10-QPeriod: Q2 FY2013

MERCADOLIBRE INC Quarterly Report for Q2 Ended Jun 30, 2013

Filed August 7, 2013For Securities:MELI

Summary

MercadoLibre, Inc. (MELI) reported solid financial results for the second quarter and first half of 2013, demonstrating continued growth across its Latin American e-commerce and payments platforms. Net revenues increased by a significant 24.5% for the first six months of the year compared to the same period in 2012, reaching $214.9 million. This growth was broad-based, with strong performance across key markets like Argentina, Brazil, and Venezuela, which saw revenue increases of 41.1%, 14.5%, and 38.0% respectively in the first half. The company's strategic investments in technology development and sales and marketing appear to be paying off, with operating expenses increasing but at a slower pace than revenue growth, leading to a healthy increase in income from operations. Net income attributable to MercadoLibre, Inc. shareholders rose to $47.5 million for the six-month period, up from $45.0 million in the prior year. Despite some challenges, including foreign currency fluctuations in Venezuela and regulatory discussions in Brazil, MercadoLibre continues to expand its user base and service offerings, positioning itself for future growth in the dynamic Latin American market.

Financial Highlights

51 data points
Beta

Revenue

$112.18M

72.3% Gross Margin

Net Income

$30.02M

26.8% Net Margin

EPS (Diluted)

$0.67

Total Assets

$529.58M

Cash & Equivalents

$131.19M

Free Cash Flow

-$6.16M

Financial Statements
Beta
Revenue$112.18M
Cost of Revenue$31.08M
Gross Profit$81.11M
Operating Expenses$45.66M
Operating Income$35.45M
Net Income$30.02M
EPS (Basic)$0.67
EPS (Diluted)$0.67
Shares Outstanding (Basic)44.15M
Shares Outstanding (Diluted)44.15M

Key Highlights

  • 1Net revenues increased by 24.5% year-over-year to $214.9 million for the first six months of 2013.
  • 2Income from operations grew to $64.0 million for the six-month period, up from $56.8 million in the prior year.
  • 3Net income attributable to MercadoLibre, Inc. shareholders was $47.5 million for the six-month period.
  • 4The company experienced strong revenue growth in key markets, notably Argentina (+41.1%) and Venezuela (+38.0%) for the six-month period.
  • 5Operating expenses, while increasing, grew at a slower rate than revenue, indicating improving operational leverage.
  • 6The company completed the acquisition of a software development company in Argentina to enhance its capabilities.
  • 7MercadoLibre continued its quarterly cash dividend payments, demonstrating a commitment to returning capital to shareholders.

Frequently Asked Questions

MercadoLibre reported a strong performance with net revenues increasing by 24.5% to $214.9 million for the six months ended June 30, 2013, compared to the same period in 2012. Income from operations also saw a healthy increase, reaching $64.0 million. Net income attributable to shareholders was $47.5 million.

Argentina and Venezuela showed particularly strong revenue growth for the six-month period, increasing by 41.1% and 38.0% respectively, compared to the prior year. Brazil, a key market, also saw consistent growth of 14.5%.

The company noted risks related to foreign currency fluctuations, particularly in Venezuela due to its highly inflationary status and exchange rate devaluation. Regulatory developments in Brazil concerning payment processing and potential legislation in Venezuela affecting automobile sales were also mentioned as areas to monitor.

While operating expenses increased, including investments in product development and sales & marketing, they grew at a slower pace than revenue. This suggests improving operational efficiency and leverage, contributing to the growth in operating income.