Earnings Call: Q2 2025

Aug 13, 2025

Summary

Q2 revenue rose 1.7% YoY as advertising spend fell 25%; adjusted EBITDA stayed positive at BRL 3.6 million. Enjoei grew, while Elo7 remained under pressure and focused on efficient recovery.

Good morning, ladies and gentlemen. Welcome to Enjoei Q2 2025 earnings call. This is being recorded. You can have access to the replay at the company's IR website. Presentation is available for download. All participants will be in a listen-only mode during the presentation. We will then have a Q&A session. Before proceeding, we would like to make it clear that forward-looking statements regarding company's perspectives, projections, financial goals are based on beliefs and premises as well as information currently available to the company. Forward-looking statements are no guarantee of performance because they depend on future events and circumstances that may or may not occur. Ana Luiza McLaren, Chairwoman of the Board, Tiê Lima, IR, Tiê Lima, Joel Queiroz, and Angela Ferrante, our CFO. I would like to turn the call over to Mr. Tiê Lima. You may proceed now, sir. Good morning, everyone. Thanks for joining us today for our earnings call. In Q2 2025, we made meaningful progress across the business, with the Enjoei platform continuing to grow and demonstrating a strong ability to leverage costs more efficiently. Elo7 held steady quarter-over-quarter, but it remains an area of focus as we work to get it back on a growth track. Flat net revenue for the quarter isn't a sign of stagnation. It's rather part of a path we've already been working on. We've been taking a sharper approach on ad spend, creating room for growth to return in a more efficient way as our long-term initiatives mature. Looking at the numbers, net revenue came in at BRL 68.7 million for the quarter, up 13.1% quarter-on-quarter and 1.7% year-on-year. At the same time, we've cut ad spend by 25% this year, a clear sign of better marketing efficiency. Enjoei's performance really stood out. Net revenue grew 15%, while we brought ad spend down by 32%. This was driven by our focus on monetizing our customer base with GMV from repeat buyers up 18% year-over-year, fueled by a 9.5% increase in that buyer base and an 8% increase in GMV per user. At Elo7, revenue proved more sensitive to shifts in marketing spend, slowing in line with a 27% cut in ad spend. As a result, Elo7's share of consolidated revenue dropped from 38% to 29%, pressuring gross margin by 2.7 percentage points due to the shift in revenue mix. To address these issues, we're rolling out major upgrades to search and discovery on both platforms. For Enjoei, that means fine-tuning our incentive programs, driving margin efficiency, and encouraging sellers to upload more products and post more often. For Elo7, the focus will be on scaling media campaigns with smarter allocation of spend to get growth moving again. On the efficiency front, we kept both overhead and service costs steady, holding adjusted EBITDA margin at 5.3%, in line with prior periods and showing encouraging improvements late in the quarter. On the cash flow front, the combination of operating and investing flows delivered a positive net change of about BRL 1.9 million for the quarter. Operating cash flow was 229% year-over-year. On the investment side, CapEx was down 47% as a result of our organization Restructuring. We also saw a 34% increase in dividends from our stake in Cresci e Perdi. Together, these factors cut the capital allocated to investing activities by 76%. Finally, in terms of strategic progress in our offline segment, Enjoei's franchise expansion remains resilient despite a high interest rate environment. We closed the quarter with seven stores, five in operation and two in rollout phase, while working through leads from our recent participation at the ABF trade show. Cresci e Perdi continues to focus on operational efficiency and franchisee profitability. 14 new stores were added this quarter, bringing the total to 557 in operation. In short, we're moving forward with discipline, efficiency, and a long-term view. Now let's dive deeper into our sales metrics and transaction-level profitability. In Q2, consolidated GMV across Enjoei and Elo7 came in at BRL 412.6 million. That's essentially flat, up 0.6% year-over-year, reflecting our focus on marketing efficiency and disciplined use of incentives. Enjoei delivered solid results with net revenue up 15% year-over-year and GMV reaching BRL 326.6 million. This momentum was fueled by targeted initiatives, screening new sellers more effectively, improving sales conversion, and running incentive programs that have proven highly effective in monetizing our existing customer base. Elo7 ended the quarter with GMV of