~~MercadoLibre, Inc.~~

~~Notes to Interim Condensed Consolidated Financial Statements (unaudited)~~

~~Foreign currency translation~~

All of the Company’s foreign operations have determined the local currency to be their functional currency, except for Venezuela since January 1, 2010, as described below. Accordingly, these foreign operating subsidiaries translate assets and liabilities from their local currencies into U.S. dollars by using period-end exchange rates while income and expense accounts are translated at the average rates in effect during the period, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of the transaction are used. The resulting translation adjustment is recorded as a component of other comprehensive (loss) income.

~~Venezuelan currency status~~

Pursuant to U.S. GAAP, the Company has transitioned its Venezuelan operations to highly inflationary status as from January 1, 2010, which requires that transactions and balances are re-measured as if the U.S. dollar was the functional currency for such operation. The cumulative three year inflation rate as from December 31, 2010 exceeded 100% at each period end. Thus, the Company continues to treat the economy of Venezuela as highly-inflationary.

On March 9, 2016 the Central Bank of Venezuela (“BCV”) issued the Exchange Agreement No.35. The agreement established a “protected” exchange rate (“DIPRO”) for certain transactions, such as but not limited to: imports of goods of the food and health sectors, as well as supplies associated with the production of said sectors; expenses relating to health treatments, sports, culture, scientific research, and other urgent matters defined by the exchange regulations. All foreign currency transactions not expressly provided in Exchange Agreement No.35 will be processed on the alternate foreign currency markets governed by the exchange regulations, at the floating supplementary market exchange rate (“DICOM”).

Additionally, the agreement established that the alternate foreign currency markets referred to in Exchange Agreement No.33 of February 10, 2015 (“SIMADI”) will continue to operate until replaced by others. From March 31, 2016 through June 30, 2016, the SIMADI exchange rate increased from 273 BsF per U.S. dollar to 628 BsF per U.S. dollar, a 130% increase in the exchange rate. As a consequence of the local currency devaluation, the Company recorded a foreign exchange loss of $4.9 million during the second quarter of 2016.

Considering the significant devaluation and the lower U.S. dollar-equivalent cash flows then expected from the Venezuelan business, the Company reviewed its long-lived assets (including non-current other assets), goodwill and intangible assets with indefinite useful life for impairment and concluded that the carrying value of certain real estate investments in Venezuela as of June 30, 2016 would not be fully recoverable. As a result, on June 30, 2016, the Company recorded an impairment of offices and commercial property under construction included within non-current other assets of $13.7 million. The carrying amount of offices and commercial property under construction was adjusted to its estimated fair value of approximately $12.5 million as of June 30, 2016, by using the market approach, and considering prices for similar assets.

On May 19, 2017, the BCV issued the Exchange Agreement No.38, which established a new foreign exchange mechanism under DICOM, replacing SIMADI. The new mechanism consists of auctions, administered by an auction committee, where sellers and buyers from the private sector may offer foreign currency under certain limits determined by the BCV.

In light of the disappearance of SIMADI (which closed at 728.0 per U.S. dollar), and the Company’s inability to gain access to U.S. dollars under SIMADI, it started requesting U.S. dollars through DICOM. As a result, the Company expects to settle its transactions through DICOM going forward and concluded that the DICOM exchange rate should be used as from June 1, 2017 to measure its bolivar-denominated monetary assets and liabilities and to measure the revenues and expenses of the Venezuelan subsidiaries. Therefore, as of June 30, 2017, monetary assets and liabilities in Bolivares Fuertes (“BsF”) were re-measured to the U.S. dollar using the DICOM closing exchange rate of 2640.0 BsF per U.S. dollar. As a consequence of the local currency devaluation, the Company recorded a foreign exchange loss of $22.0 million during the second quarter of 2017.

Considering the significant devaluation and the lower U.S. dollar-equivalent cash flows then expected from the Venezuelan business, the Company reviewed its long-lived assets (including non-current other assets), goodwill and intangible assets with indefinite useful life for impairment and concluded that the carrying value of certain real estate investments in Venezuela as of June 30, 2017 would not be fully recoverable. As a result, on June 30, 2017, the Company recorded an impairment of offices and commercial property under construction included within non-current other assets of $2.8 million. The carrying amount of offices and commercial property under construction was adjusted to its estimated fair value of approximately $9.7 million as of June 30, 2017, by using the market approach and considering prices for similar assets. As of September 30, 2017, the DICOM exchange rate was 3,345.0 BsF per U.S. dollar.

~~Table of Contents~~

~~MercadoLibre, Inc.~~

~~Notes to Interim Condensed Consolidated Financial Statements (unaudited)~~

Until 2010 the Company was able to obtain U.S. dollars for any purpose, including dividends distribution, using alternative mechanisms other than through the Commission for the Administration of Foreign Exchange Control (CADIVI). Those U.S. dollars, obtained at a higher exchange rate than the one offered by CADIVI, and held at U.S. bank accounts of its Venezuelan subsidiaries, were used until 2011 for dividend distributions from its Venezuelan subsidiaries. The Company has not distributed dividends from the Venezuelan subsidiaries since 2011.

The following table sets forth the assets, liabilities and net assets of the Company’s Venezuelan subsidiaries, before intercompany eliminations of a net liability of $29,594 thousands and $ 15,843 thousands, as of September 30, 2017 and December 31, 2016 and net revenues for the nine-month periods ended September 30, 2017 and 2016:

September 30,

2017

2016

(In thousands)
Venezuelan operations

Net Revenues

$
38,329

$
26,451

September 30,

December 31,

2017

2016

(In thousands)

Assets

62,648

66,165

Liabilities

(37,269)

(22,950)

Net Assets

$
25,379

$
43,215

As of September 30, 2017, the net assets (before intercompany eliminations) of the Venezuelan subsidiaries amounted to 6.2% of consolidated net assets, and cash and investments of the Venezuelan subsidiaries held in local currency in Venezuela amounted to 2.2% of our consolidated cash and investments.

The Company’s ability to obtain U.S. dollars in Venezuela is negatively affected by the exchange regulations in Venezuela that are described above and elsewhere in these interim condensed consolidated financial statements. In addition, its business and ability to obtain U.S. dollars in Venezuela would be negatively affected by additional material devaluations or the imposition of significant additional and more stringent controls on foreign currency exchange by the Venezuelan government.

~~Despite the current difficult macroeconomic environment in Venezuela, the Company continues to actively manage, through its Venezuelan subsidiaries, its investment in Venezuela.~~

~~Income and asset taxes~~

The Company is subject to U.S. and foreign income taxes. The Company accounts for income taxes following the liability method of accounting which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets are also recognized for tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets or liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded when, based on the available evidence, it is more likely than not that all or a portion of the Company’s deferred tax assets will not be realized. The Company’s income tax expense consists of taxes currently payable, if any, plus the change during the period in the Company’s deferred tax assets and liabilities.

On August 17, 2011, the Argentine government issued a new software development law and on September 9, 2013 the regulatory decree was issued, which established the new requirement to become beneficiary of the new software development law. The decree establishes compliance requirements with annual incremental ratios related to exports of services and research and development expenses that must be achieved to remain within the tax holiday. The Company’s Argentine subsidiary has to achieve certain required ratios annually under the software development law in order to be eligible for the benefits mentioned below.

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~~MercadoLibre, Inc.~~

~~Notes to Interim Condensed Consolidated Financial Statements (unaudited)~~

On September 17, 2015, the Argentine Industry Secretary issued Resolution 1041/2015 approving the Company’s application for eligibility under the new software development law for the Company’s Argentinean subsidiary, Mercadolibre S.R.L. Furthermore, on September 18, 2016, the Argentine Industry Secretary issued Resolutions 93/2016 and 97/2016 approving the Company’s application for eligibility under the new software development law for the Company’s Argentinean subsidiaries, Neosur S.RL. and Business Vision S.A. As a result, the Company’s Argentinean subsidiaries have been granted a tax holiday retroactive from September 18, 2014. A portion of the benefits obtained as beneficiaries of the new law is a relief of 60% of total income tax related to software development activities and a 70% relief in payroll taxes related to software development activities.

The benefits to the Company under the software development law will expire on December 31, 2019. As a result of the Company’s eligibility under the new law, it recorded an income tax benefit of $17,672 thousands and $6,367 thousands during the nine and three-month periods ended September 30, 2017, respectively. Aggregate per share effect of the Argentine tax holiday amounted to $0.40 and $0.14 for the nine and three-month periods ended September 30, 2017, respectively. Furthermore, the Company recorded a labor cost benefit of $5,513 thousands and $2,016 thousands during the nine and three-month periods ended September 30, 2017, respectively. Additionally, $1,623 thousands and $587 thousands were accrued to pay software development law audit fees during the nine and three-month periods ended September 30, 2017, respectively. During the nine months period ended September 30, 2016, the Company recorded an income tax benefit of $16,018 thousands, a labor cost benefit of $4,173 thousands and $1,416 thousands were accrued to pay software development law audit fees. Additionally, during the third quarter of 2016, the Company recorded an income tax benefit of $6,823 thousands, a labor cost benefit of $2,167 thousands and $631 thousands were accrued to pay software development law audit fees. ~~Aggregate per share effect of the Argentine tax holiday amounted to $0.46 and $0.20 for the nine and three-month periods ended September 30, 2016, respectively.~~

As of September 30, 2017 and December 31, 2016, the Company had included under non-current deferred tax assets the foreign tax credits related to the dividend distributions received from its subsidiaries for a total amount of $11,588 thousands and $13,515 thousands, respectively. Those foreign tax credits will be used to offset the future domestic income tax payable.

~~Accumulated other comprehensive loss~~

~~The following table sets forth the Company’s accumulated other comprehensive loss as of September 30, 2017 and the year ended December 31, 2016:~~

September 30,

December 31,

2017

2016

(In thousands)
Accumulated other comprehensive loss:

Foreign currency translation

$                    (277,171)

$             (259,226)
Unrealized gains (losses) on investments

518

(909)
Estimated tax (loss) gain on unrealized gains (losses) on investments

(178)

322

$                    (276,831)

$             (259,813)

~~The following tables summarize the changes in accumulated balances of other comprehensive loss for the nine-month period ended September 30, 2017:~~

Unrealized

Foreign

Estimated tax

(Losses) Gains on

Currency

(expense)

Investments

Translation

benefit

Total

(In thousands)
Balances as of December 31, 2016

$                          (909)

$             (259,226)

$                    322

$           (259,813)

Other comprehensive loss before reclassifications adjustments for gains (losses) on available for sale investments

518

(17,945)

(178)

(17,605)

Amount of gain (loss) reclassified from accumulated other comprehensive loss

909

—

(322)

587

Net current period other comprehensive income gain (loss)

1,427

(17,945)

(500)

(17,018)

Ending balance

$                            518

$             (277,171)

$                  (178)

$           (276,831)

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~~MercadoLibre, Inc.~~

~~Notes to Interim Condensed Consolidated Financial Statements (unaudited)~~



	~~Amount of (Loss) Gain~~
	~~Reclassified from~~
~~Details about Accumulated~~	~~Accumulated Other~~
~~Other Comprehensive Loss~~	~~Comprehensive~~	~~Affected Line Item~~
~~Components~~	~~Loss~~	~~in the Statement of Income~~
	~~(In thousands)~~
~~Unrealized losses on investments~~	~~$ (909)~~	~~Interest expense and other financial losses~~
~~Estimated tax gain on unrealized losses on investments~~	~~322~~	~~Income tax gain~~
~~Total reclassifications for the year~~	~~$ (587)~~	~~Total, net of income taxes~~

~~Impairment of long-lived assets~~

The Company reviews its long-lived assets (including non-current other assets) for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

As explained in section “Foreign Currency Translation” of the present Note to these interim condensed consolidated financial statements, Venezuelan currency experienced a steep devaluation in the second quarter of 2017 and 2016.

Considering this change in facts and circumstances and the lower U.S. dollar-equivalent cash flows expected from the Venezuelan business, and long-lived assets expected use, the Company concluded that certain real estate investments held in Caracas, Venezuela, should be impaired. The fair value of long-lived assets was estimated through market approach using level 3 inputs in the fair value hierarchy. These level 3 inputs included, but are not limited to, executed purchase agreements in similar assets and third party valuations. As a consequence, the Company estimated the fair value of the impaired long-lived assets, and recorded impairment losses of $2.8 million and $13.7 million on June 30, 2017 and June 30, 2016, respectively.

Use of estimates

~~(*) Includes, among other things, Ad Sales, Classified Fees, Payment Fees, Shipping Fees and other ancillary services.~~

(**) Includes an amount of $232,426 thousands and $139,630 thousands of Payment Fees for the nine-month periods ended September 30, 2017 and 2016, respectively. Includes an amount of $92,254 thousands and $52,444 thousands of Payment Fees for the three-month periods ended September 30, 2017 and 2016, respectively.

~~The material portion of the Sovereign Debt Securities consists of U.S. Treasury Notes, which carry no significant risk.~~

~~As of September 30, 2017, the estimated fair values (in thousands of U.S. dollars) of cash equivalents, short-term and long-term investments classified by their effective maturities are as follows:~~

From time to time, the Company acquires shares of its own common stock in the Argentine market and pays for them in Argentine Pesos at a price that reflects the additional cost of accessing U.S. dollars through securities denominated in U.S. dollars, because of restrictions imposed by the Argentine government for buying U.S. dollars at the ~~Company’s election. The intention~~official exchange rate in Argentina (See Note 2 - “Summary of ~~the Company is to share-settle the total amount due upon conversion~~significant accounting policies - Argentine currency status” of ~~the Notes.~~

~~From October 1, 2017 to the date of issuance of~~ these unaudited interim condensed consolidated financial ~~statements, no additional conversion requests were made.~~

~~In connection with the issuance of the Notes,~~statements). As a result, the Company ~~paid $19.7~~recognized foreign currency losses of $386 million and ~~$67.3~~$108 million ~~(including transaction expenses) in June 2014 and September 2017, respectively, to enter into capped call transactions with respect to shares of~~for the common stock (the “Capped Call Transactions”), with certain financial institutions. The Capped Call Transactions are expected generally to reduce the potential dilution upon conversion of the Convertible Notes in the event that the market price of the common stock is greater than the strike price of the Capped Call Transactions. The cost of the Capped Call Transactions is included as a net reduction to additional paid-in capital in the stockholders’ equity section of the consolidated balance sheets.

~~The total estimated fair value of the Notes was$687.9 millionand$458.8 millionas of~~nine-month periods ended September 30, ~~2017~~2023 and ~~December 31, 2016, respectively. The fair value was determined based on the closing trading price per $100 of the Notes as of the last day of trading~~2022 respectively, while foreign currency losses for the ~~period. The Company considered the fair value of the Notes as of~~three-month periods ended September 30, ~~2017~~2023 and ~~December 31, 2016~~2022 amounted to ~~be a Level 2 measurement. The fair value of the Notes is primarily affected by the trading price of our common stock~~$173 million and ~~market interest rates.Based on the $258.9 closing price of the Company’s common stock on September 30, 2017, the if-converted value of the Notes exceeded their principal amount by $348.0 million.~~

~~The following table presents the carrying amounts of the liability and equity components related to the 2.25% Convertible Senior Notes Due 2019 as of September 30, 2017 and December 31, 2016:~~

September 30, 2017

December 31, 2016

(In thousands)
Amount of the equity component (1)
$
45,808

$
45,808

2.25% convertible senior notes due 2019
$
330,000

$
330,000
Unamortized debt discount (2)

(17,909)

(25,097)
Unamortized transaction costs related to the debt component

(2,862)

(3,968)
Contractual coupon interest accrual

5,569

7,425
Contractual coupon interest payment

(3,713)

(7,425)
Net carrying amount
$
311,085

$
300,935

~~(1)~~

~~Net of $1,177 thousands of transaction costs related to the equity component of the Notes.~~

$45 million, respectively.

~~(2)~~

~~As of September 30, 2017, the remaining period over which the unamortized debt discount will be amortized is 1.75 years.~~

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~~MercadoLibre, Inc.~~

~~Notes to Interim Condensed Consolidated Financial Statements (unaudited)~~

~~The following table presents the interest expense for the contractual interest, the accretion of debt discount and the amortization of debt issuance costs:~~

Nine-months period ended September 30,

Three-months period ended September 30,

2017

2016

2017

2016

(In thousands)

(In thousands)

(In thousands)

(In thousands)
Contractual coupon interest expense
$
5,569

$
5,569

$
1,856

$
1,856
Amortization of debt discount

7,188

6,806

2,440

2,310
Amortization of debt issuance costs

1,106

998

381

344
Total interest expense related to the Notes
$
13,863

$
13,373

$
4,677

$
4,510

~~10. Cash Dividend Distribution~~

~~In each of February, May, August and November of 2016, the Board of Directors approved a quarterly cash dividend of $6,624thousands (or$0.150per share) on the Company’s outstandingshares of common stock. The dividends were paid on April 15, July 15,October 14, 2016 and January 16, 2017 to stockholders of record as of the close of business onMarch 31, June 30, September 30, andDecember 31, 2016.~~

On March 2, 2017, the Board of Directors approved a change to the Company’s dividend policy for providing for a fixed quarterly dividend payment in 2017 of $0.150 per share ($0.600 per share annually). The new dividend policy took effect following the payment of the $0.150 per share dividend declared by the Board of Directors of the Company, which was paid on April 17, 2017 to shareholders of record as of the close of business on March 31, 2017.

On May 2, 2017, the Board of Directors approved a quarterly cash dividend of $6,624 thousands (or $0.150 per share) on the Company´s outstanding shares of common stock. The second quarterly dividend was paid on July 14, 2017 to stockholders~~of record as of the close of business on June 30, 2017.~~

~~On July 31, 2017, the Board of Directors approved a quarterly cash dividend of$6,624thousands (or$0.150per share) on ouroutstandingshares of common stock. The third quarterly dividend was paid onOctober 16, 2017to stockholders of record as of the close of business onSeptember 30, 2017.~~

~~On October 31, 2017, the Board of Directors approved a quarterly cash dividend of$6,624thousands (or$0.150per share) on ouroutstandingshares of common stock. This quarterly dividend is payable on January 16, 2018to stockholders of record as of the close of business onDecember 31, 2017.~~

~~Table of Contents~~

ItemItem 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward-Looking Statements

Any statementsmade or impliedin this report that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements within the meaning of Section 27A of the Securities ~~Exchange~~ Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and should be evaluated as such. The words “anticipate,” “believe,” “expect,” “intend,” “plan,” “estimate,” “target,” “project,” “should,” “may,” “could,” “will” and similar words and expressions are intended to identify forward-looking statements. These forward-looking statements are contained throughout this report. Forward-looking statements generally relate to information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, future economic, political and social conditions in the countries in which we operate and their possible impact on our business, and the effects of future regulation and the effects of competition. Such forward-looking statements reflect, among other things, our current expectations, plans, projections and strategies, anticipated financial results, future events and financial trends affecting our business, all of which are subject to known and unknown risks, uncertainties and other important factors (in addition to those discussed elsewhere in this report) that may cause our actual results to differ materially from those expressed or implied by these forward-looking statements. These risks and uncertainties include, among other things:

~~our expectations regarding the continued growth of online commerce and Internet usage in Latin America;~~

~~our ability to expand our operations and adapt to rapidly changing technologies;~~

•our expectations regarding the continued growth of e-commerce, digital financial services and Internet usage in Latin America;

~~government and central bank regulations;~~

•competition;

~~litigation and legal liability;~~

•our ability to expand our operations and adapt to rapidly changing technologies;

~~systems interruptions or failures;~~

•our ability to attract new customers, retain existing customers and increase revenues;

~~our ability to attract and retain qualified personnel;~~

•the impact of government, central bank and other regulations on our business;

~~consumer trends;~~

•credit risk and other risks of lending, such as increases in defaults by customers and other delinquencies;

~~security breaches and illegal uses of our services;~~

•litigation and legal liability;

~~competition;~~

•security breaches and illegal uses of our services;

~~reliance on third-party service providers;~~

•systems interruptions or failures;

~~enforcement of intellectual property rights;~~

•our ability to attract and retain qualified personnel;

~~our ability to attract new customers, retain existing customers and increase revenues;~~

•consumer trends;

~~seasonal fluctuations; and~~

•reliance on third-party service providers;

~~political, social and economic conditions in Latin America in general, and Venezuela in particular, and possible future currency devaluation and other changes to its exchange rate systems.~~

•enforcement of intellectual property rights;

•our expectations regarding benefits and synergies from recent or future strategic investments, acquisitions of businesses, technologies, services or products;

•seasonal fluctuations;

•our indebtedness;

•volatility of market prices, impairment and unique risks related to loss of the digital assets that we acquire;

•political, social and economic conditions in Latin America; and

•our long-term sustainability goals.

Many of these risks are beyond our ability to control or predict. New risk factors emerge from time to time and it is not possible for ~~management~~Management to predict all such risk factors, nor can it assess the impact of all such risk factors on our company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Table of Contents

These statements are based on currently available information and our current assumptions, expectations and projections about future events. While we believe that our assumptions, expectations and projections are reasonable in view of the currently available information, you are cautioned not to place undue reliance on our forward-looking statements. These statements are not guarantees of future performance. They are subject to future events, risks and ~~uncertainties–many~~uncertainties –many of which are beyond our ~~control-as~~control– as well as potentially inaccurate assumptions that could cause actual results to differ materially from our expectations and projections.Some of the material risks and uncertainties that could cause actual results to differ materially from our expectations and projections are described in “Item 1A — Risk Factors” in Part I of ~~our Annual Report on Form~~the Company’s 2022 10-K ~~for the fiscal year ended December 31, 2016~~filed with the ~~Securities and Exchange Commission(“SEC”)~~SEC onFebruary 24,~~, 2017, as updated by those described in “Item 1A — Risk Factors” in Part II of this report~~ 2023 and in other reports we file from time to time with the SEC.

