Locaweb Servicos De Internet SA

BOVESPA:LWSA3

Q1-2025 Earnings Call

[Operator]

Good morning, ladies and gentlemen. Welcome to LWSA Q1 2025 Earnings Conference. Joining us today are CEO, Mr. Rafael Chamas; and CFO and IRO, Mr. Andre Kubota. For the Q&A session, we will also be joined by the company's senior management team.

This event is being streamed online via Zoom webinar with simultaneous interpretation into English and will be available for replay at ri.lwsa.tech. You can download the slide deck for this presentation at the same website's Results Center under the Financial Information tab.

The reported figures are denominated in Brazilian real and have been calculated in accordance with Brazil's standard accounting practices as per the statements, guidelines and interpretations issued by the Brazilian Accounting Pronouncements Committee.

Before moving on, we would like to mention that any statement made during this presentation regarding LWSA's business prospects, operational and financial forecasts as well as future growth estimates are merely projections and as such, will be based solely on its management's outlook for the business. This outlook relies heavily on market conditions, the performance of the Brazilian economy, the industry and international markets and, therefore, may change without prior notice.

Unless stated otherwise, all variations and rounded off figures here presented have been calculated in thousands of Brazilian reais. This business performance presentation includes both accounting and nonaccounting data, such as organic and pro forma operating and financial results as well as projections based on the company's management's expectations. The nonaccounting data have not been reviewed by independent auditors. [Operator Instructions]

I will now turn over to Mr. Rafael Chamas, who will begin the presentation, followed by Mr. Andre Kubota. Please, Mr. Chamas, you may proceed.

[Rafael Chamas Alves, executive]

Good morning, everyone, and thank you for joining our Q1 2025 earnings presentation. On Slide 3, I start by bringing you the most important takeaway messages that I tried to convey in our Q4 2024 conference.

So 2025, our focus was accelerating company growth. I mentioned that in 2024, we saw sound operational operators, but growth itself fell short of what the company can deliver. Second, continued focus on profitability. We've been very successful in making the company more profitable. Our product strategy has also been sharply focused on our customer journey. So following a cycle of M&A, our ecosystem has been very well rounded, and focus on customer journey during these interactions will be significant for the company. And obviously, cash generation and return to shareholder. These are obviously the first main topics I would like to convey to you at the beginning of the presentation.

As to our operational fundamentals, we remain really solid. Our GMV for our ecosystem has significantly improved to BRL 18.2 billion, up 14.5%. This includes revenue from our close to 2 million (sic) [ 200,000 ] subscribers, which is what we see in our left -- right-hand side of the slide, a 6.8% increase in our subscriber base, even more than what we had last quarter. We ended this quarter with 195.9 million (sic) [ 195,900 ] customer. And another very interesting data point that speaks to our GMV is the revenue from subscriptions, which has gone up by 15.5% in keeping with the increase in our GMV.

Next slide. Our own store GMV has also gone up at a significant tune by 14.1%. We ended the quarter with BRL 1.5 million (sic) [ BRL 1.5 billion ] in our owned stores, which is interesting because we have incremental growth here. And on the right-hand side, our payments indicator or TPV, which went up by 15.7%, having processed BRL 2 billion in this first quarter of the year.

I talked about reigniting growth in the company. Last quarter, we were affected by the restructuring at Squid, which is something we've discussed at length, and we're now seeing acceleration again. The first quarter ended in consolidated terms with an 8.8% increase in net revenue, surpassing any -- every quarter in 2024.

Now thinking about profitability in the next slide. This is the second topic we mentioned in our agenda. As I said, profitability has grown successively. So in comparison with the first quarter of last year, both our margins and our adjusted EBITDA have gone up. We end the quarter with a 20.1% margin, up 1 percentage point versus last year, growth by 15.1% at BRL 70.2 million when it comes to EBITDA in this quarter.

