Dotz (DOTZ3) Q1 2023 earnings summary

Executive summary

• Evolved from a coalition loyalty program into an engagement platform spanning Loyalty, Marketplace and TechFin, with an asset-light model and R$18.8bn in potential GMV.

• Q1 billings were R$66.2 million, down 7.5% YoY; excluding promotional campaigns, they grew 10%, led by 42% TechFin growth.

• Super App reached 4.7 million downloads and 1.5 million completed registrations; 39.5% of redemptions involved converting points to reais.

Financial highlights

• Net revenue was R$30.3 million, down 10% YoY; net revenue before redemption costs was R$60.0 million, down 13% YoY and stable excluding promotional campaigns.

• Gross profit was R$25.7 million, down 16% YoY; gross margin was 42.9%, versus 44.6% in Q1 2022 and 43.0% in Q4 2022.

• SG&A was R$41.6 million, down 17% YoY despite Noverde consolidation; adjusted expenses excluding Noverde and non-recurring items fell 23% YoY and 17% QoQ.

• Net loss was R$15.5 million versus R$16.7 million in Q1 2022; loss per share was R$0.12 versus R$0.13.

• EBITDA loss was R$15.9 million, improving 18% YoY and 35% QoQ; EBITDA margin was -26.4%. Adjusted EBITDA loss was R$17.6 million.

Outlook and guidance

• Management expected promotional campaigns to be more concentrated in H2, supporting a recovery in billings and revenue in line with historical seasonality.

• Revenue growth, expense efficiency and the return of bank campaigns were expected to bring breakeven within reach in coming quarters.

• Expense optimization and integration across Loyalty, Marketplace and TechFin remained priorities; monthly costs could fluctuate with discretionary commercial spending.