MERCADOLIBRE INC
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
MELI$1,510.00-1.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0001099590-24-000026
ITEM 2. — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001099590-24-000042
ITEM 2. — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 262 previous paragraphs and 271 current paragraphs.
175 unchanged; 75 reworded; 19 added; 12 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 31 previous and 31 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
The following table summarizes our consolidated net revenues and financial income for the nine and three-month periods ended September 30, 2024 and 2023:
Current report
Commerce revenues in Brazil increased 60.2% in the nine-month period ended September 30, 2024 as compared to the same period in 2023. This increase was generated by an increase of $1,561 million in our Commerce services revenues mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent, and an increase of $345 million in our revenues from Commerce products sales. Fintech revenues grew by 34.5%, a $820 million increase, during the nine-month period ended September 30, 2024 as compared to the same period in 2023, mainly driven by an increase of $576 million in our Credits revenues and an increase of $239 million in our revenues from Financial services and income.
Current report
Commerce revenues in Brazil increased 49.4% in the three-month period ended September 30, 2024 as compared to the same period in 2023. This increase was generated by an increase of $445 million in our Commerce services revenues mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent, and an increase of $153 million in our revenues from Commerce products sales. Fintech revenues grew by 29.6%, a $252 million increase, during the three-month period ended September 30, 2024 as compared to the same period in 2023, mainly driven by an increase of $195 million in our Credits revenues and an increase of $53 million in our revenues from Financial services and income.
Current report
Net revenues growth during the nine and three-month periods ended September 30, 2024, as compared to the same periods in 2023, were offset by the average increase of Brazil´s exchange rate against U.S. dollar of 4.6% and 13.6%, respectively.
Current report
Commerce revenues in Mexico increased 58.2% in the nine-month period ended September 30, 2024 as compared to the same period in 2023. This increase was generated by an increase of $704 million in our Commerce services revenues mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent, and an increase of $94 million in our revenues from Commerce products sales. Fintech revenues grew 51.5%, a $390 million increase, during the nine-month period ended September 30, 2024 as compared to the same period in 2023, mainly driven by an increase of $249 million in our Credits revenues and an increase of $137 million in our revenues from Financial services and income.
Current report
Commerce revenues in Mexico increased 51.9% in the three-month period ended September 30, 2024 as compared to the same period in 2023. This increase was generated by an increase of $218 million in our Commerce services revenues mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent, and an increase of $41 million in our revenues from Commerce products sales. Fintech revenues grew 30.7%, a $91 million increase, during the three-month period ended September 30, 2024 as compared to the same period in 2023, mainly driven by an increase of $51 million in our Credits revenues and an increase of $39 million in our revenues from Financial services and income.
Current report
Net revenues growth during the three-month period ended September 30, 2024, as compared to the same period in 2023, were offset by the average increase of Mexico´s exchange rate against U.S. dollar of 11.1%.
Current report
Commerce revenues in Argentina increased 3.7% in the nine-month period ended September 30, 2024 as compared to the same period in 2023. This increase was generated by an increase of $68 million in our Commerce services revenues, partially offset by a decrease of $35 million in our revenues from Commerce products sales. Fintech revenues decreased 4.4%, a $74 million decrease, during the nine-month period ended September 30, 2024 as compared to the same period in 2023, mainly driven by a decrease of $77 million in our Credits revenues, partially offset by an increase of $3 million in our revenues from Financial services and income.
Current report
(2) Net revenues growth for the three-month period ended September 30, 2024 as compared to the three-month period ended June 30, 2024 were offset by the average increase of Brazil and Mexico official exchange rate against U.S. dollar of 6.3% and 9.8%, respectively.
Current report
(2)For the nine-month period ended September 30, 2024, the average inter-annual increase of Argentina’s official exchange rate against U.S. dollar of 273.8% was partially offset by an average inter-annual inflation rate in our Argentine segment of 262.8%. For the three-month period ended September 30, 2024, the average inter-annual inflation rate in our Argentine segment of 236.4% was higher than the average inter-annual increase of Argentina’s official exchange rate against U.S. dollar of 204.7%.
Current report
For the nine and three-month periods ended September 30, 2024 and 2023, our gross profit margins were 46.4% and 45.9%, and 51.8% and 53.3%, respectively.
Current report
For the three-month period ended September 30, 2024, the increase in general and administrative expenses as compared to the same period in 2023 was primarily attributable to a: i) $51 million increase in contingencies; ii) $28 million increase in salaries and wages, mainly related to the increase of 12% in general and administrative headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; and iii) $18 million increase in other general and administrative expenses mainly related to higher tax withholding in connection with intercompany export services billing duties.
