Infracommerce CXaaS S.A. (IFCM3) Earnings Call Transcript & Summary

Good morning, everyone. We would like to welcome everyone. For those who would like to follow this call in English, please press translation button. My name is Bruno Vasques, and I am the CFO and IRO, and I will host this earnings call together with our Global CEO, Mariano Oriozabala. Before moving forward, I would like to inform that both this material, which will serve as the basis for our discussion as well as the audited financial statements can be found on our Investor Relations website. This presentation and the management's remarks may contain forward-looking statements based on reasonable and current assumptions. However, it's important to point out that such forward-looking statements are no guarantee of future events. Several factors, including risks and uncertainties, may cause events and forward-looking statements discussed in this document not to materialize. Therefore, the company's future results may materially be different from those expressed in such forward-looking statements. Lastly, we would like to recommend that the indicators herein expressed should not be analyzed in an isolated manner. To that end, please refer to the complete financial statements found in our website. 2025 represented an important hallmark of Infracommerce transformation trajectory. The group executed consistently and diligently a comprehensive restructuring plan of a financial, corporate and operating nature with the following purposes: realign its capital structure and liquidity indicators to optimize its operational performance and promote the recurring and sustainable generation of positive operating results and cash flows. Throughout 2025, we measured the operating performance by the accounting EBITDA after rental income, CapEx expenditure, both technological and structural and added expenses with advances of customer receivables accounted for as financial expenses. Lastly, we excluded impairment write-offs. Therefore, the reported EBITDA with those elements reflect in a more assertive and transparent manner the company's capacity to generate operating cash. All calculations are demonstrated in our earnings release, and they can be directly reconciled with our financial statements. Having said that, we outlined the consolidation of the operation stability with this indicator, reaching the amount of minus BRL 2.3 million in 2025, reversing a cash burn of BRL 208 million in 2024. It's important to note that the company reported BRL 13.7 million of expenses of termination costs in the last quarter of 2025 related to the consolidation of the group organizational structure in Latin America and new initiatives of productivity gains, especially to use artificial intelligence. Throughout the year, we resized the organizational and logistics structure. We optimized the systems, processes and captured gains in efficiency and synergy in all geographical areas where we operate. The expenses and total costs in the quarter amounted to BRL 212 million with a significant reduction of 26% when compared to the same period of the previous year. In annual terms, we ended 2025 with BRL 750 million of total cost and expenses with a reduction of 39% or BRL 486 million over the previous year. The net worth at the end of the period stood at BRL 195 million, reversing the uncovered net worth of BRL 101 million at the end of the fourth quarter of 2024. This important turnaround is a result of the conversion of approximately 65% of the balance of the mandatory convertible debentures throughout the year in addition to the result reported in the period. The analytical breakdown of the result of the period of negative BRL 342 million provide evidence of the element recognized in the results with no cash effect and the other liquidity indicators. The year's results have the following impacts: financial expenses with convertible instruments, BRL 187 million. It's important to mention that the balance of these instruments both the principal and the recognized accrued interest will be settled with the capitalization in the instrument cycles as an option or in the maturity date as a compulsory event. Provision of reduction of recoverable amounts impairment, BRL 71 million. The current dependence of cash generation in the operations expressed in Argentinian pesos associated with the high capital cost of Argentina, shows the need to recognize the reduction of recoverable amounts in intangible assets in the cash-generating unit of the remaining Latin American countries, except for Brazil, which was duly addressed in 2024. Depreciation and amortization, BRL 75 million. The CapEx incurred in 2025 was BRL 20 million, in which 73% were lower with expenses in amortization and depreciations in the period. Therefore, 97.7% of the accounting result come from the three elements previously mentioned, which have no cash effect and are, to a large extent, related to the transformation agenda necessary and implemented. The fourth quarter of 2025 consolidates the strengthening of the capital structure and the liquidity indicators of the company. The adjusted net debt except the balance of the convertible instruments, which will have no cash effect upon its liquidation is positive at BRL 11.7 million. This important transformation is as a result of the conversion of approximately 65% of the balance of the mandatory convertible debentures throughout the year. The balance of the mandatory convertible instruments stood at BRL 323 million at the end of 2025. Equally important is the net working capital reported at the end of the year at BRL 230 million, reversing the negative balance of BRL 526 million on December 31, 2024. We highlight the capitalization of financial and operational liabilities and the optimization of the working capital with efficiency gains in the billing cycle. The significant improvement in service levels, operational indicators, liquidity ratios and the capital structure consolidate Infracommerce as the ideal business partner to provide the complete digital solutions from data platform, logistics and payments in Brazil, Argentina, Mexico, Chile, among other countries in Latin America. I would now like to turn the floor over to Mariano, who will share his views of 2025 and the strategic direction for 2026.

