10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

-OR-

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-33647

MercadoLibre, Inc.

(Exact name of Registrant as specified in its Charter)

Delaware	98-0212790
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

Arias 3751, 7th Floor

Buenos Aires, C1430CRG, Argentina

(Address of registrant’s principal executive offices)

(+5411) 4640-8000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   ☒     No   ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.    Yes   ☒     No   ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐   (Do not check if a smaller reporting company)	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ☐     No   ☒

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

44,157,364 shares of the issuer’s common stock, $0.001 par value, outstanding as of November 1, 2017.

MERCADOLIBRE, INC.

INDEX TO FORM 10-Q

PART I. FINANCIAL INFORMATION
Item 1 — Unaudited Interim Condensed Consolidated Financial Statements
Interim Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016	1
Interim Condensed Consolidated Statements of Income for the nine and three-month periods ended September 30, 2017 and 2016	2
Interim Condensed Consolidated Statements of Comprehensive Income for the nine and three-month periods ended September 30, 2017 and 2016	3
Interim Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2017 and 2016	4
Notes to Interim Condensed Consolidated Financial Statements (unaudited)	5
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3 — Qualitative and Quantitative Disclosures About Market Risk	51
Item 4 — Controls and Procedures	56
PART II. OTHER INFORMATION	56
Item 1 — Legal Proceedings	56
Item 1A — Risk Factors	56
Item 6 — Exhibits	56
INDEX TO EXHIBITS	58

MercadoLibre, Inc.

Interim Condensed Consolidated Financial Statements

as of September 30, 2017 and December 31, 2016

and for the nine and three-month periods

ended September 30, 2017 and 2016

MercadoLibre, Inc.

Interim Condensed Consolidated Balance Sheets

As of September 30, 2017 and December 31, 2016

(In thousands of U.S. dollars, except par value)

(Unaudited)

	September 30,	December 31,
	2017	2016
Assets
Current assets:
Cash and cash equivalents	$                461,198	$                234,140
Short-term investments	175,165	253,321
Accounts receivable, net	28,564	25,435
Credit cards receivables, net	406,883	307,904
Loans receivable, net	51,843	6,283
Prepaid expenses	8,199	15,060
Inventory	2,309	1,103
Other assets	47,995	26,215
Total current assets	1,182,156	869,461
Non-current assets:
Long-term investments	45,550	153,803
Property and equipment, net	136,101	124,261
Goodwill	95,249	91,797
Intangible assets, net	24,642	26,277
Deferred tax assets	66,163	45,017
Other assets	68,431	56,819
Total non-current assets	436,136	497,974
Total assets	$             1,618,292	$             1,367,435
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses	$                181,557	$                105,106
Funds payable to customers	519,420	370,693
Salaries and social security payable	61,168	48,898
Taxes payable	27,923	27,338
Loans payable and other financial liabilities	24,701	11,583
Other liabilities	1,400	6,359
Dividends payable	6,624	6,624
Total current liabilities	822,793	576,601
Non-current liabilities:
Salaries and social security payable	22,124	16,173
Loans payable and other financial liabilities	309,444	301,940
Deferred tax liabilities	40,435	34,059
Other liabilities	17,340	9,808
Total non-current liabilities	389,343	361,980
Total liabilities	$             1,212,136	$                938,581
Equity:
Common stock, $0.001 par value, 110,000,000 shares authorized,
44,157,364 shares issued and outstanding at September 30,
2017 and  December 31, 2016	$                          44	$                          44
Additional paid-in capital	70,674	137,982
Retained earnings	612,269	550,641
Accumulated other comprehensive loss	(276,831)	(259,813)
Total Equity	406,156	428,854
Total Liabilities and Equity	$             1,618,292	$             1,367,435

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

1

MercadoLibre, Inc.

Interim Condensed Consolidated Statements of Income

For the nine and three-month periods ended September 30, 2017 and 2016

(In thousands of U.S. dollars, except for share data)

(Unaudited)

	Nine Months Ended September 30		Three Months Ended September 30,
	2017	2016	2017	2016
Net revenues	$                961,117	$                588,121	$                370,661	$                230,847
Cost of net revenues	(444,879)	(213,993)	(194,834)	(85,199)
Gross profit	516,238	374,128	175,827	145,648
Operating expenses:
Product and technology development	(93,019)	(72,223)	(32,380)	(26,066)
Sales and marketing	(207,925)	(107,743)	(84,139)	(39,723)
General and administrative	(91,575)	(64,061)	(31,766)	(26,150)
Impairment of Long-Lived Assets	(2,837)	(13,717)	—	—
Total operating expenses	(395,356)	(257,744)	(148,285)	(91,939)
Income from operations	120,882	116,384	27,542	53,709
Other income (expenses):
Interest income and other financial gains	37,020	25,192	14,200	9,892
Interest expense and other financial losses	(19,686)	(18,807)	(6,709)	(6,492)
Foreign currency (loss) / gain	(19,475)	(5,062)	1,622	(4,823)
Net income before income tax expense	118,741	117,707	36,655	52,286
Income tax expense	(37,241)	(32,690)	(8,989)	(13,374)
Net income	$                  81,500	$                  85,017	$                  27,666	$                  38,912

	Nine Months Ended September 30		Three Months Ended September 30,
	2017	2016	2017	2016
Basic EPS
Basic net income
Available to shareholders per common share	$                     1.85	$                     1.93	$                     0.63	$                     0.88
Weighted average of outstanding common shares	44,157,364	44,157,215	44,157,364	44,157,341
Diluted EPS
Diluted net income
Available to shareholders per common share	$                     1.85	$                     1.93	$                     0.63	$                     0.88
Weighted average of outstanding common shares	44,157,364	44,157,215	44,157,364	44,157,341
Cash Dividends declared (per share)	0.450	0.450	0.150	0.150

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

2

MercadoLibre, Inc.

Interim Condensed Consolidated Statements of Comprehensive Income

For the nine and three-month periods ended September 30, 2017 and 2016

(In thousands of U.S. dollars)

(Unaudited)

	Nine Months Ended September 30		Three Months Ended September 30,
	2017	2016	2017	2016
Net income	$                  81,500	$                  85,017	$                  27,666	$                  38,912
Other comprehensive (loss) income, net of income tax:
Currency translation adjustment	(17,945)	(11,056)	(5,180)	(2,974)
Unrealized net gains (losses) on available for sale investments	340	712	(1,413)	1,106
Less: Reclassification adjustment for losses on available for sale investments	(587)	(672)	—	—
Net change in accumulated other comprehensive loss, net of income tax	(17,018)	(9,672)	(6,593)	(1,868)
Total Comprehensive income	$                  64,482	$                  75,345	$                  21,073	$                  37,044

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

3

MercadoLibre, Inc.

Interim Condensed Consolidated Statements of Cash Flow

For the nine-month periods ended September 30, 2017 and 2016

(In thousands of U.S. dollars)

(Unaudited)

	Nine Months Ended September 30
	2017	2016
Cash flows from operations:
Net income	$                  81,500	$                  85,017
Adjustments to reconcile net income to net cash provided by operating activities:
Unrealized Devaluation Loss, net	28,463	5,162
Impairment of Long-Lived Assets	2,837	13,717
Depreciation and amortization	29,953	20,698
Accrued interest	(16,391)	(12,643)
Non cash interest and convertible bonds amortization of debt discount and amortization of debt issuance costs	9,234	9,122
LTRP accrued compensation	28,734	19,251
Deferred income taxes	(14,769)	(5,895)
Changes in assets and liabilities:
Accounts receivable	(13,380)	(2,409)
Credit Card Receivables	(113,514)	(92,811)
Prepaid expenses	6,800	(272)
Inventory	(1,172)	(1,048)
Other assets	(31,528)	(15,865)
Accounts payable and accrued expenses	71,794	13,852
Funds payable to customers	151,635	100,322
Other liabilities	3,703	136
Interest received from investments	18,490	11,348
Net cash provided by operating activities	242,389	147,682
Cash flows from investing activities:
Purchase of investments	(3,180,633)	(2,548,060)
Proceeds from sale and maturity of investments	3,371,543	2,525,118
Payment for acquired businesses, net of cash acquired	—	(7,284)
Purchases of intangible assets	(84)	(49)
Advance for property and equipment	(12,777)	(6,129)
Changes in principal of loans receivable, net	(46,951)	—
Purchases of property and equipment	(39,280)	(55,510)
Net cash provided by (used in) investing activities	91,818	(91,914)
Cash flows from financing activities:
Proceeds from loans payable and other financial liabilities	13,153	3,892
Payments on loans payable and other financing liabilities	(4,304)	(6,492)
Dividends paid	(19,871)	(17,795)
Purchase of convertible note capped call	(67,308)	—
Net cash used in financing activities	(78,330)	(20,395)
Effect of exchange rate changes on cash and cash equivalents	(28,819)	(14,259)
Net increase in cash and cash equivalents	227,058	21,114
Cash and cash equivalents, beginning of the period	$                234,140	$                166,881
Cash and cash equivalents, end of the period	$                461,198	$                187,995

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

4

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

1. Nature of Business

MercadoLibre, Inc. (“MercadoLibre” or the “Company”) was incorporated in the state of Delaware, in the United States of America in October 1999. MercadoLibre is the leading e-commerce company in Latin America, serving as an integrated regional platform and as an enabler of the necessary online and technology tools to allow businesses and individuals to trade products and services in the region. The Company enables commerce through its marketplace platform (including online classifieds for motor vehicles, vessels, aircraft, services and real estate), which allows users to buy and sell in most of Latin America. 

Through MercadoPago, MercadoLibre enables individuals and businesses to send and receive online payments; through MercadoEnvios, MercadoLibre facilitates the shipping of goods from sellers to buyers; through our advertising products, MercadoLibre facilitates advertising services to large retailers and brands to promote their product and services on the web; through MercadoShops, MercadoLibre facilitates users to set-up, manage, and promote their own on-line web-stores under a subscription-based business model; and through MercadoCredito, MercadoLibre extends loans to specific merchants and consumers. In addition, MercadoLibre develops and sells software enterprise solutions to e-commerce business clients in Brazil.

As of September 30, 2017, MercadoLibre, through its wholly-owned subsidiaries, operated online ecommerce platforms directed towards Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Peru, Mexico, Panama, Honduras, Nicaragua, Salvador, Portugal, Uruguay, Bolivia, Guatemala, Paraguay and Venezuela. Additionally, MercadoLibre operates an online payments solution directed towards Argentina, Brazil, Mexico, Venezuela, Colombia, Chile, Peru and Uruguay. It also offers a shipping solution directed towards Argentina, Brazil, Mexico, Colombia and Chile. In addition, the Company operates a real estate classified platform that covers some areas of State of Florida, in the United States of America.

2. Summary of significant accounting policies

Basis of presentation

The accompanying unaudited interim condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) and include the accounts of the Company and its wholly-owned subsidiaries. These interim condensed consolidated financial statements are stated in U.S. dollars, except for amounts otherwise indicated. Intercompany transactions and balances with subsidiaries have been eliminated for consolidation purposes.

Substantially all net revenues, cost of net revenues and operating expenses, are generated in the Company’s foreign operations. Operating income of foreign operations amounted to 96.7% and 99.9% of the consolidated amounts during the nine-month periods ended September 30, 2017 and 2016. Long-lived assets, Intangible assets and Goodwill located in the foreign jurisdictions totaled $247,401 thousands and $232,314thousands as of September 30, 2017 and December 31, 2016, respectively.

These interim condensed consolidated financial statements reflect the Company’s consolidated financial position as of September 30, 2017 and December 31, 2016. These financial statements also show the Company’s consolidated statements of income and comprehensive income for the nine and three-month periods ended September 30, 2017 and 2016; and statement of cash flows for the nine-month periods ended September 30, 2017 and 2016. These interim condensed consolidated financial statements include all normal recurring adjustments that management believes are necessary to fairly state the Company’s financial position, operating results and cash flows.

Because all of the disclosures required by U.S. GAAP for annual consolidated financial statements are not included herein, these unaudited interim condensed financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2016, contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”). The condensed consolidated statements of income, of comprehensive income and of cash flows for the periods presented herein are not necessarily indicative of results expected for any future period. For a more detailed discussion of the Company’s significant accounting policies, see note 2 to the financial statements in the Form 10-K. During the nine-month period ended September 30, 2017, there were no material updates made to the Company’s significant accounting policies.

5

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

Foreign currency translation

All of the Company’s foreign operations have determined the local currency to be their functional currency, except for Venezuela since January 1, 2010, as described below. Accordingly, these foreign operating subsidiaries translate assets and liabilities from their local currencies into U.S. dollars by using period-end exchange rates while income and expense accounts are translated at the average rates in effect during the period, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of the transaction are used. The resulting translation adjustment is recorded as a component of other comprehensive(loss) income.

Venezuelan currency status

Pursuant to U.S. GAAP, the Company has transitioned its Venezuelan operations to highly inflationary status as from January 1, 2010, which requires that transactions and balances are re-measured as if the U.S. dollar was the functional currency for such operation. The cumulative three year inflation rate as from December 31, 2010 exceeded 100% at each period end. Thus, the Company continues to treat the economy of Venezuela as highly-inflationary.

On March 9, 2016 the Central Bank of Venezuela (“BCV”) issued the Exchange Agreement No.35. The agreement established a “protected” exchange rate (“DIPRO”) for certain transactions, such as but not limited to: imports of goods of the food and health sectors, as well as supplies associated with the production of said sectors; expenses relating to health treatments, sports, culture, scientific research, and other urgent matters defined by the exchange regulations. All foreign currency transactions not expressly provided in Exchange Agreement No.35 will be processed on the alternate foreign currency markets governed by the exchange regulations, at the floating supplementary market exchange rate (“DICOM”).

Additionally, the agreement established that the alternate foreign currency markets referred to in Exchange Agreement No.33 of February 10, 2015 (“SIMADI”) will continue to operate until replaced by others. From March 31, 2016 through June 30, 2016, the SIMADI exchange rate increased from 273 BsF per U.S. dollar to 628 BsF per U.S. dollar, a 130% increase in the exchange rate. As a consequence of the local currency devaluation, the Company recorded a foreign exchange loss of $4.9 million during the second quarter of 2016.

Considering the significant devaluation and the lower U.S. dollar-equivalent cash flows then expected from the Venezuelan business, the Company reviewed its long-lived assets (including non-current other assets), goodwill and intangible assets with indefinite useful life for impairment and concluded that the carrying value of certain real estate investments in Venezuela as of June 30, 2016 would not be fully recoverable. As a result, on June 30, 2016, the Company recorded an impairment of offices and commercial property under construction included within non-current other assets of $13.7 million. The carrying amount of offices and commercial property under construction was adjusted to its estimated fair value of approximately $12.5 million as of June 30, 2016, by using the market approach, and considering prices for similar assets.

On May 19, 2017, the BCV issued the Exchange Agreement No.38, which established a new foreign exchange mechanism under DICOM, replacing SIMADI. The new mechanism consists of auctions, administered by an auction committee, where sellers and buyers from the private sector may offer foreign currency under certain limits determined by the BCV.

In light of the disappearance of SIMADI  (which closed at 728.0 per U.S. dollar), and the Company’s inability to gain access to U.S. dollars under SIMADI, it started requesting U.S. dollars through DICOM. As a result, the Company expects to settle its transactions through DICOM going forward and concluded that the DICOM exchange rate should be used as from June 1, 2017 to measure its bolivar-denominated monetary assets and liabilities and to measure the revenues and expenses of the Venezuelan subsidiaries. Therefore, as of June 30, 2017, monetary assets and liabilities in Bolivares Fuertes (“BsF”) were re-measured to the U.S. dollar using the DICOM closing exchange rate of 2640.0BsF per U.S. dollar. As a consequence of the local currency devaluation, the Company recorded a foreign exchange loss of $22.0 million during the second quarter of 2017.

Considering the significant devaluation and the lower U.S. dollar-equivalent cash flows then expected from the Venezuelan business, the Company reviewed its long-lived assets (including non-current other assets), goodwill and intangible assets with indefinite useful life for impairment and concluded that the carrying value of certain real estate investments in Venezuela as of June 30, 2017 would not be fully recoverable. As a result, on June 30, 2017, the Company recorded an impairment of offices and commercial property under construction included within non-current other assets of $2.8 million. The carrying amount of offices and commercial property under construction was adjusted to its estimated fair value of approximately $9.7 million as of June 30, 2017, by using the market approach and considering prices for similar assets. As of September 30, 2017, the DICOM exchange rate was 3,345.0 BsF per U.S. dollar.

6

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

Until 2010 the Company was able to obtain U.S. dollars for any purpose, including dividends distribution, using alternative mechanisms other than through the Commission for the Administration of Foreign Exchange Control (CADIVI). Those U.S. dollars, obtained at a higher exchange rate than the one offered by CADIVI, and held at U.S. bank accounts of its Venezuelan subsidiaries, were used until 2011 for dividend distributions from its Venezuelan subsidiaries. The Company has not distributed dividends from the Venezuelan subsidiaries since 2011.

The following table sets forth the assets, liabilities and net assets of the Company’s Venezuelan subsidiaries, before intercompany eliminations of a net liability of $29,594 thousands and $ 15,843 thousands, as of September 30, 2017 and December 31, 2016 and net revenues for the nine-month periods ended September 30, 2017 and 2016:

			September 30,
		2017		2016
		(In thousands)
Venezuelan operations
	Net Revenues	$	38,329	$	26,451
		September 30,		December 31,
		2017		2016
		(In thousands)
	Assets		62,648		66,165
	Liabilities		(37,269)		(22,950)
	Net Assets	$	25,379	$	43,215

As of September 30, 2017, the net assets (before intercompany eliminations) of the Venezuelan subsidiaries amounted to 6.2% of consolidated net assets, and cash and investments of the Venezuelan subsidiaries held in local currency in Venezuela amounted to 2.2% of our consolidated cash and investments.

The Company’s ability to obtain U.S. dollars in Venezuela is negatively affected by the exchange regulations in Venezuela that are described above and elsewhere in these interim condensed consolidated financial statements. In addition, its business and ability to obtain U.S. dollars in Venezuela would be negatively affected by additional material devaluations or the imposition of significant additional and more stringent controls on foreign currency exchange by the Venezuelan government.

Despite the current difficult macroeconomic environment in Venezuela, the Company continues to actively manage, through its Venezuelan subsidiaries, its investment in Venezuela.

Income and asset taxes

The Company is subject to U.S. and foreign income taxes. The Company accounts for income taxes following the liability method of accounting which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets are also recognized for tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets or liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded when, based on the available evidence, it is more likely than not that all or a portion of the Company’s deferred tax assets will not be realized. The Company’s income tax expense consists of taxes currently payable, if any, plus the change during the period in the Company’s deferred tax assets and liabilities.

On August 17, 2011, the Argentine government issued a new software development law and on September 9, 2013 the regulatory decree was issued, which established the new requirement to become beneficiary of the new software development law. The decree establishes compliance requirements with annual incremental ratios related to exports of services and research and development expenses that must be achieved to remain within the tax holiday. The Company’s Argentine subsidiary has to achieve certain required ratios annually under the software development law in order to be eligible for the benefits mentioned below.

7

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

On September 17, 2015, the Argentine Industry Secretary issued Resolution 1041/2015 approving the Company’s application for eligibility under the new software development law for the Company’s Argentinean subsidiary, Mercadolibre S.R.L. Furthermore, on September 18, 2016, the Argentine Industry Secretary issued Resolutions 93/2016 and 97/2016 approving the Company’s application for eligibility under the new software development law for the Company’s Argentinean subsidiaries, Neosur S.RL. and Business Vision S.A. As a result, the Company’s Argentinean subsidiaries have been granted a tax holiday retroactive from September 18, 2014. A portion of the benefits obtained as beneficiaries of the new law is a relief of 60% of total income tax related to software development activities and a 70% relief in payroll taxes related to software development activities.

The benefits to the Company under the software development law will expire on December 31, 2019. As a result of the Company’s eligibility under the new law, it recorded an income tax benefit of $17,672 thousands and $6,367 thousands during the nine and three-month periods ended September 30, 2017, respectively. Aggregate per share effect of the Argentine tax holiday amounted to $0.40 and $0.14 for the nine and three-month periods ended September 30, 2017, respectively. Furthermore, the Company recorded a labor cost benefit of $5,513 thousands and $2,016 thousands during the nine and three-month periods ended September 30, 2017, respectively. Additionally, $1,623 thousands and $587 thousands were accrued to pay software development law audit fees during the nine and three-month periods ended September 30, 2017, respectively. During the nine months period ended September 30, 2016, the Company recorded an income tax benefit of $16,018thousands, a labor cost benefit of $4,173 thousands and $1,416 thousands were accrued to pay software development law audit fees. Additionally, during the third quarter of 2016, the Company recorded an income tax benefit of $6,823 thousands, a labor cost benefit of $2,167 thousands and $631 thousands were accrued to pay software development law audit fees. Aggregate per share effect of the Argentine tax holiday amounted to $0.46 and $0.20 for the nine  and three-month periods ended September  30, 2016, respectively.

As of September 30, 2017 and December 31, 2016, the Company had included under non-current deferred tax assets the foreign tax credits related to the dividend distributions received from its subsidiaries for a total amount of $11,588 thousands and $13,515 thousands, respectively. Those foreign tax credits will be used to offset the future domestic income tax payable.

Accumulated other comprehensive loss

The following table sets forth the Company’s accumulated other comprehensive loss as of September 30, 2017 and the year ended December 31, 2016:

	September 30,	December 31,
	2017	2016
	(In thousands)
Accumulated other comprehensive loss:
Foreign currency translation	$                    (277,171)	$             (259,226)
Unrealized gains (losses) on investments	518	(909)
Estimated tax (loss) gain on unrealized gains (losses) on investments	(178)	322
	$                    (276,831)	$             (259,813)

The following tables summarize the changes in accumulated balances of other comprehensive loss for the nine-month period ended September 30, 2017:

	Unrealized	Foreign	Estimated tax
	(Losses) Gains on	Currency	(expense)
	Investments	Translation	benefit	Total
	(In thousands)
Balances as of December 31, 2016	$                          (909)	$             (259,226)	$                    322	$           (259,813)
Other comprehensive loss before reclassifications adjustments for gains (losses) on available for sale investments	518	(17,945)	(178)	(17,605)
Amount of gain (loss) reclassified from accumulated other comprehensive loss	909	—	(322)	587
Net current period other comprehensive income gain (loss)	1,427	(17,945)	(500)	(17,018)
Ending balance	$                            518	$             (277,171)	$                  (178)	$           (276,831)

8

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

	Amount of (Loss) Gain
	Reclassified from
Details about Accumulated	Accumulated Other
Other Comprehensive Loss	Comprehensive	Affected Line Item
Components	Loss	in the Statement of Income
	(In thousands)
Unrealized losses on investments	$                          (909)	Interest expense and other financial losses
Estimated tax gain on unrealized losses on investments	322	Income tax gain
Total reclassifications for the year	$                          (587)	Total, net of income taxes

Impairment of long-lived assets

The Company reviews its long-lived assets (including non-current other assets) for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

As explained in section “Foreign Currency Translation” of the present Note to these interim condensed consolidated financial statements, Venezuelan currency experienced a steep devaluation in the second quarter of 2017 and 2016.

Considering this change in facts and circumstances and the lower U.S. dollar-equivalent cash flows expected from the Venezuelan business, and long-lived assets expected use, the Company concluded that certain real estate investments held in Caracas, Venezuela, should be impaired. The fair value of long-lived assets was estimated through market approach using level 3 inputs in the fair value hierarchy. These level 3 inputs included, but are not limited to, executed purchase agreements in similar assets and third party valuations. As a consequence, the Company estimated the fair value of the impaired long-lived assets, and recorded impairment losses of $2.8 million and $13.7 million on June 30, 2017 and June 30, 2016, respectively.

Use of estimates

The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for, but not limited to accounting for allowance for doubtful accounts and chargeback provisions, recoverability of goodwill and intangible assets with indefinite useful life, useful life of long-lived assets and intangible assets, impairment of short-term and long-term investments, impairment of long-lived assets, compensation costs relating to the Company’s long term retention plan, fair value of convertible debt note, recognition of income taxes and contingencies. Actual results could differ from those estimates.

Recently issued accounting pronouncements

In 2014, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance related to revenue recognition. This new standard will replace all current GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition guidance provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. In 2016, the FASB issued several amendments to the standard, including principal versus agent considerations when another party is involved in providing goods or services to a customer and the application of identifying performance obligations. The Company has substantially completed the assessment on the adoption of this standard concluding that it is not expected to have a material measurement impact on the Company´s financial statements. However, the Company continues assessing the potential impacts regarding the presentation of certain incentives recorded as an expense under current guidance.  The adoption of this standard will also require to expand and include certain additional disclosures. The standard is required to be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. The Company continues evaluating the transition method upon adoption. The Company will adopt the new revenue standard in its first quarter of 2018.

9

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

OnFebruary25, 2016 the FASB issued ASU 2016-02.Theamendments in this updatecreate Topic 842, Leases, which supersedes Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. Previous GAAP did not require lease assets and lease liabilities to be recognized for most leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in the statement of comprehensive income and the statement of cash flows is largely unchanged from previous GAAP. Based on existing leases currently classified as operating leases, the Company expects to recognize on the statements of financial position right-of-use assets and lease liabilities. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is assessing the effects that the adoption of this accounting pronouncement may have on the Company’s financial statements.

On June 16, 2016 the FASB issued ASU 2016-13 “Financial Instruments-Credit Losses (Topic 326): Measurement of credit losses on financial instruments”. This update amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, this update eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however this topic will require that credit losses be presented as an allowance rather than as a write-down. The new standard is effective for fiscal years beginning after December 15, 2019. The Company is assessing the effects that the adoption of this accounting pronouncement may have on its financial statements. 

On October 24, 2016 the FASB issued “ASU 2016-16—Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory”. This update eliminates the prohibition on recognizing current and deferred income tax consequences for an intra-entity asset transfer until the asset or assets have been sold to an outside party. Consequently, this update requires recognition of the current and deferred income tax consequences of an intra-entity asset transfer when the transfer occurs. The new standard is effective for fiscal years beginning after December 15, 2017.The adoption of this standard is not expected to have a material impact on the Company´s financial statements. 

On September 29, 2017 the FASB issued “ASU 2017-13—Revenue recognition (Topic 605), Revenue from contracts with customers (Topic 606), Leases (Topic 840), and Leases (Topic 842)”. This update addresses Transition Related to Accounting Standards Updates No. 2014-09, Revenue from Contracts with Customers (Topic 606), and No. 2016-02, Leases (Topic 842). This Update also supersedes SEC paragraphs pursuant the rescission of SEC Staff Announcement, “Accounting for Management Fees Based on a Formula”, effective upon the initial adoption of Topic 606, Revenue from Contracts with Customers, and SEC Staff Announcement, “Lessor Consideration of Third-Party Value Guarantees,” effective upon the initial adoption of Topic 842, Leases. The adoption of this standard is not expected to have a material impact on the Company´s financial statements.  

10

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

3. 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 June 30, 2014, the Company issued 2.25% Convertible Senior Notes due 2019 (see Note 9 of these interim condensed consolidated financial statements for discussion regarding these debt notes). The conversion of these debt notes are included in the calculation for diluted earnings per share utilizing the “if converted” method. The effect of that conversion 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 nine and three-month periods ended September 30, 2017 and 2016 does not include any effect from the 2014 and 2017 Capped Call Transactions (as defined below)because it would be antidilutive. In the event of conversion of any or all of the Notes, the shares that would be delivered to the Company under theCapped Call Transactions are designed to partially neutralize the dilutive effect of the shares that the Company would issue under the Notes.See Note 9 of these interim condensed consolidated financial statements and Note 17 of the financial statements as of December 31,2016 on Form 10-K for more details.

For the nine and three-month periods ended September 30, 2017 and 2016, the effects on diluted earnings per share were antidilutive and, as a consequence, they were not computed for diluted earnings per share.

Net income per share of common stock is as follows for the nine and three-month periods ended September 30, 2017 and 2016:

			Nine Months Ended September 30,					Three Months Ended September 30,
	2017					2016		2017		2016
			(In thousands)					(In thousands)
		Basic		Diluted	Basic		Diluted	Basic	Diluted	Basic	Diluted
Net income per common share	$      1.85			$         1.85	$         1.93		$         1.93	$         0.63	$         0.63	$         0.88	$        0.88
Numerator:
Net income	$  81,500			$     81,500	$     85,017		$     85,017	$     27,666	$     27,666	$     38,912	$     38,912
Denominator:
Weighted average of common stock outstanding for Basic earnings per share	44,157,364				44,157,215			44,157,364		44,157,341
Adjusted weighted average of common stock outstanding for Diluted earnings per share				44,157,364			44,157,215		44,157,364		44,157,341

11

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

4. Goodwill and intangible assets

Goodwill and intangible assets

The composition of goodwill and intangible assets is as follows:

	September 30,	December 31,
	2017	2016
	(In thousands)
Goodwill	$                  95,249	$                  91,797
Intangible assets with indefinite lives
- Trademarks	13,153	12,490
Amortizable intangible assets
- Licenses and others	6,565	8,738
- Non-compete agreement	2,491	1,787
- Customer list	15,215	14,580
- Trademarks	1,854	993
Total intangible assets	$                  39,278	$                  38,588
Accumulated amortization	(14,636)	(12,311)
Total intangible assets, net	$                  24,642	$                  26,277

Goodwill

The changes in the carrying amount of goodwill for the nine-month period ended September 30, 2017 and the year ended December 31, 2016 are as follows:

	Period ended September 30, 2017
	Brazil	Argentina	Chile	Mexico	Venezuela	Colombia	Other Countries	Total
	(In thousands)
Balance, beginning of the period	$          27,660	$               6,587	$             17,388	$                29,342	$                                       5,989	$                            3,643	$                     1,188	$             91,797
- Effect of exchange rates changes	245	(809)	783	3,158	—	50	25	3,452
Balance, end of the period	$          27,905	$               5,778	$             18,171	$                32,500	$                                       5,989	$                            3,693	$                     1,213	$             95,249

	Year ended December 31, 2016
	Brazil	Argentina	Chile	Mexico	Venezuela	Colombia	Other Countries	Total
	(In thousands)
Balance, beginning of year	$             18,526	$               7,430	$             16,438	$             33,834	$                            5,729	$                   3,437	$               1,151	$             86,545
- Business acquisition	5,635	700	—	190	260	57	32	6,874
- Effect of exchange rates changes	3,499	(1,543)	950	(4,682)	—	149	5	(1,622)
Balance, end of the year	$             27,660	$               6,587	$             17,388	$             29,342	$                            5,989	$                   3,643	$               1,188	$             91,797

Intangible assets with definite useful life

Intangible assets with definite useful life are comprised of customer lists, non-compete and non-solicitation agreements, acquired software licenses, other acquired intangible assets including developed technologies and trademarks. Aggregate amortization expense for intangible assets totaled$1,182thousands and$1,144thousands for the three-month periods ended September 30, 2017 and 2016, respectively, while for the nine-month periods ended at such dates amounted to$3,247thousands and$2,863thousands, respectively.

12

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

The following table summarizes the remaining amortization of intangible assets (in thousands of U.S. dollars) with definite useful life as of September 30, 2017:

For year ended 12/31/2017	$                    1,343
For year ended 12/31/2018	4,475
For year ended 12/31/2019	2,201
For year ended 12/31/2020	956
Thereafter	2,514
	$                  11,489

5. Segment reporting

Reporting segments are based upon the Company’s internal organizational structure, the manner in which the Company’s operations are managed and resources are assigned, the criteria used by management to evaluate the Company’s performance, the availability of separate financial information, and overall materiality considerations.

Segment reporting is based on geography as the main basis of segment breakdown to reflect the evaluation of the Company’s performance defined by the management. The Company’s segments include Brazil, Argentina, Mexico, Venezuela and other countries (such as Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Panama, Honduras, Nicaragua, Salvador, Bolivia, Guatemala, Paraguay, Peru, Portugal, Uruguay and USA).

Direct contribution consists of net revenues from external customers less direct costs. Direct costs include costs of net revenues, product and technology development expenses, sales and marketing expenses, and general and administrative expenses over which segment managers have direct discretionary control, such as advertising and marketing programs, customer support expenses, allowances for doubtful accounts, payroll and third party fees. All corporate related costs have been excluded from the Company’s direct contribution.

Expenses over which segment managers do not currently have discretionary control, such as certain technology and general and administrative costs are monitored by management through shared cost centers and are not evaluated in the measurement of segment performance.

The following tables summarize the financial performance of the Company’s reporting segments:

	Nine Months Ended September 30, 2017
	Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
	(In thousands)
Net revenues	$           569,320	$              250,692	$               58,324	$                38,329	$               44,452	$             961,117
Direct costs	(390,008)	(150,973)	(95,683)	(16,841)	(37,052)	(690,557)
Impairment of Long-lived Assets	-	-	-	(2,837)	-	(2,837)
Direct contribution	179,312	99,719	(37,359)	18,651	7,400	267,723
Operating expenses and indirect costs of net revenues						(146,841)
Income from operations						120,882
Other income (expenses):
Interest income and other financial gains						37,020
Interest expense and other financial losses						(19,686)
Foreign currency losses						(19,475)
Net income before income tax expense						$             118,741

13

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

	Nine Months Ended September 30, 2016
	Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
	(In thousands)
Net revenues	$                    311,427	$                    185,885	$                   34,375	$                   26,451	$                   29,983	$                        588,121
Direct costs	(188,772)	(105,217)	(29,004)	(12,691)	(21,281)	(356,965)
Impairment of Long-lived Assets	-	-	-	(13,717)	-	(13,717)
Direct contribution	122,655	80,668	5,371	43	8,702	217,439
Operating expenses and indirect costs of net revenues						(101,055)
Income from operations						116,384
Other income (expenses):
Interest income and other financial gains						25,192
Interest expense and other financial losses						(18,807)
Foreign currency losses						(5,062)
Net income before income tax expense						$                        117,707

		Three Months Ended September 30, 2017
		Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
		(In thousands)
Net revenues		$            229,475	$           91,308	$               22,604	$                     9,751	$               17,523	$                        370,661
Direct costs		(182,858)	(56,210)	(36,038)	(4,582)	(14,409)	(294,097)
Direct contribution		46,617	35,098	(13,434)	5,169	3,114	76,564
Operating expenses and indirect costs of net revenues							(49,022)
Income from operations							27,542
Other income (expenses):
	Interest income and other financial gains						14,200
	Interest expense and other financial losses						(6,709)
	Foreign currency gains						1,622
Net income before income tax expense							$36,655

14

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

		Three Months Ended September 30, 2016
		Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
		(In thousands)
Net revenues		$131,003	$69,983	$11,807	$6,885	$11,169	$230,847
Direct costs		(77,012)	(39,026)	(10,353)	(3,462)	(7,943)	(137,796)
Direct contribution		53,991	30,957	1,454	3,423	3,226	93,051
Operating expenses and indirect costs of net revenues							(39,342)
Income from operations							53,709
Other income (expenses):
	Interest income and other financial gains						9,892
	Interest expense and other financial losses						(6,492)
	Foreign currency losses						(4,823)
Net income before income tax expense							$52,286

The following table summarizes the allocation of property and equipment, net based on geography:

	September 30,	December 31,
	2017	2016
	(In thousands)
US property and equipment, net	$                    8,445	$                    9,771
Other countries
Argentina	25,842	25,071
Brazil	67,351	55,706
Mexico	3,487	2,307
Venezuela	21,935	21,615
Other countries	9,041	9,791
	$                127,656	$                114,490
Total property and equipment, net	$                136,101	$                124,261

The following table summarizes the allocation of the goodwill and intangible assets based on geography:

	September 30,	December 31,
	2017	2016
	(In thousands)
US intangible assets	$                      146	$                      250
Other countries goodwill and intangible assets
Argentina	6,630	7,717
Brazil	30,400	31,170
Mexico	41,992	38,860
Venezuela	7,168	7,366
Chile	28,164	27,395
Other countries	5,391	5,316
	$               119,745	$               117,824
Total goodwill and intangible assets	$               119,891	$               118,074

15

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

Consolidated net revenues by similar products and services for the nine and three-month periods ended September 30, 2017 and 2016 were as follows:

	Nine-months Ended September 30,		Three-months Ended September 30,
Consolidated Net Revenues	2017	2016	2017	2016
	(In thousands)		(In thousands)
Marketplace	$                582,475	$                341,749	$                227,269	$                134,374
Non-marketplace (*) (**)	$                378,642	$                246,372	$                143,392	$                  96,473
Total	$                961,117	$                588,121	$                370,661	$                230,847

(*)  Includes, among other things, Ad Sales, Classified Fees, Payment Fees, Shipping Fees and other ancillary services.

