Earnings Call: Q2 2020

Aug 13, 2020

Good afternoon, everyone. Welcome to Via Varejo's conference call to discuss the results for the second quarter of 2020. This call is being broadcast via Internet. And, the slide selection will be controlled by you. If you are in the English version, please refresh the link for the download. The questions will be answered analysts questions should be administered, and the journalists should, talk to us via email or know, our website. Before turning the floor to Roberto, I would like to say that, the forward looking statements may during this conference call regarding business perspectives, projections, and operating and financial goals are based on the beliefs and assumptions Varejo's management and on information currently available. Forward looking statements are not guaranteed of performance. They involve risks, uncertainties, and assumptions because they relate to future events, and therefore, dependent circumstances that may or may not occur. Investors should understand that general economic conditions industry conditions and other operating factors could also affect the future results of Via Varejo and cause results to differ materially from those expressed in such forward looking statements. With us today, we have Mr. Roberto, CEO of the company, Mr. Otivato Adelia, CFO, and I are officer. And so now I would like to turn the floor to Roberta. Good afternoon, everyone. I would like to thank you for being interested in our company, and for being with us in this call. I hope that all of you are doing well and your family also. And to start, I will give you a brief overview of what we are at here. If you have an issue regarding COVID, we are taking all measures needed to, good health, we already have 2017 stores open. That is 95% of our stores. Both our stores as well as our logistics are following strict protocols. For the safety of our employees, as well as customers in our headquarters. Most of 90% of people are still working remotely in their homes. We do not have, a date to go back. And we are not in a hurry either. We adapted really well to this new way of operating, and we are very productive and with this remote working. As I said in our last call, with this huge change that we saw in the world, the winners are going to be those that adapt faster, and we are performing all needed adaptations to our business. Whether for the current moment or for whatever comes ahead. Now talking about our 2nd quarter, and, not on the presentation yet. This has been a very challenging quarter. And it was extremely transformational for the whole world, and especially for Veevarez. I believe it was even more transformational. And before starting, I should thank, some people first, really, a huge thanks for Tia Varej's team. That's a great team. It's amazing to see their resilience and capacity to adapt as well as the passion that they have disabled to to serve over 85,000,000 customers. So thank you very much, the advantages team. I know that many of them are here with us that afternoon. I also would like to thank all our customers, whether, you know, oldest clients, the ones that we have for a long time, or the other ones that are just checking our apps and our digital platforms and really enjoyed what they have seen and ended up staying with us. And it is really a privilege to be able to serve you all. We'll do everything that we can to keep these new consumers in the house. And I also should thank our 444,521 shareholders. And probably all of them, our, our, our consumers as well, our customers. Thank you for believing in our company and in our capacity to carry out the largest and fastest digital transformation of the Brazilian market. I think that the figures that you will see And this afternoon, we'll make you very pleased. This is our 5th call. And I believe that the market already had the opportunity of getting to know a status. So I wanted to stress some of the messages that we have been going to use since we started, and I would like to reinforce them to stress them. First, we are strongly committed to the coherence and governance in all of the decisions that we make here at Via Validation, we will always looking for a very fast progress, but in a very consistent way with a lot of transparent both in our transformation as well as in our results delivery. I think that consistency and transparency is something that we have been waiting since our first call. And as we deliver in every quarter, it is more clear that we do have that commitment and that is it is coming through. We are a transformation case in the market today. A lot of people talk about us We are democratic company. You can see the number of shareholders. We are inclusive, not only in terms of the team that is here our customers, but also in the stock market. So I think this is very nice. And at every quarter, we have been improving the level of information that we have here so that everyone can have a better understanding of what is this company and also the potential that the company has after a year. Then I think all of you can see how much we have delivered. And it is very clear also to see the consistency of this team. We are not here to win a soccer match if we are here to to take the world champion. Ship, but that's what we want. Pierre Vallejo is ready for that, and we are also preparing ourselves for that competition. We do respect our competitors And I can say that Pia Fadejo, was not taking all the room, all the space that it was ours, but We are doing that now. This is a long term journey. I want you to have that period here. And in this point of being a long journey. We are very determined about fast deliveries. We want to take and Jia Pradesh is already there, but we wanted to be even more the way and where people buy all Brazilians where how and the way they want it. We're gonna go after consumers. We are going to have this relationship with consumers the way they want. Slow. Now turning to page 2 of our presentation. We think it's important to say who May this transformation of Via Varejo who transformed the Vareza, this digital giant, which we already are we just carried out a survey in house, and the results are just out. We are today 41,000 active employees. The average of age here is, 36 years, and the average time is around 5.4 years, 47% of our team is comprised by women, 53% men. And we have 53% of our team in the leadership of the company. We can see leadership here since the coordinator, a lot of all of them are leading positions and a lot of our stores. I remember each one of the stores that is a company in itself. We do have signals of the stores, and that is 53% in leadership are open. So we are following Brazil's path. The Brazil has already more women as the head of the house, and I think we are very, very represented here. We have over 2000, disabled people working here at 17.50 apprentices that do engage and our culture, and we have everything to write a beautiful story with these apprentices, and they can become employees in the future. We were what we are looking for here is to have, a huge diversity. We want the president's society to be represented with the invitation. Therefore, we are able to talk to the society and to Zoo, and I believe that we are on the right track. We still have a lot to do, but we are in an expedited path and in a very good trajectory. Turning to the next page. I think that, once again, is stressing this is the way of purchasing for every Brazilian, whatever, whenever, however they want. This is a real again, this was a very challenging order. We have seen over 80% of our stores. Actually, 100% of our stores were closed. And we were able to serve other consumers where they wanted to be served. We were able to quickly migrate our sales to the online channel. Padilla, we will issue all that performance happened on monthly basis in the border, and it's amazing to see how fast we were able to do it. We had a total GMV of 7,300,000,000, considering that out