* Q3'09 net revenues up 25.7% year-over-year to $50.6 million;
year-over-year growth in local currency up 42.3%
* Q3'09 net income increases by 67.7% year-over-year to $9.9 million
* Items sold during Q3'09 increase by 43.4% year-over-year to $8.0 million
BUENOS AIRES, Argentina, Nov. 4, 2009 (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, 2009.
Marcos Galperin, President and Chief Executive Officer of MercadoLibre, Inc., commented, "Our strong performance for the third quarter and the first ninth months of the fiscal year validates the continued strength of our business model as well as our ability to execute well on our strategic initiatives. Moreover, we have succeeded in further strengthening the positions of MercadoLibre and MercadoPago as the leading e-commerce sites in Latin America. Each provide excellent foundations for our growing portfolio of online businesses and continue to demonstrate enormous growth potential for the future. For these reasons, we are confident that we will be positioned to extend our terrific positive momentum into the fourth quarter holiday shopping season and beyond."
Third Quarter 2009 Financial Results Summary
MercadoLibre reported consolidated net revenues for the three months ended September 30, 2009 of $50.6 million, representing 25.7% year-over-year growth in US dollars and 42.3% year-over-year growth in local currencies.
Marketplace revenue grew 16.9% to $37.1 million in the third quarter of 2009 from $31.7 million in the third quarter of 2008. Payments revenue grew 58.3% to $13.5 million from $8.5 million in the prior year period. Year-over-year revenue growth in both platforms was impacted by unfavorable currency exchange rates. When measured in local currencies, Marketplace revenue grew 32.3% year-over-year and Payments grew 79.5% year-over-year. Strong revenue growth for both platforms was primarily attributable to positive demand for MercadoLibre services. Items sold on MercadoLibre grew 43.4% to 8.0 million, representing the sixth consecutive quarter of acceleration in this key metric has accelerated. Total payments transactions grew 69.1% to 0.9 million when compared to the third quarter of 2008.
Gross profit increased grew 25.2% to $40.2 million from $32.1 million in the prior year quarter. Third quarter 2009 gross profit margin was 79.5% when compared to 79.7% for the third quarter of 2008, as our lower gross margin Payments business grew from 21.2% to 26.7% of net revenues.
Income from operations grew 62.6% to $19.0 million in the third quarter of 2009 compared to $11.7 million in the third quarter of 2008. Operating income margin for the third quarter of 2009 was 37.5%, representing an increase from 29.0% for the same period one year earlier.
The blended tax rate for the third quarter of 2009 decreased to 20.5% from a blended tax rate of 28.9% for the third quarter of 2008 as a consequence of improvements in the Company's tax planning initiatives, efficient use of accumulated tax loss carry forward credits from previously acquired companies, and other non-recurring items.
Foreign currency losses for the third quarter of 2009 were $3.3 million, as compared to losses of $2.6 million for the prior year period. Foreign currency losses were primarily a consequence of local currency appreciation on the cash balances held by the Company's Venezuelan and Brazilian subsidiaries in U.S. dollars.
Net income for the three-month period ended September 30, 2009 increased 67.7% to $9.9 million, from $5.9 million of net income for the third quarter of 2008. Measured in local currencies, net income for the third quarter of 2009 increased 106.7% over the third quarter of 2008. Net income margin was 19.5% for the third quarter compared to 14.6% for the third quarter of 2008. Earnings per share for the third quarter were $0.22 compared to $0.13 for the prior year third quarter.
The following table summarizes certain key performance metrics for the three months ended September 30, 2008 and 2009.
Key Performance Metrics
--------------------------------------------------------------------- Three months ended September 30, YoY (in millions) 2008 2009 growth % --------------------------------------------------------------------- Total confirmed registered users at end of the period 32.0 40.2 25.6% --------------------------------------------------------------------- New confirmed registered users during the period 3.9 2.4 -38.4% --------------------------------------------------------------------- Gross merchandise volume* $ 590.1 $ 791.0 34.0% --------------------------------------------------------------------- Succesful Items 5.6 8.0 43.4% --------------------------------------------------------------------- Total payment volume* $ 81.5 $ 114.0 39.8% --------------------------------------------------------------------- Total payment transactions 0.5 0.9 69.1% --------------------------------------------------------------------- * Gross merchandise volume and total payments volume grew 52.1% and 57.9% in local currencies year over year respectively.
