UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2023~~March 31, 2024

-OR-


o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission file number 001-33647

MercadoLibre, Inc.

(Exact name of Registrant as specified in its Charter)


Delaware			98-0212790
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

WTC Free Zone

Dr. Luis Bonavita 1294, Of. 1733, Tower II

Montevideo, Uruguay, 11300

(Address of registrant’s principal executive offices) (Zip Code)

(+598) 2-927-2770

(Registrant’s telephone number, including area code)

~~(Former name, former address and former fiscal year, if changed since last report)~~

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

MELI

Nasdaq Global Select Market

2.375% Sustainability Notes due 2026

MELI26

The Nasdaq Stock Market LLC

3.125% Notes due 2031

MELI31

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x☒ No o☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x☒ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

x☒

Accelerated filer

o☐

Non-accelerated filer

o☐

Smaller reporting company

o☐

Emerging growth company

o☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o☐ No x☒

~~APPLICABLE ONLY TO CORPORATE ISSUERS:~~

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

~~50,559,537~~50,697,442 shares of the issuer’s common stock, $0.001 par value, outstanding as of ~~November 1, 2023.~~May 2, 2024.

Table of Contents

MERCADOLIBRE, INC.

INDEX TO FORM 10-Q


			Page
PART I. FINANCIAL INFORMATION

ITEM 1 — UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS			1
~~Item 1 — Unaudited Interim Condensed Consolidated Financial Statements~~
Interim Condensed Consolidated Balance Sheets as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023			1

Interim Condensed Consolidated Statements of Income for the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~			2

Interim Condensed Consolidated Statements of Comprehensive Income for the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~			3

Interim Condensed Consolidated Statements of Equity for the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~			4

Interim Condensed Consolidated Statements of Cash Flows for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~			5

Notes to Interim Condensed Consolidated Financial Statements (unaudited)			67

~~Item~~ITEM 2 — ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			3738

~~Item~~ITEM 3 — ~~Qualitative and Quantitative Disclosures About Market Risk~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			6357

~~Item~~ITEM 4 — ~~Controls and Procedures~~CONTROLS AND PROCEDURES			6660

PART II. OTHER INFORMATION			6761

~~Item~~ITEM 1 — ~~Legal Proceedings~~LEGAL PROCEEDINGS			6761

~~Item~~ITEM 1A — ~~Risk Factors~~RISK FACTORS			6761

~~Item~~ITEM 2 — ~~Unregistered Sales of Equity Securities and Use of Proceeds~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			6761

~~Item~~ITEM 5 — ~~Other Information~~OTHER INFORMATION			6761

~~Item~~ITEM 6 — ~~Exhibits~~EXHIBITS			6761

INDEX TO EXHIBITS			6862

SIGNATURES			63

Table of Contents

MercadoLibre, Inc. - Interim Condensed Consolidated Balance Sheets as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023

(In millions of U.S. dollars, except par value) (Unaudited)

September 30,
2023 December 31,
2022
Assets
Current assets:
Cash and cash equivalents $ 2,171 $ 1,910
Restricted cash and cash equivalents 1,085 1,453
Short-term investments 3,320 2,339
Accounts receivable, net 161 130
Credit card receivables and other means of payments, net 3,375 2,946
Loans receivable, net of allowances of $989 and $1,074 (Note 6) 2,336 1,704
Prepaid expenses 43 38
Inventories 246 152
Customer crypto-assets safeguarding assets 21 15
Other assets 292 266
Total current assets 13,050 10,953
Non-current assets:
Long-term investments 149 322
Loans receivable, net of allowances of $35 and $30 (Note 6) 42 32
Property and equipment, net 1,081 993
Operating lease right-of-use assets 796 656
Goodwill 159 153
Intangible assets, net 21 25
Deferred tax assets 489 346
Other assets 337 256
Total non-current assets 3,074 2,783
Total assets $ 16,124 $ 13,736
Liabilities
Current liabilities:
Accounts payable and accrued expenses $ 1,910 $ 1,393
Funds payable to customers 4,016 3,454
Amounts payable due to credit and debit card transactions 745 483
Salaries and social security payable 519 401
Taxes payable 530 414
Loans payable and other financial liabilities 2,272 2,131
Operating lease liabilities 171 142
Customer crypto-assets safeguarding liabilities 21 15
Other liabilities 122 129
Total current liabilities 10,306 8,562
Non-current liabilities:
Amounts payable due to credit and debit card transactions 12 5
Loans payable and other financial liabilities 2,182 2,627
Operating lease liabilities 615 514
Deferred tax liabilities 163 106
Other liabilities 105 95
Total non-current liabilities 3,077 3,347
Total liabilities $ 13,383 $ 11,909
Commitments and contingencies (Note 10)
Equity
Common stock, $0.001 par value, 110,000,000 shares authorized, 50,496,474 and 50,257,751 shares issued and outstanding $ — $ —
Additional paid-in capital 1,959 2,309
Treasury stock (587) (931)
Retained earnings 1,735 913
Accumulated other comprehensive loss (366) (464)
Total equity 2,741 1,827
Total liabilities and equity $ 16,124 $ 13,736


	March 31, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	2,579	$	2,556
Restricted cash and cash equivalents	1,239		1,292
Short-term investments	3,671		3,480
Accounts receivable, net	170		156
Credit card receivables and other means of payments, net	3,962		3,632
Loans receivable, net of allowances of $1,197 and $1,042	3,119		2,629
Inventories	223		238
Customer crypto-assets safeguarding assets	71		34
Other assets	471		277
Total current assets	15,505		14,294
Non-current assets:
Long-term investments	249		162
Loans receivable, net of allowances of $46 and $42	86		65
Property and equipment, net	1,260		1,250
Operating lease right-of-use assets	872		899
Goodwill	158		163
Intangible assets, net	12		11
Intangible assets at fair value	40		24
Deferred tax assets	810		710
Other assets	70		68
Total non-current assets	3,557		3,352
Total assets	$	19,062	$	17,646
Liabilities
Current liabilities:
Accounts payable and accrued expenses	$	2,203	$	2,117
Funds payable to customers	5,059		4,475
Amounts payable due to credit and debit card transactions	1,329		1,072
Salaries and social security payable	531		545
Taxes payable	500		477
Loans payable and other financial liabilities	2,246		2,292
Operating lease liabilities	163		166
Customer crypto-assets safeguarding liabilities	71		34
Other liabilities	154		119
Total current liabilities	12,256		11,297
Non-current liabilities:
Amounts payable due to credit and debit card transactions	23		20
Loans payable and other financial liabilities	2,224		2,203
Operating lease liabilities	653		672
Deferred tax liabilities	226		183
Other liabilities	290		200
Total non-current liabilities	3,416		3,278
Total liabilities	$	15,672	$	14,575
Commitments and contingencies (Note 11)
Equity
Common stock, $0.001 par value, 110,000,000 shares authorized, 50,697,442 shares issued and outstanding	$	—	$	—
Additional paid-in capital	1,770		1,770
Treasury stock	(310)		(310)
Retained earnings	2,245		1,901
Accumulated other comprehensive loss	(315)		(290)
Total equity	3,390		3,071
Total liabilities and equity	$	19,062	$	17,646

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

1 | MercadoLibre, Inc.

Table of Contents

MercadoLibre, Inc.

Interim Condensed Consolidated Statements of Income

For the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~

(In millions of U.S. dollars, except for share data)

(Unaudited)

Nine Months Ended
September 30, Three Months Ended
September 30,
2023 2022 2023 2022
Net service revenues $ 9,233 $ 6,766 $ 3,419 $ 2,437
Net product revenues 979 769 341 253
Net revenues 10,212 7,535 3,760 2,690
Cost of net revenues (4,961) (3,830) (1,765) (1,342)
Gross profit 5,251 3,705 1,995 1,348
Operating expenses:
Product and technology development (1,145) (774) (396) (278)
Sales and marketing (1,207) (916) (441) (333)
Provision for doubtful accounts (751) (845) (277) (288)
General and administrative (565) (485) (196) (153)
Total operating expenses (3,668) (3,020) (1,310) (1,052)
Income from operations 1,583 685 685 296
Other income (expenses):
Interest income and other financial gains 545 142 196 65
Interest expense and other financial losses (297) (221) (111) (92)
Foreign currency losses, net (508) (134) (239) (71)
Net income before income tax expense and equity in earnings of unconsolidated entity 1,323 472 531 198
Income tax expense (504) (154) (172) (69)
Equity in earnings of unconsolidated entity 3 (1) — —
Net income $ 822 $ 317 $ 359 $ 129

Nine Months Ended
September 30, Three Months Ended
September 30,
2023 2022 2023 2022
Basic earning per share
Basic net income available to shareholders per common share $ 16.40 $ 6.30 $ 7.18 $ 2.57
Weighted average of outstanding common shares 50,137,826 50,365,813 50,008,320 50,325,075
Diluted earning per share
Diluted net income available to shareholders per common share $ 16.36 $ 6.29 $ 7.16 $ 2.56
Weighted average of outstanding common shares 50,338,945 51,356,081 50,209,439 51,315,343


	Three Months Ended March 31,
		2024		2023 (1)
Net service revenues and financial income		$	3,955	$	2,912
Net product revenues		378		274
Net revenues and financial income		4,333		3,186
Cost of net revenues and financial expenses		(2,309)		(1,572)
Gross profit		2,024		1,614
Operating expenses:
Product and technology development		(458)		(381)
Sales and marketing		(478)		(383)
Provision for doubtful accounts		(374)		(252)
General and administrative		(186)		(180)
Total operating expenses		(1,496)		(1,196)
Income from operations		528		418

Other income (expenses):
Interest income and other financial gains		25		23
Interest expense and other financial losses		(38)		(34)
Foreign currency losses, net		(34)		(87)
Net income before income tax expense and equity in earnings of unconsolidated entity		481		320

Income tax expense		(137)		(122)
Equity in earnings of unconsolidated entity		—		3
Net income		$	344	$	201

(1) Recast for consistency with the current presentation due to the change in the presentation of certain financial results. Please refer to Note 2 – Summary of significant accounting policies - Change in the presentation of certain financial results and reclassification of prior year results.


	Three Months Ended March 31,
		2024		2023
Basic earning per share
Basic net income available to shareholders per common share		$	6.78	$	4.01
Weighted average of outstanding common shares		50,697,442		50,245,073
Diluted earning per share
Diluted net income available to shareholders per common share		$	6.78	$	3.97
Weighted average of outstanding common shares		50,697,442		51,235,341

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

2 | MercadoLibre, Inc.

Table of Contents

MercadoLibre, Inc.

Interim Condensed Consolidated Statements of Comprehensive Income

For the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~

(In millions of U.S. dollars)

(Unaudited)

Nine Months Ended September 30, Three Months Ended September 30,
2023 2022 2023 2022
Net income $ 822 $ 317 $ 359 $ 129
Other comprehensive income:
Currency translation adjustment 99 — (76) (38)
Unrealized (losses) gains on hedging activities (8) (33) 2 (9)
Tax benefit (expenses) on unrealized (losses) gains on hedging activities 2 8 (1) 3
Less: Reclassification adjustment for losses on hedging activities included in cost of net revenues, interest expense and foreign currency losses (8) (18) (6) (9)
Less: Reclassification adjustment for estimated tax benefit on unrealized gains 3 5 2 3
Net change in accumulated other comprehensive income, net of income tax 98 (12) (71) (38)
Total comprehensive income $ 920 $ 305 $ 288 $ 91


	Three Months Ended March 31,
	2024		2023
Net income	$	344	$	201
Other comprehensive (loss) income, net of income tax:
Currency translation adjustment	(28)		77
Unrealized gains (losses) on hedging activities	2		(7)
Tax (expense) benefit on unrealized gains (losses) on hedging activities	(1)		2
Less: Reclassification adjustment for losses on hedging activities included in cost of net revenues and financial expenses, interest expense and other financial losses and foreign currency losses, net	(3)		(2)
Less: Reclassification adjustment for estimated tax benefit on unrealized losses	1		1
Total other comprehensive (loss) income, net of income tax	(25)		73
Total comprehensive income	$	319	$	274

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

3 | MercadoLibre, Inc.

Table of Contents

MercadoLibre, Inc.

Interim Condensed Consolidated Statements of Equity

For the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~

(In millions of U.S. dollars)

(Unaudited)

Common stock Additional
paid-in
capital Treasury
Stock (*) Retained
Earnings Accumulated
other
comprehensive
loss Total
Equity
Shares Amount
Balance as of December 31, 2022 50 $ — $ 2,309 $ (931) $ 913 $ (464) $ 1,827
Common Stock repurchased — — — (61) — — (61)
Net income — — — — 201 — 201
Other comprehensive income — — — — — 73 73
Balance as of March 31, 2023 50 $ — $ 2,309 $ (992) $ 1,114 $ (391) $ 2,040
Common Stock repurchased — — — (146) — — (146)
Net income — — — — 262 — 262
Other comprehensive income — — — — — 96 96
Balance as of June 30, 2023 50 $ — $ 2,309 $ (1,138) $ 1,376 $ (295) $ 2,252
Capped call settlement — — 412 (412) — — —
Conversion of 2028 Convertible Notes — — (762) 1,112 — — 350
Common Stock repurchased — — — (149) — — (149)
Net income — — — — 359 — 359
Other comprehensive loss — — — — — (71) (71)
Balance as of September 30, 2023 50 $ — $ 1,959 $ (587) $ 1,735 $ (366) $ 2,741


~~(*)~~			~~As of September 30, 2023, the Company held 425,913 shares as treasury stock.~~


	Common stock			Additional paid-in capital		Treasury Stock (1)		Retained Earnings		Accumulated other comprehensive loss		Total Equity
	Shares	Amount
Balance as of December 31, 2023	50	$	—	$	1,770	$	(310)	$	1,901	$	(290)	$	3,071
Net income	—	—		—		—		344		—		344
Other comprehensive loss	—	—		—		—		—		(25)		(25)
Balance as of March 31, 2024	50	$	—	$	1,770	$	(310)	$	2,245	$	(315)	$	3,390

(1) As of March 31, 2024, the Company held 224,945 shares as treasury stock.

Common stock Additional
paid-in
capital Treasury
Stock Retained
Earnings Accumulated
other
comprehensive
loss Total
Equity
Shares Amount
Balance as of December 31, 2021 50 $ — $ 2,439 $ (790) $ 397 $ (515) $ 1,531
Changes in accounting standards — — (131) — 34 — (97)
Balance as of December 31, 2021 Restated 50 $ — $ 2,308 $ (790) $ 431 $ (515) $ 1,434
Common Stock repurchased — — — (39) — — (39)
Net income — — — — 65 — 65
Other comprehensive income — — — — — 129 129
Balance as of March 31, 2022 50 $ — $ 2,308 $ (829) $ 496 $ (386) $ 1,589
Shares granted — — — 6 — — 6
Common Stock repurchased — — — (35) — — (35)
Net income — — — — 123 — 123
Other comprehensive loss — — — — — (103) (103)
Balance as of June 30, 2022 50 $ — $ 2,308 $ (858) $ 619 $ (489) $ 1,580
Shares granted — — — 1 — — 1
Stock-based compensation - restricted shares — — — (1) — — (1)
Common Stock repurchased — — — (40) — — (40)
Net income — — — — 129 — 129
Other comprehensive loss — — — — — (38) (38)
Balance as of September 30, 2022 50 $ — $ 2,308 $ (898) $ 748 $ (527) $ 1,631


	Common stock			Additional paid-in capital		Treasury Stock		Retained Earnings		Accumulated other comprehensive loss		Total Equity
	Shares	Amount
Balance as of December 31, 2022	50	$	—	$	2,309	$	(931)	$	913	$	(464)	$	1,827
Common Stock repurchased	—	—		—		(61)		—		—		(61)
Net income	—	—		—		—		201		—		201
Other comprehensive income	—	—		—		—		—		73		73
Balance as of March 31, 2023	50	$	—	$	2,309	$	(992)	$	1,114	$	(391)	$	2,040

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

4 | MercadoLibre, Inc.

Table of Contents

MercadoLibre, Inc. - Interim Condensed Consolidated Statements of Cash Flows

For the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~

(In millions of U.S. dollars)

(Unaudited)

Nine Months Ended September 30,
2023 2022
Cash flows from operations:
Net income $ 822 $ 317
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in earnings of unconsolidated entity (3) 1
Unrealized foreign currency losses, net 498 265
Impairment of digital assets — 11
Depreciation and amortization 389 281
Accrued interest income (232) (111)
Non cash interest expense and amortization of debt issuance costs and other charges 79 132
Provision for doubtful accounts 751 845
Results on derivative instruments 26 28
Stock-based compensation expense — restricted shares — 1
Long term retention program (“LTRP”) accrued compensation 122 59
Deferred income taxes (84) (96)
Changes in assets and liabilities:
Accounts receivable (46) (27)
Credit card receivables and other means of payments (361) (768)
Prepaid expenses (3) (22)
Inventories (85) 102
Other assets (89) (60)
Payables and accrued expenses 605 150
Funds payable to customers 440 216
Amounts payable due to credit and debit card transactions 255 77
Other liabilities (85) (87)
Interest received from investments 213 84
Net cash provided by operating activities 3,212 1,398
Cash flows from investing activities:
Purchases of investments (15,540) (9,266)
Proceeds from sale and maturity of investments 14,847 7,861
Payments from settlements of derivative instruments (49) (7)
Purchases of intangibles assets — (1)
Changes in loans receivable, net (1,465) (1,470)
Investments of property and equipment (329) (342)
Net cash used in investing activities (2,536) (3,225)
Cash flows from financing activities:
Proceeds from loans payable and other financial liabilities 19,390 12,478
Payments on loans payable and other financing liabilities (19,353) (11,421)
Payments of finance lease obligations (21) (14)
Common Stock repurchased (356) (115)
Net cash (used in) provided by financing activities (340) 928
Effect of exchange rate changes on cash, cash equivalents, restricted cash and cash equivalents (443) (221)
Net decrease in cash, cash equivalents, restricted cash and cash equivalents (107) (1,120)
Cash, cash equivalents, restricted cash and cash equivalents, beginning of the period $ 3,363 $ 3,648
Cash, cash equivalents, restricted cash and cash equivalents, end of the period $ 3,256 $ 2,528


	Three Months Ended March 31,
	2024		2023
Cash flows from operations:
Net income	$	344	$	201
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in earnings of unconsolidated entity	—		(3)
Unrealized foreign currency losses, net	9		117
Depreciation and amortization	154		126
Accrued interest income	(83)		(72)
Non cash interest expense and amortization of debt issuance costs and other charges	48		52
Provision for doubtful accounts	374		252
Results on derivative instruments	1		11
Long term retention program (“LTRP”) accrued compensation	68		47
Results on digital assets at fair value	(16)		—
Deferred income taxes	(65)		8
Changes in assets and liabilities:
Accounts receivable	(22)		(12)
Credit card receivables and other means of payments	(403)		165
Inventories	11		(39)
Other assets	(202)		(16)
Payables and accrued expenses	81		107
Funds payable to customers	727		(242)
Amounts payable due to credit and debit card transactions	292		63
Other liabilities	109		39
Interest received from investments	85		55
Net cash provided by operating activities	1,512		859
Cash flows from investing activities:
Purchases of investments	(4,095)		(5,124)
Proceeds from sale and maturity of investments	3,728		5,104
Payments from settlements of derivative instruments	(5)		(8)
Purchases of intangibles assets	(2)		—
Changes in loans receivable, net	(946)		(421)
Investments of property and equipment	(146)		(89)
Net cash used in investing activities	(1,466)		(538)
Cash flows from financing activities:
Proceeds from loans payable and other financial liabilities	3,519		5,977
Payments on loans payable and other financing liabilities	(3,506)		(6,022)
Payments of finance lease liabilities	(13)		(6)
Common Stock repurchased	—		(61)
Net cash used in financing activities	—		(112)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and cash equivalents	(76)		(48)
Net (decrease) increase in cash, cash equivalents, restricted cash and cash equivalents	(30)		161
Cash, cash equivalents, restricted cash and cash equivalents, beginning of the period	3,848		3,363
Cash, cash equivalents, restricted cash and cash equivalents, end of the period	$	3,818	$	3,524

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

5 | MercadoLibre, Inc.

Table of Contents

MercadoLibre, Inc. -Interim Condensed Consolidated Statements of Cash Flows

For the three-month periods ended March 31, 2024 and 2023

(In millions of U.S. dollars)

(Unaudited)


	Three Months Ended March 31,
	2024		2023
Non-cash transactions:
Right-of-use assets obtained under operating leases	$	12	$	42
Property and equipment obtained under finance leases	6		11

6 | MercadoLibre, Inc.

Table of Contents

MercadoLibre, Inc.

Notes to unaudited interim condensed consolidated financial statements

NOTE 1. ~~Nature of Business~~NATURE OF BUSINESS

MercadoLibre, Inc. (“MercadoLibre” orand together with its consolidated entities, the “Company”) was incorporated in the state of Delaware, in the United States of America, in October 1999. MercadoLibre is the largest online commerce ecosystem in Latin America, serving as an integrated regional platform and as a provider of necessary digital and technology tools that allow businesses and individuals to trade products and services in the region.

The Company enables commerce through its marketplace platform, which allows users to buy and sell in most of Latin America. Through Mercado Pago, the fintech solution, MercadoLibre enables individuals and businesses to send and receive digital payments; through Mercado Envios, MercadoLibre facilitates the shipping of goods from the Company and sellers to buyers; through the advertising products, MercadoLibre facilitates advertising services for large retailers and brands to promote their products and services on the web; through Mercado Shops, MercadoLibre allows users to set-up, manage, and promote their own on-line web-stores under a subscription-based business model; through Mercado Credito, MercadoLibre extends loans to certain merchants and consumers; and through Mercado Fondo, MercadoLibre allows users to invest funds deposited in their Mercado Pago accounts.

As of ~~September 30, 2023,~~March 31, 2024, MercadoLibre, through its wholly-owned subsidiaries, operated online e-commerce platforms directed towards Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Peru, Mexico, Panama, Honduras, Nicaragua, El Salvador, Uruguay, Bolivia, Guatemala, Paraguay and Venezuela. Additionally, MercadoLibre operates its fintech solution in Argentina, Brazil, Mexico, Colombia, Chile, Peru, Uruguay and Ecuador, and extends loans through Mercado Credito in Argentina, Brazil, Mexico and Chile. It also offers a shipping solution directed towards Argentina, Brazil, Mexico, Colombia, Chile, Uruguay, Peru and Ecuador.

NOTE 2. ~~Summary of significant accounting policies~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying unaudited interim condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of the Company, its wholly-owned subsidiaries and consolidated Variable Interest Entities (“VIE”). Investments in entities where the Company holds joint control, but not control, over the investee are accounted for using the equity method of accounting. These unaudited interim condensed consolidated financial statements are stated in U.S. dollars, except where otherwise indicated. Intercompany transactions and balances ~~with subsidiaries~~ have been eliminated for consolidation purposes.

Substantially all net revenues and financial income, cost of net revenues and financial expenses and operating expenses, are generated in the Company’s foreign operations. Long-lived assets, intangible assets and goodwill and operating lease right-of-use assets located in the foreign jurisdictions totaled ~~$2,046~~$2,297 million and ~~$1,817~~$2,321 million as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

These unaudited interim condensed consolidated financial statements reflect the Company’s consolidated financial position as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023. These unaudited interim condensed consolidated financial statements include the Company’s consolidated statements of income, comprehensive income, ~~and~~ equity ~~for the nine~~ and ~~three-month periods ended September 30, 2023 and 2022 and statements of~~ cash flows for the ~~nine-month~~three-month periods ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023. These unaudited interim condensed consolidated financial statements include all normal recurring adjustments that Management believes are necessary to fairly state the Company’s financial position, operating results and cash flows.

Because all of the disclosures required by U.S. GAAP for annual consolidated financial statements are not included herein, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, ~~2022,~~2023, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022~~2023 filed with the Securities and Exchange Commission (“SEC”) (the “Company’s ~~2022~~2023 10-K”). The Company has evaluated all subsequent events through the date these unaudited interim condensed consolidated financial statements were issued. The ~~unaudited~~ interim condensed consolidated statements of income, comprehensive income, equity and cash flows for the periods presented herein are not necessarily indicative of results expected for any future period. For a more detailed discussion of the Company’s significant accounting policies, see Note 2 to the financial statements in the Company’s ~~2022~~2023 10-K. During the ~~nine-month~~three-month period ended ~~September 30, 2023,~~March 31, 2024, there were no material updates made to the Company’s significant accounting policies. For information regarding the change in the presentation of the statements of income, please refer to section “Change in the presentation of certain financial results and reclassification of prior year results” of Note 2 – Summary of significant accounting policies of these unaudited interim condensed consolidated financial statements.

Change in the presentation of certain financial results and reclassification of prior year results

Change in the presentation of certain financial results

Mercado Pago Fintech platform operations have significantly evolved during the last several years, not only because of the increase in the volume of transactions but also as a result of transitioning from being a non-regulated business to a regulated business, subject to the oversight of central banks and other regulators in the various countries in which the Company operates (refer to Note 3 – Fintech Regulations to the consolidated financial statements in the Company’s 2023 10-K for further details).

Many of the regulations to which the Company is subject require that the Company, among other things, maintain liquidity reserves to guarantee the funds on users’ account balances in their Mercado Pago digital accounts. Depending on the country, these reserves can be partially or totally invested. During the last several years, these new regulations, coupled with the increase in the volume of transactions, have led the Company to view interest income and other financial gains from investments of these liquidity reserves as part of the Company’s operations.

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Notes to unaudited interim condensed consolidated financial statements

Furthermore, the evolution of Mercado Pago’s activities themselves has resulted in the Company managing a significant volume of cash, cash equivalents and investments. This is due to an increase in users’ account balances in their Mercado Pago digital account managed by the Company, and an increase in the level of the Company’s indebtedness to finance those operations. As a result, Mercado Pago’s available cash, together with the financing activities, have generated a significant volume of interest income and other financial gains and interest expenses and other financial losses, respectively.

The Company believes that these regulatory trends and related activities will continue and, therefore, with the goal of creating a better measure of the performance of the Company, the Company decided to reclassify and present certain financial results from “Other income (expenses)” to “Net revenues and financial income” and “Cost of net revenues and financial expenses,” in the statement of income, starting January 1, 2024 and for all prior periods presented.

The reclassified financial results are related to activities that are needed or mandatory for Mercado Pago’s operations, and consist of:

■interest income derived from investments, cash and cash equivalents, generated as part of the treasury strategy of the fintech business and because of the different regulations that require liquidity reserves, net of sales taxes;

■interest expense and other financing costs generated by the different sources of funding of the fintech activities; and

■gains and losses of derivatives hedging risks related to Mercado Pago’s activities.

Reclassification of prior year results

According to the Accounting Standards Codification (“ASC”) 205, Presentation of Financial Statements, the Company should present in a consistent manner all periods presented within the accompanying unaudited interim condensed consolidated financial statements. Therefore, prior period balances have been reclassified for consistency with the current presentation. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s 2023 10-K.

This reclassification did not have an impact on previously reported net income, earnings per share, retained earnings or other components of equity or total equity.

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Notes to unaudited interim condensed consolidated financial statements

The following tables, recast for the changes summarized above, present condensed statement of income line items affected by the revisions and reclassifications of previously reported financial statements, detailing amounts previously reported, the impact upon those line items due to reclassifications and amounts as currently revised within the financial statements:


	Three Months Ended March 31, 2023						Three Months Ended June 30, 2023		Three Months Ended September 30, 2023		Three Months Ended December 31, 2023		For the year ended December 31, 2023
	As reported		Reclassification		Recast		Recast		Recast		Recast		Recast
	(In millions)						(In millions)		(In millions)		(In millions)		(In millions)
Net service revenues and financial income	$	2,763	$	149	$	2,912	$	3,221	$	3,586	$	3,898	$	13,617
Net product revenues	274		—		274		364		341		511		1,490
Net revenues and financial income	3,037		149		3,186		3,585		3,927		4,409		15,107
Cost of net revenues and financial expenses	(1,501)		(71)		(1,572)		(1,754)		(1,832)		(2,359)		(7,517)
Gross profit	1,536		78		1,614		1,831		2,095		2,050		7,590
Operating expenses:
Product and technology development	(381)		—		(381)		(368)		(396)		(686)		(1,831)
Sales and marketing	(383)		—		(383)		(383)		(441)		(529)		(1,736)
Provision for doubtful accounts	(252)		—		(252)		(222)		(277)		(299)		(1,050)
General and administrative	(180)		—		(180)		(189)		(196)		(201)		(766)
Total operating expenses	(1,196)		—		(1,196)		(1,162)		(1,310)		(1,715)		(5,383)
Income from operations	340		78		418		669		785		335		2,207

Other income (expenses):
Interest income and other financial gains	161		(138)		23		34		38		40		135
Interest expense and other financial losses	(94)		60		(34)		(49)		(53)		(38)		(174)
Foreign currency losses, net	(87)		—		(87)		(182)		(239)		(107)		(615)
Net income before income tax expense and equity in earnings of unconsolidated entity	320		—		320		472		531		230		1,553

Income tax expense	(122)		—		(122)		(210)		(172)		(65)		(569)
Equity in earnings of unconsolidated entity	3		—		3		—		—		—		3
Net income	$	201	$	—	$	201	$	262	$	359	$	165	$	987

Furthermore, the following tables, recast for the changes summarized above, present net revenues per reporting segment (which have been disaggregated by similar products and services), detailing amounts previously reported, the impact upon those line items due to reclassifications and amounts as currently revised within the financial statements for the three-month period ended March 31, 2023:


	Three Months Ended March 31, 2023
As reported	Brazil		Argentina		Mexico		Other countries		Total
	(In millions)
Commerce services	$	762	$	224	$	338	$	91	$	1,415
Commerce products sales	145		49		60		7		261
Total commerce revenues	907		273		398		98		1,676
Fintech services	426		287		56		43		812
Credit revenues	241		159		135		1		536
Fintech products sales	5		2		2		4		13
Total fintech revenues	672		448		193		48		1,361
Total net revenues	$	1,579	$	721	$	591	$	146	$	3,037

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Notes to unaudited interim condensed consolidated financial statements


	Three Months Ended March 31, 2023
Reclassification	Brazil		Argentina		Mexico		Other countries		Total
	(In millions)



Fintech services and financial income	$	60	$	66	$	19	$	4	$	149


Total fintech revenues	60		66		19		4		149
Total net revenues and financial income	$	60	$	66	$	19	$	4	$	149


	Three Months Ended March 31, 2023
Recast	Brazil		Argentina		Mexico		Other countries		Total
	(In millions)
Commerce services	$	762	$	224	$	338	$	91	$	1,415
Commerce products sales	145		49		60		7		261
Total commerce revenues	907		273		398		98		1,676
Fintech services and financial income	486		353		75		47		961
Credit revenues	241		159		135		1		536
Fintech products sales	5		2		2		4		13
Total fintech revenues	732		514		212		52		1,510
Total net revenues and financial income	$	1,639	$	787	$	610	$	150	$	3,186

Use of estimates

The preparation of these unaudited interim condensed consolidated financial statements in conformity with U.S. GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for, but not limited to, accounting and disclosures for allowance for doubtful accounts and chargeback provisions, inventories valuation reserves, recoverability of goodwill, intangible assets with indefinite useful lives and deferred tax assets, impairment of short-term and long-term investments, impairment of long-lived assets, separation of lease and non lease components for aircraft leases, asset retirement obligation, compensation costs relating to the Company’s long term retention program, fair value of ~~convertible debt,~~customer crypto-assets safeguarding assets and liabilities, fair value of ~~investments,~~certain loans payable and other financial liabilities, fair value of loans receivable, fair value of derivative instruments, income taxes, ~~and~~ contingencies and determination of the incremental borrowing rate at commencement date of lease operating agreements. Actual results could differ from those estimates.

Customer crypto-assets safeguarding assets and liabilities

As of March 31, 2024 and December 31, 2023, the fair value of the crypto-assets held in customers’ names by third-party service providers that the Company recognized on its consolidated balance sheets for both the crypto-asset safeguarding liability and the corresponding safeguarding asset, which are included in “Customer crypto-assets safeguarding liabilities” and “Customer crypto-assets safeguarding assets,” respectively, was $71 million and $34 million, respectively, which consisted of $41 million and $18 million of Bitcoin, $15 million and $7 million of Ether, and $15 million and $9 million of other crypto-assets, respectively.

For further information related to customer crypto-assets safeguarding assets and liabilities please refer to Note 2 to the consolidated financial statements in the Company’s 2023 10-K.

Supplier finance programs

The Company and certain financial institutions participate in a supplier finance program that enables certain of the Company’s suppliers, at their own election, to request the payment of their invoices to the financial institutions earlier than the terms stated in the Company’s payment policy. As of March 31, 2024 and December 31, 2023, the obligations outstanding that the Company has confirmed as valid to the financial institutions amounted to $368 million and $381 million, respectively.

For further information related to Supplier Finance Programs please refer to Note 2 to the consolidated financial statements in the Company’s 2023 10-K.

Revenue recognition

Revenue recognition criteria for the services provided and goods sold by the Company are described in Note 2 to the consolidated financial statements in the Company’s ~~2022~~2023 10-K.

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Notes to unaudited interim condensed consolidated financial statements

The aggregate gain included in “Fintech ~~services”~~services and financial income” revenues arising from financing transactions and sales of financial assets, net of the costs recognized on sale of credit card receivables, is ~~$1,055~~$365 million and ~~$379~~$336 million for the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and 2023, ~~and $751~~respectively.

Revenues recognized under ASC 606, Revenue from contracts with customers, amounted to $3,099 million and ~~$261~~$2,165 million for the ~~nine and~~ three-month periods ended ~~September 30, 2022,~~March 31, 2024 and 2023, respectively. Revenues not recognized under ASC 606 amounted to $1,234 million and $1,021 million for the three-month periods ended March 31, 2024 and 2023, respectively.

Contract balances

Timing of revenue recognition may differ from the timing of invoicing to customers. Receivables represent amounts invoiced and revenue recognized prior to invoicing when the Company has satisfied the performance obligation and has the unconditional right to payment. Accounts receivable and credit card receivables and other means of payments are presented net of allowance for doubtful accounts and chargebacks of ~~$35~~$40 million and ~~$25~~$42 million as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. See Note 6 – Loans receivable, net of these unaudited interim condensed consolidated financial statements for information related to the allowance for doubtful accounts with respect to the Company’s loans receivable.

Deferred revenue consists of fees received related to unsatisfied performance obligations at the end of the period in accordance with ~~Accounting Standards Codification (“ASC”)~~ASC 606. Due to the generally short-term duration of contracts, the majority of the performance obligations are satisfied in the following months. Deferred revenue as of December 31, ~~2022~~2023 was ~~$44~~$29 million, of which ~~$29~~$18 million was recognized as revenue during the ~~nine-month~~three-month period ended ~~September 30, 2023.~~March 31, 2024.

As of ~~September 30, 2023,~~March 31, 2024, total deferred revenue recognized within current other liabilities was ~~$34~~$38 million, mainly due to fees related to classifieds advertising services billed and loyalty programs that are expected to be recognized as revenue in the coming months.

