Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 07, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | MELI | |
Entity Registrant Name | MERCADOLIBRE INC | |
Entity Central Index Key | 1,099,590 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 44,157,364 |
Interim Condensed Consolidated
Interim Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 489,157 | $ 388,260 |
Restricted cash and cash equivalents | 34,854 | |
Short-term investments | 69,432 | 209,432 |
Accounts receivable, net | 27,470 | 28,168 |
Credit cards receivables, net | 307,614 | 521,130 |
Loans receivable, net | 112,066 | 73,409 |
Prepaid expenses | 14,410 | 5,864 |
Inventory | 7,938 | 2,549 |
Other assets | 62,213 | 58,107 |
Total current assets | 1,125,154 | 1,286,919 |
Non-current assets: | ||
Long-term investments | 11,394 | 34,720 |
Property and equipment, net | 113,170 | 114,837 |
Goodwill | 83,637 | 92,279 |
Intangible assets, net | 19,256 | 23,174 |
Deferred tax assets | 106,330 | 57,324 |
Other assets | 60,500 | 63,934 |
Total non-current assets | 394,287 | 386,268 |
Total assets | 1,519,441 | 1,673,187 |
Current liabilities: | ||
Accounts payable and accrued expenses | 226,101 | 221,095 |
Funds payable to customers | 498,623 | 583,107 |
Salaries and social security payable | 50,043 | 65,053 |
Taxes payable | 28,300 | 32,150 |
Loans payable and other financial liabilities | 146,655 | 56,325 |
Other liabilities | 25,342 | 3,678 |
Dividends payable | 6,624 | |
Total current liabilities | 975,064 | 968,032 |
Non-current liabilities: | ||
Salaries and social security payable | 19,123 | 25,002 |
Loans payable and other financial liabilities | 333,364 | 312,089 |
Deferred tax liabilities | 23,166 | 23,819 |
Other liabilities | 13,987 | 18,466 |
Total non-current liabilities | 389,640 | 379,376 |
Total liabilities | 1,364,704 | 1,347,408 |
Equity: | ||
Common stock, $0.001 par value, 110,000,000 shares authorized, 44,157,364 shares issued and outstanding at June 30, 2018 and December 31, 2017 | 44 | 44 |
Additional paid-in capital | 24,969 | 70,661 |
Retained earnings | 515,846 | 537,925 |
Accumulated other comprehensive loss | (386,122) | (282,851) |
Total Equity | 154,737 | 325,779 |
Total Liabilities and Equity | $ 1,519,441 | $ 1,673,187 |
Interim Condensed Consolidated3
Interim Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Interim Condensed Consolidated Balance Sheets [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 110,000,000 | 110,000,000 |
Common stock, shares issued | 44,157,364 | 44,157,364 |
Common stock, shares outstanding | 44,157,364 | 44,157,364 |
Interim Condensed Consolidated4
Interim Condensed Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Interim Condensed Consolidated Statements of Income [Abstract] | ||||
Net revenues | $ 335,377 | $ 283,882 | $ 656,353 | $ 553,558 |
Cost of net revenues | (175,628) | (112,328) | (333,847) | (213,148) |
Gross profit | 159,749 | 171,554 | 322,506 | 340,410 |
Operating expenses: | ||||
Product and technology development | (33,437) | (30,338) | (71,833) | (60,639) |
Sales and marketing | (121,216) | (76,856) | (231,939) | (123,786) |
General and administrative | (33,337) | (31,498) | (76,395) | (59,808) |
Impairment of Long-Lived Assets | (2,837) | (2,837) | ||
Total operating expenses | (187,990) | (141,529) | (380,167) | (247,070) |
(Loss) income from operations | (28,241) | 30,025 | (57,661) | 93,340 |
Other income (expenses): | ||||
Interest income and other financial gains | 9,915 | 10,663 | 19,110 | 22,820 |
Interest expense and other financial losses | (13,202) | (6,506) | (23,936) | (12,977) |
Foreign currency gains (losses) | 12,577 | (21,760) | 18,178 | (21,097) |
Net (loss) income before income tax gain (expense) | (18,951) | 12,422 | (44,309) | 82,086 |
Income tax gain (expense) | 7,700 | (7,106) | 20,138 | (28,252) |
Net (loss) income | $ (11,251) | $ 5,316 | $ (24,171) | $ 53,834 |
Basic EPS: Basic net (loss) income | ||||
Available to shareholders per common share | $ (0.25) | $ 0.12 | $ (0.55) | $ 1.22 |
Weighted average of outstanding common shares | 44,157,364 | 44,157,364 | 44,157,364 | 44,157,364 |
Diluted EPS: Diluted net (loss) income | ||||
Available to shareholders per common share | $ (0.25) | $ 0.12 | $ (0.55) | $ 1.22 |
Weighted average of outstanding common shares | 44,157,364 | 44,157,364 | 44,157,364 | 44,157,364 |
Cash Dividends declared (per share) | $ 0.150 | $ 0.150 |
Interim Condensed Consolidated5
Interim Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Interim Condensed Consolidated Statements of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (11,251) | $ 5,316 | $ (24,171) | $ 53,834 |
Other comprehensive (loss) income, net of income tax: | ||||
Currency translation adjustment | (86,956) | (22,430) | (102,530) | (12,765) |
Unrealized gains on hedging activities | 912 | 912 | ||
Unrealized net gains on available for sale investments | 88 | 509 | 65 | 1,753 |
Less: Reclassification adjustment for gains (losses) from accumulated other comprehensive income | 922 | 1,718 | (587) | |
Net change in accumulated other comprehensive (loss) income, net of income tax | (86,878) | (21,921) | (103,271) | (10,425) |
Total Comprehensive (loss) income | $ (98,129) | $ (16,605) | $ (127,442) | $ 43,409 |
Interim Condensed Consolidated6
Interim Condensed Consolidated Statements of Cash Flow - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operations: | ||
Net (loss) income | $ (24,171) | $ 53,834 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Unrealized Devaluation Loss, net | 6,976 | 25,502 |
Impairment of Long-Lived Assets | 2,837 | |
Depreciation and amortization | 22,566 | 19,083 |
Accrued interest | (7,845) | (10,930) |
Non cash interest and convertible notes amortization of debt discount and amortization of debt issuance costs | 9,684 | 4,798 |
LTRP accrued compensation | 16,792 | 22,068 |
Deferred income taxes | (54,818) | (10,451) |
Changes in assets and liabilities: | ||
Accounts receivable | (21,807) | (5,165) |
Credit card receivables | 97,097 | 34,161 |
Prepaid expenses | (10,143) | 5,462 |
Inventory | (6,299) | 102 |
Other assets | (24,441) | (22,074) |
Accounts payable and accrued expenses | 42,771 | 33,633 |
Funds payable to customers | 32,513 | 63,164 |
Other liabilities | 20,213 | (498) |
Interest received from investments | 8,066 | 10,788 |
Net cash provided by operating activities | 107,154 | 226,314 |
Cash flows from investing activities: | ||
Purchase of investments | (1,248,452) | (2,186,528) |
Proceeds from sale and maturity of investments | 1,390,713 | 2,200,172 |
Purchases of intangible assets | (242) | (74) |
Advance for property and equipment | (4,426) | (8,351) |
Changes in principal of loans receivable, net | (66,629) | (20,143) |
Purchases of property and equipment | (42,092) | (26,147) |
Net cash provided by (used in) investing activities | 28,872 | (41,071) |
Cash flows from financing activities: | ||
Proceeds from loans payable and other financial liabilities | 146,666 | 7,800 |
Payments on loans payable and other financing liabilities | (14,893) | (2,969) |
Dividends paid | (6,624) | (13,247) |
Purchase of convertible note capped call | (45,692) | |
Net cash provided by (used in) financing activities | 79,457 | (8,416) |
Effect of exchange rate changes on cash, cash equivalents, restricted cash and cash equivalents | (79,732) | (28,176) |
Net increase in cash, cash equivalents, restricted cash and cash equivalents | 135,751 | 148,651 |
Cash, cash equivalents, restricted cash and cash equivalents, beginning of the period | 388,260 | 234,140 |
Cash, cash equivalents, restricted cash and cash equivalents, end of the period | $ 524,011 | $ 382,791 |
Nature of Business
Nature of Business | 6 Months Ended |
Jun. 30, 2018 | |
Nature of Business [Abstract] | |
Nature of Business | 1. Nature of Business MercadoLibre, Inc. (“MercadoLibre” or the “Company”) was incorporated in the state of Delaware, in the United States of America in October 1999. MercadoLibre is one of the largest online commerce ecosystem in Latin America , serving as an integrated regional platform and as an enabler of the necessary online and technology tools to allow businesses and individuals to trade products and services in the region. The Company enables commerce through its marketplace platform (including online classifieds for motor vehicles, vessels, aircraft, services and real estate), which allows users to buy and sell in most of Latin America. Through MercadoPago, MercadoLibre enables individuals and businesses to send and receive online payments; through MercadoEnvios, MercadoLibre facilitates the shipping of goods from sellers to buyers; through our advertising products, MercadoLibre facilitates advertising services for large retailers and brands to promote their product and services on the web; through MercadoShops, MercadoLibre allows users to set-up, manage and promote their own online webstores under a subscription-based business model; and through MercadoCredito, MercadoLibre extends loans to certain merchants and consumers. In addition, MercadoLibre develops and sells software enterprise solutions to e-commerce business clients in Brazil. As of June 30, 2018, MercadoLibre, through its wholly-owned subsidiaries, operated online ecommerce platforms in Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Peru, Mexico, Panama, Honduras, Nicaragua, Salvador, Uruguay, Bolivia, Guatemala, Paraguay and Venezuela. Additionally, MercadoLibre operates an online payments solution in Argentina, Brazil, Mexico, Venezuela, Colombia, Chile, Peru and Uruguay. It also offers a shipping solution available in Argentina, Brazil, Mexico, Colombia, Chile and Uruguay. The Company operates a real estate classified platform that covers some areas of State of Florida, in the United States of America. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. 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”). These 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, cost of net revenues and operating expenses, are generated in the Company’s foreign operations. Operating (loss) income of foreign operations amounted to 99.5% and 97.6% of the consolidated amounts during the six-month periods ended June 30, 2018 and 2017, respectively. Long-lived assets, intangible assets and goodwill located in the foreign jurisdictions totaled $211,369 thousands and $ 223,134 thousands as of June 30, 2018 and December 31, 2017, respectively. These interim condensed consolidated financial statements reflect the Company’s consolidated financial position as of June 30, 2018 and December 31, 2017. These financial statements include the Company’s consolidated statements of income and comprehensive income for the six and three-month periods ended June 30, 2018 and 2017 and statement of cash flows for the six-month periods ended June 30, 2018 and 2017. These 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 financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2017, contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”). The condensed consolidated statements of income, of comprehensive income and of 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 Form 10-K for the year ended December 31, 2017. During the six-month period ended June 30, 2018, there were no material updates made to the Company’s significant accounting policies, except for the adoption of ASC 606 and ASU 2016-16- Income taxes (Topic 740) as of January 1, 2018 and early adoption of ASU 2017-12 Derivatives and Hedging (Topic 815) as of April 1, 2018. S ee Note 2 of these interim condensed consolidated financial statements for more details. Revenue recognition Revenues are recognized when control of the promised services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Contracts with customers may include promises to transfer multiple services including discounts on current or future services. Determining whether services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Revenues are recognized when each performance obligation is satisfied by transferring the promised service to the customer according to the following criteria described for each type of service: · Revenues from the Enhanced Marketplace service, include the final value fees and shipping fees charged to the Company’s customers. Because the Company acts as an agent, revenues derived from the shipping services are presented net of the respective transportation costs charged by third-party carriers and paid by the Company. As part of the Company’s business strategy, shipping costs may be fully or partially subsidized at the Company’s option. · Revenues from the Non-Marketplace services are generated from payments fees, classifieds fees, ad sales up-front fees; and fees from other ancillary businesses. Revenue recognition criteria for the services mentioned above are described in note 2 to the consolidated financial statements in the Company’s Form 10-K for the year ended December 31, 2017. 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. The allowance for doubtful accounts, loan receivables and chargebacks is estimated based upon our assessment of various factors including historical experience, the age of the accounts receivable balances, current economic conditions and other factors that may affect our customers’ ability to pay. The allowance for doubtful accounts, loan receivables and chargebacks was $29,807 thousands and $19,734 thousands as of June 30, 2018 and December 31, 2017, respectively. Deferred revenue consists of fees received related to unsatisfied performance obligations at the end of the period in accordance with ASC 606 (as defined below). Due to the generally short-term duration of contracts, the majority of the performance obligations are satisfied in the following reporting period. Deferred revenue as of December 31, 2017 and 2016 was $6,116 thousands and $1,955 thousands, respectively, of which $5,395 thousands and $2,043 thousands were recognized as revenue during the six-months periods ended June 30, 2018 and 2017, respectively. As of June 30, 2018, total deferred revenue was $5,931 thousands, mainly due to fees related to listing and optional feature services billed and loyalty programs that are expected to be recognized as revenue in the coming months. Variable Interest Entities (VIE) A VIE is an entity that (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support, (ii) has equity investors who lack the characteristics of a controlling financial interest or (iii) in which the voting rights of some equity investors are disproportionate to their obligation to absorb losses or their right to receive returns, and substantially all of the entity’s activities are conducted on behalf of the equity investors with disproportionately few voting rights. The Company consolidates VIEs of which it is the primary beneficiary. The Company is considered to be the primary beneficiary of a VIE when it has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. Please see Note 12 to these unaudited interim consolidated financial statements for additional detail on the VIEs used for securitization purposes. Foreign currency translation All of the Company’s consolidated foreign operations have determined the local currency to be their functional currency. Accordingly, these foreign subsidiaries 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 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 (loss) income. See also “Highly inflationary status in Argentina” below for a description of the current inflationary status of Argentina and the expected future impacts of foreign currency translation on the Company’s operations in Argentina. Derivative Financial Instruments The Company’s operations are in various foreign currencies and consequently are exposed to foreign currency risk. The Company uses derivative instruments to reduce the volatility of earnings and cash flows. All outstanding derivatives are recognized in the Company ’s consolidated balance sheet at fair value. The effective portion of a designated derivative’s gain or loss is initially reported as a component of accumulated other comprehensive income (loss) and is subsequently reclassified into the financial statement line item in which the variability of the hedged item is recorded in the period the hedging transaction affects earnings. The Company also hedges its economic exposure to foreign currency risk related to foreign currency denominated monetary assets and liabilities with foreign derivative currency contracts. The gains and losses on the foreign exchange derivative contracts economically offset gains and losses on certain foreign currency denominated monetary assets and liabilities recognized in earnings. Accordingly, these outstanding non-designated derivatives are recognized in the Company ’s consolidated balance sheet at fair value, and changes in fair value from these contracts are recorded in other income (expense), net in the consolidated statement of income. Highly inflationary status in Argentina During May 2018, the International Practices Task Force (“IPTF”) discussed the highly inflationary status of the Argentine economy. Historically, the IPTF has used the Consumer Price Index (“CPI”) when considering the inflationary status of the Argentine economy. Given that the CPI was considered flawed by the current Argentine Government until December 2015 and the new CPI was published as from June 2016, the IPTF considered alternative indices to determine the three-year cumulative inflation. A highly inflationary economy is one that has cumulative inflation of approximately 100% or more over a three-year period. The alternative three-year cumulative indices at June 30, 2018 exceeded 100%. According to U.S. GAAP, the company should apply highly inflationary accounting no later than July 1, 2018. Therefore, the Company will transition the Argentinian operations to highly inflationary status as of July 1, 2018 and, going forward, will change the functional currency for Argentina from Argentine Pesos to U.S. dollars, which is the functional currency of its immediate parent company. Argentina is the second principal market of the business (see note 5 – Segment reporting). Recently, the economic environment in this country has been volatile with weak economic conditions, devaluation of local currency, high interest rates, high level of inflation and a large public deficit which generated a financial assistance request from Argentina to the International Monetary Fund . The Argentine subsidiaries have monetary assets denominated in Argentine Pesos amounting to $286,664 thousands, and monetary liabilities denominated in Argentine Pesos amounting to $259,028 thousands, as of June 30, 2018, which will expose the Company to foreign exchange losses or gains resulting from exchange rate changes from July 1, 2018 forward. The Company does not anticipate that the change in functional currency will have any significant impact on revenues and expenses, as they were already translated to U.S. dollars for consolidation purposes at exchange rates prevailing at the date of the transaction or at the average monthly rates. Furthermore, although translation of property and equipment and intangible assets with definite useful life at the exchange rate as of July 1, 2018 or the respective date of the subsequent acquisition is likely to maintain the level of the future depreciation charge expressed in U.S. dollars, the Company does not anticipate that effect to be significant. Moreover, the Company has not identified any triggering event or impairment indicator that should be considered to assess the recoverability of the net book value of the fixed assets and goodwill and intangible assets assigned to the Argentine reporting unit as of June 30, 2018. As part of its assessment, the Company considered the expected business and macroeconomic trends, the impact of the change in functional currency as previously mentioned and the net book value of fixed assets and goodwill and intangible assets allocated to the Argentine reporting unit as of June 30, 2018. Venezuelan deconsolidation Effective December 1, 2017, the Company determined that deteriorating conditions in Venezuela had led the Company to no longer meet the accounting criteria for control over its Venezuelan subsidiaries. Venezuela’s recent selective default determination, restrictive exchange controls and suspension of foreign exchange market in Venezuela, the lack of access to U.S. dollars through official currency exchange mechanisms together with the worsening in Venezuela macroeconomic environment resulted in other-than-temporary lack of exchangeability between the Venezuela bolivar and the U.S. dollar, and restricted the Company’s ability to pay dividends and its ability to satisfy other obligations denominated in U.S. dollars. Therefore, in accordance with the applicable accounting standards, as of December 1, 2017, the Company deconsolidated the financial statements of its subsidiaries in Venezuela and began reporting the results under the cost method of accounting . Beginning December 1, 2017, the Company no longer includes the results of the Venezuelan subsidiaries in its consolidated financial statements. Income tax The Company is subject to U.S. and foreign income taxes. The Company accounts for income taxes following the liability method of accounting which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets are also recognized for tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets or liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. 