You should read that information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report, our unaudited interim condensed consolidated financial statements and related notes in Item 1 of Part I of this report and our audited consolidated financial statements and related notes in Item 8 of Part II of ~~our Annual Report on Form 10-K for~~ the ~~year ended December 31, 2016.~~Company’s 2022 10-K. We note such information for investors as permitted by the Private Securities Litigation Reform Act of 1995. There also may be other factors that we cannot anticipate or that are not described in this report, generally because they are unknown to us or we do not perceive them to be a material ~~risk~~ that could cause results to differ materially from our expectations.

~~Table~~ Certain monetary amounts included elsewhere in this document have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of ~~Contents~~

the figures that precede them.

Forward-looking statements speak only as of the date they are made, and we do not undertake to update these forward-looking statements except as may be required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the SEC.

The discussion and analysis of our financial condition and results of operations ~~presents~~has been organized to present the following:

~~a brief overview of our company;~~

~~a discussion of our principal trends and results of operations for the nine and the three-month periods ended September 30, 2017 and 2016;~~

•a brief overview of our company;

~~a review of our financial presentation and accounting policies, including our critical accounting policies;~~

•a review of our financial presentation and accounting policies, including our critical accounting policies;

~~a discussion of the principal factors that influence our results of operations, financial condition and liquidity;~~

•a discussion of our principal trends and results of operations for the nine and three-month periods ended September 30, 2023 and 2022;

~~a discussion of our liquidity and capital resources and a discussion of our capital expenditures;~~

•a discussion of the principal factors that influence our results of operations, financial condition and liquidity;

~~a description of our non-GAAP financial measures; and~~

•a discussion of our liquidity and capital resources and a discussion of our capital expenditures; and

~~a discussion of the market risks that we face.~~

•a description of our non-GAAP financial measures.

Other Information

We routinely post important information for investors on our Investor Relations website, http://investor.mercadolibre.com. We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under SEC Regulation FD (Fair Disclosure). Accordingly, investors should monitor our Investor Relations website, in addition to following our press releases, SEC filings, public conference calls and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this report.

Business Overview

~~MercadoLibre, Inc. (together with its subsidiaries “us”, “we”, “our” or the “Company”) is one of~~

We are the largest online commerce ~~ecosystems~~ecosystem in Latin ~~America.~~America based on unique visitors and orders processed, and we are present in 18 countries: Argentina, Brazil, Mexico, Chile, Colombia, Peru, Uruguay, Venezuela, Bolivia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Honduras, Nicaragua, Panama, Paraguay and El Salvador. Our platform is designed to provide users with a complete portfolio of services to facilitate commercial ~~transactions. We are a market leader in e-commerce in each of Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, Mexico, Peru, Uruguay~~transactions both digitally and Venezuela, based on number of unique visitors and page views. We also operate online commerce platforms in the Dominican Republic, Honduras, Nicaragua, Salvador, Panama, Bolivia, Guatemala, Paraguay and Portugal.

offline.

Through our e-commerce platform, we provide buyers and sellers with a robust and safe environment that fosters the development of a large e-commerce community in Latin America, a region with a population of over ~~610~~650 million people and with one of the fastest-growing Internet penetration and e-commerce growth rates in the world. We believe that we offer world-class technological and commercial solutions that address the distinctive cultural and geographic challenges of operating ~~an online~~a digital commerce platform in Latin America.

We offer our users an ecosystem of six integrated e-commerce services and digital financial services: the ~~MercadoLibre~~Mercado Libre Marketplace, the ~~MercadoLibre Classifieds Service,~~Mercado Pago Fintech platform, the ~~MercadoPago payments~~Mercado Envios logistics service, the Mercado Ads solution, the ~~MercadoEnvios shipping~~Mercado Libre Classifieds service ~~the MercadoLibre advertising program~~ and the ~~MercadoShops~~Mercado Shops online ~~webstores~~storefronts solution.

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The ~~MercadoLibre~~Mercado Libre Marketplace, ~~which we sometimes refer to as our marketplace,~~ is a fully-automated, topically-arranged and user-friendly online commerce ~~service.~~platform, which can be accessed through our website and mobile app. This ~~service permits both businesses~~platform enables us (when we act as sellers in our first party sales), merchants and individuals to list merchandise and conduct sales and purchases ~~online in either~~digitally. The Marketplace has an ample assortment of products, with a ~~fixed-price or auction-based format.~~

wide range of categories such as consumer electronics, apparel and beauty, home goods, automotive accessories, toys, books and entertainment and consumer packaged goods.

To complement the ~~MercadoLibre~~Mercado Libre Marketplace and enhance the user experience for our buyers and sellers, we developed ~~MercadoPago,~~Mercado Pago, an integrated ~~online~~digital payments solution. ~~MercadoPago is~~Mercado Pago was initially designed to facilitate transactions ~~both~~ on ~~and off our marketplace~~Mercado Libre’s Marketplaces by providing a mechanism that ~~allows~~allowed our users to securely, easily and promptly send and receive ~~payments online.~~payments. Now Mercado Pago is ~~currently available in:~~a full ecosystem of financial technology solutions both in the digital and physical world. Our digital payments solution enables any MercadoLibre registered user to securely and easily send and receive digital payments and to pay for purchases made on any of Mercado Libre Marketplaces. Currently, Mercado Pago processes and settles all transactions on our Marketplaces in Argentina, Brazil, Mexico, Chile, Colombia, ~~Venezuela,~~ Uruguay, ~~Perú~~Peru and ~~Chile. MercadoPago~~Ecuador.

Beyond facilitating Marketplace transactions, over the years we have expanded our array of Mercado Pago services to third parties outside Mercado Libre’s Marketplace. We began first by satisfying the growing demand for online-based payment solutions by providing merchants the necessary digital payment infrastructure for e-commerce to flourish in Latin America. Today, Mercado Pago’s digital payments business not only allows merchants to facilitate checkout and payment processes on their websites ~~and~~through a branded or white label solution or software development kits, but it also enables users to ~~simply~~ transfer money in a simple manner to each other ~~either~~ through the Mercado Pago website or ~~using~~on Mercado Pago app. Through Mercado Pago, we brought trust to the ~~MercadoPago App, available~~merchant customer relationship, allowing online consumers to shop easily and safely, while giving them the confidence to share sensitive personal and financial data with us. Finally, we have also deepened our Fintech offerings by growing our online-to-offline (“O2O”) products and services.

The Mercado Envios logistics solution enables sellers on ~~iOS~~our platform to utilize third-party carriers and ~~Android. Additionally, during 2016,~~other logistics service providers, while also providing them with fulfillment and warehousing services. The logistics services we ~~launched MercadoCredito, which is designed to extend loans to specific merchants~~offer are an integral part of our value proposition, as they reduce friction between buyers and ~~consumers. Our MercadoCredito solution allows~~sellers, and allow us to ~~deepen~~have greater control over the full experience. Sellers that opt into our ~~engagement with our merchants, in Argentina, Brazil and Mexico, and consumers, in Argentina, by offering them additional services and is currently available.~~

To further enhance our suite of e-commerce services we launched the MercadoEnvios shipping program in Brazil, Argentina, Mexico, Colombia and Chile. Through MercadoEnvios, we offer our sellers a cost-efficient way to utilize our existing distribution chain to fulfill their sales. Sellers opting into the programlogistics solutions are not only able to offer a uniform and seamlessly integrated shipping experience to their buyers at competitive ~~prices.~~

prices, but are also eligible to access shipping subsidies to offer free or discounted shipping for many of their sales on our Marketplaces. In 2020, we launched Meli Air with a fleet of dedicated aircraft covering routes across Brazil and Mexico, with the aim of improving our delivery times. We have also developed a network of independent neighborhood stores and commercial points (known as “Meli Places”) to receive and store packages that are in transit using our integrated technology. Meli Places network allows buyers and sellers to pick-up, drop-off, or return packages with a better experience, reducing the travel distance for all parties. As of September 30, 2023, we offer our shipping solution directed towards deliveries in Argentina, Brazil, Mexico, Chile, Colombia, Uruguay, Peru and Ecuador and we also offer free shipping to buyers in Argentina, Brazil, Mexico, Chile, Colombia, Uruguay and Peru.

Mercado Credito, our credit solution available in Argentina, Brazil, Mexico and Chile, leverages our user base, which is loyal and engaged, and in part has also been historically underserved or overlooked by financial institutions and suffers from a lack of access to needed credit. Facilitating credit is a key service overlay that enables us to further strengthen the engagement and lock-in rate of our users, while also generating additional touchpoints and incentives to use Mercado Pago as an end-to-end financial solution.

Our asset management product, which is available in Argentina, Brazil and Mexico, is a critical pillar to build our alternative two-sided network vision. It incentivizes our users to begin to fund their digital wallets with cash as opposed to credit or debit cards given that the return our product offers is greater than traditional checking accounts.

As an extension of our asset management and savings solutions for users, we launched a digital assets feature as part of the Mercado Pago wallet in Brazil in 2021, in Mexico in 2022 and in Chile in 2023. This service allows our millions of users to purchase, hold and sell selected digital assets through our interface without leaving the Mercado Pago application, while a partner acts as the custodian and offers the blockchain infrastructure platform. This feature is available for all users through their Mercado Pago wallet.

Our advertising platform, Mercado Ads, enables businesses to promote their products and services on the Internet. Through ~~MercadoLibre~~our advertising platform, MercadoLibre’s brands and sellers are able to display ads on our webpages through product searches, banner ads, or suggested products. Our advertising platform enables merchants and brands to access the millions of consumers that are on our Marketplaces at any given time with the intent to purchase, which increases the likelihood of conversion.

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Through Mercado Libre Classifieds, ~~Service,~~ our online classified listing service, our users can also list and purchase motor vehicles, ~~vessels, aircraft,~~ real estate and services in ~~all~~the countries where we operate. Classifieds listings differ from Marketplace listings as they only charge optional placement fees and ~~never~~not final value fees. Our classifieds pages are also a major source of traffic to our ~~website, benefitting~~platform, benefiting both the ~~Marketplace~~Commerce and ~~non-marketplace~~Fintech businesses.

~~To enhance~~

Complementing the ~~MercadoLibre Marketplace,~~services that we ~~developed~~offer, our ~~MercadoLibre advertising program,~~digital storefront solution, Mercado Shops, allows users to enable businesses to promote their products and services on the Internet. Through our advertising program, MercadoLibre’s sellers and large advertisers are able to display product ads on our webpages and our associated vertical sites in the region.

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~~Additionally, through MercadoShops, our online store solution, users can~~ set-up, manage and promote their own ~~online store.~~digital stores. These stores are hosted by ~~MercadoLibre~~Mercado Libre and offer integration with the ~~other marketplace,~~rest of our ecosystem, namely our Marketplaces, payment services and ~~advertising services we offer.~~logistics services. Users can ~~choose from~~create a ~~basic, free~~ store ~~or pay monthly subscriptions for enhanced functionality~~at no cost, and can access additional functionalities and value added services on ~~their store.~~

~~MercadoLibre also began developing and selling enterprise software solutions to e-commerce business clients in Brazil during the second quarter of 2015.~~

commission.

Reporting Segments and Geographic Information

Our segment reporting is based on geography, which is the ~~current~~ criterion ~~we are using~~our Management currently uses to evaluate our segment performance. Our geographic segments ~~include~~are Brazil, Argentina, Mexico ~~Venezuela~~ and ~~other countries~~Other Countries (including Chile, Colombia, Costa Rica, ~~Dominican Republic,~~ Ecuador, ~~Panama,~~ Peru ~~Portugal, Bolivia, Honduras, Nicaragua, Salvador, Guatemala, Paraguay, Uruguay~~ and ~~the United States of America (real estate classifieds in the State of Florida only))~~Uruguay).Although we discuss long-term trends in our business, it is our policy not to ~~not~~ provide earnings guidance in the traditional sense. We believe that uncertain conditions make the forecasting of near-term results difficult. Further, we seek to make decisions focused primarily on the long-term welfare of our ~~company~~Company and believe focusing on ~~short term~~short-term earnings does not best serve the interests of our stockholders. We believe that execution of key strategic initiatives as well as our expectations for long-term growth in our markets will best create stockholder value. ~~We, therefore, encourage potential investors to consider this strategy before making an investment in our common stock.~~ A long-term focus may make it more difficult for industry analysts and the market to evaluate the value of our ~~company,~~Company, which could reduce the value of our common stock or permit competitors with ~~short term~~short-term tactics to grow ~~stronger~~more rapidly than us.

We, therefore, encourage potential investors to consider this strategy before making an investment in our common stock.

The following table sets forth the percentage of our consolidated net revenues by segment for the nine and ~~the~~ three-month periods ended September 30, ~~2017~~2023 and ~~2016:~~

2022:


	Nine-months Periods Ended				Three-month Periods Ended					Nine Months Ended September 30,				Three Months Ended September 30,
	September 30,				September 30,
(% of total consolidated net revenues) (*)	2017		2016		2017		2016
(% of total consolidated net revenues)									(% of total consolidated net revenues)	2023		2022		2023		2022
Brazil	59.2	%	53.0	%	61.9	%	56.7	%	Brazil	52.5	%	54.9	%	53.4	%	53.2	%
Argentina	26.1		31.6		24.6		30.3		Argentina	22.7		23.7		21.9		25.1
Mexico	6.1		5.8		6.1		5.1		Mexico	20.2		16.7		20.5		17.3
Venezuela	4.0		4.5		2.6		3.0
Other Countries	4.6		5.1		4.7		4.8		Other Countries	4.6		4.7		4.2		4.4

~~(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.~~

The following table summarizes the changes in our net revenues by segment for the nine and three-month periods ended September 30, ~~2017~~2023 and ~~2016:~~

2022:


	Nine-months Periods Ended		Change from 2016			Three-month Periods Ended		Change from 2016
	September 30,		to 2017 (*)			September 30,		to 2017 (*)				Nine Months Ended September 30,				Change from 2022 to 2023				Three Months Ended September 30,				Change from 2022 to 2023
	2017	2016	in Dollars	in %		2017	2016	in Dollars	in %			2023		2022		in Dollars		in %		2023		2022		in Dollars		in %
	(in millions, except percentages)					(in millions, except percentages)						(in millions, except percentages)								(in millions, except percentages)
Net Revenues:											Net Revenues:
Brazil	$ 569.3	$ 311.4	$ 257.9	82.8	%	$ 229.5	$ 131.0	$ 98.5	75.2	%	Brazil	$	5,365	$	4,134	$	1,231	29.8	%	$	2,006	$	1,431	$	575	40.2	%
Argentina	250.7	185.9	64.8	34.9		91.3	70.0	21.3	30.5		Argentina	2,317		1,787		530		29.7		825		675		150		22.2
Mexico	58.3	34.4	23.9	69.7		22.6	11.8	10.8	91.4		Mexico	2,066		1,257		809		64.4		772		465		307		66.0
Venezuela	38.3	26.5	11.9	44.9		9.8	6.9	2.9	41.6
Other Countries	44.5	30.0	14.5	48.3		17.5	11.2	6.4	56.9		Other Countries	464		357		107		30.0		157		119		38		31.9
Total Net Revenues	$ 961.1	$ 588.1	$ 373.0	63.4	%	$ 370.7	$ 230.8	$ 139.8	60.6	%	Total Net Revenues	$	10,212	$	7,535	$	2,677	35.5	%	$	3,760	$	2,690	$	1,070	39.8	%

~~(*)~~ ~~Percentages~~

Critical Accounting Policies and Estimates

There have been ~~calculated using whole-dollar amounts rather than rounded amounts that appear~~no significant changes in our critical accounting policies, Management estimates or accounting policies since the year ended December 31, 2022 and disclosed in the ~~table. The table above may not total due~~Company’s 2022 10-K, see “Critical Accounting Policies and Estimates”. See also the section Recently Adopted Accounting Standards of Note 2 to ~~rounding.~~

our unaudited interim condensed consolidated financial statements included in Item 1 of Part I of this report.

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~~Recent Developments~~

~~2017 Capped Call Transactions~~

Results of operations for the nine and three-month periods ended September ~~2017, we paid~~ ~~$67.3 million (including transaction expenses) to~~ ~~enter into privately negotiated capped call transactions with respect to shares of our common stock with several financial institutions. The 2017 Capped Call Transactions are~~ ~~in addition~~30, 2023 compared to the ~~2014 Capped Call Transactions~~nine and three-month periods ended September 30, 2022

The selected financial data for the nine and three-month periods ended September 30, 2023 and 2022 discussed herein is derived from our unaudited interim condensed consolidated financial statements included in Item 1 of Part I of this report. The results of operations for the nine and three-month periods ended September 30, 2023, are ~~expected generally to reduce the potential dilution upon conversion~~not necessarily indicative of the ~~Convertible Notes in the event~~results that ~~the market price of our common stock is greater than the strike price of the Capped Call Transactions, initially set at $295.67~~ ~~per common share. The 2017 Capped Call Transactions are subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Notes, and have a cap price of approximately $366.06~~ ~~per common share.~~ ~~If any portion of the Notes are converted prior to maturity or we repurchase any portion of the Notes prior to maturity, a corresponding portion of the Capped Call Transactions~~ may be ~~terminated~~expected for ~~value at our election.~~

~~Description~~the full year ending December 31, 2023 or for any other period.

Statement of ~~Line Items~~

income data


	Nine Months Ended September 30,				Three Months Ended September 30,
(In millions)	2023		2022		2023		2022
	(Unaudited)				(Unaudited)
Net service revenues	$	9,233	$	6,766	$	3,419	$	2,437
Net product revenues	979		769		341		253
Net revenues	10,212		7,535		3,760		2,690

Cost of net revenues	(4,961)		(3,830)		(1,765)		(1,342)
Gross profit	5,251		3,705		1,995		1,348

Operating expenses:
Product and technology development	(1,145)		(774)		(396)		(278)
Sales and marketing	(1,207)		(916)		(441)		(333)
Provision for doubtful accounts	(751)		(845)		(277)		(288)
General and administrative	(565)		(485)		(196)		(153)
Total operating expenses	(3,668)		(3,020)		(1,310)		(1,052)
Income from operations	1,583		685		685		296

Other income (expenses):
Interest income and other financial gains	545		142		196		65
Interest expense and other financial losses	(297)		(221)		(111)		(92)
Foreign currency losses, net	(508)		(134)		(239)		(71)
Net income before income tax expense and equity in earnings of unconsolidated entity	1,323		472		531		198

Income tax expense	(504)		(154)		(172)		(69)
Equity in earnings of unconsolidated entity	3		(1)		—		—
Net income	$	822	$	317	$	359	$	129

Principal trends in results of operations

Net revenues

We ~~recognize~~disaggregate revenues ~~in each of our five~~into four geographical reporting segments. Within each of our segments, the services we provide and the products we sell generally fall into two distinct revenue ~~streams, “Marketplace” which includes our core business~~streams: “Commerce” and ~~“Non-Marketplace” which includes ad sales, classified fees, payment fees, shipping fees and other ancillary businesses.~~

~~The following table summarizes our consolidated net revenues by revenue stream for the nine and the three-month periods ended September 30, 2017 and 2016:~~

“Fintech”.

Nine-month Periods Ended

Three-month Periods Ended

September 30, (*)

September 30, (*)
Consolidated net revenues by revenue stream

2017

2016

2017

2016

(in millions)

(in millions)
Marketplace

$
582.5

$
341.7

$
227.3

$
134.4
Non-Marketplace (**) (***)

378.6

246.4

143.4

96.5
Total

$
961.1

$
588.1

$
370.7

$
230.8

~~(*) The table above may not total due to rounding.~~

~~(**) Includes, among other things, Ad Sales, Classified Fees, Payment Fees, Shipping Fees and other ancillary services.~~

~~(***)~~ Includes an amount of $232.4 million and $139.6 million of Payment Fees for the nine-month periods ended September 30, 2017 and 2016, respectively. Includes an amount of $92.3 million and $52.4 million of Payment Fees for the three-month periods ended September 30, 2017 and 2016, respectively.

Revenues from ~~Marketplace~~Commerce transactions are mainly generated from:

~~final value fees; and~~

~~up-front fees.~~

~~For Marketplace services,~~•marketplace fees that include final value fees ~~representing~~and flat fees for transactions below a certain merchandise value. Final value fees represent a percentage of the sale value that is charged to the seller once an item is successfully sold and flat fees represent a fixed charge for transactions below a certain merchandise value;

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•first party sales, which are generated when control of the good is transferred, upon delivery to our customers;

•shipping fees, which are generated when a buyer elects to receive an item through our shipping service, net of the third-party carrier costs (when we act as an agent), and storage fees, which are charged to the seller ~~once~~for the ~~item is successfully sold. Up-front~~utilization of the Company’s fulfillment facilities;

•ad sales fees due to advertising services provided to sellers, vendors, brands and others, through performance product ads and display advertising, which are recognized based on the number of clicks or impressions;

•classifieds fees due to offerings in vehicles, real estate and services, which are charged to ~~the seller in exchange for improved~~sellers who opt to give their listings greater exposure throughout our websites; and

•fees from other ancillary businesses.