On Slide 8. Again, this slide was present in Q4. The company has been very consistent in how it offers its products, streamlining and obviously, offering the same simplified structure to customer in a very integrated way as well. This has been the slogan of the company's GMV growth. I will mention a few items, but I just wanted to remind you the journeys that we have with hosting, in the e-commerce world -- our e-commerce platform, which we offer for many different segments, including a few integrated solutions in a fully embedded and streamlined way for financial services and logistics, and I'll give you a few concrete examples of that in the next few slides, also in terms of ERP to manage our cash and electronic management as well as conversational tools. So this is how we're looking at the company's portfolio right now.

Over to the following slide. And over the next 3 slides, I will explore something we've shown -- I haven't shown you that much previously, which is how Bling provides broader and more integrated journeys for small and medium businesses. We often talk about the more obvious integration, which is payment forms in electronic commerce, but ERP can also be an incremental source of revenue from our clients. That's because Bling offers the possibility to have several touch points along the retailer journey.

This is a concrete example with a journey that's added a lot of value to our customers that's been delivered in May 2025, which allows them to integrate logistics tools across the entire ERP journey. Of course, we have a very powerful logistics tool, which is Melhor Envio, which we leverage to offer a completely transparent, seamless and integrated journey within Melhor Envio.

What I mean by that is by accessing or subscribing to Bling, the customer already has a fully integrated operation of its entire ecosystem. Obviously, Melhor Envio's access was not fully transparent before, and now we have a single touch point and point of service within Bling. So it addresses labeling and contact. So there's no secondary touch point. This is fully integrated, which is why -- what I mean by integrating the journey in full, and in this case, a specific journey, which is the ERP journey. This was something that was very important to us, and we're already seeing its results. We've had significant growth in terms of logistics in the first quarter when it comes to labeling. And this is already the result of this innate integration that we have with Bling.

Another very interesting thing that we have in terms of the customer journey, still talking about Bling, are AI solutions that allow the customer this integration via artificial intelligence and automation. AI is a major focus for us. We have been very comprehensive in terms of thinking of ways of using AI within the company, whether in processes, but most importantly, in ways to add greater and more numerous capacities for the customers, so from simplifying settings and the journey itself to simplifying how to use the product itself. This is how much of our energy and efforts have been devoted.

So on this first slide, we bring you within Bling itself how artificial intelligence is being used to offer suggestions that, I would say, improve the company's management capacities by using Bling. So the video shows how it works. Smart recommendation -- product recommendation. So based on predictive sales and inventory behavior, we anticipate the customer flow. So recommend how much the client can purchase and when. So based on the client's record, we have not only information about their sales and predictions for it, but also intelligence to help them better manage its inventory and working capital. This is very powerful. And since March 2025, this has been available to our entire client base. And feedback has been overwhelmingly positive because it adds context and intelligence to the client's ERP.

This following slide also adds an interesting fact, which is we have begun to introduce conversational logic via AI within Bling. So as you can see here how it works on the mobile phone. This gives us the idea of a much simpler and easier interface for the client to have more information about their business in a much simpler and seamless way, which is the conversational interface. So via WhatsApp, they get significant information about their business performance, information about their operations, their results. They can also use this for service requests. So we're adding to Bling an entire conversational logic, which for a product such as this one, which is focused on SMEs, is outstandingly powerful.

In the following slide, again, talking about returns to shareholders. In 2024, our shareholder distribution was very significant, both in terms of buybacks and dividend sharing. In combination, that added up to BRL 152.6 million. And now in 2025, we've opened another program. We're buying 38.8 million shares, which is already underway. So we've purchased BRL 26 million in shares in the first quarter. And in April, we've already purchased over BRL 4 million, which allows us to say that without a question, reinvesting in the company is the best use of our money. This is something we continue to believe in and invest in.

Now I'd like to turn it over to our CFO, Andre Kubota. Andre, please go ahead.

[Andre Kubota, executive]

Thank you, Rafa. Good morning, everyone. I'm thrilled to join you for our Q1 2025 earnings conference. On this slide, I start by talking about our net revenue. In consolidated terms, growth was by 8.8% year-over-year to BRL 348.9 million. When we look at the breakdown in Commerce, we saw a 12.6% increase year-over-year, whereas BeOnline/SaaS grew by 0.9% year-over-year.

