Positivo Tecnologia (POS3) Q2 2024 earnings summary

Executive summary

• Gross revenue reached R$946 million in 2Q24, up 5.7% year-over-year, driven by strong cash generation and service transformation, but below expectations due to competition and delayed public sector purchases.

• Service revenue accounted for 11% of total revenue in the quarter.

• Completed acquisition of Algar Tech MSP, with June results consolidated and outperforming budget; first cross-sell contract worth R$100 million signed.

• Achieved double Gold ESG recognition, including EcoVadis and Brazilian GHG Protocol awards.

• Net income dropped to R$5 million (0.6% margin) in 2Q24, mainly due to lower EBITDA and increased financial expenses from currency fluctuations.

Financial highlights

• Gross revenue for 2Q24 was R$946 million (+5.7% YoY); 1H24: R$2.1 billion (+21.4% YoY).

• EBITDA for 2Q24 was R$84 million, down 12.8% YoY; 1H24 EBITDA was R$200 million, up 10.1%.

• Net profit for 2Q24 was R$5 million, down 77.2% YoY; 1H24 net profit was R$69 million, up 131.8%.

• Gross margin for 2Q24 was 24.9%, down from 30.5% in 2Q23.

• Cash generation reached R$332 million in 2Q24 and R$416 million in 1H24.

Outlook and guidance

• Backlog for 2H24 exceeds R$600 million, with two-thirds already contracted.

• 3Q revenue expected to remain at 2Q levels, with revenue concentration in 4Q.

• Annual gross revenue guidance maintained at R$4.0–4.5 billion (excluding Algar), now expected near the lower end.

• Major public sector projects expected to be awarded later in the year.

• Gradual margin recovery expected as component costs decline and price adjustments are implemented.