Enjoei SA

BOVESPA:ENJU3

Earnings Call Transcript

[Unknown Executive]

Good afternoon, ladies and gentlemen. Welcome to the Enjoei conference to discuss the results of the fourth quarter 2024. This video conference is being recorded, and the replay can be accessed on the company's Investor Relations website. The presentation is also available for download. [Operator Instructions]

Before proceeding, we would like to clarify that any statements that may be made during this conference regarding Enjoei's business prospects, projections, operational and financial goals constitute beliefs and assumptions of the company's management and are based on information currently available to Enjoei. Forward-looking statements are not a guarantee of performance, and they involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur.

Present at this conference are Ana Luiza McLaren, Chairman of the Board of Directors; Tie Lima, CEO; and Investor Relations Director; Iuri Lima, Growth Director; and Joel Queiroz, Operations Director.

I would like to hand the floor over to Tie Lima, who will begin the presentation. You may proceed.

[Tie Lima, executive]

Hello, everyone, good morning. We are immensely proud to close the year 2024, consolidating achievements that reflect the strength of our strategy and the dedication of our team. This was a year of sound growth, operational advances and innovation positioning Enjoei for an even brighter future. Over the last few quarters, we have made significant progress in the profitability of the business, expansion of our channels and innovation of our platforms. The figures for 2024 reflect this trajectory of transformation. Our net revenue grew 7% vis-a-vis the previous year, reaching BRL 61.1 million (sic) [ BRL 68.1 million ] in the quarter with a significant advance of 36.3% in the year, totaling BRL 265.2 million in 2024. Gross profit rose 14.2% with a gross margin of 56%. This evolution reflects the positive impact of our initiatives aimed at profitability and operational efficiency.

Our GMV reached BRL 428 million, a growth of 21.4%, driven by improved transaction dynamics and an increase in the number of items sold. We had an increase of 8.5% in the volume of items transacted, reinforcing the growing engagement of our seller and buyer base. In terms of profitability, we maintained our positive trajectory, achieving an adjusted EBITDA of BRL 4.4 million in the quarter, an increase of 31.2% vis-a-vis the fourth quarter '23. This demonstrates the company's financial discipline and operational efficiency, which continues to balance growth and value creation.

Looking at our platforms, Elo continued to make progress with a 3% growth in GMV, driven by continuous improvements in user experience and sales growth. Enjoei platform had an annual growth of 29%, demonstrating resilience even in a seasonally more challenging environment. In addition, at the beginning of 2025, we took a fundamental step in our offline channel in Marista unit in Goiana. This move marked the beginning of our structured expansion in our physical channel, expanding our physical presence and providing consumers with a more complete and integrated experience.

Regarding Cresci e Perdi, we ended the fourth quarter '24 with 28 new stores totaling 538 units in operation with strong growth in financial metrics. The recognition of equity pickup of BRL 2.5 million in the quarter reflects our 25% stake in the company. Dividends totaled BRL 1.9 million in the quarter, reinforcing the value generated by our stake. Our cash remains sound, closing the quarter with BRL 198.8 million, guaranteeing the flexibility we need to continue investing in growth and innovation.

I would like to invite Iuri to detail some of the product and innovation improvement that boosted our performance.

[Iuri Lima, executive]

Thank you, Tie. In the fourth quarter, we continued to advance our strategy of improving the user experience and platform efficiency with a focus on engagement, conversion and purchase recurrence. These advances were driven by investments we continue to make in product and technology. One of the highlights was the evolution of Credito bate e volta, which has established itself as a strong loyalty mechanism. This feature encourages recurring purchases, returning a percentage of the amount spent that can be used in the next transaction. The results are positive with an increase in the frequency of purchases and growth in revenue per user.

Another important initiative that we mentioned was the implementation of preco-esperto, smart pricing. Automatically, it suggests the best price range for the products listed based on our sales database. This feature has shown a strong uptake and a significant improvement in the liquidity of available items, helping to speed up our inventory turnover.

