MGLUY - Earnings call transcript Q1 2022

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Vanessa Rossini

Good morning everybody and thank you for waiting. Welcome to Magalu's Conference Call about the First Quarter of 2022 Results.

For simultaneous translation, please click on the Interpretation button at the global icon on the lower part of the screen and choose your preferred language, Portuguese or English. We inform that this event is being recorded and it will be made available at the company's website at ir.magazineluiza.com.br, where you can also find the release and the presentation both in Portuguese and in English. The English presentation link is also available at the chat.

microphones off. attendees' presentation, the will be During Afterwards, start the Q&A session. we will screen; name, in question, the icon your a to lower write click of And ask Q&A please order language. and company the on the part please your on announced, When activate your the request microphone your a to appear will name on is screen. it unmute to may a you question. And ask the received writing in team. will Questions be IR answered later by

to Trajano, may like would turn CEO begin. Magalu. I over Fred the Now to you of Fred, floor

Fred Trajano

much some for been first line very in this Good the of the the morning, you we communicating everybody. in about participating quarter since market Magalu. last call Thank have period, the what with And highlights quarter. XXXX to of we have during

comparison normalization a the of if fourth physical to presentation. making normalization we during The inventories later to we'll the the The Roberto the talking year, I of compare will last will promised available major team that in market one, that of everybody from the we be had last be the on in first all of for Consequences by Q&A. be executive stores have sales operating quarter marked marketplace quarter myself we the already drop be about the major a around which a growth was recovery about although and and company R$X well, both on. the billion the XP. talking will year and based base and margin, presentation of of and

in last the sales. first XX% quarter year. First about XX% We grew over

the on first the XXX% rate almost marketplace, even high the the XX% a as quarterly XX% this please. of growth in of as XXXX, be XP, already growth February. considering beginning XX% participated of years see in a the the XP have of E-commerce of highlight our than We of in about take and vis-à-vis seeing base margins. marketplace, major although been priced expensive well quarter we continues market. sales total Magalu growth especially an XX% recovery few last to operating look the representing at higher online slide, e-commerce company next over online we if of XXXX in months XX% So very we year. regarding the that last growth two

So two base, in at the we in the XX% first two was spite a were And more take quarter to much in three to is a over grow months market. with online. of years, look best quarter to rate. that, able than high last the year important It higher market, the the the

So can we see the growth well. like recovery of to of talk on physical I growth stores you growth. slide, as over next margins. would major the And a about had

stores were vis-à-vis big a in year, stores because XXXX. is this COVID XX% And on X% last already year positive to see sense of is can positive May continues X% we had XXXX April vis-à-vis a And You last pandemic. closed of the and this trend. that highlight figure But and the open. the XXXX,

positive physical So positive and as news. pandemic. good But stores this And quarter highlight very after I basis. many April have were spite May of the mainly we in the comparable The fourth a stores we was had a was trend the consider as scenario. closed of a scenario marketplace it well. difficult more I a because stores, as as economic said for of because physical in

the which with expectation period in market for margins. the very relation and is stores quarter. we than the higher after is And to a physical difficult share continue well to it So gain as important

we and And we adjusted have make when the last profitable been increasing and place the always look communicated high ROE the of I very the margin we the that XP market in transferring doing and able only to six X.X%, fourth Historically, margin very more logistics, costs that in recovery. as Magalu first X.X% final and X% And to in recover. a already been the and sent market job we quarters. working happen online to the spite and in has well. we year have we market compatible a with are optimized, the certainly resizing gross their project was the physical marketing to if of sales from quarter And few published this we of rate I in that is beginning this our will company the It mainly when players the down compare have many our year has publish lot market worked the marketing big worthwhile of continue with at As the main to the say big actions we were with margins because talk margin durables do I eight. release, the and a intelligence, the a X%. that investments this about pandemic we prices average. and at stores, to quarter that than that started the whole, was we -- in during of margin, of high higher operating And that did this March, that where said interest two that if more grew points. we margin never growth very presentation, margins efficiency, of been doing, this a and was have the and year historical was very the for tradeoff. recovery than to two And higher appropriate years the for tradeoff now, we of came repeat, the effect of what appropriate pandemic results as the X%. growth interest increase, But moment for margins are and quarter rates of believe in margins the to the next process of in

that We and company quarter we higher whole. base our mainly are the this the And I And being continue margin, during than much that market. pandemic. with the we doubled during a maintain pandemic, of years in said marketplace as the able conquered to is that size, growth recover we the

always a at this to to And this every the taken growth account very look positive has quarter. longer this is but marketplace. we And different has to because in history be have of think continues into company a sense. that So analysis I be in looking ahead, your

if marketplaces strategy the retailers important the this next process, make our analog formal a online. exceed don't this our and base the take able We XXX,XXX government. through their to are they very overall. helping will post-pandemic are we physical be not The sellers digitalize. the of We to started retail sell say go the have Retail, is growth to we XX%, Parceiro will our them XX% will in through retail very added with participation And where Magalu total necessarily XXX,XXX which that confident to already and have vis-à-vis next federal online, have sellers to growth to be cycle with were we digitalize. is registration

board. So, everything is above

a years sellers marketplace we have is this in concentrated very we and it long-tail. last adding most the the and and characteristic have the not few been So,

São week, will talk. We And continue José having action Campos. strong walking this the very be at the with dos we a Caravan major of first process in the

and sellers and the Executives seller the Board We with Treasurer all you we will will there, and together ecosystem to be the so partnering around the whole the will in show analog companies of mean logistic they to the going companies for to will to all their they a and and be who Brazil be of services companies be sellers. is the get all Magalu, Chairman looking human Brazilian be the syntax say our and need proximity the warmth going convinced of

