* Third Quarter Revenue Increases 72.4% to $22.8 Million * Third Quarter Operating Income Increases by 422.4% to $6.0 Million * Third Quarter Net Income, Excluding Non-Cash Charge of $1.0 Million Related to the Increase in Fair Value of Warrants Increased to $3.7 Million
BUENOS AIRES, Argentina, Nov. 13, 2007 (PRIME NEWSWIRE) -- MercadoLibre, Inc. (Nasdaq:MELI) (http://www.mercadolibre.com), host of the largest online trading and payments platform in Latin America, today reported financial results for its third fiscal quarter and nine months ended September 30, 2007.
"We continue to achieve solid growth in all of our key metrics through unwavering focus on our stated strategy of providing our users with a superior and highly-innovative e-commerce experience," commented Marcos Galperin, President and Chief Executive Officer of MercadoLibre, Inc. "We are particularly pleased that this focus has led to accelerated top line growth rates in both our marketplace and payments business segments. Another important factor in our growth is the continued expansion of e-commerce in Latin America as evidenced by significant increases in the number of Internet users and broadband connections."
Financial Results
Third Quarter Results
MercadoLibre reported consolidated net revenues for the three months ended September 30, 2007 of $22.8 million, representing a quarterly year over year growth rate of 72.4%. Revenue growth was driven by improvements in the monetization of transactions on the Company's platforms, as well as by continued growth in confirmed registered users, gross merchandise volume, successful items, and total payment volume. Third quarter marketplace revenues grew 60.6% to $18.1 million from $11.3 million for the prior year period. Payments revenues grew to $4.7 million for the third quarter, up 141.8% from $1.9 million for the same period during 2006. MercadoLibre's take rate, as measured by revenues as a percentage of gross merchandise volume, improved to 5.8% during the third quarter of 2007, as compared to 4.7% in the third quarter of 2006.
Gross profit grew 75.1% to $17.6 million from $10.1 million in the third quarter 2006, representing a gross profit margin of 77.2%.
Income from operations grew 422.4% to $6.0 million, representing a 26.3% operating margin, as the business continues to show significant economies of scale.
Net income for the three-month period was $2.8 million, compared to $38 thousand during the same period of 2006. Net income for the nine-month period includes $1.0 million in non-cash expenses related to an increase in the fair value of warrants outstanding during the quarter. These warrants have been exercised in full, rendering this expense a non-recurrent charge going forward.
First Nine Months Results
Revenue for the first nine months ended September 30, 2007 increased 59.1% to $58.2 million compared with $36.6 million for the first nine-months ended September 30, 2006. Gross profit increased 61.2% to $45.4 million from $28.2 million from the prior year period. Income from operations increased 304.6% to $13.6 million from $3.4 million for the year-ago period.
Net income for the nine-month period was $4.4 million, compared to $0.8 million during the same period of 2006. Net income for the nine-month period includes $3.0 million in non-cash expenses related to an increase in the fair value of warrants outstanding during the nine-month period.
Key Performance Metrics
The following are highlights on certain key performance metrics for the third quarter ended September 30, 2007.
Registered Users -- New confirmed registered users for the three month period ended September 30, 2007 were 1.7 million, 6.4% higher than the number of new confirmed registered users for the third quarter of 2006. Total confirmed registered users increased to 23.3 million as of September 30, 2007, an increase of 40.6% over the 16.5 million users registered as of September 30, 2006.
Transaction volume -- Gross merchandise volume was $394.9 million for the third quarter of 2007, a 39.2% growth from gross merchandise volume of $283.7 for the same period during 2006. MercadoLibre totaled 4.6 million successful items during the third quarter of 2007, 22.7% more than the 3.7 million successful items sold during the same quarter of 2006. Total payment volume was $43.6 million during the three-month period ending September 30, 2007, a growth of 89.0% over total payment volume of $23.1 million for the same period of 2006.
Conference Call and Webcast
MercadoLibre will host a conference call to discuss results for the quarter and nine-months ending September 30, 2007 today at 4:30 p.m. Eastern Time. The conference call may be accessed by dialing (913) 312-1491. A live webcast of the conference call can be accessed at the company's investor relations website at http://investor.mercadolibre.com/. An archive will be available for one week following the conclusion of the conference call.
Definition of Selected Operational Metrics
New confirmed registered users -- Measure of the number of new users who have registered on the MercadoLibre marketplace and confirmed their registration.
Total confirmed registered users -- Measure of the cumulative number of users who have registered on the MercadoLibre marketplace 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.
Successful items - Measure of the number of items that were sold/purchased through the MercadoLibre marketplace.