Foreign currency translation

All of the Company’s foreign operations have determined the local currency to be their functional currency, except for Argentina, which has used the U.S. dollar as its functional currency since July 1, 2018. Accordingly, the foreign subsidiaries with local currency as functional currency translate assets and liabilities from their local currencies into U.S. dollars by using period-end exchange rates while income and expense accounts are translated at the average monthly rates in effect during the period, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of the transaction are used. The resulting translation adjustment is recorded as a component of other comprehensive ~~income.~~income (loss). Gains and losses resulting from transactions denominated in non-functional currencies are recognized in earnings. Net foreign currency transaction results are included in the ~~unaudited~~ interim condensed consolidated statements of income under the caption “Foreign currency losses, net”.

Argentine currency status and macroeconomic outlook

As of July 1, 2018, the Company transitioned its Argentine operations to highly inflationary status in accordance with U.S. GAAP, and changed the functional currency for Argentine subsidiaries from Argentine Pesos to U.S. dollars, which is the functional currency of their immediate parent company. Argentina’s inflation rate for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2024 and 2023 was 51.6% and ~~2022 was 103.2% and 66.1%~~21.7%, respectively.

~~Table of Contents~~

Additionally, Argentina's average inter-annual inflation rate was 272.8%, for the three-month period ended March 31, 2024.

The Company uses Argentina’s official exchange rate to account for transactions in the Argentine segment, which as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 was ~~349.95~~858.00 and ~~177.16~~808.45 Argentine Pesos, respectively, against the U.S. dollar. ~~On August 14,~~For the three-month periods ended March 31, 2024 and 2023, Argentina’s ~~local currency depreciated 22% against the U.S. dollar. reaching the~~ official exchange rate ~~of 349.95 Argentine Pesos. For the nine-month periods ended September 30, 2023 and 2022, Argentina’s depreciation of its local currency~~ against the U.S. dollar ~~was 97.5%~~increased 6.1% and ~~43.4%~~18.0%, respectively. The average exchange rate for the three-month periods ended March 31, 2024 and 2023 was 834.46 and 192.41, respectively, resulting in an increase of 334%.

The following table sets forth the assets, liabilities and net assets of the Company’s Argentine subsidiaries and consolidated VIEs, before intercompany eliminations, as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022:~~2023:


		September 30, 2023		December 31, 2022
		(In millions)
	March 31, 2024					March 31, 2024		December 31, 2023
	(In millions)						(In millions)
Assets	Assets	$	3,936	$	3,238
Liabilities	Liabilities	2,601		2,419
Net assets	Net assets	$	1,335	$	819

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Notes to unaudited interim condensed consolidated financial statements

The following table provides information relating to net revenues and financial income and direct contribution (see Note 89 – Segments of these unaudited interim condensed consolidated financial statements for definition of direct contribution) for the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ of the Company’s Argentine subsidiaries and consolidated VIEs:


		Nine Months Ended September 30,						Three Months Ended September 30,
		2023			2022			2023		2022
		(In millions)						(In millions)
Net revenues		$	2,317		$	1,787		$	825	$	675
					Three Months Ended March 31,
					Three Months Ended March 31,
					Three Months Ended March 31,
							2024						2024	2023
				(In millions)								(In millions)
Net revenues and financial income
Direct contribution	Direct contribution	1,028			719			384		299

Argentine exchange regulations

Since the second half of 2019, the Argentine government instituted exchange controls restricting the ability of companies and individuals to exchange Argentine Pesos for foreign currencies and their ability to remit foreign currency out of Argentina. An entity’s authorization request to the Central Bank of Argentina (“CBA”) to access the official exchange market to make foreign currency payments may be denied depending on the circumstances. As a result of these exchange controls, markets in Argentina developed trading mechanisms, in which an entity or individual buys U.S. dollar denominated securities in Argentina (i.e. shares, sovereign debt) using Argentine Pesos, and subsequently sells the securities for U.S. dollars, in Argentina, to access U.S. dollars locally, or outside Argentina, by transferring the securities abroad, prior to being sold (the latter commonly known as “Blue Chip Swap Rate”). The Blue Chip Swap Rate has diverged significantly from Argentina’s official exchange rate (commonly known as exchange spread). ~~In recent years,~~Since the ~~Blue Chip Swap Rate has been higher than~~increase of the Argentina’s official exchange ~~rate. As of September 30,~~rate in December 2023, ~~and December 31, 2022,~~ the spread of the Blue Chip Swap ~~was 135.0%~~has declined, being 26.5% and ~~94.2%, respectively (see Note 16~~20.4% as of ~~these unaudited interim condensed consolidated financial statements).~~March 31, 2024 and December 31, 2023, respectively.

As part of the exchange controls, since 2019, the Argentine government imposes a tax on the acquisition of foreign currency through the official exchange market in certain circumstances. On July 24, 2023, through the Executive Power Decree No. 377/2023, the Argentine government extended the application of this tax to the following cases: (i) certain services acquired from abroad or services rendered by foreign residents in Argentina (i.e. technical, legal, accounting, management, advertising, engineering, audiovisual services, among others), which will be subject to a 25% tax rate, (ii) freight and other transportation services for import and export of goods, which will be subject to a 7.5% tax rate; and (iii) imported goods, which will be subject to a 7.5% tax rate, with certain exemptions (such as fuels and products of the basic food basket). Later, the Decree No. 29/2023, modified the tax rate for the cases mentioned above under ii) and iii) from 7.5% to 17.5%.

Income taxes

Income taxes’ accounting policy is described in Note 2 to the consolidated financial statements in the Company’s ~~2022~~2023 10-K.

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The Company’s consolidated estimated effective tax rate for the ~~nine-month~~three-month period ended ~~September 30, 2023 increased~~March 31, 2024 as compared to the same period in ~~2022. This was~~2023, decreased from 38.1% to 28.5%, mainly as a result of (i) no foreign exchange losses recognition during the period related to the acquisition of the Company's common stock in the Argentine market, which was considered as non-deductible expense, ii) lower taxable foreign exchange gains accounted for in Argentina for local tax purposes that are not recorded for accounting purposes since, under U.S. GAAP, ~~Argentina’s~~Argentine operations’ functional currency is the U.S. dollar due to the highly inflationary status of the country, ~~(ii) a higher proportion of pre-tax results arising from entities under general income tax treatment regime over the Brazilian segment as compared to the same period in 2022~~ and (iii) higher ~~non-deductible foreign exchange losses~~deductions related to ~~the acquisition of our own common stock~~tax inflation adjustments in ~~the Argentine market. This increase was partially offset by the reversal of the valuation allowances in one of the Company’s Mexican subsidiaries during the third quarter of 2023.~~

The Company’s consolidated estimated effective tax rate for the three-month period ended September 30, 2023 decreased as compared to the same period in 2022, mainly as a result of the reversal of the valuation allowances in one of its Mexican subsidiaries during the third quarter of 2023. This decrease was partially offset by taxable foreign exchange gains accounted for local tax purposes, which are not recorded for accounting purposes given that under U.S. GAAP and due to Argentina’s highly inflationary status, Argentina’s operations’ functional currency is the U.S. dollar.Argentina.

A valuation allowance is recorded when, based on the available evidence, it is more likely than not that all or a portion of the Company’s deferred tax assets will not be realized. In accordance with ASC 740, Management periodically assesses the need to either establish or reverse a valuation allowance for deferred tax assets considering positive and negative objective evidence related to the realization of the deferred tax assets. In its assessment, Management considers, among other factors, the nature, frequency and magnitude of current and cumulative losses on an individual subsidiary basis, projections of future taxable income, the duration of statutory carryforward periods, as well as feasible tax planning strategies, which would be employed by the Company to prevent tax loss carryforwards from expiring unutilized. As of September 30, 2023, the Company’s Management concluded that an amount of $141 million of valuation allowance should be reversed at that date given that is more likely than not that deferred tax assets from DeRemate.com de México, S. de R.L. de C.V., a Mexican subsidiary, will be realized in the foreseeable future. The change in judgment regarding the realizability of the deferred tax assets of the Mexican subsidiary was triggered during the three-month period ended September 30, 2023, as positive trends observed in recent periods became enough evidence to support the conclusion.

Knowledge-based economy promotional regime in Argentina

In August 2021, the Under Secretariat of Knowledge Economy issued the Disposition 316/2021 approving MercadoLibre S.R.L.’s application for eligibility under the knowledge-based economy promotional regime, established by the Law No. 27,506 and complemented by Argentina’s Executive Power Decree No. 1034/2020, Argentina’s Ministry of Productive Development’s Resolution No. 4/2021 and the Under Secretariat of Knowledge Economy’s Disposition No. 11/2021.

As a result, the Company recorded an income tax benefit of ~~$35~~$1 million and ~~$14 million, and $19 million and $15~~$10 million during the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and March 31, 2023, ~~and 2022,~~ respectively. The aggregate per share effect of the income tax benefit amounted to ~~$0.69~~$0.01 and ~~$0.27, and $0.38 and $0.30~~$0.19 for the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively. Furthermore, the Company recorded a social security benefit of ~~$49~~$17 million and ~~$16 million, and $39 million and $13~~$18 million during the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively.

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Notes to unaudited interim condensed consolidated financial statements

Fair value option applied to certain financial instruments

Under ASC 825, U.S. GAAP provides an option to elect fair value with impact on the statement of income as an alternative measurement for certain financial instruments and other items on the balance sheet.

The Company has elected to measure certain financial assets at fair value with impact on the statement of income for several reasons including to avoid the mismatch generated by the recognition of certain linked instruments / transactions, separately, in the ~~unaudited~~ interim condensed consolidated ~~statement~~statements of income and ~~unaudited~~ interim condensed consolidated ~~statement~~statements of comprehensive income and to better reflect the financial model applied for selected instruments. The Company’s election of the fair value option applies ~~to the:~~to: i) ~~Brazilian federal~~foreign government ~~bonds~~debt securities, and ii) U.S. ~~treasury notes.~~government debt securities.

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Recently Adopted Accounting Standards

On October 28, 2021, the FASB issued the Accounting Standards Update (“ASU”) 2021-08 “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”. The amendments in this update improve comparability for the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination by specifying for all acquired revenue contracts regardless of their timing of payment (1) the circumstances in which the acquirer should recognize contract assets and contract liabilities that are acquired in a business combination and (2) how to measure those contract assets and contract liabilities. The amendments provide consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The Company adopted this standard effective as of January 1, 2023 and it did not have a material impact on the Company’s financial statements.

On March 31, 2022, the FASB issued the ASU 2022-02 “Troubled Debt Restructurings (“TDRs”) and Vintage Disclosures (Topic 326): Financial Instruments – Credit Losses”, which eliminates the accounting guidance on TDRs, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. In addition, the guidance requires disclosure of current-period gross write-offs by year of origination for financing receivables and net investment in leases. The amendments should be applied prospectively, except for the transition method related to the recognition and measurement of TDRs, where an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. The Company adopted this standard effective as of January 1, 2023 and it did not have a material impact on the Company’s financial statements.

On September 29, 2022, the FASB issued the ASU 2022-04 “Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations”. The amendments in this update require entities that use supplier finance programs in connection with the purchase of goods and services to disclose the key terms of the programs and information about their obligations outstanding at the end of the reporting period, including a rollforward of those obligations. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. The Company adopted this standard effective as of January 1, 2023, except for the rollforward requirement, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The guidance should be applied retrospectively to all periods in which a balance sheet is presented, except for the rollforward requirement, which should be applied prospectively. The Company and certain financial institutions participate in a supplier finance program (“SFP”) that enables certain of the Company’s suppliers, at their own election, to request the payment of their invoices to the financial institutions earlier than the terms stated in the Company’s payment policy. Suppliers’ voluntary inclusion of invoices in the SFP does not change the Company’s payment terms, the amounts paid or liquidity. The Company has no economic interest in a supplier’s decision to participate in the SFP and has no financial impact in connection with the SFP. As of September 30, 2023 and December 31, 2022, the obligations outstanding that the Company has confirmed as valid to the financial institutions amounted to $302 million and $227 million, respectively, and are included in the unaudited interim condensed consolidated balance sheets within accounts payable and accrued expenses line.

~~Recently issued accounting pronouncements not yet adopted~~

As of the date of issuance of these unaudited interim condensed consolidated financial statements there were no accounting pronouncements recently adopted by the Company.

Recently issued accounting pronouncements not yet adopted ~~expected~~

On November 27, 2023, the FASB issued the ASU 2023-07 “Segment Reporting (Topic 280)—Improvements to ~~have a material impact~~Reportable Segment Disclosures”. The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance should be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the ~~Company’s~~significant segment expense categories identified and disclosed in the period of adoption. The Company is assessing the effects that the adoption of this accounting pronouncement may have on its financial statements.

On December 14, 2023, the FASB issued the ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. The amendments in this update provide more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information, requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The other amendments in this update improve the effectiveness and comparability of disclosures by adding disclosures of pretax income (or loss) and income tax expense (or benefit) and removing disclosures that no longer are considered cost beneficial or relevant. The amendments are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The guidance should be applied on a prospective basis while retrospective application is permitted. The Company is assessing the effects that the adoption of this accounting pronouncement may have on its financial statements.

NOTE 3. ~~Fintech Regulations~~FINTECH REGULATIONS

Regulations issued by the Central Banks and other regulators of the countries where the Company operates applicable to its Fintech business are described in Note 3 to the consolidated financial statements in the Company’s 2023 10-K.

Brazil

In March 2022, ~~10-K.~~the Central Bank of Brazil announced new rules for payment institutions based on their size and complexity and raised standards for required capital. The new framework, which was effective starting in July 2023 with full implementation by January 2025, will extend the application of the rule regarding proportionality of regulatory requirements (currently applicable to conglomerates of financial institutions) to financial conglomerates led by payment institutions. The new rules require a gradual increase, between 2023 and 2025, in the regulatory capital requirements applicable to the Company’s regulated Brazilian subsidiaries based on the following schedule: from July 2023 onwards, 6.75%, from January 2024 onwards, 8.75% and from January 2025 onwards, 10.50%.

On January 2, 2024, article 28 of Law 14,690 came into force, which caps the total amount that may be charged to a credit card holder in the form of interest and financial charges at the value of the original debt. The Central Bank of Brazil also defined rules on the Resolution CMN N° 5,112, clarifying the topic and defining criteria for calculating the original value of the debt in card revolving and invoice financing operations. To comply with the new regulation, Company’s subsidiaries reduced the duration of the credit card invoice financing plans since January 2024.

Argentina

On September 1, 2022, the CBA issued Communication “A” 7593, which extended the application of regulations for the protection of financial services users to the payment service providers who offer payment accounts (“PSPOCP” according to its Spanish acronym), such as MercadoLibre S.R.L. The regulations were already applicable to non-financial credit providers. This communication came into effect on March 1, 2023. On February 15,May 18, 2023, the ~~CBA issued Communication “A” 7699, which establishes~~Central Bank of Argentina (“CBA”) enacted a new regulation that ~~PSPOCP~~established that QR Codes must ~~submit the Information Regime on Claims,~~be interoperable with ~~the first submission deadline being April 24, 2023, and the Information Regime on Transparency, Chapter II, with first submission deadline for monthly information being March 14, 2023.~~

~~Table of Contents~~

~~On August 24, 2023, the CBA issued Communication “A” 7825, which states that PSPOCPs must allocate in full to their clients any compensation received~~credit card payments. This regulation is effective as from financial institutions for investing clients’ funds held in deposit accounts into Argentine treasury bonds. Since August 25, 2023, MercadoLibre S.R.L. is not receiving any compensation from financial institutions for clients’ funds held in deposit account. As a consequence, Communication “A” 7825 has no applicable effect for MercadoLibre S.R.L.May 1, 2024.

On September 14, 2023, the CBA issued Communication “A” 7861, establishing that starting on December 1, 2023, DEBIN (debit immediate), the main and simple funding source of Mercado Pago users’ accounts, will be suspended and replaced with a pull transfer method that requires the consent of the client outside of Mercado Pago’s environment before the first use. ~~Management is currently assessing~~After several extensions of the ~~situation since~~application of the Communication "A" 7861, it came into effect as from May 1, 2024.

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MercadoLibre, Inc.

Notes to unaudited interim condensed consolidated financial statements

Chile

On October 12, 2022, the Chilean Congress approved the Fintech and Open-Banking Law Project, which was published on January 4, 2023, and came into effect on February 3, 2023. This law established a regulatory framework for certain technological financial services that did not have their own legal framework. These services are: (i) Alternative Transaction Systems, (ii) Crowdfunding Financing Platforms, (iii) Financial Instrument Intermediation, (iv) Order Routing, (v) Credit Advisory, and (vi) Investment Advisory. Pursuant to this ~~suspension and replacement may lead to pertinent changes to the way that~~law, Mercado Pago ~~users are able to link and transfer funds to their digital accounts from their respective bank accounts or other digital accounts.~~

~~Brazil~~

~~The new prudential rules announced by~~Crypto S.A. shall file a license request with the ~~Central Bank during March 2022 were effective starting in July 2023, with full implementation by January 2025. The new rules require a gradual increase in regulatory capital requirement~~Commission for the ~~Company’s~~Financial Market (“CMF” according to its Spanish acronym) in order to continue offering Order Routing services through the “buy, hold and sell” product launched in 2023 in collaboration with Ripio Chile SpA. The rules governing the specifics of this filing and the license that CMF must grant, were issued on January 12, 2024, giving Mercado Pago Crypto S.A. until February 3, 2025 to file the license request. In addition, an Open Finance System is created to allow financial service providers to exchange customer financial information.

On April 8, 2024, the Cybersecurity Law was published. Although Mercado Pago Chilean entities already comply with the law’s main obligations as a result of being regulated ~~Brazilian subsidiaries until 2025: 6.75% from July 2023, 8.75% from January 2024~~entities, as a result of this new law, such entities will be subject to a new regulator and ~~10.50% from January 2025.~~must comply with certain reporting requirements for cyber security incidents. We expect that the Mercado Pago Chilean entities will be required to comply with these new reporting requirements sometime during 2025 or 2026.

Colombia

OnIn June ~~28,~~ 2023, MercadoPago S.A. Compañía de Financiamiento obtained a license to operate as a financial institution in Colombia, ~~which enables it~~and therefore is able to offer ~~financial deposits (digital accounts). The~~credits, digital accounts, investments and prepaid cards. On April 22, 2024, MercadoPago S.A. Compañía de Financiamiento started operations offering, for the moment, the “Ordinary Deposit” product only and is subject to minimum capital, ~~requirement has been paid-in. This subsidiary is expected to be operational by the first quarter of 2024.~~reporting, consumer protection and risk management requirements.

Uruguay

On ~~July 11, 2023,~~April 12, 2024, MercadoPago Uruguay S.R.L. initiated a process with the Central Bank of Uruguay (“BCU”) to be authorized to act as a payment acquirer with transfers, as an activity related to electronic money issuances, in compliance with new regulations that came into effect on March 1, 2024.

On April 17, 2024, MercadoPago Uruguay S.R.L. was approved as a participant in the automated clearing house managed by Urutec S.A. This approval allows MercadoPago Uruguay S.R.L. to ~~start operations as an Electronic Money Issuing Institution (“IEDE” according~~participate in the fast payment system and offer a new payment method to its Spanish acronym). On October 1, 2023, MercadoPago Uruguay S.R.L. started operations. Under applicable regulations, MercadoPago Uruguay S.R.L. must deposit and maintain users’ funds in specific local bank accounts in order to ensure availability of existing balances in each user’s digital account.

~~Chile~~

~~On April 27, 2023,~~users: interoperable QR transfer payments. Even though the ~~Commission~~regulator initially set June 6, 2024 as the release date for the Financial Market (“CMF” according to its Spanish acronym) authorized the merger of Mercado Pago Operadora S.A. (formerly known as “Mercado Pago S.A.”) and Red Procesadora de Pagos Limitada, effective on May 1, 2023. This merger allows Mercado Pago Operadora S.A. to extend the processing of transactions and enable businesses and entrepreneurs in Chile the opportunity to access the Company’s ecosystem of Fintech services.interoperable QR transfer payments, this date is currently under review.

NOTE 4. ~~Net income per share~~NET INCOME PER SHARE

Basic earnings per share for the Company’s common stock is computed by dividing, net income for the period by the weighted average number of common shares outstanding during the period.

In August 2018, the Company issued an aggregate principal amount of $880 million of 2.00% Convertible Senior Notes due 2028 (“2028 Notes”). which were fully converted or redeemed in November 2023. The conversion of these notes iswas included in the calculation for diluted earnings per share utilizing the “if converted” ~~method.~~method for the three-month period ended March 31, 2023. Accordingly, conversion of these Notes iswas not assumed for purposes of computing diluted earnings per share if the effect iswas antidilutive.

The denominator for diluted net income per share for the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2022~~March 31, 2023 did not include any effect from the capped call transactions entered into by the Company with certain financial institutions with respect to shares of the Company’s common stock (“2028 Notes Capped Call Transactions”), which were settled on September 1, 2023, because it would behave been antidilutive. See Note 1213 – Loans payable and other financial liabilities to these unaudited interim condensed consolidated financial statements and Note 17 to the financial statements for the year ended December 31, ~~2022,~~2023, contained in the Company’s ~~2022~~2023 10-K for more details regarding the 2028 Notes and the 2028 Notes Capped Call Transactions.

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MercadoLibre, Inc.

Notes to unaudited interim condensed consolidated financial statements

Net income per share of common stock is as follows for the ~~nine and~~ three-month periods ended ~~September 30, 2023~~March 31, 2024 and ~~2022:~~2023:


		Nine Months Ended September 30,										Three Months Ended September 30,
		2023					2022					2023				2022
		Basic		Diluted			Basic		Diluted			Basic		Diluted		Basic		Diluted
Net income per common share (*)		$	16.40	$	16.36		$	6.30	$	6.29		$	7.18	$	7.16	$	2.57	$	2.56
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024															2024			2023
											Basic																Basic			Diluted	Basic	Diluted
Net income per common share (1)

Numerator (in millions):	Numerator (in millions):
Numerator (in millions):
Numerator (in millions):
Net income
Net income
Net income	Net income	$	822	$	822		$	317	$	317		$	359	$	359	$	129	$	129
Effect of dilutive 2028 Notes	Effect of dilutive 2028 Notes	—		1			—		6			—		—		—		2
Net income available to common stock	Net income available to common stock	$	822	$	823		$	317	$	323		$	359	$	359	$	129	$	131

Denominator:	Denominator:																			Denominator:
Weighted average of common stock outstanding for earnings per share	Weighted average of common stock outstanding for earnings per share	50,137,826		50,137,826			50,365,813		50,365,813			50,008,320		50,008,320		50,325,075		50,325,075		Weighted average of common stock outstanding for earnings per share		50,697,442	50,697,442					50,245,073
Adjustment for assumed conversions	Adjustment for assumed conversions	—		201,119			—		990,268			—		201,119		—		990,268		Adjustment for assumed conversions		—			—			990,268
Adjusted weighted average of common stock outstanding for earnings per share	Adjusted weighted average of common stock outstanding for earnings per share	50,137,826		50,338,945			50,365,813		51,356,081			50,008,320		50,209,439		50,325,075		51,315,343		Adjusted weighted average of common stock outstanding for earnings per share		50,697,442	50,697,442			50,245,073			51,235,341

~~(*)~~(1) Figures have been calculated using non-rounded amounts.

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MercadoLibre, Inc.

Notes to unaudited interim condensed consolidated financial statements

NOTE 5. ~~Cash, cash equivalents, restricted cash and cash equivalents and investments~~CASH, CASH EQUIVALENTS, RESTRICTED CASH AND CASH EQUIVALENTS AND INVESTMENTS

The composition of cash, cash equivalents, restricted cash and cash equivalents, short-term and long-term investments is as follows:

September 30, 2023 December 31, 2022
(In millions)
Cash and cash equivalents
Cash in bank accounts $ 1,238 $ 1,160
Money market 764 599
Time deposits 169 130
U.S. government debt securities — 21
Total cash and cash equivalents $ 2,171 $ 1,910
Restricted cash and cash equivalents
Securitization transactions (2) $ 281 $ 459
Foreign government debt securities (Central Bank of Brazil mandatory guarantee) (1) — 158
Bank account (Argentine Central Bank regulation) (1) 413 496
Bank account (Mexican National Banking and Securities Commission regulation) (1) 38 9
Time deposits (Mexican National Banking and Securities Commission regulation) (1) 264 239
Bank account (Chilean Commission for the Financial Market regulation) (1) 27 4
Time deposits (Chilean Commission for the Financial Market regulation) (1) 36 49
Money market (Secured lines of credit guarantee) 26 33
Bank account (Financial Superintendence of Colombia regulation) (1) — 1
Money market (Financial Superintendence of Colombia regulation) (1) — 5
Total restricted cash and cash equivalents $ 1,085 $ 1,453
Total cash, cash equivalents, restricted cash and cash equivalents (3) $ 3,256 $ 3,363
Short-term investments
U.S. government debt securities $ 1,124 $ 558
Foreign government debt securities (Central Bank of Brazil mandatory guarantee) (1) 1,762 1,219
Foreign government debt securities (4) 94 123
Time deposits 326 439
Securitization transactions (2) 1 —
Equity securities at fair value 13 $ —
Total short-term investments $ 3,320 $ 2,339
Long-term investments
U.S. government debt securities $ — $ 175
Foreign government debt securities (5) 67 70
Securitization transactions (2) 24 21
Equity securities held at cost 58 56
Total long-term investments $ 149 $ 322


	March 31, 2024		December 31, 2023
	(In millions)
Cash in bank accounts	$	1,218	$	1,458
Money market	955		639
Time deposits	185		367
U.S. government debt securities	221		60
Foreign government debt securities	—		32
Total cash and cash equivalents	2,579		2,556
Securitization transactions (1)	312		355
Foreign government debt securities (Central Bank of Brazil mandatory guarantee)	—		114
Cash in bank accounts (Argentine Central Bank regulation)	390		309
Cash in bank accounts (Mexican National Banking and Securities Commission regulation)	155		91
Time deposits (Mexican National Banking and Securities Commission regulation)	278		314
Cash in bank accounts (Chilean Commission for the Financial Market regulation)	36		42
Time deposits (Chilean Commission for the Financial Market regulation)	48		54
Money market (Secured lines of credit guarantee)	12		7
Cash in bank accounts (Central Bank of Uruguay mandatory guarantee)	—		1
Time deposits (Central Bank of Uruguay mandatory guarantee)	4		1
Money market (Central Bank of Uruguay mandatory guarantee)	3		2
Foreign government debt securities (Central Bank of Uruguay mandatory guarantee)	1		2
Total restricted cash and cash equivalents	1,239		1,292
Total cash, cash equivalents, restricted cash and cash equivalents (2)	$	3,818	$	3,848
U.S. government debt securities	$	853	$	1,009
Foreign government debt securities (3)	2,745		2,451
Time deposits (4)	35		15
Corporate debt securities	38		5
Total short-term investments	$	3,671	$	3,480

Foreign government debt securities	$	54	$	56
Securitization transactions (1)	23		23
Corporate debt securities	113		25
Equity securities held at cost	59		58
Total long-term investments	$	249	$	162

(1)~~Regulations issued by the Central Banks~~Cash, cash equivalents and other regulators of the countries where the Company operates applicable to its Fintech business are described in Note 3 to the consolidated financial statements in the Company’s 2022 10-K. Recently issued regulations are described in Note 3 of these unaudited interim condensed consolidated financial statements.

~~(2)Investments~~investments from securitization transactions are restricted to the payment of amounts due to third-party investors.

~~(3)~~(2)Cash, cash equivalents, restricted cash and cash equivalents as reported in the interim condensed consolidated ~~statement~~statements of cash flows.

~~(4)~~(3)As of ~~September 30,~~March 31, 2024 and December 31, 2023, ~~this~~includes $2,452 million and $2,283 million, respectively, considered restricted due to the Central Bank of Brazil's mandatory guarantee. Also, as of March 31, 2024 and December 31, 2023, includes $6 million that ~~guarantee~~guarantees a line of credit and ~~are~~is considered restricted.

~~(5)On September 11, 2023, the Brazilian subsidiary Mercado Crédito Sociedade de Crédito, Financiamento e Investimento S.A. received $15~~ As of March 31, 2024, includes $5 million ~~of capital contribution from its shareholders, which is in the process of legal registration by~~considered restricted due to the Central Bank of ~~Brazil.~~Uruguay's mandatory guarantee.

(4) As ~~a result, $15~~of March 31, 2024, includes $35 millionof ~~long-term investments are~~collateral as part of card scheme arrangement rules in Brazil, and is considered ~~restricted as of September 30, 2023~~.restricted.

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MercadoLibre, Inc.

Notes to unaudited interim condensed consolidated financial statements

NOTE 6. ~~Loans receivable, net~~LOANS RECEIVABLE, NET

The Company classifies loans receivable as “On-line merchant”, “Consumer”, “In-store merchant” and “Credit cards”. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the components of current and non-current Loans receivable, net were as follows:


		September 30, 2023
		Loans receivable		Allowance for doubtful accounts		Loans receivable, net
		(In millions)
	March 31, 2024									March 31, 2024
	Loans receivable							Loans receivable	Allowance for doubtful accounts		Loans receivable, net
	(In millions)									(In millions)
On-line merchant	On-line merchant	$	418	$	(120)	$	298
Consumer	Consumer	1,827		(573)		1,254
In-store merchant	In-store merchant	294		(127)		167
Credit cards	Credit cards	863		(204)		659
Total	Total	$	3,402	$	(1,024)	$	2,378

December 31, 2022
Loans receivable Allowance for doubtful accounts Loans receivable, net
(In millions)
On-line merchant $ 394 $ (120) $ 274
Consumer 1,568 (614) 954
In-store merchant 267 (145) 122
Credit cards 611 (225) 386
Total $ 2,840 $ (1,104) $ 1,736


	December 31, 2023
	Loans receivable		Allowance for doubtful accounts		Loans receivable, net
	(In millions)
On-line merchant	$	429	$	(119)	$	310
Consumer	1,808		(592)		1,216
In-store merchant	332		(137)		195
Credit cards	1,209		(236)		973
Total	$	3,778	$	(1,084)	$	2,694

The allowance for doubtful accounts with respect to the Company’s loans receivable amounts to ~~$1,038~~$1,260 million and ~~$1,112~~$1,102 million as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively, which includes ~~$14~~$17 million and $8$18 million related to unused agreed loan commitment on credit cards portfolio presented in Other liabilities of the ~~unaudited~~ interim condensed consolidated balance sheets as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

As of ~~September 30,~~March 31, 2024 and December 31, 2023, the Company is exposed to off-balance sheet unused agreed loan commitments on ~~its~~ credit cards portfolio, which ~~exposes~~expose the Company to credit ~~risks.~~risks for $1,407 million and $934 million, respectively. For the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and 2023, the Company recognized in Provision for doubtful accounts ~~of $5~~less than $1 million and $2$4 million as expected credit losses, respectively.

The Company closely monitors credit quality for all loans receivable on a recurring basis to assess and manage its exposure to credit risk. To assess merchants and consumers seeking a loan under the Mercado Credito solution, the Company uses, among other indicators, risk models internally developed, as a credit quality indicator to help predict the merchant’s and consumer’s ability to repay the principal balance and interest related to the credit. The risk model uses multiple variables as predictors of the merchant’s and consumer’s ability to repay the credit, including external and internal indicators. Internal indicators consider user behavior related to credit/payment history, and with lower weight in the risk models, the Company uses the number of transactions in the Company’s ecosystem and the merchant’s annual sales volume, among other indicators. In addition, the Company considers external bureau information to enhance the model and the decision making process.

17 | MercadoLibre, Inc.

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MercadoLibre, Inc.

Notes to unaudited interim condensed consolidated financial statements

The amortized cost of the loans receivable classified by the Company’s credit quality internal indicator was as follows:


		September 30, 2023		December 31, 2022
		(In millions)
1-30 days past due		$	183	$	118
	March 31, 2024					March 31, 2024		December 31, 2023
	(In millions)						(In millions)
1-14 days past due
15-30 days past due
31-60 days past due	31-60 days past due	98		88
61-90 days past due	61-90 days past due	78		86
91-120 days past due	91-120 days past due	83		103
121-150 days past due	121-150 days past due	81		110
151-180 days past due	151-180 days past due	73		112
181-210 days past due	181-210 days past due	69		100
211-240 days past due	211-240 days past due	74		93
241-270 days past due	241-270 days past due	71		89
271-300 days past due	271-300 days past due	72		73
301-330 days past due	301-330 days past due	82		85
331-360 days past due	331-360 days past due	84		75
Total past due	Total past due	1,048		1,132
To become due	To become due	2,354		1,708
Total	Total	$	3,402	$	2,840

As of March 31, 2024 and December 31, 2023, renegotiations represented 2.2% and 2.8% of the loans receivable portfolio, respectively.

The following tables summarize the allowance for doubtful accounts activity during the ~~nine-month~~three-month periods ended ~~September 30, 2023~~March 31, 2024 and ~~2022:~~2023:


		September 30, 2023
		On-line merchant		Consumer		In-store merchant		Credit cards		Total
		(In millions)
	March 31, 2024														March 31, 2024
	On-line merchant											On-line merchant	Consumer	In-store merchant		Credit cards	Total
	(In millions)														(In millions)
Balance at beginning of year	Balance at beginning of year	$	120	$	614	$	145	$	225	$	1,104
Net charged to Net Income	Net charged to Net Income	81		417		93		140		731
Currency translation adjustments	Currency translation adjustments	3		9		—		10		22
Write-offs (*)		(84)		(467)		(111)		(171)		(833)
Write-offs (1)
Balance at end of period	Balance at end of period	$	120	$	573	$	127	$	204	$	1,024


		September 30, 2022
		On-line merchant		Consumer		In-store merchant		Credit cards		Total
		(In millions)
	March 31, 2023														March 31, 2023
	On-line merchant											On-line merchant	Consumer	In-store merchant		Credit cards	Total
	(In millions)														(In millions)
Balance at beginning of year	Balance at beginning of year	$	79	$	232	$	76	$	48	$	435
Net charged to Net Income	Net charged to Net Income	83		457		111		191		842
Currency translation adjustments	Currency translation adjustments	(2)		(19)		(3)		(9)		(33)
Write-offs (*)		(48)		(133)		(48)		(7)		(236)
Write-offs (1)
Balance at end of period	Balance at end of period	$	112	$	537	$	136	$	223	$	1,008

~~(*)~~(1) The Company writes off loans when customer balance becomes 360 days past due.

The ~~increase~~decrease in write-offs for the ~~nine-month~~three-month period ended ~~September 30,~~March 31, 2024, compared to the same period in 2023, is mainly a consequence of better quality originations of loans receivable for the three-month period ended March 31, 2023, compared to the same period in ~~2022, is mainly generated~~2022. This was partially off-set by higher originations of loans ~~receivable~~receivables for the ~~nine-month~~three-month period ended ~~September 30, 2022,~~March 31, 2023, compared to the same period in ~~2021, generating a higher write-offs effect in the period ended September 30, 2023.~~

2022.

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MercadoLibre, Inc.

