QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
| ||||||||||||||
x | Accelerated filer | o | ||||||||||||
Non-accelerated filer | o | Smaller reporting company | ||||||||||||
Emerging growth company |
PART I. FINANCIAL INFORMATION | |||||
Item 1 — Unaudited Interim Condensed Consolidated Financial Statements | |||||
March 31, 2023 | December 31, 2022 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash and cash equivalents | |||||||||||
Short-term investments ($ | |||||||||||
Accounts receivable, net | |||||||||||
Credit card receivables and other means of payments, net | |||||||||||
Loans receivable, net of allowances of $ | |||||||||||
Prepaid expenses | |||||||||||
Inventories | |||||||||||
Customer crypto-assets safeguarding assets | |||||||||||
Other assets | |||||||||||
Total current assets | |||||||||||
Non-current assets: | |||||||||||
Long-term investments | |||||||||||
Loans receivable, net of allowances of $ | |||||||||||
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 | $ | $ | |||||||||
Liabilities | |||||||||||
Current liabilities: | |||||||||||
Accounts payable and accrued expenses | $ | $ | |||||||||
Funds payable to customers | |||||||||||
Amounts payable due to credit and debit card transactions | |||||||||||
Salaries and social security payable | |||||||||||
Taxes payable | |||||||||||
Loans payable and other financial liabilities | |||||||||||
Operating lease liabilities | |||||||||||
Customer crypto-assets safeguarding liabilities | |||||||||||
Other liabilities | |||||||||||
Total current liabilities | |||||||||||
Non-current liabilities: | |||||||||||
Amounts payable due to credit and debit card transactions | |||||||||||
Loans payable and other financial liabilities | |||||||||||
Operating lease liabilities | |||||||||||
Deferred tax liabilities | |||||||||||
Other liabilities | |||||||||||
Total non-current liabilities | |||||||||||
Total liabilities | $ | $ | |||||||||
Commitments and contingencies (Note 10) | |||||||||||
Equity | |||||||||||
Common stock, $ | $ | $ | |||||||||
Additional paid-in capital | |||||||||||
Treasury stock | ( | ( | |||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total Equity | |||||||||||
Total Liabilities and Equity | $ | $ |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Net service revenues | $ | $ | |||||||||
Net product revenues | |||||||||||
Net revenues | |||||||||||
Cost of net revenues | ( | ( | |||||||||
Gross profit | |||||||||||
Operating expenses: | |||||||||||
Product and technology development | ( | ( | |||||||||
Sales and marketing | ( | ( | |||||||||
Provision for doubtful accounts | ( | ( | |||||||||
General and administrative | ( | ( | |||||||||
Total operating expenses | ( | ( | |||||||||
Income from operations | |||||||||||
Other income (expenses): | |||||||||||
Interest income and other financial gains | |||||||||||
Interest expense and other financial losses | ( | ( | |||||||||
Foreign currency losses, net | ( | ( | |||||||||
Net income before income tax expense and equity in earnings of unconsolidated entity | |||||||||||
Income tax expense | ( | ( | |||||||||
Equity in earnings of unconsolidated entity | |||||||||||
Net income | $ | $ |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Basic earning per share | |||||||||||
Basic net income available to shareholders per common share | $ | $ | |||||||||
Weighted average of outstanding common shares | |||||||||||
Diluted earning per share | |||||||||||
Diluted net income available to shareholders per common share | $ | $ | |||||||||
Weighted average of outstanding common shares |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Net income | $ | $ | |||||||||
Other comprehensive income, net of income tax: | |||||||||||
Currency translation adjustment | |||||||||||
Unrealized losses on hedging activities | ( | ( | |||||||||
Less: Reclassification adjustment for losses from accumulated other comprehensive income | ( | ( | |||||||||
Net change in accumulated other comprehensive income, net of income tax | |||||||||||
Total Comprehensive income | $ | $ |
Common stock | Additional paid-in capital | Treasury Stock (*) | Retained Earnings | Accumulated other comprehensive loss | Total Equity | ||||||||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2022 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Common Stock repurchased | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Net Income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Other comprehensive Income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2023 | $ | $ | $ | ( | $ | $ | ( | $ |
(*) |
Common stock | Additional paid-in capital | Treasury Stock | Retained Earnings | Accumulated other comprehensive loss | Total Equity | ||||||||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2021 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
— | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2021 Restated | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Common Stock repurchased | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Net Income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Other comprehensive Income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2022 | $ | $ | $ | ( | $ | $ | ( | $ |
March 31, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operations: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
Equity in earnings of unconsolidated entity | ( | ||||||||||
Unrealized foreign currency losses, net | |||||||||||
Impairment of digital assets | |||||||||||
Depreciation and amortization | |||||||||||
Accrued interest income | ( | ( | |||||||||
Non cash interest expense, convertible notes amortization of debt discount and amortization of debt issuance costs and other charges | |||||||||||
Provision for doubtful accounts | |||||||||||
Results on derivative instruments | |||||||||||
Long term retention program (“LTRP”) accrued compensation | |||||||||||
Deferred income taxes | ( | ||||||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable | ( | ( | |||||||||
Credit card receivables and other means of payments | ( | ||||||||||
Prepaid expenses | ( | ( | |||||||||
Inventories | ( | ||||||||||
Other assets | ( | ( | |||||||||
Payables and accrued expenses | ( | ||||||||||
Funds payable to customers | ( | ( | |||||||||
Amounts payable due to credit and debit card transactions | |||||||||||
Other liabilities | |||||||||||
Interest received from investments | |||||||||||
Net cash provided by (used in) operating activities | ( | ||||||||||
Cash flows from investing activities: | |||||||||||
Purchases of investments | ( | ( | |||||||||
Proceeds from sale and maturity of investments | |||||||||||
Payments from settlements of derivative instruments | ( | ( | |||||||||
Changes in principal loans receivable, net | ( | ( | |||||||||
Investments 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 | ( | ( | |||||||||
Payments of finance lease obligations | ( | ( | |||||||||
Common Stock repurchased | ( | ( | |||||||||
Net cash (used in) provided by financing activities | ( | ||||||||||
Effect of exchange rate changes on cash, cash equivalents, restricted cash and cash equivalents | ( | ||||||||||
Net increase (decrease) in cash, cash equivalents, restricted cash and cash equivalents | ( | ||||||||||
Cash, cash equivalents, restricted cash and cash equivalents, beginning of the period | $ | $ | |||||||||
Cash, cash equivalents, restricted cash and cash equivalents, end of the period | $ | $ |
March 31, 2023 | December 31, 2022 | ||||||||||
(In millions) | |||||||||||
Assets | $ | $ | |||||||||
Liabilities | |||||||||||
Net Assets | $ | $ |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(In millions) | |||||||||||
Net revenues | $ | $ | |||||||||
Direct contribution |
Unrealized (Loss) Gains on hedging activities, net | Foreign Currency Translation | Estimated tax benefit (expense) | Total | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Balances as of December 31, 2022 | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ||||||||||||||||||||||
Amount of (gain) loss reclassified from accumulated other comprehensive income (loss) | ( | ||||||||||||||||||||||
Net current period other comprehensive income (loss) | ( | ||||||||||||||||||||||
Ending balance | $ | ( | $ | ( | $ | $ | ( |
Unrealized Gains (Loss) on hedging activities, net | Foreign Currency Translation | Estimated tax benefit (expense) | Total | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Balances as of December 31, 2021 | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ||||||||||||||||||||||
Amount of (gain) loss reclassified from accumulated other comprehensive income (loss) | ( | ||||||||||||||||||||||
Net current period other comprehensive income (loss) | ( | ||||||||||||||||||||||
Ending balance | $ | ( | $ | ( | $ | $ | ( |
Details about Accumulated Other Comprehensive loss Components | Amount of (Loss) Gain Reclassified from Accumulated Other Comprehensive loss | Affected Line Item in the Statement of Income | |||||||||||||||
Three Months Ended March 31, | |||||||||||||||||
2023 | 2022 | ||||||||||||||||
(In millions) | |||||||||||||||||
Unrealized losses on hedging activities | $ | ( | $ | ( | Cost of net revenues, interest expense and foreign currency losses | ||||||||||||
Estimated tax benefit on unrealized losses | Income tax expense | ||||||||||||||||
Total reclassifications for the period | $ | ( | $ | ( | Total, net of income taxes |
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Basic | Diluted | Basic | Diluted | ||||||||||||||||||||
Net income per common share (*) | $ | $ | $ | $ | |||||||||||||||||||
Numerator (in millions): | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Effect of dilutive Convertible Senior Notes | — | — | |||||||||||||||||||||
Net income corresponding to common stock | $ | $ | $ | $ | |||||||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted average of common stock outstanding for earnings per share | |||||||||||||||||||||||
Adjustment for assumed conversions | — | — | |||||||||||||||||||||
Adjusted weighted average of common stock outstanding for earnings per share |
March 31, 2023 | December 31, 2022 | ||||||||||
(In millions) | |||||||||||
Cash and cash equivalents | |||||||||||
Cash in bank accounts | $ | $ | |||||||||
Money market | |||||||||||
Time deposits | |||||||||||
U.S. government debt securities | |||||||||||
Total cash and cash equivalents | $ | $ | |||||||||
Restricted cash and cash equivalents | |||||||||||
Securitization transactions | $ | $ | |||||||||
Foreign government debt securities (Central Bank of Brazil mandatory guarantee) (*) | |||||||||||
Bank account (Argentine Central Bank regulation) (*) | |||||||||||
Bank account (Mexican National Banking and Securities Commission regulation) (*) | |||||||||||
Time deposits (Mexican National Banking and Securities Commission regulation) (*) | |||||||||||
Bank account (Chilean Commission for the Financial Market regulation) (*) | |||||||||||
Time deposits (Chilean Commission for the Financial Market regulation) (*) | |||||||||||
Money market (Secured lines of credit guarantee) | |||||||||||
Bank account (Financial Superintendence of Colombia regulation) (*) | |||||||||||
Money market (Financial Superintendence of Colombia regulation) (*) | |||||||||||
Total restricted cash and cash equivalents | $ | $ | |||||||||
Total cash, cash equivalents, restricted cash and cash equivalents | $ | $ | |||||||||
Short-term investments | |||||||||||
U.S. government debt securities | $ | $ | |||||||||
Foreign government debt securities (Central Bank of Brazil mandatory guarantee) (*) | |||||||||||
Foreign government debt securities | |||||||||||
Time deposits | |||||||||||
Securitization transactions (**) | |||||||||||
Total short-term investments | $ | $ | |||||||||
Long-term investments | |||||||||||
U.S. government debt securities | $ | $ | |||||||||
Foreign government debt securities | |||||||||||
Securitization transactions (**) | |||||||||||
Equity securities held at cost | |||||||||||
Total long-term investments | $ | $ |
(*) | Regulations issued by the Central Banks and other regulators of the countries where the Company operates applicable to its Fintech business are described in Note 3 to the consolidated financial statements in the Company’s 2022 10-K. Recently issued regulations are described in Note 3 of these unaudited interim condensed consolidated financial statements. | ||||
(**) | Investments from securitization transactions are restricted to the payment of amounts due to third-party investors. |
March 31, 2023 | |||||||||||||||||
Loans receivable | Allowance for doubtful accounts | Loans receivable, net | |||||||||||||||
(In millions) | |||||||||||||||||
On-line merchant | $ | $ | ( | $ | |||||||||||||
Consumer | ( | ||||||||||||||||
In-store merchant | ( | ||||||||||||||||
Credit Cards | ( | ||||||||||||||||
Total | $ | $ | ( | $ |
December 31, 2022 | |||||||||||||||||
Loans receivable | Allowance for doubtful accounts | Loans receivable, net | |||||||||||||||
(In millions) | |||||||||||||||||
On-line merchant | $ | $ | ( | $ | |||||||||||||
Consumer | ( | ||||||||||||||||
In-store merchant | ( | ||||||||||||||||
Credit Cards | ( | ||||||||||||||||
Total | $ | $ | ( | $ |
March 31, 2023 | December 31, 2022 | ||||||||||
(In millions) | |||||||||||
1-30 days past due | $ | $ | |||||||||
31-60 days past due | |||||||||||
61 -90 days past due | |||||||||||
91 -120 days past due | |||||||||||
121 -150 days past due | |||||||||||
151 -180 days past due | |||||||||||
181 -210 days past due | |||||||||||
211 -240 days past due | |||||||||||
241 -270 days past due | |||||||||||
271 -300 days past due | |||||||||||
301 -330 days past due | |||||||||||
331 -360 days past due | |||||||||||
Total past due | |||||||||||
To become due | |||||||||||
Total | $ | $ |
March 31, 2023 | |||||||||||||||||||||||||||||
On-line merchant | Consumer | In-store merchant | Credit Cards | Total | |||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||
Balance at beginning of year | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Net charged to Net Income | |||||||||||||||||||||||||||||
Currency translation adjustments | |||||||||||||||||||||||||||||
Write-offs (*) | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
Balance at end of period | $ | $ | $ | $ | $ |
March 31, 2022 | |||||||||||||||||||||||||||||
On-line merchant | Consumer | In-store merchant | Credit Cards | Total | |||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||
Balance at beginning of year | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Net charged to Net Income | |||||||||||||||||||||||||||||