Total payment volume -- Measure of total U.S. dollar sum of all transactions paid for using MercadoPago.
Take rate -- Total net revenues as a percentage of gross merchandise volume.
About MercadoLibre
MercadoLibre is the largest online trading platform in Latin America. We are market leaders in e-commerce in each of Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay and Venezuela, based on unique visitors and page views during 2006. Additionally, we have recently launched online trading platforms in Costa Rica, the Dominican Republic and Panama. With a market of over 550 million people and a region with one of the world's fastest-growing Internet penetration rates, we provide buyers and sellers a robust online trading environment that fosters the development of a large and growing e-commerce community. We offer a technological and commercial solution that addresses the distinctive cultural and geographic challenges of operating an online trading platform in Latin America.
Forward-Looking Statements
Any statements contained in this press release that are not statements of historical fact, including statements about the company's beliefs and expectations, are forward-looking statements and should be evaluated as such. Such forward-looking statements reflect, among other things, the company's current expectations, plans, projections and strategies, anticipated financial results, future events and financial trends affecting the company's business, all of which are subject to known or unknown risk and uncertainties that may cause the company's actual results to differ materially from those expressed or implied by these forward-looking statements, including general market conditions, the failure of customary closing conditions, adverse changes in the company's markets and other risks disclosed in the prospectus. Because of the risks, uncertainties and assumptions, investors should not place undue reliance on any forward-looking statements.
Nine Months Ended Three Months Ended
September 30, September 30,
------------------------- -------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
(Unaudited)
Net revenues $ 58,232,755 $ 36,596,493 $ 22,800,130 $ 13,224,610
Cost of net
revenues (12,840,016) (8,432,483) (5,192,650) (3,166,559)
------------ ------------ ------------ ------------
Gross profit 45,392,739 28,164,010 17,607,480 10,058,051
Operating
expenses:
Product and
technology
development (3,157,033) (2,251,767) (1,154,317) (782,097)
Sales and
marketing (19,629,001) (16,647,142) (6,982,476) (6,057,976)
General and
administrative (8,970,232) (5,894,455) (3,483,918) (2,071,974)
------------ ------------ ------------ ------------
Total
operating
expenses (31,756,266) (24,793,364) (11,620,711) (8,912,047)
------------ ------------ ------------ ------------
Income from
operations 13,636,473 3,370,646 5,986,769 1,146,004
------------ ------------ ------------ ------------
Other income
(expenses):
Interest income 872,207 177,819 352,968 82,530
Interest expense
and other
financial
charges (1,217,569) (1,277,329) (390,029) (469,535)
Foreign currency
loss (1,806,520) (118,481) (802,348) (54,793)
Other expenses,
net (3,006,416) (1,342,048) (960,358) (237,682)
------------ ------------ ------------ ------------
Net income
before income /
asset tax
expense 8,478,175 810,607 4,187,002 466,524
------------ ------------ ------------ ------------
Income / asset
tax expense (4,107,628) (1,583,610) (1,401,528) (428,983)
------------ ------------ ------------ ------------
Net income
(loss) $ 4,370,547 $ (773,003)$ 2,785,474 $ 37,541
============ ============ ============ ============
Accretion of
preferred stock (309,299) (371,158) (61,860) (123,719)
------------ ------------ ------------ ------------
Net income /
(loss) available
to common
shareholders $ 4,061,248 $ (1,144,161)$ 2,723,614 $ (86,178)
============ ============ ============ ============
Nine Months Ended Three Months Ended
September 30, September 30,
------------------------ ------------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
Basic EPS
Basic net
income / (loss)
available to
common
shareholders
per common
share $ 0.10 $ (0.09) $ 0.07 $ (0.01)
=========== =========== =========== ===========
Weighted average
shares 18,214,978 13,132,216 27,538,652 13,141,676
=========== =========== =========== ===========
Diluted EPS
Diluted net
income per
common share $ 0.10 $ 0.07
=========== ===========
Weighted average
shares 18,608,181 27,685,028
=========== ===========
September 30, December 31,
2007 2006
------------- -------------
Assets (Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 14,535,980 $ 7,143,027