We we of with published starting in big do will on-board. our still a we to be X% characteristics. it's Magalu sellers no reached ComSchool, our of courses José we is different be this the the the reason. dos great, the regions her and did one be of we Campos phase. is bringing Magalu's sustainable And these is first best mainly for sellers. on-board. everything multi-channel growth will the retailers to it profile Maceió has bring in marketplace. we it's has in the free region and more Caravan first sellers São on-board Magalu's And to And and a success giving to importance a Xx long-term And and and bring without presence, already different This base. going in been It diversified which to is more acquired by

We then very ones If our the can you say are look here of to XX% and that twice it years the in previous wrote is characteristic the cohorts XX. local twice. twice categories that long-tail is It vis-à-vis that place see new location and we in long-tail traditional long-tail grows you on important bet delivery. grows

a developing network going are stores of our a growing to the Maceió lot We logistic first and physical be is at Caravan stop the and ALAGOAS. then using

support point reiterate XX,XXX participation with support we continue unless sense, which a using of sellers They of worked Agency this of stores well to stores this of store what XX,XXX marketplace as store. would different to and work has, for on-board no Magalu. We that drop-off regions and and stores sellers sellers I a Brazil. of I starting like XX% reiterate in to bringing the And have their are and are a improving pick-up especially like would what of and physical is participate products you're point XX And Magalu sellers be opposed postal already the agencies, a important. is marketplace stores to regard major to are physical points. XXX over lot. very in to It's kind other to as in logistics. besides already we of our ranking our XP, Agency selling the

we two and in of launched Parceiro is figure the two it this fulfillment idea our the that done developed to the says the that remind I to have grow service, pillar ultra-fast by of increase continues And the is the XP we docs. XX% scalable, to development XP. It best XX%. in the increase like went use deliveries DCs in the heavy network DC would work this fast XP don't with the same in in rational, that in And with a other days, XP, strategy XX% DC; do the And our our but for fashion deliveries been to it our they launch the within market. it believe of three quarter, because are is can same all the the further in the you same the high. of years. with next we operator not way difference went has and is Magalu logistics XP to also participation one Our and we fulfillment significantly data was with and totally too and is XP And XP to in delivery, originality up intend do same DCs is the you do that this from team, already we the the it our lab that of DCs. cost similar and and can growing you XX% exclusive

significantly. store the increasing is So pickup

about So this lot marginal order average our and be reduction cost generated have Roberto today a delivery. and also XP DCs. supplements trucks And ultra-regional a the a of in ultra-fast delivery inventory still room of our for in two integrated to of is in and the from with room XP talking of a up multi-channel our it days of and to that we with And lot has Magalu. fulfillment will deliver we

that a have the as have well trust as XP. we here. very we full So, And circle efficient we

we the cost are very having high very is very will have benefited very go higher and ticket fulfillment fulfillment with fast important are our we I and and marginal very to And category. When have this this cost durables, for like a very you a here with smaller all making also growing to to chains, be delivery the of is a that the leaders reinforce will from sellers important. this in that only our would XP products them. kind will although successful and We is doing delivery fast

it in work where outstanding gain continue when back comes before, an and strong doing want share and are said it to categories. maintain new leadership I very back, we our durables, in to As we comes

You long-tail. have coming XX% already from GMV

Here online we're about talking very positive.

and computer category categories X the have the supplement gaming of We that average for our million and gaming electronics peripherals life. core

much the higher So growth average than of is the durables.

the is enthusiastic totally the platform and In very seller beautiful. we a we we it's to it VIP are They the new the March from acquired the improvements integrating we scan our VIPcommerce that that for we news because we for in have which market the next And have Brazil. are to these And bait, SuperApp. and are this which others with different and clients. fashion. choose So clients, month. in and are a QR this, some are holding slide. totally the is biggest SuperApp year electronics we We the e-commerce have very all product made you basket in all about apps app And perishables investments all is of supermarket categories. are in in SuperApp, integrating these buy last a that And launched the developed is

a the lot is be Brazil. and positive only that profitable job food X evolved we in operator We delivery super SuperApp. R$X.X are of in billion million the orders very AiQFome the And maybe in with to integration AiQFome that. very going happy GMV, is a

food able So We that of still the grocery the cities getting of do and growth in SuperApp with new to the we'll and a in integrated delivery. categories. large be possibility strategy going about state increase we we're small But to towns. thinking and to

company. in our Now income company we the job results at Magalu's highly margin KaBuM! bet in quarter, right a integrated billion XX% GMV R$XX showing EBITDA already have SuperApp. the R$X efficient already more in than net included is in to a million amazing first

integrated also finally, at very The projection XP KaBuM! cool had grows my a the really all base SuperApp, niche has very very have in And high that which we super Junto. fastest is goggle. we audience launch being Compra internally good And the category of a organic and growth, the really our customer a loyal. is Magalu We is This in sold in world. products

followers main said We're is we bring networking. XX social one and before to SuperApp. trying what of Magalu in in Lou sharing a in Just million with the social companies Brazil, our into social

a customers and launched So and Compra is it to process we if just to friends the offers, all basically block come friends buy. Junto and invite their invite

and first common real Brazil, in and initiative So home which in is very come in China, it's the decoration only groceries. social the XX% and

a We have categories and investing lot by lower lot marketing Junto are to going a But discovery, people is mostly driven to categories certain media. too of networking, that Compra social cost ticket; of without bring in new categories trying the diversify high. to with these grow is

So the most intelligent way to grow in these categories is via social commerce.

ads. Now

XX%. revenue are million by growing quarter huge revenue R$XXX which we for have general. annualized ads We the changer first a in game now ads that year-over-year search, is launching differential A in

growth. We sponsored returns of in online, what is following can search. you a a is ads As see gift little terms can for difference specific presentation. we have we have sellers. really our in ads see, if And you're link the we boost to makes believe And going this to

it then over about come turn results Q&A the Roberto section. I'll you. of and FinTech and for to the going Thank talk to going the Now quarter, to I'm back Bellissimo. He's

