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SEGMENTS | 9 Months Ended
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Sep. 30, 2024
Segment Reporting [Abstract] |
SEGMENTS | SEGMENTS 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, Mexico, Argentina and Other Countries (which includes Chile, Colombia, Costa Rica, Ecuador, Peru and Uruguay). Direct contribution consists of net revenues and financial income from external customers less direct costs, which include costs of net revenues and financial expenses, 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, 2024
| Brazil |  | Mexico |  | Argentina |  | Other Countries |  | Total
| (In millions)
Net revenues and financial income | $ | 8,270 |  |  | $ | 3,317 |  |  | $ | 2,511 |  |  | $ | 620 |  |  | $ | 14,718 |
Direct costs | (6,528) |  |  | (2,707) |  |  | (1,449) |  |  | (543) |  |  | (11,227) |
Direct contribution | 1,742 |  |  | 610 |  |  | 1,062 |  |  | 77 |  |  | 3,491 |
Operating expenses and indirect costs of net revenues and financial expenses |  |  |  |  |  |  |  |  | (1,680) |
Income from operations |  |  |  |  |  |  |  |  | 1,811 |
Other income (expenses): |  |  |  |  |  |  |  |  |
Interest income and other financial gains |  |  |  |  |  |  |  |  | 107 |
Interest expense and other financial losses |  |  |  |  |  |  |  |  | (117) |
Foreign currency losses, net |  |  |  |  |  |  |  |  | (132) |
Net income before income tax expense and equity in earnings of unconsolidated entity |  |  |  |  |  |  |  |  | $ | 1,669 |
| Nine Months Ended September 30, 2023 (1)
| Brazil |  | Mexico |  | Argentina |  | Other Countries |  | Total
| (In millions)
Net revenues and financial income | $ | 5,544 |  |  | $ | 2,129 |  |  | $ | 2,552 |  |  | $ | 473 |  |  | $ | 10,698 |
Direct costs | (4,183) |  |  | (1,593) |  |  | (1,314) |  |  | (445) |  |  | (7,535) |
Direct contribution | 1,361 |  |  | 536 |  |  | 1,238 |  |  | 28 |  |  | 3,163 |
Operating expenses and indirect costs of net revenues and financial expenses |  |  |  |  |  |  |  |  | (1,291) |
Income from operations |  |  |  |  |  |  |  |  | 1,872 |
Other income (expenses): |  |  |  |  |  |  |  |  |
Interest income and other financial gains |  |  |  |  |  |  |  |  | 95 |
Interest expense and other financial losses |  |  |  |  |  |  |  |  | (136) |
Foreign currency losses, net |  |  |  |  |  |  |  |  | (508) |
Net income before income tax expense and equity in earnings of unconsolidated entity |  |  |  |  |  |  |  |  | $ | 1,323 |
(1) Recast for consistency with the current presentation due to the change in the presentation of certain financial results. Please refer to Note 2 – Summary of significant accounting policies - Change in the presentation of certain financial results and reclassification of prior year results.
