Segments

9 Months Ended

Sep. 30, 2011

Segments [Abstract]

Segments

5. Segments

Reporting segments are based upon the Company’s internal organizational structure, the manner in which the Company’s operations are managed, the criteria used by management to evaluate the Company’s performance, the availability of separate financial information, and overall materiality considerations.

Segment reporting is based on geography as the main basis of segment breakdown to reflect the evaluation of the Company’s performance defined by the management.

The MercadoLibre segments include Brazil, Argentina, Mexico, Venezuela and other countries (such as Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Panama, Peru, Portugal and Uruguay).

Direct contribution consists of net revenues from external customers less direct costs. Direct costs include specific costs of net revenues, sales and marketing expenses, and general and administrative expenses over which segment managers have direct discretionary control, such as advertising and marketing programs, customer support expenses, allowances for doubtful accounts, headcount compensation, third party fees. All corporate related costs have been excluded from the Company’s direct contribution.

Expenses over which segment managers do not currently have discretionary control, such as certain technology and general and administrative costs, are monitored by management through shared cost centers and are not evaluated in the measurement of segment performance.

The following tables summarize the financial performance of the Company’s reporting segments:

	Three Months Ended September 30, 2011
	Brazil			Argentina			Mexico			Venezuela			Other Countries			Total
Net revenues	$	46,003,915		$	15,828,272		$	5,608,572		$	9,045,783		$	5,141,602		$	81,628,144
Direct costs		(25,709,957	)		(6,264,769	)		(3,183,432	)		(3,180,061	)		(2,636,836	)		(40,975,055	)
Direct contribution		20,293,958			9,563,503			2,425,140			5,865,722			2,504,766			40,653,089
Operating expenses and indirect costs of net revenues																	(10,689,366	)
Income from operations																	29,963,723
Other income (expenses):
Interest income and other financial gains																	2,913,596
Interest expense and other financial results																	(1,052,865	)
Foreign currency gain																	3,284,190
Other losses, net																	(7,292	)
Net income before income / asset tax expense																$	35,101,352

	Three Months Ended September 30, 2010
	Brazil			Argentina			Mexico			Venezuela			Other Countries			Total
Net revenues	$	31,077,654		$	10,802,682		$	4,722,635		$	5,762,290		$	3,586,117		$	55,951,378
Direct costs		(19,235,066	)		(5,353,452	)		(2,914,273	)		(2,653,357	)		(2,230,064	)		(32,386,212	)
Direct contribution		11,842,588			5,449,230			1,808,362			3,108,933			1,356,053			23,565,166
Operating expenses and indirect costs of net revenues																	(4,254,460	)
Income from operations																	19,310,706
Other income (expenses):
Interest income and other financial gains																	1,361,899
Interest expense and other financial results																	(567,969	)
Foreign currency loss																	(354,219	)
Net income before income / asset tax expense																$	19,750,417

	Nine Months Ended September 30, 2011
	Brazil			Argentina			Mexico			Venezuela			Other Countries			Total
Net revenues	$	120,659,242		$	38,800,077		$	16,212,999		$	23,051,176		$	13,742,478		$	212,465,972
Direct costs		(69,712,512	)		(15,845,674	)		(8,881,811	)		(9,096,997	)		(7,230,721	)		(110,767,715	)
Direct contribution		50,946,730			22,954,403			7,331,188			13,954,179			6,511,757			101,698,257
Operating expenses and indirect costs of net revenues																	(30,891,982	)
Income from operations																	70,806,275
Other income (expenses):
Interest income and other financial gains																	7,037,264
Interest expense and other financial results																	(2,562,633	)
Foreign currency gains																	2,080,822
Other income, net																	253,148
Net income before income / asset tax expense																$	77,614,876

	Nine Months Ended September 30, 2010
	Brazil			Argentina			Mexico			Venezuela			Other Countries			Total
Net revenues	$	88,210,536		$	28,609,190		$	13,861,921		$	13,705,926		$	10,011,910		$	154,399,483
Direct costs		(50,090,123	)		(13,985,689	)		(8,544,912	)		(6,759,831	)		(5,694,502	)	$	(85,075,057	)
Direct contribution		38,120,413			14,623,501			5,317,009			6,946,095			4,317,408			69,324,426
Operating expenses and indirect costs of net revenues																	(15,694,887	)
Income from operations																	53,629,539
Other income (expenses):
Interest income and other financial gains																	3,073,427
Interest expense and other financial results																	(6,919,307	)
Foreign currency gains																	7,275
Net income before income / asset tax expense																$	49,790,934

The following table summarizes the allocation of the long-lived tangible assets based on geography:

	September 30,		December 31,
	2011		2010
US long-lived tangible assets	$	6,871,005	$	3,617,420
Other countries long-lived tangible assets
Argentina		14,147,946		13,580,175
Brazil		2,637,183		3,264,625
Mexico		456,358		68,878
Venezuela (*)		6,823,256		206,815
Other countries		416,218		79,799
	$	24,480,961	$	17,200,292
Total long-lived tangible assets	$	31,351,966	$	20,817,712

(*) On June 2, 2011, the Company’s Venezuelan subsidiary acquired an office property of 992 square meters in a building located in Caracas, Venezuela. The purchase price of $6.6 million was paid in cash.

The following table summarizes the allocation of the goodwill and intangible assets based on geography:

	September 30,		December 31,
	2011		2010
US intangible assets	$	—	$	3,507
Other countries goodwill and intangible assets
Argentina		23,044,009		24,825,718
Brazil		11,813,433		13,137,658
Mexico		13,898,219		5,043,335
Venezuela		6,595,409		6,595,866
Other countries		14,220,815		15,031,397
	$	69,571,885	$	64,633,974
Total goodwill and intangible assets	$	69,571,885	$	64,637,481