Fintech revenues correspond to our Mercado Pago service, which are attributable to:

•commissions representing a percentage of the ~~listings throughout~~payment volume processed that are charged to sellers in connection with off Marketplace-platform transactions;

•commissions from additional fees we charge when a buyer elects to pay in installments through our Mercado Pago platform, for transactions that occur either on or off our Marketplace platform;

•commissions from additional fees we charge when our sellers elect to withdraw cash;

•interest, cash advances and ~~are not subject to~~fees from merchant and consumer loans granted under our Mercado Credito solution;

•commissions that we charge from transactions carried out with Mercado Pago credit and debit cards; and

•revenues from the ~~successful~~ sale of ~~the items listed.~~

~~Revenues for Non-Marketplace services are generated from:~~

~~payments fees;~~

mobile points of sale products and insurtech fees.

~~classifieds fees;~~

~~ad sales up-front fees;~~

~~shipping fees; and~~

~~fees from other ancillary businesses.~~

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~~With respect to our MercadoPago service, we generate payment fees attributable to:~~

~~commissions representing a percentage of the payment volume processed that are charged to sellers in connection with off Marketplace-platform transactions;~~

~~commissions from additional fees we charge when a buyer elects to pay in installments through our MercadoPago platform, for transactions that occur either on or off our Marketplace platform;~~

~~commissions from additional fees we charge when our sellers elect to withdraw cash;~~

~~interest, cash advances and fees from customers and merchant and consumer credits granted under our MercadoCredito solution; and~~

~~revenues from the sale of mobile points of sale products.~~

Although we also process payments on the Marketplace, we do not charge sellers an added commission for this service, as it is already included in the Marketplace final value fee that we charge.

Through our classifieds offerings in motor vehicles, real estate and services, we generate revenues from up-front fees. These fees are charged to sellers who opt to give their listings greater exposure throughout our websites.

~~Our Advertising revenues are generated by selling either display product and/or text link ads throughout our websites to interested advertisers.~~

~~Finally, our shipping revenues are generated when a buyer elects to receive the item through our shipping service.~~

When more than one service is included in one single arrangement with the customer, we recognize revenue according to multiple element arrangements accounting, distinguishing between each of the services provided and allocating revenues based on their respective estimated selling prices.

We have a highly fragmented customer revenue base given the large numbers of sellers and buyers who use our platforms. For the nine ~~month period~~and three-month periods ended September 30, ~~2017~~2023 and ~~2016,~~2022, no single customer accounted for more than 5.0% of our net revenues.

Our ~~MercadoLibre~~Mercado Libre Marketplace is available in 1918 countries (Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Peru, Mexico, Panama, ~~Peru, Portugal, Uruguay, Venezuela, Bolivia,~~ Honduras, Nicaragua, El Salvador, Uruguay, Bolivia, Guatemala, Venezuela (deconsolidated since December 1, 2017) and Paraguay), and ~~MercadoPago~~Mercado Pago is available in 8 countries (Argentina, Brazil, Mexico, Colombia, Chile, Peru, ~~Colombia, Mexico,~~ Uruguay and ~~Venezuela)~~Ecuador). Additionally, ~~MercadoEnvios~~Mercado Envios is available in ~~5 countries: Argentina,~~8 countries (Argentina, Brazil, Mexico, Colombia, Chile, Peru, Uruguay and ~~Chile.~~Ecuador). The functional currency for each country’s operations is the country’s local currency, except for ~~Venezuela~~Argentina, where the functional currency is the U.S. dollar due to ~~Venezuela’s~~Argentina’s status as a highly inflationary economy. ~~See—“Critical accounting policies and estimates—Foreign Currency Translation” included below. Therefore, our~~Our net revenues are generated in multiple foreign currencies and then translated into U.S. dollars at the average monthly exchange rate.

Please refer to “Summary of significant accounting policies” in Note 2 to our unaudited interim condensed consolidated financial statements for further detail on foreign currency translation.

Our net revenues grew during the nine and three-month periods ended September 30, 2023 as compared to the same periods in 2022, boosted by the growth of our gross merchandise volume and total payment volume.

The continued execution of our long-term strategies in Commerce and Fintech businesses has enabled us to deliver growth in gross merchandise volume, total payment volume and net revenues, alongside record quarterly operating results and strong cash generation.

The following table summarizes our consolidated net revenues for the nine and three-month periods ended September 30, 2023 and 2022:


	Nine Months Ended September 30,				Change from 2022 to 2023				Three Months Ended September 30,				Change from 2022 to 2023
	2023		2022		in Dollars		in %		2023		2022		in Dollars		in %
	(in millions, except percentages)								(in millions, except percentages)
Net revenues	$	10,212	$	7,535	$	2,677	35.5	%	$	3,760	$	2,690	$	1,070	39.8	%

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The following table summarizes our consolidated net revenues by revenue stream and geographic segment for the nine and three-month periods ended September 30, 2023 and 2022:


	Nine Months Ended September 30,				Change from 2022 to 2023				Three Months Ended September 30,				Change from 2022 to 2023
Consolidated net revenues by revenue stream	2023		2022		in Dollars		in %		2023		2022		in Dollars		in %
	(in millions, except percentages)								(in millions, except percentages)
Brazil
Commerce	$	3,167	$	2,221	$	946	42.6	%	$	1,211	$	780	$	431	55.3	%
Fintech	2,198		1,913		285		14.9	%	795		651		144		22.1	%
	$	5,365	$	4,134	$	1,231	29.8	%	$	2,006	$	1,431	$	575	40.2	%
Argentina
Commerce	$	885	$	800	$	85	10.6	%	$	310	$	290	$	20	6.9	%
Fintech	1,432		987		445		45.1	%	515		385		130		33.8	%
	$	2,317	$	1,787	$	530	29.7	%	$	825	$	675	$	150	22.2	%
Mexico
Commerce	$	1,372	$	863	$	509	59.0	%	$	499	$	311	$	188	60.5	%
Fintech	694		394		300		76.1	%	273		154		119		77.3	%
	$	2,066	$	1,257	$	809	64.4	%	$	772	$	465	$	307	66.0	%
Other countries
Commerce	$	316	$	263	$	53	20.2	%	$	108	$	84	$	24	28.6	%
Fintech	148		94		54		57.4	%	49		35		14		40.0	%
	$	464	$	357	$	107	30.0	%	$	157	$	119	$	38	31.9	%
Consolidated
Commerce	$	5,740	$	4,147	$	1,593	38.4	%	$	2,128	$	1,465	$	663	45.3	%
Fintech	4,472		3,388		1,084		32.0	%	1,632		1,225		407		33.2	%
Total	$	10,212	$	7,535	$	2,677	35.5	%	$	3,760	$	2,690	$	1,070	39.8	%

See Note 8 “Segment reporting” of our unaudited interim condensed consolidated financial statements for further information regarding our net revenues disaggregated by similar products and services for the nine and three-month periods ended September 30, 2023 and 2022.

Our Commerce revenues grew $1,593 million and $663 million, or 38.4% and 45.3%, for the nine and three-month periods ended September 30, 2023, as compared to the same periods in 2022, respectively. This increase in Commerce revenues was primarily attributable to:

a)an increase of $1,380 million and $573 million in our Commerce services revenues for the nine and three-month periods ended September 30, 2023, respectively, is mainly related to a 26% and 32% increase in gross merchandise volume, respectively, a 22% and 27% increase in our shipped items, respectively, and higher flat fee contributions for low gross merchandise volume transactions. Shipping carrier costs which are netted against revenues increased $430 million and $168 million, from $1,280 million and $443 million for the nine and three-month periods ended September 30, 2022 to $1,710 million and $611 million for the nine and three-month periods ended September 30, 2023, respectively; and

b)an increase of $213 million and $90 million in our revenues from Commerce products sales for the nine and three-month periods ended September 30, 2023, respectively, as compared to the same periods in 2022, mainly in Brazil and Mexico.

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Our Fintech revenues grew 32.0% and 33.2%, from $3,388 million and $1,225 million for the nine and three-month periods ended September 30, 2022, respectively, to $4,472 million and $1,632 million for the nine and three-month periods ended September 30, 2023, respectively. This increase was mainly generated by:

a) an increase of $756 million and $279 million in our revenues from Fintech services, mainly related to a 44% and 47% increase in our total payment volume, respectively; and

b) an increase of $331 million and $130 million in our credits revenues, for the nine and three-month periods ended September 30, 2023, respectively, as compared to the same periods in 2022, mainly as a consequence of higher originations.

Brazil

Commerce revenues in Brazil increased 42.6% in the nine-month period ended September 30, 2023 as compared to the same period in 2022. This increase was generated by an increase of $738 million in our Commerce services revenues and an increase of $208 million in our revenues from Commerce products sales. Fintech revenues grew by 14.9%, a $285 million increase, during the nine-month period ended September 30, 2023 as compared to the same period in 2022, mainly driven by an increase of $316 million in our revenues from Fintech services, partially offset by a decrease of $25 million in our Credits revenues.

Commerce revenues in Brazil increased 55.3% in the three-month period ended September 30, 2023 as compared to the same period in 2022. This increase was generated by an increase of $338 million in our Commerce services revenues and an increase of $93 million in our revenues from Commerce products sales. Fintech revenues grew by 22.1%, a $144 million increase, during the three-month period ended September 30, 2023 as compared to the same period in 2022, mainly driven by an increase of $130 million in our revenues from Fintech services and an increase of $17 million in our Credits revenues.

Argentina

Commerce revenues in Argentina increased 10.6% in the nine-month period ended September 30, 2023 as compared to the same period in 2022. This increase was generated by an increase of $125 million in our Commerce services revenues, partially offset by a decrease of $40 million in our revenues from Commerce products sales. Fintech revenues grew 45.1%, a $445 million increase, during the nine-month period ended September 30, 2023 as compared to the same period in 2022, mainly driven by an increase of $291 million in our revenues from Fintech services and an increase of $155 million in our Credits revenues.

Commerce revenues in Argentina increased 6.9% in the three-month period ended September 30, 2023 as compared to the same period in 2022. This increase was generated by an increase of $39 million in our Commerce services revenues, partially offset by a decrease of $19 million in our revenues from Commerce products sales. Fintech revenues grew 33.8%, a $130 million increase, during the three-month period ended September 30, 2023 as compared to the same period in 2022, mainly driven by an increase of $99 million in our revenues from Fintech services and an increase of $32 million in our Credits revenues.

Mexico

Commerce revenues in Mexico increased 59.0% in the nine-month period ended September 30, 2023 as compared to the same period in 2022. This increase was generated by an increase of $458 million in our Commerce services revenues and an increase of $51 million in our revenues from Commerce products sales. Fintech revenues grew 76.1%, a $300 million increase, during the nine-month period ended September 30, 2023 as compared to the same period in 2022, mainly driven by an increase of $198 million in our Credits revenues and an increase of $101 million in our revenues from Fintech services.

Commerce revenues in Mexico increased 60.5% in the three-month period ended September 30, 2023 as compared to the same period in 2022. This increase was generated by an increase of $172 million in our Commerce services revenues and an increase of $16 million in our revenues from Commerce products sales. Fintech revenues grew 77.3%, a $119 million increase, during the three-month period ended September 30, 2023 as compared to the same period in 2022, mainly driven by an increase of $80 million in our Credits revenues and an increase of $37 million in our revenues from Fintech services.

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The following table sets forth our total net revenues and the sequential quarterly growth of these net revenues for the periods described below:


	Quarter Ended
	March 31,			June 30,			September 30,			December 31,
	(in millions, except percentages)
2023
Net revenues	$	3,037		$	3,415		$	3,760		n/a
Percent change from prior quarter	1		%	12		%	10		%
2022
Net revenues	$	2,248		$	2,597		$	2,690		$	3,002
Percent change from prior quarter	5		%	16		%	4		%	12		%

The following table sets forth the growth in net revenues in local currencies, for the nine and three-month periods ended September 30, 2023 as compared to the same period in 2022:


	Change from 2022 to 2023
(% of revenue growth in Local Currency) (*)	Nine-month period		Three-month period
Brazil	26.5	%	30.3	%
Argentina (**)	163.3	%	179.6	%
Mexico	43.8	%	39.8	%
Other countries	26.3	%	23.5	%
Total consolidated	61.8	%	69.1	%

(*)The local currency revenue growth was calculated by using the average monthly exchange rates for each month during 2022 and applying them to the corresponding months in 2023, so as to calculate what our financial results would have been if exchange rates had remained stable from one year to the next. See also “Non-GAAP Financial Measures” section below for details on FX neutral measures.

(**)Average inter-annual inflation rate in our Argentine segment for the nine and three-month periods ended September 30, 2023 was 113.4% and 125.4%, respectively. This effect was offset by an average inter-annual depreciation of the Argentine peso of 105.2% and 133.2% for the nine and three-month periods ended September 30, 2023, respectively.

Cost of net revenues

Cost of net revenues primarily includes cost of goods sold, shipping operation costs (including warehousing costs), carrier and other operating costs, collection fees, sales taxes, funding costs related to our credits business, fraud prevention fees, certain taxes on bank transactions, hosting and site operation fees, compensation for customer support personnel and depreciation and amortization. The following table presents cost of net revenues for the periods indicated:


	Nine Months Ended September 30,					Change from 2022 to 2023			Three Months Ended September 30,				Change from 2022 to 2023
	2023			2022		in Dollars		in %	2023		2022		in Dollars		in %
	(in millions, except percentages)								(in millions, except percentages)
Total cost of net revenues	$	4,961		$	3,830	$	1,131	29.5%	$	1,765	$	1,342	$	423	31.5%
As a percentage of net revenues	48.6		%	50.8%					46.9%		49.9%

For the nine-month period ended September 30, 2023 as compared to the same period in 2022, the increase in cost of net revenues was primarily attributable to a: i) $402 million increase in shipping operating and carrier costs; ii) $197 million increase in sales taxes; iii) $181 million increase in collection fees, which was mainly attributable to our Brazilian and Mexican operations as a result of the higher transactions volume of Mercado Pago in those countries; iv) $158 million increase in other Fintech costs mainly related to higher funding costs in connection with our credits business; v) $119 million increase in cost of sales of goods mainly in Brazil and Mexico; and vi) $72 million increase in hosting and site operation fees.

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For the three-month period ended September 30, 2023 as compared to the same period in 2022, the increase in cost of net revenues was primarily attributable to a: i) $164 million increase in shipping operating and carrier costs; ii) $70 million increase in collection fees, which was mainly attributable to our Brazilian, Mexican and Argentinian operations as a result of the higher transactions volume of Mercado Pago in those countries; iii) $69 million increase in sales taxes; iv) $52 million increase in other Fintech costs mainly related to higher funding costs in connection with our credits business; v) $37 million increase in cost of sales of goods mainly in Brazil; and vi) $27 million increase in hosting and site operation fees.

Our subsidiaries in Brazil, Argentina ~~Venezuela~~ and Colombia are subject to certain taxes on revenues, which are classified as a cost of net revenues. These taxes represented ~~7.0%~~7.5% and 7.2% of net revenues for the nine and three-month ~~period~~periods endedSeptember 30, ~~2017, as compared to 9.5%~~2023, respectively, and 7.5% and 7.5% for the same ~~period~~periods in ~~2016.~~

~~Cost~~2022.

Gross profit margins

Our gross profit margin is defined as total net revenues minus total cost of net revenues,

~~Cost~~ as a percentage of net revenues.

Our main cost of net revenues ~~primarily represents bank and credit card processing charges for transactions and fees paid with credit cards~~is composed of shipping operation costs (including warehousing costs), carrier and other ~~payment methods,~~operating costs, collection fees, sales taxes, funding costs related to our credits business, cost of goods sold, fraud prevention fees, certain taxes on ~~revenues, free shipping costs, certain taxes on~~ bank transactions, hosting and site operation fees, compensation for customer support personnel ~~ISP connectivity charges,~~and depreciation and ~~amortization, hosting~~amortization. This cost structure is directly affected by the level of operations of our services, and ~~site operation fees,~~our strategic plan on gross profit is built on factors such as an ample liquidity to fund expenses and investments and a cost-effective capital structure.

For the nine and three-month periods ended September 30, 2023 and 2022, our gross profit margins were 51.4% and 53.1%, and 49.2% and 50.1%, respectively. The increase in our gross profit margins resulted primarily from the decrease in our cost of ~~mobile point of sale products~~goods sold and ~~other operation costs.~~

collection fees, as a percentage of net revenues, partially offset by an increase of our funding costs related to our credits business, as a percentage of net revenues.

In the future, our gross profit margin could decline if we continue growing our sales of goods business, which has a lower pure product margin, building up our logistics network and if we fail to maintain an appropriate relationship between our cost of revenue structure and our net revenues trend.

Product and technology development expenses

Our product and technology development related expenses consist primarily of compensation for our engineering and web-development staff (including long term retention program compensation), depreciation and amortization ~~costs~~expenses related to product and technology development, certain tax withholding related to export duties, telecommunications costs and payments to third-party suppliers who provide technology maintenance services to us.

The following table presents product and technology development expenses for the periods indicated:


	Nine Months Ended September 30,						Change from 2022 to 2023			Three Months Ended September 30,				Change from 2022 to 2023
	2023			2022			in Dollars		in %	2023		2022		in Dollars		in %
	(in millions, except percentages)									(in millions, except percentages)
Product and technology development	$	1,145		$	774		$	371	47.9%	$	396	$	278	$	118	42.4%
As a percentage of net revenues	11.2		%	10.3		%				10.5%		10.3%

For the nine-month period ended September 30, 2023, the increase in product and technology development expenses as compared to the same period in 2022 was primarily attributable to a: i) $266 million increase in salaries and wages mainly related to the increase of 23% in our product and technology development headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; ii) $55 million increase in other product and technology development expenses mainly related to certain tax withholding in connection with intercompany export services billing duties; and iii) $40 million increase in depreciation and amortization expenses mainly related to capitalized information and technology assets.

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For the three-month period ended September 30, 2023, the increase in product and technology development expenses as compared to the same period in 2022 was primarily attributable to a: i) $85 million increase in salaries and wages mainly related to the increase of 32% in our product and technology development headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; ii) $17 million increase in other product and technology development expenses mainly related to certain tax withholding in connection with intercompany export services billing duties; and iii) $13 million increase in depreciation and amortization expenses mainly related to capitalized information and technology assets.

We believe that product and technology development is one of our key competitive advantages and we intend to continue to invest in hiring engineers to meet the increasingly sophisticated product expectations of our customer base.

Sales and marketing expenses

Our sales and marketing expenses consist primarily of costs ofrelated to marketing our platforms through online and offline advertising and agreements with portals, ~~and~~ search engines and other sales expenses related to strategic marketing initiatives, charges related to our buyer protection ~~programs,~~program, the salaries of employees involved in these activities (including long term retention program compensation), chargebacks related to our ~~MercadoPago~~Mercado Pago operations, ~~bad debt charges, public relations costs,~~branding initiatives, marketing activities for our users and depreciation and amortization ~~costs.~~

expenses.

We carry out the majority of our marketing efforts on the Internet. We enter into agreements with portals, search engines, social networks,, ad networks and other sites in order to attract Internet users to the ~~MercadoLibre~~Mercado Libre Marketplace and convert them into registered users and active traders on our platform.

We also work intensively on attracting, developing and growing our seller community through our customer support efforts. We have dedicated professionals in most of our operations that work with sellers through trade show participation, seminars and meetings to provide them with important tools and skills to become effective sellers on our platform.

The following table presents sales and marketing expenses for the periods indicated:


	Nine Months Ended September 30,						Change from 2022 to 2023			Three Months Ended September 30,						Change from 2022 to 2023
	2023			2022			in Dollars		in %	2023			2022			in Dollars		in %
	(in millions, except percentages)									(in millions, except percentages)
Sales and marketing	$	1,207		$	916		$	291	31.8%	$	441		$	333		$	108	32.4%
As a percentage of net revenues	11.8		%	12.2		%				11.7		%	12.4		%

For the nine-month period ended September 30, 2023, the increase in sales and marketing expenses as compared to the same period in 2022 was primarily attributable to a: i) $121 million increase in online and offline marketing expenses mainly in Brazil; ii) $73 million increase in our buyer protection program expenses; iii) $53 million increase in salaries and wages mainly related to the increase of 29% in our sales and marketing headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; iv) $21 million increase in sales expenses; and v) $19 million increase in chargebacks.

For the three-month period ended September 30, 2023, the increase in sales and marketing expenses as compared to the same period in 2022 was primarily attributable to a: i) $58 million increase in online and offline marketing expenses mainly in Brazil; ii) $25 million increase in our buyer protection program expenses; and iii) $19 million increase in salaries and wages mainly related to the increase of 30% in our sales and marketing headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price.