| Three Months Ended September 30, 2024
| Brazil |  | Mexico |  | Argentina |  | Other Countries |  | Total
| (In millions)
Net revenues and financial income | $ | 2,913 |  |  | $ | 1,145 |  |  | $ | 1,033 |  |  | $ | 221 |  |  | $ | 5,312 |
Direct costs | (2,408) |  |  | (953) |  |  | (576) |  |  | (191) |  |  | (4,128) |
Direct contribution | 505 |  |  | 192 |  |  | 457 |  |  | 30 |  |  | 1,184 |
Operating expenses and indirect costs of net revenues and financial expenses |  |  |  |  |  |  |  |  | (627) |
Income from operations |  |  |  |  |  |  |  |  | 557 |
Other income (expenses): |  |  |  |  |  |  |  |  |
Interest income and other financial gains |  |  |  |  |  |  |  |  | 43 |
Interest expense and other financial losses |  |  |  |  |  |  |  |  | (40) |
Foreign currency losses, net |  |  |  |  |  |  |  |  | (40) |
Net income before income tax expense and equity in earnings of unconsolidated entity |  |  |  |  |  |  |  |  | $ | 520 |
| Three Months Ended September 30, 2023 (1)
| Brazil |  | Mexico |  | Argentina |  | Other Countries |  | Total
| (In millions)
Net revenues and financial income | $ | 2,063 |  |  | $ | 795 |  |  | $ | 910 |  |  | $ | 159 |  |  | $ | 3,927 |
Direct costs | (1,492) |  |  | (605) |  |  | (447) |  |  | (155) |  |  | (2,699) |
Direct contribution | 571 |  |  | 190 |  |  | 463 |  |  | 4 |  |  | 1,228 |
Operating expenses and indirect costs of net revenues and financial expenses |  |  |  |  |  |  |  |  | (443) |
Income from operations |  |  |  |  |  |  |  |  | 785 |
Other income (expenses): |  |  |  |  |  |  |  |  |
Interest income and other financial gains |  |  |  |  |  |  |  |  | 38 |
Interest expense and other financial losses |  |  |  |  |  |  |  |  | (53) |
Foreign currency losses, net |  |  |  |  |  |  |  |  | (239) |
Net income before income tax expense and equity in earnings of unconsolidated entity |  |  |  |  |  |  |  |  | $ | 531 |
(1) Recast for consistency with the current presentation due to the change in the presentation of certain financial results. Please refer to Note 2 – Summary of significant accounting policies - Change in the presentation of certain financial results and reclassification of prior year results. The following table summarizes net revenues and financial income per reporting segment, which have been disaggregated by similar products and services for the nine and three-month periods ended September 30, 2024 and 2023:
| Nine Months Ended September 30,
| Brazil |  | Mexico |  | Argentina |  | Other Countries |  | Total
| 2024 | 2023 (1) |  | 2024 | 2023 (1) |  | 2024 | 2023 (1) |  | 2024 | 2023 (1) |  | 2024 | 2023 (1)
| (In millions)
Commerce services (2) | $ | 4,176 |  | $ | 2,615 |  |  | $ | 1,864 |  | $ | 1,160 |  |  | $ | 795 |  | $ | 727 |  |  | $ | 396 |  | $ | 293 |  |  | $ | 7,231 |  | $ | 4,795 |
Commerce products sales (3) | 897 |  | 552 |  |  | 306 |  | 212 |  |  | 123 |  | 158 |  |  | 48 |  | 23 |  |  | 1,374 |  | 945 |
Total commerce revenues | 5,073 |  | 3,167 |  |  | 2,170 |  | 1,372 |  |  | 918 |  | 885 |  |  | 444 |  | 316 |  |  | 8,605 |  | 5,740 |
Financial services and income (4) | 1,793 |  | 1,554 |  |  | 398 |  | 261 |  |  | 1,165 |  | 1,162 |  |  | 165 |  | 143 |  |  | 3,521 |  | 3,120 |
Credit revenues (5) | 1,384 |  | 808 |  |  | 738 |  | 489 |  |  | 425 |  | 502 |  |  | 8 |  | 5 |  |  | 2,555 |  | 1,804 |
Fintech products sales (6) | 20 |  | 15 |  |  | 11 |  | 7 |  |  | 3 |  | 3 |  |  | 3 |  | 9 |  |  | 37 |  | 34 |
Total fintech revenues | 3,197 |  | 2,377 |  |  | 1,147 |  | 757 |  |  | 1,593 |  | 1,667 |  |  | 176 |  | 157 |  |  | 6,113 |  | 4,958 |
Total net revenues and financial income | $ | 8,270 |  | $ | 5,544 |  |  | $ | 3,317 |  | $ | 2,129 |  |  | $ | 2,511 |  | $ | 2,552 |  |  | $ | 620 |  | $ | 473 |  |  | $ | 14,718 |  | $ | 10,698 |
| Three Months Ended September 30,
| Brazil |  | Mexico |  | Argentina |  | Other Countries |  | Total
| 2024 | 2023 (1) |  | 2024 | 2023 (1) |  | 2024 | 2023 (1) |  | 2024 | 2023 (1) |  | 2024 | 2023 (1)
| (In millions)
