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MERCADOLIBRE INC

MERCADOLIBRE INCMELIEarnings & Financial Report

Nasdaq · e-commerce

MercadoLibre, Inc., known as Mercado Livre in Brazil, literally meaning "free market" in both languages, is a company of Argentine origin and incorporated in Delaware in the United States that operates online marketplaces dedicated to e-commerce and online auctions. As of 2016, Mercado Libre had 174.2 million users in Latin America, making it the region's most popular e-commerce site by number of visitors.

What changed in MERCADOLIBRE INC's 10-K — 2023 vs 2024

Top changes in MERCADOLIBRE INC's 2024 10-K

710 paragraphs added · 622 removed · 472 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

84 edited+81 added−76 removed81 unchanged
According to the BACEN’s regulation, Mercado Pago is required to maintain funds in an amount equal to the value of the balance of funds held in a payment account and in transit between payment accounts at the same payment institution in: (i) a specific account in the BACEN (Correspondent Account for Electronic Currency - CCME) or (ii) federal government bonds, registered at the Special Settlement and Custody System (“SELIC”).
According to the BACEN’s regulation, Mercado Pago is required to maintain funds in an amount equal to the value of the balance of funds held in a payment account and in transit between payment accounts at the same payment institution in: (i) a specific account in the BACEN (Correspondent Account for Electronic Currency) or (ii) federal government bonds, registered at the Special Settlement and Custody System (“SELIC”).
While we are currently a market leader in a number of the markets in which we operate, we currently or potentially could compete with marketplace operators, businesses that offer business-to-consumer online e-commerce services or others with a focus on specific vertical categories, as well as a growing number of brick and mortar retailers that have launched online offerings.
While we are currently a market leader in a number of the markets in which we operate, we currently or potentially could compete with marketplace operators, businesses that offer business-to-consumer online e-commerce services or others with a focus on specific vertical categories, as well as brick and mortar retailers that have launched online offerings.
Colombia Colombian regulations establish specific requirements to open accounts and provide certain financial services, as well as policies for cash and risk management. There are also regulations requiring payment processors such as Mercado Pago to comply with certain security, privacy and anti-money laundering standards. As a result, in June 2023, MercadoPago S.A.
Colombia Colombian regulations establish specific requirements to open accounts and provide certain financial services, as well as policies for cash and risk management. There are also regulations requiring payment processors such as Mercado Pago to comply with certain security, privacy and anti-money laundering standards. In June 2023, MercadoPago S.A.
In 2020 the BACEN, within the Brazilian instant payment (IP) ecosystem, created Pix, the Brazilian IP scheme that enables its users — people, companies and governmental entities — to send or receive payment transfers in a few seconds at any time, including non-business days.
In 2020 the BACEN, within the Brazilian instant payment ecosystem, created Pix, the Brazilian instant payment scheme that enables its users — people, companies and governmental entities — to send or receive payment transfers in a few seconds at any time, including non-business days.
Due to these areas of legal uncertainty, and the user´s adoption of the Internet and other online services, it is possible that new laws and regulations will be adopted with respect to the Internet or other online services.
Due to these areas of legal uncertainty, and the user ’ s adoption of the Internet and other online services, it is possible that new laws and regulations will be adopted with respect to the Internet or other online services.
Our main trademarks and domain names are duly protected in the countries where we have our main operations, however, we may not have effective protection or it might not be granted to us by the appropriate regulatory authority in every country where our services are available online, meaning our ability to protect our brands against third-party infringers would be compromised and we could face claims by third-party trademark owners.
Our main trademarks and domain names are duly protected in the countries where we have our main operations, however, we may not have effective protection or it might not be granted to us by the appropriate regulatory authority in every country where our services are available online, meaning our ability to protect our brands against third-party infringement would be compromised and we could face claims by third-party trademark owners.
Risk factors—Intellectual Property Risks—We could face legal and financial liability upon the sale of items that infringe intellectual property rights of third parties and for information and material disseminated through our platforms”, which describes these risks as well as our Brand Protection Program, which we make available to IPR holders to enable them to enforce their rights against listings on our sites that allegedly infringe upon their rights.
Risk factors—Intellectual Property Risks—We could face legal and financial liability upon the sale of items that infringe intellectual property rights of third parties and for information and material disseminated through our platforms”, which describes these risks as well as our Brand Protection Program, which we make available to IP rights holders to enable them to enforce their rights against listings on our sites that allegedly infringe upon their rights.
In addition, Law No. 12,865/2013 gave the Brazilian Central Bank (“BACEN”), according to guidelines set out by the National Monetary Council (“CMN”) authority to regulate entities involved in the payments industry. 12 | MercadoLibre, Inc. Table of Contents Pursuant to that authority, the CMN and the BACEN created a regulatory framework regulating the operation of payment schemes and payment institutions.
Table of Contents In addition, Law No. 12,865/2013 gave the Brazilian Central Bank (“BACEN”), according to guidelines set out by the National Monetary Council (“CMN”) authority to regulate entities involved in the payments industry. Pursuant to that authority, the CMN and the BACEN created a regulatory framework regulating the operation of payment schemes and payment institutions.
This service allows our millions of users to purchase, hold and sell selected digital assets through our interface without leaving the Mercado Pago application, while a partner acts as the custodian and offers the blockchain infrastructure platform. This feature is available for all users through their Mercado Pago wallet.
This service allows our millions of users to purchase, hold and sell selected digital assets through our interface without leaving the Mercado Pago application, while a partner acts as the custodian and offers the blockchain infrastructure platform. This feature is available for all users through their Mercado Pago account.
Competition The online commerce market is rapidly evolving and is highly competitive. Barriers-to-entry for large, well-established internet companies are relatively low, and current and new competitors can launch new sites at a relatively low cost using commercially available software.
Competition The online commerce market is rapidly evolving and is highly competitive. Barriers-to-entry for large, well-established technology companies are relatively low, and current and new competitors can launch new sites at a relatively low cost using commercially available software.
As an extension of our asset management and savings solutions for users, we launched a digital assets feature as part of the Mercado Pago wallet in Brazil, Mexico and Chile, in 2021, 2022 and 2023, respectively.
As an extension of our asset management and savings solutions for users, we launched a digital assets feature as part of the Mercado Pago account in Brazil, Mexico and Chile, in 2021, 2022 and 2023, respectively.
Over the past few years, we have seen competition intensify not only as local players grow their e-commerce businesses, but also as international players expand, mainly in Brazil and Mexico. The financial services market is also becoming increasingly competitive with the growth of several fintechs established in Latin America.
Over the past few years, we have seen competition intensify not only as local players grow their e-commerce businesses, but also as international players expand, mainly in Brazil and Mexico. The financial services market is also becoming increasingly competitive with the growth of several fintech companies established in Latin America.
In addition, our developers frequently interact with technology suppliers and attend technology-related events to familiarize themselves with the latest innovations and developments in the field. We also rely on certain technologies that we license from third parties, suppliers of key database technology, operating systems and specific hardware components for our services. 8 | MercadoLibre, Inc.
In addition, our developers frequently interact with technology suppliers and attend technology-related events to familiarize themselves with the latest innovations and developments in the field. We also rely on certain technologies that we license from third parties, suppliers of key database technology, operating systems and specific hardware components for our services.
Our investor relations website is investor.mercadolibre.com. We use our investor relations website as a means of disclosing material, non-public information and for complying with our disclosure obligations under SEC Regulation FD (Fair Disclosure). Accordingly, investors should monitor our investor relations website, in addition to following our press releases, SEC filings, public conference calls and webcasts.
We use our investor relations website as a means of disclosing material, non-public information and for complying with our disclosure obligations under SEC Regulation FD (Fair Disclosure). Accordingly, investors should monitor our investor relations website, in addition to following our press releases, SEC filings, public conference calls and webcasts.
Intellectual Property Rights Our intellectual property rights are critical to our future success and rely on a combination of copyright, trademark, patent designs, trade secret laws and contractual restrictions. We pursue the registration of our intangible assets in each country where we operate.
Intellectual Property Rights Our intellectual property ("IP") rights are critical to our future success and rely on a combination of copyright, trademark, patent designs, trade secret laws and contractual restrictions, among others. We pursue the registration of our intangible assets in each country where we operate.
Our Mercado Pago service is subject to regulation in the countries in which we operate, as described below: Brazil Mercado Pago’s activities are subject to a number of laws and regulations that relate to payment schemes and payment institutions, including Law No. 12,865/2013, which established the first set of rules regulating the electronic payments industry within the Brazilian Payment System (the Sistema de Pagamentos Brasileiro, or “SPB”) and created the concepts of payment schemes and payment institutions.
Our Mercado Pago services are subject to regulation in the countries in which we operate, as described below: Brazil Mercado Pago’s activities are subject to a number of laws and regulations that relate to payment schemes and payment institutions, including Law No. 12,865/2013, which established the first set of rules regulating the electronic payments industry within the Brazilian Payment System (the Sistema de Pagamentos Brasileiro, or “SPB”) and created the concepts of payment schemes and payment institutions. 12 | MercadoLibre, Inc.
In July 2023, MercadoPago Uruguay S.R.L. obtained the approval by the BCU to operate as an Electronic Money Issuing Institution (“IEDE”) facilitating electronic money transfers.
In July 2023, MercadoPago Uruguay S.R.L. obtained the approval by the BCU to operate as an Electronic Money Issuing Institution (“IEDE”).
In November 2021, the Chilean Commission for the Financial Market (“CMF”) granted Mercado Pago, through its entities Mercado Pago Emisora S.A. and Mercado Pago Operadora S.A. (formerly know as MercadoPago S.A.), a prepaid card issuer license and payment card operator license, respectively.
Table of Contents In November 2021, the Chilean Commission for the Financial Market (“CMF”) granted Mercado Pago, through its entities Mercado Pago Emisora S.A. and Mercado Pago Operadora S.A. (formerly know as MercadoPago S.A.), a prepaid card issuer license and payment card operator license, respectively.
Our distribution capabilities and in-depth understanding of our customers’ behavior and merchants’ sales on the Mercado Libre Marketplace and machine learning and artificial intelligence algorithms have also allowed us to develop our own proprietary credit risk models with unique data that differentiate our scoring from traditional financial institutions.
Our distribution capabilities and in-depth understanding of our customers’ behavior and merchants’ sales on the Mercado Libre Marketplace combined with machine learning ("ML") and artificial intelligence ("AI") algorithms have allowed us to develop our own proprietary credit risk models with unique data that differentiate our scoring from traditional financial institutions.
We also serve our users by making capital more accessible through different credit products and fostering entrepreneurship and social mobility, with the goal of creating significant value for our stakeholders. More broadly, we strive to make inefficient markets more efficient through technology and in that process generate value for all our stakeholders.
We also serve our users by making financial services more accessible through different credit and other financial products and by fostering entrepreneurship and social mobility, with the goal of creating significant value for our stakeholders. More broadly, we strive to make inefficient markets more efficient through technology and in that process generate value for all our stakeholders.
Our Services revenue stream is mainly generated from Marketplace fees that include final value fees and flat fees for transactions below a certain merchandise value, related shipping fees net of third-party carrier costs (when we act as an agent) and storage fees, classifieds fees, advertising sales fees, and fees from other ancillary businesses.
Our Services revenue stream is mainly generated from Marketplace fees that include final value fees, which include the use of the payment solution, and flat fees for certain transactions below a certain merchandise value, related shipping fees, net of third-party carrier costs when we act as an agent, and storage fees, classifieds fees, advertising sales fees, and fees from other ancillary businesses.
In Mexico some of our fulfillment employees are represented by the Mexican Commercial Labor Union (“Federación Obrera Sindical de la República Mexicana”). Unions or local regulations in other countries could also require that employees be represented.
In Mexico some of our fulfillment employees are represented by the Mexican Commercial Labor Union (Federación Obrera Sindical de la República Mexicana). Unions or local regulations in other countries could also require that employees be represented.
Since then, we have seen significant adoption of our platform and entire companies built on and around our APIs and services, all of them focused on adding even more value to our users. During this overhaul, we built a proprietary Platform as a Service (“PAAS”) product used daily by our development team.
Since then, we have seen significant adoption of our platform and entire companies built on and around our APIs and services, all of them focused on adding even more value to our users. 8 | MercadoLibre, Inc. Table of Contents During this overhaul, we built a proprietary Platform as a Service (“PAAS”) product used daily by our development team.
We strive to leverage our various services and our loyalty program, to promote greater cross-usage and synergies, thereby creating a fully integrated ecosystem of e-commerce offerings.
We strive to leverage our various services to promote greater cross-usage and synergies, thereby creating a fully integrated ecosystem of e-commerce and fintech offerings.
Table of Contents Chile In 2017 and 2018, Chile enacted regulations regarding the issuance and operation of payment cards, which could affect Mercado Pago’s operations, including authorization to operate, anti-money laundering obligations, capital requirements and reserve funds, operational and security safeguards, among others.
Chile In 2017 and 2018, Chile enacted regulations regarding the issuance and operation of payment cards, which could affect Mercado Pago’s operations, including authorization to operate, anti-money laundering obligations, capital requirements and reserve funds, operational and security safeguards, among others. 15 | MercadoLibre, Inc.
We also intend to grow our business and maintain our leadership by taking advantage of the expanding potential user base that has resulted from the growth of internet penetration rates in Latin America.
We also intend to grow our business and maintain our leadership by taking advantage of the expanding potential user base that has resulted from the growth of e-commerce penetration in Latin America.
On September 14, 2023, the CBA issued Communication “A” 7861 establishing that starting on December 1, 2023, DEBIN (debit immediate), the main and simple funding source of Mercado Pago users’ accounts, will be suspended and replaced with a pull transfer method that requires the consent of the client outside of Mercado Pago’s environment before the first use.
On September 14, 2023, the CBA established that starting on December 1, 2023, DEBIN (debit immediate), the main and simple funding source of Mercado Pago users’ accounts, will be suspended and replaced with a pull transfer method that requires the consent of the client outside of Mercado Pago’s environment before the first use.
Uruguay Uruguay has implemented comprehensive regulations governing electronic payments. In September 2016, we obtained the registration of our Uruguayan subsidiary Deremate.com de Uruguay S.R.L. from the Central Bank of Uruguay (“BCU”) as an entity entitled to provide services of payments and collections (“PSPC”). Thus, on November 1, 2016, Mercado Pago was launched in Uruguay.
In September 2016, we obtained the registration of our Uruguayan subsidiary Deremate.com de Uruguay S.R.L. from the Central Bank of Uruguay (“BCU”) as an entity entitled to provide services of payments and collections (“PSPC”). Thus, on November 1, 2016, Mercado Pago was launched in Uruguay.
Consequently, we will continue to promote the adoption of our Mercado Envios logistics solution, our advertising solution, our Mercado Pago payments solution on our Marketplaces and reward our users in each country for increased usage and engagement.
Consequently, we will continue to promote the adoption of our Mercado Envios logistics solution, our advertising solution, our Mercado Pago payments and financial services solution and reward our users in each country for increased usage and engagement.
Cybersecurity Policies: In 2018 the BACEN published new rules setting forth cybersecurity policies and requirements for the contracting relevant data processing and storage services as well as cloud-based computing services, which are applicable both to Mercado Pago and Mercado Credito. 4.
Cybersecurity Policies: In 2018 the BACEN published new rules setting forth cybersecurity policies and requirements for the contracting relevant data processing and storage services as well as cloud-based computing services, which are applicable to Mercado Pago and its lending products. 4.
Information on or connected to our website is neither part of nor incorporated into this report on Form 10-K or any other SEC filings we make from time to time. 17 | MercadoLibre, Inc. Table of Contents
Information on or connected to our website is neither part of nor incorporated into this report on Form 10-K or any other SEC filings we make from time to time.
Product Development and Technology On December 31, 2023, we had 15,638 employees on our information technology and product development staff, an increase of 13% from 13,856 employees on December 31, 2022, due to new hires and as a consequence of improvements in our ecosystem products, which increased our information technology and product development staff.
Product Development and Technology On December 31, 2024, we had 18,282 employees on our information technology and product development staff, an increase of 17% from 15,638 employees on December 31, 2023, due to new hires and as a consequence of improvements in our ecosystem products, which increased our information technology and product development staff.
We offer our users an ecosystem of six integrated e-commerce and digital financial services: the Mercado Libre Marketplace, the Mercado Pago Fintech platform, the Mercado Envios logistics service, the Mercado Ads solution, the Mercado Libre Classifieds service and the Mercado Shops online storefronts solution.
We offer our users an ecosystem of integrated e-commerce and digital financial services, which includes: the Mercado Libre Marketplace, the Mercado Pago fintech platform, the Mercado Envios logistics service, the Mercado Ads solution and the Mercado Libre Classifieds service.
The CMF has until June 3, 2024 to issue secondary regulation. On October 24, 2022, Mercado Pago Corredores de Seguros SpA was registered as an Insurance Broker in the Registry of Trade Assistants for Insurance of the CMF. The main objective of the Company is the remunerated intermediation of general and life insurance contracts with any insurer based in Chile.
On October 24, 2022, Mercado Pago Corredores de Seguros SpA was registered as an Insurance Broker in the Registry of Trade Assistants for Insurance of the CMF. The main objective of the Company is the remunerated intermediation of general and life insurance contracts with any insurer based in Chile.
During March 2022, the Central Bank of Brazil announced new rules for payment institutions based on their size and complexity and raised standards for required capital.
During March 2022, the BACEN announced new rules for payment institutions based on their size and complexity and raised standards for required capital.
Our employees in Brazil are represented by different labor unions: i) Fetramag (“Federação dos Trabalhadores na Movimentação de Mercadorias em Geral de Goiás, Bahia e Piauí”) in the States of Goias, Bahia and Piauí, ii) Fetrammergs (“Federação dos Trabalhadores na Movimentação de Mercadorias em Geral, Comércio Armazenador e Auxiliares de Administração de Armazéns Gerais do Estado do Rio Grande do Sul”) in the State of Rio Grande do Sul, iii) Sindiesp (“Sindicato dos Trabalhadores nas Empresas e Cursos de Informática do Estado de São Paulo”) in the State of São Paulo, iv) Fetramov (“Federação dos Trabalhadores na Movimentação de Mercadorias em Geral e Operações de Logística do Estado de Minas Gerais”) in the State of Minas Gerais, v) Sintracamp (“Sindicato da Categoria Profissional dos Trabalhadores Empregados e Avulsos, na Movimentação e Ensacamento de Mercadorias e de Cargas e Descargas em Geral de Campinas e Região”) in the city of Louveira, State of São Paulo, vi) Sintrammgep (“Sindicato dos Trabalhadores em Movimentação de Mercadorias em Geral de Paulínia e Região”) in the city of Cajamar, State of São Paulo, vii) Fetrammasc (“Federação dos Trabalhadores na Movimentação de Mercadorias em Geral e Auxiliar de Administração em Gerais, Similares, Conexos”) in the State of Santa Catarina, viii) Sintramoju (“Sindicato dos Trabalhadores na Movimentação de Mercadorias em Geral e Logistica de Jundiaí e Região”) in the city of Franco da Rocha, State of São Paulo, ix) Sintrammsp (“Sindicato dos Trabalhadores, na Movimentação de Mercadorias em Geral e Auxiliar na Administração em Geral de São Paulo”) in the city of Perus, State of São Paulo, x) Sindpd SC (“Sindicato dos Empregados em Empresas de Processamento de Dados de Santa Catarina”) in the State of Santa Catarina, and xi) Sinetrosv (“Sindicato dos Empregados em Escritório de Empresas de Transporte Rodoviário de Osasco, Sorocaba e Vale do Ribeira”) in the cities of Osasco, Sorocaba and Vale do Ribeira, State of São Paulo.