Current report
For the nine and three-month periods ended September 30, 2024, as compared to the same period in 2023, our operating income margin decreased from 17.5% and 20.0% to 12.3% and 10.5%, respectively.
Current report
For the three-month period ended September 30, 2024, as compared to the same period in 2023, direct costs increased mainly driven by a: i) $93 million increase in cost of net revenues and financial expenses, mainly attributable to an increase in shipping operating and carrier costs mostly due to an increase in the share of shipping services where we act as principal, as opposed to agent, collection fees, sales tax and hosting and site operation fees, partially offset by by a decrease in other payments costs mainly related to lower funding cost related to our credits business; and ii) $20 million increase in sales and marketing expenses mainly due to an increase in online and offline marketing expenses.
Current report
63 | MercadoLibre, Inc.
Current report
64 | MercadoLibre, Inc.
Current report
65 | MercadoLibre, Inc.
Current report
66 | MercadoLibre, Inc.
Current report
67 | MercadoLibre, Inc.
Removed paragraphs (12)
Previous report
41 | MercadoLibre, Inc.
Previous report
42 | MercadoLibre, Inc.
Previous report
43 | MercadoLibre, Inc.
Previous report
The following table summarizes our consolidated net revenues and financial income for the six and three-month periods ended June 30, 2024 and 2023:
Previous report
Commerce revenues in Brazil increased 66.9% in the six-month period ended June 30, 2024 as compared to the same period in 2023. This increase was generated by an increase of $1,116 million in our Commerce services revenues mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent, and an increase of $192 million in our revenues from Commerce products sales. Fintech revenues grew by 37.2%, a $568 million increase, during the six-month period ended June 30, 2024 as compared to the same period in 2023, mainly driven by an increase of $381 million in our Credits revenues and an increase of $186 million in our revenues from Financial services and income.
Previous report
Commerce revenues in Brazil increased 62.2% in the three-month period ended June 30, 2024 as compared to the same period in 2023. This increase was generated by an increase of $565 million in our Commerce services revenues mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent, and an increase of $87 million in our revenues from Commerce products sales. Fintech revenues grew by 36.8%, a $292 million increase, during the three-month period ended June 30, 2024 as compared to the same period in 2023, mainly driven by an increase of $206 million in our Credits revenues and an increase of $85 million in our revenues from Financial services and income.
Previous report
Commerce revenues decreased 11.8% in the six-month period ended June 30, 2024 as compared to the same period in 2023. This decrease was generated by a decrease of $38 million in our revenues from Commerce products sales and a decrease of $30 million in our Commerce services revenues. Fintech revenues decreased 9.0%, a $96 million decrease, during the six-month period ended June 30, 2024 as compared to the same period in 2023, mainly driven by a decrease of $69 million in our Credits revenues and a decrease of $26 million in our revenues from Financial services and income.
Previous report
Commerce revenues in Mexico increased 61.7% in the six-month period ended June 30, 2024 as compared to the same period in 2023. This increase was generated by an increase of $486 million in our Commerce services revenues mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent, and an increase of $53 million in our revenues from Commerce products sales. Fintech revenues grew 64.9%, a $299 million increase, during the six-month period ended June 30, 2024 as compared to the same period in 2023, mainly driven by an increase of $198 million in our Credits revenues and an increase of $98 million in our revenues from Financial services and income.
Previous report
Commerce revenues in Mexico increased 68.2% in the three-month period ended June 30, 2024 as compared to the same period in 2023. This increase was generated by an increase of $293 million in our Commerce services revenues mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent, and an increase of $31 million in our revenues from Commerce products sales. Fintech revenues grew 61.4%, a $153 million increase, during the three-month period ended June 30, 2024 as compared to the same period in 2023, mainly driven by an increase of $101 million in our Credits revenues and an increase of $50 million in our revenues from Financial services and income.
Previous report
(2)Average inter-annual increase of Argentina’s official exchange rate against U.S. dollar for the six and three-month periods ended June 30, 2024 was 308.4% and 282.5%, respectively. This effect was partially offset by an average inter-annual inflation rate in our Argentine segment of 275.9% and 279.1% for the six and three-month periods ended June 30, 2024, respectively.
Previous report
For the six-month period ended June 30, 2024, the increase in general and administrative expenses as compared to the same period in 2023 was primarily attributable to a: i) $25 million increase in salaries and wages, mainly related to the increase of 11% in general and administrative headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; and ii) $9 million increase in tax and other fees. This increase was partially offset by $12 million gain related to the change in the fair value of digital assets.