At Elo Sete, we continue to refine the user experience. We implemented a new commercial policy with adjustments in commissioning and more advantageous commercial conditions and more accessible shipping and installments. This has made the platform more competitive and attractive to buyers. All of these initiatives reinforce our commitment towards continuous innovation, guaranteeing an efficient and dynamic environment for our users. We are confident that these advances will continue to drive engagement, recurrence and growth on our platform throughout 2025.

I'll hand over to Joel who will speak about our off-line channel.

[Joel Queiroz Junior, executive]

Thank you, and good morning, everybody. The fourth quarter was a milestone for our offline strategy. After a period of successful testing in our 3 pilot stores, we took an important step in the expansion of Enjoei in physical retail. We opened our first franchise locating in the Marista unit in Goiana that began operations in February 2025. This inauguration represents a fundamental strategic advance for the company. The pilot stores were essential to understand the dynamic of physical retail.

With the franchise up and running, we have validated the scalability of our model and remain confident in the expansion of this new business front. The franchise model has a strong competitive edge supported on the data intelligence of our platform. Each unit has access to proprietary systems that make it easier to choose a commercial location, price inventory and manage sales, offering franchisees robust technological support.

Additionally, the power of our brand in the digital environment creates a natural flow of customers boosting sales opportunities. This performance grants us the confidence to accelerate our expansion plan and further strengthen Enjoei's presence in the offline channel. We remain focused on building an integrated ecosystem that brings together the best of digital and differentiated offline experience.

I'd like to thank the entire team that has been a key player in this moment of growth. I return the floor to Tie for his closing remarks.

[Tie Lima, executive]

Thank you, Joel. We end 2024 with significant progress and an even more solid business model. Our strategy is well defined, and we remain focused on growth, operational efficiency and innovation. More than the numbers, this quarter's results reflect the progress of our strategy focused on operational efficiency, innovation and user experience. We continue to improve our platform, invest in technology and strengthen our presence both digitally and in the physical channels with the expansion of Enjoei's stores.

As we enter 2025, we remain confident in the evolution of our business. We are committed to accelerate the expansion of our network, strengthening our presence in the online market and improving our users' experience. We believe that the solidity of our business model allied to strategic execution will deliver ever more robust and sustainable results. I would like to thank our employees, partners and investors for their trust in their journey. I would now like to open the floor for questions and answers.

[Unknown Executive]

We will now go on with the question and answer session for investors and analysts. [Operator Instructions] Our first question comes from Laryssa Sumer from XP.

[Laryssa Sumer, analyst]

First of all, congratulations on your results for that quarter of the year. Our question is about that first franchise in Goiana. How wonderful that you have reached that milestone. If you could share more about that experience, the learnings and what you expect from this opening? And how is the pipeline for new openings of franchises in different markets? What can we expect in terms of the size of this operation for 2025 and going forward?

A last question, if there will be more openings of your own stores, Enjoei.

[Joel Queiroz Junior, executive]

Well, good morning, Laryssa. This is Joel. Let's speak a bit about the experience of the store in Goiana. It's a milestone, our first franchise store. The experience has been very positive. Thanks to the first 3 stores of Enjoei that we set up where we learned about this process. And the implementation is very successful and quite calm. We're very aligned with the new franchisee and the result of the first processes, the inauguration and the purchase of products has surpassed our expectations. We're working in alignment with the franchisee. We're selling products to consumer beginning on April 10, which means that in 10 days, this store will inaugurate to purchase products.

Now referring franchises this year, we would like to sell 30 franchises. We have 4 that have been sold out besides the 1 in Goiana with implementation plans. And about the new Enjoei stores, we're going to remain with those 3 stores to work on tests and innovation to replicate this among our franchisees. Once again, congratulations for your results.

