Neogrid Participações S.A. ($NGRD3)

Good morning, everyone. Welcome to the teleconference of Q1 2026 earnings call of Neogrid. Today, we have here with us our CEO, Nicolas Simone; Augusto Vilela, our CFO and Investor Relations. I'd like to inform that this presentation is being recorded and has simultaneous translation. [Operator Instructions] Before we begin, I'd like to remind you that any statements and forecasts reflect the expectations of the management and are subject to risks and uncertainties. After the highlights, we will open the Q&A session. The recording and slides will be available on the Neogrid's IR website. Now I would like to give the floor to Nicolas Simone. Nicolas, good morning.

Thank you. Good morning. Before I go into the numbers, I want to give you the context of this quarter briefing. The first quarter of 2026 is the quarter where we matured our operations in a bimodal way with the same discipline and culture of efficiency that we showed in 2025. We are making the structural investments that enable the next growth curve. The 2 fronts do not compete with each other, they sustain each other. And it is the short term that finances and creates the space for long term. This quarter's results reflect exactly that. I would like to highlight 4 points that summarize the first quarter of 2026. First, revenue has -- beginning to grow again with BRL 65.9 million in the quarter, an increase of 1.3% compared to Q4 2025, supported by the revenue that is the same and continue to represent 97.6% of total revenues. After a frequency of quarters absorbing this moment of transition, it is a sign that it reinforces the confidence in the structural work that we have been conducting. Second, the complete effect of the exit of the international contract. Second, the cost discipline reserves absorbing the payroll and tax incentives. The expenses with sales have decreased 26.8%, with a decrease of 9.1% year-on-year. When we look at the chart on this -- the picture becomes even more clear. Operating expenses ex-CapEx went from 62% to 8% (sic) [ 62.8% ] in Q1 2024 to 55.6% in Q1 2026, a reduction of 7.2 percentage points in 2 years, going through increases in the payroll load. These figures reflect structural changes, not quarter statistics. Third, structural investments that prepare Neogrid for the next phase. We are in the middle of a technological migration to a structure with lower unit cost and more scalable costs. The structural gains in this migration will begin to appear in the coming quarters as we move forward. So we will do more with less. Fourth, preserve -- cash preserved and positive free cash flow. We ended this quarter with a net cash of BRL 121.7 million stable compared to December and 8.8% above March 2025. So we had a positive cash flow of BRL 1.9 million. And this absorbed 2 relevant effective points, the migration cost and extraordinary expenses related to the public tender of for-profits. Even so, we generated cash. And to me, this is the point that best translates the quality of what is being delivered within the short range we are delivering and within the long range we are building and the same discipline sustaining both. I want to go a little deeper into the long-term front. The first quarter of 2026 is a turning point in our journey of building the agency company. We left in diagnosis phase and now we are in the execution phase, and it's important to show that this construction happens in 2 integrated fronts and with the Bimodal logic that I have presented, in which we are reinventing our value proposition with intelligent agents. And another inward looking where we are applying the same capacity to make the operations more resilient and more efficient. On the first front which we are calling market and value realization, we have completed the mapping of the structural gains of the supply chain from industry to retail. We have consolidated the thesis of the company of the future with agents operating in different layers of value generation and building an execution road map with a clear sequency of delivery. When we look at what we have now at hand, I see an asset that is difficult to replicate, more than 2 decades of transactional data, active integration with industry, retailers and distributors and a platform that makes decisions on a daily basis within our chain. This is a starting point that only few have. On the second is operational resilience by adopting artificial intelligence, that has gone to a pilot phase to a daily practice. The agent factory operates with governance and formalized policy, AI committee and the continuous training of the team. So we want to start with a defined process and a governance that allows us to have a healthy starting point. We are focusing on creating agents and supporting in the back office, both administratively and commercially. And this will give us more intelligence and less friction in the direction of a company that makes decisions and creates conditions for the efficiency gains to continue materializing along time. What makes me convinced of what is coming ahead is precisely that technology has been advancing rapidly and AI tools become more sophisticated every month. You see how this revolution or this evolution, better saying, is happening on a daily basis and month-after-month. What cannot be copied is an organization that knows how to use it. That's why -- That is why I said in the last call that Agentic Neogrid is not a product, but a company. Now I'll give the floor to Augusto Vilela that will give you the figures of the quarter. Thank you very much.