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Provision for doubtful accounts

Provision for doubtful accounts consists of the current expected credit losses on our financial assets, mainly loans receivable. The following table presents provision for doubtful accounts expenses for the periods indicated:


	Nine Months Ended September 30,						Change from 2022 to 2023			Three Months Ended September 30,				Change from 2022 to 2023
	2023			2022			in Dollars		in %	2023		2022		in Dollars		in %
	(in millions, except percentages)									(in millions, except percentages)
Provision for doubtful accounts	$	751		$	845		$	(94)	(11.1)%	$	277	$	288	$	(11)	(3.8)%
As a percentage of net revenues	7.4		%	11.2		%				7.4%		10.7%

For the nine and three-month periods ended September 30, 2023, as compared to the same periods in 2022, the provision for doubtful accounts decreased $94 million and $11 million, respectively. Initiatives to rebalance portfolio exposure towards lower risk customers allowed us to improve our non-performing loans ratio from 37.0% as of September 30, 2022 to 30.8% as of September 30, 2023.

General and administrative expenses

Our general and administrative expenses consist primarily of salaries for management and administrative staff, compensation ~~for outside~~of non-employee directors, long term retention ~~plan~~program compensation, ~~impairment of Long-Lived assets,~~ expenses for legal, audit and other professional services, insurance expenses, office space rental expenses, impairment losses from digital assets, travel and business expenses, as well as depreciation and amortization ~~costs.~~expenses. Our general and administrative expenses include the costs of the following areas: general management, finance, treasury, internal audit, administration, accounting, tax, legal and human resources.

The following table presents general and administrative expenses for the periods indicated:


	Nine Months Ended September 30,						Change from 2022 to 2023			Three Months Ended September 30,				Change from 2022 to 2023
	2023			2022			in Dollars		in %	2023		2022		in Dollars		in %
	(in millions, except percentages)									(in millions, except percentages)
General and administrative	$	565		$	485		$	80	16.5%	$	196	$	153	$	43	28.1%
As a percentage of net revenues	5.5		%	6.4		%				5.2%		5.7%

For the nine-month period ended September 30, 2023, the increase in general and administrative expenses as compared to the same period in 2022 was primarily attributable to a $84 million increase in salaries and wages, mainly related to the increase of 12% in general and administrative headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price. This increase was partially offset by a $9 million decrease in temporary services primarily related to administrative workers.

For the three-month period ended September 30, 2023, the increase in general and administrative expenses as compared to the same period in 2022 was primarily attributable to a: i) $31 million increase in salaries and wages, mainly related to the increase of 17% in general and administrative headcount and increases in amounts accrued under the LTRPs as a consequence of the increase in our common stock price; and ii) $10 million increase in tax, legal and other fees.

Operating income margins

Our operating income margin is defined as income from operations as a percentage of net revenues.

Our operating income margin is affected by our operating expenses structure, which mainly consists of our employees’ salaries, our sales and marketing expenses related to those activities we incurred to promote our services, provision for doubtful accounts mainly related to our loans receivable portfolio and product and technology development expenses, among other operating expenses. As we continue to grow and focus on expanding our leadership in the region, we will continue to invest in product and technology development, sales and marketing and human resources in order to promote our services and capture long-term business opportunities. As a result, we may experience decreases in our operating income margins.

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For the nine and three-month periods ended September 30, 2023, as compared to the same periods in 2022, our operating income margins increased from 9.1% and 11.0% to 15.5% and 18.2%, respectively. This increase was mainly explained by a decrease in provision for doubtful accounts, as a percentage of net revenues and our improvement in cost of net revenues margins. This increase was partially offset by higher salaries and wages due to headcount increases and increases in amounts accrued under the LTRPs as result of the increase in our common stock price. The nine and three-month periods ended September 30, 2023’s financial results reflect our ongoing commitment to deliver sustainable and profitable growth.

Other expense, net

Other income (expenses), net

~~Other income (expenses)~~ consists primarily of interest income derived from our investments and cash equivalents, interest expense and other financial charges related to financial liabilities and foreign currency gains or losses. The following table presents other income (expense), net for the periods indicated:


	Nine Months Ended September 30,						Change from 2022 to 2023			Three Months Ended September 30,						Change from 2022 to 2023
	2023			2022			in Dollars		in %	2023			2022			in Dollars		in %
	(in millions, except percentages)									(in millions, except percentages)
Other expense, net	$	(260)		$	(213)		$	(47)	22.1%	$	(154)		$	(98)		$	(56)	57.1%
As a percentage of net revenues	(2.5)		%	(2.8)		%				(4.1)		%	(3.6)		%

For the nine-month period ended September 30, 2023, the increase in other expense, net as compared to the same period in 2022 was primarily attributable to: i) foreign exchange losses that were $374 million higher than foreign exchange losses for the same period in 2022, mainly due to higher acquisition of our own common stock in the Argentine market at a price that reflects the additional cost of accessing U.S. dollars through an indirect mechanism due to restrictions imposed by the Argentine government for buying U.S. dollars at the official exchange rate (refer to Note 16 of our unaudited interim condensed consolidated financial statements for further detail) and higher foreign exchange losses from our Argentine subsidiaries, partially offset by higher foreign exchange gains from our Mexican subsidiaries and lower foreign exchange losses from our Brazilian subsidiaries; and ii) a $76 million increase in interest expense and other financial losses mainly attributable to higher levels of indebtedness in 2023 (mainly in Brazil, Mexico and Chile).

This increase was partially offset by an increase of $403 million in interest income and other financial gains from financial investments as a result of higher cash levels invested due to higher interest rates (mainly in Argentina, Brazil and Mexico).

For the three-month period ended September 30, 2023, the increase in other expense, net as compared to the same period in 2022 was primarily attributable to: i) foreign exchange losses that were $168 million higher than foreign exchange losses for the same period in 2022, mainly due to higher acquisition of our own common stock in the Argentine market at a price that reflects the additional cost of accessing U.S. dollars through an indirect mechanism due to restrictions imposed by the Argentine government for buying U.S. dollars at the official exchange rate (refer to Note 16 of our unaudited interim condensed consolidated financial statements for further detail) and higher foreign exchange losses from our Argentine subsidiaries; and ii) a $19 million increase in interest expense and other financial losses mainly attributable to higher levels of indebtedness in 2023 (mainly in Brazil). This increase was partially offset by an increase of $131 million in interest income and other financial gains from financial investments as a result of higher cash levels invested due to higher interest rates (mainly in Argentina, Brazil and Mexico).

Income tax

We are subject to federal and state ~~taxes~~income tax in the United States, as well as foreign taxes in the multiple jurisdictions where we operate. Our tax obligations consist of current and deferred income ~~taxes and asset~~ taxes incurred in these jurisdictions. We account for income taxes following the liability method of accounting. A valuation allowance is recorded when, based on the available evidence, it is more likely than not that all or a portion of our deferred tax assets will not be realized.Therefore, our income tax expense consists of taxes currently payable, if any (given that in certain jurisdictions we still have net operating loss carry-forwards), plus the change in our deferred tax assets and liabilities during each period.

~~Critical Accounting Policies and Estimates~~

The preparation of our unaudited interim condensed consolidated financial statements and related notes requires us to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We have based our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our management has discussed the development, selection and disclosure of these estimates with our audit committee and our board of directors. Actual results may differ from these estimates under different assumptions or conditions.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our interim condensed consolidated financial statements. We believe that the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of our interim condensed consolidated financial statements.

There have been no significant changes in our critical accounting policies, management estimates or accounting policies since the year ended December 31, 2016 and disclosed in the Form 10-K. See Item – “Critical Accounting Policies”.

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~~Foreign Currency Translation~~

All of our foreign operations (other than Venezuela since January 1, 2010, as described below) use the local currency as their functional currency. Accordingly, these operating foreign subsidiaries translate assets and liabilities from their local currencies to U.S. dollars using period-end exchange rates while income and expense accounts are translated at the average exchange rates in effect during the period, unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of the transaction are used. The resulting translation adjustment is recorded as part of other comprehensive (loss) income, a component of equity. Gains and losses resulting from transactions denominated in non-functional currencies are recognized in earnings. Net foreign currency exchange losses or gains are included in the consolidated statements of income under the caption “Foreign currency (losses) gains”.

~~Venezuelan Currency Status~~

Pursuant to U.S. GAAP, we have classified our Venezuelan operations as highly inflationary since January 1, 2010, using the U.S. dollar as the functional currency for purposes of reporting our financial statements. Therefore, no translation effect has been accounted for in other comprehensive income related to our Venezuelan operations.

On March 9, 2016 the Central Bank of Venezuela (“BCV”) issued the Exchange Agreement No.35, which is effective since March 10, 2016. The agreement established a “protected” exchange rate (“DIPRO”) for certain transactions, such as but not limited to: imports of goods of the food and health sectors, as well as supplies associated with the production of said sectors; expenses relating to health treatments, sports, culture, scientific research, and other urgent matters defined by the exchange regulations. All foreign currency transactions not expressly provided in Exchange Agreement No.35 will be processed on the alternate foreign currency markets governed by the exchange regulations, at the floating supplementary market exchange rate (“DICOM”).

On May 19, 2017, the BCV issued the Exchange Agreement No.38, which established a new foreign exchange mechanism under DICOM, replacing previous SIMADI. The new mechanism consists of auctions, administered by an auction committee, where sellers and buyers from the private sector may offer foreign currency under certain limits determined by the BCV.

Considering the significant devaluation and the lower U.S. dollar-equivalent cash flows then expected from the Venezuelan business, the Company reviewed its long-lived assets (including non-current other assets), goodwill and intangible assets with indefinite useful life for impairment and concluded that the carrying value of certain real estate investments in Venezuela as of June 30, 2017 would not be fully recoverable. As a result, on June 30, 2017, the Company recorded an impairment of offices and commercial property under construction included within non-current other assets of $2.8 million. The carrying amount of offices and commercial property under construction was adjusted to its estimated fair value of approximately $9.7 million as of June 30, 2017, by using the market approach, and considering prices for similar assets. ~~As of September 30, 2017, the DICOM exchange rate was 3,345.0 BsF per U.S. dollar~~

Until 2010 we were able to obtain U.S. dollars for any purpose, including dividend distributions, using alternative mechanisms other than through the Commission for the Administration of Foreign Exchange Control (CADIVI). Those U.S. dollars, obtained at a ~~higher~~ exchange rate than the one offered by CADIVI and held in balance at U.S. bank accounts of our Venezuelan subsidiaries, were used for dividend distributions from our Venezuelan subsidiaries. We have not distributed dividends from our Venezuelan subsidiaries since 2011.

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The following table ~~sets forth~~summarizes the ~~assets, liabilities and net assets~~composition of our Venezuelan subsidiaries, before intercompany eliminations of a net liability of $29.6 million and $15.8 million, as of September 30, 2017 and December 31, 2016 and net revenues for the nine-month periods ended September 30, 2017 and 2016:

Nine-month Periods Ended September 30,

2017

2016
Venezuelan operations

(In millions)
Net Revenues

$ 38.3

$ 26.5

September 30,

September 30,

2017

2016

(In millions)
Assets

62.6

66.2
Liabilities

(37.3)

(23.0)
Net Assets

$ 25.4

$ 43.2

As of September 30, 2017, the net assets (before intercompany eliminations) of our Venezuelan subsidiaries amounted to approximately 6.2% of our consolidated net assets, and cash and investments of our Venezuelan subsidiaries held in local currency in Venezuela amounted to approximately 2.2% of our consolidated cash and investments.

~~Our ability to obtain U.S. dollars in Venezuela is negatively affected by the exchange restrictions in Venezuela that are described above. If~~ ~~our~~ access to U.S. dollars becomes widely available at a more unfavorable rate than the current DICOM exchange rate (or if DICOM exchange rate experiences significant devaluation in the future), and we decided to use that alternative mechanism considering that exchange rate as the one applicable for re-measurement, our results of operations, earnings and value of our net assets in Venezuela would be negatively impacted, and we cannot assure that the impact would not be material. In addition, our business and ability to obtain U.S. dollars in Venezuela would be negatively affected by any additional material devaluations or the imposition of significant ~~additional~~ ~~and more stringent controls on foreign currency exchange by the Venezuelan government in the future.~~

~~Despite the current difficult macroeconomic environment in Venezuela, we continue managing, through our Venezuelan~~ ~~subsidiaries~~, our investment in Venezuela. Despite the current operating, political and economic conditions and certain other factors in Venezuela, we currently plan to continue supporting our business in Venezuela in the long run.

In November 2013 the Venezuelan Congress approved an “enabling law” granting the president of Venezuela the authority to enact laws and regulations in certain policy areas by decree. This authority includes the ability to restrict profit margins and impose greater ~~controls~~ on foreign exchange and the production, import, and distribution of certain goods. Among other actions, the president has used this decree power to pass the Law of Costs, Earnings, and Fair Profits, which became effective in January 2014 and, among other provisions, authorizes the Venezuelan government to set “fair prices” and maximum profit margins in the private sector. On October 26, 2015, the decree number 2,074 was published in the Official Gazette of Venezuela, establishing certain definitions related to the determination of prices in that country.

~~Despite we do not expect that this law together with the decree issued by the Venezuelan Government will have a material adverse~~ ~~impact~~ on our financial condition or results of operations, considering the current difficult macroeconomic environment in Venezuela, the final potential effects remains uncertain. The effects of such potential effects, if any, would be recognized in our financial statements once the mentioned uncertainty is resolved.

~~Allowances for doubtful accounts and for chargebacks~~

We are exposed to losses due to uncollectible accounts and credits to sellers. Allowances for these items represent our estimate of future losses based on our historical experience. The allowances for doubtful accounts and for chargebacks are recorded as charges to sales and marketing expenses. Historically, our actual losses have been consistent with our charges. However, future adverse changes to our historical experience for doubtful accounts and chargebacks could have a material impact on our future consolidated statements of income and cash flows.

~~We believe that the accounting estimate related to allowances for doubtful accounts and for chargebacks is a critical accounting estimate~~ ~~because~~ ~~it requires management to make assumptions about future collections and credit analysis. Our management’s assumptions about future collections require significant judgment~~.

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~~Legal contingencies~~

In ~~connection~~ with certain pending litigation and other claims, we have estimated the range of probable loss and provided for such losses through charges to our interim condensed consolidated statement of income. These estimates are based on our assessment of the facts and circumstances and historical information related to actions filed against us at each balance sheet date and are subject to change based upon new information and future events.

~~Convertible Senior Notes~~

~~On June 30, 2014, we issued $330 million of 2.25% convertible senior notes due 2019 (the “Notes”). The Notes may be converted, under~~ ~~specific~~ conditions, based on an initial conversion rate of 7.9353 shares of common stock per $1,000 principal amount of Notes, subject to adjustment as described in the indenture governing the Notes. The convertible debt instrument, within the scope of the cash conversion subsection, was separated into debt and equity components at issuance and a fair value was assigned. The value assigned to the debt component was the estimated fair value, as of the issuance date, of a similar debt without the conversion feature. As of June 30, 2014, we determined the fair value of the liability component of the Notes by reviewing market data that was available for senior, unsecured nonconvertible corporate bonds issued by comparable companies. The difference between the cash proceeds and this estimated fair value represents the value assigned to the equity component and was recorded as a debt discount. The debt discount is amortized using the effective interest method from the origination date through its stated contractual maturity date.

~~In connection with the issuance of the Notes, we paid $19.7 million and~~ ~~$67.3 million (including transaction expenses)~~ ~~in June 2014 and September 2017, respectively, to enter into capped call transactions with respect to shares of our~~ ~~common~~ stock (the “Capped Call Transactions”), with certain financial institutions. The Capped Call Transactions are expected generally to reduce the potential dilution upon conversion of the Convertible Notes in the event that the market price of our common stock is greater than the strike price of the Capped Call Transactions. The cost of the ~~Capped~~ ~~Call~~ ~~Transactions is included as a net reduction to additional paid-in capital in the stockholders’ equity section of our consolidated balance sheets.~~

~~For~~ ~~more~~ ~~detailed information in relation to the Notes and the Capped Call~~ Transactions, see “—Results of operations for the nine-month period ended September 30, 2017 compared to the nine-month period ended September 30, 2016 and the three-month period ended September 30, 2017 compared to the ~~three-month period ended September 30, 2016—Debt” and Note 9 to our unaudited interim condensed consolidated financial statements.~~

~~Impairment of long-lived assets, goodwill and intangible assets with indefinite useful life~~

We review long-lived assets for impairments whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Furthermore, goodwill and certain indefinite life trademarks are reviewed for impairment at each year-end or more frequently when events or changes in circumstances indicate that their carrying value may not be recoverable.

We believe that the accounting estimate related to impairment of long lived assets and goodwill is critical since it is highly susceptible to change from period to period because: (i) it requires management to make assumptions about gross merchandise volume growth, total payment volume, total payment transactions, future interest rates, sales and costs; and (ii) the impact that recognizing an impairment would have on the assets reported on our balance sheet as well as our net income would be material. Management’s assumptions about future sales and future costs require significant judgment.

~~For additional information, see “Critical~~ ~~Accounting Policies” section~~ ~~in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.~~

~~Income taxes~~

~~We are required to recognize a provision for~~ income taxes based upon taxable income and temporary differences between the book and tax bases of our assets and liabilities for each of the tax jurisdictions in which we operate. This process requires a calculation of taxes payable under currently enacted tax laws in each jurisdiction and an analysis of temporary differences between the book and tax bases of our assets and liabilities, including various accruals, allowances, depreciation and amortization. The tax effect of these temporary differences and the estimated tax benefit from our tax net operating losses are reported as deferred tax assets and liabilities in our consolidated balance sheet. We also assess the likelihood that our net deferred tax assets will be realized from future taxable income. To the extent we believe that it is more likely than not that some portion or all of our deferred tax assets will not be realized, we establish a valuation allowance. As of September 30, 2017, we had a valuation allowance on certain foreign net operating losses based on our assessment that it is more likely than not that the deferred tax asset will not be realized. To the extent we establish a valuation allowance or change the allowance in a period, we reflect the change with a corresponding increase or decrease in our “Income/asset tax expense” line in our consolidated statement of income.

~~Table of Contents~~

~~Stock-based compensation~~

Our board of directors adopted long-term retention plans (“LTRPs”), under which certain eligible employees receive awards. See “Item 3. Quantitative and Qualitative Disclosures About Market Risk —Equity Price Risk” for details on the LTRPs. The variable LTRP awards are calculated based on the fair value of our common stock on NASDAQ Global Market.

Results of operations for the nine-month period ended September 30, 2017 compared to the nine-month period ended September 30, 2016 and three-month period ended September 30, 2017 compared to the three-month period ended September 30, 2016

~~The selected financial data~~ for the nine and three-month periods ended September 30, ~~2017~~2023 and ~~2016 discussed herein is derived from our unaudited interim condensed consolidated financial statements included in Item 1 of Part I of this report. These statements include all normal~~ ~~recurring~~ adjustments that management believes are necessary to fairly state our financial position, results of operations and cash flows. The results of operations for the nine and three-month period ended September 30, 2017 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2017 or for any other period.

~~Statement of income data~~

2022:

Since our inception, we have consistently generated revenue growth from our Marketplace and Non-Marketplace revenue streams, driven by the strong growth of our key operational metrics. Our net revenues grew 63.4% in the nine-month period ended September 30, 2017 as compared to the same period in 2016. Our successful items sold and total payment volume increased 45.8% and 76.9%, respectively, in the nine-month period ended September 30, 2017 as compared to the same period in 2016. Additionally, our number of ~~confirmed~~ registered users was 21.0% higher as of September 30, 2017 as compared to the number of confirmed registered users as of September 30, 2016. Furthermore, our gross merchandise volume (“GMV”) increased 39.6% in the nine-month period ended September 30, 2017 as compared to the same period in 2016. Finally, our shipped items volume increased in the nine-month period ended September 30, 2017 as compared to the same period in 2016.

Our net revenues grew 60.6% in the three-month period ended September 30, 2017 as compared to the same period in 2016. Our successful items sold and total payment volume increased 55.7% and 73.5%, respectively, in the three-month period ended September 30, 2017 as compared to the same period in 2016. Additionally, our number of confirmed registered users was 21.0% higher as of September 30, 2017 than as of September 30, 2016. Furthermore, our GMV increased 50.7% in the three-month period ended September 30, 2017 as compared to the same period in 2016. Finally, our shipped items volume increased in the three-month period ended September 30, 2017 as compared to the same period in 2016.

~~We believe that the growth in net revenues should continue in the future. However, despite this positive historical trend,~~ ~~the current~~ ~~weak~~ ~~global macro-economic environment, coupled with devaluations of certain local currencies in Latin America versus the U.S. dollar, the effects of Venezuelan translations of local currencies into~~ ~~the U.S. dollar, Venezuelan Government limits~~ ~~on prices and high interest rates in~~ ~~Latin America, could cause a decline~~ ~~year-over-year of our net revenues, particularly as measured in U.S. dollars.~~

During ~~the past years, our business has experienced decreasing gross profit margins, defined as total net revenues minus total cost of net~~ ~~revenues, as a percentage of net revenues.~~

~~Our~~ ~~gross~~ profit margins were 53.7% and 63.6% for the nine-month periods ended September 30, 2017 and 2016, respectively. For the three-month periods ended September 30, 2017 and 2016, our gross profit margins were 47.4% and 63.1%, respectively. The decrease in our gross profit margins resulted primarily from:

(i) Increased costs of providing free shipping in Mexico and Brazil of $102.6 million and $65.7 million for the nine and three-month period ended September 30, 2017, as compared with the same periods in 2016, respectively.