Our employees in Brazil are represented by different labor unions: (i) Fetramag (Federação dos Trabalhadores na Movimentação de Mercadorias em Geral de Goiás, Bahia e Piauí) in the States of Goias, Bahia and Piauí, (ii) Fetrammergs (Federação dos Trabalhadores na Movimentação de Mercadorias em Geral, Comércio Armazenador e Auxiliares de Administração de Armazéns Gerais do Estado do Rio Grande do Sul) in the State of Rio Grande do Sul, (iii) Sindiesp (Sindicato dos Trabalhadores nas Empresas e Cursos de Informática do Estado de São Paulo) in the State of São Paulo, (iv) Fetramov (Federação dos Trabalhadores na Movimentação de Mercadorias em Geral e Operações de Logística do Estado de Minas Gerais) in the State of Minas Gerais, (v) Sintrammgep (Sindicato dos Trabalhadores em Movimentação de Mercadorias em Geral de Paulínia e Região) in the city of Cajamar, State of São Paulo, (vi) Fetrammasc (Federação dos Trabalhadores na Movimentação de Mercadorias em Geral e Auxiliar de Administração em Gerais, Similares, Conexos) in the State of Santa Catarina, (vii) Sintramoju (Sindicato dos Trabalhadores na Movimentação de Mercadorias em Geral e Logistica de Jundiaí e Região) in the city of Franco da Rocha, State of São Paulo, (viii) Sintrammsp (Sindicato dos Trabalhadores, na Movimentação de Mercadorias em Geral e Auxiliar na Administração em Geral de São Paulo) in the city of Perus, State of São Paulo, (ix) Sindpd SC (Sindicato dos Empregados em Empresas de Processamento de Dados de Santa Catarina) in the State of Santa Catarina, (x) Sintramov (Sindicato dos Trabalhadores na Movimentação de Mercadorias em Geral de Contagem, Betim e Região in the State of Minas Gerais) and (xi) Sinetrosv (Sindicato dos Empregados em Escritório de Empresas de Transporte Rodoviário de Osasco, Sorocaba e Vale do Ribeira) in the cities of Osasco, Sorocaba and Vale do Ribeira, State of São Paulo. 10 | MercadoLibre, Inc.
Our Product Sales revenue stream entails selling merchandise on a first-party basis from our own inventory and related shipping fees. ■ Fintech revenue Our Fintech business is comprised of three primary revenue streams: (a) Fintech Services, which includes revenues from commissions we charge for transactions off-platform derived from use of the payment solution, offering installments, either when we finance transactions directly or when we sell the corresponding financial assets, as well as Mercado Pago credit and debit card fees, and insurtech fees; (b) Credit Revenues, which includes revenues from interest earned on loans and advances granted to merchants and consumers, and interest earned on Mercado Pago credit card transactions; and (c) Fintech Product Sales, which includes revenues from sales of mobile point of sales devices.
Our Product Sales revenue stream entails selling merchandise on a first-party basis from our own inventory and related shipping fees. ■ Fintech revenue Our Fintech business is comprised of three primary revenue streams: (a) Financial services and income, which includes revenues from commissions we charge for transactions off-platform derived from use of the payment solution and asset management product, offering installments, either when we finance transactions directly or when we sell the corresponding financial assets, interest earned on cash and investments as part of Mercado Pago activities, including those required due to fintech regulations, net of interest gains pass through our Brazilian users in connection with our asset management product, as well as Mercado Pago debit card commissions, and insurtech fees; (b) Credit Revenues, which includes revenues from interest earned on loans and advances granted to merchants and consumers, and interest and commissions earned on Mercado Pago credit card transactions; and (c) Fintech Product Sales, which includes revenues from sales of mobile point of sales devices.
Mercado Pago also competes in the rapidly evolving fintech space with local and strong global players that offer digital financial services such as access to credit, virtual and physical cards, insurance, savings accounts, and asset management. In the classifieds and advertising market, we compete with regional and local players with general or verticalized focus.
Mercado Pago also competes in the rapidly evolving fintech space with local and strong global players that offer digital financial services such as access to credit, virtual and physical cards, insurance, savings accounts, and asset management.
Table of Contents In the past, we started a deep technology overhaul to switch from a closed and monolithic system to an open and decoupled one. We split our teams into many decoupled and autonomous “cells”. A cell is a functional unit with its own team, hardware, data and source code.
In the past, we started a deep technology overhaul to switch from a closed and monolithic system to an open and decoupled one. We split our teams into many decoupled and autonomous “cells”. A cell is a functional unit with its own team, hardware, data and source code. Cells interact with each other using Application Programming Interfaces ("APIs").
Cells interact with each other using Application Programming Interfaces, or APIs. This successful overhaul allowed us to unlock greater developer productivity from all our teams. In the past, we opened up our platform to allow third parties to integrate the various features of our platform into custom applications.
This successful overhaul allowed us to unlock greater developer productivity from all our teams. In the past, we opened up our platform to allow third parties to integrate the various features of our platform into custom applications.
Some of these initiatives include increasing our fee structure, selling advertising on our platform, offering other e-commerce services and expanding our fee-based features. ■ Take advantage of the natural synergies that exist among our services.
Some of these initiatives include increasing our fee structure, selling advertising on our platform, offering other e-commerce services, expanding our fee-based features and cross-selling financial services to individuals transacting on our Marketplace and merchants who use our payments processing services. ■ Take advantage of the natural synergies that exist among our services.
Table of Contents On September 1, 2022, the CBA issued a regulation that extended the application of the rules for the protection of users of financial services to PSPOCP. The regulation was already applicable to non-financial loan providers. This regulation came into effect on March 1, 2023.
On September 1, 2022, the CBA issued a regulation that extended the application of the rules for the protection of users of financial services to payment services providers who offer payment accounts (“PSPOCP” according to its Spanish acronym). The regulation was already applicable to non-financial loan providers. This regulation came into effect on March 1, 2023.
Offices We are a Delaware corporation incorporated on October 15, 1999. Our registered office is located at 800 North State Street, Suite 304, Kent County, Dover, Delaware, 19901. Our principal executive offices are located at Dr. Luis Bonavita 1294, Of. 1733, Tower II, Montevideo, Uruguay, 11300. 16 | MercadoLibre, Inc. Table of Contents Available Information Our Internet address is www.mercadolibre.com.
Our registered office is located at 800 North State Street, Suite 304, Kent County, Dover, Delaware, 19901. Our principal executive offices are located at Dr. Luis Bonavita 1294, Of. 1733, Tower II, Montevideo, Uruguay, 11300. Available Information Our Internet address is www.mercadolibre.com. Our investor relations website is investor.mercadolibre.com.
Risk factors—Intellectual Property Risks—We may not be able to adequately protect and enforce our intellectual property rights. We could potentially face claims alleging that our technologies infringe the property rights of others. 9 | MercadoLibre, Inc.
Risk factors—Intellectual Property Risks—We may not be able to adequately protect and enforce our intellectual property rights. We could potentially face claims alleging that our technologies infringe the property rights of others". 9 | MercadoLibre, Inc. Table of Contents Offices We are a Delaware corporation incorporated on October 15, 1999.
We believe that we offer world-class technological and commercial solutions that address the distinctive cultural and geographic challenges of operating a digital commerce platform in Latin America. The Mercado Libre Marketplace is a fully-automated, topically-arranged and user-friendly online commerce platform, which can be accessed through our website and mobile app.
We believe that we offer world-class technological and commercial solutions that address the distinctive cultural and geographic challenges of operating a digital commerce platform in Latin America. The Mercado Libre Marketplace is a user-friendly online commerce platform that can be accessed through our mobile app or website. Third-party sellers ("3P") account for most of the GMV transacted on the Marketplace.
Law 13,709 (LGPD) in Brazil, Law 25,326 in Argentina, Federal Law on the Protection of Personal Data on Private Sector Possession in Mexico, Laws No. 1581/2012 and 1266/2008 in Colombia, Law No. 19,628 in Chile, Law No. 18,331 in Uruguay and Law No. 29,733 in Peru).
Law No. 13,709 (“LGPD”) in Brazil, Law No. 25,326 in Argentina, Federal Law on the Protection of Personal Data on Private Sector Possession in Mexico, Laws No. 1581/2012 and 1266/2008 in Colombia, Law No. 21.719 in Chile, Law No. 18,331 in Uruguay, Organic Law on Personal Data Protection in Ecuador, Law No. 29,733 in Peru, Personal Information Protection Law in China and some privacy and data protection state laws in the U.S.).
Our strategy Our main focus is to serve people in Latin America by enabling wider access to retail, digital payments and e-commerce services, and by providing compelling technology-based solutions that democratize commerce and money, thus contributing to the development of a large and growing digital economy in a region with a population of over 650 million people and one of the fastest-growing e-commerce and internet penetration rates in the world.
Our strategy Our main focus is to serve people in Latin America by enabling wider access to e-commerce, digital payments and financial services. By providing compelling technology-based solutions that democratize commerce and money, we contribute to the development of a large and growing digital economy in the region.
We intend to continually enhance our e-commerce ecosystem in order to better serve individuals, brands, retailers and other businesses that want to buy or sell goods and services online in a convenient, simple and safe way. We are committed to continue investing in the development of new tools and technologies that facilitate web and mobile commerce on our platform.
We intend to continually enhance our e-commerce ecosystem in order to better serve individuals, brands, retailers and other businesses that want to buy or sell goods and services online in a convenient, simple and safe way.
We offer credit lines to both our online merchants as well as MPOS device users. Because our online merchants’ business flows through Mercado Pago, we are able to collect principal and interest payments from their existing sales on Mercado Libre’s Marketplaces, meaningfully reducing the risk of uncollectability on the loans we originate to our merchants.
Because our online merchants’ business flows through Mercado Pago, we are able to collect principal and interest payments from their existing sales on Mercado Libre’s Marketplace, meaningfully reducing the risk of uncollectability on the loans we originate to our merchants. Consumers can access credit lines once we score and approve them through our proprietary models.
In partnership with a third party, we also launched three investment fund options in Brazil, which enable our users to diversify their investment portfolio in an accessible way and with options for quick withdrawal. Our advertising platform, Mercado Ads, enables businesses to promote their products and services on the Mercado Libre Marketplace and Mercado Pago Fintech platform.
In partnership with a third party, we also launched three investment fund options in Brazil, which enable our users to diversify their investment portfolio in an accessible way and with options for quick withdrawal.
We consider our relations with our employees to be good and we implement a variety of human resources practices, programs and policies that are designed to hire, develop, compensate and retain our employees.
We consider our relations with our employees to be good and we implement a variety of human resources practices, programs and policies that are designed to hire, develop, compensate and retain our employees. Culture and Development Our entrepreneurial culture is the most significant attribute that makes Mercado Libre a unique place to work.
The logistics services we offer are an integral part of our value proposition, as they reduce friction between buyers and sellers, and allow us to have greater control over the full user experience.
The logistics services we offer are an integral and crucial part of our value proposition as they reduce friction between buyers and sellers, allow us to have greater control over the full user experience and enable faster deliveries at a more competitive cost than would otherwise be available with third-party carriers.
We will continue to focus on improving the functionality of our websites and apps, building a verticalized experience in key categories, driving increased usage of our payments and shipping solutions to deliver a more efficient and safe shopping experience and providing our users with the help of a dedicated customer support department.
We will continue to focus on improving the functionality of our websites and apps to deliver a more efficient and safe shopping experience and providing our users with the help of a dedicated customer support department. We will continue to focus on increasing purchase frequency and transaction volumes from our existing users.
In line with our constant focus on innovation, a critical component of user experience is the vertical solutions that we offer across key categories.
We are committed to continue investing in the development of new tools and technologies that facilitate web and mobile commerce on our platform. In line with our constant focus on innovation, a critical component of user experience is the vertical solutions that we offer across key categories.
Also, some of our employees in Argentina are represented by the Commercial Labor Union (“Sindicato de Empleados de Comercio”) and our fulfillment employees in Argentina are represented by “Sindicato de Carga y Descarga” and some of our employees in Uruguay are represented by the Commercial Labor Union (“Federación Uruguaya de Empleados de Comercio y Servicios”).
Table of Contents Also, some of our employees in Argentina are represented by the Commercial Labor Union (Sindicato de Empleados de Comercio) and our fulfillment employees in Argentina are represented by Sindicato de Carga y Descarga, some of our employees in Uruguay are represented by the Commercial Labor Union (Federación Uruguaya de Empleados de Comercio y Servicios), and some of our employees in Chile are represented by the Mercado Libre Chile Employees’ Union.
Compañía de Financiamiento obtained a license to operate as a financial institution in Colombia, and therefore is able to offer credits, digital accounts, investments and prepaid cards. We expect this new company to be operational by the first quarter of 2024 and be subject to minimum capital, reporting, consumer protection and risk management requirements.
Compañía de Financiamiento obtained a license issued by Colombian Financial Superintendence to operate as a financial institution in Colombia, enabling it to offer credits, digital accounts, investments and prepaid cards. As a financial company it is subject to minimum capital, reporting, consumer protection and risk management requirements. On April 22, 2024, MercadoPago S.A.
In our main markets, we currently offer the following solutions: ■ In-store physical payments by selling mobile point of sale (“MPOS”) devices and through quick response (“QR”) payment codes; ■ Digital payment solutions for utilities, mobile phone top up, peer-to-peer payments and more through our digital account; ■ Pre-paid cards and debit cards for users to spend and withdraw their account balances from their Mercado Pago digital account; ■ Merchant and consumer credits, both on and off the Mercado Libre Marketplace, and credit cards; ■ Insurance products such as extended warranties, theft and damage policies, among others; 5 | MercadoLibre, Inc.
Table of Contents In our main markets, we currently offer the following solutions: ■ Digital payment solutions for utilities, mobile phone top up, peer-to-peer payments and more through our digital account; ■ Pre-paid cards and debit cards for users to spend and withdraw their account balances from their Mercado Pago digital account; ■ Credit cards and merchant and consumer credits, both on and off the Mercado Libre Marketplace; ■ Insurance products such as extended warranties, personal accident cover, theft and damage policies, among others; ■ Savings and investment products to invest balances stored on Mercado Pago digital accounts; and ■ A cryptocurrency buy, hold and sell feature of our digital account in Brazil, Mexico and Chile, for users to buy, hold and sell selected global cryptocurrencies and stablecoins.
The new rules require a gradual increase in regulatory capital requirements for the Company’s regulated Brazilian subsidiaries until 2025: 6.75% from July 2023, 8.75% from January 2024 and 10.50% from January 2025.
The new rules required a gradual increase between 2023 and 2025 in the regulatory capital requirements applicable to our regulated Brazilian entities based on the following schedule: from July 2023 onwards, 6.75%, from January 2024 onwards, 8.75% and from January 2025 onwards, 10.50%.
In October 2023, Communication No. 2023/196 mandated bi-monthly reports on administered fund compositions, and significant modifications addressing fast payment systems and regulatory rules were made to the payment system rules. Peru On November 10, 2022, the Central Reserve Bank of Peru (“BCRP”) enacted regulations related to the card payment processing system that applies to issuers, acquirers and payment facilitators.
In October 2023, Communication No. 2023/196 mandated bi-monthly reports on administered fund compositions, and significant modifications addressing fast payment systems and regulatory rules were made to the payment system rules.
In December 2018, the former president of Brazil issued Provisional Measure No. 869/2018 which amended the LGPD and created Brazil’s national data protection authority (the “ANPDP”). We have created a program to implement the relevant changes to our business processes, compliance infrastructures and IT systems to reflect the new requirements and comply with the LGPD.
We have created a program to implement the relevant changes to our business processes, compliance infrastructures and IT systems to reflect the new requirements and comply with the LGPD.
Table of Contents Human Capital Employees and Labor Relations The following table shows the number of our employees by country as of December 31, 2023: Country Number of Employees Brazil 22,791 Mexico 16,195 Argentina 10,663 Colombia 4,419 Chile 2,380 Uruguay 1,780 Peru 45 Venezuela 26 United States 10 Ecuador 4 Total 58,313 We manage operations in the remaining countries in which we have operations remotely.
Human Capital Employees and Labor Relations The following table shows the number of our employees by country as of December 31, 2024: Country Number of Employees Brazil 36,548 Mexico 25,699 Argentina 12,043 Colombia 5,286 Chile 2,639 Uruguay 1,863 Peru 54 Venezuela 25 United States 20 Spain 19 Ecuador 6 China 5 Total 84,207 We manage operations in the remaining countries in which we have operations remotely.
Through our e-commerce platform, we provide buyers and sellers with a robust and safe environment that fosters the development of a large e-commerce community in Latin America, a region with a population of over 650 million people and with one of the fastest-growing Internet penetration and e-commerce growth rates in the world.
Our e-commerce platform provides buyers and sellers with a robust and safe environment that fosters the development of a large e-commerce community in Latin America, a region with a population of over 650 million people where penetration of e-commerce over total retail significantly lags benchmarks such as the United States of America ("U.S."), the U.K. and China.
We are also subject to significant general data protection and privacy-related regulations in many of the jurisdictions in which we operate (e.g.
Risk factors—Risks related to doing business in Latin America—Local currencies used in the conduct of our business are subject to depreciation, volatility and exchange controls” for more information. We are also subject to significant general data protection and privacy-related regulations in many of the jurisdictions in which we operate (e.g.
This included over 70 training sessions focused on maximizing the impact of our leaders, with an emphasis on overcoming challenges, embodying MercadoLibre's culture through a protagonist attitude, and the importance of effective feedback. We are excited about the positive impact these trainings have generated, not only on the participants and their teams but, consequently, on the business results.
This initiative included more than 140 training sessions focused on enhancing the impact of our leaders, emphasizing the importance of overcoming challenges, embodying a proactive attitude and delivering effective feedback. We are thrilled with the positive outcomes this initiative has generated, not only for the participants and their teams but also for the overall business results.
Mercado Credito, our credit solution available in Argentina, Brazil, Mexico and Chile, leverages our user base, which is loyal and engaged, and in part has also been historically underserved or overlooked by financial institutions and suffers from a lack of access to needed credit.
Our lending solution is available in Argentina, Brazil, Mexico and Chile. We offer credits mostly to merchants and consumers that already form part of our user base, many of whom have historically been underserved or overlooked by financial institutions and therefore suffer from a lack of access to credit.
Mercado Pago was initially designed to facilitate transactions on Mercado Libre’s Marketplaces by providing a mechanism that allowed our users to securely, easily and promptly send and receive payments. Now, Mercado Pago is a full ecosystem of financial technology solutions both in the digital and physical world.
Mercado Pago was initially designed to facilitate transactions on Mercado Libre’s Marketplace by providing a mechanism that allowed our users to securely, easily and promptly send and receive payments. This brought trust to the merchant-consumer relationship. In the countries in which Mercado Pago operates, it processes and settles all transactions on our Marketplace.
Since 2019, we also extend personal loans to recurring consumer credit borrowers, allowing them to buy products and services outside of our platform via the Mercado Pago digital account. In 2021, we launched our first Mercado Pago credit card in Brazil, followed by Mexico in 2023, which is free, internationally accepted, digitally managed and can be used on- and off-platform.
Loans can be used for a purchase on the Mercado Libre Marketplace, or on third party sites that use our payments processing technology. Since 2019, we also extend personal loans to recurring consumer credit borrowers, allowing them to buy products and services outside of our platform via the Mercado Pago digital account.
Our leaders are expected to be the first to give their best, to spread enthusiasm and, above all, to inspire the Company’s culture and DNA with their actions. Over the past year, we have trained over 1,500 leaders to become multipliers of our DNA.
One of our Leadership principles is to “Lead by Example.” We expect our leaders to be the first to give their all, to inspire enthusiasm, and, above all, to embody our culture and DNA through their actions. In the past year, we have trained over 2,700 leaders to serve as multipliers of our DNA.
On February 15, 2023, the CBA issued another regulation, which establishes that PSPOCP must submit the Information Regime on Claims, with the first submission deadline was on April 24, 2023, and the Information Regime on Transparency, Chapter II, with the first submission deadline for monthly information was on March 14, 2023.
