,605)||(20,060,474)|
|Product and technology development||(21,703,194)||(16,600,802)||(7,983,301)||(5,925,019)|
|Sales and marketing||(52,820,525)||(45,567,338)||(18,587,486)||(16,701,982)|
|General and administrative||(34,110,996)||(28,160,262)||(11,288,705)||(8,976,946)|
|Total operating expenses||(108,634,715)||(90,328,402)||(37,859,492)||(31,603,947)|
|Income from operations||90,529,351||70,806,275||33,713,687||29,963,723|
|Other income (expenses):|
|Interest income and other financial gains||8,996,775||7,037,264||2,925,913||2,913,596|
|Interest expense and other financial losses||(864,477)||(2,562,633)||(312,860)||(1,052,865)|
|Foreign currency (loss)/gain||(477,499)||2,080,822||(193,529)||3,284,190|
|Other (loss) / income, net||(190,968)||253,148||(179,707)||(7,292)|
|Net income before income / asset tax expense||97,993,182||77,614,876||35,953,504||35,101,352|
|Income / asset tax expense||(26,893,425)||(22,439,967)||(9,885,607)||(8,804,905)|
|Net income||$ 71,099,757||$ 55,174,909||$ 26,067,897||$ 26,296,447|
|Less: Net Income attributable to Noncontrolling Interest||42,864||522||24,804||522|
|Net income attributable to MercadoLibre, Inc.||$ 71,056,893||$ 55,174,387||$ 26,043,093||$ 26,295,925|
|Nine Months Ended September 30,||Three Months Ended September 30,|
|Basic net income attributable to MercadoLibre, Inc. per common share||$ 1.62||$ 1.25||$ 0.59||$ 0.60|
|Weighted average shares||44,146,834||44,137,176||44,150,387||44,141,925|
|Diluted net income attributable to MercadoLibre, Inc. per common share||$ 1.62||$ 1.25||$ 0.59||$ 0.60|
|Weighted average shares||44,153,778||44,150,872||44,157,321||44,151,218|
|Consolidated statements of cash flows|
|Nine Months Ended September 30,|
|Cash flows from operations:|
|Net income attributable to MercadoLibre, Inc.||$ 71,056,893||$ 55,174,387|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Net Income attributable to Noncontrolling Interest||42,864||522|
|Depreciation and amortization||6,412,210||5,249,168|
|LTRP accrued compensation||3,338,368||2,527,494|
|Deferred income taxes||(813,538)||1,174,177|
|Changes in assets and liabilities:|
|Credit Card Receivables||(18,852,184)||(8,188,181)|
|Accounts payable and accrued expenses||10,869,830||6,288,050|
|Funds payable to customers||19,984,595||16,052,471|
|Net cash provided by operating activities||83,708,138||62,293,672|
|Cash flows from investing activities:|
|Purchase of investments||(344,739,785)||(297,570,336)|
|Proceeds from sale and maturity of investments||320,436,580||268,529,776|
|Payment for acquired businesses, net of cash acquired||--||(5,468,180)|
|Purchases of intangible assets||(1,341,789)||(119,262)|
|Purchases of property and equipment||(11,682,839)||(17,084,397)|
|Net cash used in investing activities||(37,327,833)||(51,712,399)|
|Cash flows from financing activities:|
|Stock options exercised||5,696||11,175|
|Net cash provided in financing activities||(13,149,738)||(7,050,672)|
|Effect of exchange rate changes on cash and cash equivalents||(2,440,393)||(1,277,650)|
|Net increase in cash and cash equivalents||30,790,175||2,252,951|
|Cash and cash equivalents, beginning of the period||67,381,677||56,830,466|
|Cash and cash equivalents, end of the period||$ 98,171,852||$ 59,083,417|
|Financial results of reporting segments|
|Three Months Ended September 30, 2012|
|Net revenues||$ 46,202,033||$ 24,122,810||$ 6,736,106||$ 14,213,460||$ 5,992,375||$ 97,266,784|
|Operating expenses and indirect costs of net revenues||(13,798,275)|
|Income from operations||33,713,687|
|Other income (expenses):|
|Interest income and other financial gains||2,925,913|
|Interest expense and other financial results||(312,860)|
|Foreign currency loss||(193,529)|
|Other losses, net||(179,707)|
|Net income before income / asset tax expense||$ 35,953,504|