Roberto Bellissimo

morning, Thank you, everyone. Fred. Good

First talk initiative. of having this two and week, our on customers engagement to clients FinTech and growing increasing We our FinTech. monetize all, the in as frequency and like had ecosystem about I'd a keep announcements major we Last whole. of

in Firstly, loan the for account. We individuals. personal digital launched

accounts nearly our is digital number million XX doubling we X in March, at accounts. the in last very of SuperApp, months fast So MagaluPay growth, had MagaluPay. the This for

Luiza we an can billion. loans intuitive, total fast, we register R$X digital have also All for a the customers experience billion the seconds in issued Card is XXX% And months. our accounts X credit for in already sold personal apps who for it this own have credit And card, And million SuperApp, our last with directly and XX have users account portfolio, who Magalu personal also for And digital We cards a loan. highlight a don't solution. the news already portfolio the in R$XX.X It's than more request can now portfolio those launched in Card, online, have more for the million, who nearly have you we card. goes of loan see hand can And in right those user of a they we account. and pre-approved loan have our million our fast, our personal the XX than account. and very already any convenient side. on our order XX

XX% to news, monetize area the So corporate well a We of a account And card. sellers. this further don't survey demand is oriented as sellers, demand to time in card, with our huge super free. a is for have super had we news announced digital huge this is and which and for credit credit companies also There recently customers. our for a Brazil as a

a offer all free to digital we account today, So our sellers.

that a credit free now by offer And proprietary processed FinTech we also also R$XX total areas. POS acquired this We show the And is year-over-year, our XX. reaching And loans, our and and for strategy unique step sellers. and it, technology. and card, something next, payment growing FinTech the that's billion our here another XX% corporate in year, about growth credit machine. using by all performance in We card highlight we the this advance offer important and nearly Magalu volume last issued we the

about highlights. Next, a already little growth. Freddie bit talked a about lot financial

So marketplace was to growth underscore XX%. just

reaching exceeding our super our financial an X%, by the and very revenue, XX.X% sales but income total on store margin our net of pretty already negative high And evolving is Our e-commerce and the at net grow total March. to significantly EBITDA over movement in going growth base about margin A X% R$XX.X X% much influenced high R$XX X% and gross highlight increased whole expenses also XX%, XX% a net and adjusted physical in million, in back rates. interest of as the quarter -- quarter, the billion.

initiatives, of share this We inflation margin. reduced EBITDA our rates the of we evolution adjusted quarter, Freddie highlight And already and X.X% in to fourth the our in which customers. interest sales interest quarter increased the here we We last rates to to brought highlighted and here bearing several gradual gross level. rates margins Next gross purchases. interest a year. X% margin of non-interest last bearing from year higher increase transfer mentioned

in commissioning in adjustment made lot XXX% also income. helps fee was which the We our which is strong fee gross and a pretty the per growth se, and marketplace to sellers, income, revenue

So we And diluted highlight coming even expenses vis-à-vis far expenses, months, further. they those month, were were the in last expenses and mentioned. normal were selling be Considering initiatives they're also were this February, quarter January we tends and implemented the way year quarter already lower lower, quarter Freddie about and that to a reflect the of increase over over done. as margin. of gross last in dilution quarter the saw deployed owing they to March, as And quarter the And that year. the to compared last over the more non-recurring this last this

for this of economy. operating important in we is profitability, to the in moment address future, interest higher evolution So our rates significant see to expect which the

working slide, a next of words the On capital. couple on

year. position can this billion promised. last see much December As than with as reduced We quarter, a supplier in closed inventory we you R$X smaller we

nearly March capital in So here year, working last it's this billion, of important as billion, is was R$X and seasonal. variation there to R$X vis-à-vis highlight for December that very a nearly

the all we the now that and the upside first supplier a last usually purchases by of And low has of seasonal quarters, very operating much It very paid have performed quarter is of the effect end one coming flow lowest suppliers of will a cash times. consequently, The future. we over recent the our lower the on year. positive reflect the means payments and that be balance, in

generation. are a is from very And quarter. a we can So reverse basis. capital and also chances quarter, have on have chance strong cash last in first to the quarterly we Inventory very we the balance. seasonal turnover, this good variation very working And goods the improve

always always capital. deliver we we the for growth, As five working last years, cash from delivered generating

and net the we working So goal, is it this been but to the impact is they now a variation R$X adjusted but make because adjustment have positive And were made -- it cash last this follow cash and our in Short-term, we the these trend necessary future paid to quarters, working seasonality cash reduce goes future, this to have inventory have capital it is was once year, variation already tends purchases cash and that not to rather why burn, a had and billion. this and positive. net normal is be a associated back in variation capital. for

keep next structures about So one retail, in a position, photo show having we cash And net billion we capital R$X.X the the on more flow. on cash. cash slide, net of figures greatest

of can mostly see total R$XX.X So payment lease million. KaBuM! R$XXX interest variation for million and investment, R$XXX R$XXX capital of clearly the around the the million working pretty much we of and IT variation and quarter, billion, billion and in and in acquisition concentrated R$X.X to logistics

in level as to capital we funded of of to So receivables. and for we of a normal R$X.X positions, robust on available have XX long-term back in in levels. first inventory And that also very cash one once with seasonal the our impact billion position cash And and and debt, quarter, in come cash cash of greatest billion. they R$X will the Also equity positions and variation R$X.X down year, a associated the last both the the we into we history, one broken R$X working billion working will the capital increase cash improve from a best billion variation, quarter to turnover will capital show, capital. slide the months, pretty again, with next this flow

