Locaweb Serviços de Internet (LWSA3) Q3 2024 earnings summary

Executive summary

• Achieved strong operational and financial performance in Q3 2024, with significant margin expansion and robust growth in key metrics despite a challenging macroeconomic environment for Brazilian retail and e-commerce.

• Net revenue grew 5.8% year-over-year in Q3 2024, reaching R$349.3 million, led by Commerce segment growth at 8.5% and BeOnline/SaaS stable at 0.3%.

• Margins increased by 4.7 percentage points year-over-year, and commerce operations grew 5.5% sequentially.

• Launched new products such as Tray POS, Wake, and Etus, enhancing omnichannel and unified commerce capabilities for SME clients.

• Completed major share buybacks and announced R$40 million in dividends, reflecting a focus on shareholder returns.

Financial highlights

• Consolidated net revenue reached R$349.3 million in Q3 2024, up 5.8% year-over-year; excluding Squid, annual growth was 11.7%.

• Gross profit increased 20.3% year-over-year to R$174.5 million, with gross margin up 6.0 p.p. to 49.9%.

• Adjusted EBITDA rose 36.2% to R$73.7 million, margin up 4.7 p.p. to 21.1%.

• Net profit was R$16.9 million (net margin 4.8%), up 336.4% year-over-year; adjusted net profit was R$37.0 million (+52.7%).

• Free cash flow after capex was R$10.0 million in Q3 2024, down from R$65.3 million in Q3 2023 due to higher capex and earnout payments.

Outlook and guidance

• Management remains optimistic about continued operational efficiency and profitability, emphasizing technology-driven growth and omnichannel trends.

• Fiscal benefits from recent integrations and restructuring, including R$800 million in tax assets from goodwill amortization, are expected to be realized in coming years.

• Continued emphasis on innovation, AI capabilities, and operational efficiency to sustain growth and profitability.