Méliuz S.A. (CASH3) Earnings Call Transcript & Summary

Very well. We have stability, an excellent day, especially for our shareholders. I would like to begin this conference by the massive support at the assembly that yesterday approved the use of Bitcoin. We are the first Bitcoin company in Brazil and Latin America. Not less important, we have delivered excellent results in the first quarter. I am Marcio Penna, the company Investor Relations Director and Corporate Governance. With me, we have Gabriel Loures, CEO and Director of Growth Strategy and New Businesses; and Israel Salmen, Founder and Chairman of the Board of Directors. This conference is being translated simultaneously into English. [Operator Instructions] Once again, all of the material presented here is already available on our website and at CBM. After the presentation, we will go on to the question-and-answer session. [Operator Instructions] This webcast is also being broadcast on our YouTube channel. I will now give the floor to Gabriel.

Well, good morning, everybody who is here with us. For the second time, I am extremely satisfied to get to our results presentation to tell you that we have historical results. This is the result of our work throughout the years. It's even more historical as we begin the new Bitcoin strategy, becoming the first Bitcoin Treasury Company in Brazil. I will go through the operational results, EBITDA, the growth of the business, and Israel will speak about the strategy for the Bitcoin Treasury Company. Thank you. Now this result is historical, and it couldn't be different. Here, we have figures representing that we all have records and highlights in the operational results of Méliuz. We have a consolidated net revenue of BRL 100 million in the first quarter '25, a variation of 22% vis-à-vis the first quarter '24. In the last 12 months, this figure grew 18%. We reached BRL 383 million of net revenue. Now this growth, along with the revenue allowed us to grow with important leverage, increasing our EBITDA at a faster pace. We more than tripled our adjusted EBITDA in the first quarter '25 vis-à-vis '24, reaching BRL 17.8 million, 3x higher than last year. And in the last 12 months vision, we reached BRL 66.1 million in terms of EBITDA result, fivefold more than in the same quarter '24. Now this is the result we're delivering in our operation month after month, accretive to offer you the incredible results we have now. So we want to stop and thank our team for the fantastic work of growing our business, growing the business with sustainability. As a result, the consolidated EBITDA margin reached 17.3%, it's 383% higher than the first quarter '24, the highest EBITDA margin in the history of Méliuz when we look at that last 12-month period. Our fixed expenses, this is an indicator we present for the first time over net revenue reached the lowest number. Now this figure allows us to see that we're growing the revenue without increasing fixed costs or increasing fixed cost at a much slower pace. And because of this, we have the operational leverage and a growth of revenue of 22% and an EBITDA growth threefold what it was. This is the reason of pride. We are a company that grows, generating ever more value for our partners and shareholders, but also a sustainable company. To speak about financial highlights, we reached 20% more than in the first quarter '24, a historical record. For the first quarter, our net take reached 12.2%. And when we look at the take rate, our commission as a percentage of GMV, we reached 8.4%, a historical figure and 47% of new accounts opened. We have 40.7 million Brazilians using Méliuz, showing our capacity to generate value for users as well as partners. If we look at consolidated net revenue, I said we obtained BRL 100.4 million. This is the highest historical figure in our series. We had historical growth in the first quarter '22. But in the first quarter '25, we had this incredible growth. Vis-à-vis last year, the growth was 22%. We went from BRL 82.4 million to BRL 104 million, and we reached BRL 383 million. And the stepwise growth in the quarters increasing our revenue, of course, fills us with pride. When we look at consolidated adjusted EBITDA, this is the consolidation of our operational efficiency. When we look at the margin, it is 18% vis-à-vis 7% in the first quarter '24. Once again, the highest result in the historical series in percentage terms and absolute terms. We have grown threefold, more than 108% year-on-year, and this consolidates and shows our operational results and the work carried out during the last 3 years. At the last call, we spent 2 years, 2022, 2023 in an operational turnout. We began the year '23 with a negative 27%, and we were investing heavily in the business. We decided to enter financial services. We had that S-curve to escalate this strategy. And through time, we have carried out the operational turnaround. In the fourth quarter of '23, we had eliminated our EBITDA, BRL 1.2 million negative. We went from deficit to an operational breakeven. In '24, we got to BRL 54 million of EBITDA that you'll see in the third quarter and now in the first quarter '25, an exceptional EBITDA with BRL 66.1 million for the last 12 months and