(**) Includes an amount of $232,426 thousands and $139,630 thousands of Payment Fees for the nine-month periods ended September 30, 2017 and 2016, respectively. Includes an amount of $92,254 thousands and $52,444 thousands of Payment Fees for the three-month periods ended September 30, 2017 and 2016, respectively.

6. Fair value measurement of assets and liabilities

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016:

		Quoted Prices in				Quoted Prices in
	Balances as of	active markets for	Significant other	Unobservable	Balances as of	active markets for	Significant other	Unobservable
	September 30,	identical Assets	observable inputs	inputs	December 31,	identical Assets	observable inputs	inputs
Description	2017	(Level 1)	(Level 2)	(Level 3)	2016	(Level 1)	(Level 2)	(Level 3)
	(In thousands)
Assets
Cash and Cash Equivalents:
Money Market Funds	$                  189,574	$               189,574	$                           —	$           —	$          111,198	$                111,198	$                  —	$               —
Investments:
Sovereign Debt Securities	$                   21,786	$                 21,786	$                           —	$           —	$            50,703	$                  50,703	$                  —	$                —
Corporate Debt Securities	30,468	28,384	2,084	—	207,633	61,986	145,647	—
Certificates of deposit	—	—	—	—	35,374	—	35,374	—
Total Financial Assets	$                  241,828	$               239,744	$                      2,084	$           —	$          404,908	$               223,887	$         181,021	$             —
Liabilities:
Contingent considerations	$                          —	$                        —	$                           —	$           —	$              4,213	$                         —	$                  —	$        4,213
Long-term retention plan	38,503	—	38,503	—	27,135	—	27,135	—
Total Financial Liabilities	$            38,503	$                        —	$            38,503	$           —	$            31,348	$                         —	$           27,135	$        4,213

16

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

As of September 30, 2017 and December 31, 2016, the Company’s financial assets valued at fair value consisted of assets valued using i) Level 1 inputs: unadjusted quoted prices in active markets (Level 1 instrument valuations are obtained from observable inputs that reflect quoted prices (unadjusted) for identical assets in active markets) and; ii) Level 2 inputs: obtained from readily-available pricing sources for comparable instruments as well as instruments with inactive markets at the measurement date.

As of September 30, 2017 and December 31, 2016, the Company´s liabilities were valued at fair value using level 2 inputs and level 3 inputs (valuations based on unobservable inputs reflecting Company assumptions). Fair value of contingent considerations are determined based on the probability of achievement of the performance targets arising from each acquisition, as well as the Company’s historical experience with similar arrangements. For the nine-month period ended September 30, 2017, the Company recognized in earnings a gain of $3,164 thousands and a loss of $166 thousands within other comprehensiveincome, in relation with contingent considerations. In addition, during the nine-month period ended September 30, 2017, the Company settled contingent considerations for an amount of $1,215 thousands.

The unrealized net gains or loss on short term and long term investments are reported as a component of other comprehensive income. The Company does not anticipate any significant realized losses associated with those investments in excess of the Company’s historical cost.

As of September 30, 2017 and December 31, 2016, the carrying value of the Company’s financial assets and liabilities measured at amortized cost approximated their fair value mainly because of its short term maturity. These assets and liabilities included cash, cash equivalents and short-term investments (excluding money markets funds and corporate debt security), accounts receivable, credit cards receivable, loans receivable, funds payable to customers, other assets, accounts payable, salaries and social security payable (excluding variable LTRP), taxes payable, provisions and other liabilities (excluding contingent consideration). The convertible senior notes (liability component), the rest of the loans payable and other financial liabilities approximate their fair value because the interest rates are not materially different from market interest rates.  

The following table summarizes the fair value level for those financial assets and liabilities of the Company measured at amortized cost as of September 30, 2017 and December 31, 2016:

	Balances as of	Significant other	Balances as of	Significant other
	September 30,	observable inputs	December 31,	observable inputs
	2017	(Level 2)	2016	(Level 2)
	(In thousands)
Assets
Time Deposits	$             167,224	$             167,224	$                113,414	$              113,414
Accounts receivable	28,564	28,564	25,435	25,435
Credit Cards receivable	406,883	406,883	307,904	307,904
Loans receivable, net	51,843	51,843	6,283	6,283
Other assets	89,097	89,097	58,900	58,900
Total Assets	$             743,611	$                        743,611	$                511,936	$              511,936
Liabilities
Accounts payable and accrued expenses	$             181,557	$                        181,557	$                105,106	$              105,106
Funds payable to customers	519,420	519,420	370,693	370,693
Salaries and social security payable	44,789	44,789	37,936	37,936
Taxes payable	27,923	27,923	27,338	27,338
Dividends payable	6,624	6,624	6,624	6,624
Loans payable and other financial liabilities (*)	334,145	334,145	313,523	313,523
Other liabilities	18,740	18,740	11,954	11,954
Total Liabilities	$          1,133,198	$                     1,133,198	$                873,174	$              873,174

(*) The fair value of the convertible senior notes (including the equity component) is disclosed in Note 9.

As of September 30, 2017 and December 31, 2016, the Company held no direct investments in auction rate securities, collateralized debt obligations or structured investment vehicles, and does not have any non-financial assets or liabilities measured at fair value.

17

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

As of September 30, 2017 and December 31, 2016, the fair value of money market funds, short and long-term investments classified as available for sale securities are as follows:

	September 30, 2017
	Cost	Gross Unrealized Gains (1)	Gross Unrealized Losses (1)	Estimated Fair Value
	(In thousands)
Cash and cash equivalents
Money Market Funds	$                       189,574	$                                 —	$                                —	$                              189,574
Total Cash and cash equivalents	$                       189,574	$                                 —	$                                —	$                              189,574
Short-term investments
Corporate Debt Securities	7,250	1	(4)	7,247
Sovereign Debt Securities	697	—	(3)	694
Total Short-term investments	$                           7,947	$                                   1	$                                 (7)	$                                  7,941
Long-term investments
Sovereign Debt Securities	$                         21,196	$                                 —	$                             (104)	$                                21,092
Corporate Debt Securities	23,210	43	(32)	23,221
Total Long-term investments	$                         44,406	$                                43	$                             (136)	$                                44,313
Total	$                       241,927	$                                44	$                             (143)	$                              241,828

18

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

	December 31, 2016
	Cost	Gross Unrealized Gains (1)	Gross Unrealized Losses (1)	Estimated Fair Value
	(In thousands)
Cash and cash equivalents
Money Market Funds	$           111,198	$                —	$                —	$           111,198
Total Cash and cash equivalents	$           111,198	$                —	$                —	$           111,198
Short-term investments
Sovereign Debt Securities	$               2,166	$                —	$                —	$               2,166
Corporate Debt Securities	102,509	26	(168)	102,367
Certificates of deposit	35,336	40	(2)	35,374
Total Short-term investments	$           140,011	$                66	$              (170)	$           139,907
Long-term investments
Sovereign Debt Securities	$             48,943	$                —	$              (406)	$             48,537
Corporate Debt Securities	105,632	90	(456)	105,266
Total Long-term investments	$           154,575	$                90	$              (862)	$           153,803
Total	$           405,784	$              156	$           (1,032)	$           404,908

(1) Unrealized gains (losses) from securities are attributable to market price movements, net foreign exchange losses and foreign currency translation. Management does not believe any remaining significant unrealized losses represent other-than-temporary impairments based on the evaluation of available evidence including the credit rating of the investments, as of September 30, 2017 and December 31, 2016.

The material portion of the Sovereign Debt Securities consists of U.S. Treasury Notes, which carry no significant risk.

As of September 30, 2017, the estimated fair values (in thousands of U.S. dollars) of cash equivalents, short-term and long-term investments classified by their effective maturities are as follows:

One year or less	197,515
One year to two years	20,331
Two years to three years	16,847
Three years to four years	7,135
Total	$             241,828

7. Commitments and Contingencies

Litigation and Other Legal Matters

The Company is subject to certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings. The Company accrues liabilities when it considers probable that future costs will be incurred and such costs can be reasonably estimated. The proceeding-related reserve is based on developments to date and historical information related to actions filed against the Company. As of September 30, 2017, the Company had established reserves for proceeding-related contingencies and other estimated contingencies of $6,208 thousand to cover legal actions against the Company in which its management has assessed the likelihood of a final adverse outcome as probable. Expected legal costs related to litigations are accrued when the legal service is actually provided. In addition, as of September 30, 2017 the Company and its subsidiaries are subject to certain legal actions considered by the Company’s management and its legal counsels to be reasonably possible for an aggregate amount up to $6,506thousand.

19

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

No loss amount has been accrued for such reasonably possible legal actions of which most significant (individually or in the aggregate) are described below and in note 15 is to the financial statements in the Form 10-K for the year ended December 31, 2016.

As of September 30, 2017, there were 56 lawsuits pending against our Argentine subsidiary in the Argentine ordinary courts and 1,856 pending claims in the Argentine Consumer Protection Agencies, where a lawyer is not required to file or pursue a claim.

As of September 30, 2017, there were 10 claims pending against our Mexican subsidiaries in the Mexican ordinary courts and 248 claims pending against our Mexican subsidiaries in the Mexican Consumer Protection Agencies, where a lawyer is not required to file or pursue a claim.

As of September 30, 2017, 700 legal actions were pending in the Brazilian ordinary courts. In addition, as of September 30, 2017, there were 4,016 cases still pending in Brazilian consumer courts. Filing and pursuing of an action before Brazilian consumer courts do not require the assistance of a lawyer.

On July 12, 2017, São Paulo tax authorities assessed taxes and fines against one of our Brazilian subsidiaries (iBazar) relating to “ICMS Publicidade” for the period from July 2012 to December 2013 in an amount of R$ 12.2 million or $ 3.7 million according to the exchange rate in effect at that time. The Company will present administrative defense against the authorities’ claim. The opinion of the Company´s management, based on the opinion of external legal counsel, is that the risk of losing the case is reasonably possible, but not probable.

In most of the cases filed against the Company, the plaintiffs asserted that the Company was responsible for fraud committed    against them, or responsible for damages suffered when purchasing an item on the Company’s website, when using MercadoPago or MercadoEnvios, or when the Company invoiced them.

Other third parties have from time to time claimed, and others may claim in the future, that the Company was responsible for fraud committed against them, or that the Company has infringed their intellectual property rights. The underlying laws with respect to the potential liability of online intermediaries like the Company are unclear in the jurisdictions where the Company operates. Management believes that additional lawsuits alleging that the Company has violated copyright or trademark laws will be filed against the Company in the future.

Intellectual property and regulatory claims, whether meritorious or not, are time consuming and costly to resolve, require significant amounts of management time, could require expensive changes in the Company’s methods of doing business, or could require the Company to enter into costly royalty or licensing agreements. The Company may be subject to patent disputes, and be subject to patent infringement claims as the Company’s services expand in scope and complexity. In particular, the Company may face additional patent infringement claims involving various aspects of the payments businesses.

From time to time, the Company is involved in other disputes or regulatory inquiries that arise in the ordinary course of business. The number and significance of these disputes and inquiries are increasing as the Company’s business expands and the Company grows larger.

Buyer protection program

The Company provides consumers with a buyer protection program (“BPP”) for all transactions completed through the Company’s online payment solution (“MercadoPago”). This program is designed to protect buyers in the Marketplace from losses due primarily to fraud or counterparty non-performance. The Company’s BPP provides protection to consumers by reimbursing them for the total value of the unfulfilled transaction, if a purchased item does not arrive or does not match the seller’s description. The Company is entitled to recover from the third-party carrier companies performing the shipping service certain amounts paid under the BPP. Furthermore, in some specific circumstances (i.e. Black Friday, Hot Sale), the Company enters into insurance contracts with third party insurance companies in order to cover contingencies that may arise from the BPP.

The maximum potential exposure under this program is estimated to be the volume of payments on the Marketplace, for which claims may be made under the Company’s existing user agreements. 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 September 30, 2017, management's estimate of the maximum potential exposure related to the Company’s buyer protection program is $663,139 thousands, for which the Company recorded an allowance of $1,212 thousands as of that date.

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MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

8. Long term retention plan (“LTRP”)

On April 3, 2017, the Board of Directors, upon the recommendation of the Compensation Committee, adopted the 2017 Long-Term Retention Plan (“2017 LTRP”). In addition to the annual salary and bonus of each employee, certain employees (“Eligible Employees”) are eligible to participate in the 2017 LTRP, which provides for the grant to an Eligible Employee of a cash-settled fixed (a “2017 LTRP Fixed Award”) and a cash-settled variable award, (a “2017 LTRP Variable Award”, and together with any 2017 LTRP Fixed Award, the “2017 LTRP Awards”). In order to receive payment in respect of the 2017 LTRP Awards, each Eligible Employee must satisfy the performance conditions established by the Board of Directors for such employee. If these conditions are satisfied, the Eligible Employee will, subject to his or her continued employment as of each applicable payment date, receive the full amount of his or her 2017 LTRP Awards, payable as follows:

· 2017 LTRP Fixed Award: The eligible employee will receive a fixed payment equal to 16.66% of his or her 2017 LTRP Fixed Award once a year for a period of six years starting in March 2018 (the “Annual Fixed Payment”); and

· 2017 LTRP Variable Award: On each date the Company pays the Annual Fixed Payment to the eligible employee, he or she will also receive a 2017 LTRP Variable Award payment equal to the product of (i) 16.66% of the applicable 2017 LTRP Variable Award and (ii) the quotient of (a) divided by (b), where (a), the numerator, equals the Applicable Year Stock Price (as defined below) and (b), the denominator, equals the 2016 Stock Price (as defined below). For purposes of the 2017 LTRP, the “2016 Stock Price” shall equal $164.17 (the average closing price of the Company´s common stock on the NASDAQ Global Market during the final 60-trading days of 2016) and the “Applicable Year Stock Price” shall equal the average closing price of the Company´s common stock on the NASDAQ Global Market during the final 60-trading days of the year preceding the applicable payment date for so long as the Company´s common stock is listed on the NASDAQ.

The following table summarizes the 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016 and 2017 long term retention plan accrued compensation expense for the nine and three-month periods ended September 30, 2017 and 2016, which are payable in cash according to the decisions made by the Board of Directors:

		Nine Months Ended September 30,				Three Months Ended September 30,
		2017		2016	2017		2016
		(In thousands)			(In thousands)
LTRP 2009	$	29	$	648	$	-	$	352
LTRP 2010		891		1,017		147		543
LTRP 2011		1,422		1,275		229		672
LTRP 2012		1,945		1,555		315		813
LTRP 2013		3,809		3,380		711		1,689
LTRP 2014		3,782		3,089		772		1,448
LTRP 2015		4,680		3,846		1,063		1,663
LTRP 2016		6,717		4,441		1,606		1,944
LTRP 2017		5,459		-		1,823		-
Total LTRP	$	28,734	$	19,251	$	6,666	$	9,124

9. 2.25% Convertible Senior Notes Due 2019

On June 30, 2014, the Company issued $330 million of 2.25% convertible senior notes due 2019 (the “Notes”). The Notes are unsecured, unsubordinated obligations of the Company, which pay interest in cash semi-annually, on January 1 and July 1, at a rate of 2.25% per annum. The Notes will mature on July 1, 2019 unless earlier repurchased or converted in accordance with their terms prior to such date. The Notes may be converted, under specific conditions, based on an initial conversion rate of 7.9353 shares of common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of $126.02 per share of common stock), subject to adjustment as described in the indenture governing the Notes. 

21

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

Holders may convert their notes at their option at any time prior to January 1, 2019 only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2014 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. On or after January 1, 2019 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their notes at any time, regardless of the foregoing circumstances. 

During the period from October 1, 2016 through December 31, 2016, 12 Notes were converted for a total amount of $12 thousands. During the period from April 1, 2017 through September 30, 2017, 16 Notes were converted for a total amount of $16 thousands. Additionally, during the third quarter of 2017, the conversion threshold was met again and the Notes became convertible at the holders’ option beginning on October 1, 2017 and ending on December 31, 2017. The determination of whether or not the Notes are convertible must continue to be performed on a quarterly basis. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. The intention of the Company is to share-settle the total amount due upon conversion of the Notes.

From October  1, 2017 to the date of issuance of these interim condensed consolidated financial statements, no additional conversion requests were made.

In connection with the issuance of the Notes, the Company paid $19.7 million and $67.3 million (including transaction expenses) in June 2014 and September 2017, respectively, to enter into capped call transactions with respect to shares of the common stock (the “Capped Call Transactions”), with certain financial institutions. The Capped Call Transactions are expected generally to reduce the potential dilution upon conversion of the Convertible Notes in the event that the market price of the common stock is greater than the strike price of the Capped Call Transactions. The cost of the Capped Call Transactions is included as a net reduction to additional paid-in capital in the stockholders’ equity section of the consolidated balance sheets.

The total estimated fair value of the Notes was$687.9 millionand$458.8 millionas of September 30, 2017 and December 31, 2016, respectively. The fair value was determined based on the closing trading price per $100 of the Notes as of the last day of trading for the period. The Company considered the fair value of the Notes as of September 30, 2017 and December 31, 2016to be a Level 2 measurement. The fair value of the Notes is primarily affected by the trading price of our common stock and market interest rates.Based on the $258.9 closing price of the Company’s common stock on September 30, 2017, the if-converted value of the Notes exceeded their principal amount by $348.0 million.

The following table presents the carrying amounts of the liability and equity components related to the 2.25% Convertible Senior Notes Due 2019 as of September 30, 2017 and December 31, 2016:

	September 30, 2017		December 31, 2016
	(In thousands)
Amount of the equity component (1)	$	45,808	$	45,808
2.25% convertible senior notes due 2019	$	330,000	$	330,000
Unamortized debt discount (2)		(17,909)		(25,097)
Unamortized transaction costs related to the debt component		(2,862)		(3,968)
Contractual coupon interest accrual		5,569		7,425
Contractual coupon interest payment		(3,713)		(7,425)
Net carrying amount	$	311,085	$	300,935

(1) Net of $1,177 thousands of transaction costs related to the equity component of the Notes.

(2) As of September 30, 2017, the remaining period over which the unamortized debt discount will be amortized is 1.75 years.

22

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

The following table presents the interest expense for the contractual interest, the accretion of debt discount and the amortization of debt issuance costs:

	Nine-months period ended September 30,				Three-months period ended September 30,
	2017		2016		2017		2016
	(In thousands)		(In thousands)		(In thousands)		(In thousands)
Contractual coupon interest expense	$	5,569	$	5,569	$	1,856	$	1,856
Amortization of debt discount		7,188		6,806		2,440		2,310
Amortization of debt issuance costs		1,106		998		381		344
Total interest expense related to the Notes	$	13,863	$	13,373	$	4,677	$	4,510

10. Cash Dividend Distribution

In each of February, May, August and November of 2016, the Board of Directors approved a quarterly cash dividend of$6,624thousands (or$0.150per share) on the Company’soutstandingshares of common stock. The dividends were paid onApril 15, July 15,October 14, 2016andJanuary 16, 2017 to stockholders of record as of the close of business onMarch 31,  June 30, September 30, andDecember 31, 2016.

On March 2, 2017, the Board of Directors approved a change to the Company’s dividend policy for providing for a fixed quarterly dividend payment in 2017 of $0.150 per share ($0.600 per share annually). The new dividend policy took effect following the payment of the $0.150 per share dividend declared by the Board of Directors of the Company, which was paid on April 17, 2017 to shareholders of record as of the close of business on March 31, 2017.  

On May 2, 2017, the Board of Directors approved a quarterly cash dividend of $6,624 thousands (or $0.150 per share) on the Company´s outstanding shares of common stock. The second quarterly dividend was paid on July 14, 2017 to stockholdersof record as of the close of business on June 30, 2017.

On July 31, 2017, the Board of Directors approved a quarterly cash dividend of$6,624thousands (or$0.150per share) on ouroutstandingshares of common stock. The third quarterly dividend was paid onOctober 16, 2017to stockholders of record as of the close of business onSeptember 30, 2017.

On October 31, 2017, the Board of Directors approved a quarterly cash dividend of$6,624thousands (or$0.150per share) on ouroutstandingshares of common stock. This quarterly dividend is payable on January 16, 2018to stockholders of record as of the close of business onDecember 31, 2017.

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Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward-Looking Statements

Any statementsmade or impliedin this report that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended,and Section 21E of the Securities Exchange Act of 1934, as amended, and should be evaluated as such. The words “anticipate,” “believe,” “expect,” “intend,” “plan,” “estimate,” “target,” “project,” “should,” “may,” “could,” “will” and similar words and expressions are intended to identify forward-looking statements. Forward-looking statements generally relate to information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, future economic, political and social conditions in the countries in which we operate the effects of future regulation and the effects of competition. Such forward-looking statements reflect, among other things, our current expectations, plans, projections and strategies, anticipated financial results, future events and financial trends affecting our business, all of which are subject to known and unknown risks, uncertainties and other important factors (in addition to those discussed elsewhere in this report) that may cause our actual results to differ materially from those expressed or implied by these forward-looking statements. These risks and uncertainties include, among other things:

· our expectations regarding the continued growth of online commerce and Internet usage in Latin America;

· our ability to expand our operations and adapt to rapidly changing technologies;

· government and central bank regulations;

· litigation and legal liability;

· systems interruptions or failures;

· our ability to attract and retain qualified personnel;

· consumer trends;

· security breaches and illegal uses of our services;

· competition;

· reliance on third-party service providers;

· enforcement of intellectual property rights;

· our ability to attract new customers, retain existing customers and increase revenues;

· seasonal fluctuations; and

· political, social and economic conditions in Latin America in general, and Venezuela in particular, and possible future currency devaluation and other changes to its exchange rate systems.

Many of these risks are beyond our ability to control or predict. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on our company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

These statements are based on currently available information and our current assumptions, expectations and projections about future events. While we believe that our assumptions, expectations and projections are reasonable in view of the currently available information, you are cautioned not to place undue reliance on our forward-looking statements. These statements are not guarantees of future performance. They are subject to future events, risks and uncertainties–many of which are beyond our control-as well as potentially inaccurate assumptions that could cause actual results to differ materially from our expectations and projections.Some of the material risks and uncertainties that could cause actual results to differ materially from our expectations and projections are described in “Item 1A — Risk Factors” in Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016filed with the Securities and Exchange Commission(“SEC”)onFebruary 24, 2017, as updated by those described in “Item 1A — Risk Factors” in Part II of this report and in other reports we file from time to time with the SEC.

You should read that information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report, our unaudited interim condensed consolidated financial statements and related notes in Item 1 of Part I of this report and our audited consolidated financial statements and related notes in Item 8 of Part II of our Annual Report on Form 10-Kfor the year ended December 31, 2016. We note such information for investors as permitted by the Private Securities Litigation Reform Act of 1995. There also may be other factors that we cannot anticipate or that are not described in this report, generally because they are unknown to us or we do not perceive them to be a material risk that could cause results to differ materially from our expectations.

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Forward-looking statements speak only as of the date they are made, and we do not undertake to update these forward-looking statements except as may be required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the SEC.

The discussion and analysis of our financial condition and results of operations presents the following:

· a brief overview of our company;

· a discussion of our principal trends and results of operations for the nine and the three-month periods ended September 30, 2017 and 2016;

· a  review of our financial presentation and accounting policies, including our critical accounting policies;

· a  discussion of the principal factors that influence our results of operations, financial condition and liquidity;

· a  discussion of our liquidity and capital resources and a discussion of our capital expenditures;

· a description of our non-GAAP financial measures; and

· a  discussion of the market risks that we face.

Business Overview

MercadoLibre, Inc. (together with its subsidiaries “us”, “we”, “our” or the “Company”) is one of the largest online commerce ecosystems in Latin America. Our platform is designed to provide users with a complete portfolio of services to facilitate commercial transactions. We are a market leader in e-commerce in each of Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, Mexico, Peru, Uruguay and Venezuela, based on number of unique visitors and page views. We also operate online commerce platforms in the Dominican Republic, Honduras, Nicaragua, Salvador, Panama, Bolivia, Guatemala, Paraguay and Portugal.

Through our platform, we provide buyers and sellers with a robust environment that fosters the development of a large e-commerce community in Latin America, a region with a population of over 610 million people and one of the fastest-growing Internet penetration rates in the world. We believe that we offer technological and commercial solutions that address the distinctive cultural and geographic challenges of operating an online commerce platform in Latin America.

We offer our users an ecosystem of six integrated e-commerce services: the MercadoLibre Marketplace, the MercadoLibre Classifieds Service, the MercadoPago payments solution, the MercadoEnvios shipping service, the MercadoLibre advertising program and the MercadoShops online webstores solution.

The MercadoLibre Marketplace, which we sometimes refer to as our marketplace, is a fully-automated, topically-arranged and user-friendly online commerce service. This service permits both businesses and individuals to list merchandise and conduct sales and purchases online in either a fixed-price or auction-based format.

To complement the MercadoLibre Marketplace, we developed MercadoPago, an integrated online payments solution. MercadoPago is designed to facilitate transactions both on and off our marketplace by providing a mechanism that allows our users to securely, easily and promptly send and receive payments online. Mercado Pago is currently available in: Argentina, Brazil, Mexico, Colombia, Venezuela, Uruguay, Perú and Chile. MercadoPago allows merchants to facilitate checkout and payment processes on their websites and also enables users to simply transfer money to each other either through the website or using the MercadoPago App, available on iOS and Android. Additionally, during 2016, we launched MercadoCredito, which is designed to extend loans to specific merchants and consumers. Our MercadoCredito solution allows us to deepen our engagement with our merchants, in Argentina, Brazil and Mexico, and consumers, in Argentina, by offering them additional services and is currently available.  

To further enhance our suite of e-commerce services we launched the MercadoEnvios shipping program in Brazil, Argentina, Mexico, Colombia and Chile. Through MercadoEnvios, we offer our sellers a cost-efficient way to utilize our existing distribution chain to fulfill their sales. Sellers opting into the program are able to offer a uniform and seamlessly integrated shipping experience to their buyers at competitive prices.

Through MercadoLibre Classifieds Service, our online classified listing service, our users can also list and purchase motor vehicles, vessels, aircraft, real estate and services in all countries where we operate. Classifieds listings differ from Marketplace listings as they only charge optional placement fees and never final value fees. Our classifieds pages are also a major source of traffic to our website, benefitting both the Marketplace and non-marketplace businesses.

To enhance the MercadoLibre Marketplace, we developed our MercadoLibre advertising program, to enable businesses to promote their products and services on the Internet. Through our advertising program, MercadoLibre’s sellers and large advertisers are able to display product ads on our webpages and our associated vertical sites in the region.

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Additionally, through MercadoShops, our online store solution, users can set-up, manage and promote their own online store. These stores are hosted by MercadoLibre and offer integration with the other marketplace, payment and advertising services we offer. Users can choose from a basic, free store or pay monthly subscriptions for enhanced functionality and value added services on their store.

MercadoLibre also began developing and selling enterprise software solutions to e-commerce business clients in Brazil during the second quarter of 2015.

Reporting Segments and Geographic Information

Our segment reporting is based on geography, which is the current criterion we are using to evaluate our segment performance. Our geographic segments include Brazil, Argentina, Mexico, Venezuela and other countries (including Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Panama, Peru, Portugal, Bolivia, Honduras, Nicaragua, Salvador, Guatemala, Paraguay, Uruguay and the United States of America (real estate classifieds in the State of Florida only)).Although we discuss long-term trends in our business, it is our policy to not provide earnings guidance in the traditional sense. We believe that uncertain conditions make the forecasting of near-term results difficult. Further, we seek to make decisions focused primarily on the long-term welfare of our company and believe focusing on short term earnings does not best serve the interests of our stockholders. We believe that execution of key strategic initiatives as well as our expectations for long-term growth in our markets will best create stockholder value. We, therefore, encourage potential investors to consider this strategy before making an investment in our common stock. A long-term focus may make it more difficult for industry analysts and the market to evaluate the value of our company, which could reduce the value of our common stock or permit competitors with short term tactics to grow stronger than us.

The following table sets forth the percentage of our consolidated net revenues by segment for the nine and the three-month periods ended September 30, 2017 and 2016:

	Nine-months Periods Ended				Three-month Periods Ended
	September 30,				September 30,
(% of total consolidated net revenues) (*)	2017		2016		2017		2016
Brazil	59.2	%	53.0	%	61.9	%	56.7	%
Argentina	26.1		31.6		24.6		30.3
Mexico	6.1		5.8		6.1		5.1
Venezuela	4.0		4.5		2.6		3.0
Other Countries	4.6		5.1		4.7		4.8

(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.

The following table summarizes the changes in our net revenues by segment for the nine and three-month periods ended September 30, 2017 and 2016:

	Nine-months Periods Ended		Change from 2016			Three-month Periods Ended		Change from 2016
	September 30,		to 2017 (*)			September 30,		to 2017 (*)
	2017	2016	in Dollars	in %		2017	2016	in Dollars	in %
	(in millions, except percentages)					(in millions, except percentages)
Net Revenues:
Brazil	$        569.3	$        311.4	$      257.9	82.8	%	$        229.5	$           131.0	$        98.5	75.2	%
Argentina	250.7	185.9	64.8	34.9		91.3	70.0	21.3	30.5
Mexico	58.3	34.4	23.9	69.7		22.6	11.8	10.8	91.4
Venezuela	38.3	26.5	11.9	44.9		9.8	6.9	2.9	41.6
Other Countries	44.5	30.0	14.5	48.3		17.5	11.2	6.4	56.9
Total Net Revenues	$        961.1	$        588.1	$      373.0	63.4	%	$        370.7	$           230.8	$      139.8	60.6	%

(*)  Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.

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Recent Developments

2017 Capped Call Transactions

In September 2017, we paid $67.3 million (including transaction expenses) to enter into privately negotiated capped call transactionswith respect to shares of our common stock with several financial institutions. The 2017 Capped Call Transactions are in addition to the 2014 Capped Call Transactions and are expected generally to reduce the potential dilution upon conversion of the Convertible Notes in the event that the market price of our common stock is greater than the strike price of the Capped Call Transactions, initially set at $295.67 per common share. The 2017 Capped Call Transactions are subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Notes, and have a cap price of approximately $366.06 per common share. If any portion of the Notes are converted prior to maturity or we repurchase any portion of the Notes prior to maturity, a corresponding portion of the Capped Call Transactions may be terminated for value at our election.

Description of Line Items

Net revenues

We recognize revenues in each of our five geographical reporting segments. Within each of our segments, the services we provide generally fall into two distinct revenue streams, “Marketplace” which includes our core business and “Non-Marketplace” which includes ad sales, classifiedfees, payment fees, shipping fees and other ancillary businesses.

The following table summarizes our consolidated net revenues by revenue stream for the nine and the three-month periods ended September 30, 2017 and 2016:

	Nine-month Periods Ended					Three-month Periods Ended
	September 30, (*)					September 30, (*)
Consolidated net revenues by revenue stream	2017		2016			2017		2016
	(in millions)					(in millions)
Marketplace	$	582.5	$	341.7	$	227.3	$	134.4
Non-Marketplace (**) (***)		378.6		246.4		143.4		96.5
Total	$	961.1	$	588.1	$	370.7	$	230.8

(*)   The table above may not total due to rounding.

(**)  Includes, among other things, Ad Sales, Classified Fees, Payment Fees, Shipping Fees and other ancillary services.

(***)Includes an amount of $232.4 million and $139.6 million of Payment Fees for the nine-month periods ended September 30, 2017 and 2016, respectively. Includes an amount of $92.3million and $52.4million of Payment Fees for the three-month periods ended September 30, 2017 and 2016, respectively.

Revenues from Marketplace transactions are generated from:

· final value fees; and

· up-front fees.

For Marketplace services, final value fees representing a percentage of the sale value that are charged to the seller once the item is successfully sold. Up-front fees are charged to the seller in exchange for improved exposure of the listings throughout our platform and are not subject to the successful sale of the items listed.

Revenues for Non-Marketplace services are generated from:

· payments fees;

· classifieds fees;

· ad sales up-front fees;

· shipping fees; and

· fees from other ancillary businesses.

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With respect to our MercadoPago service, we generate payment fees attributable to:

· commissions representing a percentage of the payment volume processed that are charged to sellers in connection with off Marketplace-platform transactions;

· commissions from additional fees we charge when a buyer elects to pay in installments through our MercadoPago platform, for transactions that occur either on or off our Marketplace platform;

· commissions from additional fees we charge when our sellers elect to withdraw cash;

· interest, cash advances and fees from customers and merchant and consumer credits granted under our MercadoCredito solution; and

· revenues from the sale of mobile points of sale products.

Although we also process payments on the Marketplace, we do not charge sellers an added commission for this service, as it is already included in the Marketplace final value fee we charge.

Through our classifieds offerings in motor vehicles, real estate and services, we generate revenues from up-front fees. These fees are charged to sellers who opt to give their listings greater exposure throughout our websites.

Our Advertising revenues are generated by selling either display product and/or text link ads throughout our websites to interested advertisers.

Finally, our shipping revenues are generated when a buyer elects to receive the item through our shipping service.

When more than one service is included in one single arrangement with the customer, we recognize revenue according to multiple element arrangements accounting, distinguishing between each of the services provided and allocating revenues based on their respective estimated selling prices.

We have a highly fragmented customer revenue base given the large numbers of sellers and buyers who use our platforms. For the nine month period ended September 30, 2017 and 2016, no single customer accounted for more than 5.0% of our net revenues.

