updated 5/4/2011 4:16:53 PM ET 2011-05-04T20:16:53

* Q1'11 net income increased by 46.1% year-over-year to $14.1 million

* Items sold during Q1'11 increased by 30.7% year-over-year to 10.9 million

* Total payments transactions in Q1'11 increased by 148.8% to 2.6 million

BUENOS AIRES, Argentina, May 4, 2011 (GLOBE NEWSWIRE) -- MercadoLibre, Inc. (Nasdaq:MELI) ( http://www.mercadolibre.com ), Latin America's leading e-commerce technology company, today reported financial results for the first quarter ended March 31, 2011.

Marcos Galperin, President and Chief Executive Officer of MercadoLibre, Inc., commented, "We had a very strong start to 2011, as we continued to see growth across all areas of our business. During the quarter, we continued to make great progress in expanding the breadth of offering available, bringing greater simplicity and satisfaction to each user experience, and driving increased transactions on our platforms. Importantly, we continue to make investments in our platform architecture to ensure that we are competitively positioned for the future."

Financial Results Summary

MercadoLibre reported consolidated net revenues for the three months ended March 31, 2011 of $61.5 million, representing 33.8% year-over-year growth.Revenue growth was negatively impacted by the pre-sale of credit card receivables beginning in the third quarter of 2010. Had the company carried out similar pre-sales of credit card receivables during 2010, revenue growth would have been 44.4% during the first quarter of 2011 as compared to the prior year quarter.

For the three months ended March 31, 2011, items sold on MercadoLibre grew 30.7% to 10.9 million while total payments transactions through MercadoPago grew 148.8% to 2.6 million as compared to the first quarter of 2010. Gross merchandise volume for the first quarter 2011 grew 30.4% year-over-year to $954.0 million, while total payment volume grew 98.1% year-over-year to $245.2 million.

Income from operations grew 24.4% to $19.3 million in the first quarter of 2011 compared to $15.5 million in the first quarter of 2010. Operating income margin for the first quarter of 2011 was 31.4%. Growth in income from operations was also negatively impacted by the pre-sale of credit card receivables.

Net income for the three months ended March 31, 2011, was $14.1 million, representing 46.1% growth over the prior year quarter. Net income margin was 22.9% for the first quarter of 2011, compared to 20.9% for the same period last year. Earnings per share for the first quarter of 2011 were $0.32 compared to $0.22 for the prior year quarter.

Free cash flow, defined as cash from operating activities less purchases of property, equipment and intangible asset, was $12.2 million for the three months ended March 31, 2011.

The following table summarizes certain key performance metrics for the three months ended March 31, 2010 and 2011.

Three month ended March 31, (in millions) 2010 2011 %YOY
Total confirmed registered users at the end of period 44.9 55.6 23.8%
New confirmed registered users during the period 2.3 2.7 14.4%
Gross merchandise volume $ 731.6 $ 954.0 30.4%
Items sold 8.3 10.9 30.7%
Total payments volume $ 123.8 $ 245.2 98.1%
Total payments transactions 1.1 2.6 148.8%

Change in MercadoPago Financing Operations

Starting in the third quarter of 2010, the company began to pre-sell credit card receivables from its MercadoPago financing operations. For this reason, starting in the third quarter of 2010, MercadoPago financing revenues now represent the net amount received from financing institutions as a result of pre-selling these installments-related financing receivables. Credit card receivables are being pre-sold in order to better manage credit risk; generate increased predictability of the associated cost; and not assume any financing risk.

The following table may prove helpful to analyze the annual evolution of the company's revenue growth, as it shows consolidated net revenues since Q1 of 2009 net of MercadoPago financing cost:

Figures in US dollars Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011
                   
Consolidated Net Revenues  32,322,501  40,901,799  50,599,276  49,020,045  45,937,774  52,510,331  55,951,378  62,316,231  61,459,668
MercadoPago Financing Costs (*)  2,330,530  3,246,008  3,927,577  3,990,072  3,383,142  3,949,545  --   --  -- 
Consolidated Net Revenues Net of MercadoPago Financing Costs 29,991,971  37,655,791  46,671,699  45,029,973  42,554,632  48,560,786  55,951,378  62,316,231  61,459,668
                   
Growth % Over Prior Year n/a n/a 19.6% 58.2% 41.9% 29.0% 19.9% 38.4% 44.4%
                   
(*) Included in Cost of Net Revenues and Interest Expense and Other Financial Charges.

MercadoLibre provides consolidated net revenues net of MercadoPago financing costs because it believes that such presentation is a beneficial supplemental disclosure to investors in analyzing and assessing the historical revenue growth of the company.