Conference Call and Webcast
MercadoLibre will host a conference call and audio webcast on November 4, 2009 at 4:30 p.m.Eastern Time. The conference call may be accessed by dialing (973) 935-8579 (Conference ID 38258486) 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 Marketplace and confirmed their registration. As of September 30, 2008 the number of new confirmed registered users included 2.2 million coming from DeRemate integration.
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 (Successful items) -- 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 transactions paid for using MercadoPago.
Gross profit margin -- Defined as gross profit as percentage of net revenues.
Operating margin -- Defined as income from operations as a percentage of net revenues.
Net Income margin -- Defined as net income as a percentage of net revenues.
Blended tax rate -- Defined as income and alternative income taxes plus deferred income tax as a percentage of pre-tax income.
Effective tax rate -- Defined as the provision for income taxes as a percentage of pre-tax income.
Local currency financial metric growth -- Calculated by applying the average 2008 monthly exchange rates for each month of the period during 2008 to the results during the corresponding months in 2009, so as to calculate what the growth would have been had exchange rates been the same throughout both periods.
About MercadoLibre
Founded in 1999 and headquartered in Buenos Aires, Argentina, 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 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 each country in which it operates according to metrics provided by comScore Networks.
MercadoLibre maintains a leadership position in 12 Latin American countries. The Company 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
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, adverse changes in the company's markets as well as those risks and uncertainties included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," in the company's Annual Report on Form 10-K for the year ended December 31, 2008 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, which are on file with the SEC and is available on the SEC website at www.sec.gov. Additional information will also be set forth in the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, which it expects to file with the SEC in November 2009. All information provided in this release and in the attachments is as of November 4, 2009 and MercadoLibre undertakes no duty to update this information.
Because of the risks, uncertainties and assumptions, investors should not place undue reliance on any forward-looking statements.
Consolidated balance sheets
September 30, December 31,
2009 2008
------------- -------------
Assets (Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 33,332,506 $ 17,474,112
Short-term investments 19,867,077 31,639,400
Accounts receivable, net 4,778,842 3,856,392
Funds receivable from customers 3,063,360 2,322,416
Prepaid expenses 1,041,145 426,869
Deferred tax assets 9,242,067 1,628,871
Other assets 3,067,597 2,953,164
------------- -------------
Total current assets 74,392,594 60,301,224
Non-current assets:
Long-term investments 24,314,404 9,218,153
Property and equipment, net 6,394,512 5,940,160
Goodwill and intangible assets, net 75,525,514 72,911,546
Deferred tax assets 2,918,816 14,270
Other assets 11,938,182 8,353,396
------------- -------------
Total non-current assets 121,091,428 96,437,525
Total assets $ 195,484,022 $ 156,738,749
------------- -------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 16,530,006 $ 16,941,173
Funds payable to customers 27,312,514 14,727,891
Social security payable 6,608,619 4,387,943
Taxes payable 12,791,888 4,989,704
Loans payable and other
financial liabilities 6,343,964 14,963,421
Provisions 88,049 299,753
------------- -------------
Total current liabilities 69,675,040 56,309,885
Non-current liabilities:
Social security payable 868,201 339,854
Loans payable -- 3,050,061
Deferred tax liabilities 5,279,199 2,556,120
Other liabilities 1,251,630 1,058,848
------------- -------------
Total non-current liabilities 7,399,030 7,004,883
Total liabilities $ 77,074,070 $ 63,314,768
------------- -------------
Commitments and contingencies
Shareholders' equity:
Common stock, $0.001 par value,
110,000,000 shares authorized,
44,113,429 and 44,070,367 shares
issued and outstanding at
September 30, 2009 and
December 31, 2008, respectively 44,114 44,071
Additional paid-in capital 120,196,731 119,807,007