Previous report
For the three-month period ended June 30, 2024, as compared to the same period in 2023, direct costs increased mainly driven by a: i) $20 million increase in cost of net revenues and financial expenses, mainly attributable to an increase in shipping operating and carrier costs mostly due to an increase in the share of shipping services where we act as principal, as opposed to agent, and hosting and site operation fees; ii) $11 million increase in product and technology development expenses, mainly due to an increase in maintenance expenses and in depreciation and amortization expenses mainly related to capitalized information and technology assets; and iii) $9 million increase in sales and marketing expenses mainly due to an increase in online and offline marketing expenses. This was partially offset by a decrease of $8 million in general and administrative expenses, mainly due to other taxes.
Reworded paragraphs (75)
Previous wording
■a review of our financial presentation and accounting policies, including our critical accounting policies;
Current wording
■a review of our critical accounting policies and estimates;
Previous wording
■a discussion of our principal trends and results of operations for the six and three-month periods ended June 30, 2024 and 2023;
Current wording
■a discussion of our principal trends and results of operations for the nine and three-month periods ended September 30, 2024 and 2023;
Previous wording
We are the largest online commerce ecosystem in Latin America based on unique visitors and orders processed, and we are present in 18 countries: Argentina, Brazil, Mexico, Chile, Colombia, Peru, Uruguay, Venezuela, Bolivia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Honduras, Nicaragua, Panama, Paraguay and El Salvador. Our platform is designed to provide users with a complete portfolio of services to facilitate commercial transactions both digitally and offline.
Current wording
We are the largest online commerce ecosystem in Latin America based on unique visitors and we are present in 18 countries: Argentina, Brazil, Mexico, Chile, Colombia, Peru, Uruguay, Venezuela, Bolivia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Honduras, Nicaragua, Panama, Paraguay and El Salvador. Our platform is designed to provide users with a complete portfolio of services to facilitate commercial transactions both digitally and offline.
Previous wording
Our segment reporting is based on geography, which is the criterion our Management currently uses to evaluate our segment performance. Our geographic segments are Brazil, Argentina, Mexico and Other Countries (including Chile, Colombia, Costa Rica, Ecuador, Peru and Uruguay). Although we discuss long-term trends in our business, it is our policy not to 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. 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 more rapidly than us. We, therefore, encourage potential investors to consider this strategy before making an investment in our common stock.
Current wording
Our segment reporting is based on geography, which is the criterion our Management currently uses to evaluate our segment performance. Our geographic segments are Brazil, Mexico, Argentina and Other Countries (including Chile, Colombia, Costa Rica, Ecuador, Peru and Uruguay). Although we discuss long-term trends in our business, it is our policy not to 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. 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 more rapidly than us. We, therefore, encourage potential investors to consider this strategy before making an investment in our common stock.
Previous wording
The following table sets forth the percentage of our consolidated net revenues by segment for the six and three-month periods ended June 30, 2024 and 2023:
Current wording
The following table sets forth the percentage of our consolidated net revenues by segment for the nine and three-month periods ended September 30, 2024 and 2023:
Previous wording
The following table summarizes the changes in our net revenues by segment for the six and three-month periods ended June 30, 2024 and 2023:
Current wording
The following table summarizes the changes in our net revenues by segment for the nine and three-month periods ended September 30, 2024 and 2023:
Previous wording
(2) The main driver of Argentina’s net revenues and financial income decrease is explained by the average inter-annual increase of Argentina’s official exchange rate against U.S. dollar of 308.4% and 282.5% for the six and three-month periods ended June 30, 2024, respectively, partially offset by an average inter-annual inflation rate in our Argentine segment of 275.9% and 279.1% for the six and three-month periods ended June 30, 2024.
Current wording
(2) For the nine-month period ended September 30, 2024, the main driver of Argentina’s net revenues and financial income decrease is partially explained by the average inter-annual increase of Argentina’s official exchange rate against U.S. dollar of 273.8% partially offset by an average inter-annual inflation rate in our Argentine segment of 262.8%. However, for the three-month period ended September 30, 2024, the average inter-annual inflation rate in our Argentine segment of 236.4%, was higher than the average inter-annual increase of Argentina’s official exchange rate against U.S. dollar of 204.7%.
Previous wording
Results of operations for the six and three-month periods ended June 30, 2024 compared to the six and three-month periods ended June 30, 2023
Current wording
Results of operations for the nine and three-month periods ended September 30, 2024 compared to the nine and three-month periods ended September 30, 2023
Previous wording
The selected financial data for the six and three-month periods ended June 30, 2024 and 2023 discussed herein is derived from our unaudited interim condensed consolidated financial statements included in Item 1 of Part I of this report. The results of operations for the six and three-month periods ended June 30, 2024, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2024 or for any other period.
Current wording
The selected financial data for the nine and three-month periods ended September 30, 2024 and 2023 discussed herein is derived from our unaudited interim condensed consolidated financial statements included in Item 1 of Part I of this report. The results of operations for the nine and three-month periods ended September 30, 2024, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2024 or for any other period.
