SABESP (SBSP3) Q2 2025 earnings summary

Executive summary

• Revenue, EBITDA, and net income saw strong year-over-year growth, with net income rising 77% to R$2,136 million, supported by tariff adjustments, volume growth, and cost discipline.

• Over 1.3 million people gained water access and 1.4 million gained sewage treatment in the first year post-privatization, with over 161,000 new connections added in the quarter.

• Capex reached R$3.6 billion in 2Q25, up 178% year-over-year, with a total of R$10.6 billion over the last twelve months, supporting accelerated infrastructure expansion.

• Major investments in technology, digital payment solutions, and smart metering contracts were signed, enhancing customer service and operational efficiency.

• Job creation exceeded 7,500 direct positions through the Capex program, supporting universalization and economic growth.

Financial highlights

• Net revenue reached R$8,965 million, up 32.8% year-over-year; adjusted EBITDA increased 21.5% to R$3,617 million, with margin at 64.2%.

• Personnel expenses fell 10.3% year-over-year, mainly due to an 11% headcount reduction from voluntary dismissal plans.

• Operating costs and expenses dropped 19% year-over-year, driven by cost control and efficiency programs.

• Removal of discounts for large clients led to a 47% average price increase versus Q4 2024 and R$211 million gain in H1 2025.

• Cash conversion reached 87.9%, reflecting robust operational cash flow.

Outlook and guidance

• Capex is expected to remain at around R$3.5 billion per quarter, with a shift in profile as major sewage plant expansions conclude.

• On track to exceed FY25 universalization targets for water and sewage units, with 111% and 86% of targets achieved, respectively.

• Efficiency programs and cost-saving initiatives are expected to continue delivering benefits, with further ramp-up in discount removal gains in H2 2025.

• Social tariff impacts will persist in H2 but will be compensated in the tariff cycle effective January 2027.

• Capex backlog of R$35 billion across 542 projects through 2029 supports long-term growth.