Thank you, Nicolas, and good morning, everyone. I will start with MRR. We closed March with BRL 24.1 million in line with the level of the previous quarter. The composition continued the transition that we have been communicating over the last few quarters, the consolidated basis becoming -- remaining stable and a reduction in the international recurring revenue since Q2 2025, as we have already anticipated in the previous disclosures. The 3 fronts of commercial initiatives listed on the slide which have been -- we've been talking about in the second quarter of '25, aligned with the transformation agenda that Nicolas presented and -- are still in progress. We have important advancements in line with our internal plan, and these are factors that will sustain the resumption of revenue growth consistently in the next quarters. Moving to net revenue. We ended Q1 '26 with BRL 65.9 million, an increase of 1.3% compared to Q4 2025 and a decrease of 5% in the annual comparison. The resumption of sequential growth is consistent with the transition that we have been communicating. And in this quarter, Neogrid has already absorbed the relevant impact of the non-renewal of international contracts in December 2025. The recurring revenues represented 97.6% of total revenue in Q1 2026, reinforcing the predictability of our model. The service line advanced 1.6% to -- compared to Q4 2025 and 4% year-on-year, a thermometer of healthy demand and the future commercial deliveries in the context in which we -- in the long term, we will have recurring contracts and consumption-based monetization. On the next slide, we will open to the revenue composition. The international operation represented 5.8% of total revenues in Q1 2026, a decrease of 1.9 percentage points compared to Q4 '25 and reflecting the exit of contracts that had already been signaling to the market. There was also an effect of exchange devaluation in the accounting revenues from abroad with a cumulative drop of 4.5% compared to Q4 2025. In the chart on the right, we opened the results business unit. The supply chain unit accounted for 57.2% of revenues in the quarter, a reduction of 1.3 percentage points compared to Q4 2025, reflecting that the most of the outflow from international contracts was concentrated in this unit. Now with collaborative intelligence, we have advanced 42.8% of revenue, gaining 1.3 percentage points in the mix. In the next slide, we closed the first quarter of 2026 with a gross income of BRL 37.2 million and a gross margin of 56.4%, a decrease of 1.5 percentage points compared to Q1 2025. The quarter absorbed one effect on the cost of connectivity and had an effect of BRL 1.8 million related to the migration of cloud servers to new suppliers. The total cost of the company decreased 1.6% year-on-year, capturing the structural efficiency gains that have -- we have put in place since last year. The new technology in this structure has operated with a unit cost that is lower and the efficiency gains are materializing progressively throughout 2026 as the migration progresses. By business unit, we had the supply chain unit represented a margin of 63% and collaborative intelligence of 43.5%. The operating expenses accounted for 55.2% of revenues in Q1 2026 compared to 58.4% in Q1 2025, an improvement of 3.2 percentage points compared with the revenues of the previous year. In R&D, the percentage increase is due to the lower capitalization of expenses with BRL 2.8 million in Q1 2025 and BRL 3 million capitalized in Q1 2026. Since development represented 23.6% of the revenue of Q1 2026, a reduction of 1.7 percentage points compared to Q1 2025, an indicator that shows more efficiency gains more clearly in this case. The highlights of the quarter were the reduction of general and administrative expenses and selling expenses. Selling expenses had a reduction of 4.2 percentage points in -- compared to 2025 and 0.2% compared to operational expenses. And we had a drop of 4.2 percentage points compared to 2025 with the commercial structure working at a more efficient standard, maximum coverage and with the resizing fully reflected in our cost base. It's worth noting that the expenditure line absorbed the continuity of the progress repayment of the payroll. So even with the increase in IFS (sic) [ INSS ] on the payroll allowed us to even so deliver the percentage reduction on revenue. Now going to Slide 12. In Q1 2026, the adjusted EBITDA was minus BRL 279,000 with an adjusted margin of minus 0.4%. The EBITDA reconciliation includes the extraordinary effect of around BRL 1.7 million related to the cost of the public tender offer classified as other operating expenses and with no impact on the operating expenses table that I presented in the previous slide. The other relevant effects in the quarter were not treated as adjustments. The one-off cost cloud infrastructure migration in the order of BRL 1.8 million reflected the cost of the services rendered and reinforced the provisions for doubtful accounts in the order of BRL 1.4 million resulting from the revision of the previous portfolio. The company chose to -- not to clarify the effects extraordinary -- to classify this effect as extraordinary and had a more conservative and transparent choice. Now going to the cash flow. The adjusted results for the noncash effects were BRL 4.6 million in Q1 '26, an increase of 19.1% compared to Q1 2025 and a direct reflection of the consistent improvement in operating generation. The free cash flow was positive at BRL 1.9 million, supported by working capital generation in the quarter. It's worth noting that this generation occurred even absorbing the specific effects already mentioned, translating the operation into real cash generation. In the chart, we see the migration costs as well. On the right-hand side chart, we see that we started March with a cash equivalent of BRL 129 million. Excluding obligations with acquired companies fully settled in August 2025, the net cash reached BRL 121.7 million, in line with the level of December of 2025 and 8.8% above March 2025. As a result -- it's a result that proves the solidity of the company's financial position. With that, we conclude the presentation, and we'll be available to answer your questions. Please continue with the Q&A session.

