Méliuz S.A. (CASH3) Earnings Call Transcript

[Interpreted] Good morning, everyone. Please let's wait 1 minute because we still have people coming in. But in a few seconds, we will initiate our earnings results conference call. Good morning, everyone, and welcome to the webcast for the Q2 of 2025 results.

I'm Marcio Pen. I am the company's Investor Relations and Corporate Governance Officer and joining me today here. Well, this call will be recorded, and this will be posted in our IR site. We also have simultaneous interpretation that can be accessed through the bottom part. Today, we have Gabriel Araujo, CEO and Officer of the Growth; and Israel Salmen, Founder and Chairman of the Board of Directors; Gabriel will initiate with the initial comments.

[Interpreted] Well, good morning to everyone. It's a great pleasure to be here with you. I believe that as you have seen, we had a very good result operationally speaking and in the Bitcoin strategy. And today, we will elaborate on the results. Let's go to the next page. And when we start, we always announced to the market that our main target since the beginning of the new strategy is the generation of Bitcoin yield. So this we were able to reach during Q2 of 2025, 908%. This is extremely relevant. This is a result of 2 major blocks. Number one would be the operating result. We reached BRL 75 million EBITDA during the last 12 months and BRL 12 million EBITDA during Q2 of 2025, and our net income was strong. The operational results allows us to have cash to buy Bitcoin. The second part was our follow-on -- we captured BRL 180 million in our follow-on very successful. This was an innovative operation in the Brazilian market for the first time an enterprise funded with different options in the market. It was highly accepted and this proves the ability of creating financial tools and to access the [ catible ] market in a credible way for our shareholders. Therefore, we can deliver more Bitcoin per share in each funding. So we had a Bitcoin yield of 908% and this shows that the first complete quarter of our operation was extremely successful. Now we will break out the presentation in 2 parts. I will start talking about the financial and operating results, the factors that were part of our EBITDA and net income in Israel will talk about Bitcoin treasury company. So let's start with the operating results. As I said, it was the best second quarter. This was due to a number of factors. This is where we created more EBITDA. It was a quarter where we had more revenue, more net revenue and when we grew most. So we were able in a clear way to follow our objectives that is speed up growth in a profitable fashion. We had BRL 97.8 million in net revenue consolidation, 12% vis-a-vis last year. And this result is even better when you see the shopping net revenue that grew over 20%. There was a drop of 30% in financial services as a result of the commercial agreement with BV. But if it wouldn't be for this we would have grown 20%. This shows how much the shopping grows, and it has shown profitable. The consolidated EBITDA was BRL 12 million, reversing a negative EBITDA and BRL 60 million during Q2 of 2024 and net income, BRL 7.6 million. In 12 months, we had BRL 75.6 million EBITDA, BRL 47.9 million in net income. And these figures do not include the nonrealized gain of the appraisal of our Bitcoin that we have in our balances. Israel will elaborate on this, but we generated almost BRL 30 million of non-realized gains. And according to the accounting loss, they are not part of our net income. By and large, our EBITDA margin was 12.3%, and it's important to highlight that this figure increased a significant growth in marketing investment. Our marketing investment went from 7.5% of net revenue consolidated during Q2 of 2024 and went to 14.2% during Q2 of 2025, practically 5.5 percentage points of marketing investment in the controllers. And then we grew our new buyers vis-a-vis was plus 33%, and we were able to do this and there was a GMV of the shopping of 70% in the amount and the increase in total account opened M was BRL 43 million. Our user base grew practically 3 when we compare it to the last year. Now when we see the revenue, when we break out the revenue, it's important to see this page because here, you can see the evolution throughout the quarters from BRL 54.5 million, and we've evolved year-on-year, and now we have a 12% growth of the consolidated net revenue of Q2 of 2025. The shopping growth was even greater. That was around 20% -- now on the EBITDA, we reversed a loss and negative EBITDA of BRL 67.6 million in Q2 2024. This was impacted by this period that was BRL 80 million. And now during Q2, we have BRL 12 million, an EBITDA margin of 12.3% between the margin, EBITDA, and we have a 14% marketing investment of our revenue. Our profit increased significantly, and we have been able to change fixed costs by marketing costs throughout the quarter when we see the first quarter, the EBITDA margin was 14%, and this is a total of BRL 27.8 million in consolidated EBITDA. This evolution was highly consistent throughout the quarters. I mentioned during the last period, we ended 2024, we had a turnaround period. And now our target is to grow with profitability, and this historic result is clear. We can see in the adjusted consolidated adjusted EBITDA, we can see from BRL 38.4 million to BRL 64 million during