01—Abstract
Summary
Summary of the 10-Q filed November 5, 2021. Cited figures are marked; the original filing is the authoritative source.
MercadoLibre Inc. (MELI) reported strong growth in its third quarter of 2021, with net revenues increasing by 86.6%a 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.
02—Key points
Key Highlights
- Net 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.
- Both the Commerce and Fintech segments showed significant growth; Commerce revenues increased by 94.3% (nine months) and Fintech revenues by 73.1% (nine months).
- Gross 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%.
- Income 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.
- Capital expenditures more than doubled to $433.9 million for the nine months ended September 30, 2021, reflecting investments in technology and logistics.
- The company repurchased $440 million in principal amount of its 2.00% Convertible Senior Notes due 2028 during the period.
- MercadoLibre completed the acquisition of Kangu Participações S.A, a logistics technology platform, shortly after the reporting period ended.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2021, Mercadolibre Inc kept $0.05.
- Revenue$1.86B100.0%
- Cost of revenue−$1.05B56.6%
- Gross profit$807.0M43.4%
- Operating costs−$647.0M34.8%
- Operating income$160.0M8.6%
- Interest, other & tax−$65.0M3.5%
- Net income$95.0M5.1%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2021filed November 5, 2021Financial Statements
Q3 FY2021 against Q3 FY2020
| Line item | Q3 FY2021Q3 FY2020 | Change |
|---|---|---|
| Revenue | $1.86B$1.12B | +66.5% |
| Cost of Revenue | $1.05B$635.51M | +65.4% |
| Gross Profit | $807.00M$480.00M | +68.1% |
| R&D Expenses | $138.00M$88.80M | +55.4% |
| Operating Expenses | $647.00M$397.12M | +62.9% |
| Operating Income | $160.00M$83.07M | +92.6% |
| Net Income | $95.00M$15.00M | +533.3% |
| EPS (Basic) | $1.92$0.28 | +585.7% |
| EPS (Diluted) | $1.92$0.28 | +585.7% |
| Shares Outstanding (Basic) | 49.60M49.72M | −0.2% |
| Shares Outstanding (Diluted) | 49.60M49.72M | −0.2% |
05—Questions
Frequently Asked Questions
What drove the significant increase in MercadoLibre's net revenues?
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.
How is the company investing its capital, and what is its liquidity position?
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.
What impact did currency fluctuations have on the company's results?
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.
Are there any significant recent developments or acquisitions?
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.
06—Continue