sales more X for million million revenues super the Luizacred, cards showing important least slide, over to our our Luizacred. monetize outside say, more Luizacred. are a super R$XX important using another often activate Magalu with highlight our XX% a This words growth in more billion to than in last to highlight And cards, XX% on we couple of both increase XX% X.X cards Luiza XX%. the often. it's not at and about base cards, customers we portfolio, the increasing and using On Magalu NPL more of we And March see our months. -- Luizacred in R$X increase and We from the market increasing XX in the than next billion than and lowest XX Also Magalu can which year. one we quality that of but vis-à-vis and more have is and Magalu also slightly December last is the card levels, NPL the last

in March However, despite in at an scenario to new and owing X.X%, on level. keep million of the IFRS which versus the stems in in a the around inflation way is Luizacred's And of provisions market quality a in of the lower that, adding to despite a we in very level policy, in the loss IFRS. And ratio The increase R$XX why are R$XX Luizacred in despite mentioned conservative, net of once XXX%. than owing are this of pre-pandemic of growth difference of shows from again, interest BRGAAP BRGAAP. of And is portfolio. et the extra coverage we delinquency scenario, when That's portfolio, customers. this R$XX provisions this large had and which is the a quality net And having rates, net income, high, clients, this we cetera. good we a a quite quarter million R$XXX I lot, million pains in also lot mean, results, difference provisioning these very million growing show XX

level quality provisioning again, So is of the the very once conservative. and

building and in are healthy one the portfolio, card we of greatest that profitable growth very credit confident rates of are We a Brazil.

So now us what session. this the question-and-answer open And you. to Thank we had. is let

Operator

Instructions]. [Operator

for waiting question JPMorgan. from the are Joseph Giordano mute. microphone was because the We

Joseph Giordano

Thank Good of of very much morning, the talked about already subject for my question. has morning, everybody. the question. you Roberto everyone. Good one

year, how the company a see, the on average assets in of Why of to the bit would about physical you already think exceeded the was lower, -- XP XX% and leveraging the little participation of e-commerce. we I side we order the do is to the the the about But ticket. has and long-tail, It reaching should like XX% grow. know One that. XX% XP categories online in Thinking e-commerce ticket see with online What the to the of this XX% XP? question company. And net do looking variation cash is the at of this projection second best in the figure? your the burn, debt Later has regarding about of corporate the to second like generation, cash annualized I in in million and Thank Magalu Pagamentos have about And you know R$XXX account. terms here. you. revenues would the thinking quarter,

Fred Trajano

will the first much they the higher. about answer will the of that cash rates answer the even on first of and Roberto I growth the quarter, one see of and XP Based we dynamic. fourth quarter last are year,

adding sellers our are base. to We

and categories is very new our in mainly growing robust. are XP We

a the a two And the years very in the the the during of category had ultimately grow ahead, because performance The Magalu, it share never to as Magalu XP not and as to good more will people All pandemic. this market bought this a leaders was growth endeavors If more the of And we had this being world all our XP looking would it in that Magalu much few we rate been to naturally will the last online historical all normal. the lot because the continue it Caravan continue a XP. is higher XXXX vis-à-vis for all the long the we to XP this physical in run. pandemic. of of will in very the the the contribution be grow operated. of And durables is company's that quarter. have doing work kind also vector grew of be average have But such XP than be growth we are a the the margins, be because and -- we XP pandemic it over in and We stores, participation. in XXXX, results major channels. more in a per pandemic, continue major view. company's target and were proportionally. the postponed growth ahead This grew a part want we But looking will the growing to and is these be blue years, And lot it se the ocean.

with rational was shipping likes we everybody something then Now the profitability market. because by This and XP But that grow every was were to Magalu healthy recently. have for the our such with And the grow. the marketplace more now. of case more free operating has to in even The very R$XX with ticket. of the well continue competition take-rate is grow operated zero as margins. And be is materialized than products as will of contributed became they as in market, to And we overall, irrationally. operated competition always practice average this

will makes will rates, on go healthy And back sellers credit rates And be part consumers at these our to certainly very contribution We level. healthy for mainly very the historical seeing of the and money we to credit with We for to the really are is FinTech. years what worked the four levels. FinTech, rates. interest and

we Nerd cetera. world considering to KaBuM!, have. credit, but result ecosystem operation the is the Netshoes, million over that and XX%, our a Jovem So you line a brings It the what is et Canaltech This channels over credit. adds activate all bottom major of R$XXX really all

a So of per before say exceed and last in year and And major increase we because even I said, capital And billion -- average, of years, on monetization is generated last contribution And before, if about this our historical year, year. inventory lot the flow. had itself would quite last will billion like a levels. individuals. you Roberto with will had and R$X a about And speaks lot quarter five our had over the generation the future. corporations the our levels. on be there, imbalance talked focus over as have we And consider always R$X for credit positive to give for even we cash year last we result. this you in but to we history us us And year can a with cash our it billion lot working than we higher R$X the CapEx a

year, We of right it plan. in economic the we but ahead. had three quarter will last said middle very to months. of complicated second had in we already a the all six We the situation, from schedule a Fred are go orders

it be stop possible So wouldn't buying. to

up increasingly made itself. level We sales. budget. are better associated purchases already of the finely this natural capital already made seeking a in higher have already, an inventory prepayment ended quarter, is we of of we that this going purchases purchases but it last an a improve of -- a the variation to inventory was happen. term we had healthy this to is we is was already year, the It and going and working to This tuned, longer is already and quite turnover. these have to We repeat not to our payments for having schedule have average inventory. seasonality, turnover. prepayment that this continue We And -- the we disperse no besides So and

more we it have of always always have in and best World normal levels said, cash top because second it back going that. Cup quarter, being the And best to is and even generated go Fred and the the quarters so As fourth we involved should in have on the is this always. third one in Netshoes the to to

