EXHIBIT 99.1
MercadoLibre, Inc. Reports Financial Results for Second Quarter 2008
Q2'08 Revenue Increases 81.7% to $34.5 Million
Q2'08 Operating Income of $8.1 Million; Q2'08 and Operating Income
of $9.7 Million Excluding Non-Recurring Compensation Expense
Q2'08 EPS of $0.07; Q2'08 EPS of $0.10 Excluding Non-Recurring
Compensation Expenses
BUENOS AIRES, Argentina, Aug. 12, 2008 (PRIME NEWSWIRE) -- MercadoLibre, Inc. (Nasdaq:MELI) (http://www.mercadolibre.com), host of the largest online trading and payments platform in Latin America, today reported financial results for its second fiscal quarter ended June 30, 2008.
"The second quarter was a very good one for MercadoLibre, as our businesses continued to deliver value to our increasing community of users," said Marcos Galperin, President and CEO of MercadoLibre. "Focusing on meeting the constantly evolving needs of our buyers and sellers is a central tenet of our Company's strategy for sustaining growth in our e-commerce and payments platforms and the best way to generate long term value for our stockholders."
Financial Results
Second Quarter Results
MercadoLibre reported consolidated net revenue for the three months ended June 30, 2008 of $34.5 million, an accelerating quarterly year over year revenue growth rate of 81.7%. Second quarter marketplace revenue grew 76.0% to $28.3 million from $16.1 million for the prior year period. Payments revenues grew to $6.2 million for the second quarter, up 113.4% from $2.9 million for the same period during 2007. Revenue growth was primarily driven by accelerating growth in both gross merchandise and total payment volume, and by the strong results from classifieds and ad sales, as the Company continues to ramp-up its efforts in these newer offerings.
Gross profit grew 84.1% to $27.6 million from $15.0 million in the prior year second quarter. Gross margin improved to 80.0% from 78.9% in the second quarter of 2007.
Income from operations grew 69.6% to $8.1 million from $4.8 million for the same period during 2007. As expected, income from operations included $1.5 million in anticipated compensation costs related to the Classified Media Group (CMG) acquisition. Excluding the compensation expenses, second quarter income from operation grew 101.8% to $9.7 million. Operating income margin, including the compensation costs was 23.6%. Excluding the compensation costs, operating income margin was 28.1%.
Income tax expenses were $2.5 million for the second quarter of 2008, an increase of 35.2% over tax expenses of $1.8 million for the same period one year earlier. Net income for the three-month period ended June 30, 2008 was $2.9 million, compared to $0.6 million during the same period of 2007, an increase of 398.8%. Net income excluding compensation expense would have been $4.5 million for the second quarter of 2008.
Earnings per share for the second quarter of 2008, both basic and diluted, were $0.07 per share. Earnings per share, excluding compensation expenses would have been $0.10 per share, both basic and diluted, for the quarter.
Six Month Results
Revenue for the six months ended June 30, 2008 increased 78.7% to $63.3 million compared with $35.4 million for the prior year period. Gross profit increased 80.3% to $50.4 million from $27.9 million from the prior year period, representing a gross profit margin of 79.6% for first half of fiscal 2008.
Income from operations increased 88.1% to $14.7 million from $7.8 million for the six months ended June 30, 2008.
Net income for the six months ended June 30, 2008 was $5.0 million, compared to $1.6 million for the prior year period, an increase of 216.4%.
Key Performance Metrics
Following are highlights on certain key performance metrics for the second quarter ended June 30, 2008.
Registered Users -- New confirmed registered users for the three month period ended June 30, 2008 were 1.6 million, generating a cumulative confirmed registered user base of 28.1 million users as of June 30, 2008, an increase of 30.5% over the 21.6 million users registered as of June 30, 2007.
Transaction volume -- Gross merchandise volume was $515.5 million for the second quarter of 2008, a 50.3% growth from gross merchandise volume of $343.0 for the same period during 2007. MercadoLibre totaled 5.1 million successful items during the second quarter of 2008, 21.1% more than the 4.2 million successful items sold during the same quarter of 2007. Total payment volume was $66.8 million during the three-month period ending June 30, 2008, a growth of 115.6% over total payment volume of $31.0 million for the same period of 2007.
