Dotz (DOTZ3) Q3 2023 earnings summary

Executive summary

• Shift toward an integrated engagement platform continued, with TechFin reaching 25% of billings in 3Q23 versus 14% in 3Q22.

• Adjusted EBITDA loss narrowed to R$5.9 million, 62% better YoY and 40% better QoQ; this was the fourth consecutive quarterly improvement.

• Priorities included POS redemption, credit quality, app upgrades, Dotz Parcela testing and reaching breakeven.

Financial highlights

• 3Q23 billings were R$65.8 million, down 7.3% YoY; 9M23 billings were R$195.4 million, down 5.4% YoY.

• 3Q23 net revenue was R$36.1 million, down 8.1% YoY; 9M23 net revenue was R$101.0 million, nearly flat YoY.

• Net revenue before redemption costs was R$62.7 million in 3Q23, down 15.0% YoY; 9M23 was R$182.3 million, down 11.0%.

• Gross profit was R$31.6 million, up 9.0% QoQ; gross margin was 50.5%, versus 48.1% in 3Q22.

• Adjusted EBITDA loss was R$5.9 million in 3Q23; 9M23 EBITDA loss was R$31.6 million, 45% better YoY.

Outlook and guidance

• Promotional campaigns generated R$4 million in 3Q23 billings; campaigns underway with Banco do Brasil could add R$14 million by year-end.

• C6 Bank points-transfer partnership was expected to launch from 4Q23, allowing customers to transfer C6 Átomos points to Dotz.

• Dotz Parcela was operationally ready, with testing planned among selected coalition partners to assess usability and acceptance.

• Additional funding sources were identified as necessary to increase credit origination; breakeven remained a target through margin improvement and cost discipline.