Notes to unaudited interim condensed consolidated financial statements

NOTE 7. ~~Goodwill and intangible assets~~GOODWILL AND INTANGIBLE ASSETS

Intangible assets

The composition of goodwill and intangible assets is as follows:

September 30, 2023 December 31, 2022
(In millions)
Goodwill $ 159 $ 153
Intangible assets with indefinite lives
- Trademarks 3 4
'- Digital assets (1)
9 9
Amortizable intangible assets
- Licenses and others 14 13
- Non-compete agreements 4 4
- Customer lists 12 12
- Trademarks 13 12
- Hubs network 4 4
- Others 3 3
Total intangible assets $ 62 $ 61
Accumulated amortization (41) (36)
Total intangible assets, net $ 21 $ 25


	March 31, 2024		December 31, 2023
	(In millions)
Goodwill	$	158	$	163
Intangible assets with indefinite lives
Trademarks	3		4
Amortizable intangible assets
Licenses and others	17		14
Non-compete agreements	4		4
Customer lists	12		12
Trademarks	12		12
Hubs network	4		4
Others	3		3
Total intangible assets	55		53
Accumulated amortization	(43)		(42)
Total intangible assets, net	$	12	$	11

~~(1)Digital assets are net of $21 million of impairment losses as of both September 30, 2023 and December 31, 2022.~~

Goodwill

The changes in the carrying amount of goodwill for the ~~nine-month~~three-month period ended ~~September 30, 2023~~March 31, 2024 and the year ended December 31, ~~2022~~2023 are as follows:


		Nine Months Ended September 30, 2023														Three Months Ended March 31, 2024
		Brazil		Argentina		Mexico		Chile		Colombia		Other countries		Total		Brazil		Argentina		Mexico		Chile		Colombia		Other countries		Total
		(In millions)														(In millions)
Balance, beginning of the period	Balance, beginning of the period	$	60	$	10	$	39	$	37	$	5	$	2	$	153
Effect of exchange rates changes	Effect of exchange rates changes	2		—		5		(2)		1		—		6
Balance, end of the period	Balance, end of the period	$	62	$	10	$	44	$	35	$	6	$	2	$	159

		Year Ended December 31, 2022
		Brazil		Argentina		Mexico		Chile		Colombia		Other countries		Total
		(In millions)
		Year Ended December 31, 2023
		Year Ended December 31, 2023
		Year Ended December 31, 2023
	Brazil																Brazil		Argentina		Mexico		Chile		Colombia		Other countries		Total
	(In millions)																								(In millions)
Balance, beginning of the period	Balance, beginning of the period	$	56	$	10	$	37	$	37	$	6	$	2	$	148
Effect of exchange rates changes	Effect of exchange rates changes	4		—		2		—		(1)		—		5
Balance, end of the period	Balance, end of the period	$	60	$	10	$	39	$	37	$	5	$	2	$	153

Amortizable intangible assets

Intangible assets with definite useful life are comprised of customer lists, non-compete and non-solicitation agreements, hubs network, acquired software licenses and other acquired intangible assets including developed technologies and trademarks. Aggregate amortization expense for intangible assets for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ amounted to ~~$4 million and $4 million, respectively, while aggregate amortization expense for intangible assets totaled~~ $1 million and $1$2 million, ~~for the three-month periods ended September 30, 2023 and 2022,~~ respectively.

1619 | MercadoLibre, Inc.

Table of Contents

MercadoLibre, Inc.

Notes to unaudited interim condensed consolidated financial statements

The following table summarizes the remaining amortization of intangible assets (in ~~millions of U.S. dollars)~~millions) with definite useful life as of ~~September 30, 2023:~~March 31, 2024:


~~For year to be ended December 31, 2023~~	$	1
For year to be ended December 31, 2024	3 $	2
For year to be ended December 31, 2025	12
For year to be ended December 31, 2026	2
For year to be ended December 31, 2027	1
Thereafter	32
	$	9

NOTE 8. ~~Segment reporting~~INTANGIBLE ASSETS AT FAIR VALUE

The following tables present the digital assets name, cost basis, fair value, and number of units for each significant digital asset holding as of March 31, 2024 and December 31, 2023:


Digital asset name	March 31, 2024
	Cost basis (1)		Fair value		Number of units held
	(In millions, except for number of units held)
Bitcoin	$	6	$	29	412.7
Ether	3		11		3,041.6


Digital asset name	December 31, 2023
	Cost basis (1)		Fair value		Number of units held
	(In millions, except for number of units held)
Bitcoin	$	6	$	17	412.7
Ether	3		7		3,041.6

(1) Cost basis of the digital assets is net of $21 million of impairment losses recognized prior to the adoption of ASU 2023-08.

NOTE 9. SEGMENTS

Reporting segments are based upon the Company’s internal organizational structure, the manner in which the Company’s operations are managed and resources are assigned, the criteria used by Management to evaluate the Company’s performance, the availability of separate financial information and overall materiality considerations.

Segment reporting is based on geography as the main basis of segment breakdown in accordance with the criteria, as determined by Management, used to evaluate the Company’s performance. The Company’s segments include Brazil, Argentina, Mexico and other countries (which includes Chile, Colombia, Costa Rica, Ecuador, Peru and Uruguay).

Direct contribution consists of net revenues and financial income from external customers less direct costs, which include costs of net revenues and financial expenses, product and technology development expenses, sales and marketing expenses, provision for doubtful accounts and general and administrative expenses over which segment managers have direct discretionary control, such as advertising and marketing programs, customer support expenses, payroll and third-party fees. All corporate related costs have been excluded from the segment’s direct contribution.

Expenses over which segment managers do not currently have discretionary control, such as certain technology and general and administrative costs, are monitored by Management through shared cost centers and are not evaluated in the measurement of segment performance.

20 | MercadoLibre, Inc.

Table of Contents

MercadoLibre, Inc.

Notes to unaudited interim condensed consolidated financial statements

The following tables summarize the financial performance of the Company’s reporting segments:


		Nine Months Ended September 30, 2023
		Brazil		Argentina		Mexico		Other Countries		Total
		(In millions)
Net revenues		$	5,365	$	2,317	$	2,066	$	464	$	10,212
	Three Months Ended March 31, 2024														Three Months Ended March 31, 2024
	Brazil											Brazil	Argentina	Mexico		Other Countries	Total
	(In millions)														(In millions)
Net revenues and financial income
Direct costs	Direct costs	(4,027)		(1,289)		(1,593)		(429)		(7,338)
Direct contribution	Direct contribution	1,338		1,028		473		35		2,874
Operating expenses and indirect costs of net revenues										(1,291)
Operating expenses and indirect costs of net revenues and financial expenses
Income from operations	Income from operations									1,583
Other income (expenses):	Other income (expenses):
Interest income and other financial gains
Interest income and other financial gains
Interest income and other financial gains	Interest income and other financial gains									545
Interest expense and other financial losses	Interest expense and other financial losses									(297)
Foreign currency losses, net	Foreign currency losses, net									(508)
Net income before income tax expense and equity in earnings of unconsolidated entity	Net income before income tax expense and equity in earnings of unconsolidated entity									$	1,323


	Three Months Ended March 31, 2023 (1)
	Brazil		Argentina		Mexico		Other Countries		Total
	(In millions)
Net revenues and financial income	$	1,639	$	787	$	610	$	150	$	3,186
Direct costs	(1,318)		(419)		(464)		(137)		(2,338)
Direct contribution	321		368		146		13		848
Operating expenses and indirect costs of net revenues and financial expenses									(430)
Income from operations									418
Other income (expenses):
Interest income and other financial gains									23
Interest expense and other financial losses									(34)
Foreign currency losses, net									(87)
Net income before income tax expense and equity in earnings of unconsolidated entity									$	320

1721 | MercadoLibre, Inc.

Table of Contents

MercadoLibre, Inc.

Nine Months Ended September 30, 2022
Brazil Argentina Mexico Other Countries Total
(In millions)
Net revenues $ 4,134 $ 1,787 $ 1,257 $ 357 $ 7,535
Direct costs (3,472) (1,068) (1,075) (348) (5,963)
Direct contribution 662 719 182 9 1,572
Operating expenses and indirect costs of net revenues (887)
Income from operations 685
Other income (expenses):
Interest income and other financial gains 142
Interest expense and other financial losses (221)
Foreign currency losses, net (134)
Net income before income tax expense and equity in earnings of unconsolidated entity $ 472
Notes to unaudited interim condensed consolidated financial statements

Three Months Ended September 30, 2023
Brazil Argentina Mexico Other Countries Total
(In millions)
Net revenues $ 2,006 $ 825 $ 772 $ 157 $ 3,760
Direct costs (1,435) (441) (605) (150) (2,631)
Direct contribution 571 384 167 7 1,129
Operating expenses and indirect costs of net revenues (444)
Income from operations 685
Other income (expenses):
Interest income and other financial gains 196
Interest expense and other financial losses (111)
Foreign currency losses, net (239)
Net income before income tax expense and equity in earnings of unconsolidated entity $ 531

~~Table of Contents~~

Three Months Ended September 30, 2022
Brazil Argentina Mexico Other Countries Total
(In millions)
Net revenues $ 1,431 $ 675 $ 465 $ 119 $ 2,690
Direct costs (1,209) (376) (384) (121) (2,090)
Direct contribution 222 299 81 (2) 600
Operating expenses and indirect costs of net revenues (304)
Income from operations 296
Other income (expenses):
Interest income and other financial gains 65
Interest expense and other financial losses (92)
Foreign currency losses, net (71)
Net income before income tax expense and equity in earnings of unconsolidated entity $ 198

The following ~~tables summarize~~table summarizes net revenues and financial income per reporting segment, which have been disaggregated by similar products and services for the ~~nine and~~ three-month periods ended ~~September 30, 2023~~March 31, 2024 and ~~2022:~~2023:

Nine Months Ended September 30,
Brazil Argentina Mexico Other Countries Total
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
(In millions)
Commerce services (a) $ 2,615 $ 1,877 $ 727 $ 602 $ 1,160 $ 702 $ 293 $ 234 $ 4,795 $ 3,415
Commerce products sales (b) 552 344 158 198 212 161 23 29 945 732
Total commerce revenues $ 3,167 $ 2,221 $ 885 $ 800 $ 1,372 $ 863 $ 316 $ 263 $ 5,740 $ 4,147
Fintech services (c) 1,375 1,059 927 636 198 97 134 86 2,634 1,878
Credit revenues (d) 808 833 502 347 489 291 5 2 1,804 1,473
Fintech products sales (e) 15 21 3 4 7 6 9 6 34 37
Total fintech revenues $ 2,198 $ 1,913 $ 1,432 $ 987 $ 694 $ 394 $ 148 $ 94 $ 4,472 $ 3,388
Total net revenues $ 5,365 $ 4,134 $ 2,317 $ 1,787 $ 2,066 $ 1,257 $ 464 $ 357 $ 10,212 $ 7,535

Three Months Ended September 30,
Brazil Argentina Mexico Other Countries Total
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
(In millions)
Commerce services (a) $ 1,007 $ 669 $ 260 $ 221 $ 429 $ 257 $ 100 $ 76 $ 1,796 $ 1,223
Commerce products sales (b) 204 111 50 69 70 54 8 8 332 242
Total commerce revenues $ 1,211 $ 780 $ 310 $ 290 $ 499 $ 311 $ 108 $ 84 $ 2,128 $ 1,465
Fintech services (c) 487 357 344 245 75 38 45 32 951 672
Credit revenues (d) 304 287 171 139 195 115 2 1 672 542
Fintech products sales (e) 4 7 — 1 3 1 2 2 9 11
Total fintech revenues $ 795 $ 651 $ 515 $ 385 $ 273 $ 154 $ 49 $ 35 $ 1,632 $ 1,225
Total net revenues $ 2,006 $ 1,431 $ 825 $ 675 $ 772 $ 465 $ 157 $ 119 $ 3,760 $ 2,690


	Three Months Ended March 31,
	Brazil				Argentina				Mexico				Other Countries				Total
	2024		2023 (1)		2024		2023 (1)		2024		2023 (1)		2024		2023 (1)		2024		2023 (1)
	(In millions)
Commerce services (2)	$	1,313	$	762	$	176	$	224	$	531	$	338	$	108	$	91	$	2,128	$	1,415
Commerce products sales (3)	250		145		24		49		82		60		12		7		368		261
Total commerce revenues	1,563		907		200		273		613		398		120		98		2,496		1,676
Fintech services and financial income (4)	587		486		295		353		123		75		52		47		1,057		961
Credit revenues (5)	416		241		119		159		232		135		3		1		770		536
Fintech products sales (6)	5		5		1		2		3		2		1		4		10		13
Total fintech revenues	1,008		732		415		514		358		212		56		52		1,837		1,510
Total net revenues and financial income	$	2,571	$	1,639	$	615	$	787	$	971	$	610	$	176	$	150	$	4,333	$	3,186

~~(a)~~(1) Recast for consistency with the current presentation due to the change in the presentation of certain financial results. Please refer to Note 2 – Summary of significant accounting policies - Change in the presentation of certain financial results and reclassification of prior year results.

(2)Includes final value fees and flat fees paid by sellers derived from intermediation services and related shipping and storage fees, classified fees derived from classified advertising services and ad sales.

~~(b)~~(3) Includes revenues from inventory sales and related shipping fees.

~~(c)~~(4) Includes revenues from commissions the Company charges for transactions off-platform derived from use of the Company’s payment solution and asset management product, revenues as a result of offering installments for the payment to its Mercado Pago users, either when the Company finances the transactions directly or when the Company sells the corresponding financial assets, interest earned on cash and investments as part of Mercado Pago activities, including those required due to fintech regulations, net of interest gains pass through our Brazilian users in connection with our asset management product, Mercado Pago credit and debit card fees and insurtech fees.

~~(d)~~(5) Includes interest earned on loans and advances granted to merchants and consumers, and interest earned on Mercado Pago credit card transactions.

~~(e)~~(6) Includes sales of mobile point of sales devices.

~~Table of Contents~~

The following table summarizes the allocation of property and equipment, net based on geography:


		September 30, 2023		December 31, 2022
		(In millions)
	March 31, 2024					March 31, 2024		December 31, 2023
	(In millions)						(In millions)
US property and equipment, net	US property and equipment, net	$	2	$	1
Property and equipment, net
Other countries
Argentina
Argentina
Argentina	Argentina	199		188
Brazil	Brazil	527		514
Mexico	Mexico	267		206
Other countries	Other countries	86		84
		$	1,079	$	992
	1,258
Total property and equipment, net	Total property and equipment, net	$	1,081	$	993

22 | MercadoLibre, Inc.

Table of Contents

MercadoLibre, Inc.

Notes to unaudited interim condensed consolidated financial statements

The following table summarizes the allocation of the operating lease right-of-use assets based on geography:


		September 30, 2023		December 31, 2022
		(In millions)
	March 31, 2024								March 31, 2024				December 31, 2023
	(In millions)											(In millions)
US right of use asset, net
Other countries
Argentina
Argentina
Argentina	Argentina	$	49	$	53
Brazil	Brazil	349		286
Mexico	Mexico	330		245
Other countries	Other countries	68		72
Total operating lease right-of-use assets		$	796	$	656
	869								869				899
Total right of use asset, net						Total right of use asset, net	$	872		$	899

The following table summarizes the allocation of the goodwill and intangible assets based on geography:


	March 31, 2024										March 31, 2024						December 31, 2023
	(In millions)													(In millions)
US intangible assets at fair value
	$								$	40					$	24
		September 30, 2023		December 31, 2022
		(In millions)
US intangible assets, net		$	9	$	9
Goodwill and intangible assets, net
Goodwill and intangible assets, net
Goodwill and intangible assets, net	Goodwill and intangible assets, net
Argentina	Argentina	13		14		Argentina	$	13				$	12
Brazil	Brazil	66		63		Brazil	67					68
Mexico	Mexico	44		40		Mexico	45					44
Other countries	Other countries	48		52		Other countries	45					50
		$	171	$	169
Total goodwill and intangible assets, net		$	180	$	178
	170										170						174
Total goodwill and intangible assets						Total goodwill and intangible assets	$	210				$	198

2023 | MercadoLibre, Inc.

Table of Contents

MercadoLibre, Inc.

~~9. Fair value measurement of assets and liabilities~~Notes to unaudited interim condensed consolidated financial statements

NOTE 10. FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES

Assets and liabilities measured and recorded at fair value on a recurring basis

The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022:~~2023:


Description			Balances as of September 30, 2023		Quoted Prices in active markets for identical Assets (Level 1)		Significant other observable inputs (Level 2)		Unobservable inputs (Level 3)		Balances as of December 31, 2022		Quoted Prices in active markets for identical Assets (Level 1)		Significant other observable inputs (Level 2)		Unobservable inputs (Level 3)
			(In millions)
Assets
		Balances as of March 31, 2024
		Balances as of March 31, 2024
		Balances as of March 31, 2024
		(In millions)
		(In millions)
		(In millions)
Cash and Cash Equivalents:	Cash and Cash Equivalents:
Money Market	Money Market		$	764	$	764	$	—	$	—	$	599	$	599	$	—	$	—
Money Market
Money Market
U.S. government debt securities (1)	U.S. government debt securities (1)		—		—		—		—		21		21		—		—

U.S. government debt securities (1)
U.S. government debt securities (1)
Foreign government debt securities (1)
Foreign government debt securities (1)
Foreign government debt securities (1)
Restricted Cash and Cash Equivalents:	Restricted Cash and Cash Equivalents:
Money Market (3)			219		219		—		—		352		352		—		—
Foreign government debt securities (Central Bank of Brazil Mandatory Guarantee) (1)			—		—		—		—		158		158		—		—
Restricted Cash and Cash Equivalents:
Restricted Cash and Cash Equivalents:
Money Market (2)
Money Market (2)
Money Market (2)
Foreign government debt securities (1)
Foreign government debt securities (1)
Foreign government debt securities (1)
Investments:
Investments:
Investments:	Investments:
U.S. government debt securities (1)	U.S. government debt securities (1)		1,124		1,124		—		—		733		733		—		—
Foreign government debt securities (Central Bank of Brazil Mandatory Guarantee) (1)			1,762		1,762		—		—		1,219		1,219		—		—
Foreign government debt securities (1) (2)			186		186		—		—		214		214		—		—
Equity securities at fair value			13		13		—		—		—		—		—		—
U.S. government debt securities (1)
U.S. government debt securities (1)
Foreign government debt securities (1) (3)
Foreign government debt securities (1) (3)
Foreign government debt securities (1) (3)
Corporate debt securities
Corporate debt securities
Corporate debt securities
Other Assets:
Other Assets:
Other Assets:	Other Assets:
Derivative Instruments	Derivative Instruments		16		—		16		—		1		—		1		—
USDC			—		—		—		—		3		3		—		—
Derivative Instruments
Derivative Instruments

Customer crypto-assets safeguarding assets	Customer crypto-assets safeguarding assets		21		—		21		—		15		—		15		—

Customer crypto-assets safeguarding assets

Customer crypto-assets safeguarding assets
Intangible assets at fair value
Intangible assets at fair value
Intangible assets at fair value
Total Assets	Total Assets		$	4,105	$	4,068	$	37	$	—	$	3,315	$	3,299	$	16	$	—
Liabilities:
Long-term retention program			$	74	$	—	$	74	$	—	$	58	$	—	$	58	$	—
Total Assets
Total Assets
Salaries and social security payable:
Salaries and social security payable:
Salaries and social security payable:
Long-term retention plan
Long-term retention plan
Long-term retention plan
Other Liabilities:	Other Liabilities:
Contingent considerations			—		—		—		—		8		—		—		8
Other Liabilities:
Other Liabilities:

Derivative Instruments

Derivative Instruments

Derivative Instruments	Derivative Instruments		18		—		18		—		24		—		24		—
Customer crypto-assets safeguarding liabilities	Customer crypto-assets safeguarding liabilities		21		—		21		—		15		—		15		—
Customer crypto-assets safeguarding liabilities
Customer crypto-assets safeguarding liabilities
Total Liabilities	Total Liabilities		$	113	$	—	$	113	$	—	$	105	$	—	$	97	$	8
Total Liabilities
Total Liabilities

(1)Measured at fair value with impact on the statement of income for the application of the fair value option. (See Note 2 – Summary of significant accounting policies – Fair value option applied to certain financial instruments).

(2)As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023, includes ~~$25~~$221 million and ~~$21~~$269 million, respectively, of money market funds from securitization transactions. (See Note 5 – Cash, cash equivalents, restricted cash and cash equivalents and investments).

(3) As of March 31, 2024 and December 31, 2023, includes $23 million and $23 million, respectively, of investments from securitization transactions that are restricted to the payment of amounts due to third-party investors. (See Note 5 -– Cash, cash equivalents, restricted cash and cash equivalents and investments).

~~(3)~~As of September 30, 2023 and December 31, 2022 includes $193 million and $314 million, respectively, of money market funds from securitization transactions. (See Note 5 - Cash, cash equivalents, restricted cash and cash equivalents and investments).

~~Table of Contents~~

~~As of September 30, 2023 and December 31, 2022, the~~The Company’s assets and liabilities measured and recorded at fair value on a recurring basis were valued using i) Level 1 inputs: unadjusted quoted prices in active markets (Level 1 instrument valuations are obtained from observable inputs that reflect quoted prices (unadjusted) for identical assets in active markets); ii) Level 2 inputs: obtained from readily-available pricing sources for comparable instruments as well as instruments with inactive markets at the measurement date; and iii) Level 3 inputs: valuations based on unobservable inputs reflecting Company’s assumptions. The unobservable inputs of the fair value of contingent considerations classified as Level 3 refer to the amounts to be paid according to the respective agreements of each acquisition, the likelihood of achievement of the performance targets arising from each one (expected to be 100%), and the Company’s historical experience with similar arrangements. Reasonable variation on those unobservable inputs would not significantly change the fair value of those instruments. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022, the Company had not changed the methodology nor the assumptions used to estimate the~~2023, there were no assets and liabilities measured and recorded at fair value ~~of the financial instruments.~~using level 3 inputs.

There were no transfers to and from Levels 1, 2 and 3 during the ~~nine-month~~three-month period ended ~~September 30, 2023. There were no transfers to and from Levels 1, 2 and 3~~March 31, 2024, nor during the year ended December 31, ~~2022, other than as detailed in the table below.~~2023.

24 | MercadoLibre, Inc.

Table of ~~September 30, 2023, the contingent considerations measured at fair value using Level 3 inputs were settled. The following table summarizes the reconciliation of the~~Contents

MercadoLibre, Inc.

Notes to unaudited interim condensed consolidated financial ~~liabilities measured at fair value using Level 3 inputs as of December 31, 2022:~~statements

Year Ended December 31, 2022
Derivative Instruments, net Contingent Considerations
(In millions)
Balance, beginning of the year $ 11 $ (9)
Net Additions 3 —
Settlements 7 1
Foreign Currency Translation (5) —
Gain (Losses) in Other Comprehensive Income (15) —
Gain (Losses) on Income Statement (28) —
Transfers out of level 3 to level 2 27 —
Balance, end of the year $ — $ (8)

The Company’s election of the fair value option applies ~~to the:~~to: i) ~~Brazilian federal~~foreign government ~~bonds~~debt securities and ii) U.S. ~~treasury notes.~~government debt securities. The Company recognized fair value changes, ~~in interest income and other financial gains~~ which includes the related interest income of those ~~instruments.~~instruments, in net revenues and financial income if it is related to Mercado Pago’s operations (please refer to Note 2 – Summary of significant accounting policies - Change in the presentation of certain financial results and reclassification of prior year results) or in interest income and other financial gains if not. Such fair value changes and interest income amount to ~~$195~~gains of $69 million and ~~$81~~$49 million in net revenues and financial income and to $10 million and ~~$104~~$8 million in interest income and ~~$42 million~~other financial gains, for the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively.

As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the ~~Company held no~~cost and the estimated fair value of the Company’s investment in corporate debt securities classified as available for ~~sale. However,~~sale amounted to $151 million and $30 million, respectively. The cost of these securities is determined under a specific identification basis. For the three-month period ended March 31, 2024, the proceeds from sales of corporate debt securities amounted to $3 million and the gross realized gains from such securities amount to less than $1 million. There were no sales of corporate debt securities during the ~~year~~three-month period ended ~~December~~March 31, ~~2022,~~2023.

The following table summarizes the ~~Company purchased and sold all~~net carrying amount of the corporate debt securities classified as available for sale, ~~resulting in $156 million~~classified by its contractual maturities:


	March 31, 2024		December 31, 2023
	(In millions)
One year or less	$	38	$	5
One year to two years	51		12
Two years to three years	23		4
Three years to four years	11		3
Four years to five years	28		6

Total available for sale investments	$	151	$	30

The following table summarizes the net carrying amount of ~~proceeds from~~ the ~~sales and in gross realized gains less than $1 million. The cost of these~~debt securities ~~was determined under a specific identification basis.~~not classified as available for sale, classified by its contractual maturities or Management expectation to convert the investments into cash:


	March 31, 2024		December 31, 2023
	(In millions)
One year or less	$	3,820	$	3,668
One year to two years	4		4
Two years to three years	35		—
Three years to four years	31		35
Four years to five years	5		37
More than five years	2		3
	$	3,897	$	3,747

2225 | MercadoLibre, Inc.

Table of Contents

MercadoLibre, Inc.

Notes to unaudited interim condensed consolidated financial statements

Financial assets and liabilities not measured and recorded at fair value

The following table summarizes the estimated fair value of the financial assets and liabilities of the Company not measured at fair value as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022:~~2023:

Balances as of
September 30, 2023 Estimated fair value as of September 30, 2023 Balances as of
December 31, 2022 Estimated fair value as of December 31, 2022
(In millions)
Assets
Cash and cash equivalents $ 1,407 $ 1,407 $ 1,290 $ 1,290
Restricted cash and cash equivalents 866 866 943 943
Investments 326 326 439 439
Accounts receivables, net 161 161 130 130
Credit card receivables and other means of payment, net 3,375 3,375 2,946 2,946
Loans receivable, net 2,378 2,387 1,736 1,761
Other assets 395 395 273 273
Total Assets $ 8,908 $ 8,917 $ 7,757 $ 7,782
Liabilities
Accounts payable and accrued expenses $ 1,910 $ 1,910 $ 1,393 $ 1,393
Funds payable to customers 4,016 4,016 3,454 3,454
Amounts payable due to credit and debit card transactions 757 757 488 488
Salaries and social security payable 445 445 349 349
Loans payable and other financial liabilities 4,454 4,486 4,758 4,997
Other liabilities 206 206 186 186
Total Liabilities $ 11,788 $ 11,820 $ 10,628 $ 10,867


	Balances as of March 31, 2024		Estimated fair value as of March 31, 2024		Balances as of December 31, 2023		Estimated fair value as of December 31, 2023
	(In millions)
Cash and cash equivalents	$	1,403	$	1,403	$	1,825	$	1,825
Restricted cash and cash equivalents	1,002		1,002		898		898
Investments	35		35		15		15
Accounts receivables, net	170		170		156		156
Credit card receivables and other means of payment, net	3,962		3,962		3,632		3,632
Loans receivable, net	3,205		3,200		2,694		2,676
Other assets	94		94		131		131
Total Assets	$	9,871	$	9,866	$	9,351	$	9,333
Accounts payable and accrued expenses	$	2,203	$	2,203	$	2,117	$	2,117
Funds payable to customers	5,059		5,059		4,475		4,475
Amounts payable due to credit and debit card transactions	1,352		1,352		1,092		1,092
Salaries and social security payable	498		498		441		441
Loans payable and other financial liabilities	4,342		4,281		4,495		4,441
Other liabilities	317		317		285		285
Total Liabilities	$	13,771	$	13,710	$	12,905	$	12,851

As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the carrying value of the Company’s financial assets (except for loans receivable and equity securities held at cost) not measured at fair value approximated their fair value mainly because of their short-term maturity. If these financial assets were measured at fair value in the financial statements, cash and restricted cash would be classified as Level 1 (where cost and fair value are aligned) and the remaining financial assets would be classified as Level 2. The estimated fair value of the loans receivable would be classified as Level 3 based on the Company’s assumptions.

As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the carrying value of the Company’s financial liabilities (except for ~~2028 Notes,~~ 2026 Sustainability Notes and 2031 Notes) not measured at fair value approximated their fair value mainly because of their short-term maturity and the effective interest rates are not materially different from market interest rates. If these financial liabilities were measured at fair value in the financial statements, these would be classified as Level 2. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the estimated fair value of the 2026 Sustainability Notes ~~and 2031 Notes~~ would be ~~$365~~$375 million and ~~$359 million, and $553 million and $541~~$375 million, respectively, ~~based on Level 2 inputs. Also, as of September 30, 2023~~ and ~~December 31, 2022,~~ the estimated fair value of the ~~2028~~2026 Notes would be ~~$255~~$585 million and ~~$884~~$599 million, respectively, ~~and would be classified as~~which is based on Level 2 based on the closing trading price per $100 principal amount of the 2028 Notes as of the last day of trading for the period. The fair value of the 2028 Notes is primarily affected by the trading price of the Company’s common stock and market interest rates. Based on the $1,267.88 closing price of the Company’s common stock on September 30, 2023, the if-converted value of the 2028 Notes exceeded their principal amount by $167 million.inputs.

NOTE 11. COMMITMENTS AND CONTINGENCIES

~~Table of Contents~~

~~10. Commitments and Contingencies~~

Litigation and Other Legal Matters

The Company is subject to certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings. The Company accrues liabilities when it considers it to be probable that future costs will be incurred and such costs can be reasonably estimated. Proceeding-related liabilities are based on developments to date and historical information related to actions filed against the Company. As of ~~September 30, 2023,~~March 31, 2024, the Company had accounted for estimated liabilities involving proceeding-related contingencies and other estimated contingencies of ~~$72~~$112 million within non-current other liabilities to cover legal actions against the Company infor which Management has assessed the likelihood of a final adverse outcome as probable. Expected legal costs related to litigations are accrued when the legal service is actually provided.

In addition, as of ~~September 30, 2023,~~March 31, 2024, the Company and its subsidiaries are subject to certain legal actions considered by the Company’s Management and its legal counsels to be reasonably possible of resulting in a loss for an estimated aggregate amount up to ~~$480 million~~.$198 million. No loss amounts have been accrued for such reasonably possible legal actions.

For further information related to contingent liabilities please refer to Note 15 to the consolidated financial statements in the Company’s ~~2022~~2023 10-K.

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MercadoLibre, Inc.

Notes to unaudited interim condensed consolidated financial statements

Tax Claims

Brazilian preliminary injunction against the Brazilian tax authorities (withholding income tax)

The tax claim related to the Brazilian preliminary injunction against the Brazilian tax authorities is described in Note 15 to the consolidated financial statements in the Company’s 2023 10-K. On April 3, 2024, the Superior Court of Justice decided to analyze whether the matter under consideration is capable of becoming a binding precedent. The Company will submit a petition claiming that the case is fully capable of being judged as a binding precedent. Management’s opinion, based on the opinion of external legal counsel, is that the risk of losing the case is probable based on the technical merits of the Company’s tax position and the existence of recent adverse decisions issued by the Superior Court of Justice. For that reason, the Company has recorded a provision for the disputed amounts, which was $338 million as of March 31, 2024, and which was recorded in non-current other liabilities in the consolidated balance sheets, net of the corresponding judicial deposits for $294 million (which includes $82 million of interest income).

Interstate rate of ICMS-DIFAL on interstate sales

Interstate rate of ICMS-DIFAL on interstate sales without Complementary Law

The tax claim related to the interstate rate of ICMS-DIFAL (Imposto sobre Circulaçao de Mercadorias, Serviços de Transporte Interestadual, Intermunicipal e Comunicação on interstate sales at a differential rate) without the existence of a complementary law is described in Note 15 to the consolidated financial statements in the Company’s ~~2022~~2023 10-K. In April 2023, and based on court authorization, the Company withdrew the deposits corresponding to the case related to the State of Santa Catarina, which had become final and unappealable in September 2022 in favor of eBazar.com.br Ltda. In June 2023, the case related to the State of Goiás (whose risk of losing had been considered remote), reached a final and unappealable judgment in favor of eBazar.com.br Ltda. and Mercado Pago Instituição de Pagamento Ltda., and the companies will withdraw the deposits corresponding to the case as soon as the court authorization is granted. In August 2023,March 2024, one of the cases related to the State of ~~Bahia~~Santa Catarina (whose risk of losing had been considered probable), reached a final and unappealable judgment in favor of the State. Finally, in September 2023, one of the cases related to the State of Rio de Janeiro (whose risk of losing had been considered probable), reached a final and unappealablereceived judgment in favor of the State. The remaining cases pending as of December 31, ~~2022~~2023 had no updates during the ~~nine-month~~three-month period ended ~~September 30, 2023~~March 31, 2024. The Company maintains a $3$2 million provision as of ~~September 30, 2023~~March 31, 2024 for the disputed amounts related to the 43 ongoing cases whose risk of losing is considered by Management to be probable, based on the opinion of external legal counsel.

~~In addition, with respect to the~~Exclusion of ICMS tax ~~claims~~benefits from federal taxes base

The tax claim related to the ~~interstate rate~~exclusion of ~~ICMS-DIFAL~~ICMS tax benefits from the tax base of the Corporate Income Tax (“IRPJ”) and of the Social Contribution on ~~interstate sales under the supplementary Law No. 190/22, as~~Net Profits (“CSLL”) is described in Note 15 to the consolidated financial statements in the Company’s ~~2022 10-K,~~2023 10-K. On April 17, 2024, the ~~Brazilian Supreme~~Federal Regional Court ~~has announced that it expects to make a judgment regarding the constitutionality~~ruled in favor of the ~~supplementary Law on November 22, 2023.~~

~~Exclusion of ICMS tax benefits from PIS~~Company. The case has not yet become final and ~~COFINS tax base~~

The Company receives ICMS tax benefits from the State of Minas Gerais, Brazil, granted through a special regime signed with the State by means of a term of agreement, which are aimed at implementing and expanding business in the State. The Company accounted for the tax benefit netting cost of net revenues for the nine and three-month periods ended September 30, 2023, for $44 million and $16 million, respectively, and for the nine and three-month periods ended September 30, 2022, for $25 million and $8 million, respectively.

On April 25, 2023, the Company filed a writ of mandamus seeking an injunction and claiming the exclusion of the amounts relating to the ICMS tax benefits granted by the State of Minas Gerais in the tax base of the Social Contributions (PIS and COFINS).

~~Table of Contents~~

~~On May 26, 2023, a decision was rendered granting the injunction requested. The Company is currently waiting for the final judicial decision.~~unappealable. Management’s opinion, based on the opinion of external legal counsel, is that the risk of losing the case is ~~reasonably possible but~~ not ~~probable~~more likely than not based on the technical merits of the Company’s tax position. For that reason, the Company has not recorded any expense or liability for the disputed amounts. ~~The Company accounted for $9 million for PIS and COFINS tax benefits arising from~~As of March 31, 2024, the ICMS tax incentives during the nine-month period ended September 30, 2023, considering the exchange rate as of September 30, 2023, of which $2 million corresponded to the period ended December 31, 2021, and $3 million corresponded to the period ended December 31, 2022.