(ii) Higher penetration of our payments and shipping solution into our Argentine, Brazilian and Mexican marketplaces. For the nine and three-month period ended September 30, 2017, total volume of payments on our marketplace represented 81.4% and 84.3% of our total GMV (excluding motor vehicles, vessels, aircraft and real estate), respectively; as compared to 66.4% and 74.5% for the nine and three-month period ended September 30, 2016. Additionally, for the nine and three-month period ended September 30, 2017, the total number of items shipped through our shipping solution represented 54.2% and 56.2% of our total number of successful items sold, respectively; as compared to 46.8% and 48.5% for the nine and three-month period ended September 30, 2016. Transactions that include such services intrinsically incur incremental costs such as collection fees, which result in lower gross profit margins associated with these as compared to other services we offer. In addition, our financing and shipping revenues are disclosed net of third party provider costs while sales taxes are paid on the gross amount of revenues, thus, decreasing our gross profit margins in terms of revenues. For the nine-month period ended September 30, 2017, collection fees and sales taxes increased $62.4 million and $23.3 million, respectively, as compared to the same period in 2016. For the three-month period ended September 30, 2017, collection fees and sales taxes increased $21.9 million and $4.0 million, respectively, as compared to the same period in 2016.

~~(iii) Increased customer support costs of $15.3 million and $4.8 million for~~ the nine and three-month periods ended September 30, 2017, as compared with the same period in 2016; mainly as a consequence of an increase in salaries and wages. The number of employees related to customer support was 2,343 as of September 30, 2017 as compared with 1,740 as of September 30, 2016.

~~(iv)~~ ~~Increased~~ ~~hosting costs of $9.3 million and $2.8 million for the nine and three-month period ended September 30, 2017, as compared with the same periods in 2016, respectively.~~

~~In the~~ ~~future, gross profit margins could decline if free shipping volume increase or if the penetration of our payment solution and shipping grows faster than our marketplace.~~

For the nine-month period ended September 30, 2017 as compared to the same period in 2016, our operating income margin decreased from 19.8% to 12.6%, mainly as a consequence of increases in costs of net revenues (driven mainly by free shipping costs), as described under “Gross profit margins” above, and increases in sales and marketing expenses (driven mainly by on and off portal deals, salaries, buyer protection program and chargebacks from credit cards). For the three-month period ended September 30, 2017 as compared to the same period in 2016, our operating income margin decreased from 23.3% to 7.4%, for the same reasons.

We anticipate that as we continue to invest in product development, sales, marketing and human resources in order to promote our services and capture the long-term business opportunity offered by the Internet in Latin America, it is increasingly difficult to sustain growth in operating income margins and we could continue experiencing decreases in operating income margins.

~~(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.~~

~~(*) Includes, among other things, ad sales, classified fees, payment fees, shipping fees and other ancillary services.~~

~~(**) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.~~

~~Net revenues for the nine and three-month period ended September 30, 2017 increased in all of our geographic segments.~~

Marketplace revenue in Brazil increased 97.3% in the nine-month period ended September 30, 2017 as compared to the same period in 2016. The increase was primarily a consequence of a 33.6% increase in our take rate (which we define as net revenues as a percentage of gross merchandise volume), a 31.9% increase in local currency volume and a 12.0% average appreciation of local currency. Non-Marketplace revenues grew 64.8%, a $90.0 million increase, during the same period, mainly driven by: i) a 90.5% increase in the volume of payments transactions; and ii) a 51.4% increase in ad sales volume.

Marketplace revenues in Brazil increased 86.8% in the three-month period ended September 30, 2017 as compared to the same period in 2016. The increase was primarily a consequence of a 64.9% increase in our take rate, a 10.4% increase in local currency volume and a 2.6% average appreciation of local currency. Non-Marketplace revenues grew 59.7%, a $33.6 million increase, during the same period, mainly driven by: i) a 85.0 % increase in the volume of payments transactions; and ii) a 39.9 % increase in ad sales volume.

Marketplace revenues of our Argentine segment increased 29.3% in the nine-month period ended September 30, 2017, as compared to the same period in 2016. The increase was primarily a consequence of an increase of 33.8% in our take rate and a 7.4% increase in local currency volume, partially offset by a 10.0% average devaluation of local currency. Non-Marketplace revenues grew 43.4%, a $31.7 million increase, during the same period, mainly driven by: i) a 43.7% increase in the volume of payments transactions; ii) a 29.1% increase in the volume of shipped items; and iii) a 68.8% increase in classifieds volume.

~~Marketplace revenues of our Argentine segment increased 31.3% in the three-month period ended September 30, 2017 as compared to the same period in 2016.~~ ~~The increase was primarily a consequence of a 62.8% increase in our take rate, partially offset by a 13.5% average devaluation of the local currency and~~ ~~a 6.7% decrease in local currency volume.~~ Non-Marketplace revenues grew 29.2% in the three-month period ended September 30, 2017, a $8.4 million increase, during the same period, mainly driven by: i) a 38.4% increase in the volume of payments transactions; ii) a 41.0% increase in the volume of shipped items; and iii) a 38.8% increase in ad sales volume.

~~Marketplace revenues of our Mexican segment increased by approximately 108.5% in the nine-month period ended September 30, 2017, as compared to the same period in 2016,~~ ~~mainly due to a 58.7% increase in our take rate, and a 35.6% increase in local currency volume, partially offset by an average local currency devaluation of 3.1%.~~ Non-Marketplace revenues increased 15.8% or $2.3 million during the same period, mainly driven by increases in the volume of payment transactions and volume of shipped items, partially offset by a decrease in our classified fees.

~~Marketplace revenues of our Mexican segment increased by approximately 119.8% in the three-month period ended September 30, 2017, as compared to the same period in 2016,~~ ~~mainly due to a 74.2% increase in our take rate, a 19.9% increase in local currency volume,~~ ~~and a 5.2% average appreciation of local currency. N~~on-Marketplace revenues increased 41.0% in the three-month period ended September 30, 2017, or $1.7 million during the same period, mainly driven by increases in the volume of payment transactions and shipped items.

~~Marketplace revenues of our Venezuelan segment increased by approximately 47.6% in the nine-month period ended September 30, 2017, as compared to the same period in 2016,~~ ~~mainly due to a 296.2% increase in local currency volume and a 41.2% increase in our take rate, partially offset by an average local currency devaluation of 73.6%.~~ ~~Non-Marketplace revenues increased 19.2%, or $0.5 million during the same period, mainly by an increase in the volume of payment transactions.~~

~~Marketplace revenues of our Venezuelan segment increased by approximately 50.6% in the three-month period ended September 30, 2017, when compared to the same period in 2016,~~ ~~mainly due to a 340.1% increase in local currency volume and a 59.8% increase in our take rate, partially offset~~ ~~by an average local currency devaluation of 78.6%~~.~~Non-Marketplace revenues decreased 25.7%, or $0.2 million during the same period, mainly due to a decrease in the volume of classified fees.~~

~~The following table sets forth our total net revenues and the sequential quarterly growth of these net revenues for the periods described below:~~

~~(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table.~~

~~The following table sets forth the growth in net revenues in local currencies for the nine and three-month period ended September 30, 2017 as compared to the same period in 2016:~~

(*) The local currency revenue growth was calculated by using the average monthly exchange rates for each month during 2016 and applying them to the corresponding months in 2017, so as to calculate what our financial results would have been had exchange rates remained stable from one year to the next. See also “Non-GAAP Financial Measures” section below for details on FX neutral measures.

In Venezuela, the increase in our net revenues is mainly due to higher Marketplace volume and average selling prices posted by sellers during the nine and three-month period ended September 30, 2017, which we do not control. The increase in average selling prices in Venezuela is a consequence of: (i) the high inflation rate; (ii) a shortage of products and (iii) changes in the mix of categories of the items sold in our Marketplace.

~~In Brazil, the increase in local currency growth is mainly a consequence of an increase of our Brazilian Marketplace take rate and volume, increases inourMercadoPago transactions and our shipped~~ ~~items~~ ~~volume.~~

~~In the case of Argentina, the increase inour net revenues is due to an increase in the Argentine take rate, successful items volume and increases inourMercadoPagotransactions.~~

~~In Mexico, the increase in local currency growth is a consequence of an increase of our Mexican Marketplace take rate and volume, and increases inourMercadoPago transactions.~~

~~(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.~~

For the nine-month period ended September 30, 2017 as compared to the same period of 2016, the increase of $230.9 million in cost of net revenues was primarily attributable to: i) an increase in shipping costs amounting to $102.6 million, related to our Brazilian and Mexican free shipping initiative; ii) an increase in collection fees of $62.4 million, which was mainly attributable to our Argentine and Brazilian operations as a result of the higher transactions volume of MercadoPago in those countries; iii) an increase in sales taxes amounting to $23.3 million, mainly related to the growth of our Argentine and Brazilian operations; iv) a $15.3 million increase in customer support costs mainly as a consequence of salaries and wages, and v) $9.3 million in hosting costs due to higher traffic in our web-site.

For the three-month period ended September 30, 2017 as compared to the same period of 2016, the increase of $109.6 million in cost of net revenues was primarily attributable to: i) a increase in shipping costs amounting to $65.7 million, due to our Mexican and Brazilian free shipping initiative; ii) an increase in collection fees amounting to $21.9 million, which was mainly attributable to our Argentine and Brazilian operations as a result of the higher transactions volumne of MercadoPago in those countries and higher off-platform transactions; iii) an increase in cost of product sold amounting to $5.2 million as a consequence of higher volumes of mobile points of sales devices sold in Brazil and Argentina; iv) a $ 4.8 million increase in customer support costs mainly as a consequence of salaries and wages, and; v) an increase in sales taxes amounting to $4.0 million, mainly related to the growth of our Argentine and Brazilian operations.

~~(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.~~

~~Forthenine and three-month periodendedSeptember 30, 2017, the increase in product and technology development expenses~~2023 as compared to the same periods in ~~2016 amounted to $20.8 million~~2022, income tax expense increased mainly as a result of higher income tax expense in Argentina and ~~$6.3 million, respectively. These increase were primarily attributable to: i) an increase~~Brazil as a consequence of ~~$10.9 million and $3.9 million~~higher pre-tax gains in ~~salaries and wages, respectively; ii) an increase~~those segments in ~~depreciation~~ ~~and amortization expenses of $6.2 million and $2.3 million, respectively.~~

We ~~believe~~ ~~development is one of our key competitive advantages and intend to continue to invest in hiring engineers to meet the increasingly sophisticated product expectations of our customer base.~~

~~(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.~~

For the nine and three-month periods ended September 30, 2017, the $100.2 and $44.4 million increase in sales and marketing expenses when compared to the same periods in 2016 was primarily attributable to: i) an increase of $59.3 million and $25.0 million in on-line and offline marketing expenses mainly in Brazil and Mexico; ii) a $15.4 million and $6.7 million increase in chargebacks from credit cards due to the increase in our MercadoPago volume, respectively; iii) a $12.1 million and $3.8 million increase in salaries and wages, respectively; and iv) a $10.7 million and $7.1 million increase in our buyer protection program expenses, respectively.

~~(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.~~

For the nine-month period ended September 30, 2017, the $27.5 million increase in general and administrative expenses when compared to the same period in 2016 was primarily attributable to: i) a $19.8 million increase in salaries and wages; ii) a $2.9 million increase in tax, audit and legal fees; iii) a $2.3 million increase in other general and administrative expenses and; iv) a $ 0.9 increase in depreciation and amortization.

For the three-month period September 30, 2017, the $5.6 million increase in general and administrative expenses when compared to the same period in 2016 was primarily attributable to: i) a $2.1 million increase in salaries and wages; ii) a $1.4 million increase in tax, audit and legal fees; iii) a $1.0 million increase in other general and administrative expenses; and iv) a $ 0.4 increase in depreciation and amortization.

~~(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.~~

We recorded an impairment of certain real estate investments owned by our Venezuelan subsidiaries of $2.8 million and $13.7 million during the second quarter of 2017 and 2016, respectively. For further information, see section “Foreign Currency ~~Translation—Venezuelan currency status.~~”

~~(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.~~

~~For thenine-month period ended September 30, 2017, the $3.4millionincrease in other expenses when compared to a gain in the same period in 2016 was~~primarily attributable to: i) an increase in foreign exchange loss of $14.4 million, from $5.1 million in 2016 to $19.5 million in 2017, and ii) an increase in financial expenses amounting to $ 0.9 million, from $ 18.8 million in 2016 to $ 19.7 million in 2017, due mainly to our convertible notes and other financial charges in Brazil.2023. This increase was partially offset by ~~an increase in interest~~ income ~~amounting to $11.8 million, from $25.2 million in 2016 to $37.0 million in 2017~~ ~~arising mainly from our financial investments in Brazil and Argentina~~. The 2017 foreign exchange loss was mainly a consequence of a $25.5 million loss arising from the U.S. Dollar revaluation over our Bolivares Fuertes net asset position in Venezuela, partially offset by and a $ 4.2 million gain arising from the Mexican Peso revaluation over our U.S. Dollar net liability position in México and a $1.9 million gain arising from the Argentine Peso devaluation over our U.S. Dollar net asset position in Argentina. The 2016 foreign exchange loss was a consequence of a $7.4 million loss arising from the U.S. Dollar revaluation over our Bolivares Fuertes net asset position in Venezuela and a $ 3.7 million loss arising from the Mexican Peso devaluation over our U.S. Dollar net liability positiontax gains in Mexico ~~partially offset by a $6.5 million gain arising from the Argentine Peso devaluation over our U.S. Dollar net asset position in Argentina.~~

~~For thethree-month period ended September 30, 2017, the $10.5millionincrease in other income when compared to a loss in the same period in~~ ~~2016~~ ~~wasprimarily attributable to: i) a decrease in foreign exchange loss of $6.4 million, from $4.8 million losses in 2016 to $1.6 million gain in 2017 and ii)~~ a $4.3 million increase in interest income arising from our financial investments in Brazil and Argentina. This increase was partially offset by an increase in our financial expenses amounting to $ 0.2 million, from $ 6.5 million in 2016 to $6.7 million in 2017 ~~due mainly to our convertible notes and other financial charges in Brazil. The 2017 foreign exchange loss was mainly~~ as a ~~consequence of a $3.1 million gain arising from the Reais revaluation over our U.S. Dollar net liability position in Brazil, partially offset by a $ 2.6 million loss arising from~~ ~~the U.S. Dollar revaluation over our Bolivares Fuertes net asset position in Venezuela.~~ The 2016 foreign exchange loss was mainly as a consequence of a $ 2.1 million loss arising from the Reais devaluation over our U.S. Dollar net liability position in Brazil and a $ 1.7 million loss arising from Mexican Peso devaluation over our U.S. Dollar net liability position in Mexico.

~~(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.~~

~~During the nine-month period ended September 30, 2017 as compared to the same period in 2016, income tax increased by $4.5 million~~ ~~mainly~~ ~~as a consequence of: i) an increase in our pre-tax gains mainly in our Brazilian subsidiaries,~~ ~~partially offset by higher pre-tax losses recorded in Mexico during 2017 (as a~~ result ~~mainly of an increase in our operating costs); and ii) the~~ ~~loss carryforwards generated in our Venezuelan subsidiaries mainly as a consequence~~ of the ~~local currency devaluation, which was not considered recoverable for tax purposes~~reversal of the valuation allowances in ~~2017~~.

~~During the three-month period ended September 30, 2017 as compared to the same period in 2016, income tax decreased by $4.4 million~~ ~~mainly~~ ~~as a consequence~~one of ~~higher pre-tax losses recorded in Mexico and lower pre-tax tax gains recorded in Brazil during 2017 (as a result mainly of an increase in~~ our ~~operating costs); partially offset by a higher income tax expense in our Argentinean~~Mexican subsidiaries during the third quarter of 2017, as compared to the same period in 2016, due to a higher pre-tax in 2017 and because, in the comparative quarter, we applied tax holiday granted to Neosur S.R.L. and Business Vision S.A. retroactively to be effective as2023. Please see Note 2 of ~~September 18, 2014.~~

~~Our blended tax rate is defined as income tax expense as a percentage of income before income tax. Our effective income tax rate is defined as the provision~~our unaudited condensed consolidated financial statements for income taxes (net of charges related to dividend distributions from foreign subsidiaries that are offset with domestic foreign tax credits) as a percentage of income before income tax. The effective income tax rate excludes the effects of the deferred income tax, and complementary income tax.

Our ~~blended~~estimated effective tax rate for the nine-month period ended September 30, ~~2017~~2023 increased as compared to the same period in ~~2016 mainly due to: i) the devaluation loss recorded in our Venezuelan subsidiaries~~2022, as ~~described above which was not considered recoverable~~a result of (i) taxable foreign exchange gains accounted for local tax purposes ~~in 2017; and ii)~~that are not recorded for accounting purposes since, under U.S. GAAP, Argentine operations’ functional currency is the U.S. dollar due to the highly inflationary status of the country, (ii) a higher ~~increase in our~~proportion of pre-tax ~~gains in our~~results arising from entities under general income tax treatment regime over the Brazilian ~~subsidiaries~~segment as compared ~~with other locations, which are taxable at a~~to the same period in 2022 and (iii) higher ~~tax rate.~~

non-deductible foreign exchange losses related to the acquisition of our own common stock in the Argentine market. This increase was partially offset by the reversal of the valuation allowances in one of our Mexican subsidiaries during the third quarter of 2023. Please see Note 2 of our unaudited condensed consolidated financial statements for further information regarding these valuation allowance reversal.

Net revenues for the nine and three-month periods ended September 30, 2017, respectively. Furthermore, we recorded a labor cost benefit of $5.5 million and $2.0 million during the nine and three-month periods ended September 30, 2017, respectively. Additionally, $1.6 million and $0.6 million were accrued to pay software development law audit fees during the nine and three-month periods ended September 30, 2017, respectively. During the nine-month period ended September 30, 2016, we recorded an income tax benefit of $16.0 million, a labor cost benefit of $4,2 million and $1.4 million were accrued to pay software development law audit fees. Additionally, during the third quarter of 2016, we recorded an income tax benefit of $6.8 million, a labor cost benefit of $2.2 million and $0.6 million were accrued to pay software development law audit fees. ~~Aggregate per share effect of the Argentine tax holiday amounted to $0.46 and $0.20 for the nine and three-month periods ended September 30, 2016, respectively~~

~~The increase in our Brazilian effective income tax rate for the nine-month periods ended September 30, 2017~~2023 as compared to the same periods in 2016, was mainly related to higher temporary differences in the current period. There is no significant variation in the effective income tax rate for the three-month period ended September 30, 2017 as compared to the same period in 2016.

~~Table of Contents~~

For the nine and three-month periods ended September 30, 2017 and 2016, our Venezuelan effective income tax rate was driven mainly by losses recorded in our Venezuelan subsidiaries related to impairment of long-lived assets and foreign exchange losses, which generated net loss before income tax; except for the third quarter of 2016 which generated pre-tax gains. The loss carryforwards generated in Venezuela were considered not recoverable for tax purposes.

~~The increase in our Mexican~~ ~~effective income tax rate for~~ the nine and three-month periods ended September 30, 2017 as compared with the same periods in 2016, is due to the higher pre-tax losses recorded during 2017 (as a result mainly of an increase in our operating costs) without any corresponding impact in our provision for income taxes.

We do not expect the domestic effective income tax rate related to dividend distributions from foreign subsidiaries to have a significant impact on our company since our strategy is to reinvest our cash surplus in our international operations, and to distribute dividends when they can be offset with available tax credits.