BRL 86 million, down 12.6% year-over-year. Performance continues to be affected by the maturing of our commercial strategy and a selective pullback in ad spend. This was a deliberate decision to cut spend now in order to pave the way for more efficient growth over the long run. Even so, we're already seeing clear signs of a rebound in Elo7's net revenue quarter-over-quarter, and we remain committed to steadily improving conversion efficiency. Lastly, our consolidated net take rate closed the quarter at 18.6%. That is a 1.6 percentage point improvement when compared to Q1. This reflects genuine conversion efficiency gains on both platforms and underscores the strength of our business model. Moving now to a key pillar of our business, our user base and inventory. In Q2, we processed 2.4 million items across both platforms, up 4.5% from Q1. This growth comes directly from a more engaged repeat user base, strengthened by consistent qualification and retention strategies. It's proof that we're building lasting relationships with buyers and sellers. Active buyers held steady at 2.4 million this quarter, reinforcing the effectiveness of our strategy to retain repeat customers. On the seller side, growth was even stronger, up 34% year-over-year. This sustained high-quality growth in our seller base shows the impact of the enhancements we've made to the selling experience and engagement. We're making it easier and more rewarding to sell on our platforms. Of course, more sellers means more inventory. Listed items grew 6%, with 16.7 million products added by roughly 1.7 million sellers in this quarter alone. This shows our platform liquidity is solid and working efficiently. Let's turn to the growth of our Enjoei franchises. We were pleased to open another unit, the first in Rio de Janeiro, which in its first month exceeded sales expectations, clearly showing the potential and the demand for our offline model. With this opening, we ended the quarter with five stores in operation and two more in the pipeline, one in São Paulo and another one in São José do Rio Preto. This progress reinforces the resilience of our strategy, even in a high interest environment. We also made our debut at the ABF Expo. This was key to solidifying our presence in the franchise market, showcasing a well-structured business model that combines the strength of our online technology and ongoing franchisee support. We're now following up on the promising leads from that event, which gives us confidence this path will keep on delivering strong results. Moving on to our investment in Cresci e Perdi. The business continues to perform well. We added 14 new stores this quarter, bringing the total to 557. That's robust growth, reinforcing both our strategy and our operational efficiency in driving franchisee profitability. Net revenue was BRL 15.4 million, down 6% quarter-on-quarter. That said, EBITDA margin remained high at 61%, preserving profitability and cash generation. We also recognized BRL 200,000 in equity income from our 25% stake in the company. The decrease was directly due to this quarter's dividend distribution, which is positive, as it means the business is generating cash and returning value to shareholders. With that, I'll turn the call over to Angela, who will walk you through the progress of our financial results. Thank you, Tiê. Good morning, everyone. I will now detail the key financial indicators for the quarter, focusing on profitability and the improvement in operational efficiency. In Q2 of 2025, our net revenue was BRL 68.7 million, up 1.7% year-over-year. Enjoei stood out with a 15% increase in net revenue, reaching BRL 48 million, the highest level in recent years. Elo7 posted a 23.9% year-over-year decline, but showed a slight recovery quarter-over-quarter, driven by adjustments to its commercial policy, including changes to freight and installment subsidies. On to costs now. The cost of services provided, excluding physical stores, totaled BRL 30.3 million in Q2 2025, remaining proportional to the net revenue versus the same period last year. This demonstrates our discipline in management, even with the cost levels of the Enjoei and Elo7 platforms remaining stable compared to Q2 of last year. There was a slight transactional impact from the increase in interest rates and the unit cost of freight at Elo7 due to its subsidy strategies. The BRL 1 million change in the physical stores line reflects the integration of the management of Enjoei-owned stores. Consolidated gross profit reached BRL 37.3 million in Q2 2025, up 8% quarter-over-quarter. Consolidated gross margin was 54.3%. Individually, Enjoei stood out in gross profit with a 16.3% year-over-year increase driven by net revenue growth, higher