Market Overview

MercadoLibre, Inc. Reports Fourth Quarter Financial Results

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Net Revenues of $428.0 million, up 61.8% on an FX neutral basis

$5.3 billion Total Payment Volume, up 68.5% on an FX neutral basis

$3.2 billion Gross Merchandise Volume, up 17.6% on an FX neutral basis

BUENOS AIRES, Argentina, Feb. 26, 2019 (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 December 31, 2018.

Pedro Arnt, Chief Financial Officer of MercadoLibre, Inc., commented, "I am pleased to report another quarter of solid performance in our business, across our key business units. During the 4Q'18 we have continued our efforts to re-calibrate our P&L with initiatives such as continued changes to our discounted shipping initiatives, and free listing caps, which allowed us to improved enhanced marketplace monetization. As a consequence our Net Revenues accelerated for the 3rd consecutive quarter, reaching 61.8% YoY on an FX neutral basis."

Fourth Quarter 2018 Business Highlights1

  • Total payment volume through MercadoPago surpassed the $5 billion mark for the first time, reaching $5.3 billion, a year-over-year increase of 22.1% in USD and 68.5% on an FX neutral basis. Total payment transactions increased 71.7% year-over-year, totaling 125.6 million transactions for the quarter.
  • MercadoPago experienced continued success in execution of off-platform payments (online and offline) through merchant services, mobile point-of-sale ("MPOS") devices, and mobile wallet business. On a consolidated basis, off-platform total payment volume grew 90.1% year-over-year in USD and 172.2% on an FX neutral basis.
  • For the first time ever, off-platform payments processed more than $2 billion in transactions, reaching almost 70 million payment transactions in a single quarter.
  • MPOS business is still one of the fastest growing non-marketplace business units, representing 46.6% of total off-platform payment volume for the quarter. On a consolidated basis, total payment volume grew 365.3% year-over-year on an FX neutral basis.
  • Our mobile wallet reached 4x more active payers during the fourth quarter than the same period of last year, while total payment volume from mobile wallet in Argentina, Brazil and Mexico is growing by triple digits year-over-year.
  • We launched our asset management product, MercadoFondo, in Brazil, the second country in which we have begun to offer our entire suite of FinTech solutions: MPOS devices, QR code in-store payments, mobile wallet and asset management.
  • Gross merchandise volume again surpassed the $3 billion mark, reaching $3.2 billion, a 10.6% year-over-year decrease in USD, and a 17.6% year-over-year increase on an FX neutral basis.
  • Items sold reached 85.6 million, growing 5.4% year-over-year versus 57.5% during the same period last year. The decrease year-over-year is attributable to Brazil, where last quarter we launched a R$5 flat listing fee on items below R$ 120 and removed listings below R$ 6 as we shift towards incentivizing buyers to purchase higher ticket items.
  • Unique buyers grew 7.5% year-over-year versus 9.4% in the third quarter. This declining growth rate is attributable primarily to pricing adjustments, including eliminating low-priced ticket items from our platform and making payments mandatory in Chile and Colombia, which also temporarily affected buyer growth.
  • Live listings offered on MercadoLibre's marketplace grew to 182.1 million in the fourth quarter of 2018, a 59.7% year-over-year increase, surpassing the 150 million mark for the third time.
  • Mobile gross merchandise volume grew 42.5% on an FX neutral basis year-over-year reaching 60.9% of GMV.
  • Items shipped through MercadoEnvíos reached 62.1 million, a 28.5% year-over-year increase, driven primarily by increases in our free shipping program. The number of items shipped in Argentina, Mexico, Chile and Colombia were highlights of the quarter, growing 84.0%, 88.3%, 72.0%, and 54.7% respectively year-over-year.

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

Adoption of ASC 606

Effective January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers related to revenue recognition ("ASC 606") issued by the Financial Accounting Standards Board ("FASB"). The Company has adopted ASC 606 using the full retrospective transition method and has accordingly revised its consolidated financial statements for the year ended December 31, 2017, and applicable interim periods within the year ended December 31, 2017, as if ASC 606 had been effective for those periods. Because the Company did not offer free shipping in 2016, net revenue for that year does not need to be recast.

As a result of adopting ASC 606, the Company must present net revenue 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 December 31, 2018 the Company incurred $108.1 million of shipping subsidies that have been netted from revenues.

As a result of adopting ASC 606, our net revenues for the periods indicated below have been recast as presented below. Our adoption of 606 does not affect our operating or net income/loss.

    In Millions***
     YTD 2017*    YTD 2018**    Q4 2017*    Q4 2018**
Gross Billings $ 1,398.1   $ 1,864.5   $ 437.0   $ 536.2  
                 
    In Millions***
     YTD 2017*    YTD 2018**    Q4 2017*    Q4 2018**
Adjustments (Decrease) $ (181.6 ) $ (424.8 ) $ (78.9 ) $ (108.1 )
                 
    In Millions***
     YTD 2017*    YTD 2018**    Q4 2017*    Q4 2018**
Net Revenues $ 1,216.5   $ 1,439.7   $ 358.1   $ 428.0  
                         

*As Recast **As Reported
***The table above may not total due to rounding.

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

      In Millions***
       YTD 2017    YTD 2018    Q4 2017    Q4 2018
  Brazil $ 831.4 $ 1,213.8 $ 262.1 $ 358.1
Gross Argentina $ 359.4 $ 402.1 $ 108.7 $ 99.0
Billings Mexico $ 86.5 $ 150.3 $ 28.2 $ 50.4
  Venezuela $ 54.3 $ 0.0 $ 16.0 $ 0.0
  Others $ 66.5 $ 98.3 $ 22.1 $ 28.7
                   


      In Millions***
       YTD 2017    YTD 2018    Q4 2017    Q4 2018
  Brazil $  (140.6 ) $  (347.7 ) $  (64.8 ) $  (92.7 )
Adjustments Argentina $  -   $  (25.5 ) $  -   $  (8.2 )
(Decrease) Mexico $  (35.2 ) $  (41.2 ) $  (10.4 ) $  (4.9 )
  Venezuela $  -   $  -   $  -   $  -  
  Others $  (5.8 ) $  (10.5 ) $  (3.7 ) $  (2.3 )
                           


      In Millions***
       YTD 2017*    YTD 2018**    Q4 2017*    Q4 2018**
  Brazil $ 690.8   866.2   197.3   265.4
Net Argentina $ 359.4   376.6   108.7   90.8
Revenues Mexico $ 51.3   109.1   17.7   45.5
  Venezuela $ 54.3   0.0   16.0   0.0
  Others $ 60.7   87.8   18.4   26.3
                   

*As Recast **As Reported
***The table above may not total due to rounding.

Fourth Quarter 2018 Financial Highlights

  • Net revenues for the fourth quarter
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