Currency translation adjustments | |||||||||||||||||||||||||||||
Write-offs (*) | ( | ( | ( | ( | |||||||||||||||||||||||||
Balance at end of period | $ | $ | $ | $ | $ |
March 31, 2023 | December 31, 2022 | ||||||||||
(In millions) | |||||||||||
Goodwill | $ | $ | |||||||||
Intangible assets with indefinite lives | |||||||||||
- Trademarks | |||||||||||
- Digital assets (1) | |||||||||||
Amortizable intangible assets | |||||||||||
- Licenses and others | |||||||||||
- Non-compete agreements | |||||||||||
- Customer lists | |||||||||||
- Trademarks | |||||||||||
- Hubs network | |||||||||||
- Others | |||||||||||
Total intangible assets | $ | $ | |||||||||
Accumulated amortization | ( | ( | |||||||||
Total intangible assets, net | $ | $ |
Three Months Ended March 31, 2023 | |||||||||||||||||||||||||||||||||||||||||
Brazil | Argentina | Mexico | Chile | Colombia | Other Countries | Total | |||||||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||||||||
Balance, beginning of the period | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Effect of exchange rates changes | |||||||||||||||||||||||||||||||||||||||||
Balance, end of the period | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Year Ended December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||
Brazil | Argentina | Mexico | Chile | Colombia | Other Countries | Total | |||||||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||||||||||||
Balance, beginning of the period | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Effect of exchange rates changes | ( | ||||||||||||||||||||||||||||||||||||||||
Balance, end of the period | $ | $ | $ | $ | $ | $ | $ |
For year ended December 31, 2023 | $ | ||||
For year ended December 31, 2024 | |||||
For year ended December 31, 2025 | |||||
For year ended December 31, 2026 | |||||
Thereafter | |||||
$ |
Three Months Ended March 31, 2023 | |||||||||||||||||||||||||||||
Brazil | Argentina | Mexico | Other Countries | Total | |||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||
Net revenues | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
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 | ( | ||||||||||||||||||||||||||||
Net income before income tax expense | $ |
Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||
Brazil | Argentina | Mexico | Other Countries | Total | |||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||
Net revenues | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
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 | ( | ||||||||||||||||||||||||||||
Net income before income tax expense | $ |
Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||
Brazil | Argentina | Mexico | Other Countries | Total | ||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||
Commerce services (a) | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Commerce products sales (b) | ||||||||||||||||||||||||||||||||||||||||||||
Total commerce revenues | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Fintech services (c) | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Credit revenues (d) | ||||||||||||||||||||||||||||||||||||||||||||
Fintech products sales (e) | ||||||||||||||||||||||||||||||||||||||||||||
Total fintech revenues | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Total net revenues | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ |
March 31, 2023 | December 31, 2022 | ||||||||||
(In millions) | |||||||||||
US property and equipment, net | $ | $ | |||||||||
Property and equipment, net | |||||||||||
Argentina | |||||||||||
Brazil | |||||||||||
Mexico | |||||||||||
Other countries | |||||||||||
$ | $ | ||||||||||
Total property and equipment, net | $ | $ |
March 31, 2023 | December 31, 2022 | ||||||||||
(In millions) | |||||||||||
Argentina | $ | $ | |||||||||
Brazil | |||||||||||
Mexico | |||||||||||
Other countries | |||||||||||
Total operating lease right-of-use assets | $ | $ |
March 31, 2023 | December 31, 2022 | ||||||||||
(In millions) | |||||||||||
US intangible assets, net | $ | $ | |||||||||
Goodwill and intangible assets, net | |||||||||||
Argentina | |||||||||||
Brazil | |||||||||||
Mexico | |||||||||||
Other countries | |||||||||||
$ | $ | ||||||||||
Total goodwill and intangible assets, net | $ | $ |
Description | Balances as of March 31, 2023 | Quoted Prices in active markets for identical Assets (Level 1) | Significant other observable inputs (Level 2) | Unobservable inputs (Level 3) | Balances as of December 31, 2022 | Quoted Prices in active markets for identical Assets (Level 1) | Significant other observable inputs (Level 2) | Unobservable inputs (Level 3) | ||||||||||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Money Market | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
U.S. government debt securities (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Cash and Cash Equivalents: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Money Market | ||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign government debt securities (Central Bank of Brazil Mandatory Guarantee) (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Investments: | ||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. government debt securities (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign government debt securities (Central Bank of Brazil Mandatory Guarantee) (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign government debt securities (1) (2) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
USDC | ||||||||||||||||||||||||||||||||||||||||||||||||||
Customer crypto-assets safeguarding assets | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total Assets | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term retention program | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Other Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Contingent considerations | ||||||||||||||||||||||||||||||||||||||||||||||||||
Customer crypto-assets safeguarding liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total Liabilities | $ | $ | $ | $ | $ | $ | $ | $ |
Year Ended December 31, 2022 | |||||||||||
Derivative Instruments, net | Contingent Considerations | ||||||||||
(In millions) | |||||||||||
Balance, beginning of the year | $ | $ | ( | ||||||||
Net Additions | |||||||||||
Settlements | |||||||||||
Foreign Currency Translation | ( | ||||||||||
Gain (Losses) in Other Comprehensive Income | ( | ||||||||||
Gain (Losses) on Income Statement | ( | ||||||||||
Transfers out of level 3 | |||||||||||
Balance, end of the year | $ | $ | ( |
Balances as of March 31, 2023 | Estimated fair value as of March 31, 2023 | Balances as of December 31, 2022 | Estimated fair value as of December 31, 2022 | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
Restricted cash and cash equivalents | |||||||||||||||||||||||
Investments | |||||||||||||||||||||||
Accounts receivables, net | |||||||||||||||||||||||
Credit card receivables and other means of payment, net | |||||||||||||||||||||||
Loans receivable, net | |||||||||||||||||||||||
Other assets | |||||||||||||||||||||||
Total Assets | $ | $ | $ | $ | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Accounts payable and accrued expenses | $ | $ | $ | $ | |||||||||||||||||||
Funds payable to customers | |||||||||||||||||||||||
Amounts payable due to credit and debit card transactions | |||||||||||||||||||||||
Salaries and social security payable | |||||||||||||||||||||||
Loans payable and other financial liabilities | |||||||||||||||||||||||
Other liabilities | |||||||||||||||||||||||
Total Liabilities | $ | $ | $ | $ |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(In millions) | |||||||||||
LTRP 2017 | $ | $ | ( | ||||||||
LTRP 2018 | |||||||||||
LTRP 2019 | |||||||||||
LTRP 2020 | |||||||||||
LTRP 2021 | |||||||||||
LTRP 2022 | |||||||||||
LTRP 2023 | |||||||||||
Total LTRP | $ | $ |
Balances as of | |||||||||||
March 31, 2023 | December 31, 2022 | ||||||||||
(In millions) | |||||||||||
Current loans payable and other financial liabilities: | |||||||||||
Loans from banks | $ | $ | |||||||||
Bank overdrafts | |||||||||||
Secured lines of credit | |||||||||||
Financial Bills | |||||||||||
Deposit Certificates | |||||||||||
Commercial Notes | |||||||||||
Finance lease obligations | |||||||||||
Collateralized debt | |||||||||||
2028 Notes | |||||||||||
2026 Sustainability Notes | |||||||||||
2031 Notes | |||||||||||
Other lines of credit | |||||||||||
$ | $ | ||||||||||
Non-Current loans payable and other financial liabilities: | |||||||||||
Loans from banks | $ | $ | |||||||||
Secured lines of credit | |||||||||||
Deposit Certificates | |||||||||||
Commercial Notes | |||||||||||
Finance lease obligations | |||||||||||
Collateralized debt | |||||||||||
2028 Notes | |||||||||||
2026 Sustainability Notes | |||||||||||
2031 Notes | |||||||||||
$ | $ |
Balances as of | ||||||||||||||||||||||||||||||||||||||||||||
Type of instrument | Currency | Interest | Weighted Average Interest Rate | Maturity | March 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||
Loans from banks | ||||||||||||||||||||||||||||||||||||||||||||
Chilean Subsidiaries | Chilean Pesos | Fixed | % | April 2023 - April 2025 | $ | $ | ||||||||||||||||||||||||||||||||||||||
Brazilian Subsidiary (*) | US Dollar | Fixed | % | November 2023 | ||||||||||||||||||||||||||||||||||||||||
Brazilian Subsidiary (*) | US Dollar | Fixed | % | August 2023 | ||||||||||||||||||||||||||||||||||||||||
Brazilian Subsidiary | Brazilian Reais | Variable | TJLP + | % | April 2023 - May 2031 | |||||||||||||||||||||||||||||||||||||||
Mexican Subsidiary | Mexican Pesos | Variable | TIIE + | % | April 2023 - June 2027 | |||||||||||||||||||||||||||||||||||||||
Uruguayan Subsidiary | Uruguayan Pesos | Fixed | % | April - June 2023 | ||||||||||||||||||||||||||||||||||||||||
Colombian Subsidiary | Colombian Pesos | Fixed | % | May 2023 - June 2023 | ||||||||||||||||||||||||||||||||||||||||
Bank overdrafts | ||||||||||||||||||||||||||||||||||||||||||||
Uruguayan Subsidiary | Uruguayan Pesos | — | — | % | — | |||||||||||||||||||||||||||||||||||||||
Argentine Subsidiaries | Argentine Pesos | Fixed | — | % | April 2023 | |||||||||||||||||||||||||||||||||||||||
Secured lines of credit | ||||||||||||||||||||||||||||||||||||||||||||
Argentine Subsidiaries | Argentine Pesos | Fixed | % | April 2024 | ||||||||||||||||||||||||||||||||||||||||
Mexican Subsidiary | Mexican Pesos | Fixed | % | April 2023 - July 2027 | ||||||||||||||||||||||||||||||||||||||||
Financial Bills | ||||||||||||||||||||||||||||||||||||||||||||
Brazilian Subsidiary | Brazilian Reais | Variable | CDI + | % | July 2023 - February 2024 | |||||||||||||||||||||||||||||||||||||||
Deposit Certificates | ||||||||||||||||||||||||||||||||||||||||||||
Brazilian Subsidiary | Brazilian Reais | Variable | IPCA + | % | April - May 2023 | |||||||||||||||||||||||||||||||||||||||
Brazilian Subsidiary | Brazilian Reais | Variable | April 2023 - September 2024 | |||||||||||||||||||||||||||||||||||||||||
Brazilian Subsidiary | Brazilian Reais | Fixed | % | April - September 2023 | ||||||||||||||||||||||||||||||||||||||||
Brazilian Subsidiary | Brazilian Reais | — | — | % | — | |||||||||||||||||||||||||||||||||||||||
Commercial Notes | ||||||||||||||||||||||||||||||||||||||||||||
Brazilian Subsidiary | Brazilian Reais | Variable | DI + | % | April 2023 - August 2027 | |||||||||||||||||||||||||||||||||||||||
Brazilian Subsidiary | Brazilian Reais | Variable | IPCA + | % | April 2023 - August 2029 | |||||||||||||||||||||||||||||||||||||||
Finance lease obligations | ||||||||||||||||||||||||||||||||||||||||||||
Collateralized debt | ||||||||||||||||||||||||||||||||||||||||||||
2028 Notes | US Dollar | Fixed | % | August 2023 - August 2028 | ||||||||||||||||||||||||||||||||||||||||
2026 Sustainability Notes | US Dollar | Fixed | % | July 2023 - January 2026 | ||||||||||||||||||||||||||||||||||||||||
2031 Notes | US Dollar | Fixed | % | July 2023 - January 2031 | ||||||||||||||||||||||||||||||||||||||||
Other lines of credit | ||||||||||||||||||||||||||||||||||||||||||||
$ | $ |
Capped call trading date | Amount | ||||
(In millions) | |||||
June 2019 (*) | $ | ||||
June 2020 (*) | |||||
August 2020 | |||||
November 2020 | |||||
January 2021 |
SPEs | Collateralized debt as of March 31, 2023 | Interest rate | Currency | Maturity | ||||||||||||||||||||||
Mercado Crédito I Brasil Fundo de Investimento Em Direitos Creditórios Não Padronizados | $ | CDI + | Brazilian Reais | June 2025 | ||||||||||||||||||||||
Fundo de Investimento Em DireitosCreditórios Arandu | CDI + | Brazilian Reais | June 2023 | |||||||||||||||||||||||
Mercado Crédito Fundo de Investimento Em Direitos Creditórios Não Padronizado | CDI + | Brazilian Reais | August 2023 | |||||||||||||||||||||||
Olimpia Fundo de Investimento Em Direitos Creditórios | CDI + | Brazilian Reais | November 2024 | |||||||||||||||||||||||
Mercado Crédito II Brasil Fundo De Investimento Em Direitos Creditórios Nao Padronizados | CDI + | Brazilian Reais | April 2028 | |||||||||||||||||||||||
Mercado Crédito Consumo IX | Badlar rates plus | Argentine Pesos | May 2023 | |||||||||||||||||||||||
Mercado Crédito Consumo X | Badlar rates plus | Argentine Pesos | June 2023 | |||||||||||||||||||||||
Mercado Crédito Consumo XI | Badlar rates plus | Argentine Pesos | August 2023 | |||||||||||||||||||||||
Mercado Crédito Consumo XII | Badlar rates plus | Argentine Pesos | September 2023 | |||||||||||||||||||||||
Mercado Crédito Consumo XIII | Badlar rates plus | Argentine Pesos | November 2023 | |||||||||||||||||||||||
Mercado Crédito Consumo XIV | Badlar rates plus | Argentine Pesos | October 2023 | |||||||||||||||||||||||
Mercado Crédito Consumo XV | Badlar rates plus | Argentine Pesos | October 2023 | |||||||||||||||||||||||
Mercado Crédito Consumo XVI | Badlar rates plus | Argentine Pesos | December 2023 | |||||||||||||||||||||||
Mercado Crédito Consumo XVII | Badlar rates plus | Argentine Pesos | January 2024 | |||||||||||||||||||||||
Mercado Crédito Consumo XVIII | Badlar rates plus | Argentine Pesos | January 2024 | |||||||||||||||||||||||
Mercado Crédito Consumo XIX (*) | Badlar rates plus | Argentine Pesos | February 2024 | |||||||||||||||||||||||
Mercado Crédito XIV | Badlar rates plus | Argentine Pesos | April 2023 | |||||||||||||||||||||||
Mercado Crédito XV | Badlar rates plus | Argentine Pesos | August 2023 | |||||||||||||||||||||||
Mercado Crédito XVI | Badlar rates plus | Argentine Pesos | September 2023 | |||||||||||||||||||||||