Thank you, Bruno. Good morning, everyone. 2025 was a tough year. And at the same time, it was the year where -- when Infracommerce moved up to another level. Our capital structure was under pressure in the beginning of the year, and we had the clear need to make difficult decisions. We have a leaner, more efficient company with positive net worth, positive working capital and real capacity to generate cash. As previously mentioned, we did the job in three fronts at the same time, capital, operation and client portfolio. Today, we operate in an efficient and integrated manner. We are one of the largest e-commerce platform in Latin America, present in many countries and providing services to global and regional brands in an integrated operation of technology, logistics and digital channels. This scale was built throughout more than 1 decade and is in our vision, what sets us apart from fragmented operations or of in-house initiatives. However, it only makes sense when accumulated knowledge and excellence in the deliveries are accompanied with efficiency. It is in this combination where our focus is. 2026 starts from a different place with a clear focus on capturing value, grow with profitability, increase productivity and generate more cash from this existing foundation. Artificial intelligence plays a central role. For us, AI are tools and executions applied where necessary, process automation, operational productivity, faster commercial operations, lower costs. The objective is simple: grow without growing the structure. I would like to thank our teams in all Latin America. Nothing that we did in 2025 would have been possible without the willingness to build, correct and come back on the following day. Let me thank the business partners, the clients who have been with us along the way. We started 2026 stronger. We are going to maintain the same discipline with a focus on growing with quality and transform efficiency in concrete values. Thank you very much. Good morning, everyone.

[Operator Instructions] Our first question comes from Jose Henrique Miranda Pereira. Why the margins of the third quarter of 2025 dropped in relation to the first quarter of 2025 and the second quarter of 2025?

Good morning, Mr. Jose Henrique and all those attending this conference. I'm going to describe the revenues very briefly. As you saw, there was a drop of BRL 170 million, excluding the advance of receivables, and the revenues comes from two macro movements. The first one is caused by the company at the end of the burdensome contracts. And the second was the leaving of clients in a desirable way. When the company signalized the crisis of liquidity, some clients, which were the core and very important to the company decided to take different paths in relation to the digitalization way related to the digitalization of the transfers of all the operators. But our billing cycle is very extensive because we -- it may include the solution or even the leaving of the solution when they are [indiscernible] was a drop of with the leaving of some clients as a result of the decisions that were made in 2024 when the company had a financial decision, which was the beginning of the process of restructuring. This caused an impact of the number of businesses and the margins of the last 2 quarters. And these are two important messages. When we look at the year -- the full year of 2025 against 2025, excluding the advanced revenues, there is a decline of 2 percentage points. And even more important, the company with financial stabilization, which was driven by the debt conversion and the positive net worth and the positive working capital and the improvement of the services. The company once again was valued by the current clients that showed a high level in the satisfaction as we saw in 2025, and the company started to be looked for and referred to the -- by the basis so that we can help the new clients in the digitalization process. So the management understands that the process of having clients leaving at a moment that we faced in 2024 is already stabilized. And now the priority of the company is to grow with the maintenance of the structure, as Mariano mentioned. In other words, we want a leaner, a lighter structure, a simpler structure with high level of excellence in delivering the services. We are now prepared to welcome new clients, help them on their digital journey, maintaining the same structure and that will enhance the resumption of the margins along the next periods.

We have a second question here from [ Clayton Torres. ] Thank you very much for your question. In which countries the operations can be considered profitable?

Clayton, I'm going to answer your question, separating the information into two micro blocks, Brazil, where our headquarters are. This is where we consolidate all the operations and the other countries in Latin America, especially Argentina, Mexico, Chile and Colombia, considering the commercial relevance. There is an explanatory note in our documents when we segregate the results. When we look from operating results, in Latin America, we had a positive results. And in Brazil, we are getting close to the breakeven point after the extremely negative results of the prior periods. Latin American operation has always been healthy from the financial perspective. And now with the new restructuring that has been completed at the end of 2025, it's even more leaner, lighter and fluid and agile. And in Brazil, the priority for 2025 was to look for operating stability and so that we can grow on a solid foundation with excellence and profitability.

[Operator Instructions] Ladies and gentlemen, considering that there are no further questions, I'll turn the floor back to the management for the final remarks.

Thank, everyone, attending this call. The first step, which is a fundamental step in the restructuring of the company has been completed. Both in relation to the capital structure, which are indicators of the liquidity. And from the operational viewpoint, we stabilized the service level, and we enhanced the results of the other countries where the company operates. We started 2026 in a new moment, a moment where we are going to be referred to by our current clients and potential new brands will look for us in order to expand their digitalization process in the region where they operate. With this, we end this event and the remaining questions will be answered by the IR area, and we wish you have a wonderful week.

The fourth quarter results conference has come to an end. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]