Hello. Good morning, everyone. Welcome to our earnings call. As we speak about the results of our first quarter in 2023, I'm Renato Franklin. I joined the company on the 2nd of May in the beginning of this week. Obviously, as you all know, the entire C-level of the company and our IR team are here today, and they will be the ones delivering the results, and they'll be clarifying any possible questions. I'm still going deeper, and I'll be available as well to answer possible questions you may have on my decision to be here and what we're looking at up ahead. I'll pass the floor to Gabriel as he leads the Q&A session. Once again, thank you so much for your participation. Gabriel?
Renato, our first question is from Vitor Pini. Vitor, you may proceed.
Thank you, Gabriel, Renato, Padilha, Sergio, and everyone. Thank you. My first question goes to Padilha. We noticed a variation in the cash position of BRL 1.8 billion in the suppliers. I would like you to explain a little more about the nature of this adjustment and what we should expect up ahead of BRL 1.4 billion that we still see in the balance sheet, what the dynamic will be for cash effect on this line.
Well, thank you, Vitor, for the question. This is a short-term line. We had already considered this reduction in about 1.5% of the end of the year. What happened in the first quarter is very seasonal, it's natural, it's connected to working capital and funding the suppliers.
This reduction, due to the seasonality of the first quarter has a natural effect. The second effect is basically the conditions with the lower supply in this line, in the Brazilian credit line. A lot of banks stopped working with this credit facility, which impacted us as well. We still carry an important significant value. These lines are pretty much kept in our plan for the next quarters. That's an important line for funding suppliers. We're keeping this leap.
Sorry. Vitor, can you hear us?
Thank you, Padilha. Not sure if he heard that, but if he comes back, we can repeat it.
Okay. I would like to call Danniela Eiger for her next question. Dani, please.
Good afternoon, guys, thanks for taking my questions. First, I wanted to go deeper in working capital and connecting with this point with lower offer or supply. We know this is a moment with the anticipation of receivables. I wanted to know if this is a strategy you guys are using to mitigate or offset this lower facility available in forfaiting. Also there's an increase in the stock levels, and I don't know if this was some other movement you guys are trying to work on with an expectation for stronger demand. I wanted to know what your strategy is behind this stock besides at this moment.
I'd like to also take advantage of this opportunity to ask you about a more strategic perspective, which is, I know it's not that much time ever since you joined, but I would like to understand what your first impressions are about the company. This movement, this change you had, if you've defined some gaps or strategic changes now in the company at this point in time.
I'm gonna start off, Dani. Thanks for that. The forfaiting and drawee risk and credit card discounts are very similar. Both paths are feasible. The reduction of this discount for forfaiting or drawee risk, we decided to use more discounts from credit cards in this quarter. These stocks are a little bit greater, and we're already getting used to preparing for the seasonality in Mother's Day.
Yeah, sorry, I didn't mention it was for Renato, but yeah, exactly. Thanks, Dani, for the question. As you mentioned, very little time, five days only. What I could say is that in all of our due diligence process and our decision-making, what I reinforced on the video yesterday was that we consider Via to be a very unique differential with a very competitive operation, strong brands, a huge portfolio of customers, and a capacity to adjust the operation that's really quick considering the market scenario. This has allowed the team to deliver these results. In the conversations I've had with the team so far, when you add up this amount of hours, it's quite intense, right? We've been surprised positively, right?
There's a lot in the oven, a lot being built. It's important to mention also that this company went through a very strong transition where we had a team taking over with a big challenge to put it back on track. They made intense investments so that the company could have the portfolio of solutions and avenues for growth and deliveries to our customers. The company has an infrastructure that's ready, right? We do have fine-tuning to be done. There are important deliveries that need to take place, projects and operations, sales, and cost efficiency reductions that are underway, and they will be delivered. This increases our competitive advantages at Via.
When we look at the earnings in our first quarter, we can see that most of the strong points we have and the productivity in our stores, the deliveries that the stores are providing, this demonstrates the differentials. When you look at default being reduced, the NPL indexes, the coverage for aging, you can see that the know-how with the credit concession is very unique. What I most noticed that made me more excited was the people, right? It's a really good work environment. People are working in a very united and engaged way with a clear direction. My agenda, we're not gonna see any big drastic changes. What I'm here to contribute with is so that we can bring more discipline. People already have this focus, right? When it comes to capital allocation.
