·

Total payment volume (“TPV”) through Mercado Pago reached $7.6 billion, a year-over-year increase of 66.2% in USD and 94.5% on an FX neutral basis. Total payment transactions increased 118.5% year-over-year, totaling 227.0 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 TPV grew 140.4% year-over-year in USD and 189.6% on an FX neutral basis.

·

For the first time ever, quarterly off-platform TPV surpassed on-platform TPV, reaching almost $4.0 billion in transactions and 158.3 million payments.

·

Our MPOS business continues to be one of the fastest growing non-marketplace business units. On a consolidated basis, MPOS TPV grew 141.2% year-over-year on an FX neutral basis.

·

Mobile wallet reached almost $1.0 billion in transactions on a consolidated basis. Our mobile wallet consumer base grew by 34.9% compared to the second quarter, reaching 6.1 million active payers during the quarter. TPV from mobile wallet in Argentina, Brazil and Mexico continues to grow 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 80% and 50% of customer funds in Mercado Pago in Brazil and Argentina, respectively.

·

Gross merchandise volume (“GMV”) increased, again surpassing the $3 billion mark and reaching $3.6 billion, representing a 21.6% and 36.8% increase in USD and on an FX neutral basis, respectively.

·

Items sold reached 98.0 million, growing 17.3% year-over-year.

·

Unique buyers numbers continue to accelerate, growing 25.7% year-over-year versus 20.8% in the second quarter.

·

Live listings offered on MercadoLibre’s marketplace reached 243.0 million, a 44.5% year-over-year increase.

·

Mobile gross merchandise volume grew 32.4% year-over-year on an FX neutral basis, reaching 65.4% of GMV.

·

Items shipped through Mercado Envios reached 81.2 million, a 47.5% year-over-year increase, driven primarily by optimizations in our free shipping program. 





In Millions (*)



Q3 2019

Q3 2018



Brazil

$

$

Gross

Argentina

$

$

Billings

Mexico

$

$



Others

$

$



Total

$

$





In Millions (*)



Q3 2019

Q3 2018



Brazil

$

$

Free Shipping

Argentina

$

$

service cost

Mexico

$

$



Others

$

$



Total

$

$







In Millions (*)



Q3 2019

Q3 2018



Brazil

$

$

Net

Argentina

$

$

Revenues

Mexico

$

$



Others

$

$



Total

$

$

·

Net revenues for the third quarter were $603.0 million, a year-over-year increase of 69.7% in USD and 90.5% on an FX neutral basis.

·

Enhanced marketplace revenues increased 70.9% year-over-year in USD and 123.9% on an FX neutral basis, while non-marketplace revenues increased 68.6% year-over-year in USD and 120.8% on an FX neutral basis.

·

Gross profit was $284.3 million with a margin of 47.2%, compared to 47.8% in the third quarter of 2018.

·

Total operating expenses were $366.3 million, an increase of 102.7% year-over-year in USD. As a percentage of revenues, operating expenses were 60.7%, compared to 50.9% during the third quarter of 2018. Of the 848 bps of margin compression in operating expenses, 689 bps were the result of an increase in marketing and branding investments and 194 bps were the result of an increase in bad debt from our credits business in Brazil.

·

Our marketing expenses alone increased $51.3 million QoQ during the quarter. The vast majority, $46.2M incremental dollars QoQ were deployed to branding initiatives allocating 60% behind Marketplace and 39% behind Payments. 

·

Loss from operations was $81.9 million, compared to a loss of $11.0 million during the third quarter of 2018. As a percentage of revenues, the loss from operations reached 13.6%.

·

Interest income was $28.5 million, a 229.5% 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, and higher float in Brazil and Argentina.

·

The Company incurred $14.5 million in financial expenses this quarter, mainly attributable to interest expense related to the 2028 Convertible Notes and financial guarantees in Argentina.

·

Foreign exchange gain this quarter was $1.0 million, as a result of the strengthening of the U.S. dollar over our Argentine Peso net liability position in Argentina during the third quarter of 2019.

·

Net loss before taxes was $66.9 million, up from a loss of $14.3 million during the third quarter of 2018.

·

Income tax loss was $79.2 million, mainly as a result of valuation allowances accounted for on certain deferred tax assets in Mexico and Colombia.

·

Net loss was $146.1 million, resulting in basic net loss per share of $2.96, due not only to the increased investment in marketing, but also a valuation allowance on deferred tax assets in Mexico and Colombia which accounted for $91.5 million and $7.2 million, respectively.