of these 7,350,100,000 thing from the, online GMV, and this is unprecedented. There is no way that a non digital company be able to have such a high GMV in the online channel. So we are very pleased about this result. And even happier about the quality of the result on the next page. Now looking at the highlights, Once again, I repeat myself. We had the 7.3000000 in the total GMV, and out of this total, 70% was in the online channel. The online makes up for 100 of lost sales due to the lockdown. So we more than made up for this, the term fee. And then think that with the pandemics and showing our capacity to quickly adapt, we created the text me on what's And this is a huge, success. It became a worldwide case at Facebook, and I think all your retakers will follow-up in the same trajectory. Talked to some of them, and we did transfer knowledge. This is an important moment for retail, but people needed to find your way to maintain their revenue, and we did play that role. That sale represented 20% of GMV in the order. And given the open 1000 stores already opened, we are still going very strong on the texting on WhatsApp. We are ready in the 3rd generation. We are ready to go to the 4th generation of that. And we were able to have over 20,000 sales reps become online and digital. So to the right, we wrote 180% in the second quarter of 2020, vis a vis the prior year. And if we do not consider Or, actually, if we consider June alone, the growth was 360 5%. And monthly, we have grown 311 in the 2nd quarter. And if you have the late June, itself, it's 422%. In the 3 you would grow a 180% and over to 111% in June, and 3b 43. We have a huge revenue growth. We are just starting our marketplace business. I will talk more about that. We have exponential growth in the number of MAUs. Remember, when we got here a year ago, we took the company with 1.5 monthly active users in our apps. And today, we have completed the second half of the year with over 15,000,000 active users. This is the huge growth. And it this all in a sustainable fashion, and I will be using this word sustainable a few times because, there were some questions when we, published it and disclosed the numbers that people asked about how sustainable was that And I will show you that this is absolutely sustainable. And on the contrary, we did gain margin in this period of time. On the next page, I think that, you know, this is very clear. Our quick and accelerated digital transformation. It already happened in. So we start a tariff on online energy and fee of 12, 18.5 in the second quarter of 19 to 70. Of course, this driven by the pandemics, but it will never be where we were at before because the stores now over 1000 open stores, our online business is still growing at an accelerated pace. So even with stores opened and reopened. These stores are selling very well. Even then the online growth is too accelerated. In this current period. So the GMP won't be growth. That went from a negative number this year to and a second quarter now. It's the GMP 1 P +3 P Growth. Also, we had a decrease in the negative number. But also we went to a crowd of over 180%. And here, I I think we have something that can be very enlightening for all of those that had questions about how sustainable was the sales growth of the operation. Our post operating margin, that is you do not have any recurring effect. In fact, if this is life as it is, our operating margin will be 27.3 in the second quarter of 19 to 30.7. Than the second quarter of 20. It's much higher. So we did have, very significant growth in the online channel without burning money without, damaging the company's profitability very much on the contrary, but we'll show you the breakdown of our gross margin and also the how much helping in terms of margin with the online operation in the second quarter. And this game is here to stay. We already have that, integrated. So the number of monthly active users went from to 50,000,000. The monthly online visits, we had 73,000,000,000 in 2019. Now, in the second quarter of 20 $187,000,000, and the number of sellers went from $4,700,000 to $6000. So we have no problems at all to bring in this others to our platform. We did have a problem on the platform itself, but we were able to do an accelerated, for the sellers. Is being unlocked with a new platform, and we should grow in the onboard. There are a lot of sellers that want to come in and want to take advantage of all this traffic that we are generating. This is going to bring in a lot of right prices. Want me to help me to read the other way around well. So we are in a very much waiting for time. So on the next page, we have the app in use. It shows the consistency that we have been having in the of monthly active users. So if you analyze June of 2019, it was 1,500,000,000 in September. That's when we adjusted the platforms that started accelerating. The online visit. We have been getting 3,000,000 users per quarter. Basically, one given new there's a month in a consistent fashion. And what happens was that with the pandemics, we ended up having 7 even users more in this quarter. But one second. We do know they have a product donations here, and we are having those in a very consistent fashion weather of the customers that we already have because by yet more than new customers that are coming in, that are trying what we have that is new. They like it, and we are working on our own CRM. With all the data intelligence that we had to maintain, to keep these, customers with us. 32% of our sales already come from our app. It was 12% last year. 34%. At this point, on-site, we are ready by We are getting a lot of traction in our app. We had promised now And if you have a day today, we actually, we promised the new apps and front ends. So we already have Yep. Because it's via app. Open really in battery accessibility, better storage, and check out. It's a good product. It shows So it's totally renewed with the top technology. Turning to the next page and talking about marketplace, we are just in the beginning of our journey. I should say that there is nothing that exists today in the marketing charges of technology for market place that we cannot have here. The technology today is more affordable and faster, and just check what we have seen in terms of transformation as company in the past year. So we will quickly gain traction in the marketplace. We are going to use all this power that we already have in our service for 3 d for this, flow, and we will have all our sellers Oh, our sales reps selling 3 p products. Our credit operations also will be available for 3 p products as well. And our logistics will be at service for 3 p as well. We get a lot of traction, and this is already robust for you. One maybe that shouldn't be in the marketplace, but there is a lot to come. New Jersey is just in the beginning. So you already have 4,200,000,000 of SKUs in our marketplace. And we have a lot to happen from now to the end of the year. On the next page, talking about margin and inventory. In our last call, I said that we had the right decision of people receiving, goods and the pandemic started. This was the right decision. No question about it. That is related to our core business. Know how to play that game. This is in our DNA. So we have 100% of your inventory that is renewed. This also helped in our March increase. We kept receiving merchandise. We are maintaining our balance. And by 3 levels, although we have a stock out here and there, maybe, there was not enough shipping in the pre COVID time, but we are very well planned in the industry. Also down in the channel integration is helping us a lot of, the sports, the logistics, the way they can, in all areas, they can, and a strategic for pricing. This is, competitive advantage. We have a lot to come in this pricing mode, but we have an amazing team in our commercial area, and they also have that in their DNA. So we are very confident about our, trajectory in terms of margin and inventory. On