of the higher scenario, And quarter a of of of leads year with sales generating next seasonality working is in described. capital you -- the retail inventories the under us regardless level control. end So macroeconomic sector following ultimately, more of dynamic up lot cash. the quite And and higher this to the first as year, paid. I the terms suppliers the or are And

this So is final of XX% been whole. Pagamentos this quarter contributing. quarter quite capital XX% of know question Magalu and in has year. last this both and first Pagamentos last already you the quarter cash first working have generation Magalu your can after as grew don't in Pagamentos practically a And years see marketplace vis-à-vis generation. answered Pagamentos. contributing GMV XX% the few growing the profitability. lot margins and in and the a totally. whether is we what has have about one, Magalu first this situation cash I I Magalu

giving You consequence, our this that contribution a been good income. a are increases to profitably. using can our And our our more. see fee our it And more our and and sellers has payment as fee revenue, means revenue, margin gross consolidated

sellers, So delivered, offered card the we being by to Pagamentos Magalu profit in with had our a credit you. corporate our very profitable quarter. This monetizes and more issued FinTech. is and more that products year further being Thank good services the trend including Magalu is more Pagamentos a

Operator

question Joseph. you hear can you, Bob next Ford. us The Bob, now? Thank

Fred Trajano

I We hear so. you. can think

Bob Ford

margins. Congratulations improvement of and you the you first operating you you. are and on the about and learned talk the What taking about about the data in long-term impact terms Thank Can the and and ads? and Great. in response on think engagement? for you MagaluAds, challenges lessons questions, functionality thank improved what long-term? the where

Fred Trajano

What long-term margins is increasing you the rates. first was short-term. the market quarter year third higher absolutely we've for for interest discussing the margins, that of Bob, something since question. with reality something thank of and Bob, the question? necessary last the been Operating the

point margins stay. increases. down, also so other XP the a not channels. talking expect to strongly durables That's about physical outlook, once interest is But these it goes stay now. short-term So people trigger, of That's grow for efficiency, about next the significantly And I'm our second comes line and bottom go XP? more when only reality whenever stores focus mean down, it year, you I durables. can But for right need What half which year. is we gain the and is some rates things now. for what only the by we

stay. So comes efficiency that that's improvement to

for also use efficiency. crisis And of to go efficiency continue. We to make then this tends

for than credit we these we but FinTech, scale more Magalu not person up only for measures, with but Like said, As about developing. new reminder, earnings. the I Magalu efficiency consumer operations products XX Payments, have are talked a also that with for credit. we not to to want individuals and up. margins years, to And the corporates tend something we new It's contributing go always

handle how fully is So controlled for NPL X%. It's we us. at know credit. And nothing new to

great margin not So margins we for stemming individuals, believe we're for contribute from in And but corporate. in the to going only to to the ads, news when also potential the have comes future. also operation, to future it a huge

IT whole very believe demand our The already it's on is bullish more profitability on base. tends operating to market it So companies. be when to this to I the also comes radar. I'm going market by this and

including So companies balance worldwide Brazil I believe everybody an in companies. eye on growth searching profitability, more and All for with startup profitability. are keeping

not no listed of like point in are return. companies be closer a balance it's fundamental with valuation to or will that And rational be companies general that. also for open Magalu will be game. The companies and good open So were the will in always

ask the do Fatala IT. more As for a you about And part IT market. Eduardo talk to service, then just for what and the maybe I'll could we you. tell ads, Jovem give flavor the also in us IT, search ads and of Thank about to

André Fatala

Hi Bob.

server. [ph] a in developed we wanted work last it made what We lock to And we to do adapt There the of Speaking year with the acquisition was to ad in some MagaluAds. MagaluAds. team. huge changes of

and of per to channels, adding now. step to launch That's Canaltech now XXX are now Netshoes, explore have the existing consumers the window working in your on search. started with that these and also in some the and to work in order location products to first traffic is started Magalu year. right with to other from And include we're recommendations something order closer are we we sessions prioritize next geo with in products to have we're to And We working the ad. more going state We Época, algorithms channel. Magalu displays, million

So and use our host traffic can ads. we sellers' all the

So we the this. with are working map, on

would evolution have ecosystem. to and ads in move now we take today, in So will add? we forward channels this Edu, to channel, other like the Magalu to you

Eduardo Galanternick

give Like are, Fatala you very think with this. scale. self-service, this platform us what's to about we said, going We're if we the if is consider confident

forces new team's and performance. like self-service, for we drivers. On the accountant verticals on One to Freddie hard commercial products in very with significant The we the the said, of growth projects revenue the and And developing special these our our join on other getting a Magalu particularly confident ads margin the of advertisers. channels, the other and and media in have moment Canaltech the all it closer community sellers. so hand, for the hand, from advertisers two is in is are funnel platform on focusing these

and growing So on delivery keep we results. can profitable

Fred Trajano

He Eduardo. the market asked about also

Let me answer it.

free If you feel do to that. want to add,

is lot orders the something of market, of the in for consider terms should we're orders, AiQFome market from important for growing also also the number XP As e-commerce. and orders. total Bob. of we highly including around a number XX% in is XP of This And

to the frequency. have all improve they think go I

growth that we just we on and are focusing As the a in perishables. in announced XP integration reminder,

optimistic. So is We're the early stage. in very this

to centralized or grow model. not traditional into platform, and way in the think stores by I XP is bringing marketplace the local commerce local

is right plane back the by buying we integrating foot the powder to think make deliver this to to the economically SuperApp So washing going feasible had not by to the I Northeast it and trying because bill.

local delivery the ticket, So be. more the should the the lower

So ticket goal for that's lower our categories.

Operator

from [Indiscernible] Citibank.