In the following slide, looking at the adjusted EBITDA for Q1, in consolidated terms, growth was by 15.1% versus Q1 2024 to BRL 70.2 million. That was an EBITDA margin by 20.1%. I think a major highlight in this case, going back to what Rafael said as to our focus in profitability, this is very significant. Looking at the breakdown on the Commerce side, growth was by 29% year-over-year with a 17.2% margin, and BeOnline/SaaS was pretty much in line with last year, but with a more significant margin to the tune of 26%.

Moving on to the next slide. Talking about cash generation, which is our adjusted EBITDA minus CapEx and financial expenses, which have to do with anticipated receivables, we grew by 46% year-over-year to BRL 34.6 billion (sic) [ BRL 34.6 million ], a close to 10% margin when it comes to net revenue.

A bit more detail about our cash flow in the following slide. You see that we started the year with BRL 447 million as a cash position and an operational cash flow of [ BRL 485 million ] and more than half of what we paid last year and a cash generation that's significantly robust to BRL 486 million operational cash after CapEx.

So we have what we call payment-related working capital, and this was a significant highlight for the quarter. Because of the surplus cash we had in Q1, we chose to, in this quarter, specifically use a little bit more of the company's cash to reduce our expenses with anticipated receivables this quarter. Also, we spent BRL 5.6 million in leasing with earnouts at BRL 430 million. And with the BRL 26 million buybacks that we had plus the earnouts in Q1, we ended this term with a very significant cash at the end of the quarter of close to BRL 400 million.

Now I would like to turn the conference back to the operator to begin our Q&A session.

[Operator]

[Operator Instructions] Our first question was by Lucca Brendim with Bank of America.

[Lucca Brendim, analyst]

Could you give us more color about the working capital and dynamics, something similar to what we had occurred last year and in Q4 and Q1 of last year? Second, could you add more color about the impacts of the reburdening of your payroll? How much could you be -- much of the cost could you pass over to customers? And could you repeat the same trend?

[Unknown Executive]

Thank you for your question, Lucca. I don't know if everyone can hear me. Please tell me if you can't hear me.

So trying to address the first question with regards to working capital. This quarter, we try to add more color about our cash flow and, most importantly, our working capital, both in our release -- earnings release and the presentation. We mentioned this trend especially when it comes to payments. So when we look at the receivable balance, that has to do with sales from our clients in-store, especially payment processing companies. And the balance that we have to retransfer is what they billed. So we have to pass it over to them.

Now because we had a cash surplus, we decided to allocate a little bit more of our own capital as opposed to anticipating those receivables, pushing back some of that -- those expenses. So even though the benchmark interest rate is higher and even though our TPV has gone up, our expenses was essentially flat, looking a lot like what we had last year.

Now looking forward, with the earnout payments, we believe this should go back to normal. And this was a specific decision in Q1 to make our capital use more efficient. I think this somewhat addresses your first point.

As to your second point, to -- regards to the payroll taxes, our prospect for the year was an impact of close to 1% in our EBITDA margin for the year. In this first quarter, the impact was very close to the level that we had established and shared with the market.

And as to cost pass-through, obviously, our client base is very diverse, most of which are small and medium businesses and unlike corporate contracts, which have very specific cyclic adjustments. That's something we've done over the course of the customer journey. And we should see repercussions of that throughout the year.

So obviously, that should be taken into account when we look at our margins. Even with that impact, we were able to offset those gains and obviously, in part by adjusting our pricing. Our product pricing power is significant. And obviously, we've been able to leverage that over the course of Q1, and we'll continue to do so throughout the year. I'm not sure if that addresses your question, but this is sort of how we look at this.

[Operator]

Our next question is by Leonardo Olmos with UBS.