the growth 5x greater vis-à-vis the first quarter last year. Now the result of this was cash generation, enabling us to acquire Bitcoin. We had BRL 8 million in our cash. We acquired 40.1 Bitcoin. And yesterday, through our Material Fact, we acquired 237 additional Bitcoin. This is our present-day position. We had 47 we had acquired back. So our cash equivalent is BRL 70 million. We deem this to be reasonable and healthy for a sustainable business for cash flow variations through the period, but we can generate ever more cash that will be used in the Bitcoin strategy. And Israel will go into more details about this strategy. In the last quarter, we had success in the strategic plan in the business for the year 2025. We're maintaining this strategic plan, and I will show you the evolution of each of the pillars. We consolidated e-commerce and Nota Fiscal in a single pillar. And we continue to advance in Nota Fiscal, which is our great objective. We're accelerating our speed in terms of acquiring new users. We have new players, new users. These users love Méliuz and each month and each year, they buy more. So this retention is important. To do this, we deliver the best possible experience, and I will share with you how to do this. We transform everything into a unique experience. Alongside this, we're working to expand the base of our verticals in the shopping to allow our partners to see ever more value. To capture ever more value, we can expand our industry partners and create new business models with our e-commerce partners. And this has been done consistently in the last few months. Here, we have our operational figures. We have a GMV of BRL 1.37 billion in the first quarter, 25% higher than the same figure in the first quarter '24. It's important to underscore that the drop is only 4% since the fourth quarter of '24. Those who know e-commerce, you know that the fourth quarter is always the strongest because of Christmas and other commemorative dates. If we compare the fourth quarter '23 with the first quarter '24, this figure that dropped only 4% had, had a drop of 12%, which is natural because of seasonality. When we look at the first quarter and see this minor drop of 4%, it points to the fact that we're growing more revenue and stronger. And this is evident in the 21% growth on growth. Net take, still very healthy of 2.6% with that GMV. Now when we look at the take rate, we reached 8.4%, the highest figure in our history, allowing our net revenue in the quarter-on-quarter comparison would vary only 1%. And we were able to grow our revenue 34% for the shopping when compared to the first quarter of '24. Our shopping growth is even stronger than the growth of Méliuz as a whole, and we were able to do this, ensuring our user would have the best purchasing experience and our partners the best shopping experience. I'm very satisfied to show you these operational and financial results, but we haven't forgotten our future growth. What is important is our speed of growth because of the growth of new users, the growth of shopping. When we look at accounts opened, we reached more than 40.8 million people, Brazilians using our app, highly representative. We grew 30% when compared to the first quarter '24. Every day, it's more difficult to open accounts. We have a huge number of Brazilians, but we continue with a very healthy growth pace. Now at 40.8 million users, we are a very relevant app. When we look at new buyers at shopping, those who bought from e-commerce for the first time, we had a growth of 29%. And the number of new buyers is not an absolute figure. It's almost the same as the first quarter '24 during Christmas, during holidays, we have a significant number of buyers, and we continue to have this in the first quarter '25. And of course, the result is the number of active users. We gave you this figure last quarter. We had a growth of 74% in active users on the app year-on-year, maintaining the levels of the fourth quarter '25 that has Black Friday, Christmas, and we're delivering a higher number of active users compared to that. Now how did we achieve this? I'd like to give you more details on our product, our evolution. In the first block, the purchasing experience, we have to repeat that we have a culture of improving our product day after day, carrying out dozens of tests to ensure that the purchasing experience is ever more better, that the flow is wonderful. It's the turn of a screw that will enable us to grow 10%, 20%, 40% in each flow. And in the dozens of tests, of course, we can lose, but we're learning how to build a product that is closer, stronger to the user. Alongside that, we work on development, something we will launch in the second quarter to users and partners, new ways for the user to gain and to generate value. For the first time, we have the product showcase. We're going up the funnel and thinking more about the selection of products. And this will reinforce our vertical of business that is growing at a very fast pace. And we want to continue to grow, allowing our partners to exhibit their products with a highlight. We have also created tools for the user to gain more with the products of our partners. We have those SKU campaigns. We bring together