Previous wording
We have a highly fragmented customer revenue base given the large numbers of sellers and buyers who use our platforms. For the six and three-month periods ended June 30, 2024 and 2023, no single customer accounted for more than 5.0% of our net revenues and financial income.
Current wording
We have a highly fragmented customer revenue base given the large numbers of sellers and buyers who use our platforms. For the nine and three-month periods ended September 30, 2024 and 2023, no single customer accounted for more than 5.0% of our net revenues and financial income.
Previous wording
Our net revenues and financial income grew during the six and three-month periods ended June 30, 2024 as compared to the same period in 2023, boosted by an increase in the share of shipping services where we act as principal, as opposed to agent, the growth of credits business originations and our gross merchandise volume. This growth was partially offset by the negative effect on net revenues of the Argentine currency depreciation.
Current wording
Our net revenues and financial income grew during the nine and three-month periods ended September 30, 2024 as compared to the same periods in 2023, boosted by an increase in the share of shipping services where we act as principal, as opposed to agent, the growth of credits business originations and our total payment volume.
Previous wording
The continued execution of our long-term strategies in Commerce and Fintech businesses has enabled us to deliver growth in gross merchandise volume, total payment volume and net revenues, alongside record quarterly operating results and strong cash generation.
Current wording
The continued execution of our long-term strategies in Commerce and Fintech businesses has enabled us to deliver growth in gross merchandise volume, total payment volume and net revenues alongside cash generation.
Previous wording
The following table summarizes our consolidated net revenues and financial income by revenue stream and geographic segment for the six and three-month periods ended June 30, 2024 and 2023:
Current wording
The following table summarizes our consolidated net revenues and financial income by revenue stream and geographic segment for the nine and three-month periods ended September 30, 2024 and 2023:
Previous wording
See Note 9 – Segments of our unaudited interim condensed consolidated financial statements for further information regarding our net revenues and financial income disaggregated by similar products and services for the six and three-month periods ended June 30, 2024 and 2023.
Current wording
See Note 9 – Segments of our unaudited interim condensed consolidated financial statements for further information regarding our net revenues and financial income disaggregated by similar products and services for the nine and three-month periods ended September 30, 2024 and 2023.
Previous wording
Our Commerce revenues grew $1,854 million and $1,034 million, or 51.3% and 53.4%, for the six and three-month periods ended June 30, 2024, respectively, as compared to the same periods in 2023. This increase in Commerce revenues was primarily attributable to:
Current wording
Our Commerce revenues grew $2,865 million and $1,011 million, or 49.9% and 47.5%, for the nine and three-month periods ended September 30, 2024, respectively, as compared to the same periods in 2023. This increase in Commerce revenues was primarily attributable to:
Previous wording
■(i) an increase of $1,631 million and $918 million in our Commerce services revenues for the six and three-month periods ended June 30, 2024, respectively, mainly related to a 20.4% and 20.4% increase in gross merchandise volume, respectively, (ii) a 28.2% and 30.4% increase in our shipped items, respectively, and (iii) higher flat fee contributions for low gross merchandise volume transactions. Shipping carrier costs, which are netted against revenues, decreased $519 million and $344 million, from $1,100 million and $563 million for the six and three-month periods ended June 30, 2023, to $581 million and $220 million for the six and three-month periods ended June 30, 2024, respectively, mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent; and
Current wording
■(i) an increase of $2,436 million and $805 million in our Commerce services revenues for the nine and three-month periods ended September 30, 2024, respectively, mainly related to a 18.0% and 13.6% increase in gross merchandise volume, respectively, (ii) a 28.8% and 29.4% increase in our shipped items, respectively, and (iii) higher flat fee contributions for low gross merchandise volume transactions. Shipping carrier costs, which are netted against revenues, decreased $916 million and $398 million, from $1,710 million and $611 million for the nine and three-month periods ended September 30, 2023, to $794 million and $213 million for the nine and three-month periods ended September 30, 2024, respectively, mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent; and
Previous wording
■an increase of $223 million and $116 million in our revenues from Commerce products sales for the six and three-month periods ended June 30, 2024, respectively, as compared to the same period in 2023, mainly in Brazil and Mexico, partially offset by Argentina, mainly due to an increase in the Argentina’s official exchange rate against U.S. dollar.
Current wording
■an increase of $429 million in our revenues from Commerce products sales for the nine-month period ended September 30, 2024, as compared to the same period in 2023, mainly in Brazil and Mexico, partially offset by Argentina, mainly due to an increase in the Argentina’s official exchange rate against U.S. dollar, and an increase of $206 million for the three-month period ended September 30, 2024, as compared to the same period in 2023, mainly in Brazil and Mexico.