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. The Company’s income tax expense consists of taxes currently payable, if any, plus the change during the period in the Company’s deferred tax assets and liabilities. On August 17, 2011, the Argentine government issued a new software development law and on September 9, 2013 a regulatory decree was issued that established new requirements to benefit from the new software development law. The decree establishes requirements to comply with annual incremental ratios related to exports of services and research and development expenses that must be achieved to remain within the tax holiday. The Company’s Argentine subsidiary has to achieve certain required ratios annually under the software development law in order to be eligible for the benefits mentioned below. On September 17, 2015, the Argentine Industry Secretary issued Resolution 1041/2015 approving the Company’s application for eligibility under the new software development law for the Company’s Argentine subsidiary, Mercadolibre S.R.L. As a result, the Company’s Argentine subsidiary has been granted a tax holiday retroactive from September 18, 2014. A portion of the benefits obtained is a 60% relief of total income tax related to software development activities and a 70% relief of payroll taxes related to software development activities. The benefits to the Company under the software development law will expire on December 31, 2019. As a result of the Company’s eligibility under the new law, it recorded an income tax benefit of $10,562 thousands and $3,263 thousands during the six and three-month periods ended June 30, 2018, respectively. Aggregate per share effect of the Argentine tax holiday amounted to $0.24 and $0.07 for the six and three-month periods ended June 30, 2018, respectively. Furthermore, the Company recorded a labor cost benefit of $3,735 thousands and $1,719 thousands during the six and three-month periods ended June 30, 2018, respectively. Additionally, $1,001 thousands and $349 thousands were accrued to pay software development law audit fees during the six and three-month periods ended June 30, 2018, respectively. During the six and three-month periods ended June 30, 2017 the Company recorded an income tax benefit of $11,305 thousands and $6,208 thousands, respectively. Aggregate per share effect of the Argentine tax holiday amounted to $0.26 and $0.14 for the six and three-month periods ended June 30, 2017, respectively. Furthermore, the Company recorded a labor cost benefit of $3,496 thousands and $1,505 thousands during the six and three-month periods ended June 30, 2017, respectively. Additionally, $1,036 thousands and $540 thousands were accrued to pay software development law audit fees during the six and three-month periods ended June 30, 2017, respectively. Tax reform Argentina On December 27, 2017, the Argentine Senate approved a comprehensive income tax reform effective since January 1, 2018. The Argentine tax reform, among other things, reduced the prior 35 percent income tax rate applicable to the Argentine entities to 30 percent for 2018 and 2019 and to 25 percent for 2020 and thereafter. The new regulation imposes a withholding income tax on dividends paid by Argentine entities of 7 percent for 2018 and 2019, increasing to 13 percent from 2020 forward. The new regulation also repeals the “equalization tax” (i.e., the prior 35 percent withholding tax applicable to dividends distributed in excess of the accumulated taxable income) for income accrued from January 1, 2018 forward. USA On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made broad and complex changes to the U.S. tax code, including, but not limited to, (1) requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries that is payable over eight years and (2) bonus depreciation that will allow for full expensing of qualified property. The Tax Act also established new tax laws that came into effect on January 1, 2018, including, but not limited to: (a) the elimination of the corporate alternative minimum tax (AMT); (b) the creation of the base erosion anti-abuse tax (BEAT), a new minimum tax; (c) a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries; (d) a new provision designed to tax global intangible low-taxed income (GILTI), which allows for the possibility of using foreign tax credits (FTCs) and a deduction of up to 50 percent to offset income tax liability (subject to some limitations); (e) a new limitation on deductible interest expense; (f) the repeal of the domestic production activity deduction; (g) limitations on the deductibility of certain executive compensation; (h) limitations on the use of FTCs to reduce the U.S. income tax liability; and (i) limitations on net operating losses (NOLs) generated after December 31, 2017, to 80 percent of taxable income. The Deemed Repatriation Transition Tax (Transition Tax) is a tax on previously untaxed accumulated and current earnings and profits (E&P) of certain of our foreign subsidiaries. To determine the amount of the Transition Tax, the Company must determine, in addition to other factors, the amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. The company was able to make a reasonable estimate of the Transition Tax and determine that no tax duty related to the Transition Tax is expected to be due because the estimated tax is expected to be offset with available foreign tax credits as of December 31, 2017. Accordingly, no adjustments have been made to income tax expense in 2017. The Transition Tax calculation will not be finalized until the MercadoLibre Inc. Federal Income Tax return is filed. The Company assessed whether its valuation allowance analysis is affected by various aspects of the Tax Act (including the deemed repatriation of deferred foreign income, GILTI inclusions and new categories of FTCs). As a consequence of such analysis, the Company recorded an increase in valuation allowance of $12,097 thousands to fully reserve the outstanding foreign tax credits as of December 31, 2017. The Tax Act created a new requirement that certain income (i.e., GILTI) earned by controlled foreign corporations (CFCs) must be included in the gross income of the CFCs’ U.S. shareholder. GILTI is the excess of the shareholder’s “net CFC tested income” over the net deemed tangible income return, which is currently defined as the excess of (1) 10 percent of the aggregate of the U.S. shareholder’s pro rata share of the qualified business asset investment of each CFC with respect to which it is a U.S. shareholder over (2) the amount of certain interest expenses taken into account in the determination of net CFC-tested income. Under U.S. GAAP, the Company was allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). The Company selected the period cost method. Accordingly, the Company has not recorded any impact in connection with the potential GILTI tax as of June 30, 2018 and December 31, 2017. The Company’s management considers the earnings of our foreign subsidiaries to be indefinitely reinvested, other than certain earnings the distributions of which do not imply withholdings, exchange rate differences or state income taxes, and for that reason has not recorded a deferred tax liability. As of June 30, 2018 and December 31, 2017, the Company had included under non-current deferred tax assets the foreign tax credits related to the dividend distributions received from its subsidiaries for a total amount of $13,774 thousands and $12,097 thousands, respectively. As of June 30, 2018 and December 31, 2017, the Company recorded a valuation allowance of $13,774 thousands and $12,097 thousands, respectively, to fully impair the outstanding foreign tax credits. Accumulated other comprehensive loss The following table sets forth the Company’s accumulated other comprehensive loss as of June 30, 2018 and December 31, 2017: June 30, December 31, 2018 2017 (In thousands) Accumulated other comprehensive loss: Foreign currency translation $ (386,177) $ (283,647) Unrealized gains on investments 60 1,211 Unrealized losses on hedging activities (10) — Estimated tax gain (loss) on unrealized gains on investments 5 (415) $ (386,122) $ (282,851) The following tables summarize the changes in accumulated balances of other comprehensive loss for the six-month period ended June 30, 2018: Unrealized Unrealized Foreign Estimated tax (Losses) Gains on (Losses) Gains on Currency (expense) hedging activities, net Investments Translation benefit Total (In thousands) Balances as of December 31, 2017 $ — $ 1,211 $ (283,647) $ (415) $ (282,851) Other comprehensive income (loss) before reclassifications 912 60 (102,530) 5 (101,553) Amount of loss (gain) reclassified from accumulated other comprehensive loss (922) (1,211) — 415 (1,718) Net current period other comprehensive income (loss) (10) (1,151) (102,530) 420 (103,271) Ending balance $ (10) $ 60 $ (386,177) $ 5 $ (386,122) Amount of (Loss) Gain Reclassified from Details about Accumulated Accumulated Other Other Comprehensive Loss Comprehensive Affected Line Item Components Loss in the Statement of Income (In thousands) Unrealized gains on investments $ 1,211 Interest income and other financial gains Unrealized gains on hedging activities 922 Foreign currency gains (losses) Estimated tax gain on unrealized losses on investments (415) Income tax loss Total reclassifications for the period $ 1,718 Total, net of income taxes Use of estimates The preparation of 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 for allowances for doubtful accounts, loan receivables and chargebacks, recoverability of goodwill and intangible assets with indefinite useful life, useful life of long-lived assets and intangible assets, impairment of short-term and long-term investments, impairment of long-lived assets, compensation costs relating to the Company’s long term retention plan, fair value of convertible note debt, fair value of investments, fair value of derivative instruments, recognition of income taxes and contingencies. Actual results could differ from those estimates. Recently Adopted Accounting Standards Effective January 1, 2018, the Company adopted ASC 606 – Revenue from Contracts with Customers related to revenue recognition (“ASC 606”) issued by the Financial Accounting Standards Board (“FASB”) in 2014. ASC 606 provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The Company adopted ASC 606 using the full retrospective transition method and recast the prior reporting period presented. In connection with the MercadoEnvios service, the Company has identified a performance obligation with the seller to arrange for the transportation of the merchandise sold to the buyer using third-party carriers. As the Company acts as agent, upon adoption of ASC 606, the revenues derived from the shipping services are presented net of the respective transportation costs charged by third-party carriers and paid by the Company. As part of the business strategy, the Company may fully or partially subsidize the cost of shipping at the Company’s option. Under the current guidance the Company must account for the subsidized cost of shipping netting of revenues rather than as cost of net sales. For the six and three-month periods ended June 30, 2018, the Company incurred $209,150 thousands and $96,653 thousands, respectively, of subsidized shipping costs that have been incurred and included as a reduction of revenues. For the six and three-month periods ended June 30, 2017, the Company incurred $36,897 thousands and $32,646 thousands, respectively, of subsidized shipping costs that have been included as a reduction of revenues. Under the full retrospective method, the Company retrospectively applied ASC 606 to the six and three-month periods ended June 30, 2017. The total impact resulting from the change in presentation of shipping subsidies was a decrease in Net revenues and Cost of net revenues of $ 36,897 thousands and $32,646 thousands in the Interim Condensed Consolidated Statement of Income for the six and three-month periods ended June 30, 2017, respectively. Additionally, the adoption of ASC 606 did not modify the carrying amount of assets or liabilities as of the beginning of the first period presented, thus, there was no effect on the opening balance of retained earnings as of January 1, 2017. Furthermore, the adoption did not have a material impact on the Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017, on Net (loss) income for the six and three-month periods ended June 30, 2018 and 2017 and on the Statements of Cash Flows for the six-month periods ended June 30, 2018 and 2017. In October 2016, the FASB issued Accounting Standards Update No. 2016-16 (ASU 2016-16) "Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory." ASU 2016-16 generally accelerates the recognition of income tax consequences for asset transfers between entities under common control. The Company adopted ASU 2016-16 as of January 1, 2018 using a modified retrospective transition method, resulting in a $2,092 thousands increase to the opening balance of retained earnings . In August 2017, the FASB issued Accounting Standards Update No. 2017-12 (ASU 2017-12) "Derivatives and Hedging (Topic 815): Target improvements to accounting for hedging activities." ASU 2017-12 expands and refines hedge accounting for both non-financial and financial risk components and align the recognition and presentation effects of the hedging instrument and the hedged item in the financial statements. The amendments also make certain improvements to simplify the hedge accounting guidance and ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness. The Company early-adopted ASU 2017-12 as of April 1, 2018. The adoption did not have a material impact on the Company’s financial statements for prior periods, as the Company did not engage in hedging activities during any of the comparative periods presented. Please see Note 11 of the Company’s unaudited condensed consolidated financial statements for additional detail on hedging activities. Recently issued accounting pronouncements not yet adopted On February 25, 2016 the FASB issued ASU 2016-02. The amendments in this update create Topic 842, Leases, which supersedes Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. Previous GAAP did not require lease assets and lease liabilities to be recognized for most leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in the statement of comprehensive income and the statement of cash flows is largely unchanged from previous GAAP. Based on existing leases currently classified as operating leases, the Company expects to recognize on the statements of financial position right-of-use assets and lease liabilities. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Additionally, on July 30, 2018 the FASB issued ASU 2018-11 which includes a new guidance related to a new alternative transition method for the implementation of ASC 842, Leases. Under this new alternative transition method, comparative periods presented in financial statements in the period of adoption will not need to be restated and lessors may elect not to separate lease and non-lease components when certain conditions are met . The Company is assessing the effects that the adoption of this accounting pronouncement may have on the Company’s financial statements and expects the ASU will have a material impact, primarily to the consolidated balance sheets and related disclosures. On June 16, 2016 the FASB issued the ASU 2016-13 “Financial Instruments-Credit Losses (Topic 326): Measurement of credit losses on financial instruments”. This update amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, this update eliminates |
Net (Loss) Income Per Share
Net (Loss) Income Per Share | 6 Months Ended |
Jun. 30, 2018 | |
Net (Loss) Income Per Share [Abstract] | |
Net (Loss) Income Per Share | 3. Net (loss) income per share Basic earnings per share for the Company’s common stock is computed by dividing, net (loss) income available to common shareholders attributable to common stock for the period by the weighted average number of common shares outstanding during the period. On June 30, 2014, the Company issued $330 million of 2.25% Convertible Senior Notes due 2019 (see Note 9 of these interim condensed consolidated financial statements). The conversion of these notes are included in the calculation for diluted earnings per share utilizing the “if converted” method. Accordingly, conversion of the notes is not assumed for purposes of computing diluted earnings per share if the effect is antidilutive. The denominator for diluted net (loss) income per share for the six and three-month periods ended June 30, 2018 and 2017 does not include any effect from the 2014, 2017 and 2018 Capped Call Transactions (as defined in Note 9) because it would be antidilutive. In the event of conversion of any or all of the Notes, the shares that would be delivered to the Company under the Capped Call Transactions are designed to partially neutralize the dilutive effect of the shares that the Company would issue under the Notes. S ee Note 9 of these interim condensed consolidated financial statements and Note 17 of the financial statements as of December 31, 2017 on Form 10-K for more details. For the six and three-month periods ended June 30, 2018 and 2017 , the effects of the Capped Call Transactions would have been antidilutive and, as a consequence, they were not factored into the calculation of diluted earnings per share. Net (loss) income per share of common stock is as follows for the six and three-month periods ended June 30, 2018 and 2017: Six Months Ended June 30, Three Months Ended June 30, 2018 2017 2018 2017 (In thousands) (In thousands) Basic Diluted Basic Diluted Basic Diluted Basic Diluted Net (loss) income per common share $ (0.55) $ (0.55) $ 1.22 $ 1.22 $ (0.25) $ (0.25) $ 0.12 $ 0.12 Numerator: Net (loss) income $ (24,171) $ (24,171) $ 53,834 $ 53,834 $ (11,251) $ (11,251) $ 5,316 $ 5,316 Denominator: Weighted average of common stock outstanding for Basic earnings per share 44,157,364 — 44,157,364 — 44,157,364 — 44,157,364 — Adjusted weighted average of common stock outstanding for Diluted earnings per share — 44,157,364 — 44,157,364 — 44,157,364 — 44,157,364 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets [Abstract] | |