[Leonardo Olmos, analyst]

First of all, I'd like to hear about earnouts, and this is a follow-up to Lucca's question. I just wanted to hear a little bit more about how you've been annualizing your cash generation. Kubota explained your relationship between corporate tax and cash flow and everything that you've been doing. How could we expect the general trend of your cash flow throughout the year of 2025? That's my first point. And second, could you speak a little bit more about the gross addition of users in the Commerce segment, which had a positive development in Q1?

[Unknown Executive]

I'll start by addressing your first point, and thank you for your questions. With regards to cash generation, what we tried to do was -- in order to make it easier for everyone to understand, last quarter, we created a cash generation proxy, which is EBITDA minus CapEx minus expense anticipation, which speaks to the slide we had in our presentation that addressed our cash flow. When you look at this operational trend, which was available in the last slide, that's a good indicator of what would be a guidance about our cash flow dynamics.

Also, we decided with regard to our capital structure, which was to advance some of our receivables. And this quarter, we did less of that, the receivables we had with our payment processing firms. And as I said, considering that now our next earnout payments will not be as high as in Q1, we understand that over the course of the year, this should go back to normal and offset the effect that we saw in Q1.

As to earnout payments, much of what we have outstanding should be settled in Q2. So the remaining payments will be a lot less significant. So I think the best way to believe how it will do throughout the year is to think about that.

As to your next question, if I continue to -- if I've addressed your first point, I will now turn to Kubota for him to answer.

[Andre Kubota, executive]

Leonardo, thank you for your questions. And going back to something I mentioned in our previous call, since last year, we have been unifying all our commerce teams in SMEs. And we had different initiatives with Bagy and Tray. These are still existing brands, but the entire marketing intelligence is no longer separate. We're already seeing the results of that, and we understand that these brands complement one another. Tray has a client profile which is a lot more connected to the brick-and-mortar world, whereas Bagy has this Internet and online-focused client base.

So it is a combination of these 2 efforts, which are now connected under a single leadership and a single team, which has allowed us to start accelerating and providing a prospect for the year, which is to see more and more results of this new trend. This has to do with the acquisition that we made, but it also goes back to the important point, which is to advance with our products.

In our SME platforms, we have developed the product very substantially. We already have integrated marketplaces. We have ERP integrations, a very strong integration with Bling. We have logistics solutions, payment solutions and many other factors that we are always highlighting here. And alongside Bling, we were pioneers in bringing the TikTok Shop yesterday. So the effect of having this adjusted operation with our product development have placed our product at the vanguard when it comes to SME solutions. So I hope this addresses your point.

[Leonardo Olmos, analyst]

Great. Your answer really helps us to forecast and understand where your company's mind is at. Rafael, could you talk a little bit more about coach and marketing because many software companies conducted several acquisitions. But even though it expands your margin, sometimes you lose the opportunity to get a bigger share of the market. Now because you're leading all of that, you could maybe give us good perspective. How does all of this integration that you have is not affecting your bottom line, especially looking at different profiles of customers? How are you managing all of that?

[Rafael Chamas Alves, executive]

Great, Leonardo. Well, we're seeing results which have been impacted by the reorganization, especially in the first couple of months. But we've had our senior leadership under [ Tiago Mazer ], who had been conducting the Tray operations and is [ ahead ] of our acquisition. So he was in charge of this operation. And we also have a few segmentations internally. So the strategy is unified, but we have customer profile-dedicated teams. It is not fully horizontal.

We have Bagy-related teams and Tray-focused teams. So what we're seeing is, in this case, these 2 brands complement each other very seamlessly. So we, again, have a unified strategy, which avoids cannibalization. And each brand focuses on one client profile. They are not competing with one another. And we have a Bagy-focused team for those customers more focused on social media. They're digital natives. And Tray, even with a [ PDV ] Tray initiative, focusing more on the more mature offline clients, clients from brick-and-mortar operations.

So we have been trying to manage this really well, and the result was investments were optimized by having the separation. So we started by adjusting, and we now see that the teams are working very well together. And marketing has also provided all of these benefits for us.