With all of these avenues for growth, we have major potential for growth. You can accelerate 1P, 3P fulfillment, solutions. Everything can grow, and the allocation of capital, understanding which returns we expect and how much capital we expect to allocate every quarter and every period, and then really taking care of the human system makes returns. This, of course, will help us to understand with greater clarity how this will impact our numbers up ahead. I'm super excited. Have positive surprises, really excited with how the company's been conducted. Of course, you have these adjustments, and we can bring in even more discipline and evolution up ahead.
This horizon up ahead is very positive because we've already finished that phase where we needed to invest a lot of cash, with most of the machinery, or tools that the team has at this point in time.
Okay, perfect.
Thank you. Thanks, Dani. Our next question is from Eric from Santander. Eric, you may proceed.
Good afternoon, guys, thanks for taking our questions. On our side, the first one, when we look at this credit and solutions area, we see that in the NPL we have relatively good numbers with the implement momentum. We just wanna understand what could be like a trigger that's a little better with more acceleration in credit granting. You notice any marginal improvements where you can identify some indicators could help with the credit granting more? When you look at the business and the competitive environment, especially when you see 1P in digital, we see this is still a challenging market, especially when you consider these products that require credit for consumption.
Considering this competitive environment with such a relevant player that's weaker, how have you looked at this from an overall perspective with 1P and the opportunities to have an important turnaround when we think about the first quarter and the slight drop, any kind of shift in the second quarter? Thanks.
Thanks, Eric. Thanks for your question. I'm gonna start talking about the credit indicators. Remember in the last call, I had mentioned that the first quarter of 2023 would have a reduction in our over 90 indicators in our provisions, which was complete. This is due to an issue with a change in strategies in our credit policies that we took place in the third quarter of 2022. When we started this, we noticed that the market was deteriorating, and we had two important adjustments. Up ahead, with the harvest in the third quarter, especially in September and more ahead, these have been performing very well, so we are comfortable up ahead. We know that the market and the situation of the Brazilian consumers are quite delicate, so we need to be careful about this.
We've been having some occasional credit openings. In this scenario we're facing, we can't joke around. We're really comfortable because so far things have been performing well, and we believe that the indicators are gonna be stable. Not sure who the second question was for.
Hey, Eric. Thanks for the question. About 1P. Considering the economic situation, nothing changed that much. Basically, we opened up sales in the same pace as the first quarter. We were having a big bet on Mother's Day, so we prepared very well, received more merchandise, and extended the terms. The month of May started really well. Even with e-commerce being really tough, we're still gaining share. We gained share in the first quarter, and we're gaining share in April, which was really good.
The market is still very tough, especially for higher ticket products.
Okay. Super clear, guys. Thanks for the answers. Thanks, Eric, for participating. Our next question is from Nicholas from JP Morgan. Nicholas, please.
Thanks, everyone. Good afternoon. I wanted to know about your initiatives from an expense perspective. What have you already done, and what do you think are the main initiatives you could work on throughout the rest of the year to help with your operational leverage? Thanks.
Well, thanks for the question. Good afternoon. Ever since last year, we have been working on some efficiency programs, and we already have been working on this for the past three quarters with the operations of the stores. Productivity has been pretty high.
There's big pressure still on inflation, sales have been having- growth below what they should be, which pressures the costs a lot. We have been working on a in-depth plan to review this structure. This goes through all of the areas in the company. We actually disclosed this. We already did part of this in the first quarter, the different work initiatives, which I consider beyond the administrative costs, also go through marketing, logistics, and corporation, and closings of stores and DCs that are not efficient. We're really quick on these plans.
The trend is that on the growth of these expenses compared to last year, took place due to a mix in the sales at the stores and sale related to the revenue that was really significant. The rest of the expenses are quite flat. We should go deeper in these initiatives with deployment of these initiatives during the year, and you should see this throughout the next quarters. It's gonna focus on the whole company, really. Thank you, Padilha.
