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FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES | 3 Months Ended
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Mar. 31, 2024
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES | FAIR VALUE MEASUREMENT OF ASSETS AND LIABILITIES Assets and liabilities measured and recorded at fair value on a recurring basis The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023:
| Balances as of March 31, 2024 |  | Quoted Prices in active markets for identical Assets (Level 1) |  | Significant other observable inputs (Level 2) |  |  |  | Balances as of December 31, 2023 |  | Quoted Prices in active markets for identical Assets (Level 1) |  | Significant other observable inputs (Level 2) |  |
| (In millions)
Cash and Cash Equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money Market | $ | 955 |  |  | $ | 955 |  |  | $ | — |  |  |  |  | $ | 639 |  |  | $ | 639 |  |  | $ | — |  |  |
U.S. government debt securities (1) | 221 |  |  | 221 |  |  | — |  |  |  |  | 60 |  |  | 60 |  |  | — |  |  |
Foreign government debt securities (1) | — |  |  | — |  |  | — |  |  |  |  | 32 |  |  | 32 |  |  | — |  |  |
Restricted Cash and Cash Equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money Market (2) | 236 |  |  | 236 |  |  | — |  |  |  |  | 278 |  |  | 278 |  |  | — |  |  |
Foreign government debt securities (1) | 1 |  |  | 1 |  |  | — |  |  |  |  | 116 |  |  | 116 |  |  | — |  |  |
Investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government debt securities (1) | 853 |  |  | 853 |  |  | — |  |  |  |  | 1,009 |  |  | 1,009 |  |  | — |  |  |
Foreign government debt securities (1) (3) | 2,822 |  |  | 2,822 |  |  | — |  |  |  |  | 2,530 |  |  | 2,530 |  |  | — |  |  |
Corporate debt securities | 151 |  |  | 151 |  |  | — |  |  |  |  | 30 |  |  | 30 |  |  | — |  |  |
Other Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative Instruments | 23 |  |  | — |  |  | 23 |  |  |  |  | 23 |  |  | — |  |  | 23 |  |  |
Customer crypto-assets safeguarding assets | 71 |  |  | — |  |  | 71 |  |  |  |  | 34 |  |  | — |  |  | 34 |  |  |
Intangible assets at fair value | 40 |  |  | 40 |  |  | — |  |  |  |  | 24 |  |  | 24 |  |  | — |  |  |
Total Assets | $ | 5,373 |  |  | $ | 5,279 |  |  | $ | 94 |  |  |  |  | $ | 4,775 |  |  | $ | 4,718 |  |  | $ | 57 |  |  |
Salaries and social security payable: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term retention plan | $ | 33 |  |  | $ | — |  |  | $ | 33 |  |  |  |  | $ | 104 |  |  | $ | — |  |  | $ | 104 |  |  |
Other Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative Instruments | 22 |  |  | — |  |  | 22 |  |  |  |  | 31 |  |  | — |  |  | 31 |  |  |
Customer crypto-assets safeguarding liabilities | 71 |  |  | — |  |  | 71 |  |  |  |  | 34 |  |  | — |  |  | 34 |  |  |
Total Liabilities | $ | 126 |  |  | $ | — |  |  | $ | 126 |  |  |  |  | $ | 169 |  |  | $ | — |  |  | $ | 169 |  |  |
(1) Measured at fair value with impact on the statement of income for the application of the fair value option. (See Note 2 – Summary of significant accounting policies – Fair value option applied to certain financial instruments). (2) As of March 31, 2024 and December 31, 2023, includes $221 million and $269 million, respectively, of money market funds from securitization transactions. (See Note 5 – Cash, cash equivalents, restricted cash and cash equivalents and investments). (3) As of March 31, 2024 and December 31, 2023, includes $23 million and $23 million, respectively, of investments from securitization transactions that are restricted to the payment of amounts due to third-party investors. (See Note 5 – Cash, cash equivalents, restricted cash and cash equivalents and investments). The Company’s assets and liabilities measured and recorded at fair value on a recurring basis were valued using i) Level 1 inputs: unadjusted quoted prices in active markets (Level 1 instrument valuations are obtained from observable inputs that reflect quoted prices (unadjusted) for identical assets in active markets); ii) Level 2 inputs: obtained from readily-available pricing sources for comparable instruments as well as instruments with inactive markets at the measurement date; and iii) Level 3 inputs: valuations based on unobservable inputs reflecting Company’s assumptions. As of March 31, 2024 and December 31, 2023, there were no assets and liabilities measured and recorded at fair value using level 3 inputs. There were no transfers to and from Levels 1, 2 and 3 during the three-month period ended March 31, 2024, nor during the year ended December 31, 2023. The Company’s election of the fair value option applies to: i) foreign government debt securities and ii) U.S. government debt securities. The Company recognized fair value changes, which includes the related interest income of those instruments, in net revenues and financial income if it is related to Mercado Pago’s operations (please refer to Note 2 – Summary of significant accounting policies - Change in the presentation of certain financial results and reclassification of prior year results) or in interest income and other