Goodwill and Intangible Assets | 4. G oodwill and intangible assets Goodwill and intangible assets The composition of goodwill and intangible assets is as follows: June 30, December 31, 2018 2017 (In thousands) Goodwill $ 83,637 $ 92,279 Intangible assets with indefinite lives - Trademarks 10,707 11,587 Amortizable intangible assets - Licenses and others 5,724 6,175 - Non-compete agreement 2,146 2,689 - Customer list 14,996 16,584 - Trademarks 1,706 1,772 Total intangible assets $ 35,279 $ 38,807 Accumulated amortization (16,023) (15,633) Total intangible assets, net $ 19,256 $ 23,174 Goodwill The changes in the carrying amount of goodwill for the six-month period ended June 30, 2018 and the year ended December 31, 2017 are as follows: Period ended June 30, 2018 Brazil Argentina Mexico Chile Colombia Other Countries Total (In thousands) Balance, beginning of the period $ 32,492 $ 5,761 $ 30,396 $ 18,805 $ 3,632 $ 1,193 $ 92,279 - Effect of exchange rates changes (5,405) (1,990) 569 (1,793) (41) 18 (8,642) Balance, end of the period $ 27,087 $ 3,771 $ 30,965 $ 17,012 $ 3,591 $ 1,211 $ 83,637 Year ended December 31, 2017 Brazil Argentina Mexico Chile Venezuela Colombia Other Countries Total (In thousands) Balance, beginning of the year $ 27,660 $ 6,587 $ 29,342 $ 17,388 $ 5,989 $ 3,643 $ 1,188 $ 91,797 - Business acquisition 5,966 — — — — — — 5,966 - Effect of exchange rates changes (1,134) (826) 1,054 1,417 — (11) 5 505 - Deconsolidation of Venezuelan subsidiaries — — — — (5,989) — — (5,989) Balance, end of the year $ 32,492 $ 5,761 $ 30,396 $ 18,805 $ — $ 3,632 $ 1,193 $ 92,279 Intangible assets with definite useful life Intangible assets with definite useful life are comprised of customer lists, non-compete and non-solicitation agreements, acquired software licenses, other acquired intangible assets including developed technologies and trademarks. Aggregate amortization expense for intangible assets totaled $1,656 thousands and $1,035 thousands for the three-month periods ended June 30, 2018 and 2017, respectively, while aggregate amortization expense for intangible assets for the six-month periods ended June 30, 2018 and 2017 amounted to $3,328 thousands and $2,065 thousands, respectively. The following table summarizes the remaining amortization of intangible assets (in thousands of U.S. dollars) with definite useful life as of June 30, 2018 : For year ended 12/31/2018 $ 1,551 For year ended 12/31/2019 2,673 For year ended 12/31/2020 1,677 For year ended 12/31/2021 1,240 Thereafter 1,408 $ 8,549 |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting | 5. Segment reporting 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 used for evaluation of the Company’s performance as determined by management. The Company’s segments include Brazil, Argentina, Mexico and other countries (which includes Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Panama, Honduras, Nicaragua, Salvador, Bolivia, Guatemala, Paraguay, Peru, Uruguay and the United States of America). As of June 30, 2017, the Company’s segments included Brazil, Argentina, Mexico, Venezuela and other countries. Direct contribution (loss) consists of net revenues from external customers less direct costs and includes any impairment of long- lived assets . Direct costs include costs of net revenues, product and technology development expenses, sales and marketing expenses and general and administrative expenses over which segment managers have direct discretionary control, such as advertising and marketing programs, customer support expenses, allowances for doubtful accounts, payroll and third-party fees. All corporate related costs have been excluded from the Company’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. As a consequence of the implementation of ASC 606 further described in Note 2, the Company reassessed the definition of its customers for each service, which resulted in a change of the information presented for net revenues by similar services. As from January 1, 2018, net revenues from shipping services are included as part of our Enhanced Marketplace Services. Such change has been applied retroactively for comparative purposes. The following tables summarize the financial performance of the Company’s reporting segments: Six Months Ended June 30, 2018 Brazil Argentina Mexico Other Countries Total (In thousands) Net revenues $ 379,994 $ 202,049 $ 34,605 $ 39,705 $ 656,353 Direct costs (353,967) (125,346) (65,857) (38,361) (583,531) Direct contribution (loss) 26,027 76,703 (31,252) 1,344 72,822 Operating expenses and indirect costs of net revenues (130,483) Loss from operations (57,661) Other income (expenses): Interest income and other financial gains 19,110 Interest expense and other financial losses (23,936) Foreign currency gains 18,178 Net loss before income tax gain $ (44,309) Six Months Ended June 30, 2017 Brazil Argentina Mexico Venezuela Other Countries Total (In thousands) Net revenues $ 316,922 $ 159,394 $ 22,129 $ 28,578 $ 26,535 $ 553,558 Direct costs (184,238) (94,763) (46,050) (12,259) (22,253) (359,563) Impairment of Long-lived Assets - - - (2,837) - (2,837) Direct contribution (loss) 132,684 64,631 (23,921) 13,482 4,282 191,158 Operating expenses and indirect costs of net revenues (97,818) Income from operations 93,340 Other income (expenses): Interest income and other financial gains 22,820 Interest expense and other financial losses (12,977) Foreign currency losses (21,097) Net income before income tax expense $ 82,086 Three Months Ended June 30, 2018 Brazil Argentina Mexico Other Countries Total (In thousands) Net revenues $ 195,839 $ 100,110 $ 17,540 $ 21,888 $ 335,377 Direct costs (176,987) (68,051) (39,534) (21,088) (305,660) Direct contribution (loss) 18,852 32,059 (21,994) 800 29,717 Operating expenses and indirect costs of net revenues (57,958) Loss from operations (28,241) Other income (expenses): Interest income and other financial gains 9,915 Interest expense and other financial losses (13,202) Foreign currency gains 12,577 Net loss before income tax gain $ (18,951) Three Months Ended June 30, 2017 Brazil Argentina Mexico Venezuela Other Countries Total (In thousands) Net revenues $ 157,152 $ 87,992 $ 10,803 $ 14,181 $ 13,754 $ 283,882 Direct costs (97,200) (49,697) (33,420) (5,708) (12,555) (198,580) Impairment of Long-lived Assets - - - (2,837) - (2,837) Direct contribution (loss) 59,952 38,295 (22,617) 5,636 1,199 82,465 Operating expenses and indirect costs of net revenues (52,440) Income from operations 30,025 Other income (expenses): Interest income and other financial gains 10,663 Interest expense and other financial losses (6,506) Foreign currency losses (21,760) Net income before income tax expense $ 12,422 The following table summarizes the allocation of property and equipment, net based on geography: June 30, December 31, 2018 2017 (In thousands) US property and equipment, net $ 4,623 $ 7,037 Other countries Argentina 24,437 26,028 Brazil 67,524 68,796 Mexico 5,952 3,570 Other countries 10,634 9,406 $ 108,547 $ 107,800 Total property and equipment, net $ 113,170 $ 114,837 The following table summarizes the allocation of the goodwill and intangible assets based on geography: June 30, December 31, 2018 2017 (In thousands) US intangible assets $ 71 $ 119 Other countries goodwill and intangible assets Argentina 4,056 6,059 Brazil 30,221 36,462 Mexico 36,783 38,600 Chile 26,510 28,985 Other countries 5,252 5,228 $ 102,822 $ 115,334 Total goodwill and intangible assets $ 102,893 $ 115,453 Consolidated net revenues by similar products and services for the six and three-month periods ended June 30, 2018 and 2017 were as follows: Six months Ended June 30, Three months Ended June 30, Consolidated Net Revenues 2018 2017 2018 2017 (In thousands) (In thousands) Enhanced Marketplace (*) $ 296,897 $ 357,939 $ 156,202 $ 180,012 Non-marketplace (**) (***) 359,456 195,619 179,175 103,870 Total $ 656,353 $ 553,558 $ 335,377 $ 283,882 (*) Includes Final Value Fees and Shipping fees. (**) Includes, among other things, Ad Sales, Classified Fees, Payment Fees and other ancillary services. (***) Includes $288,678 thousands and $140,173 thousands of Payment Fees for the six-month periods ended June 30, 2018 and 2017, respectively. Includes an amount of $143,915 thousands and $75,013 thousands of Payment Fees for the three-month periods ended June 30, 2018 and 2017, respectively. |
Fair Value Measurement of Asset
Fair Value Measurement of Assets and Liabilities | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Measurement of Assets and Liabilities [Abstract] | |
Fair Value Measurement of Assets and Liabilities | 6. Fair value measurement of assets and liabilities The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2018 and December 31, 2017: Quoted Prices in Quoted Prices in Balances as of active markets for Significant other Balances as of active markets for Significant other June 30, identical Assets observable inputs December 31, identical Assets observable inputs Description 2018 (Level 1) (Level 2) 2017 (Level 1) (Level 2) (In thousands) Assets Cash and Cash Equivalents: Money Market Funds $ 240,137 $ 240,137 $ — $ 85,337 $ 85,337 $ — Restricted Cash and cash equivalents: Money Market Funds $ 34,854 34,854 — — — — Investments: Sovereign Debt Securities $ 4,039 $ 4,039 $ — $ 15,896 $ 15,896 $ — Corporate Debt Securities 6,404 5,973 431 24,313 15,512 8,801 Other Assets: Derivative Instruments $ 1,493 $ — $ 1,493 $ — $ — $ — Total Financial Assets $ 286,927 $ 285,003 $ 1,924 $ 125,546 $ 116,745 $ 8,801 Liabilities: Long-term retention plan 36,577 — 36,577 43,227 — 43,227 Total Financial Liabilities $ 36,577 $ — $ 36,577 $ 43,227 $ — $ 43,227 As of June 30, 2018 and December 31, 2017, the Company’s financial assets valued at fair value consisted of assets 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); and ii) Level 2 inputs: obtained from readily-available pricing sources for comparable instruments as well as instruments with inactive markets at the measurement date. As of June 30, 2018 and December 31, 2017 , the Company´s liabilities were valued at fair value using level 2 inputs. The unrealized net gains or losses on short-term and long-term investments are reported as a component of other comprehensive income. The Company does not anticipate any significant realized losses associated with those investments in excess of the Company’s historical cost. As of June 30, 2018 and December 31, 2017, the carrying value of the Company’s financial assets and liabilities measured at amortized cost approximated their fair value mainly because of their short-term maturity. These assets and liabilities included cash, cash equivalents, restricted cash and cash equivalents and short-term investments (excluding money markets funds and corporate debt security), accounts receivable, credit cards receivable, loans receivable, funds payable to customers, other assets (excluding derivative instruments), accounts payable, salaries and social security payable (excluding variable LTRP), taxes payable, provisions and other liabilities. The estimated fair value of the convertible senior notes (liability component), which is based on Level 2 inputs, is $325,345 thousands and was determined based on market interest rates. The rest of the loans payable and other financial liabilities approximate their fair value because the interest rates are not materially different from market interest rates. The following table summarizes the fair value level for those financial assets and liabilities of the Company measured at amortized cost as of June 30, 2018 and December 31, 2017: Balances as of Significant other Balances as of Significant other June 30, observable inputs December 31, observable inputs 2018 (Level 2) 2017 (Level 2) (In thousands) Assets Time Deposits $ 68,712 $ 68,712 $ 202,820 $ 202,820 Accounts receivable 27,470 27,470 28,168 28,168 Credit Cards receivable 307,614 307,614 521,130 521,130 Loans receivable, net 112,066 112,066 73,409 73,409 Other assets 105,091 105,091 101,552 101,552 Total Assets $ 620,953 $ 620,953 $ 927,079 $ 927,079 Liabilities Accounts payable and accrued expenses $ 226,101 $ 226,101 $ 221,095 $ 221,095 Funds payable to customers 498,623 498,623 583,107 583,107 Salaries and social security payable 32,589 32,589 46,828 46,828 Taxes payable 28,300 28,300 32,150 32,150 Dividends payable — — 6,624 6,624 Loans payable and other financial liabilities (*) 480,019 487,560 368,414 379,500 Other liabilities 39,329 39,329 22,144 22,144 Total Liabilities $ 1,304,961 $ 1,312,502 $ 1,280,362 $ 1,291,448 (*) The fair value of the convertible senior notes (including the equity component) is disclosed in Note 9. As of June 30, 2018 and December 31, 2017 , the Company held no direct investments in auction rate securities and does not have any non-financial assets or liabilities measured at fair value. As of June 30, 2018 and December 31, 2017 , the fair value of money market funds, short and long-term investments classified as available for sale securities are as follows: June 30, 2018 Cost Gross Unrealized Gains (1) Gross Unrealized Losses (1) Estimated Fair Value (In thousands) Cash and cash equivalents Money Market Funds $ 240,137 $ — $ — $ 240,137 Total Cash and cash equivalents $ 240,137 $ — $ — $ 240,137 Restricted cash and cash equivalents Money Market Funds $ 34,854 $ — $ — $ 34,854 Total Restricted cash and cash equivalents $ 34,854 $ — $ — $ 34,854 Short-term investments Corporate Debt Securities 412 — (3) 409 Sovereign Debt Securities 314 — (3) 311 Total Short-term investments $ 726 $ — $ (6) $ 720 Long-term investments Sovereign Debt Securities $ 3,762 $ — $ (34) $ 3,728 Corporate Debt Securities 6,087 — (92) 5,995 Total Long-term investments $ 9,849 $ — $ (126) $ 9,723 Total $ 285,566 $ — $ (132) $ 285,434 December 31, 2017 Cost Gross Unrealized Gains (1) Gross Unrealized Losses (1) Estimated Fair Value (In thousands) Cash and cash equivalents Money Market Funds $ 85,337 $ — $ — $ 85,337 Total Cash and cash equivalents $ 85,337 $ — $ — $ 85,337 Short-term investments Sovereign Debt Securities $ 2,235 $ — $ (10) $ 2,225 Corporate Debt Securities 4,396 — (9) 4,387 Total Short-term investments $ 6,631 $ — $ (19) $ 6,612 Long-term investments Sovereign Debt Securities $ 13,821 $ — $ (150) $ 13,671 Corporate Debt Securities 20,054 — (128) 19,926 Total Long-term investments $ 33,875 $ — $ (278) $ 33,597 Total $ 125,843 $ — $ (297) $ 125,546 (1) Unrealized gains (losses) from securities are attributable to market price movements, net foreign exchange losses and foreign currency translation. Management does not believe any remaining significant unrealized losses represent other-than-temporary impairments based on the evaluation of available evidence including the credit rating of the investments, as of June 30, 2018 and December 31, 2017. The material portion of the Sovereign Debt Securities consists of U.S. Treasury Notes, which carry no significant risk. As of June 30, 2018 , the estimated fair values (in thousands of U.S. dollars) of cash equivalents, short-term and long-term investments classified by their effective maturities are as follows: One year or less 275,711 One year to two years 5,297 Two years to three years 3,554 Three years to four years 769 Four years to five years 103 Total $ 285,434 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 7. 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 probable that future costs will be incurred and such costs can be reasonably estimated. The proceeding-related reserve is based on developments to date and historical information related to actions filed against the Company. As of June 30, 2018 , the Company had established reserves for proceeding-related contingencies and other estimated contingencies of $5,669 thousand to cover legal actions against the Company in which its 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 June 30, 2018 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 for an aggregate amount up to $7,339 thousand. No loss amounts have been accrued for such reasonably possible legal actions of which most significant (individually or in the aggregate) are described below and in note 15 to the financial statements in the Form 10-K for the year ended December 31, 2017. As of June 30, 2018 , there were 71 lawsuits pending against our Argentine subsidiary in the Argentine ordinary courts and 2,482 pending claims in the Argentine Consumer Protection Agencies, where a lawyer is not required to file or pursue a claim. As of June 30, 2018 , 901 legal actions were pending in the Brazilian ordinary courts. In addition, as of June 30, 2018 , there were 6,693 cases still pending in Brazilian consumer courts. Filing and pursuing of an action before Brazi lian consumer courts do not require the assistance of a lawyer. As of June 30, 2018 , there wer e 9 claims pending against our Mexican subsidiaries in the Mexican ordinary courts and 230 claims pending against our Mexican subsidiaries in the Mexican Consumer Protection Agencies, where a lawyer is not required to file or pursue a claim. City of São Paulo Tax Claim In 2007, São Paulo tax authorities assessed taxes and fines against our Brazilian subsidiary MercadoLivre.com relating to the “Imposto sobre Serviços” for the period from 2005 to 2007 in an approximate amount of $5.9 million according to the exchange rate in effect at that time. In 2007, the Company presented administrative defenses against the authorities’ claim. On September 12, 2009, the São Paulo tax authorities ruled against the Company upholding, the previously assessed taxes and fines. Also in 2009, the Company presented an appeal to the Conselho Municipal de Tributos (São Paulo Municipal Council of Taxes), which reduced the fine. On February 11, 2011, the Company appealed this decision to the Câmaras Reunidas do Conselho Municipal de Tributos (Superior Chamber of the São Paulo Municipal Council of Taxes), which affirmed the reduction of the fine. With this decision, the administrative stage is finished. On August 15, 2011, the Company made a deposit in court of R$9.5 million and filed a lawsuit with the 8th Public Treasury Court of the City of São Paulo, State of São Paulo, Brazil, to contest the taxes and fines assessed by the tax authorities. On May 31, 2016, a lower court judge ruled in favor of the Company. On November 10, 2016, the São Paulo Municipal Council appealed that decision, and the Company presented its counter arguments. On April 12, 2018, the São Paulo Appellate Court rejected an appeal of the São Paulo Municipal Council, confirming the 2016 lower court decision in favor of the Company. On July 4, 2018, the São Paulo Appellate Court denied the admissibility of a subsequent special appeal by the São Paulo Municipal Council. As of the date of this report, the Company is waiting for a further appeal that may be filed by the São Paulo Municipal Council to seek a ruling by the Superior Court of Justice. As of the date of these interim condensed consolidated financial statements, the total amount of the claim is $3.9 million, including surcharges and interest. The opinion of the Company's management, based on the opinion of external legal counsel, is that the risk of losing the case is remote. Administrative tax claims On July 12, 2017, São Paulo tax authorities assessed taxes and fines against our Brazilian subsidiary IBazar relating to “ICMS Publicidade” for the period from July 2012 to December 2013 in an amount of R$12.2 million (or $3.1 million according to the exchange rate in effect at that time). The Company filed an administrative defense against the claim, but the São Paulo authorities ruled against the Company and upheld the assessed taxes and fines. On October 30, 2017, the Company filed an appeal with the Tribunal de Impostos e Taxas de São Paulo (São Paulo Administrative Tax Court), which the court granted on February 23, 2018. As of the date of these interim condensed consolidated financial statements , the Company is waiting an appeal by the São Paulo tax authorities. The opinion of the Company's management, based on the opinion of external legal counsel, is that the risk of losing the case is reasonably possible, but not probable. Other third parties have from time to time claimed, and others may claim in the future, that the Company was responsible for fraud committed against them, or that the Company has infringed their intellectual property rights. The underlying laws with respect to the potential liability of online intermediaries like the Company are unclear in the jurisdictions where the Company operates. Management believes that additional lawsuits alleging that the Company has violated copyright or trademark laws will be filed against the Company in the future. Intellectual property and regulatory claims, whether meritorious or not, are time consuming and costly to resolve, require significant amounts of management time, could require expensive changes in the Company’s methods of doing business, or could require the Company to enter into costly royalty or licensing agreements. The Company may be subject to patent disputes, and be subject to patent infringement claims as the Company’s services expand in scope and complexity. In particular, the Company may face additional patent infringement claims involving various aspects of the payments businesses. From time to time, the Company is involved in other disputes or regulatory inquiries that arise in the ordinary course of business. The number and significance of these disputes and inquiries are increasing as the Company’s business expands and the Company grows larger. Buyer protection program The Company provides consumers with a buyer protection program (“BPP”) for all transactions completed through the Company’s online payment solution (“MercadoPago”). This program is designed to protect buyers in the Marketplace from losses due primarily to fraud or counterparty non-performance. 