funds from partners with the funds from partner industries. And with this, we have those shared funds increasing our addressable market. Now which is our market potential? Along with the industry, we can increase this and accelerate our growth in the shopping vertical. We're working very strongly so that we continue to keep these results in the second quarter and going forward. When we look at financial services, our great goal for the year 2025 is the evolution of our account, our card, the growth of our balance, our time deposits, CDBs and the launch of new products. The first great growth that was evolution, we had a growth of 192%, more than doubling, almost tripling the number of accounts opened. We have 4.25 million current accounts, digital accounts opened with our customers in a partnership with BV bank. And we also have 241.1 million of cards issued with a growth of 169% compared to the first quarter '24. Well, beyond that, we have worked arduously to make this vertical of financial services more profitable by launching new products. Our investment products more than doubled our balance in account when compared with the first quarter '25. I'm beginning with March up to date until 2 days ago, this because we have launched several products that help us to increase these time deposits. Now the first quarter '25 for the first time, we are working with CDBs, with different profitability, different terms. We have allowed for this evolution, as you can see in the graph to the right. We have also launched insurance and card insurance. It's in our app. We're going to scale this up during the second quarter, second half of the year. And this will allow our users to buy and sell Bitcoins in our channel and to exchange Bitcoins, which makes sense given our strategy as of this moment. Finally, to conclude my presentation, I would like to speak about operational efficiency. We continue to grow but with high profitability and sustainability. For the first time, I'll show you a graph that points to this on a base 100. When we look at our net revenue and fixed expenses in the first quarter '23, we begin with base 100. Net revenue has grown to BRL 122 million in the last 12 months. When we look at our fixed expenses and fixed expenses for us, our total consolidated expenses, excluding extraordinary items, the impact of our involvement with Bitcoin, these expenditures went from 100 and went to 66. They dropped almost 41%. So this is the alligator mouth that we have opened, allowing us to significantly increase our EBITDA margin. That was 18%, the highest in our history. Now the net revenue and fixed expenses, 77% of our net revenue is used to pay for our expenses, and we have a record. We have grown revenues without growing our cost. In truth, we have decreased the base of fixed costs, which means we are a much healthier company and we have 41% to pay for those fixed expenses. This is the effort of our team to ensure that we grow with efficiency and sustainability in the future. And here, a graph that I'm very proud of. I have worked with Marcos Marchesi and others. And the graph to the left allows me to feel extremely proud. We are at 76% of fixed expenses, down to 41%. But if you look at our marketing expenses, they have grown through time. We maintain them stable during the operational turnaround. Of course, we wanted to grow and invest, and our operational turnaround was based on fixed costs that do not generate revenues. As of the third quarter '24, we once again increased our investment in marketing, going from 7% of our revenue base to 11%. So we're reducing our base of fixed expenses but growing our marketing investment. This will allow us to have a sounder company that will grow faster. And I have showed you the number of active users on our app that has grown 74%. We're growing with efficiency and a faster pace. Now this is the result of this, our EBITDA and evolution revenue. We went from BRL 313 million in the first quarter '23 going to BRL 383 million of consolidated net revenue in the first quarter of '25, a growth of 22%. And EBITDA went from minus BRL 83 million to BRL 66 million, which is a proof of our efficiency. The EBITDA margin is 17%, and we want to continue to grow this with profitability. What does this allow us to do to generate cash? Now to generate cash allows us to make sense of the Bitcoin Treasury Company. We're growing revenues, meaning our fixed expenses stable, generating more cash. By generating more cash, we have ever more money to invest in Bitcoin and in growth to generate value and to continue generating cash. We invest in these 2 verticals, and we deliver value, a reserve of value in Bitcoin, which is our value. We generate visibility, visibility for our users, our partners and investors, and this allows us to acquire ever more users. We acquired new business opportunities that will come about like the Bitcoin Treasury Company, and we generate more cash, more revenues and more results. I'm extremely satisfied with the approval of 99.3% for this strategy among all of those that quoted for the purchase of Bitcoin, and our operational Bitcoin reinforces our Bitcoin strategy. I will now give the floor to Israel, who will delve into this new strategy.