Unidentified Analyst

an morning. about Good long talk Looking well, ads, GMV monetizing Could the this for if be the contribution monetizing may addition interpretation of is investments. already to as would would is remainder percentage the about for as of you commission idea I the economics other you for said Fred, we a at you charged we fulfillment, a that? of XP? contribution of sustain margin that margin are margin and so from more of to to going What of XP penetration medium please. or What run yourself, to you again long know future. at contribution economics the the the by you in of Maybe like fulfillment? the change said, how the like seller. my about to see going XP the might and And it may run the charge incremental has your Fred? overall to company medium fulfillment and correct. fulfillment of looking Are environment, offset as rational the and means and the in fulfillment, the I know

Fred Trajano

bases question. you wanted docs, talk the But about that using the operator reducing a to of logistics and all area last and X for fulfillment well, and the the year, XP to designed DCs, XP. we and storage same lot that the cross-docky said the meters I'm same the we lot going maybe add to supplementary the square we invested trucks something. of inventories be and the million a the in. to same including over we would rational, solution Fatala same Thank network, like of fulfillment fleet have and a We invested

We have that and already room there. to using areas are have these partners sellers

And sometimes, capacity of we trucks have idle that XX%. have

of focus up in order up that to to from Entregas going growing to complete And XP. bringing zero So We lot you or XP the routes a or increase supplement quite going this to target. went evolving in with started years delivery of give is guidance this the the up help we lot. and deliveries to in idea any to two Magalu are four any have a XX% room participation We and And we is not do ago. sales. XX%. already these five about I'm two-day deliveries of We today -- zero to going XX% have this is days.

there. lot So we a working have been

the Our we fulfillment increase accretive will is is totally have of installed should and really And be further believe base because area. we marginal we DCs what and profits. this we cost an generating already

and areas, DCs a cross-docking towards We this XX% it's to storage our invested the important the have centers. of reinforce and already this areas, lot

us for XP pickup is rational of this multi-channel. no that It's And company. lot. benefits store back terms into in is low and low the I rational seller, to tap same this for going the for be going cost pickup the a the going track. into multi-channel to is going very increase is figure this the there's believe store in The help tapping to of store of to So pickup, very

years interest many negative had I think rates we world. of all the over

be see do makes whatsoever investors any longer. executives So overall going that of no sense interest the growth. see Brazil not back terms possibility in focusing growth rates. on and I I Irrational will rational of

burn they go many lot pressure. are the to companies cash a cannot they and are So and market working of with under

we I there is such, back. where way Magalu operated So is will cost in as historically always so the balanced to turning way. very operate This capital continue in environment And believe is no has the a mainly high. an

André Fatala

Fred. much, you Thank very

the contribution R$X to offering, billion which margin of increase, inclusion We yes. we not this allows products positive conclude is are some we are work that and cash FinTech to already fashion. Marketplace in Just in of us a up places and XP in going have the ads with a per is burning situation. margin more some year

hiccups way. this keeping upward no with are we the but trend, So along

And to we to this positive XP exaggeration. wanted are long in XP no margins it the have initiatives we to with over develop XP. of grow continue We steady in Thank and XP. being just in growth run, you. tougher We margins in are be to and to increase going need terms but

Operator

Goldman Sgarz Irma question, João is question with please Irma, The ahead. further Sachs. go No . next

Irma Sgarz

Hello, questions. morning. two good have I

be wouldn't rational, to another there sense fulfillment, learning, or offering already understand solution to back been mindset. changed that cross-docking also the changed have like that the might would another the believe would important Firstly, you. feedback to idle make said capacity very I going make but In another as mindset. lesson -- your fulfillment I what to your a more so just past, much I would you better understand sellers sense. Cross-docking

the Is growth? a or of force evolution you mid-term? about make fulfillment? Caravan strategies, And for sellers maybe the in more that for core year of the year expect be the what logistics Partner So and tell driving second future they when or sense. Could this Thank to a you in about to XP you. the something the second Magalu for us question lot for half

Fred Trajano

you questions. thank your for Irma,

change. the never not that We Your clarify questions have strategic is fulfillment. to as give this wouldn't me chance said we

same. heavily focusing and deliveries. using to is the and adding in to cross-docking growing logistic our an pretty only be future. is here. of with always product our services on will to to XP marginal XP compared lot the for are bulk an the fulfillment on exclusive delivery This costs remains local focus a with XP with market the deliveries only willing fulfillment on cross-docking, I add operations. who and keep standard our additional which it something said also inventory option lower and XP, local is by delivery believe We'll and strategies on DC, not sellers have We was don't It to is

strategic our also that to the profitable add don't in it's XP market. to applied was was just only a in And but sellers. the something we change, I see so uniqueness So XP, as to that the XP,

So for believe who -- future, I the willing for provide the be fulfillment option the the important better bulk of never all our are an to for pay not a but faster is deliveries, service. to sellers service delivery and

Caravan? many next underscoring I do So to cities and closer we'll not this to very to on We keep the is route. Brazilian be it's question. doing the to Well, very in attract seller. strategic specific the about this cities? seller, believe conversion. a This important and want just visit project. a going annual important clearly year something year. We is The change add analog We're There's don't to the is second several Caravan. it something remember

higher value remember, We not proposition part only is this are legwork. very of excited. is And a

We have sellers. for IT support analog

have to allowing physical hub a for prepare. We stores

We Magalu. with Agency logistics have

to and put the of And difference. if we already number work bring have So a beginning hunter they analog together, sellers. of show are we a lot to all other initiatives them

company; base have two in years. more the sellers for formal We We two pilot had important we April. into studies have the last our

seller if the cards, only and IT add all to Magalu adding group, seller but in only on the of to important old So the new optimistic for me. is growth and I'm will more Caravan, these help about initiatives the sustainable something the us to sellers that deliver cherry base pie, not will this like not which we very Caravan be in sellers to others having platforms in in the sell bring and POS credit, but restaurants machines, services ecosystem the

want in ecosystem only city, more the cross-selling. clear. with we to you. not sellers, in Thank materialize So bring but also the Crystal

Operator

[Indiscernible].