the last 12 months. This is a growth of 66% with an adjusted EBITDA margin of 11.3 to 16.3%, but this is reflected for the first time in RF. We have significant noncash effects throughout 2024 that were adjusted. And for the first time, you can see our clean result, and this is correct in Méliuz . Now we have 75.6%, an EBITDA margin of 19.2%, an evolution of 178%. This is the first quarter where we can improve the operational result, but this is also directly reflected on our financial statements and RDR. Now we saw this in net revenue as well. or net income. The consolidated net income went from BRL 60.8 million negative million in Q2 of 2024 to BRL 7.6 million and then BRL 54.7 million to BRL 47.9 million. This is an 88% growth. This is relevant because we will be able to generate cash to buy more Bitcoin and to achieve our target that is to generate Bitcoin. Now in details here, I'd like to demonstrate in our calls how our strategy is evolving throughout the year, and we announced these 3 major pillars, our operational strategy. Number one would be growth e-commerce and Nota Fiscal, financial services profitability together with BV and operational efficiency to grow with profitability. We maintain our targets, and I will give you more color and break them out. Let's go to shopping. When we see shopping, we've grown 17% in our GMV, 15% of revenue. This result was based on 2 important points. We had a take rate of 7.1% that is better than the historic average. The first quarter of 2025 was an exceptional quarter, but 7.1% was higher than the historic average. This is the result of our capacity of creating new business models and to have better commercial relationships with our partners. I will show you products that we've launched, but it's important to highlight that from the user, we have grown a lot. But from our partners, we have also created new commercial models that allows the take rate to grow throughout time, and we have focused strongly on this. When we think about business development, T GMV, we've grown 17%, but we have to note that our net take rate continues stable. We've increased take rate, revenue GMV without wavering margin. Next point. And this is the product detail that I mentioned during the last quarter, we discussed the array of products and SKU campaigns. This is how our users can get cash back and gain more when they buy. And we -- and simultaneously, these are products that allow us to bring incremental funds and give new results to our partners here. We want the brands to invest in our channel and online to deliver different cashbacks for products that they want to sell. This could be a launch. This is a product sometimes when they want to change a line. And now we have -- we combinate the brand and the e-commerce -- and this is a way how our users and our customers can win. We are developing other business models. We have 3 examples throughout Q2, we concluded the launching and the go-to-market of a new market vertical that is Méliuz in store with excellent results in a recurring fashion. This is Méliuz technology to provide benefits, sales and campaigns to the brick-and-mortar point of sales, this is what the insight does in order to create insights in the brick-and-mortar BV. And here, we can have campaigns of performance and funds of performance to the brick-and-mortar world. We are also developing 2 major products. One is Méliuz performance networks. That is how retail partner networks can provide benefits to our user base. And number two would be the Méliuz survey together with our partners in order to deliver something self-service so that our partners can create qualitative insights with our base in a very solid way, we work with users that have certain purchase behaviors, and we want to understand why. And we are trying to see our market as a business core of e-business, we have marketing and performance funds. And here is how we can bring funds from brands and recurring funds that come from technology or technology. And this has been very successful because we've increased the addressable market in addition to the user base. I wanted to show you an example. Now this is an example of dozens of cases that we have together with our partner. This is a launching with a partner throughout this quarter. this was a launching of a new product, the product, the partner wanted to experiment this in the point of sale and how you do it is you have to take people, there's logistics. It's difficult to measure because you cannot understand what is the cost of acquisition of the new customer, how much you're spending, so the person spends and how much it takes for them to come back again. And the first -- and it's difficult to segment this. There is an experimentation in the POS who are going to try are the people that go to the POS every day. We were able to deliver a campaign that achieved the targets. We had over 3 million people in the target audience. This was a fitness audience focused on the health trend. There was a growth of 6 percentage points in the market share. So this was extremely expensive. And more than that, we were able to measure the repurchase in the following month. These are people that went back and bought it at a full price, and there was a 30% reduction in CAC. This is versus physical sampling. This is an example, but in practice, what we have been able to create with the different brands is a