Retained earnings /
(Accumulated deficit) 6,370,967 (15,552,256)
Accumulated other comprehensive loss (8,201,860) (10,874,841)
------------- -------------
Total shareholders' equity 118,409,952 93,423,981
------------- -------------
Total liabilities and
shareholders' equity $ 195,484,022 $ 156,738,749
------------- -------------
Consolidated statements of income
Nine Months Ended Three Months Ended
September 30, September 30,
2009 2008 2009 2008
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
Net revenues $123,823,576 $103,572,881 $ 50,599,276 $ 40,260,643
Cost of net
revenues (25,620,134) (21,075,044) (10,390,671) (8,153,862)
------------ ------------ ------------ ------------
Gross profit 98,203,442 82,497,837 40,208,605 32,106,781
Operating
expenses:
Product and
technology
development (9,016,061) (5,218,502) (3,295,436) (1,744,608)
Sales and
marketing (31,342,260) (30,905,222) (11,048,799) (11,425,168)
General and
administ-
rative (19,683,004) (18,088,234) (6,882,020) (7,261,068)
Compensation
cost
related to
acquisi-
tions -- (1,919,870) -- --
------------ ------------ ------------ ------------
Total
operating
expenses (60,041,325) (56,131,828) (21,226,255) (20,430,844)
------------ ------------ ------------ ------------
Income from
operations 38,162,117 26,366,009 18,982,350 11,675,937
------------ ------------ ------------ ------------
Other income
(expenses):
Interest
income
and
other
financial
gains 2,112,180 1,350,068 580,343 330,139
Interest
expense
and
other
financial
charges (9,718,003) (3,453,671) (3,873,230) (1,132,524)
Foreign
currency
loss (2,770,725) (5,689,938) (3,299,938) (2,648,584)
Other
income,
net -- 41,874 -- 39,587
------------ ------------ ------------ ------------
Net income
before
income
/ asset tax
expense 27,785,569 18,614,342 12,389,525 8,264,555
------------ ------------ ------------ ------------
Income /
asset tax
expense (5,862,346) (7,723,778) (2,537,257) (2,388,763)
------------ ------------ ------------ ------------
Net income $ 21,923,223 $ 10,890,564 $ 9,852,268 $ 5,875,792
============ ============ ============ ============
Nine Months Ended Three Months Ended
September 30, September 30,
---------------------- -----------------------
2009 2008 2009 2008
---------- ---------- ---------- -----------
Basic EPS
Basic net income
per common share $ 0.50 $ 0.25 $ 0.22 $ 0.13
========== ========== ========== ===========
Weighted
average shares 44,079,171 44,255,985 44,088,936 44,290,540
========== ========== ========== ===========
Diluted EPS
Diluted net income
per common share $ 0.50 $ 0.25 $ 0.22 $ 0.13
========== ========== ========== ===========
Weighted
average shares 44,130,078 44,374,124 44,138,031 44,379,682
========== ========== ========== ===========
Consolidated statements of cash flows
Nine Months Ended
September 30,
2009 2008
------------ ------------
(Unaudited)
Cash flows from operations:
Net income $ 21,923,223 $ 10,890,564
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,959,277 2,475,850
Interest expense 343,643 58,484
Unrealized gains on investments (437,137) (1,011,899)
Stock-based compensation expense
- stock options 1,312 3,684
Stock-based compensation expense
- restricted shares 52,706 81,875
LTRP accrued compensation 1,163,139 352,271
Deferred income taxes (1,020,056) (168,148)
Changes in assets and liabilities,
excluding the effect of acquisitions:
Accounts receivable (1,537,363) 4,782,430
Funds receivable from customers (221,236) (8,984,163)
Prepaid expenses (596,311) (513,844)
Other assets (3,078,233) (1,358,459)
Accounts payable and
accrued expenses 317,019 7,790,459
Funds payable to customers 8,169,631 4,026,062
Provisions (195,006) (540,629)
Deferred tax liabilities (180,141) --
Other liabilities (1,102,948) (1,696,567)
------------ ------------
Net cash provided by
operating activities 26,561,519 16,187,970
------------ ------------
Cash flows from investing activities:
Purchase of investments (45,960,414) (59,614,525)
Proceeds from sale and
maturity of investments 48,767,850 90,593,742
Payment for businesses
acquired, net of cash acquired -- (39,178,449)
Purchases of intangible assets (946,500) (58,238)
Purchases of property
and equipment (2,967,487) (3,869,309)
------------ ------------
Net cash used in
investing activities (1,106,551) (12,126,779)
------------ ------------
Cash flows from financing activities:
Increase in short term debt -- 12,104
Decrease in short term debt (12,313,161) (9,736,824)
Stock options exercised 22,530 64,859
------------ ------------
Net cash used in financing activities (12,290,631) (9,659,861)