Unidentified Analyst

factor the improvement. for for Thank [indiscernible] this you you. questions. Thank

Fred Trajano

question, When in the from XP the went up the revenue of price for affect it you went this and the in last similar something the the company, gross talk the a growth last the the we grew customers to and is margin merchandise over talk Ileana. collection services. interest gross well view. play, you first because parent with in and positive the have Netshoes have of charging Magalu, merchandise Thank one. you we gross growing XX%. And then margin effect positive lot, of The grows fees. Magalu cosmetics and fee, final when margin look look talk of income basically back verticals we -- the see we And and margin the which merchandises. of where and from even beat of to new increases quarters, is consolidation we figure the -- it quarter of company, we overall, parent XX% this to When associated of even the about for fee helping about have year, margin. the see gross we into we the Pagamentos Magalu, important consolidated that, gross many very the we about the factors more at coming merchandise service have a company, very when from and FinTech And the specifically. controlling Época at already And FinTech consolidated result, Magalu in categories, service cosmetics, This marketplace

force an operating point usually the the non-interest cetera. promotions bearing this And at bearing up in bearing, e-commerce. excellent And we has our campaigns able able a And vis-à-vis and and mobilization interest the We to mentioned. this And do the ago. non-interest the sale selling in e-commerce to channels. efficiency we R$X quarters, are do sales. and XX very lower and sales quarter with because were were tests our in of than stores, charge the of were stores higher increase lot increasing that year. fantastic et sales, previous proportion, And to able physical is were of the all past. able tops this in a You most proportion much and but do two of one because bearing were reduce And with inventories billion mentioned year sales promotions, months a interest a interest that by to we they relevant in marked to and we now in is to the lower we last small the margin the rates

can in spite you see inventory. factors up So into margin R$X selling of so go that play our many billion came that could gross merchandise in over

will of So of Thank is this they whole a factors this are sustainable, and result. seek continue to range kind you. and we all

Operator

Eiger question, Thank Investimentos. next Ileana. you question The for XP the Danniela by is with

Danniela Eiger

my for questions. follow-up Good I morning, everyone. couple question. you Thank have of a taking

working about capital. First point

a the for still lockdown level. also negotiation future, said more we of having Brazil to I'd deals. First price understand see QX? also risk it it adequate like half and to new of for we terms, you eight? it sense the levels, the possible can could just maybe I gross in How like of have margin of was the a a second the or half second consider came to What is sense tell us year, make is but to I second lower or year? in much it in more to adequate Now more -- back the shortage levels? have delinquency? consider rates control, to with purely that specifically This the composition, second about timing could very it on a is Actually to the under with about inventory levels about inventory this possibly more possibly U.S. second What you'll in lower And more you purchasing of resumption consider risk margin quarter follow-up and China go the last And or Does the you question related for cash What dynamics your but it we something breakdown of do make at in to the anything products got opportunity a we normal If considering with purchase payment sure inventory more an better in new at you these envisage maybe to I'd of explore does to correctly. more you Thank challenging the consider the mentioned taking scenario? be this sellers that mortality And could you or just tell you understand a this for may now focus behavior? is of the operating about suppliers. challenging all, new a macro question, from year reduction lower envisage disruption, about my makes level? resumption how offer related questions. what us the strong margin range. a about half sellers? the possible consider more

Fred Trajano

your parts are question. to there morning. Danniela, Hi, good Well, several

them see me I all. Let remember if

terms, compared better margins. lower with to inventory suppliers to levels onwards the of comes what's having if levels profitable levels year order good are you last we which working negotiating to end it trading check second supplier on payments healthy. on run no the and then more And in with was dynamics, option, to to the you. consider have and always to clean and the work inventory terms, lower or lower actually purchases to them with more deadlines quarter long a about We to or you're again and in balance actually, a Firstly when consider absolutely effectively, it better scenario cost the second quarter operating

for clean have QX. we flow So cash

we not room, had believe inventory negotiation for the is better coverage onwards. If still which a I here second positive have term, good terms. we we So quarter fully is consider balanced. the

quarter, we said products in homework So do. peak buying the circumstance the we not we still of inventory Danniela the conditions it in was that, current the Having world. were third in year. have U.S. the I all QX. second compared to was better Last balanced, but at last is had way and and in some XXX achieved It's the year fully bulk to heated believe

So they that U.S., time. Coronavirus maybe were well, well the in $X,XXX at

moment And shortage increase rate is in of because down do going suppliers rates. down and the were the I which plan with to is in So we suppliers better this what a year, continue we there? products half with had with believe and rates. to conversation to But of of explosion see And dollars dollar my as the we and go second to has was you economy world will products, dollar the of not five. rate availability see most it more with U.S. was consumption interest in now excess the expect in the

is we'll we better margins. and our So and future. price to capital working to we The exception to better is buy, but conditions evolve But have the think I have margins sell, working no lean for in which availability. conditions improve going cost. with to products manage white the steel, in we in still capital higher future have significantly we problem But pressure believe better of line, negotiations

we historically make them of this again. come guidance convinced to and said and clear, our it can to of eight operated I'm eight. not was It standard given Danniela, again, naturally are any in for Just common at operated we margins is a possible fully I a a going we What back prior already but that not we that stores in open row guidance. give not guidance, This pandemic, be to years growth margin. the are all will just balanced better to is with four a

costs. to more company more we fixed bigger, position plenty power. of more The have to So scale has bargaining scale, is will dilute It go back.

that. if add we're not that. So I'm give a feel data, recall to want guidance is it's for this but the to timeframe I you don't going a do to free convinced and not other possible, Fabrício, supplier questions. to the

Fabrício Bittar Garcia

focus by is These invest of sell Good our our and with sellers product loans provided need delinquency morning, in more sellers. which a delinquency, inventory who sellers we loans wanted you a marketplace. [ph]. on sellers Danniela. have small About and know We about for to in for with loan the than have are a thousand sellers we funded to XXX,XXX already more fatigue

So on average per these are we sellers loan R$XXX,XXX that loan.