On February 15, 2023, the CBA issued another regulation requiring PSPOCPs to comply with the Information Regime on Claims and the Information Regime on Transparency, Chapter II. 14 | MercadoLibre, Inc.
These services are: (i) Alternative Transaction Systems, (ii) Crowdfunding Financing Platforms, (iii) Financial Instrument Intermediation, (iv) Order Routing, (v) Credit Advisory, and (vi) Investment Advisory.
These services are: (i) Alternative Transaction Systems, (ii) Crowdfunding Financing Platforms, (iii) Financial Instrument Intermediation, (iv) Order Routing, (v) Credit Advisory, and (vi) Investment Advisory. Pursuant to this law, in January 2025, Mercado Pago Crypto S.A. submitted the license application to the CMF within the legal deadline for its ruling, which is still pending approval.
ITEM 1. BUSINESS MercadoLibre, Inc. (together with its subsidiaries “us”, “we”, “our” or the “Company”) is the largest online commerce ecosystem in Latin America based on unique visitors and orders processed, and is 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.
Mercado Libre's e-commerce platform is 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) and our fintech platform, Mercado Pago, is present in 8 countries (Argentina, Brazil, Mexico, Chile, Colombia, Peru, Uruguay and Ecuador).
These new transactional offerings include, but are not limited to: (a) maximizing utilization of Mercado Pago on our platform and expanding off-platform in digital and offline transactions, (b) offering additional product categories in our marketplace, (c) expanding our presence in vehicle, real estate and services classifieds, (d) maximizing the value and usage of account money through savings and investment products, (e) maximizing utilization of Mercado Envios, (f) expanding our Mercado Credito service, (g) offering enterprise software solutions to our online commerce business users and (h) expanding our advertising offerings.
These new transactional offerings include, but are not limited to: (a) offering additional product categories in our Marketplace, (b) bringing new brands to our Marketplace, (c) complementing our 3P selection with 1P goods in selected categories where we can enhance price competitiveness and assortment, (d) expanding our presence in vehicle, real estate and services classifieds and (e) offering enterprise software solutions to our online commerce business users. ■ Continue to improve the shopping experience for our users .
Our Mexican subsidiary submitted an application to obtain such license in September 2019. On April 29, 2022, MercadoLibre, S.A. de C.V.
On April 29, 2022, MercadoLibre, S.A. de C.V.
This platform enables us (when we act as sellers in our first-party sales), merchants and individuals to list merchandise and conduct sales and purchases digitally. The Marketplace has an ample assortment of products, with a wide range of categories such as consumer electronics, apparel and beauty, home goods, automotive accessories, toys, books and entertainment and consumer packaged goods.
The Marketplace has an extensive assortment of products, with a wide range of categories including consumer electronics, apparel and beauty, home goods, automotive accessories, toys, books and entertainment and consumer packaged goods. We also have a selection of international products available, primarily from sellers in China and the U.S., through our cross-border trade (“CBT”) operations.
Data Protection Law: In August 2018, Brazil approved its first comprehensive data protection law (the “Lei Geral de Proteção de Dados Pessoais” or “LGPD”), which became applicable to our business in Brazil in August 2020.
Data Protection Law: In August 2018, Brazil approved its first comprehensive data protection law, the LGPD, which became applicable to our business in Brazil in August 2020. In December 2018, the president of Brazil issued Provisional Measure No. 869/2018 which amended the LGPD and created Brazil’s national data protection authority (the “ANPDP”).
Our asset management product, which is available in Argentina, Brazil, Mexico and Chile, is a critical pillar to build our alternative two-sided network vision. It incentivizes our users to begin to fund their digital wallets with cash as opposed to credit or debit cards given that the return our product offers is greater than traditional checking accounts.
Our asset management product, which is available in Argentina, Brazil, Mexico and Chile, is a critical pillar of our financial services offering that enables us to compete with large banks. This product offers remuneration on balances held in the Mercado Pago digital account that is greater than traditional checking and savings accounts.
Complementing the services we offer, our digital storefront solution, Mercado Shops, allows users to set up, manage and promote their own digital stores. These stores are hosted by Mercado Libre and offer integration with the rest of our ecosystem, namely our Marketplaces, payment services and logistics services.
Mercado Shops is a service we offer to sellers to complement their business on our Marketplace. It is a digital storefront solution that allows sellers to set up, manage and promote their own digital stores, whilst using Mercado Libre's logistics, advertising and payments services.
The subscription also includes video content discounts for certain third-party content providers such as HBO Max, Paramount+ and Vix. In Argentina, Chile and Colombia we still have the original Level 6 subscription. In addition, in 2023 we launched Mercado Play, a streaming service available to all users in Argentina, Brazil, Mexico, Colombia, Chile, Peru and Uruguay.
In 2024 we continued to scale Mercado Play, an AVOD streaming service first launched in 2023 and available to all users in Argentina, Brazil, Mexico, Colombia, Chile, Peru and Uruguay.
We believe that a significant portion of our growth will be derived from these new or expanded product and service launches within our ecosystem in the future. 7 | MercadoLibre, Inc. Table of Contents ■ Continue to improve the shopping experience for our users .
We believe that a significant portion of our growth will be derived from the development of these tools and technologies in the future. ■ Become the principal financial services partner to our users. We intend to continue scaling Mercado Pago's day-to-day financial services offerings for individuals and merchants through our digital account.
In a fast-paced, dynamic, joyful and collaborative environment, we offer people the opportunity to develop through complex challenges, pursuing excellence and achieving outstanding results while working as a team.
At MercadoLibre, we achieve this by providing meaningful experiences and co-creating an environment that reflects our DNA. In a fast-paced, dynamic, joyful and collaborative workplace, we give our teams the chance to grow by tackling complex challenges, pursuing excellence and achieving outstanding results together.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Failure to pay amounts due under a debt instrument or breach any of its covenants may result in the acceleration of the indebtedness (subject in certain cases to a grace or cure period).
Failure to pay amounts due under a debt instrument or a breach of any of its covenants may result in the acceleration of the indebtedness (subject in certain cases to a grace or cure period).
Any changes to, enforcement of, failure, or perceived failure to comply with these regulations, or the enactment of new regulations, could result in lawsuits, civil or criminal penalties, or fines against the Company or its subsidiaries, forfeiture of significant assets, an outright or partial restriction on our operations, additional compliance and licensure requirements, an adverse impact on our business, results of operations or financial position, or may otherwise force us to change the way we or our users do business, which could adversely affect the operations and reputation of our businesses in those jurisdictions.
Any changes to, enforcement of, failure, or perceived failure to comply with these regulations, or the enactment of new regulations and legislation, could result in lawsuits, civil or criminal penalties, or fines against the Company or its subsidiaries, forfeiture of significant assets, an outright or partial restriction on our operations, additional compliance and licensure requirements, an adverse impact on our business, results of operations or financial position, or may otherwise force us to change the way we or our users do business, which could adversely affect the operations and reputation of our businesses in those jurisdictions.
We have also received, and anticipate that we may continue to receive, legal claims from content and IP owners alleging violations of their IP rights and also from users affected by listing takedowns and account restrictions, which could result in substantial monetary awards, penalties or costly injunctions against us, as well as adversely affect our reputation.
We have also received, and anticipate that we may continue to receive, legal claims from content and IP owners alleging violations of their IP rights and also from users affected by listing takedowns and account restrictions, which could result in substantial monetary damages awards, penalties or costly injunctions against us, as well as adversely affect our reputation.
In addition, if changes to the existing terms and conditions interfere with the distribution of our products, if the platforms are unavailable for any prolonged period of time or if we are unable to maintain a good relationship with these third-party providers (including as a result of ongoing or future claims of anticompetitive practices), our business and results of operations could suffer.
In addition, if changes to the existing terms and conditions interfere with the distribution of our products, if the platforms are unavailable for a prolonged period of time or if we are unable to maintain a good relationship with these third-party providers (including as a result of ongoing or future claims of anticompetitive practices), our business and results of operations could suffer.
These competitive advantages could be used to harm our competitive position through the adoption of restrictive covenants with suppliers, self-preferencing their product offerings, tying and bundling services and cross subsidizing. Competing services tied to established banks and other financial institutions may offer greater liquidity and create greater consumer confidence in the safety and efficacy of their services.
These competitive advantages could be used to harm our competitive position through the adoption of restrictive covenants with suppliers, self-preferencing their product offerings, tying and bundling services and cross subsidizing. Competing services tied to established banks and other financial institutions may offer greater liquidity and create greater consumer confidence in the safety and efficacy of our competitors' services.
If the impact of the program becomes material to our operations, our reported results could be affected by variations in the market price of the token, since, under the current terms of the program, the tokens can be sold at the then prevailing market price and users may use the resulting fiat currency to purchase products and services on the Mercado Libre Marketplace.
If the impact of the program becomes material to our operations, our reported results could be affected by variations in the market price of the tokens, since, under the current terms of the program, the tokens can be sold at the then prevailing market price and users may use the resulting fiat currency to purchase products and services on the Mercado Libre Marketplace.
Customers may prefer to pay using credit cards rather than bank account transfers for a number of reasons, including the ability to pay in installments, the ability to dispute and reverse charges, the ability to earn frequent flyer miles or other incentives offered by credit cards, the ability to defer payment, or a reluctance to provide bank account information to us.
Customers may prefer to pay using credit cards rather than bank account transfers for a number of reasons, including the ability to pay in installments, dispute and reverse charges, earn frequent flyer miles or other incentives offered by credit cards, defer payment, or due to a reluctance to provide bank account information to us.
We assess the credit risk of merchants and/or consumers seeking a loan based on a risk model internally developed, among other factors, which may not accurately predict their creditworthiness due to inaccurate assumptions about the particular merchant and/or consumer or the economic environment or limited product history, among other aspects.
We assess the credit risk of merchants and/or consumers seeking a loan based on an internally-developed risk model which, among other factors, may not accurately predict their creditworthiness due to inaccurate assumptions about the particular merchant and/or consumer or the economic environment or limited product history, among other aspects.
In addition, changes by any rating agency to our outlook or credit rating could negatively affect the value of both our debt and equity securities and increase our borrowing costs. If our credit ratings are downgraded or other negative action is taken, the interest rates payable by us under our indebtedness may increase.
In addition, changes by any rating agency to our outlook or credit rating could negatively affect the value of both our debt and equity securities and increase our borrowing costs. If our credit ratings are downgraded or other negative action by rating agencies is taken, the interest rates payable by us under our indebtedness may increase.
Our future success depends on our ability to expand and adapt our operations to meet rapidly changing industry and technology standards in a cost-effective and timely manner Rapid, significant, and disruptive technological changes impact the industries in which we operate, and the effects of technological changes on our business are uncertain.
Our future success depends on our ability to expand and adapt our operations to meet rapidly changing industry and technology standards in a cost-effective and timely manner Rapid, significant and disruptive technological changes impact the industries in which we operate. Moreover, the effects of technological changes on our business are uncertain.
For the purposes of offering such intermediated investment functionality, Mercado Pago entered into diverse contractual relationships with licensed third party brokers and fund managers who serve as the managers of the investment funds and the facilitators of all associated investment services, including but not limited to the execution of investment orders.
For the purposes of offering such intermediated investment functionality, Mercado Pago has entered into diverse contractual relationships with licensed third party brokers and fund managers who serve as the managers of the investment funds and the facilitators of all associated investment services, including but not limited to the execution of investment orders.
Despite our disclaimer of liability for any loss, damage, claim, cost and/or expense that may arise in connection with the loyalty token program, users may also try to pursue claims against us if the loyalty token program is unsuccessful or the tokens otherwise decrease in value.
Despite our disclaimer of liability for any loss, damage, claim, cost and/or expense that may arise in connection with the loyalty program, users may also try to pursue claims against us if the loyalty program is unsuccessful or the tokens otherwise decrease in value.
If we were not able to make use of this technology, we would need to obtain substitute technology that may be of lower quality or performance standards or at greater cost, which could materially adversely affect our business, results of operations and financial condition.
If we were not able to make use of this technology, we would need to obtain substitute technology that may be of lower quality or performance standards or be obtained at greater cost, which could materially adversely affect our business, results of operations and financial condition.
We could potentially face claims alleging that our technologies infringe the property rights of others Our IP rights are pivotal to our continued growth and success. These rights are safeguarded through a combination of copyright, trademark, patent designs, trade secret laws, and contractual measures.
We could potentially face claims alleging that our technologies infringe the property rights of others Our IP rights are pivotal to our continued growth and success. These rights are safeguarded through a combination of copyright, trademark, patent, trade secret laws, and contractual measures.
Any changes to, or failure to comply with, money services laws or regulations or any tax regulations, or if we engage in an unauthorized banking or financial business, could result in liability, inability to continue doing business with residents of certain countries, changes to our business or regulatory status.
Any changes to, or failure to comply with, money services laws or regulations or any tax regulations, or if we engage in an unauthorized banking or financial business, could result in liability, inability to continue doing business with residents of certain countries and changes to our business or regulatory status.
If we are unable to compete effectively for advertising spend, or if our merchants reduce advertising spend, our business and results of operations could be materially harmed We developed a growing advertising business on our platform.
If we are unable to compete effectively for advertising spend, or if our merchants reduce advertising spend, our business and results of operations could be materially harmed We have developed a growing advertising business on our platform.
We have at times been and may continue to be subject to fines for certain users’ sales of products that have not been approved or infringe laws dictated by the government.
We have at times been—and may continue to be—subject to fines for certain users’ sales of products that have not been approved or infringe laws dictated by the applicable government.
Intellectual Property Risks We could face legal and financial liability upon the sale of items that infringe intellectual property rights of third parties and for information and material disseminated through our platforms We have received in the past, and anticipate that we will receive in the future, complaints alleging that certain items listed or sold through the Mercado Libre Marketplace or Mercado Shops or using Mercado Pago, or delivered by Mercado Envios infringe third-party copyrights, trademarks and/or other intellectual property (“IP”) rights.
Intellectual Property Risks We could face legal and financial liability upon the sale of items that infringe intellectual property rights of third parties and for information and material disseminated through our platforms We have received in the past, and anticipate that we will receive in the future, complaints alleging that certain items listed or sold through the Mercado Libre Marketplace or Mercado Shops or using Mercado Pago, or delivered by Mercado Envios infringe third-party copyrights, trademarks and/or other IP rights.
Competitors with larger, more well-established and well-financed companies have greater resources, longer history, greater brand recognition, more customers and better access to suppliers of critical inputs and products.
Competitors with larger, more well-established and well-financed companies have greater resources, a longer history, greater brand recognition, more customers and better access to suppliers of critical inputs and products.
Table of Contents However, we are aware that certain goods, such as alcohol, tobacco, firearms, animals, adult material and other goods that may be subject to regulation by local or national authorities of various jurisdictions have been traded by users on the Mercado Libre Marketplace in complete infringement to our policies, bypassing our various security efforts and measures to go undetected.
However, we are aware that certain goods, such as alcohol, tobacco, firearms, animals, adult material and other goods that may be subject to regulation by local or national authorities of various jurisdictions have been traded by users on the Mercado Libre Marketplace in complete infringement to our policies, bypassing our various security efforts and measures to go undetected.
Table of Contents Our debt instruments contain restrictions that limit our flexibility in operating our business, and changes by any rating agency to our outlook or credit rating could negatively affect us The terms of our senior unsecured notes issued in January 2021 and certain collateralized debt under securitization transactions contain, and any debt instruments we enter in the future may contain, covenants that restrict or could restrict, among other things, our business and operations.
Our debt instruments contain restrictions that limit our flexibility in operating our business, and changes by any rating agency to our outlook or credit rating could negatively affect us The terms of our senior unsecured notes issued in January 2021 and certain collateralized debt under securitization transactions contain, and any debt instruments we enter in the future may contain, covenants that restrict or could restrict, among other things, our business and operations.
The markets in which we operate are rapidly evolving and we may not be able to maintain our profitability As a result of the emerging nature and related volatility of the markets and economies in the countries in which we operate, the increased variety of services and products that we offer and the rapidly evolving nature of our business, it is particularly difficult for us to forecast our revenues or earnings accurately.
Table of Contents The markets in which we operate are rapidly evolving and we may not be able to maintain our profitability As a result of the emerging nature and related volatility of the markets and economies in the countries in which we operate, the increased variety of services and products that we offer and the rapidly evolving nature of our business, it is particularly difficult for us to forecast our revenues or earnings accurately.
Such events could result (whether directly or indirectly) in physical damage to, or the complete loss of, one or more of our facilities, loss or spoilage of inventory, limits on our ability to receive the inventories of third parties efficiently and ship orders to customers, business interruption, the lack of an adequate work force in a market, the unavailability of our platforms to our users, changes in the purchasing patterns of consumers and in consumers’ disposable income, the temporary or long-term supply chain and logistics disruption, the disruption of critical infrastructure and communication systems, banking systems, utility services or energy availability. 25 | MercadoLibre, Inc.
Such events could result (whether directly or indirectly) in physical damage to, or the complete loss of, one or more of our facilities, loss or spoilage of inventory, limits on our ability to receive the inventories of third parties efficiently and ship orders to customers, business interruption, the lack of an adequate work force in a market, the unavailability of our platforms to our users, changes in the purchasing patterns of consumers and in consumers’ disposable income, the temporary or long-term supply chain and logistics disruption, the disruption of critical infrastructure and communication systems, banking systems, utility services or energy availability.
Risks related to doing business in Latin America We face the risk of political and economic crises, instability, terrorism, civil strife, labor conflicts, expropriation, corruption and other risks of doing business in emerging markets We conduct our operations in emerging market countries in Latin America, which have historically experienced uneven periods of economic growth, as well as recession, periods of high inflation and economic instability.
Table of Contents Risks related to doing business in Latin America We face the risk of political and economic crises, instability, terrorism, civil strife, labor conflicts, expropriation, corruption and other risks of doing business in emerging markets We conduct our operations in emerging market countries in Latin America, which have historically experienced uneven periods of economic growth, as well as recession, periods of high inflation and economic instability.
As our business grows, the cost of remediating for fraudulent activity, including customer reimbursements, may materially increase and could negatively affect our operating results.
As our business grows, the cost of remediating fraudulent activity, including customer reimbursements, may materially increase and could negatively affect our operating results.
We rely on banks and investment funds which acquire Mercado Pago’s receivables and payment processors to fund transactions, and changes to card association fees, rules or practices may adversely affect our business Mercado Pago relies on banks, investment funds or payment processors to process the funding of Mercado Pago transactions and Mercado Libre Marketplace collections, and must pay a fee for this service.
We rely on banks and investment funds that acquire Mercado Pago’s receivables and payment processors to fund transactions, and changes to card association fees, rules or practices may adversely affect our business Mercado Pago relies on banks, investment funds or payment processors to process the funding of Mercado Pago transactions and Mercado Libre Marketplace collections, and we must pay a fee for this service.
Manufacturers may limit distribution of their products by distributors, prevent distributors from selling through us or encourage governments to limit e-commerce Manufacturers may attempt to enforce minimum resale price maintenance arrangements to prevent distributors from selling on our websites or on the Internet generally, or at prices that would make our site unattractive relative to other alternatives.
Table of Contents Manufacturers may limit distribution of their products by distributors, prevent distributors from selling through us or encourage governments to limit e-commerce Manufacturers may attempt to enforce minimum resale price maintenance arrangements to prevent distributors from selling on our websites or on the internet generally, or at prices that would make our site unattractive relative to other alternatives.
Our repurchase programs may not require us to repurchase any specific required dollar amount or number of shares. Further, our repurchases could affect our share trading prices, increase their volatility, reduce our cash reserves and may be suspended or terminated at any time, which may result in a decrease in the trading of our stock. ITEM 1B.
Our repurchase programs may not require us to repurchase any specific required dollar amount or number of shares. Further, our repurchases could affect our share trading prices, increase their volatility, reduce our cash reserves and may be suspended or terminated at any time, which may result in a decrease in the trading of our stock.