|Three Months Ended September 30, 2011|
|Net revenues||$ 46,003,915||$ 15,828,272||$ 5,608,572||$ 9,045,783||$ 5,141,602||$ 81,628,144|
|Operating expenses and indirect costs of net revenues||(10,689,366)|
|Income from operations||29,963,723|
|Other income (expenses):|
|Interest income and other financial gains||2,913,596|
|Interest expense and other financial results||(1,052,865)|
|Foreign currency gain||3,284,190|
|Other loss, net||(7,292)|
|Net income before income / asset tax expense||$ 35,101,352|
|Nine Months Ended September 30, 2012|
|Net revenues||$ 132,572,544||$ 62,800,492||$ 19,366,784||$ 37,872,351||$ 17,234,677||$ 269,846,848|
|Operating expenses and indirect costs of net revenues||(39,881,473)|
|Income from operations||90,529,351|
|Other income (expenses):|
|Interest income and other financial gains||8,996,775|
|Interest expense and other financial results||(864,477)|
|Foreign currency loss||(477,499)|
|Other losses, net||(190,968)|
|Net income before income / asset tax expense||$ 97,993,182|
|Nine Months Ended September 30, 2011|
|Net revenues||$ 120,659,242||$ 38,800,077||$ 16,212,999||$ 23,051,176||$ 13,742,478||$ 212,465,972|
|Operating expenses and indirect costs of net revenues||(30,891,982)|
|Income from operations||70,806,275|
|Other income (expenses):|
|Interest income and other financial gains||7,037,264|
|Interest expense and other financial results||(2,562,633)|
|Foreign currency gain||2,080,822|
|Other income, net||253,148|
|Net income before income / asset tax expense||77,614,876|
Non-GAAP Financial Measures
To supplement the Company's condensed consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP), MercadoLibre uses free cash flows, a non-GAAP measure.
This non-GAAP measure should not be considered in isolation or as a substitute for measures of performance prepared in accordance with 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 MercadoLibre's results of operations as determined in accordance with GAAP. This non-GAAP financial measure should only be used to evaluate MercadoLibre's results of operations in conjunction with the most comparable GAAP financial measures.
Reconciliation of this non-GAAP financial measure to the most comparable GAAP financial measure can be found in the table included in this press release.
Non-GAAP financial measures are provided to enhance investors' overall understanding of the Company's current financial performance. Specifically, the Company believes that free cash flow provides useful information to both management and investors by excluding payments for the acquisition of property, equipment, of intangible assets and of businesses net of cash acquired, that may not be indicative of the Company's core operating results. In addition, because MercadoLibre has historically reported certain non-GAAP results to investors, the Company believes that the inclusion of non-GAAP measures provides consistency in the Company's financial reporting.
Free cash flow represents cash from operating activities less payment for the acquisition of property, equipment and intangible assets and businesses net of cash acquired. MercadoLibre considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the Company's operations after the purchases of property, and equipment, of intangible assets and of businesses net of cash acquired. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in the Company's cash balance for the period.
Reconciliation of Operating Cash Flows to Free Cash Flows
Three Months Ended
|Net Cash provided by Operating Activities||$ 25.2||$ 28.6|
|Payment for acquired businesses, net of cash acquired||--||(5.5)|
|Purchase of intangible assets||0.0||--|
|Purchases of property and equipment||(3.4)||(3.8)|
|Free cash flows||$ 21.9||$ 19.2|
|The table above may not total due to rounding.|