* Accelerating Net Revenues Grew to $123.1 Million, a 45% Growth in Local Currencies, 27% in USD
* Gross Merchandise Volume of $1.9 Billion, a 49% Growth in Local Currencies, 31% in USD
* Total Payments Volume of $641.6 Million, a 55% Growth in Local Currencies, 34% in USD
Marcos Galperin, President and Chief Executive Officer of MercadoLibre, Inc., commented, "With topline growth accelerating for the third consecutive quarter in local currencies, the MercadoLibre ecosystem is clearly benefiting from our recent pace of innovation, as we continue to expand our product selection across a wider range of devices, adding key functionalities along the way. Led by Brazil, value-adding services are driving strong marketplace growth across the board, optimally positioning us for the upcoming holiday shopping season."
MercadoLibre reported consolidated net revenues for the three months ended September 30, 2013 of $123.1 million, representing a year-over-year growth of 26.5% in USD and 45.2% in local currencies.
For the three months ended September 30, 2013, gross merchandise volume grew to $1,877.8 million, while total payment volume reached $641.6 million, representing year-over-year growth of 30.7% and 33.6% respectively. In local currencies, gross merchandise volume grew 49.1% year-over-year, while payment volume grew 54.8% year-over-year.
Items sold on MercadoLibre during the third quarter 2013 increased 25.2% to 22.0 million, while total payments transactions through MercadoPago increased 31.5% to 8.4 million.
Gross profit for the third quarter of 2013 was $88.9 million. Gross profit margin for the period was 72.3%, down from 73.6% during the third quarter of 2012.
Total operating expenses during the third quarter 2013 were $51.5 million. Total operating expenses as a percentage of net revenues for the third quarter of 2013 were 41.9%, an increase of 294 basis points from 38.9% for the same quarter one year earlier.
Income from operations for the third quarter 2013 was $37.4 million, representing a year-over-year growth of 10.9% in USD and 28.4% in local currencies. Operating income margin for the period was 30.4%, down from 34.7% during the third quarter of 2012. Operating income margin decreased 121 basis points from 31.6% in Q2'13.
Net income before taxes was $41.2 million. The blended tax rate for the quarter was 29.3%, as compared to 27.5% during the same quarter one year earlier.
Consequently, net income for the three months ended September 30, 2013, was $29.1 million. Earnings per share for the third quarter of 2013 were $0.66.
Free cash flow, defined as cash from operating activities less payment for the acquisition of property (including any advance payment that as of the date of this press release became a fixed asset), equipment, intangible assets and payment for acquired business net of cash acquired, was $25.7 million for the three months ended September 30, 2013.*
(*) See note on "Non-GAAP Financial Measures"
Three months ended September 30, (in MM) 2013 2012 %YoY %YoY Constant USD
Total confirmed registered users at the end of period 95.0 77.2 23.1% --
New confirmed registered users during the period 4.8 4.0 20.1% --
Gross merchandise volume $ 1,877.7 $ 1,436.4 30.7% 49.1%
Items sold 22.0 17.6 25.2% --
Total payments volume $ 641.6 $ 480.1 33.6% 54.8%
Total payments transactions 8.4 6.4 31.5% --
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Brazil 25% 19% 28% 22% 28%
Argentina 69% 62% 63% 66% 66%
Mexico 29% 19% 15% 19% 19%
Venezuela 57% 43% 49% 68% 92%
Others 20% 15% 13% 19% 13%
Total 37% 31% 36% 38% 45%
The Company will host a conference call and audio webcast on November 5, 2013 at 4:30 p.m. Eastern Time. The conference call may be accessed by dialing +(970) 315-0420 or +(877) 303-7209 (Conference ID 94730797) and requesting inclusion in the call for MercadoLibre. The live conference call can be accessed via audio webcast at the investor relations section of the Company's website, at http://investor.mercadolibre.com. An archive of the webcast will be available for one week following the conclusion of the conference call.
Total confirmed registered users — Measure of the cumulative number of users who have registered on the MercadoLibre platform (including MercadoPago) and confirmed their registration. As of July'12, registration and confirmation take place in the same step of the registration flow.