~~Marketplace joint and several liability~~

In the context of intermediation transactions on the marketplace platform, the Brazilian subsidiary eBazar.com.br Ltda. received tax assessments aimed at collecting alleged ICMS debts for the 2017 to 2019 fiscal years, in thetotal amount of $8 million, considering the exchange rate as of September 30, 2023. The tax assessment intends to attribute to eBazar.com.br Ltda. the joint and several liability for the payment of ICMS allegedly due by sellers on the sale of goods without compliant invoices. The Company presented its objection in August 2023. Management’s opinion, based on the opinion of external legal counsel, is that the risk of losing the case is reasonably possible, but not probable.under dispute was $48 million.

Buyer protection program

The buyer protection program (“BPP”) is designed to protect buyers in the Marketplace from losses due primarily to fraud or counterparty ~~non-performance.~~non-performance for all transactions completed through the Company’s online payment solution Mercado Pago (except for certain excluded categories). The Company’s BPP provides protection to consumers by reimbursing them for the total value of a purchased item and the value of any shipping service paid if it does not arrive, arrives incomplete or damaged, does not match the seller’s description or if the buyer regrets the purchase. The Company is entitled to recover from the third-party carrier companies performing the shipping service certain amounts paid under the BPP. Furthermore, in some specific circumstances, the Company enters into insurance contracts with third-party insurance companies in order to cover contingencies that may arise from the BPP.

The maximum potential exposure under this program is estimated to be the volume of payments on the Marketplace, for which claims may be made under the terms and conditions of the Company’s BPP. Based on historical losses to date, the Company does not believe that the maximum potential exposure is representative of the actual potential exposure. The Company records a liability with respect to losses under this program when they are probable and the amount can be reasonably estimated.

As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, Management’s estimate of the maximum potential exposure related to the Company’s buyer protection program is ~~$4,364~~$4,649 million and ~~$4,002~~$5,072 million, respectively, for which the Company recorded a provision of $5$9 million and $6$8 million, respectively.

Commitments

The Company committed to purchase cloud platform services from two U.S. suppliers based on the following terms:

a) 1.for a total amount of $824 million, to be paid between October 1, 2021 and September 30, 2026. As of ~~September 30, 2023,~~March 31, 2024, the Company had paid ~~$342~~$461 million; and

b) 2.for a total amount of $200 million, to be paid between September 23, 2022 and September 23, 2025. As of ~~September 30, 2023,~~March 31, 2024, the Company had paid ~~$51~~$80 million.

On April 8, 2022, the Company signed a 10-year agreement with Gol Linhas Aereas S.A. under which the Company is committed to contract a minimum amount of air logistics services for a total annual cost of $43 million (total amount once all the dedicated aircraft are in operation). Pursuant to the agreement, Gol Linhas Aereas S.A. provides logistics services in Brazil to Mercado Envios through six dedicated aircraft, ~~five~~all of which have already started operations as of ~~September 30, 2023.~~

In connection with the closing of MELI Kaszek Pioneer Corp’s (“MEKA”) initial public offering on October 1, 2021, MEKA (a special purpose acquisition company sponsored by MELI Kaszek Pioneer Sponsor LLC (the “Sponsor”), which is a joint venture between Company’s subsidiary MELI Capital Ventures LLC and Kaszek Ventures Opportunity II, L.P.) entered into a forward purchase agreement with the Sponsor, pursuant to which the Sponsor committed to purchase from MEKA 5 million Class A ordinary shares at a price of $10 per share in a private placement to close substantially concurrently with the consummation of MEKA’s initial business combination. MEKA will be deemed to be dissolved on January 2, 2024, resulting in the extinguishment of this commitment.March 31, 2024.

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MercadoLibre, Inc.

~~11. Long~~Notes to unaudited interim condensed consolidated financial statements

Since October 2023, the Company signed 3-year agreements with certain shipping companies in Brazil, under which the Company is committed to contract a minimum amount of logistics services for a total cost of $66 million.

On January 10, 2024, the Company signed a 5-year agreement for the naming rights of the Complexo Pacaembu (municipal stadium of the city of São Paulo), for a total amount of $56 million. The agreement has the option to extend the term ~~retention program (“LTRP”)~~for 5 additional independent periods of 5 years each, for the same amount indexed by the Brazilian inflation rate index IPCA.

NOTE 12. LONG TERM RETENTION PROGRAM

The following table summarizes the long term retention program accrued compensation expense for the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ which are payable in cash according to the decisions made by the Board of Directors (the “Board”):


		Nine Months Ended September 30,				Three Months Ended September 30,
		2023		2022		2023		2022
		(In millions)				(In millions)
LTRP 2017		$	—	$	(3)	$	—	$	1
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
		(In millions)
		(In millions)
		(In millions)
LTRP 2018
LTRP 2018
LTRP 2018	LTRP 2018	3		(2)		1		1
LTRP 2019	LTRP 2019	13		12		4		5
LTRP 2019
LTRP 2019
LTRP 2020
LTRP 2020
LTRP 2020	LTRP 2020	15		14		5		5
LTRP 2021	LTRP 2021	17		16		5		5
LTRP 2021
LTRP 2021
LTRP 2022
LTRP 2022
LTRP 2022	LTRP 2022	31		22		9		7
LTRP 2023	LTRP 2023	43		—		15		—
LTRP 2023
LTRP 2023
LTRP 2024
LTRP 2024
LTRP 2024
Total LTRP	Total LTRP	$	122	$	59	$	39	$	24
Total LTRP
Total LTRP

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MercadoLibre, Inc.

~~12. Loans payable and other~~Notes to unaudited interim condensed consolidated financial ~~liabilities~~statements

NOTE 13. LOANS PAYABLE AND OTHER FINANCIAL LIABILITIES

The following tables summarize the Company’s Loans payable and other financial liabilities as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022:~~2023:


		September 30, 2023		December 31, 2022
		(In millions)
Current loans payable and other financial liabilities:
	March 31, 2024					March 31, 2024		December 31, 2023
	(In millions)						(In millions)
Loans from banks	Loans from banks	$	489	$	319
Bank overdrafts	Bank overdrafts	—		9
Secured lines of credit	Secured lines of credit	94		115
Financial Bills		—		113
Deposit Certificates	Deposit Certificates	901		993
Commercial Notes	Commercial Notes	2		6
Finance lease obligations	Finance lease obligations	20		14
Collateralized debt	Collateralized debt	664		535
2028 Notes		87		3
2026 Sustainability Notes	2026 Sustainability Notes	2		4
2031 Notes	2031 Notes	4		10
Other lines of credit	Other lines of credit	9		10
Current loans payable and other financial liabilities
		$	2,272	$	2,131
Non-Current loans payable and other financial liabilities:
Loans from banks
Loans from banks
Loans from banks	Loans from banks	$	90	$	145
Secured lines of credit	Secured lines of credit	19		24
Financial Bills	Financial Bills	8		—
Deposit Certificates		—		3
Commercial Notes	Commercial Notes	202		187
Finance lease obligations		40		37
Finance lease liabilities
Collateralized debt	Collateralized debt	774		703
2028 Notes		—		436
2026 Sustainability Notes	2026 Sustainability Notes	397		398
2031 Notes	2031 Notes	651		694
Other lines of credit	Other lines of credit	1		—
		$	2,182	$	2,627
Non-Current loans payable and other financial liabilities

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MercadoLibre, Inc.

Type of instrument Currency Interest Weighted Average Interest Rate Maturity September 30, 2023 December 31, 2022
(In millions)
Loans from banks
Chilean Subsidiaries Chilean Pesos Fixed 9.99 % October 2023 - April 2025 $ 102 $ 150
Brazilian Subsidiary (*) US Dollar Fixed 5.75 % November 2023 52 —
Brazilian Subsidiary (*) US Dollar — — % — — 59
Brazilian Subsidiary (*) US Dollar Fixed 5.91 % August 2024 162 —
Brazilian Subsidiary Brazilian Reais Variable TJLP + 0.8 % October 2023 - May 2031 9 9
Mexican Subsidiary Mexican Pesos Variable TIIE + 2.20 - 3.50 % October 2023 - June 2027 192 177
Uruguayan Subsidiary Uruguayan Pesos Fixed 9.90 % October 2023 48 47
Colombian Subsidiary Colombian Pesos Fixed 13.98 % November 2023 14 22
Bank overdrafts
Uruguayan Subsidiary Uruguayan Pesos — — % — — 9
Secured lines of credit
Argentine Subsidiaries Argentine Pesos Fixed 103.12 % October 2023 84 107
Mexican Subsidiary Mexican Pesos Fixed 10.17 % October 2023 - July 2027 29 32
Financial Bills
Brazilian Subsidiary Brazilian Reais Variable CDI + 1.15 - 1.40 % March - June 2025 8 113
Deposit Certificates
Brazilian Subsidiary Brazilian Reais — — % — — 272
Brazilian Subsidiary Brazilian Reais Variable 100% to 140% of CDI October 2023 - September 2024 769 565
Brazilian Subsidiary Brazilian Reais Fixed 11.90 - 14.40 % October 2023 - April 2024 92 114
Brazilian Subsidiary Brazilian Reais Variable 106.50% of CDI November 2023 40 45
Commercial Notes
Brazilian Subsidiary Brazilian Reais Variable DI + 0.88 % October 2023 - August 2027 72 71
Brazilian Subsidiary Brazilian Reais Variable IPCA + 6.41 % October 2023 - August 2029 132 122
Finance lease obligations 60 51
Collateralized debt 1,438 1,238
2028 Notes US Dollar Fixed 2.00 % October - November 2023 87 439
2026 Sustainability Notes US Dollar Fixed 2.375 % January 2024 - January 2026 399 402
2031 Notes US Dollar Fixed 3.125 % January 2024 - January 2031 655 704
Other lines of credit 10 10
$ 4,454 $ 4,758
Notes to unaudited interim condensed consolidated financial statements


Type of instrument	Currency	Interest	Weighted Average Interest Rate	Maturity	March 31, 2024		December 31, 2023
					(In millions)
Loans from banks
Chilean Subsidiaries	Chilean Pesos	Fixed	8.52%	April 2024 - April 2025	$	104	$	104
Brazilian Subsidiary	Brazilian Reais	Variable	CDI + 0.81%	March 2025	50		—
Brazilian Subsidiary (1)	US Dollar	Fixed	5.90%	August - November 2024	219		216
Brazilian Subsidiary	Brazilian Reais	Variable	TJLP + 0.80%	April 2024 - May 2031	9		9
Mexican Subsidiary	Mexican Pesos	Variable	TJLP + 2.20% to 3.5%	April 2024 - June 2027	164		178
Uruguayan Subsidiary	Uruguayan Pesos	Fixed	9.13%	April 2024	62		50
Colombian Subsidiary	Colombian Pesos	Fixed	12.99%	May 2024	4		—

Bank overdrafts
Uruguayan Subsidiary	Uruguayan Pesos	—	—	—	—		13
Chilean Subsidiary	Chilean Pesos	—	—	April 2024	4		20
Argentine Subsidiaries	Argentine Pesos	—	—	April 2024	6		1

Secured lines of credit
Argentine Subsidiaries	Argentine Pesos	Fixed	76.18%	April 2024	36		29
Mexican Subsidiary	Mexican Pesos	Fixed	10.32%	April 2024 - July 2027	26		27

Financial Bills
Brazilian Subsidiary	Brazilian Reais	Variable	CDI + 0.95% - 1.40%	April 2025 - March 2026	28		8

Deposit Certificates
Brazilian Subsidiary	Brazilian Reais	Variable	98% to 120% of CDI	April 2024 - March 2025	739		703
Brazilian Subsidiary	Brazilian Reais	Fixed	10.07% - 14.20%	April - September 2024	52		77
Brazilian Subsidiary	Brazilian Reais	Variable	105.00% to 105.50% of CDI	April 2024	40		196

Commercial Notes
Brazilian Subsidiary	Brazilian Reais	Variable	DI + 0.88%	April 2024 - August 2027	72		78
Brazilian Subsidiary	Brazilian Reais	Variable	IPCA + 6.41%	April 2024 - August 2029	140		140

Finance lease liabilities					128		131
Collateralized debt					1,549		1,475
2026 Sustainability Notes	US Dollar	Fixed	2.375%	July 2024 - January 2026	391		393
2031 Notes	US Dollar	Fixed	3.125%	July 2024 - January 2031	630		635
Other lines of credit					17		12
					$	4,470	$	4,495

~~(*)~~(1)The carrying amount includes the effect of the derivative instrument that qualified for fair value hedge accounting. See Note ~~15 "Derivative instruments"~~16 – Derivative instruments for further detail.

See ~~Notes 13~~Note 14 – Securitization transactions and 14Note 15 – Leases to these unaudited interim condensed consolidated financial statements for details regarding the Company’s collateralized debt securitization transactions and finance lease obligations, respectively.

2.375% Sustainability Senior Notes Due 2026 and 3.125% Senior Notes Due 2031

On January 14, 2021, the Company closed a public offering of $400 million aggregate principal amount of 2.375% Sustainability Notes due 2026 (the “2026 Sustainability Notes”) and $700 million aggregate principal amount of 3.125% Notes due 2031 (the “2031 Notes”, and together with the 2026 Sustainability Notes, the “Notes”).

~~In May~~

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Notes to unaudited interim condensed consolidated financial statements

During 2023, the Company repurchased a $2$9 million and ~~$44~~$70 million principal amount of the outstanding 2026 Sustainability Notes and 2031 Notes, ~~respectively.~~respectively, plus $1 million of interest accrued. The total amount paid amounted to ~~$38~~$66 million. For the nine-month periods ended September 30, 2023, the Company recognized $8 million as a gain in Interest income and other financial gains in the unaudited interim condensed consolidated statements of income.

For additional information regarding the 2026 Sustainability Notes and the 2031 Notes please refer to Note 17 to the audited consolidated financial statements for the year ended December 31, ~~2022,~~2023, contained in the Company’s ~~2022~~2023 10-K.

~~Table of Contents~~

2.00% Convertible Senior Notes Due 2028 (“2028 Notes”)

On September 19, 2023, the Company announced its intention to redeem all its 2028 Notes on November 14, 2023. Holders of the 2028 Notes ~~may~~could elect to convert their notes at any time before November 13, 2023. Each $1,000 principal amount of 2028 Notes iswas convertible into 2.2952 shares of MercadoLibre common stock.

This conversion rate reflects an increase of 0.0399 additional shares per $1,000 principal amount of 2028 Notes above the otherwise applicable conversion rate, which applies because the notes have been called for redemption. The Company settles any conversions solely in shares of common stock, except that any fractional shares that would otherwise be deliverable are paid out in cash. The redemption price to be paid for any notes that are not converted will be 100% of the redeemed notes’ principal amount plus accrued and unpaid interest up to, but excluding, the redemption date.

~~As of September 30,~~On November 13, 2023, holders of the 2028 Notes converted ~~$351~~$439 million principal amount of 2028 Notes into ~~806,629~~1,007,597 shares of the Company’s common stock which MercadoLibre held as treasury stock. As of ~~September 30,~~December 31, 2023, ~~these 2028 Notes conversions generated a non-cash transaction of $350 million. As of the date of issuance of these unaudited interim condensed consolidated financial statements, $379 million~~no principal amount of 2028 Notes ~~were converted into 869,692 shares of the Company’s common stock. After all 2028 Notes’ conversions mentioned, the outstanding principal amount of 2028 Notes is $60 million.~~remained outstanding.

The Company entered into 2028 Notes Capped Call Transactions. The settlement averaging period with respect to the 2028 Notes Capped Call Transactions began on June 28, 2023 and ended on August 30, 2023, and the 2028 Notes Capped Call Transactions settlement date was September 1, 2023. As a result the Company received 289,675 shares of common stock.

As of September 30, 2023, the principal and issuance costs of the 2028 Notes amounted to $88 million and $1 million, respectively. As of December 31, 2022, the principal and issuance costs of the 2028 Notes amounted to $439 million and $3 million, respectively. For the ~~nine and~~ three-month ~~periods~~period ended ~~September 30,~~March 31, 2023, ~~and 2022,~~ the Company recognized interest expense, including the amortization of issuance costs, of ~~$7 million and~~ $2 ~~million, in both periods, respectively.~~million.

For additional information regarding the 2028 Notes and the 2028 Notes Capped Call Transactions please refer to Note 17 to the audited consolidated financial statements for the year ended December 31, ~~2022,~~2023, contained in the Company’s ~~2022~~2023 10-K.

Revolving Credit Agreement

On March 31, 2022, the Company, as borrower, and certain of its Subsidiaries, as guarantors, entered into a $400 million revolving credit agreement. For additional information regarding the Credit Agreement please refer to Note 17 to the audited consolidated financial statements for the year ended December 31, ~~2022,~~2023, contained in the Company’s ~~2022~~2023 10-K.

As of ~~September 30, 2023,~~March 31, 2024, no amounts have been borrowed under the facility.

~~13. Securitization Transactions~~

NOTE 14. SECURITIZATION TRANSACTIONS

The process of securitization consists of the issuance of securities collateralized by a pool of assets through a special purpose entity (“SPEs”), often under a VIE.

The Company securitizes financial assets associated with its credit card receivables and loans receivable portfolio. The Company’s securitization transactions typically involve the legal transfer of financial assets to bankruptcy remote SPEs. The Company generally retains economic interests in the collateralized securitization transactions, which are retained in the form of subordinated interests. For accounting purposes, the Company is generally precluded from recording the transfers of assets in securitization transactions as sales or is required to consolidate the SPE.

The Company securitizes certain credit card receivables related to users’ purchases through Chilean SPEs. Under the SPE contracts, the Company has determined that it has no obligation to absorb losses or the right to receive benefits of the SPEs that could be significant because it does not retain any equity certificate of participation or subordinated interest in the SPEs. As the Company does not control the vehicles, its assets, liabilities and related results are not consolidated in the Company’s financial statements.

Additionally, the Company securitizes certain credit card receivables related to users’ purchases through Brazilian SPEs. Under the SPE contracts, the Company has determined that it has the obligation to absorb losses or the right to receive benefits of the SPEs that could be significant because it retains subordinated interest in the SPEs. As the Company controls the vehicles, the assets, liabilities and related results are consolidated in its financial statements.

~~Table of Contents~~

The Company securitizes certain loans receivable through Brazilian, Argentine and Mexican SPEs, formed to securitize loans receivable provided by the Company to its users or purchased from financial institutions that grant loans to the Company’s users through Mercado Pago. According to the SPE contracts, the Company has determined that it has both the power to direct the activities of the entity that most significantly impact the entity’s performance and the obligation to absorb losses or the right to receive benefits of the entity that could be significant because it retains the equity certificates of participation and would therefore also be consolidated.

When the Company controls the vehicle, it accounts for the securitization transactions as if they were secured financing and therefore the assets, liabilities and related results are consolidated in its financial statements.

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MercadoLibre, Inc.

Notes to unaudited interim condensed consolidated financial statements

The following table summarizes the Company’s collateralized debt under securitization transactions, as of ~~September 30, 2023:~~March 31, 2024:

SPEs

Collateralized debt as of September 30, 2023

Interest rate

Currency

Maturity

SPEs

Collateralized debt as of March 31, 2024

Interest rate

Currency

Maturity

Mercado Crédito I Brasil Fundo de Investimento Em Direitos Creditórios Não Padronizados

201

CDI + 2.50%

Brazilian Reais

May 2025

Mercado Crédito I Brasil Fundo de Investimento Em Direitos Creditórios Não Padronizados

201

CDI + 2.50%

Brazilian Reais

May 2025

Mercado Crédito Fundo de Investimento Em Direitos Creditórios Não Padronizado

CDI + 3.50%

Brazilian Reais

August 2025

Mercado Crédito Fundo de Investimento Em Direitos Creditórios Não Padronizado

CDI + 3.50%

Brazilian Reais

August 2025

Olimpia Fundo de Investimento Em Direitos Creditórios

105

CDI + 1.25%

Brazilian Reais

November 2024

Olimpia Fundo de Investimento Em Direitos Creditórios

104

CDI + 1.25%

Brazilian Reais

November 2024

Mercado Crédito II Brasil Fundo De Investimento Em Direitos Creditórios Nao Padronizados

125

CDI + 2.35%

Brazilian Reais

January 2030

Mercado Crédito II Brasil Fundo De Investimento Em Direitos Creditórios Nao Padronizados

185

CDI + 2.35%

Brazilian Reais

January 2030

Seller Fundo De Investimento Em Direitos Creditórios

208

CDI + 1.60%

Brazilian Reais

March 2026

Seller Fundo De Investimento Em Direitos Creditórios

208

CDI + 1.60%

Brazilian Reais

March 2026

Seller Fundo De Investimento Em Direitos Creditórios

103

CDI + 1.80%

Brazilian Reais

May 2026

Seller Fundo De Investimento Em Direitos Creditórios

105

CDI + 1.80%

Brazilian Reais

May 2026

Mercado Crédito Consumo XVI

Badlar rates plus 200 basis points with a min 60% and a max 92%

Argentine Pesos

December 2023

Mercado Crédito Consumo XVII

Badlar rates plus 200 basis points with a min 60% and a max 92%

Argentine Pesos

January 2024

Mercado Crédito Consumo XVIII

Badlar rates plus 200 basis points with a min 60% and a max 92%

Argentine Pesos

January 2024

Mercado Crédito Consumo XIX

Badlar rates plus 200 basis points with a min 60% and a max 92%

Argentine Pesos

February 2024

Mercado Crédito Consumo XX

Badlar rates plus 200 basis points with a min 60% and a max 92%

Argentine Pesos

March 2024

Seller Fundo De Investimento Em Direitos Creditórios

CDI + 1.40%

Brazilian Reais

September 2026

Seller Fundo De Investimento Em Direitos Creditórios

CDI + 1.60%

Brazilian Reais

November 2026

Mercado Crédito Consumo XXI

Badlar rates plus 200 basis points with a min 80% and a max 120%

Argentine Pesos

June 2024

Mercado Crédito Consumo XXI

Badlar rates plus 200 basis points with a min 80% and a max 120%

Argentine Pesos

June 2024

Mercado Crédito Consumo XXII

Badlar rates plus 200 basis points with a min 80% and a max 120%

Argentine Pesos

June 2024

Mercado Crédito Consumo XXII

Badlar rates plus 200 basis points with a min 80% and a max 120%

Argentine Pesos

June 2024

Mercado Crédito Consumo XXIII

Badlar rates plus 200 basis points with a min 80% and a max 120%

Argentine Pesos

August 2024

Mercado Crédito Consumo XXIII

Badlar rates plus 200 basis points with a min 80% and a max 120%

Argentine Pesos

August 2024

Mercado Crédito Consumo XXIV

Badlar rates plus 200 basis points with a min 100% and a max 140%

Argentine Pesos

October 2024

Mercado Crédito Consumo XXIV

Badlar rates plus 200 basis points with a min 100% and a max 140%

Argentine Pesos

October 2024

Mercado Crédito Consumo XXV (*)

Badlar rates plus 200 basis points with a min 100% and a max 150%

Argentine Pesos

November 2024

Mercado Crédito XVII

Badlar rates plus 200 basis points with a min 35% and a max 88%

Argentine Pesos

March 2024

Mercado Crédito XVIII

Badlar rates plus 200 basis points with a min 35% and a max 92%

Argentine Pesos

January 2024

Mercado Crédito Consumo XXV

Badlar rates plus 200 basis points with a min 100% and a max 150%

Argentine Pesos

November 2024

Mercado Crédito Consumo XXVI

Badlar rates plus 200 basis points with a min 100% and a max 160%

Argentine Pesos

November 2024

Mercado Crédito Consumo XXVII

Badlar rates plus 200 basis points with a min 100% and a max 180%

Argentine Pesos

March 2025

Mercado Crédito Consumo XXVIII

Badlar rates plus 200 basis points with a min 100% and a max 190%

Argentine Pesos

April 2025

Mercado Crédito Consumo XXIX

Badlar rates plus 200 basis points with a min 75% and a max 155%

Argentine Pesos

March 2025

Mercado Crédito Consumo XXX

Badlar rates plus 200 basis points with a min 75% and a max 155%

Argentine Pesos

April 2025

Mercado Crédito Consumo XXXI (1)

Badlar rates plus 200 basis points with a min 45% and a max 125%

Argentine Pesos

March 2025

Mercado Crédito XIX

Badlar rates plus 200 basis points with a min 100% and a max 140%

Argentine Pesos

August 2024

Mercado Crédito XIX

Badlar rates plus 200 basis points with a min 100% and a max 140%

Argentine Pesos

August 2024

Mercado Crédito XX

Badlar rates plus 200 basis points with a min 100% and a max 170%

Argentine Pesos

December 2024

Mercado Crédito XXI (1)

Badlar rates plus 200 basis points with a min 45% and a max 125%

Argentine Pesos

March 2025

Fideicomiso de administración y fuente de pago CIB/3756

239

The equilibrium interbank interest rate published by Banco de Mexico in the Diario Oficial plus 2.35%

Mexican Pesos

August 2026

Fideicomiso de administración y fuente de pago CIB/3756

253

The equilibrium interbank interest rate published by Banco de Mexico in the Diario Oficial plus 2.35%

Mexican Pesos

August 2026

Fideicomiso de administración y fuente de pago CIB/3369

289

The equilibrium interbank interest rate published by Banco de Mexico in the Diario Oficial plus 3.0%

Mexican Pesos

April 2025

1,438

32 | MercadoLibre, Inc.

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MercadoLibre, Inc.

~~(*)~~Notes to unaudited interim condensed consolidated financial statements

SPEs

Collateralized debt as of March 31, 2024

Interest rate

Currency

Maturity

Fideicomiso de administración y fuente de pago CIB/3369

The equilibrium interbank interest rate published by Banco de Mexico in the Diario Oficial plus 7.0%

Mexican Pesos

April 2025

Fideicomiso de administración y fuente de pago CIB/3369

275

The equilibrium interbank interest rate published by Banco de Mexico in the Diario Oficial plus 3.0%

Mexican Pesos

April 2025

1,549

(1)As of ~~September 30, 2023,~~March 31, 2024, Loans payable owned by this trust were obtained through private placements. Mercado Crédito Consumo ~~XXV~~XXXI trust made a public bond offering in the Argentine stock market on ~~October 4, 2023.~~April 8, 2024. Mercado Crédito XXI trust made a public bond offering in the Argentine stock market on April 11, 2024.

~~Table of Contents~~

This secured debt is issued by the SPEs and includes collateralized securities used to fund the Company’s Fintech business. The third-party investors in the securitization transactions have legal recourse only to the assets securing the debt and do not have recourse to the Company. Additionally, the cash flows generated by the SPEs are restricted to the payment of amounts due to third-party investors, but the Company retains the right to residual cash flows.

The assets and liabilities of the SPEs are included in the Company’s unaudited interim condensed consolidated financial statements as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 as follows:


		September 30, 2023		December 31, 2022
	March 31, 2024							March 31, 2024	December 31, 2023
Assets	Assets	(In millions)				Assets	(In millions)
Current assets:	Current assets:
Restricted cash and cash equivalents	Restricted cash and cash equivalents	$	281	$	459
Short-term investments		1		—
Restricted cash and cash equivalents
Restricted cash and cash equivalents
Credit card receivables and other means of payments, net	Credit card receivables and other means of payments, net	106		317
Loans receivable, net	Loans receivable, net	1,169		799
Total current assets	Total current assets	1,557		1,575
Non-current assets:	Non-current assets:
Long-term investments
Long-term investments
Long-term investments	Long-term investments	24		21
Loans receivable, net	Loans receivable, net	19		24
Total non-current assets	Total non-current assets	43		45
Total assets	Total assets	$	1,600	$	1,620
Liabilities	Liabilities
Current liabilities:	Current liabilities:
Accounts payable and accrued expenses		$	—	$	4
Current liabilities:
Current liabilities:
Loans payable and other financial liabilities
Loans payable and other financial liabilities
Loans payable and other financial liabilities	Loans payable and other financial liabilities	664		535
Other liabilities	Other liabilities	4		1
Total current liabilities	Total current liabilities	668		540
Non-current liabilities:	Non-current liabilities:
Loans payable and other financial liabilities	Loans payable and other financial liabilities	774		703
Loans payable and other financial liabilities
Loans payable and other financial liabilities
Total non-current liabilities	Total non-current liabilities	774		703
Total liabilities	Total liabilities	$	1,442	$	1,243

~~Table of Contents~~

~~14. Leases~~NOTE 15. LEASES

The Company leases certain fulfillment, cross-docking and services centers, office space, aircraft, aircraft hangars, machines, and vehicles in the various countries in which it operates. The lease agreements do not contain any residual value guarantees or material restrictive covenants.

33 | MercadoLibre, Inc.

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MercadoLibre, Inc.

Notes to unaudited interim condensed consolidated financial statements

Supplemental balance sheet information related to leases was as follows:

September 30, 2023

December 31, 2022

(In millions)

March 31, 2024

December 31, 2023

(In millions)

Operating Leases

Operating lease right-of-use assets

796

656

Operating lease liabilities

786

656

Operating lease liabilities

Finance Leases

Property and equipment, at cost

106

Accumulated depreciation

(42)

(31)

Property and equipment, net

Loans payable and other financial liabilities

The following table summarizes the weighted average remaining lease term and the weighted average incremental borrowing rate for operating leases and the weighted average discount rate for finance leases as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022:~~2023:

September 30, 2023

December 31, 2022

March 31, 2024

December 31, 2023

Weighted average remaining lease term

Operating leases

7 Years

8 Years

7 Years

8 Years

Finance leases

3 Years

Finance leases

3 Years

Weighted average discount rate (*)

Weighted average discount rate (1)

Operating leases

Finance leases

~~(*)~~(1)Includes discount rates of leases in local currency and U.S. dollar.

The components of lease expense were as follows:

Nine Months Ended
September 30,
2023 2022
(In millions)
Operating lease cost $ 130 $ 91
Finance lease cost:
Depreciation of property and equipment 15 13
Interest on lease liabilities 7 6
Total finance lease cost $ 22 $ 19


	Three Months Ended March 31,
	2024		2023
	(In millions)
Operating lease cost	$	48	$	42

Finance lease cost:
Depreciation of property and equipment	$	10	$	5
Interest on lease liabilities	4		2
Total finance lease cost	$	14	$	7

3234 | MercadoLibre, Inc.

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MercadoLibre, Inc.

~~Supplemental cash flow information related~~Notes to ~~leases was as follows:~~unaudited interim condensed consolidated financial statements

Nine Months Ended
September 30,
2023 2022
(In millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 129 $ 85
Financing cash flows from finance leases 21 14
Assets obtained in exchange for lease obligations:
Operating leases $ 188 $ 193
Finance leases 20 15

The following table summarizes the fixed, future minimum rental payments, excluding variable costs, which are discounted by the Company’s incremental borrowing rates to calculate the lease liabilities for the operating and finance leases:


Period Ending September 30, 2023		Operating Leases		Finance Leases
		(In millions)
Period Ending March 31, 2024						Period Ending March 31, 2024	Operating Leases	Finance Leases
	(In millions)								(In millions)
One year or less	One year or less	$	171	$	32
One year to two years	One year to two years	171		27
Two years to three years	Two years to three years	144		22
Three years to four years	Three years to four years	118		8
Four years to five years	Four years to five years	111		—
Thereafter	Thereafter	384		—
Total lease payments	Total lease payments	$	1,099	$	89
Less imputed interest	Less imputed interest	(313)		(29)
Total	Total	$	786	$	60

~~15. Derivative instruments~~NOTE 16. DERIVATIVE INSTRUMENTS

Cash flow hedges

As of ~~September 30, 2023,~~March 31, 2024, the Company used foreign currency exchange contracts to hedge the foreign currency effects related to the forecasted purchase of MPOs devices in U.S. dollars owed by a Brazilian subsidiary whose functional currency is the Brazilian Real. The Company designated the foreign currency exchange contracts as cash flow hedges, the ~~derivative’s~~derivatives’ gain or loss is initially reported as a component of accumulated other comprehensive ~~income~~loss and subsequently reclassified into ~~earnings~~the interim condensed consolidated statements of income in the “Cost of net revenues and financial expenses” line item, in the same period the forecasted transaction affects earnings. As of ~~September 30, 2023,~~March 31, 2024, the Company estimated that the whole amount of net derivative gains or losses related to its cash flow hedges included in accumulated other comprehensive ~~income~~loss will be reclassified into ~~earnings~~the interim condensed consolidated statements of income within the next 12 months.

In addition, the Company has entered into swap contracts to hedge the interest rate fluctuation of its ~~variable~~ financial debt ~~issued~~held by one of its Brazilian subsidiaries. The Company designated the swap contracts as cash flow hedges. The ~~derivative’s~~derivatives’ gain or loss is initially reported as a component of accumulated other comprehensive ~~income~~loss and subsequently reclassified into ~~earnings~~the interim condensed consolidated statements of income in the “Cost of net revenues and financial expenses” line item within the next 12 months.

~~Table of Contents~~

Fair value hedges

The Company has entered into ~~cross currency~~ swap contracts to hedge the interest rate and the foreign currency exposure of its fixed-rate, foreign currency financial debt ~~issued~~held by its Brazilian subsidiaries. The Company designated the swap contracts as fair value hedges. The ~~derivative’s~~derivatives’ gain or loss is reported in ~~earnings~~the interim condensed consolidated statements of income in the same line items as the change in the value of the financial debt due to the hedged risks. Since the terms of the interest rate swaps match the terms of the hedged debts, changes in the fair value of the interest rate swaps are offset by changes in the fair value of the hedged debts attributable to changes in interest rates. Accordingly, the net impact in current earnings is that the interest expense associated with the hedged debts is recorded at the floating rates.

Net investment hedge

The Company used cross currency swap contracts, to reduce the foreign currency exchange risk related to its investment in its Brazilian foreign subsidiaries and the interest rate risk. This derivative was designated as a net investment hedge and, accordingly, gains and losses are reported as a component of accumulated other comprehensive ~~income.~~loss. The derivative’s gain or loss is initially reported as a component of accumulated other comprehensive ~~income~~loss and ~~is expected to be~~subsequently reclassified into ~~earnings~~the interim condensed consolidated statements of income in the “Interest expense and other financial losses” and “Foreign currency losses, net” line items, in the same period that the interest expense affects earnings.

Derivative instruments not designated as hedging instruments

As of ~~September 30, 2023,~~March 31, 2024, the Company entered into certain foreign currency exchange contracts to hedge the foreign currency fluctuations related to certain transactions denominated in U.S. dollars of certain of its Brazilian subsidiaries, whose functional currencies are the Brazilian Real. These transactions were not designated as hedges for accounting purposes.

35 | MercadoLibre, Inc.

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MercadoLibre, Inc.

Notes to unaudited interim condensed consolidated financial statements

In addition, the Company entered into full cross currency swap contracts to hedge the interest rate fluctuation and foreign currency fluctuations of its financial debt nominated in U.S. dollars held by its Brazilian subsidiaries. These transactions were not designated as hedges for accounting purposes.

Finally, as of ~~September 30, 2023,~~March 31, 2024, the Company entered into swap contracts to hedge the interest rate fluctuation of a certain portion of its financial debt in its Brazilian subsidiaries and VIEs. These transactions were not designated as hedges for accounting purposes.