the next page, the payment book. It's it's a very traditional payment for Casa's Baya. We have just break, relationships with our consumers. This is a very resilient system, and Padilla will go into the details here. But, the little of the delinquency that we have seen going up in the beginning, and it had a lot to do with not have in this store to go in and make the payments. And and that's already adjusted itself at a very fast pace, but then it will go into the we started in the mid of the second quarter, our digital payment book. So we have the same payment book that are the words already know, and it's very democratic. And now that they do have a digital version, we already have a portfolio of a 100, almost the 20,000,000. It has been, it is available for our productivity. We are ramping up that by until end of the year. So it should gain representative as, you know, digital sales. We also increased the the base of preapproved, customers, we did change our scoring model. We reviewed all of our credit engines our data scientists are working hard with our, credit operations team. Bro. It did help us. There's this now in the second quarter. We also increased, almost to the maximum, the way that we collected credit So 90% of the decision is already automated. So there is a intelligence to in order to analyze it's using our models and that the rider represents that 90% of our sales by the operations. So we are in the right track. The credit operations is growing, and we have an issue. It it comes, yeah, because it's like you course and now on the online as well. So we do have a path that is moving towards growth on the next page. Our tech culture. We are also, very much working on increasing our tech team. We already have 1400 developers 120 is flag. So you 3 tech helps and 29 drives. This, it's a very robust team. And we have just announced yesterday, I think. We are opening 300 openings for our already, in this demo. So the team is going to work remote. So they will be hired to work on remote charging. So that brings a lot of paradigms in terms of the team, wanting it not to be in certain places. So these new employees will be operating from whatever they want to. On our next page, we have the performance and development of our platform. It's still accelerated. We promised a lot of things that Tia Varejo did. So we analyze what we renewed, so it's already up and running. Or experience of the cell phones, mobile phones in the hands of our sales reps, for them to sell. This is being rolled out. We already have a footprint there in 2 states, and with the single. And by the end of the year, 100% of Brazil will have that available. The new experience, the use of Wi Fi, so that then, register that consumer understand the consumer so that our sales reps will know about the consumer who is this the consumer, the credit limit that is pre approved for ERC. So this is, we're gonna celebrate it, and there is also a geolocation. So I think this is going very well. We in the online channels, we have the new apps. We also have the new front ends. There are a lot of improvements to come in the future and in the marketplace, we are now adding a new platform that we're on running, and we'll be able to have an accelerated onboarding for my sellers. This is going program in terms of recurrence and, also a better assortment. On the next page, Now talking about logistics, we had promised for this year, 120, many hubs. And we are ready to have 380 of them. And with all those 2, we have this 3rd order. We want to reach 500 mini hubs. So all the cities in which we need to have any any hub, we we will have that. And it does it's going to happen this year. Alright. This is a the trench This is a competitive advantage that is unprecedented. Via Varejo has several sustained pillars, and logistics is one of them It really did reach us a lot from everything else that you see in the market. I think that the the barrier technology, we already made it clear. This is no longer, a huge barrier. It is accessible and fast to go over it and and now to put together the logistics structure that this company does. That's not easy. That's not fast. And to be present in most Brazilian cities, with the highest mile for in their cities. And as the online gains more representative that's in Brazil in today's 6%. Basically, on the large capitals where logistics is easy, but when we go inside the large city resort to have, these 1000 stores to serve their logistics and all does not work because we won't lock the potential when we will allow us to have an important advantage in the Brazilian market. For example, we integrated that in the 2nd quarter, it is already active with 3 and 30 of the current 280 and many hubs. It's just a matter of so that we can have it active for many hubs. The process is, accelerated in the 3 p. We will come as I said, but we will have logistics surfing on board, repeat sellers as well. In the marketplace. It does show the company by the end of the year. It's already available today. It does have all they they already operate in our 3 d, but this all is going to be going to be a financial logistics. And I think we gained another important avenue there. And just as an extra piece of information in the second quarter of 22 just so we don't mind our logistics has processed over, but billion deliveries. With the deficiency, a level of over 95%. And that's important because that has to do with our NPS. And the level that we are present also in So it's a crisis in the recall on behalf of the visual of having a bad leadership in the in the outside. 3rd quarter of last year. So in that way, you want to check it now. We are not in the position where we want to be. There is a lot be done. We are more or less than 60 to 90 days. So take a, you know, it's called a consumers sales. But today, when you're ready to go left, but the position we had last year. And there are other retail companies that are in the place where we were in the past. So you're very busy. About the path you're following regarding the speed of your logistics. So talking about our bank, this is our digital wallet that already works as a super app. We already have over 1,700,000 downloads. Acceptance has been really outstanding, and We promoted the total integration of Banque in this 2nd quarter, and then with that, we were able to share our database. The banquet comes in with more than 35,000,000 clients, we are recognizing 3 percent growth in new accounts in the second quarter 20 versus the 1st quarter up here. And if we only look at July alone, we see a 93% growth over the 2nd quarter. Manual relation to the 2nd quarter. And it is an outstanding growth. The GPV is also growing. It's growing a 120,000,000 in the second order. We already have more than a 160,000 CDC clients on board. And we we also experienced an an amazing significant reduction in client acquisition cost given all of the customer things and the information we have on our clients. Therefore, it's it's much cheaper for for us to acquire a new client unlike what we see in in the market in Japan. So our acquisition cost is extremely low. Now moving to the next page. Now here, we'll look at our capital structure at the end of the second quarter I think we corrected one of the major problems or efficiency you said we had, and I'm referring to the company's capital structure in the 2nd quarter We ended the quarter with 7,400,000,000 URLs in the cash between cash and And so receivables, we changed our capital structure with more than 10,000,000,000 bureaus and transactions up. Hello. Was extremely successful. I think this was the first major follow on. And during the pandemic period, we were able to captured 4,400,000,000 of the new shareholders that came forward are very pleased. And with that, together with father measures that we also adopted. We were able to redeem a promissory note be another one point 5,000,000,000 VRL. So that is a major advantage of of equal amount for up to 2 years yet. We also