transaction approval rates, and efficient incentive management. On to operating expenses. We maintained strict discipline. General and administrative expenses, excluding SOP, amounted to BRL 23.6 million in Q2 of this year, an improvement of 1.5 percentage points compared to Q1 relative to net revenue. Recurring G&A decreased 5.6% quarter-over-quarter, ensuring a healthy level of expense dilution. I highlight the 10% reduction in salaries and benefits quarter-over-quarter, and the 13% year-over-year drop in technology expenses, reflecting the efficiency of the business area and austerity in management. Advertising expenses were cut by 25% year-over-year. A significant decrease, reducing dilution by 5.2 percentage points relative to net revenue. Enjoei cut spend by 32%. On the other hand, Elo7 reduced by 28.1% versus the same period of last year. We continue to improve the efficiency of resource allocation for acquisition and retention with expense dilution remaining well controlled. As a result, adjusted consolidated EBITDA was positive and steady at BRL 3.6 million in Q2 of 2025, despite challenges at Elo7. The majority contribution came from advances at Enjoei with a 15% year-over-year increase in net revenue and strong diligence in reducing ad spend. Finally, operating cash flow remained positive at BRL 6.1 million this quarter. A significant improvement versus a BRL 4.7 million outflow last year. Investments fell 76% year-over-year due to tighter CapEx control and organizational Restructuring. This quarter, we generated BRL 1.9 million in cash, and cash and equivalents totaled BRL 198.6 million at the end of Q2 2025. In summary, we remain steadfast in executing a lean, scalable and financially sustainable model. The consistency of our indicators shows the path is well set. Cost discipline, thoughtful capital allocation, and a clear focus on margins. I now hand it back to Tiê for his closing remarks. Thank you, Angelo. Looking ahead, we remain confident in the consistent growth of Enjoei's GMV and revenue. As for Elo7, we are taking a more cautious stance, sharpening investment allocation with the goal of accelerating growth sustainably. We've already reviewed our headcount and made adjustments to the team. As a result, we expect further dilution of payroll expenses over the coming quarters. Our advertising policy remains guided by a spend cap relative to net revenue, always focusing on maximizing allocation efficiency. Our core objective is to maintain an EBITDA margin that supports positive cash generation, essential for efficient capital allocation to sustain investments over the medium and long term. We'll keep on strengthening our platforms with projects that increase liquidity and reinforce user frequency. Enjoei's physical stores have been a very positive part of this strategy. The Rio de Janeiro opening is exceeding expectations, just as we saw in Goiânia. It's proof we're consolidating learnings and laying the groundwork for increasingly resilient expansion. In closing, I'd like to express my heartfelt thank yous. Thank you for all your time and for the interest in learning more about our results. We'll now begin the Q&A session. If you'd like to ask a question, please press the button raise hand or send your name and company in the Q&A chat box. Laryssa Sumer from XP asks the first question. Good morning. Thank you for taking my question. We have actually two questions. First is about Elo7. This has actually stood out in the quarter. You've said that you are resuming investments in marketing, but when do you expect that recovery from happening? What are the results or the expected results of these initiatives? I have a second question. I would like to hear more about the Cresci e Perdi performance. A slight decrease on that historical data. Is it something, a one-off event, or is it more structural? What can we expect on that front? Thank you. Thank you for your question, Laryssa. Let me address the Elo7 question first. When you see that revenue drop was even above than the investments in marketing, we already have that contracted efficiency, but that's not enough. We've been investing in the quarter. We want to stabilize that before we expand. We are already seeing some more promising signs. We don't want to speed things up. Ad spend and net revenue, that's our metric. We are already seeing some promising signs in that direction. We are having the roadmap for Elo7 as a product. It's a personalized purchase. We have to use AI, something along those lines to help sellers generate more leads. We have a very specific roadmap to improve the Elo7, but the focus is to dilute ad spend to have the system more efficient overall. Onto Cresci e Perdi. We had one-off expenditures for the