·

Total payment volume through Mercado Pago surpassed $6.5 billion for the first time, reaching $6.52 billion, a year-over-year increase of 47.2% in USD and 90.3% on an FX neutral basis. Total payment transactions increased 112.5% year-over-year, totaling 181.6 million transactions for the quarter.

·

Mercado Pago delivered successful execution in off-platform payments (online and offline) through merchant services, mobile point-of-sale (“MPOS”) devices and its mobile wallet business. On a consolidated basis, off-platform total payment volume grew 121.5% year-over-year in USD and 197.5% on an FX neutral basis.

·

For the first time ever, off-platform payments processed almost $3.2 billion in transactions, surpassing 120.0 million payment transactions in a single quarter with 120.1 million payments. Off-platform reached an important milestone in June, as it was the first month in our history that off platform TPV surpassed on platform TPV.

·

Our MPOS business continues to be one of the fastest growing non-marketplace business units, representing 41.9% of total off-platform payment volume during the quarter. On a consolidated basis, MPOS total payment volume grew 172.2% year-over-year on an FX neutral basis.

·

Mobile wallet reached 4.5 million active payers during the quarter, while total payment volume from mobile wallet in Argentina, Brazil and Mexico are all growing by triple digits year-over-year.

·

Our asset management product, Mercado Fondo, is available in Argentina and Brazil, where we offer our entire suite of FinTech solutions: MPOS devices, QR code in-store payments, mobile wallet and asset management. Mercado Fondo has invested over 70% and 50% of customer funds in Mercado Pago in Brazil and Argentina, respectively.

·

Gross merchandise volume (“GMV”) increased surpassing again $3 billion mark reaching $3.4 billion, representing an 8.4% and 33.0% increase in USD and on an FX neutral basis, respectively.

·

Items sold reached 88.7 million, growing 3.8% year-over-year versus 38.8% during the same period last year. The decrease in growth rates year-over-year is attributable to Brazil, where in July of last year we launched the R$5 flat listing fee on items below R$120 and removed listings below R$ 6 as we shift towards incentivizing buyers to purchase higher ticket items, as well as the implementation of the same initiative in Argentina during the second quarter of 2019.

·

Unique buyers numbers continue to accelerate versus the prior quarter, growing 20.8% year-over-year versus 10.8% in the first quarter.

·

Live listings offered on MercadoLibre’s marketplace surpassed 200 million for the second time, reaching 224.1 million in the second quarter of 2019, a 50.6% year-over-year increase.

·

Mobile gross merchandise volume grew 23.5% year-over-year on an FX neutral basis reaching 59.6% of GMV.

·

Items shipped through Mercado Envios reached 70.2 million, a 33.0% year-over-year increase, driven primarily by optimizations in our free shipping program. 





In Millions (*)



Q2 2019

Q2 2018



Brazil

$

$

Gross

Argentina

$

$

Billings

Mexico

$

$



Others

$

$



Total

$

$





In Millions (*)



Q2 2019

Q2 2018



Brazil

$

$

Free Shipping

Argentina

$

$

service cost

Mexico

$

$



Others

$

$



Total

$

$







In Millions (*)



Q2 2019

Q2 2018



Brazil

$

$

Net

Argentina

$

$

Revenues

Mexico

$

$



Others

$

$



Total

$

$

·

Net revenues for the second quarter were $545.2 million, a year-over-year increase of 62.6% in USD and 102.1% on an FX neutral basis.

·

Enhanced marketplace revenues increased 84.6% year-over-year in USD and 122.7% on an FX neutral basis, while non-marketplace revenues increased 43.4% year-over-year in USD and 73.0% on an FX neutral basis.

·

Gross profit was $272.4 million with a margin of 50.0%, compared to 47.6% in the second quarter of 2018.

·

Total operating expenses were $284.9 million, an increase of 51.6% year-over-year in USD. As a percentage of revenues, operating expenses were 52.3%, as compared to 56.1% during the second quarter of 2018.

·

Loss from operations was $12.5 million, compared to a loss of $28.2 million during the second quarter of 2018. As a percentage of revenues, the loss from operations reached 2.3%.