~~Segment information~~

(In millions, except for percentages)
Nine-month Period Ended September 30, 2017 (*)

Brazil

Argentina

Mexico

Venezuela

Other Countries

Total
Net revenues
$            569.3

$             250.7

$             58.3

$               38.3

$                 44.5

$             961.1
Direct costs
$           (390.0)

$            (151.0)

$           (95.7)

$              (16.8)

$               (37.1)

$            (690.6)
Impairment of Long-lived Assets
—

—

—

(2.8)

—

(2.8)
Direct contribution
179.3

99.7

(37.4)

18.7

7.4

267.7
Margin
31.5%

39.8%

-64.1%

48.7%

16.6%

27.9%

Nine-month Period Ended September 30, 2016 (*)

Brazil

Argentina

Mexico

Venezuela

Other Countries

Total
Net revenues
$            311.4

$             185.9

$             34.4

$               26.5

$                 30.0

$             588.1
Direct costs
$           (188.8)

$            (105.2)

$           (29.0)

$              (12.7)

$               (21.3)

$            (357.0)
Impairment of Long-lived Assets
—

—

—

(13.7)

—

(13.7)
Direct contribution
122.7

80.7

5.4

0.0

8.7

217.4
Margin
39.4%

43.4%

15.6%

0.2%

29.0%

37.0%

Change from the Nine-month Period Ended September 30, 2016 to September 30, 2017 (*)

Brazil

Argentina

Mexico

Venezuela

Other Countries

Total
Net revenues

in Dollars
$            257.9

$               64.8

$             23.9

$               11.9

$                 14.5

$             373.0
in %
82.8%

34.9%

69.7%

44.9%

48.3%

63.4%
Direct costs

in Dollars
$           (201.2)

$              (45.8)

$           (66.7)

$                (4.1)

$               (15.8)

$            (333.6)
in %
106.6%

43.5%

229.9%

32.7%

74.1%

93.5%
Impairment of Long-Lived Assets

in Dollars
$                 —

$                  —

$                —

$               10.9

$                    —

$               10.9
in %
0.0%

0.0%

0.0%

-79.3%

0.0%

-79.3%
Direct contribution

in Dollars
$              56.7

$               19.1

$           (42.7)

$               18.6

$                 (1.3)

$               50.3
in %
46.2%

23.6%

-795.6%

43274.4%

-15.0%

23.1%

~~Table of Contents~~

(In millions, except for percentages)
Three-month Period Ended September 30, 2017 (*)

Brazil

Argentina

Mexico

Venezuela

Other Countries

Total
Net revenues
$             229.5

$               91.3

$             22.6

$                  9.8

$                 17.5

$              370.7
Direct costs
(182.9)

(56.2)

(36.0)

(4.6)

(14.4)

(294.1)
Direct contribution
46.6

35.1

(13.4)

5.2

3.1

76.6
Margin
20.3%

38.4%

-59.4%

53.0%

17.8%

20.7%

Three-month Period Ended September 30, 2016(*)

Brazil

Argentina

Mexico

Venezuela

Other Countries

Total
Net revenues
$             131.0

$               70.0

$             11.8

$                  6.9

$                 11.2

$              230.8
Direct costs
(77.0)

(39.0)

(10.4)

(3.5)

(7.9)

(137.8)
Direct contribution
54.0

31.0

1.5

3.4

3.2

93.1
Margin
41.2%

44.2%

12.3%

49.7%

28.9%

40.3%

Change from the Three-month Period Ended September 30, 2016 to September 30, 2017 (*)

Brazil

Argentina

Mexico

Venezuela

Other Countries

Total
Net revenues

in Dollars
$               98.5

$               21.3

$             10.8

$                  2.9

$                   6.4

$              139.8
in %
75.2%

30.5%

91.4%

41.6%

56.9%

60.6%
Direct costs

in Dollars
$           (105.8)

$              (17.2)

$            (25.7)

$                (1.1)

$                 (6.5)

$            (156.3)
in %
137.4%

44.0%

248.1%

32.4%

81.4%

113.4%
Direct contribution

in Dollars
$               (7.4)

$                 4.1

$            (14.9)

$                  1.7

$                 (0.1)

$              (16.4)
in %
-13.7%

13.4%

-1023.9%

51.0%

-3.5%

-17.6%

~~(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.~~

~~Net revenues~~

~~Net revenues for the nine and three-month period ended September 30, 2017 as compared to the same period in 2016,~~2022 are described above in “Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations —~~Operations—Principal trends in results of operations— Net revenues”.

~~(*) Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. The table above may not total due to rounding.~~

We believe that reconciliation of ~~FX neutral~~these non-GAAP measures to the most directly comparable GAAP measure provides investors an overall understanding of our current financial performance and its prospects for the future. ~~Specifically,~~

The table below shows the impact on our net revenues, cost of net revenues, operating expenses, other ~~expenses~~income (expenses) and income tax, net income and equity for a positive and a negative 10% fluctuation on all the foreign currencies to which we are exposed to at the moment of translating our financial statements to U.S. dollars for the nine-month period ended September 30, ~~2017:~~

Foreign Currency Sensitivity Analysis (*)
(In millions)

-10%
Actual
+10%

(1)

(2)
Net revenues

$                      1,067.8
$                       961.1
$                       873.8
Expenses

(933.7) (840.2) (763.8)
Income from operations

134.1 120.9 110.0

Other expenses and income tax related to P&L items

(21.0) (19.9) (19.0)

Foreign Currency impact related to the remeasurement of our Net Asset position

(21.5) (19.5) (17.8)
Net income

91.7 81.5 73.2

Total Shareholders' Equity

$                         457.9
$                       406.2
$                       365.9

~~(1)~~

~~Appreciation of the subsidiaries local currency against U.S. Dollar~~

2023:

~~(2)~~

~~Depreciation of the subsidiaries local currency against U.S. Dollar~~


Foreign Currency Sensitivity Analysis
(In millions)	-10%		Actual		+10%
	(1)				(2)
Net revenues	$	11,346	$	10,212	$	9,284
Expenses (*)	(9,545)		(8,629)		(7,880)
Income from operations	1,801		1,583		1,404

Other income/(expenses), equity in earning of unconsolidated entity and income tax related to P&L items	(275)		(253)		(234)
Foreign Currency impact related to the remeasurement of our Net Asset position	(521)		(508)		(497)
Net Income	$	1,005	$	822	$	673

Total Shareholders’ Equity	$	2,902	$	2,741	$	2,610

(1)Appreciation of the subsidiaries’ local currency against U.S. Dollar.

(2)Depreciation of the subsidiaries’ local currency against U.S. Dollar.

(*) ~~The table above may not total due to rounding.~~

Includes cost of net revenues and operating expenses.

The table above shows an increase in our net income when the U.S. dollar weakens against foreign currencies because of the ~~re-measurement~~positive impact of ~~our net asset position in U.S. dollars has a lesser impact than~~ the increase in ~~our net revenues, operating expenses, and~~income from operations. On the other ~~expenses, net and income tax lines related to the translation effect. Similarly,~~hand, the table above shows a decrease in our net income when the U.S. dollar strengthens against foreign currencies because of the ~~re-measurement~~negative impact of ~~our net asset position in U.S. dollars has a lesser impact than~~ the decrease in ~~our net revenues, operating expenses, and other expenses, net and~~ income ~~tax lines related to~~from operations.

Brazilian segment

Considering a hypothetical devaluation of 10% of the ~~translation effect.~~

~~During~~Brazilian Real against the ~~nine and three-month period ended~~U.S. dollar on September 30, ~~2017,~~2023, the reported net assets in our Brazilian subsidiaries would have decreased by approximately $227 million with the related impact in Other Comprehensive Income. Additionally, we ~~did not enter into any such hedging transaction.~~

~~Venezuelan Segment~~

would have recorded a foreign currency loss amounting to approximately $46 million in our Brazilian subsidiaries.

Argentine segment

In accordance with U.S. GAAP, we have classified our ~~Venezuelan~~Argentine operations as highly inflationary since ~~January~~July 1, ~~2010,~~2018, using the U.S. dollar as the functional currency for purposes of reporting our financial statements. Therefore, no translation effect has been accounted for in other comprehensive income related to our ~~Venezuelan operations. As of~~Argentine operations since July 1, 2018. Argentina’s inflation rate for the nine-month periods ended September 30, ~~2017, monetary assets~~2023 and ~~liabilities in BsF were re-measured to the U.S. dollar using the DICOM closing~~2022 was 103.2% and 66.1%, respectively.

We use Argentina’s official exchange rate ~~of 41,478.0 BsF per U.S. dollar.~~

~~See Item 2 of Part I, “Management’s discussion and analysis of financial condition and results of operations—Critical accounting policies and estimates—Foreign Currency Translation”~~to account for ~~details on the currency status of~~transactions in our ~~Venezuelan segment.~~

Although the current mechanisms available to obtain U.S. dollars for dividend distributions to shareholders outside of Venezuela imply increased restrictions, we do not expect that the current restrictions to purchase U.S. dollars will have a significant adverse effect on our business ~~strategy with regard to the investment in Venezuela.~~

~~In order to assist investors in their overall understanding of the impact on our Venezuelan~~Argentine segment, reporting, we developed a scenario that considers a 1240% additional devaluation over the DICOM rate as of the date of this report, applied for the period starting on January 1, 2017 to September 30, 2017. These disclosures may help investors to project sensitivities, on segment information captions, to devaluations of whatever order of magnitude they choose by simple arithmetic calculations. The information is just a scenario and does not represent a forward-looking statement about our expectations or projections related to future events in Venezuela. The investors and other readers or users of the financial information presented in this caption are cautioned not to place undue reliance on this scenario. This information is not a guarantee of future events.

The information disclosed below does not include any inflation effect, nor the devaluation impact related to the assumed devaluation or any other effect derived from the assumed devaluation, such as further impairments of long-lived assets. The information below should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP. In addition, this information is not based on any comprehensive set of accounting rules or principles.

~~Table of Contents~~

The evolution of the Venezuelan economy and any future governmental interventions in the Venezuelan economy are beyond our ability to control or predict. New events could happen in the future in Venezuela and it is not possible for management to predict all such events, nor can it assess the impact of all such events on our Venezuelan business.

The table below provides specific sensitivity information of our Venezuelan segment reporting for the period indicated assuming approximately a 1240% additional devaluation over the DICOM rate as of the date of this report, applied for the period starting on January 1, 2017 to September 30, 2017:

Nine-month period ended
September 30, 2017

Three-month period ended
September 30, 2017

Actual (*)

Sensitivity(**) (**)

Actual (*)

Sensitivity (**)

(In million)

(In million)

Net revenues
$38.3

$1.3

$9.8

$0.7

Direct costs
(16.8)

(5.4)

(4.6)

(1.8)

Direct contribution before impairment of Long-lived assets
$21.5

$(4.1)

$5.2

$ (1.0)

Direct Contribution Margin before impairment %
56.1%

-314.6%

53.0%

-144.8%

Non-current other assets impairment
(2.8)

(2.8)

-

-

Direct Contribution after impairment
18.7

$(7.0)

5.2

$(1.0)

Direct Contribution Margin after impairment %
48.7%

-530.7%

53.0%

-144.8%

~~(*) As reported.~~

~~(**) Computing a hypothetical devaluation of the Venezuelan segment from January 1 to September 30, 2017 assuming an exchange rate of 41,478.0 BsF per U.S. dollar (1240% of the exchange rate~~which as of September 30, ~~2017).~~

~~Despite~~2023 and December 31, 2022 was 349.95 and 177.16 Argentine Pesos, respectively, against the continued uncertainty and restrictions relating to foreign currency exchange in Venezuela as described above, we believe that our underlying business in that country is competitively well-positioned and continues to exhibit solid growth, in terms of units sold, even while economic conditions inU.S. dollar. For the Venezuelan economy remain difficult. As economic conditions in that country improve, we expect that our business in Venezuela will benefit accordingly. Although during the first half of 2017, we experienced a strong devaluation of ~~our~~ business in Venezuela, we cannot assure you that the BsF will not experience further devaluations or that the Venezuelan government will not default on its obligations to creditors in the future, which may be significant and could have a material negative impact on our future financial results of our Venezuela segment and value of our bolivar denominated net assets. However, for the reasons stated at the beginning of this paragraph, we remain strongly committed to our business and investment in Venezuela.

~~Argentine Segment~~

~~As of~~nine-month periods ended September 30, ~~2017, the Argentine Peso exchange rate~~2023 and 2022 Argentina’s depreciation of its local currency against the U.S. dollar was ~~17.3.~~

~~Had~~97.5% and 43.4%, respectively.

Considering a hypothetical devaluation of 10% of the Argentine ~~peso~~Peso against the U.S. dollar ~~occurred~~ on September 30, ~~2017,~~2023, the ~~reported~~effect on non-functional currency net ~~assets~~liability position in our Argentine subsidiaries would have ~~decreased by approximately $20.6 million with a related impact on Other Comprehensive Income. Additionally, we would have recorded~~been a foreign exchange gain amounting to approximately ~~$0.4~~$9 million in our Argentine subsidiaries.

~~Brazilian Segment~~

Table of ~~September 30, 2017,~~Contents

See “Summary of significant accounting policies - Foreign currency translation - Argentine currency status and Argentine exchange regulations” in Note 2 of our unaudited interim condensed consolidated financial statements for further detail on the ~~Brazilian Reais~~currency status and the exchange ~~rate against the U.S. dollar was 3.2.~~

~~Had~~regulations of our Argentine segment.

Mexican segment

Considering a hypothetical devaluation of 10% of the ~~Brazilian Reais~~Mexican Peso against the U.S. dollar ~~occurred~~ on September 30,~~, 2017,~~ 2023, the reported net assets in our ~~Brazilian~~Mexican subsidiaries would have decreased by approximately ~~$10.4~~$90 million with the related impact in Other Comprehensive Income. Additionally, we would have recorded a foreign ~~exchange~~currency loss amounting to approximately ~~$2.1~~$17 million in our ~~Brazilian~~Mexican subsidiaries.

Interest

Our earnings and cash flows are also affected by changes in interest rates. These changes could have an impact on the interest rates that financial institutions charge us prior to the time we sell our ~~MercadoPago receivables.~~Mercado Pago receivables and on the financial debt that we use to fund Mercado Pago and Mercado Credito’s operations. As of September 30, ~~2017, MercadoPago’s~~2023, Mercado Pago’s receivables totaled ~~$406.9~~$3,375 million. Interest rate fluctuations could also impact interest earned through our ~~MercadoCredito~~Mercado Credito solution. As of September 30, ~~2017,~~2023, loans ~~granted under~~receivable from our ~~MercadoCredito~~Mercado Credito solution totaled ~~$51.8~~$2,378 million. Interest rate fluctuations could also negatively affect certain of our fixed rate and floating rate investments comprised primarily of time deposits, money market funds ~~investment grade corporate debt securities~~ and sovereign debt securities. Investments in both fixed rate and floating rate interest earning products carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than predicted if interest rates fall.

~~Table of Contents~~

~~Under our current policies, we do not use interest rate derivative instruments to manage exposure to interest rate changes.~~ As of September 30, 2017, the average duration of our available for sale securities, defined as the approximate percentage change in price for a 100-basis-point change in yield, was 0.52%. If interest rates were to instantaneously increase (decrease) by 100 basis points, the fair market value of our available for sale securities as of September 30, 2017 could decrease (increase) by approximately $1.0 million.

~~As of September 30, 2017,~~2023, our short-term investments amounted to ~~$175.2~~$3,320 million and our long-term investments amounted to ~~$45.6~~$149 million. ~~These~~Our short-term investments can be readily converted at any time into cash or into securities with a shorter remaining time to maturity. We determine the appropriate classification of our investments at the time of purchase and re-evaluate such designations as of each balance sheet date.

~~Equity Price Risk~~

~~Our board~~ See Notes 3 and 5 of ~~directors adopted~~our unaudited interim condensed consolidated financial statements for further detail on our restricted investments.

In order to receive an award under the ~~2013, 2014 and/or 2015~~2018 LTRP, each eligible employee must satisfy the performance conditions established by the Board ~~of Directors~~ for such employee. If these conditions are satisfied, the eligible employee will, subject to his or her continued employment as of each applicable payment date, receive the full amount of his or her ~~2013, 2014 and/or 2015~~2018 LTRP award, payable as follows:

the eligible employee will receive a fixed payment, equal to 8.333% of his or her 2013, 2014 and/or 2015 LTRP bonus once a year for a period of six years starting in March 2014, 2015 and/or 2016 respectively (the “2013, 2014 or 2015 Annual Fixed Payment”, respectively); and

on each date we pay the Annual Fixed Payment to an eligible employee, he or she will also receive a payment (the “2013, 2014 or 2015 Variable Payment”, respectively) equal to the product of (i) 8.333% of the applicable 2013, 2014 and/or 2015 LTRP award and (ii) the quotient of (a) divided by (b), where (a), the numerator, equals the Applicable Year Stock Price (as defined below) and (b), the denominator, equals the 2012 (with respect to the 2013 LTRP), 2013 (with respect to the 2014 LTRP) and 2014 (with respect to the 2015 LTRP) Stock Price, defined as $79.57, $118.48 and $127.29 for the 2013, 2014 and 2015 LTRP, respectively, which was the average closing price of our common stock on the NASDAQ Global Market during the final 60 trading days of 2012, 2013, 2014 and 2015 respectively. The “Applicable Year Stock Price” shall equal the average closing price of our common stock on the NASDAQ Global Market during the final 60 trading days of the year preceding the applicable payment date.

•the eligible employee will receive a fixed payment, equal to 8.333% of his or her 2018 LTRP bonus once a year for a period of six years starting no later than April 30, 2019 (the “2018 Annual Fixed Payment”); and

•on each date we pay the respective Annual Fixed Payment to an eligible employee, he or she will also receive a payment (the “2018 Variable Payment”) equal to the product of (i) 8.333% of the applicable 2018 LTRP award and (ii) the quotient of (a) divided by (b), where (a), the numerator, equals the Applicable Year Stock Price (as defined below) and (b) the denominator, equals the 2017 Stock Price, defined as $270.84, which was the average closing price of our common stock on the NASDAQ Global Select Market during the final 60 trading days of 2017. The ~~2013, 2014 and 2015 LTRPs are filed as Exhibits 10.05, 10.06 and 10.07, respectively, to~~“Applicable Year Stock Price” shall equal the average closing price of our ~~Quarterly Report~~common stock on ~~Form 10-Q filed with~~ the ~~SEC on August 5, 2016, and~~NASDAQ Global Select Market during the ~~above description~~final 60 trading days of ~~such LTRPs is qualified in its entirety by reference to such exhibits.~~

the year preceding the applicable payment date.

Table of Contents

~~On August 2, 2016, the~~

Our Board, ~~of Directors,~~ upon the recommendation of the ~~Compensation Committee, adopted~~compensation committee, approved the ~~2016 LTRP~~2019, 2020, 2021, 2022 and 2023 Long Term Retention Programs (the “2019, 2020, 2021, 2022 and 2023 LTRPs”), respectively, under which ~~provides~~certain eligible employees have the opportunity to receive cash payments annually for a period of six years (with the first payment occurring no later than April 30, 2020, 2021, 2022, 2023 and 2024 for the ~~grant to eligible employees of a fixed award (the 2016 LTRP Fixed Award)~~2019, 2020, 2021, 2022 and ~~a variable award (the 2016 LTRP Variable Award)~~2023 LTRPs, respectively). In order to receive ~~awards~~the full target award under the ~~2016 LTRP,~~2019, 2020, 2021, 2022 and/or 2023 LTRPs, each eligible employee must satisfy the performance conditions established by the Board of Directors for such employee, which generally are expected to be based on pre-set goals for the Company’s financial and operational performance. If these conditions are satisfied, the eligible employee will, subject to his or her continued employmentremain employed as of each applicable payment ~~date,~~date. The 2019, 2020, 2021, 2022 and 2023 LTRP awards are payable as follows:

•the eligible employee will receive ~~the full amount~~16.66% of half of his or her ~~2016~~target 2019, 2020, 2021, 2022 and/or 2023 LTRP ~~Awards, payable as follows:~~

~~Fixed award: The eligible employee will receive a fixed payment equal to 16.66% of his or her 2016 LTRP Fixed Award~~bonus once a year for a period of six years, ~~starting in March 2017 (the “Annual Fixed Payment”); and~~

Variable award: On each date the Company pays the Annual Fixed Award to the eligible employee, he or she will also receive the 2016 LTRP Variable Award payment equal to the product of (i) 16.66% of the applicable 2016 LTRP Variable Award and (ii) the quotient of (a) divided by (b), where (a), the numerator, equals the Applicable Year Stock Price (as defined below) and (b), the denominator, equals the 2015 Stock Price (as defined below). For purposes of the 2016 LTRP, the “2015 Stock Price” shall equal $111.02 (the average closing price of the Company´s common stock on the NASDAQ Global Market during the final 60 -trading days of 2015) and the “Applicable Year Stock Price” shall equal the average closing price of the Company´s common stock on the NASDAQ Global Market during the final 60-trading days of the year preceding the applicable payment date for so long as the Company´s common stock is listed on the NASDAQ.

~~The 2016 LTRP is filed as Exhibit 10.08 to our Quarterly Report on Form 10-Q filed~~ with the ~~SEC~~ first payment occurring no later than April 30, 2020, 2021, 2022, 2023 and 2024, respectively (the “2019, 2020, 2021, 2022 or 2023 Annual Fixed Payment”, respectively); and

•on ~~August 5, 2016, and~~each date we pay the ~~description~~respective Annual Fixed Payment to an eligible employee, he or she will also receive a payment (the “2019, 2020, 2021, 2022 or 2023 Variable Payment”) equal to the product of (i) 16.66% of half of the ~~2016~~target 2019, 2020, 2021, 2022 or 2023 LTRP ~~above is qualified in its entirety~~award and (ii) the quotient of (a) divided by ~~reference to such exhibit.~~

~~On April 3, 2017,~~(b), where (a), the ~~Board~~numerator, equals the Applicable Year Stock Price (as defined below) and (b), the denominator, equals the average closing price of ~~Directors, upon~~our common stock on the ~~recommendation~~NASDAQ Global Select Market during the final 60 trading days of 2018, 2019, 2020, 2021 and 2022 defined as $322.91, $553.45, $1,431.26, $1,391.81 and $888.69 for the 2019, 2020, 2021, 2022 and 2023 LTRPs, respectively. The “Applicable Year Stock Price” shall equal the average closing price of our common stock on the NASDAQ Global Select Market during the final 60 trading days of the ~~Compensation Committee, adopted~~year preceding the 2017 LTRP which provides for the grant to eligible employees of a fixed award (the 2017 LTRP Fixed Award) and a variable award (the 2017 LTRP Variable Award). In order to receive awards under the 2017 LTRP, each eligible employee must satisfy the performance conditions established by the Board of Directors for such employee, which generally are expected to be based on pre-set goals for the Company’s financial and operational performance. If these conditions are satisfied, the eligible employee will, subject to his or her continued employment as of each applicable payment ~~date, receive the full amount~~date.