[Operator]

Our next question is by Maria Clara with Itau BBA.

[Maria Infantozzi, analyst]

I just wanted to hear a little bit more about your growth prospects for the year. It was clear that you expect to see some acceleration in Commerce growth, especially in a comparison basis with last year. But I just wanted to hear a bit more about cross-selling, in addition to several other options, could help drive that growth and also understand how we could think about your growth buildup over the course of the year.

[Rafael Chamas Alves, executive]

This is Rafael speaking. Thank you for your question. First of all, and very importantly, in our previous conference -- and Otavio also helped us with that. I explored a little bit more of that today, how we could unlock growth within the company. Obviously, this will be progressive. Growth in Q3 was very much connected to what we saw last quarter. So it is a progressive operation, but it is leveraged by these very powerful assets we have within the group.

So Willians brought a few important factors which have to do guiding our go-to-market clients. So first of all, it speaks to how we communicate with customers, especially with our products and offerings that we have available in different journeys to different audiences. Second, I mentioned a few examples within Bling, for example, that also goes back to that, which is incremental products that we offer within that journey.

Whenever we think of our SaaS strategy, the upselling and cross-selling dynamics is very important and very powerful and well leveraged. That's why we have a product perspective since last year, which is trying to leverage all of this power that we have within the ecosystem, whether that's with brick-and-mortar solutions, online solutions, payment solutions so that, that can be used throughout the journey, but also making the most of what we have in terms of products and brands to help our customers.

And we're seeing this happen, especially starting with logistics. So the delivery we have with Bling is very significant within the e-commerce journey. This was something that we already had, and we're now optimizing. We're seeing TPV and payment indicators also accelerate. So we're starting to see more traction in payments, obviously. So all of these elements combined tend to help the company accelerate. But again, these are progressive trends. We've been working on several different fronts. I mentioned our strategic plan, which will allow us to leverage all of this potential in isolated integrated journeys to work better. And we're supposed to see results of that throughout the year. But again, it's a slow buildup, a slow burn.

[Operator]

Our next question is by Silvio Doria with Safra.

[Silvio Doria, analyst]

I have a question about your cloud solutions. This quarter, we saw the impact of migrating to the cloud in your results. So if you could talk a little bit more about that. Is some economy of scale already clear? Or are your costs still weighing on your results and will continue to do so in Q2? I just wanted to understand how specific that is.

And my second question has to do with your GMV. Currently, how much of your GMV is coming specifically from the [ BV ] market? I just wanted to understand whether Mel E is a good proxy to understand your GMV dynamics and whether that has changed over the last few quarters.

[Higor de Araújo Franco, executive]

Silvio, this is Higor. I will take your first question about the cloud migration. So a few consolidation and migration initiatives that have been occurring, which is what the market calls workload, and these are operations that rely on cloud services. Obviously, observing synergies is a continuous work as well as potential optimizations we can work on, always seeking to have a consumption per SaaS user versus infrastructure. So we have internal metrics for better efficiency in terms of cloud consumption. And the consolidation you mentioned is part of our strategy to build something bigger, which in the medium to long term, you'll already begin to see in our indicators coming from these synergies.

Just to add a little bit more color. What happened in the last few months is we found significant room to consolidate and evolve -- technologically evolved one of the significant parts we have in public cloud. And because this is a migration that involves a significant part of our online base, we decided to do this as safely as possible, which is why we created redundancies so that this movement could occur in a very secure way without leading to lack of availability.

So over the last few weeks and months, that led to a bit more pressure on our cloud efficiency indicators. But that was on behalf of getting a lot more synergy in the medium to long term. And we're already beginning to see, from our latest indicators, the benefits of that shift. So without going too much into detail, this was, in general, the movement we conducted and explained some of what you're seeing in our report.

Silvio, now going to your second point. We already have over [ BRL 70 billion ] in GMV running in our ecosystem from our latest figures. So obviously, we do not break down this figure for the marketplace, but it is to be expected such a significance as a proxy for the market, always remembering that our customer -- our client profile is usually low added value products. That's what we can see massively in our customer base.

