Locaweb Serviços de Internet (LWSA3) Q2 2024 earnings summary

Executive summary

• Ecosystem GMV grew 22.5% year-over-year to R$16.9 billion in Q2 2024, with Own Store GMV up 17.8% and TPV up 12.8%.

• Platform subscriber base increased 7.8% year-over-year to nearly 190 million, driving 21.7% growth in platform subscription revenue.

• Net revenue reached R$336.0 million, up 7.1% year-over-year and 4.8% quarter-over-quarter; excluding Squid, annual growth was 11.2%.

• Adjusted EBITDA rose 22.0% year-over-year to R$65.4 million, with margin expanding 2.4 p.p. to 19.5%.

• Net income was R$18.3 million (net margin 5.5%) in Q2 2024, reversing a loss in Q2 2023.

Financial highlights

• Gross profit increased 10.6% to R$160.0 million, with gross margin up 1.5 p.p. to 47.6% in Q2 2024.

• Free cash flow after capex surged to R$28.7 million from R$0.7 million in Q2 2023.

• Capex as a percentage of net revenue decreased to 7.0% from 8.3% in Q2 2023.

• Net cash position (ex-lease liabilities) was R$565.8 million at quarter-end.

• Commerce segment net revenue grew 10.4% year-over-year in Q2 2024, with adjusted EBITDA margin expanding 5.0 p.p. to 17.8%.

Outlook and guidance

• Management remains focused on sustainable growth, margin expansion, and leveraging new financial services capabilities following Central Bank approval.

• Further simplification of the corporate structure and incorporation of subsidiaries are planned to unlock additional tax benefits.

• Restructuring of Squid is ongoing, with focus on profitability and cost reduction.

• Strategic moves in logistics, omnichannel integration, and product launches are expected to drive further revenue and margin improvements.