Conference Call and Webcast

The Company will host a conference call and audio webcast on May 4, 2011 at 4:30 p.m. Eastern Time. The conference call may be accessed by dialing (970) 315-0420 or (877) 303-7209 (Conference ID 63001762) and requesting inclusion in the call for MercadoLibre. The live conference call can be accessed via audio webcast at the investor relations section of the Company's website, at http://investor.mercadolibre.com. An archive of the webcast will be available for one week following the conclusion of the conference call.

Definition of Selected Operational Metrics

Total confirmed registered users – Measure of the cumulative number of users who have registered on the MercadoLibre Marketplace and confirmed their registration.

New confirmed registered users – Measure of the number of new users who have registered on the MercadoLibre Marketplace and confirmed their registration.

Gross merchandise volume – Measure of the total U.S. dollar sum of all transactions completed through the MercadoLibre Marketplace, excluding motor vehicles, vessels, aircraft, real estate, and services.

Items sold – Measure of the number of items sold/purchased through the MercadoLibre Marketplace.

Total payment volume – Measure of total U.S. dollar sum of all transactions paid for using MercadoPago.

Total payment transactions – Measure of the number of all transactions paid for using MercadoPago.

Operating margin – Defined as income from operations as a percentage of net revenues.

Net Income margin – Defined as net income as a percentage of net revenues.

Free Cash Flow – Defined as cash flow from operating activities less purchases of property, equipment and intangible asset.

About MercadoLibre

Founded in 1999, MercadoLibre is Latin America's leading e-commerce technology company. Through its primary platforms, MercadoLibre.com and MercadoPago.com, it provides solutions to individuals and companies buying, selling, advertising, and paying for goods online.

MercadoLibre.com serves millions of users and creates a market for a wide variety of goods and services in an easy, safe and efficient way. The site is among the top 50 in the world in terms of page views and is the leading retail platform in unique visitors in each country in which it operates according to metrics provided by comScore Networks. MercadoLibre maintains a leadership position in 12 Latin American countries. The Company is listed on NASDAQ (Nasdaq:MELI) following its initial public offering in 2007.

For more information about the company visit: http://investor.mercadolibre.com .

The MercadoLibre, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4193

Consolidated balance sheets
     
  March 31, December 31,
  2011 2010
Assets (Unaudited) (Audited)
Current assets:    
Cash and cash equivalents $ 50,968,258 $ 56,830,466
Short-term investments 3,179,205 5,342,766
Accounts receivable, net 13,446,387 12,618,173
Funds receivable from customers 5,633,787 6,151,518
Prepaid expenses 843,908 913,262
Deferred tax assets 12,956,214 12,911,256
Other assets 7,196,704 6,867,767
Total current assets 94,224,463 101,635,208
Non-current assets:    
Long-term investments 101,824,319 78,846,281
Property and equipment, net 22,672,952 20,817,712
Goodwill, net 60,480,828 60,496,314
Intangible assets, net 3,978,903 4,141,167
Deferred tax assets 2,841,633 2,975,118
Other assets 710,076 771,223
Total non-current assets 192,508,711 168,047,815
     
Total assets $ 286,733,174 $ 269,683,023
     
Liabilities and Shareholders' Equity    
Current liabilities:    
Accounts payable and accrued expenses $ 17,945,181 $ 17,232,103
Funds payable to customers 52,771,717 48,788,225
Payroll and social security payable 9,775,513 10,786,534
Taxes payable 9,777,052 11,487,574
Loans payable and other financial liabilities 92,513 100,031
Dividends payable 3,530,510 --
Total current liabilities 93,892,486 88,394,467
Non-current liabilities:    
Payroll and social security payable 2,513,539 2,562,343
Loans payable and other financial liabilities 166,592 188,846
Deferred tax liabilities 5,149,708 5,167,699
Other liabilities  1,905,713 1,651,398
Total non-current liabilities 9,735,552 9,570,286
Total liabilities $ 103,628,038 $ 97,964,753
     
Commitments and contingencies    
     
Shareholders' equity:    
Common stock, $0.001 par value, 110,000,000 shares authorized,    
44,131,966 and 44,131,376 shares issued and outstanding at March 31,    
2011 and December 31, 2010, respectively $ 44,132 $ 44,131
Additional paid-in capital 120,426,216 120,391,622
Retained earnings  84,208,680  73,681,556
Accumulated other comprehensive loss (21,573,892) (22,399,039)
Total shareholders' equity 183,105,136 171,718,270
     
Total liabilities and shareholders' equity $ 286,733,174 $ 269,683,023
 
Consolidated statements of income
     
  Three Months Ended March 31,
  2011 2010
  (Unaudited)
     
Net revenues $ 61,459,668 $ 45,937,774
Cost of net revenues (14,331,703) (9,893,051)
Gross profit 47,127,965 36,044,723
     