rationale of left in value of the customer. That is to bring the performance funds, the marking performance to the brick-and-mortar world. And this is a way how we've increased our addressable market and giving more value to our partners and our users. This creates new value, and there are more possibilities for the users to buy in the physical world. Now let's see our financial services. Now when we analyze financial services, our accumulated digital accounts opened more than doubled year-on-year. So we have 4.5 million of digital accounts opened. These are users that use Méliuz day by day with BV for their PIX, for their transactions to invest. And this user base, well, we can penetrate them with our financial services and one is our card base. We had 261,000 cards in Q2. This has been a modest growth because of credit, and we want this base of user base to be sound, but this is significant of almost 100% when we think about the issued cards year-on-year. We also launched throughout the second quarter, 2 major products, and we did the go-to-market. We also have the Piggybank that is a net investment for the users. We ended our investments in CDBs. Now they can have a number of CDBs with different profitabilities together with the bank with aggressive and competitive conditions in the market as our insurance product, it is account and card account. This protects PIX credit card with better conditions than the main benchmarks. And these are products that allow you to accumulate points and there is good retention. Insurance maintains with active insurance for some time. Therefore, we can guarantee that these products will be incremental throughout time, and we are reassured with this accrual of courts because of their results. Now from here on, -- from here on, we have focused to develop products of financial services with BV, but I would like to highlight a product that is purchase and selling of Bitcoin and crypto banks, so people can receive their cash back in our platform in Bitcoin. In addition to the obvious synergy with our business and platform and the responsibility of a company that wants Bitcoin to be more disseminated in the Brazilian market. There is a great potential of user acquisition as well as user retention with these features because these are new features that allow us to attract a special public that invests believes in Bitcoin and there is that there is great value here. And we believe that this will create future results, not only for the Bitcoin strategy to attract more Bitcoins and to grow in Bitcoins. And the third block of operational efficiency, I would like to highlight. This is the most important slide of our presentation that would be how have we evolved in terms of efficiency and in terms of investment when we see the fixed of the business since 2023, they are dropping within the fixed expenses. We have our marketing investment that started growing significantly as of Q2 of last year, precisely 1 year ago. This is when we realized that we had that we had a percentage of fixed expenses that was reasonable, and we started to invest more in marketing when you see this figure from 7% of net revenue to 12% in the last months, this is a constant growth of our investments so we can grow faster. Now at the same time, they continued growing and now they're stable. But once again, with marketing investment within these expenses growing, we are changing costs that don't generate a profit like material office, and these are investments in marketing that will allow us to grow faster. When we see exclusively Q2 of 2025, we went from 7.5% of our net revenue being invested in marketing to 14.2%. We've grown over 7% our investment over the net revenue on Q2 of 2025, and we went from 7% to 12%. Now we are accelerating growth. Therefore, we have 59% of more active users on the app vis-a-vis Q2 of 2024 and 33% new buyers, active users show how many users do transactions. And this is interesting because this is the second result of the growth as we have high retention shows how the purchasers will behave throughout time, and it demonstrates how we are acquiring these new groups. We're growing in numbers. And in 2024, we were the third app that grew most in Brazil after Temu and Mercado Libre. With a high growth base, we're growing 33% above. And the results will be seen not only in the shopping results this quarter, but also in the results throughout the upcoming quarters and years because the retention of our users is higher with great retention. Now we always like to show we started with a net revenue of BRL 313 million to a revenue of practically BRL 400 million. This is a growth of 15% year-on-year and EBITDA last month of BRL 3 8 million to BRL 64 million during Q2 of 2024. The adjusted EBITDA margin was minus 27% in 2023, 11% Q2 2024 and 16% on Q2 of 2025. And to end our business, I have to talk about our cash flow evolution, and we have a sound cash position. Our cash is BRL 71.4 million of cash equivalent. And at the end of the quarter, in addition, we have BRL 374 million in Bitcoin portfolio, value added, both numbers, we have BRL 446 million in cash, but the Bitcoin portfolio is not part of the balance because of the accounting rules in Brazil. But we do know that it's a net -- we have -- this is a net value, but we have BRL 374 million in Bitcoin portfolio value. Now Israel will talk in depth about our Bitcoin strategy.