Apple also forbids the distribution and commercialization of third-party digital goods, thereby prohibiting the development of a digital goods marketplace in iOS in competition with Apple.
Apple also forbids the in-app distribution and commercialization of third-party digital goods, thereby prohibiting the development of a digital goods marketplace in iOS in competition with Apple.
Mercado Pago competes with existing online and offline payment methods, including, among others: traditional banks and financial institutions; fintechs (e.g., crowdfunding institutions, electronic payment providers), and other providers of financial services, particularly credit, prepaid and debit cards, checks, money orders, and electronic bank deposits and transactions; payment networks that facilitate processing and aggregation of payments cards and retail networks; tokenized and contactless payment services, digital wallets, QR code-based solutions and other payment solutions; international and local online payments services; the use of cash, which is often preferred in Latin America; offline funding alternatives such as cash deposit and money transfer services; peer to peer payments and electronic money remittances and other point of sale terminals and devices or technologies installed at merchants’ sites.
Mercado Pago competes with existing online and offline companies, including, among others: traditional banks and financial institutions; fintech companies (e.g., crowdfunding institutions, electronic payment providers), and other providers of financial services and payment methods, particularly credit, prepaid and debit cards, checks, money orders, and electronic bank deposits and transactions; payment networks that facilitate processing and aggregation of payments cards and retail networks; tokenized and contactless payment services, digital wallets, cryptocurrency wallets, QR code-based solutions and other payment solutions; international and local online payments services; the use of cash, which is often preferred in Latin America; offline funding alternatives such as cash deposit and money transfer services; peer to peer payments and electronic money remittances and other point of sale terminals and devices or technologies installed at merchants’ sites.
In addition, while banks and other financial institutions in Latin America have generally granted e-commerce merchants the right to process online transactions, adjustments to the fraud and risk management processes of these banks and financial institutions, including due to concerns about credit card fraud, may negatively impact our payments approval rates.
In addition, while banks and other financial institutions in Latin America have generally granted merchants the right to process online transactions, adjustments to the fraud and risk management processes of these banks and financial institutions, including due to concerns about credit card fraud, may negatively impact our payments approval rates.
Table of Contents We may be liable for or experience reputational damage from the failure of users of our Marketplace to deliver merchandise or make required payments Our success depends largely upon sellers accurately representing and reliably delivering the listed goods and buyers paying the agreed purchase price.
We may be liable for or experience reputational damage from the failure of users of our Marketplace to deliver merchandise or make required payments Our success depends largely upon sellers accurately representing and reliably delivering the listed goods and buyers paying the agreed purchase price.
Any supply chain constraints that affects us, our merchants or vendors could also adversely affect our ability to operate our fulfillment network effectively. We offer to sellers our Fulfillment Protection Program, for any damage or loss of seller’s inventories as a result of using our fulfillment network service, subject to certain conditions.
Any supply chain constraint that affects us, our merchants or vendors could also adversely affect our ability to operate our fulfillment network effectively. We offer to sellers our Fulfillment Protection Program for any damage or loss of seller’s inventories as a result of using our fulfillment network service, subject to certain conditions.
It may be difficult to enforce judgments rendered against us in U.S. courts Although we are a Delaware corporation, our subsidiaries and most of our assets are located outside of the U.S. Furthermore, most of our directors, officers, and some advisors and experts named in this report reside outside the U.S.
Table of Contents It may be difficult to enforce judgments rendered against us in U.S. courts Although we are a Delaware corporation, our subsidiaries and most of our assets are located outside of the U.S. Furthermore, most of our directors, officers, and some advisors and experts named in this report reside outside the U.S.
Further, any changes to, suspension or revocation of, any tax incentive regimes or other tax benefits that we may receive, including tax benefits under the Argentina knowledge-based economy promotional regime and under the Brazilian social security contribution regime and ICMS (Imposto sobre Circulação de Mercadorias, Serviços de Transporte Interestadual, Intermunicipal e Comunicação) tax incentive benefits, could have a material adverse effect in our business, results of operation and financial position. 26 | MercadoLibre, Inc.
Further, any changes to, suspension or revocation of, any tax incentive regimes or other tax benefits that we may receive, including tax benefits under the Argentina knowledge-based economy promotional regime and under the Brazilian social security contribution regime and ICMS (Imposto sobre Circulação de Mercadorias, Serviços de Transporte Interestadual, Intermunicipal e Comunicação) tax incentive benefits, could have a material adverse effect in our business, results of operation and financial position.
Failure to successfully operate our fulfillment network may also negatively affect our business Through our logistics solution, Mercado Envios, we offer sellers on our platform fulfillment and warehousing services, including maintaining inventories of third parties that sell products through our platform. We also use fulfillment and warehousing services for our first-party business.
Table of Contents Failure to successfully operate our fulfillment network may also negatively affect our business Through our logistics solution, Mercado Envios, we offer sellers on our platform fulfillment and warehousing services, including maintaining inventories of third parties that sell products through our platform. We also use fulfillment and warehousing services for our first-party business.
As digital assets, including bitcoin, have grown in popularity and market size, there has been increasing focus on the extent to which digital assets can be used to launder the proceeds of illegal activities or fund criminal or terrorist activities, or entities subject to sanctions regimes.
As digital assets, including Bitcoin, have grown in popularity and market size, there has been an increasing focus on the extent to which such digital assets can be used to launder the proceeds of illegal activities or fund criminal or terrorist activities and/or entities subject to sanctions regimes.
Even if we are not forced to change our Mercado Pago business, we could be required to obtain licenses or regulatory approvals.
Even if we are not required to change our Mercado Pago business, we could be required to obtain licenses or regulatory approvals.
There are potential risks related to our loyalty token program and our cryptocurrency buy, hold and sell feature There are potential risks to MercadoLibre from the loyalty token program.
There are potential risks related to our loyalty program and our cryptocurrency buy, hold and sell feature There are potential risks to MercadoLibre from the loyalty program.
As intangible assets without centralized issuers or governing bodies, digital assets have been, and may in the future be, subject to security breaches, cyberattacks or other malicious activities, as well as human errors or computer malfunctions, that may result in operational problems or the loss or destruction of private keys needed to access such assets, which may be irreversible and could adversely affect the value of our digital assets and an investment in our Company.
As intangible assets without centralized issuers or governing bodies, digital assets have been, and may in the future be, subject to security breaches, cyberattacks or other malicious activities, as well as human errors or computer malfunctions, that may result in operational problems or the loss, compromise or destruction of, or our inability to access, cryptographic private keys needed to access such assets, which may be irreversible and could adversely affect the value of our digital assets and an investment in our Company.
RISK FACTORS Risks related to our business and operations Our business depends on the continued growth of online commerce and digital financial services, the commercial and financial activity that our users generate on our platforms and the availability and reliability of the Internet in Latin America Online commerce and digital financial services are still a developing market in Latin America.
Risks related to our business and operations Our business depends on the continued growth of online commerce and digital financial services, the commercial and financial activity that our users generate on our platforms and the availability and reliability of the Internet in Latin America Online commerce and digital financial services are still a developing market in Latin America.
Moreover, they rely on technology for their creation, existence and transactional validation and their decentralization may subject their integrity to the threat of malicious attacks and technological obsolescence. The status of such assets for a variety of regulatory purposes is unclear and may change in the future.
Moreover, these assets rely on technology for their creation, existence and transactional validation, and their decentralization may subject their integrity to the threat of malicious attacks and technological obsolescence. The status of such assets for a variety of regulatory purposes is unclear and may change in the future.
In addition, our operations in most of the countries where we operate are subject to risks related to compliance with the U.S. Foreign Corrupt Practices Act (“FCPA”) and other applicable U.S. and other local laws prohibiting corrupt payments to government officials and other third parties.
Anticorruption Our operations in most of the countries where we operate are subject to risks related to compliance with the U.S. Foreign Corrupt Practices Act (“FCPA”) and other applicable U.S. and other local laws prohibiting corrupt payments to government officials and other third parties.
Table of Contents Our failure or the failure of our partners to manage Mercado Pago users’ funds properly could harm our business Our ability to manage and account accurately for Mercado Pago users’ funds requires a high level of internal controls. As Mercado Pago continues to grow, we must strengthen our internal controls accordingly.
Our failure or the failure of our partners to manage Mercado Pago users’ funds properly could harm our business Our ability to manage and account accurately for Mercado Pago users’ funds requires a high level of internal controls. As Mercado Pago continues to grow, we must strengthen our internal controls accordingly.
Table of Contents Furthermore, the long-term impacts of climate change, whether involving physical risks (such as extreme weather conditions, drought, or rising sea levels) or transition risks (such as regulatory or technology changes) are expected to be widespread and unpredictable.
Furthermore, the long-term impacts of climate change, whether involving physical risks (such as extreme weather conditions, drought, or rising sea levels) or transition risks (such as regulatory or technology changes) are expected to be widespread and unpredictable.
If we fail to comply with shipping services laws or regulations, or if we engage in an unauthorized shipping business, we could be subject to liability, forced to cease doing business with residents of certain countries, or to change our business practices or to become a postal entity.
If we fail to comply with shipping services laws or regulations, or if we engage in an unauthorized shipping business, we could be subject to liability, required to cease doing business with residents of certain countries, or to change our business practices or to become a postal entity.
Mercado Libre’s Marketplace currently competes with a number of companies, including: traditional brick and mortar retailers, e-commerce and omnichannel retailers and vendors and distributors offering physical, digital and interactive media products that we offer and sell on our platform; online sales, auction services and comparison shopping websites; social media platforms and online and app-based means of search engines for the purchase of goods and services; companies that provide e-commerce related services such as inventory, storage and supply chain management, fulfillment, advertising and payment processing; other small online service providers, including those that serve specialty markets; business-to-consumer online commerce services; in each case located throughout Latin America.
Mercado Libre’s Marketplace currently competes with a number of companies operating throughout Latin America, including: traditional brick and mortar retailers, e-commerce and omnichannel retailers and vendors and distributors offering physical, digital and interactive media products that we offer and sell on our platform; online sales, auction services and comparison shopping websites; social media platforms and online and app-based means of search engines for the purchase of goods and services; companies that provide e-commerce related services such as inventory, storage and supply chain management, fulfillment, advertising and payment processing; other small online service providers, including those that serve specialty markets; business-to-consumer online commerce services.
While we have undertaken measures to defend our IP rights, there’s no guarantee that these actions, or any future efforts, will effectively deter technology misappropriation, safeguard against the dilution of our trademarks, or prevent third parties from creating similar or competing technologies. Our trademark portfolio is owned by MercadoLibre Inc. and its subsidiaries.
While we have undertaken measures to defend our IP rights, there is no guarantee that these actions, or any future efforts, will effectively deter misappropriation, safeguard against the dilution of our trademarks, or prevent third parties from creating similar or competing technologies. Our trademark portfolio is owned by MercadoLibre, Inc. and its subsidiaries.
We also offer Mercado Pago prepaid cards in Brazil and Mercado Pago credit cards in Brazil and Mexico, all under the VISA brand, as well as an electronic payment funds card (equivalent to a debit card) in Mexico and Argentina issued under the MasterCard brand.
We also offer Mercado Pago prepaid cards in Brazil and Mercado Pago credit cards in Brazil and Mexico, all under the VISA brand, as well as an electronic payment funds card (similar to a debit card) in Mexico and Argentina issued under the MasterCard brand.
Unless consumer fraud laws in Latin American countries are modified to protect e-commerce merchants and consumers, and until secure, integrated online payment processing methods are fully implemented across the region, our ability to generate revenues from e-commerce may be limited, which could have a material adverse effect on our Company.
Unless consumer fraud laws in Latin American countries are modified to protect merchants and consumers, and until secure, integrated online payment processing methods are fully implemented across the region, our ability to generate revenues may be limited, which could have a material adverse effect on our Company.
These limitations may prevent the deployment of initiatives for mobile apps, thereby limiting the range of their overall impact. These limitations may materially affect our competitiveness with respect to other digital integrated conglomerates that do not face the same limitations, thereby impacting our capacity to grow, to innovate and to enter and compete in new markets.
These limitations may prevent the deployment of initiatives for mobile apps, thereby limiting the range of their overall impact. These limitations may materially affect our competitiveness with respect to other digitally integrated conglomerates that do not face the same limitations, thereby negatively impacting our capacity to grow, innovate, enter and compete in new markets.
Financial, regulatory, or other problems that might prevent these companies from providing services to us or our users could reduce the number of listings on our websites or make completing transactions on our websites more difficult, which would harm our business. Any security breach at one of these companies could also affect our customers and harm our business.
Financial, regulatory, or other problems that might prevent these companies from providing services to us or our users could reduce the number of listings on our websites or make completing transactions on our ecosystem more difficult, which may harm our business. Any security breach at one of these companies could also affect our customers and harm our business.
Banking, Money Transmission and Domestic or Cross-Border Electronic Funds Transfer A number of jurisdictions where we operate have enacted legislation regulating money deposits, transmitters, lending activity and/or electronic payments or funds transfers.
Table of Contents Banking, Money Transmission and Domestic or Cross-Border Electronic Funds Transfer A number of jurisdictions where we operate have enacted legislation regulating money deposits, transmitters, lending activity and/or electronic payments or funds transfers.
New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, taxes, diligence and disclosure. The costs of changing any of our current practices to comply with any new legal and regulatory requirements in the U.S. and elsewhere may be substantial.
New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, taxes, diligence and disclosure. The costs of changing any of our current practices to comply with any new legal and regulatory requirements in the U.S. and other jurisdictions may be substantial.
In order to respond to changes in the competitive environment, we may, from time to time, make pricing, service or marketing decisions or acquisitions that may be controversial with and lead to dissatisfaction among some of our sellers, which could reduce activity on our websites and harm our profitability. 20 | MercadoLibre, Inc.
In order to respond to changes in the competitive environment, we may, from time to time, make pricing, service or marketing decisions or acquisitions that may be controversial with and lead to dissatisfaction among some of our sellers, which could reduce activity on our websites and harm our profitability.
We depend on key personnel, the loss of which could have a material adverse effect on us Our performance depends substantially on the continued services and on the performance of our senior management and other key personnel.
Table of Contents We depend on key personnel, the loss of which could have a material adverse effect on us Our performance depends substantially on the continued services and on the performance of our senior management and other key personnel.
Fraudulent activity by our users could negatively impact our operating results, brand and reputation and cause the use of services to decrease We are subject to the risk of fraudulent activity by our users, including fraudulent and illicit sales, money laundering, bank fraud, fraud from means of payment entities, employee fraud and online securities fraud.
Fraudulent activity by our users could negatively impact our operating results, brand and reputation and cause the use of services to decrease We are subject to the risk of fraudulent activity by our users, including fraudulent and illicit sales, money laundering, bank fraud, fraud from means of payment entities, employee fraud, third parties providers' fraud and online securities fraud.
In the event that those private keys are lost, destroyed, unable to be accessed or anyway compromised and no back up of such private keys exists, the SPs will not be able to access the tokens or crypto-assets held on behalf of our customers in their custody.
In the event that those private keys are lost, destroyed, unable to be accessed or in any way compromised and no back up of such private keys exists, the SPs will not be able to access the tokens or crypto-assets held on behalf of our customers in their custody.
Even if we are not forced to change our Mercado Envios business practices, we could be required to obtain licenses or regulatory approvals that could be very expensive and time consuming, and we cannot assure that we would be able to obtain them in a timely manner or at all.
Even if we are not required to change our Mercado Envios business practices, we could be required to obtain licenses or regulatory approvals, which could be a very expensive and time consuming process, and we cannot assure that we would be able to obtain them in a timely manner or at all.
Availability, transaction speeds, acceptance, interest and use of the Internet across Latin America are all critical to our growth and services and the occurrence of any one or more of the above challenges to Internet usage could have a material adverse effect on our business.
Availability, transaction speeds, acceptance, interest and use of the Internet across Latin America are all critical to our growth and services, and the occurrence of any one or more of the above challenges to Internet usage could have a material adverse effect on our business. 19 | MercadoLibre, Inc.
Any business disruption, litigation, system failure or natural or man-made disaster may cause us to incur substantial costs and divert resources, which could have a material adverse effect on our business, results of operation and financial condition. 23 | MercadoLibre, Inc.
Any business disruption, litigation, system failure or natural or man-made disaster may cause us to incur substantial costs and divert resources, which could have a material adverse effect on our business, results of operation and financial condition.
Barriers to entry are relatively low and current offline and new competitors, including small businesses who want to create and promote their own stores or platforms, can easily launch new sites, mobile platforms or applications at relatively low cost using software that is commercially available or partner with other e-commerce, search, advertising or social media companies.
Barriers to entry are relatively low, and our current offline and new digital competitors, including small businesses who want to create and promote their own stores or platforms, can easily launch new sites, mobile platforms or applications at relatively low costs using software that is commercially available, or partner with other e-commerce, search, advertising or social media companies.
If debt financing for potential future acquisitions is unavailable, we may determine to issue shares of our common stock or preferred stock in connection with such an acquisition and any such issuance could result in the dilution of our common stock.
If debt financing for potential future acquisitions is unavailable, we may determine to issue shares of our common stock or preferred stock in connection with such an acquisition, and any such issuance could result in the dilution of our common stock. 25 | MercadoLibre, Inc.
Cybersecurity and Technology Risks Any delay or problem with operating or upgrading our existing information technology infrastructure could cause a disruption in our business and adversely impact our financial results Our ability to operate our business on a day-to-day basis largely depends on the efficient operation of our information technology infrastructure and our cloud providers, the largest of which is Amazon Web Services.
Cybersecurity and Technology Risks Any delay or problem with operating or upgrading our existing information technology infrastructure could cause a disruption in our business and adversely impact our financial results Our ability to operate our business on a day-to-day basis largely depends on the efficient operation of our information technology infrastructure and our cloud providers, the largest of which are Amazon Web Services and Google Cloud Platform.
Although we generally have been able to renew or extend the terms of contractual arrangements with these service providers on acceptable terms, we cannot assure you that we will continue to be able to do so in the future.
Although we generally have been able to renew or extend the terms of contractual arrangements with these service providers on acceptable terms, we cannot assure you that we will continue to be able to do so in the future. 33 | MercadoLibre, Inc.
In addition, there can be no assurance that our current policies, practices, reporting frameworks and principles will be in compliance with any new environmental and social laws and regulations that may be promulgated in the U.S. and elsewhere.
In addition, there can be no assurance that our current policies, practices, reporting frameworks and principles will be in compliance with any new environmental and social laws and regulations that may be promulgated in the U.S. and other jurisdictions.
On the other hand, the appreciation of local currencies against the U.S. dollar may lead to the deterioration of public accounts and the balance of payments of the countries where we operate, and may reduce export growth in those countries.
On the other hand, the appreciation of local currencies against the U.S. dollar may lead to the deterioration of public accounts and the balance of payments of the countries where we operate, and may reduce export growth in those countries. 34 | MercadoLibre, Inc.
Natural disasters, climate change, geopolitical events, global health epidemics or pandemics and catastrophic events could materially adversely affect our financial performance The occurrence of one or more natural disasters, such as hurricanes, tropical storms, floods, fires, earthquakes, tsunamis, cyclones, typhoons; weather conditions such as major or extended winter storms, droughts and tornadoes, whether as a result of climate change or otherwise; geopolitical events (such as international trade disputes and the ongoing conflicts in Ukraine and the Middle East); global health epidemics or pandemics or other contagious outbreaks (such as COVID-19 and its variants); and catastrophic events, such as war, civil unrest, terrorist attacks or other acts of violence, including active shooter situations, acts of vandalism or terrorism, labor or trade disputes, and similar events in countries in which we operate, in which our users are located, or in other areas of the world could adversely affect our operations and financial performance.
