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Segment reporting | 6 Months Ended
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Jun. 30, 2023
Segment Reporting [Abstract] |
Segment reporting | 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, 2023
| Brazil |  | Argentina |  | Mexico |  | Other Countries |  | Total
| (In millions)
Net revenues | $ | 3,359 |  |  | $ | 1,492 |  |  | $ | 1,294 |  |  | $ | 307 |  |  | $ | 6,452 |
Direct costs | (2,592) |  |  | (848) |  |  | (987) |  |  | (279) |  |  | (4,706) |
Direct contribution | 767 |  |  | 644 |  |  | 307 |  |  | 28 |  |  | 1,746 |
Operating expenses and indirect costs of net revenues |  |  |  |  |  |  |  |  | (848) |
Income from operations |  |  |  |  |  |  |  |  | 898 |
Other income (expenses): |  |  |  |  |  |  |  |  |
Interest income and other financial gains |  |  |  |  |  |  |  |  | 349 |
Interest expense and other financial losses |  |  |  |  |  |  |  |  | (186) |
Foreign currency losses, net |  |  |  |  |  |  |  |  | (269) |
Net income before income tax expense and equity in earnings of unconsolidated entity |  |  |  |  |  |  |  |  | $ | 792 |
| 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 and equity in earnings of unconsolidated entity |  |  |  |  |  |  |  |  | $ | 274 |
| Three Months Ended June 30, 2023
| Brazil |  | Argentina |  | Mexico |  | Other Countries |  | Total
| (In millions)
Net revenues | $ | 1,780 |  |  | $ | 771 |  |  | $ | 703 |  |  | $ | 161 |  |  | $ | 3,415 |
Direct costs | (1,331) |  |  | (436) |  |  | (524) |  |  | (148) |  |  | (2,439) |
Direct contribution | 449 |  |  | 335 |  |  | 179 |  |  | 13 |  |  | 976 |
Operating expenses and indirect costs of net revenues |  |  |  |  |  |  |  |  | (418) |
Income from operations |  |  |  |  |  |  |  |  | 558 |
Other income (expenses): |  |  |  |  |  |  |  |  |
Interest income and other financial gains |  |  |  |  |  |  |  |  | 188 |
Interest expense and other financial losses |  |  |  |  |  |  |  |  | (92) |
Foreign currency losses, net |  |  |  |  |  |  |  |  | (182) |
Net income before income tax expense and equity in earnings of unconsolidated entity |  |  |  |  |  |  |  |  | $ | 472 |
| 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 and equity in earnings of unconsolidated entity |  |  |  |  |  |  |  |  | $ | 163 |
The following table summarizes net revenues per reporting segment, which have been disaggregated by similar products and services for the six and three-month periods ended June 30, 2023 and 2022:
| Six Months Ended June 30,
| Brazil |  | Argentina |  | Mexico |  | Other Countries |  | Total
| 2023 | 2022 |  | 2023 | 2022 |  | 2023 | 2022 |  | 2023 | 2022 |  | 2023 | 2022
| (In millions)
Commerce services (a) | $ | 1,608 |  | $ | 1,208 |  |  | $ | 467 |  | $ | 381 |  |  | $ | 731 |  | $ | 445 |  |  | $ | 193 |  | $ | 158 |  |  | $ | 2,999 |  | $ | 2,192 |
Commerce products sales (b) | 348 |  | 233 |  |  | 108 |  | 129 |  |  | 142 |  | 107 |  |  | 15 |  | 21 |  |  | 613 |  | 490 |
Total commerce revenues | $ | 1,956 |  | $ | 1,441 |  |  | $ | 575 |  | $ | 510 |  |  | $ | 873 |  | $ | 552 |  |  | $ | 208 |  | $ | 179 |  |  | $ | 3,612 |  | $ | 2,682 |
Fintech services (c) | 888 |  | 702 |  |  | 583 |  | 391 |  |  | 123 |  | 59 |  |  | 89 |  | 54 |  |  | 1,683 |  | 1,206 |
Credit revenues (d) | 504 |  | 546 |  |  | 331 |  | 208 |  |  | 294 |  | 176 |  |  | 3 |  | 1 |  | 1,132 |  | 931 |
Fintech products sales (e) | 11 |  | 14 |  |  | 3 |  | 3 |  |  | 4 |  | 5 |  |  | 7 |  | 4 |  | 25 |  | 26 |
Total fintech revenues | $ | 1,403 |  | $ | 1,262 |  |  | $ | 917 |  | $ | 602 |  |  | $ | 421 |  | $ | 240 |  |  | $ | 99 |  | $ | 59 |  |  | $ | 2,840 |  | $ | 2,163 |
Total net revenues | $ | 3,359 |  | $ | 2,703 |  |  | $ | 1,492 |  | $ | 1,112 |  |  | $ | 1,294 |  | $ | 792 |  |  | $ | 307 |  | $ | 238 |  |  | $ | 6,452 |  | $ | 4,845 |
