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MercadoLibre, Inc. Reports Financial Results for Third Quarter 2012



MercadoLibre, Inc. Reports Financial Results for Third Quarter 2012

    * Net Revenues in Q3'12 grew to 97.3 million, a 37.0% growth in local
                    currencies, and a 19.2% growth in USD

 * Items sold during Q3'12 increased by 22.4% year-over-year to 17.6 million

* Total payment transactions during Q3'12 increased by 64.7% year-over-year to
                                 6.4 million

BUENOS AIRES, Argentina, Nov. 1, 2012 (GLOBE NEWSWIRE) -- MercadoLibre, Inc.
(Nasdaq:MELI) (http://www.mercadolibre.com), Latin America's leading
e-commerce technology company, today reported financial results for the third
quarter ended September 30, 2012.

Marcos Galperin, President and Chief Executive Officer of MercadoLibre, Inc.,
commented, "We are pleased to see the business deliver 37% revenue growth in
local currency, and in particular with the performance of our adjacent
business units which now represent slightly more than 30% of our revenue. This
growth rate is especially impressive, since this quarter marks the first
anniversary of the launch of our new technology platform, and the subsequent
acceleration it has brought about in our business. As a result of our
investment and execution in the platform, today we are in a much better
position to continue to innovate for our customers while we remain focused on
building the most complete e-commerce ecosystem in the region, which we
believe is still only a fraction of what it will become."

Financial Results Summary

MercadoLibre reported consolidated net revenues for the three months ended
September 30, 2012 of $97.3 million, representing a year-over-year growth of
19.2% in USD, and 37.0% in local currencies.

For the three months ended September 30, 2012, gross merchandise volume grew
6.5% year-over-year to $1,436.4 million, while total payment volume grew 30.3%
year-over-year to $480.1 million. In local currencies, gross merchandise
volume grew 20.0% year-over-year, while payment volume grew 55.3%
year-over-year.

Items sold on MercadoLibre during the third quarter 2012 increased 22.4% to
17.6 million, while total payments transactions through MercadoPago increased
64.7% to 6.4 million.

Gross profit for the third quarter of 2012 was $71.6 million, a 16.3% increase
over the previous year quarter. Gross profit margin for the period was 73.6%,
down from 75.4% during the third quarter of 2011, driven primarily by the
growth in the lower margin payment business.

Total operating expenses during the third quarter 2012 were $37.9 million, a
19.8% increase over the previous year quarter. Total operating expenses as a
percentage of net revenues for the third quarter of 2012 were 38.9%, compared
to 38.7% for the same quarter one year earlier. Operating expenses as a
percentage of revenues were primarily affected by increased compensation costs
associated with hiring and retaining talent, principally for new development
centers in Uruguay, Venezuela and the United States.

Income from operations for the third quarter 2012 was $33.7 million,
representing a year-over-year growth of 12.5% in USD, and 26.6% in local
currencies. Operating income margin for the period was 34.7%, down from 36.7%
during the third quarter of 2011.

Net income before taxes was $36.0 million, an increase of 2.4% over the third
quarter of 2011. The blended tax rate for the quarter was of 27.5%, as
compared to 25.1% during the same quarter one year earlier, which had been
benefited by a reversal of a $2.0 million tax valuation allowance in Brazil.

Net income for the three months ended September 30, 2012, decreased 0.9%
year-over-year to $26.1 million, a local currency growth of 13.7%. Had there
been no one-time tax benefit in the third quarter of last year, net income
growth would have been 7.3% in US Dollars, and 23.1% in local currencies.

Net income margin was 26.8% for the third quarter of 2012, compared to 32.2%
for the same period last year. Earnings per share for the third quarter of
2012 were $0.59 compared to $0.60 for the prior year quarter.

Free cash flow, defined as cash from operating activities less payment for the
acquisition of property, equipment and intangible assets, was $21.9 million
for the three months ended September 30, 2012, an increase of 13.8% over the
third quarter of 2011.*

(*) See note on "Non-GAAP Financial Measures"

The following table summarizes certain key performance metrics for the three
months ended September 30, 2012 and 2011.