Natural disasters, climate change, geopolitical events, global health epidemics or pandemics, transportation disruptions and catastrophic events could materially adversely affect our financial performance The occurrence of one or more natural disasters, such as hurricanes, tropical storms, floods, fires, earthquakes, tsunamis, cyclones, typhoons; weather conditions such as major or extended winter storms, droughts and tornadoes, whether as a result of climate change or otherwise; geopolitical events (such as international trade disputes and the ongoing conflicts in Ukraine and the Middle East; global health epidemics or pandemics or other contagious outbreaks (such as COVID-19 and its variants); transportation disruptions that affect transportation and warehousing providers (for instance, labor disputes and work stoppages); and catastrophic events, such as war, civil unrest, terrorist attacks or other acts of violence, including active shooter situations, acts of vandalism or terrorism, labor or trade disputes, and similar events in countries in which we operate, in which our users are located, or in other areas of the world could adversely affect our operations and financial performance.
Our failure to accurately forecast customer demand, staffing and properly handle inventories and commercial relationships with third parties could result in excess or insufficient fulfillment capacity, service interruptions, an inability to optimize platform fulfillment or staffing, unexpected costs and adversely affect our reputation or results of operations.
Our failure to accurately forecast customer demand, seller demand for storage, staffing and properly handle inventories and commercial relationships with third parties could result in excess or insufficient fulfillment capacity, service interruptions, an inability to optimize platform fulfillment or staffing, unexpected costs and may adversely affect our reputation or results of operations.
Table of Contents Failure or perceived failure to adapt to achieve our goals or commitments, or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners and our stock price.
Failure or perceived failure to adapt to achieve our goals or commitments, or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners and our stock price.
The accuracy of the risk model and our ability to manage credit risk may also be affected by legal or regulatory changes (e.g., bankruptcy laws and minimum payment regulations), competitors’ actions, changes in consumer behavior, funding resources, changes in the economic environment and other factors.
The accuracy of the risk model and our ability to manage credit risk may also be affected by legal or regulatory changes (e.g., bankruptcy laws and minimum payment regulations), competitors’ actions, changes in consumer behavior, funding resources, changes in the economic environment, changes in regulation on interest rates and other factors.
Increased ESG related compliance costs for us as well as among Marketplace merchants and vendors and various other parties within our supply chain could result in increases to our overall operational costs. 24 | MercadoLibre, Inc.
Increased ESG related compliance costs for us as well as among Marketplace merchants and vendors and various other parties within our supply chain could result in increases to our overall operational costs.
Internet Services Regulation There is uncertainty in many of the countries where we operate with respect to the liability of Internet service providers, the application of existing regulations to our business as they relate to, or the enactment of new regulations relating to, issues such as e-commerce, electronic or mobile payments, information requirements for Internet providers, data collection, data protection, data security, data localization, online privacy, cryptocurrencies, artificial intelligence and machine learning (e.g. in relation to risk analysis) governing anti-money laundering, taxation, reporting obligations, consumer protection and businesses.
Internet Services Regulation There is uncertainty in many of the countries where we operate with respect to the liability of Internet service providers, the application of existing regulations to our business as they relate to, or the enactment of new regulations or legislation relating to, issues such as e-commerce, electronic or mobile payments, information requirements for Internet providers, data collection, data protection, data security, data localization, online privacy, cryptocurrencies, AI and ML (e.g. in relation to risk analysis) governing anti-money laundering, taxation, reporting obligations, consumer protection and businesses.
We operate in a highly competitive and evolving environment The e-commerce and omnichannel retail, e-commerce services, fintech and digital content and electronic devices industries are relatively new in Latin America, rapidly evolving, highly innovative and intensely competitive, and we expect competition to become more intense in the future.
Table of Contents We operate in a highly competitive and evolving environment The e-commerce and omnichannel retail, e-commerce services, fintech and digital content and electronic devices industries are still relatively new in Latin America, rapidly evolving, highly innovative and intensely competitive, and we expect competition to become more intense in the future.
Mercado Pago offers its users in Argentina, Mexico and Chile the option to use the balances stored on their Mercado Pago wallets to invest in low-risk investment funds (money market fund equivalents).
Mercado Pago offers its users in Argentina, Mexico and Chile the option to use the balances stored on their Mercado Pago digital accounts to invest in low-risk investment funds (money market fund equivalents).
Our Mercado Credito solution exposes us to the credit risk of our merchants and consumers, among other risks Our Mercado Credito solution is offered to certain merchants and consumers, and the financial success of this product depends on the effective management of the credit related risk.
Our lending solution exposes us to the credit risk of our merchants and consumers, among other risks Our lending solution is offered to certain merchants and consumers, and the financial success of this product depends on the effective management of the credit-related risk.
Those terms and conditions include limitations on the sale of digital goods and services (e.g., streaming video services), the mandatory use of the providers’ own payment processor for the sale of digital goods with a steep fee that ranges from 15% to 30% of the product’s listed price and anti-steering rules that forbid developers from informing users of their apps that alternative means of purchase are available outside the respective app store.
Those terms and conditions include limitations on the sale of digital goods and services (e.g., streaming video services), the mandatory use of the providers’ own payment processor for the sale of digital goods, with a steep fee that ranges from 15% to 30% of the product’s listed price, and anti-steering rules that forbid developers from informing users of their apps, via in-app communications, about alternative means of purchase available outside the respective app.
This uncertainty could negatively affect our users’ perception and use of our services and could result in significant expense should we have to defend cases in an unclear legal environment.
This uncertainty could negatively affect our users’ perception and use of our services, and could result in significant expense should we have to defend cases in an unclear legal environment. 28 | MercadoLibre, Inc.
Any costs that we incur as a result of this liability or asserted liability could have a material adverse effect on our business, results of operations and financial condition.
Any costs that we incur as a result of this liability or asserted liability could have a material adverse effect on our business, results of operations and financial condition. 30 | MercadoLibre, Inc.
It is also possible that new laws and regulations may be adopted with respect to intermediaries’ liability or mandatory out-of-court procedures to solve any disputes related to intermediaries’ liability that could have a material adverse effect on our operations.
It is also possible that new laws and regulations may be adopted with respect to intermediary liability or mandatory out-of-court procedures to resolve any disputes related to intermediary liability that could have a material adverse effect on our operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Our Cybersecurity VP is a certified information systems security professional (CISSP) and has considerable experience in the field of information security, fraud and prevention. As part of our cybersecurity risk management processes, our Cybersecurity VP presents security risk matters to the risk committee on an as-necessary basis, and to the Audit Committee annually and on an as-necessary basis.
Our Cybersecurity VP is a certified information systems security professional and has considerable experience in the field of information security, fraud and prevention. As part of our cybersecurity risk management processes, our Cybersecurity VP presents security risk matters to the risk committee on an as-necessary basis and to the Audit Committee annually and on an as-necessary basis.
Annually and on an as-necessary basis, members of management and/or of the risk committee provide presentations to the Audit Committee regarding cybersecurity matters, including any material risks. These presentations include information regarding cybersecurity risks, the evolution of those risks and initiatives to optimize and improve the processes of cybersecurity.
Annually and on an as-necessary basis, individual members of management and/or of the risk committee provide presentations to the Audit Committee regarding cybersecurity matters, including any material risks. These presentations include information regarding cybersecurity risks, the evolution of those risks and initiatives to optimize and improve the processes of cybersecurity.
The risk committee also meets quarterly and presents the status, evolution and main indicators of each security risk to management, although information security may not be deemed a risk in each particular quarter.
The risk committee also meets quarterly and presents to management the status, evolution and main indicators of each principal security risk, although information security may not be deemed a risk in each particular quarter.
CYBERSECURITY Risk Management and Strategy We maintain a comprehensive process for assessing, identifying and managing material risks from cybersecurity threats, including risks relating to disruption of technology infrastructure and business operations, intellectual property theft, fraud, harm to employees or customers, violation of privacy laws and confidentiality, other litigation and legal risks, and reputational risk, as part of our overall risk management principles and processes. 32 | MercadoLibre, Inc.
CYBERSECURITY Risk Management and Strategy We maintain a comprehensive process for assessing, identifying and managing material risks from cybersecurity threats, including risks relating to disruption of technology infrastructure and business operations, intellectual property theft, fraud, harm to employees or customers, violation of privacy laws and confidentiality, other litigation and legal risks, and reputational risk, as part of our overall risk management principles and processes.
Our risk committee is comprised of the Chief Financial Officer, Commerce Executive VP, Fintech President and the Heads of Corporate Affairs, Risk & Compliance, Data Privacy, Information Security, AML & Sanctions, Legal & Government Relations, Commerce Product Development, Fintech Product Development and IT Infrastructure.
Our risk committee is comprised of the Chief Financial Officer, Commerce President, Fintech President and the Heads of Corporate Affairs, Risk & Compliance, Data Privacy, Information Security, AML & Sanctions, Legal & Government Relations, Commerce Product Development, Fintech Product Development and IT Infrastructure.
In the last fiscal three years, we have not experienced any material information security breach incidents and the expenses we have incurred from information security breach incidents were immaterial. See “Risk Factors” in Item 1A of this Annual Report on Form 10-K for more information on our cybersecurity-related risks.
In the last fiscal three years, we have not experienced any material information security breach incidents and the expenses we have incurred from information security breach incidents were immaterial. See “Risk Factors” in Item 1A of this Annual Report on Form 10-K for more information on our cybersecurity-related risks. 36 | MercadoLibre, Inc.
Governance Management The cybersecurity risk management processes described above are managed by our Cybersecurity VP under the supervision of the risk committee. The Audit Committee of the board of directors provides additional oversight as needed.
Table of Contents Governance Management The cybersecurity risk management processes described above are managed by our Cybersecurity VP under the supervision of the risk committee. The Audit Committee of the board of directors provides additional oversight as needed.
We also have teams in place to oversee and manage our cybersecurity risk management processes, including: (i) an information security team, organized around our various services and products, responsible for day-to-day cybersecurity matters related to the respective services and products; (ii) a risk committee, comprised of members of management, that oversees the Company’s financial and non-financial risks, including cybersecurity risks, and assists management in oversight; and (iii) internal local, corporate and strategic crisis management teams that form part of our crisis management framework.
We also have teams in place to oversee and manage our cybersecurity risk management processes, including: (i) an information security team, organized around our various services and products, responsible for day-to-day cybersecurity matters related to the respective services and products; (ii) a risk committee that is comprised of members of management and oversees the Company’s financial and non-financial risks, including cybersecurity risks, as described in more detail below under the heading “Governance”; and (iii) internal local, corporate and strategic crisis management teams that form part of our crisis management framework.
Its primary purpose is to assist management and the board directly and/or indirectly through the board’s Audit Committee, overseeing the Company’s financial and non-financial risks, including cybersecurity risks. Our Cybersecurity VP and some of our risk committee members are skilled in technology, security and/or risk and compliance.
The primary purpose of the risk committee is to assist management and the board, either directly or indirectly through the board’s Audit Committee, with their oversight of the Company’s financial and non-financial risks, including cybersecurity risks. Our Cybersecurity VP and certain other members of our risk committee are skilled in technology, security and/or risk and compliance.
In the event of a critical incident that may impact the Company’s operations, the Company’s crisis management framework activates the strategic crisis management team for evaluation and response. The strategic crisis management team is comprised of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Commerce Executive VP, Fintech President, Corporate Affairs Executive VP and Marketing Executive VP.
In the event of a critical cybersecurity incident, the Company’s crisis management framework activates the cross-functional crisis management team, which, depending on the circumstances, is comprised of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Commerce President, Fintech President, Corporate Affairs Executive VP, Marketing Executive VP and the Cybersecurity VP.
Table of Contents Our risk management framework includes several security pillars, including data security, identity management, cloud security, infrastructure security, application security, incident response, and cybersecurity risk management. Our cybersecurity risk management processes incorporate frameworks aligned with recognized cybersecurity and cyber risk established frameworks.
Our risk management framework includes several security pillars, including data security, identity management, cloud security, infrastructure security, application security, incident response, and cybersecurity risk management.
We also conduct, with the assistance of an external auditor, annual Payment Card Industry Data Security Standard (PCI-DSS) reviews of our payment information security controls.
We conduct annual International Organization for Standardization Information Security Management Systems ("ISMS") Requirements ("ISO/IEC 27001") reviews and Payment Card Industry Data Security Standard ("PCI-DSS") reviews of our payment information security controls with the assistance of an external certified auditor. Our cybersecurity risk management processes incorporate frameworks aligned with recognized cybersecurity and cyber risk established frameworks.
Further, the Company’s cybersecurity processes are formally evaluated by the Cybersecurity VP on an annual basis, which includes updating the Company’s cybersecurity policy, security risk management policy and methodology, and classification of information. 33 | MercadoLibre, Inc. Table of Contents Board of directors The Audit Committee is primarily responsible for the oversight of cybersecurity risks and threats.
This group works with the incident response team to help to evaluate, contain, eradicate and, if necessary, recover from the incident. The Company’s cybersecurity processes are formally evaluated by the Cybersecurity VP on an annual basis, which includes updating the Company’s cybersecurity policy, security risk management policy and methodology, and classification of information.
Added
Board of directors The Audit Committee is primarily responsible for the oversight of cybersecurity risks and threats.

Item 2. Properties

Properties — owned and leased real estate

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While we believe our existing facilities are adequate to meet our immediate needs, it may become necessary to lease or acquire additional or alternative space to accommodate any future growth. For Mercado Envios, we operate fulfillment, cross docking and service centers in multiple locations in Argentina, Brazil, Mexico, Chile and Colombia. Our headquarters are located in Montevideo, Uruguay.
While we believe our existing facilities are adequate to meet our immediate needs, it may become necessary to lease or acquire additional or alternative space to accommodate any future growth. For Mercado Envios, we operate fulfillment, cross docking and service centers in multiple locations in Argentina, Brazil, Mexico, Chile, Colombia and Uruguay. Our headquarters are located in Montevideo, Uruguay.
The leases for our facilities provide for renewal options and after expiration, we can renegotiate the leases with our current landlords, or move to another location. From time to time we consider various alternatives related to our long-term facility needs.
T he leases for our facilities provide for renewal options and after expiration, we can renegotiate the leases with our current landlords, or move to another location. From time to time we consider various alternatives related to our long-term facility needs.
ITEM 2. PROPERTIES We lease facilities in different countries of Latin America that are used for administrative, marketing, product development and shipping activities purposes. All of our offices are occupied under lease agreements, except for three of our Argentine offices.
ITEM 2. PROPERTIES We lea se facilities in different countries of Latin America that are used for administrative, marketing, product development and shipping activities purposes. All of our offices are occupied under lease agreements, except for three of our Argentine offices and the Venezuelan offices that are owned by the Company.
Removed
As of December 31, 2023, our owned and leased facilities (excluding data centers) provided us with square meters as follows: Argentina Brazil Mexico Others Total Owned facilities 13,918 — — 880 14,798 Leased facilities 96,974 1,085,900 924,660 89,555 2,197,089 Managed by Third Parties (1) 57,223 536,627 — 92,520 686,370 Total facilities 168,115 1,622,527 924,660 182,955 2,898,257 (1) Includes properties that are leased by the Company and managed by third parties.
Added
As of December 31, 2024, our owned and leased facilities (excluding data centers) provided us with square meters as follows: Argentina Brazil Mexico Others Total Owned facilities (1) 5,766 — — 880 6,646 Leased facilities 103,699 1,721,362 1,350,233 91,279 3,266,573 Managed by Third Parties (2) 85,761 733,708 — 140,351 959,820 Total facilities 195,226 2,455,070 1,350,233 232,510 4,233,039 (1) Includes offices in Venezuela.
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(2) Includes properties that are leased by the Company and managed by third parties.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Holders of record As of January 31, 2024, we had 198 holders of record of our common stock. This figure does not reflect the beneficial ownership of shares held in nominee name. Recent Sales of Unregistered Securities There were no sales of unregistered securities by us during the year ended December 31, 2023.
Holders of record As of January 31, 2025, we had 198 holders of record of our common stock. This figure does not reflect the beneficial ownership of shares held in nominee name. Recent Sales of Unregistered Securities There were no sales of unregistered securities by us during the year ended December 31, 2024.
Stock Performance Graph The graph below shows the total stockholder return of an investment of $100 on December 31, 2018 through December 31, 2023 for (i) our common stock; (ii) The Nasdaq Composite Index; (iii) The S&P 500 Index; and (iv) the Dow Jones Industrial Average Index.
Table of Contents Stock Performance Graph The graph below shows the total stockholder return of an investment of $100 on December 31, 2019 through December 31, 2024 for (i) our common stock; (ii) the Nasdaq Composite Index; (iii) the S&P 500 Index; and (iv) the Dow Jones Industrial Average Index.
Dividend Policy After reviewing the Company’s capital allocation process, the board of directors has concluded that it has multiple investment opportunities that can generate greater return to shareholders through investing capital into the business over a dividend policy.
Dividend Policy After reviewing the Company’s capital allocation process, the board of directors has concluded that it has multiple investment opportunities that can generate greater return to shareholders through investing capital into the business over a dividend policy. Consequently, the board of directors suspended the payment of dividend to shareholders as from the first quarter of 2018.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters.” Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Program (in millions) (1) October, 2023 — — — Up to $157 November, 2023 — — — Up to $157 December, 2023 — — — Up to $157 (1) On February 21, 2023, the Board authorized the Company to repurchase shares of the Company’s common stock, for aggregate consideration of up to $900 million to expire on March 31, 2024 (the “Program”).
Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters.” Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Program (in millions) October, 2024 — — — — November, 2024 — — — — December, 2024 — — — — 38 | MercadoLibre, Inc.
Consequently, the board of directors suspended the payment of dividend to shareholders as from the first quarter of 2018. 34 | MercadoLibre, Inc. Table of Contents Equity Compensation Plan Information Information regarding securities authorized for issuance under the Company’s equity compensation plan as of December 31, 2023 is set forth in “Item 12.
Equity Compensation Plan Information Information regarding securities authorized for issuance under the Company’s equity compensation plan as of December 31, 2024 is set forth in “Item 12.
Removed
As of December 31, 2023, the estimated remaining balance available for share repurchases under this Program was $157 million. Please refer to Note 25 – Share repurchase program of our audited consolidated financial statements for additional detail.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Debt Securities Guaranteed by Subsidiaries On January 14, 2021, we issued $400 million aggregate principal amount of 2.375% Sustainability Notes due 2026 (the “2026 Sustainability Notes”) and $700 million aggregate principal amount of 3.125% Notes due 2031 (the “2031 Notes” and collectively, the “Notes”).
Debt Debt Securities Guaranteed by Subsidiaries On January 14, 2021, we issued $400 million aggregate principal amount of 2.375% Sustainability Notes due 2026 (the “2026 Sustainability Notes”) and $700 million aggregate principal amount of 3.125% Notes due 2031 (the “2031 Notes” and collectively, the “Notes”).
Table of Contents Under the indenture governing the Notes, the Subsidiary Guarantee of a Subsidiary Guarantor will terminate upon: (i) the sale, exchange, disposition or other transfer (including by way of consolidation or merger) of the Subsidiary Guarantor or the sale or disposition of all or substantially all the assets of the Subsidiary Guarantor (other than to the Company or a Subsidiary) otherwise permitted by the indenture, (ii) satisfaction of the requirements for legal or covenant defeasance or discharge of the Notes, (iii) the release or discharge of the guarantee by such Subsidiary Guarantor of the Triggering Indebtedness (as defined in the applicable indenture) or the repayment of the Triggering Indebtedness, in each case, that resulted in the obligation of such Subsidiary to become a Subsidiary Guarantor, provided that in no event shall the Subsidiary Guarantee of an Initial Subsidiary Guarantor terminate pursuant to this provision, or (iv) such Subsidiary Guarantor becoming an Excluded Subsidiary (as defined in the applicable indenture) or ceasing to be a Subsidiary.