Commerce services (2) | $ | 1,452 |  | $ | 1,007 |  |  | $ | 647 |  | $ | 429 |  |  | $ | 358 |  | $ | 260 |  |  | $ | 144 |  | $ | 100 |  |  | $ | 2,601 |  | $ | 1,796 |
Commerce products sales (3) | 357 |  | 204 |  |  | 111 |  | 70 |  |  | 53 |  | 50 |  |  | 17 |  | 8 |  |  | 538 |  | 332 |
Total commerce revenues | 1,809 |  | 1,211 |  |  | 758 |  | 499 |  |  | 411 |  | 310 |  |  | 161 |  | 108 |  |  | 3,139 |  | 2,128 |
Financial services and income (4) | 597 |  | 544 |  |  | 137 |  | 98 |  |  | 458 |  | 429 |  |  | 57 |  | 47 |  |  | 1,249 |  | 1,118 |
Credit revenues (5) | 499 |  | 304 |  |  | 246 |  | 195 |  |  | 163 |  | 171 |  |  | 2 |  | 2 |  |  | 910 |  | 672 |
Fintech products sales (6) | 8 |  | 4 |  |  | 4 |  | 3 |  |  | 1 |  | — |  |  | 1 |  | 2 |  |  | 14 |  | 9 |
Total fintech revenues | 1,104 |  | 852 |  |  | 387 |  | 296 |  |  | 622 |  | 600 |  |  | 60 |  | 51 |  |  | 2,173 |  | 1,799 |
Total net revenues and financial income | $ | 2,913 |  | $ | 2,063 |  |  | $ | 1,145 |  | $ | 795 |  |  | $ | 1,033 |  | $ | 910 |  |  | $ | 221 |  | $ | 159 |  |  | $ | 5,312 |  | $ | 3,927 |
(1) Recast for consistency with the current presentation due to the change in the presentation of certain financial results. Please refer to Note 2 – Summary of significant accounting policies - Change in the presentation of certain financial results and reclassification of prior year results. (2) Includes final value fees and flat fees paid by sellers derived from intermediation services and related shipping and storage fees, classified fees derived from classified advertising services and ad sales. (3) Includes revenues from inventory sales and related shipping fees. (4) Includes revenues from commissions the Company charges for transactions off-platform derived from use of the Company’s payment solution and asset management product, 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, interest earned on cash and investments as part of Mercado Pago activities, including those required due to fintech regulations, net of interest gains pass through our Brazilian users in connection with our asset management product, Mercado Pago debit card commissions and insurtech fees. (5) Includes interest earned on loans and advances granted to merchants and consumers, and interest and commissions earned on Mercado Pago credit card transactions. (6) Includes sales of mobile point of sales devices. The following table summarizes the allocation of property and equipment, net based on geography:
| September 30, 2024 |  | December 31, 2023
| (In millions)
US property and equipment, net | $ | 3 |  |  | $ | 2 |
Other countries |  |  |
Brazil | 585 |  |  | 603 |
Mexico | 376 |  |  | 345 |
Argentina | 226 |  |  | 208 |
Other countries | 93 |  |  | 92 |
| 1,280 |  |  | 1,248 |
Total property and equipment, net | $ | 1,283 |  |  | $ | 1,250 |
The following table summarizes the allocation of the operating lease right-of-use assets based on geography:
| September 30, 2024 |  | December 31, 2023
| (In millions)
US right of use asset, net | $ | 4 |  |  | $ | — |
Other countries |  |  |
Brazil | 437 |  |  | 396 |
Mexico | 421 |  |  | 380 |
Argentina | 38 |  |  | 51 |
Other countries | 68 |  |  | 72 |
| 964 |  | 899
Total right of use asset, net | $ | 968 |  | $ | 899
The following table summarizes the allocation of the goodwill and intangible assets based on geography:
| September 30, 2024 |  | December 31, 2023
| (In millions)
US intangible assets at fair value | 34 |  |  | $ | 24 |
| $ | 34 |  | $ | 24
Goodwill and intangible assets, net |  |  |
Brazil | $ | 62 |  | $ | 68
Mexico | 39 |  | 44
Argentina | 12 |  | 12
Other countries | 48 |  | 50
| 161 |  | 174
Total goodwill and intangible assets | $ | 195 |  | $ | 198

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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/exampleRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 48 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482785/280-10-55-48 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards 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