Previous wording
Our Fintech revenues grew 24.7% and 27.5%, from $3,159 million and $1,649 million for the six and three-month periods ended June 30, 2023, respectively, to $3,940 million and $2,103 million for the six and three-month periods ended June 30, 2024, respectively. This increase was mainly generated by:
Current wording
Our Fintech revenues grew 23.3% and 20.8%, from $4,958 million and $1,799 million for the nine and three-month periods ended September 30, 2023, respectively, to $6,113 million and $2,173 million for the nine and three-month periods ended September 30, 2024, respectively. This increase was mainly generated by:
Previous wording
■an increase of $513 million and $279 million in our credits revenues for the six and three-month periods ended June 30, 2024, respectively, mainly as a consequence of higher originations; and
Current wording
■an increase of $751 million and $238 million in our credits revenues for the nine and three-month periods ended September 30, 2024, respectively, mainly as a consequence of higher originations; and
Previous wording
■an increase of $270 million and $174 million in our revenues from Financial services and income for the six and three-month periods ended June 30, 2024, respectively, mainly related to a 35.1% and 35.6% increase in our total payment volume, and a 55.1% and 54.8% increase in our total payment transactions, respectively.
Current wording
■an increase of $401 million and $131 million in our revenues from Financial services and income for the nine and three-month periods ended September 30, 2024, respectively, mainly related to a 34.7% and 34.0% increase in our total payment volume, and a 52.2% and 47.5% increase in our total payment transactions, respectively, partially offset by a decrease of financial income as a result of lower interest rates mainly in Argentina.
Previous wording
The main driver of Argentina’s net revenues and financial income decrease in the six-month period ended June 30, 2024 is explained by an average inter-annual increase of Argentina’s official exchange rate against U.S. dollar of 308.4% for the six-month period ended June 30, 2024, partially offset by an average inter-annual inflation rate in our Argentine segment of 275.9% for the six-month period ended June 30, 2024, respectively.
Current wording
The main driver of the decrease in Argentina’s net revenues and financial income for the nine-month period ended September 30, 2024 is an average inter-annual increase of Argentina’s official exchange rate against the U.S. dollar of 273.8% for the nine-month period ended September 30, 2024, partially offset by an average inter-annual inflation rate in our Argentine segment of 262.8% for the nine-month period ended September 30, 2024.
Previous wording
Commerce revenues increased 1.7% in the three-month period ended June 30, 2024 as compared to the same period in 2023. This increase was generated by an increase of $18 million in our Commerce services revenues, partially offset by a decrease of $13 million in our revenues from Commerce products sales. Fintech revenues increased 0.5%, a $3 million increase, during the three-month period ended June 30, 2024 as compared to the same period in 2023, mainly driven by an increase of $32 million in our revenues from Financial services and income, partially offset by a decrease of $29 million in our Credits revenues.
Current wording
Commerce revenues in Argentina increased 32.6% in the three-month period ended September 30, 2024 as compared to the same period in 2023. This increase was generated by an increase of $98 million in our Commerce services revenues, and an increase of $3 million in our revenues from Commerce products sales. Fintech revenues increased 3.7%, a $22 million increase, during the three-month period ended September 30, 2024 as compared to the same period in 2023, mainly driven by an increase of $29 million in our revenues from Financial services and income, partially offset by a decrease of $8 million in our Credits revenues.
Previous wording
The following table sets forth the growth in net revenues and financial income in local currencies, for the six and three-month periods ended June 30, 2024 as compared to the same period in 2023:
Current wording
The following table sets forth the growth in net revenues and financial income in local currencies, for the nine and three-month periods ended September 30, 2024 as compared to the same period in 2023:
Previous wording
Cost of net revenues and financial expenses primarily includes cost of goods sold, shipping operation costs (including warehousing costs), carrier and other operating costs, collection fees, sales taxes, funding costs related to our credits and Mercado Pago business, fraud prevention expenses, hosting and site operation fees, certain tax withholding related to export duties, compensation for customer support personnel and depreciation and amortization. The following table presents cost of net revenues and financial expenses for the periods indicated:
Current wording
Cost of net revenues and financial expenses primarily includes shipping operation costs (including warehousing costs), carrier and other operating costs, cost of goods sold, collection fees, sales taxes, funding costs related to our credits and Mercado Pago business, fraud prevention expenses, hosting and site operation fees, certain tax withholding related to export duties, compensation for customer support personnel and depreciation and amortization. The following table presents cost of net revenues and financial expenses for the periods indicated:
Previous wording
For the six-month period ended June 30, 2024 as compared to the same period in 2023, the increase in cost of net revenues and financial expenses was primarily attributable to a: i) $1,160 million increase in shipping operating and carrier costs mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent; ii) $185 million increase in collection fees, which was mainly attributable to our Brazilian and Mexican operations as a result of the higher transactions volume of Mercado Pago in those countries; iii) $159 million increase in cost of sales of goods mainly in Brazil and Mexico, partially offset by a decrease in Argentina; and iv) $101 million increase in sales taxes.
