Petz (PETZ3) Q3 2024 earnings summary

Executive summary

• Achieved a reversal in financial results trend in 3Q24, with record gross revenue of R$1.02 billion, up 7.6% year-over-year, and growth in digital channel sales by 19.7%, while maintaining stable physical store sales.

• Net income surged 120.1% year-over-year to R$14.9 million, with adjusted net income up 76.5% to R$26.0 million, reflecting margin expansion and positive financial results.

• Gross profit increased 9.4% year-over-year to R$395.2 million, with gross margin at 38.9% (+0.6 p.p. y/y), and adjusted EBITDA grew 14.0% to R$74.6 million (7.3% of gross revenue).

• Opened 5 new stores, totaling 257 across 24 states, and expanded digital penetration to 43.8% of gross revenue.

• Maintained a robust financial structure with net cash of R$48.9 million and leverage at 0.0x adjusted EBITDA.

Financial highlights

• Gross revenue reached R$1,016.7 million (+7.6% y/y), with digital gross revenue at R$445.5 million (+19.7% y/y) and physical channel stable.

• Adjusted EBITDA grew 14.0% year-over-year to R$74.6 million, with a margin of 7.3% of gross revenue (+0.4 p.p. y/y).

• Net income was R$14.9 million (+120.1% y/y), with a net margin of 1.5% (+0.7 p.p. y/y); adjusted net income reached R$26.0 million (+76.5% y/y).

• Gross profit was R$395.2 million (+9.4% y/y), with a gross margin of 38.9%.

• Free cash flow was R$145.8 million in 3Q24, compared to negative R$35.0 million in 3Q23.

Outlook and guidance

• Management expects continued growth and operational efficiency, leveraging a strong cash position, customer base growth, and market leadership in a resilient segment.

• Strategic focus on competitiveness, customer loyalty, and omnichannel expansion.

• Integration planning for the merger with Cobasi is ongoing, with synergies and organizational alignment as key focus areas.