Azzas 2154 (AZZA3) Q2 2025 earnings summary

Executive summary

• Q2 2025 marked one year since the merger, consolidating the largest fashion group in Latin America, with 10.3% consolidated revenue growth and significant leadership transitions, including new Chair, CEO, and CFO appointments, focused on integration, governance, and Vision 2030.

• The group achieved strong integration and strategic alignment, advancing projects like the knitwear hub and launching Farm Etc to target Gen Z.

• Despite macroeconomic challenges and underperformance in Shoes & Bags and franchise channels, structural progress and efficiency gains were achieved, preparing for a new growth cycle.

• Strategic priorities include accelerating integration, focusing on core business, and defining Vision 2030.

• Portfolio simplification included discontinuation of several brands and the sale of Baw Clothing.

Financial highlights

• 2Q25 gross revenue reached R$3.6bn, up 10.3% year-over-year; net revenue was R$2.9bn, up 4.8%; recurring EBITDA was R$535.6mn (+9.0%), with margin at 18.5% (+0.8 p.p.); recurring net income was R$283.7mn (+81.7%), margin 9.8%.

• Accounting net income reached R$537.7mn (+408.2%), mainly due to reversal of tax provisions.

• 1H25 gross revenue was R$6.9bn (+13.0% vs. 1H24); recurring EBITDA R$963.3mn (+14.9%), recurring net income R$401.4mn (+55.6%).

• Gross margin in 2Q25 was 55.9% (-0.2 p.p. vs. 2Q24); recurring EBITDA margin 18.5% (+0.8 p.p.).

• Net financial expense increased 32.9% to R$201.7mn, mainly due to higher FX and interest costs.

Outlook and guidance

• The group is positioned for a new cycle of sustainable growth, with a focus on integration, operational discipline, and capturing value creation potential.

• High single-digit growth is expected for the second half of 2025, with continued focus on inventory efficiency, expense optimization, and portfolio expansion, especially targeting Gen Z.

• Management reaffirmed business projections and guidance as per the Reference Form.