Our MercadoLibre Marketplace is available in 19 countries (Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Mexico, Panama, Peru, Portugal, Uruguay, Venezuela, Bolivia, Honduras, Nicaragua, Salvador, Guatemala and Paraguay), and MercadoPago is available in 8 countries (Argentina, Brazil, Chile, Peru, Colombia, Mexico, Uruguay and Venezuela). Additionally, MercadoEnvios is available in 5 countries: Argentina, Brazil, Mexico, Colombia and Chile. The functional currency for each country’s operations is the country’s local currency, except for Venezuela where the functional currency is the U.S. dollar due to Venezuela’s status as a highly inflationary economy. See—“Critical accounting policies and estimates—Foreign Currency Translation” included below. Therefore, our net revenues are generated in multiple foreign currencies and then translated into U.S. dollars at the average monthly exchange rate.

Our subsidiaries in Brazil, Argentina, Venezuela and Colombia are subject to certain taxes on revenues which are classified as a cost of net revenues. These taxes represented 7.0% of net revenues for the three-month period endedSeptember 30, 2017, as compared to 9.5%for the same period in 2016.

Cost of net revenues

Cost of net revenues primarily represents bank and credit card processing charges for transactions and fees paid with credit cards and other payment methods, fraud prevention fees, certain taxes on revenues, free shipping costs, certain taxes on bank transactions, compensation for customer support personnel, ISP connectivity charges, depreciation and amortization, hosting and site operation fees, cost of mobile point of sale products sold and other operation costs.

Product and technology development expenses

Our product and technology development related expenses consist primarily of compensation for our engineering and web-development staff, depreciation and amortization costs related to product and technology development, telecommunications costs and payments to third-party suppliers who provide technology maintenance services to us.

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Sales and marketing expenses

Our sales and marketing expenses consist primarily of costs of marketing our platforms through online and offline advertising and agreements with portals and search engines, charges related to our buyer protection programs, the salaries of employees involved in these activities, chargebacks related to our MercadoPago operations, bad debt charges, public relations costs, marketing activities for our users and depreciation and amortization costs.

We carry out the majority of our marketing efforts on the Internet. We enter into agreements with portals, search engines, social networks, ad networks and other sites in order to attract Internet users to the MercadoLibre Marketplace and convert them into registered users and active traders on our platform.

We also work intensively on attracting, developing and growing our seller community through our customer support efforts. We have dedicated professionals in most of our operations that work with sellers through trade show participation, seminars and meetings to provide them with important tools and skills to become effective sellers on our platform.

General and administrative expenses

Our general and administrative expenses consist primarily of salaries for management and administrative staff, compensation for outside directors, long term retention plan compensation, impairment of Long-Lived assets, expenses for legal, audit and other professional services, insurance expenses, office space rental expenses, travel and business expenses, as well as depreciation and amortization costs. Our general and administrative expenses include the costs of the following areas: general management, finance, administration, accounting, legal and human resources.

Other income (expenses), net

Other income (expenses) consists primarily of interest income derived from our investments and cash equivalents, interest expense related to financial liabilities and foreign currency gains or losses.

Income tax

We are subject to federal and state taxes in the United States, as well as foreign taxes in the multiple jurisdictions where we operate. Our tax obligations consist of current and deferred income taxes and asset taxes incurred in these jurisdictions. We account for income taxes following the liability method of accounting. A valuation allowance is recorded when, based on the available evidence, it is more likely than not that all or a portion of our deferred tax assets will not be realized.Therefore, our income tax expense consists of taxes currently payable, if any (given that in certain jurisdictions we still have net operating loss carry-forwards), plus the change in our deferred tax assets and liabilities during each period.

Critical Accounting Policies and Estimates

The preparation of our unaudited interim condensed consolidated financial statements and related notes requires us to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We have based our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our management has discussed the development, selection and disclosure of these estimates with our audit committee and our board of directors. Actual results may differ from these estimates under different assumptions or conditions.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our interim condensed consolidated financial statements. We believe that the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of our interim condensed consolidated financial statements.

There have been no significant changes in our critical accounting policies, management estimates or accounting policies since the year ended December 31, 2016 and disclosed in the Form 10-K. See Item – “Critical Accounting Policies”.

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Foreign Currency Translation

All of our foreign operations (other than Venezuela since January 1, 2010, as described below) use the local currency as their functional currency. Accordingly, these operating foreign subsidiaries translate assets and liabilities from their local currencies to U.S. dollars using period-end exchange rates while income and expense accounts are translated at the average exchange 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 part of other comprehensive (loss)income, a component of equity. Gains and losses resulting from transactions denominated in non-functional currencies are recognized in earnings. Net foreign currency exchange losses or gains are included in the consolidated statements of income under the caption “Foreign currency (losses) gains”.

Venezuelan Currency Status

Pursuant to U.S. GAAP, we have classified our Venezuelan operations as highly inflationary since January 1, 2010, using the U.S. dollar as the functional currency for purposes of reporting our financial statements. Therefore, no translation effect has been accounted for in other comprehensive income related to our Venezuelan operations.

On March 9, 2016 the Central Bank of Venezuela (“BCV”) issued the Exchange Agreement No.35, which is effective since March 10, 2016. The agreement established a “protected” exchange rate (“DIPRO”) for certain transactions, such as but not limited to: imports of goods of the food and health sectors, as well as supplies associated with the production of said sectors; expenses relating to health treatments, sports, culture, scientific research, and other urgent matters defined by the exchange regulations. All foreign currency transactions not expressly provided in Exchange Agreement No.35 will be processed on the alternate foreign currency markets governed by the exchange regulations, at the floating supplementary market exchange rate (“DICOM”).

Considering the significant devaluation and the lower U.S. dollar-equivalent cash flows then expected from the Venezuelan business, the Company reviewed its long-lived assets (including non-current other assets), goodwill and intangible assets with indefinite useful life for impairment and concluded that the carrying value of certain real estate investments in Venezuela as of June 30, 2016 would not be fully recoverable. As a result, on June 30, 2016, the Company recorded an impairment of offices and commercial property under construction included within non-current other assets of $13.7 million. The carrying amount of offices and commercial property under construction was adjusted to its estimated fair value of approximately $12.5 million as of June 30, 2016, by using the market approach, and considering prices for similar assets.

On May 19, 2017, the BCV issued the Exchange Agreement No.38, which established a new foreign exchange mechanism under DICOM, replacing previous SIMADI. The new mechanism consists of auctions, administered by an auction committee, where sellers and buyers from the private sector may offer foreign currency under certain limits determined by the BCV.

In light of the disappearance of SIMADI (which closed at 728.0 per U.S. dollar), and the Company’s inability to gain access to U.S. dollars under SIMADI, it started requesting U.S. dollars through DICOM. As a result, the Company expects to settle its transactions through DICOM going forward and concluded that the DICOM exchange rate should be used as from June 1, 2017 to measure its bolivar-denominated monetary assets and liabilities and to measure the revenues and expenses of the Venezuelan subsidiaries. Therefore, as of June 30, 2017, monetary assets and liabilities in Bolivares Fuertes (“BsF”) were re-measured to the U.S. dollar using the DICOM closing exchange rate of 2640.0 BsF per U.S. dollar.  As a consequence of the local currency devaluation, the Company recorded a foreign exchange loss of $22.0 million during the second quarter of 2017.

Considering the significant devaluation and the lower U.S. dollar-equivalent cash flows then expected from the Venezuelan business, the Company reviewed its long-lived assets (including non-current other assets), goodwill and intangible assets with indefinite useful life for impairment and concluded that the carrying value of certain real estate investments in Venezuela as of June 30, 2017 would not be fully recoverable. As a result, on June 30, 2017, the Company recorded an impairment of offices and commercial property under construction included within non-current other assets of $2.8 million. The carrying amount of offices and commercial property under construction was adjusted to its estimated fair value of approximately $9.7 million as of June 30, 2017, by using the market approach, and considering prices for similar assets.As of September 30, 2017, the DICOM exchange rate was 3,345.0 BsF per U.S. dollar

Until 2010 we were able to obtain U.S. dollars for any purpose, including dividend distributions, using alternative mechanisms other than through the Commission for the Administration of Foreign Exchange Control (CADIVI). Those U.S. dollars, obtained at a higher exchange rate than the one offered by CADIVI and held in balance at U.S. bank accounts of our Venezuelan subsidiaries, were used for dividend distributions from our Venezuelan subsidiaries. We have not distributed dividends from our Venezuelan subsidiaries since 2011.

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The following table sets forth the assets, liabilities and net assets of our Venezuelan subsidiaries, before intercompany eliminations of a net liability of $29.6 million and $15.8 million, as of September 30, 2017 and December 31, 2016 and net revenues for the nine-month periods ended September 30, 2017 and 2016:

	Nine-month Periods Ended September 30,
	2017	2016
Venezuelan operations	(In millions)
Net Revenues	$               38.3	$               26.5

	September 30,	September 30,
	2017	2016
	(In millions)
Assets	62.6	66.2
Liabilities	(37.3)	(23.0)
Net Assets	$               25.4	$               43.2

As of September 30, 2017, the net assets (before intercompany eliminations) of our Venezuelan subsidiaries amounted to approximately 6.2% of our consolidated net assets, and cash and investments of our Venezuelan subsidiaries held in local currency in Venezuela amounted to approximately 2.2% of our consolidated cash and investments.

Our ability to obtain U.S. dollars in Venezuela is negatively affected by the exchange restrictions in Venezuela that are described above. If our access to U.S. dollars becomes widely available at a more unfavorable rate than the current DICOM exchange rate (or if DICOM exchange rate experiences significant devaluation in the future), and we decided to use that alternative mechanism considering that exchange rate as the one applicable for re-measurement, our results of operations, earnings and value of our net assets in Venezuela would be negatively impacted, and we cannot assure that the impact would not be material. In addition, our business and ability to obtain U.S. dollars in Venezuela would be negatively affected by any additional material devaluations or the imposition of significant additional and more stringent controls on foreign currency exchange by the Venezuelan government in the future.

Despite the current difficult macroeconomic environment in Venezuela, we continue managing, through our Venezuelan subsidiaries, our investment in Venezuela. Despite the current operating, political and economic conditions and certain other factors in Venezuela, we currently plan to continue supporting our business in Venezuela in the long run.

In November 2013 the Venezuelan Congress approved an “enabling law” granting the president of Venezuela the authority to enact laws and regulations in certain policy areas by decree. This authority includes the ability to restrict profit margins and impose greater controls on foreign exchange and the production, import, and distribution of certain goods. Among other actions, the president has used this decree power to pass the Law of Costs, Earnings, and Fair Profits, which became effective in January 2014 and, among other provisions, authorizes the Venezuelan government to set “fair prices” and maximum profit margins in the private sector. On October 26, 2015, the decree number 2,074 was published in the Official Gazette of Venezuela, establishing certain definitions related to the determination of prices in that country.

Despite we do not expect that this law together with the decree issued by the Venezuelan Government will have a material adverse impact on our financial condition or results of operations, considering the current difficult macroeconomic environment in Venezuela, the final potential effects remains uncertain. The effects of such potential effects, if any, would be recognized in our financial statements once the mentioned uncertainty is resolved.

Allowances for doubtful accounts and for chargebacks

We are exposed to losses due to uncollectible accounts and credits to sellers. Allowances for these items represent our estimate of future losses based on our historical experience. The allowances for doubtful accounts and for chargebacks are recorded as charges to sales and marketing expenses. Historically, our actual losses have been consistent with our charges. However, future adverse changes to our historical experience for doubtful accounts and chargebacks could have a material impact on our future consolidated statements of income and cash flows.

We believe that the accounting estimate related to allowances for doubtful accounts and for chargebacks is a critical accounting estimate because it requires management to make assumptions about future collections and credit analysis. Our management’s assumptions about future collections require significant judgment.  

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Legal contingencies

In connection with certain pending litigation and other claims, we have estimated the range of probable loss and provided for such losses through charges to our interim condensed consolidated statement of income. These estimates are based on our assessment of the facts and circumstances and historical information related to actions filed against us at each balance sheet date and are subject to change based upon new information and future events.

Convertible Senior Notes

On June 30, 2014, we issued $330 million of 2.25% convertible senior notes due 2019 (the “Notes”). The Notes may be converted, under specific conditions, based on an initial conversion rate of 7.9353 shares of common stock per $1,000 principal amount of Notes, subject to adjustment as described in the indenture governing the Notes. The convertible debt instrument,  within the scope of the cash conversion subsection, was separated into debt and equity components at issuance and a fair value was assigned. The value assigned to the debt component was the estimated fair value, as of the issuance date, of a similar debt without the conversion feature. As of June 30, 2014, we determined the fair value of the liability component of the Notes by reviewing market data that was available for senior, unsecured nonconvertible corporate bonds issued by comparable companies. The difference between the cash proceeds and this estimated fair value represents the value assigned to the equity component and was recorded as a debt discount. The debt discount is amortized using the effective interest method from the origination date through its stated contractual maturity date.

In connection with the issuance of the Notes, we paid $19.7 million and $67.3 million (including transaction expenses) in June 2014 and September 2017, respectively, to enter into capped call transactions with respect to shares of our common stock (the “Capped Call Transactions”), with certain financial institutions. The Capped Call Transactions are expected generally to reduce the potential dilution upon conversion of the Convertible Notes in the event that the market price of our common stock is greater than the strike price of the Capped Call Transactions. The cost of the Capped Call Transactions is included as a net reduction to additional paid-in capital in the stockholders’ equity section of our consolidated balance sheets.

For more detailed information in relation to the Notes and the Capped Call Transactions, see “—Results of operations for the nine-month period ended September 30, 2017 compared to the nine-month period ended September 30, 2016 and the three-month period ended September 30, 2017 compared to the three-month period ended September 30, 2016—Debt” and Note 9 to our unaudited interim condensed consolidated financial statements.

Impairment of long-lived assets, goodwill and intangible assets with indefinite useful life

We review long-lived assets for impairments whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Furthermore, goodwill and certain indefinite life trademarks are reviewed for impairment at each year-end or more frequently when events or changes in circumstances indicate that their carrying value may not be recoverable.

We believe that the accounting estimate related to impairment of long lived assets and goodwill is critical since it is highly susceptible to change from period to period because: (i) it requires management to make assumptions about gross merchandise volume growth, total payment volume, total payment transactions, future interest rates, sales and costs; and (ii) the impact that recognizing an impairment would have on the assets reported on our balance sheet as well as our net income would be material. Management’s assumptions about future sales and future costs require significant judgment.

For additional information, see “Critical Accounting Policies” section in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

Income taxes

We are required to recognize a provision for income taxes based upon taxable income and temporary differences between the book and tax bases of our assets and liabilities for each of the tax jurisdictions in which we operate. This process requires a calculation of taxes payable under currently enacted tax laws in each jurisdiction and an analysis of temporary differences between the book and tax bases of our assets and liabilities, including various accruals, allowances, depreciation and amortization. The tax effect of these temporary differences and the estimated tax benefit from our tax net operating losses are reported as deferred tax assets and liabilities in our consolidated balance sheet. We also assess the likelihood that our net deferred tax assets will be realized from future taxable income. To the extent we believe that it is more likely than not that some portion or all of our deferred tax assets will not be realized, we establish a valuation allowance. As of September 30, 2017, we had a valuation allowance on certain foreign net operating losses based on our assessment that it is more likely than not that the deferred tax asset will not be realized. To the extent we establish a valuation allowance or change the allowance in a period, we reflect the change with a corresponding increase or decrease in our “Income/asset tax expense” line in our consolidated statement of income.

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Stock-based compensation

Our board of directors adopted long-term retention plans (“LTRPs”), under which certain eligible employees receive awards. See “Item 3. Quantitative and Qualitative Disclosures About Market Risk —Equity Price Risk” for details on the LTRPs. The variable LTRP awards are calculated based on the fair value of our common stock on NASDAQ Global Market.

Results of operations for the nine-month period ended September 30, 2017 compared to the nine-month period ended September 30, 2016 and three-month period ended September 30, 2017 compared to the three-month period ended September 30, 2016

The selected financial data for the nine and three-month periods ended September 30, 2017 and 2016 discussed herein is derived from our unaudited interim condensed consolidated financial statements included in Item 1 of Part I of this report. These statements include all normal recurring adjustments that management believes are necessary to fairly state our financial position, results of operations and cash flows. The results of operations for the nine and three-month period ended September 30, 2017 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2017 or for any other period.

Statement of income data

	Nine-months Periods Ended September 30,		Three-months Periods Ended September 30,
(In millions)	2017 (*)	2016 (*)	2017 (*)	2016 (*)
	(Unaudited)		(Unaudited)
Net revenues	$961.1	$588.1	$370.7	$230.8
Cost of net revenues	(444.9)	(214.0)	(194.8)	(85.2)
Gross profit	516.2	374.1	175.8	145.6
Operating expenses:
Product and technology development	(93.0)	(72.2)	(32.4)	(26.1)
Sales and marketing	(207.9)	(107.7)	(84.1)	(39.7)
General and administrative	(91.6)	(64.1)	(31.8)	(26.2)
Impairment of Long-Lived Assets	(2.8)	(13.7)	-	-
Total operating expenses	(395.4)	(257.7)	(148.3)	(91.9)
Income from operations	120.9	116.4	27.5	53.7
Other income (expenses):
Interest income and other financial gains	37.0	25.2	14.2	9.9
Interest expense and other financial charges	(19.7)	(18.8)	(6.7)	(6.5)
Foreign currency (loss) gain	(19.5)	(5.1)	1.6	(4.8)
Net income before income tax expense	118.7	117.7	36.7	52.3
Income tax expense	(37.2)	(32.7)	(9.0)	(13.4)
Net income	$81.5	$85.0	$27.7	$38.9

(*) The table above may not total due to rounding.

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Principal trends in results of operations

Growth in net revenues

Since our inception, we have consistently generated revenue growth from our Marketplace and Non-Marketplace revenue streams, driven by the strong growth of our key operational metrics. Our net revenues grew 63.4% in the nine-month period ended September 30, 2017 as compared to the same period in 2016. Our successful items sold and total payment volume increased 45.8% and 76.9%, respectively, in the nine-month period ended September 30, 2017 as compared to the same period in 2016. Additionally, our number of confirmed registered users was 21.0% higher as of September30, 2017 as compared to the number of confirmed registered users as of September 30, 2016. Furthermore, our gross merchandise volume (“GMV”) increased 39.6% in the nine-month period ended September 30, 2017 as compared to the same period in 2016. Finally, our shipped items volume increased in the nine-month period ended September 30, 2017 as compared to the same period in 2016.

Our net revenues grew 60.6% in the three-month period ended September 30, 2017 as compared to the same period in 2016. Our successful items sold and total payment volume increased 55.7% and 73.5%, respectively, in the three-month period ended September 30, 2017 as compared to the same period in 2016. Additionally, our number of confirmed registered users was 21.0% higher as of September 30, 2017 than as of September 30, 2016. Furthermore, our GMV increased 50.7% in the three-month period ended September 30, 2017 as compared to the same period in 2016. Finally, our shipped items volume increased in the three-month period ended September 30, 2017 as compared to the same period in 2016.

We believe that the growth in net revenues should continue in the future. However, despite this positive historical trend, the current weak global macro-economic environment, coupled with devaluations of certain local currencies in Latin America versus the U.S. dollar, the effects of Venezuelan translations of local currencies into the U.S. dollar, Venezuelan Government limits on prices and high interest rates in Latin America, could cause a decline year-over-year of our net revenues, particularly as measured in U.S. dollars.

Gross profit margins

During the past years, our business has experienced decreasing gross profit margins, defined as total net revenues minus total cost of net revenues, as a percentage of net revenues.

Our gross profit margins were 53.7% and 63.6% for the nine-month periods ended September 30, 2017 and 2016, respectively. For the three-month periods ended September 30, 2017 and 2016, our gross profit margins were 47.4% and 63.1%, respectively. The decrease in our gross profit margins resulted primarily from:

(i) Increased costs of providing free shipping in Mexico and Brazil of $102.6 million and $65.7 million for the nine and three-month period ended September 30, 2017, as compared with the same periods in 2016, respectively.

(ii) Higher penetration of our payments and shipping solution into our Argentine, Brazilian and Mexican marketplaces. For the nineand three-month period ended September 30, 2017, total volume of payments on our marketplace represented 81.4% and 84.3% of our total GMV (excluding motor vehicles, vessels, aircraft and real estate), respectively; as compared to 66.4% and 74.5% for the nine  and three-month period ended September 30, 2016. Additionally, for the nine  and three-month period ended September 30, 2017, the total number of items shipped through our shipping solution represented 54.2% and 56.2% of our total number of successful items sold, respectively; as compared to 46.8% and 48.5% for the nine and three-month period ended September 30, 2016. Transactions that include such services intrinsically incur incremental costs such as collection fees, which result in lower gross profit margins associated with these as compared to other services we offer. In addition, our financing and shipping revenues are disclosed net of third party provider costs while sales taxes are paid on the gross amount of revenues, thus, decreasing our gross profit margins in terms of revenues. For the nine-month period ended September 30, 2017, collection fees and sales taxes increased $62.4 million and $23.3 million, respectively, as compared to the same period in 2016. For the three-month period ended September 30, 2017, collection fees and sales taxes increased $21.9 million and $4.0 million, respectively, as compared to the same period in 2016.

(iii) Increased customer support costs of $15.3 million and $4.8 million for the nine and three-month periods ended September 30, 2017, as compared with the same period in 2016; mainly as a consequence of an increase in salaries and wages. The number of employees related to customer support was 2,343 as of September 30, 2017 as compared with 1,740 as of September 30, 2016.

(iv)  Increased hosting costs of $9.3 million and $2.8 million for the nine and three-month period ended September 30, 2017, as compared with the same periods in 2016, respectively.

In the future, gross profit margins could declineif free shipping volume increase or if the penetration of our payment solution and shipping grows faster than our marketplace.

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Operating income margins

For the nine-month period ended September 30, 2017 as compared to the same period in 2016, our operating income margin decreased from 19.8% to 12.6%, mainly as a consequence of increases in costs of net revenues (driven mainly by free shipping costs), as described under“Gross profit margins” above, and increases in sales and marketing expenses (driven mainly by on and off portal deals, salaries, buyer protection program and chargebacks from credit cards). For the three-month period ended September 30, 2017 as compared to the same period in 2016, our operating income margin decreased from 23.3% to 7.4%, for the same reasons.

We anticipate that as we continue to invest in product development, sales, marketing and human resources in order to promote our services and capture the long-term business opportunity offered by the Internet in Latin America, it is increasingly difficult to sustain growth in operating income margins and we could continue experiencing decreases in operating income margins.

Other Data

	Nine-months Periods Ended September 30,					Three-month Periods Ended September 30,
(in millions)		2017		2016		2017	2016
Number of confirmed registered users at end of period (1)		201.2		166.3		201.2		166.3
Number of confirmed new registered users during period (2)		27.0		21.7		10.0		7.7
Gross merchandise volume (3)	$	8,131.6	$	5,826.0	$	3,075.3	$	2,040.2
Number of successful items sold (4)		188.9		129.6		74.2		47.6
Number of successful items shipped (5)		102.4		60.7		41.7		23.1
Total payment volume (6)	$	9,388.9	$	5,306.9	$	3,667.1	$	2,114.0
Total volume of payments on marketplace (7)	$	6,620.3	$	3,867.8	$	2,592.9	$	1,519.9
Total payment transactions (8)		158.2		96.2		62.3		36.8
Unique buyers (9)		27.6		23.0		16.3		12.4
Unique sellers (10)		8.7		7.7		4.6		4.0
Capital expenditures	$	52.1	$	69.0	$	17.5	$	24.1
Depreciation and amortization	$	30.0	$	20.7	$	10.9	$	7.5

(1) Measure of the cumulative number of users who have registered on the MercadoLibre Marketplace and confirmed their registration.

(2) Measure of the number of new users who have registered on the MercadoLibre Marketplace and confirmed their registration.

(3) Measure of the total U.S. dollar sum of all transactions completed through the MercadoLibre Marketplace, excluding motor vehicles, vessels, aircraft and real estate.

(4) Measure of the number of items that were sold/purchased through the MercadoLibre Marketplace.

(5) Measure of the number of items that were shipped through our shipping service.

(6) Measure of the total U.S. dollar sum of all transactions paid for using MercadoPago, including marketplace and non-marketplace transactions.

(7) Measure of the total U.S. dollar sum of all marketplace transactions paid for using MercadoPago, excluding shipping and financing fees.

(8) Measure of the number of all transactions paid for using MercadoPago.

(9) New or existing users with at least one purchase made in the period.

(10) New or existing users with at least one sale made in the period. 

Net revenues

	Nine-month Periods Ended		Change from 2016		Three-month Periods Ended		Change from 2016
	September 30,		to 2017 (*)		September 30,		to 2017 (*)
	2017	2016	in Dollars	in %	2017	2016	in Dollars	in %
	(in millions, except percentages)				(in millions, except percentages)
Total Net Revenues	$          961.1	$         588.1	$        373.0	63.4%	$         370.7	$         230.8	$      139.8	60.6%
As a percentage of net revenues (*)	100.0%	100.0%			100.0%	100.0%

(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.

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	Nine-month Periods Ended		Change from 2016		Three-month Periods Ended		Change from 2016
	September 30,		to 2017 (**)		September 30,		to 2017 (**)
Consolidated Net Revenues by revenue stream	2017	2016	in Dollars	in %	2017	2016	in Dollars	in %
	(in millions, except percentages)				(in millions, except percentages)
Brazil
Marketplace	$            340.6	$            172.7	$      167.9	97.3%	$            139.6	$                 74.7	$        64.9	86.8%
Non-Marketplace	228.7	138.8	90.0	64.8%	89.9	56.3	33.6	59.7%
	569.3	311.4	257.9	82.8%	229.5	131.0	98.5	75.2%
Argentina
Marketplace	$            145.8	$            112.8	$        33.1	29.3%	$              54.1	$                 41.2	$        12.9	31.3%
Non-Marketplace	104.9	73.1	31.7	43.4%	37.2	28.8	8.4	29.2%
	250.7	185.9	64.8	34.9%	91.3	70.0	21.3	30.5%
Mexico
Marketplace	$              41.6	$              20.0	$        21.7	108.5%	$              16.6	$                   7.6	$          9.1	119.8%
Non-Marketplace	16.7	14.4	2.3	15.8%	6.0	4.3	1.7	41.0%
	58.3	34.4	23.9	69.7%	22.6	11.8	10.8	91.4%
Venezuela
Marketplace	$              35.4	$              24.0	$        11.4	47.6%	$                9.2	$                   6.1	$          3.1	50.6%
Non-Marketplace	2.9	2.5	0.5	19.2%	0.6	0.8	(0.2)	-25.7%
	38.3	26.5	11.9	44.9%	9.8	6.9	2.9	41.6%
Other countries
Marketplace	$              19.0	$              12.4	$          6.6	53.6%	$                7.8	$                   4.8	$          3.0	62.2%
Non-Marketplace	25.4	17.6	7.8	44.5%	9.7	6.4	3.4	52.9%
	44.5	30.0	14.5	48.3%	17.5	11.2	6.4	56.9%
Marketplace	582.5	341.7	240.7	70.4%	227.3	134.4	92.9	69.1%
Non-Marketplace (*)	378.6	246.4	132.3	53.7%	143.4	96.5	46.9	48.6%
Total	$            961.1	$            588.1	$      373.0	63.4%	$            370.7	$               230.8	$      139.8	60.6%

(*) Includes, among other things, ad sales, classified fees, payment fees, shipping fees and other ancillary services.

(**) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.

Net revenues for the nine and three-month period ended September 30, 2017 increased in all of our geographic segments.

Brazil

Marketplace revenue in Brazil increased 97.3% in the nine-month period ended September 30, 2017 as compared to the same period in 2016. The increase was primarily a consequence of a 33.6% increase in our take rate (which we define as net revenues as a percentage of gross merchandise volume), a 31.9% increase in local currency volume and a 12.0% average appreciation of local currency. Non-Marketplace revenues grew 64.8%, a $90.0 million increase, during the same period, mainly driven by: i) a 90.5% increase in the volume of payments transactions; and ii) a 51.4% increase in ad sales volume.

Marketplace revenues in Brazil increased 86.8% in the three-month period ended September 30, 2017 as compared to the same period in 2016. The increase was primarily a consequence of a 64.9% increase in our take rate, a 10.4% increase in local currency volume and a 2.6% average appreciation of local currency. Non-Marketplace revenues grew 59.7%, a $33.6 million increase, during the same period, mainly driven by: i) a 85.0 % increase in the volume of payments transactions; and ii) a 39.9 % increase in ad sales volume.

Argentina

Marketplace revenues of our Argentine segment increased 29.3% in the nine-month period ended September 30, 2017, as compared to the same period in 2016. The increase was primarily a consequence of an increase of 33.8% in our take rate and a 7.4% increase in local currency volume, partially offset by a 10.0% average devaluation of local currency. Non-Marketplace revenues grew 43.4%, a $31.7 million increase, during the same period, mainly driven by: i) a 43.7% increase in the volume of payments transactions; ii) a 29.1% increase in the volume of shipped items; and iii) a 68.8% increase in classifieds volume.

36

Marketplace revenues of our Argentine segment increased 31.3% in the three-month period ended September 30, 2017 as compared to the same period in 2016. The increase was primarily a consequence of a 62.8% increase in our take rate, partially offset by a 13.5% average devaluation of the local currency and a 6.7% decrease in local currency volume. Non-Marketplace revenues grew 29.2% in the three-month period ended September 30, 2017, a $8.4 million increase, during the same period, mainly driven by: i) a 38.4% increase in the volume of payments transactions; ii) a 41.0% increase in the volume of shipped items; and iii) a 38.8% increase in ad sales volume.

Mexico

Marketplace revenues of our Mexican segment increased by approximately 108.5% in the nine-month period ended September 30, 2017, as compared to the same period in 2016, mainly due to a 58.7% increase in our take rate, and a 35.6% increase in local currency volume, partially offset by an average local currency devaluation of 3.1%. Non-Marketplace revenues increased 15.8% or $2.3 million during the same period, mainly driven by increases in the volume of payment transactions and volume of shipped items, partially offset by a decrease in our classified fees.

Marketplace revenues of our Mexican segment increased by approximately 119.8% in the three-month period ended September 30, 2017, as compared to the same period in 2016, mainly due to a 74.2% increase in our take rate, a 19.9% increase in local currency volume, and a 5.2% average appreciation of local currency. Non-Marketplace revenues increased 41.0% in the three-month period ended September 30, 2017, or $1.7 million during the same period, mainly driven by increases in the volume of payment transactions and shipped items.

Venezuela

Marketplace revenues of our Venezuelan segment increased by approximately 47.6% in the nine-month period ended September 30, 2017, as compared to the same period in 2016, mainly due to a 296.2% increase in local currency volume and a 41.2% increase in our take rate, partially offset by an average local currency devaluation of 73.6%. Non-Marketplace revenues increased 19.2%, or $0.5 million during the same period, mainly by an increase in the volume of payment transactions.

Marketplace revenues of our Venezuelan segment increased by approximately 50.6% in the three-month period ended September 30, 2017, when compared to the same period in 2016, mainly due to a 340.1% increase in local currency volume and a 59.8% increase in our take rate, partially offset by an average local currency devaluation of 78.6%.Non-Marketplace revenues decreased 25.7%, or $0.2 million during the same period, mainly due to a decrease in the volume of classified fees.

The following table sets forth our total net revenues and the sequential quarterly growth of these net revenues for the periods described below:

	Quarter Ended
	March 31,	June 30,	September 30,	December 31,
	(in millions, except percentages)
	(*)
2017
Net revenues	$              273.9	$              316.5	$              370.7	n/a
Percent change from prior quarter	7%	16%	17%
2016
Net revenues	$              157.6	$              199.6	$              230.8	$              256.3
Percent change from prior quarter	-13%	27%	16%	11%

(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table.

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The following table sets forth the growth in net revenues in local currencies for the nine and three-month period ended September 30, 2017 as compared to the same period in 2016:

	Changes from 2016 to 2017 (*)
(% of revenue growth in Local Currency)	Nine-months	Three-months
Brazil	66.1%	70.6%
Argentina	50.4%	50.9%
Mexico	72.9%	82.0%
Venezuela	432.6%	571.1%
Other Countries	42.3%	54.7%
Total Consolidated	74.3%	79.4%

(*) The local currency revenue growth was calculated by using the average monthly exchange rates for each month during 2016 and applying them to the corresponding months in 2017, so as to calculate what our financial results would have been had exchange rates remained stable from one year to the next. See also “Non-GAAP Financial Measures” section below for details on FX neutral measures.

In Venezuela, the increase in our net revenues is mainly due to higher Marketplace volume and average selling prices posted by sellers during the nine and three-month period ended September 30, 2017, which we do not control. The increase in average selling prices in Venezuela is a consequence of: (i) the high inflation rate; (ii) a shortage of products and (iii) changes in the mix of categories of the items sold in our Marketplace.

In Brazil, the increase in local currency growth is mainly a consequence of an increase of our Brazilian Marketplace take rate and volume, increases inourMercadoPago transactions and our shipped items volume.

In the case of Argentina, the increase inour net revenues is due to an increase in the Argentine take rate, successful items volume and increases inourMercadoPagotransactions.

In Mexico, the increase in local currency growth is a consequence of an increase of our Mexican Marketplace take rate and volume, and increases inourMercadoPago transactions.

Cost of net revenues

	Nine-month Periods Ended		Change from 2016		Three-month Periods Ended		Change from 2016
	September 30,		to 2017 (*)		September 30,		to 2017 (*)
	2017	2016	in Dollars	in %	2017	2016	in Dollars	in %
	(in millions, except percentages)				(in millions, except percentages)
Total cost of net revenues	$         444.9	$            214.0	$      230.9	107.9%	$           194.8	$             85.2	$      109.6	128.7%
As a percentage of net revenues (*)	46.3%	36.4%			52.6%	36.9%

(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.

For the nine-month period ended September 30, 2017 as compared to the same period of 2016, the increase of $230.9 million in cost of net revenues was primarily attributable to: i) an increase in shipping costs amounting to $102.6 million, related to our Brazilian and Mexican free shipping initiative; ii) an increase in collection fees of $62.4 million, which was mainly attributable to our Argentine and Brazilian operations as a result of the higher transactions volume of MercadoPago in those countries; iii) an increase in sales taxes amounting to $23.3 million, mainly related to the growth of our Argentine and Brazilian operations; iv) a $15.3 million increase in customer support costs mainly as a consequence of salaries and wages, and v) $9.3 million in hosting costs due to higher traffic in our web-site.

For the three-month period ended September30, 2017 as compared to the same period of 2016, the increase of $109.6 million in cost of net revenues was primarily attributable to: i) a increase in shipping costs amounting to $65.7 million, due to our Mexican and Brazilian free shipping initiative; ii) an increase in collection fees amounting to $21.9 million, which was mainly attributable to our Argentine and Brazilian operations as a result of the higher transactions volumne of MercadoPago in those countries and higher off-platform transactions; iii) an increase in cost of product sold amounting to $5.2 million as a consequence of higher volumes of mobile points of sales devices sold in Brazil and Argentina; iv) a $ 4.8 million increase in customer support costs mainly as a consequence of salaries and wages, and; v) an increase in sales taxes amounting to $4.0 million, mainly related to the growth of our Argentine and Brazilian operations.