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 or does not match the seller’s description. 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 (i.e. Black Friday, Hot Sale), 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 June 30, 2018 and December 31, 2017, management's estimate of the maximum potential exposure related to the Company’s buyer protection program is $648,101 thousands and $925,690 thousands, respectively, for which the Company recorded an allowance of $4,190 thousands and $1,087 thousands , respectively. Loans payable and other financial liabilities During the second quarter of 2018, the Company, through its Argentine subsidiary, obtained two lines of credit from Banco de Galicia y Buenos Aires S.A., denominated in Argentine pesos, to be applied to working capital needs. As of June 30, 2018, the amount outstanding under these lines of credit is $36,627 thousands with maturity in November 2018, bears fixed interest at a weighted average rate of 39.25% per annum. During the first quarter of 2018, the Company obtained a line of credit from JPMorgan Chase Bank N.A. denominated in U.S. dollars, to be applied to working capital needs. As of June 30, 2018, the amount outstanding under this line of credit is $50,073 thousands and bears interest at a fixed rate of 3.44% per annum. This line of credit was fully paid off on July 13, 2018. During the last quarter of 2017, the Company through its Argentine subsidiary obtained two lines of credit from Citibank N.A. of New York, denominated in Argentine pesos, to be applied to working capital needs. As of June 30, 2018, one line of credit was fully paid off and the amount outstanding under the remaining line of credit is $12,270 thousands and bears interest at a fixed rate of 24.25% per annum. The outstanding amount under this line of credit was fully paid off on July 17, 2018. During the last quarter of 2017, the Company, through its Chilean subsidiary obtained a line of credit from Banco de Chile denominated in Chilean pesos, to be applied to working capital needs. As of June 30, 2018, the amount outstanding under this line of credit is $22,331 thousands with maturity in August 2018 and bears interest at a fixed rate of 4.44% per annum. As of June 30, 2018, the Company, through its Chilean and Uruguayan subsidiaries obtained unsecured lines of credit for an amount of $15,623 thousands which bear interest at rates between 5.90% and 9.11% per annum, and through its Argentine subsidiary obtained an unsecured line of credit for an amount of $9,757 thousands which bears interest at a fixed rate of 36.75% per annum. These lines of credit have maturity date within the next two months. See Note 9 and Note 12 of these interim condensed consolidated financial statements for details regarding the Company’s 2.25% Convertible Senior Notes due 2019 and collateralized debt securitization transactions, respectively. |
Long Term Retention Plan
Long Term Retention Plan | 6 Months Ended |
Jun. 30, 2018 | |
Long Term Retention Plan [Abstract] | |
Long Term Retention Plan | 8. Long term retention plan (“LTRP”) The following table summarizes the 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017 and 2018 long term retention plan accrued compensation expense for the six and three-month periods ended June 30, 2018 and 2017, which are payable in cash according to the decisions made by the Board of Directors: Six Months Ended June 30, Three Months Ended June 30, 2018 2017 2018 2017 (In thousands) (In thousands) LTRP 2009 $ - $ 29 $ - $ - LTRP 2010 24 744 (29) 417 LTRP 2011 487 1,193 (175) 704 LTRP 2012 799 1,630 (326) 982 LTRP 2013 1,422 3,098 (327) 1,802 LTRP 2014 1,712 3,010 (372) 1,745 LTRP 2015 2,317 3,617 (499) 2,031 LTRP 2016 3,416 5,111 (492) 2,871 LTRP 2017 3,513 3,636 173 2,353 LTRP 2018 3,102 - 3,102 - Total LTRP $ 16,792 $ 22,068 $ 1,055 $ 12,905 |
2.25% Convertible Senior Notes
2.25% Convertible Senior Notes Due 2019 | 6 Months Ended |
Jun. 30, 2018 | |
2.25% Convertible Senior Notes Due 2019 [Abstract] | |
2.25% Convertible Senior Notes Due 2019 | 9. 2.25% Convertible Senior Notes Due 2019 On June 30, 2014, the Company issued $330 million of 2.25% convertible senior notes due 2019 (the “Notes”). The Notes are unsecured, unsubordinated obligations of the Company, which pay interest in cash semi-annually, on January 1 and July 1, at a rate of 2.25% per annum. The Notes will mature on July 1, 2019 unless earlier repurchased or converted in accordance with their terms prior to such date. The Notes may be converted, under specific conditions, based on an initial conversion rate of 7.9353 shares of common stock per $1,000 principal amount of the Notes (equivalent to an initial conversion price of $126.02 per share of common stock), subject to adjustment as described in the indenture governing the Notes. Holders may convert their notes at their option at any time prior to January 1, 2019 only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2014 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. On or after January 1, 2019 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their notes at any time, regardless of the foregoing circumstances. During the period from October 1, 2016 through June 30, 2018, 32 Notes were converted for a total amount of $32 thousands. Additionally, during the second quarter of 2018, the conversion threshold was met again and the Notes became convertible at the holders’ option beginning on July 1, 2018 and ending on September 30, 2018. The determination of whether or not the Notes are convertible must continue to be performed on a quarterly basis. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. The intention of the Company is to share-settle the total amount due upon conversion of the Notes. From July 1, 2018 to the date of issuance of these interim condensed consolidated financial statements, no additional conversion requests were made. In connection with the issuance of the Notes, the Company paid $19.7 million, $67.3 million and $45.7 million (including transaction expenses) in June 2014, September 2017 and March 2018, respectively, to enter into capped call transactions with respect to shares of the common stock (the “Capped Call Transactions”), with certain financial institutions. The Capped Call Transactions are expected generally to reduce the potential dilution upon conversion of the Notes in the event that the market price of the common stock is greater than the strike price of the Capped Call Transactions. The cost of the Capped Call Transactions is included as a net reduction to additional paid-in capital in the stockholders’ equity section of the consolidated balance sheets. The total estimated fair value of the Notes was $800.3 million and $829.0 million as of June 30, 2018 and December 31, 2017, respectively. The fair value was determined based on the closing trading price per $100 principal amount of the Notes as of the last day of trading for the period. The Company considered the fair value of the Notes as of June 30, 2018 and December 31, 2017 to be a Level 2 measurement. The fair value of the Notes is primarily affected by the trading price of our common stock and market interest rates. Based on the $298.9 closing price of the Company’s common stock on June 30, 2018 , the if-converted value of the Notes exceeded their principal amount by $452.7 million. The following table presents the carrying amounts of the liability and equity components related to the 2.25% Convertible Senior Notes Due 2019 as of June 30, 2018 and December 31, 2017: June 30, 2018 December 31, 2017 (In thousands) Amount of the equity component (1) $ 45,808 $ 45,808 2.25% convertible senior notes due 2019 $ 329,968 $ 329,972 Unamortized debt discount (2) (10,453) (15,469) Unamortized transaction costs related to the debt component (1,711) (2,509) Contractual coupon interest accrual 3,713 7,425 Contractual coupon interest payment (3,713) (7,425) Net carrying amount $ 317,804 $ 311,994 (1) Net of $1,177 thousands of transaction costs related to the equity component of the Notes. (2) As of June 30, 2018 , the remaining period over which the unamortized debt discount will be amortized is 1 year. The following table presents the interest expense for the contractual interest, the accretion of debt discount and the amortization of debt issuance costs: Six month periods ended June 30, Three month periods ended June 30, 2018 2017 2018 2017 (In thousands) (In thousands) (In thousands) (In thousands) Contractual coupon interest expense $ 3,713 $ 3,713 $ 1,857 $ 1,857 Amortization of debt discount 5,016 4,748 2,508 2,374 Amortization of debt issuance costs 798 725 399 362 Total interest expense related to the Notes $ 9,527 $ 9,186 $ 4,764 $ 4,593 |
Cash Dividend Distribution
Cash Dividend Distribution | 6 Months Ended |
Jun. 30, 2018 | |
Cash Dividend Distribution [Abstract] | |
Cash Dividend Distribution | 10. Cash Dividend Distribution In each of March, May, July and October of 2017, the Board of Directors approved a fixed quarterly cash dividend of $6,624 thousands (or $0.150 per share) on the Company’s outstanding shares of common stock. The dividends were paid on April 17 , July 14 , October 16, 2017 and January 12, 2018 to stockholders of record as of the close of business on March 31 , June 30 , September 30 , and December 31, 2017 . After reviewing the Company's capital allocation process the Board of Directors has concluded that it has multiple investment opportunities that should generate greater return to shareholders through investing capital into the business as compared to a dividend policy. Consequently, the decision has been made to suspend the payment of dividend to shareholders as of the first quarter of 2018. |
Derivative Instruments
Derivative Instruments | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments [Abstract] | |
Derivative Instruments | 11. Derivative instruments The Company's operations are in various foreign currencies and consequently are exposed to foreign currency risk. The Company uses foreign currency exchange contracts to reduce the volatility of earnings and cash flows. As of June 30, 2018 the Company used foreign currency exchange contracts to hedge the foreign currency effects related to the principal amount of certain loans denominated in U.S. dollars owed by a Brazilian subsidiary whose functional currency is the Brazilian Reais. Pursuant to these contracts, the Company will buy a notional amount of $30,000 thousands in May 2019 and $16,500 thousands in June 2019, respectively, at a fixed currency exchange rate of 3.88 and 3.96 Brazilian Reais per U.S. dollar, respectively. The Company designated the foreign currency exchange contracts as cash flow hedges, the derivative’s gain or loss is initially reported as a component of accumulated other comprehensive income (“AOCI”) and subsequently reclassified into earnings in the same period the forecasted transaction affects earnings. As of June 30, 2018, the Company estimated that the whole amount of net derivative losses related to its cash flow hedges included in accumulated other comprehensive income will be reclassified into earnings within the next 12 months. On June 4, 2018 the Company entered into a foreign currency exchange contract to hedge the foreign currency effects related to certain transactions denominated in U.S. dollars of a Chilean subsidiary whose functional currency is the Chilean Peso. Pursuant to this contract, the Company will buy a notional amount of $20,000 thousands in December 2018, at a fixed currency exchange rate of 630.75 Chilean Pesos per U.S. dollar. This contract was not designated as hedging instrument, and changes in fair value of this contract are recorded in other income (expense), net in the consolidated statement of income. Foreign exchange contracts The fair values of the Company's outstanding derivative instruments as of June 30, 2018 and December 31, 2017 were as follows: June 30, December 31, Balance sheet location 2018 2017 (In thousands) Derivative assets Foreign exchange contracts designated as cash flow hedges Other current Assets $ 790 $ — Foreign exchange contracts not designated as hedging instruments Other current Assets 703 — $ 1,493 $ — |
Securitization Transactions
Securitization Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Securitization Transactions [Abstract] | |
Securitization Transactions | 12. Securitization Transactions The process of securitization consists of the issuance of securities collateralized by a pool of assets through a special purpose vehicle, often under a VIE. The Company securitizes financial assets associated with its loan receivables portfolio. The Company’s securitization transactions typically involve the legal transfer of financial assets to bankruptcy remote special purpose entities (“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 precluded from recording the transfers of assets in securitization transactions as sales. The Company started to securitize certain loan receivables through a trust created in Brazil, whose main purpose is to securitize loan receivables provided by the Company to its users. According to the trust contract, 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 the securitization transactions as if they were secured financing and therefore the assets, liabilities, and related results are consolidated in its financial statements. As of June 30, 2018, the carrying value of the collateralized debt was $15,679 thousands and bears interest at a rate of Brazilian CI plus 3.5% per annum for a term of 36 months. This secured debt is issued by the trust and includes collateralized securities used to fund MercadoCredito 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 trust are restricted to the payment of amounts due to third-party investors, but the Company retains the right to residual cash flows. Interest expense on securitization debt was $135 thousand for the six-month period ended June 30, 2018. These assets and liabilities of the trust are included in the Company’s interim condensed consolidated financial statements as of June 30, 2018 as follows: June 30, 2018 Assets (in thousands) Current assets: Restricted cash and cash equivalents $ 34,854 Accounts receivable, net 760 Loans receivable, net 70,844 Total current assets 106,458 Total assets $ 106,458 Liabilities Current liabilities: Accounts payable and accrued expenses $ 77 Funds payable to customers 1 Loans payable and other financial liabilities 131 Total current liabilities 209 Non-current liabilities: Loans payable and other financial liabilities 15,548 Total non-current liabilities 15,548 Total liabilities $ 15,757 |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | 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”). These 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, cost of net revenues and operating expenses, are generated in the Company’s foreign operations. Operating (loss) income of foreign operations amounted to 99.5% and 97.6% of the consolidated amounts during the six-month periods ended June 30, 2018 and 2017, respectively. Long-lived assets, intangible assets and goodwill located in the foreign jurisdictions totaled $211,369 thousands and $ 223,134 thousands as of June 30, 2018 and December 31, 2017, respectively. These interim condensed consolidated financial statements reflect the Company’s consolidated financial position as of June 30, 2018 and December 31, 2017. These financial statements include the Company’s consolidated statements of income and comprehensive income for the six and three-month periods ended June 30, 2018 and 2017 and statement of cash flows for the six-month periods ended June 30, 2018 and 2017. These 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 financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2017, contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”). The condensed consolidated statements of income, of comprehensive income and of 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 Form 10-K for the year ended December 31, 2017. During the six-month period ended June 30, 2018, there were no material updates made to the Company’s significant accounting policies, except for the adoption of ASC 606 and ASU 2016-16- Income taxes (Topic 740) as of January 1, 2018 and early adoption of ASU 2017-12 Derivatives and Hedging (Topic 815) as of April 1, 2018. S ee Note 2 of these interim condensed consolidated financial statements for more details. |