protect the company to a $500,000,000 CCP up to 2 years as well. We've concluded the acquisition of AirFox and the ASF log. And on the right hand side, despite a quarter with great challenges. We were able to generate 4242,000,000 BRLs in positive cash This is an improvement of 1,400,000,000 of figure out fees, I think, q 2 of 19. And we also had a final and then a bill decision for peace and co fees of 264,000,000 PRLs. And so this is very transparent because we are just outlining what is recurrent and what is not recurring. But this capital structure puts us a very sound position and it allows us to promote all the transportation we have in our pipeline. Therefore, Our position is very sound, and we are ready to reach all the new challenges along the road. And now moving to the next slide, When we look at all the confirmation that we already promoted, we have to then probably look at via values and fax steps. All of these next steps are very well aligned. We we move on on our daily journey to improve conversion. This is the everyday or the real operation of any online business. With the Casa's Baya app already delivered. Now we are pursuing the delivery of our new app for you and extra dot com. We are also trying to merge all of that before by Friday of November with the same visibility, with US renewed and, you know, navigation and a better cart. And less clicks until you finalize your purchase. Everything that is applied in as Avaya have we're all something available in the other. And there are still some critical improvements for the cousin via app. So this involves a continuous improvement. By the same token, we start our pricing journey. Our data scientists are focused right now in revisiting our entire pricing journey so as to make it more intelligent. There are some gains to be both in terms of sales and also in terms of margins that can be captured. Now moving on to marketplace, we are We are focused on a real time onboarding of sellers. We will also very soon open to sellers of the the possibility of sellers having coupons, and then they will manage the coupons and the discounts they want to grant. Inside the platforms. Evias, which is also via various working in paper of creepy. We are also engaged in this journey, and our journey also involves full commerce for those sellers who express interest. We can provide a an integrated operation is all of these are part of our journeys and these enhancements will come every quarter. So in the next coming quarters, we will gain one new company and a recorder with all of these new equipment. So we are optimizing off the offline business. The PMI through the app at Mobile will boost sales of 1 PM3 peak. There is a group the the modality ship from store. We want to reach 500 mini hubs in the 3rd quarter. Therefore, we will grow this potential and we will focus on doing that last mile based on the way you have this represents very significant savings in our delivery costs. Wi Fi also. Wi Fi. Is widely available when our consumer is in the store, and we capture the app of our customers in the store. So we can provide information to our sales rep more quickly. So if they want to to go embark on a journey and I'll store using the apps for your preparing your brick and mortar stores to be even more integrated with our online service and with vice versa. And we move on on our journey to improve and use our tech culture, we will improve our some kind of tech hub. We want it to be ready to face this new technological wave Our policy, our home office, our office policy is more robust. We just opened. We had new vacancies for home office engineers. We are now putting together our new home office policy ever thereafter this period is over so far everybody is working from home, but we are focusing on this new this new way of working, and this is across the company. We are very, Joil across the company and through some methodology and technology There are many things happening at the moment, and I believe that our technology I mean, our technology is a 100% present in all of our business areas. And the other way is also is also true. In every corner of the technology, we are grieving and experiencing new business. That's why we are very focused on this new journey. And, frankly, there are many functionalities. We are adding more features, and there is get a lot more to come. It would be totally integrated with fixed. Once it's ready to operate, it might be ready and operational. Also, give a QR code agency in the counter, the branches in the account, and we'll come by the end of the year. And the, corporate account is also something that is in our pipeline. Now I will turn the floor for to speak about the results, the financial results. Good afternoon. I just wanna make sure that the audio is okay. So now we start on page 17 with the first financial figures comparing with the figure from last year. Here, I start with GMV, and and these numbers refer to the numbers that we showed before the company. Is is growing a lot, and this compensates for all of the losses coming from the stores that were shut down during the pandemic period. For 1 P and 3 P. These are the numbers that we originally refer to them. So it's really a very robust route with the peaking, June of almost 40 percent of total GMV, 365, on the online, 422 in one peach, you have it in 11 3p stores, you know, following 27%. In the release, we also try to answer questions from investors regarding to what will happen to the stores after the reopening, the concept same store sales that we applied in the past, they're very difficult to be reapplied now after the shutdown and the reopening. We try to think about that in a more effective way. So using an an old concept of same stores open in May, April and June. We arrived a 15% growth of stores following the concept of same store sales. And if we compare the days that these stores were open this year. In the 2nd in the second quarter of last year, in the 2nd quarter, that lead us to a number of 23%, meaning that the physical stores that were reopened. We're able to capture also a very significant growth. And then on page 18, this is a broke a breakdown of the results. And here we see the important results for the company showing total GMV growing, you know, 700 to 10 gross, gross profit. It's not 6,400, and 6 1,000,000,000 down, gross profit, 1.182 and percent better than last year. And in addition, it's also is impacted by the tax credits of Facebook news that has already been this quarter. And then I will show you how this was accounted for in the different lines of our P and L. And that's G And A or general and salesmen are administered to expenses, you know, minus 25.9. This is a very behavior throughout the quarter, but I will show you how the operating expenses and operating margins behave. Therefore, we arrived at a competitive cavity results of 10.50 a pickup, 555,000,000, 173 more than the year before. 4.20 percentage points higher. Financial income also impacted by tax credits. 