------------ ------------
Effect of exchange rate changes
on cash and cash equivalents 2,694,057 324,848
------------ ------------
Net increase (decrease) in
cash and cash equivalents 15,858,394 (5,273,822)
Cash and cash equivalents,
beginning of the year 17,474,112 15,677,407
------------ ------------
Cash and cash equivalents,
end of the period $ 33,332,506 $ 10,403,585
------------ ------------
Condensed consolidated statements of cash flows
Nine Months Ended
September 30,
2009 2008
----------- -----------
(Unaudited)
Supplemental cash flow information:
Cash paid for interest $ 8,895,023 $ 2,565,076
Cash paid for income taxes $ 7,286,257 $ 6,945,183
Acquisition of DeRemate and
Classified Media Group:
Cash and cash equivalents $ -- $ 691,632
Funds receivable from customers -- 117,473
Accounts receivable -- 6,755,668
Tax credits -- 604,419
Other current assets -- 928,523
Non current assets -- 496,911
----------- -----------
Total assets acquired -- 9,594,626
----------- -----------
Accounts payable and accrued expenses -- 4,676,259
Funds payable to customers -- 123,089
Taxes payable -- 1,181,607
Social security payable -- 395,112
Other liabilities -- 1,602,269
Non current liabilities -- 14,000
Provisions -- 1,506,447
----------- -----------
Total liabilities assumed -- 9,498,783
----------- -----------
Net assets acquired -- 95,843
----------- -----------
Goodwill -- 52,949,111
Trademarks -- 5,622,188
Customer lists -- 1,227,600
Non Compete Agreement -- 573,484
Deferred income tax on intangible assets -- (2,598,145)
----------- -----------
Total purchase price -- 57,870,081
----------- -----------
Cash and cash equivalents acquired -- (691,632)
----------- -----------
Payment for businesses acquired,
net of cash acquired $ -- $39,178,449
----------- -----------
Seller financing for DeRemate
business acquisition $ -- $18,000,000
----------- -----------
The following tables summarize the financial results of our reporting segments
Nine Months Ended September 30, 2009
------------------------------------------------------
Marketplaces
------------------------------------------------------
Brazil Argentina Mexico Venezuela
------------ ------------ ------------ ------------
Net revenues $ 37,963,430 $ 17,136,120 $ 9,853,059 $ 22,118,467
Direct costs (22,850,813) (6,404,058) (5,657,139) (11,038,145)
------------ ------------ ------------ ------------
Direct
contribution 15,112,617 10,732,062 4,195,920 11,080,322
Operating
expenses
and
indirect
costs
of net
revenues
Income from
operations
Other income
(expenses):
Interest
income
and other
financial
gains
Interest
expense
and other
financial
results
Foreign
currency
loss
Other
income,
net
Net income
before
income /
asset tax
expense
Nine Months Ended September 30, 2009
------------------------------------------------------
Marketplaces
--------------------------
Other
Countries Total Payments Consolidated
------------ ------------ ------------ ------------
Net revenues $ 7,003,962 $ 94,075,038 $ 29,748,538 $123,823,576
Direct costs (3,314,818) (49,264,973) (15,824,655) (65,089,628)
------------ ------------ ------------ ------------
Direct
contribution 3,689,144 44,810,065 13,923,883 58,733,948
Operating
expenses
and indirect
costs of net
revenues (20,571,831)
------------
Income from
operations 38,162,117
------------
Other income
(expenses):
Interest
income
and other
financial
gains 2,112,180
Interest
expense
and
other
financial
results (9,718,003)
Foreign
currency
loss (2,770,725)
Other
income,
net --
------------
Net income
before
income /
asset tax
expense $ 27,785,569
============
Nine Months Ended September 30, 2008
------------------------------------------------------
Marketplaces
------------------------------------------------------
Brazil Argentina Mexico Venezuela
------------ ------------ ------------ ------------
Net revenues $40,447,913 $13,184,145 $9,609,505 $ 15,581,777
Direct costs (26,239,812) (6,248,223) (6,230,842) (8,373,177)
------------ ------------ ------------ ------------
Direct
contribution 14,208,101 6,935,922 3,378,663 7,208,600
Operating
expenses
and indirect
costs of net
revenues
Income from
operations
Other income
(expenses):
Interest
income
and other
financial
gains
Interest
expense
and other
financial
results
Foreign
currency
loss
Other
income,
net
Net income
before income
/ asset tax
expense
Nine Months Ended September 30, 2008
------------------------------------------------------
Marketplaces
--------------------------
Other
Countries Total Payments Consolidated