Thank you, Nicholas, for your participation. Our next question is from João from Bradesco. João, you may proceed.
Good afternoon, guys. Thanks for taking my question. I have two questions, actually. One is about the dynamic for the revenue from services. What would be your diagnosis?
Are there any levers that you have been working on that should be considered? The second question is what your perspectives are for the capital improvements, and if we can expect any kind of changes or improvements that are more structural in regards to this part of the business. Abel will talk about the revenue for services.
The revenue for services, we lost a bit of it in the first quarter because of the what we can see that is really in line with the sales of the buy now, pay later, the Crediário. We've already recovered these at normal pace in the rest of the year. It's just a specific occasional situation based on major special sales in January.
You lose a bit of what you're selling with extended warranty that are also products that are being exhibited at the stores. We had an important shift of almost BRL 1.8 billion, and we shifted things around for the rest of the year. It was very occasional, and it's under control. Now about the working capital. João, we've already done some work that's very significant in the past quarters to bring and optimize the working capital and the stock front. This should lead to some significant continuity. Very intense rigor in working capital investments, and we should see this kind of balance from now on.
Okay. Perfect, guys. Thank you.
Well, thanks, João, for participating. Our next question is from Gustavo Fracchini from Creditas. Gustavo, you may proceed.
Hey, guys. How's it going? Thanks for taking my question. On one side here, one, we had a bit of a trough. On the other side, the store had a significant V. I wanna understand if you've looked at this migration a little more back to the store and if you continue to see this now in the second quarter. Thank you.
Gustavo, thanks for the question. We've been gaining productivity in our stores for many quarters. We have productivity with our sellers at the stores that are really strong, and we've been implementing new technology. Ever since we began with them, me chama no zap called me on WhatsApp, our sales reps are at the store, and so we've been gaining a lot of productivity there. Consumers have been getting back to the stores, but not at the same pace we were expecting.
What we're doing is an expansion of the productivity and capacity at the stores. Our stores have productivity that's a lot higher than our competitors. This is a big differential at Via.
Perfect. Thank you. Super clear.
Thanks, Gustavo, for the question. Our next question is from João Soares from Citi. João, you may proceed.
Good afternoon, guys, and thanks for the call. I think it's the first time we've been speaking with Renato, so I wish you luck, Renato, in this new position. I wanna take advantage of this opportunity to ask you about the strategy. We've been reviewing some notes on our first meetings with the previous management, and I think it's really important to understand some things. What's your relationship with suppliers today?
In the past, it was essential to recover a closed relationship, and I remember that at the time you wanted to continue the wholesale business, not have to confront the suppliers. Now with this softer competitive environment, I think there's even a question about this. I think it's important to understand how you look at this relationship today and how the role of this store manager is and if before he was focused on selling services, but now he's more focused on selling products. What's your understanding of the role of the store manager? Last but not least, I wanna understand the digital operation, how you've been managing this. What's your mindset like for the marketplace? We've seen an improvement of the take rate.
It's really important to understand how you guys are monetizing the business and what you're looking at, up ahead in the growth overall for the digital business. Sorry, a lot of questions here, but just wanted to give you a broader vision of all of this. Thanks, guys. I just wanted to thank him, but of course I'll let Abel talk about our relationship with suppliers and strategy. I don't wanna say anything stupid. Let me do my homework here. Next time we'll have greater in-depth knowledge to contribute more. Abel can answer about these for sure.
Thanks, João, for the question. Our relationship with Via and the suppliers is a very strong long-term relationship, and it's an important pillar in the company. We have strong partnerships, we've been working in the long term.
Everything we do, basically, we already have like a full year closed, with all the industries and the big numbers. The industry has three key as well. Selling directly just comes in as a long tail. Really strong partnership, and we don't have this kind of struggle from one side to another. We complement each other here in-house. The other question you asked, you had so many questions, so I forgot a few. Sorry about that.
No, I think I wanted to know about the role of the store manager. When we get back, we saw it's fundamental to the business. We have a lot more autonomy with the store manager when it comes to discounts, and this is something that remains. It's a fundamental piece of the business.
