MercadoLibre, Inc. Reports Financial Results for Fourth Quarter and Full Year 2007
-- Fourth quarter revenue increases 73.9 percent to $26.9 million
-- Fourth quarter operating income margin increases to 27.1 percent
on Income from Operations of $7.3 million
-- Fourth quarter net income increases 188.5 percent to $5.3 million
BUENOS AIRES, Argentina, March 5, 2008 (PRIME NEWSWIRE) -- MercadoLibre, Inc. (Nasdaq:MELI) (http://www.mercadolibre.com), host of the largest online trading and payments platform in Latin America, today reported financial results for the fourth quarter and full year ended December 31, 2007.
Marcos Galperin, President and Chief Executive Officer of MercadoLibre, Inc. commented, "2007 was a year of significant achievements and milestones for MercadoLibre, the highlight of which was our successful transition to a publicly-traded company listed on The Nasdaq Stock Market in the United States. Throughout the year, we further strengthened our leadership position in e-commerce delivering strong operational and financial performance. Our robust performance continued into the fourth quarter as we delivered revenue growth of 73.9% and operating income margins of 27.1%. Growth rates were strong across all of our business units as well as all of our key geographies. Clearly, we are continuing to benefit from the positive growth trends influencing internet, broadband and PC penetration rates in Latin America, and we believe this course will persist for many years to come."
Financial Results
Fourth Quarter Results
MercadoLibre reported consolidated net revenues for the three months ended December 31, 2007 of $26.9 million, representing a quarterly year over year growth rate of 73.9%. Revenue growth was driven by strong results in both the marketplace and payments businesses. Marketplace revenues grew 61.5% to $21.1 million while Payments revenues grew 141.1% to $5.8 million.
Gross profit grew 75.6% over fourth quarter 2006 to $20.7 million, representing gross profit margins, defined as gross profits as a percentage of revenues, of 77.1%. Income from operations grew 260.0% for the same period to $7.3 million. Operating income margin, defined as income from operations as a percentage of revenues, for the fourth quarter was 27.1%.
Net income for the three-month period was $5.3 million, an increase of 188.5% over the $1.8 million of net income for same period of 2006.
Full Year Results
Revenue for the full year ended December 31, 2007 increased 63.5% to $85.1 million compared with $52.1 million for the full year ended December 31, 2006. Marketplace revenues for the full year 2007 grew 55.4% to $69.5 million over 2006 while Payments revenues grew 112.9% to $15.6 million.
Gross profit increased 65.4% to $66.1 million from $40.0 million from the prior year, representing a gross profit margin of 77.7% for 2007. Income from operations increased 287.8% to $20.9 million from $5.4 million for the year ended December 31, 2006. Operating income margin for the full year was up to 24.6% from 10.4% for the previous year.
Net income for the full year ended December 31, 2007 was $9.7 million, compared to $1.1 million during 2006, an increase of 804.1%.
Mr. Galperin concluded, "As we look forward to 2008, we expect to build on the momentum generated over the past year. Our progress in adapting to web 2.0, as well as our other efforts in enhancing our users' overall experience, positions us well for the long-term. Additionally, we intend to leverage our leadership position and the industry dynamics in Latin America to further drive top-line growth and sustain margins throughout the year. Our focus will remain on providing our users with a superior and highly-innovative e-commerce experience, while delivering value to our shareholders."
Key Performance Metrics
The following are highlights on certain key performance metrics for the quarter ended December 31, 2007.
Registered Users -- New confirmed registered users for the three-month period ended December 31, 2007 were 1.6 million. Total confirmed registered users increased to 24.9 million as of December 31, 2007, an increase of 37.1% over the 18.2 million users registered as of December 31, 2006.
Transaction volume -- Gross merchandise volume was $461.0 million for the fourth quarter of 2007, a 40.2% increase from gross merchandise volume of $328.8 million for the same period during 2006. Successful items sold through MercadoLibre totaled 4.8 million during the fourth quarter of 2007, up 17.9% from the 4.1 million successful items sold during the same quarter of 2006. Total payment volume was $56.8 million during the three-month period ending December 31, 2007, a growth of 86.8% over total payment volume of $30.4 million for the same period of 2006.
