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 Commerce segment performance and operational improvements, with accelerated growth in e-commerce and robust cash generation for the fourth consecutive quarter.

• AI initiatives enhanced productivity and customer experience, with up to 80% productivity gains in engineering and 50% reduction in customer service calls, and new proprietary AI tools launched for internal and client use.

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

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

• Appointment of a new Vice President for Financial Services to drive growth in 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 rose 16.1% year-over-year to R$75.9 million, with margin expanding to 20.5%.

• Free cash flow after capex surged 258.1% year-over-year to R$102.7 million in Q2 2025; operational cash generation was R$90.6 million over six months.

• Cash and equivalents at quarter-end were R$277.3 million, 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 earnout payments in Q2 2025 were R$217.7 million.

Outlook and guidance

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

• 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.