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Segment Reporting | 9 Months Ended
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Sep. 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:
|  | Nine Months Ended September 30, 2022
|  | Brazil |  | Argentina |  | Mexico |  | Other Countries |  | Total
|  | (In millions)
Net revenues |  | $ 4,134 |  | $ 1,787 |  | $ 1,257 |  | $ 357 |  | $ 7,535
Direct costs |  | (3,472) |  | (1,068) |  | (1,075) |  | (348) |  | (5,963)
Direct contribution |  | 662 |  | 719 |  | 182 |  | 9 |  | 1,572
Operating expenses and indirect costs of net revenues |  |  |  |  |  |  |  |  |  | (887)
Income from operations |  |  |  |  |  |  |  |  |  | 685
Other income (expenses): |  |  |  |  |  |  |  |  |  |
Interest income and other financial gains |  |  |  |  |  |  |  |  |  | 142
Interest expense and other financial losses |  |  |  |  |  |  |  |  |  | (221)
Foreign currency losses, net |  |  |  |  |  |  |  |  |  | (134)
Net income before income tax expense |  |  |  |  |  |  |  |  |  | $ 472
‎
|  | Nine Months Ended September 30, 2021
|  | Brazil |  | Argentina |  | Mexico |  | Other Countries |  | Total
|  | (In millions)
Net revenues |  | $ 2,783 |  | $ 1,056 |  | $ 780 |  | $ 320 |  | $ 4,939
Direct costs |  | (2,170) |  | (674) |  | (767) |  | (247) |  | (3,858)
Direct contribution |  | 613 |  | 382 |  | 13 |  | 73 |  | 1,081
Operating expenses and indirect costs of net revenues |  |  |  |  |  |  |  |  |  | (664)
Income from operations |  |  |  |  |  |  |  |  |  | 417
Other income (expenses): |  |  |  |  |  |  |  |  |  |
Interest income and other financial gains |  |  |  |  |  |  |  |  |  | 84
Interest expense and other financial losses |  |  |  |  |  |  |  |  |  | (175)
Foreign currency losses, net |  |  |  |  |  |  |  |  |  | (52)
Net income before income tax expense |  |  |  |  |  |  |  |  |  | $ 274
|  |  | Three Months Ended September 30, 2022
|  |  | Brazil |  | Argentina |  | Mexico |  | Other Countries |  | Total
|  |  | (In millions)
Net revenues |  | $ 1,431 |  | $ 675 |  | $ 465 |  | $ 119 |  | $ 2,690
Direct costs |  | (1,209) |  | (376) |  | (384) |  | (121) |  | (2,090)
Direct contribution |  | 222 |  | 299 |  | 81 |  | (2) |  | 600
Operating expenses and indirect costs of net revenues |  |  |  |  |  |  |  |  |  | (304)
Income from operations |  |  |  |  |  |  |  |  |  | 296
Other income (expenses): |  |  |  |  |  |  |  |  |  |
| Interest income and other financial gains |  |  |  |  |  |  |  |  |  | 65
| Interest expense and other financial losses |  |  |  |  |  |  |  |  |  | (92)
| Foreign currency losses, net |  |  |  |  |  |  |  |  |  | (71)
Net income before income tax expense |  |  |  |  |  |  |  |  |  | $ 198
|  |  | Three Months Ended September 30, 2021
|  |  | Brazil |  | Argentina |  | Mexico |  | Other Countries |  | Total
|  |  | (In millions)
Net revenues |  | $ 1,063 |  | $ 393 |  | $ 291 |  | $ 111 |  | $ 1,858
Direct costs |  | (831) |  | (253) |  | (285) |  | (91) |  | (1,460)
Direct contribution |  | 232 |  | 140 |  | 6 |  | 20 |  | 398
Operating expenses and indirect costs of net revenues |  |  |  |  |  |  |  |  |  | (238)
Income from operations |  |  |  |  |  |  |  |  |  | 160
Other income (expenses): |  |  |  |  |  |  |  |  |  |
| Interest income and other financial gains |  |  |  |  |  |  |  |  |  | 35
| Interest expense and other financial losses |  |  |  |  |  |  |  |  |  | (44)
| Foreign currency losses, net |  |  |  |  |  |  |  |  |  | (25)
Net income before income tax expense |  |  |  |  |  |  |  |  |  | $ 126
‎ The following tables summarize net revenues per reporting segment, which have been disaggregated by similar products and services for the nine and three-month periods ended September 30, 2022 and 2021:
| Nine-month periods ended September 30,
| Brazil |  |  | Argentina |  | Mexico |  |  | Other Countries |  |  | Total
| 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Commerce services (a) | $ | 1,877 | $ | 1,553 |  | $ | 602 | $ | 440 |  | $ | 702 | $ | 516 |  | $ | 234 | $ | 221 |  | $ | 3,415 | $ | 2,730
Commerce products sales (b) |  | 344 |  | 240 |  |  | 198 |  | 172 |  |  | 161 |  | 96 |  |  | 29 |  | 40 |  |  | 732 |  | 548
Total commerce revenues | $ | 2,221 | $ | 1,793 |  | $ | 800 | $ | 612 |  | $ | 863 | $ | 612 |  | $ | 263 | $ | 261 |  | $ | 4,147 | $ | 3,278
Fintech services (c) | $ | 1,059 | $ | 672 |  | $ | 636 | $ | 332 |  | $ | 97 | $ | 62 |  | $ | 86 | $ | 59 |  | $ | 1,878 | $ | 1,125
Credit revenues (d) |  | 833 |  | 302 |  |  | 347 |  | 106 |  |  | 291 |  | 103 |  |  | 2 |  | — |  | 1,473 |  | 511
Fintech products sales (e) |  | 21 |  | 16 |  |  | 4 |  | 6 |  |  | 6 |  | 3 |  |  | 6 |  | — |  | 37 |  | 25
Total fintech revenues | $ | 1,913 | $ | 990 |  | $ | 987 | $ | 444 |  | $ | 394 | $ | 168 |  | $ | 94 | $ | 59 |  | $ | 3,388 | $ | 1,661
Total net revenues | $ | 4,134 | $ | 2,783 |  | $ | 1,787 | $ | 1,056 |  | $ | 1,257 | $ | 780 |  | $ | 357 | $ | 320 |  | $ | 7,535 | $ | 4,939
| Three-month periods ended September 30,
| Brazil |  |  | Argentina |  | Mexico |  |  | Other Countries |  |  | Total
| 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Commerce services (a) | $ | 669 | $ | 575 |  | $ | 221 | $ | 174 |  | $ | 257 | $ | 184 |  | $ | 76 | $ | 75 |  | $ | 1,223 | $ | 1,008
Commerce products sales (b) |  | 111 |  | 103 |  |  | 69 |  | 61 |  |  | 54 |  | 36 |  |  | 8 |  | 17 |  |  | 242 |  | 217
Total commerce revenues | $ | 780 | $ | 678 |  | $ | 290 | $ | 235 |  | $ | 311 | $ | 220 |  | $ | 84 | $ | 92 |  | $ | 1,465 | $ | 1,225
Fintech services (c) | $ | 357 | $ | 256 |  | $ | 245 | $ | 109 |  | $ | 38 | $ | 23 |  | $ | 32 | $ | 19 |  | $ | 672 | $ | 407
Credit revenues (d) |  | 287 |  | 123 |  |  | 139 |  | 47 |  |  | 115 |  | 46 |  |  | 1 |  | — |  | 542 |  | 216
Fintech products sales (e) |  | 7 |  | 6 |  |  | 1 |  | 2 |  |  | 1 |  | 2 |  |  | 2 |  | — |  | 11 |  | 10
Total fintech revenues | $ | 651 | $ | 385 |  | $ | 385 | $ | 158 |  | $ | 154 | $ | 71 |  | $ | 35 | $ | 19 |  | $ | 1,225 | $ | 633
Total net revenues | $ | 1,431 | $ | 1,063 |  | $ | 675 | $ | 393 |  | $ | 465 | $ | 291 |  | $ | 119 | $ | 111 |  | $ | 2,690 | $ | 1,858
(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 inventory 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 interest earned on Mercado Pago 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:
|  | September 30, |  | December 31,
|  | 2022 |  | 2021
|  | (In millions)
US property and equipment, net |  | $ 1 |  | $ 1
Other countries |  |  |  |
Argentina |  | 185 |  | 174
Brazil |  | 490 |  | 395
Mexico |  | 190 |  | 176
Other countries |  | 79 |  | 61
|  | $ 944 |  | $ 806
Total property and equipment, net |  | $ 945 |  | $ 807
‎ The following table summarizes the allocation of the goodwill and intangible assets based on geography:
|  | September 30, |  | December 31,
|  | 2022 |  | 2021
|  | (In millions)
US intangible assets |  | $ 10 |  | $ 21
Other countries goodwill and intangible assets |  |  |  |
Argentina |  | 14 |  | 16
Brazil |  | 61 |  | 60
Mexico |  | 43 |  | 41
Chile |  | 39 |  | 45
Other countries |  | 9 |  | 10
|  | $ 166 |  | $ 172
Total goodwill and intangible assets |  | $ 176 |  | $ 193
‎

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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