[Operator Instructions] Our first question is about operational efficiency -- about -- operational efficiency ex-CapEx dropped from 62.8% to 55.6% going through 2 rounds of reinstatement of tax. Will there be more space or it is a steady state? How does that reflect in the margins of 2026?

Well, first of all, thank you for the question. The 7.2% that we reduced were real gains that were in the past and represent -- and these 2 steps represent 10 percentage points in increase. So we had wins in reals. And this is structural, not only in the quarter. They are actions that were implemented to be able to do the contention of operational expenses and still have some efficiency on them. I do believe there is more -- there is room for more because what we have captured so far, the result of a consistent operational efficiency work and the next return will come from AI automation, digitalization of process, robotization of processes to reduce the service costs. So like I said, to do more with less. The reduction of our technological structure. So we are migrating to new suppliers, to new cloud providers because that enables a lot the reduction of unit cost and the operational leverage as the revenue grows. And the 3 are ongoing. Referring to March, it's [indiscernible] guidance. But just to contribute with the reason, yes, we do -- we did absorb the reinstatement of tax. We have the revenue growing. So all the factors are in our favor. I don't know, Augusto, if you would like to complement my comment, but this will be my comment and my response to this question. Thank you for the question.

Yes, the company is structurally lighter and more efficient and with a lot of space to continue advancing in these processes.

So our second question says, could you comment on the next steps of the public bidding? And how is the company getting prepared for that?

Thank you for the question. Well, first, I would like to remember -- remind you that Neogrid is not the one that provides the offer of the public bidding. Our role has been ensure transparency to the market and comply with regulatory demands, maintaining our shareholder base very well informed. The last evolutions were the approval of the registration of the public bidding by CVM and publication of the minute. And now it's -- the next one is scheduled for March 27. And we're going to have the price of BRL 3.89 per share corrected by the SELIC rate since 2025 by -- until the liquidation date. So that depends on the evolution of our -- of the public bidding results. So we don't have any treatment with regard to the events and about -- we have been preparing. We have been waiting and following the developments of the public bidding, but our offer is intact with the same offers of growth and stable growth. And then we were waiting for the future.

The Q&A session is finished, and we would like to give the floor to Mr. Nicolas Simone to make a final consideration.

Well, before we wrap up, I would like to make clear 3 points referring to what we said today. First, we have been delivering. So the revenue is continuing to grow. The cash flow is also growing for the third quarter in a row. And the cost structure, as you have been questioned, is 7.2 percentage points more efficient than 2 years ago. So we have retained 2 restatement of tax rounds. And the second point is we have more room for automation via AI because it's reducing the cost of serving and the revenue is continuing to grow. So we want more. Our vectors are aligned, but we want more. We want better results, and we want to continue doing more with less. And the third point is that I really believe in what we're building. We have 27 years of data integration with the biggest retailers and distributors, a platform that makes decisions on a daily basis within the consumer chain. And I believe that these assets are already very relevant, but the transformation agenda that we've been building exists for -- to make us even stronger and more powerful and add more and more value to our customers and to the supply chain. And we have a fundamental role in the supply chain because with regard to optimization of inventory of the retailers, and the cost of capital that we have here in Brazil, we do have a very relevant role in our customers in which we are and we can add a lot of value and that we can add more and more with what we've been building lately and what -- with -- with what there is ahead of us. So summarizing, we have the assets, and we're on the right track. So I would like to thank you all, shareholders and customers for participating, for being part of it. And also, I want to thank our team that is very engaged and very enthusiastic about what's to come.

The Q1 2026 Neogrid webcast is finished, and I -- we would like to thank everybody for your participation. Have you all a great day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]