Three month ended September 30,    2012      2011      %YoY  %YoY Constant USD
(in MM)
Total confirmed registered users   77.2      62.0      24.5% --
at the end of period
New confirmed registered users     4.0       3.6       11.1% --
during the period
Gross merchandise volume           $ 1,436.4 $ 1,348.3 6.5%  20.0%
Items sold                         17.6      14.4      22.4% --
Total payments volume              $ 480.1   $ 368.5   30.3% 55.3%
Total payments transactions        6.4       3.9       64.7% --

Table of Year-on-Year Local Currency Revenue Growth Rates by Quarter

                            YoY Growth rates at previous years exchange rates 
 Consolidated Net           
Revenues 
                            Q3'11      Q4'11      Q1'12     Q2'12     Q3'12 
Brazil                     38%        39%        29%       36%       25%
Argentina                  55%        70%        85%       81%       69%
Mexico                     14%        31%        35%       30%       29%
Venezuela                  57%        64%        66%       72%       57%
Others                     37%        35%        34%       30%       20%
Total                      41%        46%        44%       47%       37%

Conference Call and Webcast

The Company will host a conference call and audio webcast on November 1, 2012
at 4:30 p.m. Eastern Time. The conference call may be accessed by dialing
+(970) 315-0420 or +(877) 303-7209 (Conference ID 56623282) 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.

Definition of Selected Operational Metrics

Total confirmed registered users – Measure of the cumulative number of users
who have registered on the MercadoLibre Marketplace and confirmed their
registration.

New confirmed registered users – Measure of the number of new users who have
registered on the MercadoLibre platform (including MercadoPago) and confirmed
their registration.

Gross merchandise volume – Measure of the total U.S. dollar sum of all
transactions completed through the MercadoLibre Marketplace, excluding motor
vehicles, vessels, aircraft, real estate, and services.

Items sold – Measure of the number of items sold/purchased through the
MercadoLibre Marketplace.

Total payment volume – Measure of total U.S. dollar sum of all transactions
paid for using MercadoPago.

Total payment transactions – Measure of the number of all payment completed
transactions using MercadoPago.

Operating margin – Defined as income from operations as a percentage of net
revenues.

Blended tax rate – Defined as income and asset tax expense as a percentage of
income before income and asset tax.

Net income margin – Defined as net income as a percentage of net revenues.

Free Cash Flow – Defined as cash flows from operating activities less
property, equipment and intangible asset.

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.

About MercadoLibre

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.

For more information about the company visit:
http://investor.mercadolibre.com.

The MercadoLibre, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=4193

Consolidated balance sheets 
 
                                                   September 30, December
                                                                 31,
                                                   2012          2011
                                                   (Unaudited)   (Audited)
Assets                                                            
Current assets:                                                   
Cash and cash equivalents                          $ 98,171,852  $ 67,381,677
Short-term investments                             79,390,492    74,928,620
Accounts receivable, net                           16,447,126    16,815,087
Credits Cards Receivables                          39,799,359    23,855,689
Prepaid expenses                                   2,232,034     1,269,594
Deferred tax assets                                10,655,188    9,131,638
Other assets                                       8,215,671     6,863,250
Total current assets                               254,911,722   200,245,555
Non-current assets:                                               
Long-term investments                              59,418,012    43,933,316
Property and equipment, net                        35,217,386    30,877,719
Goodwill, net                                      61,357,722    62,093,948
Intangible assets, net                             7,535,276     6,494,857
Deferred tax assets                                6,137,545     6,491,646
Other assets                                       6,046,889     5,794,395
Total non-current assets                           175,712,830   155,685,881
                                                                  