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Product and technology development expenses

	Nine-month Periods Ended		Change from 2016		Three-month Periods Ended		Change from 2016
	September 30,		to 2017 (*)		September 30,		to 2017 (*)
	2017	2016	in Dollars	in %	2017	2016	in Dollars	in %
	(in millions, except percentages)				(in millions, except percentages)
Product and technology development	$             93.0	$             72.2	$        20.8	28.8%	$           32.4	$           26.1	$          6.3	24.2%
As a percentage of net revenues (*)	9.7%	12.3%			8.7%	11.3%

(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.

Forthenine and three-month periodendedSeptember 30, 2017, the increase in product and technology development expenses as compared to the same periods in 2016 amounted to $20.8 million and $6.3 million, respectively. These increase were primarily attributable to: i) an increase of $10.9 million and $3.9 million in salaries and wages, respectively; ii) an increase in depreciation and amortization expenses of $6.2 million and $2.3 million, respectively.

We believe development is one of our key competitive advantages and intend to continue to invest in hiring engineers to meet the increasingly sophisticated product expectations of our customer base.

Sales and marketing expenses

	Nine-month Periods Ended		Change from 2016		Three-month Periods Ended		Change from 2016
	September 30,		to 2017 (*)		September 30,		to 2017 (*)
	2017	2016	in Dollars	in %	2017	2016	in Dollars	in %
	(in millions, except percentages)				(in millions, except percentages)
Sales and marketing	$            207.9	$        107.7	$      100.2	93.0%	$          84.1	$          39.7	$        44.4	111.8%
As a percentage of net revenues (*)	21.6%	18.3%			22.7%	17.2%

(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.

For the nine and three-month periods ended September 30, 2017, the $100.2 and $44.4 million increase in sales and marketing expenses when compared to the same periods in 2016 was primarily attributable to: i) an increase of $59.3 million and $25.0 million in on-line and offline marketing expenses mainly in Brazil and Mexico;  ii) a $15.4 million and $6.7 million increase in chargebacks from credit cards due to the increase in our MercadoPago volume, respectively; iii) a $12.1 million and $3.8 million increase in salaries and wages, respectively; and iv) a $10.7 million and $7.1 million increase in our buyer protection program expenses, respectively.  

General and administrative expenses

	Nine-month Periods Ended		Change from 2016		Three-month Periods Ended		Change from 2016
	September 30,		to 2017 (*)		September 30,		to 2017 (*)
	2017	2016	in Dollars	in %	2017	2016	in Dollars	in %
	(in millions, except percentages)				(in millions, except percentages)
General and administrative	$            91.6	$          64.1	$      27.5	42.9%	$            31.8	$            26.2	$          5.6	21.5%
As a percentage of net revenues (*)	9.5%	10.9%			8.6%	11.3%

(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding. 

For the nine-month period ended September 30, 2017, the $27.5 million increase in general and administrative expenses when compared to the same period in 2016 was primarily attributable to: i) a $19.8 million increase in salaries and wages; ii) a $2.9 million increase in tax, audit and legal fees; iii) a $2.3 million increase in other general and administrative expenses and; iv) a $ 0.9 increase in depreciation and amortization.

For the three-month period September 30, 2017, the $5.6 million increase in general and administrative expenses when compared to the same period in 2016 was primarily attributable to: i) a $2.1 million increase in salaries and wages; ii) a $1.4 million increase in tax, audit and legal fees; iii) a $1.0 million increase in other general and administrative expenses; and iv) a $ 0.4 increase in depreciation and amortization.

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Impairment of Long-Lived assets

	Nine-month Periods Ended		Change from 2016		Three-month Periods Ended		Change from 2016
	September 30,		to 2017 (*)		September 30,		to 2017 (*)
	2017	2016	in Dollars	in %	2017	2016	in Dollars	in %
	(in millions, except percentages)				(in millions, except percentages)
Impairment of Long-Lived Assets	$           2.8	$           13.7	$       (10.9)	(79.3%)	$            -	$               -	$       -	0.0%
As a percentage of net revenues (*)	0.3%	2.3%			0.0%	0.0%

 (*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.

We recorded an impairment of certain real estate investments owned by our Venezuelan subsidiaries of $2.8 million and $13.7 million during the second quarter of 2017 and 2016, respectively. For further information, see section “Foreign Currency Translation—Venezuelan currency status.”

Other (expenses) income, net

	Nine-month Periods Ended		Change from 2016		Three-month Periods Ended		Change from 2016
	September 30,		to 2017 (*)		September 30,		to 2017 (*)
	2017	2016	in Dollars	in %	2017	2016	in Dollars	in %
	(in millions, except percentages)				(in millions, except percentages)
Other (expense) income, net	$          (2.1)	$            1.3	$        (3.4)	-261.9%	$           9.1	$            (1.4)	$       10.5	-740.5%
As a percentage of net revenues (*)	-0.2%	0.2%			2.5%	-0.6%

(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.

For thenine-month period ended September 30, 2017, the $3.4millionincrease in other expenses when compared to a gain in the same period in 2016 wasprimarily attributable to: i) an increase in foreign exchange loss of $14.4 million, from $5.1 million in 2016 to $19.5 million in 2017, and ii) an increase in financial expenses amounting to $ 0.9 million, from $ 18.8 million in 2016 to $ 19.7 million in 2017, due mainly to our convertible notes and other financial charges in Brazil. This increase was partially offset by an increase in interest income amounting to $11.8 million, from $25.2 million in 2016 to $37.0 million in 2017 arising mainly from our financial investments in Brazil and Argentina.  The 2017 foreign exchange loss was mainly a consequence of a $25.5 million loss arising from the U.S. Dollar revaluation over our Bolivares Fuertes net asset position in Venezuela, partially offset by and a $ 4.2 million gain arising from the Mexican Peso revaluation over our U.S. Dollar net liability position in México and a $1.9 million gain arising from the Argentine Peso devaluation over our U.S. Dollar net asset position in Argentina.The 2016 foreign exchange loss was a consequence of a $7.4 million loss arising from the U.S. Dollar revaluation over our Bolivares Fuertes net asset position in Venezuela and a $ 3.7 million loss arising from the Mexican Peso devaluation over our U.S. Dollar net liability position in Mexico, partially offset by a $6.5 million gain arising from the Argentine Peso devaluation over our U.S. Dollar net asset position in Argentina.  

For thethree-month period ended September 30, 2017, the $10.5millionincrease in other income when compared to a loss in the same period in 2016 wasprimarily attributable to:i) a decrease in foreign exchange loss of $6.4 million, from $4.8 million losses in 2016 to $1.6 million gain in 2017 and ii) a $4.3 million increase in interest income arising from our financial investments in Brazil and Argentina. This increase was partially offset by an increase in our financial expenses amounting to $ 0.2 million, from $ 6.5 million in 2016 to $6.7 million in 2017due mainly to our convertible notes and other financial charges in Brazil.  The 2017foreign exchange loss was mainly as a consequence of a $3.1 million gain arising from the Reais revaluation over our U.S. Dollar net liability position in Brazil, partially offset by a $ 2.6 million loss arising from the U.S. Dollar revaluation over our Bolivares Fuertes net asset position in Venezuela.The 2016 foreign exchange loss was mainly as a consequence of a $ 2.1 million loss arising from the Reais devaluation over our U.S. Dollar net liability position in Brazil and a $ 1.7 million loss arising from Mexican Peso devaluation over our U.S. Dollar net liability position in Mexico.

40

Income tax

	Nine-month Periods Ended		Change from 2016		Three-month Periods Ended		Change from 2016
	September 30,		to 2017 (*)		September 30,		to 2017 (*)
	2017	2016	in Dollars	in %	2017	2016	in Dollars	in %
	(in millions, except percentages)				(in millions, except percentages)
Income tax	$          37.2	$         32.7	$          4.5	13.9%	$           9.0	$           13.4	$      (4.4)	-32.8%
As a percentage of net revenues (*)	3.9%	5.6%			2.4%	5.8%

(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.

During the nine-month period ended September 30, 2017 as compared to the same period in 2016, income tax increased by $4.5 million mainly as a consequence of: i) an increase in our pre-tax gains mainly in our Brazilian subsidiaries, partially offset by higher pre-tax losses recorded in Mexico during 2017 (as a result mainly of an increase in our operating costs); and ii) the loss carryforwards generated in our Venezuelan subsidiaries mainly as a consequence of the local currency devaluation, which was not considered recoverable for tax purposes in 2017.

During the three-month period ended September 30, 2017 as compared to the same period in 2016, income tax decreased by $4.4 millionmainly as a consequence of higher pre-tax losses recorded in Mexico and lower pre-tax tax gains recorded in Brazil during 2017 (as a result mainly of an increase in our operating costs); partially offset by a higher income tax expense in our Argentinean subsidiaries during the third quarter of 2017, as compared to the same period in 2016, due to a higher pre-tax in 2017 and because, in the comparative quarter, we applied tax holiday granted to Neosur S.R.L. and Business Vision S.A. retroactively to be effective as of September 18, 2014.

Our blended tax rate is defined as income tax expense as a percentage of income before income tax. Our effective income tax rate is defined as the provision for income taxes (net of charges related to dividend distributions from foreign subsidiaries that are offset with domestic foreign tax credits) as a percentage of income before income tax. The effective income tax rate excludes the effects of the deferred income tax, and complementary income tax.

The following table summarizes our blended and effective tax rates for the nine and three-month periods ended September 30, 2017 and 2016:

	Nine-month Periods Ended		Three-month Periods Ended
	September 30,		September 30,
	2017	2016	2017	2016
Blended tax rate	31.4%	27.8%	24.5%	25.6%
Effective tax rate	43.8%	31.4%	36.3%	28.0%

41

Our blended tax rate for the nine-month period ended September 30, 2017 increased as compared to the same period in 2016 mainly due to: i) the devaluation loss recorded in our Venezuelan subsidiaries as described abovewhich was not considered recoverable for tax purposes in 2017; and ii) a higher increase in our pre-tax gains in our Brazilian subsidiaries as compared with other locations, which are taxable at a higher tax rate.

Our blended tax rate for the three-month period ended September 30, 2017 decreased as compared to the same period in 2016 mainly due to: i) an increase in our pre-tax losses in our Mexican subsidiaries as compared with other locations, which are taxable at a higher tax rate; and ii) a decrease in our pre-tax gains in our Brazilian subsidiaries as compared with other locations, which are taxable at a higher tax rate, partially offset by a higher income tax expenses in Argentina as described above.

Our effective tax rate for the nine and three-month periods ended September 30, 2017 increased as compared to the same period in 2016 mainly due to an increase in our pre-tax losses in our Mexican subsidiaries, which reduce our consolidated pre-tax gain without any corresponding recognition of provision for income taxes.

The following table sets forth our effective income tax rate on a segment basis for the nine and three-month periods ended September 30, 2017 and 2016:

	Nine-month Periods Ended		Three-month Periods Ended
	September 30,		September 30,
	2017	2016	2017	2016
Effective tax rate by country
Argentina	21.1%	20.2%	18.8%	21.2%
Brazil	29.3%	26.1%	23.6%	23.5%
Venezuela	-0.8%	-0.6%	-3.0%	20.9%
Mexico	-0.2%	-9.0%	0.4%	-6.3%

The increase in the effective income tax rate in our Argentine subsidiaries during the nine-month period ended September 30, 2017 as compared to the same period in 2016 was mainly related to higher temporary differences in the current period.The decrease in the effective income tax rate in our Argentine subsidiaries during the three-month period ended September 30, 2017 as compared to the same periods in 2016, was mainly related to lower temporary differences in the current period.

On August 17, 2011, the Argentine government issued a new software development law and on September 9, 2013 a regulatory decree was issued, which established the new requirements to become a beneficiary of the new software development law. The new decree establishes compliance requirements with annual incremental ratios related to exports of services and research and development expenses that must be achieved to remain within the tax holiday. Our Argentine subsidiary will have to achieve certain required ratios annually under the new software development law to remain eligible for the benefits.

On September 17, 2015, the Argentine Industry Secretary approved our application for eligibility under the new software development law for our Argentinean subsidiary, Mercadolibre S.R.L. Furthermore, on September 18, 2016, the Argentine Industry Secretary approved our application for eligibility under the new software development law for our Argentinean subsidiaries, Neosur S.RL. and Business Vision S.A. As a result, our Argentinean subsidiaries have been granted a tax holiday retroactive from September 18, 2014. A portion of the benefits obtained as beneficiaries of the new law is a relief of 60% of total income tax related to software development activities and a 70% relief in payroll taxes related to software development activities.

Our benefits under the software development law will expire on December 31, 2019. As a result of oureligibility under the new law, we recorded an income tax benefit of $17.7million and $6.4 million during the nine and three-month periods ended September 30, 2017, respectively. Aggregate per share effect of the Argentine tax holiday amounted to $0.40 and $0.14 for the nine and three-month periods ended September 30, 2017, respectively. Furthermore, we recorded a labor cost benefit of $5.5million and $2.0 million during the nine and three-month periods ended September 30, 2017, respectively. Additionally, $1.6million and $0.6million were accrued to pay software development law audit fees during the nine and three-month periods ended September 30, 2017, respectively. During the nine-month period ended September 30, 2016, we recorded an income tax benefit of $16.0 million, a labor cost benefit of $4,2million and $1.4million were accrued to pay software development law audit fees. Additionally, during the third quarter of 2016, we recorded an income tax benefit of $6.8million, a labor cost benefit of $2.2million and $0.6million were accrued to pay software development law audit fees. Aggregate per share effect of the Argentine tax holiday amounted to $0.46 and $0.20 for the nine  and three-month periods ended September  30, 2016, respectively

The increase in our Brazilian effective income tax rate for the nine-month periods  ended September 30, 2017 as compared to the same periods in 2016, was mainly related to higher temporary differences in the current period.There is no significant variation in the effective income tax rate for the three-month period ended September 30, 2017 as compared to the same period in 2016.

42

For the nine and three-month periods ended September 30, 2017 and 2016, our Venezuelan effective income tax rate was driven mainly by losses recorded in our Venezuelan subsidiaries related to impairment of long-lived assets and foreign exchange losses, which generated net loss before income tax; except for the third quarter of 2016 which generated pre-tax gains. The loss carryforwards generated in Venezuela were considered not recoverable for tax purposes.

The increase in our Mexican effective income tax rate for the nine and three-month periods ended September 30, 2017 as compared with the same periods in 2016, is due to the higher pre-tax losses recorded during 2017 (as a result mainly of an increase in our operating costs) without any corresponding impact in our provision for income taxes.

We do not expect the domestic effective income tax rate related to dividend distributions from foreign subsidiaries to have a significant impact on our company since our strategy is to reinvest our cash surplus in our international operations, and to distribute dividends when they can be offset with available tax credits.

Segment information

(In millions, except for percentages)	Nine-month Period Ended September 30, 2017 (*)
	Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
Net revenues	$            569.3	$             250.7	$             58.3	$               38.3	$                 44.5	$             961.1
Direct costs	$           (390.0)	$            (151.0)	$           (95.7)	$              (16.8)	$               (37.1)	$            (690.6)
Impairment of Long-lived Assets	—	—	—	(2.8)	—	(2.8)
Direct contribution	179.3	99.7	(37.4)	18.7	7.4	267.7
Margin	31.5%	39.8%	-64.1%	48.7%	16.6%	27.9%

	Nine-month Period Ended September 30, 2016 (*)
	Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
Net revenues	$            311.4	$             185.9	$             34.4	$               26.5	$                 30.0	$             588.1
Direct costs	$           (188.8)	$            (105.2)	$           (29.0)	$              (12.7)	$               (21.3)	$            (357.0)
Impairment of Long-lived Assets	—	—	—	(13.7)	—	(13.7)
Direct contribution	122.7	80.7	5.4	0.0	8.7	217.4
Margin	39.4%	43.4%	15.6%	0.2%	29.0%	37.0%

	Change from the Nine-month Period Ended September 30, 2016 to September 30, 2017 (*)
	Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
Net revenues
in Dollars	$            257.9	$               64.8	$             23.9	$               11.9	$                 14.5	$             373.0
in %	82.8%	34.9%	69.7%	44.9%	48.3%	63.4%
Direct costs
in Dollars	$           (201.2)	$              (45.8)	$           (66.7)	$                (4.1)	$               (15.8)	$            (333.6)
in %	106.6%	43.5%	229.9%	32.7%	74.1%	93.5%
Impairment of Long-Lived Assets
in Dollars	$                 —	$                  —	$                —	$               10.9	$                    —	$               10.9
in %	0.0%	0.0%	0.0%	-79.3%	0.0%	-79.3%
Direct contribution
in Dollars	$              56.7	$               19.1	$           (42.7)	$               18.6	$                 (1.3)	$               50.3
in %	46.2%	23.6%	-795.6%	43274.4%	-15.0%	23.1%

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(In millions, except for percentages)	Three-month Period Ended September 30, 2017 (*)
	Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
Net revenues	$             229.5	$               91.3	$             22.6	$                  9.8	$                 17.5	$              370.7
Direct costs	(182.9)	(56.2)	(36.0)	(4.6)	(14.4)	(294.1)
Direct contribution	46.6	35.1	(13.4)	5.2	3.1	76.6
Margin	20.3%	38.4%	-59.4%	53.0%	17.8%	20.7%

	Three-month Period Ended September 30, 2016(*)
	Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
Net revenues	$             131.0	$               70.0	$             11.8	$                  6.9	$                 11.2	$              230.8
Direct costs	(77.0)	(39.0)	(10.4)	(3.5)	(7.9)	(137.8)
Direct contribution	54.0	31.0	1.5	3.4	3.2	93.1
Margin	41.2%	44.2%	12.3%	49.7%	28.9%	40.3%

	Change from the Three-month Period Ended September 30, 2016 to September 30, 2017 (*)
	Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
Net revenues
in Dollars	$               98.5	$               21.3	$             10.8	$                  2.9	$                   6.4	$              139.8
in %	75.2%	30.5%	91.4%	41.6%	56.9%	60.6%
Direct costs
in Dollars	$           (105.8)	$              (17.2)	$            (25.7)	$                (1.1)	$                 (6.5)	$            (156.3)
in %	137.4%	44.0%	248.1%	32.4%	81.4%	113.4%
Direct contribution
in Dollars	$               (7.4)	$                 4.1	$            (14.9)	$                  1.7	$                 (0.1)	$              (16.4)
in %	-13.7%	13.4%	-1023.9%	51.0%	-3.5%	-17.6%

(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.

Net revenues

Net revenues for the nine and three-month period ended September 30, 2017 as compared to the same period in 2016, are described above in “Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Net revenues”.

Direct costs

Brazil

For the nine-month period ended September 30, 2017 as compared to the same period in 2016, direct costs increased by 106.6%, mainly driven by: i) a 140.6% increase in cost of net revenues, mainly attributable to an increase in shipping costs, collection fees as a consequence of higher transactions volume of our MercadoPago business, sales tax and salaries and wages; ii) a 81.7% increase in sales and marketing expenses, mainly due to an increase in online marketing expenses, salaries and wages, chargebacks from credit cards due to the increase in our MercadoPago volume and buyer protection program expenses; iii)  a 39.7% increase in product and technology development expenses, mainly due to an increase in depreciation and amortization expenses and other product development expensesand; iv)  a 33.6% increase in general and administrative expenses, mainly attributable to an increase in salary and wages and legal fees.

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For the three-month period ended September 30, 2017 as compared to the same period in 2016, direct costs increased by 137.4%, mainly driven by: i) a 178.4% increase in cost of net revenues, mainly attributable to an increase in shipping costs, collection fees as a consequence of higher transactions volume of our MercadoPago business, sales tax and salaries and wages related to customer service; ii) a  120.7% increase in sales and marketing expenses, mainly due to an increase in online marketing expenses, chargebacks from credit cards due to increase in our MercadoPago volume and salaries and wages; iii) a 36.3% increase in product and technology development expenses, mainly due to an increase in depreciation and amortization expenses and other product development expenses; and iv) a 19.5%  increase in general and administrative expenses, mainly attributable to an increase in depreciation and amortization expenses and legal fees.

Argentina

For the nine-month period ended September 30, 2017 as compared to the same period in 2016, direct costs increasedby 43.5%, mainly driven by: i) a 75.5% increase in sales and marketing expenses, mainly due to an increase in online marketing expenses, buyer protection program expenses and chargebacks from credit cards due to increase in our MercadoPago volume; ii) a 68.4% increase in product and technology development expenses, mainly due to an increase in depreciation and amortization expenses; iii) a 37.5% increase in cost of net revenues, mainly attributable to an increase in collection fees as a consequence of a higher operation volume of MercadoPago business, customer support costs and sales taxes. This increase was partially offset by a 3.7% decrease in general and administrative expenses.

For the three-month period ended September 30, 2017 as compared to the same period in 2016, direct costs increased by 44.0%, mainly driven by: i) a 111.9% increase in sales and marketing expenses, mainly due to an increase in online marketing expenses, buyer protection program expenses and chargebacks from credit cards due to increase in our MercadoPago volume; ii) a 58.9% increase in product and technology development expenses, mainly due to an increase in depreciation and amortization expenses; iii) a 39.5% increase in general and administrative expenses mainly attributable to an increase in salaries and wages and other general and administrative expenses; and iv) a 30.0% increase in cost of net revenues, mainly attributable to an increase in collection fees as a consequence of a higher operation volume of MercadoPago business, customer support costs and sales taxes.

Mexico

For the nine-month period ended September 30, 2017 as compared to the same period in 2016, direct costs increased by 229.9%, mainly driven by: i) a 358.3% increase in cost of net revenues, mainly attributable to an increase in shipping costs,collection fees as a consequence of higher penetration of our MercadoPago business and customer support costs; ii) a 236.8% increase in sales and marketing expenses, mainly due to increases in online and offline marketing expenses; and iii) a 21.0% increase in general and administrative expenses. This increase was partially offset by a 10.3% decrease in product and technology development expenses, mainly attributable to a decrease in salaries and wages.

For the three-month period ended September 30, 2017 as compared to the same period in 2016, direct costs increased by 248.1%, mainly driven by: i) a 421.7% increase in cost of net revenues, mainly attributable to an increase in shipping costs, collection fees due to higher MercadoPago penetration and customer support costs; ii)a  205.8% increase in sales and marketing expenses, mainly due to increases in online and offline marketing expenses and chargebacks from credit cards due to increase in our MercadoPago volume; iii) a 31.9% increase in general and administrative expenses and; iv)a 22.3% increase in product and technology development expenses, mainly attributable to depreciation and amortization.

Venezuela

During second quarter of 2016 and the second quarter of 2017, we recorded an impairment of long-lived assets of $13.7 million and $2.8 million respectively in our Venezuelan subsidiaries.

For the nine-month period ended September 30, 2017 as compared to the same period in 2016, direct costs increased by 32.7%, mainly driven by: i) a 47.7% increase in cost of net revenues that was mainly attributable to an increase in customer support costs and collection fees due to higher MercadoPago penetration and certain new taxes on payment business; ii) a 28.1% increase in product and technology development expenses attributable to an increase in depreciation and amortization expenses; iii) a 13.2% increase in general and administrative expenses; and iv) a 10.1% increase in sales and marketing expenses, mainly due to an increase in the buyer protection program and bad debt expenses

For the three-month period ended September 30, 2017 as compared to the same period in 2016, direct costs increased by 32.4%, mainly driven by: i) a 63.2% increase in product and technology development expenses, mainly attributable to an increase in depreciation and amortization expenses; ii) a 36.6% increase in cost of revenues, mainly attributable to an increase in customer support costs, collection fees and sales taxes; and iii) a 29.2% in sales and marketing expenses, mainly due to increases in the buyer protection program, bad debt expenses. This increase was partially mitigated by a 10.6% decrease in general and administrative expenses.

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Liquidity and Capital Resources

Our main cash requirement historically has been working capital to fund MercadoPago financing operations in Brazil. We also require cash for capital expenditures relating to technology infrastructure, software applications, office space, business acquisitions, to fund our credit business, to fund the payment of quarterly cash dividends on shares of our common stock and to fund the interest payments on our Convertible Notes.

Since our inception, we have funded our operations primarily through contributions received from our stockholders during the first two years of operations, from funds raised during our initial public offering, and from cash generated from our operations. We issued on June 30, 2014, $330 million principal balance of Convertible Notes for net proceeds to us of approximately $321.7 million. We have funded MercadoPago mainly by discounting credit card receivables and through cash advances derived from our business.

As of September 30, 2017, our main source of liquidity, amounting to $636.4 million of cash and cash equivalents and short-term investments and $45.6 million of long-term investments, was provided by cash generated from operations and from the issuance of the Convertible Notes. We consider our long-term investments as part of our liquidity because long-term investments are comprised of available-for-sale securities classified as long-term as a consequence of their contractual maturities.

The significant components of our working capital are cash and cash equivalents, short-term investments, accounts receivable, loans receivable, accounts payable and accrued expenses, funds receivable from and payable to MercadoPago users, and short-term debt. As long as we continue transferring credit card receivables to financial institutions in return for cash, we will continue generating cash from those receivables.

As of September 30, 2017, cash and investments of our foreign subsidiaries amounted to $481.8 million, or 70.6% of our consolidated cash and investments, and approximately 62.3% of our consolidated cash and investments were held outside the U.S., mostly in Brazil and Argentina. Our strategy is to reinvest the undistributed earnings of our foreign operations in those operations and to distribute dividends when they can be offset with available tax credits. We do not expect a material impact in any repatriation of undistributed earnings of foreign subsidiaries on our operations since the taxable domestic gains generated by any dividend distributions will be mostly offset with foreign tax credits that arise from income tax paid in our foreign operations, which we are allowed to compute for domestic income tax purposes.

In the event we change the way we manage our business, our working capital needs could be funded, as we did in the past, through a combination of the sale of credit card coupons to financial institutions and cash advances from our business.

The following table presents our cash flows from operating activities, investing activities and financing activities for the nine-month periods ended September 30, 2017 and 2016:

	Nine-month Periods Ended
	September 30, (*)
(In millions)	2017	2016
Net cash provided by (used in):
Operating activities	$        242.4	$      147.7
Investing activities	91.8	(91.9)
Financing activities	(78.3)	(20.4)
Effect of exchange rates on cash and cash equivalents	(28.8)	(14.3)
Net increase in cash and cash equivalents	$        227.1	$        21.1

(*) The table above may not total due to rounding.

Net cash provided by operating activities

Cash provided by operating activities consists of net income adjusted for certain non-cash items, and the effect of changes in working capital and other activities:

	Nine-month Periods Ended		Change from 2016
	September 30,		to 2017 (*)
	2017	2016	in Dollars	in %
	(in millions, except percentages)
Net Cash provided by:
Operating activities	$             242.4	$        147.7	$        94.7	64.1%

(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.

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The $94.7million increase in net cash provided by operating activities during the nine-month period ended September 30, 2017, as compared to the same period in 2016, was primarily driven by a $57.9 million increase in accounts payable and accrued expenses and a  $51.3million increase in funds payable to customers of MercadoPago partially offset by a $ 20.7 decrease in credit card receivables.

Net cash used in investing activities

	Nine-month Periods Ended		Change from 2016
	September 30,		to 2017 (*)
	2017	2016	in Dollars	in %
	(in millions, except percentages)
Net Cash provided by (used in):
Investing activities	$               91.8	$         (91.9)	$      183.7	-199.9%

(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.

Net cash provided by investing activities in the nine-month period ended September 30, 2017 resulted mainly from purchases of investments of $3,180.6 million, which was offset by proceeds from the sale and maturity of investments of $3,371.5 million, as part of our financial strategy. We used $ 47.0 million in principal of loans receivable granted to merchants and consumers under our MercadoCredito solution, $39.3 million in the purchase of property plant and equipment (mainly in information technology in Argentina, Brazil and the United States)and $12.8 million in advances for property and equipment.

Net cash used in financing activities

	Nine-month Periods Ended		Change from 2016
	September 30,		to 2017 (*)
	2017	2016	in Dollars	in %
	(in millions, except percentages)
Net Cash used in:
Financing activities	$              (78.3)	$         (20.4)	$       (57.9)	284.1%

 (*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.

For the nine-month period ended September 30, 2017, our primary use of cash was to fund $ 67.3 million for the 2017 Capped Call Transactions, $19.9 million in cash dividends and $4.3 million for the payments on loans payable and other financing. In addition, we generated $13.2 million proceeds from the issuance of loans.

In the event that we decide to pursue strategic acquisitions in the future, we may fund them with available cash, third-party debt financing, or by raising equity capital, as market conditions allow.

Debt

On June 30, 2014, we issued $330 million of 2.25% Convertible Senior Notes due 2019 (the “Notes”). The Notes are unsecured, unsubordinated obligations of our Company, which pay interest in cash semi-annually, on January 1 and July 1, at a rate of 2.25% per annum. The Notes will mature on July 1, 2019 unless earlier repurchased or converted in accordance with their terms prior to such date. The Notes may be converted, under the conditions specified below, based on an initial conversion rate of 7.9353 shares of common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $126.02 per share of common stock), subject to adjustment as described in the indenture governing the Notes.

Holders may convert their notes at their option at any time prior to January 1, 2019 only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2014 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. On or after January 1, 2019 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their notes at any time, regardless of the foregoing circumstances.

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As of September 30, 2017, the conversion threshold had been met and the Notes became convertible at the holders’ option beginning on October 1, 2017 and ending on December 31, 2017. The determination of whether or not the Notes are convertible must continue to be performed on a quarterly basis. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. The intention of the Company is to share-settle the amount due upon conversion of the Notes.

From October 1 to the date of issuance of this form, no additional conversion request were made.

The total estimated fair value of the Notes was$687.9 millionand$458.8 millionas of September 30, 2017 and December 31, 2016, respectively. The fair value was determined based on the closing trading price per $100 of the Notes as of the last day of trading for the period. Based on the $258.9 closing price of the Company’s common stock on September 30, 2017, the if-converted value of the Notes exceeded their principal amount by approximately $348.0 million.

Capped Call Transactions

The net proceeds from the Notes were approximately $321.7 million after considering the transaction costs in an amount of $8.3 million. In connection with the issuance of the Notes, we paid approximately $19.7 million in June 2014 to enter into privately negotiated capped call transactions with respect to our common stock with certain financial institutions (the “2014 Capped Call Transactions”). In September 2017, we paid $67.3 million (including transaction expenses) to enter into additional privately negotiated capped call transactions with certain financial institutions (the “2017 Capped Call Transactions”; and together with the 2014 Capped Call Transactions, the “Capped Call Transactions”). The 2017 Capped Call Transactions are in addition to the 2014 Capped Call Transactions and have a higher strike price and cap price. The 2014 Capped Call Transactions have a cap price of approximately $155.78 per common share and the 2017 Capped Call Transactions have a cap price of approximately $366.06 per common share. The Capped Call Transactions are expected generally to reduce the potential dilution upon conversion of the Convertible Notes in the event that the market price of our common stock is greater than the strike price of the Capped Call Transactions. The strike price of the 2014 Capped Call Transactions was initially set at $126.02 per common share, which corresponds to the initial conversion price of the Notes. The strike price of the 2017 Capped Call Transactions was initially set at $295.67 per common share. The Capped Call Transactions are subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Notes. The Capped Call Transactions allow us to receive shares of our common stock and/or cash related to the excess conversion value that we would pay to the holders of the Notes upon conversion, up to the applicable cap price.

Cash Dividends

In each of February, May, August and November of 2016, the Board of Directors approved a quarterly cash dividend of$6,624thousands (or$0.150per share) on the Company’soutstandingshares of common stock. The dividends were paid onApril 15, July 15,October 14, 2016andJanuary 16, 2017to stockholders of record as of the close of business onMarch 31, June 30, September 30, andDecember 31, 2016.

On March 2, 2017, the Board of Directors approved a change to the Company’s dividend policy for providing for a fixed quarterly dividend payment in 2017 of $0.150 per share ($0.600 per share annually). The new dividend policy took effect following the payment of the $0.150 per share dividend declared by the Board of Directors of the Company, which was paid on April 17, 2017 to shareholders of record as of the close of business on March 31, 2017.

On May 2, 2017, the Board of Directors approved a quarterly cash dividend of $6,624 thousands (or $0.150 per share) on the Company´s outstanding shares of common stock. The second quarterly dividend was paid on July 14, 2017 to stockholdersof record as of the close of business on June 30, 2017.

On July 31, 2017, the Board of Directors approved a quarterly cash dividend of$6,624thousands (or$0.150per share) on ouroutstandingshares of common stock. The third quarterly dividend was paid on October 16, 2017to stockholders of record as of the close of business onSeptember 30, 2017.

On October 31, 2017, our board of directors approved a quarterly cash dividend of $6,624 thousands (or $0.150 per share) on our outstanding shares of common stock. This quarterly dividend is payable on January 16, 2018 to stockholders of record as of the close of business on December 31, 2017.

We currently expect to continue paying comparable cash dividends on a quarterly basis. However, any future determination as to the declaration of dividends on our common stock will be made at the discretion of our board of directors and will depend on our earnings, operating and financial condition, capital requirements and other factors deemed relevant by our board of directors, including the applicable requirements of the Delaware General Corporation Law.  

48

Capital expenditures

Our capital expenditures (composed of our payments for property and equipment, intangible assets and acquired business) for the nine-month periods ended September 30, 2017 and 2016 amounted to $52.1 million and $69.0 million, respectively.

During the nine-month period ended September 30, 2017 we invested $32.9 million in Information Technology in Brazil, Argentina, the United States and Mexico, and $2.3 million in our Brazilian and Argentinean offices.

On February 12, 2016, through our subsidiaries Meli Participaciones S.L. and Marketplace Investment LLC, we acquired 100% of the issued and outstanding shares of capital stock of Monits S.A., a software development company located and organized under the laws of Buenos Aires, Argentina, for the purchase price of $3.1 million, measured at its fair value.

In April 2016, our Venezuelan subsidiary acquired commercial properties still in the construction process and totaling 135.81 square meters in Caracas, Venezuela for a total purchase price of approximately BF$1,359 million, or $3.7 million, for investment purposes and included in non-current other assets. The Venezuelan subsidiary paid the purchase price in Bolivares Fuertes. According to the purchase agreements, the commercial properties will be delivered in December 2018.

On June 1, 2016, through our subsidiary Ebazar.com.br Ltda., we acquired 100% of the issued and outstanding shares of capital stock of Axado, a company that develops logistic software for the e-commerce industry in Brazil, for the purchase price of $5.5 million, measured at its fair value. We believe this acquisition will allow us to enhance our software development capabilities on Transportation Management System and will contribute to our shipping business performance.

We are permanently increasing the level of investment on hardware and software licenses necessary to improve and update the technology of our platform and cost of computer software developed internally. We anticipate continued investments in capital expenditures related to information technology in the future as we strive to maintain our position in the Latin American e-commerce market.

We believe that our existing cash and cash equivalents, including the sale of credit card receivables and cash generated from operations will be sufficient to fund our operating activities, property and equipment expenditures and to pay or repay obligations going forward.

Off-balance sheet arrangements

As of September 30, 2017, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.

Recently issued accounting pronouncements

See Item 1 of Part I, “Unaudited Interim Condensed Consolidated Financial Statements-Note2-Summary of significant accounting policies-Recently issued accounting pronouncements.”

Non-GAAP Financial Measures

To supplement our consolidated financial statements presented in accordance with U.S. GAAP, we use foreign exchange (“FX”) neutral measures as non-GAAP measure.