74,000,000 better than the year before. And net income with a 4 of 65000000, 1.2% and an improvement in 227,000,000 when compared to the First State Court or Athena before, 3.92 basis points. Next page, page 19th, we will isolate the nonrecurring effect on the quarter and also the same quarter of 2019 in order to run a comparison without these effects. So this era. Therefore, we had $140,000,000 of the tax credit that was accounted for in our gross profit a 123,000,000 of the same, you know, tax credit monetary correction posted in our financial expenses, which was enhanced. So excluding these impacts, the operating loss of the company in the court 175,000,000 or 38.30. Hit the same for Avina Bufour. There were also several adjustments in made of nonrecurring effects. The first one was 51,000,000 of tax credit sales and a 157,000,000 in expenses. Of physical fits, expenses with advertising and marketing. So the adjustment was 203,000,000 for EBITDA 34,000,000 in terms of net income. Well, once the adjustments were made, we move to the next page, page 20. Here, we were able to know the operating performance in both quarters in a comparable basis like for like Therefore, we had 7.262 and 7.175 plus year of total GMV. Growing 1.2 percent, 85 percent better, operating gross profit 1.1.621 slightly below last year and monitor returns, but 3.4 percentage points higher than last year. I will have a special slide just to explain this effect and also to demonstrate that this is real in terms of SG And A. 1.365 or 25.9 when compared to 25.30 of last year. This has the strong impact of the a ton of stores, 147,000,000 better than the year before. Point, you know, 0.60.60 basis points. Adjusted EBITDA, 340,000,000 or 5.9, which is almost twice as much as last year, which was 79 or 3.0 percent financial expenses were worse. And that include all of the initial impacts the onset of the pandemic, especially late in when are generally late April in May and because of insurance rates. So minus 49. And but in terms of percentage, it was better. So net income We had a loss of 176 or 3.3 negative when compared to the operating figures up to 96. So even with the pandemic this year, our loss, I mean, was improved by a 120. So it was flats worse when when we compare 2 of the figures of the same quarter of the year before. On slide 21 here, We have a very clear snapshot of what happened throughout the quarter. The 1st these 1st 3 months were totally different. This is the first time, and this is the part time that we break down the figures for every month to be more transparent in paid for our truck in 1.87 871 so much lower. So the online operations didn't react immediately, but you the gradual reaction. So from April to May, there was a growth of 6.30 of GMV. And from And from if you look at June April, there was an an increase of almost 1 meal in terms of invoicing that was exceptional performance of this re this refers or is it true to the online transformation of the company that, therefore, we were to recover our revenue. It was a strong recovery. As you can see, we had been talking about that even in a previous quarter, we refer to the incredible potential that the company has to to house a good gross margin for product because of the noahawk company because our inventory management expertise. So 34. I'm talking about profit So at the end of the quarter, we had our gross revenue reaching 30.7 percent in terms of expenses. As stores were reopened and the global revenue both from physical stores and online e Commerce shows productivity gains. So we we went. It started by 29.8. And it's 24.0 in June. Certainly, all of that involves very strong, stringent cost and expenses management. We we were really in terms of looking at rents how all of the possibilities that were opened up by the government and all of the different mechanisms were used by the company. And with all of that, it's very clear that the company was able to recover properly. Coming from a negative EBITDA close to 3% in March to to 22.70 negative in April and a positive figure in May, and even surpassing 10% agent would show that that loss was basically Something that occurred in the 1st 30 days of the quarter. Next slide. Here, we explain how what is the breakdown of the gross margin of 30 point 7 when compared to the year before, which was 27.3. First of all, we must look at a very, very important change. Of a loss of mix in furniture. This is a strong loss in terms of monetary volume and brick and mortar stores, and this accounts for a loss of half a percentage point in our gross profit profit in in the mix of general the in gross profit in the stores. It's a bit higher, especially because of the furniture category and other relevant categories. And then we have operating results in paper bulk services extended warranty here in the channel, we have multiple point 3 percent. We'll certainly with the recovery of stores and the reopening of the store. This We'll experiment down, and we'll start on our recovery path. In terms of of forfeiting an agreement that's what's turned into a pet king bed. So there's no longer a cost in the gross profit, but it's a financial expense and and this improves the margin to points 6%. So all of the negotiation gain, considering all the decisions taken by the company, on the onset of the pandemic to to have robust inventory to cope with the situation through to be assertive. And that's why we were able to to experience this impressive gain of 5.6 percent, which allows to have a gross margin growing 30.7%. In the next slide here, we we strengthened and reinforce our inventory management practice. We made the decision to to enhance our inventories at the end of April. We did not close our distribution centers. We've made commercial agreements with our suppliers. We we charge for products that were rejected by other clients who check down their warehouses. So at the end of the quarter, we reached a level of 5.30 too in our inventory. Most of you up to us during the the process. My remember that this meant a potential of almost 8,000,000,000 or above 8,000,000,000 when we talk about sale price. On the right hand side of slide here, we have, let's say, in concept in terms of days of inventory. The case of inventory went from a 100 to a 124 days. When we look forward and look at our future selling potential. We can shortly say that this is absolutely in the world and the company and keep their inventories and their replenishment costs despite this challenging moment in a moment when our suppliers are going through restrictions. So now moving to slide 24. Is it okay? I see another Image here. On page 24 that here, I show I'm showing our cash position at the end of the quarter. And this is more than telling you that that after the follow on, this position does not consider any new cash position considering what happened at the other corner. So excluding this, in fact, between the 1st and the second quarter. The company generated almost 250,000,000 in cash. If you look at the same variation between the 1st and the second quarter of 2019, we used up 1,100,000,000 barrels And so we can say that the company improved its operating cash position in more than 1 300,000,000 or or almost 1,400,000,000 more certainly because we were able to extend CCB in the follow-up follow on. So we are now in a very comfortable position where whereas we have more than 7 people in cash. And the final slide before we finish the presentation and go into the Q And A session. This is the balance sheet position of our CDCI. This is the first time that we show you this chart because I think that this can help you understand how we stand. And this refers to the pages that appear on the ITR. The ITR has an accounting view and therefore future interest rates, assets and liabilities appear on separate accounts. Therefore, when we look at this as a managerial with a manager perspective, we have, 3.15 of assets to receive. And another amount that should be has to work with banks. This kind of at the previous quarter. This year, our position was slightly lower. And during the months of April in May, until the stores begin to reopen, we did not produce so many payment books in this position appears here in our in our receivables. In this quarter, we had 776 interest to be accrued and 88,000,000 of active interest to be accrued in our liability line. For the position on of provisions for doubtful accounts. It means that this account for 2.3% of our book to be received on in terms of total receivables. I've been reinstating this every time I talk to our investors and analysts that our payment book has a historic resilience. This is not something new because whenever there is a crisis of payment book proves that is still very resilient and provides low risk. Certainly, there was the bubble of delinquencies, especially in in April and May. And this was made due to the shut shutdown of the stores because only 6% of the collection was outside the stores and 65% of all