Mercado Crédito XVII | Badlar rates plus | Argentine Pesos | March 2024 | |||||||||||||||||||||||
Mercado Crédito XVIII | Badlar rates plus | Argentine Pesos | January 2024 | |||||||||||||||||||||||
Fideicomiso de administración y fuente de pago CIB/3756 | The equilibrium interbank interest rate published by Banco de Mexico in the Diario Oficial plus | Mexican Pesos | September 2024 | |||||||||||||||||||||||
Fideicomiso de administración y fuente de pago CIB/3369 | The equilibrium interbank interest rate published by Banco de Mexico in the Diario Oficial plus | Mexican Pesos | April 2025 | |||||||||||||||||||||||
$ |
March 31, 2023 | December 31, 2022 | ||||||||||
Assets | (In millions) | ||||||||||
Current assets: | |||||||||||
Restricted cash and cash equivalents | $ | $ | |||||||||
Short-term investments | |||||||||||
Credit card receivables and other means of payments, net | |||||||||||
Loans receivable, net | |||||||||||
Total current assets | |||||||||||
Non-current assets: | |||||||||||
Long-term investments | |||||||||||
Loans receivable, net | |||||||||||
Total non-current assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities | |||||||||||
Current liabilities: | |||||||||||
Accounts payable and accrued expenses | $ | $ | |||||||||
Loans payable and other financial liabilities | |||||||||||
Other liabilities | |||||||||||
Total current liabilities | |||||||||||
Non-current liabilities: | |||||||||||
Loans payable and other financial liabilities | |||||||||||
Total non-current liabilities | |||||||||||
Total liabilities | $ | $ |
March 31, 2023 | December 31, 2022 | ||||||||||
(In millions) | |||||||||||
Operating Leases | |||||||||||
Operating lease right-of-use assets | $ | $ | |||||||||
Operating lease liabilities | $ | $ | |||||||||
Finance Leases | |||||||||||
Property and equipment, at cost | |||||||||||
Accumulated depreciation | ( | ( | |||||||||
Property and equipment, net | $ | $ | |||||||||
Loans payable and other financial liabilities | $ | $ |
March 31, 2023 | December 31, 2022 | ||||||||||
Weighted average remaining lease term | |||||||||||
Operating leases | |||||||||||
Finance leases | |||||||||||
Weighted average discount rate (*) | |||||||||||
Operating leases | % | % | |||||||||
Finance leases | % | % |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(In millions) | |||||||||||
Operating lease cost | $ | $ | |||||||||
Finance lease cost: | |||||||||||
Depreciation of property and equipment | |||||||||||
Interest on lease liabilities | |||||||||||
Total finance lease cost | $ | $ |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(In millions) | |||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
Operating cash flows from operating leases | $ | $ | |||||||||
Financing cash flows from finance leases | |||||||||||
Assets obtained in exchange for lease obligations: | |||||||||||
Operating leases | $ | $ | |||||||||
Finance leases |
Period Ending March 31, 2023 | Operating Leases | Finance Leases | |||||||||
(In millions) | |||||||||||
One year or less | $ | $ | |||||||||
One year to two years | |||||||||||
Two years to three years | |||||||||||
Three years to four years | |||||||||||
Four years to five years | |||||||||||
Thereafter | |||||||||||
Total lease payments | $ | $ | |||||||||
Less imputed interest | ( | ( | |||||||||
Total | $ | $ |
Notional Amount as of | |||||||||||
March 31, 2023 | December 31, 2022 | ||||||||||
(In millions) | |||||||||||
Designated as hedging instrument | |||||||||||
Foreign exchange contracts | $ | $ | |||||||||
Interest rate swap contracts | |||||||||||
Cross currency swap contracts | |||||||||||
Not designated as hedging instrument | |||||||||||
Foreign exchange contracts | $ | $ | |||||||||
Interest rate swap contracts |
March 31, | December 31, | ||||||||||||||||
Balance sheet location | 2023 | 2022 | |||||||||||||||
(In millions) | |||||||||||||||||
Derivative Instruments | |||||||||||||||||
Foreign exchange contracts designated as cash flow hedges | Other current assets | $ | $ | ||||||||||||||
Cross currency swap contracts designated as net investment hedge | Other current liabilities | ||||||||||||||||
Interest rate swap contracts designated as cash flow hedges | Other current liabilities | ||||||||||||||||
Cross currency swap contracts designated as fair value hedge | Other current liabilities | ||||||||||||||||
Interest rate swap contracts not designated as hedging instruments | Other current liabilities | ||||||||||||||||
Foreign exchange contracts not designated as hedging instruments | Other current liabilities | ||||||||||||||||
Foreign exchange contracts designated as cash flow hedges | Other current liabilities | ||||||||||||||||
Interest rate swap contracts not designated as hedging instruments | Other non-current liabilities | ||||||||||||||||
Cross currency swap contracts designated as net investment hedge | Other non-current liabilities |
December 31, 2022 | Amount of gain (loss) recognized in other comprehensive income | Amount of gain (loss) reclassified from accumulated other comprehensive income | March 31, 2023 | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||
Foreign exchange contracts designated as cash flow hedges | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Interest swap contracts designated as cash flow hedges | ( | ( | ( | ||||||||||||||||||||
Cross currency swap contracts designated as net investment hedge | ( | ( | ( | ||||||||||||||||||||
$ | ( | $ | ( | $ | $ | ( |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(In millions) | |||||||||||
Foreign exchange contracts not designated as hedging instruments recognized in Foreign currency losses, net | $ | ( | $ | ( | |||||||
Currency swap contracts not designated as hedging instruments recognized in Foreign currency losses, net | ( | ||||||||||
Interest rate contracts not designated as hedging instruments recognized in Interest expense and other financial losses |
Three Months Ended March 31, | ||||||||||||||
(% of total consolidated net revenues) | 2023 | 2022 | ||||||||||||
Brazil | 52.0 | % | 55.7 | % | ||||||||||
Argentina | 23.7 | 23.0 | ||||||||||||
Mexico | 19.5 | 16.2 | ||||||||||||
Other Countries | 4.8 | 5.1 |
Three Months Ended March 31, | Change from 2022 to 2023 | |||||||||||||||||||||||||
2023 | 2022 | in Dollars | in % | |||||||||||||||||||||||
(in millions, except percentages) | ||||||||||||||||||||||||||
Net Revenues: | ||||||||||||||||||||||||||
Brazil | $ | 1,579 | $ | 1,252 | $ | 327 | 26.1 | % | ||||||||||||||||||
Argentina | 721 | 518 | 203 | 39.2 | ||||||||||||||||||||||
Mexico | 591 | 364 | 227 | 62.4 | ||||||||||||||||||||||
Other Countries | 146 | 114 | 32 | 28.1 | ||||||||||||||||||||||
Total Net Revenues | $ | 3,037 | $ | 2,248 | $ | 789 | 35.1 | % |
Three Months Ended March 31, | ||||||||||||||
Consolidated net revenues by revenue stream | 2023 | 2022 | ||||||||||||
(in millions) | ||||||||||||||
Commerce | $ | 1,676 | $ | 1,277 | ||||||||||
Fintech | 1,361 | 971 | ||||||||||||
Total | $ | 3,037 | $ | 2,248 |
Three Months Ended March 31, | ||||||||||||||
(In millions) | 2023 | 2022 | ||||||||||||
(Unaudited) | ||||||||||||||
Net service revenues | $ | 2,763 | $ | 1,997 | ||||||||||
Net product revenues | 274 | 251 | ||||||||||||
Net revenues | 3,037 | 2,248 | ||||||||||||
Cost of net revenues | (1,501) | (1,175) | ||||||||||||
Gross profit | 1,536 | 1,073 | ||||||||||||
Operating expenses: | ||||||||||||||
Product and technology development | (381) | (234) | ||||||||||||
Sales and marketing | (383) | (286) | ||||||||||||
Provision for doubtful accounts | (252) | (255) | ||||||||||||
General and administrative | (180) | (159) | ||||||||||||
Total operating expenses | (1,196) | (934) | ||||||||||||
Income from operations | 340 | 139 | ||||||||||||
Other income (expenses): | ||||||||||||||
Interest income and other financial gains | 161 | 31 | ||||||||||||
Interest expense and other financial losses | (94) | (56) | ||||||||||||
Foreign currency losses, net | (87) | (3) | ||||||||||||
Net income before income tax expense and equity in earnings of unconsolidated entity | 320 | 111 | ||||||||||||
Income tax expense | (122) | (46) | ||||||||||||
Equity in earnings of unconsolidated entity | 3 | — | ||||||||||||
Net income | $ | 201 | $ | 65 |
Three Months Ended March 31, | ||||||||||||||
(in millions)(*) | 2023 | 2022 | ||||||||||||
Unique active users (1) | 101 | 81 | ||||||||||||
Gross merchandise volume(2) | $ | 9,434 | $ | 7,665 | ||||||||||
Number of successful items sold (3) | 309 | 267 | ||||||||||||
Number of successful items shipped(4) | 302 | 254 | ||||||||||||
Total payment volume(5) | $ | 36,986 | $ | 25,319 | ||||||||||
Total volume of payments on marketplace(6) | $ | 9,950 | $ | 8,071 | ||||||||||
Total payment transactions(7) | 1,875 | 1,091 | ||||||||||||
Capital expenditures | $ | 89 | $ | 137 | ||||||||||
Depreciation and amortization | $ | 126 | $ | 84 |
Three Months Ended March 31, | Change from 2022 to 2023 | ||||||||||||||||||||||
2023 | 2022 | in Dollars | in % | ||||||||||||||||||||
(in millions, except percentages) | |||||||||||||||||||||||
Total Net Revenues | $ | 3,037 | $ | 2,248 | $ | 789 | 35.1 | % |
Three Months Ended March 31, | Change from 2022 to 2023 | |||||||||||||||||||||||||
Consolidated Net Revenues by revenue stream | 2023 | 2022 | in Dollars | in % | ||||||||||||||||||||||
(in millions, except percentages) | ||||||||||||||||||||||||||
Brazil | ||||||||||||||||||||||||||
Commerce | $ | 907 | $ | 689 | $ | 218 | 31.6 | % | ||||||||||||||||||
Fintech | 672 | 563 | 109 | 19.4 | % | |||||||||||||||||||||
$ | 1,579 | $ | 1,252 | $ | 327 | 26.1 | % | |||||||||||||||||||
Argentina | ||||||||||||||||||||||||||
Commerce | $ | 273 | $ | 240 | $ | 33 | 13.8 | % | ||||||||||||||||||
Fintech | 448 | 278 | 170 | 61.2 | % | |||||||||||||||||||||
$ | 721 | $ | 518 | $ | 203 | 39.2 | % | |||||||||||||||||||
Mexico | ||||||||||||||||||||||||||
Commerce | $ | 398 | $ | 262 | $ | 136 | 51.9 | % | ||||||||||||||||||
Fintech | 193 | 102 | 91 | 89.2 | % | |||||||||||||||||||||
$ | 591 | $ | 364 | $ | 227 | 62.4 | % | |||||||||||||||||||
Other countries | ||||||||||||||||||||||||||
Commerce | $ | 98 | $ | 86 | $ | 12 | 14.0 | % | ||||||||||||||||||
Fintech | 48 | 28 | 20 | 71.4 | % | |||||||||||||||||||||
$ | 146 | $ | 114 | $ | 32 | 28.1 | % | |||||||||||||||||||
Consolidated | ||||||||||||||||||||||||||
Commerce | $ | 1,676 | $ | 1,277 | $ | 399 | 31.2 | % | ||||||||||||||||||
Fintech | 1,361 | 971 | 390 | 40.2 | % | |||||||||||||||||||||
Total | $ | 3,037 | $ | 2,248 | $ | 789 | 35.1 | % |
Quarter Ended | |||||||||||||||||||||||
March 31, | June 30, | September 30, | December 31, | ||||||||||||||||||||
(in millions, except percentages) | |||||||||||||||||||||||
2023 | |||||||||||||||||||||||
Net revenues | $ | 3,037 | n/a | n/a | n/a | ||||||||||||||||||
Percent change from prior quarter | 1 | % | |||||||||||||||||||||
2022 | |||||||||||||||||||||||
Net revenues | $ | 2,248 | $ | 2,597 | $ | 2,690 | $ | 3,002 | |||||||||||||||
Percent change from prior quarter | 5 | % | 16 | % | 4 | % | 12 | % |
(% of revenue growth in Local Currency) (*) | Three-month period | |||||||
Brazil | 25.9 | % | ||||||
Argentina (**) | 150.9 | % | ||||||
Mexico | 47.7 | % | ||||||
Other Countries | 29.8 | % | ||||||
Total Consolidated | 58.4 | % |
Three Months Ended March 31, | Change from 2022 to 2023 | |||||||||||||||||||||||||
2023 | 2022 | in Dollars | in % | |||||||||||||||||||||||
(in millions, except percentages) | ||||||||||||||||||||||||||
Total cost of net revenues | $ | 1,501 | $ | 1,175 | $ | 326 | 27.7% | |||||||||||||||||||
As a percentage of net revenues | 49.4% | 52.3% |
Three Months Ended March 31, | Change from 2022 to 2023 | |||||||||||||||||||||||||
2023 | 2022 | in Dollars | in % | |||||||||||||||||||||||
(in millions, except percentages) | ||||||||||||||||||||||||||
Product and technology development | $ | 381 | $ | 234 | $ | 147 | 62.8% | |||||||||||||||||||
As a percentage of net revenues | 12.5% | 10.4% |
Three Months Ended March 31, | Change from 2022 to 2023 | |||||||||||||||||||||||||
2023 | 2022 | in Dollars | in % | |||||||||||||||||||||||
(in millions, except percentages) | ||||||||||||||||||||||||||
Sales and marketing | $ | 383 | $ | 286 | $ | 97 | 33.9% | |||||||||||||||||||
As a percentage of net revenues | 12.6 | % | 12.7 | % |
Three Months Ended March 31, | Change from 2022 to 2023 | |||||||||||||||||||||||||
2023 | 2022 | in Dollars | in % | |||||||||||||||||||||||
(in millions, except percentages) | ||||||||||||||||||||||||||
Provision for doubtful accounts | $ | 252 | $ | 255 | $ | (3) | (1.2)% | |||||||||||||||||||
As a percentage of net revenues | 8.3% | 11.3% |
Three Months Ended March 31, | Change from 2022 to 2023 | |||||||||||||||||||||||||
2023 | 2022 | in Dollars | in % | |||||||||||||||||||||||
(in millions, except percentages) | ||||||||||||||||||||||||||
General and administrative | $ | 180 | $ | 159 | $ | 21 | 13.2% | |||||||||||||||||||
As a percentage of net revenues | 5.9% | 7.1% |
Three Months Ended March 31, | Change from 2022 to 2023 | |||||||||||||||||||||||||
2023 | 2022 | in Dollars | in % | |||||||||||||||||||||||
(in millions, except percentages) | ||||||||||||||||||||||||||
Other expense, net | $ | (20) | $ | (28) | $ | 8 | (28.6)% | |||||||||||||||||||
As a percentage of net revenues | -0.7 | % | -1.2 | % |
Three Months Ended March 31, | Change from 2022 to 2023 | |||||||||||||||||||||||||
2023 | 2022 | in Dollars | in % | |||||||||||||||||||||||
(in millions, except percentages) | ||||||||||||||||||||||||||
Income tax expense | $ | 122 | $ | 46 | $ | 76 | 165.2 | % | ||||||||||||||||||
As a percentage of net revenues | 4.0 | % | 2.0 | % |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Effective tax rate (*) | 38.1% | 40.7% |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Effective tax rate by country | ||||||||||||||
Argentina | 31.2% | 26.2% | ||||||||||||
Brazil | 6.8% | -0.7% | ||||||||||||
Mexico | 40.6% | -27.8% |
Three Months Ended March 31, 2023 | |||||||||||||||||||||||||||||
Brazil | Argentina | Mexico | Other Countries | Total | |||||||||||||||||||||||||
(In millions, except percentages) | |||||||||||||||||||||||||||||
Net revenues | $ | 1,579 | $ | 721 | $ | 591 | $ | 146 | $ | 3,037 | |||||||||||||||||||
Direct costs | (1,261) | (411) | (464) | (131) | (2,267) | ||||||||||||||||||||||||
Direct contribution | $ | 318 | $ | 310 | $ | 127 | $ | 15 | $ | 770 | |||||||||||||||||||
Margin | 20.1% | 43.0% | 21.5% | 10.3% | 25.4% |
Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||