"We are proud of the work our teams have carried out so far this year, and look forward to the second half of 2008 as we continue to focus on delivering a world class trading experience for our community of users," said Mr. Galperin.
Conference Call and Webcast
MercadoLibre will host a conference call to discuss results for the quarter ending June 30, 2008 today at 4:30 p.m. Eastern Time. The conference call may be accessed by dialing 719-234-0008. A live webcast of the conference call can be accessed at the company's investor relations website at http://investor.mercadolibre.com/. An archive will be available for one week following the conclusion of the conference call.
Definition of Selected Operational Metrics
New confirmed registered users -- Measure of the number of new users who have registered on the MercadoLibre marketplace and confirmed their registration.
Total confirmed registered users -- Measure of the cumulative number of users who have registered on the MercadoLibre marketplace and confirmed their registration.
Gross merchandise volume -- Measure of the total U.S. dollar sum of all transactions completed through the MercadoLibre marketplace, excluding motor vehicles, vessels, aircraft, real estate, and services.
Successful items -- Measure of the number of items that were sold/purchased through the MercadoLibre marketplace.
Total payment volume -- Measure of total U.S. dollar sum of all transactions paid for using MercadoPago.
Operating income margin -- Income from operations as a percentage of net revenues.
About MercadoLibre
MercadoLibre is the largest online trading platform in Latin America. We are market leaders in e-commerce in each of Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay and Venezuela, based on unique visitors and page views during 2006. Additionally, we have recently launched online trading platforms in Costa Rica, the Dominican Republic and Panama. With a market of over 550 million people and a region with one of the world's fastest-growing Internet penetration rates, we provide buyers and sellers a robust online trading environment that fosters the development of a large and growing e-commerce community. We offer a technological and commercial solution that addresses the distinctive cultural and geographic challenges of operating an online trading platform in Latin America.
Non-GAAP Financial Measures
This press release includes the following financial measures defined as "non-GAAP financial measures" by the Securities and Exchange Commission (SEC). See "Non GAAP Measures of Financial Performance" for more information about these measures.
Forward-Looking Statements
Any statements contained in this press release that are not statements of historical fact, including statements about the company's beliefs and expectations, are forward-looking statements and should be evaluated as such. Such forward-looking statements reflect, among other things, the company's current expectations, plans, projections and strategies, anticipated financial results, future events and financial trends affecting the company's business, all of which are subject to known or unknown risk and uncertainties that may cause the company's actual results to differ materially from those expressed or implied by these forward-looking statements, including general market conditions, the failure of customary closing conditions, adverse changes in the company's markets and other risks disclosed in the company's filings with the Securities and Exchange Commission. Because of the risks, uncertainties and assumptions, investors should not place undue reliance on any forward-looking statements.
June 30 December 31
2008 2007
------------- -------------
Assets (Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 17,674,256 $ 15,677,407
Short-term investments 31,743,124 52,300,007
Accounts receivable 3,507,800 3,211,252
Funds receivable from customers 36,094,640 29,162,763
Prepaid expenses 841,083 283,477
Deferred tax assets 3,775,170 3,445,101
Other assets 1,557,460 894,163
------------- -------------
Total current assets 95,193,533 104,974,170
Non-current assets:
Long-term investments 2,244,276 1,323,789
Property and equipment, net 5,676,382 4,143,204
