·

Unique active users grew 45.2% reaching 51.5 million.

·

Gross merchandise volume (“GMV”) reached $5.0 billion, representing an increase of 48.5% in USD and 101.5% on an FX neutral basis.

·

Items sold reached 178.5 million, growing 101.4% year-over-year.

·

Live listings offered on MercadoLibre’s marketplace reached 289.0 million, a 26.2% year-over-year growth.

·

Mobile gross merchandise volume grew 272.8% year-over-year on an FX neutral basis, reaching 69.4% of GMV.

·

Even through these trying times and surge in managed volumes, Mercado Envios was able to ship 157.5 million items during the quarter without any significant disruptions, representing a 124.2% year-over-year increase.

·

Total payment volume (“TPV”) through Mercado Pago reached $11.2 billion, a year-over-year increase of 72.1% in USD and 142.1% on an FX neutral basis. Total payment transactions increased 122.9% year-over-year, totaling 404.8 million transactions for the quarter.

·

Off-platform TPV grew 92.1% in USD and 174.7% year-over-year on a FX neutral basis reaching $6.1 billion in transactions and 280.7 million payments, a 133.7% year-over-year growth.

·

Merchant Services had a strong performance, aided by the shift to e-commerce consumption, accelerating sequentially to 163.9% on an FX neutral basis.

·

Mobile wallet delivered $2.1 billion in transactions on a consolidated basis, leading to also 373.2% year-over-year growth on an FX neutral basis. Our mobile wallet consumer base grew by 109.3% compared to the second quarter of 2019, reaching 9.5 million unique payers. TPV from mobile wallet in Argentina, Brazil and Mexico continues to grow by triple digits year-over-year.

·

On a consolidated basis MPOS TPV grew 80.1% on an FX neutral basis, decelerating sequentially around 20%, mainly due to lower foot traffic as a consequence of partial or total lockdowns throughout the region. The resilience that our MPOS  business showed during the quarter is a result of the long tail base of merchants we cater to plus a relevant share of merchants who continued to operate their business with lesser disruptions throughout the lockdowns.

·

The pace of sales of devices reached a milestone this quarter, surpassing the 1 million mark of new MPOS sold throughout Latin America.

·

PayPal is now available for cross-border transactions on Mercado Libre in Brazil and Mexico and is also available as a payment option within Mercado Pago’s online checkout for foreign shoppers. 

·

Net revenues for the second quarter were $878.4 million, a year-over-year increase of 61.1% in USD and 123.4% on an FX neutral basis.

·

Commerce revenues increased 79.5% year-over-year in USD reaching $581.7 million, while Fintech revenues increased 34.1% year-over-year in USD reaching $296.7 million.  

·

Gross profit was $427.2 million with a margin of 48.6%, compared to 50.0% in the second quarter of 2019.

·

Total operating expenses were $327.7 million, an increase of 15.0% year-over-year in USD. As a percentage of revenues, operating expenses were 37.3%, compared to 52.3% during the second quarter of 2019. The $14.8 million improvement in operating expenses quarter-over-quarter was mostly driven by marketing expenditure efficiencies.

·

During the quarter we recorded an allowance for doubtful accounts on receivables from a Mercado Pago collection agent, for $26.7 million. Upon review we realized that collection efforts for these receivables had not been carried out effectively, and that the ageing of these receivables exceeded what our internal control policies allow. We assessed the impact of this matter on the effectiveness of our internal controls, and have included the results of that assessment in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.

·

Income from operations was $99.4 million, compared to a loss of $29.7 million during the prior quarter. As a percentage of revenues, income from operations reached 11.3%.

·

Interest income was $18.8 million, a 44.2% decreased year-over-year, as a result of lower interest rates in our investment as a consequence of the pandemic.

·

The Company incurred $27.0 million in financial expenses this quarter, mainly attributable to financial loans entered into during the second quarter of 2020, mainly in Brazil and Argentina and interest expenses from our trusts related to our factoring business and the 2028 Convertible Note.

·

Net income before taxes was $89.3 million, up from a loss of $16.7 million during last quarter.

·

Income tax expense was $33.4 million, mainly as a result of higher income tax expense in Brazil, as a consequence of higher pre-tax gain in our Brazilian segment during 2020; valuation allowances on certain deferred tax assets in Mexico accounted for in the first half of 2020 and higher income tax expense in Argentina as a consequence of the temporary suspension of the knowledge-based economy promotional regime in 2020, which had a direct impact on the income tax rate for our Argentine business.

·

Net income was $55.9 million, resulting in net earnings per share of $1.11.





Six-month Periods Ended
June 30,

Three-month Periods Ended
June 30,

(in millions)

2020

2019

2020

2019



Unique active users

Number of confirmed new registered users during period

Gross merchandise volume

$

$

$

$

Number of successful items sold

Number of successful items shipped

Total payment volume

$

$

$

$

Total volume of payments on marketplace

$

$

$

$

Total payment transactions

Capital expenditures

$

$

$

$

Depreciation and amortization

$

$

$

$





Consolidated Net Revenues

Q2’19

Q3’19

Q4’19

Q1’20

Q2’20



Brazil

74

%

77

%

61

%

31

%

37

%



Argentina

14

%

39

%

46

%

42

%

110

%



Mexico

267

%

146

%

86

%

74

%

96

%







Consolidated Net Revenues

Q2’19

Q3’19

Q4’19

Q1’20

Q2’20



Brazil

89

%

77

%

74

%

55

%

87

%



Argentina

115

%

119

%

133

%

123

%

224

%



Mexico

261

%

153

%

80

%

81

%

138

%







June 30,

December 31,



2020

2019

Assets

Current assets:

Cash and cash equivalents

$                       1,169,550

$                    1,384,740

Restricted cash and cash equivalents

Short-term investments (530,660 and 522,798 held in guarantee)

Accounts receivable, net

Credit cards receivable and other means of payment, net

Loans receivable, net

Prepaid expenses

Inventory

Other assets

Total current assets

Non-current assets:

Long-term investments

Loans receivable, net

Property and equipment, net

Operating lease right-of-use assets

Goodwill

Intangible assets, net

Deferred tax assets

Other assets

Total non-current assets

Total assets

$                       5,452,736

$                    4,781,691

Liabilities

Current liabilities:

Accounts payable and accrued expenses

$                          417,759

$                       372,309

Funds payable to customers

Salaries and social security payable

Taxes payable

Loans payable and other financial liabilities

Operating lease liabilities

Other liabilities

Total current liabilities

Non-current liabilities:

Salaries and social security payable

Loans payable and other financial liabilities

Operating lease liabilities

Deferred tax liabilities

Other liabilities

Total non-current liabilities

Total liabilities

$                       3,545,644

$                    2,699,728



Commitments and Contingencies



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

100,000 shares issued and outstanding at June 30, 2020 and December 31, 2019

$                            98,843

$                         98,843



Equity



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

49,709,955 shares issued and outstanding at June 30,

2020 and December 31, 2019

$                                   50

$                                50

Additional paid-in capital

Treasury stock

Retained earnings

Accumulated other comprehensive loss

Total Equity

Total Liabilities, Redeemable convertible preferred stock and Equity

$                       5,452,736

$                    4,781,691





Six Months Ended June 30,

Three Months Ended June 30,



2020

2019

2020

2019

Net revenues

$    1,530,460

$    1,019,012

$       878,369

$       545,242

Cost of net revenues

Gross profit

Operating expenses:

Product and technology development

Sales and marketing

General and administrative

Total operating expenses

Income (loss) from operations



Other income (expenses):

Interest income and other financial gains

Interest expense and other financial losses

Foreign currency (losses) gains

Net income before income tax (expense) gain



Income tax (expense) gain

Net income

$         34,838

$         28,081

$         55,947

$         16,217





Six Months Ended June 30,

Three Months Ended June 30,



2020

2019

2020

2019

Basic EPS

Basic net income

Available to shareholders per common share

$                       0.66

$                       0.45

$                       1.11

$                       0.31

Weighted average of outstanding common shares

Diluted EPS

Diluted net income

Available to shareholders per common share

$                       0.66

$                       0.45

$                       1.11

$                       0.31

Weighted average of outstanding common shares







Six Months Ended June 30,



2020

2019



Cash flows from operations:

Net income

$                   34,838

$                   28,081

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

Unrealized devaluation loss, net

Depreciation and amortization

Accrued interest

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

Financial results on derivative instruments

Stock-based compensation expense — restricted shares

 —

LTRP accrued compensation

Deferred income taxes

Changes in assets and liabilities:

Accounts receivable 

Credit cards receivable and other means of payment

Prepaid expenses

Inventory

Other assets

Payables and accrued expenses

Funds payable to customers

Other liabilities

Interest received from investments

Net cash provided by operating activities

Cash flows from investing activities:

Purchase of investments

Proceeds from sale and maturity of investments

Receipts from settlements of derivative instruments

 —

Payment for acquired businesses, net of cash acquired

 —

Purchases of intangible assets

Changes in principal of loans receivable, net

Purchases of property and equipment

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from loans payable and other financial liabilities

Payments on loans payable and other financing liabilities

Payment of finance lease obligations

Purchase of convertible note capped call

Dividends paid of preferred stock

Common Stock repurchased

 —

Proceeds from issuance of convertible redeemable preferred stock, net

 —

Proceeds from issuance of common stock, net

 —

Net cash provided by financing activities

Effect of exchange rate changes on cash, cash equivalents, restricted cash and cash equivalents

Net increase in cash, cash equivalents, restricted cash and cash equivalents

Cash, cash equivalents, restricted cash and cash equivalents, beginning of the period

$              1,451,424

$                 464,695

Cash, cash equivalents, restricted cash and cash equivalents, end of the period

$              1,663,358

$              1,128,322





Three Months Ended June 30, 2020



Brazil

Argentina

Mexico

Other Countries

Total



(In thousands)

Net revenues

$                           465,298 

$                        239,204 

$                          125,950 

$                           47,917 

$                           878,369 

Direct costs

Direct contribution



Operating expenses and indirect costs of net revenues

Income from operations



Other income (expenses):



Interest income and other financial gains



Interest expense and other financial losses



Foreign currency losses

Net income before income tax expense

$                            89,340 







Three-months Ended June 30, 2019



Brazil

Argentina

Mexico

Other Countries

Total



(In thousands)

Net revenues

$                           340,858 

$                        113,913 

$                            64,383 

$                           26,088 

$                           545,242 

Direct costs

Direct contribution



Operating expenses and indirect costs of net revenues

Loss from operations



Other income (expenses):



Interest income and other financial gains



Interest expense and other financial losses



Foreign currency gains

Net income before income tax expense

$                               7,300 





Three-month Periods Ended
June 30, (*)



As reported

FX Neutral Measures

As reported

(In millions, except percentages)

2020

2019

Percentage Change

2020

2019

Percentage Change



(Unaudited)

(Unaudited)

Net revenues

$                                 878.4

$                        545.2

$                        1,218.3

$                        545.2

Cost of net revenues

Gross profit



Operating expenses

Income (loss) from operations