Nexpe Participacoes SA

BOVESPA:NEXP3

Earnings Call Analysis

Nexpe Q4 2023: Revenue Growth Amid Challenges

Nexpe ended Q4 2023 with gross revenue of BRL 33.4 million, marking a 7% increase from Q3 but a 5% decrease year-over-year. Administrative expenses reduced by 26%, leading to a fourth-quarter adjusted EBITDA of BRL 10.4 million, a considerable improvement from the negative BRL 3.9 million in Q3 and negative BRL 12.9 million year-over-year. GFV in the financial services vertical grew by 15% annually, exceeding BRL 4.4 billion. Net revenue per headcount also increased, as the company ended the year with BRL 7.9 million in cash. However, the performance in real estate was not as robust, with a notable decrease in GFV.

Overview of Nexpe's Fourth Quarter Financial Performance

Nexpe concluded the fourth quarter of 2023 with a stride in gross revenue, hitting beyond the BRL 30 million mark per quarter. They reported a year-on-year growth of 15% in their financial services vertical, achieving a Gross Financial Volume (GFV) exceeding BRL 4.4 billion. Additionally, they managed a noteworthy reduction in administrative expenses compared to the previous year, saving BRL 20 million. This tightening of the administrative belt led to an impressive 26% drop in those expenses, falling from 77% to 51% as a portion of revenue from Q4 2022 to Q4 2023.

Current Quarter Revenue and Profitability Insights

The story of this quarter is one of mixed results with some diminishing figures alongside positive developments. The company's gross revenue for Q4 posted a 7% increase over Q3, reaching BRL 33.4 million. However, this figure represents a 5% dip from the same period the previous year. Similarly, the quarter saw a 14% growth in gross results from the last quarter, yet an 11% decline from the previous year. Nonetheless, these declines were offset by the bolstered adjusted EBITDA, which swung from a negative BRL 3.9 million in Q3 to a positive BRL 10.4 million in Q4. This is a substantial swing upward, marking an improvement of BRL 14.3 million quarter-over-quarter and BRL 23.4 million year-over-year.

Strides in Efficiency and Cash Flow

Nexpe demonstrated notable improvement in operational efficiency, reflected in the net revenue per headcount which surged by BRL 9,000 from Q3 to Q4 2023, and even more strikingly, by BRL 23,000 from Q4 2022. Furthermore, cash flow management seems to be effective, evidenced by the closing cash position of BRL 7.9 million for the year 2023.

Challenges in the Legal and Market Sectors

The company still grapples with legal challenges, maintaining 137 labor lawsuits, although they stressed a significant decrease in the last quarter. On the market front, Nexpe observed a notable decrease in GFV in real estate, with 77% of their units sold in Rio de Janeiro, followed by 18% in Sao Paulo, and just 5% in other regions, indicating a concentrated market presence with potential vulnerabilities in geographical diversification.

Conclusion and Forward Outlook

Daniel Guerbatin, CEO, CFO, and IRO of Nexpe, concluded the earnings call without providing explicit future guidance on revenue growth or margins. He emphasized the operational improvements and financial tightening achieved during the quarter but left the forward outlook open to interpretation based on presented results and core financial metrics.

Earnings Call Transcript 2023-Q4

[Operator]

[Interpreted] Good afternoon, ladies and gentlemen, welcome to Nexpe the video conference to discuss the results for the fourth quarter of 2023. This video conference is being recorded and the replay can be accessed on the company's website at www.nexpe.com (sic) [ www.nexpe.co ]. The presentation is also available for download. [Operator Instructions]

Before proceeding, we would like to clarify that any forward-looking statements are based on the beliefs and assumptions of Nexpe's management and the current information available to the company. These statements may involve risks and uncertainties in view of the fact that they relate to future events and therefore, may depend on circumstances that may or not occur. It is important to take into account the event related to the macroeconomic environment. This segment and other factors that may cause the results to be materially different from those expressed in the respective forward-looking statements.

In this video conference, we have Mr. Daniel Guerbatin, CEO, CFO and DRI (sic) [ IRO ] of the company. I would now like to give the floor to Mr. Guerbatin, who will begin the presentation.

[Daniel Guerbatin, executive]

[Interpreted] Good afternoon, you're all welcome to the 2023 fourth quarter video conference to discuss the results. We had a gross revenue greater than BRL 30 million per quarter in '23. The consolidation of the VGC (sic) [ GFV ] was greater than BRL 4.4 billion in the vertical of financial services in '23, with a growth of 15% in the annual base. A reduction of 20 minutes (sic) [ BRL 20 million ] in administrative expenses when compared to the previous year was achieved.

In Slide 4, we can see the result for '23, the consolidated results. The gross revenue for the fourth quarter was BRL 33.4 million, 7% greater than the third quarter. And then we can see a reduction of 5% when compared to '22.

In Slide 5, when we talk about our gross results, there was a 14% increase when compared to the previous quarter, and a reduction of 11% when compared to the previous year.

In the next slide, when we look at the administrative expenses, which closed with BRL 17 million for the quarter and administrative expenses, which were reduced 26% going from 77% in the fourth quarter of '23 -- '22, I'm sorry, to 51% in the fourth quarter of '23.

In Slide 7, we have the adjusted EBITDA without any legal liabilities, it was positive in BRL 10.4 million in the fourth quarter when compared to BRL 3.9 million negative in the third quarter, representing an improvement of BRL 14.3 million when compared to the negative BRL 12.9 million of the fourth quarter for '22. The improvement is of BRL 23.4 million.

In Slide #8, we can see a significant improvement in our performance where the net revenue per headcount closed the fourth quarter of '23 with an increase of BRL 9,000 when compared to the third part of '23, and BRL 23,000 when compared to the fourth quarter of '22.

In Slide #9, we have our cash flow management, where we closed the year '23 with BRL 7.9 million in our cash.

In Slide #10. Regarding the main problems of the companies throughout the past decade, we still have 137 labor lawsuits with a significant decrease in the last quarter.

In Slide 11, we can see that we reached to BRL 18.7 billion in VGC (sic) [ GFV ]. The origination of credit includes different products such as real estate, consortium.

In Slide 12, we can see the performance of real estate. We had a significant VGV (sic) [ GFV ] decrease. 77% of the units were sold in the state of Rio de Janeiro, 18% in Sao Paulo, and 5% in other locations.

Thank you very much for your attention. And now we're going to open for the Q&A session.

[Operator]

[Interpreted] [Operator Instructions] Q&A session is now over. We would now like to turn over to Mr. Guerbatin.

[Daniel Guerbatin, executive]

Thank you all for being present with us today. I wish you a good afternoon.

[Operator]

[Interpreted] Nexpe video conference is now over. We thank you all for your participation and wish you a wonderful afternoon.

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