Goodwill and intangible assets, net 43,893,181 23,428,646
Deferred tax assets 33,406 269,596
Other assets 375,434 353,395
------------- -------------
Total non-current assets 52,222,679 29,518,630
Total assets $ 147,416,212 $ 134,492,800
============= =============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 12,903,962 $ 9,278,138
Funds payable to customers 19,333,050 16,418,177
Social security payable 4,241,352 3,778,236
Taxes payable 4,025,173 2,493,749
Loans payable 2,667,192 9,713,227
Provisions 93,623 69,979
------------- -------------
Total current liabilities 43,264,352 41,751,506
Non-current liabilities:
Loans payable 5,959 --
Deferred tax liabilities 1,967,766 --
Other liabilities 1,204,958 1,068,155
------------- -------------
Total non-current liabilities 3,178,683 1,068,155
Total liabilities 46,443,035 42,819,661
------------- -------------
Commitments and contingencies
Shareholders' equity:
Common stock, $0,001 par value,
110,000,000 shares authorized,
44,292,273 and 44,226,563 shares
issued and outstanding at
June 30, 2008 and December 31,
2007, respectively 44,292 44,227
Additional paid-in capital 122,001,703 121,890,138
Accumulated deficit (29,349,145) (34,363,917)
Accumulated other comprehensive
income 8,276,327 4,102,691
------------- -------------
Total shareholders' equity 100,973,177 91,673,139
------------- -------------
Total liabilities and
shareholders' equity $ 147,416,212 $ 134,492,800
============= =============
Six Months Ended June 30 Three Months Ended June 30
-------------------------- --------------------------
2008 2007 2008 2007
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
Net revenues $ 63,312,238 $ 35,432,625 $ 34,471,508 $ 18,973,288
Cost of net
revenues (12,921,182) (7,487,262) (6,901,503) (3,999,922)
------------ ------------ ------------ ------------
Gross profit 50,391,056 27,945,363 27,570,005 14,973,366
Operating
expenses:
Product and
technology
development (3,473,893) (2,002,716) (1,730,780) (1,029,096)
Sales and
marketing (19,480,049) (12,646,525) (10,265,389) (6,330,128)
General and
administra-
tive (10,827,171) (5,486,314) (5,879,569) (2,811,198)
Compensation
Cost related
to acquisi-
tions (1,919,870) -- (1,546,397) --
------------ ------------ ------------ ------------
Total operating
expenses (35,700,983) (20,135,555) (19,422,135) (10,170,422)
------------ ------------ ------------ ------------
Income from
operations 14,690,073 7,809,808 8,147,870 4,802,944
------------ ------------ ------------ ------------
Other income
(expenses):
Interest
income 1,019,929 519,239 270,576 421,522
Interest ex-
pense and
other
financial
charges (2,321,147) (987,644) (958,348) (451,783)
Foreign
currency
loss (3,041,354) (1,004,172) (2,052,638) (599,398)
Other ex-
penses, net 2,285 (2,046,058) 2,285 (1,761,421)
------------ ------------ ------------ ------------
Net income
before income
/ asset tax
expense 10,349,786 4,291,173 5,409,745 2,411,864
------------ ------------ ------------ ------------
Income / asset
tax expense (5,335,014) (2,706,100) (2,462,650) (1,820,978)
------------ ------------ ------------ ------------
Net income $ 5,014,772 $ 1,585,073 $ 2,947,095 $ 590,886
============ ============ ============ ============
Accretion of
preferred
stock -- (247,439) -- (123,720)
------------ ------------ ------------ ------------
Net income
available to
common share-
holders $ 5,014,772 $ 1,337,634 $ 2,947,095 $ 467,166
============ ============ ============ ============
Basic EPS
Basic net
income per
share $ 0.11 $ 0.03 $ 0.07 $ 0.01
============ ============ ============ ============
Weighted
average
shares 44,238,146 13,475,873 44,238,166 13,575,158
============ ============ ============ ============
Diluted EPS
Diluted net
income per
common
share $ 0.11 $ 0.03 $ 0.07 $ 0.01
============ ============ ============ ============
Weighted
average
shares 44,367,846 13,986,707 44,369,317 13,987,128
============ ============ ============ ============
Six Months Ended June 30
--------------------------
2008 2007
------------ ------------
(Unaudited)
Cash flows from operations:
Net income $ 5,014,772 $ 1,585,073
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 1,520,702 1,101,050