Total assets                                       $ 430,624,552 $ 355,931,436
                                                                  
Liabilities and Equity                                            
Current liabilities:                                              
Accounts payable and accrued expenses              $ 24,298,361  $ 20,251,313
Funds payable to customers                         83,559,610    69,216,185
Salaries and social security payable               18,022,393    13,525,293
Taxes payable                                      12,598,869    11,633,178
Loans payable and other financial liabilities      124,753       146,194
Dividends payable                                  4,812,036     3,531,362
Total current liabilities                          143,416,022   118,303,525
Non-current liabilities:                                          
Salaries and social security payable               4,139,830     3,844,172
Loans payable and other financial liabilities      74,937        136,227
Deferred tax liabilities                           8,367,423     8,670,606
Other liabilities                                  2,520,584     1,797,890
Total non-current liabilities                      15,102,774    14,448,895
Total liabilities                                  $ 158,518,796 $ 132,752,420
Commitments and contingencies (Note 7)                            
Redeemable noncontrolling interest                 $ 4,000,000   $ 4,000,000
Equity:                                                           
Common stock, $0.001 par value, 110,000,000 shares
authorized, 44,150,920 and 44,142,020 shares       $ 44,151      $ 44,142
issued and outstanding at September 30, 2012 and
December 31, 2011, respectively
Additional paid-in capital                         120,468,759   120,452,032
Retained earnings                                   192,668,273   135,726,188
Accumulated other comprehensive loss               (45,075,427)  (37,043,346)
Total Equity                                       268,105,756   219,179,016
                                                                  
Total liabilities, redeemable noncontrolling       $ 430,624,552 $ 355,931,436
interest and equity

 
 Consolidated statements of income 
 
                         Nine Months Ended September Three Months Ended
                         30,                         September 30,
                         2012          2011          2012         2011
                         (Unaudited)                 (Unaudited)
Net revenues             $ 269,846,848 $ 212,465,972 $ 97,266,784 $ 81,628,144
Cost of net revenues     (70,682,782)  (51,331,295)  (25,693,605) (20,060,474)
Gross profit             199,164,066   161,134,677   71,573,179   61,567,670
                                                                   
Operating expenses:                                                
Product and technology   (21,703,194)  (16,600,802)  (7,983,301)  (5,925,019)
development
Sales and marketing      (52,820,525)  (45,567,338)  (18,587,486) (16,701,982)
General and              (34,110,996)  (28,160,262)  (11,288,705) (8,976,946)
administrative
Total operating          (108,634,715) (90,328,402)  (37,859,492) (31,603,947)
expenses 
Income from operations   90,529,351    70,806,275    33,713,687   29,963,723
                                                                   
Other income (expenses):                                           
Interest income and      8,996,775     7,037,264     2,925,913    2,913,596
other financial gains
Interest expense and     (864,477)     (2,562,633)   (312,860)    (1,052,865)
other financial losses
Foreign currency         (477,499)     2,080,822     (193,529)    3,284,190
(loss)/gain
Other (loss) / income,   (190,968)     253,148       (179,707)    (7,292)
net 
Net income before income 97,993,182    77,614,876    35,953,504   35,101,352
/ asset tax expense 
                                                                   
Income / asset tax       (26,893,425)  (22,439,967)  (9,885,607)  (8,804,905)
expense
Net income               $ 71,099,757  $ 55,174,909  $ 26,067,897 $ 26,296,447
                                                                   
Less: Net Income
attributable to          42,864        522           24,804       522
Noncontrolling Interest
Net income attributable  $ 71,056,893  $ 55,174,387  $ 26,043,093 $ 26,295,925
to MercadoLibre, Inc.
                                                                   
                                                                   
                         Nine Months Ended September Three Months Ended
                         30,                         September 30,
                         2012          2011          2012         2011
                                                     (Unaudited)
Basic EPS                                                          
Basic net income
attributable to          $ 1.62        $ 1.25        $ 0.59       $ 0.60
MercadoLibre, Inc.
per common share
Weighted average shares  44,146,834    44,137,176    44,150,387   44,141,925
                                                                   
                                                                   
Diluted EPS                                                        
Diluted net income
attributable to          $ 1.62        $ 1.25        $ 0.59       $ 0.60
MercadoLibre, Inc.
per common share
Weighted average shares  44,153,778    44,150,872    44,157,321   44,151,218

 
 