Operating expenses:    
Product and technology development (5,156,890) (3,224,775)
Sales and marketing  (13,228,942) (11,108,801)
General and administrative (9,450,977) (6,206,881)
Total operating expenses  (27,836,809) (20,540,457)
Income from operations 19,291,156 15,504,266
     
Other income (expenses):    
Interest income and other financial gains 1,873,768 794,142
Interest expense and other financial charges (628,950) (2,995,418)
Foreign currency gain / (loss)  (500,655) 396,972
Other income, net  20,344 --
Net income before income / asset tax expense  20,055,663 13,699,962
     
Income / asset tax expense (5,998,029) (4,079,361)
Net income  $ 14,057,634 $ 9,620,601
     
  Three Months Ended March 31,
  2011 2010
  (Unaudited)
Basic EPS    
Basic net income per common share $ 0.32 $ 0.22
     
Weighted average shares 44,131,383 44,113,595
     
Diluted EPS    
Diluted net income per common share $ 0.32 $ 0.22
Weighted average shares 44,147,667 44,149,700
 
Consolidated statements of cash flows
     
  Three Months Ended March 31,
  2011 2010
  (Unaudited)
Cash flows from operations:    
Net income   $ 14,057,634  $ 9,620,601
Adjustments to reconcile net income to net cash provided by    
operating activities:    
Depreciation and amortization  1,541,143  946,873
Accrued interest  (575,613)  (228,151)
Stock-based compensation expense - stock options  --   61
Stock-based compensation expense - restricted shares  --   21,204
LTRP accrued compensation   1,170,710  324,607
Deferred income taxes  316,866  (407,531)
Changes in assets and liabilities:    
Accounts receivable   (378,620)  (3,020,745)
Funds receivable from customers  479,325  441,399
Prepaid expenses  71,641  58,009
Other assets  (70,095)  (92,884)
Accounts payable and accrued expenses  (4,736,229)  3,840,657
Funds payable to customers  3,072,102  418,066
Other liabilities  220,113  (467,618)
Net cash provided by operating activities  15,168,977 11,454,548
Cash flows from investing activities:    
Purchase of investments  (99,069,739)  (34,354,598)
Proceeds from sale and maturity of investments  80,823,544  12,723,697
Purchases of intangible assets  (73,405)  (12,865)
Purchases of property and equipment  (2,886,154)  (1,396,672)
Net cash used in investing activities   (21,205,754) (23,040,438)
Cash flows from financing activities:    
Decrease in loans payable  --   (3,213,878)
Stock options exercised  885 1,970
Net cash used in financing activities   885 (3,211,908)
Effect of exchange rate changes on cash and cash equivalents  173,684  (371,305)
Net decrease in cash and cash equivalents  (5,862,208)  (15,169,103)
Cash and cash equivalents, beginning of the period  56,830,466  49,803,402
Cash and cash equivalents, end of the period  $ 50,968,258  $ 34,634,299
     
Supplemental cash flow information:    
Cash paid for interest $ 13,889 $ 2,832,119
Cash paid for income and asset taxes $ 7,898,283 $ 4,935,701
 
Financial results of reporting segments
             
  Three Months Ended March 31, 2011
  Brazil Argentina Mexico Venezuela Other Countries Total
             
Net revenues $ 34,723,195 $ 10,579,932 $ 5,234,333 $ 6,770,453 $ 4,151,755 $ 61,459,668
Direct costs (20,075,608) (4,427,098) (2,716,359) (3,069,739) (2,100,316) (32,389,120)
Direct contribution 14,647,587 6,152,834 2,517,974 3,700,714 2,051,439 29,070,548
             
Operating expenses and indirect costs of net revenues           (9,779,392)
Income from operations           19,291,156
             
Other income (expenses):            
Interest income and other financial gains           1,873,768
Interest expense and other financial results           (628,950)
Foreign currency losses           (500,655)
Other income, net           20,344
Net income before income / asset tax expense           $ 20,055,663
             
  Three Months Ended March 31, 2010
  Brazil Argentina Mexico Venezuela Other Countries Total
             
Net revenues $ 26,351,472 $ 8,354,246 $ 4,469,937 $ 3,475,490 $ 3,286,629 $ 45,937,774
Direct costs (14,862,460) (3,945,784) (2,800,357) (1,914,056) (1,723,523) (25,246,180)
Direct contribution 11,489,012 4,408,462 1,669,580 1,561,434 1,563,106 20,691,594
             
Operating expenses and indirect costs of net revenues           (5,187,328)
Income from operations           15,504,266
             
Other income (expenses):            
Interest income and other financial gains           794,142
Interest expense and other financial results           (2,995,418)
Foreign currency gains           396,972
Other income, net           --
Net income before income / asset tax expense           $ 13,699,962
CONTACT: MercadoLibre, Inc.
         Investor Relations
         Pedro Arnt
         investor@mercadolibre.com
         http://investor.mercadolibre.com

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