Current wording
For the nine-month period ended September 30, 2024 as compared to the same period in 2023, the increase in cost of net revenues and financial expenses was primarily attributable to a: i) $1,838 million increase in shipping operating and carrier costs mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent; ii) $326 million increase in cost of sales of goods mainly in Brazil and Mexico, partially offset by a decrease in Argentina; iii) $270 million increase in collection fees, which was mainly attributable to our Brazilian and Mexican operations as a result of the higher growth of total payment volume of Mercado Pago in those countries; and iv) $179 million increase in sales taxes.
Previous wording
For the three-month period ended June 30, 2024 as compared to the same period in 2023, the increase in cost of net revenues and financial expenses was primarily attributable to a: i) $673 million increase in shipping operating and carrier costs mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent; ii) $110 million increase in collection fees, which was mainly attributable to our Brazilian and Mexican operations as a result of the higher transactions volume of Mercado Pago in those countries; iii) $93 million increase in cost of sales of goods mainly in Brazil and Mexico; and iv) $42 million increase in sales taxes.
Current wording
For the three-month period ended September 30, 2024 as compared to the same period in 2023, the increase in cost of net revenues and financial expenses was primarily attributable to a: i) $678 million increase in shipping operating and carrier costs mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent; ii) $167 million increase in cost of sales of goods mainly in Brazil and Mexico; iii) $86 million increase in collection fees, which was mainly attributable to our Brazilian, Argentinian and Mexican operations as a result of the higher transactions volume of Mercado Pago in those countries; and iv) $77 million increase in sales taxes.
Previous wording
Our subsidiaries in Brazil, Argentina and Colombia are subject to certain taxes on revenues and financial income, which are classified as a cost of net revenues and financial expenses. These taxes represented 6.6% and 6.2% of net revenues and financial income for the six and three-month periods ended June 30, 2024, and 7.7% and 7.6% for the same period in 2023.
Current wording
Our subsidiaries in Brazil, Argentina and Colombia are subject to certain taxes on revenues and financial income, which are classified as a cost of net revenues and financial expenses. These taxes represented 6.7% and 6.7% of net revenues and financial income for the nine and three-month periods ended September 30, 2024, and 7.5% and 7.1% for the same period in 2023.
Previous wording
For the six and three-month periods ended June 30, 2024 and 2023, our gross profit margins were 46.7% and 46.6%, and 50.9% and 51.1%, respectively. The decrease in our gross profit margin resulted primarily from an increase in our shipping operating and carrier costs, as a percentage of net revenues and financial income mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent, partially offset by a decrease of our other fintech costs, sales taxes, cost of sales of goods and collection fees, as a percentage of net revenues and financial income.
Current wording
For the three-month period ended September 30, 2024, as compared to the same period in 2023, the decrease in our gross profit margin resulted primarily from an increase in our shipping operating and carrier costs, as a percentage of net revenues and financial income, mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent, and an increase in cost of sales of goods as a percentage of net revenues and financial income, partially offset by a decrease of our other fintech costs, collection fees and sales taxes as a percentage of net revenues and financial income.
Previous wording
In the future, our gross profit margin could decline if we continue growing our sales of goods business, which has a lower pure product margin, building up our logistics network and if we fail to maintain an appropriate relationship between our cost of revenue structure and our net revenues and financial income trend.
Current wording
In the future, our gross profit margin could continue declining if we maintain the growth of our sales of goods business, which has a lower pure product margin, building up our logistics network and if we fail to maintain an appropriate relationship between our cost of revenue structure and our net revenues and financial income trend.
Previous wording
For the six-month period ended June 30, 2024, the increase in product and technology development expenses as compared to the same period in 2023 was primarily attributable to a: i) $82 million increase in salaries and wages mainly related to the increase of 17% in our product and technology development headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; ii) $50 million increase in other product and technology development expenses mainly related to certain disputed amounts regarding withholding income tax contingencies in Brazil and higher tax withholding in connection with intercompany export services billing duties; and iii) $23 million increase in depreciation and amortization expenses mainly related to capitalized information and technology assets.
Current wording
For the nine-month period ended September 30, 2024, the increase in product and technology development expenses as compared to the same period in 2023 was primarily attributable to a: i) $146 million increase in salaries and wages mainly related to the increase of 17% in our product and technology development headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; ii) $78 million increase in other product and technology development expenses mainly related to certain disputed amounts regarding withholding income tax contingencies in Brazil and higher tax withholding in connection with intercompany export services billing duties; and iii) $32 million increase in depreciation and amortization expenses mainly related to capitalized information and technology assets.