the payment books of April were paid, but 35% were not paid. And I'm already disregarding at his time of books that were passed down. Payment was postponed through the end of April. So once stores begin to reopen in the second half of May, the collection process was expedited. There were times that there were lines in the stores, and we had to be very careful because they're no great walk and gotta be careful because of this distancing protocol, but at the end of June, July, August, also, we had a great evolution if we compare two two periods in the onset of the So we see a very strong rebound. The recovery is coming, and it's very good. This recovery should also be gradual throughout this order in this half year, and this shows that we will see the return of you know, new payment books and new credit operations because we do believe that this is a very safe answer for the company. We didn't see we don't see any major risks down the road in this inflected in There's amount of provisions that we also put in large potential for this instrument because this help the civil world further considering that many banks choose credit card limits. It's this is it different to when compared to the use of payables. Still talking about digital credit. Our digital credit operation gets out, you know, provided almost 120,000,000. And in our portfolio. So this is a very safe and commitment with great potential low risk or risk are totally under control by us. So that's it. Thank you very much. Now Roberto. So now we are going to start our Q And A session is starting with a question by Victor from for this. Robert Vipatile. He wants to know if the online sales in just came from new customers, existing customers, or and if you had kind of realization between our sales and online sales, especially when the stores started reopening. Victor, thank you very much for your question. We did have a mix of both. A lot of new customers are new to our base and a lot of our customers responding utigital. So we do have a number of new consumers. And as we reopened the stores, We kept growing a lot in the online. So the physical stores today are growing a lot. The sales rep from the brick and mortar stores are selling, whether to, customers that are going into the store or customers that are talking to our sales reps via Zapp and also our online is going. So obviously, there is a balance there, but we are growing on the online as well even after the stores have re been reopened. Our next question is from Bob Ford from Merrill Lynch. To understand a little bit better. How is this new relationship, with global in terms of functionality and how this partner will work in our marketing department. Hello, Bob. Thank you for your question. Global has just launched the tea commerce. This is experimental at this moment. It's something that was opened. We started, just last weekend. We are engaged in this project with them for a while. And so we always challenge our agency and all our partners. We ask them how we can innovate in terms of selling and having a relationship with our consumers. So global, we pride it as for this partnership and we are working on this project with them. Basically, there is, an interaction of what what happens with viewers. They can buy several of the products that are in the show that is running on. And that is in a very interactive fashion with their, remote control. They can place an order for using your mobile phone and your workload. This was a nice issue. The test went well, and we are managed to go and they're still working on this innovation process with them. Next question from Tobias from Sid Bank. His question is whether in your our perception of the company with this this recovery, meaning the strong growth of the physical retailer, Is it due to the measure by the government or some distribution between segments, or whether this trend will continue? Tobias, thank you very much for your question. Very difficult to draw a conclusion at this point because we are not I mean, as things are going so well, we are not even questioning where all of this is coming from. But what we've seen is that in fact, there are some sectors like traveling and some other industries that were were heavily hit. I mean, consumers are working straight from home, and this has a direct impact with our business. A lot of people in Brazil are not just divine online. People that did not buy online now. They are going back to the stores and the sale is more conservative because they are not just rousing the store is that when they look at the store, they have a very good idea of what they wanna buy. They help straight to to the sales rep and the sales rep can help them decide what will be the best product for them before is it's difficult to understand the impact of the corona voucher at this point. But we we are noticing a a very strong, you know, consumption in the brick and mortar stores and by the same token on the e commerce side as well. Next question from Thiago Macruz from. He wants to understand what are the main drivers play that gross margin. Oh, my traffic is strong. Get to be able to extract some benefit, and maybe you didn't have to enter into that patient whether there was, more, you know, tracing retagging in the period. Thiago, thank you for the question. The market is strong as it has always been competition. It's been around as it has always been but we it's part of our DNA to to play this portion when we have an excellent team in charge that. And I think we're just took good advantage of this moment and advantage of the enormous flow of the clients that came in during dispute. I mean, our brands are very strong. What we were lucky maybe was to add the, you know, more excellence to our services. Consumers I always wanted to buy all my dramas, which is gonna be ready to cater to the needs of these consumers. They said, oh, we are ready because of our platform. Not only to serve its customer, but we have the entire logistics, service ready to serve these customers. Therefore, it's just a combination of our good brands with everything else that we've been doing. I don't recall, you know, having just a single thing that made things happen. I think with the pandemic, it became more apparent. But we were already rolling our online penetration and what happened now with the pandemic. It's that the cake became more digital, more online, and many consumers, used to consume in other locations, and they also turned their eyes to us. If they try out, they'd like what they saw. They gave us the opportunity to make a sale and also to deliver right. Our satisfaction level is high. We already see self return customers. The the market was probably asking whether there was any margin destruction. No. There's no market. Structure there. So cashback, we didn't use any artificial thing to do the sale. What happened? The consumer migrated to us because of everything we did for the company throughout this last year. Next question from Danielle Abra Tower from 11. She wants to understand if the service with you that usually has a good margin is at a new normal or if there was a structural change. And also if over delinquency should go back to regular levels still this year. I will answer the first part of the question, and Padilla will take the second. Thank you. Hello, Daniela. Thank you for your question. About a service the sales. It is damaged by e Commerce. We believe that credit operation sales and the e Commerce with the digital payment logo we are already on the right track there. We are going to increase credit operations, but service sales, it's not that those are not as simple. But as all the stores are reopened, we'll go back to the same volume that we had. For a service sales. So that also is going to affect our margin. And there is a trend to to bring move, the service sales, of course. So I'll turn to Badivia for the second question. Hello, Daniel. And thank you for your question. And as I have already said, that there was a strong