Short-term investments 48,373,617 6,320,656
Accounts receivable 2,499,780 1,983,003
Funds receivable from customers 17,216,572 10,188,712
Prepaid expenses 590,898 333,570
Deferred tax assets 2,185,423 2,904,558
Other current assets 678,950 246,352
------------- -------------
Total current assets 86,081,220 29,119,878
Non-current assets:
Long-term investments 1,459,271 --
Property and equipment, net 4,171,087 2,931,470
Goodwill and intangible assets, net 23,018,001 21,342,315
Deferred tax assets 561,085 390,820
Other assets 167,877 28,089
------------- -------------
Total non-current assets 29,377,321 24,692,694
Total assets $ 115,458,541 $ 53,812,572
------------- -------------
Liabilities and Shareholders'
Equity (Deficit)
Current liabilities:
Accounts payable and accrued
expenses $ 7,818,585 $ 5,708,682
Funds payable to customers 12,498,257 9,085,013
Social security payable 3,622,343 2,722,874
Taxes payable 2,001,754 1,735,975
Loans payable 3,050,580 97,527
Provisions 36,100 310,848
------------------------------
Total current liabilities 29,027,619 19,660,919
Non-current liabilities:
Loans payable -- 9,000,000
Other liabilities 948,406 1,803,315
------------- -------------
Total non-current liabilities 948,406 10,803,315
Total liabilities 29,976,025 30,464,234
------------- -------------
Commitments and contingencies
Mandatorily redeemable convertible
preferred stock, $0.01 par value,
45,600,000 shares authorized,
27,187,838 shares issued and
outstanding at December 31, 2006;
liquidation amount: $78,334,161
at December 31, 2006 -- 64,076,545
------------- -------------
Shareholders' equity (deficit):
Common stock, $0.001 and $0.01 par
value, 108,800,000 shares
authorized,44,226,563 and
13,166,982 shares issued and
outstanding at September 30, 2007
and December 31, 2006 44,227 131,670
Additional paid-in capital 121,881,108 2,694,404
Accumulated deficit (39,686,310) (44,054,817)
Accumulated other comprehensive
income 3,243,491 500,536
------------- -------------
Total shareholders' equity
(deficit) 85,482,516 (40,728,207)
------------- -------------
Total liabilities, mandatorily
redeemable convertible preferred
stock and shareholders' equity
(deficit) $ 115,458,541 $ 53,812,572
------------- -------------
Cash Flow
Nine Months Ended
September 30,
--------------------------
2007 2006
------------ ------------
(Unaudited)
Cash flows from operations:
Net income (loss) $ 4,370,547 $ (773,003)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 1,667,918 1,481,106
Interest expense -- 637,000
Realized gains on investments (362,891) --
Unrealized gains on investments (244,676) (17,749)
Stock-based compensation expense - stock
options 20,434 23,367
Stock-based compensation expense -
restricted shares 1,977 --
Change in fair value of warrants 3,045,992 1,143,678
Deferred income taxes 511,589 56,082
Changes in assets and liabilities:
Accounts receivable (516,777) 240,834
Funds receivable from customers (7,027,860) (3,132,463)
Prepaid expenses (257,328) (263,290)
Other assets (572,386) (625,929)
Accounts payable 3,275,151 3,232,579
Funds payable to customers 3,413,244 2,219,247
Provisions (274,748) (707,953)
Other liabilities 638,721 147,217
------------ ------------
Net cash provided by operating
activities 7,688,907 3,660,723
------------ ------------
Cash flows from investing activities:
Purchase of investments (49,916,141) (2,875,665)
Proceeds from sale of investments 6,892,718 --
Purchase of intangible assets (47,461) (258,790)
Purchases of property and equipment (2,061,477) (1,423,942)
------------ ------------
Net cash used in investing activities (45,132,361) (4,558,397)
------------ ------------
Cash flows from financing activities:
Increase in short term debt 3,049,886 1,911
Loans paid (9,000,000) --
Stock options exercised 38,579 6,398
Exercise of Warrants 749,991 --
Issuance of common stock 49,573,239 --
------------ ------------
Net cash provided by financing
activities 44,411,695 8,309
------------ ------------
Effect of exchange rate changes on cash
and cash equivalents 424,712 140,908
------------ ------------
Net increase (decrease) in cash and cash
equivalents 7,392,953 (748,457)
Cash and cash equivalents, beginning of
year 7,143,027 8,979,838
------------ ------------
Cash and cash equivalents, end of period $ 14,535,980 $ 8,231,381
------------ ------------
Nine Months Ended
September 30,
--------------------------
2007 2006
------------ ------------
(Unaudited)
Supplemental cash flow information:
Cash paid for interest $ 495,833 $ --
Cash paid for income taxes $ 3,463,724 $ 1,336,001
Non-cash financing activities:
Accretion of preferred stock $ 309,299 $ 371,158
Conversion of mandatorily redeemable
convertible preferred stock into common
stock $ 64,385,844 $ --
Reclassifications of warrants $ 4,636,456 $ --
------------ ------------
Three Months Ended September 30, 2007
-----------------------------------------------------------
Marketplaces
-----------------------------------------------------------
Other
Brazil Argentina Mexico Countries Total
----------- ----------- ----------- ----------- -----------
Net
revenues $ 9,735,433 $ 3,117,546 $ 2,480,155 $ 2,809,492 $18,142,626
Direct
costs (6,275,225) (1,488,304) (1,699,950) (1,438,725)(10,902,204)
----------- ----------- ----------- ----------- -----------
Direct
contri-
bution 3,460,208 1,629,242 780,205 1,370,767 7,240,422
Payments Consolidated
----------- -----------
Net revenues $ 4,657,504 $22,800,130
Direct costs (3,196,955) (14,099,159)
----------- -----------
Direct contribution 1,460,549 8,700,971
Operating expenses and indirect costs of
net revenues (2,714,202)
-----------
Income from operations 5,986,769
-----------
Other income (expenses):
Interest income 352,968
Interest expense and other financial results (390,029)
Foreign exchange (802,348)
Other expenses, net (960,358)
-----------
Net income before income / asset tax expense $ 4,187,002
===========
Three Months Ended September 30, 2006
-----------------------------------------------------------
Marketplaces
-----------------------------------------------------------
Other
Brazil Argentina Mexico Countries Total
----------- ----------- ----------- ----------- -----------
Net
revenues $ 6,254,917 $ 1,966,340 $ 1,577,906 $ 1,499,079 $11,298,242
Direct
costs (4,684,170) (1,249,097) (1,339,453) (1,188,705) (8,461,425)
----------- ----------- ----------- ----------- -----------
Direct
contri-
bution 1,570,747 717,243 238,453 310,374 2,836,817
Payments Consolidated
----------- -----------
Net revenues $ 1,926,368 $13,224,610
Direct costs (1,731,912) (10,193,337)
----------- -----------
Direct contribution 194,456 3,031,273
Operating expenses and indirect costs of
net revenues (1,885,269)
-----------
Income from operations 1,146,004
-----------
Other income (expenses):
Interest income 82,530
Interest expense and other financial results (469,535)
Foreign exchange (54,793)
Other expenses, net (237,682)
-----------
Net income before income / asset tax expense $ 466,524
===========
Nine Months Ended September 30, 2007
-----------------------------------------------------
Marketplaces
-----------------------------------------------------
Other
Brazil Argentina Mexico Countries
----------- ---------- ---------- ----------
Net revenues $26,306,517 $7,859,816 $6,917,780 $7,339,954
Direct costs (17,108,926) (3,987,398) (4,498,440) (4,341,008)
----------- ---------- ---------- ----------
Direct
contribution 9,197,591 3,872,418 2,419,340 2,998,946
Total Payments Consolidated
------------ ----------- -------------
Net revenues $ 48,424,067 $ 9,808,688 $ 58,232,755
Direct costs (29,935,772) (7,502,044) (37,437,816)
------------ ----------- -------------
Direct
contribution 18,488,295 2,306,644 20,794,939
Operating
expenses and
indirect costs
of net revenues (7,158,466)
-------------
Income from
operations 13,636,473
-------------
Other income
(expenses):
Interest income 872,207
Interest expense
and other
financial
results (1,217,569)
Foreign exchange (1,806,520)
Other expenses,
net (3,006,416)
-------------
Net income
before
income/asset
tax expense $8,478,175
=============
Nine Months Ended September 30, 2006
-----------------------------------------------------
Marketplaces
-----------------------------------------------------
Other
Brazil Argentina Mexico Countries
----------- ---------- ---------- ----------
Net revenues $18,571,053 $4,888,526 $4,336,164 $3,876,396
Direct costs (13,197,634) (3,336,969) (3,666,491) (3,133,676)
----------- ---------- ---------- ----------
Direct
contribution 5,373,419 1,551,557 669,673 742,720
Total Payments Consolidated
------------ ----------- -------------
Net revenues $ 31,672,139 $ 4,924,354 $ 36,596,493
Direct costs (23,334,770) (4,528,070) (27,862,840)
------------ ----------- -------------
Direct
contribution 8,337,369 396,284 8,733,653
Operating
expenses and
indirect costs
of net revenues (5,363,007)
-------------
Income from
operations 3,370,646
-------------
Other income
(expenses):
Interest income 177,819
Interest
expense and
other financial
results (1,277,329)
Foreign exchange (118,481)
Other
expenses, net (1,342,048)
-------------
Net income before
income/asset
tax expense $ 810,607
============