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Segment Reporting
 6 Months Ended
Jun. 30, 2022
Segment Reporting [Abstract]  
Segment Reporting 7. Segment reporting

Reporting segments are based upon the Company’s internal organizational structure, the manner in which the Company’s operations are managed and resources are assigned, 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 in accordance with the criteria, as determined by Management, used to evaluate the Company’s performance. The Company’s segments include Brazil, Argentina, Mexico and other countries (which includes Chile, Colombia, Costa Rica, Ecuador, Peru and Uruguay).

Direct contribution consists of net revenues from external customers less direct costs, which include costs of net revenues, product and technology development expenses, sales and marketing expenses, provision for doubtful accounts and general and administrative expenses over which segment managers have direct discretionary control, such as advertising and marketing programs, customer support expenses, payroll and third-party fees. All corporate related costs have been excluded from the segment’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, 2022

Brazil

Argentina

Mexico

Other Countries

Total

(In millions)

Net revenues

$                            2,703 

$                            1,112 

$                               792 

$                               238 

$                            4,845 

Direct costs

(2,263)

(692)

(691)

(227)

(3,873)

Direct contribution

440

420

101

11

972

Operating expenses and indirect costs of net revenues

(583)

Income from operations

389

Other income (expenses):

Interest income and other financial gains

77

Interest expense and other financial losses

(129)

Foreign currency losses, net

(63)

Net income before income tax expense

$                               274 


‎

Six Months Ended June 30, 2021

Brazil

Argentina

Mexico

Other Countries

Total

(In millions)

Net revenues

$                            1,720 

$                               663 

$                               489 

$                               209 

$                            3,081 

Direct costs

(1,339)

(421)

(482)

(156)

(2,398)

Direct contribution

381

242

7

53

683

Operating expenses and indirect costs of net revenues

(426)

Income from operations

257

Other income (expenses):

Interest income and other financial gains

49

Interest expense and other financial losses

(131)

Foreign currency losses, net

(27)

Net income before income tax expense

$                               148 

Three Months Ended June 30, 2022

Brazil

Argentina

Mexico

Other Countries

Total

(In millions)

Net revenues

$                               1,451 

$                              594 

$                                428 

$                               124 

$                              2,597 

Direct costs

(1,198)

(372)

(363)

(117)

(2,050)

Direct contribution

253

222

65

7

547

Operating expenses and indirect costs of net revenues

(297)

Income from operations

250

Other income (expenses):

Interest income and other financial gains

46

Interest expense and other financial losses

(73)

Foreign currency losses, net

(60)

Net income before income tax expense

$                                 163 

Three Months Ended June 30, 2021

Brazil

Argentina

Mexico

Other Countries

Total

(In millions)

Net revenues

$                                 951 

$                              366 

$                                259 

$                               127 

$                              1,703 

Direct costs

(721)

(232)

(261)

(92)

(1,306)

Direct contribution

230

134

(2)

35

397

Operating expenses and indirect costs of net revenues

(231)

Income from operations

166

Other income (expenses):

Interest income and other financial gains

24

Interest expense and other financial losses

(40)

Foreign currency losses, net

(12)

Net income before income tax expense

$                                 138 


‎

The following tables summarize net revenues per reporting segment, which have been disaggregated by similar products and services for the six and three-month periods ended June 30, 2022 and 2021:

Six Months Ended June 30,

Brazil

Argentina

Mexico

Other Countries

Total

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

(In millions)

Commerce services (a)

$

1,208 

$

978 

$

381 

$

266 

$

445 

$

332 

$

158 

$

146 

$

2,192 

$

1,722 

Commerce products sales (b)

233 

137 

129 

111 

107 

60 

21 

23 

490 

331 

Total commerce revenues

$

1,441 

$

1,115 

$

510 

$

377 

$

552 

$

392 

$

179 

$

169 

$

2,682 

$

2,053 

Fintech services (c)

$

702 

$

416 

$

391 

$

223 

$

59 

$

39 

$

54 

$

40 

$

1,206 

$

718 

Credit revenues (d)

546 

179 

208 

59 

176 

57 

1 

—

931 

295 

Fintech products sales (e)

14 

10 

3 

4 

5 

1 

4 

—

26 

15 

Total fintech revenues

$

1,262 

$

605 

$

602 

$

286 

$

240 

$

97 

$

59 

$

40 

$

2,163 

$

1,028 

Total net revenues

$

2,703 

$

1,720 

$

1,112 

$

663 

$

792 

$

489 

$

238 

$

209 

$

4,845 

$

3,081 

Three Months Ended June 30,

Brazil

Argentina

Mexico

Other Countries

Total

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

(In millions)

Commerce services (a)

$

641 

$

545 

$

200 

$

148 

$

232 

$

171 

$

82 

$

89 

$

1,155 

$

953 

Commerce products sales (b)

111 

79 

70 

62 

58 

33 

10 

15 

249 

189 

Total commerce revenues

$

752 

$

624 

$

270 

$

210 

$

290 

$

204 

$

92 

$

104 

$

1,404 

$

1,142 

Fintech services (c)

$

384 

$

224 

$

202 

$

121 

$

34 

$

21 

$

28 

$

23 

$

648 

$

389 

Credit revenues (d)

307 

97 

120 

33 

101 

33 

1 

—

529 

163 

Fintech products sales (e)

8 

6 

2 

2 

3 

1 

3 

—

16 

9 

Total fintech revenues

$

699 

$

327 

$

324 

$

156 

$

138 

$

55 

$

32 

$

23 

$

1,193 

$

561 

Total net revenues

$

1,451 

$

951 

$

594 

$

366 

$

428 

$

259 

$

124 

$

127 

$

2,597 

$

1,703 

(a)

Includes final value fees paid by sellers derived from intermediation services and related shipping fees, classified fees derived from classified advertising services and ad sales.

(b)

Includes revenues from inventories sales and related shipping fees.

(c)

Includes revenues from commissions the Company charges for transactions off-platform derived from use of the Company's payment solution, revenues as a result of offering installments for the payment to its Mercado Pago users, either when the Company finances the transactions directly or when the Company sells the corresponding financial assets, Mercado Pago credit and debit card fees and insurtech fees.

(d)

Includes interest earned on loans and advances granted to merchants and consumers, and credit card transactions.

(e)

Includes sales of mobile point of sales devices.

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

June 30,

December 31,

2022

2021

(In millions)

US property and equipment, net

$                                 1

$                                 1

Other countries

Argentina

183

174

Brazil

486

395

Mexico

188

176

Other countries

74

61

$                             931

$                             806

Total property and equipment, net

$                             932

$                             807


‎

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

June 30,

December 31,

2022

2021

(In millions)

US intangible assets

$                               10

$                               21

Other countries goodwill and intangible assets

Argentina

15

16

Brazil

63

60

Mexico

42

41

Chile

40

45

Other countries

10

10

$                             170

$                             172

Total goodwill and intangible assets

$                             180

$                             193