Meliuz SA

BOVESPA:CASH3

Earnings Call Transcript 2024-Q3

[Marcio Penna, executive]

Good morning, and thank you for joining us for another Méliuz earnings call. Before we get started, like to let you know that this conference is being simultaneously translated into English. If you'd like to switch languages, just click the interpretation, but at the bottom of your screen.

I'm Marcio Penna, I'm Director of Investor Relations and Corporate Governance at the company. And joining me today are Israel Salmen, Founder of Méliuz and our Chairman of the Board and Institutional President of CASH3 Group; and Gabriel Loures, our newly appointed CEO, who's also overseeing Growth Strategy and new business. So please note that this event is being recorded and will be published later on our Investor Relations website along with the full transcript.

The presentation materials are already available on our website and the CVM portal. After the presentation, we will open up for questions and answers. [Operator Instructions]. Enjoy the call. Over to you, Israel.

[Israel Salmen, executive]

Thank you, Marcio. Good morning, everyone. There have been some changes in our organizational chart. -- changes for the better. I know I'd like to first bank, the co-founder of Méliuz, who was with me in 2011, we made great contributions from Méliuz to be where it is today. Up until yesterday, he was the Chairman of the Board. Hopefully, [ said goodbye ]. He is -- now I'm the Chairman of the Board because he resigned, but I'm also in an executive role, I'll be working with the CEOs of the different companies of the group, including Gabriel, giving him all the support I can. So congratulations, Gabriel.

You are one of the most intelligent people I've ever met. And one of the -- most hardworking people I've ever met. So I know that she's going to be great for this job and count on me for whatever you need going forward, and I hope we will experience together great times in this company.

We've made the right choice in appointing this new CEO. And we know that because of the response of our team when we announced that. The team was really happy when they heard that Gabriel is going to be the CEO. He was congratulated by everyone, and we saw in each one faces when we made the announcement that, that decision made sense for everyone. So welcome Gabriel to this new job and I hope this is going to be a very happy journey.

[Gabriel Araujo, executive]

Thank you, Israel. I can't, but begin by thanking you for everything we've done together so far your trust and autonomy. I'm really aware of the responsibility upon me now, and I'm confident that the journey going forward is going to be great. I also thank the Board members for their trust and I'd like to thank the Méliuz team who have been working together since 2018 when I joined Méliuz and everyone working together to grow the business and ensure the sustainability.

I'd like to -- to the investors here, I'd like to let you know that I'm aware of the challenge, and I feel very energized to take the next step. So we're going to go on, on this growth journey, building more operational efficiency as we already see in our results as we are going to be seeing today.

So let's have a look at our performance. First of all, I'd like to talk about the growth of Shopping Brazil. GMV 10% higher when compared to quarter 3 of 2023 and 20% higher net revenue in the same period at BRL 60.2 million in Q3 2024. The performance was -- thanks to the performance and commitment of our team of offering best experience to users and working on retention and also that's also a result of our engagement partners. And that is what we see in the take rate, which is now 6.6% and against 5.9% last year, and this is the result of all of those campaigns that we've been working on with our partners and a closer relationship we have been having with partners.

And with that, we offer them more opportunities for them to sell more. They have more ROI and each one achieving their goals of profitability in sales. I'm really happy with this third quarter growth. Also, it's important to look at the number of new buyers. We don't publish absolute number, but it was a 31% increase in year-on-year comparison, and we tireslessly worked on that, working with Marcos, our Growth Director, finding new channels, growing the base, and that's why we have this significant growth in new buyers.

And this is going to have an impact on the long run because we have a very good retention as we have mentioned before, and the users are going to go on buying at Shopping Brazil in the future.

Now, I will talk about financial services. We see we are at the same growth pace that we've been having in the past few months with an increase in open digital accounts of 36% growth, also 172,000 credit cards issued in our partnership with BV Bank. It's a 27% increase when compared to last quarter. And financial services net revenue was BRL 15.9 million. That's an 8% growth when compared to second quarter.

So we are going on strong, working to increase engagement with more financial services, foster this ecosystem, great value for users. And so that financial services can be increasingly profitable and our financial services are more and more used by our clients. An important point step was the launch of this product with BV. It is a CDB product. It was launched in October '24. So it was a little over one month ago, and we already have encouraging results.

The initial results are really positive. And this is just the first step. We're working with the BV Bank to launch other products and increase engagement, increase our net balance and make our products more comfortable and fostering more this ecosystem and more cross-selling. So we have developed new investment products.

In addition to this one, we are going to be offering other choices for our users and safe products that we are going to be launching and also credit products that are part of our road map, so as to ensure more engagement and use of our financial services, which is our goal, as I mentioned. And the consequence of the revenue growth together with our attention to operating efficiency is this EBITDA numbers that we see here for the quarter.

Adjusted EBITDA of the parent company is BRL 14.1 million in the third quarter. It's almost double as it was last year. And in the 9-month view, we reversed a number that was minus 6.8% in the initial 9 months of 2023. And now we have a positive EBITDA of BRL 42.9 million in the year-to-date.

Consequently, 18.8% EBITDA margin adjusted for Q3 2024. And in the long run, which is the right side of the page, we see what we've been working on in the past few years. 2023 was a year of operating adjustments, so as to recover profitability and the margin was minus 35.8%, increased to 12.8%. And in 2024, we've been growing revenue and so compared quarter-by-quarter, we've had 38% growth and also the improvement of our EBITDA margin, achieving 18.8%, as I just mentioned. That's been possible because of our very stringent expense control.