This is why we have very important productivity above average in the market. Financial services are really an important part of our results. As I mentioned, we had a drop in January due to the special sale where we reduced our stocks a lot, and we really wanted to prepare stock for the year. It was a real occasional situation when it comes to services. Services are definitely something that's super important. This is something that we continue to have strong. About 3P. 3P is mostly for recurrence. We get back to growing. In the past, we had strong 3P. We converted this last year to be able to really have this recurrence, and we're getting back to growing. We had a growth of double digits. We finished very well.
In the second quarter, we continued the same pace as the first quarter in 3P. It really complements our 1P. In our store today, we have basically our 20,000 sellers selling our 3P at the stores. We can fit products that were not part of our portfolio before, and the managers and sellers at the stores can fit this in their sales today.
Super clear, Abel. T here's one other point I wanted to cover about the B2B business. I saw there are a few opportunities to see some different platforms you could sell and intermediate other platforms as well. I wanted to understand how this has been analyzed by the company as an opportunity in the long run.
We have a very strong B2B. It's one of the lines that most grows.
We are working with different partners than we. This has really helped us increase our strength in the industry. I have a strong marketplace, some competitors, and you've seen this as well. This is a very profitable business line, and we've been growing a lot this year. I can give you more details about this, but it's a sales channel that's super important for Via today.
Thank you, Abel, and thank you everyone. Once again, good luck.
Our next question is from Andrew from Morgan Stanley, and he has a question in English, and we can answer in Portuguese. Andrew, you may go. Just a follow-up on the e-commerce operation.
Just some more detail on what you're seeing with the long tail and in relation to the marketplace, where you guys are now in relation to repricing. Can you hear me?
I think, I hope the translation is good. About e-commerce and the mix with 3P and the long tail ratio. Yes, due to seasonality between the moment we're experiencing in the quarter and we did notice better. A smaller growth of the long tail items than what we were having before. This doesn't change our strategic direction with the role of bringing this recurrence in this quarter. You also saw the growth rate of different long tail categories are really high in the previous quarter as well. Varied categories, and these diversify our source of revenue. We're moving towards strategic direction for 3P. We did have a moment where we were going through this different seasonal moment, of course this didn't change our strategy.
About the competitive environment, the take rates, I'm going to connect this to what we mentioned with greater penetration of services and a focus on the health and profitability of our 3P operation. You saw our take rate supported by greater penetration with logistical services and the buy now, pay later as well. You know that recently, three or four quarters ago, we started this operation with the buy now, pay later in the marketplace with a really big horizon for penetration. You're gonna see we're focused on penetration of these 3P services, which supports our profitability in the operation, while it also brings the strategic objective of allowing for recurrence.
Thank you, Andrew. Since we don't have any other questions, Renato, I'll pass the floor to you for your final remarks. I wanna thank you all.
Well, guys, thanks again. I wanna thank you all for your messages wishing me good luck. This is of course due hard work, and here we have a lot of that. There are some important differentials and João's question from Citi reinforces this a bit, right? People wanna understand how the company's assets have been performing and how quality is so much higher, right? Is our store manager unique? Well, the conversations I had during this month of conversation, I did visit some stores. You can see that there's a desire to really meet the customer's needs. It's really different. The relationship with the suppliers is long-term, but it's solid also. Via is a lead buyer in different categories, and there's strong reliance.
We can build this long-term alliance as well, focus on both. Today we have this complementarity of having this portfolio, the marketplace solutions, a buy now, pay later that's very strong, a B2B that works well. This gives us the conditions to optimize the profitability. Once again, I'm super excited. I just came in here, so I can't reach conclusions yet. They're still my first perspectives, but these are positive, and we have big opportunities. In each of the points we're looking at, we have a lot of opportunities we have to prioritize. We're gonna be prioritizing the execution a lot more so that we can really generate more value. This is what our agenda is, and I wanna thank you all for your presence. Soon we'll be back exchanging more information.
We have Mother's Day, don't miss out on the special sales. If you don't have our app, please download it. You can buy and perform like a purchase experience at the best store in Brazil. You can choose Casas Bahia, Ponto. We have different brands, and we have a lot of different products that have super valuable assets to the company. We count on you guys so we can expand our company and generate even more value. Thank you all. Have a great day.