Conference Call and Webcast
MercadoLibre will host a conference call to discuss results for the quarter and year ending December 31, 2007 on Wednesday, March 5, 2008 at 4:30 p.m. Eastern Time. The conference call may be accessed by dialing (719) 325-4891. A live webcast of the conference call can be accessed at the company's investor relations website at http://investor.mercadolibre.com/. An archive will be available for one week following the conclusion of the conference call.
Definition of Selected Operational Metrics
New confirmed registered users -- Measure of the number of new users who have registered on the MercadoLibre marketplace and confirmed their registration.
Total confirmed registered users -- Measure of the cumulative number of users who have registered on the MercadoLibre marketplace and confirmed their registration.
Gross merchandise volume -- Measure of the total U.S. dollar sum of all transactions completed through the MercadoLibre marketplace, excluding motor vehicles, vessels, aircraft, real estate, and services.
Successful items -- Measure of the number of items sold/purchased through the MercadoLibre marketplace.
Total payment volume -- Measure of total U.S. dollar sum of all transactions paid for using MercadoPago.
Take rate -- Total net revenues as a percentage of gross merchandise volume.
About MercadoLibre
MercadoLibre is the largest online trading platform in Latin America. We are market leaders in e-commerce in each of Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay and Venezuela, based on unique visitors and page views during 2006. Additionally, we have recently launched online trading platforms in Costa Rica, the Dominican Republic and Panama. With a market of over 550 million people and a region with one of the world's fastest-growing Internet penetration rates, we provide buyers and sellers a robust online trading environment that fosters the development of a large and growing e-commerce community. We offer a technological and commercial solution that addresses the distinctive cultural and geographic challenges of operating an online trading platform in Latin America.
The MercadoLibre, Inc. logo is available athttp://www.primenewswire.com/newsroom/prs/?pkgid=4193
Forward-Looking Statements
Any statements contained in this press release that are not statements of historical fact, including statements about the company's beliefs and expectations, are forward-looking statements and should be evaluated as such. Such forward-looking statements reflect, among other things, the company's current expectations, plans, projections and strategies, anticipated financial results, future events and financial trends affecting the company's business, all of which are subject to known or unknown risk and uncertainties that may cause the company's actual results to differ materially from those expressed or implied by these forward-looking statements, including general market conditions, adverse changes in the company's markets and other risks disclosed in the company filings with the Securities and Exchange Commission. Because of the risks, uncertainties and assumptions, investors should not place undue reliance on any forward-looking statements.
MELI_F
Financial Tables
All dollar amounts in this release are approximate after giving effect to rounding.
December 31, December 31,
2007 2006
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 15,677,407 $ 7,143,027
Short-term investments 52,300,007 6,320,656
Accounts receivable 3,211,252 1,983,003
Funds receivable from customers 29,162,763 10,188,712
Prepaid expenses 283,477 333,570
Deferred tax assets 3,445,101 2,904,558
Other assets 894,163 246,352
------------- -------------
Total current assets 104,974,170 29,119,878
Non-current assets:
Long-term investments 1,323,789 --
Property and equipment, net 4,143,204 2,931,470
Goodwill and intangible assets, net 23,428,646 21,342,315
Deferred tax assets 269,596 390,820
Other assets 353,395 28,089
------------- -------------
Total non-current assets 29,518,630 24,692,694
Total assets $134,492,800 $ 53,812,572
============= =============
Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
Accounts payable and accrued expenses $ 9,278,138 $ 5,708,682
Funds payable to customers 16,418,177 9,085,013
Social security payable 3,778,236 2,722,874
Taxes payable 2,493,749 1,735,975
Loans payable 9,713,227 97,527
Deferred tax liabilities -- --
Other liabilities -- --
Provisions 69,979 310,848
------------- -------------
Total current liabilities 41,751,506 19,660,919