Revenue Recognition | Revenue recognition Revenues are recognized when control of the promised services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Contracts with customers may include promises to transfer multiple services including discounts on current or future services. Determining whether services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Revenues are recognized when each performance obligation is satisfied by transferring the promised service to the customer according to the following criteria described for each type of service: · Revenues from the Enhanced Marketplace service, include the final value fees and shipping fees charged to the Company’s customers. Because the Company acts as an agent, revenues derived from the shipping services are presented net of the respective transportation costs charged by third-party carriers and paid by the Company. As part of the Company’s business strategy, shipping costs may be fully or partially subsidized at the Company’s option. · Revenues from the Non-Marketplace services are generated from payments fees, classifieds fees, ad sales up-front fees; and fees from other ancillary businesses. Revenue recognition criteria for the services mentioned above are described in note 2 to the consolidated financial statements in the Company’s Form 10-K for the year ended December 31, 2017. 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. The allowance for doubtful accounts, loan receivables and chargebacks is estimated based upon our assessment of various factors including historical experience, the age of the accounts receivable balances, current economic conditions and other factors that may affect our customers’ ability to pay. The allowance for doubtful accounts, loan receivables and chargebacks was $29,807 thousands and $19,734 thousands as of June 30, 2018 and December 31, 2017, respectively. Deferred revenue consists of fees received related to unsatisfied performance obligations at the end of the period in accordance with ASC 606 (as defined below). Due to the generally short-term duration of contracts, the majority of the performance obligations are satisfied in the following reporting period. Deferred revenue as of December 31, 2017 and 2016 was $6,116 thousands and $1,955 thousands, respectively, of which $5,395 thousands and $2,043 thousands were recognized as revenue during the six-months periods ended June 30, 2018 and 2017, respectively. As of June 30, 2018, total deferred revenue was $5,931 thousands, mainly due to fees related to listing and optional feature services billed and loyalty programs that are expected to be recognized as revenue in the coming months. |
Variable Interest Entities | Variable Interest Entities (VIE) A VIE is an entity that (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support, (ii) has equity investors who lack the characteristics of a controlling financial interest or (iii) in which the voting rights of some equity investors are disproportionate to their obligation to absorb losses or their right to receive returns, and substantially all of the entity’s activities are conducted on behalf of the equity investors with disproportionately few voting rights. The Company consolidates VIEs of which it is the primary beneficiary. The Company is considered to be the primary beneficiary of a VIE when it has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. Please see Note 12 to these unaudited interim consolidated financial statements for additional detail on the VIEs used for securitization purposes. |
Foreign Currency Translation | Foreign currency translation All of the Company’s consolidated foreign operations have determined the local currency to be their functional currency. Accordingly, these foreign subsidiaries 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 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 (loss) income. See also “Highly inflationary status in Argentina” below for a description of the current inflationary status of Argentina and the expected future impacts of foreign currency translation on the Company’s operations in Argentina. |
Derivative Financial Instruments | Derivative Financial Instruments The Company’s operations are in various foreign currencies and consequently are exposed to foreign currency risk. The Company uses derivative instruments to reduce the volatility of earnings and cash flows. All outstanding derivatives are recognized in the Company ’s consolidated balance sheet at fair value. The effective portion of a designated derivative’s gain or loss is initially reported as a component of accumulated other comprehensive income (loss) and is subsequently reclassified into the financial statement line item in which the variability of the hedged item is recorded in the period the hedging transaction affects earnings. The Company also hedges its economic exposure to foreign currency risk related to foreign currency denominated monetary assets and liabilities with foreign derivative currency contracts. The gains and losses on the foreign exchange derivative contracts economically offset gains and losses on certain foreign currency denominated monetary assets and liabilities recognized in earnings. Accordingly, these outstanding non-designated derivatives are recognized in the Company ’s consolidated balance sheet at fair value, and changes in fair value from these contracts are recorded in other income (expense), net in the consolidated statement of income. |
Highly Inflationary Status in Argentina | Highly inflationary status in Argentina During May 2018, the International Practices Task Force (“IPTF”) discussed the highly inflationary status of the Argentine economy. Historically, the IPTF has used the Consumer Price Index (“CPI”) when considering the inflationary status of the Argentine economy. Given that the CPI was considered flawed by the current Argentine Government until December 2015 and the new CPI was published as from June 2016, the IPTF considered alternative indices to determine the three-year cumulative inflation. A highly inflationary economy is one that has cumulative inflation of approximately 100% or more over a three-year period. The alternative three-year cumulative indices at June 30, 2018 exceeded 100%. According to U.S. GAAP, the company should apply highly inflationary accounting no later than July 1, 2018. Therefore, the Company will transition the Argentinian operations to highly inflationary status as of July 1, 2018 and, going forward, will change the functional currency for Argentina from Argentine Pesos to U.S. dollars, which is the functional currency of its immediate parent company. Argentina is the second principal market of the business (see note 5 – Segment reporting). Recently, the economic environment in this country has been volatile with weak economic conditions, devaluation of local currency, high interest rates, high level of inflation and a large public deficit which generated a financial assistance request from Argentina to the International Monetary Fund . The Argentine subsidiaries have monetary assets denominated in Argentine Pesos amounting to $286,664 thousands, and monetary liabilities denominated in Argentine Pesos amounting to $259,028 thousands, as of June 30, 2018, which will expose the Company to foreign exchange losses or gains resulting from exchange rate changes from July 1, 2018 forward. The Company does not anticipate that the change in functional currency will have any significant impact on revenues and expenses, as they were already translated to U.S. dollars for consolidation purposes at exchange rates prevailing at the date of the transaction or at the average monthly rates. Furthermore, although translation of property and equipment and intangible assets with definite useful life at the exchange rate as of July 1, 2018 or the respective date of the subsequent acquisition is likely to maintain the level of the future depreciation charge expressed in U.S. dollars, the Company does not anticipate that effect to be significant. Moreover, the Company has not identified any triggering event or impairment indicator that should be considered to assess the recoverability of the net book value of the fixed assets and goodwill and intangible assets assigned to the Argentine reporting unit as of June 30, 2018. As part of its assessment, the Company considered the expected business and macroeconomic trends, the impact of the change in functional currency as previously mentioned and the net book value of fixed assets and goodwill and intangible assets allocated to the Argentine reporting unit as of June 30, 2018. |
Venezuelan Deconsolidation | Venezuelan deconsolidation Effective December 1, 2017, the Company determined that deteriorating conditions in Venezuela had led the Company to no longer meet the accounting criteria for control over its Venezuelan subsidiaries. Venezuela’s recent selective default determination, restrictive exchange controls and suspension of foreign exchange market in Venezuela, the lack of access to U.S. dollars through official currency exchange mechanisms together with the worsening in Venezuela macroeconomic environment resulted in other-than-temporary lack of exchangeability between the Venezuela bolivar and the U.S. dollar, and restricted the Company’s ability to pay dividends and its ability to satisfy other obligations denominated in U.S. dollars. Therefore, in accordance with the applicable accounting standards, as of December 1, 2017, the Company deconsolidated the financial statements of its subsidiaries in Venezuela and began reporting the results under the cost method of accounting . Beginning December 1, 2017, the Company no longer includes the results of the Venezuelan subsidiaries in its consolidated financial statements. |
Income Taxes/Tax Reform | Income tax The Company is subject to U.S. and foreign income taxes. The Company accounts for income taxes following the liability method of accounting which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets are also recognized for tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets or liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. 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. The Company’s income tax expense consists of taxes currently payable, if any, plus the change during the period in the Company’s deferred tax assets and liabilities. On August 17, 2011, the Argentine government issued a new software development law and on September 9, 2013 a regulatory decree was issued that established new requirements to benefit from the new software development law. The decree establishes requirements to comply with annual incremental ratios related to exports of services and research and development expenses that must be achieved to remain within the tax holiday. The Company’s Argentine subsidiary has to achieve certain required ratios annually under the software development law in order to be eligible for the benefits mentioned below. On September 17, 2015, the Argentine Industry Secretary issued Resolution 1041/2015 approving the Company’s application for eligibility under the new software development law for the Company’s Argentine subsidiary, Mercadolibre S.R.L. As a result, the Company’s Argentine subsidiary has been granted a tax holiday retroactive from September 18, 2014. A portion of the benefits obtained is a 60% relief of total income tax related to software development activities and a 70% relief of payroll taxes related to software development activities. The benefits to the Company under the software development law will expire on December 31, 2019. As a result of the Company’s eligibility under the new law, it recorded an income tax benefit of $10,562 thousands and $3,263 thousands during the six and three-month periods ended June 30, 2018, respectively. Aggregate per share effect of the Argentine tax holiday amounted to $0.24 and $0.07 for the six and three-month periods ended June 30, 2018, respectively. Furthermore, the Company recorded a labor cost benefit of $3,735 thousands and $1,719 thousands during the six and three-month periods ended June 30, 2018, respectively. Additionally, $1,001 thousands and $349 thousands were accrued to pay software development law audit fees during the six and three-month periods ended June 30, 2018, respectively. During the six and three-month periods ended June 30, 2017 the Company recorded an income tax benefit of $11,305 thousands and $6,208 thousands, respectively. Aggregate per share effect of the Argentine tax holiday amounted to $0.26 and $0.14 for the six and three-month periods ended June 30, 2017, respectively. Furthermore, the Company recorded a labor cost benefit of $3,496 thousands and $1,505 thousands during the six and three-month periods ended June 30, 2017, respectively. Additionally, $1,036 thousands and $540 thousands were accrued to pay software development law audit fees during the six and three-month periods ended June 30, 2017, respectively. Tax reform Argentina On December 27, 2017, the Argentine Senate approved a comprehensive income tax reform effective since January 1, 2018. The Argentine tax reform, among other things, reduced the prior 35 percent income tax rate applicable to the Argentine entities to 30 percent for 2018 and 2019 and to 25 percent for 2020 and thereafter. The new regulation imposes a withholding income tax on dividends paid by Argentine entities of 7 percent for 2018 and 2019, increasing to 13 percent from 2020 forward. The new regulation also repeals the “equalization tax” (i.e., the prior 35 percent withholding tax applicable to dividends distributed in excess of the accumulated taxable income) for income accrued from January 1, 2018 forward. USA On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made broad and complex changes to the U.S. tax code, including, but not limited to, (1) requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries that is payable over eight years and (2) bonus depreciation that will allow for full expensing of qualified property. The Tax Act also established new tax laws that came into effect on January 1, 2018, including, but not limited to: (a) the elimination of the corporate alternative minimum tax (AMT); (b) the creation of the base erosion anti-abuse tax (BEAT), a new minimum tax; (c) a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries; (d) a new provision designed to tax global intangible low-taxed income (GILTI), which allows for the possibility of using foreign tax credits (FTCs) and a deduction of up to 50 percent to offset income tax liability (subject to some limitations); (e) a new limitation on deductible interest expense; (f) the repeal of the domestic production activity deduction; (g) limitations on the deductibility of certain executive compensation; (h) limitations on the use of FTCs to reduce the U.S. income tax liability; and (i) limitations on net operating losses (NOLs) generated after December 31, 2017, to 80 percent of taxable income. The Deemed Repatriation Transition Tax (Transition Tax) is a tax on previously untaxed accumulated and current earnings and profits (E&P) of certain of our foreign subsidiaries. To determine the amount of the Transition Tax, the Company must determine, in addition to other factors, the amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. The company was able to make a reasonable estimate of the Transition Tax and determine that no tax duty related to the Transition Tax is expected to be due because the estimated tax is expected to be offset with available foreign tax credits as of December 31, 2017. Accordingly, no adjustments have been made to income tax expense in 2017. The Transition Tax calculation will not be finalized until the MercadoLibre Inc. Federal Income Tax return is filed. The Company assessed whether its valuation allowance analysis is affected by various aspects of the Tax Act (including the deemed repatriation of deferred foreign income, GILTI inclusions and new categories of FTCs). As a consequence of such analysis, the Company recorded an increase in valuation allowance of $12,097 thousands to fully reserve the outstanding foreign tax credits as of December 31, 2017. The Tax Act created a new requirement that certain income (i.e., GILTI) earned by controlled foreign corporations (CFCs) must be included in the gross income of the CFCs’ U.S. shareholder. GILTI is the excess of the shareholder’s “net CFC tested income” over the net deemed tangible income return, which is currently defined as the excess of (1) 10 percent of the aggregate of the U.S. shareholder’s pro rata share of the qualified business asset investment of each CFC with respect to which it is a U.S. shareholder over (2) the amount of certain interest expenses taken into account in the determination of net CFC-tested income. Under U.S. GAAP, the Company was allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). The Company selected the period cost method. Accordingly, the Company has not recorded any impact in connection with the potential GILTI tax as of June 30, 2018 and December 31, 2017. The Company’s management considers the earnings of our foreign subsidiaries to be indefinitely reinvested, other than certain earnings the distributions of which do not imply withholdings, exchange rate differences or state income taxes, and for that reason has not recorded a deferred tax liability. As of June 30, 2018 and December 31, 2017, the Company had included under non-current deferred tax assets the foreign tax credits related to the dividend distributions received from its subsidiaries for a total amount of $13,774 thousands and $12,097 thousands, respectively. As of June 30, 2018 and December 31, 2017, the Company recorded a valuation allowance of $13,774 thousands and $12,097 thousands, respectively, to fully impair the outstanding foreign tax credits. |
Accumulated Other Comprehensive Loss | Accumulated other comprehensive loss The following table sets forth the Company’s accumulated other comprehensive loss as of June 30, 2018 and December 31, 2017: June 30, December 31, 2018 2017 (In thousands) Accumulated other comprehensive loss: Foreign currency translation $ (386,177) $ (283,647) Unrealized gains on investments 60 1,211 Unrealized losses on hedging activities (10) — Estimated tax gain (loss) on unrealized gains on investments 5 (415) $ (386,122) $ (282,851) The following tables summarize the changes in accumulated balances of other comprehensive loss for the six-month period ended June 30, 2018: Unrealized Unrealized Foreign Estimated tax (Losses) Gains on (Losses) Gains on Currency (expense) hedging activities, net Investments Translation benefit Total (In thousands) Balances as of December 31, 2017 $ — $ 1,211 $ (283,647) $ (415) $ (282,851) Other comprehensive income (loss) before reclassifications 912 60 (102,530) 5 (101,553) Amount of loss (gain) reclassified from accumulated other comprehensive loss (922) (1,211) — 415 (1,718) Net current period other comprehensive income (loss) (10) (1,151) (102,530) 420 (103,271) Ending balance $ (10) $ 60 $ (386,177) $ 5 $ (386,122) Amount of (Loss) Gain Reclassified from Details about Accumulated Accumulated Other Other Comprehensive Loss Comprehensive Affected Line Item Components Loss in the Statement of Income (In thousands) Unrealized gains on investments $ 1,211 Interest income and other financial gains Unrealized gains on hedging activities 922 Foreign currency gains (losses) Estimated tax gain on unrealized losses on investments (415) Income tax loss Total reclassifications for the period $ 1,718 Total, net of income taxes |
