Azzas 2154 (AZZA3) Q3 2025 earnings summary

Executive summary

• Consolidated recurring gross revenue from continuing operations reached BRL 3.72 billion in 3Q25, up 4.4% year-over-year, with recurring EBITDA at BRL 476.7 million and a margin of 16.1% (+0.4 p.p.).

• Recurring net income grew 22.9% year-over-year to BRL 201.3 million, reflecting improved expense control and margin expansion.

• Fashion Women, led by Farm Rio's 40.6% international growth, and Fashion Men units were operational highlights, while Shoes & Bags faced a challenging quarter due to Vans' global downturn.

• Basic BU (Hering) began a transformation cycle with new leadership, focusing on operational restructuring and margin recovery.

• The group advanced integration, unifying Fashion Women and Men under single leadership to capture synergies and operational gains.

Financial highlights

• 3Q25 recurring gross revenue (continuing brands): BRL 3.72 billion (+4.4% vs. 3Q24); recurring EBITDA: BRL 476.7 million (flat vs. 3Q24); recurring net income: BRL 201.3 million (+22.9% vs. 3Q24); recurring EBITDA margin: 16.1% (+0.4 p.p.).

• 9M25 recurring gross revenue: BRL 10.6 billion (+9.8% vs. 9M24); recurring EBITDA: BRL 1.44 billion (+9.5% vs. 9M24); recurring net income: BRL 602.7 million (+42.9% vs. 9M24).

• Gross margin in 3Q25 was 54.7% (+0.3 p.p. vs. 3Q24); recurring net margin: 6.8% (+1.4 p.p.).

• International revenue rose 28.2% year-over-year, driven by Farm Rio, now 13.1% of gross revenue.

• Net debt at quarter-end was BRL 2.29 billion, with leverage at 1.37x Net Debt/LTM Recurring EBITDA (pre-IFRS-16).

Outlook and guidance

• Strategic focus on integration, efficiency, and margin improvement continues, with ongoing leadership transitions in Shoes & Bags and Basic units to drive profitability and long-term value.

• Basic BU (Hering) is undergoing a turnaround with new leadership, focusing on franchise model review, product mix repositioning, industrial efficiency, and working capital optimization.

• Women's apparel expected to maintain double-digit growth, though at a slower pace due to base effects.

• The company maintains its projections as presented in the current Reference Form, with no changes resulting from the quarter's results.

• Focus remains on gross margin, cash generation, and working capital efficiency.