Brazil | Argentina | Mexico | Other Countries | Total | |||||||||||||||||||||||||
(In millions, except percentages) | |||||||||||||||||||||||||||||
Net revenues | $ | 1,252 | $ | 518 | $ | 364 | $ | 114 | $ | 2,248 | |||||||||||||||||||
Direct costs | (1,065) | (320) | (328) | (110) | (1,823) | ||||||||||||||||||||||||
Direct contribution | $ | 187 | $ | 198 | $ | 36 | $ | 4 | $ | 425 | |||||||||||||||||||
Margin | 14.9% | 38.2% | 9.9% | 3.5% | 18.9% |
Change from the Three Months Ended March 31, 2022 to March 31, 2023 | |||||||||||||||||||||||||||||
Brazil | Argentina | Mexico | Other Countries | Total | |||||||||||||||||||||||||
(In millions, except percentages) | |||||||||||||||||||||||||||||
Net revenues | |||||||||||||||||||||||||||||
in Dollars | $ | 327 | $ | 203 | $ | 227 | $ | 32 | $ | 789 | |||||||||||||||||||
in % | 26.1% | 39.2% | 62.4% | 28.1 | % | 35.1% | |||||||||||||||||||||||
Direct costs | |||||||||||||||||||||||||||||
in Dollars | $ | (196) | $ | (91) | $ | (136) | $ | (21) | $ | (444) | |||||||||||||||||||
in % | 18.4% | 28.4% | 41.5% | 19.1% | 24.4% | ||||||||||||||||||||||||
Direct contribution | |||||||||||||||||||||||||||||
in Dollars | $ | 131 | $ | 112 | $ | 91 | $ | 11 | $ | 345 | |||||||||||||||||||
in % | 70.1% | 56.6% | 252.8 | % | 275.0 | % | 81.2% |
Three Months Ended March 31, | ||||||||||||||
(In millions) | 2023 | 2022 | ||||||||||||
Net cash provided by (used in): | ||||||||||||||
Operating activities | $ | 859 | $ | (233) | ||||||||||
Investing activities | (538) | (1,224) | ||||||||||||
Financing activities | (112) | 152 | ||||||||||||
Effect of exchange rates on cash and cash equivalents, restricted cash and cash equivalents | (48) | 71 | ||||||||||||
Net increase (decrease) in cash and cash equivalents, restricted cash and cash equivalents | $ | 161 | $ | (1,234) |
Three Months Ended March 31, | Change from 2022 to 2023 | ||||||||||||||||||||||
2023 | 2022 | in Dollars | in % | ||||||||||||||||||||
(in millions, except percentages) | |||||||||||||||||||||||
Net Cash provided by (used in): | |||||||||||||||||||||||
Operating activities | $ | 859 | $ | (233) | $ | 1,092 | (468.7) | % |
Three Months Ended March 31, | Change from 2022 to 2023 | ||||||||||||||||||||||
2023 | 2022 | in Dollars | in % | ||||||||||||||||||||
(in millions, except percentages) | |||||||||||||||||||||||
Net Cash used in: | |||||||||||||||||||||||
Investing activities | $ | (538) | $ | (1,224) | $ | 686 | (56.0) | % |
Three Months Ended March 31, | Change from 2022 to 2023 | ||||||||||||||||||||||
2023 | 2022 | in Dollars | in % | ||||||||||||||||||||
(in millions, except percentages) | |||||||||||||||||||||||
Net Cash (used in) provided by: | |||||||||||||||||||||||
Financing activities | $ | (112) | $ | 152 | $ | (264) | (173.7) | % |
(In millions) | March 31, 2023 | December 31, 2022 | ||||||||||||
Current assets (1) (2) | $ | 8,688 | $ | 7,966 | ||||||||||
Non-current assets (3) | 2,811 | 2,693 | ||||||||||||
Current Liabilities (4) | 7,706 | 7,214 | ||||||||||||
Non-current Liabilities | 2,655 | 2,547 |
(In millions) | March 31, 2023 | |||||||
Net revenues (1) | $ | 2,544 | ||||||
Gross Profit (2) | 1,181 | |||||||
Income from operations (3) | 252 | |||||||
Net Income (4) | 155 |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Net income | $ | 201 | $ | 65 | |||||||
Adjustments: | |||||||||||
Depreciation and amortization | 126 | 84 | |||||||||
Interest income and other financial gains | (161) | (31) | |||||||||
Interest expense and other financial losses | 94 | 56 | |||||||||
Foreign currency losses, net | 87 | 3 | |||||||||
Income tax expense | 122 | 46 | |||||||||
Equity in earnings of unconsolidated entity | (3) | — | |||||||||
Adjusted EBITDA | $ | 466 | $ | 223 |
March 31, 2023 | December 31, 2022 | ||||||||||
Current Loans payable and other financial liabilities | $ | 2,332 | $ | 2,131 | |||||||
Non-current Loans payable and other financial liabilities | 2,500 | 2,627 | |||||||||
Current Operating lease liabilities | 159 | 142 | |||||||||
Non-current Operating lease liabilities | 529 | 514 | |||||||||
Total debt | $ | 5,520 | $ | 5,414 | |||||||
Less: | |||||||||||
Cash and cash equivalents | $ | 2,143 | $ | 1,910 | |||||||
Short-term investments (1) | 1,070 | 1,120 | |||||||||
Long-term investments (2) | 200 | 245 | |||||||||
Net debt | $ | 2,107 | $ | 2,139 |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Total credits revenues | $ | 536 | $ | 402 | |||||||
Less: Provision for doubtful accounts | 240 | 253 | |||||||||
Subtotal (a) | $ | 296 | $ | 149 | |||||||
Loans receivable (b) | $ | 3,049 | $ | 2,415 | |||||||
Annualized ratio (a/b)*4 | 38.8 | % | 24.7 | % |
Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||
As reported | FX Neutral Measures | As reported | ||||||||||||||||||||||||||||||||||||
(In millions, except percentages) | 2023 | 2022 | Percentage Change | 2023 | 2022 | Percentage Change | ||||||||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||||||||||||||||
Net revenues | $ | 3,037 | $ | 2,248 | 35.1 | % | $ | 3,562 | $ | 2,248 | 58.4 | % | ||||||||||||||||||||||||||
Cost of net revenues | (1,501) | (1,175) | 27.7 | % | (1,709) | (1,175) | 45.4 | % | ||||||||||||||||||||||||||||||
Gross profit | 1,536 | 1,073 | 43.2 | % | 1,853 | 1,073 | 72.6 | % | ||||||||||||||||||||||||||||||
Operating expenses | (1,196) | (934) | 28.1 | % | (1,450) | (934) | 55.4 | % | ||||||||||||||||||||||||||||||
Income from operations | $ | 340 | $ | 139 | 144.6 | % | $ | 403 | $ | 139 | 188.3 | % |
Foreign Currency Sensitivity Analysis | ||||||||||||||||||||
(In millions) | -10% | Actual | +10% | |||||||||||||||||
(1) | (2) | |||||||||||||||||||
Net revenues | $ | 3,374 | $ | 3,037 | $ | 2,761 | ||||||||||||||
Expenses (*) | (2,983) | (2,697) | (2,463) | |||||||||||||||||
Income from operations | 391 | 340 | 298 | |||||||||||||||||
Other income/(expenses), equity in earning of unconsolidated entity and income tax related to P&L items | 57 | (52) | 62 | |||||||||||||||||
Foreign Currency impact related to the remeasurement of our Net Asset position | (204) | (87) | (193) | |||||||||||||||||
Net Income | $ | 244 | $ | 201 | $ | 167 | ||||||||||||||
Total Shareholders’ Equity | $ | 2,348 | $ | 2,040 | $ | 1,788 |
As of March 31, 2023 | ||||||||||||||
MercadoLibre, Inc Equity Price | 2018, 2019, 2020, 2021, 2022 and 2023 LTRP Variable contractual obligation | |||||||||||||
(In Millions, except equity price) | ||||||||||||||
Change in equity price in percentage | ||||||||||||||
40 | % | 1,853.60 | 644 | |||||||||||
30 | % | 1,721.20 | 598 | |||||||||||
20 | % | 1,588.80 | 552 | |||||||||||
10 | % | 1,456.40 | 506 | |||||||||||
Static | (*) | 1,324.00 | 460 | |||||||||||
-10 | % | 1,191.60 | 414 | |||||||||||
-20 | % | 1,059.20 | 368 | |||||||||||
-30 | % | 926.80 | 322 | |||||||||||
-40 | % | 794.40 | 276 |
Period | Total Number of Shares Purchased (2) | Average Price per Share (1) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Program (in millions) (2) | ||||||||||||||||||||||
January, 2023 | — | — | — | Up to $48 | ||||||||||||||||||||||
February, 2023 | — | — | — | Up to $900 | ||||||||||||||||||||||
March, 2023 | 50,144 | 2,341.28 | 50,144 | Up to $783 |
Incorporated by Reference | ||||||||||||||||||||||||||
Exhibit Number | Exhibit Description | Filed (*) or Furnished (**) Herewith | Form | Filing Date | ||||||||||||||||||||||
3.1 | S-1 | May 11, 2007 | ||||||||||||||||||||||||
3.2 | S-1 | May 11, 2007 | ||||||||||||||||||||||||
4.1 | 10-K | February 27, 2009 | ||||||||||||||||||||||||
4.2 | 8-K | August 24, 2018 | ||||||||||||||||||||||||
4.3 | 8-K | January 14, 2021 | ||||||||||||||||||||||||
4.4 | 8-K | January 14, 2021 | ||||||||||||||||||||||||
4.5 | 8-K | January 14, 2021 | ||||||||||||||||||||||||
4.6 | 8-K | January 14, 2021 | ||||||||||||||||||||||||
4.7 | 10-K | February 23, 2022 | ||||||||||||||||||||||||
22.1 | 10-K | February 24, 2023 | ||||||||||||||||||||||||
31.1 | * | |||||||||||||||||||||||||
31.2 | * | |||||||||||||||||||||||||
32.1 | * | |||||||||||||||||||||||||
32.2 | * | |||||||||||||||||||||||||
101 | The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, formatted in Inline XBRL: (i) Interim Condensed Consolidated Balance Sheets, (ii) Interim Condensed Consolidated Statements of Income, (iii) Interim Condensed Consolidated Statements of Comprehensive Income, (iv) Interim Condensed Statements of Equity, (v) Interim Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Interim Condensed Consolidated Financial Statements. | * | ||||||||||||||||||||||||
104 | The cover page from the Company’s Form 10-Q for the quarterly period ended March 31, 2023, formatted in Inline XBRL and contained in Exhibit 101 | * |
MERCADOLIBRE, INC. | ||||||||
Registrant | ||||||||
Date: May 4, 2023. | By: | /s/ Marcos Galperin | ||||||
Marcos Galperin | ||||||||
President and Chief Executive Officer | ||||||||
By: | /s/ Pedro Arnt | |||||||
Pedro Arnt | ||||||||
Executive Vice President and Chief Financial Officer |
May 4, 2023 | /s/ Marcos Galperin | ||||
Marcos Galperin | |||||
President and Chief Executive Officer (Principal Executive Officer) |
May 4, 2023 | /s/ Pedro Arnt | ||||
Pedro Arnt | |||||
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
/s/ Marcos Galperin | ||
Marcos Galperin | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) |
/s/ Pedro Arnt | ||
Pedro Arnt | ||
Executive Vice President and Chief Financial Officer | ||
(Principal Financial Officer) |
Interim Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Short-term investments, held in guarantee | $ 1,409 | $ 1,219 |
Loans receivable allowance, current | 1,116 | 1,074 |
Loans receivable allowance, noncurrent | $ 25 | $ 30 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 110,000,000 | 110,000,000 |
Common stock, shares issued (in shares) | 50,207,607 | 50,257,751 |
Common stock, shares outstanding (in shares) | 50,207,607 | 50,257,751 |
Interim Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 201 | $ 65 |
Other comprehensive income, net of income tax: | ||
Currency translation adjustment | 77 | 151 |
Unrealized losses on hedging activities | (5) | (24) |
Less: Reclassification adjustment for losses from accumulated other comprehensive income | (1) | (2) |
Net change in accumulated other comprehensive income, net of income tax | 73 | 129 |
Total Comprehensive income | $ 274 | $ 194 |
Interim Condensed Consolidated Statements of Equity - USD ($) $ in Millions |
Total |
Cumulative Effect, Period of Adoption, Adjustment |
Cumulative Effect, Period of Adoption, Adjusted Balance |
Common stock |
Common stock
Cumulative Effect, Period of Adoption, Adjusted Balance
|
Additional paid-in capital |
Additional paid-in capital
Cumulative Effect, Period of Adoption, Adjustment
|
Additional paid-in capital
Cumulative Effect, Period of Adoption, Adjusted Balance
|
Treasury Stock |
Treasury Stock
Cumulative Effect, Period of Adoption, Adjusted Balance
|
Retained Earnings |
Retained Earnings
Cumulative Effect, Period of Adoption, Adjustment
|
Retained Earnings
Cumulative Effect, Period of Adoption, Adjusted Balance
|
Accumulated other comprehensive loss |
Accumulated other comprehensive loss
Cumulative Effect, Period of Adoption, Adjusted Balance
|
|||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Beginning Balance (in shares) at Dec. 31, 2021 | 50,000,000 | 50,000,000 | ||||||||||||||||
Beginning Balance at Dec. 31, 2021 | $ 1,531 | $ (97) | $ 1,434 | $ 0 | $ 0 | $ 2,439 | $ (131) | $ 2,308 | $ (790) | $ (790) | $ 397 | $ 34 | $ 431 | $ (515) | $ (515) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||
Common Stock repurchased | (39) | (39) | ||||||||||||||||
Net Income | 65 | 65 | ||||||||||||||||
Other comprehensive Income | 129 | 129 | ||||||||||||||||
Ending Balance (in shares) at Mar. 31, 2022 | 50,000,000 | |||||||||||||||||
Ending Balance at Mar. 31, 2022 | $ 1,589 | $ 0 | 2,308 | (829) | 496 | (386) | ||||||||||||
Beginning Balance (in shares) at Dec. 31, 2022 | 50,257,751 | 50,000,000 | ||||||||||||||||
Beginning Balance at Dec. 31, 2022 | $ 1,827 | $ 0 | 2,309 | (931) | [1] | 913 | (464) | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||
Common Stock repurchased | (61) | (61) | [1] | |||||||||||||||
Net Income | 201 | 201 | ||||||||||||||||
Other comprehensive Income | $ 73 | 73 | ||||||||||||||||
Ending Balance (in shares) at Mar. 31, 2023 | 50,207,607 | 50,000,000 | ||||||||||||||||
Ending Balance at Mar. 31, 2023 | $ 2,040 | $ 0 | $ 2,309 | $ (992) | [1] | $ 1,114 | $ (391) | |||||||||||
|
Interim Condensed Consolidated Statements of Equity (Parenthetical) |
Mar. 31, 2023
shares
|
---|---|
Statement of Stockholders' Equity [Abstract] | |
Treasury stock, shares (in shares) | 714,094 |
Nature of Business |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | 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 the largest online commerce ecosystem in Latin America, serving as an integrated regional platform and as a provider of necessary digital and technology tools that allow businesses and individuals to trade products and services in the region. The Company enables commerce through its marketplace platform, which allows users to buy and sell in most of Latin America. Through Mercado Pago, the fintech solution, MercadoLibre enables individuals and businesses to send and receive digital payments; through Mercado Envios, MercadoLibre facilitates the shipping of goods from the Company and sellers to buyers; through the advertising products, MercadoLibre facilitates advertising services for large retailers and brands to promote their products and services on the web; through Mercado Shops, MercadoLibre allows users to set-up, manage, and promote their own on-line web-stores under a subscription-based business model; through Mercado Credito, MercadoLibre extends loans to certain merchants and consumers; and through Mercado Fondo, MercadoLibre allows users to invest funds deposited in their Mercado Pago accounts. As of March 31, 2023, MercadoLibre, through its wholly-owned subsidiaries, operated online e-commerce platforms directed towards Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Peru, Mexico, Panama, Honduras, Nicaragua, El Salvador, Uruguay, Bolivia, Guatemala, Paraguay and Venezuela. Additionally, MercadoLibre operates its fintech solution in Argentina, Brazil, Mexico, Colombia, Chile, Peru, Uruguay and Ecuador, and extends loans through Mercado Credito in Argentina, Brazil, Mexico and Chile. It also offers a shipping solution directed towards Argentina, Brazil, Mexico, Colombia, Chile, Uruguay, Peru and Ecuador.
