01—Abstract
Summary
Summary of the 10-Q filed May 7, 2013. Cited figures are marked; the original filing is the authoritative source.
MercadoLibre, Inc. (MELI) reported its first-quarter 2013 financial results, showcasing continued growth in net revenues and user engagement.
Net revenues increased by 22.7% year-over-year, reaching $102.7 milliona, driven by a 20.5% rise in items sold and a significant 44.9% increase in non-marketplace revenues from financing and off-platform payments. The company also saw strong growth in its payment solutions, MercadoPago, with total payment volume up 43.8% year-over-year. Despite a notable foreign currency loss of $6.4 million due to the devaluation of the Venezuelan Bolivar, MercadoLibre's net income attributable to shareholders was $17.5 million, a decrease from the previous year's $19.6 million, largely influenced by this currency fluctuation.
However, the company's operational performance remained robust, with income from operations increasing by 14.6%b. MercadoLibre also continued to invest in its platform, evidenced by a 23.7% rise in product and technology development expenses, and made a strategic acquisition of a software development company in Argentina.
02—Key points
Key Highlights
- Net revenues grew 22.7% to $102.7 million in Q1 2013 compared to Q1 2012.
- Gross merchandise volume (GMV) increased by 18.3% year-over-year.
- Total payment volume (TPV) through MercadoPago surged by 43.8%.
- A significant foreign currency loss of $6.4 million was recorded due to the devaluation of the Venezuelan Bolivar.
- Income from operations increased by 14.6% to $28.6 million.
- The company acquired a software development company in Argentina for approximately $3.5 million.
- Quarterly cash dividends are being paid consistently, with $6.3 million approved for Q1 2013.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2013, Mercadolibre Inc kept $0.17.
- Revenue$102.7M100.0%
- Cost of revenue−$28.6M27.9%
- Gross profit$74.1M72.1%
- Operating costs−$45.5M44.3%
- Operating income$28.6M27.8%
- Interest, other & tax−$11.0M10.8%
- Net income$17.5M17.1%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2013filed May 7, 2013Financial Statements
Q1 FY2013 against Q1 FY2012
| Line item | Q1 FY2013Q1 FY2012 | Change |
|---|---|---|
| Revenue | $102.73M$83.74M | +22.7% |
| Cost of Revenue | $28.65M$21.10M | +35.8% |
| Gross Profit | $74.08M$62.64M | +18.3% |
| Operating Expenses | $45.51M$37.71M | +20.7% |
| Operating Income | $28.57M$24.93M | +14.6% |
| Net Income | $17.52M$19.64M | −10.8% |
| EPS (Basic) | $0.40$0.45 | −11.1% |
| EPS (Diluted) | $0.40$0.45 | −11.1% |
| Shares Outstanding (Basic) | 44.15M44.14M | 0.0% |
| Shares Outstanding (Diluted) | 44.15M44.15M | 0.0% |
05—Questions
Frequently Asked Questions
What was the primary driver for the increase in net revenues?
The primary driver for the 22.7% increase in net revenues to $102.7 million was a combination of a 20.5% increase in items sold on the marketplace and a substantial 44.9% growth in non-marketplace revenues from financing and off-platform payments via MercadoPago.
How did the Venezuelan currency devaluation impact the company's financial results?
The devaluation of the Venezuelan Bolivar in February 2013 resulted in a foreign currency loss of approximately $6.4 million, significantly impacting the 'Other income (expenses)' line item and contributing to a decrease in net income compared to the prior year's quarter.
What is the company's strategy regarding cash and investments?
MercadoLibre holds a significant portion of its cash and investments outside the U.S. (approximately 60.2%) primarily in Brazil, Argentina, and Venezuela. The company's strategy is to reinvest earnings in its international operations and distribute dividends when tax credits can offset them, aiming not to materially impact operations through repatriation of foreign earnings.
What are the main risks and challenges highlighted in the report?
Key risks include the volatile political and economic conditions in Latin America, particularly in Venezuela (highly inflationary economy, currency devaluations) and Argentina (currency controls). The company also faces risks related to foreign currency fluctuations, potential legal and intellectual property claims, and the need for continuous investment in technology and platform enhancements.
06—Continue