In 2022, expenses were BRL 420 million. And in the last 12 months, as of Q3 of 2024, the number was BRL 221.7 million. So this is a 23% drop when compared to 2022, with a slight increase in the second to third quarter 2024, which is also a consequence of our greater revenue and a number of new buyers.

In terms of EBITDA, we see long-term vision that we are doing. The consolidated EBITDA in 12 months was minus BRL 93.5 million back in 2022. In 2023, it was very close to breakeven with minus BRL 1.1 million. And in Q3 2024 in the last 12 months, it's BRL 49.4 million EBITDA margin. So this is what we have mentioned in the past calls. We focus on growing, but growing sustainably and with the margins.

And to conclude, I couldn't but mention, our Black Friday promotion, it's already started and you know how important this period is in our seasonality. And this year, we want to be the #1 in cash back because we are the first player to have adopted this model in Brazil. And there is many new developments, and we are working more and more closely with Promobit. There are greater commercial end products and synergies.

Promobit is a social selling initiative in the CASH3 group. Users both and look for the best offerings for other users to buy. This is a slightly different model from Méliuz, but it's focused on social selling and there is good synergies for a successful Black Friday for both parties. Also, as I mentioned my letter or our release, our Black Friday started in December last year.

As soon as the last year's Black Friday closed, and we've been working on dozens of improvements. So it's to increase number of users, so as to engage our users better and to retain more users. And this is the results we see now.

Here also, we have developed new special opportunities for partners and users alike. So it's important that we have a robust campaign calendar, offering more opportunities for our partners to invest with a healthy ROI and greater sales. And we've been doing that a lot for Black Friday 2024 and opportunities for users as well, so that they can make more. So Méliuz Prime is one of the choices that our users have so as to have greater cash back in each one of their purchases that increases engagement in our ecosystem.

There's a new feature of combined redemption. So there's different things we are doing for both parties, both to benefit users and the benefit of our partners. So that we have can have better -- even better performance in this Black Friday. Over to you, Marcio.

[Marcio Penna, executive]

Thank you, Gabriel. So let's begin the Q&A session. The first session is by [ Alexandre ] from Morgan Stanley.

[Unknown Analyst]

Congratulations. Also congratulations, Israel for your new job and congratulations, Gabriel, on this new challenge. I have just one question. In your release, you mentioned what a few in your notes about the Black Friday, is that you're very excited. So -- what's your early read for November? Do you have any? Because we know that many players have already started working on their Black Friday promotion. So that's my question. Thank you.

[Gabriel Araujo, executive]

Thank you for your question [ Alexandre ]. We cannot yet publish anything about -- cannot disclose anything about Black Friday, but our partners are really excited, and we are working on many opportunities so that our users can benefit. So that's what we see in our emissions and distributed cash back. And also we've been working to improve products and increase retention and engagement for 12 months already. So now we see the results. We know that the better products will have an impact on this Black Friday. But I can't disclose anything about in terms of figures or guidance for this year's Black Friday.

[Unknown Analyst]

No, I'm not talking about guidance. I just wanted to know if you had any performance figures for the beginning of November. But anyway -- so a very quick follow-up question. You mentioned improvements that you started to develop last year. But in terms of appetite of partners, do you see your partners with peptide for cash back campaigns or not so much? Is it kind of flat when compared to last year.?

[Gabriel Araujo, executive]

We have seen great appetite on the part of our partners. It's important seasonality period, of course, but we see great appetite on part of our partners, especially based on what I mentioned because we are coming up with new opportunities and more customized opportunities for partners to sell and so that we can have better performance. So there is Méliuz, Prime which is an example. We have a number of campaigns for these high users. Also coming up with new promotions in November, working with our product marketing teams and also working closely with e-commerce and industry partners, so that this is going to be a great Black Friday, very engaging Black Friday for our users.

[Marcio Penna, executive]

Next question, [ Antonio Cozman, Genial Investments.]

[Unknown Analyst]

Congratulations, Gabriel and Israel for your promotion. In your release, you mentioned about Méliuz Ads. It's a product that -- for which I see great potential and we see it's been very successful in other companies. If you could give us more color about that? And what you see for Q4, with Black Friday?

[Gabriel Araujo, executive]

Thank you, Antonio. We've seen significant growth of Méliuz Ads. Over the past years, we are very excited with this product and what we've been building in partnership with our e-commerce and industry partners. There's been a growth in available spaces for our partners' ads, in our channels, our app, website extension, but also in other channels. We've been working with influencers and other market players who help us advertise the promotions and campaigns. So we have seen significant growth in the past few years. And we're going very excited Méliuz Ads in this Black Friday and the whole year ahead.

[Marcio Penna, executive]

Thank you for your question. I will now turn it over to Gabriel for his final remarks.

[Gabriel Araujo, executive]

Thank you, Marcio, and thank you all for having joined us this morning. I'd like to reinforce my commitment and energy for us to achieve the established growth goals of profitability and growth. We are very excited with this year-end 2024 and next year. And we go on the same note, ensuring more value for our partners in every vertical and financial services and ensuring greater user engagement, so that we can grow in sales and profitability. Thank you very much. Thank you for your presence and ahead to the Black Friday.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]