As of ~~his or her 2017 LTRP Awards, payable as follows:~~

Fixed award: The eligible employee will receive a fixed payment equal to 16.66% of his or her 2017 LTRP Fixed Award once a year for a period of six years starting in March 2018 (the “Annual Fixed Payment”); and

Variable award: On each date the Company pays the Annual Fixed Award to the eligible employee, he or she will also receive the 2017 LTRP Variable Award payment equal to the product of (i) 16.66% of the applicable 2017 LTRP Variable Award and (ii) the quotient of (a) divided by (b), where (a), the numerator, equals the Applicable Year Stock Price (as defined below) and (b), the denominator, equals the 2016 Stock Price (as defined below). For purposes of the 2017 LTRP, the “2016 Stock Price” shall equal $164.17 (the average closing price of the Company´s common stock on the NASDAQ Global Market during the final 60 -trading days of 2016) and the “Applicable Year Stock Price” shall equal the average closing price of the Company´s common stock on the NASDAQ Global Market during the final 60-trading days of the year preceding the applicable payment date for so long as the Company´s common stock is listed on the NASDAQ.

~~Table of Contents~~

At September 30, ~~2017,~~2023, the total contractual obligation fair value of our ~~2010, 2011, 2012, 2013, 2014, 2015, 2016 and 2017~~outstanding LTRP Variable Award Payment obligation subject to equity price risk amounted to ~~$67.4~~$442 million. As of September 30, ~~2017,~~2023, the accrued liability related to the ~~2010, 2011, 2012, 2013, 2014, 2015, 2016 and 2017~~outstanding Variable Award Payment of the LTRP included in Salaries and ~~Social~~social security payable in our ~~condensed~~ consolidated balance sheet amounted to ~~$38.5~~$74 million. The following table shows a sensitivity analysis of the risk associated with our total contractual obligation fair value related to the ~~2010, 2011, 2012, 2013, 2014, 2015, 2016 and 2017~~outstanding LTRP Variable Award Payment subject to equity price risk if our common stock price per share were to increase or decrease by up to 40%:

As of September 30, 2017

MercadoLibre, Inc

2010, 2011, 2012, 2013, 2014, 2015, 2016 and 2017

Equity Price

variable LTRP contractual obligation
(In thousands, except equity price)

Change in equity price in percentage

40%

372.04

94,320
30%

345.47

87,583
20%

318.89

80,846
10%

292.32

74,109
Static
(*)
265.74

67,372
-10%

239.17

60,634
-20%

212.59

53,897
-30%

186.02

47,160
-40%

159.45

40,423


	As of September 30, 2023
	MercadoLibre, Inc Equity Price	2018, 2019, 2020, 2021, 2022 and 2023 LTRP Variable contractual obligation
Change in equity price in percentage	(In millions, except equity price)
40%	1,785.27	619
30%	1,657.75	574
20%	1,530.23	530
10%	1,402.71	486
Static (*)	1,275.19	442
(10)%	1,147.67	398
(20)%	1,020.15	353
(30)%	892.63	309
(40)%	765.11	265

(*) ~~Average~~Present value of average closing stock price for the last 60 trading days of the ~~closing~~year preceding the applicable payment date.

Item

In November 2021, we acquired Kangú Participações S.A. Former Kangú’s shareholders who after the acquisition became the Company’s employees will receive cash payments annually over a three-year period subject to certain performance and stay conditions. The payments will be indexed based on changes in equity price of our common stock. As of September 30, 2023, the total contractual obligation fair value of the mentioned payments amounted to $8 million.

Item 4 — Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our ~~management,~~Management, including our ~~chief executive officer~~Chief Executive Officer and ~~chief financial officer,~~Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Table of Contents

Evaluation of ~~disclosure controls~~Disclosure Controls and ~~procedures~~

Procedures

Based on the evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) required by Exchange Act Rules 13a-15(b) or 15d-15(b), our ~~chief executive officer~~Chief Executive Officer and our ~~chief financial officer~~Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Changes in Internal Controls Over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the nine-month period ended September 30, ~~2017~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PARTWe permit remote work for most positions of our Company, and we monitor and assess the impact of this remote work environment on our internal controls.

PART II. OTHER INFORMATION

Item

Item 1 — Legal Proceedings

See Item 1 of Part I, “Financial Statements—Note 710 Commitments and Contingencies—Litigation and other Legal ~~Matters.”~~

Matters”.

Item 1A — Risk Factors

As of September 30, ~~2017,~~2023, there have been no material changes in our risk factors from those disclosed in ~~our Annual Report on Form 10-K~~the Company’s 2022 10-K.

Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities


Period	Total Number of Shares Purchased (2)	Average Price per Share (1)	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Program (in millions) (2)
July, 2023	—	—	—	Up to $479
August, 2023	69,807	2,718.29	69,807	Up to $290
September, 2023	43,343	3,063.36	43,343	Up to $157

(1)Average price paid per share does not include costs associated with the repurchases. It includes the foreign exchange loss recognized for the ~~fiscal year~~nine-month period ended ~~December~~September 30, 2023. Please refer to Note 16 of our unaudited interim condensed consolidated financial statements for additional detail.

(2)On February 21, 2023, the Board authorized the Company to repurchase shares of the Company’s common stock, for aggregate consideration of up to $900 million to expire on March 31, ~~2016.~~

Item2024 (the “Program”). As of September 30, 2023, the estimated remaining balance available for share repurchases under this Program was $157 million. Please refer to Note 16 of our unaudited interim condensed consolidated financial statements for additional detail.

Item 5 — Other Information

Rule 10b5-1 Trading Plans

During the three months ended September 30, 2023, none of the Company’s directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any “non-Rule 10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K.

Item 6 — Exhibits

The information set forth under “Index to Exhibits” below is incorporated herein by reference.

Table of Contents

~~Sign~~

MercadoLibre, Inc.

INDEX TO EXHIBITS

Incorporated by Reference

Exhibit Number

Exhibit Description

Filed (*) or
Furnished (**)
Herewith

Form

Filing Date

3.1

Registrant’s Amended and Restated Certificate of Incorporation.

S-1

May 11, 2007

3.2

Registrant’s Amended and Restated Bylaws.

S-1

May 11, 2007

4.1

Form of Specimen Certificate for the Registrant’s Common Stock.

10-K

February 27, 2009

4.2

Indenture with respect to the Registrant’s 2.00% Convertible Senior Notes due 2028, dated as of August 24, 2018, between the Registrant and Wilmington Trust, National Association, as trustee.

8-K

August 24, 2018

4.3

Indenture, dated January 14, 2021, between MercadoLibre, Inc., MercadoLibre S.R.L., Ibazar.com Atividades de Internet Ltda., eBazar.com.br Ltda., Mercado Envios Servicos de Logistica Ltda., MercadoPago.com Representações Ltda., MercadoLibre Chile Ltda., MercadoLibre, S. de R.L. de C.V., DeRemate.com de México, S. de R.L. de C.V. and MercadoLibre Colombia Ltda. and The Bank of New York Mellon, as trustee.

8-K

January 14, 2021

4.4

First Supplemental Indenture, dated January 14, 2021, between MercadoLibre, Inc., MercadoLibre S.R.L., Ibazar.com Atividades de Internet Ltda., eBazar.com.br Ltda., Mercado Envios Servicos de Logistica Ltda., MercadoPago.com Representações Ltda., MercadoLibre Chile Ltda., MercadoLibre, S. de R.L. de C.V., DeRemate.com de México, S. de R.L. de C.V. and MercadoLibre Colombia Ltda. and The Bank of New York Mellon, as trustee.

8-K

January 14, 2021

4.5

Form of Global Note representing the Registrant’s 2.375% Sustainability Notes due 2026.

8-K

January 14, 2021

4.6

Form of Global Note representing the Registrant’s 3.125% Notes due 2031.

8-K

January 14, 2021

4.7

Second Supplemental Indenture, dated October 27, 2021 among MP Agregador, S. de R.L. de C.V., MercadoLibre, Inc. and The Bank of New York Mellon, as Trustee

10-K

February 23, 2022

22.1

List of Subsidiary Guarantors for the Registrant’s 2.375% Sustainability Notes due 2026 and 3.125% Notes due 2031.

10-K

February 24, 2023

31.1

Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL: (i) Interim Condensed Consolidated Balance Sheets, (ii) Interim Condensed Consolidated Statements of Income, (iii) Interim Condensed Consolidated Statements of Comprehensive Income, (iv) Interim Condensed Statements of Equity, (v) Interim Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Interim Condensed Consolidated Financial Statements.

104

The cover page from the Company’s Form 10-Q for the quarterly period ended September 30, 2023, formatted in Inline XBRL and contained in Exhibit 101

Table of Contents~~atures~~

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MERCADOLIBRE, INC.

~~MERCADOLIBRE, INC.~~

Registrant

~~Registrant~~

Date: November ~~3, 2017.~~

2, 2023.

By:

~~By:~~

/s/ Marcos Galperin

Marcos Galperin

President and Chief Executive Officer

By:

~~By:~~

/s/ ~~Pedro Arnt~~

Martín de los Santos

~~Pedro Arnt~~

Martín de los Santos

~~Executive~~Sr. Vice President and Chief Financial Officer

~~Table of Contents~~

~~MercadoLibre, Inc.~~

~~INDEX TO EXHIBITS~~



~~3.1~~		~~Registrant’s Amended and Restated Certificate of Incorporation.(1)~~
~~3.2~~		~~Registrant’s Amended and Restated Bylaws.(1)~~
~~4.1~~		~~Form of Specimen Certificate for the Registrant’s Common Stock.(2)~~
~~4.2~~		~~Second Amended and Restated Registration Rights Agreement, dated September 24, 2001, by and among the Registrant and the investors named therein.~~ ~~(1)~~
~~4.3~~		~~Indenture with respect to the Registrant’s 2.25% Convertible Senior Notes due 2019, dated as of June 30, 2014, between the Registrant and Wilmington Trust, National Association, as trustee.~~ ~~(3)~~
~~31.1~~		~~Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~ *
~~31.2~~		~~Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~ *
~~32.1~~		~~Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~ *
~~32.2~~		~~Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~ *
~~101.INS~~		~~XBRL Instance Document~~
~~101.SCH~~		~~XBRL Taxonomy Extension Schema Document~~
~~101.CAL~~		~~XBRL Taxonomy Extension Calculation Linkbase Document~~
~~101.LAB~~		~~XBRL Taxonomy Extension Label Linkbase Document~~
~~101.PRE~~		~~XBRL Taxonomy Extension Presentation Linkbase Document~~
~~101.DEF~~		~~XBRL Taxonomy Extension Definition Linkbase~~


*	~~Filed or furnished herewith, as applicable.~~
~~(1)~~	~~Incorporated by reference to the Registration Statement on Form S-1 filed on May 11, 2007.~~
~~(2)~~	~~Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 filed on February 27, 2009.~~
~~(3)~~	~~Incorporated by reference to the Registrant’s Current Report on form 8-K filed on June 30, 2014.~~

	98-0212790

~~Delaware~~	~~98-0212790~~
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)


PART I. FINANCIAL INFORMATION
Item 1 — Unaudited Interim Condensed Consolidated Financial Statements
Interim Condensed Consolidated Balance Sheets as of September 30, ~~2017~~2023 and December 31, ~~2016~~2022			1
Interim Condensed Consolidated Statements of Income for the nine and three-month periods ended September 30, ~~2017~~2023 and ~~2016~~2022			2
Interim Condensed Consolidated Statements of Comprehensive Income for the nine and three-month periods ended September 30, ~~2017~~2023 and ~~2016~~2022			3
Interim Condensed Consolidated Statements of Equity for the nine and three-month periods ended September 30, 2023 and 2022			4
Interim Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 30, ~~2017~~2023 and ~~2016~~2022			4 5
Notes to Interim Condensed Consolidated Financial Statements (unaudited)			5 6
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations			24 37
Item 3 — Qualitative and Quantitative Disclosures About Market Risk			51 63
Item 4 — Controls and Procedures			56 66
PART II. OTHER INFORMATION			56 67
Item 1 — Legal Proceedings			56 67
Item 1A — Risk Factors			56 67
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds			67
Item 5 — Other Information			67
Item 6 — Exhibits			56 67
INDEX TO EXHIBITS			58 68


	September 30,	December 31,
	2017	2016		September 30, 2023		December 31, 2022
Assets			Assets
Current assets:			Current assets:
Cash and cash equivalents	$ 461,198	$ 234,140	Cash and cash equivalents	$	2,171	$	1,910
Restricted cash and cash equivalents			Restricted cash and cash equivalents	1,085		1,453
Short-term investments	175,165	253,321	Short-term investments	3,320		2,339
Accounts receivable, net	28,564	25,435	Accounts receivable, net	161		130
Credit cards receivables, net	406,883	307,904
Loans receivable, net	51,843	6,283
Credit card receivables and other means of payments, net			Credit card receivables and other means of payments, net	3,375		2,946
Loans receivable, net of allowances of $989 and $1,074 (Note 6)			Loans receivable, net of allowances of $989 and $1,074 (Note 6)	2,336		1,704
Prepaid expenses	8,199	15,060	Prepaid expenses	43		38
Inventory	2,309	1,103
Inventories			Inventories	246		152
Customer crypto-assets safeguarding assets			Customer crypto-assets safeguarding assets	21		15
Other assets	47,995	26,215	Other assets	292		266
Total current assets	1,182,156	869,461	Total current assets	13,050		10,953
Non-current assets:			Non-current assets:
Long-term investments	45,550	153,803	Long-term investments	149		322
Loans receivable, net of allowances of $35 and $30 (Note 6)			Loans receivable, net of allowances of $35 and $30 (Note 6)	42		32
Property and equipment, net	136,101	124,261	Property and equipment, net	1,081		993
Operating lease right-of-use assets			Operating lease right-of-use assets	796		656
Goodwill	95,249	91,797	Goodwill	159		153
Intangible assets, net	24,642	26,277	Intangible assets, net	21		25
Deferred tax assets	66,163	45,017	Deferred tax assets	489		346
Other assets	68,431	56,819	Other assets	337		256
Total non-current assets	436,136	497,974	Total non-current assets	3,074		2,783
Total assets	$ 1,618,292	$ 1,367,435	Total assets	$	16,124	$	13,736
Liabilities and Equity
Liabilities			Liabilities
Current liabilities:			Current liabilities:
Accounts payable and accrued expenses	$ 181,557	$ 105,106	Accounts payable and accrued expenses	$	1,910	$	1,393
Funds payable to customers	519,420	370,693	Funds payable to customers	4,016		3,454
Amounts payable due to credit and debit card transactions			Amounts payable due to credit and debit card transactions	745		483
Salaries and social security payable	61,168	48,898	Salaries and social security payable	519		401
Taxes payable	27,923	27,338	Taxes payable	530		414
Loans payable and other financial liabilities	24,701	11,583	Loans payable and other financial liabilities	2,272		2,131
Operating lease liabilities			Operating lease liabilities	171		142
Customer crypto-assets safeguarding liabilities			Customer crypto-assets safeguarding liabilities	21		15
Other liabilities	1,400	6,359	Other liabilities	122		129
Dividends payable	6,624	6,624
Total current liabilities	822,793	576,601	Total current liabilities	10,306		8,562
Non-current liabilities:			Non-current liabilities:
Salaries and social security payable	22,124	16,173
Amounts payable due to credit and debit card transactions			Amounts payable due to credit and debit card transactions	12		5
Loans payable and other financial liabilities	309,444	301,940	Loans payable and other financial liabilities	2,182		2,627
Operating lease liabilities			Operating lease liabilities	615		514
Deferred tax liabilities	40,435	34,059	Deferred tax liabilities	163		106
Other liabilities	17,340	9,808	Other liabilities	105		95
Total non-current liabilities	389,343	361,980	Total non-current liabilities	3,077		3,347
Total liabilities	$ 1,212,136	$ 938,581	Total liabilities	$	13,383	$	11,909

Equity:

Common stock, $0.001 par value, 110,000,000 shares authorized,
44,157,364 shares issued and outstanding at September 30,
2017 and December 31, 2016	$ 44	$ 44
Commitments and contingencies (Note 10)			Commitments and contingencies (Note 10)
Equity			Equity
Common stock, $0.001 par value, 110,000,000 shares authorized, 50,496,474 and 50,257,751 shares issued and outstanding			Common stock, $0.001 par value, 110,000,000 shares authorized, 50,496,474 and 50,257,751 shares issued and outstanding	$	—	$	—
Additional paid-in capital	70,674	137,982	Additional paid-in capital	1,959		2,309
Treasury stock			Treasury stock	(587)		(931)
Retained earnings	612,269	550,641	Retained earnings	1,735		913
Accumulated other comprehensive loss	(276,831)	(259,813)	Accumulated other comprehensive loss	(366)		(464)
Total Equity	406,156	428,854
Total Liabilities and Equity	$ 1,618,292	$ 1,367,435
Total equity			Total equity	2,741		1,827
Total liabilities and equity			Total liabilities and equity	$	16,124	$	13,736


	Nine Months Ended September 30		Three Months Ended September 30,
	2017	2016	2017	2016
Basic EPS
Basic net income
Available to shareholders per common share	$ 1.85	$ 1.93	$ 0.63	$ �� 0.88
Weighted average of outstanding common shares	44,157,364	44,157,215	44,157,364	44,157,341
Diluted EPS
Diluted net income
Available to shareholders per common share	$ 1.85	$ 1.93	$ 0.63	$ 0.88
Weighted average of outstanding common shares	44,157,364	44,157,215	44,157,364	44,157,341

Cash Dividends declared (per share)	0.450	0.450	0.150	0.150


	Nine Months Ended September 30,				Three Months Ended September 30,
	2023		2022		2023		2022
Basic earning per share
Basic net income available to shareholders per common share	$	16.40	$	6.30	$	7.18	$	2.57
Weighted average of outstanding common shares	50,137,826		50,365,813		50,008,320		50,325,075
Diluted earning per share
Diluted net income available to shareholders per common share	$	16.36	$	6.29	$	7.16	$	2.56
Weighted average of outstanding common shares	50,338,945		51,356,081		50,209,439		51,315,343


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐ o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Nine Months Ended September 30,				Three Months Ended September 30,
	2023		2022		2023		2022
Net income	$	822	$	317	$	359	$	129
Other comprehensive income:
Currency translation adjustment	99		—		(76)		(38)
Unrealized (losses) gains on hedging activities	(8)		(33)		2		(9)
Tax benefit (expenses) on unrealized (losses) gains on hedging activities	2		8		(1)		3
Less: Reclassification adjustment for losses on hedging activities included in cost of net revenues, interest expense and foreign currency losses	(8)		(18)		(6)		(9)
Less: Reclassification adjustment for estimated tax benefit on unrealized gains	3		5		2		3
Net change in accumulated other comprehensive income, net of income tax	98		(12)		(71)		(38)
Total comprehensive income	$	920	$	305	$	288	$	91


	Common stock			Additional paid-in capital		Treasury Stock (*)		Retained Earnings		Accumulated other comprehensive loss		Total Equity
	Shares	Amount
Balance as of December 31, 2022	50	$	—	$	2,309	$	(931)	$	913	$	(464)	$	1,827
Common Stock repurchased	—	—		—		(61)		—		—		(61)
Net income	—	—		—		—		201		—		201
Other comprehensive income	—	—		—		—		—		73		73
Balance as of March 31, 2023	50	$	—	$	2,309	$	(992)	$	1,114	$	(391)	$	2,040
Common Stock repurchased	—	—		—		(146)		—		—		(146)
Net income	—	—		—		—		262		—		262
Other comprehensive income	—	—		—		—		—		96		96
Balance as of June 30, 2023	50	$	—	$	2,309	$	(1,138)	$	1,376	$	(295)	$	2,252
Capped call settlement	—	—		412		(412)		—		—		—
Conversion of 2028 Convertible Notes	—	—		(762)		1,112		—		—		350
Common Stock repurchased	—	—		—		(149)		—		—		(149)
Net income	—	—		—		—		359		—		359
Other comprehensive loss	—	—		—		—		—		(71)		(71)
Balance as of September 30, 2023	50	$	—	$	1,959	$	(587)	$	1,735	$	(366)	$	2,741


(*)			As of September 30, 2023, the Company held 425,913 shares as treasury stock.


