01—Abstract
Summary
Summary of the 10-K filed February 14, 2020. Cited figures are marked; the original filing is the authoritative source.
MercadoLibre, Inc. (MELI) operates as the largest online commerce and digital payments ecosystem in Latin America.
For the fiscal year ending December 31, 2019, the company demonstrated significant revenue growth, with total net revenues increasing by 59.5% year-over-year to $2.3 billiona. This growth was driven by a robust performance across its core segments, particularly in Brazil, Argentina, and Mexico, with notable increases in both its Enhanced Marketplace and Non-Marketplace services. The company's integrated ecosystem, comprising the MercadoLibre Marketplace, Mercado Pago FinTech platform, Mercado Envios logistics, and other services, continues to solidify its market leadership.
Despite increasing operating expenses, especially in sales and marketing, the company's strategic investments in technology and product development are aimed at driving long-term growth and capturing market share in a rapidly expanding digital economy across Latin America. Investors should note the company's continued focus on expanding its service offerings and geographic reach.
02—Key points
Key Highlights
- Revenue Growth: Net revenues increased by 59.5% to $2.3 billion for the year ended December 31, 2019.
- Ecosystem Strength: The company's integrated model, including Marketplace, Mercado Pago, and Mercado Envios, continues to be a key driver of its success and market leadership in Latin America.
- Segment Performance: Strong revenue growth observed across all major geographic segments, with Brazil showing particularly strong performance.
- Investment in Growth: Significant investments were made in product development and sales and marketing, indicating a focus on future growth and market expansion.
- Mercado Pago Expansion: Non-Marketplace revenues, largely driven by Mercado Pago, increased significantly, highlighting the growing importance of the FinTech platform.
- FX Headwinds: While net revenues grew significantly, foreign currency devaluations, particularly in Argentina, presented a partial offset to overall growth in USD terms.
- Increased Operating Loss: Despite revenue growth, an increase in operating expenses led to a wider operating loss compared to the previous year.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2019, Mercadolibre Inc lost $0.07.
- Revenue$2.30B100.0%
- Cost of revenue−$1.19B52.0%
- Gross profit$1.10B48.0%
- Operating costs−$1.26B54.7%
- Operating income−$153.2M6.7%
- Interest, other & tax−$18.8M0.8%
- Net income−$172.0M7.5%
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 14, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $2.30B$1.44B | +59.5% |
| Cost of Revenue | $1.19B$742.64M | +60.8% |
| Gross Profit | $1.10B$697.01M | +58.1% |
| R&D Expenses | $223.81M$146.27M | +53.0% |
| Operating Expenses | $1.26B$766.49M | +63.8% |
| Operating Income | -$153.16M-$69.48M | −120.4% |
| Net Income | -$172.00M-$36.59M | −370.1% |
| EPS (Basic) | $-3.71$-0.82 | −352.4% |
| EPS (Diluted) | $-3.71$-0.82 | −352.4% |
| Shares Outstanding (Basic) | 48.69M44.53M | +9.3% |
| Shares Outstanding (Diluted) | 48.69M44.53M | +9.3% |
05—Questions
Frequently Asked Questions
What were the main drivers of MercadoLibre's revenue growth in 2019?
MercadoLibre's revenue growth in 2019 was primarily driven by a substantial increase in net revenues from its Enhanced Marketplace services, supported by strong local currency Gross Merchandise Volume (GMV) growth in key markets like Argentina, Brazil, and Mexico. Additionally, Non-Marketplace revenues saw significant growth, largely due to the expansion of its Mercado Pago platform and related financing and credit businesses, particularly off-platform transactions.
How is MercadoLibre investing in its future growth?
MercadoLibre is making significant investments in product development and technology, as evidenced by the substantial increase in expenses in this area. The company is also heavily investing in sales and marketing to promote its services and capture long-term growth opportunities in the Latin American market. These investments are crucial for enhancing its ecosystem and maintaining its competitive edge.
What are the key risks or challenges MercadoLibre highlighted in its 2019 filing?
MercadoLibre highlighted several key risks, including intense competition from both local and international players, potential economic and political instability in Latin American countries, currency volatility and depreciation, regulatory changes affecting its e-commerce and FinTech operations, and cybersecurity risks. The company also noted the challenge of managing rapid growth and expanding its operations effectively across diverse markets.
How does Mercado Pago contribute to MercadoLibre's business?
Mercado Pago is a critical component of MercadoLibre's ecosystem, facilitating transactions both on and off its marketplace. It provides users with secure and easy payment solutions, and its expansion into offering credit (Mercado Credito) and investment services (Mercado Fondo) diversifies revenue streams and deepens user engagement. The growth in off-platform payment volume is a significant contributor to Non-Marketplace revenue.
06—Continue