[Unknown Executive]

Our next question comes from Victoria Antonella from JPMorgan.

[Victoria Antonella, analyst]

Can you hear me?

[Unknown Executive]

Yes, perfectly very well.

[Victoria Antonella, analyst]

We have 3 questions at our end. The first refers to the level of the business as a whole for the year 2025. The next question refers to your margin levels. We saw a significant reduction in this line item in the fourth quarter. Should this new level be considered as a normal one going forward? And we would like to know more about Elo Sete. There was an expansion vis-a-vis the previous quarter. So what are your expectations regarding the growth of this platform?

[Unknown Executive]

Thank you. Well, thank you very much for the question, Victoria. To answer about margins, now the margin for this quarter is deemed to be a margin that is in the right plateau without significant expansions or otherwise. The expansion will take place when we have a new mix. We think it is stable. It is between 55% and 56% and not an additional percentage points. It shouldn't be seen as a reduction instead of change of mix.

Regarding Elo Sete, what are we doing with this platform? It's a reflex of the previous quarter. We carried out reviews in the commercial policy of Elo Sete. To simplify it, we had 5 commercial plans for the seller. Now we did this is so that in Elo Sete, we could also have the same growth strategy as we have in Enjoei. We use intelligence, freight incentives to increase conversion, increasing the efficiency of marketing. So we carried out new tests in the previous quarter that will be complemented in this quarter.

Now what has been done, it's a structural issue. It's a conversion of Elo Sete removing barriers. So we have carried out adjustments in the commercial policy to benefit the final customer and marketing will be more efficient, and this will create a growth mechanism. This began at the beginning of this year, but the test began at the end of last year. And that is why Elo Sete platform has a higher margin.

Now I would like to shed light on what you can expect from this transition in the commercial policy in a structured way, of course. We began this year, this current year. There is a period of adjustment and price adaptation that, of course, is expected. This has already occurred. And at the end of this quarter, we reached the combination we wanted a healthy and stable margin for Elo Sete and a policy that fosters growth through conversion and higher dynamism and efficiency of marketing. All of this is already in place, and we have begun to capture the results in this quarter of 2025. So this is the trajectory that you can expect a trajectory of growth beginning the second quarter. And this is what we expect for Elo Sete.

We are quite confident and enthusiastic with these changes we carried out recently. It already is growing in terms of GMV, the margin was somewhat impacted by a growth of the category, the electric category. There was an exponential growth. And because of this, the margin did not accompany the growth of GMV. But of course, this is a strategy for the continuous growth of the company. The question-and-answer session ends here. We would like to return the floor to Tie Lima for the company's closing remarks.

[Tie Lima, executive]

Well, thank you very much, everybody, for your attendance. My closing remarks reflect the vision we have for 2025, of course, connected to the results we presented for the fourth quarter '24. This was a quarter of growth. We consolidated our figures, and we were able to maintain our cash. It's important to highlight that when we look at this last quarter, we had seasonable -- seasonal changes. For example, [indiscernible] salary, we have BRL 4 million for the year and seasonality for the revenues of the fourth quarter, but with positive effects, considering these onetime effects. And of course, this gives us the confidence that our cash is ever more stable and robust.

For the future, in 2025, we began the year with very important factors for our business. The adjustment in Elo7, adjustments in revenue and the company margin. We're working so as to further dilute our SG&A throughout the year and of course, our marketing efficiency. With the combination of these 3 factors, we will see changes not only in the first quarter, but throughout the year, you will see a company that grows, generates revenues and generates a market with sound conditions. We have additional projects such as payment means.

And of course, all of this brings us confidence for the results we would like to achieve, not only in 2025, bringing more EBITDA, but also profitability and cash generation. This is a message that we have for the entire year, and we're going to focus on these factors.

Thank you very much all for your attendance. We hope to see you during the next quarter. The Enjoei conference ends here. We would like to thank all of you for your participation. Have a good day.