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 NoncontrollingInterest 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. percommon 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. percommon 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 firstname.lastname@example.org http://investor.mercadolibre.com company logo
MercadoLibre, Inc. Reports Financial Results for Third Quarter 2012
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