Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ecosystem GMV accelerated growth, reaching nearly BRL17 million, up 22.5% year-over-year.
- Subscriber base grew to nearly 190 million, an increase of 8%.
- Gross margin improved to 47.6%, up 1.5 percentage points.
- EBITDA margin increased by 22% year-over-year, reaching BRL65.4 million.
- Net profit increased to BRL18.3 million, a 5.5% rise.
Negative Points
- Squid restructuring has diluted overall revenue growth.
- BeOnline business saw a seasonal decrease in EBITDA margin, down to 24.4%.
- TPV growth showed a significant slowdown, raising concerns about sustainability.
- Financial services and digital account integration are expected to show more significant results only in 2025.
- CapEx demand is expected to stabilize but remains a concern for future investments.
Q & A Highlights
Q: What are the next stages of the pricing efforts that you've been making and what we could expect for the next quarters? Also, what elements have played into the better trend for Melhor Envio this quarter, and how sustainable is this increase?
A: (Fernando Cirne, CEO) Our pricing efforts are ongoing, with small and steady steps to avoid affecting our customers. We have preserved nearly 100% of our subscriber base, and our last move was in Bling in June. We plan to continue these efforts as long as there is room for it without hurting the subscriber base. For Melhor Envio, the positive results are due to pricing, revenue migration to Melhor Envio solutions, and a better service mix, including more transport companies and reduced operating costs.
Q: Can you talk about the margin breakdown, especially the substantial decrease in BeOnline margins? Also, what caused the significant slowdown in TPV?
A: (Igor Franco, VP SME Converse) BeOnline margins are subject to seasonal shifts, and while Q2 margins were lower, the first six months of the year show a close to 25% adjusted EBITDA margin. The slowdown in TPV is due to a strategic shift to prioritize more profitable operations, maintaining a 70% penetration rate, which is our sweet spot for profitability.
Q: Where do you believe the demand for CapEx will stabilize, given the decrease observed?
A: (Rafael Chamas Alves, CFO) CapEx demand will stabilize with a lower growth rate in web hosting services and a focus on R&D. The decrease is due to the dynamics in the web host service, and we expect CapEx to be diluted as a share of revenue while still prioritizing R&D investments.
Q: What are the trade-offs between margin and growth, and what risks are you running in terms of marketing or R&D? Also, can you detail the progress with Squid's restructuring?
A: (Fernando Cirne, CEO) We aim to grow without compromising profitability and cash generation. We are investing in mature operations like Bling and new growth avenues like cross-selling and financial services. For Squid, we have streamlined operations and focused on efficiency, with better results in Q2 and an optimistic outlook for the future.
Q: Can we expect more incorporations like the recent ones with Bling, Tray, and Etus? Also, what are your macroeconomic growth prospects?
A: (Fernando Cirne, CEO) Yes, more incorporations are planned, unlocking significant tax benefits and operational efficiencies. Despite macroeconomic challenges, we are growing by 18% in commerce, investing in profitable operations, and planting seeds for future growth.
Q: Can you elaborate on the growth prospects for Wake and financial services?
A: (Fernando Cirne, CEO) Wake is seeing solid growth with new clients and omnichannel strategies. Financial services, including digital accounts and credit, are expected to accelerate in 2025, with a focus on short-term, collateralized credit risk.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