R$XX portfolio small. math we the around is million relatively do So If the only.

and We to are also adjustments in experience models. the the making

And It pretty a soon scale seller up future the and in the much speed to will up expect it our marketplace the to increase driven base by growth and whole. we as in our product.

are all And well. the model; made available We cancellation why that daily So well. our this is And results. the and data very We seller low to of product it purposes preapproval on X%, growth a make delinquency basis. low, to public sellers the of is the for disclose richness market. disclosed lower external growth, [ph] transactions the all today delinquency to seller fatigue approve base use of in by we and these NPL is experience, is Delinquency as we a so than this combine firstly is our upside to data making numbers. data what NPS, adjustments. This very all our low. approval very seller based are data in rate, also rate, this score That's have as in we is bring on daily quality, really naturally.

end is per in relationship a on day, they are very seller And well. has so of to pay top keep So on with they sell of platform; highly selling approval already at us. the the efficient. that, They willing the the the close se as can

interdependence So it's a we and as inventories as even guarantee. and future, is a we different all, the strong transactional from purely as well have There might thing. guarantee above relationship, a in a have receivables some

relevant and of potential. and to very So growth marketplace our to operation FinTech the and our it a strategy is monetization the

less control and low really much very under delinquency So NPR. is than X%

Danniela Eiger

Excellent. Thank Crystal you. clear.

Fred Trajano

you, Thank Danniela.

Operator

Richard Cathcart from Banco Bradesco.

Richard Cathcart

SuperApp. the the organic sellers question that in you would we Thank back this very are to to bad. incentivizing among sound you. go traffic that like and category, your the apologize of you the level the the Also today. for and was disclosed information I of Thank levels cross-sell

Fred Trajano

We specialists the the for role. question. of Magalu. for value good generalists, that understand of proposals, important Richard, they a thank you each you one very the Thank have the question proposals the about SuperApp of

doing SuperApp stop is on objective the one shop. has based Our the marketplace. the of objective This

to and many then able diversity board drive of consumers. So sellers assortment we convenience on are bringing and our the this bringing facility to

So we developing many our from cash value do a generalist, we benefits. proposal, one that. are there cetera, our et that cross back campaigns, And are consumers benefit when within benefits

be We to categories, the by the able the all digitalize themselves. Partner both then we small not sellers, who both and otherwise for Magalu do Magalu, the bringing purpose per would Magalu, have board, on and beauty, who sellers is se relevant fashion smaller involving have of very the

already, Magalu. product we some of that cross-sell, bring give asked in means is drive major you when by sell tickets, and can this Zattini, productive been fashion we in more we focused specialty the able this our ever major mix. higher the also in board of we in specific sayings. this between their with on illustrate digitalize. driven representing same and more that We also independently. take you category role clients very million quarters reinforcing that just from and are support understand for And X sites them They And Netshoes we each cross-sell, play about Magalu understand their you category. sellers Época talk SuperApp. them And already on, audience we sales these continue do of fact will the So tickets to achieving have are we benefit our on in speed. And specialist Magalu help Zattini ever XX% this own fashion our has see just this platforms, now is one within speciality and of direction a growing about the the digit and are that them Zattini. the usually three if And model a results higher to at

have higher, as organic size flow can are are And an quite So conquered organic that relevant. continue platform and Netshoes, to there well. have they very active see driven which million Zattini flow. engaged is we very in higher is users from. categories. believe they The you destination is apps to X invest flow, much we in position. and that specialist important Zattini, this for these Época, about very asked these We this is it our already our the by And

million among installed It X one of they're apps Zattini the apps As fashion. much has I engaged. installed before very is most and said in

accessing, Magalu a users in of we organic Magalu, via So have then this helps engage paid terms flow. have invest we In increasing falling of to us and And to but more the app. we able been is lot there traffic the base as within see organic as and organic this progressive traffic well. in evolution create this evolution the increase knowledge we of are

Operator

ahead. question. with the The question go Stanley. for Morgan you Andrew, thank next Andrew Ruben is by Richard, please

Andrew Ruben

thank to a strong been continued Hi, Most fly Thank to answered, are business. I'd that in question. particular, if about for from there understand KaBuM! you. any margin you can drove the core what Magalu trajectory more KaBuM!’s the like and have the bit but a perhaps margin takeaways

Fred Trajano

in huge sale several a you company Organic question. and Well, growing cash with for also traffic is huge loyal fastest aspects, it is special a is Thank very segment your is great. very base. in a KaBuM!

high receivables stake have discount, So a a ticket very of is well. high don't efficient lot it is we cash very although and as

in so. XX% These take competitors. a competition, operation are efficient name. inventories XX% Brazil centralizing don't is SG&A who So small so much not major or are operators It's Anyway, very is very low. with no KaBuM!’s

to So to it peculiar as intend this deliver that results. XP going in it's all with certainly smart more is very acquire, also with good We're efficient unique. use well we very know-how that evidence bring did KaBuM! we operations. processes, and also it whole, but can managed In companies we and Netshoes a XP

Operator

has like end. would the to to over Trajano. floor come I session turn Q&A Frederico The an to

Fred Trajano

to and would call very you thank wish week. much good I very like in a all for our you participating

Operator

you a to good the that to might team you call questions answer has end come have. to conference Thank much. be Magalu's any IR available Have an continues very and day.

Magazine Luiza (MGLUY) 17 May 222022 Q1 Earnings call transcript