	Common stock			Additional paid-in capital		Treasury Stock		Retained Earnings		Accumulated other comprehensive loss		Total Equity
	Shares	Amount
Balance as of December 31, 2021	50	$	—	$	2,439	$	(790)	$	397	$	(515)	$	1,531
Changes in accounting standards	—	—		(131)		—		34		—		(97)
Balance as of December 31, 2021 Restated	50	$	—	$	2,308	$	(790)	$	431	$	(515)	$	1,434
Common Stock repurchased	—	—		—		(39)		—		—		(39)
Net income	—	—		—		—		65		—		65
Other comprehensive income	—	—		—		—		—		129		129
Balance as of March 31, 2022	50	$	—	$	2,308	$	(829)	$	496	$	(386)	$	1,589
Shares granted	—	—		—		6		—		—		6
Common Stock repurchased	—	—		—		(35)		—		—		(35)
Net income	—	—		—		—		123		—		123
Other comprehensive loss	—	—		—		—		—		(103)		(103)
Balance as of June 30, 2022	50	$	—	$	2,308	$	(858)	$	619	$	(489)	$	1,580
Shares granted	—	—		—		1		—		—		1
Stock-based compensation - restricted shares	—	—		—		(1)		—		—		(1)
Common Stock repurchased	—	—		—		(40)		—		—		(40)
Net income	—	—		—		—		129		—		129
Other comprehensive loss	—	—		—		—		—		(38)		(38)
Balance as of September 30, 2022	50	$	—	$	2,308	$	(898)	$	748	$	(527)	$	1,631



	Unrealized	Foreign	Estimated tax
	(Losses) Gains on	Currency	(expense)
	Investments	Translation	benefit	Total
	(In thousands)
Balances as of December 31, 2016	$ (909)	$ (259,226)	$ 322	$ (259,813)
Other comprehensive loss before reclassifications adjustments for gains (losses) on available for sale investments	518	(17,945)	(178)	(17,605)
Amount of gain (loss) reclassified from accumulated other comprehensive loss	909	—	(322)	587
Net current period other comprehensive income gain (loss)	1,427	(17,945)	(500)	(17,018)
Ending balance	$ 518	$ (277,171)	$ (178)	$ (276,831)


	September 30, 2023		December 31, 2022
	(In millions)
Cash and cash equivalents
Cash in bank accounts	$	1,238	$	1,160
Money market	764		599
Time deposits	169		130
U.S. government debt securities	—		21

Total cash and cash equivalents	$	2,171	$	1,910
Restricted cash and cash equivalents
Securitization transactions (2)	$	281	$	459
Foreign government debt securities (Central Bank of Brazil mandatory guarantee) (1)	—		158
Bank account (Argentine Central Bank regulation) (1)	413		496
Bank account (Mexican National Banking and Securities Commission regulation) (1)	38		9
Time deposits (Mexican National Banking and Securities Commission regulation) (1)	264		239
Bank account (Chilean Commission for the Financial Market regulation) (1)	27		4
Time deposits (Chilean Commission for the Financial Market regulation) (1)	36		49
Money market (Secured lines of credit guarantee)	26		33
Bank account (Financial Superintendence of Colombia regulation) (1)	—		1
Money market (Financial Superintendence of Colombia regulation) (1)	—		5
Total restricted cash and cash equivalents	$	1,085	$	1,453
Total cash, cash equivalents, restricted cash and cash equivalents (3)	$	3,256	$	3,363
Short-term investments
U.S. government debt securities	$	1,124	$	558
Foreign government debt securities (Central Bank of Brazil mandatory guarantee) (1)	1,762		1,219
Foreign government debt securities (4)	94		123
Time deposits	326		439
Securitization transactions (2)	1		—
Equity securities at fair value	13		$	—
Total short-term investments	$	3,320	$	2,339
Long-term investments
U.S. government debt securities	$	—	$	175
Foreign government debt securities (5)	67		70
Securitization transactions (2)	24		21
Equity securities held at cost	58		56
Total long-term investments	$	149	$	322


	September 30, 2023
	Loans receivable		Allowance for doubtful accounts		Loans receivable, net
	(In millions)
On-line merchant	$	418	$	(120)	$	298
Consumer	1,827		(573)		1,254
In-store merchant	294		(127)		167
Credit cards	863		(204)		659
Total	$	3,402	$	(1,024)	$	2,378


	September 30, 2022
	On-line merchant		Consumer		In-store merchant		Credit cards		Total
	(In millions)
Balance at beginning of year	$	79	$	232	$	76	$	48	$	435
Net charged to Net Income	83		457		111		191		842
Currency translation adjustments	(2)		(19)		(3)		(9)		(33)
Write-offs (*)	(48)		(133)		(48)		(7)		(236)
Balance at end of period	$	112	$	537	$	136	$	223	$	1,008


Delaware


	Period ended September 30, 2017									Nine Months Ended September 30, 2023
	Brazil	Argentina	Chile	Mexico	Venezuela	Colombia	Other Countries	Total		Brazil		Argentina		Mexico		Chile		Colombia		Other countries		Total
	(In thousands)									(In millions)
Balance, beginning of the period	$ 27,660	$ 6,587	$ 17,388	$ 29,342	$ 5,989	$ 3,643	$ 1,188	$ 91,797	Balance, beginning of the period	$	60	$	10	$	39	$	37	$	5	$	2	$	153
- Effect of exchange rates changes	245	(809)	783	3,158	—	50	25	3,452
Effect of exchange rates changes									Effect of exchange rates changes	2		—		5		(2)		1		—		6
Balance, end of the period	$ 27,905	$ 5,778	$ 18,171	$ 32,500	$ 5,989	$ 3,693	$ 1,213	$ 95,249	Balance, end of the period	$	62	$	10	$	44	$	35	$	6	$	2	$	159

										Year Ended December 31, 2022
										Brazil		Argentina		Mexico		Chile		Colombia		Other countries		Total
										(In millions)
Balance, beginning of the period									Balance, beginning of the period	$	56	$	10	$	37	$	37	$	6	$	2	$	148
Effect of exchange rates changes									Effect of exchange rates changes	4		—		2		—		(1)		—		5
Balance, end of the period									Balance, end of the period	$	60	$	10	$	39	$	37	$	5	$	2	$	153



	Year ended December 31, 2016
	Brazil	Argentina	Chile	Mexico	Venezuela	Colombia	Other Countries	Total
	(In thousands)
Balance, beginning of year	$ 18,526	$ 7,430	$ 16,438	$ 33,834	$ 5,729	$ 3,437	$ 1,151	$ 86,545
- Business acquisition	5,635	700	—	190	260	57	32	6,874
- Effect of exchange rates changes	3,499	(1,543)	950	(4,682)	—	149	5	(1,622)
Balance, end of the year	$ 27,660	$ 6,587	$ 17,388	$ 29,342	$ 5,989	$ 3,643	$ 1,188	$ 91,797


For year to be ended ~~12/31/2017~~ December 31, 2023	$	1	~~$ 1,343~~
For year to be ended ~~12/31/2018~~ December 31, 2024	3			~~4,475~~
For year to be ended ~~12/31/2019~~ December 31, 2025	1			~~2,201~~
For year to be ended ~~12/31/2020~~ December 31, 2026	1			~~956~~
Thereafter	3			~~2,514~~
	$	9	~~$ 11,489~~


	Nine Months Ended September 30, 2017							Nine Months Ended September 30, 2023
	Brazil	Argentina	Mexico	Venezuela	Other Countries	Total		Brazil		Argentina		Mexico		Other Countries		Total
	(In thousands)							(In millions)
Net revenues	$ 569,320	$ 250,692	$ 58,324	$ 38,329	$ 44,452	$ 961,117	Net revenues	$	5,365	$	2,317	$	2,066	$	464	$	10,212
Direct costs	(390,008)	(150,973)	(95,683)	(16,841)	(37,052)	(690,557)	Direct costs	(4,027)		(1,289)		(1,593)		(429)		(7,338)
Impairment of Long-lived Assets	-	-	-	(2,837)	-	(2,837)
Direct contribution	179,312	99,719	(37,359)	18,651	7,400	267,723	Direct contribution	1,338		1,028		473		35		2,874

Operating expenses and indirect costs of net revenues						(146,841)	Operating expenses and indirect costs of net revenues									(1,291)
Income from operations						120,882	Income from operations									1,583

Other income (expenses):							Other income (expenses):
Interest income and other financial gains						37,020	Interest income and other financial gains									545
Interest expense and other financial losses						(19,686)	Interest expense and other financial losses									(297)
Foreign currency losses						(19,475)
Net income before income tax expense						$ 118,741
Foreign currency losses, net							Foreign currency losses, net									(508)
Net income before income tax expense and equity in earnings of unconsolidated entity							Net income before income tax expense and equity in earnings of unconsolidated entity									$	1,323


	Nine Months Ended September 30, 2016
	Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
	(In thousands)
Net revenues	$ 311,427	$ 185,885	$ 34,375	$ 26,451	$ 29,983	$ 588,121
Direct costs	(188,772)	(105,217)	(29,004)	(12,691)	(21,281)	(356,965)
Impairment of Long-lived Assets	-	-	-	(13,717)	-	(13,717)
Direct contribution	122,655	80,668	5,371	43	8,702	217,439

Operating expenses and indirect costs of net revenues						(101,055)
Income from operations						116,384

Other income (expenses):
Interest income and other financial gains						25,192
Interest expense and other financial losses						(18,807)
Foreign currency losses						(5,062)
Net income before income tax expense						$ 117,707


		Three Months Ended September 30, 2017							Nine Months Ended September 30, 2022
		Brazil	Argentina	Mexico	Venezuela	Other Countries	Total		Brazil		Argentina		Mexico		Other Countries		Total
		(In thousands)							(In millions)
Net revenues	Net revenues	$ 229,475	$ 91,308	$ 22,604	$ 9,751	$ 17,523	$ 370,661	Net revenues	$	4,134	$	1,787	$	1,257	$	357	$	7,535
Direct costs	Direct costs	(182,858)	(56,210)	(36,038)	(4,582)	(14,409)	(294,097)	Direct costs	(3,472)		(1,068)		(1,075)		(348)		(5,963)
Direct contribution	Direct contribution	46,617	35,098	(13,434)	5,169	3,114	76,564	Direct contribution	662		719		182		9		1,572

Operating expenses and indirect costs of net revenues	Operating expenses and indirect costs of net revenues						(49,022)	Operating expenses and indirect costs of net revenues									(887)
Income from operations	Income from operations						27,542	Income from operations									685

Other income (expenses):	Other income (expenses):							Other income (expenses):
	Interest income and other financial gains						14,200
	Interest expense and other financial losses						(6,709)
	Foreign currency gains						1,622
Net income before income tax expense							$36,655
Interest income and other financial gains								Interest income and other financial gains									142
Interest expense and other financial losses								Interest expense and other financial losses									(221)
Foreign currency losses, net								Foreign currency losses, net									(134)
Net income before income tax expense and equity in earnings of unconsolidated entity								Net income before income tax expense and equity in earnings of unconsolidated entity									$	472


	Three Months Ended September 30, 2023
	Brazil		Argentina		Mexico		Other Countries		Total
	(In millions)
Net revenues	$	2,006	$	825	$	772	$	157	$	3,760
Direct costs	(1,435)		(441)		(605)		(150)		(2,631)
Direct contribution	571		384		167		7		1,129
Operating expenses and indirect costs of net revenues									(444)
Income from operations									685
Other income (expenses):
Interest income and other financial gains									196
Interest expense and other financial losses									(111)
Foreign currency losses, net									(239)
Net income before income tax expense and equity in earnings of unconsolidated entity									$	531


	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 and equity in earnings of unconsolidated entity									$	198


		Three Months Ended September 30, 2016
		Brazil	Argentina	Mexico	Venezuela	Other Countries	Total
		(In thousands)
Net revenues		$131,003	$69,983	$11,807	$6,885	$11,169	$230,847
Direct costs		(77,012)	(39,026)	(10,353)	(3,462)	(7,943)	(137,796)
Direct contribution		53,991	30,957	1,454	3,423	3,226	93,051

Operating expenses and indirect costs of net revenues							(39,342)
Income from operations							53,709

Other income (expenses):
	Interest income and other financial gains						9,892
	Interest expense and other financial losses						(6,492)
	Foreign currency losses						(4,823)
Net income before income tax expense							$52,286


	Nine-months Ended September 30,		Three-months Ended September 30,

Consolidated Net Revenues	2017	2016	2017	2016
	(In thousands)		(In thousands)
Marketplace	$ 582,475	$ 341,749	$ 227,269	$ 134,374
Non-marketplace () (*)	$ 378,642	$ 246,372	$ 143,392	$ 96,473
Total	$ 961,117	$ 588,121	$ 370,661	$ 230,847



		Quoted Prices in				Quoted Prices in
	Balances as of	active markets for	Significant other	Unobservable	Balances as of	active markets for	Significant other	Unobservable
	September 30,	identical Assets	observable inputs	inputs	December 31,	identical Assets	observable inputs	inputs
Description	2017	(Level 1)	(Level 2)	(Level 3)	2016	(Level 1)	(Level 2)	(Level 3)
	(In thousands)
Assets
Cash and Cash Equivalents:
Money Market Funds	$ 189,574	$ 189,574	$ —	$ —	$ 111,198	$ 111,198	$ —	$ —
Investments:
Sovereign Debt Securities	$ 21,786	$ 21,786	$ —	$ —	$ 50,703	$ 50,703	$ —	$ —
Corporate Debt Securities	30,468	28,384	2,084	—	207,633	61,986	145,647	—
Certificates of deposit	—	—	—	—	35,374	—	35,374	—
Total Financial Assets	$ 241,828	$ 239,744	$ 2,084	$ —	$ 404,908	$ 223,887	$ 181,021	$ —
Liabilities:
Contingent considerations	$ —	$ —	$ —	$ —	$ 4,213	$ —	$ —	$ 4,213
Long-term retention plan	38,503	—	38,503	—	27,135	—	27,135	—
Total Financial Liabilities	$ 38,503	$ —	$ 38,503	$ —	$ 31,348	$ —	$ 27,135	$ 4,213


Description	Balances as of September 30, 2023		Quoted Prices in active markets for identical Assets (Level 1)		Significant other observable inputs (Level 2)		Unobservable inputs (Level 3)		Balances as of December 31, 2022		Quoted Prices in active markets for identical Assets (Level 1)		Significant other observable inputs (Level 2)		Unobservable inputs (Level 3)
	(In millions)
Assets
Cash and Cash Equivalents:
Money Market	$	764	$	764	$	—	$	—	$	599	$	599	$	—	$	—
U.S. government debt securities (1)	—		—		—		—		21		21		—		—

Restricted Cash and Cash Equivalents:
Money Market (3)	219		219		—		—		352		352		—		—
Foreign government debt securities (Central Bank of Brazil Mandatory Guarantee) (1)	—		—		—		—		158		158		—		—
Investments:
U.S. government debt securities (1)	1,124		1,124		—		—		733		733		—		—
Foreign government debt securities (Central Bank of Brazil Mandatory Guarantee) (1)	1,762		1,762		—		—		1,219		1,219		—		—
Foreign government debt securities (1) (2)	186		186		—		—		214		214		—		—
Equity securities at fair value	13		13		—		—		—		—		—		—
Other Assets:
Derivative Instruments	16		—		16		—		1		—		1		—
USDC	—		—		—		—		3		3		—		—
Customer crypto-assets safeguarding assets	21		—		21		—		15		—		15		—
Total Assets	$	4,105	$	4,068	$	37	$	—	$	3,315	$	3,299	$	16	$	—
Liabilities:
Long-term retention program	$	74	$	—	$	74	$	—	$	58	$	—	$	58	$	—
Other Liabilities:
Contingent considerations	—		—		—		—		8		—		—		8
Derivative Instruments	18		—		18		—		24		—		24		—
Customer crypto-assets safeguarding liabilities	21		—		21		—		15		—		15		—
Total Liabilities	$	113	$	—	$	113	$	—	$	105	$	—	$	97	$	8


	Year Ended December 31, 2022
	Derivative Instruments, net		Contingent Considerations
	(In millions)
Balance, beginning of the year	$	11	$	(9)
Net Additions	3		—
Settlements	7		1
Foreign Currency Translation	(5)		—
Gain (Losses) in Other Comprehensive Income	(15)		—
Gain (Losses) on Income Statement	(28)		—
Transfers out of level 3 to level 2	27		—
Balance, end of the year	$	—	$	(8)


	Balances as of September 30, 2023		Estimated fair value as of September 30, 2023		Balances as of December 31, 2022		Estimated fair value as of December 31, 2022
	(In millions)
Assets
Cash and cash equivalents	$	1,407	$	1,407	$	1,290	$	1,290
Restricted cash and cash equivalents	866		866		943		943
Investments	326		326		439		439
Accounts receivables, net	161		161		130		130
Credit card receivables and other means of payment, net	3,375		3,375		2,946		2,946
Loans receivable, net	2,378		2,387		1,736		1,761
Other assets	395		395		273		273
Total Assets	$	8,908	$	8,917	$	7,757	$	7,782
Liabilities
Accounts payable and accrued expenses	$	1,910	$	1,910	$	1,393	$	1,393
Funds payable to customers	4,016		4,016		3,454		3,454
Amounts payable due to credit and debit card transactions	757		757		488		488
Salaries and social security payable	445		445		349		349
Loans payable and other financial liabilities	4,454		4,486		4,758		4,997
Other liabilities	206		206		186		186
Total Liabilities	$	11,788	$	11,820	$	10,628	$	10,867



	September 30, 2017
	Cost	Gross Unrealized Gains (1)	Gross Unrealized Losses (1)	Estimated Fair Value

	(In thousands)
Cash and cash equivalents
Money Market Funds	$ 189,574	$ —	$ —	$ 189,574
Total Cash and cash equivalents	$ 189,574	$ —	$ —	$ 189,574

Short-term investments
Corporate Debt Securities	7,250	1	(4)	7,247
Sovereign Debt Securities	697	—	(3)	694
Total Short-term investments	$ 7,947	$ 1	$ (7)	$ 7,941

Long-term investments
Sovereign Debt Securities	$ 21,196	$ —	$ (104)	$ 21,092
Corporate Debt Securities	23,210	43	(32)	23,221
Total Long-term investments	$ 44,406	$ 43	$ (136)	$ 44,313

Total	$ 241,927	$ 44	$ (143)	$ 241,828


	December 31, 2016
	Cost	Gross Unrealized Gains (1)	Gross Unrealized Losses (1)	Estimated Fair Value

	(In thousands)
Cash and cash equivalents
Money Market Funds	$ 111,198	$ —	$ —	$ 111,198
Total Cash and cash equivalents	$ 111,198	$ —	$ —	$ 111,198

Short-term investments
Sovereign Debt Securities	$ 2,166	$ —	$ —	$ 2,166
Corporate Debt Securities	102,509	26	(168)	102,367
Certificates of deposit	35,336	40	(2)	35,374
Total Short-term investments	$ 140,011	$ 66	$ (170)	$ 139,907

Long-term investments
Sovereign Debt Securities	$ 48,943	$ —	$ (406)	$ 48,537
Corporate Debt Securities	105,632	90	(456)	105,266
Total Long-term investments	$ 154,575	$ 90	$ (862)	$ 153,803

Total	$ 405,784	$ 156	$ (1,032)	$ 404,908


~~One year or less~~		~~197,515~~
~~One year to two years~~		~~20,331~~
~~Two years to three years~~		~~16,847~~
~~Three years to four years~~		~~7,135~~
~~Total~~		~~$ 241,828~~


Type of instrument	Currency	Interest	Weighted Average Interest Rate		Maturity	September 30, 2023		December 31, 2022
						(In millions)
Loans from banks
Chilean Subsidiaries	Chilean Pesos	Fixed	9.99	%	October 2023 - April 2025	$	102	$	150
Brazilian Subsidiary (*)	US Dollar	Fixed	5.75	%	November 2023	52		—
Brazilian Subsidiary (*)	US Dollar	—	—	%	—	—		59
Brazilian Subsidiary (*)	US Dollar	Fixed	5.91	%	August 2024	162		—
Brazilian Subsidiary	Brazilian Reais	Variable	TJLP + 0.8	%	October 2023 - May 2031	9		9
Mexican Subsidiary	Mexican Pesos	Variable	TIIE + 2.20 - 3.50	%	October 2023 - June 2027	192		177
Uruguayan Subsidiary	Uruguayan Pesos	Fixed	9.90	%	October 2023	48		47
Colombian Subsidiary	Colombian Pesos	Fixed	13.98	%	November 2023	14		22

Bank overdrafts
Uruguayan Subsidiary	Uruguayan Pesos	—	—	%	—	—		9

Secured lines of credit
Argentine Subsidiaries	Argentine Pesos	Fixed	103.12	%	October 2023	84		107
Mexican Subsidiary	Mexican Pesos	Fixed	10.17	%	October 2023 - July 2027	29		32

Financial Bills
Brazilian Subsidiary	Brazilian Reais	Variable	CDI + 1.15 - 1.40	%	March - June 2025	8		113

Deposit Certificates
Brazilian Subsidiary	Brazilian Reais	—	—	%	—	—		272
Brazilian Subsidiary	Brazilian Reais	Variable	100% to 140% of CDI		October 2023 - September 2024	769		565
Brazilian Subsidiary	Brazilian Reais	Fixed	11.90 - 14.40	%	October 2023 - April 2024	92		114
Brazilian Subsidiary	Brazilian Reais	Variable	106.50% of CDI		November 2023	40		45

Commercial Notes
Brazilian Subsidiary	Brazilian Reais	Variable	DI + 0.88	%	October 2023 - August 2027	72		71
Brazilian Subsidiary	Brazilian Reais	Variable	IPCA + 6.41	%	October 2023 - August 2029	132		122

Finance lease obligations						60		51
Collateralized debt						1,438		1,238
2028 Notes	US Dollar	Fixed	2.00	%	October - November 2023	87		439
2026 Sustainability Notes	US Dollar	Fixed	2.375	%	January 2024 - January 2026	399		402
2031 Notes	US Dollar	Fixed	3.125	%	January 2024 - January 2031	655		704
Other lines of credit						10		10
						$	4,454	$	4,758


	September 30, 2023		December 31, 2022
Weighted average remaining lease term
Operating leases	7 Years		8 Years
Finance leases	3 Years		3 Years

Weighted average discount rate (*)
Operating leases	10	%	10	%
Finance leases	22	%	16	%


Period Ending September 30, 2023	Operating Leases		Finance Leases
	(In millions)
One year or less	$	171	$	32
One year to two years	171		27
Two years to three years	144		22
Three years to four years	118		8
Four years to five years	111		—
Thereafter	384		—
Total lease payments	$	1,099	$	89
Less imputed interest	(313)		(29)
Total	$	786	$	60