Under the indenture governing the Notes, the Subsidiary Guarantee of a Subsidiary Guarantor will terminate upon: (i) the sale, exchange, disposition or other transfer (including by way of consolidation or merger) of the Subsidiary Guarantor or the sale or disposition of all or substantially all the assets of the Subsidiary Guarantor (other than to the Company or a Subsidiary) otherwise permitted by the indenture, (ii) satisfaction of the requirements for legal or covenant defeasance or discharge of the Notes, (iii) the release or discharge of the guarantee by such Subsidiary Guarantor of the Triggering Indebtedness (as defined in the applicable indenture) or the repayment of the Triggering Indebtedness, in each case, that resulted in the obligation of such Subsidiary to become a Subsidiary Guarantor, provided that in no event shall the Subsidiary Guarantee of an Initial Subsidiary Guarantor terminate pursuant to this provision, or (iv) such Subsidiary Guarantor becoming an Excluded Subsidiary (as defined in the applicable indenture) or ceasing to be a Subsidiary.
The lifetime expected credit losses are determined by applying probability of default and loss given default models to monthly projected exposures, then discounting these cash flows to present value using the portfolio’s loans interest rate, estimated as a weighted average of the original effective interest rate of all the loans that conform to the portfolio segment.
The lifetime expected credit losses is determined by applying probability of default and loss given default models to monthly projected exposures, then discounting these cash flows to present value using the portfolio’s loans interest rate, estimated as a weighted average of the original effective interest rate of all the loans that conform to the portfolio segment.
The functional currency for each country’s operations is the country’s local currency, except for Argentina, where the functional currency is the U.S. dollar due to Argentina’s status as a highly inflationary economy. Our net revenues are generated in multiple foreign currencies and then translated into U.S. dollars at the average monthly exchange rate.
The functional currency for each country’s operations is the country’s local currency, except for Argentina, where the functional currency is the U.S. dollar due to Argentina’s status as a highly inflationary economy. Our net revenues and financial income are generated in multiple foreign currencies and then translated into U.S. dollars at the average monthly exchange rate.
(2) The local currency revenue growth was calculated by using the average monthly exchange rates for each month during 2021 and applying them to the corresponding months in 2022, so as to calculate what our financial results would have been had exchange rates remained stable from one year to the next.
(2) The local currency revenue growth was calculated by using the average monthly exchange rates for each month during 2022 and applying them to the corresponding months in 2023, so as to calculate what our financial results would have been had exchange rates remained stable from one year to the next.
Table of Contents Net debt We define net debt as total debt which includes current and non-current loans payable and other financial liabilities and current and non-current operating lease liabilities, less cash and cash equivalents, short-term investments and long-term investments, excluding foreign government debt securities restricted and held in guarantee, securitization transactions and equity securities held at cost.
Table of Contents Net debt We define net debt as total debt which includes current and non-current loans payable and other financial liabilities and current and non-current operating lease liabilities, less cash and cash equivalents, short-term investments and long-term investments, excluding time deposits and foreign government debt securities restricted and held in guarantee, securitization transactions and equity securities held at cost.
The FX neutral measures were calculated by using the average monthly exchange rates for each month during 2022 and applying them to the corresponding months in 2023, so as to calculate what our results would have been had exchange rates remained stable from one year to the next.
The FX neutral measures were calculated by using the average monthly exchange rates for each month during 2023 and applying them to the corresponding months in 2024, so as to calculate what our results would have been had exchange rates remained stable from one year to the next.
Table of Contents Product and technology development expenses Our product and technology development related expenses consist primarily of compensation for our engineering and web-development staff (including long term retention program compensation), depreciation and amortization expenses related to product and technology development, certain tax withholding related to export duties, telecommunications costs and payments to third-party suppliers who provide technology maintenance services to us.
Product and technology development expenses Our product and technology development related expenses consist primarily of compensation for our engineering and web-development staff (including long term retention program compensation), depreciation and amortization expenses related to product and technology development, certain tax withholding related to export duties, telecommunications costs and payments to third-party suppliers who provide technology maintenance services to us.
Table of Contents Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that represents our net income, adjusted to eliminate the effect of depreciation and amortization charges, interest income and other financial gains, interest expense and other financial losses, foreign currency losses, net, income tax expense and equity in earnings of an unconsolidated entity.
Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that represents our net income, adjusted to eliminate the effect of depreciation and amortization charges, interest income and other financial gains, interest expense and other financial losses, foreign currency losses, net, income tax expense and equity in earnings of an unconsolidated entity.
Reporting Segments and Geographic Information 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).
Reporting Segments and Geographic Information 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, Uruguay and the U.S.).
Table of Contents Pillar Two The Organization for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting published the Pillar Two model rules designed to address the tax challenges arising from the digitalization of the global economy.
Pillar Two The Organization for Economic Co-operation and Development ("OECD")/G20 Inclusive Framework on Base Erosion and Profit Shifting published the Pillar Two model rules designed to address the tax challenges arising from the digitalization of the global economy.
The comparative FX neutral measures were calculated by using the average monthly exchange rates for each month during 2021 and applying them to the corresponding months in 2022.The table below excludes intercompany allocation FX effects.
The comparative FX neutral measures were calculated by using the average monthly exchange rates for each month during 2022 and applying them to the corresponding months in 2023.The table below excludes intercompany allocation FX effects.
As an extension of our asset management and savings solutions for users, we launched a digital assets feature as part of the Mercado Pago wallet in Brazil, Mexico and Chile, in 2021, 2022 and 2023, respectively.
As an extension of our asset management and savings solutions for users, we launched a digital assets feature as part of the Mercado Pago account in Brazil, Mexico and Chile, in 2021, 2022 and 2023, respectively.
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.
Table of Contents 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.
These non-GAAP financial measures should only be used to evaluate our results of operations in conjunction with the most comparable U.S. GAAP financial measures. We believe that reconciliation of these non-GAAP measures to the most directly comparable GAAP measure provides investors an overall understanding of our current financial performance and its prospects for the future. 55 | MercadoLibre, Inc.
These non-GAAP financial measures should only be used to evaluate our results of operations in conjunction with the most comparable U.S. GAAP financial measures. We believe that reconciliation of these non-GAAP measures to the most directly comparable GAAP measure provides investors an overall understanding of our current financial performance and its prospects for the future.
This service allows our millions of users to purchase, hold and sell selected digital assets through our interface without leaving the Mercado Pago application, while a partner acts as the custodian and exchange and offers the blockchain infrastructure platform. This feature is available for all users through their Mercado Pago wallet.
This service allows our millions of users to purchase, hold and sell selected digital assets through our interface without leaving the Mercado Pago application, while a partner acts as the custodian and offers the blockchain infrastructure platform. This feature is available for all users through their Mercado Pago account.
Facilitating credit is a key service overlay that enables us to further strengthen the engagement and lock-in rate of our users, while also generating additional touchpoints and incentives to use Mercado Pago as an end-to-end financial solution.
Facilitating credit is a key service overlay that enables us to further strengthen the engagement and lock-in rate of our users, while also generating additional touchpoints and incentives to use Mercado Pago as an end-to-end financial solution. 40 | MercadoLibre, Inc.
Our future effective tax rates could be adversely affected by earnings being lower than anticipated in countries where we have lower statutory rates and higher than anticipated in countries where we have higher statutory rates, by changes in the valuations of our deferred tax assets or liabilities, or by changes or interpretations in tax laws, regulations or accounting principles. 47 | MercadoLibre, Inc.
Our future effective tax rates could be adversely affected by earnings being lower than anticipated in countries where we have lower statutory rates and higher than anticipated in countries where we have higher statutory rates, by changes in the valuations of our deferred tax assets or liabilities, or by changes or interpretations in tax laws, regulations or accounting principles.
General and administrative expenses Our general and administrative expenses consist primarily of salaries for management and administrative staff, compensation of non-employee directors, long term retention program compensation, expenses for legal, audit and other professional services, insurance expenses, office space rental expenses, changes in the fair value (for the year ended December 31, 2023) and impairment (for the years ended December 31, 2022 and 2021) of digital assets, travel and business expenses, as well as depreciation and amortization expenses.
Table of Contents General and administrative expenses Our general and administrative expenses consist primarily of salaries for management and administrative staff, compensation of non-employee directors, long term retention program compensation, expenses for legal, audit and other professional services, contingencies, insurance expenses, office space rental expenses, changes in the fair value (for the years ended December 31, 2024 and 2023) and impairment (for the year ended December 31, 2022) of digital assets, travel and business expenses, as well as depreciation and amortization expenses.
By virtue of this limitation, a Subsidiary Guarantor’s obligation under its Subsidiary Guarantee could be significantly less than amounts payable with respect to the Notes, or a Subsidiary Guarantor may have effectively no obligation under its Subsidiary Guarantee. 52 | MercadoLibre, Inc.
By virtue of this limitation, a Subsidiary Guarantor’s obligation under its Subsidiary Guarantee could be significantly less than amounts payable with respect to the Notes, or a Subsidiary Guarantor may have effectively no obligation under its Subsidiary Guarantee.
We anticipate continued investments in capital expenditures related to information technology and logistics network capacity in the future as we strive to maintain our position in the Latin American e-commerce and fintech market.
We anticipate continued investments in capital expenditures related to information technology and logistics network capacity in the future as we strive to maintain our position in the Latin American e-commerce and fintech market. 59 | MercadoLibre, Inc.
To the extent we believe that it is more likely than not that some portion or the total deferred tax assets will not be realized, we establish a valuation allowance. As of December 31, 2023 and 2022, our valuation allowance amounted to $374 million and $360 million, respectively.
To the extent we believe that it is more likely than not that some portion or the total deferred tax assets will not be realized, we establish a valuation allowance. As of December 31, 2024 and 2023, our valuation allowance amounted to $584 million and $374 million, respectively.
Table of Contents Provision for doubtful accounts Provision for doubtful accounts consists of the current expected credit losses on our financial assets, mainly loans receivable.
Provision for doubtful accounts Provision for doubtful accounts consists of the current expected credit losses on our financial assets, mainly loans receivable.
GAAP financial measures can be found in the tables below. These non-GAAP measures 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.
Reconciliation of these non-GAAP financial measures to the most comparable U.S. GAAP financial measures can be found in the tables below. These non-GAAP measures 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.
Risk Factors - Risks related to doing business in Latin America - Local currencies used in the conduct of our business are subject to depreciation, volatility and exchange controls".
Risk Factors - Risks related to doing business in Latin America - Local currencies used in the conduct of our business are subject to depreciation, volatility and exchange controls". 46 | MercadoLibre, Inc.
Segment information See Note 9 – Segments of our audited consolidated financial statements for detailed description about our reporting segments.
Segment information See Note 10 – Segments of our audited consolidated financial statements for detailed description about our reporting segments.
Capital expenditures Our capital expenditures (comprised of our investments in property and equipment (such as certain assets used in our fulfillment centers) and intangible assets (excluding digital assets) for the years ended December 31, 2023 and 2022 amounted to $509 million and $455 million, respectively.
Capital expenditures Our capital expenditures comprised of our investments in property and equipment (such as certain assets used in our fulfillment centers) and intangible assets (excluding digital assets) for the years ended December 31, 2024 and 2023 amounted to $860 million and $509 million, respectively.
We believe that our existing cash and cash equivalents, including the sale of credit card receivables, short-term investments and cash generated from operations, will be sufficient to fund our operating activities, property and equipment expenditures and to pay or repay obligations in the foreseeable future. 54 | MercadoLibre, Inc.
Table of Contents We believe that our existing cash and cash equivalents, including the sale of credit card receivables, short-term investments and cash generated from operations, will be sufficient to fund our operating activities, property and equipment expenditures and to pay or repay obligations in the foreseeable future.
As of December 31, 2023, the obligations outstanding that the Company has confirmed as valid to the financial institutions amounted to $381 million, and are included in the consolidated balance sheets within the accounts payable and accrued expenses line.
As of December 31, 2024, the obligations outstanding that the Company has confirmed as valid to the financial institutions amounted to $425 million, and are included in the consolidated balance sheets within the accounts payable and accrued expenses line.
During the year ended December 31, 2023, we invested $225 million in information and technology assets in Brazil, Argentina and Mexico, and $233 million in our Argentine, Brazilian and Mexican shipping premises and offices. We are continually increasing our level of investment in hardware and software licenses necessary to improve and update our platform’s technology and computer software developed internally.
During the year ended December 31, 2024, we invested $316 million in information and technology assets in Brazil, Argentina and Mexico, and $484 million in our Argentine, Brazilian and Mexican shipping premises and offices. We are continually increasing our level of investment in hardware and software licenses necessary to improve and update our platform’s technology and computer software developed internally.
Table of Contents See Note 9 – Segments of our audited consolidated financial statements for further information regarding our net revenues disaggregated by similar products and services for the years ended December 31, 2023, 2022 and 2021.
Table of Contents See Note 10 – Segments of our audited consolidated financial statements for further information regarding our net revenues and financial income disaggregated by similar products and services for the years ended December 31, 2024, 2023 and 2022.
Net revenues We disaggregate revenues into four geographical reporting segments. Within each of our segments, the services we provide and the products we sell generally fall into two distinct revenue streams: “Commerce” and “Fintech”. Revenues from commerce transactions are mainly generated from: ■ marketplace fees that include final value fees and flat fees.
Within each of our segments, the services we provide and the products we sell generally fall into two distinct revenue streams: “Commerce” and “Fintech”. Commerce revenues are mainly generated from: ■ marketplace fees that include final value fees and flat fees.
The measurement of the current expected credit losses (“CECL”) is based on probability-weighted scenarios (probability of default for each month), in view of past events, current conditions and adjustments to reflect the reasonable and supportable forecast of future economic conditions.
The measurement of the CECL is based on probability-weighted scenarios (probability of default for each month), in view of past events, current conditions and adjustments to reflect the reasonable and supportable forecast of future economic conditions.
Our non-U.S. dollar-denominated cash and investments are located primarily in Brazil, Mexico and Argentina.
Our non-U.S. dollar-denominated cash and investments are located primarily in Brazil, Mexico and Argentina. 56 | MercadoLibre, Inc.
(4) Includes other income/(expense) from transactions with non-guarantor subsidiaries of $(52) million for the year ended December 31, 2023.
(4) Includes other income/(expense) from transactions with non-guarantor subsidiaries of $97 million for the year ended December 31, 2024.
Probability of default models (“PDs”) are estimated using a survival methodology; these PDs are constructed using individual default information through time, taking into account the expected future delinquency rate (forward-looking models) using, since 2022, three probability-weighted macroeconomic scenarios (base, optimistic and pessimistic) following the increased complexity and possible outcomes of the global, regional and domestic macroeconomic performance, so that the models include macroeconomic outlook or projections and recent performance, instead of using one scenario as prior years.
For most of the products, probability of default models (“PDs”) are estimated using a survival methodology; these PDs are constructed using individual default information through time, taking into account the expected future delinquency rate (forward-looking models) using three probability-weighted macroeconomic scenarios (base, optimistic and pessimistic) following the increased complexity and possible outcomes of the global, regional and domestic macroeconomic performance, so that the models include macroeconomic outlook or projections and recent performance.
Table of Contents 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 that we charge.
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 that we charge. 43 | MercadoLibre, Inc.
Our cost structure is directly affected by the level of operations of our services, and our strategic plan on gross profit is built on factors such as an ample liquidity to fund expenses and investments and a cost-effective capital structure. For the years ended December 31, 2023 and 2022, our gross profit margins were 49.8% and 49.0%, respectively.
Our cost structure is directly affected by the level of operations of our services, and our strategic plan on gross profit is built on factors such as an ample liquidity to fund expenses and investments and a cost-effective capital structure. For the years ended December 31, 2024 and 2023, our gross profit margins were 46.1% and 50.2%, respectively.
The discussion and analysis of our financial condition and results of operations has been organized to present the following: ■ a brief overview of our company; ■ a review of our financial presentation and accounting policies, including our critical accounting policies and estimates; ■ a discussion of our principal trends and results of operations for the years ended December 31, 2023, 2022 and 2021; ■ 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 key performance indicators; and ■ a description of our non-GAAP financial measures.
The discussion and analysis of our financial condition and results of operations has been organized to present the following: ■ a brief overview of our Company; ■ a review of our critical accounting policies and estimates; ■ a discussion of our principal trends and results of operations for the years ended December 31, 2024, 2023 and 2022; ■ 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 key performance indicators; and 39 | MercadoLibre, Inc.
We offer our users an ecosystem of six integrated e-commerce services and digital financial services: the Mercado Libre Marketplace, the Mercado Pago Fintech platform, the Mercado Envios logistics service, the Mercado Ads solution, the Mercado Libre Classifieds service and the Mercado Shops online storefronts solution.
We offer our users an ecosystem of integrated e-commerce and digital financial services, which includes: the Mercado Libre Marketplace, the Mercado Pago fintech platform, the Mercado Envios logistics service, the Mercado Ads solution and the Mercado Libre Classifieds service.
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 trend. 42 | MercadoLibre, Inc.
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.
Table of Contents Other income (expenses), net Other income (expenses), net consists primarily of interest income derived from our investments and cash equivalents, interest expense and other financial charges related to financial liabilities and foreign currency gains or losses.
Other income (expenses), net Other income (expenses), net consists primarily of interest income derived from our investments and cash equivalents and, interest expense and other financial charges related to financial liabilities not related to Mercado Pago’s operations, and foreign currency gains or losses.
Our subsidiaries in Brazil, Argentina and Colombia are subject to certain taxes on revenues, which are classified as a cost of net revenues. These taxes represented 7.7%, 7.5% and 8.0% of net revenues for the years ended December 31, 2023, 2022 and 2021, respectively.
Our subsidiaries in Brazil, Argentina and Colombia are subject to certain taxes on revenues, which are classified as a cost of net revenues and financial expenses. These taxes represented 6.6%, 7.7% and 7.5% of net revenues and financial income for the years ended December 31, 2024, 2023 and 2022, respectively.
As of December 31, 2023, our main source of liquidity was $3,747 million of cash and cash equivalents and short-term investments, which excludes $2,289 million investment mainly related to the Central Bank of Brazil Mandatory Guarantee, and consists of cash generated from operations and proceeds from loans.
As of December 31, 2024, our main source of liquidity was $3,686 million of cash and cash equivalents and short-term investments, which excludes $3,434 million investments mainly related to the Central Bank of Brazil Mandatory Guarantee, and consists of cash generated from operations and proceeds from loans.
The following table summarizes the composition of our income taxes for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 (In millions) Current: U.S. $ 41 $ 12 $ — Non-U.S. 812 383 178 853 395 178 Deferred: U.S. 36 55 (3) Non-U.S.
The following table summarizes the composition of our income taxes for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 (In millions) Current: U.S. $ 64 $ 41 $ 12 Non-U.S. 700 812 383 764 853 395 Deferred: U.S. 17 36 55 Non-U.S.
Gross profit margins Our gross profit margin is defined as total net revenues minus total cost of net revenues, as a percentage of net revenues.
Gross profit margins Our gross profit margin is defined as total net revenues and financial income minus total cost of net revenues and financial expenses, as a percentage of net revenues and financial income.
In this sense, as of December 31, 2023, we have committed rental expenditures with our lessors for $1,180 million and $173 million for operating leases and finance leases, respectively. See Note 23 – Leases of our audited consolidated financial statements for further detail on leases.
In this sense, as of December 31, 2024, we have committed rental expenditures with our lessors for $1,598 million and $141 million for operating leases and finance leases, respectively. See Note 22 – Leases of our audited consolidated financial statements for further detail on leases.
Cost of net revenues Cost of net revenues 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 business, fraud prevention expenses, certain taxes on bank transactions, hosting and site operation fees, certain tax withholding related to export duties, compensation for customer support personnel and depreciation and amortization.
Table of Contents Cost of net revenues and financial expenses 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 lending solution 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.
(2) Includes charges from transactions with non-guarantor subsidiaries of $698 million for the year ended December 31, 2023. (3) In addition to the charges included in Gross profit, Income from operations includes charges from transactions with non-guarantor subsidiaries of $828 million for the year ended December 31, 2023.