------------ ------------ ------------ ------------
Net revenues $4,709,996 $83,533,336 $ 20,039,545 $103,572,881
Direct costs (2,847,890) (49,939,944) (12,814,364) (62,754,308)
------------ ------------ ------------ ------------
Direct
contribution 1,862,106 33,593,392 7,225,181 40,818,573
Operating
expenses and
indirect costs
of net
revenues (14,452,564)
------------
Income from
operations 26,366,009
------------
Other income
(expenses):
Interest
income and
other
financial
gains 1,350,068
Interest
expense
and other
financial
results (3,453,671)
Foreign
currency
loss (5,689,938)
Other
income,
net 41,874
------------
Net income
before income
/ asset tax
expense $18,614,342
============
Three Months Ended September 30, 2009
------------------------------------------------------
Marketplaces
------------------------------------------------------
Brazil Argentina Mexico Venezuela
------------ ------------ ------------ ------------
Net revenues $15,481,697 $6,621,213 $3,676,709 $8,450,839
Direct costs (8,617,810) (1,965,224) (1,992,722) (3,938,725)
------------ ------------ ------------ ------------
Direct
contribution 6,863,887 4,655,989 1,683,987 4,512,114
Operating
expenses and
indirect costs
of net
revenues
Income from
operations
Other income
(expenses):
Interest
income and
other
financial
gains
Interest
expense
and other
financial
results
Foreign
currency
loss
Other income,
net
Net income
before income
/ asset tax
expense
Three Months Ended September 30, 2009
------------------------------------------------------
Marketplaces
--------------------------
Other
Countries Total Payments Consolidated
------------ ------------ ------------ ------------
Net revenues $2,880,098 $37,110,556 $ 13,488,720 $ 50,599,276
Direct costs (1,227,900) (17,742,381) (6,311,654) (24,054,035)
------------ ------------ ------------ ------------
Direct
contribution 1,652,198 19,368,175 7,177,066 26,545,241
Operating
expenses
and indirect
costs of
net revenues (7,562,891)
------------
Income from
operations 18,982,350
------------
Other income
(expenses):
Interest
income
and other
financial
gains 580,343
Interest
expense
and other
financial
results (3,873,230)
Foreign
currency
loss (3,299,938)
Other
income,
net --
------------
Net income
before income
/ asset tax
expense $12,389,525
============
Three Months Ended September 30, 2008
------------------------------------------------------
Marketplaces
------------------------------------------------------
Brazil Argentina Mexico Venezuela
------------ ------------ ------------ ------------
Net revenues $14,922,939 $5,405,752 $3,560,840 $6,112,651
Direct costs (10,316,048) (2,375,980) (2,023,418) (3,202,864)
------------ ------------ ------------ ------------
Direct
contribution 4,606,891 3,029,772 1,537,422 2,909,787
Operating
expenses and
indirect costs
of net
revenues
Income from
operations
Other income
(expenses):
Interest
income and
other
financial
gains
Interest
expense
and other
financial
results
Foreign
currency
loss
Other
income,
net
Net income
before income
/ asset tax
expense
Three Months Ended September 30, 2008
------------------------------------------------------
Marketplaces
--------------------------
Other
Countries Total Payments Consolidated
------------ ------------ ------------ ------------
Net revenues $1,740,073 $31,742,255 $8,518,388 $40,260,643
Direct costs (1,263,202) (19,181,512) (5,020,589) (24,202,101)
------------ ------------ ------------ ------------
Direct
contribution 476,871 12,560,743 3,497,799 16,058,542
Operating
expenses and
indirect costs
of net
revenues (4,382,605)
------------
Income
from
operations 11,675,937
------------
Other income
(expenses):
Interest
income
and other
financial
gains 330,139
Interest
expense
and other
financial
results (1,132,524)
Foreign
currency
loss (2,648,584)
Other
income,
net 39,587
------------
Net income
before income
/ asset tax
expense $8,264,555
============
Non-GAAP Measures of Financial Performance
This press release includes certain non-GAAP financial measures as defined under Securities and Exchange Commission (SEC) Rules to supplement the company's consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP.
These measures are not in accordance with, or an alternative to, measures 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 MercadoLibre's results of operations as the corresponding GAAP measures.
Reconciliation to the most comparable GAAP measure of all non-GAAP financial measures included in this press release can be found in the tables included at the end of this press release.