recovery of payments of customers after the stores have been reopened. Obviously, we did not wait for them to go through starts to make their payments. In the beginning of the pandemic, then a little bit before, actually, we already had developed several digitization actions. Some of of those projects were running already in 3 quarters ago. So we did launch our payment book, digital option as a pilot before. And We did, we did that with our own, customers with us not in an open seat. So we do have a a controlled delinquency rate. The customers that did not make any payments on April 4th May, they went back paying that May even June. And in June, that's when we we we measure it in different ways. So in the 4 main weeks, and the comparable in the comparable form, the volume of payments of June meet all receivables volumes and the pre COVID waste up to March. So we still see that happening. Calabrio and the new team collection they had already digitized the collection across several collection initiatives, portals. Plans plan renegotiation. All of that was opened for customers and so that they could shift their payment to their new reality. So in a way, this is bringing a lot of return, for our collection and apartment, credit recovery, And we also have seen that we are starting a a normal period. So, we is this is not we don't have a single indicator here. Several indicators show the recovery in a very relevant fashion. And in addition to that, also considering our digital payment we start going back to the volume of contracts that we had pre COVID times. And that increases our portfolio mass and that boosts any possible risks. Also talking about credit granting. The new area is developing several tools to improve the a concession analysis. Roberto has showed us that 90% of that is already automated. And this percentage is increasing. Every month, we have new technologies and new ways, to improve it, both credit renting as well as, but, we were telling you that, especially in the follow on eighties. And also after in the pre follow on post pandemic, telling you that this is a resilient portfolio. We did hear that from the founders of especially at the Baya because that's where we have a very strong private operation since the company started at today. So all of that summed up give us confidence to, say that the risk was low. And now we are just proving it. With the figures. So, just a matter of safety, we do not have a that ADA in our portfolio going up, but we believe that we see a lot of opportunity of our credit operations, gaining more penetration and rental funds. On source sales and now on the online sales as well. Next question from. Two questions. How were sales in July or, Father's Day? What was the trend? And I think she explained that but also how is the provisioning policy for credit operations if we expect to increase the provision considering the end of the impact of the emergency funds. The the government has rented the public June. June, July was very good. Father's Day also was good. Sales, both sales, both The motor sales and also online sales are following a good trajectory. About the second question, I think what you already talked about that. But now I would like to go back to Jacqueline's question. Part of all that that happened is that everything that we're doing with marketing with our brands and all the intelligence of CRM that is applied to this the interface of customers that we have. There's not much use in the company before, but we have a lot of data scientists working on the analytics of the space and rating and extracting from it, all, potential for consumption and relationship that helps explain the enrollment that we are seeing on the online. Next question from Andrew from Morgan Stanley. He would like to have more details about the changes on the seller onboarding in the marketplace. A little bit about the profile of the category. Landau, good afternoon. Thank you for your question. We had a a very long line of sellers, and this will be solve now once onboarding is released, and we will pursue real time onboard from now till the end of the year. I mean, we will do what the feeling of categories in our marketplace. We've been testing several categories. We have a very clear idea of what the categories are and what are the sellers who make a difference, maybe in other marketplaces, in the Brazilian market. And the good news is is that most of these sellers are willing to join us. They are willing to get on board. I mean, sellers are not loyal because marketplace is a big shopping mall. And sellers want to be in Weber has a a large flow and with brands that can add more sales to them. Therefore, as we improve our service level, And we are quite transparent with that. We chose to to focus on the 1b corrections because this would give more support to the company, and this is very apparent in our current results, and we arrived at a very good level at 1b, but there's still a lot more to be done, but I can say that our stability is is good, and the quality level is also good, and our team is now totally immersed in our marketplace. So I what I can say is that there is nothing in technology that is available in other marketplaces in Brazil. That Via Varejo cannot have in the next 1, 2, or 3 quarters. I mean, technology is not a barrier. We have an excellent team. But on the other hand, there are several features that only and so what we'll do, we will then focus on these features and am available. Most part of all the competitors in the more in in marketplace do not have, you know, so such a vast capital or any most marketplaces don't have more than 20,000. So we're a step would be willing to sell all three key items at the Avaya. Most of them do not have their own credit operation and the same track history that we have in this world possibly available to our marketplace. And not only that, we have gigantic number of hits. And this will also be at the surface of marketplace. We have more than active users. And at first, all of that can boost marketplace. And after that, I mean, Once marketplaces boost it, this will generate a recurrency to view. Right? This is, like, win win situation in this earnings have had other opportunities to to gain with logistics services and many other things that are still in our pipeline and our radar. In most marketplaces, you don't have a bank as we do have here, which is totally driven by 80,000,000 customers that we have in our customer base. So what we're missing at marketplace it's, you know, enhanced technology. But once again, there is nothing available in the market that we could not have, you know, yourselves. We would be able to deliver that and to deploy that very soon and as we evolve, we would be more attraction, not only when people 3p. So our development driver is now 3p at the moment. Next question from Joseph from JP Nord. He wants to run the company's strategy to attract talents in technology and what are the main, challenges in terms of development looking for the next 3 months. Think somebody asked Alice in that same question yesterday. So the answer is right at the top of my head. In fact, I think good people attracts good talent. We have an exceptional team working in our technology area. Wellington have Alison have a great team with several levels. I mean, attack people. They love a challenge. They're driven by challenges. There were a challenge to transform. And then also given the company's potential considering what has happened in is yet to happen. This draw the attention of a lot of attack people. And we can't really see that being translated to the onboarding of new people coming to the, I think that when Yesterday, we decided to open 300 new positions and we are offering the possibility of working from home in 24 hours, we have been very successful. This is on the table of the success we are experiencing since, you know, 3 months ago. We want to to say, you know, I think before we just say, I was part of one of the largest