|
Summary of significant accounting policies and supplemental information |
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Summary of significant accounting policies and supplemental information | Summary of significant accounting policies and supplemental information Basis of presentation The accompanying unaudited interim condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) and include the accounts of the Company, its wholly-owned subsidiaries and consolidated Variable Interest Entities (“VIE”). Investments in entities where the Company holds joint control, but not control, over the investee are accounted for using the equity method of accounting. These unaudited interim condensed consolidated financial statements are stated in U.S. dollars, except where otherwise indicated. Intercompany transactions and balances with subsidiaries have been eliminated for consolidation purposes. Substantially all net revenues, cost of net revenues and operating expenses are generated in the Company’s foreign operations. Long-lived assets, intangible assets and goodwill and operating lease right-of-use assets located in the foreign jurisdictions totaled $1,905 million and $1,817 million as of March 31, 2023 and December 31, 2022, respectively. These unaudited interim condensed consolidated financial statements reflect the Company’s consolidated financial position as of March 31, 2023 and December 31, 2022. These unaudited interim condensed consolidated financial statements include the Company’s consolidated statements of income, comprehensive income, equity and cash flows for the three-month periods ended March 31, 2023 and 2022. These unaudited interim condensed consolidated financial statements include all normal recurring adjustments that Management believes are necessary to fairly state the Company’s financial position, operating results and cash flows. Certain comparative figures of these unaudited interim condensed consolidated financial statements were modified to provide more detailed disclosures. This change has not impacted the total amount of net income and total equity. The Company discloses the provision for doubtful accounts as a separate line item of its operating expenses in the unaudited interim condensed consolidated statements of income. The provision for doubtful accounts amounts to $252 million and $255 million for the three-month periods ended March 31, 2023 and 2022, respectively. Because all of the disclosures required by U.S. GAAP for annual consolidated financial statements are not included herein, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2022, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) (the “Company’s 2022 10-K”). The Company has evaluated all subsequent events through the date these unaudited condensed consolidated financial statements were issued. The unaudited interim condensed consolidated statements of income, comprehensive income, equity and cash flows for the periods presented herein are not necessarily indicative of results expected for any future period. For a more detailed discussion of the Company’s significant accounting policies, see Note 2 to the financial statements in the Company’s 2022 10-K. During the three-month period ended March 31, 2023, there were no material updates made to the Company’s significant accounting policies. Use of estimates The preparation of these unaudited interim condensed consolidated financial statements in conformity with U.S. GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for, but not limited to, accounting for allowance for doubtful accounts and chargeback provisions, inventories valuation reserves, recoverability of goodwill, intangible assets with indefinite useful lives and deferred tax assets, impairment of short-term and long-term investments, impairment of long-lived assets, compensation costs relating to the Company’s long term retention program, fair value of convertible debt, fair value of investments, fair value of loans receivable, fair value of derivative instruments, income taxes and contingencies and determination of the incremental borrowing rate at commencement date of lease operating agreements. Actual results could differ from those estimates. Revenue recognition Revenue recognition criteria for the services provided and goods sold by the Company are described in Note 2 to the consolidated financial statements in the Company’s 2022 10-K. The aggregate gain included in “Fintech services” revenues arising from financing transactions and sales of financial assets, net of the costs recognized on sale of credit card receivables, is $336 million and $227 million for the three-month periods ended March 31, 2023 and 2022, respectively. Contract Balances Timing of revenue recognition may differ from the timing of invoicing to customers. Receivables represent amounts invoiced and revenue recognized prior to invoicing when the Company has satisfied the performance obligation and has the unconditional right to payment. Accounts receivable and credit card receivables and other means of payments are presented net of allowance for doubtful accounts and chargebacks of $16 million and $25 million as of March 31, 2023 and December 31, 2022, respectively. The allowance for doubtful accounts with respect to the Company’s loans receivable amounts to $1,154 million and $1,112 million as of March 31, 2023 and December 31, 2022, respectively, which includes $13 million and $8 million, respectively, related to unused agreed loan commitment on credit cards portfolio presented in Other liabilities of the unaudited interim condensed consolidated balance sheets. Deferred revenue consists of fees received related to unsatisfied performance obligations at the end of the period in accordance with Accounting Standards Codification (“ASC”) 606. Due to the generally short-term duration of contracts, the majority of the performance obligations are satisfied in the following months. Deferred revenue as of December 31, 2022 was $44 million, of which $17 million was recognized as revenue during the three-month period ended March 31, 2023. As of March 31, 2023, total deferred revenue was $39 million, mainly due to fees related to classifieds advertising services billed and loyalty programs that are expected to be recognized as revenue in the coming months. Foreign currency translation All of the Company’s foreign operations have determined the local currency to be their functional currency, except for Argentina, which has used the U.S. dollar as its functional currency since July 1, 2018. Accordingly, the foreign subsidiaries with local currency as functional currency translate assets and liabilities from their local currencies into U.S. dollars by using period-end exchange rates while income and expense accounts are translated at the average monthly rates in effect during the period, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of the transaction are used. The resulting translation adjustment is recorded as a component of other comprehensive income (loss). Net foreign currency transaction results are included in the unaudited interim condensed consolidated statements of income under the caption “Foreign currency losses, net”. Argentine currency status As of July 1, 2018, the Company transitioned its Argentine operations to highly inflationary status in accordance with U.S. GAAP, and changed the functional currency for Argentine subsidiaries from Argentine Pesos to U.S. dollars, which is the functional currency of their immediate parent company. Argentina’s quarterly inflation rate for the three-month periods ended March 31, 2023 and 2022 was 21.7% and 16.1%, respectively. The Company uses Argentina’s official exchange rate to account for transactions in the Argentine segment, which as of March 31, 2023 and December 31, 2022 was 209.01 and 177.16 Argentine Pesos, respectively, against the U.S. dollar. For the three-month periods ended March 31, 2023 and 2022, Argentina’s quarterly depreciation of its local currency against the U.S. dollar was 18.0% and 8.1%, respectively. The following table sets forth the assets, liabilities and net assets of the Company’s Argentine subsidiaries and consolidated VIEs, before intercompany eliminations, as of March 31, 2023 and December 31, 2022:
The following table provides information relating to net revenues and direct contribution for the three-month periods ended March 31, 2023 and 2022 of the Company’s Argentine subsidiaries and consolidated VIEs:
Argentine Exchange regulations Since the second half of 2019, the Argentine government instituted exchange controls restricting the ability of companies and individuals to exchange Argentine Pesos for foreign currencies and their ability to remit foreign currency out of Argentina. An entity’s authorization request to the Central Bank of Argentina (“CBA”) to access the official exchange market to make foreign currency payments may be denied depending on the circumstances. As a result of these exchange controls, markets in Argentina developed trading mechanisms, in which an entity or individual buys U.S. dollar denominated securities in Argentina (i.e. shares, sovereign debt) using Argentine pesos, and subsequently sells the securities for U.S. dollars, in Argentina, to access U.S. dollars locally, or outside Argentina, by transferring the securities abroad, prior to being sold (the latter commonly known as “Blue Chip Swap Rate”). The Blue Chip Swap Rate has diverged significantly from Argentina’s official exchange rate (commonly known as exchange spread). In recent years, the Blue Chip Swap Rate has been higher than Argentina’s official exchange rate. As of March 31, 2023 and December 31, 2022, the spread of the Blue Chip Swap was 94.5% and 94.2%, respectively (see Note 16 of these unaudited interim condensed consolidated financial statements). Income taxes Income taxes’ accounting policy is described in Note 2 to the consolidated financial statements in the Company’s 2022 10-K. The Company’s consolidated effective tax rate for the three-month period ended March 31, 2023 compared to the same period in 2022 decreased from 40.7% to 38.1%, as a result of lower proportion of pre-tax losses in the Company’s Mexican segment which were included in the valuation allowance. This effect was offset by higher foreign exchange losses related to the acquisition of the Company’s own common stock in the Argentine market at a price that reflects the additional cost of accessing U.S. dollars through an indirect mechanism due to restrictions imposed by the Argentine government for buying U.S. dollars at the official exchange rate, which was considered as non-deductible expense. Based on Management’s assessment, the Company maintained a valuation allowance on deferred tax assets of $407 million and $360 million as of March 31, 2023 and December 31, 2022, respectively. This valuation allowance includes $183 million and $156 million to fully reserve the outstanding U.S. foreign tax credits as of March 31, 2023 and December 31, 2022, respectively. During the three-month period ended March 31, 2023, the Company increased its valuation allowance mainly on U.S foreign tax credits by $27 million and in certain subsidiaries in its Mexican operations by $17 million. Knowledge-based economy promotional regime in Argentina In August 2021, the Under Secretariat of Knowledge Economy issued the Disposition 316/2021 approving MercadoLibre S.R.L.’s application for eligibility under the knowledge-based economy promotional regime, established by the Law No. 27,506 and complemented by Argentina’s Executive Power Decree No. 1034/2020, Argentina’s Ministry of Productive Development’s Resolution No. 4/2021 and the Under Secretariat of Knowledge Economy’s Disposition No. 11/2021. Tax benefits granted pursuant to the promotional regime to MercadoLibre S.R.L. were retroactive to January 1, 2020. As a result, the Company accounted for an income tax benefit of $10 million and $1 million during the three-month periods ended March 31, 2023 and 2022, respectively. The aggregate per share effect of the income tax benefit amounted to $0.19 and $0.03 for the three-month periods ended March 31, 2023 and 2022, respectively. Furthermore, the Company recorded a social security benefit of $18 million and $15 million during the three-month periods ended March 31, 2023 and 2022, respectively. Fair value option applied to certain financial instruments Under ASC 825, U.S. GAAP provides an option to elect fair value with impact on the statement of income as an alternative measurement for certain financial instruments and other items on the balance sheet. The Company has elected to measure certain financial assets at fair value with impact on the statement of income for several reasons including to avoid the mismatch generated by the recognition of certain linked instruments / transactions, separately, in the unaudited interim condensed consolidated statement of income and unaudited interim condensed consolidated statement of comprehensive income and to better reflect the financial model applied for selected instruments. The Company’s election of the fair value option applies to the: i) Brazilian federal government bonds and ii) U.S. treasury notes. Accumulated other comprehensive loss The following tables summarize the changes in accumulated balances of other comprehensive income (loss) for the three-month periods ended March 31, 2023 and 2022:
The following table provides details about reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2023 and 2022:
Recently Adopted Accounting Standards On October 28, 2021, the FASB issued the Accounting Standards Update (“ASU”) 2021-08 “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” The amendments in this update improve comparability for the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination by specifying for all acquired revenue contracts regardless of their timing of payment (1) the circumstances in which the acquirer should recognize contract assets and contract liabilities that are acquired in a business combination and (2) how to measure those contract assets and contract liabilities. The amendments provide consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The adoption of this standard did not have a material impact on the Company’s financial statements. On March 31, 2022, the FASB issued the ASU 2022-02 “Troubled Debt Restructurings (“TDRs”) and Vintage Disclosures (Topic 326): Financial Instruments – Credit Losses,” which eliminates the accounting guidance on TDRs, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. In addition, the guidance requires disclosure of current-period gross write-offs by year of origination for financing receivables and net investment in leases. The amendments in this update are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The amendments should be applied prospectively, except for the transition method related to the recognition and measurement of TDRs, where an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. The adoption of this standard did not have a material impact on the Company’s financial statements. On September 29, 2022, the FASB issued the ASU 2022-04 “Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” The amendments in this update require entities that use supplier finance programs in connection with the purchase of goods and services to disclose the key terms of the programs and information about their obligations outstanding at the end of the reporting period, including a rollforward of those obligations. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. The amendments in this update are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, except for the rollforward requirement, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The guidance should be applied retrospectively to all periods in which a balance sheet is presented, except for the rollforward requirement, which should be applied prospectively. The Company and certain financial institutions participate in a supplier finance program (“SFP”) that enables certain of the Company’s suppliers, at their own election, to request the payment of their invoices to the financial institutions earlier than the terms stated in the Company’s payment policy. Suppliers’ voluntary inclusion of invoices in the SFP does not change the Company’s payment terms, the amounts paid or liquidity. The Company has no economic interest in a supplier’s decision to participate in the SFP and has no financial impact in connection with the SFP. As of March 31, 2023 and December 31, 2022, the obligations outstanding that the Company has confirmed as valid to the financial institutions amounted to $254 million and $227 million, respectively, and are included in the unaudited interim condensed consolidated balance sheets within accounts payable and accrued expenses line. Recently issued accounting pronouncements not yet adopted As of the date of issuance of these unaudited interim condensed consolidated financial statements there were no accounting pronouncements issued not yet adopted expected to have a material impact on the Company’s financial statements.
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Fintech Regulations |
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Mar. 31, 2023 | |
Fintech Regulations [Abstract] | |
Fintech Regulations | Fintech Regulations Regulations issued by the Central Banks and other regulators of the countries where the Company operates applicable to its Fintech business are described in Note 3 to the consolidated financial statements in the Company’s 2022 10-K. Recently issued regulations issued by CBA On September 1, 2022, the CBA issued Communication “A” 7593, which extended the application of regulations for the protection of financial services users to the payment service providers who offer payment accounts (“PSPOCP” according to its Spanish acronym). The regulations were already applicable to non-financial credit providers. This communication came into effect on March 1, 2023. On February 15, 2023, the CBA issued Communication “A” 7699, which establishes that PSPOCPs must submit the Information Regime on Claims, with the first submission deadline being April 24, 2023, and the Information Regime on Transparency - Chapter II -, whose first submission deadline for monthly information corresponded to March 14, 2023.
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Net income per share |
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Net income per share | Net income per share Basic earnings per share for the Company’s common stock is computed by dividing, net 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 August 24, 2018 and August 31, 2018 the Company issued an aggregate principal amount of $880 million of 2.00% Convertible Senior Notes due 2028 (see Note 12 to these unaudited interim condensed consolidated financial statements and Note 17 to the financial statements for the year ended December 31, 2022, contained in the Company’s 2022 10-K). The conversion of these notes is included in the calculation for diluted earnings per share utilizing the “if converted” method. Accordingly, conversion of these Notes is not assumed for purposes of computing diluted earnings per share if the effect is antidilutive. The denominator for diluted net income per share for the three-month periods ended March 31, 2023 and 2022 does not include any effect from the capped call transactions entered into by the Company with certain financial institutions with respect to shares of the Company’s common stock (“2028 Notes Capped Call Transactions”) because it would be antidilutive. In the event of conversion of any or all of the 2028 Notes, the shares that would be delivered to the Company under the 2028 Notes Capped Call Transactions are designed to partially neutralize the dilutive effect of the shares that the Company would issue under the Notes. See Note 17 to the financial statements for the year ended December 31, 2022, contained in the Company’s 2022 10-K for more details. For the three-month period ended March 31, 2022, the effect of the conversion of the Notes would have been antidilutive and, as a consequence, it was not factored into the calculation of diluted earnings per share. Net income per share of common stock is as follows for the three-month periods ended March 31, 2023 and 2022:
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Cash, cash equivalents, restricted cash and cash equivalents and investments |
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, cash equivalents, restricted cash and cash equivalents and investments | Cash, cash equivalents, restricted cash and cash equivalents and investments The composition of cash, cash equivalents, restricted cash and cash equivalents, short-term and long-term investments is as follows:
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Loans receivable, net |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans receivable, net | Loans receivable, net The Company classifies loans receivable as “On-line merchant”, “Consumer”, “In-store merchant” and “Credit Cards.” As of March 31, 2023 and December 31, 2022, the components of Loans receivable, net were as follows:
The allowance for doubtful accounts with respect to the Company’s loans receivable amounts to $1,154 million and $1,112 million as of March 31, 2023 and December 31, 2022, respectively, which includes $13 million and $8 million related to unused agreed loan commitment on credit cards portfolio presented in Other liabilities of the unaudited interim condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively. As of March 31, 2023, the Company is exposed to off-balance sheet unused agreed loan commitments on its credit cards portfolio, which exposes the Company to credit risks. For the period ended March 31, 2023, the Company recognized in Provision for doubtful accounts $4 million as expected credit losses. The Company closely monitors credit quality for all loans receivable on a recurring basis to assess and manage its exposure to credit risk. To assess merchants and consumers seeking a loan under the Mercado Credito solution, the Company uses, among other indicators, risk models internally developed, as a credit quality indicator to help predict the merchant’s and consumer’s ability to repay the principal balance and interest related to the credit. The risk model uses multiple variables as predictors of the merchant’s and consumer’s ability to repay the credit, including external and internal indicators. Internal indicators consider user behavior related to credit/payment history, and with lower weight in the risk models, the Company uses the number of transactions in the Company’s ecosystem and the merchant’s annual sales volume, among other indicators. In addition, the Company considers external bureau information to enhance the model and the decision making process. The amortized cost of the loans receivable classified by the Company’s credit quality internal indicator was as follows:
The following tables summarize the allowance for doubtful accounts activity during the three-month periods ended March 31, 2023 and 2022:
(*) The Company writes off loans when customer balance becomes 360 days past due. The increase in write-offs for the period ended March 31, 2023, compared to the same period in 2022, is mainly generated by higher originations of loans receivable for the period ended March 31, 2022, compared to the same period in 2021, generating a higher write-offs effect in the period ended March 31, 2023.