Non-current liabilities:
Loans payable -- 9,000,000
Deferred tax liabilities -- --
Other liabilities 1,068,155 1,803,315
------------- -------------
Total non-current liabilities 1,068,155 10,803,315
Total liabilities 42,819,661 30,464,234
------------- -------------
Commitments and contingencies
Mandatorily redeemable convertible
preferred stock, $0.001 par value,
40,000,000 shares authorized at
December 31, 2007 and $0.01, par value
45,600,000 shares authorized,
27,187,838 shares issued and
outstanding at December 31, 2006;
liquidation amount: $78,334,161 at
December 31, 2006. -- 64,076,545
------------- -------------
Shareholders' equity (deficit):
Common stock, $0.001 par value,
110,000,000 shares authorized,
44,226,563 shares issued and
outstanding at December 31, 2007 and
$0.01 par value, 108,800,000 shares
authorized, 13,166,982 shares issued
and outstanding at December 31, 2006 44,227 131,670
Additional paid-in capital 121,890,138 2,694,404
Preferred stock warrants -- --
Unearned stock-based compensation -- --
Accumulated deficit (34,363,917) (44,054,817)
Accumulated other comprehensive income 4,102,691 500,536
------------- -------------
Total shareholders' equity (deficit) 91,673,139 (40,728,207)
------------- -------------
Total liabilities, mandatorily
redeemable convertible preferred
stock and shareholders'
equity (deficit) $134,492,800 $ 53,812,572
============= =============
Year Ended Three Months Ended
December 31, December 31,
------------- ------------- ------------- -------------
2007 2006 2007 2006
------------- ------------- ------------- -------------
Net revenues $ 85,126,341 $ 52,058,890 $ 26,893,585 $ 15,462,398
Cost of net
revenues (19,001,060) (12,085,648) (6,161,044) (3,653,165)
------------- ------------- ------------- -------------
Gross profit 66,125,281 39,973,242 20,732,542 11,809,232
Operating
expenses:
Product and
technology
development (4,369,376) (3,066,304) (1,212,344) (814,537)
Sales and
marketing (27,598,683) (23,358,510) (7,969,681) (6,711,368)
General and
admini-
strative (13,223,522) (8,150,499) (4,253,290) (2,256,045)
------------- ------------- ------------- -------------
Total
operating
expenses (45,191,581) (34,575,313) (13,435,315) (9,781,949)
------------- ------------- ------------- -------------
Income from
operations 20,933,700 5,397,929 7,297,227 2,027,283
------------- ------------- ------------- -------------
Other income
(expenses):
Interest
income 1,609,403 520,508 737,196 342,690
Interest
expense
and other
financial
charges (2,009,781) (1,743,315) (792,212) (465,986)
Foreign
currency
loss (3,106,515) (391,981) (1,299,995) (273,501)
Other
expenses,
net (3,006,416) (1,468,220) -- (126,173)
------------- ------------- ------------- -------------
Net income
before
income /
asset tax
expense and
cumulative
effect of
change in
accounting
principle 14,420,391 2,314,921 5,942,216 1,504,314
------------- ------------- ------------- -------------
Income / asset
tax (expense)
benefit (4,727,451) (1,242,838) (619,824) 340,773
------------- ------------- ------------- -------------
Net income $ 9,692,940 $ 1,072,083 $ 5,322,392 $ 1,845,086
============= ============= ============= =============
Accretion of
preferred
stock (309,299) (494,878) -- (123,720)
------------- ------------- ------------- -------------
Net income
available to
common
shareholders $ 9,383,641 $ 577,205 $ 5,322,392 $ 1,721,366
------------- ------------- ------------- -------------
Year Ended December 31,
---------------------------
2007 2006
------------- -------------
Basic EPS
Basic net
income
available
to common
shareholder
before
cumulative
effect of
change in
accounting
principle
per common
share $ 0.22 $ 0.01
Cumulative
effect of
change in
accounting
principle -- --
------------- -------------
Basic net
income
available
to common
shareholder
per common
share $ 0.22 $ 0.01
============= =============
Weighted
average
shares 25,149,405 13,149,139
============= =============
Diluted EPS
Diluted net
income
available
to common
shareholder
before
cumulative
effect of
change in
accounting
principle
per common
share $ 0.22
Cumulative
effect of
change in
accounting
principle
per common
share --
-------------
Diluted net
income
available
to common
shareholder
per common
share $ 0.22
=============
Weighted
average
shares 25,478,336
=============
Year Ended December 31,
2007 2006
------------ ------------
Cash flows from operations:
Net income $ 9,692,940 $ 1,072,083
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 2,307,649 2,016,939
Interest expense -- 96,833