Interest expense -- 316,750
Realized gains on investments (813,757) (306,854)
Unrealized gains on investments (56,649) (83,118)
Stock-based compensation expense
- stock options 2,447 13,548
Stock-based compensation expense
- restricted shares 46,329 --
Change in fair value of warrants -- 2,087,960
Deferred income taxes 193,619 705,619
Changes in assets and liabilities,
excluding the effect of CMG
acquisition:
Accounts receivable 324,660 97,797
Funds receivable from customers (3,463,772) 87,624
Prepaid expenses (546,196) (875,371)
Other assets 295,528 (255,788)
Accounts payable and accrued expenses 3,241,464 784,903
Funds payable to customers 1,175,341 95,341
Provisions (390,673) (305,552)
Other liabilities 23,779 481,273
------------ ------------
Net cash provided by operating
activities 6,567,594 5,530,255
------------ ------------
Cash flows from investing activities:
Purchase of investments (39,085,208) (7,378,220)
Proceeds from sale and maturity of
investments 60,732,449 5,622,548
Payment for purchase of CMG, net of
cash acquired (16,824,065) --
Purchase of intangible assets (59,098) (20,179)
Purchases of property and equipment (2,675,365) (1,942,189)
------------ ------------
Net cash provided by (used in)
investing activities 2,088,713 (3,718,040)
------------ ------------
Cash flows from financing activities:
Increase in short term debt -- 1,370
Decrease in short term debt (7,630,307) --
Loans received 5,958 --
Stock options exercised 62,854 22,888
------------ ------------
Net cash provided by (used in)
financing activities (7,561,495) 24,258
------------ ------------
Effect of exchange rate changes
on cash and cash equivalents 902,037 115,430
------------ ------------
Net decrease in cash and
cash equivalents 1,996,849 1,951,903
Cash and cash equivalents,
beginning of the period 15,677,407 7,143,027
------------ ------------
Cash and cash equivalents,
end of the period $ 17,674,256 $ 9,094,930
------------ ------------
Six Months Ended June 30,
-------------------------
2008 2007
----------- ----------
(Unaudited)
Supplemental cash flow information:
Cash paid for interest $ 187,774 $ 160,105
Cash paid for income taxes $ 4,145,532 $1,864,120
Non-cash financing activities:
Accretion of preferred stock $ -- $ 247,439
Acquisition of Classified Media Group:
Cash and cash equivalents $ 554,739 $ --
Accounts receivable 56,613 --
Other current assets 904,791 --
Non current assets 365,190 --
----------- ----------
Total assets acquired 1,881,333 --
----------- ----------
Accounts payable and accrued expenses 69,516 --
Taxes payable 459,462 --
Social security payable 243,141 --
Non current liabilities 14,000 --
Provisions 408,336 --
----------- ----------
Total liabilities assumed 1,194,455 --
----------- ----------
Net assets acquired 686,878 --
----------- ----------
Goodwill 13,037,504 --
Trademarks 5,622,188 --
Deferred Income Tax on Trademarks (1,967,766) --
----------- ----------
Total purchase price 17,378,804 --
----------- ----------
Cash and cash equivalents acquired (554,739) --
----------- ----------
Payment for purchase of Classified Media,
net of cash acquired $16,824,065 $ --
----------- ----------
Three Months Ended June 30, 2008
------------------------------------------------------
Marketplaces
--------------------------------------------
Brazil Argentina Mexico
------------ ------------ ------------
Net revenues $ 13,649,406 $ 4,252,040 $ 3,108,820
Direct costs (8,397,321) (2,020,438) (2,158,256)
------------ ------------ ------------
Direct
contribution 5,252,085 2,231,602 950,564
-------------------------
Marketplaces
-------------------------
Other
Countries Total Payments Consolidated
----------- ----------- ----------- ------------
Net revenues $ 7,300,156 $28,310,422 $ 6,161,086 $ 34,471,508
Direct costs (3,622,649) (16,198,664) (4,110,109) (20,308,773)
----------- ----------- ----------- ------------
Direct
contribution 3,677,507 12,111,758 2,050,977 14,162,735
Operating
expenses and
indirect costs
of net revenues (6,014,865)
------------
Income from operations 8,147,870
------------
Other income (expenses):
Interest income 270,576
Interest expense and
other financial
results (958,348)
Foreign exchange (2,052,638)
