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Segment Reporting
 6 Months Ended
Jun. 30, 2015
Segment Reporting [Abstract]  
Segment Reporting

5. Segment reporting

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

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

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

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

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2015

 

 

(In thousands)

 

 

Brazil

 

Argentina

 

Mexico

 

Venezuela

 

Other
Countries

 

Total

Net revenues

 

$             141,365 

 

$             104,262 

 

$             19,428 

 

$             19,669 

 

$             17,694 

 

$             302,417 

Direct costs

 
(83,676)

 
(53,842)

 
(12,615)

 
(6,835)

 
(11,083)

 
(168,051)

Impairment of Long-lived Assets

 

 —

 

 —

 

 —

 
(16,226)

 

 —

 
(16,226)

Direct contribution

 
57,689 

 
50,420 

 
6,813 

 
(3,392)

 
6,611 

 
118,140 

Operating expenses and indirect costs of net revenues

 

 

 

 

 

 

 

 

 

 

 
(57,916)

Income from operations

 

 

 

 

 

 

 

 

 

 

 
60,224 

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income and other financial gains

 

 

 

 

 

 

 

 

 

 

 
8,991 

Interest expense and other financial losses

 

 

 

 

 

 

 

 

 

 

 
(10,151)

Foreign currency loss

 

 

 

 

 

 

 

 

 

 

 
(9,217)

Net income before income / asset tax expense

 

 

 

 

 

 

 

 

 

 

 

$               49,847 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2014

 

 

(In thousands)

 

 

Brazil

 

Argentina

 

Mexico

 

Venezuela

 

Other
Countries

 

Total

Net revenues

 

$             115,834 

 

$               61,229 

 

$             17,453 

 

$             35,908 

 

$             16,807 

 

$             247,231 

Direct costs

 
(68,310)

 
(34,523)

 
(10,294)

 
(10,492)

 
(8,887)

 
(132,506)

Impairment of Long-lived Assets

 

 —

 

 —

 

 —

 
(49,496)

 

 —

 
(49,496)

Direct contribution

 
47,524 

 
26,706 

 
7,159 

 
(24,080)

 
7,920 

 
65,229 

Operating expenses and indirect costs of net revenues

 

 

 

 

 

 

 

 

 

 

 
(37,141)

Income from operations

 

 

 

 

 

 

 

 

 

 

 
28,088 

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income and other financial gains

 

 

 

 

 

 

 

 

 

 

 
6,609 

Interest expense and other financial losses

 

 

 

 

 

 

 

 

 

 

 
(1,805)

Foreign currency loss

 

 

 

 

 

 

 

 

 

 

 
(12,871)

Net income before income / asset tax expense

 

 

 

 

 

 

 

 

 

 

 

$               20,021 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2015

 

 

(In thousands)

 

 

Brazil

 

Argentina

 

Mexico

 

Venezuela

 

Other
Countries

 

Total

Net revenues

 

$             72,867 

 

$             56,830 

 

$            9,991 

 

$               5,714 

 

$            8,912 

 

$             154,314 

Direct costs

 
(43,995)

 
(29,057)

 
(6,646)

 
(2,631)

 
(5,912)

 
(88,241)

Direct contribution

 
28,872 

 
27,773 

 
3,345 

 
3,083 

 
3,000 

 
66,073 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses and indirect costs of net revenues

 

 

 

 

 

 

 

 

 

 

 
(31,436)

Income from operations

 

 

 

 

 

 

 

 

 

 

 
34,637 

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income and other financial gains

 

 

 

 

 

 

 

 

 

 

 
4,683 

Interest expense and other financial losses

 

 

 

 

 

 

 

 

 

 

 
(5,201)

Foreign currency loss

 

 

 

 

 

 

 

 

 

 

 
(648)

Net income before income / asset tax expense

 

 

 

 

 

 

 

 

 

 

 

$               33,471 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2014

 

 

(In thousands)

 

 

Brazil

 

Argentina

 

Mexico

 

Venezuela

 

Other
Countries

 

Total

Net revenues

 

$             63,400 

 

$             33,267 

 

$            9,370 

 

$             16,552 

 

$            9,260 

 

$             131,849 

Direct costs

 
(37,793)

 
(17,609)

 
(5,546)

 
(4,857)

 
(4,972)

 
(70,777)

Impairment of Long-lived Assets

 

 —

 

 —

 

 —

 
(49,496)

 

 —

 
(49,496)

Direct contribution

 
25,607 

 
15,658 

 
3,824 

 
(37,801)

 
4,288 

 
11,576 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses and indirect costs of net revenues

 

 

 

 

 

 

 

 

 

 

 
(17,489)

Income from operations

 

 

 

 

 

 

 

 

 

 

 
(5,913)

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income and other financial gains

 

 

 

 

 

 

 

 

 

 

 
3,573 

Interest expense and other financial losses

 

 

 

 

 

 

 

 

 

 

 
(778)

Foreign currency loss

 

 

 

 

 

 

 

 

 

 

 
(15,965)

Net loss before income / asset tax expense

 

 

 

 

 

 

 

 

 

 

 

$             (19,083)

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2015

 

2014

 

 

(In thousands)

 

 

 

 

 

US Property and equipment, net

 

$               10,707

 

$               13,226

Other countries property and equipment, net

 

 

 

 

Argentina

 
29,394 

 
28,005 

Brazil

 
14,805 

 
8,237 

Mexico

 
2,709 

 
2,801 

Venezuela (*)

 
21,264 

 
36,237 

Other countries

 
3,856 

 
3,039 

 

 

$               72,028

 

$               78,319

Total Property and equipment, net

 

$               82,735

 

$               91,545

 

(*)  After the impairment of Venezuelan long-lived assets. See Note 2 “Foreign currency translation - Venezuelan currency status”.

 

During June 2015, our Venezuelan subsidiary acquired two offices in process of construction of a total of 475.48 square meters, in Caracas, Venezuela for a total purchase price of approximately BF$1,474 million for investment purposes and included in non-current other assets . Our Venezuelan subsidiary paid the purchase price in Bolivares Fuertes, and funded the transaction with funds from its own operations. The office will be delivered within seventeen months from the acquisition date, according to the agreement.

 

 

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

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2015

 

2014

 

 

(In thousands)

 

 

 

 

 

US intangible assets

 

$                   290

 

$                    172

Other countries goodwill and intangible assets

 

 

 

 

Argentina

 
12,808 

 
12,580 

Brazil

 
27,811 

 
11,212 

Mexico

 
51,406 

 
21,734 

Venezuela

 
7,498 

 
7,515 

Other countries (*)

 
36,292 

 
38,787 

 

 

$            135,815

 

$               91,828

Total goodwill and intangible assets

 

$            136,105

 

$               92,000

 

(*)  Includes the acquisition of online classified advertisement company in Chile. See Note 4.

 

Consolidated net revenues by similar products and services for the six and three-month periods ended June 30, 2015 and 2014 were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

Six-months Ended June 30,

 

Three-months Ended June 30,

Consolidated Net Revenues

 

2015

 

2014

 

2015

 

2014

 

 

(In thousands)

 

(In thousands)

Marketplace

 

$          187,943

 

$          174,960

 

$         93,181

 

$         91,517

Non-marketplace (*)

 
114,474 

 
72,271 

 
61,133 

 
40,332 

Total

 

$          302,417

 

$          247,231

 

$       154,314

 

$       131,849

 

(*)  Includes, among other things, Ad Sales, Real Estate, Motors, Financing Fees, Off-platform Payment Fees and other ancillary services.