Well, thank you, Gabriel. I would like to congratulate you and congratulate the entire team. It seems to be the result of a quarter, but it's the result of 3 years of arduous work, 3 years in which our team gave their utmost. But in 3 years, all of them as shareholders of Méliuz or most of them as shareholders of Méliuz were not rewarded for that when we think of the market. So this new moment for the company truly celebrates that hard work of very serious people who never gave up. Well, at Méliuz, we truly believe that nothing is impossible. We're going to continue strongly with this new strategy we have added to the company. We want to be a Bitcoin Treasury Company. And today is an extremely important day. It's important for Méliuz because it becomes the first Bitcoin Treasury Company in Latin America, not only in Brazil, but it's also an important day for the Brazilian capital market. The Brazilian capital market has offered us the opportunity of taking the next steps in this strategy, and we're going to discuss this further at the beginning of March. Simply to recap, at the beginning of March, we announced the allocation of 10% of our cash on Bitcoin. And we also announced that we would carry out an internal survey to see the visibility of expanding that strategy to have Bitcoin as the main reserve for our treasury. We carried out these studies. We convened an assembly to change our social goal to truly become a Bitcoin Treasury Company. As Gabriel mentioned, we had the approval of 99.3% of the votes. We had a quorum of more than 60% of the assembly to be able to obtain those votes. And it was the most significant quorum in our history since the IPO. It shows us how the new and older shareholders became engaged with this new phase, with this new strategy and how they have given us their full backing. Therefore, I would like to thank all of the Méliuz Board members. I would also like to thank our legal team, the entire team who masterfully conducted this change, being very transparent with the shareholders, giving them the right to recess, explaining the strategy and taking these first steps in the right way. So thank you to the entire legal team at Méliuz for the extremely incredible work and for these first steps. We began with 45.72 Bitcoins in the first quarter to 320.25 Bitcoin with the new acquisition we just carried out. And Méliuz now is #42 in the ranking of listed companies with more Bitcoins in their treasury. Once again, this is a reason of pride to include the flag of Brazil in this graph that is led by one of our greatest inspirations, MicroStrategy, that has more than 568,000 Bitcoin in their treasury. They began this strategy in 2020, and they have paved this path for Méliuz and other companies throughout the world to adopt this Bitcoin standard. The beginning of our Bitcoin standard era began when we convened the assembly to share our plans with the market. And we had an excellent result in our volume. The average daily volume for our shares before convening the assembly was at BRL 44.2 million. Nowadays, it is 20x greater. If we think of today at 11:30, the floor has opened 1.5 hours. We have gained BRL 65 million in the Brazilian stock market, much above the average of the previous days. So once again, we do consider that Bitcoin is like a nuclear reactor that has been installed in our balance. It is an asset that draws attention. It is an asset that has a large number of shareholders supporting it, larger than the number of investors that are investing in shares in Brazil at present. We're extremely satisfied with this movement, and it will be the springboard for a new era for Méliuz and our shareholders. On the 14th, 2 days ago, when we ended the presentation, we had a return since we had convened the assembly of 176%. Once again, we had a volume of new investors besides the holder investors and an appreciation of our share and appreciation of our company. And of course, this is a reward for all of us who have been working on this for 3 years. This slide perhaps is the most important one in my presentation. We would like to introduce 3 new KPIs as our strategy of Bitcoin Treasury Company. First, we have the Bitcoin yield, the BTC yield. What is this KPI about? The percentage variation of Bitcoin per share. What does it do? It shows us if shareholders are gaining exposure to Bitcoin, which is our main mission as of now, how to use this. Basically, you have to follow up on the number of Bitcoin through shares through time. Now these KPIs or Bitcoins, you will follow up on them in our future communication and actions and the Bitcoin gain as well. It is a Bitcoin acquired without share dilution. It quantifies the net share of Bitcoin, and you can compare the gain of Bitcoins during periods. In this case, the