| Three Months Ended June 30,
| Brazil |  | Argentina |  | Mexico |  | Other Countries |  | Total
| 2023 | 2022 |  | 2023 | 2022 |  | 2023 | 2022 |  | 2023 | 2022 |  | 2023 | 2022
| (In millions)
Commerce services (a) | $ | 846 |  | $ | 641 |  |  | $ | 243 |  | $ | 200 |  |  | $ | 393 |  | $ | 232 |  |  | $ | 102 |  | $ | 82 |  |  | $ | 1,584 |  | $ | 1,155 |
Commerce products sales (b) | 203 |  | 111 |  |  | 59 |  | 70 |  |  | 82 |  | 58 |  |  | 8 |  | 10 |  |  | 352 |  | 249 |
Total commerce revenues | $ | 1,049 |  | $ | 752 |  |  | $ | 302 |  | $ | 270 |  |  | $ | 475 |  | $ | 290 |  |  | $ | 110 |  | $ | 92 |  |  | $ | 1,936 |  | $ | 1,404 |
Fintech services (c) | 462 |  | 384 |  |  | 296 |  | 202 |  |  | 67 |  | 34 |  |  | 46 |  | 28 |  |  | 871 |  | 648 |
Credit revenues (d) | 263 |  | 307 |  |  | 172 |  | 120 |  |  | 159 |  | 101 |  |  | 2 |  | 1 |  | 596 |  | 529 |
Fintech products sales (e) | 6 |  | 8 |  |  | 1 |  | 2 |  |  | 2 |  | 3 |  |  | 3 |  | 3 |  | 12 |  | 16 |
Total fintech revenues | $ | 731 |  | $ | 699 |  |  | $ | 469 |  | $ | 324 |  |  | $ | 228 |  | $ | 138 |  |  | $ | 51 |  | $ | 32 |  |  | $ | 1,479 |  | $ | 1,193 |
Total net revenues | $ | 1,780 |  | $ | 1,451 |  |  | $ | 771 |  | $ | 594 |  |  | $ | 703 |  | $ | 428 |  |  | $ | 161 |  | $ | 124 |  |  | $ | 3,415 |  | $ | 2,597 |
(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:
| June 30, 2023 |  | December 31, 2022
| (In millions)
US property and equipment, net | $ | 3 |  |  | $ | 1 |
Property and equipment, net |  |  |
Argentina | 191 |  |  | 188 |
Brazil | 542 |  |  | 514 |
Mexico | 262 |  |  | 206 |
Other countries | 92 |  |  | 84 |
| $ | 1,087 |  |  | $ | 992 |
Total property and equipment, net | $ | 1,090 |  |  | $ | 993 |
The following table summarizes the allocation of the operating lease right-of-use assets based on geography:
| June 30, 2023 |  | December 31, 2022
| (In millions)
Argentina | $ | 51 |  | $ | 53
Brazil | 357 |  | 286
Mexico | 295 |  | 245
Other countries | 76 |  | 72
Total operating lease right-of-use assets | $ | 779 |  | $ | 656
The following table summarizes the allocation of the goodwill and intangible assets based on geography:
| June 30, 2023 |  | December 31, 2022
| (In millions)
US intangible assets, net | $ | 9 |  |  | $ | 9 |
Goodwill and intangible assets, net |  |  |
Argentina | 13 |  | 14
Brazil | 68 |  | 63
Mexico | 44 |  | 40
Other countries | 54 |  | 52
| $ | 179 |  | $ | 169
Total goodwill and intangible assets, net | $ | 188 |  | $ | 178

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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 -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 22 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-22 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-15 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 31 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-31 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 42 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-42 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 40 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-40 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//280/tableOfContent Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 26 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-26 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 34 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-34 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 41 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-41 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-21 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-21 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 + Details
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