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Goodwill and intangible assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and intangible assets | . Goodwill and intangible assets Intangible assets The composition of goodwill and intangible assets is as follows:
(1)Digital assets are net of $21 million of impairment losses as of both March 31, 2023 and December 31, 2022. Goodwill The changes in the carrying amount of goodwill for the three-month period ended March 31, 2023 and the year ended December 31, 2022 are as follows:
Amortizable intangible assets Intangible assets with definite useful life are comprised of customer lists, non-compete and non-solicitation agreements, hubs network, acquired software licenses and other acquired intangible assets including developed technologies and trademarks. Aggregate amortization expense for intangible assets totaled $2 million and $5 million for the three-month periods ended March 31, 2023 and 2022, respectively. The following table summarizes the remaining amortization of intangible assets (in millions of U.S. dollars) with definite useful life as of March 31, 2023:
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Segment reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment reporting | 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, as determined by Management, used to evaluate the Company’s performance. The Company’s segments include Brazil, Argentina, Mexico and other countries (which includes Chile, Colombia, Costa Rica, Ecuador, Peru and Uruguay). Direct contribution consists of net revenues from external customers less direct costs, which include costs of net revenues, product and technology development expenses, sales and marketing expenses, provision for doubtful accounts and general and administrative expenses over which segment managers have direct discretionary control, such as advertising and marketing programs, customer support expenses, payroll and third-party fees. All corporate related costs have been excluded from the segment’s direct contribution. Expenses over which segment managers do not currently have discretionary control, such as certain technology and general and administrative costs, are monitored by Management through shared cost centers and are not evaluated in the measurement of segment performance. The following tables summarize the financial performance of the Company’s reporting segments:
The following table summarizes net revenues per reporting segment, which have been disaggregated by similar products and services for the three-month periods ended March 31, 2023 and 2022:
(a)Includes final value fees paid by sellers derived from intermediation services and related shipping fees, classified fees derived from classified advertising services and ad sales. (b)Includes revenues from inventory sales and related shipping fees. (c)Includes revenues from commissions the Company charges for transactions off-platform derived from use of the Company’s payment solution, revenues as a result of offering installments for the payment to its Mercado Pago users, either when the Company finances the transactions directly or when the Company sells the corresponding financial assets, Mercado Pago credit and debit card fees and insurtech fees. (d)Includes interest earned on loans and advances granted to merchants and consumers, and interest earned on Mercado Pago credit card transactions. (e)Includes sales of mobile point of sales devices. The following table summarizes the allocation of property and equipment, net based on geography:
The following table summarizes the allocation of the operating lease right-of-use assets based on geography:
The following table summarizes the allocation of the goodwill and intangible assets based on geography:
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Fair value measurement of assets and liabilities |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurement of assets and liabilities | Fair value measurement of assets and liabilities Assets and liabilities measured and recorded at fair value on a recurring basis The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022:
(1)Measured at fair value with impact on the unaudited interim condensed consolidated statement of income for the application of the fair value option. (See Note 2 – Fair value option applied to certain financial instruments.) (2)As of March 31, 2023 and December 31, 2022 includes $22 million and $21 million, respectively, of investments from securitization transactions that are restricted to the payment of amounts due to third-party investors. (See Note 5 - Cash, cash equivalents, restricted cash and cash equivalents and investments.) As of March 31, 2023 and December 31, 2022, the Company’s assets and liabilities measured and recorded at fair value on a recurring basis were valued using i) Level 1 inputs: unadjusted quoted prices in active markets (Level 1 instrument valuations are obtained from observable inputs that reflect quoted prices (unadjusted) for identical assets in active markets); ii) Level 2 inputs: obtained from readily-available pricing sources for comparable instruments as well as instruments with inactive markets at the measurement date; and iii) Level 3 inputs: valuations based on unobservable inputs reflecting Company’s assumptions. The unobservable inputs of the fair value of contingent considerations classified as Level 3 refer to the amounts to be paid according to the respective agreements of each acquisition, the likelihood of achievement of the performance targets arising from each one (expected to be 100%), and the Company’s historical experience with similar arrangements. Reasonable variation on those unobservable inputs would not significantly change the fair value of those instruments. As of March 31, 2023, the changes in the fair value of the financial liabilities measured at fair value using Level 3 inputs were less than $1 million. The following table summarizes the reconciliation of the financial liabilities measured at fair value using Level 3 inputs as of December 31, 2022:
The Company’s election of the fair value option applies to the: i) Brazilian federal government bonds and ii) U.S. treasury notes. As a result of the election of the fair value option for the investments held as of March 31, 2023 and December 31, 2022, the Company recognized fair value gains in interest income and other financial gains for $41 million and $29 million, respectively. As of March 31, 2023 and December 31, 2022, the Company held no investment in corporate debt securities that are classified as available for sale. However, during the year ended December 31, 2022, the Company purchased and sold these kinds of instruments, being the proceeds from the sales $156 million and the gross realized gains less than $1 million. The cost of these securities was determined under a specific identification basis. Financial assets and liabilities not measured and recorded at fair value As of March 31, 2023 and December 31, 2022, the carrying value of the Company’s financial assets (except for loans receivable) and liabilities not measured at fair value approximated their fair value mainly because of their short-term maturity. These assets and liabilities included cash and cash equivalents, restricted cash and cash equivalents, short and long-term investments (excluding money markets and U.S. and foreign government debt securities), accounts receivable, credit card receivables and other means of payments, other assets (excluding derivative instruments and USD Coin - “USDC”), accounts payable and accrued expenses, funds payable to customers, amounts payable due to credit and debit card transactions, salaries and social security payable (excluding variable LTRP), and other liabilities (excluding variable LTRP, contingent considerations and derivative instruments). If these financial instruments were measured at fair value in the financial statements, cash and restricted cash would be classified as Level 1 (where cost and fair value are aligned) and the remaining financial instruments would be classified as Level 2. As of March 31, 2023 and December 31, 2022, the estimated fair value of the loans receivable, which is based on Level 3 inputs, is $1,954 million and $1,761 million, respectively, and was determined based on Company’s assumptions. As of March 31, 2023 and December 31, 2022, the estimated fair value of the 2026 and 2031 Notes, which is based on Level 2 inputs, is $361 million and $359 million, and $550 million and $541 million, respectively. As of March 31, 2023 and December 31, 2022, the estimated fair value of the 2028 Notes, which is based on Level 2 inputs, is $1,329 million and $884 million, respectively, and was determined based on the closing trading price per $100 principal amount of the 2028 Notes as of the last day of trading for the period (see Note 12 - Loans payable and other financial liabilities of these unaudited interim condensed consolidated financial statements for further details). The rest of the loans payable and other financial liabilities approximate their fair value because the effective interest rates are not materially different from market interest rates. The following table summarizes the estimated fair value level for the remaining financial assets and liabilities of the Company not measured at fair value as of March 31, 2023 and December 31, 2022:
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Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation and Other Legal Matters The Company is subject to certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings. The Company accrues liabilities when it considers it probable that future costs will be incurred and such costs can be reasonably estimated. Proceeding-related liabilities are based on developments to date and historical information related to actions filed against the Company. As of March 31, 2023, the Company had accounted for estimated liabilities involving proceeding-related contingencies and other estimated contingencies of $62 million to cover legal actions against the Company in which Management has assessed the likelihood of a final adverse outcome as probable. Expected legal costs related to litigations are accrued when the legal service is actually provided. In addition, as of March 31, 2023, the Company and its subsidiaries are subject to certain legal actions considered by the Company’s Management and its legal counsels to be reasonably possible of resulting in a loss for an estimated aggregate amount up to $402 million. No loss amounts have been accrued for such reasonably possible legal actions. For further information related to contingent liabilities please refer to Note 15 to the consolidated financial statements in the Company’s 2022 10-K. Tax Claims Interstate rate of ICMS-DIFAL on interstate sales The tax claim related to the interstate rate of ICMS-DIFAL on interstate sales is described in Note 15 to the consolidated financial statements in the Company’s 2022 10-K. In April 2023, and based on court authorization, the Company withdrew the deposits corresponding to the case related to the branch of Santa Catarina, which had become final and unappealable in September 2022 in favor of eBazar.com.br Ltda. The remaining cases, which were pending as of December 31, 2022, had no updates during the three-month period ended March 31, 2023. The Company maintains a $5 million provision as of March 31, 2023 for the disputed amounts related to the 6 ongoing cases whose risk of losing is considered by Management to be probable, based on the opinion of external legal counsel. Buyer protection program The buyer protection program (“BPP”) 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, arrives incomplete or damaged, does not match the seller’s description or if the buyer regrets the purchase. The Company is entitled to recover from the third-party carrier companies performing the shipping service certain amounts paid under the BPP. Furthermore, in some specific circumstances, the Company enters into insurance contracts with third-party insurance companies in order to cover contingencies that may arise from the BPP. The maximum potential exposure under this program is estimated to be the volume of payments on the Marketplace, for which claims may be made under the terms and conditions of the Company’s BPP. Based on historical losses to date, the Company does not believe that the maximum potential exposure is representative of the actual potential exposure. The Company records a liability with respect to losses under this program when they are probable and the amount can be reasonably estimated. As of March 31, 2023 and December 31, 2022, Management’s estimate of the maximum potential exposure related to the Company’s buyer protection program is $4,010 million and $4,002 million, respectively, for which the Company recorded a provision of $8 million and $6 million, respectively. Commitments The Company committed to purchase cloud platform services from two U.S. suppliers based on the following terms: a) for a total amount of $824 million, to be fully paid off between October 1, 2021 and September 30, 2026. As of March 31, 2023, the Company had paid $212 million in relation thereto; and b) for a total amount of $200 million, to be fully paid off between September 23, 2022 and September 23, 2025. As of March 31, 2023, the Company had paid $14 million in relation thereto. In connection with the closing of MELI Kaszek Pioneer Corp’s (“MEKA”) initial public offering on October 1, 2021, MEKA (a special purpose acquisition company sponsored by MELI Kaszek Pioneer Sponsor LLC (the “Sponsor”), which is a joint venture between Company’s subsidiary MELI Capital Ventures LLC and Kaszek Ventures Opportunity II, L.P.) entered into a forward purchase agreement with the Sponsor, pursuant to which the Sponsor committed to purchase from MEKA 5 million Class A ordinary shares at a price of $10 per share in a private placement to close substantially concurrently with the consummation of MEKA’s initial business combination. On April 8, 2022, the Company signed a 10-year agreement with Gol Linhas Aereas S.A. under which the Company is committed to contract a minimum amount of air logistics services for a total annual cost of $43 million (total amount once all the dedicated aircraft are in operation). Pursuant to the agreement, Gol Linhas Aereas S.A. provides logistics services in Brazil to Mercado Envios through six dedicated aircraft, three of which have already started operations as of March 31, 2023.
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Long term retention program ("LTRP") |
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Long term retention program ("LTRP") | Long term retention program (“LTRP”) The following table summarizes the long term retention program accrued compensation expense for the three-month periods ended March 31, 2023 and 2022, which are payable in cash according to the decisions made by the Board of Directors (the “Board”):
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Loans payable and other financial liabilities |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans payable and other financial liabilities | Loans payable and other financial liabilities The following tables summarize the Company’s Loans payable and other financial liabilities as of March 31, 2023 and December 31, 2022:
(*)The carrying amount includes the effect of the derivative instrument that qualified for fair value hedge. See note 15 "Derivative Instruments" for further detail. See Notes 13 and 14 to these unaudited interim condensed consolidated financial statements for details regarding the Company’s collateralized debt securitization transactions and finance lease obligations, respectively. 2.375% Sustainability Senior Notes Due 2026 and 3.125% Senior Notes Due 2031 On January 14, 2021, the Company closed a public offering of $400 million aggregate principal amount of 2.375% Sustainability Notes due 2026 (the “2026 Sustainability Notes”) and $700 million aggregate principal amount of 3.125% Notes due 2031 (the “2031 Notes”, and together with the 2026 Sustainability Notes, the “Notes”). For additional information regarding the 2026 Sustainability Notes and the 2031 Notes please refer to Note 17 to the audited consolidated financial statements for the year ended December 31, 2022, contained in the Company’s 2022 10-K. 2.00% Convertible Senior Notes Due 2028 (“2028 Notes”) As of March 31, 2023, the principal and issuance costs of the 2028 Notes amounted to $439 million and $3 million, respectively. As of December 31, 2022, the principal and issuance costs of the 2028 Notes amounted to $439 million and $3 million, respectively. For the three-month period ended March 31, 2023 and 2022, the Company recognized interest expense, including the amortization of issuance costs of $2 million and $2 million, respectively . During the three-month period ended March 31, 2023, a total principal amount of $2 thousand was requested for conversion. The determination of whether or not the Notes are convertible must be performed on a quarterly basis. The Company reconfirmed during the first quarter of 2023 that the conversion threshold was met and the Notes remain eligible for conversion. From April 1, 2023 to the date of issuance of these unaudited interim condensed consolidated financial statements, additional conversion request for $1 thousand of principal amount was made. The Company has entered into capped call transactions with respect to shares of its common stock with certain financial institutions (the “2028 Notes Capped Call Transactions”). The 2028 Notes Capped Call Transactions are expected generally to reduce the potential dilution upon conversion of the 2028 Notes in the event that the market price of the Company’s common stock is greater than the strike price and lower than the cap price of the 2028 Notes Capped Call Transactions. The amounts the Company has paid, including transaction expenses, are as follows:
(*) Partially unwound in 2021. Based on the $1,318.06 closing price of the Company’s common stock on March 31, 2023, and if the stock price remains constant, the Company could obtain 369,489 shares of common stock on the 2028 Notes Capped Calls Transactions settlement date. The total estimated fair value of the 2028 Notes was $1,329 million and $884 million as of March 31, 2023 and December 31, 2022, respectively. The fair value was determined based on the closing trading price per $100 principal amount of the 2028 Notes as of the last day of trading for the period. The fair value of the 2028 Notes is primarily affected by the trading price of the Company’s common stock and market interest rates. Based on the $1,318.06 closing price of the Company’s common stock on March 31, 2023, the if-converted value of the 2028 Notes exceeded their principal amount by $866 million. For additional information regarding the 2028 Notes and the 2028 Notes Capped Call Transactions please refer to Note 17 to the audited consolidated financial statements for the year ended December 31, 2022, contained in the Company’s 2022 10-K. Revolving Credit Agreement On March 31, 2022, the Company, as borrower, and certain of its Subsidiaries, as guarantors, entered into a $400 million revolving credit agreement. For additional information regarding the Credit Agreement please refer to Note 17 to the audited consolidated financial statements for the year ended December 31, 2022, contained in the Company’s 2022 10-K. As of March 31, 2023, no amounts have been borrowed under the facility.