purchase was done in quarter 2 compared to the Bitcoin in the first quarter. And the Bitcoin gain, it's a currency in dollars, the value in dollars for the Bitcoin you have acquired without the share dilution. Why does it matter? Because it communicates performance according to traditional monetary terms, not Bitcoin. How do you use it? Well, we're putting this strategy into context in trust funds and trust money. Here, you have a vision designed based on the KPIs and the new acquisition we carried out yesterday and the comparison with the first quarter where we had 45,000 Bitcoin. We had a Bitcoin increase of 600%. We added a number of Bitcoin per share per investor, giving them this return. It's an increase of Bitcoin per share. We went -- as you can see to the left of 0.00052 Bitcoin per share to 0.00367 or [ 367 ] gains in terms of Bitcoin. Now the Bitcoin gain as we had no dilution of shareholders was the amount that we acquired yesterday, BRL 161 million. You can see the Bitcoin gain in reais. And as we mentioned, we reached 320 Bitcoins, a little more than that in custody at an average purchase price of $101 (sic) [ $101,000 ]. Now the company's idea is to generate a BTC yield based on operational cash generation and market operations. Now it's a number of Bitcoins for operation that matters. Now to generate Bitcoin, we acquired BRL 185 million surplus of our cash, and this is a way of adding Bitcoin for our shareholders. Additionally to that, and as we are a publicly listed company, we can use a diverse financial instruments in the capital market to accelerate this accrual. Throughout the coming results, I'm going to bring you some comparisons of return, not only for our shares, but also of other assets. In this case, for example, we're looking at the 12 months before this new Bitcoin area, which is when we convene the assembly. Now Méliuz during that period had a profitability of 4%. All of this is pegged to the dollar normalized. In the last 12 months, we had an accrued return of 2%. And when we look at the rest of the assets to the left in orange, the Planet [indiscernible], which is the first Bitcoin Treasury Company for Japan that began this strategy literally 12 months ago in April, May of 2024 and is now a leader in that ranking with the highest return for shareholders since that. In the second place, our inspiration, the ones that paved this path since 2020, teaching all companies, how to take these initial steps, MicroStrategy with 110% of accrued return. And of course, once again, this was shown at the assembly. And we have several other assets, comparative assets, Bitcoin itself with a return of 26% in the last 12 months. And to the right, most of the Brazilian assets listed in the stock market with a negative performance. Now if we take away the part of the convening for the assembly, when we look at the last 12 months, 14th of May '24 to present, now Metaplanet continues to be a leader in returns for the shareholder with 2,700% in these last 12 months, MicroStrategy in the second place with 221%, Méliuz with 138% of return for shareholders in the last 12 months. Bitcoin was 66% in the period. We have a short-term vision here. Since the beginning of our Bitcoin standard area when we convened the assembly to deliberate on this, we have an accumulation of 188% return, higher than all of the assets, higher than Metaplanet from Japan with 64% and MicroStrategy with a return of 34% and higher than Bitcoin itself with a return of 23% during the same period. Past performances, of course, are no guarantee of the future, but it is important to bring you that vision and to show our shareholders that the Bitcoin standard has been well adopted in some countries of the world. I brought you the example of a Japanese company, an American company. Others have been very successful in France. I was able to meet the founder as well as other companies conversing on this theme. So we're very satisfied to put Méliuz in the radar of those who like Bitcoin, that like Bitcoin treasury companies. And I would like to make a commitment here with our shareholders of always pursuing a positive Bitcoin. This will be our main metric going forward. And we hope it will be the beginning of a new trajectory, an incredible trajectory for our shareholders and the entire Méliuz team involved in this new journey and operation. Very well. Thank you very much to the entire Méliuz team for their trust. Our thanks to the Board members for their support and their confidence and to all shareholders who have also gone through difficult moments in the last 3 years but have never given up. We hope this will be a new journey for Méliuz. You can count upon us to take these next steps. We're going to offer our best, and we believe that nothing is impossible.

