Allied Tecnologia (ALLD3) Q2 2024 earnings summary

Executive summary

• Net revenue for Q2 2024 was R$1.31 billion, down 14.9% year-over-year, mainly due to international distribution declines, while retail and digital channels showed strong growth and margin resilience.

• Gross margin improved to 12.3% (+1.3 p.p. vs. 2Q23), driven by a higher share of retail in the revenue mix and prioritization of profitability.

• Adjusted net income for 6M24 rose 90.7% year-over-year to R$65.7 million, with net income margin at 16%, slightly down from 18% last year due to the end of a tax benefit.

• Operating cash flow was positive at R$49.8 million in 2Q24, and net debt/EBITDA remained low at 0.8x.

• Strategic partnerships and portfolio expansion, including new agreements with Microsoft (Xbox) and Motorola, are expected to drive future growth.

Financial highlights

• Consolidated net revenue: R$1,310.7 million in 2Q24 (-14.9% YoY); R$2,729.9 million in 6M24 (-6.0% YoY).

• Gross profit: R$160.7 million in 2Q24 (-5.2% YoY); gross margin 12.3% (+1.3 p.p. YoY).

• Adjusted EBITDA: R$61.2 million in 2Q24 (-13.3% YoY); margin 4.7%.

• Adjusted net income: R$15.5 million in 2Q24 (-14.2% YoY); R$65.7 million in 6M24 (+90.7% YoY).

• Cash and cash equivalents at period end were R$421.6 million.

Outlook and guidance

• Focus remains on expanding operational synergies, value generation, and cautious optimism for the sector's short-term performance.

• Strategic priorities for 2024 include growth in refurbished products (Trocafy), international expansion, and strengthening B2C and B2B partnerships.

• Management is focused on profitability over top-line growth, especially in international markets.

• Ongoing evaluation of asset optimization and technological tools to maximize returns.

• Deferred tax assets are expected to be realized within nine years, based on projected future taxable income.