[Interpreted] Thank you very much, Gabriel. Thank you to everyone. I believe that it was yesterday, but 5 months have gone by since we took our first steps with Bitcoin in March. Now when we see that 5 months have gone by, we've seen that we've been able to do a lot in a very short period of time. We had a Bitcoin yield of 908%. The target of the company. Our main target is to increase the number of Bitcoins per share. Our shareholders want to see the amount of Bitcoins that they have indirectly according to each share, and this is what we're doing right now. The number of sets per share as well where Bitcoins per share is 528 Bitcoins per share in the next chart, I will show you how this has grown -- this is for you to see how this has increased and also Bitcoin portfolio valuation. with the valuation of the asset was around BRL 30 million. Now this chart shows us the price of our share throughout the year, but it also shows you the traded volume in the exchange and how much this has changed throughout time. The first purchase of Bitcoin was in March, 10% of cash in March. But in April, we summed the general meeting to change the strategy of the company, so we could become a Bitcoin treasury company to increase the amount of Bitcoins per share. And when we summed this meeting, we saw 2 things happening. Number one was the valuation and a strong appreciation of our share, generating more value to our shareholders. Since this day, the appreciation was almost 77%. So if we analyze from the beginning of the year, our share has valuated around 120% throughout 2025. and the traded volume that in the past was very low, around BRL 2 million, BRL 3 million, BRL 4 million a day. This hindered greater investors to create positions and to become shareholders, the average volume that was traded since the day of the meeting, it went from BRL 3 million to BRL 37 million per day average. So this shows us how the Bitcoin strategy. As a matter of fact, has put us under the radar of the investors, not only retail investors, but mainly the institutional investors that have helped us to create this follow-on of around BRL 170 million net that have already been used to buy more Bitcoin. And now we're amongst the 50 main holders of Bitcoin within public companies, and we are the greatest Bitcoin holders in Latin America when we think about public companies. Now here, I have this chart just to show you that our shareholder that had shares during Q1 of this year when we acquired 10% of our cash, this same shareholder for each share has 10x more Bitcoins directly because of our actions using our cash to buy more Bitcoin to using the business cash generation to buy more Bitcoin or the issuance or the follow-on of shares that allow us to buy even more. And increase significantly the amount of Bitcoins per share for our shareholders. The purchase average price is $103,000. But as we always say, we do not have an alpha price for asset. Our horizon, our investment horizon is for always, we don't intend to sell the assets. We want to use it from cash. We want to use from the market to issue follow-ons in order to buy more. So here, we have the average price. So you can see the appreciation, but we want to maintain this asset within our balance, and we want to increase the amount of Bitcoins that we have. The beginning the beginning of a strategy of a Bitcoin treasury company. We've done a lot, but I could say that what we've done mainly since we started is in the backstage. You still cannot see it. We've done a lot to create structures that can help us to create new types of issuers to be more nimble to bring capital from new investors. There's a lot of red tape that we focused on in the first 5 months, and we feel even more prepared. One of these red tapes would be listing in the United States. we submitted our paperwork to have a listed ADR in the U.S. to so that our shares are more liquid to achieve the American market and to bring interested investors. This takes some time. There was a time line in a recent material fact, our expectation to become public abroad. This takes time, but once it's concluded, we will be able to harvest good results. Just an example, we have other initiatives that we are undergoing, and we are reassured because as we deliver these initiatives, we will be able to become a Bitcoin treasury company that is more nimble and more efficient. Now we have this slide. So we can break out the valuation of the market cap of the company. This -- the date here is August 5, it was around BRL 608 million, while the company during the same day had BRL 71 million in cash NMV, a number of Bitcoin and cash BRL 374.3 million. If we exclude this from cash and Bitcoin, well, the company has an enterprise adjusted value of BRL 166 million. If we consider that the EBITDA of the last 12 months of BRL 75.6 million and multiple EBITDA -- EV EBITDA multiple, the market values is 2.2x the EBITDA of the last 12 months of the company. I'm showing you this just to underscore 2 things. that the company is well managed by Gabriel and