financial gains if not. Such fair value changes and interest income amount to gains of $69 million and $49 million in net revenues and financial income and to $10 million and $8 million in interest income and other financial gains, for the three-month periods ended March 31, 2024 and 2023, respectively. As of March 31, 2024 and December 31, 2023, the cost and the estimated fair value of the Company’s investment in corporate debt securities classified as available for sale amounted to $151 million and $30 million, respectively. The cost of these securities is determined under a specific identification basis. For the three-month period ended March 31, 2024, the proceeds from sales of corporate debt securities amounted to $3 million and the gross realized gains from such securities amount to less than $1 million. There were no sales of corporate debt securities during the three-month period ended March 31, 2023. The following table summarizes the net carrying amount of the corporate debt securities classified as available for sale, classified by its contractual maturities:
| March 31, 2024 |  | December 31, 2023
| (In millions)
One year or less | $ | 38 |  |  | $ | 5 |
One year to two years | 51 |  |  | 12 |
Two years to three years | 23 |  |  | 4 |
Three years to four years | 11 |  |  | 3 |
Four years to five years | 28 |  |  | 6 |
Total available for sale investments | $ | 151 |  |  | $ | 30 |
The following table summarizes the net carrying amount of the debt securities not classified as available for sale, classified by its contractual maturities or Management expectation to convert the investments into cash:
| March 31, 2024 |  | December 31, 2023
| (In millions)
One year or less | $ | 3,820 |  |  | $ | 3,668 |
One year to two years | 4 |  |  | 4 |
Two years to three years | 35 |  |  | — |
Three years to four years | 31 |  |  | 35 |
Four years to five years | 5 |  |  | 37 |
More than five years | 2 |  |  | 3 |
| $ | 3,897 |  |  | $ | 3,747 |
Financial assets and liabilities not measured and recorded at fair value The following table summarizes the estimated fair value of the financial assets and liabilities of the Company not measured at fair value as of March 31, 2024 and December 31, 2023:
| Balances as of March 31, 2024 |  | Estimated fair value as of March 31, 2024 |  | Balances as of December 31, 2023 |  | Estimated fair value as of December 31, 2023
| (In millions)
Cash and cash equivalents | $ | 1,403 |  |  | $ | 1,403 |  |  | $ | 1,825 |  |  | $ | 1,825 |
Restricted cash and cash equivalents | 1,002 |  |  | 1,002 |  |  | 898 |  |  | 898 |
Investments | 35 |  |  | 35 |  |  | 15 |  |  | 15 |
Accounts receivables, net | 170 |  |  | 170 |  |  | 156 |  |  | 156 |
Credit card receivables and other means of payment, net | 3,962 |  |  | 3,962 |  |  | 3,632 |  |  | 3,632 |
Loans receivable, net | 3,205 |  |  | 3,200 |  |  | 2,694 |  |  | 2,676 |
Other assets | 94 |  |  | 94 |  |  | 131 |  |  | 131 |
Total Assets | $ | 9,871 |  |  | $ | 9,866 |  |  | $ | 9,351 |  |  | $ | 9,333 |
Accounts payable and accrued expenses | $ | 2,203 |  |  | $ | 2,203 |  |  | $ | 2,117 |  |  | $ | 2,117 |
Funds payable to customers | 5,059 |  |  | 5,059 |  |  | 4,475 |  |  | 4,475 |
Amounts payable due to credit and debit card transactions | 1,352 |  |  | 1,352 |  |  | 1,092 |  |  | 1,092 |
Salaries and social security payable | 498 |  |  | 498 |  |  | 441 |  |  | 441 |
Loans payable and other financial liabilities | 4,342 |  |  | 4,281 |  |  | 4,495 |  |  | 4,441 |
Other liabilities | 317 |  |  | 317 |  |  | 285 |  |  | 285 |
Total Liabilities | $ | 13,771 |  |  | $ | 13,710 |  |  | $ | 12,905 |  |  | $ | 12,851 |
As of March 31, 2024 and December 31, 2023, the carrying value of the Company’s financial assets (except for loans receivable and equity securities held at cost) not measured at fair value approximated their fair value mainly because of their short-term maturity. If these financial assets were measured at fair value in the financial statements, cash and restricted cash would be classified as Level 1 (where cost and fair value are aligned) and the remaining financial assets would be classified as Level 2. The estimated fair value of the loans receivable would be classified as Level 3 based on the Company’s assumptions. As of March 31, 2024 and December 31, 2023, the carrying value of the Company’s financial liabilities (except for 2026 Sustainability Notes and 2031 Notes) not measured at fair value approximated their fair value mainly because of their short-term maturity and the effective interest rates are not materially different from market interest rates. If these financial liabilities were measured at fair value in the financial statements, these would be classified as Level 2. As of March 31, 2024 and December 31, 2023, the estimated fair value of the 2026 Sustainability Notes would be $375 million and $375 million, respectively, and the estimated fair value of the 2026 Notes would be $585 million and $599 million, respectively, which is based on Level 2 inputs.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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