Other expenses, net 2,285
------------
Net income before
income / asset tax
expense $ 5,409,745
===========
Three Months Ended June 30, 2007
------------------------------------------------------
Marketplaces
--------------------------------------------
Brazil Argentina Mexico
------------ ------------ ------------
Net revenues $ 8,872,163 $ 2,534,266 $ 2,255,789
Direct costs (5,755,064) (1,273,008) (1,430,436)
------------ ------------ ------------
Direct
contribution 3,117,099 1,261,258 825,353
-------------------------
Marketplaces
-------------------------
Other
Countries Total Payments Consolidated
----------- ----------- ----------- ------------
Net revenues $ 2,424,392 $16,086,610 $ 2,886,678 $ 18,973,288
Direct costs (1,534,890) (9,993,398) (2,188,887) (12,182,285)
----------- ----------- ----------- ------------
Direct
contribution 889,502 6,093,212 697,791 6,791,003
Operating
expenses and
indirect costs
of net revenues (1,988,059)
Income from
operations 4,802,944
------------
Other income (expenses):
Interest income 421,522
Interest expense and
other financial
results (451,783)
Foreign exchange (599,398)
Other expenses, net (1,761,421)
------------
Net income before
income / asset tax
expense $ 2,411,864
============
Six Months Ended June 30, 2008
------------------------------------------------------
Marketplaces
--------------------------------------------
Brazil Argentina Mexico
------------ ------------ ------------
Net revenues $ 25,524,974 $ 7,778,392 $ 6,048,665
Direct costs (15,923,765) (3,872,243) (4,207,424)
------------ ------------ ------------
Direct
contribution 9,601,209 3,906,149 1,841,241
-------------------------
Marketplaces
-------------------------
Other
Countries Total Payments Consolidated
----------- ----------- ----------- ------------
Net revenues $12,439,049 $51,791,080 $11,521,158 $ 63,312,238
Direct costs (6,754,998) (30,758,430) (7,793,776) (38,552,206)
----------- ----------- ----------- ------------
Direct
contribution 5,684,051 21,032,650 3,727,382 24,760,032
Operating
expenses and
indirect costs
of net revenues (10,069,959)
------------
Income from
operations 14,690,073
------------
Other income (expenses):
Interest income 1,019,929
Interest expense and
other financial results (2,321,147)
Foreign exchange (3,041,354)
Other expenses, net 2,285
------------
Net income before
income / asset tax
expense $ 10,349,786
============
Six Months Ended June 30, 2007
------------------------------------------------------
Marketplaces
--------------------------------------------
Brazil Argentina Mexico
------------ ------------ ------------
Net revenues $ 16,571,084 $ 4,742,270 $ 4,437,625
Direct costs (10,673,597) (2,499,094) (2,798,490)
------------ ------------ ------------
Direct
contribution 5,897,487 2,243,176 1,639,135
-------------------------
Marketplaces
-------------------------
Other
Countries Total Payments Consolidated
----------- ----------- ----------- ------------
Net revenues $ 4,530,462 $30,281,441 $ 5,151,184 $ 35,432,625
Direct costs (2,902,283) (18,873,464) (4,305,089) (23,178,553)
----------- ----------- ----------- ------------
Direct
contribution 846,095 12,254,072 1,628,179 11,407,977
Operating
expenses and
indirect costs
of net revenues (4,444,264)
------------
Income from
operations 7,809,808
------------
Other income (expenses):
Interest income 519,239
Interest expense and
other financial results (987,644)
Foreign exchange (1,004,172)
Other expenses, net (2,046,058)
------------
Net income before
income / asset tax
expense $ 4,291,173
============
Non-GAAP Measures of Financial Performance
This press release includes certain non GAAP financial measures as defined under Securities and Exchange Commission (SEC) Rules to supplement the company's consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP.
These measures are not in accordance with, or an alternative for, measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with MercadoLibre's results of operations in conjunction with the corresponding GAAP measures.
Reconciliation to the nearest GAAP measure of all non-GAAP measures included in this press release can be found in the tables included in this press release.