the company and Gabriel have a target that is to increase users to increase financial services, shopping and at the end of the line, generating more cash. And we want this cash to be used so we can carry out more movements as a Bitcoin treasury company. We already have a relevant position. We are the greatest Bitcoin holder in Latin America. And we expect Bitcoin to continue evaluating. We believe that this is the best asset that we could have in our treasury. But this is not enough for us. We are always looking for new ways of increasing the amount of Bitcoins that we have per share for our shareholders. What we recently did was a follow-on. We're always seeing new ways of being agile and being aggressive so that we can increase the number of Bitcoins that we hold. So our market value is made up from a business managed by Gabriel and our treasury and how efficient we are bringing more Bitcoins to our balance and the appreciation of the Bitcoin throughout time. So now we -- this is just an invitation for all of you. We will have our Q&A session that will take place -- throughout this link, it is more focused on the Méliuz operation. And Marcio, Gabriel, I can also answer questions. But afterwards, we will go to X, and we will continue with this talk. The link which was announced a couple of minutes ago, we will have 3 guests that understand a lot about Bitcoin and the thesis of Bitcoin treasury companies, and we will have an open conversation about the side of the company. We wait for you. Marcio can conduct our Q&A session, and I'm at your disposal.

[Interpreted] Thank you, Israel, Gabriel, exactly. Well, we invite all of you to participate in our first talks with guests through X. The link has already been communicated to the market through mailing and you can find it in our site. There is a pop-up in our site. And in the pop-up, you will see the link. I think this will be a nice conversation, a short conversation as of noon today. So let's go to our Q&A session today. [Operator Instructions] I will give you the floor. We have a first question here from Ricardo. Ricardo, is an analyst of BTG Pactual.

[Interpreted] Well, this quarter, you generated BRL 10 million of EBITDA without excluding taxes that became and operating cash BRL 3 million, BRL 4 million. So wouldn't it be interesting if you could elaborate on which lines are impacting this cash conversion? What can we expect during the next quarters? And two, you spoke about marketing investments. You said that can provide more growth opportunities. Now thinking about this, does it make sense to wait for the GMV of the company accelerating the growth of the company? When do you expect to see the return on your marketing investment?

[Interpreted] Thank you, Ricardo, for your questions. I will start by your second question, that is the growth of GMV. As you know, we always announce the number of users with good retention. Our business is based on creating new numbers of users in e-commerce, and it has to be retained throughout time. We do not provide guidance to tell you what the GMV of the upcoming quarters will be a good proxy would be to see the past retentions that we allowed. What is the cohort retention like and with the 33% of new users and the increase of users and to see the expected behavior. We've seen the activation of new registries, attracting new buyers. These new purchases remain in our platform. And what can I say in terms of marketing investments? Well, it has increased, but we closely follow up the ROI and payback, and they are within the expected return. This did not -- we did not drop the return expected. So we are maintaining the short-term paying back and the return in the short term. Now the users will generate shopping and other lines, new products, financial services, invoices. I can't give you a figure. Now regarding cash conversion. Now obviously, we have items. Depreciation is highly controlled. We have taxes, and there is no significant point that can impact the net conversion to net profit. We want to generate more EBITDA in cash in light. If you see our adjusted EBITDA of the last 12 months is lower than the accounting EBITDA because we adjusted downward because there was a noncash impact in 2024 because it was a reversion of earn-out. So there are things that change the conversion. We want to grow more in EBITDA and to grow cash generation. For the acquisition of Bitcoin, as we announced when we started our strategy, we had a minimum cash that will be respected so that the business continues with a minimum cash to invest to grow and to guarantee the sustainability of the business in the long term, but the cash generation based on the minimum cash, we will buy Bitcoin. So we will probably purchase more Bitcoins in brief.

[Interpreted] Now thinking about the EBITDA conversion in EBITDA. I know that there are effects that are connected to intangible CapEx, some expenses you capitalize, you have variation of working capital. Does it make sense to think about the levels of Q2 as a good proxy in terms of what to expect?