The following table presents the notional amounts of the Company’s outstanding derivative instruments:

Notional Amount as of
September 30, 2023 December 31, 2022
(In millions)
Designated as hedging instrument
Foreign exchange contracts $ 62 $ 109
Interest rate swap contracts — 229
Cross currency swap contracts 244 133
Not designated as hedging instrument
Foreign exchange contracts $ 39 $ 110
Interest rate swap contracts 249 480

~~Table of Contents~~


	Notional Amount as of
	March 31, 2024		December 31, 2023
	(In millions)
Designated as hedging instrument
Foreign exchange contracts	$	95	$	91
Cross currency swap contracts	229		244

Not designated as hedging instrument
Foreign exchange contracts	$	4	$	16
Interest rate swap contracts	230		245

Derivative ~~Instrument Contracts~~instrument contracts

The fair values of the Company’s outstanding derivative instruments as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 were as follows:

Balance sheet location

September 30, 2023

December 31, 2022

(In millions)

Derivative Instruments

Foreign exchange contracts designated as cash flow hedges

Other current assets

—

Derivative instruments

Balance sheet location

March 31,

December 31,

2024

2023

(In millions)

Cross currency swap contracts designated as fair value hedge

Other current assets

—

Interest rate swap contracts not designated as hedging instruments

Other non-current assets

—

Cross currency swap contracts designated as net investment hedge

Other current liabilities

Interest rate swap contracts designated as cash flow hedges

Other current liabilities

—

Cross currency swap contracts designated as fair value hedge

Other current liabilities

Interest rate swap contracts not designated as hedging instruments

Other current liabilities

Foreign exchange contracts not designated as hedging instruments

Other current liabilities

Foreign exchange contracts designated as cash flow hedges

Other current liabilities

Interest rate swap contracts not designated as hedging instruments

Other non-current liabilities

—

Cross currency swap contracts designated as net investment hedge

Other non-current liabilities

—

The effects of derivative contracts on the ~~unaudited~~ interim condensed consolidated statement of comprehensive income ~~as of September 30,~~for the three-month periods ended March 31, 2024 and March 31, 2023 were as follows:


		December 31, 2022		Amount of gain (loss) recognized in other comprehensive income		Amount of (gain) loss reclassified from accumulated other comprehensive income		September 30, 2023
		(In millions)
	December 31, 2023									December 31, 2023	Amount of gain recognized in other comprehensive loss	Amount of loss reclassified from accumulated other comprehensive loss	March 31, 2024
	(In millions)											(In millions)
Foreign exchange contracts designated as cash flow hedges	Foreign exchange contracts designated as cash flow hedges	$	(2)	$	(9)	$	9	$	(2)
Interest swap contracts designated as cash flow hedges		(2)		8		(6)		—
Cross currency swap contracts designated as net investment hedge	Cross currency swap contracts designated as net investment hedge	(1)		(7)		5		(3)
		$	(5)	$	(8)	$	8	$	(5)
	$

3536 | MercadoLibre, Inc.

Table of Contents

MercadoLibre, Inc.

Notes to unaudited interim condensed consolidated financial statements


	December 31, 2022		Amount of gain (loss) recognized in other comprehensive income		Amount of (gain) loss reclassified from accumulated other comprehensive loss		March 31, 2023
	(In millions)
Foreign exchange contracts designated as cash flow hedges	$	(2)	$	(4)	$	1	$	(5)
Interest swap contracts designated as cash flow hedges	(2)		2		(1)		(1)
Cross currency swap contracts designated as net investment hedge	(1)		(5)		2		(4)
	$	(5)	$	(7)	$	2	$	(10)

The effect of the Company’s fair value hedge relationships on the ~~unaudited~~ interim condensed consolidated statements of income for the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2023~~March 31, 2024 is a ~~loss of $9 million and a~~net gain of $4 million, ~~respectively,~~ and affected ~~interest expense~~Cost of net revenues and ~~other~~ financial ~~losses~~expenses and foreign exchange losses, net. For the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2022,~~March 31, 2023, the Company recognized a ~~gain~~loss of $1$5 million that affected ~~interest expense~~Cost of net revenues and ~~other~~ financial ~~losses.~~expenses.

The carrying amount of the hedged items for fair value hedges included in the “Loans payable and other financial liabilities” line item of the interim condensed consolidated balance sheets as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 was ~~$214~~$219 million and ~~$59~~$216 million, respectively.

The effect of the Company’s fair value hedge relationships on the ~~unaudited~~ interim condensed consolidated balance sheets related to cumulative basis adjustments for fair value hedges as of ~~September 30,~~March 31, 2024 and December 31, 2023 is ~~less than~~ $1 million, ~~while as of September 30, 2022 is $1 million.~~respectively.

The effects of derivative contracts not designated as hedging instruments on the ~~unaudited~~ interim condensed consolidated statements of income for the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ were as follows:


		Nine Months Ended September 30,						Three Months Ended September 30,
		2023			2022			2023		2022
		(In millions)						(In millions)
					Three Months Ended March 31,
					Three Months Ended March 31,
					Three Months Ended March 31,
							2024						2024	2023
				(In millions)								(In millions)
Foreign exchange contracts not designated as hedging instruments recognized in Foreign currency losses, net	Foreign exchange contracts not designated as hedging instruments recognized in Foreign currency losses, net	$	(10)		$	—		$	1	$	—
Currency swap contracts not designated as hedging instruments recognized in Foreign currency losses, net		—			(23)			—		(1)
Interest rate contracts not designated as hedging instruments recognized in Interest expense and other financial losses	Interest rate contracts not designated as hedging instruments recognized in Interest expense and other financial losses	1			(5)			(4)		(5)
							$

~~16. Share repurchase program~~NOTE 17. SHARE REPURCHASE PROGRAM

On February 21, 2023, the Board authorized the Company to repurchase shares of the Company’s common stock, for an aggregate consideration of up to $900 ~~million to expire~~million. This Program expired on March 31, 2024. ~~As of September 30, 2023, the estimated remaining balance available for share repurchases under this Program was $157 million.~~

The Company expects to purchase shares at any time and from time to time, in compliance with applicable federal securities laws, through open-market purchases, block trades, derivatives, trading plans established in accordance with SEC rules, or privately negotiated transactions. The timing of repurchases will depend on factors including market conditions and prices, the Company’s liquidity requirements and alternative uses of capital. The share repurchase program may be suspended from time to time or discontinued, and there is no assurance as to the number of shares that will be repurchased under the program or that there will be any additional repurchases.

~~As of September 30, 2023, the Company had~~ acquired ~~570,049 shares under the aforementioned share repurchase programs.~~

~~From time to time, the Company acquires~~ shares of its own common stock in the Argentine market and ~~pays~~paid for them in Argentine Pesos at a price that reflects the additional cost of accessing U.S. dollars through securities denominated in U.S. dollars, because of restrictions imposed by the Argentine government for buying U.S. dollars at the official ~~exchange~~exchange rate in Argentina (See Note 2 ~~- “Summary~~– Summary of significant accounting policies - Argentine currency ~~status”~~status and macroeconomic outlook of these unaudited interim condensed consolidated financial statements). As a result, the Company recognized foreign currency losses of ~~$386 million and $108~~$56 million for the ~~nine-month periods~~three-month period ended ~~September 30, 2023 and 2022 respectively, while foreign currency losses for~~March 31, 2023. During the three-month periods ended ~~September 30, 2023 and 2022 amounted to $173 million and $45 million, respectively.~~March 31, 2024, the Company had not acquired any shares under the aforementioned share repurchase program.

3637 | MercadoLibre, Inc.

Table of Contents

~~Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations~~ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Statements

Any statements made or implied in this report that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements within the meaning of Section 27 A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and should be evaluated as such. The words “anticipate,” “believe,” “expect,” “intend,” “plan,” “estimate,” “target,” “project,” “should,” “may,” “could,” “will” and similar words and expressions are intended to identify forward-looking statements. These forward-looking statements are contained throughout this report. ~~Forward-looking~~Such forward looking statements ~~generally relate~~include, but are not limited to, ~~information concerning~~statements regarding MercadoLibre, Inc.'s expectations, objectives and progress against strategic priorities; initiatives and strategies related to our ~~possible or assumed future results~~products and services; business and market outlook, opportunities, strategies and trends; impacts of ~~operations, business strategies, financing plans, competitive position, industry~~foreign exchange; the potential impact of the uncertain macroeconomic and geopolitical environment ~~potential growth opportunities, future economic, political and social conditions in the countries in which we operate and their possible impact~~ on our ~~business,~~financial results; customer demand and market expansion; our planned product and services releases and capabilities; industry growth rates; future stock repurchases; our expected tax rate and tax strategies; and the ~~effects~~impact and result of ~~future regulation~~pending legal, administrative and ~~the effects of competition.~~tax proceedings. Such forward-looking statements ~~reflect, among other things, our current expectations, plans, projections and strategies, anticipated financial results, future events and financial trends affecting our business, all of which~~ are subject to known and unknown risks, uncertainties and other important factors (in addition to those discussed elsewhere in this report) that may cause our actual results to differ materially from those expressed or implied by these forward-looking statements. ~~These~~Some of the material risks and uncertainties ~~include, among other things:~~

•that could cause actual results to differ materially from our expectations ~~regarding the continued growth of e-commerce, digital financial services~~ and ~~Internet usage~~projections are described in ~~Latin America;~~

•~~competition;~~

•~~our ability to expand our operations and adapt to rapidly changing technologies;~~

•~~our ability to attract new customers, retain existing customers and increase revenues;~~

•~~the impact of government, central bank and other regulations on our business;~~

•~~credit risk and other risks of lending, such as increases~~“Item 1A—Risk Factors” in ~~defaults by customers and other delinquencies;~~

•~~litigation and legal liability;~~

•~~security breaches and illegal uses of our services;~~

•~~systems interruptions or failures;~~

•~~our ability to attract and retain qualified personnel;~~

•~~consumer trends;~~

•~~reliance on third-party service providers;~~

•~~enforcement of intellectual property rights;~~

•~~our expectations regarding benefits and synergies from recent or future strategic investments, acquisitions of businesses, technologies, services or products;~~

•~~seasonal fluctuations;~~

•~~our indebtedness;~~

•~~volatility of market prices, impairment and unique risks related to loss~~Part I of the ~~digital assets~~Company’s 2023 10-K filed with the Securities and Exchange Commission (“SEC”) on February 23, 2024. You should read that information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report, our unaudited interim condensed consolidated financial statements and related notes in Item 1 of Part I of this report and our audited consolidated financial statements and related notes in Item 8 of Part II of the Company’s 2023 10-K, as well as the factors discussed in the other reports and documents we file from time to time with the SEC.

We note such information for investors as permitted by the Private Securities Litigation Reform Act of 1995. There also may be other factors that we ~~acquire;~~

•~~political, social~~cannot anticipate or that are not described in this report, generally because they are unknown to us or we do not perceive them to be material that could cause results to differ materially from our expectations. Forward-looking statements speak only as of the date they are made, and ~~economic conditions~~we do not undertake to update these forward-looking statements except as may be required by law. You are advised, however, to review any further disclosures we make on related subjects in ~~Latin America; and~~

•our ~~long-term sustainability goals.~~periodic filings with the SEC.

Many of these risks are beyond our ability to control or predict. New risk factors emerge from time to time and it is not possible for Management to predict all such risk factors, nor can it assess the impact of all such risk factors on our company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

~~Table of Contents~~

These statements are based on currently available information and our current assumptions, expectations and projections about future events. While we believe that our assumptions, expectations and projections are reasonable in view of the currently available information, you are cautioned not to place undue reliance on our forward-looking statements. These statements are not guarantees of future performance. ~~They are subject~~

The discussion and analysis of our financial condition and results of operations has been organized to ~~future events, risks~~present the following:

■a brief overview of our company;

■a review of our financial presentation and ~~uncertainties –many~~accounting policies, including our critical accounting policies;

■a discussion of ~~which are beyond~~ our ~~control– as well as potentially inaccurate assumptions that could cause actual~~principal trends and results ~~to differ materially from our expectations~~of operations for the three-month periods ended March 31, 2024 and ~~projections. Some~~2023;

■a discussion of the material risks and uncertainties that could cause actual results to differ materially from our expectations and projections are described in “Item 1A — Risk Factors” in Part I of the Company’s 2022 10-K filed with the SEC on February 24, 2023 and in other reports we file from time to time with the SEC.

You should read that information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report, our unaudited interim condensed consolidated financial statements and related notes in Item 1 of Part I of this report and our audited consolidated financial statements and related notes in Item 8 of Part II of the Company’s 2022 10-K. We note such information for investors as permitted by the Private Securities Litigation Reform Act of 1995. There also may be otherprincipal factors that ~~we cannot anticipate or that are not described in this report, generally because they are unknown to us or we do not perceive them to be material that could cause~~influence our results ~~to differ materially from~~of operations, financial condition and liquidity;

■a discussion of our ~~expectations.~~ liquidity and capital resources and a discussion of our capital expenditures;

■a description of our key performance indicators; and

■a description of our non-GAAP financial measures.

Certain monetary amounts included elsewhere in this document have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them.

Forward-looking statements speak only as of the date they are made, and we do not undertake to update these forward-looking statements except as may be required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the SEC.

~~The discussion and analysis of our financial condition and results of operations has been organized to present the following:~~

•~~a brief overview of our company;~~

•~~a review of our financial presentation and accounting policies, including our critical accounting policies;~~

•~~a discussion of our principal trends and results of operations for the nine and three-month periods ended September 30, 2023 and 2022;~~

•~~a discussion of the principal factors that influence our results of operations, financial condition and liquidity;~~

•~~a discussion of our liquidity and capital resources and a discussion of our capital expenditures; and~~

•~~a description of our non-GAAP financial measures.~~

Other Information

We routinely post important information for investors on our Investor Relations website, ~~http://~~investor.mercadolibre.com. We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under SEC Regulation FD (Fair Disclosure). Accordingly, investors should monitor our Investor Relations website, in addition to following our press releases, SEC filings, public conference calls and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this report.

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Business Overview

We are the largest online commerce ecosystem in Latin America based on unique visitors and orders processed, and we are present in 18 countries: Argentina, Brazil, Mexico, Chile, Colombia, Peru, Uruguay, Venezuela, Bolivia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Honduras, Nicaragua, Panama, Paraguay and El Salvador. Our platform is designed to provide users with a complete portfolio of services to facilitate commercial transactions both digitally and offline.

Through our e-commerce platform, we provide buyers and sellers with a robust and safe environment that fosters the development of a large e-commerce community in Latin America, a region with a population of over 650 million people and with one of the fastest-growing Internet penetration and e-commerce growth rates in the world. We believe that we offer world-class technological and commercial solutions that address the distinctive cultural and geographic challenges of operating a digital commerce platform in Latin America.

We offer our users an ecosystem of six integrated e-commerce services and digital financial services: the Mercado Libre Marketplace, the Mercado Pago Fintech platform, the Mercado Envios logistics service, the Mercado Ads solution, the Mercado Libre Classifieds service and the Mercado Shops online storefronts solution.

~~Table of Contents~~

The Mercado Libre Marketplace, is a fully-automated, topically-arranged and user-friendly online commerce platform, which can be accessed through our website and mobile app. This platform enables us (when we act as sellers in our first party sales), merchants and individuals to list merchandise and conduct sales and purchases digitally. The Marketplace has an ample assortment of products, with a wide range of categories such as consumer electronics, apparel and beauty, home goods, automotive accessories, toys, books and entertainment and consumer packaged goods.

To complement the Mercado Libre Marketplace and enhance the user experience for our buyers and sellers, we developed Mercado Pago, an integrated digital payments solution. Mercado Pago was initially designed to facilitate transactions on Mercado Libre’s Marketplaces by providing a mechanism that allowed our users to securely, easily and promptly send and receive payments. Now, Mercado Pago is a full ecosystem of financial technology solutions both in the digital and physical world. Our digital payments solution enables any MercadoLibre registered user to securely and easily send and receive digital payments and to pay for purchases made on any of Mercado ~~Libre~~Libre’s Marketplaces. Currently, Mercado Pago processes and settles all transactions on our Marketplaces in Argentina, Brazil, Mexico, Chile, Colombia, Uruguay, Peru and Ecuador.

Beyond facilitating Marketplace transactions, over the years we have expanded our array of Mercado Pago services to third parties outside Mercado Libre’s Marketplace. We began first by satisfying the growing demand for online-based payment solutions by providing merchants the necessary digital payment infrastructure for e-commerce to flourish in Latin America. Today, Mercado Pago’s digital payments business not only allows merchants to facilitate checkout and payment processes on their websites through a branded or white label solution or software development kits, but it also enables users to transfer money in a simple manner to each other through the Mercado Pago website or on the Mercado Pago app. Through Mercado Pago, we brought trust to the merchant customer relationship, allowing online consumers to shop easily and safely, while giving them the confidence to share sensitive personal and financial data with us. Finally, we have also deepened our ~~Fintech~~fintech offerings by growing our online-to-offline (“O2O”) products and services.

The Mercado Envios logistics solution enables sellers on our platform to utilize third-party carriers and other logistics service providers, while also providing them with fulfillment and warehousing services. The logistics services we offer are an integral part of our value proposition, as they reduce friction between buyers and sellers, and allow us to have greater control over the full experience. Sellers that opt into our logistics solutions are not only able to offer a uniform and seamlessly integrated shipping experience to their buyers at competitive prices, but are also eligible to access shipping subsidies to offer free or discounted shipping for many of their sales on our Marketplaces. In 2020, we launched Meli Air with a fleet of dedicated aircraft covering routes across Brazil and Mexico, with the aim of improving our delivery times. We have also developed a network of independent neighborhood stores and commercial points (known as “Meli Places”) to receive and store packages that are in transit using our integrated technology. Meli Places network allows buyers and sellers to pick-up, drop-off, or return packages with a better experience, reducing the travel distance for all parties. As of ~~September 30, 2023,~~March 31, 2024, we offer our shipping solution directed towards deliveries in Argentina, Brazil, Mexico, Chile, Colombia, Uruguay, Peru and Ecuador and we also offer free shipping to buyers in Argentina, Brazil, Mexico, Chile, Colombia, Uruguay and Peru.

Mercado Credito, our credit solution available in Argentina, Brazil, Mexico and Chile, leverages our user base, which is loyal and engaged, and in part has also been historically underserved or overlooked by financial institutions and suffers from a lack of access to needed credit. Facilitating credit is a key service overlay that enables us to further strengthen the engagement and lock-in rate of our users, while also generating additional touchpoints and incentives to use Mercado Pago as an end-to-end financial solution.

Our asset management product, which is available in Argentina, Brazil, Mexico and ~~Mexico,~~Chile, is a critical pillar to build our alternative two-sided network vision. It incentivizes our users to begin to fund their digital wallets with cash as opposed to credit or debit cards given that the return our product offers is greater than traditional checking accounts.

As an extension of our asset management and savings solutions for users, we launched a digital assets feature as part of the Mercado Pago wallet in Brazil, Mexico and Chile, in 2021, ~~in Mexico in~~ 2022 and ~~in Chile in 2023.~~2023, respectively. This service allows our millions of users to purchase, hold and sell selected digital assets through our interface without leaving the Mercado Pago application, while a partner acts as the custodian and exchange and offers the blockchain infrastructure platform. This feature is available for all users through their Mercado Pago wallet.

Our advertising platform, Mercado Ads, enables businesses to promote their products and services on the ~~Internet.~~Mercado Libre Marketplace and Mercado Pago Fintech platform. Through our advertising platform, MercadoLibre’s brands and sellers are able to display ads on our webpages through product searches, banner ads, or suggested products. Our advertising platform enables merchants and brands to access the millions of consumers that are on our Marketplaces at any given time with the intent to purchase, which increases the likelihood of conversion. Advertisers are able to leverage our first-party data to create and target highly particularized audiences.

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Through Mercado Libre Classifieds, our online classified listing service, our users can also list and purchase motor vehicles, real estate and services in the countries where we operate. Classifieds listings differ from Marketplace listings as they only charge optional placement fees and not final value fees. Our classifieds pages are also a major source of traffic to our platform, benefiting both the ~~Commerce~~commerce and ~~Fintech~~fintech businesses.

Complementing the services ~~that~~ we offer, our digital storefront solution, Mercado Shops, allows users to set-up, manage and promote their own digital stores. These stores are hosted by Mercado Libre and offer integration with the rest of our ecosystem, namely our Marketplaces, payment services and logistics services. Users can create a store at no cost, and can access additional functionalities and value added services on commission.

Reporting Segments and Geographic Information

Our segment reporting is based on geography, which is the criterion our Management currently uses to evaluate our segment performance. Our geographic segments are Brazil, Argentina, Mexico and Other Countries (including Chile, Colombia, Costa Rica, Ecuador, Peru and Uruguay). Although we discuss long-term trends in our business, it is our policy not to provide earnings guidance in the traditional sense. We believe that uncertain conditions make the forecasting of near-term results difficult. Further, we seek to make decisions focused primarily on the long-term welfare of our Company and believe focusing on short-term earnings does not best serve the interests of our stockholders. We believe that execution of key strategic initiatives as well as our expectations for long-term growth in our markets will best create stockholder value. A long-term focus may make it more difficult for industry analysts and the market to evaluate the value of our Company, which could reduce the value of our common stock or permit competitors with short-term tactics to grow more rapidly than us. We, therefore, encourage potential investors to consider this strategy before making an investment in our common stock.

The following table sets forth the percentage of our consolidated net revenues by segment for the ~~nine and~~ three-month periods ended ~~September 30, 2023~~March 31, 2024 and ~~2022:~~2023:


		Nine Months Ended September 30,					Three Months Ended September 30,
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
(% of total consolidated net revenues)	(% of total consolidated net revenues)	2023			2022		2023		2022		(% of total consolidated net revenues)	2024		2023 (1)
Brazil	Brazil	52.5	%		54.9	%	53.4	%	53.2	%	Brazil	59.3	%	51.4	%
Argentina	Argentina	22.7			23.7		21.9		25.1
Mexico	Mexico	20.2			16.7		20.5		17.3
Other Countries	Other Countries	4.6			4.7		4.2		4.4

The following table summarizes the changes in our net revenues by segment for the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and 2023:


		Three Months Ended March 31,	Change from 2023 to 2024
			2024		2023 (1)		in Dollars		in %
	(in millions, except percentages)
Brazil			$	2,571	$	1,639	$	932	56.9	%
Argentina (2)			615		787		(172)		(21.9)
Mexico			971		610		361		59.2
Other Countries			176		150		26		17.3
Total Net Revenues			$	4,333	$	3,186	$	1,147	36.0	%

(1)Recast for consistency with the current presentation due to the change in the presentation of certain financial results. Please refer to Note 2 – Summary of significant accounting policies - Change in the presentation of certain financial results and reclassification of prior year results to our unaudited interim condensed consolidated financial statements for further details.

(2) The main driver of Argentina’s net revenues and financial income decrease is explained by the increase in Argentina’s official exchange rate against the U.S. dollar from an average exchange rate of 192.41 for the three-month period ended March 31, 2023, ~~and 2022:~~

Nine Months Ended
September 30, Change from 2022 to 2023 Three Months Ended
September 30, Change from 2022 to 2023
2023 2022 in Dollars in % 2023 2022 in Dollars in %
(in millions, except percentages) (in millions, except percentages)
Net Revenues:
Brazil $ 5,365 $ 4,134 $ 1,231 29.8 % $ 2,006 $ 1,431 $ 575 40.2 %
Argentina 2,317 1,787 530 29.7 825 675 150 22.2
Mexico 2,066 1,257 809 64.4 772 465 307 66.0
Other Countries 464 357 107 30.0 157 119 38 31.9
Total Net Revenues $ 10,212 $ 7,535 $ 2,677 35.5 % $ 3,760 $ 2,690 $ 1,070 39.8 %
as compared to an average exchange rate of 834.46 for the three-month period ended March 31, 2024, partially offset by an average inter-annual inflation rate in our Argentine segment of 272.8% for the three-month period ended March 31, 2024.

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Critical Accounting Policies and Estimates

There have been no significant changes in our critical accounting policies, Management estimates or accounting policies since the year ended December 31, ~~2022~~2023 and disclosed in the Company’s ~~2022~~2023 10-K, see “Critical Accounting Policies and Estimates”. ~~See also~~For information regarding the change in the presentation of the statements of income, please refer to section ~~Recently Adopted Accounting Standards~~“Change in the presentation of certain financial results and reclassification of prior year results” of Note 2 – Summary of significant accounting policies to our unaudited interim condensed consolidated financial statements included in Item 1 of Part I of this report.

~~Table of Contents~~

Results of operations for the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2023~~March 31, 2024 compared to the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2022~~March 31, 2023

The selected financial data for the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ discussed herein is derived from our unaudited interim condensed consolidated financial statements included in Item 1 of Part I of this report. The results of operations for the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2023,~~March 31, 2024, are not necessarily indicative of the results that may be expected for the full year ending December 31, ~~2023~~2024 or for any other period.

~~Statement of income data~~

Nine Months Ended
September 30, Three Months Ended
September 30,
(In millions) 2023 2022 2023 2022
(Unaudited) (Unaudited)
Net service revenues $ 9,233 $ 6,766 $ 3,419 $ 2,437
Net product revenues 979 769 341 253
Net revenues 10,212 7,535 3,760 2,690
Cost of net revenues (4,961) (3,830) (1,765) (1,342)
Gross profit 5,251 3,705 1,995 1,348
Operating expenses:
Product and technology development (1,145) (774) (396) (278)
Sales and marketing (1,207) (916) (441) (333)
Provision for doubtful accounts (751) (845) (277) (288)
General and administrative (565) (485) (196) (153)
Total operating expenses (3,668) (3,020) (1,310) (1,052)
Income from operations 1,583 685 685 296
Other income (expenses):
Interest income and other financial gains 545 142 196 65
Interest expense and other financial losses (297) (221) (111) (92)
Foreign currency losses, net (508) (134) (239) (71)
Net income before income tax expense and equity in earnings of unconsolidated entity 1,323 472 531 198
Income tax expense (504) (154) (172) (69)
Equity in earnings of unconsolidated entity 3 (1) — —
Net income $ 822 $ 317 $ 359 $ 129

Principal trends in results of operations

Net revenues and financial income

We disaggregate revenues into four geographical reporting segments. Within each of our segments, the services we provide and the products we sell generally fall into two distinct revenue streams: “Commerce” and “Fintech”.

Revenues from Commerce transactions are mainly generated from:

•■marketplace fees that include final value fees and flat ~~fees for transactions below a certain merchandise value.~~fees. Final value fees represent a percentage of the sale value that is charged to the seller once an item is successfully sold and flat fees represent a fixed charge for certain transactions below a certain merchandise value;

~~Table of Contents~~

•■first party sales, which are generated when control of the good is transferred, upon delivery to our customers;

•■shipping fees, which are generated when a buyer elects to receive an item through our shipping service, net of the third-party carrier costs (when we act as an agent),. When the Company acts as principal, revenues derived from shipping services are recognized upon delivery of the good to the customer, and presented on a gross basis. In addition, the Company generates storage fees, which are charged to the seller for the utilization of the Company’s fulfillment facilities;

•■ad sales fees due to advertising services provided to sellers, vendors, brands and others, through performance ~~product~~products (product ads and brand ads) and display ~~advertising,~~formats, which are recognized based on the number of clicks ~~or impressions;~~and impressions, respectively;

•■classifieds fees due to offerings in vehicles, real estate and services, which are charged to sellers who opt to give their listings greater exposure throughout our websites; and

•■fees from other ancillary businesses.

Fintech revenues and financial income correspond to our Mercado Pago service, which are attributable to:

•■commissions representing a percentage of the payment volume processed that are charged to sellers in connection with off Marketplace-platform transactions;

•■commissions from additional fees we charge when a buyer elects to pay in installments through our Mercado Pago platform, for transactions that occur either on or off our Marketplace platform;

•~~commissions from additional fees we charge when our sellers elect to withdraw cash;~~

•■interest, cash advances and fees from merchant and consumer loans granted under our Mercado Credito solution;

•■revenues from our asset management product;

■interest earned on investments as part of Mercado Pago activities, including those required due to fintech regulations, net of interest gains passed through to our Brazilian users in connection with our asset management product;

■commissions that we charge from transactions carried out with Mercado Pago credit and debit cards; ~~and~~

•■revenues from the sale of mobile points of sale ~~products~~products;

■revenues from insurtech fees; and ~~insurtech fees.~~

■commissions from additional fees we charge when our sellers elect to withdraw cash.

Although we also process payments on the Marketplace, we do not charge sellers an added commission for this service, as it is already included in the Marketplace final value fee that we charge.

We have a highly fragmented customer revenue base given the large numbers of sellers and buyers who use our platforms. For the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ no single customer accounted for more than 5.0% of our net ~~revenues.~~revenues and financial income.

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Our Mercado Libre Marketplace is available in 18 countries (Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Peru, Mexico, Panama, Honduras, Nicaragua, El Salvador, Uruguay, Bolivia, Guatemala, Venezuela (deconsolidated since December 1, 2017) and Paraguay), and Mercado Pago is available in 8 countries (Argentina, Brazil, Mexico, Colombia, Chile, Peru, Uruguay and Ecuador). Additionally, Mercado Envios is available in 8 countries (Argentina, Brazil, Mexico, Colombia, Chile, Peru, Uruguay and Ecuador). The functional currency for each country’s operations is the country’s local currency, except for Argentina, where the functional currency is the U.S. dollar due to Argentina’s status as a highly inflationary economy. Our net revenues are generated in multiple foreign currencies and then translated into U.S. dollars at the average monthly exchange rate. Please refer to ~~“Summary~~Note 2 – Summary of significant accounting ~~policies” in Note 2~~policies to our unaudited interim condensed consolidated financial statements for further detail on foreign currency translation.

Our net revenues and financial income grew during the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2023~~March 31, 2024 as compared to the same ~~periods~~period in ~~2022,~~2023, boosted by the growth of our gross merchandise volume, credits business originations and ~~total payment volume.~~an increase in the share of shipping services where we act as principal, as opposed to agent. This growth was partially offset by Argentine currency depreciation.

The continued execution of our long-term strategies in Commerce and Fintech businesses has enabled us to deliver growth in gross merchandise volume, total payment volume and net revenues, alongside record quarterly operating results and strong cash generation.

The following table summarizes our consolidated net revenues and financial income for the ~~nine and~~ three-month periods ended ~~September 30, 2023~~March 31, 2024 and ~~2022:~~2023:


		Three Months Ended March 31,	Change from 2023 to 2024
			2024		2023 (1)		in Dollars		in %
	(in millions, except percentages)
Net revenues and financial income			$	4,333	$	3,186	$	1,147	36.0	%

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The following table summarizes our consolidated net revenues and financial income by revenue stream and geographic segment for the ~~nine and~~ three-month periods ended ~~September 30, 2023~~March 31, 2024 and ~~2022:~~2023:


		Nine Months Ended September 30,					Change from 2022 to 2023					Three Months Ended September 30,				Change from 2022 to 2023
Consolidated net revenues by revenue stream		2023			2022		in Dollars		in %			2023		2022		in Dollars		in %
		(in millions, except percentages)										(in millions, except percentages)
Consolidated net revenues and financial income

Consolidated net revenues and financial income																					Consolidated net revenues and financial income	Three Months Ended March 31,		Change from 2023 to 2024
																								2024			2023 (1)				in Dollars				in %
				(in millions, except percentages)																			(in millions, except percentages)
Brazil	Brazil
Commerce	Commerce	$	3,167		$	2,221	$	946	42.6	%		$	1,211	$	780	$	431	55.3	%
Commerce
Commerce																									$	1,563			$	907			$	656			72.3		%
Fintech	Fintech	2,198			1,913		285		14.9	%		795		651		144		22.1	%
		$	5,365		$	4,134	$	1,231	29.8	%		$	2,006	$	1,431	$	575	40.2	%
											2,571
Argentina	Argentina
Commerce	Commerce	$	885		$	800	$	85	10.6	%		$	310	$	290	$	20	6.9	%
Commerce
Commerce
Fintech	Fintech	1,432			987		445		45.1	%		515		385		130		33.8	%
		$	2,317		$	1,787	$	530	29.7	%		$	825	$	675	$	150	22.2	%
											615
Mexico	Mexico
Commerce	Commerce	$	1,372		$	863	$	509	59.0	%		$	499	$	311	$	188	60.5	%
Commerce
Commerce
Fintech	Fintech	694			394		300		76.1	%		273		154		119		77.3	%
		$	2,066		$	1,257	$	809	64.4	%		$	772	$	465	$	307	66.0	%
											971
Other countries	Other countries
Commerce	Commerce	$	316		$	263	$	53	20.2	%		$	108	$	84	$	24	28.6	%
Commerce
Commerce
Fintech	Fintech	148			94		54		57.4	%		49		35		14		40.0	%
		$	464		$	357	$	107	30.0	%		$	157	$	119	$	38	31.9	%
											176
Consolidated	Consolidated
Commerce
Commerce
Commerce	Commerce	$	5,740		$	4,147	$	1,593	38.4	%		$	2,128	$	1,465	$	663	45.3	%
Fintech	Fintech	4,472			3,388		1,084		32.0	%		1,632		1,225		407		33.2	%
Total	Total	$	10,212		$	7,535	$	2,677	35.5	%		$	3,760	$	2,690	$	1,070	39.8	%	Total					$	4,333		$	$	3,186		$	$	1,147		36.0		36.0		%

See Note ~~8 “Segment reporting”~~9 – Segments of our unaudited interim condensed consolidated financial statements for further information regarding our net revenues and financial income disaggregated by similar products and services for the ~~nine and~~ three-month periods ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023.

Our Commerce revenues grew ~~$1,593 million and $663~~$820 million, or ~~38.4% and 45.3%~~48.9%, for the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2023,~~March 31, 2024, as compared to the same ~~periods~~period in ~~2022, respectively.~~2023. This increase in Commerce revenues was primarily attributable to:

a)■(i) an increase of ~~$1,380 million and $573~~$713 million in our Commerce services revenues ~~for the nine and three-month periods ended September 30, 2023, respectively, is~~ mainly related to a ~~26% and 32%~~20.5% increase in gross merchandise volume, ~~respectively,~~(ii) a ~~22% and 27%~~25.6% increase in our shipped items, ~~respectively,~~ and (iii) higher flat fee contributions for low gross merchandise volume transactions. Shipping carrier costs, which are netted against revenues, ~~increased $430 million and $168~~decreased $174 million, from ~~$1,280 million and $443~~$535 million for the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2022~~March 31, 2023 to ~~$1,710 million and $611~~$361 million for the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2023, respectively;~~March 31, 2024, mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent; and

b)■an increase of ~~$213 million and $90~~$107 million in our revenues from Commerce products sales for the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2023, respectively,~~March 31, 2024, as compared to the same ~~periods~~period in ~~2022,~~2023, mainly in Brazil and ~~Mexico.~~Mexico, partially offset by Argentina, mainly due to an increase in the Argentina's official exchange rate against U.S. dollar.