(2) Includes charges from transactions with non-guarantor subsidiaries of $1,408 million for the year ended December 31, 2024. (3) In addition to the charges included in Gross profit, Income from operations includes charges from transactions with non-guarantor subsidiaries of $797 million for the year ended December 31, 2024.
(2) Includes Current assets from non-guarantor subsidiaries of $1,405 million and $863 million as of December 31, 2023 and December 31, 2022, respectively. (3) Includes Non-current assets from non-guarantor subsidiaries of $309 million and $410 million as of December 31, 2023 and December 31, 2022, respectively.
(2) Includes Current assets from non-guarantor subsidiaries of $2,520 million and $1,405 million as of December 31, 2024 and 2023, respectively. (3) Includes Non-current assets from non-guarantor subsidiaries of $152 million and $309 million as of December 31, 2024 and 2023, respectively.
Also, for credit cards, since 2022, the Company has used, as applicable, credit conversion factor (“CCF”) estimated according to terms and conditions, considering the increase in the volume of credit cards portfolio. The loss given default (“LGD”) is the percentage of the exposure at default that is not recoverable. The LGD is estimated using Work-out and Chainladder approaches.
Also, for Brazil credit cards loans, we use, as applicable, a one month credit conversion factor (“CCF”) estimated according to terms and conditions, considering the increase in the volume of credit cards portfolio. The loss given default (“LGD”) is the percentage of the exposure at default that is not recoverable. The LGD is estimated using work-out and Chainladder approaches.
We have funded Mercado Pago mainly by selling credit card receivables and through credit lines. Additionally, we have financed our Mercado Pago and Mercado Credito businesses through the securitization of credit card receivables and certain loans through SPEs created in Brazil, Mexico and Argentina. Finally, we obtained funding through our financial institution in Brazil through deposit certificates and financial bills.
Additionally, we have financed our Mercado Pago and lending businesses through the securitization of credit card receivables and certain loans through SPEs created in Brazil, Mexico, Chile and Argentina. Finally, we obtained funding through our financial institution in Brazil through deposit certificates, financial bills and loans from banks.
(2) Excludes investments held in VIEs as a consequence of securitization transactions and equity securities held at cost. 57 | MercadoLibre, Inc.
(2) Excludes foreign government debt securities restricted, investments held in VIEs as a consequence of securitization transactions and equity securities held at cost. 62 | MercadoLibre, Inc.
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.
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.
We and certain financial institutions participate in a supplier finance program (“SFP”) that enables certain of our suppliers, at their own election, to request the payment of their invoices to the financial institutions earlier than the terms stated in our payment policies.
As of December 31, 2024, the remaining purchase commitment is $16 million. We and certain financial institutions participate in a supplier finance program (“SFP”) that enables certain of our suppliers, at their own election, to request the payment of their invoices to the financial institutions earlier than the terms stated in our payment policies.
The following table presents our cash flows from operating activities, investing activities and financing activities for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 (In millions) Net cash provided by (used in): Operating activities $ 5,140 $ 2,940 $ 965 Investing activities (3,450) (3,871) (1,597) Financing activities (267) 916 1,925 Effect of exchange rates on cash and cash equivalents, restricted cash and cash equivalents (938) (270) (153) Net increase (decrease) in cash, cash equivalents, restricted cash and cash equivalents $ 485 $ (285) $ 1,140 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: Year Ended December 31, Change from 2022 to 2023 2023 2022 in Dollars in % (In millions, except percentages) Net Cash provided by: Operating activities $ 5,140 $ 2,940 $ 2,200 74.8 % Net cash provided by operating activities during the year ended December 31, 2023, resulted primarily from our net income of $987 million, adjustments to net income related to non-cash items of $2,103 million, a $1,502 million increase in funds payable to customers, an increase of $1,225 million in payables and accrued expenses and an increase of $693 million in amounts payable due to credit and debit card transactions, which were partially offset by a $1,321 million increase in credit card receivables and other means of payments.
Table of Contents The following table presents our cash flows from operating activities, investing activities and financing activities for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 (In millions) Net cash provided by (used in): Operating activities $ 7,918 $ 5,140 $ 2,940 Investing activities (8,287) (3,450) (3,871) Financing activities 1,959 (267) 916 Effect of exchange rates on cash and cash equivalents, restricted cash and cash equivalents (739) (938) (270) Net increase (decrease) in cash, cash equivalents, restricted cash and cash equivalents $ 851 $ 485 $ (285) 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: Year Ended December 31, Change from 2023 to 2024 2024 2023 in Dollars in % (In millions, except percentages) Net Cash provided by: Operating activities $ 7,918 $ 5,140 $ 2,778 54.0 % Net cash provided by operating activities during the year ended December 31, 2024, resulted primarily from our net income of $1,911 million, adjustments to net income related to non-cash items of $2,587 million, a $3,605 million increase in funds payable to customers, an increase of $1,595 million in payables and accrued expenses and an increase of $1,213 million in amounts payable due to credit and debit card transactions, which were partially offset by a $2,530 million increase in credit card receivables and other means of payments.
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.
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.
Since October 2023, we signed 3-year agreements with certain shipping companies in Brazil, under which we committed to contract a minimum amount of logistics services for a total cost of $31 million.
Since October 2023, we signed 3-year agreements with certain shipping companies in Brazil, under which we committed to contract a minimum amount of logistics services for a total cost of $49 million. As of December 31, 2024, the remaining purchase commitment is $39 million.
Summarized balance sheet information for the Obligor Group as of December 31, 2023 and 2022 is provided in the table below: December 31, 2023 2022 (In millions) Current assets (1) (2) $ 11,343 $ 7,966 Non-current assets (3) 3,032 2,693 Current Liabilities (4) 9,683 7,214 Non-current Liabilities 2,327 2,547 (1) Includes restricted cash and cash equivalents of $430 million and $687 million and foreign government debt securities (Central Bank of Brazil mandatory guarantee) of $2,289 million and $1,219 million as of December 31, 2023 and December 31, 2022, respectively.
Summarized balance sheet information for the Obligor Group as of December 31, 2024 and 2023 is provided in the table below: December 31, 2024 2023 (In millions) Current assets (1) (2) $ 15,510 $ 11,343 Non-current assets (3) 3,849 3,032 Current Liabilities (4) 14,935 9,683 Non-current Liabilities 2,449 2,327 (1) Includes restricted cash and cash equivalents of $940 million and $430 million and foreign government debt securities (Central Bank of Brazil mandatory guarantee) of $3,417 million and $2,289 million as of December 31, 2024 and 2023, respectively.
On January 10, 2024, we signed a 5-year agreement for the naming rights of the Complexo Pacaembu (municipal stadium of the city of São Paulo), for a total amount of $56 million.
On January 10, 2024, we signed a 5-year agreement for the naming rights of the Complexo Pacaembu (municipal stadium of the city of São Paulo), for a total amount of $44 million, which has not commenced as of December 31, 2024.
As of December 31, 2023, cash and cash equivalents, restricted cash and cash equivalents and investments of our non-U.S. subsidiaries amounted to $6,459 million, or 86.2% of our consolidated cash and cash equivalents, restricted cash and cash equivalents and investments, and our cash and cash equivalents, restricted cash and cash equivalents and investments held outside U.S. amounted to 78.3% of our consolidated cash and cash equivalents, restricted cash and cash equivalents and investments.
As of December 31, 2024, cash and cash equivalents, restricted cash and cash equivalents and investments of our non-U.S. subsidiaries amounted to $9,031 million, or 86.9% of our consolidated cash and cash equivalents, restricted cash and cash equivalents and investments, and our cash and cash equivalents, restricted cash and cash equivalents and investments held outside U.S. amounted to 80.3% of our consolidated cash and cash equivalents, restricted cash and cash equivalents and investments.
Table of Contents The following table sets forth the growth in net revenues in local currencies, for the years ended December 31, 2023 and 2022 as compared to the same periods in 2022 and 2021, respectively: Changes from (% of revenue growth in Local Currency) 2022 to 2023 (1) 2021 to 2022 (2) Brazil 29.4 % 38.7 % Argentina (3) 184.2 126.3 Mexico 40.8 57.1 Other countries 24.9 23.2 Total consolidated 67.9 % 59.7 % (1) The local currency revenue growth was calculated by using the average monthly exchange rates for each month during 2022 and applying them to the corresponding months in 2023, so as to calculate what our financial results would have been had exchange rates remained stable from one year to the next.
The following table sets forth the growth in net revenues and financial income in local currencies, for the years ended December 31, 2024 and 2023 as compared to the same periods in 2023 and 2022, respectively: Changes from (% of revenue growth in Local Currency) 2023 to 2024 (1) 2022 to 2023 (2) Brazil 58.5 % 30.2 % Mexico 58.7 42.7 Argentina (3) 244.0 202.1 Other countries 44.1 26.1 Total consolidated 101.5 % 73.2 % (1) The local currency revenue growth was calculated by using the average monthly exchange rates for each month during 2023 and applying them to the corresponding months in 2024, so as to calculate what our financial results would have been had exchange rates remained stable from one year to the next.
We estimate the exposure at default that the portfolio of loans would have in each possible moment of default, meaning for each possible scenario mentioned above. For credit cards we estimate an amortization scheme based on historical information.
The exposure at default is equal to the receivables’ expected outstanding principal, interest and other allowable balances. We estimate the exposure at default that the portfolio of loans would have in each possible moment of default, meaning for each possible scenario mentioned above. For credit cards loans we estimate an amortization scheme based on historical information.
The following table presents sales and marketing expenses for the years indicated: Year Ended December 31, Change from 2022 to 2023 Year Ended December 31, Change from 2021 to 2022 2023 2022 in Dollars in % 2022 2021 in Dollars in % (In millions, except percentages) (In millions, except percentages) Sales and marketing $ 1,736 $ 1,296 $ 440 34.0% $ 1,296 $ 1,074 $ 222 20.7% As a percentage of net revenues 12.0% 12.3% 12.3% 15.2% For the year ended December 31, 2023, the increase in sales and marketing expenses as compared to the year ended December 31, 2022 was primarily attributable to a: i) $194 million increase in online and offline marketing expenses mainly in Brazil; ii) $100 million increase in our buyer protection program expenses; iii) $71 million increase in salaries and wages mainly related to the increase of 12% 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; iv) $27 million increase in sales expenses; and v) $27 million increase in chargebacks. 43 | MercadoLibre, Inc.
The following table presents sales and marketing expenses for the years indicated: Year Ended December 31, Change from 2023 to 2024 Year Ended December 31, Change from 2022 to 2023 2024 2023 in Dollars in % 2023 2022 in Dollars in % (In millions, except percentages) (In millions, except percentages) Sales and marketing $ 2,191 $ 1,736 $ 455 26.2% $ 1,736 $ 1,296 $ 440 34.0% As a percentage of net revenues and financial income 10.5% 11.5% 11.5% 12.0% For the year ended December 31, 2024, the increase in sales and marketing expenses as compared to the year ended December 31, 2023 was primarily attributable to a: i) $266 million increase in online and offline marketing expenses mainly in Brazil and Mexico; ii) $57 million increase in chargebacks; iii) $55 million increase in our buyer protection program expense; and iv) $38 million increase in salaries and wages mainly related to the increase of 15% 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.
Net cash used in investing activities Year Ended December 31, Change from 2022 to 2023 2023 2022 in Dollars in % (In millions, except percentages) Net Cash used in: Investing activities $ (3,450) $ (3,871) $ 421 (10.9) % Net cash used in investing activities in the year ended December 31, 2023 resulted mainly from the use of $2,047 million related to changes on loans receivable due to loans granted to merchants and consumers and Mercado Pago credit card utilization under our Mercado Credito solution net of collections and $509 million in the investment of property and equipment (mainly related to our shipping network and information technology assets in Argentina, Brazil and Mexico). 51 | MercadoLibre, Inc.
Net cash used in investing activities Year Ended December 31, Change from 2023 to 2024 2024 2023 in Dollars in % (In millions, except percentages) Net Cash used in: Investing activities $ (8,287) $ (3,450) $ (4,837) 140.2 % Net cash used in investing activities in the year ended December 31, 2024 resulted mainly from the use of $4,688 million related to changes on loans receivable due to loans granted to merchants and consumers and Mercado Pago credit card utilization under our lending solution net of collections, $2,748 million related to the net purchases of investments and $860 million in the investment of property and equipment (mainly related to our shipping network and information technology assets in Argentina, Brazil and Mexico) and intangible assets.
The following table summarizes the composition of our deferred tax assets from loss carryforwards as of December 31, 2023 and 2022: December 31, December 31, Loss carryforwards 2023 in % 2022 in % (In millions, except percentages) (In millions, except percentages) Mexican operations $ 123 69.5 % $ 161 63.1 % Brazilian operations 31 17.5 67 26.3 Argentine operations 10 5.6 15 5.9 Operations in other countries 13 7.4 12 4.7 Total $ 177 100.0 % $ 255 100.0 % We also assess the likelihood that our net deferred tax assets will be realized from future taxable income.
The following table summarizes the composition of our deferred tax assets from loss carryforwards as of December 31, 2024 and 2023: December 31, December 31, Loss carryforwards 2024 in % 2023 in % (In millions, except percentages) (In millions, except percentages) Mexico $ 35 54.7 % $ 123 69.5 % Brazil 9 14.1 31 17.5 Argentina 4 6.3 10 5.6 Other countries 16 24.9 13 7.4 Total $ 64 100.0 % $ 177 100.0 % We also assess the likelihood that our net deferred tax assets will be realized from future taxable income.
Our Mercado Libre Marketplace is available in 18 countries (Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Peru, Mexico, Panama, Honduras, Nicaragua, El Salvador, Uruguay, Bolivia, Guatemala, Venezuela (deconsolidated since December 1, 2017) and Paraguay), while Mercado Pago and Mercado Envios are available in 8 countries (Argentina, Brazil, Mexico, Colombia, Chile, Peru, Uruguay and Ecuador).
Table of Contents Our Mercado Libre Marketplace is available 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) and our fintech platform, Mercado Pago, is present in 8 countries (Argentina, Brazil, Mexico, Chile, Colombia, Peru, Uruguay and Ecuador).
(4) Includes Current liabilities to non-guarantor subsidiaries of $1,808 million and $1,334 million as of December 31, 2023 and December 31, 2022, respectively. 53 | MercadoLibre, Inc.
(4) Includes Current liabilities to non-guarantor subsidiaries of $2,749 million and $1,808 million as of December 31, 2024 and 2023, respectively.
Fintech revenues correspond to our Mercado Pago service, which are 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 Mercado Pago platform, for transactions that occur either on or off our Marketplace platform; ■ interest, cash advances and fees from merchant and consumer loans granted under our Mercado Credito solution; ■ commissions that we charge from transactions carried out with Mercado Pago credit and debit cards; ■ revenues from the sale of mobile points of sale products; ■ revenues from insurtech fees; and ■ commissions from additional fees we charge when our sellers elect to withdraw cash. 39 | MercadoLibre, Inc.
Fintech revenues are 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 Mercado Pago platform, for transactions that occur either on or off our Marketplace platform; ■ interest, cash advances and fees from credit cards, merchant and consumer loans granted under our lending solution; ■ revenues from our asset management product; ■ interest earned on investments as part of Mercado Pago activities, including those required due to fintech regulations, net of interest gains passed through to our Brazilian users in connection with our asset management product; ■ commissions that we charge from transactions carried out with Mercado Pago credit and debit cards; ■ revenues from the sale of mobile points of sale products; ■ revenues from insurtech fees; ■ commissions from additional fees we charge when our sellers elect to withdraw cash; and ■ fees from other ancillary services.
These estimates are based on our assessment of the facts and circumstances and historical information related to actions filed against the Company at each balance sheet date and are subject to change based upon new information and future events. 38 | MercadoLibre, Inc.
These estimates are based on our assessment of the facts and circumstances and historical information related to actions filed against the Company at each balance sheet date and are subject to change based upon new information and future events. From time to time, we are involved in disputes that arise in the ordinary course of business.
We are presenting the following summarized financial information for the issuer and the Subsidiary Guarantors (together, the “Obligor Group”) pursuant to Rule 13-01 of Regulation S-X, Guarantors and Issuers of Guaranteed Securities Registered or Being Registered. For purposes of the following summarized financial information, transactions between the Company and the Subsidiary Guarantors, presented on a combined basis, have been eliminated.
Table of Contents We are presenting the following summarized financial information for the issuer and the Subsidiary Guarantors (together, the “Obligor Group”) pursuant to Rule 13-01 of Regulation S-X, Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.
See also the “Non-GAAP Measures of Financial Performance” section for details on FX neutral measures. (3) Average inter-annual inflation rates in our Argentine segment for the years ended December 31, 2022 and 2021 was 70.7% and 48.1%, respectively.
See also the “Non-GAAP Measures of Financial Performance” section for details on FX neutral measures. (3) For the year ended December 31, 2024, 2023 and 2022, the average inter-annual inflation rate in our Argentine segment was 236.8%, 127.9% and 70.7%, respectively. See also "Item 1A.
The following table presents a reconciliation of net debt for each of the periods indicated: December 31, 2023 2022 (In millions) Current Loans payable and other financial liabilities $ 2,292 $ 2,131 Non-current Loans payable and other financial liabilities 2,203 2,627 Current Operating lease liabilities 166 142 Non-current Operating lease liabilities 672 514 Total debt 5,333 5,414 Less: Cash and cash equivalents 2,556 1,910 Short-term investments (1) 1,191 1,120 Long-term investments (2) 81 245 Net debt $ 1,505 $ 2,139 (1) Excludes foreign government debt securities restricted and held in guarantee.
The following table presents a reconciliation of net debt for each of the years indicated: December 31, 2024 2023 (In millions) Current Loans payable and other financial liabilities $ 2,828 $ 2,292 Non-current Loans payable and other financial liabilities 2,887 2,203 Current Operating lease liabilities 241 166 Non-current Operating lease liabilities 894 672 Total debt 6,850 5,333 Less: Cash and cash equivalents 2,635 2,556 Short-term investments (1) 1,051 1,191 Long-term investments (2) 1,124 81 Net debt $ 2,040 $ 1,505 (1) Excludes time deposits and foreign government debt securities restricted and held in guarantee.
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 Mercado Libre Marketplace and convert them into registered users and active traders on our platform.
We enter into agreements with portals, search engines, social networks, ad networks and other sites in order to attract Internet users to the Mercado Libre 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.
GAAP, we present earnings before interest income and other financial gains, interest expense and other financial losses, foreign currency losses, net, income tax expense, depreciation and amortization and equity in earnings of unconsolidated entity (“Adjusted EBITDA”), net debt and foreign exchange (“FX”) neutral measures as non-GAAP measures. Reconciliation of these non-GAAP financial measures to the most comparable U.S.
GAAP, we present earnings before interest income and other financial gains, interest expense and other financial losses, foreign currency losses, net, income tax expense, depreciation and amortization and equity in earnings of unconsolidated entity (“Adjusted EBITDA”), net debt, foreign exchange (“FX”) neutral measures and Adjusted free cash flow and Net increase (decrease) in available cash and investments as non-GAAP measures.
Our Commerce revenues grew $2,393 million, or 41.2%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Our Commerce revenues grew $3,958 million, or 48.3%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
Financial information for the non-guarantor subsidiaries, and any investment in a non-guarantor subsidiary by the Company or by any Subsidiary Guarantor, have been excluded. Amounts due from, due to and transactions with the non-guarantor subsidiaries and other related parties, as applicable, have been separately presented in footnotes.
Amounts due from, due to and transactions with the non-guarantor subsidiaries and other related parties, as applicable, have been separately presented in footnotes.
The $2,200 million increase in the net cash provided by operating activities in the year ended December 31, 2023, as compared to 2022, is mainly explained by the $505 million increase in net income together with a $776 million increase in payables and accrued expenses, an increase of $565 million in amounts payable due to credit and debit card transactions and $458 million in funds payable to customers.