Use of Estimates | Use of estimates The preparation of 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 for allowances for doubtful accounts, loan receivables and chargebacks, recoverability of goodwill and intangible assets with indefinite useful life, useful life of long-lived assets and intangible assets, impairment of short-term and long-term investments, impairment of long-lived assets, compensation costs relating to the Company’s long term retention plan, fair value of convertible note debt, fair value of investments, fair value of derivative instruments, recognition of income taxes and contingencies. Actual results could differ from those estimates. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards Effective January 1, 2018, the Company adopted ASC 606 – Revenue from Contracts with Customers related to revenue recognition (“ASC 606”) issued by the Financial Accounting Standards Board (“FASB”) in 2014. ASC 606 provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The Company adopted ASC 606 using the full retrospective transition method and recast the prior reporting period presented. In connection with the MercadoEnvios service, the Company has identified a performance obligation with the seller to arrange for the transportation of the merchandise sold to the buyer using third-party carriers. As the Company acts as agent, upon adoption of ASC 606, the revenues derived from the shipping services are presented net of the respective transportation costs charged by third-party carriers and paid by the Company. As part of the business strategy, the Company may fully or partially subsidize the cost of shipping at the Company’s option. Under the current guidance the Company must account for the subsidized cost of shipping netting of revenues rather than as cost of net sales. For the six and three-month periods ended June 30, 2018, the Company incurred $209,150 thousands and $96,653 thousands, respectively, of subsidized shipping costs that have been incurred and included as a reduction of revenues. For the six and three-month periods ended June 30, 2017, the Company incurred $36,897 thousands and $32,646 thousands, respectively, of subsidized shipping costs that have been included as a reduction of revenues. Under the full retrospective method, the Company retrospectively applied ASC 606 to the six and three-month periods ended June 30, 2017. The total impact resulting from the change in presentation of shipping subsidies was a decrease in Net revenues and Cost of net revenues of $ 36,897 thousands and $32,646 thousands in the Interim Condensed Consolidated Statement of Income for the six and three-month periods ended June 30, 2017, respectively. Additionally, the adoption of ASC 606 did not modify the carrying amount of assets or liabilities as of the beginning of the first period presented, thus, there was no effect on the opening balance of retained earnings as of January 1, 2017. Furthermore, the adoption did not have a material impact on the Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017, on Net (loss) income for the six and three-month periods ended June 30, 2018 and 2017 and on the Statements of Cash Flows for the six-month periods ended June 30, 2018 and 2017. In October 2016, the FASB issued Accounting Standards Update No. 2016-16 (ASU 2016-16) "Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory." ASU 2016-16 generally accelerates the recognition of income tax consequences for asset transfers between entities under common control. The Company adopted ASU 2016-16 as of January 1, 2018 using a modified retrospective transition method, resulting in a $2,092 thousands increase to the opening balance of retained earnings . In August 2017, the FASB issued Accounting Standards Update No. 2017-12 (ASU 2017-12) "Derivatives and Hedging (Topic 815): Target improvements to accounting for hedging activities." ASU 2017-12 expands and refines hedge accounting for both non-financial and financial risk components and align the recognition and presentation effects of the hedging instrument and the hedged item in the financial statements. The amendments also make certain improvements to simplify the hedge accounting guidance and ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness. The Company early-adopted ASU 2017-12 as of April 1, 2018. The adoption did not have a material impact on the Company’s financial statements for prior periods, as the Company did not engage in hedging activities during any of the comparative periods presented. Please see Note 11 of the Company’s unaudited condensed consolidated financial statements for additional detail on hedging activities. Recently issued accounting pronouncements not yet adopted On February 25, 2016 the FASB issued ASU 2016-02. The amendments in this update create Topic 842, Leases, which supersedes Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. Previous GAAP did not require lease assets and lease liabilities to be recognized for most leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in the statement of comprehensive income and the statement of cash flows is largely unchanged from previous GAAP. Based on existing leases currently classified as operating leases, the Company expects to recognize on the statements of financial position right-of-use assets and lease liabilities. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Additionally, on July 30, 2018 the FASB issued ASU 2018-11 which includes a new guidance related to a new alternative transition method for the implementation of ASC 842, Leases. Under this new alternative transition method, comparative periods presented in financial statements in the period of adoption will not need to be restated and lessors may elect not to separate lease and non-lease components when certain conditions are met . The Company is assessing the effects that the adoption of this accounting pronouncement may have on the Company’s financial statements and expects the ASU will have a material impact, primarily to the consolidated balance sheets and related disclosures. On June 16, 2016 the FASB issued the ASU 2016-13 “Financial Instruments-Credit Losses (Topic 326): Measurement of credit losses on financial instruments”. This update amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, this update eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however this topic will require that credit losses be presented as an allowance rather than as a write-down. The new standard is effective for fiscal years beginning after December 15, 2019. The Company is assessing the effects that the adoption of this accounting pronouncement may have on its financial statements. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Accumulated Other Comprehensive Loss | June 30, December 31, 2018 2017 (In thousands) Accumulated other comprehensive loss: Foreign currency translation $ (386,177) $ (283,647) Unrealized gains on investments 60 1,211 Unrealized losses on hedging activities (10) — Estimated tax gain (loss) on unrealized gains on investments 5 (415) $ (386,122) $ (282,851) |
Summary of Changes in Accumulated Balances of Other Comprehensive Loss | Unrealized Unrealized Foreign Estimated tax (Losses) Gains on (Losses) Gains on Currency (expense) hedging activities, net Investments Translation benefit Total (In thousands) Balances as of December 31, 2017 $ — $ 1,211 $ (283,647) $ (415) $ (282,851) Other comprehensive income (loss) before reclassifications 912 60 (102,530) 5 (101,553) Amount of loss (gain) reclassified from accumulated other comprehensive loss (922) (1,211) — 415 (1,718) Net current period other comprehensive income (loss) (10) (1,151) (102,530) 420 (103,271) Ending balance $ (10) $ 60 $ (386,177) $ 5 $ (386,122) |
Reclassifications Out of Accumulated Other Comprehensive Loss | Amount of (Loss) Gain Reclassified from Details about Accumulated Accumulated Other Other Comprehensive Loss Comprehensive Affected Line Item Components Loss in the Statement of Income (In thousands) Unrealized gains on investments $ 1,211 Interest income and other financial gains Unrealized gains on hedging activities 922 Foreign currency gains (losses) Estimated tax gain on unrealized losses on investments (415) Income tax loss Total reclassifications for the period $ 1,718 Total, net of income taxes |
Net (Loss) Income Per Share (Ta
Net (Loss) Income Per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Net (Loss) Income Per Share [Abstract] | |
Net (Loss) Income Per Share of Common Stock | Six Months Ended June 30, Three Months Ended June 30, 2018 2017 2018 2017 (In thousands) (In thousands) Basic Diluted Basic Diluted Basic Diluted Basic Diluted Net (loss) income per common share $ (0.55) $ (0.55) $ 1.22 $ 1.22 $ (0.25) $ (0.25) $ 0.12 $ 0.12 Numerator: Net (loss) income $ (24,171) $ (24,171) $ 53,834 $ 53,834 $ (11,251) $ (11,251) $ 5,316 $ 5,316 Denominator: Weighted average of common stock outstanding for Basic earnings per share 44,157,364 — 44,157,364 — 44,157,364 — 44,157,364 — Adjusted weighted average of common stock outstanding for Diluted earnings per share — 44,157,364 — 44,157,364 — 44,157,364 — 44,157,364 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets [Abstract] | |
Composition of Goodwill and Intangible Assets | June 30, December 31, 2018 2017 (In thousands) Goodwill $ 83,637 $ 92,279 Intangible assets with indefinite lives - Trademarks 10,707 11,587 Amortizable intangible assets - Licenses and others 5,724 6,175 - Non-compete agreement 2,146 2,689 - Customer list 14,996 16,584 - Trademarks 1,706 1,772 Total intangible assets $ 35,279 $ 38,807 Accumulated amortization (16,023) (15,633) Total intangible assets, net $ 19,256 $ 23,174 |
Changes in Carrying Amount of Goodwill | Period ended June 30, 2018 Brazil Argentina Mexico Chile Colombia Other Countries Total (In thousands) Balance, beginning of the period $ 32,492 $ 5,761 $ 30,396 $ 18,805 $ 3,632 $ 1,193 $ 92,279 - Effect of exchange rates changes (5,405) (1,990) 569 (1,793) (41) 18 (8,642) Balance, end of the period $ 27,087 $ 3,771 $ 30,965 $ 17,012 $ 3,591 $ 1,211 $ 83,637 Year ended December 31, 2017 Brazil Argentina Mexico Chile Venezuela Colombia Other Countries Total (In thousands) Balance, beginning of the year $ 27,660 $ 6,587 $ 29,342 $ 17,388 $ 5,989 $ 3,643 $ 1,188 $ 91,797 - Business acquisition 5,966 — — — — — — 5,966 - Effect of exchange rates changes (1,134) (826) 1,054 1,417 — (11) 5 505 - Deconsolidation of Venezuelan subsidiaries — — — — (5,989) — — (5,989) Balance, end of the year $ 32,492 $ 5,761 $ 30,396 $ 18,805 $ — $ 3,632 $ 1,193 $ 92,279 |
Expected Intangible Asset Amortization Expense | For year ended 12/31/2018 $ 1,551 For year ended 12/31/2019 2,673 For year ended 12/31/2020 1,677 For year ended 12/31/2021 1,240 Thereafter 1,408 $ 8,549 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Financial Performance of Company's Reporting Segments | Six Months Ended June 30, 2018 Brazil Argentina Mexico Other Countries Total (In thousands) Net revenues $ 379,994 $ 202,049 $ 34,605 $ 39,705 $ 656,353 Direct costs (353,967) (125,346) (65,857) (38,361) (583,531) Direct contribution (loss) 26,027 76,703 (31,252) 1,344 72,822 Operating expenses and indirect costs of net revenues (130,483) Loss from operations (57,661) Other income (expenses): Interest income and other financial gains 19,110 Interest expense and other financial losses (23,936) Foreign currency gains 18,178 Net loss before income tax gain $ (44,309) Six Months Ended June 30, 2017 Brazil Argentina Mexico Venezuela Other Countries Total (In thousands) Net revenues $ 316,922 $ 159,394 $ 22,129 $ 28,578 $ 26,535 $ 553,558 Direct costs (184,238) (94,763) (46,050) (12,259) (22,253) (359,563) Impairment of Long-lived Assets - - - (2,837) - (2,837) Direct contribution (loss) 132,684 64,631 (23,921) 13,482 4,282 191,158 Operating expenses and indirect costs of net revenues (97,818) Income from operations 93,340 Other income (expenses): Interest income and other financial gains 22,820 Interest expense and other financial losses (12,977) Foreign currency losses (21,097) Net income before income tax expense $ 82,086 Three Months Ended June 30, 2018 Brazil Argentina Mexico Other Countries Total (In thousands) Net revenues $ 195,839 $ 100,110 $ 17,540 $ 21,888 $ 335,377 Direct costs (176,987) (68,051) (39,534) (21,088) (305,660) Direct contribution (loss) 18,852 32,059 (21,994) 800 29,717 Operating expenses and indirect costs of net revenues (57,958) Loss from operations (28,241) Other income (expenses): Interest income and other financial gains 9,915 Interest expense and other financial losses (13,202) Foreign currency gains 12,577 Net loss before income tax gain $ (18,951) Three Months Ended June 30, 2017 Brazil Argentina Mexico Venezuela Other Countries Total (In thousands) Net revenues $ 157,152 $ 87,992 $ 10,803 $ 14,181 $ 13,754 $ 283,882 Direct costs (97,200) (49,697) (33,420) (5,708) (12,555) (198,580) Impairment of Long-lived Assets - - - (2,837) - (2,837) Direct contribution (loss) 59,952 38,295 (22,617) 5,636 1,199 82,465 Operating expenses and indirect costs of net revenues (52,440) Income from operations 30,025 Other income (expenses): Interest income and other financial gains 10,663 Interest expense and other financial losses (6,506) Foreign currency losses (21,760) Net income before income tax expense $ 12,422 |
Allocation of Long-Lived Tangible Assets Based on Geography | June 30, December 31, 2018 2017 (In thousands) US property and equipment, net $ 4,623 $ 7,037 Other countries Argentina 24,437 26,028 Brazil 67,524 68,796 Mexico 5,952 3,570 Other countries 10,634 9,406 $ 108,547 $ 107,800 Total property and equipment, net $ 113,170 $ 114,837 |
Allocation of Goodwill and Intangible Assets Based on Geography | June 30, December 31, 2018 2017 (In thousands) US intangible assets $ 71 $ 119 Other countries goodwill and intangible assets Argentina 4,056 6,059 Brazil 30,221 36,462 Mexico 36,783 38,600 Chile 26,510 28,985 Other countries 5,252 5,228 $ 102,822 $ 115,334 Total goodwill and intangible assets $ 102,893 $ 115,453 |
Consolidated Net Revenues by Similar Products and Services | Six months Ended June 30, Three months Ended June 30, Consolidated Net Revenues 2018 2017 2018 2017 (In thousands) (In thousands) Enhanced Marketplace (*) $ 296,897 $ 357,939 $ 156,202 $ 180,012 Non-marketplace (**) (***) 359,456 195,619 179,175 103,870 Total $ 656,353 $ 553,558 $ 335,377 $ 283,882 (*) Includes Final Value Fees and Shipping fees. (**) Includes, among other things, Ad Sales, Classified Fees, Payment Fees and other ancillary services. (***) Includes $288,678 thousands and $140,173 thousands of Payment Fees for the six-month periods ended June 30, 2018 and 2017, respectively. |
Fair Value Measurement of Ass24
Fair Value Measurement of Assets and Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Measurement of Assets and Liabilities [Abstract] | |
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | Quoted Prices in Quoted Prices in Balances as of active markets for Significant other Balances as of active markets for Significant other June 30, identical Assets observable inputs December 31, identical Assets observable inputs Description 2018 (Level 1) (Level 2) 2017 (Level 1) (Level 2) (In thousands) Assets Cash and Cash Equivalents: Money Market Funds $ 240,137 $ 240,137 $ — $ 85,337 $ 85,337 $ — Restricted Cash and cash equivalents: Money Market Funds $ 34,854 34,854 — — — — Investments: Sovereign Debt Securities $ 4,039 $ 4,039 $ — $ 15,896 $ 15,896 $ — Corporate Debt Securities 6,404 5,973 431 24,313 15,512 8,801 Other Assets: Derivative Instruments $ 1,493 $ — $ 1,493 $ — $ — $ — Total Financial Assets $ 286,927 $ 285,003 $ 1,924 $ 125,546 $ 116,745 $ 8,801 Liabilities: Long-term retention plan 36,577 — 36,577 43,227 — 43,227 Total Financial Liabilities $ 36,577 $ — $ 36,577 $ 43,227 $ — $ 43,227 |
Fair Value of Financial Assets and Liabilities Measured at Amortized Cost | Balances as of Significant other Balances as of Significant other June 30, observable inputs December 31, observable inputs 2018 (Level 2) 2017 (Level 2) (In thousands) Assets Time Deposits $ 68,712 $ 68,712 $ 202,820 $ 202,820 Accounts receivable 27,470 27,470 28,168 28,168 Credit Cards receivable 307,614 307,614 521,130 521,130 Loans receivable, net 112,066 112,066 73,409 73,409 Other assets 105,091 105,091 101,552 101,552 Total Assets $ 620,953 $ 620,953 $ 927,079 $ 927,079 Liabilities Accounts payable and accrued expenses $ 226,101 $ 226,101 $ 221,095 $ 221,095 Funds payable to customers 498,623 498,623 583,107 583,107 Salaries and social security payable 32,589 32,589 46,828 46,828 Taxes payable 28,300 28,300 32,150 32,150 Dividends payable — — 6,624 6,624 Loans payable and other financial liabilities (*) 480,019 487,560 368,414 379,500 Other liabilities 39,329 39,329 22,144 22,144 Total Liabilities $ 1,304,961 $ 1,312,502 $ 1,280,362 $ 1,291,448 (*) The fair value of the convertible senior notes (including the equity component) is disclosed in Note 9. |
Fair Value of Money Market Funds, Short and Long-Term Investments Classified as Available for Sale Securities | June 30, 2018 Cost Gross Unrealized Gains (1) Gross Unrealized Losses (1) Estimated Fair Value (In thousands) Cash and cash equivalents Money Market Funds $ 240,137 $ — $ — $ 240,137 Total Cash and cash equivalents $ 240,137 $ — $ — $ 240,137 Restricted cash and cash equivalents Money Market Funds $ 34,854 $ — $ — $ 34,854 Total Restricted cash and cash equivalents $ 34,854 $ — $ — $ 34,854 Short-term investments Corporate Debt Securities 412 — (3) 409 Sovereign Debt Securities 314 — (3) 311 Total Short-term investments $ 726 $ — $ (6) $ 720 Long-term investments Sovereign Debt Securities $ 3,762 $ — $ (34) $ 3,728 Corporate Debt Securities 6,087 — (92) 5,995 Total Long-term investments $ 9,849 $ — $ (126) $ 9,723 Total $ 285,566 $ — $ (132) $ 285,434 December 31, 2017 Cost Gross Unrealized Gains (1) Gross Unrealized Losses (1) Estimated Fair Value (In thousands) Cash and cash equivalents Money Market Funds $ 85,337 $ — $ — $ 85,337 Total Cash and cash equivalents $ 85,337 $ — $ — $ 85,337 Short-term investments Sovereign Debt Securities $ 2,235 $ — $ (10) $ 2,225 Corporate Debt Securities 4,396 — (9) 4,387 Total Short-term investments $ 6,631 $ — $ (19) $ 6,612 Long-term investments Sovereign Debt Securities $ 13,821 $ — $ (150) $ 13,671 Corporate Debt Securities 20,054 — (128) 19,926 Total Long-term investments $ 33,875 $ — $ (278) $ 33,597 Total $ 125,843 $ — $ (297) $ 125,546 (1) Unrealized gains (losses) from securities are attributable to market price movements, net foreign exchange losses and foreign currency translation. Management does not believe any remaining significant unrealized losses represent other-than-temporary impairments based on the evaluation of available evidence including the credit rating of the investments, as of June 30, 2018 and December 31, 2017. |
Estimated Fair Values of Cash Equivalents, Short-Term and Long-Term Investments, Effective Maturities | One year or less 275,711 One year to two years 5,297 Two years to three years 3,554 Three years to four years 769 Four years to five years 103 Total $ 285,434 |
Long Term Retention Plan (Table
Long Term Retention Plan (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Long Term Retention Plan [Abstract] | |
Long Term Retention Plans Accrued Compensation Expense | Six Months Ended June 30, Three Months Ended June 30, 2018 2017 2018 2017 (In thousands) (In thousands) LTRP 2009 $ - $ 29 $ - $ - LTRP 2010 24 744 (29) 417 LTRP 2011 487 1,193 (175) 704 LTRP 2012 799 1,630 (326) 982 LTRP 2013 1,422 3,098 (327) 1,802 LTRP 2014 1,712 3,010 (372) 1,745 LTRP 2015 2,317 3,617 (499) 2,031 LTRP 2016 3,416 5,111 (492) 2,871 LTRP 2017 3,513 3,636 173 2,353 LTRP 2018 3,102 - 3,102 - Total LTRP $ 16,792 $ 22,068 $ 1,055 $ 12,905 |
2.25% Convertible Senior Note26
2.25% Convertible Senior Notes Due 2019 (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
2.25% Convertible Senior Notes Due 2019 [Abstract] | |