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Securitization Transactions |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Securitization Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securitization Transactions | Securitization Transactions The process of securitization consists of the issuance of securities collateralized by a pool of assets through a special purpose entity (“SPEs”), often under a VIE. The Company securitizes financial assets associated with its credit cards and loans receivable portfolio. The Company’s securitization transactions typically involve the legal transfer of financial assets to bankruptcy remote SPEs. The Company generally retains economic interests in the collateralized securitization transactions, which are retained in the form of subordinated interests. For accounting purposes, the Company is generally precluded from recording the transfers of assets in securitization transactions as sales or is required to consolidate the SPE. The Company securitizes certain credit card receivables related to users’ purchases through Chilean SPEs. Under the SPE contracts, the Company has determined that it has no obligation to absorb losses or the right to receive benefits of the SPEs that could be significant because it does not retain any equity certificate of participation or subordinated interest in the SPEs. As the Company does not control the vehicles, its assets, liabilities and related results are not consolidated in the Company’s financial statements. Additionally, the Company securitizes certain credit card receivables related to users’ purchases through Brazilian SPEs. Under the SPE contracts, the Company has determined that it has the obligation to absorb losses or the right to receive benefits of the SPEs that could be significant because it retains subordinated interest in the SPEs. As the Company controls the vehicles, the assets, liabilities and related results are consolidated in its financial statements. The Company securitizes certain loans receivable through Brazilian, Argentine and Mexican SPEs, formed to securitize loans receivable provided by the Company to its users or purchased from financial institutions that grant loans to the Company’s users through Mercado Pago. According to the SPE contracts, the Company has determined that it has both the power to direct the activities of the entity that most significantly impact the entity’s performance and the obligation to absorb losses or the right to receive benefits of the entity that could be significant because it retains the equity certificates of participation and would therefore also be consolidated. When the Company controls the vehicle, it accounts for the securitization transactions as if they were secured financing and therefore the assets, liabilities and related results are consolidated in its financial statements. The following table summarizes the Company’s collateralized debt under securitization transactions, as of March 31, 2023:
(*)As of March 31, 2023, Loans payable owned by these trusts were obtained through private placements. Mercado Crédito Consumo XIX trust made a public bond offering in the Argentine stock market on April 13, 2023. This secured debt is issued by the SPEs and includes collateralized securities used to fund the Company’s Fintech business. The third-party investors in the securitization transactions have legal recourse only to the assets securing the debt and do not have recourse to the Company. Additionally, the cash flows generated by the SPEs are restricted to the payment of amounts due to third-party investors, but the Company retains the right to residual cash flows. The assets and liabilities of the SPEs are included in the Company’s unaudited interim condensed consolidated financial statements as of March 31, 2023 and December 31, 2022 as follows:
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company leases certain fulfillment, cross-docking and services centers, office space, aircraft, machines, and vehicles in the various countries in which it operates. The lease agreements do not contain any residual value guarantees or material restrictive covenants. Supplemental balance sheet information related to leases was as follows:
The following table summarizes the weighted average remaining lease term and the weighted average incremental borrowing rate for operating leases and the weighted average discount rate for finance leases as of March 31, 2023 and December 31, 2022:
(*)Includes discount rates of leases in local currency and U.S. dollar. The components of lease expense were as follows:
Supplemental cash flow information related to leases was as follows:
The following table summarizes the fixed, future minimum rental payments, excluding variable costs, which are discounted by the Company’s incremental borrowing rates to calculate the lease liabilities for the operating and finance leases:
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Leases | Leases The Company leases certain fulfillment, cross-docking and services centers, office space, aircraft, machines, and vehicles in the various countries in which it operates. The lease agreements do not contain any residual value guarantees or material restrictive covenants. Supplemental balance sheet information related to leases was as follows:
The following table summarizes the weighted average remaining lease term and the weighted average incremental borrowing rate for operating leases and the weighted average discount rate for finance leases as of March 31, 2023 and December 31, 2022:
(*)Includes discount rates of leases in local currency and U.S. dollar. The components of lease expense were as follows:
Supplemental cash flow information related to leases was as follows:
The following table summarizes the fixed, future minimum rental payments, excluding variable costs, which are discounted by the Company’s incremental borrowing rates to calculate the lease liabilities for the operating and finance leases:
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Derivative instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative instruments | Derivative instruments Cash Flow Hedges As of March 31, 2023, the Company used foreign currency exchange contracts to hedge the foreign currency effects related to the forecasted purchase of MPOS devices in U.S. dollars owed by a Brazilian subsidiary whose functional currency is the Brazilian Reais. 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 and subsequently reclassified into earnings in the same period the forecasted transaction affects earnings. As of March 31, 2023, the Company estimated that the whole amount of net derivative gains or losses related to its cash flow hedges included in accumulated other comprehensive income will be reclassified into earnings within the next 12 months. In addition, the Company has entered into swap contracts to hedge the interest rate fluctuation of its financial debt issued by one of its Brazilian subsidiaries. The Company designated the swap contracts as cash flow hedges. The derivative’s gain or loss is initially reported as a component of accumulated other comprehensive income and subsequently reclassified into earnings within the next 12 months. Fair Value Hedges The Company has entered into swap contracts to hedge the interest rate and the foreign currency exposure of its fixed-rate, foreign currency financial debt issued by one of its Brazilian subsidiaries. The Company designated the swap contracts as fair value hedges. The derivative’s gain or loss is reported in earnings in the same line items as the change in the value of the financial debt due to the hedged risks. Since the terms of the interest rate swaps match the terms of the hedged debts, changes in the fair value of the interest rate swaps are offset by changes in the fair value of the hedged debts attributable to changes in interest rates. Accordingly, the net impact in current earnings is that the interest expense associated with the hedged debts is recorded at the floating rates. Net Investment Hedge The Company used cross currency swap contracts, to reduce the foreign currency exchange risk related to its investment in its Brazilian foreign subsidiaries and the interest rate risk. This derivative was designated as a net investment hedge and, accordingly, gains and losses are reported as a component of accumulated other comprehensive income. The derivative’s gain or loss is initially reported as a component of accumulated other comprehensive income and is expected to be reclassified into earnings in the same period that the interest expense affects earnings. Derivative instruments not designated as hedging instruments As of March 31, 2023, the Company entered into certain foreign currency exchange contracts to hedge the foreign currency fluctuations related to certain transactions denominated in U.S. dollars of certain of its Brazilian subsidiaries, whose functional currencies are the Brazilian Reais. These transactions were not designated as hedges for accounting purposes. Finally, as of March 31, 2023, the Company entered into swap contracts to hedge the interest rate fluctuation of certain portion of its financial debt in its Brazilian subsidiaries and VIEs. These transactions were not designated as hedges for accounting purposes. The following table presents the notional amounts of the Company’s outstanding derivative instruments:
Derivative Instrument Contracts The fair values of the Company’s outstanding derivative instruments as of March 31, 2023 and December 31, 2022 were as follows:
The effects of derivative contracts on the unaudited interim condensed consolidated statement of comprehensive income as of March 31, 2023 were as follows:
The effect of the Company’s fair value hedge relationships on the unaudited interim condensed consolidated statements of income for the three-month period ended March 31, 2023 is a loss of $5 million, and affected interest expense and other financial losses (there were no fair value hedge relationships during the three-month period ended March 31, 2022). The carrying amount of the hedged item for fair value hedges as of March 31, 2023 is $109 million (there were no fair value hedge relationships as of March 31, 2022). The effect of the Company’s fair value hedge relationships on the unaudited interim condensed consolidated balance sheets related to cumulative basis adjustments for fair value hedges for the three-month period ended March 31, 2023 is less than $1 million (there were no fair value hedge relationships during the three-month period ended March 31, 2022). The effects of derivative contracts not designated as hedging instruments on the unaudited interim condensed consolidated statements of income for the three-month periods ended March 31, 2023 and 2022 were as follows:
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Share repurchase program |
3 Months Ended |
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Mar. 31, 2023 | |
Equity [Abstract] | |
Share repurchase program | Share repurchase program On August 4, 2021, the Board authorized the Company to repurchase shares of the Company’s common stock, for aggregate consideration of up to $150 million. This authorization was scheduled to expire on August 31, 2022. On March 1, 2022, the Board authorized an increase in that authorization of $300 million, from an aggregate consideration of up to $150 million to an aggregate consideration of up to $450 million (the “Existing Program”). On March 1, 2022, the Board also authorized a new extension of the term of the Existing Program, from August 31, 2022 to August 31, 2023. On February 21, 2023, the Board terminated the Existing Program and authorized a new program to repurchase shares of the Company’s common stock, for an aggregate consideration of up to $900 million to expire on March 31, 2024. As of March 31, 2023, the estimated remaining balance available for share repurchases under this Program was $783 million. The Company expects to purchase shares at any time and from time to time, in compliance with applicable federal securities laws, through open-market purchases, block trades, derivatives, trading plans established in accordance with SEC rules, or privately negotiated transactions. The timing of repurchases will depend on factors including market conditions and prices, the Company’s liquidity requirements and alternative uses of capital. The share repurchase program may be suspended from time to time or discontinued, and there is no assurance as to the number of shares that will be repurchased under the program or that there will be any additional repurchases. As of March 31, 2023, the Company had acquired 341,276 shares under the aforementioned share repurchase programs. From time to time, the Company acquires shares of its own common stock in the Argentine market and pays for them in Argentine pesos at a price that reflects the additional cost of accessing U.S. dollars through securities denominated in U.S. dollars, because of restrictions imposed by the Argentine government for buying U.S. dollars at the official exchange rate in Argentina (See Note 2 - “Summary of significant accounting policies and supplemental information - Argentine currency status” of these unaudited interim condensed consolidated financial statements). As a result, the Company recognized foreign currency losses of $56 million and $35 million for the three-month periods ended March 31, 2023 and 2022, respectively.
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Summary of significant accounting policies and supplemental information (Policies) |
3 Months Ended |
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Mar. 31, 2023 | |
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”). Investments in entities where the Company holds joint control, but not control, over the investee are accounted for using the equity method of accounting. These unaudited interim condensed consolidated financial statements are stated in U.S. dollars, except where otherwise indicated. Intercompany transactions and balances with subsidiaries have been eliminated for consolidation purposes.
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Use of estimates | Use of estimates The preparation of these unaudited interim condensed consolidated financial statements in conformity with U.S. GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for, but not limited to, accounting for allowance for doubtful accounts and chargeback provisions, inventories valuation reserves, recoverability of goodwill, intangible assets with indefinite useful lives and deferred tax assets, impairment of short-term and long-term investments, impairment of long-lived assets, compensation costs relating to the Company’s long term retention program, fair value of convertible debt, fair value of investments, fair value of loans receivable, fair value of derivative instruments, income taxes and contingencies and determination of the incremental borrowing rate at commencement date of lease operating agreements. Actual results could differ from those estimates.
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Revenue recognition | Revenue recognition Revenue recognition criteria for the services provided and goods sold by the Company are described in Note 2 to the consolidated financial statements in the Company’s 2022 10-K. The aggregate gain included in “Fintech services” revenues arising from financing transactions and sales of financial assets, net of the costs recognized on sale of credit card receivables, is $336 million and $227 million for the three-month periods ended March 31, 2023 and 2022, respectively. Contract Balances Timing of revenue recognition may differ from the timing of invoicing to customers. Receivables represent amounts invoiced and revenue recognized prior to invoicing when the Company has satisfied the performance obligation and has the unconditional right to payment. Accounts receivable and credit card receivables and other means of payments are presented net of allowance for doubtful accounts and chargebacks of $16 million and $25 million as of March 31, 2023 and December 31, 2022, respectively. The allowance for doubtful accounts with respect to the Company’s loans receivable amounts to $1,154 million and $1,112 million as of March 31, 2023 and December 31, 2022, respectively, which includes $13 million and $8 million, respectively, related to unused agreed loan commitment on credit cards portfolio presented in Other liabilities of the unaudited interim condensed consolidated balance sheets. Deferred revenue consists of fees received related to unsatisfied performance obligations at the end of the period in accordance with Accounting Standards Codification (“ASC”) 606. Due to the generally short-term duration of contracts, the majority of the performance obligations are satisfied in the following months.
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Foreign currency translation | Foreign currency translation All of the Company’s foreign operations have determined the local currency to be their functional currency, except for Argentina, which has used the U.S. dollar as its functional currency since July 1, 2018. Accordingly, the foreign subsidiaries with local currency as functional currency translate assets and liabilities from their local currencies into U.S. dollars by using period-end exchange rates while income and expense accounts are translated at the average monthly rates in effect during the period, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of the transaction are used. The resulting translation adjustment is recorded as a component of other comprehensive income (loss). Net foreign currency transaction results are included in the unaudited interim condensed consolidated statements of income under the caption “Foreign currency losses, net”. Argentine currency status As of July 1, 2018, the Company transitioned its Argentine operations to highly inflationary status in accordance with U.S. GAAP, and changed the functional currency for Argentine subsidiaries from Argentine Pesos to U.S. dollars, which is the functional currency of their immediate parent company.
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Income taxes | Income taxes Income taxes’ accounting policy is described in Note 2 to the consolidated financial statements in the Company’s 2022 10-K. The Company’s consolidated effective tax rate for the three-month period ended March 31, 2023 compared to the same period in 2022 decreased from 40.7% to 38.1%, as a result of lower proportion of pre-tax losses in the Company’s Mexican segment which were included in the valuation allowance. This effect was offset by higher foreign exchange losses related to the acquisition of the Company’s own common stock in the Argentine market at a price that reflects the additional cost of accessing U.S. dollars through an indirect mechanism due to restrictions imposed by the Argentine government for buying U.S. dollars at the official exchange rate, which was considered as non-deductible expense. Based on Management’s assessment, the Company maintained a valuation allowance on deferred tax assets of $407 million and $360 million as of March 31, 2023 and December 31, 2022, respectively. This valuation allowance includes $183 million and $156 million to fully reserve the outstanding U.S. foreign tax credits as of March 31, 2023 and December 31, 2022, respectively. During the three-month period ended March 31, 2023, the Company increased its valuation allowance mainly on U.S foreign tax credits by $27 million and in certain subsidiaries in its Mexican operations by $17 million. Knowledge-based economy promotional regime in Argentina In August 2021, the Under Secretariat of Knowledge Economy issued the Disposition 316/2021 approving MercadoLibre S.R.L.’s application for eligibility under the knowledge-based economy promotional regime, established by the Law No. 27,506 and complemented by Argentina’s Executive Power Decree No. 1034/2020, Argentina’s Ministry of Productive Development’s Resolution No. 4/2021 and the Under Secretariat of Knowledge Economy’s Disposition No. 11/2021. Tax benefits granted pursuant to the promotional regime to MercadoLibre S.R.L. were retroactive to January 1, 2020. As a result, the Company accounted for an income tax benefit of $10 million and $1 million during the three-month periods ended March 31, 2023 and 2022, respectively. The aggregate per share effect of the income tax benefit amounted to $0.19 and $0.03 for the three-month periods ended March 31, 2023 and 2022, respectively. Furthermore, the Company recorded a social security benefit of $18 million and $15 million during the three-month periods ended March 31, 2023 and 2022, respectively.
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Fair value option applied to certain financial instruments | Fair value option applied to certain financial instruments Under ASC 825, U.S. GAAP provides an option to elect fair value with impact on the statement of income as an alternative measurement for certain financial instruments and other items on the balance sheet. The Company has elected to measure certain financial assets at fair value with impact on the statement of income for several reasons including to avoid the mismatch generated by the recognition of certain linked instruments / transactions, separately, in the unaudited interim condensed consolidated statement of income and unaudited interim condensed consolidated statement of comprehensive income and to better reflect the financial model applied for selected instruments. The Company’s election of the fair value option applies to the: i) Brazilian federal government bonds and ii) U.S. treasury notes.
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Recently Adopted Accounting Standards & Recently issued accounting pronouncements not yet adopted | Recently Adopted Accounting Standards On October 28, 2021, the FASB issued the Accounting Standards Update (“ASU”) 2021-08 “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” The amendments in this update improve comparability for the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination by specifying for all acquired revenue contracts regardless of their timing of payment (1) the circumstances in which the acquirer should recognize contract assets and contract liabilities that are acquired in a business combination and (2) how to measure those contract assets and contract liabilities. The amendments provide consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The adoption of this standard did not have a material impact on the Company’s financial statements. On March 31, 2022, the FASB issued the ASU 2022-02 “Troubled Debt Restructurings (“TDRs”) and Vintage Disclosures (Topic 326): Financial Instruments – Credit Losses,” which eliminates the accounting guidance on TDRs, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. In addition, the guidance requires disclosure of current-period gross write-offs by year of origination for financing receivables and net investment in leases. The amendments in this update are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The amendments should be applied prospectively, except for the transition method related to the recognition and measurement of TDRs, where an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. The adoption of this standard did not have a material impact on the Company’s financial statements. On September 29, 2022, the FASB issued the ASU 2022-04 “Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” The amendments in this update require entities that use supplier finance programs in connection with the purchase of goods and services to disclose the key terms of the programs and information about their obligations outstanding at the end of the reporting period, including a rollforward of those obligations. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. The amendments in this update are effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, except for the rollforward requirement, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The guidance should be applied retrospectively to all periods in which a balance sheet is presented, except for the rollforward requirement, which should be applied prospectively. The Company and certain financial institutions participate in a supplier finance program (“SFP”) that enables certain of the Company’s suppliers, at their own election, to request the payment of their invoices to the financial institutions earlier than the terms stated in the Company’s payment policy. Suppliers’ voluntary inclusion of invoices in the SFP does not change the Company’s payment terms, the amounts paid or liquidity. The Company has no economic interest in a supplier’s decision to participate in the SFP and has no financial impact in connection with the SFP. As of March 31, 2023 and December 31, 2022, the obligations outstanding that the Company has confirmed as valid to the financial institutions amounted to $254 million and $227 million, respectively, and are included in the unaudited interim condensed consolidated balance sheets within accounts payable and accrued expenses line. Recently issued accounting pronouncements not yet adopted As of the date of issuance of these unaudited interim condensed consolidated financial statements there were no accounting pronouncements issued not yet adopted expected to have a material impact on the Company’s financial statements.
