10-QPeriod: Q1 FY2014

MERCADOLIBRE INC Quarterly Report for Q1 Ended Mar 31, 2014

Filed May 9, 2014For Securities:MELI

Summary

MercadoLibre, Inc. reported its first quarter results for the period ending March 31, 2014, showing a solid increase in net revenues, up 12.3% to $115.4 million compared to $102.7 million in the prior year period. This growth was driven by a 16.3% increase in Marketplace revenues, outpacing the 3.2% growth in Non-Marketplace revenues. The company's 'Direct Contribution' also saw a significant increase of 18.9%, indicating improved profitability at the segment level. The company's financial performance was positively impacted by a substantial foreign currency gain of $3.1 million in the current quarter, a significant turnaround from a $6.2 million loss in the comparable period last year. This gain was largely due to the devaluation of the Argentine Peso. However, the company continues to navigate complex foreign currency dynamics, particularly in Venezuela, where new exchange rate mechanisms (SICAD 1 and SICAD 2) are being implemented. Despite these challenges, MercadoLibre demonstrated resilience, with its Venezuelan operations seeing a notable 27.7% increase in net revenues. Overall, the first quarter of 2014 showed continued revenue growth and operational improvements for MercadoLibre, although currency fluctuations and economic conditions in certain Latin American countries, especially Venezuela and Argentina, remain key factors to monitor.

Financial Highlights

49 data points
Beta

Revenue

$115.38M

72.7% Gross Margin

Net Income

$30.33M

26.3% Net Margin

EPS (Diluted)

$0.69

Total Assets

$597.86M

Cash & Equivalents

$131.14M

Free Cash Flow

$20.66M

Financial Statements
Beta
Revenue$115.38M
Cost of Revenue$31.54M
Gross Profit$83.84M
Operating Expenses$49.84M
Operating Income$34.00M
Net Income$30.33M
EPS (Basic)$0.69
EPS (Diluted)$0.69
Shares Outstanding (Basic)44.15M
Shares Outstanding (Diluted)44.15M

Key Highlights

  • 1Net revenues increased by 12.3% to $115.4 million for the three months ended March 31, 2014, compared to $102.7 million for the same period in 2013.
  • 2Marketplace revenue grew by 16.3% to $83.4 million, outperforming Non-Marketplace revenue growth of 3.2% ($32.0 million).
  • 3Income from operations rose by 19.0% to $34.0 million, reflecting efficient cost management.
  • 4A foreign currency gain of $3.1 million was recorded in Q1 2014, a significant improvement from a $6.2 million loss in Q1 2013, primarily due to Argentine Peso devaluation.
  • 5Venezuela segment revenue increased by 27.7% to $19.4 million, driven by strong Marketplace performance, despite ongoing currency exchange challenges.
  • 6The company's balance sheet reflects total assets of $597.9 million and total liabilities of $244.0 million as of March 31, 2014.
  • 7Cash and cash equivalents stood at $131.1 million, while net cash provided by operating activities was $27.6 million for the quarter.

Frequently Asked Questions

MercadoLibre reported a 12.3% increase in net revenues to $115.4 million for the three months ended March 31, 2014, compared to $102.7 million in the prior year. Income from operations also grew by 19.0% to $34.0 million, indicating improved operational efficiency. Net income attributable to shareholders increased substantially to $30.3 million from $17.5 million in the same period last year.

The Marketplace segment showed strong growth, with revenues increasing by 16.3% to $83.4 million. Non-Marketplace revenues grew at a slower pace of 3.2% to $32.0 million. This indicates that the core marketplace business continues to be the primary growth driver for the company.

MercadoLibre experienced a significant positive impact from foreign currency fluctuations in the first quarter of 2014, reporting a gain of $3.1 million, largely due to the devaluation of the Argentine Peso. This contrasts with a foreign currency loss of $6.2 million in the same period of 2013, which was primarily driven by a devaluation in Venezuela. The company continues to monitor and manage currency risks, especially in highly inflationary economies like Venezuela and Argentina.

Brazil remains the largest segment, contributing 45.4% of net revenues, followed by Argentina (24.2%) and Venezuela (16.8%). While Venezuela's revenue grew strongly (27.7%), the company highlights ongoing concerns regarding political and economic instability, foreign exchange controls, and potential government interventions, which could materially affect operations.