New confirmed registered users — Measure of the number of new users who have registered on the MercadoLibre platform (including MercadoPago) and confirmed their registration. As of July'12, registration and confirmation take place in the same step of the registration flow.
Total payment transactions — Measure of the number of all transactions completed using MercadoPago.
Blended tax rate — Defined as income and asset tax expense as a percentage of income before income and assets tax.
Free Cash Flow — Defined as cash flows from operating activities less property, equipment, intangible assets and payment for acquired business net of cash acquired.
Local Currency Growth Rates — Calculated by using the average monthly exchange rate for each month during the previous year and applying it to the corresponding month in the current year, so as to calculate what the growth would have been had exchange rates been the same throughout both periods.
Founded in 1999, MercadoLibre is Latin America's leading e-commerce technology company. Through its primary platforms, MercadoLibre.com and MercadoPago.com, it provides solutions to individuals and companies buying, selling, advertising, and paying for goods and services online.
MercadoLibre.com serves millions of users and creates a market for a wide variety of goods and services in an easy, safe and efficient way. The site is among the top 50 in the world in terms of page views and is the leading retail platform in unique visitors in the major countries in which it operates according to metrics provided by comScore Networks. The Company is listed on NASDAQ (Nasdaq:MELI) following its initial public offering in 2007.
Cash and cash equivalents $ 128,096,994 $ 101,489,002
Short-term investments 91,330,179 93,694,805
Credit cards receivables, net 37,867,650 35,816,506
Prepaid expenses 4,158,163 2,080,079
Other assets 15,351,008 11,403,218
Advance for fixed assets 26,167,766 --
Goodwill 57,855,465 60,366,063
Funds payable to customers 122,286,835 101,472,662
Salaries and social security payable 23,313,366 19,974,463
Taxes payable 16,187,618 19,210,568
Loans payable and other financial liabilities 18,909,134 84,570
Dividends payable 6,313,869 4,812,396
Total current liabilities 220,222,795 169,531,272
Salaries and social security payable 8,555,276 3,452,445
Loans payable and other financial liabilities 23,575 59,493
Total non-current liabilities 20,897,909 15,324,378
Total liabilities $ 241,120,704 $ 184,855,650
Redeemable noncontrolling interest $ 4,000,000 $ 4,000,000
Retained earnings 275,583,588 218,083,844
Total Liabilities, Redeemable Noncontrolling Interest and Equity $ 569,321,245 $ 478,669,276
Net revenues $ 337,964,538 $ 269,846,848 $ 123,055,431 $ 97,266,784
Product and technology development (31,217,195) (21,703,194) (12,074,586) (7,983,301)
General and administrative (44,119,063) (34,110,996) (15,261,345) (11,288,705)
Total operating expenses (142,673,191) (108,634,715) (51,511,379) (37,859,492)
Income from operations 101,419,979 90,529,351 37,399,063 33,713,687
Interest expense and other financial losses (1,379,516) (864,477) (487,496) (312,860)
Foreign currency gains (losses) (1,073,255) (477,499) 1,575,592 (193,529)
Other losses, net (44,557) (190,968) (42,217) (179,707)
Net income before income / asset tax expense 107,295,763 97,993,182 41,221,733 35,953,504
Income / asset tax expense (30,605,467) (26,893,425) (12,075,486) (9,885,607)
Less: Net (Loss) Income attributable to Redeemable Noncontrolling Interest (53,213) 42,864 (137,927) 24,804
Net income attributable to MercadoLibre, Inc. shareholders $ 76,743,509 $ 71,056,893 $ 29,284,174 $ 26,043,093
Basic net income attributable to MercadoLibre, Inc.
Shareholders per common share $ 1.73 $ 1.62 $ 0.66 $ 0.59
Weighted average of outstanding common shares 44,152,402 44,146,834 44,152,933 44,150,387
Diluted net income attributable to MercadoLibre, Inc.