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Summary of significant accounting policies and supplemental information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets, Liabilities and Net Assets of Company's Argentinean Subsidiaries | The following table sets forth the assets, liabilities and net assets of the Company’s Argentine subsidiaries and consolidated VIEs, before intercompany eliminations, as of March 31, 2023 and December 31, 2022:
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Schedule of Net Revenues and Net Income Before Income Tax of Company's Subsidiaries | The following table provides information relating to net revenues and direct contribution for the three-month periods ended March 31, 2023 and 2022 of the Company’s Argentine subsidiaries and consolidated VIEs:
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Summary of Changes in Accumulated Balances of Other Comprehensive Loss | The following tables summarize the changes in accumulated balances of other comprehensive income (loss) for the three-month periods ended March 31, 2023 and 2022:
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Reclassifications out of Accumulated Other Comprehensive Loss | The following table provides details about reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2023 and 2022:
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Net income per share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Share of Common Stock | Net income per share of common stock is as follows for the three-month periods ended March 31, 2023 and 2022:
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Cash, cash equivalents, restricted cash and cash equivalents and investments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Cash, Cash Equivalents, Restricted Cash and Cash Equivalents and Investments | The composition of cash, cash equivalents, restricted cash and cash equivalents, short-term and long-term investments is as follows:
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Loans receivable, net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loans Receivable, Net | The Company classifies loans receivable as “On-line merchant”, “Consumer”, “In-store merchant” and “Credit Cards.” As of March 31, 2023 and December 31, 2022, the components of Loans receivable, net were as follows:
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Schedule of Credit Quality Analysis of Loans Receivables | The amortized cost of the loans receivable classified by the Company’s credit quality internal indicator was as follows:
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Summary of Allowance for Uncollectible Accounts Activity | The following tables summarize the allowance for doubtful accounts activity during the three-month periods ended March 31, 2023 and 2022:
(*) The Company writes off loans when customer balance becomes 360 days past due.
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Goodwill and intangible assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Composition of Goodwill and Intangible Assets | The composition of goodwill and intangible assets is as follows:
(1)Digital assets are net of $21 million of impairment losses as of both March 31, 2023 and December 31, 2022.
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Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the three-month period ended March 31, 2023 and the year ended December 31, 2022 are as follows:
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Expected Intangible Asset Amortization Expense | The following table summarizes the remaining amortization of intangible assets (in millions of U.S. dollars) with definite useful life as of March 31, 2023:
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Segment reporting (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Performance of Company's Reporting Segments | The following tables summarize the financial performance of the Company’s reporting segments:
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Consolidated Net Revenues by Similar Products and Services | The following table summarizes net revenues per reporting segment, which have been disaggregated by similar products and services for the three-month periods ended March 31, 2023 and 2022:
(a)Includes final value fees paid by sellers derived from intermediation services and related shipping fees, classified fees derived from classified advertising services and ad sales. (b)Includes revenues from inventory sales and related shipping fees. (c)Includes revenues from commissions the Company charges for transactions off-platform derived from use of the Company’s payment solution, revenues as a result of offering installments for the payment to its Mercado Pago users, either when the Company finances the transactions directly or when the Company sells the corresponding financial assets, Mercado Pago credit and debit card fees and insurtech fees. (d)Includes interest earned on loans and advances granted to merchants and consumers, and interest earned on Mercado Pago credit card transactions. (e)Includes sales of mobile point of sales devices.
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Allocation of Property and Equipment Based on Geography | The following table summarizes the allocation of property and equipment, net based on geography:
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Schedule of Operating Lease Right of Use Assets Based on Geography | The following table summarizes the allocation of the operating lease right-of-use assets based on geography:
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Allocation of Goodwill and Intangible Assets Based on Geography | The following table summarizes the allocation of the goodwill and intangible assets based on geography:
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Fair value measurement of assets and liabilities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022:
(1)Measured at fair value with impact on the unaudited interim condensed consolidated statement of income for the application of the fair value option. (See Note 2 – Fair value option applied to certain financial instruments.) (2)As of March 31, 2023 and December 31, 2022 includes $22 million and $21 million, respectively, of investments from securitization transactions that are restricted to the payment of amounts due to third-party investors. (See Note 5 - Cash, cash equivalents, restricted cash and cash equivalents and investments.)
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Summary of Reconciliation of Financial Liabilities Valuated at Fair Value | The following table summarizes the reconciliation of the financial liabilities measured at fair value using Level 3 inputs as of December 31, 2022:
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Fair Value of Financial Assets and Liabilities Measured at Amortized Cost | The following table summarizes the estimated fair value level for the remaining financial assets and liabilities of the Company not measured at fair value as of March 31, 2023 and December 31, 2022:
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Long term retention program ("LTRP") (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long Term Retention Program Accrued Compensation Expense | The following table summarizes the long term retention program accrued compensation expense for the three-month periods ended March 31, 2023 and 2022, which are payable in cash according to the decisions made by the Board of Directors (the “Board”):
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Loans payable and other financial liabilities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Loans Payable and Other Financial Liabilities | The following tables summarize the Company’s Loans payable and other financial liabilities as of March 31, 2023 and December 31, 2022:
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Schedule of Capped Call Transactions | The amounts the Company has paid, including transaction expenses, are as follows:
(*) Partially unwound in 2021.
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Securitization Transactions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securitization Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Collateralized Debt | The following table summarizes the Company’s collateralized debt under securitization transactions, as of March 31, 2023:
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Assets and Liabilities of the Trust | The assets and liabilities of the SPEs are included in the Company’s unaudited interim condensed consolidated financial statements as of March 31, 2023 and December 31, 2022 as follows:
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Leases (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases was as follows:
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Summary of Weighted Average Remaining Lease Term and Discount Rate | The following table summarizes the weighted average remaining lease term and the weighted average incremental borrowing rate for operating leases and the weighted average discount rate for finance leases as of March 31, 2023 and December 31, 2022:
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Components of Lease Expense | The components of lease expense were as follows:
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Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information related to leases was as follows:
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Maturities of Lease Liabilities | The following table summarizes the fixed, future minimum rental payments, excluding variable costs, which are discounted by the Company’s incremental borrowing rates to calculate the lease liabilities for the operating and finance leases:
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Derivative instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Notional Amounts | The following table presents the notional amounts of the Company’s outstanding derivative instruments:
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Summary of Outstanding Derivative Instruments | The fair values of the Company’s outstanding derivative instruments as of March 31, 2023 and December 31, 2022 were as follows:
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Effect of Derivative Contracts on Comprehensive Income | The effects of derivative contracts on the unaudited interim condensed consolidated statement of comprehensive income as of March 31, 2023 were as follows:
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Effect of Derivative Contracts on Income Statement | The effects of derivative contracts not designated as hedging instruments on the unaudited interim condensed consolidated statements of income for the three-month periods ended March 31, 2023 and 2022 were as follows:
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Summary of significant accounting policies and supplemental information - Assets, Liabilities and Net Assets of Company's Argentinean Subsidiaries (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Subsidiary or Equity Method Investee [Line Items] | ||
Assets | $ 14,201 | $ 13,736 |
Liabilities | 12,161 | 11,909 |
Argentinean Subsidiaries | ||
Subsidiary or Equity Method Investee [Line Items] | ||
Assets | 3,295 | 3,238 |
Liabilities | 2,259 | 2,419 |
Net Assets | $ 1,036 | $ 819 |
Summary of significant accounting policies and supplemental information - Net Revenues and Net Income before Income Tax of Company's Argentenian Subsidiaries (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Subsidiary or Equity Method Investee [Line Items] | ||
Net revenues | $ 3,037 | $ 2,248 |
Direct contribution | 770 | 425 |
Argentinean Subsidiaries | ||
Subsidiary or Equity Method Investee [Line Items] | ||
Net revenues | 721 | 518 |
Direct contribution | $ 310 | $ 198 |
Summary of significant accounting policies and supplemental information - Reclassifications out of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Cost of net revenues, interest expense and foreign currency losses | $ 1,501 | $ 1,175 |
Income tax expense | (122) | (46) |
Net income | 201 | 65 |
Amount of (Loss) Gain Reclassified from Accumulated Other Comprehensive loss | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Income tax expense | (1) | (1) |
Net income | (1) | (2) |
Amount of (Loss) Gain Reclassified from Accumulated Other Comprehensive loss | Unrealized (Loss) Gains on hedging activities, net | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Cost of net revenues, interest expense and foreign currency losses | $ (2) | $ (3) |
Net income per share - Narrative (Details) - Convertible Senior Notes - 2028 Notes - USD ($) $ in Millions |
Aug. 31, 2018 |
Aug. 24, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Convertible senior notes, issued | $ 880 | $ 880 |
Convertible senior notes, interest rate | 2.00% | 2.00% |
Net income per share - Net Income Per Share of Common Stock (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Net income attributable to MercadoLibre, Inc. per common share | ||
Net income per common share, Basic (in dollars per share) | $ 4.01 | $ 1.30 |
Net income per common share, Diluted (in dollars per share) | $ 3.97 | $ 1.30 |
Numerator: | ||
Net income | $ 201 | $ 65 |
Effect of Dilutive Convertible Senior Notes | 2 | 0 |
Net income corresponding to common stock, Basic | 201 | 65 |
Net income corresponding to common stock, Diluted | $ 203 | $ 65 |
Denominator: | ||
Weighted average of outstanding common shares, Basic (in shares) | 50,245,073 | 50,408,754 |
Weighted average of outstanding common shares, Diluted (in shares) | 51,235,341 | 50,408,754 |
Adjustment for assumed conversions, Diluted (in shares) | 990,268 | 0 |
Loans receivable, net - Narrative (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Receivables [Abstract] | ||
Allowance for doubtful accounts | $ 1,154 | $ 1,112 |
Unused agreed loan commitment | 13 | $ 8 |
Expected credit losses | $ 4 |
Goodwill and intangible assets - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Aggregate amortization expense for intangible assets | $ 2 | $ 5 |
Goodwill and intangible assets - Expected Intangible Asset Amortization Expense (Details) $ in Millions |
Mar. 31, 2023
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
For year ended December 31, 2023 | $ 3 |
For year ended December 31, 2024 | 3 |
For year ended December 31, 2025 | 1 |
For year ended December 31, 2026 | 1 |
Thereafter | 3 |
Total remaining amortization of intangible assets | $ 11 |
Segment reporting - Allocation of Property and Equipment Based on Geography (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | $ 1,036 | $ 993 |
US | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 3 | 1 |
Argentina | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 190 | 188 |
Brazil | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 521 | 514 |
Mexico | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 230 | 206 |
Other Countries | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 92 | 84 |
Total Other Countries | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | $ 1,033 | $ 992 |
Segment reporting - Schedule of Operating Lease Right of Use Assets Based on Geography (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Operating lease right-of-use assets | $ 697 | $ 656 |
Operating Segments | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Operating lease right-of-use assets | 697 | 656 |
Argentina | Operating Segments | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Operating lease right-of-use assets | 51 | 53 |
Brazil | Operating Segments | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Operating lease right-of-use assets | 308 | 286 |
Mexico | Operating Segments | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Operating lease right-of-use assets | 262 | 245 |
Other Countries | Operating Segments | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Operating lease right-of-use assets | $ 76 | $ 72 |
Fair value measurement of assets and liabilities - Summary of Reconciliation of Financial Liabilities Valuated at Fair Value (Details) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2022
USD ($)
| |
Derivative Instruments, net | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Balance, beginning of the year | $ 11 |
Net Additions | 3 |
Settlements | 7 |
Foreign Currency Translation | (5) |
Gain (Losses) in Other Comprehensive Income | (15) |
Gain (Losses) on Income Statement | (28) |
Transfers out of level 3 | 27 |
Balance, end of the year | 0 |
Contingent Considerations | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Balance, beginning of the year | (9) |
Net Additions | 0 |
Settlements | 1 |
Foreign Currency Translation | 0 |
Gain (Losses) in Other Comprehensive Income | 0 |
Gain (Losses) on Income Statement | 0 |
Transfers out of level 3 | 0 |
Balance, end of the year | $ (8) |
Loans payable and other financial liabilities - Schedule of Capped Call Transactions (Details) - USD ($) $ in Millions |
Jan. 31, 2021 |
Nov. 30, 2020 |
Aug. 31, 2020 |
Jun. 30, 2020 |
Jun. 30, 2019 |
---|---|---|---|---|---|
2028 Notes | Convertible Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Amount paid to enter into capped call transactions | $ 101 | $ 120 | $ 83 | $ 104 | $ 88 |
Leases - Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Leases [Abstract] | ||
Operating lease right-of-use assets | $ 697 | $ 656 |
Operating lease liabilities | 688 | 656 |
Property and equipment, at cost | 102 | 87 |
Accumulated depreciation | (36) | (31) |
Property and equipment, net | 66 | 56 |
Loans payable and other financial liabilities | $ 61 | $ 51 |
Leases - Summary of Weighted Average Remaining Lease Term and Discount Rate (Details) |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Leases [Abstract] | ||
Weighted average remaining lease term, Operating leases | 8 years | 8 years |
Weighted average remaining lease term, Finance leases | 3 years | 3 years |
Weighted average discount rate, Operating leases | 10.00% | 10.00% |
Weighted average discount rate, Finance leases | 13.00% | 16.00% |
Leases - Components of Lease Expense (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Leases [Abstract] | ||
Operating lease cost | $ 42 | $ 27 |
Depreciation of property and equipment | 5 | 4 |
Interest on lease liabilities | 2 | 2 |
Total finance lease cost | $ 7 | $ 6 |
Leases - Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Leases [Abstract] | ||
Operating cash flows from operating leases | $ 41 | $ 27 |
Financing cash flows from finance leases | 6 | 4 |
Operating leases | 42 | 61 |
Finance leases | $ 11 | $ 3 |
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Operating Leases | ||
One year or less | $ 159 | |
One year to two years | 148 | |
Two years to three years | 133 | |
Three years to four years | 103 | |
Four years to five years | 91 | |
Thereafter | 339 | |
Total lease payments | 973 | |
Less imputed interest | (285) | |
Total | 688 | $ 656 |
Finance Leases | ||
One year or less | 23 | |
One year to two years | 20 | |
Two years to three years | 14 | |
Three years to four years | 5 | |
Four years to five years | 2 | |
Thereafter | 0 | |
Total lease payments | 64 | |
Less imputed interest | (3) | |
Finance lease obligations | $ 61 | $ 51 |
Derivative instruments - Summary of Notional Amounts (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Designated as hedging instrument | Foreign exchange contracts | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amount | $ 85 | $ 109 |
Designated as hedging instrument | Interest rate swap contracts | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amount | 191 | 229 |
Designated as hedging instrument | Cross currency swap contracts | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amount | 174 | 133 |
Not designated as hedging instrument | Foreign exchange contracts | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amount | 59 | 110 |
Not designated as hedging instrument | Interest rate swap contracts | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amount | $ 387 | $ 480 |
Derivative instruments - Effect of Fair Value Hedge Relationships on Income Statement (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2023
USD ($)
| |
Fair Value Hedging | Interest Expense | Designated as hedging instrument | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Effect of fair value relationships | $ (5) |
Derivative instruments - Cumulative Basis Adjustments for Fair Value Hedges (Details) - Fair Value Hedging - Loans Payable And Other Financial Liabilities Current - USD ($) $ in Millions |
Mar. 31, 2023 |
Mar. 31, 2022 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Carrying amount of the hedged item | $ 109 | |
Fair value hedge relationships less than | $ 1 | $ 0 |
Derivative instruments - Narrative (Details) - Fair Value Hedging - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Loans Payable And Other Financial Liabilities Current | ||
Derivatives, Fair Value [Line Items] | ||
Carrying amount of the hedged item | $ 109 | |
Fair value hedge relationships less than | 1 | $ 0 |
Designated as hedging instrument | Interest Expense | ||
Derivatives, Fair Value [Line Items] | ||
Effect of fair value relationships | $ (5) |
Derivative instruments - Effect of Derivative Contracts Not Designated as Hedging Instruments on Income Statement (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Foreign exchange contracts not designated as hedging instruments recognized in Foreign currency losses, net | $ (6) | $ (5) |
Currency swap contracts not designated as hedging instruments recognized in Foreign currency losses, net | 0 | (32) |
Interest rate contracts not designated as hedging instruments recognized in Interest expense and other financial losses | $ 2 | $ 0 |
Label | Element | Value |
---|---|---|
Accounting Standards Update [Extensible Enumeration] | us-gaap_AccountingStandardsUpdateExtensibleList | Accounting Standards Update 2021-08 [Member] |
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