But if you look at our categories, footwear, electronics and so on and so forth, that's more in line with what we have with the rest of the market. But if you look at Magalu, Shopee, it's a multitude of channels. We already talked about our TikTok stores. So within our client base, we have every type of sales channel and divisions within our segments that are very similar to what you see in the market share at large.

[Operator]

Our next question is by Livea Mizobata with JPMorgan.

[Livea Mizobata, analyst]

My first one has to do with the GMV dynamics. I wanted to understand where your mindset with regards to e-commerce in this first half of the year. Anything you can add in terms of the holistic perspective of the competitive environment?

And secondly, within the company's strategy, both short term and long term, would it make sense to you divest from any of your assets? Where is your mind at when it comes to new M&As?

[Unknown Executive]

Livea, let's take it piece by piece, starting with our GMV. As I said earlier, close to [ BRL 18 billion ], so that's 20% growth. Just underscoring what I said before, our consolidated GMV, considering our client profile, it is focused on medium added value and subjected to significant credit cycles. So they have grown at a healthy level, but within a more challenging macro environment. So we see growth in Q1 very similar to what we had in the previous quarter. What we're seeing in April is very much in line with that. In spite of the volatility that the holidays and celebrations such as Mother's Day have brought, we're seeing levels very close to what we've seen so far in Q1.

As to your second point, which is divesting from assets, currently, we have a very broad portfolio, which makes a lot of sense strategically and is very synergistic. So obviously, what we've done over time is to focus everywhere we're seeing greater competitive edge in a wider market and seeking strategies that allows us to monetize every aspect where our competitive edge is more significant, such as cloud, which has brought greater clients and, as we said, is adding more profitability and revenue to the company.

So we have no prospect of divestment. What we have, our strategy is focused on maximizing the assets that we currently have. We talk a lot about normalized growth and that the normalizing cycle has taken place. And I think that our Q1 results show that this was a successful strategy so far. So this is the prospect of monetizing the existing assets.

And to your last question, our M&A focus, the broader focus of the company is to unlock value with the existing assets. The cycle that started since our IPO has been very healthy. I think that we became more relevant in the Brazilian market. In 2020, e-commerce was just a theory for the company. It was less than 30% of the company's revenue. Now there's over BRL 40 billion coming in via our ecosystem.

Now we have our broader basis with Wake that allows us to grow our offers and journeys. We have a logistics solution with Melhor Envio. All of that was made possible by our M&As. We brought significant assets to the group and helped us to cement our place as a group and solidify our economy. So our focus now is to unlock value with our existing assets, integrating journeys such as the one I showed you today with Bling, but there are several others taking place at the same time as well.

[Operator]

Our next question is by Luis Chagas with XP.

[Luis Chagas, analyst]

We have 2 questions. The first about CapEx. When we look at your CapEx year-over-year, that was 5% lower. So my question is, what should we expect from -- in terms of CapEx for the year and for the next quarter as well?

And the next question is about your transformation process. You have many initiatives on several different fronts. Could you talk a little bit more about the 80-20 of these initiatives, meaning what fronts and initiatives are you most excited about and you expect to unlock the most value or generate the greatest impact?

[Andre Kubota, executive]

Luis, this is Andre speaking. I'll take your first question about CapEx. I think first of all, quarter by quarter, you can see some fluctuation or volatility in our CapEx, whether because -- whether in terms of fixed assets or new products. And what we've been sharing and commented so far, this first quarter, that might be -- that might have been a little bit lower than expected for the year. And a more normalized level, which would be closer to what we had in Q4 of last year, would be more or less what we expect for the year at large, not considering this fluctuation between quarters.

But obviously, and very importantly, we always look at our profitability and cash generation. Obviously, that also has to do with how the company is growing and what's the market's economic performance more broadly. So Q4 might be a better proxy for the year at large.

And to your second point, I will now turn back to Rafa's team, which will help clarify that.