These non-GAAP measures are provided to enhance investors overall understanding of the company's current financial performance. Specifically, the company believes the non-GAAP measures provide useful information to both management and investors by excluding certain compensation expenses that may not be indicative of its core operating results, thereby enhancing an investor's ability to make period over period comparisons of the company's results. The company believes the inclusion of non-GAAP measures provides consistency in the company's financial reporting and uses these measures in internal budgets and models and in determining executive compensation benchmarks. In this press release MercadoLibre includes each of net income, earnings per basic and diluted share, operating margin, blended and effective tax rate and net cash provided by operating activities and provided by (used in) investing activities after excluding (or adding back) the following charge required by GAAP:
Compensation Costs Related to Acquisitions: This amount relates to the purchase price of the shares of CMG and its subsidiaries. Under EITF 95-8 "Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination", we have recognized a contingent consideration paid to former shareholders as compensation for services. Total compensation paid in cash amounts to $ 1,546,397 and $1,919,870, for the three and six month period ended June 30, 2008 respectively. The following tables show a reconciliation of this exclusion back to the GAAP measures.
Reconciliation to Income from Operations and Operating Margin
Three months ended June 30
--------------------------
2008 2007
----------- -----------
Income from operations $ 8,147,870 $ 4,802,944
Compensation costs related to
acquisitions 1,546,397 --
----------- -----------
Income from operations before
compensation cost $ 9,694,267 $ 4,802,944
----------- -----------
Income from operations margin before
compensation cost 28.1% 25.3%
----------- -----------
Reconciliation of Net Income to Net Income before compensation cost
Net income $ 2,947,095 $ 590,886
Compensation costs related to acquisitions 1,546,397 --
----------- -----------
Net income before compensation cost $ 4,493,492 $ 590,886
----------- -----------
Basic net income per common share: $ 0.07 $ 0.01
----------- -----------
Basic net income per common share before
compensation cost: $ 0.10
----------- -----------
Shares used in basic net income per
share calculation: 44,238,166 13,575,158
----------- -----------
Diluted net income per common share $ 0.07 $ 0.01
----------- -----------
Diluted net income per common share
before compensation cost: $ 0.10
----------- -----------
Shares used in diluted net income per
share calculation: 44,369,317 13,987,128
----------- -----------
Reconciliation of Blended and Effective tax Rate including and excluding
compensation cost
Three months ended
June 30
-----------------------
2008 2007
---------- ----------
Income and asset tax expense $2,462,650 $1,820,978
---------- ----------
Income before income taxes $5,409,745 $2,411,864
Compensation costs related to acquisitions 1,546,397 --
---------- ----------
Income before income taxes and compensation
cost $6,956,142 $2,411,864
---------- ----------
Blended tax rate(1) 45.5% 75.5%
---------- ----------
Blended tax rate excluding compensation
cost(1) 35.4% 75.5%
---------- ----------
Efective tax rate(2)(3) 34.8% 45.8%
---------- ----------
Efective tax rate excluding compensation
cost(2)(3) 27.1% --
---------- ----------
1 - Blended tax rate defined as income and asset tax expense as a
percentage of income before income and asset tax
2 - Effective income tax rate defined as the provision for income
taxes as a percentage of Income before Income tax
3 - The efective tax rate does not include the effect of the
Mexican Tax call Impuesto Empresarial a Tasa Unica (IETU)
Reconciliation of Net cash provided by operating activities and provided
by (used in) investing activities after excluding effect of compensation
cost
------------------------
Six month ended
June 30
------------------------
2008 2007
----------- -----------
Net cash provided by operating activities $ 6,567,594 $ 5,530,255
Compensation costs related to acquisitions 1,919,870 --
----------- -----------
Net cash provided by operating activities
before compensation cost $ 8,487,464 $ 5,530,255
----------- -----------
Net cash provided by (used in) investing
activities $ 2,088,713 $(3,718,040)
Payment for purchase of CMG, net of cash
acquired (1,919,870) --
----------- -----------
Net cash provided by (used in) investing
activities $ 168,843 $(3,718,040)
----------- -----------
MELI_F
CONTACT: MercadoLibre
Investor Relations contact:
Pedro Arnt
+54 (11) 5352 8000
investor@mercadolibre.com
Media Relations contact:
Lorena Diaz Quijano
+54 (11) 5352 8026
lorena.diazquijano@mercadolibre.com