Carrying Amounts of Liability and Equity Components | June 30, 2018 December 31, 2017 (In thousands) Amount of the equity component (1) $ 45,808 $ 45,808 2.25% convertible senior notes due 2019 $ 329,968 $ 329,972 Unamortized debt discount (2) (10,453) (15,469) Unamortized transaction costs related to the debt component (1,711) (2,509) Contractual coupon interest accrual 3,713 7,425 Contractual coupon interest payment (3,713) (7,425) Net carrying amount $ 317,804 $ 311,994 (1) Net of $1,177 thousands of transaction costs related to the equity component of the Notes. (2) As of June 30, 2018 , the remaining period over which the unamortized debt discount will be amortized is 1 year. |
Summary of Interest Expense for Contractual Interest and Accretion of Debt Discount | Six month periods ended June 30, Three month periods ended June 30, 2018 2017 2018 2017 (In thousands) (In thousands) (In thousands) (In thousands) Contractual coupon interest expense $ 3,713 $ 3,713 $ 1,857 $ 1,857 Amortization of debt discount 5,016 4,748 2,508 2,374 Amortization of debt issuance costs 798 725 399 362 Total interest expense related to the Notes $ 9,527 $ 9,186 $ 4,764 $ 4,593 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments [Abstract] | |
Fair Value Of Derivative Instruments | June 30, December 31, Balance sheet location 2018 2017 (In thousands) Derivative assets Foreign exchange contracts designated as cash flow hedges Other current Assets $ 790 $ — Foreign exchange contracts not designated as hedging instruments Other current Assets 703 — $ 1,493 $ — |
Securitization Transactions (Ta
Securitization Transactions (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Securitization Transactions [Abstract] | |
Aassets And Liabilities Of The Trust | June 30, 2018 Assets (in thousands) Current assets: Restricted cash and cash equivalents $ 34,854 Accounts receivable, net 760 Loans receivable, net 70,844 Total current assets 106,458 Total assets $ 106,458 Liabilities Current liabilities: Accounts payable and accrued expenses $ 77 Funds payable to customers 1 Loans payable and other financial liabilities 131 Total current liabilities 209 Non-current liabilities: Loans payable and other financial liabilities 15,548 Total non-current liabilities 15,548 Total liabilities $ 15,757 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Significant Accounting Policies [Line Items] | |||||||||
Percentage of revenues and operating costs generated in foreign operations | 99.50% | 97.60% | |||||||
Long-lived assets, intangible assets and goodwill located in the foreign operations | $ 211,369 | $ 211,369 | $ 223,134 | ||||||
Tax Cuts and Jobs Act of 2017, Incomplete Accounting, Transition Tax for Accumulated Foreign Earnings, Provisional Income Tax Expense (Benefit) | 0 | ||||||||
Tax Cuts and Jobs Act of 2017, Foreign Tax Credits, Valuation Allowance | 12,097 | ||||||||
Foreign tax credit, valuation allowance | 13,774 | 13,774 | 12,097 | ||||||
Allowance for doubtful accounts, loan receivables and chargebacks | 29,807 | 29,807 | 19,734 | ||||||
Deferred Revenue | 5,931 | 5,931 | 6,116 | $ 1,955 | |||||
Deferred Revenue, Revenue Recognized | $ 5,395 | $ 2,043 | |||||||
Percentage on relief of total income tax | 60.00% | ||||||||
Percentage on relief of payroll tax | 70.00% | ||||||||
Foreign tax credit | 13,774 | $ 13,774 | 12,097 | ||||||
Shipping costs | 96,653 | $ 32,646 | 209,150 | 36,897 | |||||
Accounting Standards Update 2016-16 [Member] | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Increase to the opening balance of retained earnings | $ 2,092 | ||||||||
Accounting Standards Update 2014-09 [Member] | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Amount effected by change in accounting standard | 32,646 | 36,897 | |||||||
Argentina [Member] | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Percent income tax rate | 35.00% | ||||||||
New Software Development Law [Member] | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Income tax gain | 3,263 | 6,208 | 10,562 | 11,305 | |||||
Labor cost benefit | $ 1,719 | $ 1,505 | $ 3,735 | $ 3,496 | |||||
Aggregate per share effect of the Argentine tax holiday | $ 0.07 | $ 0.14 | $ 0.24 | $ 0.26 | |||||
Software development law audit fees | $ 349 | $ 540 | $ 1,001 | $ 1,036 | |||||
Scenario, Plan [Member] | Argentina [Member] | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Percent income tax rate | 25.00% | 30.00% | 30.00% | ||||||
Withholding income tax on dividends paid percent | 13.00% | 7.00% | 7.00% | ||||||
Argentinean Subsidiaries [Member] | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Monetaty Assets | 286,664 | 286,664 | |||||||
Monetaty Liabilities | $ 259,028 | $ 259,028 |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Summary of Significant Accounting Policies [Abstract] | ||
Foreign currency translation | $ (386,177) | $ (283,647) |
Unrealized gains on investments | 60 | 1,211 |
Unrealized lossed on hedging activities | (10) | |
Estimated tax gain (loss) on unrealized gains on investments | 5 | (415) |
Accumulated other comprehensive loss | $ (386,122) | $ (282,851) |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Summary of Changes in Accumulated Balances of Other Comprehensive Loss) (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |
Beginning Balance, Estimated tax (expense) benefit | $ (415) |
Other comprehensive income (loss) before reclassifications, Estimated tax (expense) benefit | 5 |
Amount of loss (gain) reclassified from accumulated other comprehensive loss, Estimated tax (expense) benefit | 415 |
Net current period other comprehensive income (loss), Estimated tax (expense) benefit | 420 |
Ending Balance, Estimated tax (expense) benefit | 5 |
Beginning Balance | (282,851) |
Other comprehensive income (loss) before reclassifications, net of tax | (101,553) |
Amount of loss (gain) reclassified from accumulated other comprehensive loss, net of tax | (1,718) |
Net current period other comprehensive income (loss), net of tax | (103,271) |
Ending Balance | (386,122) |
Unrealized (Losses) Gains on Hedging Activities, Net [Member] | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |
Other comprehensive income (loss) before reclassifications, before tax | 912 |
Amount of loss (gain) reclassified from accumulated other comprehensive loss, before tax | (922) |
Net current period other comprehensive income (loss), before tax | (10) |
Ending Balance | (10) |
Unrealized (Loss) Gains on Investments [Member] | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |
Beginning Balance | 1,211 |
Other comprehensive income (loss) before reclassifications, before tax | 60 |
Amount of loss (gain) reclassified from accumulated other comprehensive loss, before tax | (1,211) |
Net current period other comprehensive income (loss), before tax | (1,151) |
Ending Balance | 60 |
Foreign Currency Translation [Member] | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |
Beginning Balance | (283,647) |
Other comprehensive income (loss) before reclassifications, before tax | (102,530) |
Net current period other comprehensive income (loss), before tax | (102,530) |
Ending Balance | $ (386,177) |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Reclassifications Out of Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Interest income and other financial gains | $ 9,915 | $ 10,663 | $ 19,110 | $ 22,820 |
Foreign currency gains (losses) | 12,577 | (21,760) | 18,178 | (21,097) |
Income tax gain | 7,700 | (7,106) | 20,138 | (28,252) |
Net (loss) income | $ (11,251) | $ 5,316 | (24,171) | $ 53,834 |
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Income tax gain | (415) | |||
Net (loss) income | 1,718 | |||
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss [Member] | Unrealized (Loss) Gains on Investments [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Interest income and other financial gains | 1,211 | |||
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss [Member] | Unrealized (Losses) Gains on Hedging Activities, Net [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Foreign currency gains (losses) | $ 922 |
Net (Loss) Income Per Share (Na
Net (Loss) Income Per Share (Narrative) (Details) - 2.25% Convertible Senior Notes Due 2019 [Member] - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2014 |
Debt Instrument [Line Items] | |||
Convertible senior notes, issued | $ 329,968,000 | $ 329,972,000 | $ 330,000,000 |
Convertible senior notes, interest rate | 2.25% | 2.25% |
Net (Loss) Income Per Share (Ne
Net (Loss) Income Per Share (Net (Loss) Income Per Share of Common Stock) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Net income attributable to MercadoLibre, Inc. per common share | ||||
Net (loss) income per common share, Basic | $ (0.25) | $ 0.12 | $ (0.55) | $ 1.22 |
Net (loss) income per common share, Diluted | $ (0.25) | $ 0.12 | $ (0.55) | $ 1.22 |
Numerator: | ||||
Net (loss) income, Basic | $ (11,251) | $ 5,316 | $ (24,171) | $ 53,834 |
Net (loss) income, Diluted | $ (11,251) | $ 5,316 | $ (24,171) | $ 53,834 |
Denominator: | ||||
Weighted average of common stock outstanding for Basic earnings per share | 44,157,364 | 44,157,364 | 44,157,364 | 44,157,364 |
Adjusted weighted average of common stock outstanding for Diluted earnings per share | 44,157,364 | 44,157,364 | 44,157,364 | 44,157,364 |
Goodwill and Intangible Asset35
Goodwill and Intangible Assets (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Goodwill and Intangible Assets [Abstract] | ||||
Aggregate amortization expense for intangible assets | $ 1,656 | $ 1,035 | $ 3,328 | $ 2,065 |
Goodwill and Intangible Asset36
Goodwill and Intangible Assets (Composition of Goodwill and Intangible Assets) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Indefinite-lived Intangible Assets [Line Items] | |||
Goodwill | $ 83,637 | $ 92,279 | $ 91,797 |
Total intangible assets | 35,279 | 38,807 | |
Accumulated amortization | (16,023) | (15,633) | |
Total intangible assets, net | 19,256 | 23,174 | |
Licenses And Others [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Amortizable intangible assets | 5,724 | 6,175 | |
Non-Compete Agreement [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Amortizable intangible assets | 2,146 | 2,689 | |
Customer Lists [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Amortizable intangible assets | 14,996 | 16,584 | |
Trademarks [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Amortizable intangible assets | 1,706 | 1,772 | |
Trademarks [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Intangible assets with indefinite lives | $ 10,707 | $ 11,587 |
Goodwill and Intangible Asset37
Goodwill and Intangible Assets (Changes in Carrying Amount of Goodwill) (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Goodwill [Line Items] | ||
Balance, beginning of the period | $ 92,279 | $ 91,797 |
Business acquisition | 5,966 | |
Effect of exchange rates changes | (8,642) | 505 |
Deconsolidation of Venezuelan subsidiaries | (5,989) | |
Balance, end of the period | 83,637 | 92,279 |
Brazil [Member] | ||
Goodwill [Line Items] | ||
Balance, beginning of the period | 32,492 | 27,660 |
Business acquisition | 5,966 | |
Effect of exchange rates changes | (5,405) | (1,134) |
Balance, end of the period | 27,087 | 32,492 |
Argentina [Member] | ||
Goodwill [Line Items] | ||
Balance, beginning of the period | 5,761 | 6,587 |
Effect of exchange rates changes | (1,990) | (826) |
Balance, end of the period | 3,771 | 5,761 |
Mexico [Member] | ||
Goodwill [Line Items] | ||
Balance, beginning of the period | 30,396 | 29,342 |
Effect of exchange rates changes | 569 | 1,054 |
Balance, end of the period | 30,965 | 30,396 |
Chile [Member] | ||
Goodwill [Line Items] | ||
Balance, beginning of the period | 18,805 | 17,388 |
Effect of exchange rates changes | (1,793) | 1,417 |
Balance, end of the period | 17,012 | 18,805 |
Venezuela [Member] | ||
Goodwill [Line Items] | ||
Balance, beginning of the period | 5,989 | |
Deconsolidation of Venezuelan subsidiaries | (5,989) | |
Balance, end of the period | ||
Colombia [Member] | ||
Goodwill [Line Items] | ||
Balance, beginning of the period | 3,632 | 3,643 |
Effect of exchange rates changes | (41) | (11) |
Balance, end of the period | 3,591 | 3,632 |
Other Countries [Member] | ||
Goodwill [Line Items] | ||
Balance, beginning of the period | 1,193 | 1,188 |
Effect of exchange rates changes | 18 | 5 |
Balance, end of the period | $ 1,211 | $ 1,193 |
Goodwill and Intangible Asset38
Goodwill and Intangible Assets (Expected Intangible Asset Amortization Expense) (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Goodwill and Intangible Assets [Abstract] | |
For year ended 12/31/2018 | $ 1,551 |
For year ended 12/31/2019 | 2,673 |
For year ended 12/31/2020 | 1,677 |
For year ended 12/31/2021 | 1,240 |
Thereafter | 1,408 |
Total remaining amortization of intangible assets | $ 8,549 |
Segment Reporting (Financial Pe
Segment Reporting (Financial Performance of Company's Reporting Segments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Net revenues | $ 335,377 | $ 283,882 | $ 656,353 | $ 553,558 |
Direct costs | (305,660) | (198,580) | (583,531) | (359,563) |
Impairment of Long-Lived Assets | (2,837) | (2,837) | ||
Direct contribution (loss) | 29,717 | 82,465 | 72,822 | 191,158 |
Operating expenses and indirect costs of net revenues | (57,958) | (52,440) | (130,483) | (97,818) |
(Loss) income from operations | (28,241) | 30,025 | (57,661) | 93,340 |
Other income (expenses): | ||||
Interest income and other financial gains | 9,915 | 10,663 | 19,110 | 22,820 |
Interest expense and other financial losses | (13,202) | (6,506) | (23,936) | (12,977) |
Foreign currency gains | 12,577 | (21,760) | 18,178 | (21,097) |
Net (loss) income before income tax gain (expense) | (18,951) | 12,422 | (44,309) | 82,086 |
Operating Segments [Member] | Brazil Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 195,839 | 157,152 | 379,994 | 316,922 |
Direct costs | (176,987) | (97,200) | (353,967) | (184,238) |
Direct contribution (loss) | 18,852 | 59,952 | 26,027 | 132,684 |
Operating Segments [Member] | Argentina Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 100,110 | 87,992 | 202,049 | 159,394 |
Direct costs | (68,051) | (49,697) | (125,346) | (94,763) |
Direct contribution (loss) | 32,059 | 38,295 | 76,703 | 64,631 |
Operating Segments [Member] | Mexico Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 17,540 | 10,803 | 34,605 | 22,129 |
Direct costs | (39,534) | (33,420) | (65,857) | (46,050) |
Direct contribution (loss) | (21,994) | (22,617) | (31,252) | (23,921) |
Operating Segments [Member] | Venezuela Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 14,181 | 28,578 | ||
Direct costs | (5,708) | (12,259) | ||
Impairment of Long-Lived Assets | (2,837) | (2,837) | ||
Direct contribution (loss) | 5,636 | 13,482 | ||
Operating Segments [Member] | Other Countries Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 21,888 | 13,754 | 39,705 | 26,535 |
Direct costs | (21,088) | (12,555) | (38,361) | (22,253) |
Direct contribution (loss) | $ 800 | $ 1,199 | $ 1,344 | $ 4,282 |
Segment Reporting (Allocation o
Segment Reporting (Allocation of Long-Lived Tangible Assets Based on Geography) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | $ 113,170 | $ 114,837 |
US [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 4,623 | 7,037 |
Argentina [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 24,437 | 26,028 |
Brazil [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 67,524 | 68,796 |
Mexico [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 5,952 | 3,570 |
Other Countries [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 10,634 | 9,406 |
Total Other Countries [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | $ 108,547 | $ 107,800 |
Segment Reporting (Allocation41
Segment Reporting (Allocation of Goodwill and Intangible Assets Based on Geography) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total goodwill and intangible assets | $ 102,893 | $ 115,453 |
US [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total goodwill and intangible assets | 71 | 119 |
Argentina [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total goodwill and intangible assets | 4,056 | 6,059 |
Brazil [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total goodwill and intangible assets | 30,221 | 36,462 |
Mexico [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total goodwill and intangible assets | 36,783 | 38,600 |
Chile [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total goodwill and intangible assets | 26,510 | 28,985 |
Other Countries [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total goodwill and intangible assets | 5,252 | 5,228 |
Total Other Countries [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total goodwill and intangible assets | $ 102,822 | $ 115,334 |
Segment Reporting (Consolidated
Segment Reporting (Consolidated Net Revenues by Similar Products and Services) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | $ 335,377 | $ 283,882 | $ 656,353 | $ 553,558 | |
Enchanced Marketplace [Member] | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | [1] | 156,202 | 180,012 | 296,897 | 357,939 |
Non-marketplace [Member] | |||||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||||
Net revenues | [2],[3] | 179,175 | 103,870 | 359,456 | 195,619 |
Payment fees | $ 143,915 | $ 75,013 | $ 288,678 | $ 140,173 | |
[1] | Includes Final Value Fees and Shipping fees. | ||||
[2] | Includes $288,678 thousands and $140,173 thousands of Payment Fees for the six-month periods ended June 30, 2018 and 2017, respectively. Includes an amount of $143,915 thousands and $75,013 thousands of Payment Fees for the three-month periods ended June 30, 2018 and 2017, respectively. | ||||
[3] | Includes, among other things, Ad Sales, Classified Fees, Payment Fees and other ancillary services. |
Fair Value Measurement of Ass43
Fair Value Measurement of Assets and Liabilities (Narrative) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Non-financial assets | $ 0 | $ 0 |
Non-financial liabilities | 0 | 0 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Convertible senior notes | 325,345 | |
Auction Rate Securities [Member] | Direct Investment [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investments | $ 0 | $ 0 |
Fair Value Measurement of Ass44
Fair Value Measurement of Assets and Liabilities (Financial Assets and Liabilities Measured at Fair Value on Recurring Basis) (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Financial Assets | $ 286,927 | $ 125,546 |
Long-term retention plan | 36,577 | 43,227 |
Total Financial Liabilities | 36,577 | 43,227 |
Derivative Instruments [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other Assets | 1,493 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Financial Assets | 285,003 | 116,745 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Financial Assets | 1,924 | 8,801 |
Long-term retention plan | 36,577 | 43,227 |
Total Financial Liabilities | 36,577 | 43,227 |
Significant Other Observable Inputs (Level 2) [Member] | Derivative Instruments [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other Assets | 1,493 | |
Money Market Funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and Cash Equivalents | 240,137 | 85,337 |
Restricted Cash and cash equivalents | 34,854 | |
Money Market Funds [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and Cash Equivalents | 240,137 | 85,337 |
Restricted Cash and cash equivalents | 34,854 | |
Sovereign Debt Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 4,039 | 15,896 |
Sovereign Debt Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 4,039 | 15,896 |
Corporate Debt Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 6,404 | 24,313 |
Corporate Debt Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 5,973 | 15,512 |