Excellent, Israel. Thank you for the presentation. Thank you, Gabriel. We're now going to open our question-and-answer session. [Operator Instructions] We have our first question from Andrew Ruben from Morgan Stanley.

Two topics from my side. The first related to Bitcoin. I'm curious if you can update on the ways you see this fitting in your operational strategy, maybe users on the app or otherwise and just thinking about any evolution to the organization as you have Bitcoin in addition to the finance strategy? And then second topic, on the core operations, it was nice growth in the Brazil GMV. I'm curious how you'd break it down between sellers and trying to think about that seller base, newer ones, existing ones? Any mix with Asia based versus Brazil based? Color there would be much appreciated. And congratulations on the results.

Thank you, Andrew. I will answer your question and answering Portuguese, of course. The first question refer to the Bitcoin operation. Our mission as a Bitcoin Treasury Company and how this impacts our operational results. As Israel mentioned, the Bitcoin is a nuclear reactor. It allows us to guarantee the attention of users of an enormous audience of Bitcoin here and in Brazil and throughout the world. Obviously, they can become partners and use it, and we create new business opportunities. We're still at the beginning of this trajectory, but several options have been created as we have been going in our balance through time. We already have 42% Bitcoin in our balance. We would like to increase this figure. And this will open up business opportunities that we will announce at the right time. Regarding your second question...

Gabriel, sorry to interrupt, I would also like to know about using Bitcoins in our application, if I understood correctly. And yes Andrew, the fit of Bitcoin, the use of Bitcoin as cashback, for example, well, these are features that we are implemented for entire chain of users. It will be available for everybody, you can continue.

If you allow me to add something, we're not going to disclose in the Méliuz operations the new users that came because of that strategy. The operation will continue to operate. As Gabriel showed you today, we will show you the growth in our metrics. And we're not -- we're going to say this came from the Bitcoin strategy. The main goal of the Bitcoin Treasury Company is to accumulate more Bitcoins in treasury, more Bitcoins per share for our consumers. Now this reflection that Gabriel mentioned in the presentation is the secondary one. It's a bonus that we will have because of the strategy, but it is not the core of our strategy.

Wonderful. That's precisely what Marcio and Israel remarked on. We see the impact of buying Bitcoin and we see the impact on our business. Now to speak about GMV to respond to your question, we had significant growth. It was concentrated mainly in e-commerce. We are partners of some of the most relevant groups of e-commerce, MercadoLibre, Amazon, Magalu and others of the great players already use our platform to generate more sales and results. So the spoke came -- the growth came from existing players. You spoke about the Chinese and other entrants in the market. They're all our partners: Shopee, Temu, AliExpress, they're all our partners. We have grown our base considerably. We're the seventh most downloaded app in Brazil, and we have been able to generate sales for all of these partners. Temu is the one that grew the most, but we're also helping all of the other partners. We can't disclose the makeup of our partners, but we're working with everybody, those that were in the market and new entrants.

Thank you for the question, Andrew. Our only question it seems was from Andrew. This being the case, I would like to give the floor to Gabriel Loures and Israel for the closing remarks on our earnings results.

I would like to thank all of those present, underscore what was said by Israel, thank our team, thank our Board members. It's the beginning of a new era on both fronts in the operational front, where we begin a new growth cycle with profitability coming out of the turnaround that ended last year and our new business with Bitcoin Treasury. Israel, would you like to make some closing remarks?

Well, thank you. Thank you very much.

Thank you once again. [Statements in English on this transcript were spoken by an interpreter present on the live call.]