[Otavio de Carvalho, executive]

This is Otavio speaking. I think we've touched on points that are representative of how excited we are this year, especially with regards to our strategic plan. And I'm referring to and betting with our simplified journeys. I think the illustrations we provided speak to the fronts we are betting the most on. These are projects that are now coming to life. And going back to what Rafael mentioned, they show the practical gains in terms of revenue, which will be gradual and has to do with how much our client base will change over time.

But I would mention e-commerce itself, payments, as was mentioned, and Willians, when he last spoke, mentioned this en passant, but our POS is specifically in e-commerce. So thinking about the journey, the omnichannel journey more broadly, going to offline from a very wide client base online already. I think these examples best show our ambitions for the year.

[Operator]

[Operator Instructions] Our next question is by Daniel Federle with Bradesco.

[Daniel Federle, analyst]

I just wanted you to help me understand your margin dynamics. Last year, you mentioned Squid was giving you losses to the tune of BRL 4 million. Considering that Squid is no longer incurring losses, your margins, excluding Squid, has not improved. So my question is help me understand what the margins -- how the margins are doing. Is Squid still accruing losses? How can we look at that moving forward?

And in connection to that, even the company's message, which is the group will continue to grow, what are the implications of that? What does it mean to focus on growth? Should we expect your margins not to widen anymore moving forward because it's -- the money is being reinvested? What does that mean in terms of profitability?

[Andre Kubota, executive]

Federle, thank you for your questions. With regards to Squid, starting this quarter, we sort of moved the topic out of the way. There was significant restructuring last year, and the impact of that -- and I'm trying to help you calculate how it will go moving forward. To us, the impact of that was resolved in Q1. We are not giving any guidance business by business. But what I can say is that our profitability has increased over the year. The increase in our revenue last year itself was progressively higher. Obviously, there are some seasonal impacts. But when we compare the dynamics year-over-year, we no longer see any detraction from revenue when it comes to Squid.

And when we look at all our units, including Commerce, we're seeing better things. Commerce itself has increased year-over-year, and Wake is inserted in that context, Squid, as we always say, has a very strong operational leverage nature. So we see that with growing revenue, despite the 1% impact on EBITDA coming from the renewed payroll, we were able to grow the company's profitability.

Obviously, we have no official guidance with regards to our margin trend moving forward, but we are very much focused in reigniting our growth trend. And obviously, that requires expenses or investments, which should be expected moving forward for us to generate value and unlock value for the future.

So what we want to show the market is a little bit of the dynamics. Of course, there's a little bit of operational leverage, which will help our EBITDA grow. There's also the synergies that we are -- we have realized last year and which are now having an impact this year. There's the reburdened payroll, which is a detractor. And there's also more expenses and more investment to reignite growth, which goes back to the initiatives that Rafa and Otavio mentioned because, again, we really believe the company's potential. The size of the market is a lot bigger than what we are leveraging. And as leaders, we want to continue growing and outgrowing the market. I don't know if Rafa has anything to add, but this is sort of how we're looking at things.

[Unknown Executive]

Federle, just adding to what Kubota said. You have been monitoring the company for a long time. We are very disciplined when it comes to cash generation and profitability. That's clear. But obviously, we are exposed to a very -- a thriving market. As we do in e-commerce, we have several significant assets. So our major investments were in M&A, and they have to do with the investments we've done so far. Of course, it's not that we -- obviously, whatever we need to do to have -- because we have more competitive products, our focus on structural discipline, cash discipline and profitability is not -- does not clash with our growth-focused plan.

[Operator]

With no further questions, this concludes the Q&A session. I will now return the conference to our CEO, Rafael Chamas, for his closing remarks.

[Rafael Chamas Alves, executive]

Well, everyone, thank you so much for joining us and for your questions. They really help us clarify a few aspects of our earnings release, and we'll see again in the next conference.

[Operator]

This concludes LWSA's Q1 2025 Earnings Conference. On behalf of the company, we would like to thank you all for joining and wish you a great day.

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