This non-GAAP measure should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP and may be different from non-GAAP measures used by other companies. In addition, this non-GAAP measure are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with U.S. GAAP. This non-GAAP financial measure should only be used to evaluate our results of operations in conjunction with the most comparable U.S. GAAP financial measures.

Reconciliation of this non-GAAP financial measure to the most comparable U.S. GAAP financial measure can be found in the table included in this quarterly report.

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We believe that reconciliation of FX neutral measures to the most directly comparable GAAP measure provides investors an overall understanding of our current financial performance and its prospects for the future. Specifically, we believe thisFX neutral non-GAAP measure provide useful information to both management and investors by excluding the foreign currency exchange rate impact that may not be indicative of our core operating results and business outlook.

The FX neutral measures were calculated by using the average monthly exchange rates for each month during 2016 and applying them to the corresponding months in 2017, so as to calculate what our results would have been had exchange rates remained stable from one year to the next. The table below excludes intercompany allocation FX effects. Finally, these measures do not include any other macroeconomic effect such as local currency inflation effects, the impact on impairment calculations or any price adjustment to compensate local currency inflation or devaluations.

The following table sets forth the FX neutral measures related to our reported results of the operations for the nine and three-month periods ended September 30, 2017:

	Nine-months Periods Ended September 30, (*)
	As reported			FX Neutral Measures
(In millions, except percentages)	2017	2016	Percentage Change	2017	2016	Percentage Change
	(Unaudited)			(Unaudited)
Net revenues	$                      961.1	$                  588.1	63.4%	$                    1,024.8	$                  588.1	74.3%
Cost of net revenues	(444.9)	(214.0)	107.9%	(449.5)	(214.0)	110.1%
Gross profit	516.2	374.1	38.0%	575.3	374.1	53.8%
Operating expenses:	(392.6)	(244.0)	60.9%	(413.1)	(244.0)	69.3%
Impairment of Long-Lived Assets	(2.8)	(13.7)	-79.3%	(2.8)	(13.7)	-79.3%
Total operating expenses	(395.4)	(257.7)	53.4%	(415.9)	(257.7)	61.3%
Income from operations	120.9	116.4	3.9%	159.4	116.4	37.0%

(*) The table above may not total due to rounding.

	Three-months Periods Ended September 30, (*)
	As reported					FX Neutral Measures
(In millions, except percentages)	2017	2016		Percentage Change		2017		2016		Percentage Change
	(Unaudited)					(Unaudited)
Net revenues	$                370.7		$                   230.8		60.6%		$                414.0		$            230.8		79.4%
Cost of net revenues	(194.8)		(85.2)		128.7%		(202.0)		(85.2)		137.1%
Gross profit	175.8		145.6		20.7%		212.0		145.6		45.6%
Operating expenses	(148.3)		(91.9)		61.3%		(160.9)		(91.9)		75.0%
Income from operations	27.5		53.7		-48.7%		51.2		53.7		-4.8%

(*) The table above may not total due to rounding.

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Item 3 — Qualitative and Quantitative Disclosure About Market Risk

We are exposed to market risks arising from our business operations. These market risks arise mainly from the possibility that changes in interest rates and the U.S. dollar exchange rate with local currencies, particularly the Brazilian real and Argentine peso due to Brazil’s and Argentine’s respective share of our revenues, may affect the value of our financial assets and liabilities.

Foreign currencies

As of September 30, 2017, we hold cash and cash equivalents in local currencies in our subsidiaries, and have receivables denominated in local currencies in all of our operations. Our subsidiaries generate revenues and incur most of their expenses in the respective local currencies of the countries in which they operate. As a result, our subsidiaries use their local currency as their functional currency, except for our Venezuelan subsidiaries, which use the U.S. dollar as if it is the functional currency due to Venezuela being a highly inflationary environment. As of September 30, 2017, the total cash and cash equivalents denominated in foreign currencies totaled $255.0 million, short-term investments denominated in foreign currencies totaled $167.2 million and accounts receivable, credit cards receivable and loans receivable in foreign currencies totaled $487.2 million. As of September 30, 2017, we had no long-term investments denominated in foreign currencies. To manage exchange rate risk, our treasury policy is to transfer most cash and cash equivalents in excess of working capital requirements into U.S. dollar-denominated accounts in the United States. As of September 30, 2017, our U.S. dollar-denominated cash and cash equivalents and short-term investments totaled $214.2 million and our U.S. dollar-denominated long-term investments totaled $45.6 million.

For the nine-month period ended September 30, 2017, we had a consolidated loss on foreign currency of $19.5millionprimarily as a result of a $25.5 million loss arising from the U.S. Dollar revaluation over our Bolivares Fuertes net asset position in Venezuela, partially offset by a $ 4.2 million gain arising from the Mexican Peso revaluation over our U.S. Dollar net liability position in México and a $1.9 million gain arising from the Argentine Peso devaluation over our U.S. Dollar net asset position in Argentina.

If the U.S. dollar weakens against foreign currencies, the translation of these foreign-currency-denominated transactions will result in increased net revenues, operating expenses, and net income while the re-measurement of our net asset position in U.S. dollars will have a negative impact in our Statement of Income. Similarly, our net revenues, operating expenses and net income will decrease if the U.S. dollar strengthens against foreign currencies, while the re-measurement of our net asset position in U.S. dollars will have a positive impact in our Statement of Income.

The following table sets forth the percentage of consolidated net revenues by segment for the nine and three-month periods ended September 30, 2017 and 2016:

	Nine-months Periods Ended				Three-month Periods Ended
	September 30,				September 30,
(% of total consolidated net revenues) (*)	2017		2016		2017		2016
Brazil	59.2	%	53.0	%	61.9	%	56.7	%
Argentina	26.1		31.6		24.6		30.3
Mexico	6.1		5.8		6.1		5.1
Venezuela	4.0		4.5		2.6		3.0
Other Countries	4.6		5.1		4.7		4.8

(*) Percentages have been calculated using whole-dollar amounts.

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Foreign Currency Sensitivity Analysis

The table below shows the impact on our net revenues, expenses, other expenses and income tax, net income and equity for a positive and a negative 10% fluctuation on all the foreign currencies to which we are exposed to for the nine-month period ended September 30, 2017:

Foreign Currency Sensitivity Analysis (*)
(In millions)	-10%	Actual	+10%
	(1)		(2)
Net revenues	$                      1,067.8	$                       961.1	$                       873.8
Expenses	(933.7)	(840.2)	(763.8)
Income from operations	134.1	120.9	110.0
Other expenses and income tax related to P&L items	(21.0)	(19.9)	(19.0)
Foreign Currency impact related to the remeasurement of our Net Asset position	(21.5)	(19.5)	(17.8)
Net income	91.7	81.5	73.2
Total Shareholders' Equity	$                         457.9	$                       406.2	$                       365.9

(1) Appreciation of the subsidiaries local currency against U.S. Dollar

(2) Depreciation of the subsidiaries local currency against U.S. Dollar

(*)  The table above may not total due to rounding.

The table above shows an increase in our net income when the U.S. dollar weakens against foreign currencies because the re-measurement of our net asset position in U.S. dollars has a lesser impact than the increase in our net revenues, operating expenses, and other expenses, net and income tax lines related to the translation effect. Similarly, the table above shows a decrease in our net income when the U.S. dollar strengthens against foreign currencies because the re-measurement of our net asset position in U.S. dollars has a lesser impact than the decrease in our net revenues, operating expenses, and other expenses, net and income tax lines related to the translation effect.

During the nine and three-month period ended September 30, 2017, we did not enter into any such hedging transaction.

Venezuelan Segment

In accordance with U.S. GAAP, we have classified our Venezuelan operations as highly inflationary since January 1, 2010, using the U.S. dollar as the functional currency for purposes of reporting our financial statements. Therefore, no translation effect has been accounted for in other comprehensive income related to our Venezuelan operations. As of September 30, 2017, monetary assets and liabilities in BsF were re-measured to the U.S. dollar using the DICOM closing exchange rate of 41,478.0 BsF per U.S. dollar.

See Item 2 of Part I, “Management’s discussion and analysis of financial condition and results of operations—Critical accounting policies and estimates—Foreign Currency Translation” for details on the currency status of our Venezuelan segment.

Although the current mechanisms available to obtain U.S. dollars for dividend distributions to shareholders outside of Venezuela imply increased restrictions, we do not expect that the current restrictions to purchase U.S. dollars will have a significant adverse effect on our business strategy with regard to the investment in Venezuela.

In order to assist investors in their overall understanding of the impact on our Venezuelan segment reporting, we developed a scenario that considers a 1240% additional devaluation over the DICOM rate as of the date of this report, applied for the period starting on January 1, 2017 to September 30, 2017. These disclosures may help investors to project sensitivities, on segment information captions, to devaluations of whatever order of magnitude they choose by simple arithmetic calculations. The information is just a scenario and does not represent a forward-looking statement about our expectations or projections related to future events in Venezuela. The investors and other readers or users of the financial information presented in this caption are cautioned not to place undue reliance on this scenario. This information is not a guarantee of future events.

The information disclosed below does not include any inflation effect, nor the devaluation impact related to the assumed devaluation or any other effect derived from the assumed devaluation, such as further impairments of long-lived assets. The information below should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP. In addition, this information is not based on any comprehensive set of accounting rules or principles.

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The evolution of the Venezuelan economy and any future governmental interventions in the Venezuelan economy are beyond our ability to control or predict. New events could happen in the future in Venezuela and it is not possible for management to predict all such events, nor can it assess the impact of all such events on our Venezuelan business.

The table below provides specific sensitivity information of our Venezuelan segment reporting for the period indicated assuming approximately a 1240% additional devaluation over the DICOM rate as of the date of this report, applied for the period starting on January 1, 2017 to September 30, 2017:

	Nine-month period ended September 30, 2017		Three-month period ended September 30, 2017
	Actual (*)	Sensitivity(**) (**)	Actual (*)	Sensitivity (**)
	(In million)		(In million)
Net revenues	$38.3	$1.3	$9.8	$0.7
Direct costs	(16.8)	(5.4)	(4.6)	(1.8)
Direct contribution before impairment of Long-lived assets	$21.5	$(4.1)	$5.2	$                (1.0)
Direct Contribution Margin before impairment %	56.1%	-314.6%	53.0%	-144.8%
Non-current other assets impairment	(2.8)	(2.8)	-	-
Direct Contribution after impairment	18.7	$(7.0)	5.2	$(1.0)
Direct Contribution Margin after impairment %	48.7%	-530.7%	53.0%	-144.8%

(*) As reported.

(**) Computing a hypothetical devaluation of the Venezuelan segment from January 1 to September 30, 2017 assuming an exchange rate of 41,478.0 BsF per U.S. dollar (1240% of the exchange rate as of September 30, 2017).

Despite the continued uncertainty and restrictions relating to foreign currency exchange in Venezuela as described above, we believe that our underlying business in that country is competitively well-positioned and continues to exhibit solid growth, in terms of units sold, even while economic conditions in the Venezuelan economy remain difficult. As economic conditions in that country improve, we expect that our business in Venezuela will benefit accordingly. Although during the first half of 2017, we experienced a strong devaluation of our business in Venezuela, we cannot assure you that the BsF will not experience further devaluations or that the Venezuelan government will not default on its obligations to creditors in the future, which may be significant and could have a material negative impact on our future financial results of our Venezuela segment and value of our bolivar denominated net assets. However, for the reasons stated at the beginning of this paragraph, we remain strongly committed to our business and investment in Venezuela.

Argentine Segment

As of September 30, 2017, the Argentine Peso exchange rate against the U.S. dollar was 17.3.

Had a hypothetical devaluation of 10% of the Argentine peso against the U.S. dollar occurred on September 30, 2017, the reported net assets in our Argentine subsidiaries would have decreased by approximately $20.6 million with a related impact on Other Comprehensive Income. Additionally, we would have recorded a foreign exchange gain amounting to approximately $0.4 million in our Argentine subsidiaries.

Brazilian Segment

As of September 30, 2017, the Brazilian Reais exchange rate against the U.S. dollar was 3.2.

Had a hypothetical devaluation of 10% of the Brazilian Reais against the U.S. dollar occurred on September 30, 2017, the reported net assets in our Brazilian subsidiaries would have decreased by approximately $10.4 million with the related impact in Other Comprehensive Income. Additionally, we would have recorded a foreign exchange loss amounting to approximately $2.1 million in our Brazilian subsidiaries.

Interest

Our earnings and cash flows are also affected by changes in interest rates. These changes could have an impact on the interest rates that financial institutions charge us prior to the time we sell our MercadoPago receivables. As of September 30, 2017, MercadoPago’s receivables totaled $406.9 million.  Interest rate fluctuations could also impact interest earned through our MercadoCredito solution. As of September 30, 2017, loans granted under our MercadoCredito solution totaled $51.8 million. Interest rate fluctuations could also negatively affect certain of our fixed rate and floating rate investments comprised primarily of time deposits, money market funds, investment grade corporate debt securities and sovereign debt securities. Investments in both fixed rate and floating rate interest earning products carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than predicted if interest rates fall.

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Under our current policies, we do not use interest rate derivative instruments to manage exposure to interest rate changes. As of September 30, 2017, the average duration of our available for sale securities, defined as the approximate percentage change in price for a 100-basis-point change in yield, was 0.52%. If interest rates were to instantaneously increase (decrease) by 100 basis points, the fair market value of our available for sale securities as of September 30, 2017 could decrease (increase) by approximately $1.0 million.

As of September 30, 2017, our short-term investments amounted to $175.2 million and our long-term investments amounted to $45.6 million. These investments can be readily converted at any time into cash or into securities with a shorter remaining time to maturity. We determine the appropriate classification of our investments at the time of purchase and re-evaluate such designations as of each balance sheet date.

Equity Price Risk

Our board of directors adopted the 2010, 2011 and 2012 long-term retention plans (the “ 2010, 2011 and 2012 LTRPs”, respectively), under which certain eligible employees receive awards (“LTRP Awards”), which are payable as follows:

· eligible employees will receive a fixed payment equal to 6.25% of his or her LTRP Award under the 2010, 2011, and/or 2012 LTRP, respectively, once a year for a period of eight years. The 2010 LTRP awards began paying out starting in 2011, the 2011 LTRP Awards starting in 2012 and the 2012 LTRP Awards starting in 2013(the “2010, 2011 or 2012 Annual Fixed Payment”, respectively); and

· on each date we pay the respective Annual Fixed Payment to an eligible employee, he or she will also receive a payment (the “2010, 2011 or 2012 Variable Payment”, respectively) equal to the product of (i) 6.25% of the applicable 2010, 2011 and/or 2012 LTRP Award and (ii) the quotient of (a) divided by (b), where (a), the numerator, equals the Applicable Year Stock Price (as defined below) and (b), the denominator, equals the 2009 (with respect to the 2010 LTRP), 2010 (with respect to the 2011 LTRP) and 2011 (with respect to the 2012 LTRP) Stock Price, ($45.75, $65.41 and $77.77 for the 2010, 2011 and 2012 LTRP, respectively, which was the average closing price of the Company’s common stock on the NASDAQ Global Market during the final 60 trading days of 2009, 2010 and 2011, respectively. The “Applicable Year Stock Price” equals the average closing price of the Company’s common stock on the NASDAQ Global Market during the final 60 trading days of the year preceding the applicable payment date.

The 2010, 2011 and 2012 LTRPs are filed as Exhibits 10.02, 10.03 and 10.04, respectively, to our Quarterly Report on Form 10-Q filed with the SEC on August 5, 2016, and the above description of such LTRPs is qualified in its entirety by reference to such exhibits.

On September 27, 2013, our Board of Directors, upon the recommendation of the compensation committee, approved the 2013 Long Term Retention Plan (the “2013 LTRP”), on March 31, 2014, the Board of Directors, upon the recommendation of the compensation committee, approved the 2014 employee retention plan (the “2014 LTRP”) and on August 4, 2015, the Board of Directors, upon the recommendation of the compensation committee, approved the 2015 employee retention plan (the “2015 LTRP”).

In order to receive an award under the 2013, 2014 and/or 2015 LTRP, each eligible employee must satisfy the performance conditions established by the Board of Directors for such employee. If these conditions are satisfied, the eligible employee will, subject to his or her continued employment as of each applicable payment date, receive the full amount of his or her 2013, 2014 and/or 2015 LTRP award, payable as follows:

· the eligible employee will receive a fixed payment, equal to 8.333% of his or her 2013, 2014 and/or 2015 LTRP bonus once a year for a period of six years starting in March 2014, 2015 and/or 2016 respectively (the “2013, 2014 or 2015 Annual Fixed Payment”, respectively); and

· on each date we pay the Annual Fixed Payment to an eligible employee, he or she will also receive a payment (the “2013, 2014 or 2015 Variable Payment”, respectively) equal to the product of (i) 8.333% of the applicable 2013, 2014 and/or 2015 LTRP award and (ii) the quotient of (a) divided by (b), where (a), the numerator, equals the Applicable Year Stock Price (as defined below) and (b), the denominator, equals the 2012 (with respect to the 2013 LTRP), 2013 (with respect to the 2014 LTRP) and 2014 (with respect to the 2015 LTRP) Stock Price, defined as $79.57, $118.48 and $127.29 for the 2013, 2014 and 2015 LTRP, respectively, which was the average closing price of our common stock on the NASDAQ Global Market during the final 60 trading days of 2012, 2013, 2014 and 2015 respectively. The “Applicable Year Stock Price” shall equal the average closing price of our common stock on the NASDAQ Global Market during the final 60 trading days of the year preceding the applicable payment date.

The 2013, 2014 and 2015 LTRPs are filed as Exhibits 10.05, 10.06 and 10.07, respectively, to our Quarterly Report on Form 10-Q filed with the SEC on August 5, 2016, and the above description of such LTRPs is qualified in its entirety by reference to such exhibits.

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On August 2, 2016, the Board of Directors, upon the recommendation of the Compensation Committee, adopted the 2016 LTRP which provides for the grant to eligible employees of a fixed award (the 2016 LTRP Fixed Award) and a variable award (the 2016 LTRP Variable Award). In order to receive awards under the 2016 LTRP, each eligible employee must satisfy the performance conditions established by the Board of Directors for such employee, which generally are expected to be based on pre-set goals for the Company’s financial and operational performance. If these conditions are satisfied, the eligible employee will, subject to his or her continued employment as of each applicable payment date, receive the full amount of his or her 2016 LTRP Awards, payable as follows:

· Fixed award: The eligible employee will receive a fixed payment equal to 16.66% of his or her 2016 LTRP Fixed Award once a year for a period of six years starting in March 2017 (the “Annual Fixed Payment”); and

· Variable award: On each date the Company pays the Annual Fixed Award to the eligible employee, he or she will also receive the 2016 LTRP Variable Award payment equal to the product of (i) 16.66% of the applicable 2016 LTRP Variable Award and (ii) the quotient of (a) divided by (b), where (a), the numerator, equals the Applicable Year Stock Price (as defined below) and (b), the denominator, equals the 2015 Stock Price (as defined below). For purposes of the 2016 LTRP, the “2015 Stock Price” shall equal $111.02 (the average closing price of the Company´s common stock on the NASDAQ Global Market during the final 60 -trading days of 2015) and the “Applicable Year Stock Price” shall equal the average closing price of the Company´s common stock on the NASDAQ Global Market during the final 60-trading days of the year preceding the applicable payment date for so long as the Company´s common stock is listed on the NASDAQ.

The 2016 LTRP is filed as Exhibit 10.08 to our Quarterly Report on Form 10-Q filed with the SEC on August 5, 2016, and the description of the 2016 LTRP above is qualified in its entirety by reference to such exhibit.

On April 3, 2017, the Board of Directors, upon the recommendation of the Compensation Committee, adopted the 2017 LTRP which provides for the grant to eligible employees of a fixed award (the 2017 LTRP Fixed Award) and a variable award (the 2017 LTRP Variable Award). In order to receive awards under the 2017 LTRP, each eligible employee must satisfy the performance conditions established by the Board of Directors for such employee, which generally are expected to be based on pre-set goals for the Company’s financial and operational performance. If these conditions are satisfied, the eligible employee will, subject to his or her continued employment as of each applicable payment date, receive the full amount of his or her 2017 LTRP Awards, payable as follows:

· Fixed award: The eligible employee will receive a fixed payment equal to 16.66% of his or her 2017 LTRP Fixed Award once a year for a period of six years starting in March 2018 (the “Annual Fixed Payment”); and

· Variable award: On each date the Company pays the Annual Fixed Award to the eligible employee, he or she will also receive the 2017 LTRP Variable Award payment equal to the product of (i) 16.66% of the applicable 2017 LTRP Variable Award and (ii) the quotient of (a) divided by (b), where (a), the numerator, equals the Applicable Year Stock Price (as defined below) and (b), the denominator, equals the 2016 Stock Price (as defined below). For purposes of the 2017 LTRP, the “2016 Stock Price” shall equal $164.17 (the average closing price of the Company´s common stock on the NASDAQ Global Market during the final 60 -trading days of 2016) and the “Applicable Year Stock Price” shall equal the average closing price of the Company´s common stock on the NASDAQ Global Market during the final 60-trading days of the year preceding the applicable payment date for so long as the Company´s common stock is listed on the NASDAQ.

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At September 30, 2017, the total contractual obligation fair value of our 2010, 2011, 2012, 2013, 2014, 2015, 2016 and 2017 LTRP Variable Award Payment obligation amounted to $67.4 million. As of September 30, 2017, the accrued liability related to the 2010, 2011, 2012, 2013, 2014, 2015, 2016 and 2017 Variable Award Payment of the LTRP included in Salaries and Social security payable in our condensed consolidated balance sheet amounted to $38.5 million. The following table shows a sensitivity analysis of the risk associated with our total contractual obligation fair value related to the 2010, 2011, 2012, 2013, 2014, 2015, 2016 and 2017 LTRP Variable Award Payment if our common stock price per share were to increase or decrease by up to 40%:

		As of September 30, 2017
		MercadoLibre, Inc	2010, 2011, 2012, 2013, 2014, 2015, 2016 and 2017
		Equity Price	variable LTRP contractual obligation
(In thousands, except equity price)
Change in equity price in percentage
40%		372.04	94,320
30%		345.47	87,583
20%		318.89	80,846
10%		292.32	74,109
Static	(*)	265.74	67,372
-10%		239.17	60,634
-20%		212.59	53,897
-30%		186.02	47,160
-40%		159.45	40,423

(*) Average closing stock price for the last 60 trading days of the closing date.

Item 4 — Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within thetime periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Evaluation of disclosure controls and procedures

Based on the evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) required by Exchange Act Rules 13a-15(b) or 15d-15(b), our chief executive officer and our chief financial officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Changes in Internal Controls Over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the nine-month period ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1 — Legal Proceedings

See Item 1 of Part I, “Financial Statements—Note 7 Commitments and Contingencies—Litigation and other Legal Matters.”

Item 1A — Risk Factors

As of September 30, 2017, there have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

Item 6 — Exhibits

The information set forth under “Index to Exhibits” below is incorporated herein by reference.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MERCADOLIBRE, INC.
	Registrant
Date: November3, 2017.	By:	/s/ Marcos Galperin
		Marcos Galperin
		President and Chief Executive Officer
	By:	/s/ Pedro Arnt
		Pedro Arnt
		Executive Vice President and Chief Financial Officer

57

MercadoLibre, Inc.

INDEX TO EXHIBITS

3.1	Registrant’s Amended and Restated Certificate of Incorporation.(1)
3.2	Registrant’s Amended and Restated Bylaws.(1)
4.1	Form of Specimen Certificate for the Registrant’s Common Stock.(2)
4.2	Second Amended and Restated Registration Rights Agreement, dated September 24, 2001, by and among the Registrant and the investors named therein. (1)
4.3	Indenture with respect to the Registrant’s 2.25% Convertible Senior Notes due 2019, dated as of June 30, 2014, between the Registrant and Wilmington Trust, National Association, as trustee. (3)
31.1	Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  *
31.2	Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  *
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  *
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  *
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase

*	Filed or furnished herewith, as applicable.
(1)	Incorporated by reference to the Registration Statement on Form S-1 filed on May 11, 2007.
(2)	Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 filed on February 27, 2009.
(3)	Incorporated by reference to the Registrant’s Current Report on form 8-K filed on June 30, 2014.

58

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Marcos Galperin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of MercadoLibre, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November3, 2017.	/s/ Marcos Galperin
	Marcos Galperin
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Pedro Arnt, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of MercadoLibre, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November3, 2017.	/s/ Pedro Arnt
	Pedro Arnt
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of MercadoLibre, Inc. (the “Company”) for the period ended September 30, 2017as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Marcos Galperin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Marcos Galperin

Marcos Galperin

President and Chief Executive Officer

(Principal Executive Officer)

November 3, 2017.

The foregoing certification is being furnished solely to accompany this report pursuant to 18 U.S.C. 1350, and is not being filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company whether made before or after the date hereof, regardless of any general incorporation language in such filing. A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of MercadoLibre, Inc. (the “Company”) for the period ended September 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Pedro Arnt, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Pedro Arnt

Pedro Arnt

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

November 3, 2017.

The foregoing certification is being furnished solely to accompany this report pursuant to 18 U.S.C. 1350, and is not being filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company whether made before or after the date hereof, regardless of any general incorporation language in such filing. A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 01, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Trading Symbol	MELI
Entity Registrant Name	MERCADOLIBRE INC
Entity Central Index Key	0001099590
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		44,157,364

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Interim Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 461,198	$ 234,140
Short-term investments	175,165	253,321
Accounts receivable, net	28,564	25,435
Credit cards receivable, net	406,883	307,904
Loans receivable, net	51,843	6,283
Prepaid expenses	8,199	15,060
Inventory	2,309	1,103
Other assets	47,995	26,215
Total current assets	1,182,156	869,461
Non-current assets:
Long-term investments	45,550	153,803
Property and equipment, net	136,101	124,261
Goodwill	95,249	91,797
Intangible assets, net	24,642	26,277
Deferred tax assets	66,163	45,017
Other assets	68,431	56,819
Total non-current assets	436,136	497,974
Total assets	1,618,292	1,367,435
Current liabilities:
Accounts payable and accrued expenses	181,557	105,106
Funds payable to customers	519,420	370,693
Salaries and social security payable	61,168	48,898
Taxes payable	27,923	27,338
Loans payable and other financial liabilities	24,701	11,583
Other liabilities	1,400	6,359
Dividends payable	6,624	6,624
Total current liabilities	822,793	576,601
Non-current liabilities:
Salaries and social security payable	22,124	16,173
Loans payable and other financial liabilities	309,444	301,940
Deferred tax liabilities	40,435	34,059
Other liabilities	17,340	9,808
Total non-current liabilities	389,343	361,980
Total liabilities	1,212,136	938,581
Equity:
Common stock, $0.001 par value, 110,000,000 shares authorized, 44,157,364 shares issued and outstanding at September 30, 2017 and December 31, 2016	44	44
Additional paid-in capital	70,674	137,982
Retained earnings	612,269	550,641
Accumulated other comprehensive loss	(276,831)	(259,813)
Total Equity	406,156	428,854
Total Liabilities and Equity	$ 1,618,292	$ 1,367,435

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Interim Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Interim Condensed Consolidated Balance Sheets [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	110,000,000	110,000,000
Common stock, shares issued	44,157,364	44,157,364
Common stock, shares outstanding	44,157,364	44,157,364

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Interim Condensed Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Interim Condensed Consolidated Statements of Income [Abstract]
Net revenues	$ 370,661	$ 230,847	$ 961,117	$ 588,121
Cost of net revenues	(194,834)	(85,199)	(444,879)	(213,993)
Gross profit	175,827	145,648	516,238	374,128
Operating expenses:
Product and technology development	(32,380)	(26,066)	(93,019)	(72,223)
Sales and marketing	(84,139)	(39,723)	(207,925)	(107,743)
General and administrative	(31,766)	(26,150)	(91,575)	(64,061)
Impairment of Long-Lived Assets			(2,837)	(13,717)
Total operating expenses	(148,285)	(91,939)	(395,356)	(257,744)
Income from operations	27,542	53,709	120,882	116,384
Other income (expenses):
Interest income and other financial gains	14,200	9,892	37,020	25,192
Interest expense and other financial losses	(6,709)	(6,492)	(19,686)	(18,807)
Foreign currency (loss) / gain	1,622	(4,823)	(19,475)	(5,062)
Net income before income tax expense	36,655	52,286	118,741	117,707
Income tax expense	(8,989)	(13,374)	(37,241)	(32,690)
Net income	$ 27,666	$ 38,912	$ 81,500	$ 85,017
Basic EPS: Basic net income
Available to shareholders per common share	$ 0.63	$ 0.88	$ 1.85	$ 1.93
Weighted average of outstanding common shares	44,157,364	44,157,341	44,157,364	44,157,215
Diluted EPS: Diluted net income
Available to shareholders per common share	$ 0.63	$ 0.88	$ 1.85	$ 1.93
Weighted average of outstanding common shares	44,157,364	44,157,341	44,157,364	44,157,215
Cash Dividends declared (per share)	$ 0.150	$ 0.150	$ 0.450	$ 0.450

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Interim Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Interim Condensed Consolidated Statements of Comprehensive Income [Abstract]
Net income	$ 27,666	$ 38,912	$ 81,500	$ 85,017
Other comprehensive (loss) income, net of income tax:
Currency translation adjustment	(5,180)	(2,974)	(17,945)	(11,056)
Unrealized net gain (losses) on available for sale investments	(1,413)	1,106	340	712
Less: Reclassification adjustment for losses on available for sale investments			(587)	(672)
Net change in accumulated other comprehensive loss, net of income tax	(6,593)	(1,868)	(17,018)	(9,672)
Total Comprehensive income	$ 21,073	$ 37,044	$ 64,482	$ 75,345

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Interim Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operations:
Net income	$ 81,500	$ 85,017
Adjustments to reconcile net income to net cash provided by operating activities:
Unrealized Devaluation Loss, net	28,463	5,162
Impairment of Long-Lived Assets	2,837	13,717
Depreciation and amortization	29,953	20,698
Accrued interest	(16,391)	(12,643)
Non cash interest and convertible bonds amortization of debt discount and amortization of debt issuance costs	9,234	9,122
LTRP accrued compensation	28,734	19,251
Deferred income taxes	(14,769)	(5,895)
Changes in assets and liabilities:
Accounts receivable	(13,380)	(2,409)
Credit Cards Receivables	(113,514)	(92,811)
Prepaid expenses	6,800	(272)
Inventory	(1,172)	(1,048)
Other assets	(31,528)	(15,865)
Accounts payable and accrued expenses	71,794	13,852
Funds payable to customers	151,635	100,322
Other liabilities	3,703	136
Interest received from investments	18,490	11,348
Net cash provided by operating activities	242,389	147,682
Cash flows from investing activities:
Purchase of investments	(3,180,633)	(2,548,060)
Proceeds from sale and maturity of investments	3,371,543	2,525,118
Payment for acquired businesses, net of cash acquired		(7,284)
Purchases of intangible assets	(84)	(49)
Advance for property and equipment	(12,777)	(6,129)
Changes in principal of loans receivable, net	(46,951)
Purchases of property and equipment	(39,280)	(55,510)
Net cash provided by (used in) investing activities	91,818	(91,914)
Cash flows from financing activities:
Proceeds from loans payable and other financial liabilities	13,153	3,892
Payments on loans payable and other financing liabilities	(4,304)	(6,492)
Dividends paid	(19,871)	(17,795)
Purchase of convertible note capped call	(67,308)
Net cash used in financing activities	(78,330)	(20,395)
Effect of exchange rate changes on cash and cash equivalents	(28,819)	(14,259)
Net increase in cash and cash equivalents	227,058	21,114
Cash and cash equivalents, beginning of the period	234,140	166,881
Cash and cash equivalents, end of the period	$ 461,198	$ 187,995

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Nature of Business

9 Months Ended

Sep. 30, 2017

Nature of Business [Abstract]

Nature of Business

1. Nature of Business

MercadoLibre, Inc. (“MercadoLibre” or the “Company”) was incorporated in the state of Delaware, in the United States of America in October 1999. MercadoLibre is the leading e-commerce company in Latin America, serving as an integrated regional platform and as an enabler of the necessary online and technology tools to allow businesses and individuals to trade products and services in the region. The Company enables commerce through its marketplace platform (including online classifieds for motor vehicles, vessels, aircraft, services and real estate), which allows users to buy and sell in most of Latin America. 

Through MercadoPago, MercadoLibre enables individuals and businesses to send and receive online payments; through MercadoEnvios, MercadoLibre facilitates the shipping of goods from sellers to buyers; through our advertising products, MercadoLibre facilitates advertising services to large retailers and brands to promote their product and services on the web; through MercadoShops, MercadoLibre facilitates users to set-up, manage, and promote their own on-line web-stores under a subscription-based business model; and through MercadoCredito, MercadoLibre extends loans to specific merchants and consumers. In addition, MercadoLibre develops and sells software enterprise solutions to e-commerce business clients in Brazil.

As of September 30, 2017, MercadoLibre, through its wholly-owned subsidiaries, operated online ecommerce platforms directed towards Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Peru, Mexico, Panama, Honduras, Nicaragua, Salvador, Portugal, Uruguay, Bolivia, Guatemala, Paraguay and Venezuela. Additionally, MercadoLibre operates an online payments solution directed towards Argentina, Brazil, Mexico, Venezuela, Colombia, Chile, Peru and Uruguay. It also offers a shipping solution directed towards Argentina, Brazil, Mexico, Colombia and Chile. In addition, the Company operates a real estate classified platform that covers some areas of State of Florida, in the United States of America.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of significant accounting policies

Basis of presentation

The accompanying unaudited interim condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) and include the accounts of the Company and its wholly-owned subsidiaries. These interim condensed consolidated financial statements are stated in U.S. dollars, except for amounts otherwise indicated. Intercompany transactions and balances with subsidiaries have been eliminated for consolidation purposes.

Substantially all net revenues, cost of net revenues and operating expenses, are generated in the Company’s foreign operations. Operating income of foreign operations amounted to 96.7% and 99.9% of the consolidated amounts during the nine-month periods ended September 30, 2017 and 2016. Long-lived assets, Intangible assets and Goodwill located in the foreign jurisdictions totaled $247,401 thousands and $232,314thousands as of September 30, 2017 and December 31, 2016, respectively.

These interim condensed consolidated financial statements reflect the Company’s consolidated financial position as of September 30, 2017 and December 31, 2016. These financial statements also show the Company’s consolidated statements of income and comprehensive income for the nine and three-month periods ended September 30, 2017 and 2016; and statement of cash flows for the nine-month periods ended September 30, 2017 and 2016. These interim condensed consolidated financial statements include all normal recurring adjustments that management believes are necessary to fairly state the Company’s financial position, operating results and cash flows.

Because all of the disclosures required by U.S. GAAP for annual consolidated financial statements are not included herein, these unaudited interim condensed financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2016, contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”). The condensed consolidated statements of income, of comprehensive income and of cash flows for the periods presented herein are not necessarily indicative of results expected for any future period. For a more detailed discussion of the Company’s significant accounting policies, see note 2 to the financial statements in the Form 10-K. During the nine-month period ended September 30, 2017, there were no material updates made to the Company’s significant accounting policies.