Consolidated statements of cash flows           
                                                
                                               Nine Months Ended September 30,
                                               2012            2011
                                               (Unaudited)
Cash flows from operations:                                     
Net income attributable to MercadoLibre, Inc.   $ 71,056,893    $ 55,174,387
Adjustments to reconcile net income to net                      
cash provided by operating activities:
Net Income attributable to Noncontrolling       42,864          522
Interest
Depreciation and amortization                   6,412,210       5,249,168
Accrued interest                                (2,321,629)     (4,461,828)
LTRP accrued compensation                       3,338,368       2,527,494
Deferred income taxes                           (813,538)       1,174,177
Changes in assets and liabilities:                              
Accounts receivable                             (3,824,015)     (6,290,360)
Credit Card Receivables                         (18,852,184)    (8,188,181)
Prepaid expenses                                (1,022,894)     (276,976)
Other assets                                    (2,092,362)     (5,228,268)
Accounts payable and accrued expenses           10,869,830      6,288,050
Funds payable to customers                      19,984,595      16,052,471
Other liabilities                               930,000         273,016
Net cash provided by operating activities       83,708,138     62,293,672
Cash flows from investing activities:                           
Purchase of investments                         (344,739,785)   (297,570,336)
Proceeds from sale and maturity of investments  320,436,580     268,529,776
Payment for acquired businesses, net of cash    --              (5,468,180)
acquired
Purchases of intangible assets                  (1,341,789)     (119,262)
Purchases of property and equipment             (11,682,839)    (17,084,397)
Net cash used in investing activities           (37,327,833)   (51,712,399)
Cash flows from financing activities:                           
Dividends paid                                  (13,155,434)   (7,061,847)
Stock options exercised                         5,696          11,175
Net cash provided in financing activities       (13,149,738)   (7,050,672)
Effect of exchange rate changes on cash and     (2,440,393)     (1,277,650)
cash equivalents
Net increase in cash and cash equivalents       30,790,175      2,252,951
Cash and cash equivalents, beginning of the     67,381,677      56,830,466
period
Cash and cash equivalents, end of the period    $ 98,171,852    $ 59,083,417

 
 Financial results of reporting segments 
                                                                               
             Three Months Ended September 30, 2012
             Brazil       Argentina    Mexico       Venezuela    Other        Total
                                                                 Countries
                                                                               
Net revenues $ 46,202,033 $ 24,122,810 $ 6,736,106  $ 14,213,460 $ 5,992,375  $ 97,266,784
Direct costs (27,296,613) (11,291,054) (4,251,146)  (4,058,735)  (2,857,274)  (49,754,822)
Direct       18,905,420   12,831,756   2,484,960    10,154,725   3,135,101    47,511,962
contribution
                                                                               
Operating
expenses and
indirect                                                                      (13,798,275)
costs of net
revenues
Income from                                                                   33,713,687
operations
                                                                               
Other income                                                                   
(expenses):
Interest
income and
other                                                                         2,925,913
financial
gains
Interest
expense and
other                                                                         (312,860)
financial
results
Foreign
currency                                                                      (193,529)
loss
Other                                                                         (179,707)
losses, net
Net income
before
income /                                                                      $ 35,953,504
asset tax
expense
                                                                               
                                                                               
             Three Months Ended September 30, 2011
             Brazil       Argentina    Mexico       Venezuela    Other        Total
                                                                 Countries
                                                                               
Net revenues $ 46,003,915 $ 15,828,272 $ 5,608,572  $ 9,045,783  $ 5,141,602  $ 81,628,144
Direct costs (25,709,957) (6,264,769)  (3,183,432)  (3,180,061)  (2,636,836)  (40,975,055)
Direct       20,293,958   9,563,503    2,425,140    5,865,722    2,504,766    40,653,089
contribution
                                                                               
Operating
expenses and
indirect                                                                      (10,689,366)
costs of net
revenues
Income from                                                                   29,963,723
operations
                                                                               
Other income                                                                   
(expenses):
Interest
income and
other                                                                         2,913,596
financial
gains
Interest
expense and
other                                                                         (1,052,865)
financial
results
Foreign
currency                                                                      3,284,190
gain
Other loss,                                                                   (7,292)
net
Net income
before
income /                                                                      $ 35,101,352
asset tax
expense
                                                                               
                                                                               
             Nine Months Ended September 30, 2012
             Brazil       Argentina    Mexico       Venezuela    Other        Total
                                                                 Countries
                                                                               