Net income attributable to MercadoLibre, Inc. Shareholders $ 76,743,509 $ 71,056,893
Net (loss) income attributable to Redeemable Noncontrolling Interest (53,213) 42,864
Net Devaluation Loss in Venezuela 6,420,929 --
Accrued interest (3,233,243) (5,713,349)
Deferred income taxes (4,006,615) (813,538)
Accounts receivable (17,138,968) (3,824,015)
Credit Card Receivables (7,559,739) (18,852,184)
Prepaid expenses (2,297,492) (1,022,894)
Accounts payable and accrued expenses 17,978,834 10,869,830
Other liabilities 2,465,012 930,000
Interest received from investments 8,693,109 3,391,720
Net cash provided by operating activities 122,848,452 83,708,138
Purchase of investments (802,270,257) (344,739,785)
Proceeds from sale and maturity of investments 803,214,085 320,436,580
Purchases of intangible assets -- (1,341,789)
Advance for fixed assets (26,167,766) --
Purchases of property and equipment (*) (49,928,150) (11,682,839)
Loans payable and other financial liabilities 13,523,158 --
Dividends paid (17,440,135) (13,155,438)
Repurchase of Common Stock (1,012,216) --
Stock options exercised 3,020 5,700
Effect of exchange rate changes on cash and cash equivalents (12,938,037) (2,440,392)
Net increase in cash and cash equivalents 26,607,992 30,790,175
Cash and cash equivalents, beginning of the period 101,489,002 67,381,677
Cash and cash equivalents, end of the period $ 128,096,994 $ 98,171,852
(*) Net of financial liabilities, see Note 5 "Office building acquisition agreement in Buenos Aires"
Net revenues $ 52,262,896 $ 33,139,321 $ 8,143,109 $ 23,001,287 $ 6,508,818 $ 123,055,431
Interest expense and other financial losses (487,496)
Other losses, net (42,217)
Net revenues $ 46,202,033 $ 24,122,810 $ 6,736,106 $ 14,213,460 $ 5,992,375 $ 97,266,784
Other losses, net (179,707)
Direct costs (89,229,337) (48,065,070) (14,350,247) (20,408,854) (8,947,601) (181,001,109)
Direct contribution 61,915,395 39,695,834 9,406,729 35,286,531 10,658,940 156,963,429
Income from operations 101,419,979
Interest expense and other financial losses (1,379,516)
Foreign currency loss (1,073,255)
Net income before income / asset tax expense $ 107,295,763
Net income before income / asset tax expense 97,993,182
To supplement our interim condensed consolidated financial statements presented in accordance with generally accepted accounting principles in the United States (U.S. GAAP), we use free cash flows, adjusted net income before income / asset tax, adjusted income / asset tax, adjusted net income, adjusted blended tax rate and adjusted earnings per share as non-GAAP measures.
These non-GAAP measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. These non-GAAP financial measures should only be used to evaluate our results of operations in conjunction with the most comparable GAAP financial measures.
Reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measure can be found in the tables included in this press release.
Non-GAAP financial measures are provided to enhance investors' overall understanding of our current financial performance. Specifically, we believe that free cash flow provides useful information to both management and investors by excluding payments for the acquisition of property (including any advance payment that as of the date of this press release became a fixed asset), equipment, of intangible assets and of acquired businesses net of cash acquired, that may not be indicative of our core operating results. In addition, we report free cash flows to investors because we believe that the inclusion of this measure provides consistency in our financial reporting.
Free cash flow represents cash from operating activities less payment for the acquisition of property (including any advance payment that as of the date of this press release became a fixed asset), equipment and intangible assets and acquired businesses net of cash acquired. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our operations after the purchase of property (including any advance payment that as of the date of this press release became a fixed asset), equipment, of intangible assets and of acquired businesses net of cash acquired. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in our cash balance for the period.
Reconciliation of Operating Cash Flows to Free Cash Flows
Net Cash provided by Operating Activities $ 63.7 $ 25.2
Payment for acquired businesses, net of cash acquired -- --
Purchase of intangible assets -- --
Advanced for fixed assets (26.2) --
Purchases of property and equipment (11.8) (3.4)
Free cash flows $ 25.7 $ 21.9
The table above may not total due to rounding.