Previous wording
For the three-month period ended June 30, 2024, the increase in product and technology development expenses as compared to the same period in 2023 was primarily attributable to a: i) $44 million increase in salaries and wages mainly related to the increase of 17% in our product and technology development headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; ii) $26 million increase in other product and technology development expenses mainly related to certain disputed amounts regarding withholding income tax contingencies in Brazil and higher tax withholding in connection with intercompany export services billing duties; and iii) $11 million increase in depreciation and amortization expenses mainly related to capitalized information and technology assets.
Current wording
For the three-month period ended September 30, 2024, the increase in product and technology development expenses as compared to the same period in 2023 was primarily attributable to a: i) $63 million increase in salaries and wages mainly related to the increase of 17% in our product and technology development headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; ii) $28 million increase in other product and technology development expenses mainly related to certain disputed amounts regarding withholding income tax contingencies in Brazil and higher tax withholding in connection with intercompany export services billing duties; and iii) $9 million increase in depreciation and amortization expenses mainly related to capitalized information and technology assets.
Previous wording
For the six-month period ended June 30, 2024, the increase in sales and marketing expenses as compared to the same period in 2023 was primarily attributable to a: i) $135 million increase in online and offline marketing expenses mainly in Brazil and Mexico; ii) $30 million increase in our buyer protection program expenses; iii) $24 million increase in salaries and wages mainly related to the increase of 11% in our sales and marketing headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; and iv) $20 million increase in chargebacks.
Current wording
For the nine-month period ended September 30, 2024, the increase in sales and marketing expenses as compared to the same period in 2023 was primarily attributable to a: i) $212 million increase in online and offline marketing expenses mainly in Brazil and Mexico; ii) $45 million increase in our buyer protection program expenses; iii) $35 million increase in salaries and wages mainly related to the increase of 13% in our sales and marketing headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; and iv) $32 million increase in chargebacks.
Previous wording
For the three-month period ended June 30, 2024, the increase in sales and marketing expenses as compared to the same period in 2023 was primarily attributable to a: i) $71 million increase in online and offline marketing expenses mainly in Brazil and Mexico; ii) $19 million increase in our buyer protection program expenses; iii) $15 million increase in chargebacks; and iv) $10 million increase in salaries and wages mainly related to the increase of 18% in our sales and marketing headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price.
Current wording
For the three-month period ended September 30, 2024, the increase in sales and marketing expenses as compared to the same period in 2023 was primarily attributable to a: i) $76 million increase in online and offline marketing expenses mainly in Brazil; ii) $14 million increase in our buyer protection program expenses; iii) $13 million increase in chargebacks; and iv) $12 million increase in salaries and wages mainly related to the increase of 16% in our sales and marketing headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price.
Previous wording
For the six and three-month period ended June 30, 2024, as compared to the same period in 2023, the provision for doubtful accounts increased $350 million and $228 million, respectively, due to the increase in originations growing at 75% and 79% (mainly related to the credit card and consumer product), respectively, and an increase of our 15-90 days non-performing loans ratio from 7.5% as of June 30, 2023 to 8.2% as of June 30, 2024.
Current wording
For the nine and three-month period ended September 30, 2024, as compared to the same period in 2023, the provision for doubtful accounts increased $580 million and $230 million, respectively, due to the increase in originations growing at 76% and 77% (mainly related to the credit card and consumer product), respectively, resulting an increase in the average balance of the loans receivable portfolio of 52.7% and 64.2%, respectively.
Previous wording
For the three-month period ended June 30, 2024, the increase in general and administrative expenses as compared to the same period in 2023 was primarily attributable to a: i) $8 million increase in salaries and wages, mainly related to the increase of 11% in general and administrative headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; ii) $6 million increase in tax and other fees; and iii) $4 million loss related to the change in the fair value of digital assets.
Current wording
For the nine-month period ended September 30, 2024, the increase in general and administrative expenses as compared to the same period in 2023 was primarily attributable to a: i) $53 million increase in salaries and wages, mainly related to the increase of 11% in general and administrative headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; ii) $52 million increase in contingencies; and iii) $23 million increase in other general and administrative expenses mainly related to higher tax withholding in connection with intercompany export services billing duties.
Previous wording
For the six and three-month periods ended June 30, 2024, as compared to the same period in 2023, our operating income margin decreased from 16.1% and 18.7% to 13.3% and 14.3%. This decrease was mainly explained by an increase in cost of net revenues and financial expenses as a percentage of net revenues and financial income, mainly due to an increase in the share of shipping services where we act as principal as opposed to agent, and provision of doubtful accounts, as a percentage of net revenues and financial income. This decrease was partially offset by product and technology development related expenses and general and administrative expenses, as a percentage of net revenues and financial income.