Foreign currency translation

All of the Company’s foreign operations have determined the local currency to be their functional currency, except for Venezuela since January 1, 2010, as described below. Accordingly, these foreign operating subsidiaries translate assets and liabilities from their local currencies into U.S. dollars by using period-end exchange rates while income and expense accounts are translated at the average rates in effect during the period, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of the transaction are used. The resulting translation adjustment is recorded as a component of other comprehensive(loss) income.

Venezuelan currency status

Pursuant to U.S. GAAP, the Company has transitioned its Venezuelan operations to highly inflationary status as from January 1, 2010, which requires that transactions and balances are re-measured as if the U.S. dollar was the functional currency for such operation. The cumulative three year inflation rate as from December 31, 2010 exceeded 100% at each period end. Thus, the Company continues to treat the economy of Venezuela as highly-inflationary.

On March 9, 2016 the Central Bank of Venezuela (“BCV”) issued the Exchange Agreement No.35. The agreement established a “protected” exchange rate (“DIPRO”) for certain transactions, such as but not limited to: imports of goods of the food and health sectors, as well as supplies associated with the production of said sectors; expenses relating to health treatments, sports, culture, scientific research, and other urgent matters defined by the exchange regulations. All foreign currency transactions not expressly provided in Exchange Agreement No.35 will be processed on the alternate foreign currency markets governed by the exchange regulations, at the floating supplementary market exchange rate (“DICOM”).

Additionally, the agreement established that the alternate foreign currency markets referred to in Exchange Agreement No.33 of February 10, 2015 (“SIMADI”) will continue to operate until replaced by others. From March 31, 2016 through June 30, 2016, the SIMADI exchange rate increased from 273 BsF per U.S. dollar to 628 BsF per U.S. dollar, a 130% increase in the exchange rate. As a consequence of the local currency devaluation, the Company recorded a foreign exchange loss of $4.9 million during the second quarter of 2016.

Considering the significant devaluation and the lower U.S. dollar-equivalent cash flows then expected from the Venezuelan business, the Company reviewed its long-lived assets (including non-current other assets), goodwill and intangible assets with indefinite useful life for impairment and concluded that the carrying value of certain real estate investments in Venezuela as of June 30, 2016 would not be fully recoverable. As a result, on June 30, 2016, the Company recorded an impairment of offices and commercial property under construction included within non-current other assets of $13.7 million. The carrying amount of offices and commercial property under construction was adjusted to its estimated fair value of approximately $12.5 million as of June 30, 2016, by using the market approach, and considering prices for similar assets.

On May 19, 2017, the BCV issued the Exchange Agreement No.38, which established a new foreign exchange mechanism under DICOM, replacing SIMADI. The new mechanism consists of auctions, administered by an auction committee, where sellers and buyers from the private sector may offer foreign currency under certain limits determined by the BCV.

In light of the disappearance of SIMADI  (which closed at 728.0 per U.S. dollar), and the Company’s inability to gain access to U.S. dollars under SIMADI, it started requesting U.S. dollars through DICOM. As a result, the Company expects to settle its transactions through DICOM going forward and concluded that the DICOM exchange rate should be used as from June 1, 2017 to measure its bolivar-denominated monetary assets and liabilities and to measure the revenues and expenses of the Venezuelan subsidiaries. Therefore, as of June 30, 2017, monetary assets and liabilities in Bolivares Fuertes (“BsF”) were re-measured to the U.S. dollar using the DICOM closing exchange rate of 2640.0BsF per U.S. dollar. As a consequence of the local currency devaluation, the Company recorded a foreign exchange loss of $22.0 million during the second quarter of 2017.

Considering the significant devaluation and the lower U.S. dollar-equivalent cash flows then expected from the Venezuelan business, the Company reviewed its long-lived assets (including non-current other assets), goodwill and intangible assets with indefinite useful life for impairment and concluded that the carrying value of certain real estate investments in Venezuela as of June 30, 2017 would not be fully recoverable. As a result, on June 30, 2017, the Company recorded an impairment of offices and commercial property under construction included within non-current other assets of $2.8 million. The carrying amount of offices and commercial property under construction was adjusted to its estimated fair value of approximately $9.7 million as of June 30, 2017, by using the market approach and considering prices for similar assets. As of September 30, 2017, the DICOM exchange rate was 3,345.0 BsF per U.S. dollar.

Until 2010 the Company was able to obtain U.S. dollars for any purpose, including dividends distribution, using alternative mechanisms other than through the Commission for the Administration of Foreign Exchange Control (CADIVI). Those U.S. dollars, obtained at a higher exchange rate than the one offered by CADIVI, and held at U.S. bank accounts of its Venezuelan subsidiaries, were used until 2011 for dividend distributions from its Venezuelan subsidiaries. The Company has not distributed dividends from the Venezuelan subsidiaries since 2011.

The following table sets forth the assets, liabilities and net assets of the Company’s Venezuelan subsidiaries, before intercompany eliminations of a net liability of $29,594 thousands and $ 15,843 thousands, as of September 30, 2017 and December 31, 2016 and net revenues for the nine-month periods ended September 30, 2017 and 2016:

			September 30,
		2017		2016
		(In thousands)
Venezuelan operations
	Net Revenues	$	38,329	$	26,451
		September 30,		December 31,
		2017		2016
		(In thousands)
	Assets		62,648		66,165
	Liabilities		(37,269)		(22,950)
	Net Assets	$	25,379	$	43,215

As of September 30, 2017, the net assets (before intercompany eliminations) of the Venezuelan subsidiaries amounted to 6.2% of consolidated net assets, and cash and investments of the Venezuelan subsidiaries held in local currency in Venezuela amounted to 2.2% of our consolidated cash and investments.

The Company’s ability to obtain U.S. dollars in Venezuela is negatively affected by the exchange regulations in Venezuela that are described above and elsewhere in these interim condensed consolidated financial statements. In addition, its business and ability to obtain U.S. dollars in Venezuela would be negatively affected by additional material devaluations or the imposition of significant additional and more stringent controls on foreign currency exchange by the Venezuelan government.

Despite the current difficult macroeconomic environment in Venezuela, the Company continues to actively manage, through its Venezuelan subsidiaries, its investment in Venezuela.

Income and asset taxes

The Company is subject to U.S. and foreign income taxes. The Company accounts for income taxes following the liability method of accounting which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets are also recognized for tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets or liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded when, based on the available evidence, it is more likely than not that all or a portion of the Company’s deferred tax assets will not be realized. The Company’s income tax expense consists of taxes currently payable, if any, plus the change during the period in the Company’s deferred tax assets and liabilities.

On August 17, 2011, the Argentine government issued a new software development law and on September 9, 2013 the regulatory decree was issued, which established the new requirement to become beneficiary of the new software development law. The decree establishes compliance requirements with annual incremental ratios related to exports of services and research and development expenses that must be achieved to remain within the tax holiday. The Company’s Argentine subsidiary has to achieve certain required ratios annually under the software development law in order to be eligible for the benefits mentioned below.

On September 17, 2015, the Argentine Industry Secretary issued Resolution 1041/2015 approving the Company’s application for eligibility under the new software development law for the Company’s Argentinean subsidiary, Mercadolibre S.R.L. Furthermore, on September 18, 2016, the Argentine Industry Secretary issued Resolutions 93/2016 and 97/2016 approving the Company’s application for eligibility under the new software development law for the Company’s Argentinean subsidiaries, Neosur S.RL. and Business Vision S.A. As a result, the Company’s Argentinean subsidiaries have been granted a tax holiday retroactive from September 18, 2014. A portion of the benefits obtained as beneficiaries of the new law is a relief of 60% of total income tax related to software development activities and a 70% relief in payroll taxes related to software development activities.

The benefits to the Company under the software development law will expire on December 31, 2019. As a result of the Company’s eligibility under the new law, it recorded an income tax benefit of $17,672 thousands and $6,367 thousands during the nine and three-month periods ended September 30, 2017, respectively. Aggregate per share effect of the Argentine tax holiday amounted to $0.40 and $0.14 for the nine and three-month periods ended September 30, 2017, respectively. Furthermore, the Company recorded a labor cost benefit of $5,513 thousands and $2,016 thousands during the nine and three-month periods ended September 30, 2017, respectively. Additionally, $1,623 thousands and $587 thousands were accrued to pay software development law audit fees during the nine and three-month periods ended September 30, 2017, respectively. During the nine months period ended September 30, 2016, the Company recorded an income tax benefit of $16,018thousands, a labor cost benefit of $4,173 thousands and $1,416 thousands were accrued to pay software development law audit fees. Additionally, during the third quarter of 2016, the Company recorded an income tax benefit of $6,823 thousands, a labor cost benefit of $2,167 thousands and $631 thousands were accrued to pay software development law audit fees. Aggregate per share effect of the Argentine tax holiday amounted to $0.46 and $0.20 for the nine  and three-month periods ended September  30, 2016, respectively.

As of September 30, 2017 and December 31, 2016, the Company had included under non-current deferred tax assets the foreign tax credits related to the dividend distributions received from its subsidiaries for a total amount of $11,588 thousands and $13,515 thousands, respectively. Those foreign tax credits will be used to offset the future domestic income tax payable.

Accumulated other comprehensive loss

The following table sets forth the Company’s accumulated other comprehensive loss as of September 30, 2017 and the year ended December 31, 2016:

	September 30,	December 31,
	2017	2016
	(In thousands)
Accumulated other comprehensive loss:
Foreign currency translation	$                    (277,171)	$             (259,226)
Unrealized gains (losses) on investments	518	(909)
Estimated tax (loss) gain on unrealized gains (losses) on investments	(178)	322
	$                    (276,831)	$             (259,813)

The following tables summarize the changes in accumulated balances of other comprehensive loss for the nine-month period ended September 30, 2017:

	Unrealized	Foreign	Estimated tax
	(Losses) Gains on	Currency	(expense)
	Investments	Translation	benefit	Total
	(In thousands)
Balances as of December 31, 2016	$                          (909)	$             (259,226)	$                    322	$           (259,813)
Other comprehensive loss before reclassifications adjustments for gains (losses) on available for sale investments	518	(17,945)	(178)	(17,605)
Amount of gain (loss) reclassified from accumulated other comprehensive loss	909	—	(322)	587
Net current period other comprehensive income gain (loss)	1,427	(17,945)	(500)	(17,018)
Ending balance	$                            518	$             (277,171)	$                  (178)	$           (276,831)

	Amount of (Loss) Gain
	Reclassified from
Details about Accumulated	Accumulated Other
Other Comprehensive Loss	Comprehensive	Affected Line Item
Components	Loss	in the Statement of Income
	(In thousands)
Unrealized losses on investments	$                          (909)	Interest expense and other financial losses
Estimated tax gain on unrealized losses on investments	322	Income tax gain
Total reclassifications for the year	$                          (587)	Total, net of income taxes

Impairment of long-lived assets

The Company reviews its long-lived assets (including non-current other assets) for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

As explained in section “Foreign Currency Translation” of the present Note to these interim condensed consolidated financial statements, Venezuelan currency experienced a steep devaluation in the second quarter of 2017 and 2016.

Considering this change in facts and circumstances and the lower U.S. dollar-equivalent cash flows expected from the Venezuelan business, and long-lived assets expected use, the Company concluded that certain real estate investments held in Caracas, Venezuela, should be impaired. The fair value of long-lived assets was estimated through market approach using level 3 inputs in the fair value hierarchy. These level 3 inputs included, but are not limited to, executed purchase agreements in similar assets and third party valuations. As a consequence, the Company estimated the fair value of the impaired long-lived assets, and recorded impairment losses of $2.8 million and $13.7 million on June 30, 2017 and June 30, 2016, respectively.

Use of estimates

The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for, but not limited to accounting for allowance for doubtful accounts and chargeback provisions, recoverability of goodwill and intangible assets with indefinite useful life, useful life of long-lived assets and intangible assets, impairment of short-term and long-term investments, impairment of long-lived assets, compensation costs relating to the Company’s long term retention plan, fair value of convertible debt note, recognition of income taxes and contingencies. Actual results could differ from those estimates.

Recently issued accounting pronouncements

In 2014, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance related to revenue recognition. This new standard will replace all current GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition guidance provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. In 2016, the FASB issued several amendments to the standard, including principal versus agent considerations when another party is involved in providing goods or services to a customer and the application of identifying performance obligations. The Company has substantially completed the assessment on the adoption of this standard concluding that it is not expected to have a material measurement impact on the Company´s financial statements. However, the Company continues assessing the potential impacts regarding the presentation of certain incentives recorded as an expense under current guidance.  The adoption of this standard will also require to expand and include certain additional disclosures. The standard is required to be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. The Company continues evaluating the transition method upon adoption. The Company will adopt the new revenue standard in its first quarter of 2018.

OnFebruary25, 2016 the FASB issued ASU 2016-02.Theamendments in this updatecreate Topic 842, Leases, which supersedes Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. Previous GAAP did not require lease assets and lease liabilities to be recognized for most leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in the statement of comprehensive income and the statement of cash flows is largely unchanged from previous GAAP. Based on existing leases currently classified as operating leases, the Company expects to recognize on the statements of financial position right-of-use assets and lease liabilities. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is assessing the effects that the adoption of this accounting pronouncement may have on the Company’s financial statements.

On June 16, 2016 the FASB issued ASU 2016-13 “Financial Instruments-Credit Losses (Topic 326): Measurement of credit losses on financial instruments”. This update amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, this update eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however this topic will require that credit losses be presented as an allowance rather than as a write-down. The new standard is effective for fiscal years beginning after December 15, 2019. The Company is assessing the effects that the adoption of this accounting pronouncement may have on its financial statements. 

On October 24, 2016 the FASB issued “ASU 2016-16—Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory”. This update eliminates the prohibition on recognizing current and deferred income tax consequences for an intra-entity asset transfer until the asset or assets have been sold to an outside party. Consequently, this update requires recognition of the current and deferred income tax consequences of an intra-entity asset transfer when the transfer occurs. The new standard is effective for fiscal years beginning after December 15, 2017.The adoption of this standard is not expected to have a material impact on the Company´s financial statements. 

On September 29, 2017 the FASB issued “ASU 2017-13—Revenue recognition (Topic 605), Revenue from contracts with customers (Topic 606), Leases (Topic 840), and Leases (Topic 842)”. This update addresses Transition Related to Accounting Standards Updates No. 2014-09, Revenue from Contracts with Customers (Topic 606), and No. 2016-02, Leases (Topic 842). This Update also supersedes SEC paragraphs pursuant the rescission of SEC Staff Announcement, “Accounting for Management Fees Based on a Formula”, effective upon the initial adoption of Topic 606, Revenue from Contracts with Customers, and SEC Staff Announcement, “Lessor Consideration of Third-Party Value Guarantees,” effective upon the initial adoption of Topic 842, Leases. The adoption of this standard is not expected to have a material impact on the Company´s financial statements.

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Net Income Per Share

9 Months Ended

Sep. 30, 2017

Net Income Per Share [Abstract]

Net Income Per Share

3. 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 June 30, 2014, the Company issued 2.25% Convertible Senior Notes due 2019 (see Note 9 of these interim condensed consolidated financial statements for discussion regarding these debt notes). The conversion of these debt notes are included in the calculation for diluted earnings per share utilizing the “if converted” method. The effect of that conversion 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 nine and three-month periods ended September 30, 2017 and 2016 does not include any effect from the 2014 and 2017 Capped Call Transactions (as defined below)because it would be antidilutive. In the event of conversion of any or all of the Notes, the shares that would be delivered to the Company under theCapped Call Transactions are designed to partially neutralize the dilutive effect of the shares that the Company would issue under the Notes.See Note 9 of these interim condensed consolidated financial statements and Note 17 of the financial statements as of December 31,2016 on Form 10-K for more details.

For the nine and three-month periods ended September 30, 2017 and 2016, the effects on diluted earnings per share were antidilutive and, as a consequence, they were not computed for diluted earnings per share.

Net income per share of common stock is as follows for the nine and three-month periods ended September 30, 2017 and 2016:

			Nine Months Ended September 30,					Three Months Ended September 30,
	2017					2016		2017		2016
			(In thousands)					(In thousands)
		Basic		Diluted	Basic		Diluted	Basic	Diluted	Basic	Diluted
Net income per common share	$      1.85			$         1.85	$         1.93		$         1.93	$         0.63	$         0.63	$         0.88	$        0.88
Numerator:
Net income	$  81,500			$     81,500	$     85,017		$     85,017	$     27,666	$     27,666	$     38,912	$38,912
Denominator:
Weighted average of common stock outstanding for Basic earnings per share	44,157,364				44,157,215			44,157,364		44,157,341
Adjusted weighted average of common stock outstanding for Diluted earnings per share				44,157,364			44,157,215		44,157,364		44,157,341

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Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets [Abstract]

Goodwill and Intangible Assets

4. Goodwill and intangible assets

Goodwill and intangible assets

The composition of goodwill and intangible assets is as follows:

	September 30,	December 31,
	2017	2016
	(In thousands)
Goodwill	$                  95,249	$                  91,797
Intangible assets with indefinite lives
- Trademarks	13,153	12,490
Amortizable intangible assets
- Licenses and others	6,565	8,738
- Non-compete agreement	2,491	1,787
- Customer list	15,215	14,580
- Trademarks	1,854	993
Total intangible assets	$                  39,278	$                  38,588
Accumulated amortization	(14,636)	(12,311)
Total intangible assets, net	$                  24,642	$                  26,277

Goodwill

The changes in the carrying amount of goodwill for the nine-month period ended September 30, 2017 and the year ended December 31, 2016 are as follows:

	Period ended September 30, 2017
	Brazil	Argentina	Chile	Mexico	Venezuela	Colombia	Other Countries	Total
	(In thousands)
Balance, beginning of the period	$          27,660	$               6,587	$             17,388	$                29,342	$                                       5,989	$                            3,643	$                     1,188	$             91,797
- Effect of exchange rates changes	245	(809)	783	3,158	—	50	25	3,452
Balance, end of the period	$          27,905	$               5,778	$             18,171	$                32,500	$                                       5,989	$                            3,693	$                     1,213	$             95,249

	Year ended December 31, 2016
	Brazil	Argentina	Chile	Mexico	Venezuela	Colombia	Other Countries	Total
	(In thousands)
Balance, beginning of year	$             18,526	$               7,430	$             16,438	$             33,834	$                            5,729	$                   3,437	$               1,151	$             86,545
- Business acquisition	5,635	700	—	190	260	57	32	6,874
- Effect of exchange rates changes	3,499	(1,543)	950	(4,682)	—	149	5	(1,622)
Balance, end of the year	$             27,660	$               6,587	$             17,388	$             29,342	$                            5,989	$                   3,643	$               1,188	$             91,797

Intangible assets with definite useful life

Intangible assets with definite useful life are comprised of customer lists, non-compete and non-solicitation agreements, acquired software licenses, other acquired intangible assets including developed technologies and trademarks. Aggregate amortization expense for intangible assets totaled$1,182thousands and$1,144thousands for the three-month periods ended September 30, 2017 and 2016, respectively, while for the nine-month periods ended at such dates amounted to$3,247thousands and$2,863thousands, respectively.

The following table summarizes the remaining amortization of intangible assets (in thousands of U.S. dollars) with definite useful life as of September 30, 2017:

For year ended 12/31/2017	$                    1,343
For year ended 12/31/2018	4,475
For year ended 12/31/2019	2,201
For year ended 12/31/2020	956
Thereafter	2,514
	$                  11,489

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Segment Reporting

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Segment Reporting

5. Segment reporting

Reporting segments are based upon the Company’s internal organizational structure, the manner in which the Company’s operations are managed and resources are assigned, the criteria used by management to evaluate the Company’s performance, the availability of separate financial information, and overall materiality considerations.

Segment reporting is based on geography as the main basis of segment breakdown to reflect the evaluation of the Company’s performance defined by the management. The Company’s segments include Brazil, Argentina, Mexico, Venezuela and other countries (such as Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Panama, Honduras, Nicaragua, Salvador, Bolivia, Guatemala, Paraguay, Peru, Portugal, Uruguay and USA).

Direct contribution consists of net revenues from external customers less direct costs. Direct costs include costs of net revenues, product and technology development expenses, sales and marketing expenses, and general and administrative expenses over which segment managers have direct discretionary control, such as advertising and marketing programs, customer support expenses, allowances for doubtful accounts, payroll and third party fees. All corporate related costs have been excluded from the Company’s direct contribution.

Expenses over which segment managers do not currently have discretionary control, such as certain technology and general and administrative costs are monitored by management through shared cost centers and are not evaluated in the measurement of segment performance.

The following tables summarize the financial performance of the Company’s reporting segments:

	Nine Months Ended September 30, 2017
	Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
	(In thousands)
Net revenues	$           569,320	$              250,692	$               58,324	$                38,329	$               44,452	$             961,117
Direct costs	(390,008)	(150,973)	(95,683)	(16,841)	(37,052)	(690,557)
Impairment of Long-lived Assets	-	-	-	(2,837)	-	(2,837)
Direct contribution	179,312	99,719	(37,359)	18,651	7,400	267,723
Operating expenses and indirect costs of net revenues						(146,841)
Income from operations						120,882
Other income (expenses):
Interest income and other financial gains						37,020
Interest expense and other financial losses						(19,686)
Foreign currency losses						(19,475)
Net income before income tax expense						$             118,741

	Nine Months Ended September 30, 2016
	Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
	(In thousands)
Net revenues	$                    311,427	$                    185,885	$                   34,375	$                   26,451	$                   29,983	$                        588,121
Direct costs	(188,772)	(105,217)	(29,004)	(12,691)	(21,281)	(356,965)
Impairment of Long-lived Assets	-	-	-	(13,717)	-	(13,717)
Direct contribution	122,655	80,668	5,371	43	8,702	217,439
Operating expenses and indirect costs of net revenues						(101,055)
Income from operations						116,384
Other income (expenses):
Interest income and other financial gains						25,192
Interest expense and other financial losses						(18,807)
Foreign currency losses						(5,062)
Net income before income tax expense						$                        117,707

		Three Months Ended September 30, 2017
		Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
		(In thousands)
Net revenues		$            229,475	$           91,308	$               22,604	$                     9,751	$               17,523	$                        370,661
Direct costs		(182,858)	(56,210)	(36,038)	(4,582)	(14,409)	(294,097)
Direct contribution		46,617	35,098	(13,434)	5,169	3,114	76,564
Operating expenses and indirect costs of net revenues							(49,022)
Income from operations							27,542
Other income (expenses):
	Interest income and other financial gains						14,200
	Interest expense and other financial losses						(6,709)
	Foreign currency gains						1,622
Net income before income tax expense							$36,655

		Three Months Ended September 30, 2016
		Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
		(In thousands)
Net revenues		$131,003	$69,983	$11,807	$6,885	$11,169	$230,847
Direct costs		(77,012)	(39,026)	(10,353)	(3,462)	(7,943)	(137,796)
Direct contribution		53,991	30,957	1,454	3,423	3,226	93,051
Operating expenses and indirect costs of net revenues							(39,342)
Income from operations							53,709
Other income (expenses):
	Interest income and other financial gains						9,892
	Interest expense and other financial losses						(6,492)
	Foreign currency losses						(4,823)
Net income before income tax expense							$52,286

The following table summarizes the allocation of property and equipment, net based on geography:

	September 30,	December 31,
	2017	2016
	(In thousands)
US property and equipment, net	$                    8,445	$                    9,771
Other countries
Argentina	25,842	25,071
Brazil	67,351	55,706
Mexico	3,487	2,307
Venezuela	21,935	21,615
Other countries	9,041	9,791
	$                127,656	$                114,490
Total property and equipment, net	$                136,101	$                124,261

The following table summarizes the allocation of the goodwill and intangible assets based on geography:

	September 30,	December 31,
	2017	2016
	(In thousands)
US intangible assets	$                      146	$                      250
Other countries goodwill and intangible assets
Argentina	6,630	7,717
Brazil	30,400	31,170
Mexico	41,992	38,860
Venezuela	7,168	7,366
Chile	28,164	27,395
Other countries	5,391	5,316
	$               119,745	$               117,824
Total goodwill and intangible assets	$               119,891	$               118,074

Consolidated net revenues by similar products and services for the nine and three-month periods ended September 30, 2017 and 2016 were as follows:

	Nine-months Ended September 30,		Three-months Ended September 30,
Consolidated Net Revenues	2017	2016	2017	2016
	(In thousands)		(In thousands)
Marketplace	$                582,475	$                341,749	$                227,269	$                134,374
Non-marketplace (*) (**)	$                378,642	$                246,372	$                143,392	$                  96,473
Total	$                961,117	$                588,121	$                370,661	$                230,847

(*)  Includes, among other things, Ad Sales, Classified Fees, Payment Fees, Shipping Fees and other ancillary services.

(**) Includes an amount of $232,426 thousands and $139,630 thousands of Payment Fees for the nine-month periods ended September 30, 2017 and 2016, respectively. Includes an amount of $92,254 thousands and $52,444 thousands of Payment Fees for the three-month periods ended September 30, 2017 and 2016, respectively.

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Fair Value Measurement of Assets and Liabilities

9 Months Ended

Sep. 30, 2017

Fair Value Measurement of Assets and Liabilities [Abstract]

Fair Value Measurement of Assets and Liabilities

6. Fair value measurement of assets and liabilities

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016:

		Quoted Prices in				Quoted Prices in
	Balances as of	active markets for	Significant other	Unobservable	Balances as of	active markets for	Significant other	Unobservable
	September 30,	identical Assets	observable inputs	inputs	December 31,	identical Assets	observable inputs	inputs
Description	2017	(Level 1)	(Level 2)	(Level 3)	2016	(Level 1)	(Level 2)	(Level 3)
	(In thousands)
Assets
Cash and Cash Equivalents:
Money Market Funds	$                  189,574	$               189,574	$                           —	$           —	$          111,198	$                111,198	$                  —	$               —
Investments:
Sovereign Debt Securities	$                   21,786	$                 21,786	$                           —	$           —	$            50,703	$                  50,703	$                  —	$                —
Corporate Debt Securities	30,468	28,384	2,084	—	207,633	61,986	145,647	—
Certificates of deposit	—	—	—	—	35,374	—	35,374	—
Total Financial Assets	$                  241,828	$               239,744	$                      2,084	$           —	$          404,908	$               223,887	$         181,021	$             —
Liabilities:
Contingent considerations	$                          —	$                        —	$                           —	$           —	$              4,213	$                         —	$                  —	$        4,213
Long-term retention plan	38,503	—	38,503	—	27,135	—	27,135	—
Total Financial Liabilities	$            38,503	$                        —	$            38,503	$           —	$            31,348	$                         —	$           27,135	$        4,213

As of September 30, 2017 and December 31, 2016, the Company’s financial assets valued at fair value consisted of assets valued using i) Level 1 inputs: unadjusted quoted prices in active markets (Level 1 instrument valuations are obtained from observable inputs that reflect quoted prices (unadjusted) for identical assets in active markets) and; ii) Level 2 inputs: obtained from readily-available pricing sources for comparable instruments as well as instruments with inactive markets at the measurement date.

As of September 30, 2017 and December 31, 2016, the Company´s liabilities were valued at fair value using level 2 inputs and level 3 inputs (valuations based on unobservable inputs reflecting Company assumptions). Fair value of contingent considerations are determined based on the probability of achievement of the performance targets arising from each acquisition, as well as the Company’s historical experience with similar arrangements. For the nine-month period ended September 30, 2017, the Company recognized in earnings a gain of $3,164 thousands and a loss of $166 thousands within other comprehensiveincome, in relation with contingent considerations. In addition, during the nine-month period ended September 30, 2017, the Company settled contingent considerations for an amount of $1,215 thousands.

The unrealized net gains or loss on short term and long term investments are reported as a component of other comprehensive income. The Company does not anticipate any significant realized losses associated with those investments in excess of the Company’s historical cost.

As of September 30, 2017 and December 31, 2016, the carrying value of the Company’s financial assets and liabilities measured at amortized cost approximated their fair value mainly because of its short term maturity. These assets and liabilities included cash, cash equivalents and short-term investments (excluding money markets funds and corporate debt security), accounts receivable, credit cards receivable, loans receivable, funds payable to customers, other assets, accounts payable, salaries and social security payable (excluding variable LTRP), taxes payable, provisions and other liabilities (excluding contingent consideration). The convertible senior notes (liability component), the rest of the loans payable and other financial liabilities approximate their fair value because the interest rates are not materially different from market interest rates.  

The following table summarizes the fair value level for those financial assets and liabilities of the Company measured at amortized cost as of September 30, 2017 and December 31, 2016:

	Balances as of	Significant other	Balances as of	Significant other
	September 30,	observable inputs	December 31,	observable inputs
	2017	(Level 2)	2016	(Level 2)
	(In thousands)
Assets
Time Deposits	$             167,224	$             167,224	$                113,414	$              113,414
Accounts receivable	28,564	28,564	25,435	25,435
Credit Cards receivable	406,883	406,883	307,904	307,904
Loans receivable, net	51,843	51,843	6,283	6,283
Other assets	89,097	89,097	58,900	58,900
Total Assets	$             743,611	$                        743,611	$                511,936	$              511,936
Liabilities
Accounts payable and accrued expenses	$             181,557	$                        181,557	$                105,106	$              105,106
Funds payable to customers	519,420	519,420	370,693	370,693
Salaries and social security payable	44,789	44,789	37,936	37,936
Taxes payable	27,923	27,923	27,338	27,338
Dividends payable	6,624	6,624	6,624	6,624
Loans payable and other financial liabilities (*)	334,145	334,145	313,523	313,523
Other liabilities	18,740	18,740	11,954	11,954
Total Liabilities	$          1,133,198	$                     1,133,198	$                873,174	$              873,174

(*) The fair value of the convertible senior notes (including the equity component) is disclosed in Note 9.

As of September 30, 2017 and December 31, 2016, the Company held no direct investments in auction rate securities, collateralized debt obligations or structured investment vehicles, and does not have any non-financial assets or liabilities measured at fair value.

As of September 30, 2017 and December 31, 2016, the fair value of money market funds, short and long-term investments classified as available for sale securities are as follows:

	September 30, 2017
	Cost	Gross Unrealized Gains (1)	Gross Unrealized Losses (1)	Estimated Fair Value
	(In thousands)
Cash and cash equivalents
Money Market Funds	$                       189,574	$                                 —	$                                —	$                              189,574
Total Cash and cash equivalents	$                       189,574	$                                 —	$                                —	$                              189,574
Short-term investments
Corporate Debt Securities	7,250	1	(4)	7,247
Sovereign Debt Securities	697	—	(3)	694
Total Short-term investments	$                           7,947	$                                   1	$                                 (7)	$                                  7,941
Long-term investments
Sovereign Debt Securities	$                         21,196	$                                 —	$                             (104)	$                                21,092
Corporate Debt Securities	23,210	43	(32)	23,221
Total Long-term investments	$                         44,406	$                                43	$                             (136)	$                                44,313
Total	$                       241,927	$                                44	$                             (143)	$                              241,828

	December 31, 2016
	Cost	Gross Unrealized Gains (1)	Gross Unrealized Losses (1)	Estimated Fair Value
	(In thousands)
Cash and cash equivalents
Money Market Funds	$           111,198	$                —	$                —	$           111,198
Total Cash and cash equivalents	$           111,198	$                —	$                —	$           111,198
Short-term investments
Sovereign Debt Securities	$               2,166	$                —	$                —	$               2,166
Corporate Debt Securities	102,509	26	(168)	102,367
Certificates of deposit	35,336	40	(2)	35,374
Total Short-term investments	$           140,011	$                66	$              (170)	$           139,907
Long-term investments
Sovereign Debt Securities	$             48,943	$                —	$              (406)	$             48,537
Corporate Debt Securities	105,632	90	(456)	105,266
Total Long-term investments	$           154,575	$                90	$              (862)	$           153,803
Total	$           405,784	$              156	$           (1,032)	$           404,908

(1) Unrealized gains (losses) from securities are attributable to market price movements, net foreign exchange losses and foreign currency translation. Management does not believe any remaining significant unrealized losses represent other-than-temporary impairments based on the evaluation of available evidence including the credit rating of the investments, as of September 30, 2017 and December 31, 2016.

The material portion of the Sovereign Debt Securities consists of U.S. Treasury Notes, which carry no significant risk.

As of September 30, 2017, the estimated fair values (in thousands of U.S. dollars) of cash equivalents, short-term and long-term investments classified by their effective maturities are as follows:

One year or less	197,515
One year to two years	20,331
Two years to three years	16,847
Three years to four years	7,135
Total	$             241,828

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies [Abstract]

Commitments and Contingencies

7. Commitments and Contingencies

Litigation and Other Legal Matters

The Company is subject to certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings. The Company accrues liabilities when it considers probable that future costs will be incurred and such costs can be reasonably estimated. The proceeding-related reserve is based on developments to date and historical information related to actions filed against the Company. As of September 30, 2017, the Company had established reserves for proceeding-related contingencies and other estimated contingencies of $6,208 thousand to cover legal actions against the Company in which its management has assessed the likelihood of a final adverse outcome as probable. Expected legal costs related to litigations are accrued when the legal service is actually provided. In addition, as of September 30, 2017 the Company and its subsidiaries are subject to certain legal actions considered by the Company’s management and its legal counsels to be reasonably possible for an aggregate amount up to $6,506thousand.

No loss amount has been accrued for such reasonably possible legal actions of which most significant (individually or in the aggregate) are described below and in note 15 is to the financial statements in the Form 10-K for the year ended December 31, 2016.

As of September 30, 2017, there were 56 lawsuits pending against our Argentine subsidiary in the Argentine ordinary courts and 1,856 pending claims in the Argentine Consumer Protection Agencies, where a lawyer is not required to file or pursue a claim.

As of September 30, 2017, there were 10 claims pending against our Mexican subsidiaries in the Mexican ordinary courts and 248claims pending against our Mexican subsidiaries in the Mexican Consumer Protection Agencies, where a lawyer is not required to file or pursue a claim.

As of September 30, 2017, 700legal actions were pending in the Brazilian ordinary courts. In addition, as of September 30, 2017, there were 4,016cases still pending in Brazilian consumer courts. Filing and pursuing of an action before Brazilian consumer courts do not require the assistance of a lawyer.

On July 12, 2017, São Paulo tax authorities assessed taxes and fines against one of our Brazilian subsidiaries (iBazar) relating to “ICMS Publicidade” for the period from July 2012 to December 2013 in an amount of R$ 12.2 million or $ 3.7 million according to the exchange rate in effect at that time. The Company will present administrative defense against the authorities’ claim. The opinion of the Company´s management, based on the opinion of external legal counsel, is that the risk of losing the case is reasonably possible, but not probable.

In most of the cases filed against the Company, the plaintiffs asserted that the Company was responsible for fraud committed    against them, or responsible for damages suffered when purchasing an item on the Company’s website, when using MercadoPago or MercadoEnvios, or when the Company invoiced them.

Other third parties have from time to time claimed, and others may claim in the future, that the Company was responsible for fraud committed against them, or that the Company has infringed their intellectual property rights. The underlying laws with respect to the potential liability of online intermediaries like the Company are unclear in the jurisdictions where the Company operates. Management believes that additional lawsuits alleging that the Company has violated copyright or trademark laws will be filed against the Company in the future.