quarter that impacted EBITDA. As we said before, it's not going to be a quarter to expand in the number of stores. That revenue suffered the biggest impact. But when you look at the revenue from royalties, that remains very strong. One-off spends that impacted the quarter, I believe will still move along in the next quarter, but Q4 onwards, things will pick up. It's a strategic decision. We don't want to speed things up too much in our expansion before we properly address the existing franchisee base. It's a matter of revenue composition. That was very clear. Thank you. Victoria Antonello from JP Morgan asks the next question. Good morning. Thank you for taking my question. I have two, actually. The first one is about the marketing line, a major drop in the quarter following the trends from previous quarter. What's the outlook for that line in the coming quarters? That line will be stable when compared to the net revenue. In the case of Enjoei, that margin will remain stable. We'll keep on growing based on the customer base and increase investments to acquire new customers throughout the year. But once you have that recurring and active customer base, that will support more investments to acquire new customers, not jeopardizing that ratio between ads and net revenue. On to Elo7. We believe that part of that is spend in advertising. We've seen a more significant reduction when compared to the revenue. We may see more investments in ad, not as substantial, because we have more efficiency in scale when maybe spending a little bit more in marketing. But we want to maintain that marketing net revenue ratio in both cases. This is the metric we'll always be using once we decide as to how much we invest in marketing. Margins overall were more of a recomposition of the contribution of each one of these units. In Elo7, margins was stable year-over-year. I mean gross margin. At Elo7, the same thing happened. But in case of Elo, the margin was bigger. The composition is more related to the mix than a depreciation of the margin overall. That was very clear. Thank you. Matteo Suarez from Market Makers submits a question in writing. "I have three questions. At Elo7, you talked about signs of stabilizing the revenue. What are the operational metrics, conversion, active base, new sellers that will indicate that uptake in second half? The 18% GMV growth, is that 18% GMV growth sustainable? Can you collect or capture more buyers, not jeopardizing marketing efficiency? Restructuring reduced salaries by 10%. What additional impacts do you see for the second half of the year?" I can't see the question. Let me address the Elo7 question first. Well, that stabilization, just like the previous question. Investments in marketing keep positive ROI. But the most important metric is the dilution of the acquisition costs for both media and customers. The ROI remains stable. We'll be able to resume investments in a more efficient fashion when compared to that of last year. Now I can see the questions. Just bear with me for a second. Can you repeat the question, please? Here's the second question. The 18% GMV growth, can it be sustainable? Is there room to capture more buyers, not jeopardizing the marketing efficiency? Yes, we believe it's very sustainable because the repeat user base has grown. Their seller base has been growing. Inventories remain stable. We're using the demand from repeat buyers to strike a balance between supply and demand. There's room for growth, both in the repeat user as well as to acquire new buyers. We remain very confident in the second part of the question, not hurting marketing efficiency. This structuring of salaries and benefits, there are no major additional impacts for the coming quarters. The stronger impact was here on expenses, and we've seen a more significant reduction in operation. CapEx and capitalization efforts were stronger, but that should remain stable onwards. Caio Loureiro from Unirio. "Good morning. Can you elaborate on non-recurring expenses for the rest of the year?" Non-recurring expenses have already been stabilized. The biggest one was the payroll adjustment, but there aren't major variations expected for the rest of the year. This concludes the Q&A session. We'll turn the call over to Mr. Tiê Lima for his closing remarks. Thank you for coming to our call. This was a stabilization quarter. It's only natural in the history of a company. Of course, we had some roadblocks along the way, but it's only natural they would happen. We still have a lot of room to improve. The team will continue to keep working hard to deliver results as we have been doing in recent years. Thank you. Well, this concludes Enjoei's earnings call. Thank you all for attending, and have a great day.