Our Fintech revenues grew 21.7%, from $1,510 million for the three-month period ended March 31, 2023, to $1,837 million for the three-month period ended March 31, 2024. This increase was mainly generated by:

■an increase of $234 million in our credits revenues, mainly as a consequence of higher originations; and

■an increase of $96 million in our revenues from Fintech services and financial income, mainly related to a 34.5% increase in our total payment volume.

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Our Fintech revenues grew 32.0% and 33.2%, from $3,388 million and $1,225 million for the nine and three-month periods ended September 30, 2022, respectively, to $4,472 million and $1,632 million for the nine and three-month periods ended September 30, 2023, respectively. This increase was mainly generated by:

~~a) an increase of $756 million and $279 million in our revenues from Fintech services, mainly related to a 44% and 47% increase in our total payment volume, respectively; and~~

b) an increase of $331 million and $130 million in our credits revenues, for the nine and three-month periods ended September 30, 2023, respectively, as compared to the same periods in 2022, mainly as a consequence of higher originations.

Brazil

Commerce revenues in Brazil increased ~~42.6%~~72.3% in the ~~nine-month~~three-month period ended ~~September 30, 2023~~March 31, 2024 as compared to the same period in ~~2022.~~2023. This increase was generated by an increase of ~~$738~~$551 million in our Commerce services revenues and an increase of ~~$208~~$105 million in our revenues from Commerce products sales. Fintech revenues grew by ~~14.9%~~37.7%, a ~~$285~~$276 million increase, during the ~~nine-month~~three-month period ended ~~September 30, 2023~~March 31, 2024 as compared to the same period in ~~2022,~~2023, mainly driven by an increase of ~~$316 million in our revenues from Fintech services, partially offset by a decrease of $25 million in our Credits revenues.~~

Commerce revenues in Brazil increased 55.3% in the three-month period ended September 30, 2023 as compared to the same period in 2022. This increase was generated by an increase of $338 million in our Commerce services revenues and an increase of $93 million in our revenues from Commerce products sales. Fintech revenues grew by 22.1%, a $144 million increase, during the three-month period ended September 30, 2023 as compared to the same period in 2022, mainly driven by an increase of $130 million in our revenues from Fintech services and an increase of $17 million in our Credits revenues.

~~Argentina~~

Commerce revenues in Argentina increased 10.6% in the nine-month period ended September 30, 2023 as compared to the same period in 2022. This increase was generated by an increase of $125 million in our Commerce services revenues, partially offset by a decrease of $40 million in our revenues from Commerce products sales. Fintech revenues grew 45.1%, a $445 million increase, during the nine-month period ended September 30, 2023 as compared to the same period in 2022, mainly driven by an increase of $291 million in our revenues from Fintech services and an increase of $155 million in our Credits revenues.

Commerce revenues in Argentina increased 6.9% in the three-month period ended September 30, 2023 as compared to the same period in 2022. This increase was generated by an increase of $39 million in our Commerce services revenues, partially offset by a decrease of $19 million in our revenues from Commerce products sales. Fintech revenues grew 33.8%, a $130 million increase, during the three-month period ended September 30, 2023 as compared to the same period in 2022, mainly driven by an increase of $99 million in our revenues from Fintech services and an increase of $32 million in our Credits revenues.

~~Mexico~~

Commerce revenues in Mexico increased 59.0% in the nine-month period ended September 30, 2023 as compared to the same period in 2022. This increase was generated by an increase of $458 million in our Commerce services revenues and an increase of $51 million in our revenues from Commerce products sales. Fintech revenues grew 76.1%, a $300 million increase, during the nine-month period ended September 30, 2023 as compared to the same period in 2022, mainly driven by an increase of $198$175 million in our Credits revenues and an increase of $101 million in our revenues from Fintech ~~services.~~services and financial income.

Argentina

The main driver of Argentina’s net revenues and financial income decrease is explained by the increase in Argentina’s official exchange rate against the U.S. dollar from an average exchange rate of 192.41 for the three-month period ended March 31, 2023, as compared to an average exchange rate of 834.46 for the three-month period ended March 31, 2024, partially offset by an average inter-annual inflation rate in our Argentine segment of 272.8% for the three-month period ended March 31, 2024. Commerce revenues ~~in Mexico increased 60.5%~~decreased 26.7% in the three-month period ended ~~September 30, 2023~~March 31, 2024 as compared to the same period in ~~2022.~~2023. This decrease was generated by a decrease of $48 million in our Commerce services revenues and a decrease of $25 million in our revenues from Commerce products sales. Fintech revenues decreased 19.3%, a $99 million decrease, during the three-month period ended March 31, 2024 as compared to the same period in 2023, mainly driven by a decrease of $58 million in our revenues from Fintech services and financial income and a decrease of $40 million in our Credits revenues.

Mexico

Commerce revenues in Mexico increased 54.0% in the three-month period ended March 31, 2024 as compared to the same period in 2023. This increase was generated by an increase of ~~$172~~$193 million in our Commerce services revenues and an increase of ~~$16~~$22 million in our revenues from Commerce products sales. Fintech revenues grew ~~77.3%~~68.9%, a ~~$119~~$146 million increase, during the three-month period ended ~~September 30, 2023~~March 31, 2024 as compared to the same period in ~~2022,~~2023, mainly driven by an increase of ~~$80~~$97 million in our Credits revenues and an increase of ~~$37~~$48 million in our revenues from Fintech ~~services.~~services and financial income.

The following table sets forth our total net revenues and financial income and the sequential quarterly variation of these net revenues and financial income for the periods described below:


	Quarter Ended
	March 31,			June 30,			September 30,			December 31,
	(in millions, except percentages)
2024
Net revenues and financial income	$	4,333		n/a			n/a			n/a
Percent change from prior quarter	(2)		%
2023 (1)
Net revenues and financial income	$	3,186		$	3,585		$	3,927		$	4,409
Percent change from prior quarter	2		%	13		%	10		%	12		%

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The following table sets forth ~~our total net revenues and the sequential quarterly growth of these net revenues for the periods described below:~~

Quarter Ended
March 31, June 30, September 30, December 31,
(in millions, except percentages)
2023
Net revenues $ 3,037 $ 3,415 $ 3,760 n/a
Percent change from prior quarter 1 % 12 % 10 %
2022
Net revenues $ 2,248 $ 2,597 $ 2,690 $ 3,002
Percent change from prior quarter 5 % 16 % 4 % 12 %

~~The following table sets forth~~ the growth in net revenues and financial income in local currencies, for the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2023~~March 31, 2024 as compared to the same period in ~~2022:~~2023:

Change from 2022 to 2023
(% of revenue growth in Local Currency) (*) Nine-month period Three-month period
Brazil 26.5 % 30.3 %
Argentina (**)
163.3 % 179.6 %
Mexico 43.8 % 39.8 %
Other countries 26.3 % 23.5 %
Total consolidated 61.8 % 69.1 %


	Change from 2023 to 2024
(% of revenue growth in Local Currency) (1)	Three-month period
Brazil	49.5	%
Argentina (2)	238.6
Mexico	45.1
Other countries	24.7
Total consolidated	94.2	%

~~(*)~~(1)The local currency revenue growth was calculated by using the average monthly exchange rates for each month during ~~2022~~2023 and applying them to the corresponding months in ~~2023,~~2024, so as to calculate what our financial results would have been if exchange rates had remained stable from one year to the next. See also “Non-GAAP Financial Measures” section below for details on FX neutral measures.

~~(**)~~(2) Average inter-annual ~~inflation~~increase of Argentina’s official exchange rate ~~in our Argentine segment~~against U.S. dollar for the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2023~~March 31, 2024 was ~~113.4% and 125.4%, respectively.~~334.2%. This effect was offset by an average inter-annual ~~depreciation~~inflation rate in our Argentine segment of ~~the Argentine peso of 105.2% and 133.2%~~272.8% for the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2023, respectively.~~March 31, 2024.

Cost of net revenues and financial expenses

Cost of net revenues and financial expenses primarily includes cost of goods sold, shipping operation costs (including warehousing costs), carrier and other operating costs, collection fees, sales taxes, funding costs related to our credits and Mercado Pago business, fraud prevention ~~fees,~~expenses, certain taxes on bank transactions, hosting and site operation fees, certain tax withholding related to export duties, compensation for customer support personnel and depreciation and amortization. The following table presents cost of net revenues and financial expenses for the periods indicated:

Nine Months Ended
September 30, Change from 2022 to 2023 Three Months Ended
September 30, Change from 2022 to 2023
2023 2022 in Dollars in % 2023 2022 in Dollars in %
(in millions, except percentages) (in millions, except percentages)
Total cost of net revenues $ 4,961 $ 3,830 $ 1,131 29.5% $ 1,765 $ 1,342 $ 423 31.5%
As a percentage of net revenues 48.6 % 50.8% 46.9% 49.9%


		Three Months Ended March 31,	Change from 2023 to 2024
			2024		2023 (1)		in Dollars		in %
	(in millions, except percentages)
Cost of net revenues and financial expenses			$	2,309	$	1,572	$	737	46.9%
As a percentage of net revenues and financial income			53.3%		49.3%

For the ~~nine-month~~three-month period ended ~~September 30, 2023~~March 31, 2024 as compared to the same period in ~~2022,~~2023, the increase in cost of net revenues and financial expenses was primarily attributable to a: i) ~~$402~~$487 million increase in shipping operating and carrier ~~costs; ii) $197 million~~costs mainly due to an increase in ~~sales taxes; iii) $181~~the share of shipping services where we act as principal, as opposed to agent; ii) $73 million increase in collection fees, which was mainly attributable to our Brazilian and Mexican operations as a result of the higher transactions volume of Mercado Pago in those countries; iii) $65 million increase in cost of sales of goods mainly in Brazil and Mexico, partially offset by a decrease in Argentina; iv) ~~$158~~$59 million increase in sales taxes; v) $31 million increase in hosting and site operation fees; and vi) $20 million increase in other ~~Fintech~~fintech costs mainly related to higher funding costs in connection with our credits ~~business; v) $119~~business. This increase was partially offset by a $22 million ~~increase~~decrease in ~~cost of sales of goods mainly in Brazil and Mexico; and vi) $72 million increase in hosting and site operation fees.~~

~~Table of Contents~~

For the three-month period ended September 30, 2023 as compared to the same period in 2022, the increase in cost of net revenues was primarily attributable to a: i) $164 million increase in shipping operating and carrier costs; ii) $70 million increase in collection fees, which wasfinancial expenses mainly attributable to ~~our Brazilian, Mexican~~lower levels of indebtedness and ~~Argentinian operations as a result of the higher transactions volume of Mercado Pago~~lower rates in ~~those countries; iii) $69 million increase~~2024 (mainly in sales taxes; iv) $52 million increase in other Fintech costs mainly related to higher funding costs in connection with our credits business; v) $37 million increase in cost of sales of goods mainly in Brazil; and vi) $27 million increase in hosting and site operation fees.Brazil).

Our subsidiaries in Brazil, Argentina and Colombia are subject to certain taxes on revenues and financial income, which are classified as a cost of net ~~revenues.~~revenues and financial expenses. These taxes represented ~~7.5% and 7.2%~~7.1% of net revenues and financial income for the ~~nine~~three-month period ended March 31, 2024, and ~~three-month periods ended September 30, 2023, respectively, and 7.5% and 7.5%~~7.8% for the same ~~periods~~period in ~~2022.~~2023.

Gross profit margins

Our gross profit margin is defined as total net revenues and financial income minus total cost of net revenues and financial expenses, as a percentage of net ~~revenues.~~revenues and financial income.

Our main cost of net revenues is composed of shipping operation costs (including warehousing costs), carrier and other operating costs, collection fees, sales taxes, funding costs related to our credits business, cost of goods sold, fraud prevention fees, certain taxes on bank transactions, hosting and site operation fees, compensation for customer support personnel and depreciation and amortization. This cost structure is directly affected by the level of operations of our services, and our strategic plan on gross profit is built on factors such as an ample liquidity to fund expenses and investments and a cost-effective capital structure.

For the ~~nine and~~ three-month periods ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022~~, our gross profit margins were ~~51.4%~~46.7%, and ~~53.1%,~~ ~~and 49.2% and 50.1%~~50.7%, respectively. The ~~increase~~decrease in our gross profit ~~margins~~margin resulted primarily from the ~~decrease~~increase in our ~~cost of goods sold~~shipping operating and ~~collection fees,~~carrier costs, as a percentage of net revenues and financial income, partially offset by ~~an increase~~a decrease of our ~~funding~~other fintech costs, ~~related to our credits business,~~collection fees, cost of sales of goods and sales tax, as a percentage of net ~~revenues.~~revenues and financial income.

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In the future, our gross profit margin could decline if we continue growing our sales of goods business, which has a lower pure product margin, building up our logistics network and if we fail to maintain an appropriate relationship between our cost of revenue structure and our net revenues and financial income trend.

Product and technology development expenses

Our product and technology development related expenses consist primarily of compensation for our engineering and web-development staff (including long term retention program compensation), depreciation and amortization expenses related to product and technology development, certain tax withholding related to export duties, telecommunications costs and payments to third-party suppliers who provide technology maintenance services to us. The following table presents product and technology development expenses for the periods indicated:


		Nine Months Ended September 30,							Change from 2022 to 2023			Three Months Ended September 30,				Change from 2022 to 2023
		2023				2022			in Dollars		in %	2023		2022		in Dollars		in %
		(in millions, except percentages)										(in millions, except percentages)								Three Months Ended March 31,	Change from 2023 to 2024
																							2024			2023			in Dollars		in %
					(in millions, except percentages)																	(in millions, except percentages)
Product and technology development	Product and technology development	$	1,145			$	774		$	371	47.9%	$	396	$	278	$	118	42.4%	Product and technology development				$	458	$	$	381	$	$	77	20.2%
As a percentage of net revenues		11.2		%		10.3		%				10.5%		10.3%
As a percentage of net revenues and financial income

For the ~~nine-month~~three-month period ended ~~September 30, 2023,~~March 31, 2024, the increase in product and technology development expenses as compared to the same period in ~~2022~~2023 was primarily attributable to a: i) ~~$266~~$38 million increase in salaries and wages mainly related to the increase of ~~23%~~17% in our product and technology development headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; ii) ~~$55~~$23 million increase in other product and technology development expenses mainly related to certain disputed amounts regarding withholding income tax contingencies in Brazil and higher tax withholding in connection with intercompany export services billing duties; and iii) ~~$40 million increase in depreciation and amortization expenses mainly related to capitalized information and technology assets.~~

~~Table of Contents~~

For the three-month period ended September 30, 2023, the increase in product and technology development expenses as compared to the same period in 2022 was primarily attributable to a: i) $85 million increase in salaries and wages mainly related to the increase of 32% in our product and technology development headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; ii) $17 million increase in other product and technology development expenses mainly related to certain tax withholding in connection with intercompany export services billing duties; and iii) $13$12 million increase in depreciation and amortization expenses mainly related to capitalized information and technology assets.

We believe that product and technology development is one of our key competitive advantages and we intend to continue to invest in hiring engineers to meet the increasingly sophisticated product expectations of our customer base.

Sales and marketing expenses

Our sales and marketing expenses consist primarily of costs related to marketing our platforms through online and offline advertising and agreements with portals, search engines and other sales expenses related to strategic marketing initiatives, charges related to our buyer protection program, the salaries of employees involved in these activities (including long term retention program compensation), chargebacks related to our Mercado Pago operations, branding initiatives, marketing activities for our users and depreciation and amortization expenses.

We carry out ~~the majority~~a relevant part of our marketing efforts on the Internet. We enter into agreements with portals, search engines, social networks, ad networks and other sites in order to attract Internet users to the Mercado Libre Marketplace and convert them into registered users and active traders on our platform.

We also work intensively on attracting, developing and growing our seller community through our customer support efforts. We have dedicated professionals in most of our operations that work with sellers through trade show participation, seminars and meetings to provide them with important tools and skills to become effective sellers on our platform.

The following table presents sales and marketing expenses for the periods indicated:


		Nine Months Ended September 30,							Change from 2022 to 2023				Three Months Ended September 30,						Change from 2022 to 2023
		2023				2022			in Dollars		in %		2023			2022			in Dollars		in %
		(in millions, except percentages)											(in millions, except percentages)
									Three Months Ended March 31,
									Three Months Ended March 31,
									Three Months Ended March 31,														Change from 2023 to 2024
												2024																					2024		2023	in Dollars	in %
					(in millions, except percentages)																			(in millions, except percentages)
Sales and marketing	Sales and marketing	$	1,207			$	916		$	291	31.8%		$	441		$	333		$	108	32.4%	Sales and marketing			$	478	$	$	383	$	$	95		24.8%
As a percentage of net revenues		11.8		%		12.2		%					11.7		%	12.4		%
As a percentage of net revenues and financial income

For the ~~nine-month~~three-month period ended ~~September 30, 2023,~~March 31, 2024, the increase in sales and marketing expenses as compared to the same period in ~~2022~~2023 was primarily attributable to a: i) ~~$121~~$64 million increase in online and offline marketing expenses mainly in ~~Brazil;~~Brazil and Mexico; ii) ~~$73 million increase in our buyer protection program expenses; iii) $53~~$14 million increase in salaries and wages mainly related to the increase of ~~29%~~12% in our sales and marketing headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; ~~iv) $21 million increase in sales expenses;~~ and ~~v) $19 million increase in chargebacks.~~

For the three-month period ended September 30, 2023, the increase in sales and marketing expenses as compared to the same period in 2022 was primarily attributable to a: i) $58 million increase in online and offline marketing expenses mainly in Brazil; ii) $25iii) $10 million increase in our buyer protection program expenses; and iii) $19 million increase in salaries and wages mainly related to the increase of 30% in our sales and marketing headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price.expenses.

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Provision for doubtful accounts

Provision for doubtful accounts consists of the current expected credit losses on our financial assets, mainly loans receivable. The following table presents provision for doubtful accounts expenses for the periods indicated:




		Nine Months Ended September 30,						Change from 2022 to 2023			Three Months Ended September 30,				Change from 2022 to 2023					Three Months Ended March 31,	Change from 2023 to 2024
		2023			2022			in Dollars		in %	2023		2022		in Dollars		in %					2024			2023			in Dollars		in %
		(in millions, except percentages)									(in millions, except percentages)								(in millions, except percentages)
Provision for doubtful accounts	Provision for doubtful accounts	$	751		$	845		$	(94)	(11.1)%	$	277	$	288	$	(11)	(3.8)%	Provision for doubtful accounts				$	374	$	$	252	$	$	122	48.4%
As a percentage of net revenues		7.4		%	11.2		%				7.4%		10.7%
As a percentage of net revenues and financial income

For the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2023,~~March 31, 2024, as compared to the same ~~periods~~period in ~~2022,~~2023, the provision for doubtful accounts ~~decreased $94~~increased $122 million due to the increase in originations (mainly related to credit card product) growing at 71%, and ~~$11 million, respectively. Initiatives to rebalance portfolio exposure towards lower risk customers allowed us to improve~~an increase of our 15-90 days non-performing loans ratio from ~~37.0%~~7.8% as of ~~September 30, 2022~~March 31, 2023 to ~~30.8%~~9.3% as of ~~September 30, 2023.~~March 31, 2024.

General and administrative expenses

Our general and administrative expenses consist primarily of salaries for management and administrative staff, compensation of non-employee directors, long term retention program compensation, expenses for legal, audit and other professional services, insurance expenses, office space rental expenses, ~~impairment losses from~~changes in the fair value of digital assets, travel and business expenses, as well as depreciation and amortization expenses. Our general and administrative expenses include the costs of the following areas: general management, finance, treasury, internal audit, administration, accounting, tax, legal and human resources. The following table presents general and administrative expenses for the periods indicated:


		Nine Months Ended September 30,							Change from 2022 to 2023				Three Months Ended September 30,				Change from 2022 to 2023
		2023				2022			in Dollars		in %		2023		2022		in Dollars		in %
		(in millions, except percentages)											(in millions, except percentages)
									Three Months Ended March 31,
									Three Months Ended March 31,
									Three Months Ended March 31,												Change from 2023 to 2024
												2024																	2024		2023	in Dollars	in %
					(in millions, except percentages)																	(in millions, except percentages)
General and administrative	General and administrative	$	565			$	485		$	80	16.5%		$	196	$	153	$	43	28.1%	General and administrative			$	186	$	180	$	6		3.3%
As a percentage of net revenues		5.5		%		6.4		%					5.2%		5.7%
As a percentage of net revenues and financial income

For the ~~nine-month~~three-month period ended ~~September 30, 2023,~~March 31, 2024, the increase in general and administrative expenses as compared to the same period in ~~2022~~2023 was primarily attributable to ~~a $84~~a: i) $16 million increase in salaries and wages, mainly related to the increase of 12% in general and administrative headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price. This increase was partially offset by a $9 million decrease in temporary services primarily related to administrative workers.

For the three-month period ended September 30, 2023, the increase in general and administrative expenses as compared to the same period in 2022 was primarily attributable to a: i) $31 million increase in salaries and wages, mainly related to the increase of 17%9% in general and administrative headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; and ii) ~~$10~~$3 million increase in tax ~~legal~~ and other fees. This increase was partially offset by $16 million gain related to the fair value of digital assets.

Operating income margins

Our operating income margin is defined as income from operations as a percentage of net ~~revenues.~~revenues and financial income.

Our operating income margin is affected by our operating expenses structure, which mainly consists of our employees’ salaries, our sales and marketing expenses related to those activities we incurred to promote our services, provision for doubtful accounts mainly related to our loans receivable portfolio and product and technology development expenses, among other operating expenses. As we continue to grow and focus on expanding our leadership in the region, we will continue to invest in product and technology development, sales and marketing and human resources in order to promote our services and capture long-term business opportunities. As a result, we may experience decreases in our operating income margins.

~~Table of Contents~~

For the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2023,~~March 31, 2024, as compared to the same ~~periods~~period in ~~2022,~~2023, our operating income ~~margins increased~~margin decreased from ~~9.1% and 11.0%~~13.1% to ~~15.5% and 18.2%, respectively.~~12.2%. This ~~increase~~decrease was mainly explained by an increase in cost of net revenues and financial expenses as a ~~decrease~~percentage of net revenues and financial income, mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent and provision ~~for~~of doubtful accounts, as a percentage of net revenues and ~~our improvement in cost of net revenues margins.~~financial income. This ~~increase~~decrease was partially offset by ~~higher~~lower salaries and wages, ~~due to headcount increases~~as a percentage of net revenues and ~~increases in amounts accrued under the LTRPs as result~~financial income.

47 | MercadoLibre, Inc.

Table of ~~the increase in our common stock price. The nine and three-month periods ended September 30, 2023’s financial results reflect our ongoing commitment to deliver sustainable and profitable growth.~~Contents

Other ~~expense,~~income (expenses), net

Other income (expenses), net consists primarily of interest income derived from our investments and cash equivalents, interest expense and other financial charges related to financial liabilities not related to Mercado Pago’s operations, and foreign currency gains or losses. The following table presents other income ~~(expense)~~(expenses), net for the periods indicated:

Nine Months Ended
September 30, Change from 2022 to 2023 Three Months Ended
September 30, Change from 2022 to 2023
2023 2022 in Dollars in % 2023 2022 in Dollars in %
(in millions, except percentages) (in millions, except percentages)
Other expense, net $ (260) $ (213) $ (47) 22.1% $ (154) $ (98) $ (56) 57.1%
As a percentage of net revenues (2.5) % (2.8) % (4.1) % (3.6) %


		Three Months Ended March 31,	Change from 2023 to 2024
			2024			2023 (1)			in Dollars		in %
	(in millions, except percentages)
Other income (expenses), net			$	(47)		$	(98)		$	51	(52.0)%
As a percentage of net revenues and financial income			(1.1)		%	(3.1)		%

For the ~~nine-month~~three-month period ended ~~September 30, 2023,~~March 31, 2024, the ~~increase~~decrease in other expense, net as compared to the same period in ~~2022~~2023 was primarily attributable ~~to: i)~~to foreign exchange losses that were ~~$374~~$53 million ~~higher~~lower than foreign exchange losses for the same period in ~~2022,~~2023, mainly ~~due to higher acquisition~~because in 2024 there were no acquisitions of our own common stock in the Argentine market at a price that reflects ~~the~~an additional cost of accessing U.S. dollars through an indirect mechanism due to restrictions imposed by the Argentine government for buying U.S. dollars at the official exchange rate (refer to Note 1617 – Share repurchase program of our unaudited interim condensed consolidated financial statements for further detail), and due to lower foreign exchange losses from our Argentine subsidiaries. This was partially offset by higher foreign exchange losses from our ~~Argentine~~Brazilian subsidiaries ~~partially offset by higher~~and lower foreign exchange gains from our Mexican subsidiaries and lower foreign exchange losses from our Brazilian subsidiaries; and ii) a $76 million increase in interest expense and other financial losses mainly attributable to higher levels of indebtedness in 2023 (mainly in Brazil, Mexico and Chile). This increase was partially offset by an increase of $403 million in interest income and other financial gains from financial investments as a result of higher cash levels invested due to higher interest rates (mainly in Argentina, Brazil and Mexico).subsidiaries.

For the three-month period ended September 30, 2023, the increase in other expense, net as compared to the same period in 2022 was primarily attributable to: i) foreign exchange losses that were $168 million higher than foreign exchange losses for the same period in 2022, mainly due to higher acquisition of our own common stock in the Argentine market at a price that reflects the additional cost of accessing U.S. dollars through an indirect mechanism due to restrictions imposed by the Argentine government for buying U.S. dollars at the official exchange rate (refer to Note 16 of our unaudited interim condensed consolidated financial statements for further detail) and higher foreign exchange losses from our Argentine subsidiaries; and ii) a $19 million increase in interest expense and other financial losses mainly attributable to higher levels of indebtedness in 2023 (mainly in Brazil). This increase was partially offset by an increase of $131 million in interest income and other financial gains from financial investments as a result of higher cash levels invested due to higher interest rates (mainly in Argentina, Brazil and Mexico).

Income tax

We are subject to federal and state income tax in the United States, as well as foreign taxes in the multiple jurisdictions where we operate. Our tax obligations consist of current and deferred income taxes incurred in these jurisdictions. We account for income taxes following the liability method of accounting. A valuation allowance is recorded when, based on the available evidence, it is more likely than not that all or a portion of our deferred tax assets will not be realized. Therefore, our income tax expense consists of taxes currently payable, if any (given that in certain jurisdictions we still have net operating loss carry-forwards), plus the change in our deferred tax assets and liabilities during each period.

~~Table of Contents~~

The following table summarizes the composition of our income taxes for the ~~nine and~~ three-month periods ended ~~September 30, 2023~~March 31, 2024 and ~~2022:~~2023:




		Nine Months Ended September 30,						Change from 2022 to 2023				Three Months Ended September 30,						Change from 2022 to 2023						Three Months Ended March 31,	Change from 2023 to 2024
		2023			2022			in Dollars		in %		2023			2022			in Dollars		in %						2024			2023			in Dollars		in %
		(in millions, except percentages)										(in millions, except percentages)											(in millions, except percentages)
Income tax expense	Income tax expense	$	504		$	154		$	350	227.3	%	$	172		$	69		$	103	149.3	%	Income tax expense				$	137	$	$	122	$	$	15	12.3	%
As a percentage of net revenues		4.9		%	2.0		%					4.6		%	2.6		%
As a percentage of net revenues and financial income

During the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2023~~March 31, 2024 as compared to the same ~~periods~~period in ~~2022,~~2023, income tax expense increased mainly as a result of higher income tax expense in ~~Argentina~~Brazil and ~~Brazil~~Mexico as a consequence of higher pre-tax gains in those segments in ~~2023.~~2024. This increase was partially offset by lower income tax expense in Argentina, due to lower pre-tax gains in Mexico as a result of the reversal of the valuation allowances in one of our Mexican subsidiaries during the third quarter of 2023. Please see Note 2 of our unaudited condensed consolidated financial statements for further information regarding this valuation allowance reversal.that segment.

The following table summarizes our estimated effective tax rates for the ~~nine and~~ three-month periods ended ~~September 30, 2023~~March 31, 2024 and ~~2022:~~2023:

Nine Months Ended
September 30, Three Months Ended
September 30,
2023 2022 2023 2022
Effective tax rate (*) 38.1% 32.6% 32.5% 34.7%


	Three Months Ended March 31,
		2024	2023
Effective tax rate (1)		28.5%	38.1%

~~(*)~~(1)Percentages have been calculated using whole-dollar amounts rather than the rounded amounts that appear in the table.

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Our estimated effective tax rate for the ~~nine-month~~three-month period ended ~~September 30, 2023 increased~~March 31, 2024 decreased as compared to the same period in ~~2022,~~2023, mainly as a result of (i) no foreign exchange losses recognition during the period related to the acquisition of our own common stock in the Argentine market, which was considered as a non-deductible expense, ii) lower taxable foreign exchange gains accounted for in Argentina for local tax purposes that are not recorded for accounting purposes since, under U.S. GAAP, the Argentine operations’ functional currency is the U.S. dollar due to the highly inflationary status of the country ~~(ii) a higher proportion of pre-tax results arising from entities under general income tax treatment regime over the Brazilian segment as compared to the same period in 2022~~ and (iii) higher ~~non-deductible foreign exchange losses~~deductions related to ~~the acquisition of our own common stock~~tax inflation adjustments in the Argentine market. This increase was partially offset by the reversal of the valuation allowances in one of our Mexican subsidiaries during the third quarter of 2023. Please see Note 2 of our unaudited condensed consolidated financial statements for further information regarding these valuation allowance reversal.

Our estimated effective tax rate for the three-month period ended September 30, 2023 decreased as compared to the same period in 2022, mainly as a result of the reversal of the valuation allowances in one of our Mexican subsidiaries during the third quarter of 2023. Please see Note 2 of our unaudited condensed consolidated financial statements for further information regarding this valuation allowances reversal. This decrease was partially offset by taxable foreign exchange gains accounted for local tax purposes, which are not recorded for accounting purposes given that under U.S. GAAP and due to Argentina’s highly inflationary status, Argentina’s operations’ functional currency is the U.S. dollar.Argentina.

The following table summarizes our estimated effective tax rates for the ~~nine and~~ three-month periods ended ~~September 30, 2023~~March 31, 2024 and ~~2022:~~2023:

Nine Months Ended
September 30, Three Months Ended
September 30,
2023 2022 2023 2022
Effective tax rate by country
Argentina 43.1% 29.7% 57.2% 35.0%
Brazil 17.0% (20.2)% 18.6% (95.0)%
Mexico (21.0)% 43.4% (126.3)% 11.9%

~~Table of Contents~~


	Three Months Ended March 31,
		2024	2023
Effective tax rate by country
Argentina		19.6%	31.2%
Brazil		14.1%	6.8%
Mexico		36.2%	40.6%

The ~~increase~~decrease in our Argentine estimated effective income tax rate during the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2023,~~March 31, 2024, as compared to the same ~~periods~~period in ~~2022,~~2023, was mainly related ~~to higher~~to: (i) lower taxable foreign exchange gains accounted for local tax purposes which are not recorded for accounting purposes since, under U.S. GAAP, Argentine operations’ functional currency is the U.S. dollar due to the highly inflationary status of the ~~country.~~country, and (ii) higher deductions related to tax inflation adjustments.

The increase in our Brazilian estimated effective income tax rate for the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2023,~~March 31, 2024, was mainly related to a higher proportion of pre-tax results arising from entities under general income tax treatment regime over the Brazilian segment as compared to the same ~~periods~~period in ~~2022.~~2023.

The decrease in our Mexican estimated effective income tax rate for the ~~nine and~~ three-month ~~periods~~period ended ~~September 30,~~March 31, 2024, as compared to the same period in 2023, was mainly driven by ~~the income tax~~pre-tax gains ~~recognized~~ in ~~Mexico during the third quarter of 2023 as~~ a ~~result of the reversal of the~~Mexican subsidiary which has accounted for a valuation allowance on tax loss carry forward, partially offset by higher non-deductible expenses in ~~one of our Mexican subsidiaries~~the period compared to the same period in 2023.

Segment information


	Three Months Ended March 31, 2024
	Brazil		Argentina		Mexico		Other Countries		Total
	(In millions, except percentages)
Net revenues and financial income	$	2,571	$	615	$	971	$	176	$	4,333
Direct costs	(2,010)		(391)		(747)		(155)		(3,303)
Direct contribution	$	561	$	224	$	224	$	21	$	1,030
Margin	21.8%		36.4%		23.1%		11.9%		23.8%


	Three Months Ended March 31, 2023 (1)
	Brazil		Argentina		Mexico		Other Countries		Total
	(In millions, except percentages)
Net revenues and financial income	$	1,639	$	787	$	610	$	150	$	3,186
Direct costs	(1,318)		(419)		(464)		(137)		(2,338)
Direct contribution	$	321	$	368	$	146	$	13	$	848
Margin	19.6%		46.8%		23.9%		8.7%		26.6%

(1) Recast for consistency with the current presentation due to the change in ~~judgment regarding~~ the ~~realizability~~presentation of ~~the deferred tax assets of the Mexican subsidiary that was triggered during the three-month period ended September 30, 2023, as positive trends observed in recent periods became enough evidence~~certain financial results. Please refer to ~~support the conclusion. Please see~~ Note 2 – Summary of significant accounting policies - Change in the presentation of certain financial results and reclassification of prior year results to our unaudited interim condensed consolidated financial statements for further ~~information regarding this valuation allowance reversal.~~

~~Segment information~~

Nine Months Ended September 30, 2023
Brazil Argentina Mexico Other Countries Total
(In millions, except percentages)
Net revenues $ 5,365 $ 2,317 $ 2,066 $ 464 $ 10,212
Direct costs (4,027) (1,289) (1,593) (429) (7,338)
Direct contribution $ 1,338 $ 1,028 $ 473 $ 35 $ 2,874
Margin 24.9% 44.4% 22.9% 7.5% 28.1%

Nine Months Ended September 30, 2022
Brazil Argentina Mexico Other Countries Total
(In millions, except percentages)
Net revenues $ 4,134 $ 1,787 $ 1,257 $ 357 $ 7,535
Direct costs (3,472) (1,068) (1,075) (348) (5,963)
Direct contribution $ 662 $ 719 $ 182 $ 9 $ 1,572
Margin 16.0% 40.2% 14.5% 2.5% 20.9%

Change from the Nine Months Ended September 30, 2022 to September 30, 2023
Brazil Argentina Mexico Other Countries Total
(In millions, except percentages)
Net revenues
in Dollars 1,231 530 809 107 2,677
in % 29.8 % 29.7 % 64.4 % 30.0 % 35.5 %
Direct costs
in Dollars (555) (221) (518) (81) (1,375)
in % 16.0 % 20.7 % 48.2 % 23.3 % 23.1 %
Direct contribution
in Dollars 676 309 291 26 1,302
in % 102.1 % 43.0 % 159.9 % 288.9 % 82.8 %
details.