Realized gains on investments (845,398) (184,094)
Unrealized gains on investments (228,877) (46,926)
Stock-based compensation expense -
stock options 15,477 33,223
Stock-based compensation expense -
restricted shares 15,966 --
Cumulative effect of change in
accounting principle -- --
Change in fair value of warrants 3,045,992 1,269,377
Deferred income taxes (198,368) (1,291,549)
Changes in assets and liabilities:
Accounts receivable (736,431) 403,075
Funds receivable from customers (15,517,486) (6,026,226)
Prepaid expenses 56,399 (207,130)
Other assets (967,264) 167,593
Accounts payable and accrued expenses 4,282,955 4,651,264
Funds payable to customers 5,423,976 4,704,108
Provisions (274,101) (559,734)
Other liabilities 689,154 59,518
------------ ------------
Net cash provided by operating
activities 6,762,583 6,158,354
------------ ------------
Cash flows from investing activities:
Purchase of investments (75,267,070) (4,944,956)
Proceeds from sale of investments 29,765,780 2,184,822
Payment for purchase of DeRemate, net of
cash acquired -- --
Purchase of intangible assets (28,748) (346,365)
Purchases of property and equipment (3,058,813) (2,097,555)
------------ ------------
Net cash used in investing activities (48,588,851) (5,204,054)
------------ ------------
Cash flows from financing activities:
Increase in short term debt 8,883,104 --
Decrease in short term debt -- (2,058)
Loans received -- --
Loans paid (9,000,000) (3,000,000)
Stock options exercised 38,576 7,107
Exercise of Warrants 749,991 --
Issuance of common stock 49,573,239 --
------------ ------------
Net cash provided by (used in) financing
activities 50,244,910 (2,994,951)
------------ ------------
Effect of exchange rate changes on cash
and cash equivalents 115,738 203,840
------------ ------------
Net increase (decrease) in cash and cash
equivalents 8,534,380 (1,836,811)
Cash and cash equivalents, beginning of
year 7,143,027 8,979,838
------------ ------------
Cash and cash equivalents, end of year $ 15,677,407 $ 7,143,027
------------ ------------
The following tables summarize the financial results of our reporting segments
Year Ended December 31, 2007
-----------------------------------------------------
Marketplaces
-----------------------------------------------------
Other
Brazil Argentina Mexico Countries
------------ ------------ ----------- ------------
Net revenues $ 37,560,419 $ 11,342,792 $ 9,628,121 $ 10,986,185
Direct costs (24,079,798) (5,657,006) (6,339,762) (6,147,572)
------------ ------------ ----------- ------------
Direct
contribution 13,480,621 5,685,786 3,288,359 4,838,613
Total Payments Consolidated
------------ ------------ ------------
Net revenues $ 69,517,517 $ 15,608,824 $ 85,126,341
Direct costs (42,224,138) (11,237,121) (53,461,260)
------------ ------------ ------------
Direct contribution 27,293,379 4,371,703 31,665,081
Operating expenses and
indirect costs of net
revenues (10,731,381)
------------
Income from operations 20,933,700
------------
Other income (expenses):
Interest income 1,609,403
Interest expense and other
financial results (2,009,781)
Foreign exchange (3,106,515)
Other expenses, net (3,006,416)
------------
Net income before income /
asset tax expense $ 14,420,391
============
Year Ended December 31, 2006
-----------------------------------------------------
Marketplaces
-----------------------------------------------------
Other
Brazil Argentina Mexico Countries
------------ ------------ ----------- ------------
Net revenues $ 25,571,405 $ 7,027,681 $ 6,199,110 $ 5,930,873
Direct costs (18,193,271) (4,553,777) (5,040,322) (4,448,878)
------------ ------------ ----------- ------------
Direct
contribution 7,378,134 2,473,904 1,158,788 1,481,995
Total Payments Consolidated
------------ ------------ ------------
Net revenues $ 44,729,069 $ 7,329,821 $ 52,058,890
Direct costs (32,236,248) (6,561,532) (38,797,780)
------------ ------------ ------------
Direct contribution 12,492,821 768,289 13,261,110
Operating expenses and
indirect costs of net
revenues (7,863,181)
------------
Income from operations 5,397,929
------------
Other income (expenses):
Interest income 520,508
Interest expense and other financial
results (1,743,315)
Foreign exchange (391,981)
Other expenses, net (1,468,220)
------------
Net income before income / asset tax expense $ 2,314,921
============
CONTACT: MercadoLibre, Inc.
Investor Relations contact:
Pedro Arnt
+54 (11) 5352 8000
investor@mercadolibre.com
Media Relations contact:
Lorena Diaz Quijano
+54 (11) 5352 8026
lorena.diazquijano@mercadolibre.com