transformation cases in the Brooklyn market. We are very enthusiastic and highly motivated to be part of this I don't know whether I forgot some part any other part of your question. Deliveries, I think, and develop. Next deliveries, this is very much aligned to the last slide of my presentation because I think It has a lot to do with the new apps from the other brands. We will put a lot of intelligence and our pricing management and, our inventory management. So as we get 500 cups, We embarked a lot of intelligence so that we can leverage inventory in a more intelligent way to the meeting hubs. To lower the cost of our logistics and we want to be to deliver quicker. We have to optimize offline and online and promote enhanced integration. We will intensify that if the reaching further. And this is I mean, pretty soon we will no longer look at where the customer is coming from. Because the the the sales draft in the brick and mortar store is placing the sales as well. All of our back office structure is being reviewed. We are making several deliveries in a very transparent way to all country. And this also has a lot of efficiency gains for her. And certainly, this represents a figure in type contact innovation with Brankley after this integration with us and after that big dive into our customer base. And this is just a bit of what I can tell you. There is more, but I can't to say everything now because I know that the competition is also listening. Next question, Roberto. Rubbing something there. What can we expect in terms of the behavior of brick and mortar stores after the third quarter and on? Thank you, Ruben, for your question. If I well understood, how can we plan the stores. Right? I think that strength that we have gained with the online, sales reps, the digital sales reps, showed us we have the ability of migrating consumers from channels and even from physical stores. So all retailers are constantly analyzing bigger stores footprints. This is in the DNA of all retailers that have physical stores. So keep on analyzing that footprint, but with some important pillars. The store that, has a relationship with consumers themselves and that has that relationship with consumers We'll check those. The stores that will be terrific, the last product, that is the last mile that reference to our little pet store, and I'll the store has a click and collect unit for consumers they buy online and pick it up, at the store, whether it be or one team. So this is going to define the review of our store's footprint, and we are constantly a lot. I think that, but I cannot tell you anything now. I just can tell you that we'd be reviewing our pipeline, based on these pillars. I think there is another there's a synergy here in this question. There are possible opportunities to buy a source or, real estate from competitors that maybe they're that are having a hard time in, in this pandemic. And if that could, be good for. Hello, Irma. Afternoon, and thank you for your question. Well, first, we need to go back to reactivating our store position plan. So analyzing these pillars that I just mentioned that that which are the the stores in the relationship with consumers. The stores are in the last mile and the stores for the people who like to, and we are then mapping some areas in Brazil where we need to to add stores. So we'll move on with our expansion plans for these areas. And we are always analyzing the situation. We are not considering, the purchase of any retailers. But, yes, we do have extra points of, sale or, physical stores that are available. There are opportunities on the table, and we are analyzing those with whatever makes sense for us to move forward with our expansion plan, and, we are analyzing these pillars. Next question from Gustavo, UBS. He wants to know whether there is still any potential to improve your gross margin looking forward. And what about the the loyalty program, something program, something to do, frankly, our cashback. We love to gain more margin. And we never rest our case when he comes to our margin. We are always pursuing more. Therefore, We are trying to be more efficient in many of our processes. And as I said, we are putting a lot of data scientists that work to improve the quality of our pricing decisions. And I think that all of that, you know, has an impact on profitability. And I cannot tell you precisely, you know, how much more we could improve, but something that it's an ongoing pursuit. Now in terms of loyalty programs, especially cashback programs, just to be very objective of cashback. It's a beautiful thing just to reduce margin and keep discounts. So this is the summary of the house that I guess and give out discounts. We don't think about doing that. I'm not have that in a range. Well, we do have an advantage because be, good enough margins that would allow us to do that, but we also believe that there are other other paths that can help us to add more cuts to our star base. And this is something we've been doing can see that if you look at the the results from the discorders. But right now, the company does not intend to do anything that could deteriorate its marches or that could, you know, some major discount. We still believe that there we have to focus on on growth with sustainability. And good continuity. Next question from Pedro from XP. He would like to hear a bit more about Bankway and how that fits into the long term strategy of your budget. Andrew, thank you very much for your questions. Well, I'm pretty fits perfectly well with our long term strategy. I believe that at first, we would generate a lot of customers to frankly because of our customer base. And secondly, I believe we also generated a lot of incurrency too, but my boy will have its own life that they will not depend on Via Varejo. We we hope that they will will, at the end, become a digital quality wallet of Brazilian seed class. We will be able to add a large number of services to that right of society. And obviously, what we have today is already a major differential to that regional society because in most cases, they do not even hold a banking account. Therefore, we want to be a digital wallet for these people because they already have a conversation with our stores. And, certainly, we can also benefit from that recurrency. And both organizations can run parallel. 1 can be the facilitator of the other. There's a last question here. Another question from Bob. Actually, it's a very nice topic. How do we see the potential of the digital payment book for the company in the future. And then if you want to make your closing remarks, I think we can end the call. Okay. Thank you, Bob, for your second question, and it's, really good. We see a very important avenue there. Every that we have built and that we have here again more credit operations is now available for digital from it as well. 90% of our credit ratings already under our digital automation process. And we concluded that there are no barriers to have a strong, credit operation in the digital area as well. And this is which potential to the company and the service level is inclusive for consumers that are coming in, to the online and they need, an amount of access, then we understand that better. So this is a great, important avenue for growth. In the online payment operations. Well, I would like to thank you very much. First thing with us. I know this was a longer call, but this was a very important quarter with excellent news transformation. I think we have, improved to 3 years 3 months here at the issue, but my message is that we are ready to go beyond retail when we wanted when we came here, we wanted to go back to the retail and then to have retail excellence, and now we are ready to go beyond retail. The future is open to us, and we'll keep on following you that execution a lot of focus, a lot of transparency, and great consistency in our deliveries. Will move on growing our view of addition. Thank you all very much for participating. Thank you.