MercadoLibre releases 2Q19 financial results

MercadoLibre, Inc., Latin America’s leading e-commerce technology company, has reported financial results for the quarter ended June 30, 2019.

Pedro Arnt, Chief Financial Officer of MercadoLibre, Inc., commented, “We are pleased and optimistic about how 2019 is playing out for us. We delivered another very strong quarter as we continue to grow and scale our leading e-commerce and FinTech ecosystems across Latin America.”

Second Quarter 2019 Business Highlights¹

• Total payment volume through Mercado Pago surpassed $6.5 billion for the first time, reaching $6.52 billion, a year-over-year increase of 47.2% in USD and 90.3% on an FX neutral basis. Total payment transactions increased 112.5% year-over-year, totaling 181.6 million transactions for the quarter.
• Mercado Pago delivered successful execution in off-platform payments (online and offline) through merchant services, mobile point-of-sale (“MPOS”) devices and its mobile wallet business. On a consolidated basis, off-platform total payment volume grew 121.5% year-over-year in USD and 197.5% on an FX neutral basis.
• For the first time ever, off-platform payments processed almost $3.2 billion in transactions, surpassing 120.0 million payment transactions in a single quarter with 120.1 million payments. Off-platform reached an important milestone in June, as it was the first month in our history that off platform TPV surpassed on platform TPV.
• Our MPOS business continues to be one of the fastest growing non-marketplace business units, representing 41.9% of total off-platform payment volume during the quarter. On a consolidated basis, MPOS total payment volume grew 172.2% year-over-year on an FX neutral basis.
• Mobile wallet reached 4.5 million active payers during the quarter, while total payment volume from mobile wallet in Argentina, Brazil and Mexico are all growing by triple digits year-over-year.
• Our asset management product, Mercado Fondo, is available in Argentina and Brazil, where we offer our entire suite of FinTech solutions: MPOS devices, QR code in-store payments, mobile wallet and asset management. Mercado Fondo has invested over 70% and 50% of customer funds in Mercado Pago in Brazil and Argentina, respectively.
• Gross merchandise volume (“GMV”) increased surpassing again $3 billion mark reaching $3.4 billion, representing an 8.4% and 33.0% increase in USD and on an FX neutral basis, respectively.
• Items sold reached 88.7 million, growing 3.8% year-over-year versus 38.8% during the same period last year. The decrease in growth rates year-over-year is attributable to Brazil, where in July of last year we launched the R$5 flat listing fee on items below R$120 and removed listings below R$ 6 as we shift towards incentivizing buyers to purchase higher ticket items, as well as the implementation of the same initiative in Argentina during the second quarter of 2019.
• Unique buyers numbers continue to accelerate versus the prior quarter, growing 20.8% year-over-year versus 10.8% in the first quarter.
• Live listings offered on MercadoLibre’s marketplace surpassed 200 million for the second time, reaching 224.1 million in the second quarter of 2019, a 50.6% year-over-year increase.
• Mobile gross merchandise volume grew 23.5% year-over-year on an FX neutral basis reaching 59.6% of GMV.
• Items shipped through Mercado Envios reached 70.2 million, a 33.0% year-over-year increase, driven primarily by optimizations in our free shipping program.

             ¹ Percentages have been calculated using whole amounts rather than rounded amounts.

The tables below present our gross billings and amounts paid by us in connection with our free shipping service.

The Company presents net revenue net of amounts paid in connection with the Company’s free shipping initiative, when the Company acts as an agent, rather than including these amounts in the cost of net sales, as previously recorded. For the three-month period ended June 30, 2019 the Company incurred $60.5 million of shipping subsidies that have been netted from revenues.

*The table above may not total due to rounding.

Second Quarter 2019 Financial Highlights

• Net revenues for the second quarter were $545.2 million, a year-over-year increase of 62.6% in USD and 102.1% on an FX neutral basis.
• Enhanced marketplace revenues increased 84.6% year-over-year in USD and 122.7% on an FX neutral basis, while non-marketplace revenues increased 43.4% year-over-year in USD and 73.0% on an FX neutral basis.
• Gross profit was $272.4 million with a margin of 50.0%, compared to 47.6% in the second quarter of 2018.
• Total operating expenses were $284.9 million, an increase of 51.6% year-over-year in USD. As a percentage of revenues, operating expenses were 52.3%, as compared to 56.1% during the second quarter of 2018.
• Loss from operations was $12.5 million, compared to a loss of $28.2 million during the second quarter of 2018. As a percentage of revenues, the loss from operations reached 2.3%.
• Interest income was $33.7 million, a 239.7% increase year-over-year, as a result of the proceeds of the 2028 Convertible Notes and equity offering in 2019, which generated more invested volume and interest gain, a higher float in Brazil and a higher interest rates in Argentina.
• The Company incurred $14.7 million in financial expenses in the second quarter of 2019, mainly attributable to interest expense related to the 2028 Convertible Notes.
• Foreign exchange gain for the second quarter of 2019 was $0.8 million, primarily as a result of the strengthening of the Brazilian Reais over our U.S. dollar net liability position in Brazil during the second quarter of 2019.
• Net income before taxes was $7.3 million, up from a loss of $19.0 million during the second quarter 2018.
• Income tax gain was $8.9 million during the second quarter driven by tax loss carry forward in Mexico partially offset for the income tax in Argentina and Brazil, yielding a negative effective tax rate for the period of 122.1%.
• Net income was $16.2 million, resulting in basic net income per share of $0.31.
• Operating cash flow was $27.6 million. Net decrease in cash, cash equivalents, restricted cash and cash equivalents was $177.9 million mostly driven by purchase of investments and a broader credit line offering.

The following table summarizes certain key performance metrics for the six and three months periods ended June 30, 2019 and 2018.

(*) Figures have been expressed using rounding amounts. Growth calculations using this table may not total due to rounding.

Table of Year-over-year USD Revenue Growth Rates by Quarter

Table of Year-over-year Local Currency Revenue Growth Rates by Quarter

SOURCE MercadoLibre, Inc.

Join us November 12-15 for the Property Portal Watch Conference Madrid 2019.