Current wording
For the nine-month period ended September 30, 2024, as compared to the same period in 2023, the decrease was mainly explained by an increase in cost of net revenues and financial expenses as a percentage of net revenues and financial income, mainly due to an increase in the share of shipping services where we act as principal as opposed to agent, and provision of doubtful accounts, as a percentage of net revenues and financial income. This decrease was partially offset by product and technology development related expenses, as a percentage of net revenues and financial income.
Previous wording
For the six-month period ended June 30, 2024, the decrease in other expense, net as compared to the same period in 2023 was primarily attributable to lower foreign exchange losses of $181 million due to acquisitions of financial instruments in the Argentine market at a price that reflects an additional cost of accessing U.S. dollars through an indirect mechanism due to restrictions imposed by the Argentine government for buying U.S. dollars at the official exchange rate, and due to lower foreign exchange losses from our Argentine subsidiaries. This was partially offset by higher foreign exchange losses from our Brazilian and Mexican subsidiaries.
Current wording
For the nine-month period ended September 30, 2024, the decrease in other expense, net as compared to the same period in 2023 was primarily attributable to lower foreign exchange losses of $327 million due to acquisitions of financial instruments in the Argentine market at a price that reflects an additional cost of accessing U.S. dollars through an indirect mechanism due to restrictions imposed by the Argentine government for buying U.S. dollars at the official exchange rate, and due to lower foreign exchange losses from our Argentine subsidiaries. This was partially offset by higher foreign exchange losses from our Brazilian and Mexican subsidiaries.
Previous wording
For the three-month period ended June 30, 2024, the decrease in other expense, net as compared to the same period in 2023 was primarily attributable to lower foreign exchange losses of $145 million due to acquisitions of financial instruments in the Argentine market at a price that reflects an additional cost of accessing U.S. dollars through an indirect mechanism due to restrictions imposed by the Argentine government for buying U.S. dollars at the official exchange rate, and due to lower foreign exchange losses from our Argentine subsidiaries. This was partially offset by higher foreign exchange losses from our Brazilian and Mexican subsidiaries.
Current wording
For the three-month period ended September 30, 2024, the decrease in other expense, net as compared to the same period in 2023 was primarily attributable to (i) lower foreign exchange losses of $146 million due to acquisitions of financial instruments in the Argentine market at a price that reflects an additional cost of accessing U.S. dollars through an indirect mechanism due to restrictions imposed by the Argentine government for buying U.S. dollars at the official exchange rate, and (ii)foreign exchange gains from our Brazilian subsidiaries during the quarter ended September 30, 2024.
Previous wording
The following table summarizes the composition of our income taxes for the six and three-month periods ended June 30, 2024 and 2023:
Current wording
The following table summarizes the composition of our income taxes for the nine and three-month periods ended September 30, 2024 and 2023:
Previous wording
During the six and three-month periods ended June 30, 2024 as compared to the same periods in 2023, income tax expense decreased mainly as a result of lower income tax expense in Argentina due to lower pre-tax gains in that segment and higher tax loss carry forward in our Mexican segment. This decrease was partially offset by higher income tax expense in Brazil as a consequence of higher pre-tax gains in that segment in 2024 and higher income tax expense due to withholding tax on dividends.
Current wording
During the nine and three-month periods ended September 30, 2024 as compared to the same periods in 2023, income tax expense decreased mainly as a result of lower income tax expense in Argentina and Brazil due to lower taxable income in Argentina and higher deferred tax assets in our Brazilian segment. This decrease was partially offset by higher income tax expense in Mexico in 2024 mainly driven by the income tax gains recognized in Mexico during the third quarter of 2023 as a result of the reversal of the valuation allowance in one of our Mexican subsidiaries and higher income tax expense due to withholding tax on dividends.
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
For the nine-month period ended September 30, 2024, as compared to the same period in 2023, the decrease in our gross profit margin resulted primarily from an increase in our shipping operating and carrier costs, as a percentage of net revenues and financial income mainly due to an increase in the share of shipping services where we act as principal, as opposed to agent, partially offset by a decrease of our other fintech costs, sales taxes and collection fees, as a percentage of net revenues and financial income.
Current report — wording carried from elsewhere
For the three-month period ended September 30, 2024, as compared to the same period in 2023, the decrease was mainly explained by an increase in cost of net revenues and financial expenses as a percentage of net revenues and financial income, mainly due to an increase in the share of shipping services where we act as principal as opposed to agent, and provision of doubtful accounts, as a percentage of net revenues and financial income.