·

Interest income was $33.7 million, a 239.7% increase year-over-year, as a result of the proceeds of the 2028 Convertible Notes and equity offering in 2019, which generated more invested volume and interest gain, a higher float in Brazil and a higher interest rates in Argentina.

·

The Company incurred $14.7 million in financial expenses in the second quarter of 2019, mainly attributable to interest expense related to the 2028 Convertible Notes.

·

Foreign exchange gain for the second quarter of 2019 was $0.8 million, primarily as a result of the strengthening of the Brazilian Reais over our U.S. dollar net liability position in Brazil during the second quarter of 2019.

·

Net income before taxes was $7.3 million, up from a loss of $19.0 million during the second quarter 2018.

·

Income tax gain was $8.9 million during the second quarter driven by tax loss carry forward in Mexico partially offset for the income tax in Argentina and Brazil, yielding a negative effective tax rate for the period of 122.1%.

·

Net income was $16.2 million, resulting in basic net income per share of $0.31.

·

Operating cash flow was $27.6 million. Net decrease in cash, cash equivalents, restricted cash and cash equivalents was $177.9 million mostly driven by purchase of investments and a broader credit line offering.





Six-month Periods Ended
June 30, (*)

Three-month Periods Ended
June 30, (*)

(in millions)

2019

2018

2019

2018



Number of confirmed registered users at end of period 

Number of confirmed new registered users during period

Gross merchandise volume 

$

$

$

$

Number of successful items sold

Number of successful items shipped 

Total payment volume 

$

$

$

$

Total volume of payments on marketplace

$

$

$

$

Total payment transactions 

Unique buyers

Unique sellers

Capital expenditures

$

$

$

$

Depreciation and amortization

$

$

$

$





Consolidated Net Revenues

Q2’18

Q3’18

Q4’18

Q1’19

Q2’19



Brazil

25

%

25

%

34

%

64

%

74

%



Argentina

14

%

(8)

%

(16)

%

(8)

%

14

%



Mexico

62

%

152

%

157

%

220

%

267

%







Consolidated Net Revenues

Q2’18

Q3’18

Q4’18

Q1’19

Q2’19



Brazil

40

%

56

%

58

%

91

%

89

%



Argentina

68

%

68

%

77

%

83

%

115

%



Mexico

71

%

168

%

170

%

227

%

261

%







June 30,

December 31,



2019

2018

Assets

Current assets:

Cash and cash equivalents

$                    1,118,662

$                       440,332

Restricted cash and cash equivalents

Short-term investments (339,299 and 284,317 held in guarantee)

Accounts receivable, net

Credit cards receivable, net

Loans receivable, net

Prepaid expenses

Inventory

Other assets

Total current assets

Non-current assets:

Long-term investments

Property and equipment, net

Operating lease right-of-use assets

 —

Goodwill

Intangible assets, net

Deferred tax assets

Other assets

Total non-current assets

Total assets

$                    4,595,492

$                    2,239,519

Liabilities

Current liabilities:

Accounts payable and accrued expenses

$                       314,703

$                       266,759

Funds payable to customers

Salaries and social security payable

Taxes payable

Loans payable and other financial liabilities

Operating lease liabilities

 —

Other liabilities

Total current liabilities

Non-current liabilities:

Salaries and social security payable

Loans payable and other financial liabilities

Operating lease liabilities

 —

Deferred tax liabilities

Other liabilities

Total non-current liabilities

Total liabilities

$                    2,350,880

$                    1,902,819



Commitments and Contingencies (Note 7)



Redeemable convertible preferred stock, $0.001 par value, 40,000,000 shares

authorized, 100,000 shares issued and outstanding at June 30, 2019 (Note 10)

$                         98,843

$                                —



Equity



Common stock, $0.001 par value, 110,000,000 shares authorized,

49,318,543 and 45,202,859 shares issued and outstanding at June 30,

2019 and December 31, 2018

$                                49

$                                45

Additional paid-in capital

Retained earnings

Accumulated other comprehensive loss

Total Equity

Total Liabilities, Redeemable convertible preferred stock and Equity

$                    4,595,492

$                    2,239,519





Six Months Ended June 30,

Three Months Ended June 30,



2019

2018

2019

2018

Net revenues

$              1,019,012

$                 656,353

$             545,242

$                       335,377

Cost of net revenues

Gross profit

Operating expenses:

Product and technology development

Sales and marketing

General and administrative

Total operating expenses

Loss from operations



Other income (expenses):

Interest income and other financial gains

Interest expense and other financial losses

Foreign currency (losses) gains

Net income (loss) before income tax gain



Income tax gain

Net income (loss)

$                   28,081

$                 (24,171)

$               16,217

$                       (11,252)





Six Months Ended June 30,

Three Months Ended June 30,



2019

2018

2019

2018

Basic EPS

Basic net income (loss)

Available to shareholders per common share

$                            0.45

$                               (0.55)

$                            0.31

$                          (0.25)

Weighted average of outstanding common shares

Diluted EPS

Diluted net income (loss)

Available to shareholders per common share

$                            0.45

$                               (0.55)

$                            0.31

$                          (0.25)

Weighted average of outstanding common shares







Six Months Ended June 30,



2019

2018



Cash flows from operations:

Net income (loss)

$                         28,081

$                       (24,171)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Unrealized devaluation loss, net

Depreciation and amortization

Accrued interest

Non cash interest and convertible notes amortization of debt discount and amortization of debt issuance costs

LTRP accrued compensation

Deferred income taxes

Changes in assets and liabilities:

Accounts receivable 

Credit card receivables

Prepaid expenses

Inventory

Other assets

Payables and accrued expenses

Funds payable to customers

Other liabilities

Interest received from investments

Net cash provided by operating activities

Cash flows from investing activities:

Purchase of investments

Proceeds from sale and maturity of investments

Purchases of intangible assets

Advance for property and equipment

 —

Changes in principal of loans receivable, net

Purchases of property and equipment

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Purchase of convertible note capped call

Proceeds from loans payable and other financial liabilities

Payments on loans payable and other financing liabilities

Payment of finance lease obligations

 —

Dividends paid

 —

Dividends paid of preferred stock

 —

Proceeds from issuance of convertible redeemable preferred stock, net

 —

Proceeds from issuance of common stock, net

 —

Net cash provided by financing activities

Effect of exchange rate changes on cash, cash equivalents, restricted cash and cash equivalents

Net increase in cash, cash equivalents, restricted cash and cash equivalents

Cash, cash equivalents, restricted cash and cash equivalents, beginning of the period

$                       464,695

$                       388,260

Cash, cash equivalents, restricted cash and cash equivalents, end of the period

$                    1,128,322

$                       524,011





Three Months Ended June 30, 2019



Brazil

Argentina

Mexico

Other Countries

Total



(In thousands)

Net revenues

$                           340,858 

$                        113,913 

$                            64,383 

$                           26,088 

$                           545,242 

Direct costs

Direct contribution



Operating expenses and indirect costs of net revenues

Loss from operations



Other income (expenses):



Interest income and other financial gains



Interest expense and other financial losses



Foreign currency gains

Net income before income tax gain

$                               7,300 







Three Months Ended June 30, 2018



Brazil

Argentina

Mexico

Other Countries

Total



(In thousands)

Net revenues

$                           195,839 

$                        100,110 

$                            17,540 

$                           21,888 

$                           335,377 

Direct costs

Direct contribution



Operating expenses and indirect costs of net revenues

Loss from operations



Other income (expenses):



Interest income and other financial gains



Interest expense and other financial losses



Foreign currency gains

Net loss before income tax gain

$                          (18,952)





Three-month Periods Ended
June 30, (*)



As reported

FX Neutral Measures

As reported

(In millions, except percentages)

2019

2018

Percentage Change

2019

2018

Percentage Change



(Unaudited)

(Unaudited)

Net revenues

$                                 545.2

$                        335.4

$                           677.9

$                        335.4

Cost of net revenues

Gross profit



Operating expenses

Loss from operations

-55.8%