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Three Months Ended September 30, 2023
Brazil Argentina Mexico Other Countries Total
(In millions, except percentages)
Net revenues $ 2,006 $ 825 $ 772 $ 157 $ 3,760
Direct costs (1,435) (441) (605) (150) (2,631)
Direct contribution $ 571 $ 384 $ 167 $ 7 $ 1,129
Margin 28.5% 46.5% 21.6% 4.5% 30.0%

Three Months Ended September 30, 2022
Brazil Argentina Mexico Other Countries Total
(In millions, except percentages)
Net revenues $ 1,431 $ 675 $ 465 $ 119 $ 2,690
Direct costs (1,209) (376) (384) (121) (2,090)
Direct contribution $ 222 $ 299 $ 81 $ (2) $ 600
Margin 15.5% 44.3% 17.4% (1.7)% 22.3%

Change from the Three Months Ended September 30, 2022 to September 30, 2023
Brazil Argentina Mexico Other Countries Total
(In millions, except percentages)
Net revenues
in Dollars $ 575 $ 150 $ 307 $ 38 $ 1,070
in % 40.2% 22.2% 66.0% 31.9 % 39.8%
Direct costs
in Dollars $ (226) $ (65) $ (221) $ (29) $ (541)
in % 18.7% 17.3% 57.6% 24.0% 25.9%
Direct contribution
in Dollars $ 349 $ 85 $ 86 $ 9 $ 529
in % 157.2% 28.4% 106.2 % 450.0% 88.2%

~~Net revenues~~


	Change from the Three Months Ended March 31, 2023 to March 31, 2024
	Brazil		Argentina		Mexico			Other Countries			Total
	(In millions, except percentages)
Net revenues and financial income
in Dollars	$	932	$	(172)	$	361		$	26		$	1,147
in %	56.9%		(21.9)%		59.2%			17.3		%	36.0%
Direct costs
in Dollars	$	(692)	$	28	$	(283)		$	(18)		$	(965)
in %	52.5%		(6.7)%		61.0%			13.1%			41.3%
Direct contribution
in Dollars	$	240	$	(144)	$	78		$	8		$	182
in %	74.8%		(39.1)%		53.4		%	61.5%			21.5%

Net revenues and financial income

Net revenues and financial income for the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2023~~March 31, 2024 as compared to the same ~~periods~~period in ~~2022~~2023 are described above in “Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations—Principal trends in results of operations— Net ~~revenues”~~revenues and financial income”.

Direct costs

Brazil

For the ~~nine-month~~three-month period ended ~~September 30, 2023,~~March 31, 2024, as compared to the same period in ~~2022,~~2023, direct costs increased mainly driven ~~by:~~by a: i) ~~a $610~~$537 million increase in cost of net revenues and financial expenses, mainly attributable to an increase in shipping operating and carrier costs mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent, sales ~~taxes,~~tax, cost of goods sold as a consequence of an increase in first-party sales, collection fees as a consequence of the higher transactions volume of our Mercado Pago business and ~~hos ting expenses;~~hosting and site operation fees; ii) ~~a $109~~$84 million increase in sales and marketing expenses, mainly due to an increase in online and offline marketing expenses, buyer protection program expenses and salaries and wages (related to headcount increase and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price). This was partially offset by a decrease of $182 million in provision for doubtful accounts mainly related to our ~~initiatives to rebalance portfolio exposure towards lower risk customers, which allowed us to improve our non-performing loans ratio.~~

~~Table of Contents~~

For the three-month period ended September 30, 2023, as compared to the same period in 2022, direct costs increased mainly driven by: i) a $228 million increase in cost of net revenues, mainly attributable to an increase in shipping operatingcredit card and ~~carrier costs, cost of goods sold, sales taxes~~consumer credits business growth; and ~~collection fees as a consequence of the higher transactions volume of our Mercado Pago business; and ii) a $33~~iii) $58 million increase in sales and marketing expenses mainly due to an increase in online and offline marketing expenses and buyer protection program expenses. ~~This was partially offset by~~

Argentina

For the three-month period ended March 31, 2024, as compared to the same period in 2023, direct costs decreased mainly driven by: i) an $18 million decrease in cost of net revenues and financial expenses, mainly attributable to a decrease cost of ~~$47~~goods sold and hosting expenses; and ii) a $13 million decrease in provision for doubtful accounts mainly related to ~~our initiatives to rebalance portfolio exposure towards~~ lower ~~risk customers, which allowed us to improve our non-performing loans ratio.~~level of originations and the increase in the Argentina's official exchange rate against U.S. dollar.

~~Argentina~~Mexico

For the three-month period ended September 30, 2023, as compared to the same period in 2022, direct costs increased mainly driven by: i) a $48 million increase in cost of net revenues, mainly attributable to an increase in other payments costs in connection with higher funding cost related to our credits business, sales taxes and collection fees as a consequence of the higher transactions volume of our Mercado Pago business; and ii) a $12 million increase in sales and marketing expenses, mainly due to online and offline marketing expenses, buyer protection program expenses and salaries and wages (related to headcount increase and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price).

~~Mexico~~

~~For the nine-month period ended September 30, 2023, as compared to the same period in 2022, direct costs increased mainly driven by: i) a $332 million increase in cost of net revenues,~~ mainly attributable to increases in shipping operating and carrier costs, collection fees due to higher Mercado Pago penetration, cost of goods sold as a consequence of an increase in first-party sales, other payments costs mainly related to higher funding cost related to our credits business and hosting expenses; ii) an $85 million increase in sales and marketing expenses, mainly due to buyer protection program expenses, online and offline marketing expenses, sales expenses, salaries and wages (related to headcount increase and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price) and chargebacks; and iii) an $83$51 million increase in provision for doubtful accounts mainly related to our ~~consumer credits business growth.~~

For the three-month period ended September 30, 2023, as compared to the same period in 2022, direct costs increased mainly driven by: i) a $139 million increase in cost of net revenues, mainly attributable to increases in shipping operating and carrier costs, collection fees due to higher Mercado Pago penetration, cost of goods sold as a consequence of an increase in first-party sales, other payments costs mainly related to higher funding cost related to our credits business and hosting expenses; ii) a $38 million increase in provision for doubtful accounts mainly related to our consumer creditscredit card business growth; and iii) ~~a $38~~$30 million increase in sales and marketing expenses mainly due to an increase in online and offline marketing ~~expenses and buyer protection program~~ expenses.

Liquidity and capital resources

Our main cash requirement has been working capital to fund Mercado Pago financing operations and our credits business. We also require cash for capital expenditures related to technology infrastructure, software applications, office space, business acquisitions, to build out our logistics capacity and to make interest payments on our loans payable and other financial liabilities.

We have funded Mercado Pago mainly by selling credit card receivables and through credit lines. Additionally, we have financed our Mercado Pago and Mercado Credito businesses through the securitization of credit card receivables and certain loans through SPEs created in Brazil, Mexico and Argentina. Finally, we obtained funding through our financial institution in Brazil through deposit certificates and financial bills. Refer to ~~Notes 12~~Note 13 – Loans payable and 13other financial liabilities and Note 14 – Securitization transactions of our unaudited interim condensed consolidated financial statements for further detail.

We committed to purchase cloud services for: i) a total amount of $824 million to be paid within a 5-year period starting on October 1, 2021 and ii) a total amount of $200 million to be paid within a 3-year period starting on September 23, 2022. Please refer to Note 1011 – Commitments and Contingencies of our unaudited interim condensed consolidated financial statements for further detail on purchase commitments.

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Further, in connection with the closing of MELI Kaszek Pioneer Corp (“MEKA”)’s initial public offering on October 1, 2021, MEKA (a special purpose acquisition company sponsored by MELI Kaszek Pioneer Sponsor LLC (the “Sponsor”), which is a joint venture between our subsidiary, MELI Capital Ventures LLC, and Kaszek Ventures Opportunity II, L.P.) entered into a forward purchase agreement with the Sponsor, pursuant to which the Sponsor committed to purchase from MEKA 5 million Class A ordinary shares at a price of $10 per share in a private placement to close substantially concurrently with the consummation of MEKA’s initial business combination. MEKA will be deemed to be dissolved on January 2, 2024, resulting in the extinguishment of this commitment.

On April 8, 2022, we signed a 10-year agreement with Gol Linhas Aereas S.A. under which we committed to contract a minimum amount of air logistics services for a total annual cost of $43 million (total amount once all the dedicated aircraft are in operation). Pursuant to the agreement, Gol Linhas Aereas S.A. will provide logistics services in Brazil to Mercado Envios through six dedicated aircraft, ~~five~~all of which have already started operations as of ~~September 30, 2023.~~March 31, 2024.

Since October 2023, we signed 3-year agreements with certain shipping companies in Brazil, under which we committed to contract a minimum amount of logistics services for a total cost of $66 million.

On January 10, 2024, we signed a 5-year agreement for the naming rights of the Complexo Pacaembu (municipal stadium of the city of São Paulo), for a total amount of $56 million. The agreement has the option to extend the term for 5 additional independent periods of 5 years each, for the same amount indexed by the Brazilian inflation rate index IPCA.

Additionally, we have several committed leases, mainly related to our fulfillment and service centers, which are one of the most important investments for our Mercado Envios business. AsIn this sense, as of ~~September 30, 2023,~~March 31, 2024, we have committed rental expenditures with our lessors for ~~$1,099~~$1,122 million and ~~$89~~$165 million for operating leases and finance leases, respectively. See Note 1415 – Leases of our unaudited interim condensed consolidated financial statements for further detail on leases.

We and certain financial institutions participate in a supplier finance program (“SFP”) that enables certain of our suppliers, at their own election, to request the payment of their invoices to the financial institutions earlier than the terms stated in our payment policy. Suppliers’ voluntary inclusion of invoices in the SFP does not change our payment terms, the amounts paid or liquidity. The supplier invoices that have been confirmed as valid under the program require payment in full according to the terms established in our payment policies (between 60 and 90 days). There are no assets pledged as security or other forms of guarantees provided for the committed payment to the financial institution. We have no economic interest in a supplier’s decision to participate in the SFP and have no financial impact in connection with the SFP. As of ~~September 30, 2023,~~March 31, 2024, the obligations outstanding that the Company has confirmed as valid to the financial institutions amounted to ~~$302~~$368 million, and are included in the balance sheet within accounts payable and accrued expenses line.

During August 2022, we issued commercial notes in Brazil (denominated in Brazilian Real) for $198 million (considering the exchange rate as of the date of issuance), the main purpose of which is to continue investing in capital expenditures for our shipping business, in order to continue developing our shipping strategy. See Note 12 of our unaudited interim condensed consolidated financial statements for further detail.

Finally, on March 31, 2022, we entered into a $400 million revolving credit arrangement (“the Credit Arrangement”). The interest rates under the Credit Arrangement are based on Adjusted Term SOFR plus an interest margin of 1.25% per annum. Any loans drawn under the Credit Arrangement must be repaid on or prior to March 31, 2025. We are also obligated to pay a commitment fee on the unused amounts of the facility at an annual rate of 0.3125%. As of ~~September 30, 2023,~~ March 31, 2024, no amounts had been borrowed under the facility. See Note 1213 – Loans payable and other financial liabilities of our unaudited interim condensed consolidated financial statements for further detail.

As of ~~September 30, 2023,~~March 31, 2024, our main source of liquidity was ~~$3,722~~$3,752 million of cash and cash equivalents and short-term investments, which excludes ~~$1,769~~$2,498 million investment mainly related to the Central Bank of Brazil Mandatory Guarantee, and consists ~~mainly~~ of cash generated from operations and proceeds from loans.

As of ~~September 30, 2023,~~March 31, 2024, cash and cash equivalents, restricted cash and cash equivalents and investments of our non-U.S. subsidiaries amounted to ~~$5,719~~$6,756 million, or ~~85.0%~~87.3% of our consolidated cash and cash equivalents, restricted cash and cash equivalents and investments, and our cash and cash ~~equivalent,~~equivalents, restricted cash and cash ~~equivalent~~equivalents and investments held outside U.S. amounted to ~~77.5%~~79.3% of our consolidated cash and cash equivalents, restricted cash and cash equivalents and investments. Our non-U.S. dollar-denominated cash and investments are located primarily in Brazil, Mexico and Argentina.

~~Table of Contents~~

The following table presents our cash flows from operating activities, investing activities and financing activities for the ~~nine-month~~three-month periods ended ~~September 30, 2023~~March 31, 2024 and ~~2022:~~2023:


		Nine Months Ended September 30,
	Three Months Ended March 31,							Three Months Ended March 31,
	2024						2024		2023
(In millions)	(In millions)	2023		2022		(In millions)
Net cash provided by (used in):	Net cash provided by (used in):
Operating activities
Operating activities
Operating activities	Operating activities	$	3,212	$	1,398
Investing activities	Investing activities	(2,536)		(3,225)
Financing activities	Financing activities	(340)		928
Effect of exchange rates on cash and cash equivalents, restricted cash and cash equivalents	Effect of exchange rates on cash and cash equivalents, restricted cash and cash equivalents	(443)		(221)
Net decrease in cash and cash equivalents, restricted cash and cash equivalents		$	(107)	$	(1,120)
Net (decrease) increase in cash and cash equivalents, restricted cash and cash equivalents

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Net cash provided by operating activities


		Nine Months Ended September 30,				Change from 2022 to 2023
		2023		2022		in Dollars		in %
	Three Months Ended March 31,														Three Months Ended March 31,					Change from 2023 to 2024
	2024											2024				2023			in Dollars				in %
		(in millions, except percentages)								(in millions, except percentages)
Net cash provided by:	Net cash provided by:
Operating activities	Operating activities	$	3,212	$	1,398	$	1,814	129.8	%
Operating activities
Operating activities										$	1,512		$	859			$	653			76.0	%

Net cash provided by operating activities in the ~~nine-month~~three-month period ended ~~September 30, 2023~~March 31, 2024 resulted mainly from our net income of ~~$822~~$344 million, adjustments to net income related to non-cash items of ~~$1,546~~$490 million, an increase ~~in payables and accrued expenses of $605 million and~~ in funds payable to customers of ~~$440~~$727 million and in amounts payable due to credit and debit card transactions of $292 million, partially offset by an increase in credit card receivables and other means of payments of ~~$361~~$403 million and in other assets of $202 million. The ~~$1,814~~$653 million increase in the net cash provided by operating activities in the ~~nine-month~~three-month period ended ~~September 30, 2023,~~March 31, 2024, as compared to the same period in ~~2022,~~2023, is mainly explained by the ~~$505~~$143 million increase in net income and the ~~$233~~increase of $969 million ~~increase~~ in ~~unrealized foreign currency losses, together with~~funds payable to customers, partially offset by an increase of ~~$407~~$568 million in funds related to credit card receivables and other means of payments, due to ~~higher~~lower credit card receivables sales.

Net cash used in investing activities


		Nine Months Ended September 30,				Change from 2022 to 2023
		2023		2022		in Dollars		in %
	Three Months Ended March 31,														Three Months Ended March 31,					Change from 2023 to 2024
	2024											2024				2023			in Dollars				in %
		(in millions, except percentages)								(in millions, except percentages)
Net cash used in:	Net cash used in:
Investing activities	Investing activities	$	(2,536)	$	(3,225)	$	689	(21.4)	%
Investing activities
Investing activities										$	(1,466)		$	(538)			$	(928)			172.5	%

Net cash used in investing activities in the ~~nine-month~~three-month period ended ~~September 30, 2023~~March 31, 2024 resulted mainly from the use of ~~$1,465~~$946 million related to changes on loans receivable due to loans granted to merchants and consumers under our Mercado Credito solution net of collections, $367 million related to the net purchases of investments and ~~$329~~$146 million in the investment of property and equipment (mainly related to our shipping network and information technology assets in Argentina, Brazil and Mexico).

Net cash ~~(used in) provided by~~used in financing activities

Nine Months Ended
September 30, Change from 2022 to 2023
2023 2022 in Dollars in %
(in millions, except percentages)
Net cash (used in) provided by:
Financing activities $ (340) $ 928 $ (1,268) (136.6) %

~~Table of Contents~~


	Three Months Ended March 31,				Change from 2023 to 2024
	2024		2023		in Dollars		in %
	(in millions, except percentages)
Net cash used in:
Financing activities	$	—	$	(112)	$	112	(100.0)	%

For the ~~nine-month~~three-month period ended ~~September 30, 2023,~~March 31, 2024, our net cash ~~used~~ in financing activities resulted primarily from ~~$356~~$13 million ~~related to repurchases of our common stock~~provided by net loans payables and ~~$21~~other financing liabilities and $13 million used for the payments of finance lease obligations. During the three-month period ended March 31, 2024 there were no repurchases of our common stock.

In the event that we decide to pursue strategic acquisitions in the future, we may fund them with available cash, third-party debt financing, or by raising equity capital, as market conditions allow.

Debt

2028 Notes

On August 24, 2018, we issued $800 million of 2.00% Convertible Senior Notes due 2028 and on August 31, 2018 we issued an additional $80 million of notes pursuant to the partial exercise of the initial purchasers’ option to purchase such additional notes, resulting in an aggregate principal amount of $880 million of 2.00% Convertible Senior Notes due ~~2028.~~2028 (collectively the “2028 Notes”). The 2028 Notes ~~are~~were unsecured, unsubordinated obligations, which ~~pay~~paid interest in cash semi-annually, on February 15 and August 15, at a rate of 2.00% per annum.

In January 2021, we signed agreements with 2028 Notes holders to repurchase $440 million principal amount of our outstanding 2028 Notes. The total amount paid amounted to $1,865 million, which includes principal, interest accrued and premium.

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On September 19, 2023, we announced our intention to redeem all our 2028 Notes on November 14, 2023. Holders of the 2028 Notes ~~may~~could elect to convert their notes at any time before November 13, 2023. Each $1,000 principal amount of 2028 Notes iswas convertible into 2.2952 shares of MercadoLibre common stock. ~~As of September 30,~~On November 13, 2023, holders of the 2028 Notes converted ~~$351~~$439 million principal amount of 2028 Notes into ~~806,629~~1,007,597 shares of ~~the Company’s~~our common stock, which ~~MercadoLibre~~we held as treasury stock. As of ~~September 30,~~December 31, 2023, ~~$88 million of~~no principal amount of 2028 Notes ~~remains~~remained outstanding. As of the date of issuance of this quarterly report, $379 million of principal amount of 2028 Notes was converted into 869,692 shares of our common stock. After all the 2028 Notes’ conversions mentioned, the outstanding principal amount of 2028 Notes is $60 million.

Please refer to Note 1213 – Loans payable and other financial liabilities to our unaudited interim condensed consolidated financial statements for additional information regarding the 2028 Notes and the related capped call transactions.

Debt Securities Guaranteed by Subsidiaries

On January 14, 2021, we issued $400 million aggregate principal amount of ~~the~~2.375% Sustainability Notes due 2026 (the “2026 Sustainability ~~Notes~~Notes”) and $700 million aggregate principal amount of 3.125% Notes due 2031 (the “2031 Notes” and collectively, the ~~2031 Notes.~~“Notes”). The payment of principal, premium, if any, interest, and all other amounts in respect of each of the Notes, is fully and unconditionally guaranteed (the “Subsidiary Guarantees”), jointly and severally, on an unsecured basis, by certain of our subsidiaries (the “Subsidiary Guarantors”). The initial Subsidiary Guarantors were MercadoLibre S.R.L., Ibazar.com Atividades de Internet Ltda., eBazar.com.br Ltda., Mercado Envios Servicos de Logistica Ltda., Mercado Pago Instituição de Pagamento Ltda. (formerly known as “MercadoPago.com Representações Ltda.”), MercadoLibre Chile Ltda., MercadoLibre, S.A. de C.V., Institución de Fondos de Pago Electrónico (formerly known as “MercadoLibre, S. de R.L. de C.V.”), DeRemate.com de México, S. de R.L. de C.V. and MercadoLibre Colombia Ltda. On October 27, 2021, MercadoLibre, S.A. de C.V., Institución de Fondos de Pago Electrónico became an excluded subsidiary pursuant to the terms of the Notes and it was released from its Subsidiary Guaranty. On October 27, 2021, MP Agregador, S. de R.L. de C.V. became a Subsidiary Guarantor under the ~~Notes~~. Notes. On July 1 and October 1, 2022, Ibazar.com Atividades de Internet Ltda. and Mercado Envios Servicos de Logistica Ltda. were merged into eBazar.com.br Ltda., respectively.

We pay interest on the Notes on January 14 and July 14 of each year, beginning on July 14, 2021. The 2026 Sustainability Notes will mature on January 14, 2026, and the 2031 Notes will mature on January 14, 2031.

The Notes rank equally in right of payment with all of the Company’s other existing and future senior unsecured debt obligations. Each Subsidiary Guarantee will rank equally in right of payment with all of the Subsidiary Guarantor’s other existing and future senior unsecured debt obligations, except for statutory priorities under applicable local law.

Each Subsidiary Guarantee will be limited to the maximum amount that would not render the Subsidiary Guarantor’s obligations subject to avoidance under applicable fraudulent conveyance provisions of applicable law. By virtue of this limitation, a Subsidiary Guarantor’s obligation under its Subsidiary Guarantee could be significantly less than amounts payable with respect to the Notes, or a Subsidiary Guarantor may have effectively no obligation under its Subsidiary Guarantee.

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Under the indenture governing the Notes, the Subsidiary Guarantee of a Subsidiary Guarantor will terminate upon: (i) the sale, exchange, disposition or other transfer (including by way of consolidation or merger) of the Subsidiary Guarantor or the sale or disposition of all or substantially all the assets of the Subsidiary Guarantor (other than to the Company or a Subsidiary) otherwise permitted by the indenture, (ii) satisfaction of the requirements for legal or covenant defeasance or discharge of the Notes, (iii) the release or discharge of the guarantee by such Subsidiary Guarantor of the Triggering Indebtedness (as defined in the applicable indenture) or the repayment of the Triggering Indebtedness, in each case, that resulted in the obligation of such Subsidiary to become a Subsidiary Guarantor, provided that in no event shall the Subsidiary Guarantee of an Initial Subsidiary Guarantor terminate pursuant to this provision, or (iv) such Subsidiary Guarantor becoming an Excluded Subsidiary (as defined in the applicable indenture) or ceasing to be a Subsidiary.

We may, at our option, redeem the 2026 Sustainability Notes, in whole or in part, at any time prior to December 14, 2025 (the date that is one month prior to the maturity of the 2026 Sustainability Notes) and the 2031 Notes, in whole or in part, at any time prior to October 14, 2030 (the date that is three months prior to the maturity of the 2031 Notes), in each case by paying 100% of the principal amount of such Notes so redeemed plus the applicable “make-whole” amount and accrued and unpaid interest and additional amounts, if any. We may, at our option, redeem the 2026 Sustainability Notes, in whole or in part, on December 14, 2025 or at any time thereafter and the 2031 Notes on October 14, 2030 or at any time thereafter, in each case at the redemption price of 100% of the principal amount of such Notes so redeemed plus accrued and unpaid interest and additional amounts, if any. If we experience certain change of control triggering events, we may be required to offer to purchase the notes at 101% of their principal amount plus any accrued and unpaid interest thereon through the purchase date.

~~In May~~During 2023, we repurchased ~~a $2~~$9 million and ~~$44~~$70 million principal amount of the outstanding 2026 Sustainability Notes and 2031 Notes, respectively. The total amount paid amounted to ~~$38~~$66 million. ~~For the nine and three-month periods ended September 30, 2023, we recognized $8 million as a gain in Interest income~~

See Note 13 – Loans payable and other financial ~~gains in our unaudited interim condensed consolidated statements of income.~~

~~See Note 12~~liabilities of our unaudited condensed consolidated financial statements for additional detail.

We are presenting the following summarized financial information for the issuer and the Subsidiary Guarantors (together, the “Obligor Group”) pursuant to Rule 13-01 of Regulation S-X, Guarantors and Issuers of Guaranteed Securities Registered or Being Registered. For purposes of the following summarized financial information, transactions between the Company and the Subsidiary Guarantors, presented on a combined basis, have been eliminated. Financial information for the non-guarantor subsidiaries, and any investment in a non-guarantor subsidiary by the Company or by any Subsidiary Guarantor, have been excluded. Amounts due from, due to and transactions with the non-guarantor subsidiaries and other related parties, as applicable, have been separately presented in footnotes.

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Summarized balance sheet information for the Obligor Group as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 is provided in the table below:

March 31, 2024

December 31, 2023

(In millions)

September 30, 2023

December 31, 2022

(In millions)

Current assets (1) (2)

10,636

7,966

Non-current assets (3)

2,786

2,693

Current liabilities (4)

9,087

7,214

Non-current liabilities

2,171

2,547

(1)Includes restricted cash and cash equivalents of ~~$439~~$402 million and ~~$687~~$430 million and guarantees in short-term investments of ~~$1,762~~$2,493 million and ~~$1,219~~$2,289 million as of ~~September 30, 2023,~~March 31, 2024, and December 31, ~~2022,~~2023, respectively.

(2)Includes Current assets from non-guarantor subsidiaries of ~~$1,994~~$1,590 million and ~~$863~~$1,405 million as of ~~September 30, 2023,~~March 31, 2024, and December 31, ~~2022,~~2023, respectively.

(3)Includes Non-current assets from non-guarantor subsidiaries of ~~$252~~$609 million and ~~$410~~$309 million as of ~~September 30, 2023,~~March 31, 2024, and December 31, ~~2022,~~2023, respectively.

(4)Includes Current liabilities to non-guarantor subsidiaries of ~~$1,816~~$1,844 million and ~~$1,334~~$1,808 million as of ~~September 30, 2023,~~March 31, 2024, and December 31, ~~2022,~~2023, respectively.

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Summarized statement of income information for the Obligor Group for the ~~nine-month~~three-month period ended ~~September 30, 2023,~~March 31, 2024, is provided in the table below:

March 31, 2024

(In millions)

September 30, 2023

(In millions)

Net revenues (1)

8,397

Net revenues and financial income (1)

3,551

Gross profit (2)

4,088

Gross profit (2)

1,405

Income from operations (3)

1,178

Income from operations (3)

379

Net income (4)

489

Net income (4)

231

(1)Includes net revenues from transactions with non-guarantor subsidiaries of ~~$49~~$16 million for the ~~nine-month~~three-month period ended ~~September 30, 2023.~~March 31, 2024.

(2)Includes charges from transactions with non-guarantor subsidiaries of ~~$446~~$219 million for the ~~nine-month~~three-month period ended ~~September 30, 2023.~~March 31, 2024.

(3)In addition to the charges included in Gross profit, Income from operations includes charges from transactions with non-guarantor subsidiaries of ~~$603~~$193 million for the ~~nine-month~~three-month period ended ~~September 30, 2023.~~March 31, 2024.

(4)Includes other income/ (expense), net from transactions with non-guarantor subsidiaries of ~~$(83)~~$(3) million for the ~~nine-month~~three-month period ended ~~September 30, 2023.~~March 31, 2024.

Capital expenditures

Our capital expenditures (comprised of our investments ~~for~~in property and equipment (such as certain assets used in our fulfillment centers), and intangible assets (excluding digital assets)) for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2024 and 2023 amounted to $148 million and ~~2022 amounted~~ ~~to $329 million~~ ~~and $343~~$89 million, respectively.

During the ~~nine-month~~three-month period ended ~~September 30, 2023,~~March 31, 2024, we invested ~~$159~~$78 million in information and technology assets in Brazil, Argentina and Mexico, and ~~$153~~$52 million in our Argentine, Brazilian and Mexican shipping premises and offices.

We are continually increasing our level of investment in hardware and software licenses necessary to improve and update our platform’s technology and computer software developed internally. We anticipate continued investments in capital expenditures related to information technology and logistics network capacity in the future as we strive to maintain our position in the Latin American e-commerce and fintech market.

We believe that our existing cash and cash equivalents, including the sale of credit card receivables, short-term investments and cash generated from operations, will be sufficient to fund our operating activities, property and equipment expenditures and to pay or repay obligations in the foreseeable future.

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Other data

The following table ~~includes eight~~includes nine key performance indicators, which are calculated as defined in the footnotes to the table. We continuously assess the adequacy of our key performance indicators based on the growth and ever changing nature of our business. Each of these indicators ~~provide~~provides a different measure of the level of activity on our ecosystem, ~~and~~which we use ~~them~~ to monitor the performance of the business.


		Nine Months Ended September 30,							Three Months Ended September 30,
(in millions, except percentages) (*)		2023				2022				2023			2022

Unique active users (1)		167				127				120			88
					Three Months Ended March 31,
					Three Months Ended March 31,
					Three Months Ended March 31,
							2024															2024	2023
			(in millions, except percentages) (1)																(in millions, except percentages) (1)
Fintech monthly active users (2)
Unique active buyers (3)
Gross merchandise volume ~~(2)~~(4)	Gross merchandise volume ~~(2)~~(4)	$	31,299			$	24,834			$	11,360		$	8,618
Number of items sold ~~(3)~~(5)	Number of items sold ~~(3)~~(5)	991				826				357			284
Number of items shipped ~~(4)~~(6)	Number of items shipped ~~(4)~~(6)	970				794				350			276
Total payment volume ~~(5)~~(7)	Total payment volume ~~(5)~~(7)	$	126,307			$	87,683			$	47,256		$	32,170
Total volume of payments on marketplace (6)		$	32,997			$	26,180			$	11,973		$	9,089
Acquiring total payments volume (8)
Total payment transactions ~~(7)~~(9)	Total payment transactions ~~(7)~~(9)	6,515				3,792				2,508			1,439
NIMAL (8)		35.1		%		29.0		%		37.4		%	29.7		%
NIMAL (10)																NIMAL (10)	31.5	%		30.6	%
Capital expenditures	Capital expenditures	$	329			$	343			$	126		$	106
Depreciation and amortization	Depreciation and amortization	$	389			$	281			$	135		$	97

~~(*)~~(1) Figures have been calculated using rounded amounts. Growth calculations based on this table may not total due to rounding.

~~(1)~~(2) ~~New~~ As of January 1, 2024, we have replaced “Unique Active Users” with “Fintech monthly active users” and “Unique active buyers” as our main indicators of our Fintech and Commerce revenue lines. Management believes that the significant growth of our Fintech business merits a standalone metric to more precisely measure its footprint and user base growth and to make the best strategic decisions for the development of the Fintech business. Fintech monthly active users is defined as Fintech payers and/or ~~existing user who~~collectors as of March 31, 2024, that, during the last month of the reporting period, performed at least one of the following actions during such month: 1) made a debit or credit card payment, 2) made a QR code payment, 3) made an off-platform online payment using our checkout or link of payment solutions while logged in to our Mercado Pago fintech platform, 4) made an investment or employed any of our savings solutions, 5) purchased an insurance policy, 6) took out a loan through our Mercado Credito solution, or 7) received the ~~reported period: (1) made~~payment from a sale or transaction either on or off marketplace.

(3) As described above, as of January 1, 2024, unique active buyers is the main performance indicator of our Commerce revenue line. Management believes that monitoring the Commerce business growth through a standalone metric enables us to better understand user behavior over each period and make strategic decisions to improve the Commerce business. Unique active buyers is defined as users that have performed at least one purchase ~~or reservation, or asked one question~~ on the Mercado Libre Marketplace or Classified Marketplace (2) maintained an active listing on Mercado Libre Marketplace or Classified Marketplace (3) maintained an active account in Mercado Shops (4) made a payment, money transfer, collection and/or advance using Mercado Pago (5) maintained an outstanding credit line through Mercado Credito or (6) maintained a balance of more than $5 invested in a Mercado Fondo asset management account. Management uses this metric to evaluateduring the size of our community of users who interact with the ecosystem and of which we have the opportunity to generate further engagement. With the changes in our businesses we believe it provides a better indication of our active user base rather than our discontinued registration metric that did not reflect any sort of interaction.reported period.

~~(2)~~(4) Total U.S. dollar sum of all transactions completed through the Mercado Libre Marketplace, excluding Classifieds transactions.

~~(3)~~(5) Number of items that were sold/purchased through the Mercado Libre Marketplace, excluding Classifieds items.

~~(4)~~(6) Number of items that were shipped through our shipping service.

~~(5)~~(7) Total U.S. dollar sum of all transactions paid for using Mercado Pago, including marketplace and non-marketplace transactions, excluding peer-to-peer transactions. As of January 1, 2024, we no longer include peer-to-peer transactions in our TPV in accordance with the metrics and underlying criteria used by our Mercado Pago team, which Management then employs to make strategic decisions. Consequently, total payment volume for the three-month period ended March 31, 2023, has been recast to exclude peer-to-peer transactions.

~~(6)~~(8) As of January 1, 2024, we have replaced “Total volume of payment on marketplace” with “Acquiring total payment volume.” Total volume of payment on marketplace was limited to the total U.S. dollar sum of all marketplace transactions paid for using Mercado ~~Pago. Management uses this~~Pago, and thus was a relevant and representative metric ~~to evaluate~~when the ~~performance~~off-platform payment processor business was managed as a payment processor with a wallet. In light of ~~our payments services and development of our integrated ecosystem. As from January 1, 2022, we no longer disclose our total volume of payments on marketplace net of shipping and financing fees. Given~~ the significant growth of our ~~shipping~~Fintech businesses and ~~Fintech businesses,~~our payment processing and settling services, Management believes that ~~including shipping and financing fees in the calculation of total volume of payments on marketplace~~Acquiring TPV, which also takes into account non-marketplace transactions paid for using Mercado Pago, results in a more ~~accurate indicator~~representative measure of ~~that performance on a go-forward basis. Consequently,~~our physical and online payment processing solutions in any given period. Acquiring TPV is defined as total U.S. dollar sum of all transactions settled using our Mercado Pago and Mercado Pago's payment processing and settling services in marketplace and non-marketplace transactions and consist of the following transactions volume: 1) point of sale payment volume, of2) commerce payment ~~on marketplace~~volume through our Mercado Libre Marketplace, 3) online payment volume through our checkout or link payment solution for ~~the nine~~merchants, and ~~three-month periods ended September 30, 2022 has been recast to include shipping and financing fees.~~4) QR code payment volume.

~~(7)~~(9) Number of all transactions paid for using Mercado ~~Pago.~~Pago, excluding peer-to-peer transactions. As of January 1, 2024 we no longer include peer-to-peer transactions in our total payment transactions in accordance with the metric and understanding criteria used by our Mercado Pago team, which Management then employs to make strategic decisions. Consequently, total payment volume for the three-month period ended March 31, 2023, has been recast to exclude peer-to-per transactions.

~~(8)~~(10)Net interest margins after losses (“NIMAL”) represents the annualized ratio between the total credits revenues less funding costs and provision for doubtful accounts for the period and total average gross loans receivable for the period. Management uses NIMAL to monitor how effectively ~~the Company~~our pricing is ~~pricing~~ and managing the credit products relative to their risk and setting targets. Accordingly, Management is of the opinion that NIMAL provides useful information to investors and others related to ~~the Company’s~~our risk appetite through the different periods and shows how ~~the Company~~we effectively prices risk.

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Non-GAAP Measures of Financial Performance

To supplement our unaudited interim condensed consolidated financial statements presented in accordance with U.S. GAAP, we present earnings before interest income and other financial gains, interest expense and other financial losses, foreign currency losses, net, income tax expense, depreciation and amortization and equity in earnings of unconsolidated entity (“Adjusted EBITDA”), net debt and foreign exchange (“FX”) neutral measures as non-GAAP measures. Reconciliation of these non-GAAP financial measures to the most comparable U.S. GAAP financial measures can be found in the tables below.