Net revenues $            $ 62,800,492 $ 19,366,784 $ 37,872,351 $ 17,234,677 $ 269,846,848
             132,572,544
Direct costs (78,106,262) (28,957,465) (11,167,356) (12,634,983) (8,569,958)  (139,436,024)
Direct       54,466,282   33,843,027   8,199,428    25,237,368   8,664,719    130,410,824
contribution
                                                                               
Operating
expenses and
indirect                                                                      (39,881,473)
costs of net
revenues
Income from                                                                   90,529,351
operations
                                                                               
Other income                                                                   
(expenses):
Interest
income and
other                                                                         8,996,775
financial
gains
Interest
expense and
other                                                                         (864,477)
financial
results
Foreign
currency                                                                      (477,499)
loss
Other                                                                         (190,968)
losses, net
Net income
before
income /                                                                      $ 97,993,182
asset tax
expense
                                                                               
                                                                               
             Nine Months Ended September 30, 2011
             Brazil       Argentina    Mexico       Venezuela    Other        Total
                                                                 Countries
                                                                               
Net revenues $            $ 38,800,077 $ 16,212,999 $ 23,051,176 $ 13,742,478 $ 212,465,972
             120,659,242
Direct costs (69,712,512) (15,845,674) (8,881,811)  (9,096,997)  (7,230,721)  $(110,767,715)
Direct       50,946,730   22,954,403   7,331,188    13,954,179   6,511,757    101,698,257
contribution
                                                                               
Operating
expenses and
indirect                                                                      (30,891,982)
costs of net
revenues
Income from                                                                   70,806,275
operations
                                                                               
Other income                                                                   
(expenses):
Interest
income and
other                                                                         7,037,264
financial
gains
Interest
expense and
other                                                                         (2,562,633)
financial
results
Foreign
currency                                                                      2,080,822
gain
Other                                                                         253,148
income, net
Net income
before
income /                                                                       77,614,876
asset tax
expense

Non-GAAP Financial Measures

To supplement the Company's condensed consolidated financial statements
presented in accordance with generally accepted accounting principles (GAAP),
MercadoLibre uses free cash flows, a non-GAAP measure.

This non-GAAP measure 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, this
non-GAAP measure is 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 MercadoLibre's results of operations as
determined in accordance with GAAP. This non-GAAP financial measure should
only be used to evaluate MercadoLibre's results of operations in conjunction
with the most comparable GAAP financial measures.

Reconciliation of this non-GAAP financial measure to the most comparable GAAP
financial measure can be found in the table included in this press release.

Non-GAAP financial measures are provided to enhance investors' overall
understanding of the Company's current financial performance. Specifically,
the Company believes that free cash flow provides useful information to both
management and investors by excluding payments for the acquisition of
property, equipment, of intangible assets and of businesses net of cash
acquired, that may not be indicative of the Company's core operating results.
In addition, because MercadoLibre has historically reported certain non-GAAP
results to investors, the Company believes that the inclusion of non-GAAP
measures provides consistency in the Company's financial reporting.

Free cash flow represents cash from operating activities less payment for the
acquisition of property, equipment and intangible assets and businesses net of
cash acquired. MercadoLibre considers free cash flow to be a liquidity measure
that provides useful information to management and investors about the amount
of cash generated by the Company's operations after the purchases of property,
and equipment, of intangible assets and of 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
the Company's cash balance for the period.

Reconciliation of Operating Cash Flows to Free Cash Flows

                                                       Three Months Ended
                                                       September 30,
                                                       2012      2011
                                                                  
                                                                  
Net Cash provided by Operating Activities               $ 25.2    $ 28.6
                                                                  
Payment for acquired businesses, net of cash acquired   --        (5.5)
                                                                  
Purchase of intangible assets                           0.0       --
                                                                  
Purchases of property and equipment                     (3.4)     (3.8)
                                                                  
Free cash flows                                         $ 21.9    $ 19.2
                                                                  
The table above may not total due to rounding.

CONTACT: MercadoLibre, Inc.
         Investor Relations
         investor@mercadolibre.com
         http://investor.mercadolibre.com

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