Corporate Debt Securities [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | $ 431 | $ 8,801 |
Fair Value Measurement of Ass45
Fair Value Measurement of Assets and Liabilities (Fair Value of Financial Assets and Liabilities Measured at Amortized Cost) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Assets | $ 620,953 | $ 927,079 | |
Liabilities | 1,304,961 | 1,280,362 | |
Accounts Payable And Accrued Expenses [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Liabilities | 226,101 | 221,095 | |
Funds Payable to Customers [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Liabilities | 498,623 | 583,107 | |
Salaries and Social Security Payable [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Liabilities | 32,589 | 46,828 | |
Taxes Payable [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Liabilities | 28,300 | 32,150 | |
Dividends Payable [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Liabilities | 6,624 | ||
Loans Payable and Other Financial Liabilities [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Liabilities | [1] | 480,019 | 368,414 |
Other Liabilities [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Liabilities | 39,329 | 22,144 | |
Significant Other Observable Inputs (Level 2) [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Assets | 620,953 | 927,079 | |
Liabilities | 1,312,502 | 1,291,448 | |
Significant Other Observable Inputs (Level 2) [Member] | Accounts Payable And Accrued Expenses [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Liabilities | 226,101 | 221,095 | |
Significant Other Observable Inputs (Level 2) [Member] | Funds Payable to Customers [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Liabilities | 498,623 | 583,107 | |
Significant Other Observable Inputs (Level 2) [Member] | Salaries and Social Security Payable [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Liabilities | 32,589 | 46,828 | |
Significant Other Observable Inputs (Level 2) [Member] | Taxes Payable [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Liabilities | 28,300 | 32,150 | |
Significant Other Observable Inputs (Level 2) [Member] | Dividends Payable [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Liabilities | 6,624 | ||
Significant Other Observable Inputs (Level 2) [Member] | Loans Payable and Other Financial Liabilities [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Liabilities | [1] | 487,560 | 379,500 |
Significant Other Observable Inputs (Level 2) [Member] | Other Liabilities [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Liabilities | 39,329 | 22,144 | |
Time Deposits [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Assets | 68,712 | 202,820 | |
Time Deposits [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Assets | 68,712 | 202,820 | |
Accounts Receivable [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Assets | 27,470 | 28,168 | |
Accounts Receivable [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Assets | 27,470 | 28,168 | |
Credit Card Receivables [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Assets | 307,614 | 521,130 | |
Credit Card Receivables [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Assets | 307,614 | 521,130 | |
Loans Receivable, Net [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Assets | 112,066 | 73,409 | |
Loans Receivable, Net [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Assets | 112,066 | 73,409 | |
Other Assets [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Assets | 105,091 | 101,552 | |
Other Assets [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Assets | $ 105,091 | $ 101,552 | |
[1] | The fair value of the convertible senior notes (including the equity component) is disclosed in Note 9. |
Fair Value Measurement of Ass46
Fair Value Measurement of Assets and Liabilities (Fair Value of Money Market Funds, Short and Long-Term Investments Classified as Available for Sale Securities) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | |
Schedule of Available-for-sale Securities [Line Items] | |||
Cost | $ 285,566 | $ 125,843 | |
Gross Unrealized Losses | (132) | (297) | [1] |
Estimated Fair Value | 285,434 | 125,546 | |
Cash and Cash Equivalents [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Cost | 240,137 | 85,337 | |
Estimated Fair Value | 240,137 | 85,337 | |
Cash and Cash Equivalents [Member] | Money Market Funds [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Cost | 240,137 | 85,337 | |
Estimated Fair Value | 240,137 | 85,337 | |
Restricted Cash and Cash Equivalents [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Cost | 34,854 | ||
Estimated Fair Value | 34,854 | ||
Restricted Cash and Cash Equivalents [Member] | Money Market Funds [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Cost | 34,854 | ||
Estimated Fair Value | 34,854 | ||
Short-term Investments [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Cost | 726 | 6,631 | |
Gross Unrealized Losses | (6) | (19) | [1] |
Estimated Fair Value | 720 | 6,612 | |
Short-term Investments [Member] | Sovereign Debt Securities [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Cost | 314 | 2,235 | |
Gross Unrealized Losses | (3) | (10) | [1] |
Estimated Fair Value | 311 | 2,225 | |
Short-term Investments [Member] | Corporate Debt Securities [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Cost | 412 | 4,396 | |
Gross Unrealized Losses | (3) | (9) | [1] |
Estimated Fair Value | 409 | 4,387 | |
Long-term Investments [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Cost | 9,849 | 33,875 | |
Gross Unrealized Losses | (126) | (278) | [1] |
Estimated Fair Value | 9,723 | 33,597 | |
Long-term Investments [Member] | Sovereign Debt Securities [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Cost | 3,762 | 13,821 | |
Gross Unrealized Losses | (34) | (150) | [1] |
Estimated Fair Value | 3,728 | 13,671 | |
Long-term Investments [Member] | Corporate Debt Securities [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Cost | 6,087 | 20,054 | |
Gross Unrealized Losses | (92) | (128) | [1] |
Estimated Fair Value | $ 5,995 | $ 19,926 | |
[1] | Unrealized gains (losses) from securities are attributable to market price movements, net foreign exchange losses and foreign currency translation. Management does not believe any remaining significant unrealized losses represent other-than-temporary impairments based on the evaluation of available evidence including the credit rating of the investments, as of June 30, 2018 and December 31, 2017. |
Fair Value Measurement of Ass47
Fair Value Measurement of Assets and Liabilities (Estimated Fair Values Of Cash Equivalents, Short-Term and Long-Term Investments, Effective Maturities) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value Measurement of Assets and Liabilities [Abstract] | ||
One year or less | $ 275,711 | |
One year to two years | 5,297 | |
Two years to three years | 3,554 | |
Three years to four years | 769 | |
Four years to five years | 103 | |
Total | $ 285,434 | $ 125,546 |
Commitments and Contingencies (
Commitments and Contingencies (Narrative I) (Details) $ in Thousands, R$ in Millions | Jul. 12, 2017BRL (R$) | Jul. 12, 2017USD ($) | Aug. 15, 2011BRL (R$) | Jun. 30, 2018USD ($)item | Dec. 31, 2007USD ($) | Dec. 31, 2017USD ($) |
Loss Contingencies [Line Items] | ||||||
Reserves for proceeding-related contingencies | $ 5,669 | |||||
Aggregate amount for legal actions for which no loss amount has been accrued | 7,339 | |||||
Loss accrued for reasonably possible legal actions | 0 | |||||
Maximum potential exposure | 648,101 | $ 925,690 | ||||
Product liability, contingency, recorded allowance | $ 4,190 | $ 1,087 | ||||
Argentinean Subsidiaries [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Number of lawsuits pending | item | 71 | |||||
Number of legal actions pending | item | 2,482 | |||||
Mexican Subsidiaries [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Number of lawsuits pending | item | 9 | |||||
Number of legal actions pending | item | 230 | |||||
Brazilian Subsidiaries [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Number of lawsuits pending | item | 901 | |||||
Number of legal actions pending | item | 6,693 | |||||
City of Sao Paulo Tax Claim [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Reserves for proceeding-related contingencies | $ 3,900 | |||||
Approximate additional amount related to asserted taxes and fines | $ 5,900 | |||||
Deposit with court | R$ | R$ 9.5 | |||||
ICMS Publicidade [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Tax authorities assessed taxes and fines | R$ 12.2 | $ 3,100 |
Commitments and Contingencies49
Commitments and Contingencies (Narrative II) (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Dec. 31, 2017item | Jun. 30, 2018USD ($) | Jun. 30, 2014 | |
2.25% Convertible Senior Notes Due 2019 [Member] | |||
Commitments And Contingencies [Line Items] | |||
Debt instrument, interest rate | 2.25% | 2.25% | |
Banco De Chile [Member] | Chilean Subsidiary [Member] | |||
Commitments And Contingencies [Line Items] | |||
Outstanding line of credit | $ 22,331 | ||
Line of credit, Fixed interest rate | 4.44% | ||
JPMorgan Chase [Member] | |||
Commitments And Contingencies [Line Items] | |||
Outstanding line of credit | $ 50,073 | ||
Line of credit, Fixed interest rate | 3.44% | ||
Banco De Galicia Y Buenos Aires S.A. [Member] | |||
Commitments And Contingencies [Line Items] | |||
Outstanding line of credit | $ 36,627 | ||
Debt weight average rate | 39.25% | ||
Line of Credit [Member] | Argentinean Subsidiaries [Member] | |||
Commitments And Contingencies [Line Items] | |||
Outstanding line of credit | $ 9,757 | ||
Line of credit, Fixed interest rate | 36.75% | ||
Line of Credit [Member] | Chilean, Uruguayan And Mexican Subsidiaries [Member] | |||
Commitments And Contingencies [Line Items] | |||
Outstanding line of credit | $ 15,623 | ||
Line of Credit [Member] | Citibank N.A. [Member] | |||
Commitments And Contingencies [Line Items] | |||
Number of unsecured line of credit facility | item | 2 | ||
Line of Credit [Member] | Citibank N.A. [Member] | Argentinean Subsidiaries [Member] | |||
Commitments And Contingencies [Line Items] | |||
Outstanding line of credit | $ 12,270 | ||
Line of credit, Fixed interest rate | 24.25% | ||
Minimum [Member] | Line of Credit [Member] | Chilean And Uruguayan Subsidiaries [Member] | |||
Commitments And Contingencies [Line Items] | |||
Line of credit, Fixed interest rate | 5.90% | ||
Maximum [Member] | Line of Credit [Member] | Chilean And Uruguayan Subsidiaries [Member] | |||
Commitments And Contingencies [Line Items] | |||
Line of credit, Fixed interest rate | 9.11% |
Long Term Retention Plan (Long
Long Term Retention Plan (Long Term Retention Plans Accrued Compensation Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Long term retention plan | $ 1,055 | $ 12,905 | $ 16,792 | $ 22,068 |
LTRP 2009 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Long term retention plan | 29 | |||
LTRP 2010 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Long term retention plan | (29) | 417 | 24 | 744 |
LTRP 2011 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Long term retention plan | (175) | 704 | 487 | 1,193 |
LTRP 2012 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Long term retention plan | (326) | 982 | 799 | 1,630 |
LTRP 2013 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Long term retention plan | (327) | 1,802 | 1,422 | 3,098 |
LTRP 2014 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Long term retention plan | (372) | 1,745 | 1,712 | 3,010 |
LTRP 2015 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Long term retention plan | (499) | 2,031 | 2,317 | 3,617 |
LTRP 2016 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Long term retention plan | (492) | 2,871 | 3,416 | 5,111 |
LTRP 2017 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Long term retention plan | 173 | $ 2,353 | 3,513 | $ 3,636 |
LTRP 2018 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Long term retention plan | $ 3,102 | $ 3,102 |
2.25% Convertible Senior Note51
2.25% Convertible Senior Notes Due 2019 (Narrative) (Details) - 2.25% Convertible Senior Notes Due 2019 [Member] | 6 Months Ended | 21 Months Ended | ||||
Jun. 30, 2018USD ($)item$ / shares$ / item | Jun. 30, 2014USD ($)$ / sharesshares | Jun. 30, 2018USD ($)$ / shares | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | |
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 329,968,000 | $ 330,000,000 | $ 329,968,000 | $ 329,972,000 | ||
Debt instrument, interest rate | 2.25% | 2.25% | 2.25% | |||
Debt instrument, maturity date | Jul. 1, 2019 | |||||
Converted instrument rate, number of shares per principal amount | shares | 7.9353 | |||||
Converted instrument, principal amount used per conversion | $ 1,000 | |||||
Convertible senior notes, conversion price | $ / shares | $ 126.02 | |||||
Amount paid to enter into capped call transactions | $ 19,700,000 | $ 45,700,000 | $ 67,300,000 | |||
Estimated fair value | $ 800,300,000 | $ 800,300,000 | $ 829,000,000 | |||
Closing trading amount price per share | $ / item | 100 | |||||
Common stock, closing price per share | $ / shares | $ 298.9 | $ 298.9 | ||||
Debt instrument convertible, if-converted value in excess of principal | $ 452,700,000 | |||||
30 Day Measurement Period [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, convertible trading days | item | 20 | |||||
Debt instrument, convertible consecutive trading days | item | 30 | |||||
Percentage of debt conversion price | 130.00% | |||||
5 Day Measurement Period [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, convertible trading days | item | 5 | |||||
Debt instrument, convertible consecutive trading days | item | 5 | |||||
Percentage of debt conversion price | 98.00% | |||||
September 31, 2016 Threshold Met [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Convertible senior notes, amount converted | $ 32,000 |
2.25% Convertible Senior Note52
2.25% Convertible Senior Notes Due 2019 (Carrying Amounts of Liability and Equity Components) (Details) - 2.25% Convertible Senior Notes Due 2019 [Member] - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2014 | |
Debt Instrument [Line Items] | ||||
Amount of the equity component | [1] | $ 45,808,000 | $ 45,808,000 | |
2.25% convertible senior notes due 2019 | 329,968,000 | 329,972,000 | $ 330,000,000 | |
Unamortized debt discount | [2] | (10,453,000) | (15,469,000) | |
Unamortized transaction costs related to the debt component | (1,711,000) | (2,509,000) | ||
Contractual coupon interest accrual | 3,713,000 | 7,425,000 | ||
Contractual coupon interest payment | (3,713,000) | (7,425,000) | ||
Net carrying amount | $ 317,804,000 | $ 311,994,000 | ||
[1] | Net of $1,177 thousands of transaction costs related to the equity component of the Notes. | |||
[2] | As of June 30, 2018, the remaining period over which the unamortized debt discount will be amortized is 1 year. |
2.25% Convertible Senior Note53
2.25% Convertible Senior Notes Due 2019 (Carrying Amounts of Liability and Equity Components - Additional Information) (Details) - 2.25% Convertible Senior Notes Due 2019 [Member] - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2014 | |
Debt Instrument [Line Items] | |||
Debt instrument, interest rate | 2.25% | 2.25% | |
Transaction costs related to the equity component | $ 1,177 | $ 1,177 | |
Remaining period over which the unamortized debt discount will be amortized | 1 year |
2.25% Convertible Senior Note54
2.25% Convertible Senior Notes Due 2019 (Summary of Interest Expense for Contractual Interest and Accretion of Debt Discount) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
2.25% Convertible Senior Notes Due 2019 [Abstract] | ||||
Contractual coupon interest expense | $ 1,857 | $ 1,857 | $ 3,713 | $ 3,713 |
Amortization of debt discount | 2,508 | 2,374 | 5,016 | 4,748 |
Amortization of debt issuance costs | 399 | 362 | 798 | 725 |
Total interest expense related to the Notes | $ 4,764 | $ 4,593 | $ 9,527 | $ 9,186 |
Cash Dividend Distribution (Det
Cash Dividend Distribution (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | ||||
Jun. 30, 2018 | Oct. 31, 2017 | Jul. 31, 2017 | May 31, 2017 | Mar. 31, 2017 | |
Dividends Payable [Line Items] | |||||
Cash dividends declared | $ 6,624 | $ 6,624 | $ 6,624 | $ 6,624 | |
Cash dividends declared, per share | $ 0.150 | $ 0.150 | $ 0.150 | $ 0.150 | |
First Quarter Previous Year [Member] | |||||
Dividends Payable [Line Items] | |||||
Dividend payable date | Apr. 17, 2017 | ||||
Dividends payment, date of record | Mar. 31, 2017 | ||||
Second Quarter Previous Year [Member] | |||||
Dividends Payable [Line Items] | |||||
Dividend payable date | Jul. 14, 2017 | ||||
Dividends payment, date of record | Jun. 30, 2017 | ||||
Third Quarter Previous Year [Member] | |||||
Dividends Payable [Line Items] | |||||
Dividend payable date | Oct. 16, 2017 | ||||
Dividends payment, date of record | Sep. 30, 2017 | ||||
Fourth Quarter Previous Years [Member] | |||||
Dividends Payable [Line Items] | |||||
Dividend payable date | Jan. 12, 2018 | ||||
Dividends payment, date of record | Dec. 31, 2017 |
Derivative Instruments (Narrati
Derivative Instruments (Narrative) (Details) - Scenario, Forecast [Member] $ in Thousands | 1 Months Ended | ||
Jun. 30, 2019USD ($)$ / $ | May 31, 2019USD ($)$ / $ | Dec. 31, 2018USD ($)$ / $ | |
Derivative [Line Items] | |||
Purchase of derivative instruments | $ 16,500 | $ 30,000 | $ 20,000 |
Foreign exchange rate | 3.96 | 3.88 | 630.75 |
Derivative Instruments (Fair Va
Derivative Instruments (Fair Value Of Derivative Instruments) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Derivatives, Fair Value [Line Items] | ||
Derivative assets | $ 1,493 | |
Other Current Assets [Member] | Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 790 | |
Other Current Assets [Member] | Not Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | $ 703 |
Securitization Transaction (Nar
Securitization Transaction (Narrative) (Details) - Collateralized Debt [Member] $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Debt Instrument [Line Items] | |
Debt instrument outstanding | $ 15,679 |
Debt term | 36 months |
Debt interest expense | $ 135 |
Brazilian CI Rate [Member] | |
Debt Instrument [Line Items] | |
Basis spread on variable rate | 3.50% |
Securitization Transaction (Ass
Securitization Transaction (Assets And Liabilities Of The Trust) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Securitzation Transactions [Line Items] | ||
Restricted cash and cash equivalents | $ 34,854 | |
Accounts receivable, net | 27,470 | $ 28,168 |
Loans receivable, net | 112,066 | 73,409 |
Total current assets | 1,125,154 | 1,286,919 |
Total assets | 1,519,441 | 1,673,187 |
Accounts payable and accrued expenses | 226,101 | 221,095 |
Funds payable to customers | 498,623 | 583,107 |
Loans payable and other financial liabilities | 146,655 | 56,325 |
Total current liabilities | 975,064 | 968,032 |
Loans payable and other financial liabilities | 333,364 | 312,089 |
Total non-current liabilities | 389,640 | 379,376 |
Total liabilities | 1,364,704 | $ 1,347,408 |
Trust Created In Brazil [Member] | ||
Securitzation Transactions [Line Items] | ||
Restricted cash and cash equivalents | 34,854 | |
Accounts receivable, net | 760 | |
Loans receivable, net | 70,844 | |
Total current assets | 106,458 | |
Total assets | 106,458 | |
Accounts payable and accrued expenses | 77 | |
Funds payable to customers | 1 | |
Loans payable and other financial liabilities | 131 | |
Total current liabilities | 209 | |
Loans payable and other financial liabilities | 15,548 | |
Total non-current liabilities | 15,548 | |
Total liabilities | $ 15,757 |