These non-GAAP measures are provided to enhance investors overall understanding of the company's current financial performance. Specifically, the company believes the non-GAAP measures provide useful information to both management and investors by excluding certain compensation expenses and unusual foreign currency effects that may not be indicative of its core operating results, thereby enhancing an investor's ability to make period over period comparisons of the company's results. The company believes the inclusion of these non-GAAP measures provides an element of consistency in the company's financial reporting and uses these measures in internal budgets and models and in determining executive compensation benchmarks.
In this press release MercadoLibre also includes each of income from operations, net income, earnings per basic and diluted share, blended and effective tax rates and certain margin percentages for the quarter ended September 30, 2009 after excluding (or adding back) the following charges required by GAAP:
* Compensation Costs Related to Acquisitions: This amount relates
to the purchase price of the shares of CMG and its subsidiaries.
Under US GAAP we have recognized a contingent consideration paid
to former shareholders as compensation for services. As of
September 30, 2008 the year to date total accrued compensation
costs amounted to $1.9 million. The following tables show a
reconciliation of this exclusion from the GAAP measures to the
non-GAAP measures.
* Long term retention plan compensation:
(a) On August 8, 2008, the Board of Directors approved a long-term
employee retention program (the 2008 LTRP) for certain executives
based on 2008 performance that will be payable 50% in cash and
50% in MercadoLibre common stock, in addition to their annual
salary and bonus. Payments will be made during the first quarter
on an annual basis according to the following vesting schedule:
year 1 (2009): 17%, year 2 (2010): 22%, year 3 (2011): 27%, year
4 (2012): 34%.
(b) On June 10, 2009 the Board of Directors approved a long-term
employee retention (the 2009 LTRP) program for certain executives
based on 2009 performance. If earned, payments to eligible
employees under the 2009 LTRP will be in addition to payments of
base salary and cash bonus, if earned, made to these employees.
In order to receive an award under the 2009 LTRP, each eligible
employee must satisfy the performance conditions established by
the board of directors for him or her. If these conditions are
satisfied, the eligible employee will, subject to his or her
continued employment as of each applicable payment date, receive
the full amount of his 2009 LTRP bonus, payable as follows: (I)
the eligible employee will receive a fixed cash payment equal to
6.25% of his or her 2009 LTRP bonus once a year during eight
years starting in 2010 (the "Fixed Payment"); and (II) on each
date the company pays the Fixed Payment to an eligible employee,
he or she will also receive a cash payment (the "Variable
Payment") equal to the product of (i) 6.25% of the applicable
2009 LTRP bonus and (ii) the quotient of (a) divided by (b),
where (a), the numerator, equals the Applicable Year Stock Price
(as defined below) and (b), the denominator, equals the 2008
Stock Price, defined as $13.81, which was the average closing
price of the Company's common stock on the NASDAQ Global Market
during the final 60 trading days of 2008. The "Applicable Year
Stock Price" shall equal the average closing price of the
Company's common stock on the NASDAQ Global Market during the
final 60 trading days of the year preceding the applicable
payment date. For the 2008 LTRP and the Variable Payment of the
2009 LTRP,the US GAAP compensation cost is recognized in
accordance with the graded-vesting attribution method and is
accrued up to each payment day. For the Fixed Payment of the 2009
LTRP, the compensation cost is recognized in a straight-line
basis. The non-GAAP measures were calculated with the cost for
each year being accrued in the full fiscal year immediately
preceding the payment date according to the same payment schedule
in which 22% of the cost of the 2008 LTRP plan vests during the
year ended December 31 2009, and 12.5% of the cost of the 2009
LTRP vests during the year ended December 31, 2009. The following
tables show a reconciliation of this cost from the GAAP measures
to the non-GAAP measures.
* Venezuelan foreign currency re-measurement effect: This amount
relates to re-measurement of assets and liabilities in U.S.
dollars in the Venezuelan statutory Financial Statements. The
Venezuelan subsidiaries have re-measured the assets and
liabilities outstanding at September 30, 2009 in U.S. dollar
balances at the parallel exchange rate and translated them to the
official exchange rate. The following tables exclude the foreign
currency re-measurement effect generated from applying different
exchange rates in order to facilitate comparisons to other
quarters, or year to date figures, and to highlight this exchange
rate matter.
The following provide a reconciliation of certain Non-GAAP financial measures to the most comparable GAAP financial measures.
