10-QPeriod: Q3 FY2021

MERCADOLIBRE INC Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 5, 2021For Securities:MELI

Summary

MercadoLibre Inc. (MELI) reported strong growth in its third quarter of 2021, with net revenues increasing by 86.6% year-over-year for the nine-month period and 66.5% for the three-month period. This growth was driven by significant increases in both its Commerce and Fintech segments across key markets like Brazil, Argentina, and Mexico. The company demonstrated robust operational performance, with income from operations showing substantial improvement compared to the prior year. Financially, MELI continues to invest heavily in its infrastructure and logistics capabilities, as evidenced by increased capital expenditures. While net cash provided by operating activities decreased compared to the prior year's strong performance, the company maintains a healthy liquidity position with substantial cash and cash equivalents. Management remains focused on long-term strategic initiatives and market leadership, navigating economic and currency fluctuations in its operating regions.

Financial Highlights

51 data points
Beta

Revenue

$1.86B

43.4% Gross Margin

Net Income

$95.00M

5.1% Net Margin

EPS (Diluted)

$1.92

Total Assets

$6.80B

Cash & Equivalents

$987.21M

Free Cash Flow

$103.00M

Financial Statements
Beta
Revenue$1.86B
Cost of Revenue$1.05B
Gross Profit$807.00M
R&D Expenses$138.00M
Operating Expenses$647.00M
Operating Income$160.00M
Net Income$95.00M
EPS (Basic)$1.92
EPS (Diluted)$1.92
Shares Outstanding (Basic)49.60M
Shares Outstanding (Diluted)49.60M

Key Highlights

  • 1Net revenues surged by 86.6% year-over-year for the nine months ended September 30, 2021, reaching $4.94 billion, and by 66.5% for the third quarter to $1.86 billion.
  • 2Both the Commerce and Fintech segments showed significant growth; Commerce revenues increased by 94.3% (nine months) and Fintech revenues by 73.1% (nine months).
  • 3Gross profit margin for the nine months was 43.6%, slightly down from 46.1% in the prior year, while the third-quarter margin remained stable at 43.4%.
  • 4Income from operations significantly improved, increasing by 173.1% to $417.4 million for the nine months and by 93.1% to $160.4 million for the three months.
  • 5Capital expenditures more than doubled to $433.9 million for the nine months ended September 30, 2021, reflecting investments in technology and logistics.
  • 6The company repurchased $440 million in principal amount of its 2.00% Convertible Senior Notes due 2028 during the period.
  • 7MercadoLibre completed the acquisition of Kangu Participações S.A, a logistics technology platform, shortly after the reporting period ended.

Frequently Asked Questions

MercadoLibre's net revenues experienced substantial growth driven by increases in both its Commerce and Fintech segments. In the Commerce segment, growth was fueled by a rise in gross merchandise volume (GMV), increased sales of goods, and higher shipping revenues. The Fintech segment saw growth from an increase in credit business, off-platform transactions, and financing activities, supported by a rise in total payment volume through Mercado Pago.

MercadoLibre is significantly increasing its investments, particularly in capital expenditures, which more than doubled to $433.9 million for the nine months. These investments are focused on improving its technology infrastructure and expanding its logistics network. The company maintains a strong liquidity position, with cash and cash equivalents, restricted cash, and short-term investments totaling approximately $1.29 billion as of September 30, 2021. While net cash provided by operating activities decreased year-over-year, this was largely due to a reduction in customer payment liabilities and an increase in receivables.

The company operates in multiple countries with local currencies that are subject to fluctuations against the U.S. dollar. For the nine months, the company reported a consolidated loss on foreign currency of $52.4 million, largely influenced by the acquisition of its own common stock in Argentina at a price reflecting indirect U.S. dollar costs due to government restrictions. The company uses hedging instruments to mitigate some of this risk.

Yes, MercadoLibre completed the acquisition of Kangu Participações S.A, a logistics technology platform operating in Brazil, Mexico, and Colombia, shortly after the reporting period ended on November 3, 2021. Additionally, in October 2021, the company invested $25 million in Aleph Group, Inc., an online advertising company, representing a strategic move to strengthen its advertising ecosystem.