Locaweb Serviços de Internet (LWSA3) Q2 2025 earnings summary

Executive summary

• Achieved double-digit revenue growth and margin expansion in Q2 2025, led by strong performance in the Commerce segment and operational improvements, with accelerated growth in both subscription and ecosystem revenues.

• Significant adoption and impact of AI tools internally and for customers, driving productivity, customer experience improvements, and operational efficiency.

• Strategic plan advanced across multiple fronts, including integration of financial services, cloud initiatives, and the launch of a scalable cloud IaaS solution.

• Most earnout obligations from past acquisitions were settled in June 2025, improving predictability and financial flexibility.

• Appointed a new Vice President for Financial Services to drive monetization across payments, credit, and digital accounts.

Financial highlights

• Consolidated net revenue grew 10.4% year-over-year to R$370.8 million in Q2 2025; Commerce segment net revenue up 15.4% to R$266.0 million.

• Adjusted EBITDA increased 16.1% year-over-year to R$75.9 million, with margin expanding to 20.5%.

• Free cash flow after capex in 6M25 totaled R$90.6 million, with a 12.6% margin; operational cash flow in Q2 was R$102.7 million.

• Cash and cash equivalents stood at R$277.3 million at quarter-end, down 51% year-over-year due to earnout payments and share buybacks.

• Paid R$28.6 million in dividends and R$35 million in stock buybacks YTD; total share buybacks in 2025 reached R$63.6 million.

Outlook and guidance

• Management expects continued growth in Commerce and ecosystem revenues, with ongoing focus on operational efficiency and AI-driven innovation.

• BeOnline and SaaS expected to maintain stable growth and profitability, targeting a 25% EBITDA margin.

• Cloud initiative in soft launch, targeting Brazil's R$3.5 billion public cloud market.

• Payments operation is regaining monetization potential after underperformance in late 2024, supported by revised go-to-market strategies.

• Focus on enhancing customer base profitability through expansion of financial services.