01—Abstract
Summary
Summary of the 10-K filed February 28, 2019. Cited figures are marked; the original filing is the authoritative source.
MercadoLibre Inc.'s 2018 10-K filing highlights its position as the dominant e-commerce and FinTech ecosystem in Latin America, operating across 18 countries.
The company's integrated services include its marketplace, MercadoPago (payments), MercadoEnvios (logistics), Classifieds, Advertising, and MercadoShops (webstores). Key financial trends from 2018 indicate revenue growth, though operating expenses, particularly in sales and marketing and cost of net revenues, increased significantly, leading to an operating loss for the year.
The company continues to invest heavily in product development and technology to enhance user experience and maintain market leadership. Despite significant investments and operational challenges, MercadoLibre remains focused on expanding its service offerings and capturing the growth potential of the Latin American digital economy.
02—Key points
Key Highlights
- MercadoLibre operates the largest online commerce ecosystem in Latin America, present in 18 countries.
- The company offers six integrated services: Marketplace, MercadoPago (FinTech), MercadoEnvios (Logistics), Classifieds, Advertising, and MercadoShops.
- Net revenues grew by 18.3% in 2018 to $1.44 billion, driven by strong growth in Total Payment Volume (TPV) and registered users, although Gross Merchandise Volume (GMV) growth was more modest.
- Operating expenses increased significantly, particularly in sales and marketing (up 48.3%) and cost of net revenues (up 49.4%), leading to an operating loss of $69.5 million in 2018.
- The company is making substantial investments in product and technology development, with expenses rising by 15.0% to $146.3 million in 2018.
- MercadoLibre has suspended dividend payments to reinvest capital back into the business for growth opportunities.
- The company faced currency devaluations in key markets like Argentina (50.5%) and Brazil (14.6%), which impacted reported revenues.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2018, Mercadolibre Inc lost $0.03.
- Revenue$1.44B100.0%
- Cost of revenue−$742.6M51.6%
- Gross profit$697.0M48.4%
- Operating costs−$766.5M53.2%
- Operating income−$69.5M4.8%
- Interest, other & tax$32.9M2.3%
- Net income−$36.6M2.5%
04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 28, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $1.44B$1.22B | +18.3% |
| Cost of Revenue | $742.64M$496.94M | +49.4% |
| Gross Profit | $697.01M$719.60M | −3.1% |
| R&D Expenses | $146.27M$127.16M | +15.0% |
| Operating Expenses | $766.49M$663.33M | +15.6% |
| Operating Income | -$69.48M$56.27M | −223.5% |
| Net Income | -$36.59M$13.78M | −365.5% |
| EPS (Basic) | $-0.82$0.31 | −364.5% |
| EPS (Diluted) | $-0.82$0.31 | −364.5% |
| Shares Outstanding (Basic) | 44.53M44.16M | +0.8% |
| Shares Outstanding (Diluted) | 44.53M44.16M | +0.8% |
05—Questions
Frequently Asked Questions
What are MercadoLibre's main sources of revenue?
MercadoLibre's main revenue streams come from its Enhanced Marketplace services, primarily final value fees on sold items and shipping fees (net of subsidies). Additionally, Non-Marketplace services contribute significantly through payment fees (MercadoPago), classified fees, advertising sales, and other ancillary services like merchant credits and MPOS device sales.
What are the primary drivers of MercadoLibre's operating expenses?
Key drivers of operating expenses include substantial investments in sales and marketing (advertising, buyer protection programs, bad debt expenses), product and technology development (salaries, R&D), cost of net revenues (processing fees, shipping carrier costs, hosting, customer support), and general administrative costs.
How does MercadoLibre manage currency risks in its operations?
MercadoLibre's operations are spread across multiple Latin American countries, exposing it to currency fluctuations. The company's policy is to transfer excess cash and equivalents to U.S. dollar-denominated accounts in the United States to manage this risk. However, currency devaluations in key markets like Argentina and Brazil can negatively impact reported revenues and overall financial results.
What is the company's strategy regarding investments and future growth?
MercadoLibre's strategy focuses on continued investment in improving the shopping experience, expanding into new transactional service offerings, increasing the monetization of transactions, and leveraging synergies between its various services. The company is also growing through organic expansion and potential strategic acquisitions.
06—Continue