The $2,778 million increase in the net cash provided by operating activities in the year ended December 31, 2024, as compared to 2023, is mainly explained by the $924 million increase in net income together with a $2,103 million increase in funds payable to customers, an increase of $520 million in amounts payable due to credit and debit card transactions and $370 million in payables and accrued expenses, partially offset by a decrease in credit card receivables and other means of payments, net of $1,209 million.
Fintech revenues grew by 18.9%, a $489 million increase, during the year ended December 31, 2023 as compared to 2022, mainly driven by an increase of $446 million in our revenues from fintech services and an increase of $53 million in our credits revenues.
Fintech revenues grew 45.8%, a $500 million increase, during the year ended December 31, 2024 as compared to 2023, mainly driven by an increase of $310 million in our Credits revenues and an increase of $184 million in our revenues from Financial services and income.
Table of Contents Summarized statement of income information for the Obligor Group for the year ended December 31, 2023 is provided in the table below: Year Ended December 31, 2023 (In millions) Net Revenues (1) $ 11,978 Gross Profit (2) 5,503 Income from operations (3) 1,172 Net income (4) 506 (1) Includes Net revenues from transactions with non-guarantor subsidiaries of $64 million for the year ended December 31, 2023.
Summarized statement of income information for the Obligor Group for the year ended December 31, 2024 is provided in the table below: Year Ended December 31, 2024 (In millions) Net Revenues and financial income (1) $ 17,165 Gross Profit (2) 6,462 Income from operations (3) 1,782 Net income (4) 1,236 (1) Includes Net revenues and financial income from transactions with non-guarantor subsidiaries of $536 million for the year ended December 31, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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These market risks arise mainly from macroeconomic instability and the possibility that changes in interest rates and the U.S. dollar exchange rate with local currencies, particularly the Brazilian Real, Argentine Peso and Mexican Peso due to Brazil’s, Argentina’s and Mexico’s respective share of our revenues, may affect the value of our financial assets and liabilities.
These market risks arise mainly from macroeconomic instability and the possibility that changes in interest rates and the U.S. dollar exchange rate with local currencies, particularly the Brazilian Real, Mexican Peso and Argentine Peso due to Brazil’s, Mexico’s and Argentina’s respective share of our revenues, may affect the value of our financial assets and liabilities.
Foreign currencies We have significant operations internationally that are denominated in foreign currencies, primarily the Brazilian Real, Argentine Peso, Mexican Peso, Colombian Peso and Chilean Peso, subjecting us to foreign currency risk, which may adversely impact our financial results. We transact business in various foreign currencies and have significant international revenues and costs.
Foreign currencies We have significant operations internationally that are denominated in foreign currencies, primarily the Brazilian Real, Mexican Peso, Argentine Peso, Colombian Peso and Chilean Peso, subjecting us to foreign currency risk, which may adversely impact our financial results. We transact business in various foreign currencies and have significant international revenues and costs.
Dollar. (2) Decrease of the subsidiaries local currency against U.S. Dollar. (3) Includes cost of net revenues and operating expenses. The table above shows an increase in our net income when the U.S. dollar weakens against foreign currencies because of the positive impact of the increase in income from operations.
Dollar. (2) Decrease of the subsidiaries local currency against U.S. Dollar. (3) Includes cost of net revenues and financial expenses and operating expenses. The table above shows an increase in our net income when the U.S. dollar weakens against foreign currencies because of the positive impact of the increase in income from operations.
The following table shows a sensitivity analysis of the risk associated with our total contractual obligation fair value related to the outstanding LTRP Variable Award Payment subject to equity price risk if our common stock price per share were to increase or decrease by up to 40%: 61 | MercadoLibre, Inc.
The following table shows a sensitivity analysis of the risk associated with our total contractual obligation fair value related to the outstanding LTRP Variable Award Payment subject to equity price risk if our common stock price per share were to increase or decrease by up to 40%: 67 | MercadoLibre, Inc.
In order to receive the full target award under the 2019, 2020, 2021, 2022 and/or 2023 LTRPs, each eligible employee must remain employed as of each applicable payment date.
In order to receive the full target award under the 2020, 2021, 2022, 2023 and/or 2024 LTRPs, each eligible employee must remain employed as of each applicable payment date.
Equity price risk Our board of directors, upon the recommendation of the compensation committee, approved the 2019, 2020, 2021, 2022 and 2023 Long Term Retention Programs (the “2019, 2020, 2021, 2022 and 2023 LTRPs”), respectively, under which certain eligible employees have the opportunity to receive cash payments annually for a period of six years (with the first payment occurring no later than April 30, 2020, 2021, 2022, 2023 and 2024 for the 2019, 2020, 2021, 2022 and 2023 LTRPs, respectively).
Equity price risk Our board of directors, upon the recommendation of the compensation committee, approved the 2020, 2021, 2022, 2023 and 2024 Long Term Retention Programs (the “2020, 2021, 2022, 2023 and 2024 LTRPs”), respectively, under which certain eligible employees have the opportunity to receive cash payments annually for a period of six years (with the first payment occurring no later than April 30, 2021, 2022, 2023, 2024 and 2025 for the 2020, 2021, 2022, 2023 and 2024 LTRPs, respectively).
The 2019, 2020, 2021, 2022 and 2023 LTRP awards are payable as follows: ■ the eligible employee will receive 16.66% of half of his or her target 2019, 2020, 2021, 2022 and/or 2023 LTRP bonus once a year for a period of six years, with the first payment occurring no later than April 30, 2020, 2021, 2022, 2023 and 2024, respectively (the “2019, 2020, 2021, 2022 or 2023 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 “2019, 2020, 2021, 2022 or 2023 Variable Payment”) equal to the product of (i) 16.66% of half of the target 2019, 2020, 2021, 2022 or 2023 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 average closing price of our common stock on the NASDAQ Global Select Market during the final 60 trading days of 2018, 2019, 2020, 2021 and 2022 defined as $322.91, $553.45, $1,431.26, $1,391.81 and $888.69 for the 2019, 2020, 2021, 2022 and 2023 LTRPs, respectively.
The 2020, 2021, 2022, 2023 and 2024 LTRP awards are payable as follows: ■ the eligible employee will receive 16.66% of half of his or her target 2020, 2021, 2022, 2023 and/or 2024 LTRP award once a year for a period of six years, with the first payment occurring no later than April 30, 2021, 2022, 2023, 2024 and 2025, respectively (the “2020, 2021, 2022, 2023 or 2024 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 “2020, 2021, 2022, 2023 or 2024 Variable Payment”) equal to the product of (i) 16.66% of half of the target 2020, 2021, 2022, 2023 or 2024 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 average closing price of our common stock on the NASDAQ Global Select Market during the final 60 trading days of 2019, 2020, 2021, 2022 and 2023 defined as $553.45, $1,431.26, $1,391.81, $888.69 and $1,426.11 for the 2020, 2021, 2022, 2023 and 2024 LTRPs, respectively.
Additionally, we would have recorded a foreign currency loss amounting to approximately $49 million in our Brazilian subsidiaries. Argentine segment In accordance with U.S. GAAP, we have classified our Argentine operations as highly inflationary since July 1, 2018, using the U.S. dollar as the functional currency for purposes of reporting our financial statements.
Additionally, we would have recorded a foreign currency loss amounting to approximately $10 million in our Mexican subsidiaries. Argentine segment In accordance with U.S. GAAP, we have classified our Argentine operations as highly inflationary since July 1, 2018, using the U.S. dollar as the functional currency for purposes of reporting our financial statements.
See Note 2 – Summary of significant accounting policies - Foreign currency translation - Argentine currency status and macroeconomic outlook of our audited consolidated financial statements for further detail on the currency status and the exchange regulations of our Argentine segment.
See Note 2 – Summary of significant accounting policies - Foreign currency translation - Argentine currency status and macroeconomic outlook of our audited consolidated financial statements for further detail on the currency status and the exchange regulations of our Argentine segment. 66 | MercadoLibre, Inc.
See Note 17 – Loans payable and other financial liabilities and Note 21 – Securitization transactions of our audited consolidated financial statements for further detail.
See Note 18 – Loans payable and other financial liabilities and Note 21 – Securitization transactions of our audited consolidated financial statements for further detail.
Brazilian segment Considering a hypothetical decrease of 10% of the Brazilian Real against the U.S. dollar on December 31, 2023, the reported net assets in our Brazilian subsidiaries would have decreased by approximately $244 million with the related impact in Other Comprehensive Income.
Brazilian segment Considering a hypothetical decrease of 10% of the Brazilian Real against the U.S. dollar on December 31, 2024, the reported net assets in our Brazilian subsidiaries would have decreased by approximately $286 million with the related impact in Other Comprehensive Income.
Mexican segment Considering a hypothetical decrease of 10% of the Mexican peso against the U.S. dollar on December 31, 2023, the reported net assets in our Mexican subsidiaries would have decreased by approximately $103 million with the related impact in Other Comprehensive Income.
Mexican segment Considering a hypothetical decrease of 10% of the Mexican peso against the U.S. dollar on December 31, 2024, the reported net assets in our Mexican subsidiaries would have decreased by approximately $142 million with the related impact in Other Comprehensive Income.
Therefore, no translation effect has been accounted for in other comprehensive income related to our Argentine operations since July 1, 2018. Argentina’s annual inflation rate for the years ended December 31, 2023, 2022 and 2021 was 211.4%, 94.8% and 50.9%, respectively.
Therefore, no translation effect has been accounted for in other comprehensive income related to our Argentine operations since July 1, 2018. Argentina’s annual inflation rate for the years ended December 31, 2024, 2023 and 2022 was 117.8%, 211.4% and 94.8%, respectively.
Cash flow hedges and net investment hedges are subsequently reclassified into the financial statement line item in which the hedged item is recorded in the same period the forecasted transaction affects earnings.
Cash flow hedges and net investment hedges are subsequently reclassified into the consolidated statements of income in the financial statement line item in which the hedged item is recorded in the same period the forecasted transaction affects earnings.
We use Argentina’s official exchange rate to account for transactions in our Argentine segment, which as of December 31, 2023, 2022 and 2021 was 808.45, 177.16 and 102.72, respectively, against the U.S. dollar. For the years ended December 31, 2023, 2022 and 2021, Argentina’s official exchange rate against the U.S. dollar increased 356.3%, 72.5% and 22.1%, respectively.
We use Argentina’s official exchange rate to account for transactions in our Argentine segment, which as of December 31, 2024, 2023 and 2022 was 1,032.00, 808.45 and 177.16, respectively, against the U.S. dollar. For the years ended December 31, 2024, 2023 and 2022, Argentina’s official exchange rate against the U.S. dollar increased 27.7%, 356.3% and 72.5%, respectively.
We have entered into swap contracts to hedge the interest rate fluctuation of $489 million notional amount, $244 million of which have been designated as hedging instruments. See Note 24 – Derivative instruments of our audited consolidated financial statements for further detail on derivatives instruments.
We have entered into swap and future contracts to hedge the interest rate fluctuation of $589 million notional amount, $486 million of which have been designated as hedging instruments. See Note 23 – Derivative instruments of our audited consolidated financial statements for further detail on derivatives instruments.
Considering a hypothetical decrease of 10% of the Argentine Peso against the U.S. dollar on December 31, 2023, the effect on non-functional currency net liability position in our Argentine subsidiaries would have been a foreign exchange gain amounting to approximately $4 million in our Argentine subsidiaries.
Considering a hypothetical decrease of 10% of the Argentine Peso against the U.S. dollar on December 31, 2024, the effect on non-functional currency net asset position in our Argentine subsidiaries would have been a foreign exchange loss amounting to approximately $72 million in our Argentine subsidiaries.
Fixed rate securities may have their fair value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than predicted if interest rates fall. As of December 31, 2023, our short-term investments amounted to $3,480 million and our long-term investments amounted to $162 million.
Fixed rate securities may have their fair value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than predicted if interest rates fall. As of December 31, 2024, our short-term investments amounted to $4,485 million and our long-term investments amounted to $1,203 million.
As of December 31, 2023, 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 of December 31, 2024, we hold cash and cash equivalents, restricted cash and cash equivalent, short and long-term investments 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 of December 31, 2023, we had $79 million long-term investments denominated in foreign currencies.
As of December 31, 2024, we had $495 million long-term investments denominated in foreign currencies.
As of December 31, 2023, our U.S. dollar-denominated cash and cash equivalents, restricted cash and cash equivalents and short-term investments totaled $1,661 million and our U.S. dollar-denominated long-term investments totaled $83 million.
As of December 31, 2024, our U.S. dollar-denominated cash and cash equivalents, restricted cash and cash equivalents and short-term investments totaled $1,373 million and our U.S. dollar-denominated long-term investments totaled $708 million.
As of December 31, 2023, our loans payable and other financial liabilities which accrue interest based on variable rates amounted to $2,810 million, while our loans payable and other financial liabilities, which accrue interest based on fixed rates, amounted to $1,685 million.
As of December 31, 2024, our Loans payable and other financial liabilities which accrue interest based on variable rates amounted to $3,920 million, while our Loans payable and other financial liabilities, which accrue interest based on fixed rates, amounted to $1,795 million.
As of December 31, 2023, the total cash and cash equivalents, restricted cash and cash equivalent denominated in foreign currencies totaled $3,201 million, short-term investments denominated in foreign currencies totaled $2,466 million and accounts receivable, credit card receivables and other means of payments and loans receivable in foreign currencies totaled $6,482 million.
As of December 31, 2024, the total cash and cash equivalents, restricted cash and cash equivalent denominated in foreign currencies totaled $4,032 million, short-term investments denominated in foreign currencies totaled $3,779 million and accounts receivable, credit card receivables and other means of payments and loans receivable in foreign currencies totaled $10,437 million.
For the year ended December 31, 2023, we had a consolidated loss on foreign currency of $615 million mainly related to higher foreign exchange losses attributable to our own common stock acquisition in the Argentine market at a price that reflects the additional cost of accessing U.S. dollars through an indirect mechanism due to restrictions imposed by the Argentine government for buying U.S. dollars at the official exchange rate, and higher foreign exchange losses from our Argentinian subsidiaries due to the devaluation of the Argentine peso during December 2023 and the acquisition of U.S. dollars in the Argentine market at a price that reflects the additional cost of accessing U.S. dollars through an indirect mechanism due to restrictions imposed by the Argentine government for buying U.S. dollars at the official exchange rate. 59 | MercadoLibre, Inc.
For the year ended December 31, 2024, we had a consolidated loss on foreign currency of $182 million mainly related to lower foreign exchange losses 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.
Interest rate fluctuations could also impact interest earned through our Mercado Credito solution. As of December 31, 2023, loans receivable net of the allowance for doubtful accounts from our Mercado Credito solution totaled $2,694 million.
As of December 31, 2024, Mercado Pago’s receivables totaled $5,288 million. Interest rate fluctuations could also impact interest earned through our lending solution. As of December 31, 2024, loans receivable net of the allowance for doubtful accounts from our lending solution totaled $4,895 million.
As of December 31, 2023, the accrued liability related to the outstanding Variable Award Payment of the LTRP included in Salaries and social security payable in our consolidated balance sheet amounted to $104 million.
As of December 31, 2024, the total contractual obligation fair value of our outstanding LTRP Variable Payment obligation subject to equity price risk amounted to $470 million. As of December 31, 2024, the accrued liability related to the outstanding Variable Payment of the LTRP included in Salaries and social security payable in our consolidated balance sheet amounted to $163 million.
These changes could have an impact on the interest rates that financial institutions charge us prior to the time we sell our Mercado Pago receivables and on the financial debt that we use to fund Mercado Pago and Mercado Credito’s operations. As of December 31, 2023, Mercado Pago’s receivables totaled $3,632 million.
Table of Contents 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 Mercado Pago receivables and on the financial debt that we use to fund Mercado Pago and lending’s operations.
Considering a hypothetical increase of 100 basis points in the interest rates, the reported Loans payable and other financial liabilities as of December 31, 2023 would have increased by approximately $16 million with the related impact in Interest expense and other financial losses.
Considering a hypothetical increase of 100 basis points in the interest rates, the reported charge to the consolidated statements of income for the year ended December 31, 2024 would have increased by approximately $28 million with the impact in Cost of net revenues and financial expenses or in Interest expense and other financial losses.
As of December 31, 2023, the total contractual obligation fair value of the mentioned payments amounted to $10 million.
As of December 31, 2024, the total contractual obligation fair value of the mentioned payments amounted to $3 million, which was fully paid on January 2, 2025.
Table of Contents Foreign currency sensitivity analysis The table below shows the impact on our net revenues, cost of net revenues, operating expenses, other income (expenses), income tax expense and equity in earnings of unconsolidated entity, net income and equity for a positive and a negative 10% fluctuation on all the foreign currencies to which we are exposed to as of December 31, 2023: (10)% (1) Actual ' +10% (2) (In millions) Net revenues $ 16,081 $ 14,473 $ 13,157 Expenses (3) (13,992) (12,650) (11,551) Income from operations 2,089 1,823 1,606 Other income (expenses), income tax expense and equity in earning of unconsolidated entity related to P&L items (243) (221) (213) Foreign Currency impact related to the remeasurement of our Net Asset position (640) (615) (595) Net Income $ 1,206 $ 987 $ 798 Total Shareholders’ Equity $ 3,435 $ 3,071 $ 2,763 (1) Increase of the subsidiaries local currency against U.S.
Table of Contents Foreign currency sensitivity analysis The table below shows the impact on our net revenues and financial income, cost of net revenues and financial expenses, operating expenses, other income (expenses), income tax expense, net income and shareholders' equity for a positive and a negative 10% fluctuation on all the foreign currencies to which we are exposed to at the moment of translating our financial statements to U.S. dollars for the year ended December 31, 2024: (10)% (1) Actual ' +10% (2) (In millions) Net revenues and financial income $ 23,081 $ 20,777 $ 18,891 Expenses (3) (20,103) (18,146) (16,543) Income from operations 2,978 2,631 2,348 Other income (expenses) and income tax expense related to P&L items (596) (538) (492) Foreign Currency impact related to the remeasurement of our Net Asset position (202) (182) (165) Net Income $ 2,180 $ 1,911 $ 1,691 Total Shareholders’ Equity $ 4,842 $ 4,351 $ 3,949 (1) Increase of the subsidiaries local currency against U.S.
Table of Contents Change in equity price in percentage As of December 31, 2023 MercadoLibre, Inc Equity Price 2019, 2020, 2021, 2022 and 2023 LTRP Variable contractual obligation (In millions, except equity price) 40% 2,210.74 585 30% 2,052.83 544 20% 1,894.92 502 10% 1,737.01 460 Static (1) 1,579.10 418 -10% 1,421.19 376 -20% 1,263.28 335 -30% 1,105.37 293 -40% 947.46 251 (1) Present value of average closing stock price for the last 60 trading days of the year preceding the applicable payment date.
Table of Contents Change in equity price in percentage As of December 31, 2024 MercadoLibre, Inc Equity Price 2020, 2021, 2022, 2023 and 2024 LTRP Variable contractual obligation (In millions, except equity price) 40% 2,393.69 658 30% 2,222.71 611 20% 2,051.74 564 10% 1,880.76 517 Static (1) 1,709.78 470 -10% 1,538.80 423 -20% 1,367.82 376 -30% 1,196.85 329 -40% 1,025.87 282 (1) Present value of average closing stock price for the last 60 trading days of the year preceding the applicable payment date.
Additionally, we would have recorded a foreign currency loss amounting to approximately $23 million in our Mexican subsidiaries. 60 | MercadoLibre, Inc. Table of Contents Interest Our earnings and cash flows are also affected by changes in interest rates.
Additionally, we would have recorded a foreign currency loss amounting to approximately $51 million in our Brazilian subsidiaries.
Removed
As of December 31, 2023, the total contractual obligation fair value of our outstanding LTRP Variable Award Payment obligation subject to equity price risk amounted to $418 million.
Added
This was partially offset by higher foreign exchange losses from our Brazilian and Mexican subsidiaries. 65 | MercadoLibre, Inc.

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