Buenos Aires-based MercadoLibre, Inc., one of Latin America's leading e-commerce technology companies, recently reported financial results for the quarter ended June 30, 2018.
Pedro Arnt, Chief Financial Officer of MercadoLibre, Inc., commented, “The outlook for our industry is as positive as ever, and our investment thesis remains intact. The internet is rapidly becoming a driving force that is increasing the pace of modernization in Latin America. This modernization presents us with the opportunity to turn a history of underdeveloped infrastructure in the areas of retail and banking from a disadvantage into an advantage, as it allows for innovation to flourish unencumbered by existing legacy players.”
Second Quarter 2018 Business Highlights
- Gross merchandise volume again surpassed $3 billion, reaching $3.1 billion, a 15.2% year-over-year increase in USD, and a 35.9% year-over-year increase on an FX neutral basis, representing the fifth consecutive quarter of growth.
- Items sold increased for the second consecutive quarter to 85.4 million, a 38.8% year-over-year increase, delivering solid growth.
- Unique buyers grew 16.0% year-over-year versus 28.0% in the first quarter. This declining growth rate is attributable primarily to the price increases from our major postal partner, and the May truckers strike that lasted ten days and had a negative impact on e-commerce in Brazil. This deceleration in unique buyers growth in Brazil was partially offset by unique buyer growth rates in Mexico, Colombia, Chile and Argentina, where growth rates in unique buyers exceeded 20%.
- Live listings offered on Mercado Libre’s marketplace grew to 154.8 million in the second quarter of 2018, a 56.4% year-over-year increase, surpassing for the first time ever the 150 million mark.
- We continue to transition to being a mobile first company, as mobile gross merchandize volume “GMV” penetration grew 28.1% year-over-year reaching 55.5% mobile penetration.
- Items shipped through MercadoEnvíos reached 52.8 million, a 58.1% year-over-year increase, driven primarily by increasing our free shipping options, strong marketing of our loyalty program and customer acquisition initiatives. Items shipped in Argentina, Mexico, Chile and Colombia were highlights of the quarter, growing 73%, 135%, 440%, and 166% respectively year-over-year.
- Total payment volume through MercadoPago reached $4.4 billion, a year-over-year increase of 40.4% in USD and 66.3% on an FX neutral basis. Total payment transactions increased 64.1% year-over-year, totaling 85.5 million for the quarter.
- We continue to successfully execute off-platform payments efforts (both online and offline) though merchant services, mPos, and mobile wallet businesses. On a consolidated basis, off-platform total payment volume grew 96.7% year-over-year in USD and 142.4% on an FX neutral basis.
- Our mobile-point-of-sale business quickly becoming one of our fastest growing non-marketplace business units, representing 43.3% of total off-platform payment volume for the quarter.
Adoption of ASC 606
- Effective January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers related to revenue recognition (“ASC 606”) issued by the Financial Accounting Standards Board (“FASB”). The Company has adopted ASC 606 using the full retrospective transition method and has accordingly revised its consolidated financial statements for the year ended December 31, 2017, and applicable interim periods within the year ended December 31, 2017, as if ASC 606 had been effective for those periods. Because the Company did not offer free shipping in 2016, net revenue for that year does not need to be recast.
- As a result of adopting ASC 606, the Company must present net revenue net of amounts paid in connection with the Company’s free shipping initiative rather than including these amounts in the cost of net sales, as previously recorded. For the three-month period ended June 30, 2018 the Company incurred $97 million of shipping subsidies that have been netted from revenues.
- As a result of adopting ASC 606, our net revenues for the periods indicated below have been recast as presented below. Our adoption of 606 does not affect our operating or net income/loss.
Full press release here.
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