These non-GAAP measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. 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 our results of operations as determined in accordance with U.S. GAAP. These non-GAAP financial measures should only be used to evaluate our results of operations in conjunction with the most comparable U.S. GAAP financial measures.

We believe that reconciliation of these non-GAAP measures to the most directly comparable GAAP measure provides investors an overall understanding of our current financial performance and its prospects for the future.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that represents our net income, adjusted to eliminate the effect of depreciation and amortization charges, interest income and other financial gains, interest expense and other financial losses, foreign currency losses, net, income tax expense and equity in earnings of an unconsolidated entity. We have included this non-GAAP financial measure because it is used by our Management to evaluate our operating performance and trends, make strategic decisions and the calculation of leverage ratios. Accordingly, we believe this measure provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our Management. In addition, it provides a useful measure for period-to-period comparisons of our business, as it removes the effect of certain items.

The following table presents a reconciliation of net income to Adjusted EBITDA for the period ~~indicated (in millions of U.S. dollars):~~indicated:


		Nine Months Ended September 30,					Three Months Ended September 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024		2023
						(In millions)						(In millions)
Net income	Net income	$	822	$	317		$	359	$	129
Adjustments:	Adjustments:
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization	Depreciation and amortization	389		281			135		97
Interest income and other financial gains	Interest income and other financial gains	(545)		(142)			(196)		(65)
Interest expense and other financial losses	Interest expense and other financial losses	297		221			111		92
Foreign currency losses, net	Foreign currency losses, net	508		134			239		71
Income tax expense	Income tax expense	504		154			172		69
Equity in earnings of unconsolidated entity	Equity in earnings of unconsolidated entity	(3)		1			—		—
Adjusted EBITDA	Adjusted EBITDA	$	1,972	$	966		$	820	$	393

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Net debt

We define net debt as total debt which includes current and non-current loans payable and other financial liabilities and current and non-current operating lease liabilities, less cash and cash equivalents, short-term investments and long-term investments, excluding time deposits and foreign government debt securities restricted and held in guarantee, securitization transactions and equity securities held at cost. We have included this non-GAAP financial measure because it is used by our Management to analyze our current leverage ratios and set targets to be met, which will also impact other components of the Company’s balance sheet, cash flows and income statement. Accordingly, we believe this measure provides useful information to investors and other market participants in showing the evolution of the Company’s indebtedness and its capability of repayment as a means to, alongside other measures, monitor our leverage based on widely-used measures.

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The following table presents a reconciliation of net debt for each of the periods ~~indicated (in millions of U.S. dollars):~~indicated:


	March 31, 2024		December 31, 2023
	(In millions)
Current Loans payable and other financial liabilities	$	2,246	$	2,292
Non-current Loans payable and other financial liabilities	2,224		2,203
Current Operating lease liabilities	163		166
Non-current Operating lease liabilities	653		672
Total debt	5,286		5,333
Less:
Cash and cash equivalents	2,579		2,556
Short-term investments (1)	1,173		1,191
Long-term investments (2)	167		81
Net debt	$	1,367	$	1,505

(

September 30, 2023 December 31, 2022
Current Loans payable and other financial liabilities $ 2,272 $ 2,131
Non-current Loans payable and other financial liabilities 2,182 2,627
Current Operating lease liabilities 171 142
Non-current Operating lease liabilities 615 514
Total debt $ 5,240 $ 5,414
Less:
Cash and cash equivalents $ 2,171 $ 1,910
Short-term investments (1)
1,551 1,120
Long-term investments (2)
52 245
Net debt $ 1,466 $ 2,139

~~(1)~~ 1) Excludes time deposits and foreign government debt securities restricted and held in ~~guarantee and investments held in VIEs as a consequence of securitization transactions.~~guarantee.

(2) Excludes ~~foreign government debt securities restricted,~~ investments held in VIEs as a consequence of securitization transactions and equity securities held at cost.

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FX neutral

We believe that FX neutral measures provide useful information to both Management and investors by excluding the foreign currency exchange rate impact that may not be indicative of our core operating results and business outlook.

The FX neutral measures were calculated by using the average monthly exchange rates for each month during ~~2022~~2023 and applying them to the corresponding months in ~~2023,~~2024, so as to calculate what our results would have been had exchange rates remained stable from one year to the next. The table below excludes intercompany allocation FX effects. Finally, these measures do not include any other macroeconomic effect such as local currency inflation effects, the impact on impairment calculations or any price adjustment to compensate local currency inflation or devaluations.

The following table sets forth the FX neutral measures related to our reported results of the operations for the ~~nine~~three-month period ended March 31, 2024:


	Three-Months ended March 31,
	As reported		As recast (1)		Percentage Change		FX Neutral Measures		As recast (1)		Percentage Change
(Unaudited)	2024		2023				2024		2023
	(In millions, except percentages)						(In millions, except percentages)
Net revenues and financial income	$	4,333	$	3,186	36.0	%	$	6,188	$	3,186	94.2	%
Cost of net revenues and financial expenses	(2,309)		(1,572)		46.9	%	(3,105)		(1,572)		97.5	%
Gross profit	2,024		1,614		25.4	%	3,083		1,614		91.0	%

Operating expenses	(1,496)		(1,196)		25.1	%	(2,453)		(1,196)		105.1	%
Income from operations	$	528	$	418	26.3	%	$	630	$	418	50.7	%

Nine Months Ended September 30,
As reported FX Neutral Measures As reported
(In millions, except percentages) 2023 2022 Percentage
Change 2023 2022 Percentage
Change
(Unaudited) (Unaudited)
Net revenues $ 10,212 $ 7,535 35.5 % $ 12,195 $ 7,535 61.8 %
Cost of net revenues (4,961) (3,830) 29.5 % (5,742) (3,830) 49.9 %
Gross profit 5,251 3,705 41.7 % 6,453 3,705 74.2 %
Operating expenses (3,668) (3,020) 21.5 % (4,493) (3,020) 48.8 %
Income from operations $ 1,583 $ 685 131.1 % $ 1,960 $ 685 186.1 %
Three Months Ended September 30,
As reported FX Neutral Measures As reported
(In millions, except percentages) 2023 2022 Percentage
Change 2023 2022 Percentage
Change
(Unaudited) (Unaudited)
Net revenues $ 3,760 $ 2,690 39.8 % $ 4,549 $ 2,690 69.1 %
Cost of net revenues (1,765) (1,342) 31.5 % (2,060) (1,342) 53.5 %
Gross profit 1,995 1,348 48.0 % 2,489 1,348 84.6 %
Operating expenses (1,310) (1,052) 24.5 % (1,620) (1,052) 54.0 %
Income from operations $ 685 $ 296 131.4 % $ 869 $ 296 193.6 %

reclassification of prior year results - to our unaudited interim condensed consolidated financial statements for further details.

See ~~“Summary~~Note 2 – Summary of significant accounting policies - Foreign currency translation - Argentine currency status and macroeconomic outlook and Argentine exchange ~~regulations” in Note 2~~regulations of our unaudited interim condensed consolidated financial statements for further detail on the currency status and the exchange regulations of our Argentine segment.

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~~Item 3 — Qualitative and Quantitative Disclosure About Market Risk~~ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks arising from our business operations. These market risks arise mainly from macroeconomic instability and the possibility that changes in interest rates and the U.S. dollar exchange rate with local currencies, particularly the Brazilian Real, Argentine Peso and Mexican Peso due to Brazil’s, Argentina’s and Mexico’s respective share of our revenues, may affect the value of our financial assets and liabilities.

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We are also exposed to market risks arising from our long-term retention programs (“LTRPs”). These market risks arise from our obligations to pay employees cash payments in amounts that vary based on the market price of our stock.

Foreign currencies

We have significant operations internationally that are denominated in foreign currencies, primarily the Brazilian Real, Argentine Peso, Mexican Peso, Colombian Peso and Chilean Peso, subjecting us to foreign currency risk, which may adversely impact our financial results. We transact business in various foreign currencies and have significant international revenues and costs. In addition, we charge our international subsidiaries for their use of intellectual property and technology and for certain corporate services. Our cash flows, results of operations and certain of our intercompany balances that are exposed to foreign exchange rate fluctuations may differ materially from expectations and we may record significant gains or losses due to foreign currency fluctuations and related hedging activities.

We use foreign currency exchange forward contracts and currency swaps to protect our foreign currency exposure and our investment in a foreign subsidiary from adverse changes in foreign currency exchange rates. These hedging contracts reduce, but do not entirely eliminate, the impact of adverse foreign currency exchange rate movements. We designate these contracts as cash flow, net investment and fair value hedges for accounting purposes. The ~~derivative’s~~derivatives’ gain or loss for cash flow and net investment hedges is initially reported as a component of accumulated other comprehensive ~~income (“AOCI”).~~loss. Cash flow hedges and net investment hedges are subsequently reclassified into the financial statement line item in which the hedged item is recorded in the same period the forecasted transaction affects earnings. The ~~derivative’s~~derivatives’ gain or loss for fair value hedges is reported in ~~earnings~~our interim condensed consolidated statements of income in the same line items as the change in the value of the hedged item due to the hedged risks.

As of ~~September 30, 2023,~~March 31, 2024, we hold cash and cash equivalents in local currencies in our subsidiaries, and have receivables denominated in local currencies in all of our operations. Our subsidiaries generate revenues and incur most of their expenses in the respective local currencies of the countries in which they operate. As a result, our subsidiaries use their local currency as their functional currency except for our Argentine subsidiaries, whose functional currency is the U.S. dollar due to the inflationary environment. As of ~~September 30, 2023,~~March 31, 2024, the total cash and cash equivalents, restricted cash and cash equivalent denominated in foreign currencies totaled ~~$2,808~~$3,198 million, short-term investments denominated in foreign currencies totaled ~~$2,196~~$2,779 million and accounts receivable, credit card receivables and other means of payment and loans receivable in foreign currencies totaled ~~$5,914~~$7,334 million. As of ~~September 30, 2023,~~March 31, 2024, we had ~~$91~~$77 million long-term investments denominated in foreign currencies. To manage exchange rate risk, our treasury policy is to transfer most cash and cash equivalents in excess of working capital requirements into U.S. dollar-denominated accounts in the United States and to enter into certain foreign exchange derivatives, such as currency forwards contracts, in order to mitigate our exposure to foreign exchange risk. As of ~~September 30, 2023,~~March 31, 2024, our U.S. dollar-denominated cash and cash equivalents, restricted cash and cash equivalents and short-term investments totaled ~~$1,572~~$1,512 million and our U.S. dollar-denominated long-term investments totaled ~~$58~~$172 million.

For the ~~nine and~~ three-month ~~periods~~period ended ~~September 30, 2023,~~March 31, 2024, we had a consolidated loss on foreign currency of ~~$508~~$34 million ~~and $239 million, respectively,~~ mainly related to higher foreign exchange losses attributable to our own common stock acquisition in the Argentine market at a price that reflects the additional cost of accessing U.S. dollars through an indirect mechanism due to restrictions imposed by the Argentine government for buying U.S. dollars at the official exchange rate, higher foreign exchange losses from our Argentinian subsidiaries due to the devaluation of the Argentine peso and foreign exchange losses from our Brazilian subsidiaries, which was partially offset by foreign exchange gains from our ~~Brazilian and~~ Mexican subsidiaries. See ~~“Management’s~~"Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of operations—Other income (expenses), net” for more information.

~~Table of Contents~~

Foreign currency sensitivity analysis

The table below shows the impact on our net revenues, cost of net revenues and financial expenses, operating expenses, other income (expenses) and income tax, net income and equity for a positive and a negative 10% fluctuation on all the foreign currencies to which we are exposed to at the moment of translating our financial statements to U.S. dollars for the ~~nine-month~~three-month period ended ~~September 30, 2023:~~March 31, 2024:

								Foreign Currency Sensitivity Analysis
	(10)% (1)									(10)% (1)	Actual	10% (2)
(In millions)	(In millions)	-10%		Actual		+10%			(In millions)
		(1)				(2)
Net revenues		$	11,346	$	10,212	$	9,284
Expenses (*)		(9,545)		(8,629)		(7,880)
Net revenues and financial income
Expenses (3)
Income from operations	Income from operations	1,801		1,583		1,404

Other income/(expenses), equity in earning of unconsolidated entity and income tax related to P&L items		(275)		(253)		(234)
Other income (expenses) and income tax expense related to P&L items
Foreign Currency impact related to the remeasurement of our Net Asset position	Foreign Currency impact related to the remeasurement of our Net Asset position	(521)		(508)		(497)
Net Income	Net Income	$	1,005	$	822	$	673

Total Shareholders’ Equity		$	2,902	$	2,741	$	2,610
Total Shareholders’ Equity
Total Shareholders’ Equity
Total Shareholders’ Equity

(1)~~Appreciation~~ Increase of the subsidiaries’ local currency against U.S. Dollar.

(2)~~Depreciation~~Decrease of the subsidiaries’ local currency against U.S. Dollar.

~~(*)~~(3) Includes cost of net revenues and financial expenses and operating expenses.

The table above shows an increase in our net income when the U.S. dollar weakens against foreign currencies because of the positive impact of the increase in income from operations. On the other hand, the table above shows a decrease in our net income when the U.S. dollar strengthens against foreign currencies because of the negative impact of the decrease in income from operations.

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Brazilian segment

Considering a hypothetical ~~devaluation~~increase of 10% of the Brazilian Real exchange rate against the U.S. dollar on ~~September 30, 2023,~~March 31, 2024, the reported net assets in our Brazilian subsidiaries would have decreased by approximately ~~$227~~$261 million with the related impact in Other Comprehensive Income. Additionally, we would have recorded a foreign currency loss amounting to approximately ~~$46~~$49 million in our Brazilian subsidiaries.

Argentine segment

In accordance with U.S. GAAP, we have classified our Argentine operations as highly inflationary since July 1, 2018, using the U.S. dollar as the functional currency for purposes of reporting our financial statements. Therefore, no translation effect has been accounted for in other comprehensive income related to our Argentine operations since July 1, 2018. Argentina’s inflation rate for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2024 and 2023 was 51.6% and ~~2022 was 103.2% and 66.1%~~21.7%, respectively.

We use Argentina’s official exchange rate to account for transactions in our Argentine segment, which as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 was ~~349.95~~858.00 and ~~177.16~~808.45 Argentine Pesos, respectively, against the U.S. dollar. For the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ Argentina’s ~~depreciation of its local currency~~official exchange rate against the U.S. dollar ~~was 97.5%~~increased 6.1% and ~~43.4%~~18.0%, respectively. The average exchange rate for the three-month periods ended March 31, 2024 and 2023 was 834.46 and 192.41, respectively, resulting in an increase of 334%.

Considering a hypothetical ~~devaluation~~increase of 10% of the Argentine Peso exchange rate against the U.S. dollar on ~~September 30, 2023,~~March 31, 2024, the effect on non-functional currency net liability position in our Argentine subsidiaries would have been a foreign exchange gain amounting to approximately $9$6 million in our Argentine subsidiaries.

~~Table of Contents~~

See ~~“Summary~~Note 2 – Summary of significant accounting policies - Foreign currency translation - Argentine currency status and Argentine exchange regulations” ~~in Note 2~~ of our unaudited interim condensed consolidated financial statements for further detail on the currency status and the exchange regulations of our Argentine segment.

Mexican segment

Considering a hypothetical ~~devaluation~~increase of 10% of the Mexican Peso exchange rate against the U.S. dollar on ~~September 30, 2023,~~March 31, 2024, the reported net assets in our Mexican subsidiaries would have decreased by approximately ~~$90~~$108 million with the related impact in Other Comprehensive Income. Additionally, we would have recorded a foreign currency loss amounting to approximately ~~$17~~$20 million in our Mexican subsidiaries.

Interest

Our earnings and cash flows are also affected by changes in interest rates. These changes could have an impact on the interest rates that financial institutions charge us prior to the time we sell our Mercado Pago receivables and on the financial debt that we use to fund Mercado Pago and Mercado Credito’s operations. As of ~~September 30, 2023,~~March 31, 2024, Mercado Pago’s receivables totaled ~~$3,375~~$3,962 million. Interest rate fluctuations could also impact interest earned through our Mercado Credito solution. As of ~~September 30, 2023,~~March 31, 2024, loans receivable net of the allowance for doubtful accounts from our Mercado Credito solution totaled ~~$2,378~~$3,205 million. Interest rate fluctuations could also negatively affect certain of our fixed rate and floating rate investments comprised primarily of time deposits, money market funds and sovereign debt securities. Investments in both fixed rate and floating rate interest earning products carry a degree of interest rate risk. Fixed rate securities may have their fair ~~market~~ value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than predicted if interest rates fall.

As of ~~September 30, 2023,~~March 31, 2024, our short-term investments amounted to ~~$3,320~~$3,671 million and our long-term investments amounted to ~~$149~~$249 million. Our short-term investments can be readily converted at any time into cash or into securities with a shorter remaining time to maturity. We determine the appropriate classification of our investments at the time of purchase and re-evaluate such designations as of each balance sheet date. See ~~Notes~~Note 3 – Fintech Regulations and Note 5 – Cash, cash equivalents, restricted cash and cash equivalents and investments of our unaudited interim condensed consolidated financial statements for further detail on our restricted investments.

Fluctuations of the interest rate could also have a negative impact on interest expense related to our Loans payable and other financial liabilities, as a portion of these instruments is subject to variable interest rates. As of ~~September 30, 2023,~~March 31, 2024, our loans payable and other financial liabilities which accrue interest based on variable rates amounted to ~~$2,666~~$2,794 million, while our loans payable and other financial liabilities, which accrue interest based on fixed rates, amounted to ~~$1,788~~$1,676 million. See ~~Notes 12~~Note 13 – Loans payable and 13other financial liabilities and Note 14 – Securitization transactions of our unaudited interim condensed consolidated financial statements for further detail.Considering a hypothetical increase of 100 ~~basic~~basis points in the interest rates, the reported Loans payable and other financial liabilities as of ~~September 30, 2023~~March 31, 2024 would have increased by approximately ~~$13~~$7 million with the related impact in ~~Interest~~cost of net revenues and financial expenses or in interest expense and other financial losses.We have entered into swap contracts to hedge the interest rate fluctuation of ~~$493~~$459 million notional amount, ~~$244~~$229 million of which have been designated as hedging instruments. See Note 1516 – Derivative instruments of our unaudited interim condensed consolidated financial statements for further detail on derivative instruments.

~~Equity price risk~~

~~Our Board, upon the recommendation of the compensation committee, approved the 2018 Long Term Retention Program (the “2018 LTRP”).~~

In order to receive an award under the 2018 LTRP, each eligible employee must satisfy the performance conditions established by the Board for such employee. 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 or her 2018 LTRP award, payable as follows:

•the eligible employee will receive a fixed payment, equal to 8.333% of his or her 2018 LTRP bonus once a year for a period of six years starting no later than April 30, 2019 (the “2018 Annual Fixed Payment”); and

•on each date we pay the respective Annual Fixed Payment to an eligible employee, he or she will also receive a payment (the “2018 Variable Payment”) equal to the product of (i) 8.333% of the applicable 2018 LTRP award 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 2017 Stock Price, defined as $270.84, which was the average closing price of our common stock on the NASDAQ Global Select Market during the final 60 trading days of 2017. The “Applicable Year Stock Price” shall equal the average closing price of our common stock on the NASDAQ Global Select Market during the final 60 trading days of the year preceding the applicable payment date.

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Equity price risk

Our Board, upon the recommendation of the compensation committee, approved the 2019, 2020, 2021, 2022, 2023 and ~~2023~~2024 Long Term Retention Programs (the “2019, 2020, 2021, 2022, 2023 and ~~2023~~2024 LTRPs”), respectively, under which certain eligible employees have the opportunity to receive cash payments annually for a period of six ~~years (with the first payment occurring no later than April 30, 2020, 2021, 2022, 2023 and 2024 for the 2019, 2020, 2021, 2022 and 2023 LTRPs, respectively).~~years. In order to receive the full target award under the 2019, 2020, 2021, 2022, 2023 and/or ~~2023~~2024 LTRPs, each eligible employee must remain employed as of each applicable payment date. The 2019, 2020, 2021, 2022, 2023 and ~~2023~~2024 LTRP awards are payable as follows:

•■the eligible employee will receive 16.66% of half of his or her target 2019, 2020, 2021, 2022, 2023 and/or ~~2023~~2024 LTRP bonus once a year for a period of six years, with the first payment occurring no later than April 30, 2020, 2021, 2022, 2023, 2024 and ~~2024,~~2025, respectively (the “2019, 2020, 2021, 2022, 2023 or ~~2023~~2024 Annual Fixed Payment”, respectively); and

•■on each date we pay the respective Annual Fixed Payment to an eligible employee, he or she will also receive a payment (the “2019, 2020, 2021, 2022, 2023 or ~~2023~~2024 Variable Payment”) equal to the product of (i) 16.66% of half of the target 2019, 2020, 2021, 2022, 2023 or ~~2023~~2024 LTRP award 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 average closing price of our common stock on the NASDAQ Global Select Market during the final 60 trading days of 2018, 2019, 2020, 2021, 2022 and ~~2022~~2023 defined as $322.91, $553.45, $1,431.26, $1,391.81, $888.69 and ~~$888.69~~$1,426.11 for the 2019, 2020, 2021, 2022, 2023 and ~~2023~~2024 LTRPs, respectively. The “Applicable Year Stock Price” shall equal the average closing price of our common stock on the NASDAQ Global Select Market during the final 60 trading days of the year preceding the applicable payment date.

As of ~~September 30, 2023,~~March 31, 2024, the total contractual obligation fair value of our outstanding LTRP Variable ~~Award~~ Payment obligation subject to equity price risk amounted to ~~$442~~$574 million. As of ~~September 30, 2023,~~March 31, 2024, the accrued liability related to the outstanding Variable Award Payment of the LTRP included in Salaries and social security payable in our consolidated balance sheet amounted to ~~$74~~$33 million. The following table shows a sensitivity analysis of the risk associated with our total contractual obligation fair value related to the outstanding LTRP Variable Award Payment subject to equity price risk if our common stock price per share were to increase or decrease by up to 40%:


		As of September 30, 2023
		MercadoLibre, Inc Equity Price	2018, 2019, 2020, 2021, 2022 and 2023 LTRP Variable contractual obligation
Change in equity price in percentage	Change in equity price in percentage	(In millions, except equity price)		Change in equity price in percentage	As of March 31, 2024
Change in equity price in percentage					MercadoLibre, Inc Equity Price			2019, 2020, 2021, 2022, 2023 and 2024 LTRP Variable contractual obligation
						(In millions, except equity price)
40%	40%	1,785.27	619	40%	2,127.92		804		804
30%	30%	1,657.75	574	30%	1,975.92		747		747
20%	20%	1,530.23	530	20%	1,823.93		689		689
10%	10%	1,402.71	486	10%	1,671.93		632		632
Static (*)		1,275.19	442
Static (1)				Static (1)	1,519.94			574
(10)%	(10)%	1,147.67	398	(10)%	1,367.95		517		517
(20)%	(20)%	1,020.15	353	(20)%	1,215.95		460		460
(30)%	(30)%	892.63	309	(30)%	1,063.96		402		402
(40)%	(40)%	765.11	265	(40)%	911.96		345		345

~~(*)~~(1)Present value of average closing stock price for the last 60 trading days of the year preceding the applicable payment date.

In November 2021, we acquired ~~Kangú~~Kangu Participações S.A. Former ~~Kangú’s~~Kangu’s shareholders who after the acquisition became the Company’s employees will receive cash payments annually over a three-year period subject to certain performance and stay conditions. The payments will be indexed based on changes in equity price of our common stock. As of ~~September 30, 2023,~~March 31, 2024, the total contractual obligation fair value of the mentioned payments ~~amount~~edamounted to $8$5 million.

~~Item 4 — Controls and Procedures~~ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our Management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

~~Table of Contents~~

Evaluation of Disclosure Controls and Procedures

Based on the evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) required by Exchange Act Rules 13a-15(b) or 15d-15(b), our Chief Executive Officer and our Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

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Changes in Internal ~~Controls~~Control Over Financial Reporting

~~There~~During the quarter ended March 31, 2024, we completed a project to implement a new version of our enterprise resource planning (ERP) software, SAP, as part of a plan to integrate and upgrade our technology platforms and enhance our business information and transaction systems and processes with SAP enterprise resource planning software. We believe that we have taken the necessary steps to monitor and maintain appropriate internal control over financial reporting during this period of change. We have also updated our processes related to internal control over financial reporting, as necessary, to accommodate applicable changes in our business processes resulting from the implementation of the new SAP technology to support accounting activities. We will continue to evaluate the operating effectiveness of related key controls during subsequent periods to ensure adequate internal control over financial reporting. See “Risk Factors – Any delay or problem with operating or upgrading our existing information technology infrastructure could cause a disruption in our business and adversely impact our financial results” included in the Company’s 2023 10-K.

Other than the changes described above, there were no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the ~~nine-month~~three-month period ended ~~September 30, 2023~~March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~We permit remote work for most positions of our Company, and we~~ ~~monitor and assess the impact of this remote work environment on our internal controls.~~

PART II. OTHER INFORMATION

~~Item 1 — Legal Proceedings~~ITEM 1. LEGAL PROCEEDINGS

See Item 1 of Part I, “Financial ~~Statements—~~Statements — Note 1011 – Commitments and ~~Contingencies—~~Contingencies — Litigation and ~~other~~Other Legal Matters”.

~~Item 1A — Risk Factors~~ITEM 1A. RISK FACTORS

As of ~~September 30, 2023,~~March 31, 2024, there have been no material changes in our risk factors from those disclosed in the Company’s ~~2022~~2023 10-K.

~~Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

Period Total Number of Shares Purchased (2) Average Price per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Program (in millions) (2)
July, 2023 — — — Up to $479
August, 2023 69,807 2,718.29 69,807 Up to $290
September, 2023 43,343 3,063.36 43,343 Up to $157

Period

Total Number of Shares Purchased

Average Price per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Program (in millions) (1)

January, 2024

—

Up to $157

February, 2024

—

Up to $157

March, 2024

—

Up to $ _

(1)Average price paid per share does not include costs associated with the repurchases. It includes the foreign exchange loss recognized for the nine-month period ended September 30, 2023. Please refer to Note 16 of our unaudited interim condensed consolidated financial statements for additional detail.

~~(2)~~On February 21, 2023, the Board authorized the Company to repurchase shares of the Company’s common stock, for aggregate consideration of up to $900 ~~million to expire~~million. This Program expired on March 31, ~~2024 (the “Program”). As of September 30, 2023, the estimated remaining balance available for share repurchases under this Program was $157 million.~~2024. Please refer to Note 1617 – Share repurchase program of our unaudited interim condensed consolidated financial statements for additional detail.

~~Item 5 — Other Information~~ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Plans

During the three months ended ~~September 30, 2023,~~March 31, 2024, none of the Company’s directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any “non-Rule 10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K.

~~Item 6 — Exhibits~~ITEM 6. EXHIBITS

The information set forth under ~~“Index to Exhibits”~~“Exhibits Index” below is incorporated herein by reference.

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~~MercadoLibre, Inc.~~

EXHIBIT INDEX ~~TO EXHIBITS~~

~~Incorporated by Reference~~

Exhibit Number

Exhibit Description

Filed (*) or
Furnished (**)
Herewith

Incorporated by Reference

Form

Filing Date

3.1

Registrant’s Amended and Restated Certificate of Incorporation.

S-1

May 11, 2007

3.2

Registrant’s Amended and Restated Bylaws.

S-1

May 11, 2007

4.1

Form of Specimen Certificate for the Registrant’s Common Stock.

10-K

February 27, 2009

4.2

Indenture with respect to the Registrant’s 2.00% Convertible Senior Notes due 2028, dated as of August 24, 2018, between the Registrant and Wilmington Trust, National Association, as trustee.

8-K

August 24, 2018

4.3

Indenture, dated January 14, 2021, between MercadoLibre, Inc., MercadoLibre S.R.L., Ibazar.com Atividades de Internet Ltda., eBazar.com.br Ltda., Mercado Envios Servicos de Logistica Ltda., MercadoPago.com Representações Ltda., MercadoLibre Chile Ltda., MercadoLibre, S. de R.L. de C.V., DeRemate.com de México, S. de R.L. de C.V. and MercadoLibre Colombia Ltda. and The Bank of New York Mellon, as trustee.

8-K

January 14, 2021

4.4

First Supplemental Indenture, dated January 14, 2021, between MercadoLibre, Inc., MercadoLibre S.R.L., Ibazar.com Atividades de Internet Ltda., eBazar.com.br Ltda., Mercado Envios Servicos de Logistica Ltda., MercadoPago.com Representações Ltda., MercadoLibre Chile Ltda., MercadoLibre, S. de R.L. de C.V., DeRemate.com de México, S. de R.L. de C.V. and MercadoLibre Colombia Ltda. and The Bank of New York Mellon, as trustee.

8-K

January 14, 2021

4.5

Form of Global Note representing the Registrant’s 2.375% Sustainability Notes due 2026.

8-K

January 14, 2021

4.6

Form of Global Note representing the Registrant’s 3.125% Notes due 2031.

8-K

January 14, 2021

4.7

Second Supplemental Indenture, dated October 27, 2021 among MP Agregador, S. de R.L. de C.V., MercadoLibre, Inc. and The Bank of New York Mellon, as Trustee

10-K

February 23, 2022

22.1

List of Subsidiary Guarantors for the Registrant’s 2.375% Sustainability Notes due 2026 and 3.125% Notes due 2031.

10-K

February 24, 2023

10.1

MercadoLibre, Inc. 2024 Long Term Retention Program.

8-K

April 23, 2024

31.1

Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2023,~~March 31, 2024, formatted in Inline XBRL: (i) Interim Condensed Consolidated Balance Sheets, (ii) Interim Condensed Consolidated Statements of Income, (iii) Interim Condensed Consolidated Statements of Comprehensive Income, (iv) Interim Condensed Statements of Equity, (v) Interim Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Interim Condensed Consolidated Financial Statements.

104

The cover page from the Company’s Form 10-Q for the quarterly period ended ~~September 30, 2023,~~March 31, 2024, formatted in Inline XBRL and contained in Exhibit ~~101~~101.

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~~Signatures~~SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	MERCADOLIBRE, INC.
	Registrant

Date: ~~November 2, 2023.~~May 3, 2024.	By:	/s/ Marcos Galperin
		Marcos Galperin
		President and Chief Executive Officer

	By:	/s/ Martín de los Santos
		Martín de los Santos
		~~Sr.~~Executive Vice President and Chief Financial Officer

6963 | MercadoLibre, Inc.


	Common stock			Additional paid-in capital		Treasury Stock (*)		Retained Earnings		Accumulated other comprehensive loss		Total Equity
	Shares	Amount
Balance as of December 31, 2022	50	$	—	$	2,309	$	(931)	$	913	$	(464)	$	1,827
Common Stock repurchased	—	—		—		(61)		—		—		(61)
Net income	—	—		—		—		201		—		201
Other comprehensive income	—	—		—		—		—		73		73
Balance as of March 31, 2023	50	$	—	$	2,309	$	(992)	$	1,114	$	(391)	$	2,040
Common Stock repurchased	—	—		—		(146)		—		—		(146)
Net income	—	—		—		—		262		—		262
Other comprehensive income	—	—		—		—		—		96		96
Balance as of June 30, 2023	50	$	—	$	2,309	$	(1,138)	$	1,376	$	(295)	$	2,252
Capped call settlement	—	—		412		(412)		—		—		—
Conversion of 2028 Convertible Notes	—	—		(762)		1,112		—		—		350
Common Stock repurchased	—	—		—		(149)		—		—		(149)
Net income	—	—		—		—		359		—		359
Other comprehensive loss	—	—		—		—		—		(71)		(71)
Balance as of September 30, 2023	50	$	—	$	1,959	$	(587)	$	1,735	$	(366)	$	2,741


	Nine Months Ended September 30, 2022
	Brazil		Argentina		Mexico		Other Countries		Total
	(In millions)
Net revenues	$	4,134	$	1,787	$	1,257	$	357	$	7,535
Direct costs	(3,472)		(1,068)		(1,075)		(348)		(5,963)
Direct contribution	662		719		182		9		1,572
Operating expenses and indirect costs of net revenues									(887)
Income from operations									685
Other income (expenses):
Interest income and other financial gains									142
Interest expense and other financial losses									(221)
Foreign currency losses, net									(134)
Net income before income tax expense and equity in earnings of unconsolidated entity									$	472


	Three Months Ended September 30, 2022
	Brazil		Argentina		Mexico		Other Countries		Total
	(In millions)
Net revenues	$	1,431	$	675	$	465	$	119	$	2,690
Direct costs	(1,209)		(376)		(384)		(121)		(2,090)
Direct contribution	222		299		81		(2)		600
Operating expenses and indirect costs of net revenues									(304)
Income from operations									296
Other income (expenses):
Interest income and other financial gains									65
Interest expense and other financial losses									(92)
Foreign currency losses, net									(71)
Net income before income tax expense and equity in earnings of unconsolidated entity									$	198


	Year Ended December 31, 2022
	Derivative Instruments, net		Contingent Considerations
	(In millions)
Balance, beginning of the year	$	11	$	(9)
Net Additions	3		—
Settlements	7		1
Foreign Currency Translation	(5)		—
Gain (Losses) in Other Comprehensive Income	(15)		—
Gain (Losses) on Income Statement	(28)		—
Transfers out of level 3 to level 2	27		—
Balance, end of the year	$	—	$	(8)


	Balances as of September 30, 2023		Estimated fair value as of September 30, 2023		Balances as of December 31, 2022		Estimated fair value as of December 31, 2022
	(In millions)
Assets
Cash and cash equivalents	$	1,407	$	1,407	$	1,290	$	1,290
Restricted cash and cash equivalents	866		866		943		943
Investments	326		326		439		439
Accounts receivables, net	161		161		130		130
Credit card receivables and other means of payment, net	3,375		3,375		2,946		2,946
Loans receivable, net	2,378		2,387		1,736		1,761
Other assets	395		395		273		273
Total Assets	$	8,908	$	8,917	$	7,757	$	7,782
Liabilities
Accounts payable and accrued expenses	$	1,910	$	1,910	$	1,393	$	1,393
Funds payable to customers	4,016		4,016		3,454		3,454
Amounts payable due to credit and debit card transactions	757		757		488		488
Salaries and social security payable	445		445		349		349
Loans payable and other financial liabilities	4,454		4,486		4,758		4,997
Other liabilities	206		206		186		186
Total Liabilities	$	11,788	$	11,820	$	10,628	$	10,867


	Change from 2022 to 2023
(% of revenue growth in Local Currency) (*)	Nine-month period		Three-month period
Brazil	26.5	%	30.3	%
Argentina (**)	163.3	%	179.6	%
Mexico	43.8	%	39.8	%
Other countries	26.3	%	23.5	%
Total consolidated	61.8	%	69.1	%


Period	Total Number of Shares Purchased (2)	Average Price per Share (1)	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Program (in millions) (2)
July, 2023	—	—	—	Up to $479
August, 2023	69,807	2,718.29	69,807	Up to $290
September, 2023	43,343	3,063.36	43,343	Up to $157