Locaweb Serviços de Internet (LWSA3) Q2 2024 earnings summary

Executive summary

• Ecosystem GMV grew 22.5% year-over-year to nearly BRL 17 million, with Own Store GMV up 17.8% and TPV up 12.8%, representing close to 20% of Brazilian e-commerce.

• Subscriber base reached nearly 190 million, up 8% year-over-year, and platform subscription revenue grew by 21.7%.

• Net revenue reached BRL 336 million in 2Q24, up 7.1% year-over-year; consolidated net revenue for the first half was BRL 656.6 million, up 6.7%.

• Adjusted EBITDA rose 22% year-over-year to BRL 65.4 million, with margin expanding to 19.5%; net income was BRL 18.3 million in 2Q24, reversing a loss in 2Q23.

• Strategic acquisitions, including Qint, and approval to operate as a Payment Institution, are set to enhance business intelligence and financial services.

Financial highlights

• Gross margin reached 47.6% in 2Q24, up from 46.1% in 2Q23.

• Adjusted EBITDA margin improved to 19.5%, with free cash flow after CapEx rising to BRL 28.7 million from near zero year-over-year.

• Net profit for the first half of 2024 was BRL 42.8 million, reversing a net loss of BRL 32.5 million year-over-year.

• CapEx as a percentage of net revenue decreased to 7.0% from 8.3% year-over-year.

• Net cash position at quarter-end was BRL 565.8 million, with no debt.

Outlook and guidance

• Management remains focused on sustainable growth, prioritizing EBITDA and cash generation, and expects continued expansion in digital transformation and financial services.

• New digital account and credit products are set to launch in 2024, leveraging Payment Institution approval.

• Further corporate incorporations and operational synergies are planned to unlock tax benefits and streamline operations.