------------------------ ------------------------
Nine Months Ended Three Months Ended
September 30, September 30,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Net income $21,923,223 $10,890,564 $ 9,852,268 $ 5,875,792
Long term
retention plan
compensation net
of tax effect 432,420 188,867 174,130 188,867
Venezuelan foreign
currency
re-measurement
effect (1,482,719) -- 1,011,313 --
Compensation cost
related to
acquisitions -- 1,919,870 -- --
----------- ----------- ----------- -----------
Non-GAAP
net income $20,872,924 $12,999,301 $11,037,711 $ 6,064,659
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Basic net income
per common share: $ 0.50 $ 0.25 $ 0.22 $ 0.13
----------- ----------- ----------- -----------
Non-GAAP basic
net income per
common share: $ 0.47 $ 0.29 $ 0.25 $ 0.14
----------- ----------- ----------- -----------
Shares used in
basic net income
per share
calculation: 44,079,171 44,255,985 44,088,936 44,290,540
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Diluted net income
per common share $ 0.50 $ 0.25 $ 0.22 $ 0.13
----------- ----------- ----------- -----------
Non-GAAP diluted
net income per
common share: $ 0.47 $ 0.29 $ 0.25 $ 0.14
----------- ----------- ----------- -----------
Shares used in
diluted net
income per share
calculation: 44,130,078 44,374,124 44,138,031 44,379,682
----------- ----------- ----------- -----------
------------------------ -----------------------
Nine Months Ended Three Months Ended
September 30, September 30,
------------------------ -----------------------
2009 2008 2009 2008
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
Income and asset
tax expense $ 5,862,346 $ 7,723,778 $ 2,537,257 $2,388,763
Income taxes
related with
long term
retention plan
compensation 189,310 31,525 135,255 31,525
Income taxes
related with
Venezuelan
foreign currency
effects (763,825) -- 520,979 --
----------- ----------- ----------- ----------
Non-GAAP income
and asset
tax expense $ 5,287,831 $ 7,755,303 $ 3,193,491 $2,420,288
----------- ----------- ----------- ----------
Income before
income taxes $27,785,569 $18,614,342 $12,389,525 $8,264,555
Long term
retention plan
compensation 621,730 220,392 309,385 220,392
Venezuelan
foreign currency
re-measurement
effect (2,246,544) -- 1,532,292 --
Compensation
cost related
to acquisitions -- 1,919,870 -- --
----------- ----------- ----------- ----------
Non-Gaap
income before
income taxes $26,160,755 $20,754,604 $14,231,202 $8,484,947
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
Blended tax rate (1) 21.1% 41.5% 20.5% 28.9%
----------- ----------- ----------- ----------
Non-GAAP
Blended
tax rate (1) 20.2% 37.4% 22.4% 28.5%
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
Effective
tax rate (2) (3) 24.3% 38.4% 30.8% 37.1%
----------- ----------- ----------- ----------
Non-Gaap
Effective
tax rate (2) (3) 25.9% 34.5% 26.9% 33.5%
----------- ----------- ----------- ----------
1 - Blended tax rate defined as income and asset tax expense as a
percentage of income before income and asset tax.
2 - Effective income tax rate defined as the provision for income
taxes as a percentage of income before income tax.
3 - The effective tax rate does not include the effect of the
Mexican Tax call Impuesto Empresarial a Tasa Unica (IETU).
-------------------------- ------------------------
Nine Months Ended Three Months Ended
September 30, September 30,
-------------------------- ------------------------
2009 2008 2009 2008
------------ ------------ ----------- -----------
------------------------------------------- ------------------------
Net revenue $123,823,576 $103,572,881 $50,599,276 $40,260,643
------------------------------------------- ------------------------
GAAP
Net Income $ 21,923,223 $ 10,890,564 $ 9,852,268 $ 5,875,792
Earnings
per share
(basic) $ 0.50 $ 0.25 $ 0.22 $ 0.13
Earnings
per share
(diluted) $ 0.50 $ 0.25 $ 0.22 $ 0.13
------------------------------------------- ------------------------
Non-GAAP
Net Income $ 20,872,924 $ 12,999,301 $11,037,711 $ 6,064,659
Earnings
per share
(basic) $ 0.47 $ 0.29 $ 0.25 $ 0.14
Earnings
per share
(diluted) $ 0.47 $ 0.29 $ 0.25 $ 0.14