Intellectual property and regulatory claims, whether meritorious or not, are time consuming and costly to resolve, require significant amounts of management time, could require expensive changes in the Company’s methods of doing business, or could require the Company to enter into costly royalty or licensing agreements. The Company may be subject to patent disputes, and be subject to patent infringement claims as the Company’s services expand in scope and complexity. In particular, the Company may face additional patent infringement claims involving various aspects of the payments businesses.

From time to time, the Company is involved in other disputes or regulatory inquiries that arise in the ordinary course of business. The number and significance of these disputes and inquiries are increasing as the Company’s business expands and the Company grows larger.

Buyer protection program

The Company provides consumers with a buyer protection program (“BPP”) for all transactions completed through the Company’s online payment solution (“MercadoPago”). This program is designed to protect buyers in the Marketplace from losses due primarily to fraud or counterparty non-performance. The Company’s BPP provides protection to consumers by reimbursing them for the total value of the unfulfilled transaction, if a purchased item does not arrive or does not match the seller’s description. The Company is entitled to recover from the third-party carrier companies performing the shipping service certain amounts paid under the BPP. Furthermore, in some specific circumstances (i.e. Black Friday, Hot Sale), the Company enters into insurance contracts with third party insurance companies in order to cover contingencies that may arise from the BPP.

The maximum potential exposure under this program is estimated to be the volume of payments on the Marketplace, for which claims may be made under the Company’s existing user agreements. 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 September 30, 2017, management's estimate of the maximum potential exposure related to the Company’s buyer protection program is $663,139 thousands, for which the Company recorded an allowance of $1,212 thousands as of that date.

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Long Term Retention Plan

9 Months Ended

Sep. 30, 2017

Long Term Retention Plan [Abstract]

Long Term Retention Plan

8. Long term retention plan (“LTRP”)

On April 3, 2017, the Board of Directors, upon the recommendation of the Compensation Committee, adopted the 2017 Long-Term Retention Plan (“2017 LTRP”). In addition to the annual salary and bonus of each employee, certain employees (“Eligible Employees”) are eligible to participate in the 2017 LTRP, which provides for the grant to an Eligible Employee of a cash-settled fixed (a “2017 LTRP Fixed Award”) and a cash-settled variable award, (a “2017 LTRP Variable Award”, and together with any 2017 LTRP Fixed Award, the “2017 LTRP Awards”). In order to receive payment in respect of the 2017 LTRP Awards, each Eligible Employee must satisfy the performance conditions established by the Board of Directors for such employee. If these conditions are satisfied, the Eligible Employee will, subject to his or her continued employment as of each applicable payment date, receive the full amount of his or her 2017 LTRP Awards, payable as follows:

· 2017 LTRP Fixed Award: The eligible employee will receive a fixed payment equal to 16.66% of his or her 2017 LTRP Fixed Award once a year for a period of six years starting in March 2018 (the “Annual Fixed Payment”); and

· 2017 LTRP Variable Award: On each date the Company pays the Annual Fixed Payment to the eligible employee, he or she will also receive a 2017 LTRP Variable Award payment equal to the product of (i) 16.66% of the applicable 2017 LTRP Variable Award and (ii) the quotient of (a) divided by (b), where (a), the numerator, equals the Applicable Year Stock Price (as defined below) and (b), the denominator, equals the 2016 Stock Price (as defined below). For purposes of the 2017 LTRP, the “2016 Stock Price” shall equal $164.17 (the average closing price of the Company´s common stock on the NASDAQ Global Market during the final 60-trading days of 2016) and the “Applicable Year Stock Price” shall equal the average closing price of the Company´s common stock on the NASDAQ Global Market during the final 60-trading days of the year preceding the applicable payment date for so long as the Company´s common stock is listed on the NASDAQ.

The following table summarizes the 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016 and 2017 long term retention plan accrued compensation expense for the nine and three-month periods ended September 30, 2017 and 2016, which are payable in cash according to the decisions made by the Board of Directors:

		Nine Months Ended September 30,				Three Months Ended September 30,
		2017		2016	2017		2016
		(In thousands)			(In thousands)
LTRP 2009	$	29	$	648	$	-	$	352
LTRP 2010		891		1,017		147		543
LTRP 2011		1,422		1,275		229		672
LTRP 2012		1,945		1,555		315		813
LTRP 2013		3,809		3,380		711		1,689
LTRP 2014		3,782		3,089		772		1,448
LTRP 2015		4,680		3,846		1,063		1,663
LTRP 2016		6,717		4,441		1,606		1,944
LTRP 2017		5,459		-		1,823		-
Total LTRP	$	28,734	$	19,251	$	6,666	$	9,124

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2.25% Convertible Senior Notes Due 2019

9 Months Ended

Sep. 30, 2017

2.25% Convertible Senior Notes Due 2019 [Abstract]

2.25% Convertible Senior Notes Due 2019

9. 2.25% Convertible Senior Notes Due 2019

On June 30, 2014, the Company issued $330 million of 2.25% convertible senior notes due 2019 (the “Notes”). The Notes are unsecured, unsubordinated obligations of the Company, which pay interest in cash semi-annually, on January 1 and July 1, at a rate of 2.25% per annum. The Notes will mature on July 1, 2019 unless earlier repurchased or converted in accordance with their terms prior to such date. The Notes may be converted, under specific conditions, based on an initial conversion rate of 7.9353 shares of common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of $126.02 per share of common stock), subject to adjustment as described in the indenture governing the Notes. 

Holders may convert their notes at their option at any time prior to January 1, 2019 only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2014 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. On or after January 1, 2019 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their notes at any time, regardless of the foregoing circumstances. 

During the period from October 1, 2016 through December 31, 2016, 12 Notes were converted for a total amount of $12 thousands. During the period from April 1, 2017 through September 30, 2017, 16 Notes were converted for a total amount of $16 thousands. Additionally, during the third quarter of 2017, the conversion threshold was met again and the Notes became convertible at the holders’ option beginning on October 1, 2017 and ending on December 31, 2017. The determination of whether or not the Notes are convertible must continue to be performed on a quarterly basis. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. The intention of the Company is to share-settle the total amount due upon conversion of the Notes.

From October  1, 2017 to the date of issuance of these interim condensed consolidated financial statements, no additional conversion requests were made.

In connection with the issuance of the Notes, the Company paid $19.7 million and$67.3 million (including transaction expenses) in June 2014 and September 2017, respectively, to enter into capped call transactions with respect to shares of the common stock (the “Capped Call Transactions”), with certain financial institutions. The Capped Call Transactions are expected generally to reduce the potential dilution upon conversion of the Convertible Notes in the event that the market price of the common stock is greater than the strike price of the Capped Call Transactions. The cost of the Capped Call Transactions is included as a net reduction to additional paid-in capital in the stockholders’ equity section of the consolidated balance sheets.

The total estimated fair value of the Notes was$687.9 millionand$458.8 millionas of September 30, 2017 and December 31, 2016, respectively. The fair value was determined based on the closing trading price per $100 of the Notes as of the last day of trading for the period. The Company considered the fair value of the Notes as of September 30, 2017 and December 31, 2016to be a Level 2 measurement. The fair value of the Notes is primarily affected by the trading price of our common stock and market interest rates.Based on the $258.9 closing price of the Company’s common stock on September 30, 2017, the if-converted value of the Notes exceeded their principal amount by $348.0 million.

The following table presents the carrying amounts of the liability and equity components related to the 2.25% Convertible Senior Notes Due 2019 as of September 30, 2017 and December 31, 2016:

	September 30, 2017		December 31, 2016
	(In thousands)
Amount of the equity component (1)	$	45,808	$	45,808
2.25% convertible senior notes due 2019	$	330,000	$	330,000
Unamortized debt discount (2)		(17,909)		(25,097)
Unamortized transaction costs related to the debt component		(2,862)		(3,968)
Contractual coupon interest accrual		5,569		7,425
Contractual coupon interest payment		(3,713)		(7,425)
Net carrying amount	$	311,085	$	300,935

(1) Net of $1,177 thousands of transaction costs related to the equity component of the Notes.

(2) As of September 30, 2017, the remaining period over which the unamortized debt discount will be amortized is 1.75 years.

The following table presents the interest expense for the contractual interest, the accretion of debt discount and the amortization of debt issuance costs:

	Nine-months period ended September 30,				Three-months period ended September 30,
	2017		2016		2017		2016
	(In thousands)		(In thousands)		(In thousands)		(In thousands)
Contractual coupon interest expense	$	5,569	$	5,569	$	1,856	$	1,856
Amortization of debt discount		7,188		6,806		2,440		2,310
Amortization of debt issuance costs		1,106		998		381		344
Total interest expense related to the Notes	$	13,863	$	13,373	$	4,677	$	4,510

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Cash Dividend Distribution

9 Months Ended

Sep. 30, 2017

Cash Dividend Distribution [Abstract]

Cash Dividend Distribution

10. Cash Dividend Distribution

In each of February, May, August and November of 2016, the Board of Directors approved a quarterly cash dividend of$6,624thousands (or$0.150per share) on the Company’soutstandingshares of common stock. The dividends were paid onApril 15, July 15,October 14, 2016andJanuary 16, 2017 to stockholders of record as of the close of business onMarch 31,  June 30, September 30, andDecember 31, 2016.

On March 2, 2017, the Board of Directors approved a change to the Company’s dividend policy for providing for a fixed quarterly dividend payment in 2017 of $0.150 per share ($0.600 per share annually). The new dividend policy took effect following the payment of the $0.150 per share dividend declared by the Board of Directors of the Company, which was paid on April 17, 2017 to shareholders of record as of the close of business on March 31, 2017.  

On May 2, 2017, the Board of Directors approved a quarterly cash dividend of $6,624 thousands (or $0.150 per share) on the Company´s outstanding shares of common stock. The second quarterly dividend was paid on July 14, 2017 to stockholdersof record as of the close of business on June 30, 2017.

On July 31, 2017, the Board of Directors approved a quarterly cash dividend of$6,624thousands (or$0.150per share) on ouroutstandingshares of common stock. The third quarterly dividend was paid onOctober 16, 2017to stockholders of record as of the close of business onSeptember 30, 2017.

On October 31, 2017, the Board of Directors approved a quarterly cash dividend of$6,624thousands (or$0.150per share) on ouroutstandingshares of common stock. This quarterly dividend is payable onJanuary 16, 2018to stockholders of record as of the close of business onDecember 31, 2017.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2017

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of presentation

The accompanying unaudited interim condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) and include the accounts of the Company and its wholly-owned subsidiaries. These interim condensed consolidated financial statements are stated in U.S. dollars, except for amounts otherwise indicated. Intercompany transactions and balances with subsidiaries have been eliminated for consolidation purposes.

Substantially all net revenues, cost of net revenues and operating expenses, are generated in the Company’s foreign operations. Operating income of foreign operations amounted to 96.7% and 99.9% of the consolidated amounts during the nine-month periods ended September 30, 2017 and 2016. Long-lived assets, Intangible assets and Goodwill located in the foreign jurisdictions totaled $247,401 thousands and $232,314thousands as of September 30, 2017 and December 31, 2016, respectively.

These interim condensed consolidated financial statements reflect the Company’s consolidated financial position as of September 30, 2017 and December 31, 2016. These financial statements also show the Company’s consolidated statements of income and comprehensive income for the nine and three-month periods ended September 30, 2017 and 2016; and statement of cash flows for the nine-month periods ended September 30, 2017 and 2016. These interim condensed consolidated financial statements include all normal recurring adjustments that management believes are necessary to fairly state the Company’s financial position, operating results and cash flows.

Because all of the disclosures required by U.S. GAAP for annual consolidated financial statements are not included herein, these unaudited interim condensed financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2016, contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”). The condensed consolidated statements of income, of comprehensive income and of cash flows for the periods presented herein are not necessarily indicative of results expected for any future period. For a more detailed discussion of the Company’s significant accounting policies, see note 2 to the financial statements in the Form 10-K. During the nine-month period ended September 30, 2017, there were no material updates made to the Company’s significant accounting policies.

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 Venezuela since January 1, 2010, as described below. Accordingly, these foreign operating subsidiaries translate assets and liabilities from their local currencies into U.S. dollars by using period-end exchange rates while income and expense accounts are translated at the average rates in effect during the period, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of the transaction are used. The resulting translation adjustment is recorded as a component of other comprehensive(loss) income.

Venezuelan currency status

Pursuant to U.S. GAAP, the Company has transitioned its Venezuelan operations to highly inflationary status as from January 1, 2010, which requires that transactions and balances are re-measured as if the U.S. dollar was the functional currency for such operation. The cumulative three year inflation rate as from December 31, 2010 exceeded 100% at each period end. Thus, the Company continues to treat the economy of Venezuela as highly-inflationary.

On March 9, 2016 the Central Bank of Venezuela (“BCV”) issued the Exchange Agreement No.35. The agreement established a “protected” exchange rate (“DIPRO”) for certain transactions, such as but not limited to: imports of goods of the food and health sectors, as well as supplies associated with the production of said sectors; expenses relating to health treatments, sports, culture, scientific research, and other urgent matters defined by the exchange regulations. All foreign currency transactions not expressly provided in Exchange Agreement No.35 will be processed on the alternate foreign currency markets governed by the exchange regulations, at the floating supplementary market exchange rate (“DICOM”).

Additionally, the agreement established that the alternate foreign currency markets referred to in Exchange Agreement No.33 of February 10, 2015 (“SIMADI”) will continue to operate until replaced by others. From March 31, 2016 through June 30, 2016, the SIMADI exchange rate increased from 273 BsF per U.S. dollar to 628 BsF per U.S. dollar, a 130% increase in the exchange rate. As a consequence of the local currency devaluation, the Company recorded a foreign exchange loss of $4.9 million during the second quarter of 2016.

Considering the significant devaluation and the lower U.S. dollar-equivalent cash flows then expected from the Venezuelan business, the Company reviewed its long-lived assets (including non-current other assets), goodwill and intangible assets with indefinite useful life for impairment and concluded that the carrying value of certain real estate investments in Venezuela as of June 30, 2016 would not be fully recoverable. As a result, on June 30, 2016, the Company recorded an impairment of offices and commercial property under construction included within non-current other assets of $13.7 million. The carrying amount of offices and commercial property under construction was adjusted to its estimated fair value of approximately $12.5 million as of June 30, 2016, by using the market approach, and considering prices for similar assets.

On May 19, 2017, the BCV issued the Exchange Agreement No.38, which established a new foreign exchange mechanism under DICOM, replacing SIMADI. The new mechanism consists of auctions, administered by an auction committee, where sellers and buyers from the private sector may offer foreign currency under certain limits determined by the BCV.

In light of the disappearance of SIMADI  (which closed at 728.0 per U.S. dollar), and the Company’s inability to gain access to U.S. dollars under SIMADI, it started requesting U.S. dollars through DICOM. As a result, the Company expects to settle its transactions through DICOM going forward and concluded that the DICOM exchange rate should be used as from June 1, 2017 to measure its bolivar-denominated monetary assets and liabilities and to measure the revenues and expenses of the Venezuelan subsidiaries. Therefore, as of June 30, 2017, monetary assets and liabilities in Bolivares Fuertes (“BsF”) were re-measured to the U.S. dollar using the DICOM closing exchange rate of 2640.0BsF per U.S. dollar. As a consequence of the local currency devaluation, the Company recorded a foreign exchange loss of $22.0 million during the second quarter of 2017.

Considering the significant devaluation and the lower U.S. dollar-equivalent cash flows then expected from the Venezuelan business, the Company reviewed its long-lived assets (including non-current other assets), goodwill and intangible assets with indefinite useful life for impairment and concluded that the carrying value of certain real estate investments in Venezuela as of June 30, 2017 would not be fully recoverable. As a result, on June 30, 2017, the Company recorded an impairment of offices and commercial property under construction included within non-current other assets of $2.8 million. The carrying amount of offices and commercial property under construction was adjusted to its estimated fair value of approximately $9.7 million as of June 30, 2017, by using the market approach and considering prices for similar assets. As of September 30, 2017, the DICOM exchange rate was 3,345.0 BsF per U.S. dollar.

Until 2010 the Company was able to obtain U.S. dollars for any purpose, including dividends distribution, using alternative mechanisms other than through the Commission for the Administration of Foreign Exchange Control (CADIVI). Those U.S. dollars, obtained at a higher exchange rate than the one offered by CADIVI, and held at U.S. bank accounts of its Venezuelan subsidiaries, were used until 2011 for dividend distributions from its Venezuelan subsidiaries. The Company has not distributed dividends from the Venezuelan subsidiaries since 2011.

The following table sets forth the assets, liabilities and net assets of the Company’s Venezuelan subsidiaries, before intercompany eliminations of a net liability of $29,594 thousands and $ 15,843 thousands, as of September 30, 2017 and December 31, 2016 and net revenues for the nine-month periods ended September 30, 2017 and 2016:

			September 30,
		2017		2016
		(In thousands)
Venezuelan operations
	Net Revenues	$	38,329	$	26,451
		September 30,		December 31,
		2017		2016
		(In thousands)
	Assets		62,648		66,165
	Liabilities		(37,269)		(22,950)
	Net Assets	$	25,379	$	43,215

As of September 30, 2017, the net assets (before intercompany eliminations) of the Venezuelan subsidiaries amounted to 6.2% of consolidated net assets, and cash and investments of the Venezuelan subsidiaries held in local currency in Venezuela amounted to 2.2% of our consolidated cash and investments.

The Company’s ability to obtain U.S. dollars in Venezuela is negatively affected by the exchange regulations in Venezuela that are described above and elsewhere in these interim condensed consolidated financial statements. In addition, its business and ability to obtain U.S. dollars in Venezuela would be negatively affected by additional material devaluations or the imposition of significant additional and more stringent controls on foreign currency exchange by the Venezuelan government.

Despite the current difficult macroeconomic environment in Venezuela, the Company continues to actively manage, through its Venezuelan subsidiaries, its investment in Venezuela.

Income and Asset Taxes

Income and asset taxes

The Company is subject to U.S. and foreign income taxes. The Company accounts for income taxes following the liability method of accounting which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets are also recognized for tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets or liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded when, based on the available evidence, it is more likely than not that all or a portion of the Company’s deferred tax assets will not be realized. The Company’s income tax expense consists of taxes currently payable, if any, plus the change during the period in the Company’s deferred tax assets and liabilities.

On August 17, 2011, the Argentine government issued a new software development law and on September 9, 2013 the regulatory decree was issued, which established the new requirement to become beneficiary of the new software development law. The decree establishes compliance requirements with annual incremental ratios related to exports of services and research and development expenses that must be achieved to remain within the tax holiday. The Company’s Argentine subsidiary has to achieve certain required ratios annually under the software development law in order to be eligible for the benefits mentioned below.

On September 17, 2015, the Argentine Industry Secretary issued Resolution 1041/2015 approving the Company’s application for eligibility under the new software development law for the Company’s Argentinean subsidiary, Mercadolibre S.R.L. Furthermore, on September 18, 2016, the Argentine Industry Secretary issued Resolutions 93/2016 and 97/2016 approving the Company’s application for eligibility under the new software development law for the Company’s Argentinean subsidiaries, Neosur S.RL. and Business Vision S.A. As a result, the Company’s Argentinean subsidiaries have been granted a tax holiday retroactive from September 18, 2014. A portion of the benefits obtained as beneficiaries of the new law is a relief of 60% of total income tax related to software development activities and a 70% relief in payroll taxes related to software development activities.

The benefits to the Company under the software development law will expire on December 31, 2019. As a result of the Company’s eligibility under the new law, it recorded an income tax benefit of $17,672 thousands and $6,367 thousands during the nine and three-month periods ended September 30, 2017, respectively. Aggregate per share effect of the Argentine tax holiday amounted to $0.40 and $0.14 for the nine and three-month periods ended September 30, 2017, respectively. Furthermore, the Company recorded a labor cost benefit of $5,513 thousands and $2,016 thousands during the nine and three-month periods ended September 30, 2017, respectively. Additionally, $1,623 thousands and $587 thousands were accrued to pay software development law audit fees during the nine and three-month periods ended September 30, 2017, respectively. During the nine months period ended September 30, 2016, the Company recorded an income tax benefit of $16,018thousands, a labor cost benefit of $4,173 thousands and $1,416 thousands were accrued to pay software development law audit fees. Additionally, during the third quarter of 2016, the Company recorded an income tax benefit of $6,823 thousands, a labor cost benefit of $2,167 thousands and $631 thousands were accrued to pay software development law audit fees. Aggregate per share effect of the Argentine tax holiday amounted to $0.46 and $0.20 for the nine  and three-month periods ended September  30, 2016, respectively.

As of September 30, 2017 and December 31, 2016, the Company had included under non-current deferred tax assets the foreign tax credits related to the dividend distributions received from its subsidiaries for a total amount of $11,588 thousands and $13,515 thousands, respectively. Those foreign tax credits will be used to offset the future domestic income tax payable.

Impairment of Long-lived Assets

Impairment of long-lived assets

The Company reviews its long-lived assets (including non-current other assets) for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

As explained in section “Foreign Currency Translation” of the present Note to these interim condensed consolidated financial statements, Venezuelan currency experienced a steep devaluation in the second quarter of 2017 and 2016.

Considering this change in facts and circumstances and the lower U.S. dollar-equivalent cash flows expected from the Venezuelan business, and long-lived assets expected use, the Company concluded that certain real estate investments held in Caracas, Venezuela, should be impaired. The fair value of long-lived assets was estimated through market approach using level 3 inputs in the fair value hierarchy. These level 3 inputs included, but are not limited to, executed purchase agreements in similar assets and third party valuations. As a consequence, the Company estimated the fair value of the impaired long-lived assets, and recorded impairment losses of $2.8 million and $13.7 million on June 30, 2017 and June 30, 2016, respectively.

Use of Estimates

Use of estimates

The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for, but not limited to accounting for allowance for doubtful accounts and chargeback provisions, recoverability of goodwill and intangible assets with indefinite useful life, useful life of long-lived assets and intangible assets, impairment of short-term and long-term investments, impairment of long-lived assets, compensation costs relating to the Company’s long term retention plan, fair value of convertible debt note, recognition of income taxes and contingencies. Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements

Recently issued accounting pronouncements

In 2014, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance related to revenue recognition. This new standard will replace all current GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition guidance provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. In 2016, the FASB issued several amendments to the standard, including principal versus agent considerations when another party is involved in providing goods or services to a customer and the application of identifying performance obligations. The Company has substantially completed the assessment on the adoption of this standard concluding that it is not expected to have a material measurement impact on the Company´s financial statements. However, the Company continues assessing the potential impacts regarding the presentation of certain incentives recorded as an expense under current guidance.  The adoption of this standard will also require to expand and include certain additional disclosures. The standard is required to be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. The Company continues evaluating the transition method upon adoption. The Company will adopt the new revenue standard in its first quarter of 2018.

OnFebruary25, 2016 the FASB issued ASU 2016-02.Theamendments in this updatecreate Topic 842, Leases, which supersedes Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. Previous GAAP did not require lease assets and lease liabilities to be recognized for most leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in the statement of comprehensive income and the statement of cash flows is largely unchanged from previous GAAP. Based on existing leases currently classified as operating leases, the Company expects to recognize on the statements of financial position right-of-use assets and lease liabilities. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is assessing the effects that the adoption of this accounting pronouncement may have on the Company’s financial statements.

On June 16, 2016 the FASB issued ASU 2016-13 “Financial Instruments-Credit Losses (Topic 326): Measurement of credit losses on financial instruments”. This update amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, this update eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however this topic will require that credit losses be presented as an allowance rather than as a write-down. The new standard is effective for fiscal years beginning after December 15, 2019. The Company is assessing the effects that the adoption of this accounting pronouncement may have on its financial statements. 

On October 24, 2016 the FASB issued “ASU 2016-16—Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory”. This update eliminates the prohibition on recognizing current and deferred income tax consequences for an intra-entity asset transfer until the asset or assets have been sold to an outside party. Consequently, this update requires recognition of the current and deferred income tax consequences of an intra-entity asset transfer when the transfer occurs. The new standard is effective for fiscal years beginning after December 15, 2017.The adoption of this standard is not expected to have a material impact on the Company´s financial statements. 

On September 29, 2017 the FASB issued “ASU 2017-13—Revenue recognition (Topic 605), Revenue from contracts with customers (Topic 606), Leases (Topic 840), and Leases (Topic 842)”. This update addresses Transition Related to Accounting Standards Updates No. 2014-09, Revenue from Contracts with Customers (Topic 606), and No. 2016-02, Leases (Topic 842). This Update also supersedes SEC paragraphs pursuant the rescission of SEC Staff Announcement, “Accounting for Management Fees Based on a Formula”, effective upon the initial adoption of Topic 606, Revenue from Contracts with Customers, and SEC Staff Announcement, “Lessor Consideration of Third-Party Value Guarantees,” effective upon the initial adoption of Topic 842, Leases. The adoption of this standard is not expected to have a material impact on the Company´s financial statements.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2017

Summary of Significant Accounting Policies [Abstract]

Assets, Liabilities and Net Assets of Company's Venezuelan Subsidiaries

			September 30,
		2017		2016
		(In thousands)
Venezuelan operations
	Net Revenues	$	38,329	$	26,451
		September 30,		December 31,
		2017		2016
		(In thousands)
	Assets		62,648		66,165
	Liabilities		(37,269)		(22,950)
	Net Assets	$	25,379	$	43,215

Accumulated Other Comprehensive Loss

	September 30,	December 31,
	2017	2016
	(In thousands)
Accumulated other comprehensive loss:
Foreign currency translation	$                    (277,171)	$             (259,226)
Unrealized gains (losses) on investments	518	(909)
Estimated tax (loss) gain on unrealized gains (losses) on investments	(178)	322
	$                    (276,831)	$             (259,813)

Summary of Changes in Accumulated Balances of Other Comprehensive Loss

	Unrealized	Foreign	Estimated tax
	(Losses) Gains on	Currency	(expense)
	Investments	Translation	benefit	Total
	(In thousands)
Balances as of December 31, 2016	$                          (909)	$             (259,226)	$                    322	$           (259,813)
Other comprehensive loss before reclassifications adjustments for gains (losses) on available for sale investments	518	(17,945)	(178)	(17,605)
Amount of gain (loss) reclassified from accumulated other comprehensive loss	909	—	(322)	587
Net current period other comprehensive income gain (loss)	1,427	(17,945)	(500)	(17,018)
Ending balance	$                            518	$             (277,171)	$                  (178)	$           (276,831)

Reclassifications Out of Accumulated Other Comprehensive Loss

	Amount of (Loss) Gain
	Reclassified from
Details about Accumulated	Accumulated Other
Other Comprehensive Loss	Comprehensive	Affected Line Item
Components	Loss	in the Statement of Income
	(In thousands)
Unrealized losses on investments	$                          (909)	Interest expense and other financial losses
Estimated tax gain on unrealized losses on investments	322	Income tax gain
Total reclassifications for the year	$                          (587)	Total, net of income taxes

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Net Income Per Share (Tables)

9 Months Ended

Sep. 30, 2017

Net Income Per Share [Abstract]

Net Income (Loss) Per Share of Common Stock

Net income per share of common stock is as follows for the nine and three-month periods ended September 30, 2017 and 2016:

			Nine Months Ended September 30,					Three Months Ended September 30,
	2017					2016		2017		2016
			(In thousands)					(In thousands)
		Basic		Diluted	Basic		Diluted	Basic	Diluted	Basic	Diluted
Net income per common share	$      1.85			$         1.85	$         1.93		$         1.93	$         0.63	$         0.63	$         0.88	$        0.88
Numerator:
Net income	$  81,500			$     81,500	$     85,017		$     85,017	$     27,666	$     27,666	$     38,912	$38,912
Denominator:
Weighted average of common stock outstanding for Basic earnings per share	44,157,364				44,157,215			44,157,364		44,157,341
Adjusted weighted average of common stock outstanding for Diluted earnings per share				44,157,364			44,157,215		44,157,364		44,157,341

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets [Abstract]

Composition of Goodwill and Intangible Assets

	September 30,	December 31,
	2017	2016
	(In thousands)
Goodwill	$                  95,249	$                  91,797
Intangible assets with indefinite lives
- Trademarks	13,153	12,490
Amortizable intangible assets
- Licenses and others	6,565	8,738
- Non-compete agreement	2,491	1,787
- Customer list	15,215	14,580
- Trademarks	1,854	993
Total intangible assets	$                  39,278	$                  38,588
Accumulated amortization	(14,636)	(12,311)
Total intangible assets, net	$                  24,642	$                  26,277

Table Showing Changes in Carrying Amount of Goodwill

	Period ended September 30, 2017
	Brazil	Argentina	Chile	Mexico	Venezuela	Colombia	Other Countries	Total
	(In thousands)
Balance, beginning of the period	$          27,660	$               6,587	$             17,388	$                29,342	$                                       5,989	$                            3,643	$                     1,188	$             91,797
- Effect of exchange rates changes	245	(809)	783	3,158	—	50	25	3,452
Balance, end of the period	$          27,905	$               5,778	$             18,171	$                32,500	$                                       5,989	$                            3,693	$                     1,213	$             95,249

	Year ended December 31, 2016
	Brazil	Argentina	Chile	Mexico	Venezuela	Colombia	Other Countries	Total
	(In thousands)
Balance, beginning of year	$             18,526	$               7,430	$             16,438	$             33,834	$                            5,729	$                   3,437	$               1,151	$             86,545
- Business acquisition	5,635	700	—	190	260	57	32	6,874
- Effect of exchange rates changes	3,499	(1,543)	950	(4,682)	—	149	5	(1,622)
Balance, end of the year	$             27,660	$               6,587	$             17,388	$             29,342	$                            5,989	$                   3,643	$               1,188	$             91,797

Expected Intangible Asset Amortization Expense

For year ended 12/31/2017	$                    1,343
For year ended 12/31/2018	4,475
For year ended 12/31/2019	2,201
For year ended 12/31/2020	956
Thereafter	2,514
	$                  11,489

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Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Financial Performance of Company's Reporting Segments

	Nine Months Ended September 30, 2017
	Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
	(In thousands)
Net revenues	$           569,320	$              250,692	$               58,324	$                38,329	$               44,452	$             961,117
Direct costs	(390,008)	(150,973)	(95,683)	(16,841)	(37,052)	(690,557)
Impairment of Long-lived Assets	-	-	-	(2,837)	-	(2,837)
Direct contribution	179,312	99,719	(37,359)	18,651	7,400	267,723
Operating expenses and indirect costs of net revenues						(146,841)
Income from operations						120,882
Other income (expenses):
Interest income and other financial gains						37,020
Interest expense and other financial losses						(19,686)
Foreign currency losses						(19,475)
Net income before income tax expense						$             118,741

	Nine Months Ended September 30, 2016
	Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
	(In thousands)
Net revenues	$                    311,427	$                    185,885	$                   34,375	$                   26,451	$                   29,983	$                        588,121
Direct costs	(188,772)	(105,217)	(29,004)	(12,691)	(21,281)	(356,965)
Impairment of Long-lived Assets	-	-	-	(13,717)	-	(13,717)
Direct contribution	122,655	80,668	5,371	43	8,702	217,439
Operating expenses and indirect costs of net revenues						(101,055)
Income from operations						116,384
Other income (expenses):
Interest income and other financial gains						25,192
Interest expense and other financial losses						(18,807)
Foreign currency losses						(5,062)
Net income before income tax expense						$                        117,707

		Three Months Ended September 30, 2017
		Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
		(In thousands)
Net revenues		$            229,475	$           91,308	$               22,604	$                     9,751	$               17,523	$                        370,661
Direct costs		(182,858)	(56,210)	(36,038)	(4,582)	(14,409)	(294,097)
Direct contribution		46,617	35,098	(13,434)	5,169	3,114	76,564
Operating expenses and indirect costs of net revenues							(49,022)
Income from operations							27,542
Other income (expenses):
	Interest income and other financial gains						14,200
	Interest expense and other financial losses						(6,709)
	Foreign currency gains						1,622
Net income before income tax expense							$36,655

		Three Months Ended September 30, 2016
		Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
		(In thousands)
Net revenues		$131,003	$69,983	$11,807	$6,885	$11,169	$230,847
Direct costs		(77,012)	(39,026)	(10,353)	(3,462)	(7,943)	(137,796)
Direct contribution		53,991	30,957	1,454	3,423	3,226	93,051
Operating expenses and indirect costs of net revenues							(39,342)
Income from operations							53,709
Other income (expenses):
	Interest income and other financial gains						9,892
	Interest expense and other financial losses						(6,492)
	Foreign currency losses						(4,823)
Net income before income tax expense							$52,286

Allocation of Long-Lived Tangible Assets Based on Geography

	September 30,	December 31,
	2017	2016
	(In thousands)
US property and equipment, net	$                    8,445	$                    9,771
Other countries
Argentina	25,842	25,071
Brazil	67,351	55,706
Mexico	3,487	2,307
Venezuela	21,935	21,615
Other countries	9,041	9,791
	$                127,656	$                114,490
Total property and equipment, net	$                136,101	$                124,261

Allocation of Goodwill and Intangible Assets Based on Geography

	September 30,	December 31,
	2017	2016
	(In thousands)
US intangible assets	$                      146	$                      250
Other countries goodwill and intangible assets
Argentina	6,630	7,717
Brazil	30,400	31,170
Mexico	41,992	38,860
Venezuela	7,168	7,366
Chile	28,164	27,395
Other countries	5,391	5,316
	$               119,745	$               117,824
Total goodwill and intangible assets	$               119,891	$               118,074

Consolidated Net Revenues by Similar Products and Services

	Nine-months Ended September 30,		Three-months Ended September 30,
Consolidated Net Revenues	2017	2016	2017	2016
	(In thousands)		(In thousands)
Marketplace	$                582,475	$                341,749	$                227,269	$                134,374
Non-marketplace (*) (**)	$                378,642	$                246,372	$                143,392	$                  96,473
Total	$                961,117	$                588,121	$                370,661	$                230,847

(*)  Includes, among other things, Ad Sales, Classified Fees, Payment Fees, Shipping Fees and other ancillary services.

(**) Includes an amount of $232,426 thousands and $139,630 thousands of Payment Fees for the nine-month periods ended September 30, 2017 and 2016, respectively. Includes an amount of $92,254 thousands and $52,444 thousands of Payment Fees for the three-month periods ended September 30, 2017 and 2016, respectively.