·

Operating cash flow was $206.9 million. Net increase in cash, cash equivalents, restricted cash and cash equivalents was $328.6 million, driven by higher proceeds from operating activities and lower proceeds used in investing activities.





Nine-month Periods Ended
September 30,(*) 

Three-month Periods Ended
September 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

Q3’18

Q4’18

Q1’19

Q2’19

Q3’19



Brazil

25

%

34

%

64

%

74

%

77

%



Argentina

(8)

%

(16)

%

(8)

%

14

%

39

%



Mexico

152

%

157

%

220

%

267

%

146

%







Consolidated Net Revenues

Q3’18

Q4’18

Q1’19

Q2’19

Q3’19



Brazil

56

%

58

%

91

%

89

%

77

%



Argentina

68

%

77

%

83

%

115

%

119

%



Mexico

168

%

170

%

227

%

261

%

153

%







September 30,

December 31,



2019

2018

Assets

Current assets:

Cash and cash equivalents

$                    1,419,934

$                       440,332

Restricted cash and cash equivalents

Short-term investments (371,572 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

$                    4,439,341

$                    2,239,519

Liabilities

Current liabilities:

Accounts payable and accrued expenses

$                       342,433

$                       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

$                    2,302,324

$                    1,902,819



Commitments and Contingencies



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

authorized, 100,000 shares issued and outstanding at September 30, 2019

$                         98,843

$                                —



Equity



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

49,709,955 and 45,202,859 shares issued and outstanding at September 30,

2019 and December 31, 2018

$                                50

$                                45

Additional paid-in capital

Treasury stock

 —

Retained earnings

Accumulated other comprehensive loss

Total Equity

Total Liabilities, Redeemable convertible preferred stock and Equity

$                    4,439,341

$                    2,239,519





Nine Months Ended September 30,

Three Months Ended September 30,



2019

2018

2019

2018

Net revenues

$               1,622,043

$               1,011,634

$                  603,031

$                  355,281

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 loss before income tax (loss) gain



Income tax (loss) gain

Net loss

$                (118,001)

$                  (34,249)

$                (146,082)

$                  (10,078)





Nine Months Ended September 30,

Three Months Ended September 30,



2019

2018

2019

2018

Basic EPS

Basic net loss

Available to shareholders per common share

$                     (2.60)

$                     (0.77)

$                     (2.96)

$                     (0.23)

Weighted average of outstanding common shares

Diluted EPS

Diluted net loss

Available to shareholders per common share

$                     (2.60)

$                     (0.77)

$                     (2.96)

$                     (0.23)

Weighted average of outstanding common shares







Nine Months Ended September 30,



2019

2018



Cash flows from operations:

Net loss

$                (118,001)

$                  (34,249)

Adjustments to reconcile net loss to net cash provided by operating activities:

Unrealized devaluation loss, net

Depreciation and amortization

Accrued interest

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

Stock-based compensation expense — restricted shares

 —

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

Payment for acquired businesses, net of cash acquired

 —

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:

Funds received from the issuance of convertible notes

 —

Transaction costs from the issuance of convertible notes

 —

Purchase of convertible note capped call

Unwind of convertible note capped call

 —

Payments on convertible notes

Proceeds from loans payable and other financial liabilities

Payments on loans payable and other financing liabilities

Payment of finance lease obligations

 —

Dividends paid

 —

Common Stock repurchased

 —

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

$               1,456,965

$               1,077,730





Three Months Ended September 30, 2019



Brazil

Argentina

Mexico

Other Countries

Total



(In thousands)

Net revenues

$                           389,941 

$                        116,203 

$                            71,364 

$                           25,523 

$                           603,031 

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 loss

$                          (66,927)







Three Months Ended September 30, 2018



Brazil

Argentina

Mexico

Other Countries

Total



(In thousands)

Net revenues

$                           220,828 

$                         83,714 

$                            28,962 

$                           21,777 

$                           355,281 

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

$                          (14,312)





Three-month Periods Ended
September 30, (*)



As reported

FX Neutral Measures

As reported

(In millions, except percentages)

2019

2018

Percentage Change

2019

2018

Percentage Change



(Unaudited)

(Unaudited)

Net revenues

$                                 603.0

$                        355.3

$                           676.9

$                        355.3

Cost of net revenues

Gross profit



Operating expenses

Loss from operations