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Fair Value Measurement of Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2017

Fair Value Measurement of Assets and Liabilities [Abstract]

Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

		Quoted Prices in				Quoted Prices in
	Balances as of	active markets for	Significant other	Unobservable	Balances as of	active markets for	Significant other	Unobservable
	September 30,	identical Assets	observable inputs	inputs	December 31,	identical Assets	observable inputs	inputs
Description	2017	(Level 1)	(Level 2)	(Level 3)	2016	(Level 1)	(Level 2)	(Level 3)
	(In thousands)
Assets
Cash and Cash Equivalents:
Money Market Funds	$                  189,574	$               189,574	$                           —	$           —	$          111,198	$                111,198	$                  —	$               —
Investments:
Sovereign Debt Securities	$                   21,786	$                 21,786	$                           —	$           —	$            50,703	$                  50,703	$                  —	$                —
Corporate Debt Securities	30,468	28,384	2,084	—	207,633	61,986	145,647	—
Certificates of deposit	—	—	—	—	35,374	—	35,374	—
Total Financial Assets	$                  241,828	$               239,744	$                      2,084	$           —	$          404,908	$               223,887	$         181,021	$             —
Liabilities:
Contingent considerations	$                          —	$                        —	$                           —	$           —	$              4,213	$                         —	$                  —	$        4,213
Long-term retention plan	38,503	—	38,503	—	27,135	—	27,135	—
Total Financial Liabilities	$            38,503	$                        —	$            38,503	$           —	$            31,348	$                         —	$           27,135	$        4,213

Fair Value of Financial Assets and Liabilities Measured at Amortized Cost

	Balances as of	Significant other	Balances as of	Significant other
	September 30,	observable inputs	December 31,	observable inputs
	2017	(Level 2)	2016	(Level 2)
	(In thousands)
Assets
Time Deposits	$             167,224	$             167,224	$                113,414	$              113,414
Accounts receivable	28,564	28,564	25,435	25,435
Credit Cards receivable	406,883	406,883	307,904	307,904
Loans receivable, net	51,843	51,843	6,283	6,283
Other assets	89,097	89,097	58,900	58,900
Total Assets	$             743,611	$                        743,611	$                511,936	$              511,936
Liabilities
Accounts payable and accrued expenses	$             181,557	$                        181,557	$                105,106	$              105,106
Funds payable to customers	519,420	519,420	370,693	370,693
Salaries and social security payable	44,789	44,789	37,936	37,936
Taxes payable	27,923	27,923	27,338	27,338
Dividends payable	6,624	6,624	6,624	6,624
Loans payable and other financial liabilities (*)	334,145	334,145	313,523	313,523
Other liabilities	18,740	18,740	11,954	11,954
Total Liabilities	$          1,133,198	$                     1,133,198	$                873,174	$              873,174

(*) The fair value of the convertible senior notes (including the equity component) is disclosed in Note 9.

Fair Value of Money Market Funds, Short and Long-Term Investments Classified as Available for Sale Securities

	December 31, 2016
	Cost	Gross Unrealized Gains (1)	Gross Unrealized Losses (1)	Estimated Fair Value
	(In thousands)
Cash and cash equivalents
Money Market Funds	$           111,198	$                —	$                —	$           111,198
Total Cash and cash equivalents	$           111,198	$                —	$                —	$           111,198
Short-term investments
Sovereign Debt Securities	$               2,166	$                —	$                —	$               2,166
Corporate Debt Securities	102,509	26	(168)	102,367
Certificates of deposit	35,336	40	(2)	35,374
Total Short-term investments	$           140,011	$                66	$              (170)	$           139,907
Long-term investments
Sovereign Debt Securities	$             48,943	$                —	$              (406)	$             48,537
Corporate Debt Securities	105,632	90	(456)	105,266
Total Long-term investments	$           154,575	$                90	$              (862)	$           153,803
Total	$           405,784	$              156	$           (1,032)	$           404,908

(1) Unrealized gains (losses) from securities are attributable to market price movements, net foreign exchange losses and foreign currency translation. Management does not believe any remaining significant unrealized losses represent other-than-temporary impairments based on the evaluation of available evidence including the credit rating of the investments, as of September 30, 2017 and December 31, 2016.

Estimated Fair Values of Money Market Funds, Short-Term and Long-Term Investments

One year or less	197,515
One year to two years	20,331
Two years to three years	16,847
Three years to four years	7,135
Total	$             241,828

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Long Term Retention Plan (Tables)

9 Months Ended

Sep. 30, 2017

Long Term Retention Plan [Abstract]

Long Term Retention Plans Accrued Compensation Expense

		Nine Months Ended September 30,				Three Months Ended September 30,
		2017		2016	2017		2016
		(In thousands)			(In thousands)
LTRP 2009	$	29	$	648	$	-	$	352
LTRP 2010		891		1,017		147		543
LTRP 2011		1,422		1,275		229		672
LTRP 2012		1,945		1,555		315		813
LTRP 2013		3,809		3,380		711		1,689
LTRP 2014		3,782		3,089		772		1,448
LTRP 2015		4,680		3,846		1,063		1,663
LTRP 2016		6,717		4,441		1,606		1,944
LTRP 2017		5,459		-		1,823		-
Total LTRP	$	28,734	$	19,251	$	6,666	$	9,124

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2.25% Convertible Senior Notes Due 2019 (Tables)

9 Months Ended

Sep. 30, 2017

2.25% Convertible Senior Notes Due 2019 [Abstract]

Carrying Amounts of Liability and Equity Components

	September 30, 2017		December 31, 2016
	(In thousands)
Amount of the equity component (1)	$	45,808	$	45,808
2.25% convertible senior notes due 2019	$	330,000	$	330,000
Unamortized debt discount (2)		(17,909)		(25,097)
Unamortized transaction costs related to the debt component		(2,862)		(3,968)
Contractual coupon interest accrual		5,569		7,425
Contractual coupon interest payment		(3,713)		(7,425)
Net carrying amount	$	311,085	$	300,935

(1) Net of $1,177 thousands of transaction costs related to the equity component of the Notes.

(2) As of September 30, 2017, the remaining period over which the unamortized debt discount will be amortized is 1.75 years.

Summary of Interest Expense for Contractual Interest and Accretion of Debt Discount

	Nine-months period ended September 30,				Three-months period ended September 30,
	2017		2016		2017		2016
	(In thousands)		(In thousands)		(In thousands)		(In thousands)
Contractual coupon interest expense	$	5,569	$	5,569	$	1,856	$	1,856
Amortization of debt discount		7,188		6,806		2,440		2,310
Amortization of debt issuance costs		1,106		998		381		344
Total interest expense related to the Notes	$	13,863	$	13,373	$	4,677	$	4,510

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Summary of Significant Accounting Policies (Narrative) (Details) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($) $ / shares VEF / $	Jun. 30, 2017 USD ($) VEF / $	Sep. 30, 2016 USD ($) $ / shares	Jun. 30, 2016 USD ($) VEF / $	Jun. 30, 2017 USD ($) VEF / $	Jun. 30, 2016 USD ($) VEF / $	Sep. 30, 2017 USD ($) $ / shares VEF / $	Sep. 30, 2016 USD ($) $ / shares	Dec. 31, 2016 USD ($)	Mar. 31, 2016 VEF / $
Significant Accounting Policies [Line Items]
Percentage of revenues and operating costs generated in foreign operations							96.70%	99.90%
Long-lived assets, intangible assets and goodwill located in the foreign operations	$ 247,401						$ 247,401		$ 232,314
Foreign currency losses	(1,622)		$ 4,823				19,475	$ 5,062
Impairment of Long lived assets							2,837	13,717
Long-Lived Assets	136,101						136,101		124,261
Liabilities	1,212,136						$ 1,212,136		938,581
Percentage on relief of total income tax							60.00%
Percentage on relief of payroll tax							70.00%
Foreign tax credit	11,588						$ 11,588		13,515
Payment for capped call transactions							67,308
New Software Development Law [Member]
Significant Accounting Policies [Line Items]
Income tax gain	6,367		6,823				17,672	16,018
Labor cost benefit	$ 2,016		$ 2,167				$ 5,513	$ 4,173
Aggregate per share effect of the Argentine tax holiday | $ / shares	$ 0.14		$ 0.20				$ 0.40	$ 0.46
Software development law audit fees	$ 587		$ 631				$ 1,623	$ 1,416
Venezuelan Operations [Member]
Significant Accounting Policies [Line Items]
Foreign exchange rate | VEF / $	3,345.0	2,640.0		628	2,640.0	628	3,345.0			273
Foreign currency losses		$ 22,000		$ 4,900
Cumulative Inflation Rate Period							3 years
Foreign currency inflation rate				130.00%		130.00%
Impairment of Long lived assets					$ 2,800	$ 13,700	$ 2,800	$ 13,700
Long-Lived Assets		$ 9,700		$ 12,500	$ 9,700	$ 12,500
Liabilities	$ 37,269						$ 37,269		22,950
Percentage of consolidated net assets	6.20%						6.20%
Percentage of consolidated cash and investments	2.20%						2.20%
Venezuelan Operations [Member] | Minimum [Member]
Significant Accounting Policies [Line Items]
Foreign currency inflation rate	100.00%						100.00%
Venezuelan Operations [Member] | Intersegment Eliminations [Member]
Significant Accounting Policies [Line Items]
Liabilities	$ 29,594						$ 29,594		$ 15,843
Venezuelan Operations [Member] | SIMADI [Member]
Significant Accounting Policies [Line Items]
Foreign exchange rate | VEF / $	728.0						728.0

XML

Summary of Significant Accounting Policies (Assets, Liabilities and Net Assets of Company's Venezuelan Subsidiaries) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Significant Accounting Policies [Line Items]
Net Revenues	$ 370,661	$ 230,847	$ 961,117	$ 588,121
Assets	1,618,292		1,618,292		$ 1,367,435
Liabilities	(1,212,136)		(1,212,136)		(938,581)
Venezuelan Operations [Member]
Significant Accounting Policies [Line Items]
Net Revenues			38,329	$ 26,451
Assets	62,648		62,648		66,165
Liabilities	(37,269)		(37,269)		(22,950)
Net Assets	$ 25,379		$ 25,379		$ 43,215

XML

Summary of Significant Accounting Policies (Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Summary of Significant Accounting Policies [Abstract]
Foreign currency translation	$ (277,171)	$ (259,226)
Unrealized gains (losses) on investments	518	(909)
Estimated tax (loss) gain on unrealized gains (losses) on investments	(178)	322
Accumulated other comprehensive loss	$ (276,831)	$ (259,813)

XML

Summary of Significant Accounting Policies (Summary of Changes in Accumulated Balances of Other Comprehensive Loss) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Beginning Balance, Estimated tax (expense) benefit	$ 322
Other comprehensive loss before reclassifications adjustments for gains (losses) on available for sale investments, Estimated tax (expense) benefit	(178)
Amount of gain (loss) reclassified from accumulated other comprehensive loss, Estimated tax (expense) benefit	(322)
Net current period other comprehensive income gain (loss), Estimated tax (expense) benefit	(500)
Ending Balance, Estimated tax (expense) benefit	(178)
Beginning Balance	(259,813)
Other comprehensive loss before reclassifications adjustments for gains (losses) on available for sale investments, net of tax	(17,605)
Amount of gain (loss) reclassified from accumulated other comprehensive loss, net of tax	587	$ 672
Net current period other comprehensive income gain (loss), net of tax	(17,018)
Ending Balance	(276,831)
Unrealized (Losses) Gains on Investments [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Beginning Balance	(909)
Other comprehensive loss before reclassifications adjustments for gains (losses) on available for sale investments, before tax	518
Amount of gain (loss) reclassified from accumulated other comprehensive loss, before tax	909
Net current period other comprehensive income gain (loss), before tax	1,427
Ending Balance	518
Foreign Currency Translation [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Beginning Balance	(259,226)
Other comprehensive loss before reclassifications adjustments for gains (losses) on available for sale investments, before tax	(17,945)
Net current period other comprehensive income gain (loss), before tax	(17,945)
Ending Balance	$ (277,171)

XML

Summary of Significant Accounting Policies (Reclassifications Out of Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest expense and other financial losses	$ (6,709)	$ (6,492)	$ (19,686)	$ (18,807)
Income tax gain	$ (8,989)	$ (13,374)	(37,241)	$ (32,690)
Amount of (Loss) Gain Reclassified from Accumulated Other Comprehensive Loss [Member] | Unrealized (Losses) Gains on Investments [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest expense and other financial losses			(909)
Income tax gain			322
Net income attributable to MercadoLibre, Inc. shareholders			$ (587)

XML

Net Income Per Share (Narrative) (Details)	Sep. 30, 2017	Jun. 30, 2014
2.25% Convertible Senior Notes Due 2019 [Member]
Debt Instrument [Line Items]
Convertible senior notes, interest rate	2.25%	2.25%

XML

Net Income Per Share (Net Income (Loss) Per Share of Common Stock) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net income attributable to MercadoLibre, Inc. per common share
Net income attributable to MercadoLibre, Inc. Shareholders per common share, Basic	$ 0.63	$ 0.88	$ 1.85	$ 1.93
Net income attributable to MercadoLibre, Inc. Shareholders per common share, Diluted	$ 0.63	$ 0.88	$ 1.85	$ 1.93
Numerator:
Net income attributable to MercadoLibre, Inc. Shareholders, Basic	$ 27,666	$ 38,912	$ 81,500	$ 85,017
Net income attributable to MercadoLibre, Inc. Shareholders, Diluted	$ 27,666	$ 38,912	$ 81,500	$ 85,017
Denominator:
Weighted average of common stock outstanding for Basic earnings per share	44,157,364	44,157,341	44,157,364	44,157,215
Adjusted weighted average of common stock outstanding for Diluted earnings per share	44,157,364	44,157,341	44,157,364	44,157,215

XML

Goodwill and Intangible Assets (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Business Combinations [Abstract]
Aggregate amortization expense for intangible assets	$ 1,182	$ 1,144	$ 3,247	$ 2,863

XML

Goodwill and Intangible Assets (Composition of Goodwill and Intangible Assets) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016	Dec. 31, 2015
Indefinite-lived Intangible Assets [Line Items]
Goodwill	$ 95,249	$ 91,797	$ 91,797	$ 86,545
Total intangible assets	39,278		38,588
Accumulated amortization	(14,636)		(12,311)
Total intangible assets, net	24,642		26,277
Licenses And Others [Member]
Indefinite-lived Intangible Assets [Line Items]
Amortizable intangible assets	6,565		8,738
Non-Compete Agreement [Member]
Indefinite-lived Intangible Assets [Line Items]
Amortizable intangible assets	2,491		1,787
Customer List [Member]
Indefinite-lived Intangible Assets [Line Items]
Amortizable intangible assets	15,215		14,580
Trademarks [Member]
Indefinite-lived Intangible Assets [Line Items]
Amortizable intangible assets	1,854		993
Trademarks [Member]
Indefinite-lived Intangible Assets [Line Items]
Intangible assets with indefinite lives	$ 13,153		$ 12,490

XML

Goodwill and Intangible Assets (Table Showing Changes in Carrying Amount of Goodwill) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Goodwill [Line Items]
Balance, beginning of the period	$ 91,797	$ 86,545
Business acquisition		6,874
Effect of exchange rates changes	3,452	(1,622)
Balance, end of the period	95,249	91,797
Brazil [Member]
Goodwill [Line Items]
Balance, beginning of the period	27,660	18,526
Business acquisition		5,635
Effect of exchange rates changes	245	3,499
Balance, end of the period	27,905	27,660
Argentina [Member]
Goodwill [Line Items]
Balance, beginning of the period	6,587	7,430
Business acquisition		700
Effect of exchange rates changes	(809)	(1,543)
Balance, end of the period	5,778	6,587
Chile [Member]
Goodwill [Line Items]
Balance, beginning of the period	17,388	16,438
Effect of exchange rates changes	783	950
Balance, end of the period	18,171	17,388
Mexico [Member]
Goodwill [Line Items]
Balance, beginning of the period	29,342	33,834
Business acquisition		190
Effect of exchange rates changes	3,158	(4,682)
Balance, end of the period	32,500	29,342
Venezuela [Member]
Goodwill [Line Items]
Balance, beginning of the period	5,989	5,729
Business acquisition		260
Balance, end of the period	5,989	5,989
Colombia [Member]
Goodwill [Line Items]
Balance, beginning of the period	3,643	3,437
Business acquisition		57
Effect of exchange rates changes	50	149
Balance, end of the period	3,693	3,643
Other Countries [Member]
Goodwill [Line Items]
Balance, beginning of the period	1,188	1,151
Business acquisition		32
Effect of exchange rates changes	25	5
Balance, end of the period	$ 1,213	$ 1,188

XML

Goodwill and Intangible Assets (Expected Intangible Asset Amortization Expense) (Details) $ in Thousands	Sep. 30, 2017 USD ($)
Goodwill and Intangible Assets [Abstract]
For year ended 12/31/2017	$ 1,343
For year ended 12/31/2018	4,475
For year ended 12/31/2019	2,201
For year ended 12/31/2020	956
Thereafter	2,514
Total remaining amortization of intangible assets	$ 11,489

XML

Segment Reporting (Financial Performance of Company's Reporting Segments) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Segment Reporting Information [Line Items]
Net revenues	$ 370,661	$ 230,847	$ 961,117	$ 588,121
Direct costs	(294,097)	(137,796)	(690,557)	(356,965)
Impairment of Long-Lived Assets			(2,837)	(13,717)
Direct contribution	76,564	93,051	267,723	217,439
Operating expenses and indirect costs of net revenues	(49,022)	(39,342)	(146,841)	(101,055)
Income from operations	27,542	53,709	120,882	116,384
Other income (expenses):
Interest income and other financial gains	14,200	9,892	37,020	25,192
Interest expense and other financial losses	(6,709)	(6,492)	(19,686)	(18,807)
Foreign currency (loss) / gain	1,622	(4,823)	(19,475)	(5,062)
Net income before income tax expense	36,655	52,286	118,741	117,707
Operating Segments [Member] | Brazil Segment [Member]
Segment Reporting Information [Line Items]
Net revenues	229,475	131,003	569,320	311,427
Direct costs	(182,858)	(77,012)	(390,008)	(188,772)
Direct contribution	46,617	53,991	179,312	122,655
Operating Segments [Member] | Argentina Segment [Member]
Segment Reporting Information [Line Items]
Net revenues	91,308	69,983	250,692	185,885
Direct costs	(56,210)	(39,026)	(150,973)	(105,217)
Direct contribution	35,098	30,957	99,719	80,668
Operating Segments [Member] | Mexico Segment [Member]
Segment Reporting Information [Line Items]
Net revenues	22,604	11,807	58,324	34,375
Direct costs	(36,038)	(10,353)	(95,683)	(29,004)
Direct contribution	(13,434)	1,454	(37,359)	5,371
Operating Segments [Member] | Venezuela Segment [Member]
Segment Reporting Information [Line Items]
Net revenues	9,751	6,885	38,329	26,451
Direct costs	(4,582)	(3,462)	(16,841)	(12,691)
Impairment of Long-Lived Assets			(2,837)	(13,717)
Direct contribution	5,169	3,423	18,651	43
Operating Segments [Member] | Other Countries Segment [Member]
Segment Reporting Information [Line Items]
Net revenues	17,523	11,169	44,452	29,983
Direct costs	(14,409)	(7,943)	(37,052)	(21,281)
Direct contribution	$ 3,114	$ 3,226	$ 7,400	$ 8,702

XML

Segment Reporting (Allocation of Long-Lived Tangible Assets Based on Geography) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Revenues from External Customers and Long-Lived Assets [Line Items]
Total property and equipment, net	$ 136,101	$ 124,261
US [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total property and equipment, net	8,445	9,771
Argentina [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total property and equipment, net	25,842	25,071
Brazil [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total property and equipment, net	67,351	55,706
Mexico [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total property and equipment, net	3,487	2,307
Venezuela [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total property and equipment, net	21,935	21,615
Other Countries [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total property and equipment, net	9,041	9,791
Total Other Countries [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total property and equipment, net	$ 127,656	$ 114,490

XML

Segment Reporting (Allocation of Goodwill and Intangible Assets Based on Geography) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Revenues from External Customers and Long-Lived Assets [Line Items]
Total goodwill and intangible assets	$ 119,891	$ 118,074
US [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total goodwill and intangible assets	146	250
Argentina [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total goodwill and intangible assets	6,630	7,717
Brazil [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total goodwill and intangible assets	30,400	31,170
Mexico [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total goodwill and intangible assets	41,992	38,860
Venezuela [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total goodwill and intangible assets	7,168	7,366
Chile [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total goodwill and intangible assets	28,164	27,395
Other Countries [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total goodwill and intangible assets	5,391	5,316
Total Other Countries [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total goodwill and intangible assets	$ 119,745	$ 117,824

XML

Segment Reporting (Consolidated Net Revenues by Similar Products and Services) (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Segment Reporting, Revenue Reconciling Item [Line Items]
Net revenues		$ 370,661	$ 230,847	$ 961,117	$ 588,121
Marketplace [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Net revenues		227,269	134,374	582,475	341,749
Non-marketplace [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Net revenues	[1],[2]	143,392	96,473	378,642	246,372
Payment fees		$ 92,254	$ 52,444	$ 232,426	$ 139,630

[1] Includes an amount of $232,426 thousands and $139,630 thousands of Payment Fees for the nine-month periods ended September 30, 2017 and 2016, respectively. Includes an amount of $92,254 thousands and $52,444 thousands of Payment Fees for the three-month periods ended September 30, 2017 and 2016, respectively.

[2] Includes, among other things, Ad Sales, Classified Fees, Payment Fees, Shipping Fees and other ancillary services.

XML

Fair Value Measurement of Assets and Liabilities (Narrative) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Gain (loss) recognized in earnings, contingent consideration	$ 3,164
Other comprehensive (loss) income, gain from contingent considerations	166
Additional contingent consideration	1,215
Non-financial assets	0	$ 0
Non-financial liabilities	0	0
Auction Rate Securities [Member] | Direct Investment [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments	0	0
Collateralized Debt Obligations [Member] | Direct Investment [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments	0	0
Structured Investment Vehicles [Member] | Direct Investment [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments	$ 0	$ 0

XML

Fair Value Measurement of Assets and Liabilities (Financial Assets and Liabilities Measured at Fair Value on Recurring Basis) (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Financial Assets	$ 241,828	$ 404,908
Contingent considerations		4,213
Long-term retention plan	38,503	27,135
Total Financial Liabilities	38,503	31,348
Certificates of Deposit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments		35,374
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Financial Assets	239,744	223,887
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Financial Assets	2,084	181,021
Long-term retention plan	38,503	27,135
Total Financial Liabilities	38,503	27,135
Significant Other Observable Inputs (Level 2) [Member] | Certificates of Deposit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments		35,374
Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent considerations		4,213
Total Financial Liabilities		4,213
Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and Cash Equivalents	189,574	111,198
Money Market Funds [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and Cash Equivalents	189,574	111,198
Sovereign Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	21,786	50,703
Sovereign Debt Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	21,786	50,703
Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	30,468	207,633
Corporate Debt Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	28,384	61,986
Corporate Debt Securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments	$ 2,084	$ 145,647

XML

Fair Value Measurement of Assets and Liabilities (Fair Value of Financial Assets and Liabilities Measured at Amortized Cost) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets	$ 743,611	$ 511,936
Liabilities	1,133,198	873,174
Accounts Payable And Accrued Expenses [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities	181,557	105,106
Funds Payable to Customers [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities	519,420	370,693
Salaries and Social Security Payable [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities	44,789	37,936
Taxes Payable [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities	27,923	27,338
Dividends Payable [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities	6,624	6,624
Loans Payable and Other Financial Liabilities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets	51,843	6,283
Liabilities	334,145	313,523
Other Liabilities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities	18,740	11,954
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets	743,611	511,936
Liabilities	1,133,198	873,174
Significant Other Observable Inputs (Level 2) [Member] | Accounts Payable And Accrued Expenses [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities	181,557	105,106
Significant Other Observable Inputs (Level 2) [Member] | Funds Payable to Customers [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities	519,420	370,693
Significant Other Observable Inputs (Level 2) [Member] | Salaries and Social Security Payable [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities	44,789	37,936
Significant Other Observable Inputs (Level 2) [Member] | Taxes Payable [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities	27,923	27,338
Significant Other Observable Inputs (Level 2) [Member] | Dividends Payable [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities	6,624	6,624
Significant Other Observable Inputs (Level 2) [Member] | Loans Payable and Other Financial Liabilities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets	51,843	6,283
Liabilities	334,145	313,523
Significant Other Observable Inputs (Level 2) [Member] | Other Liabilities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities	18,740	11,954
Time Deposits [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets	167,224	113,414
Time Deposits [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets	167,224	113,414
Accounts Receivable [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets	28,564	25,435
Accounts Receivable [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets	28,564	25,435
Credit Cards Receivable [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets	406,883	307,904
Credit Cards Receivable [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets	406,883	307,904
Other Assets [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets	89,097	58,900
Other Assets [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets	$ 89,097	$ 58,900

XML

Fair Value Measurement of Assets and Liabilities (Fair Value of Money Market Funds, Short and Long-Term Investments Classified as Available for Sale Securities) (Details) - USD ($) $ in Thousands		Sep. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Cost		$ 241,927	$ 405,784
Gross Unrealized Gains		44	156	[1]
Gross Unrealized Losses		(143)	(1,032)	[1]
Estimated Fair Value		241,828	404,908
Cash and Cash Equivalents [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost		189,574	111,198
Estimated Fair Value		189,574	111,198
Cash and Cash Equivalents [Member] | Money Market Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost		189,574	111,198
Estimated Fair Value		189,574	111,198
Short-term Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost		7,947	140,011
Gross Unrealized Gains		1	66	[1]
Gross Unrealized Losses		(7)	(170)	[1]
Estimated Fair Value		7,941	139,907
Short-term Investments [Member] | Sovereign Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost		697	2,166
Gross Unrealized Losses		(3)
Estimated Fair Value		694	2,166
Short-term Investments [Member] | Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost		7,250	102,509
Gross Unrealized Gains		1	26	[1]
Gross Unrealized Losses		(4)	(168)	[1]
Estimated Fair Value		7,247	102,367
Short-term Investments [Member] | Certificates of Deposit [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost			35,336
Gross Unrealized Gains	[1]		40
Gross Unrealized Losses	[1]		(2)
Estimated Fair Value			35,374
Long-term Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost		44,406	154,575
Gross Unrealized Gains		43	90	[1]
Gross Unrealized Losses		(136)	(862)	[1]
Estimated Fair Value		44,313	153,803
Long-term Investments [Member] | Sovereign Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost		21,196	48,943
Gross Unrealized Losses		(104)	(406)	[1]
Estimated Fair Value		21,092	48,537
Long-term Investments [Member] | Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost		23,210	105,632
Gross Unrealized Gains		43	90	[1]
Gross Unrealized Losses		(32)	(456)	[1]
Estimated Fair Value		$ 23,221	$ 105,266

[1] Unrealized gains (losses) from securities are attributable to market price movements, net foreign exchange losses and foreign currency translation. Management does not believe any remaining significant unrealized losses represent other-than-temporary impairments based on the evaluation of available evidence including the credit rating of the investments, as of September 30, 2017 and December 31, 2016.

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Fair Value Measurement of Assets and Liabilities (Estimated Fair Values of Money Market Funds, Short-Term and Long-Term Investments) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value Measurement of Assets and Liabilities [Abstract]
One year or less	$ 197,515
One year to two years	20,331
Two years to three years	16,847
Three years to four years	7,135
Total	$ 241,828	$ 404,908

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Commitments and Contingencies (Narrative) (Details) $ in Thousands, BRL in Millions	9 Months Ended
	Sep. 30, 2017 USD ($) item	Dec. 31, 2013 BRL	Dec. 31, 2013 USD ($)
Loss Contingencies [Line Items]
Reserves for proceeding-related contingencies | $	$ 6,208
Aggregate amount for legal actions for which no loss amount has been accrued | $	6,506
Loss accrued for reasonably possible legal actions | $	0
Maximum potential exposure | $	663,139
Recorded allowance of buyer protection program | $	$ 1,212
Argentinean Subsidiaries [Member]
Loss Contingencies [Line Items]
Number of lawsuits pending	56
Number of legal actions pending	1,856
Mexican Subsidiaries [Member]
Loss Contingencies [Line Items]
Number of lawsuits pending	10
Number of legal actions pending	248
Brazilian Subsidiaries [Member]
Loss Contingencies [Line Items]
Number of lawsuits pending	700
Number of legal actions pending	4,016
Fine against company's subsidiaries		BRL 12.2	$ 3,700

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Long Term Retention Plan (Narrative) (Details) - LTRP 2017 [Member]	9 Months Ended
	Sep. 30, 2017 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percent of fixed awards for fixed payments	16.66%
Percent of variable awards for variable payments	16.66%
Term of fixed payments for eligible employees	6 years
Stock price per share, average closing price	$ 164.17
Long term retention plan, number of trading days	60 days

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Long Term Retention Plan (Long Term Retention Plans Accrued Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Long term retention plan	$ 6,666	$ 9,124	$ 28,734	$ 19,251
LTRP 2009 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Long term retention plan		352	29	648
LTRP 2010 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Long term retention plan	147	543	891	1,017
LTRP 2011 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Long term retention plan	229	672	1,422	1,275
LTRP 2012 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Long term retention plan	315	813	1,945	1,555
LTRP 2013 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Long term retention plan	711	1,689	3,809	3,380
LTRP 2014 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Long term retention plan	772	1,448	3,782	3,089
LTRP 2015 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Long term retention plan	1,063	1,663	4,680	3,846
LTRP 2016 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Long term retention plan	1,606	$ 1,944	6,717	$ 4,441
LTRP 2017 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Long term retention plan	$ 1,823		$ 5,459

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2.25% Convertible Senior Notes Due 2019 (Narrative) (Details) - 2.25% Convertible Senior Notes Due 2019 [Member]		6 Months Ended	9 Months Ended
		Jun. 30, 2014 USD ($) $ / shares shares	Sep. 30, 2017 USD ($) item $ / shares $ / item	Dec. 31, 2016 USD ($)
Debt Instrument [Line Items]
Debt instrument, face amount		$ 330,000,000	$ 330,000,000	$ 330,000,000
Debt instrument, interest rate		2.25%	2.25%
Debt instrument, maturity date			Jul. 01, 2019
Converted instrument rate, number of shares per principal amount | shares		7.9353
Converted instrument, principal amount used per conversion		$ 1,000
Convertible senior notes, conversion price | $ / shares		$ 126.02
Amount paid to enter into capped call transactions		$ 19,700,000	$ 67,300,000
Convertible notes, amount converted	[1]		45,808,000	45,808,000
Estimated fair value			$ 687,900,000	458,800,000
Closing trading amount price per share | $ / item			100
Common stock, closing price per share | $ / shares			$ 258.9
Debt instrument convertible, if-converted value in excess of principal			$ 348,000,000
30 Day Measurement Period [Member]
Debt Instrument [Line Items]
Debt instrument, convertible trading days | item			20
Debt instrument, convertible consecutive trading days			30 days
Percentage of debt conversion price		130.00%
5 Day Measurement Period [Member]
Debt Instrument [Line Items]
Debt instrument, convertible trading days | item			5
Debt instrument, convertible consecutive trading days			5 days
Percentage of debt conversion price		98.00%
September 31, 2016 Threshold Met [Member]
Debt Instrument [Line Items]
Convertible notes, amount converted			$ 16,000	$ 12,000

[1] Net of $1,177 thousands of transaction costs related to the equity component of the Notes.

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2.25% Convertible Senior Notes Due 2019 (Carrying Amounts of Liability and Equity Components) (Details) - 2.25% Convertible Senior Notes Due 2019 [Member] - USD ($)		Sep. 30, 2017	Dec. 31, 2016	Jun. 30, 2014
Debt Instrument [Line Items]
Amount of the equity component	[1]	$ 45,808,000	$ 45,808,000
2.25% convertible senior notes due 2019		330,000,000	330,000,000	$ 330,000,000
Unamortized debt discount	[2]	(17,909,000)	(25,097,000)
Unamortized transaction costs related to the debt component		(2,862,000)	(3,968,000)
Contractual coupon interest accrual		5,569,000	7,425,000
Contractual coupon interest payment		(3,713,000)	(7,425,000)
Net carrying amount		$ 311,085,000	$ 300,935,000

[1] Net of $1,177 thousands of transaction costs related to the equity component of the Notes.

[2] As of September 30, 2017, the remaining period over which the unamortized debt discount will be amortized is 1.75 years.

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2.25% Convertible Senior Notes Due 2019 (Carrying Amounts of Liability and Equity Components - Additional Information) (Details) - 2.25% Convertible Senior Notes Due 2019 [Member] - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016	Jun. 30, 2014
Debt Instrument [Line Items]
Debt instrument, interest rate	2.25%		2.25%
Transaction costs related to the equity component	$ 1,177	$ 1,177
Remaining period over which the unamortized debt discount will be amortized	1 year 9 months

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2.25% Convertible Senior Notes Due 2019 (Summary of Interest Expense for Contractual Interest and Accretion of Debt Discount) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
2.25% Convertible Senior Notes Due 2019 [Abstract]
Contractual coupon interest expense	$ 1,856	$ 1,856	$ 5,569	$ 5,569
Amortization of debt discount	2,440	2,310	7,188	6,806
Amortization of debt issuance costs	381	344	1,106	998
Total interest expense related to the Notes	$ 4,677	$ 4,510	$ 13,863	$ 13,373

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Cash Dividend Distribution (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2017	Oct. 31, 2017	Jul. 31, 2017	May 02, 2017	Mar. 02, 2017	Nov. 30, 2016	Aug. 31, 2016	May 31, 2016	Feb. 29, 2016
Dividends Payable [Line Items]
Cash dividends declared			$ 6,624	$ 6,624		$ 6,624	$ 6,624	$ 6,624	$ 6,624
Cash dividends declared, per share			$ 0.150	$ 0.150	$ 0.15	$ 0.150	$ 0.150	$ 0.150	$ 0.150
Annual cash dividends declared, per share	$ 0.60
Subsequent Events [Member]
Dividends Payable [Line Items]
Cash dividends declared		$ 6,624
Cash dividends declared, per share		$ 0.150
First Quarter Previous Year [Member]
Dividends Payable [Line Items]
Dividend payable date	Apr. 15, 2016
Dividends payment, date of record	Mar. 31, 2016
Second Quarter Previous Year [Member]
Dividends Payable [Line Items]
Dividend payable date	Jul. 15, 2016
Dividends payment, date of record	Jun. 30, 2016
Third Quarter Previous Year [Member]
Dividends Payable [Line Items]
Dividend payable date	Oct. 14, 2016
Dividends payment, date of record	Sep. 30, 2016
Fourth Quarter Prior Years [Member]
Dividends Payable [Line Items]
Dividend payable date	Jan. 16, 2017
Dividends payment, date of record	Dec. 31, 2016
First Quarter [Member]
Dividends Payable [Line Items]
Dividends payable, date declared	Mar. 02, 2017
Dividend payable date	Apr. 17, 2017
Dividends payment, date of record	Mar. 31, 2017
Second Quarter [Member]
Dividends Payable [Line Items]
Dividends payable, date declared	May 02, 2017
Dividend payable date	Jul. 14, 2017
Dividends payment, date of record	Jun. 30, 2017
Third Quarter [Member]
Dividends Payable [Line Items]
Dividends payable, date declared	Jul. 31, 2017
Dividend payable date	Oct. 16, 2017
Dividends payment, date of record	Sep. 30, 2017
Fourth Quarter [Member]
Dividends Payable [Line Items]
Dividends payable, date declared	Oct. 31, 2017
Dividend payable date	Jan. 16, 2018
Dividends payment, date of record	Dec. 31, 2017