Earnings Call: Q1 2025

May 9, 2025

Summary

Record insurance issuance and growth in net revenue, EBITDA, and net income marked Q1. Management expects continued growth while navigating high rates, the Promotiva recovery, and selective capital deployment.

Good morning, everyone. Welcome to Wiz Co's video conference for the results of Q1 of 2025. For simultaneous interpretation, this tool is available through the interpretation globe icon located at the bottom center of your screen. Once selected, please choose your preferred language, Portuguese or English. For English-speaking attendees, there's an option to mute the original Portuguese audio. Simply click Mute Original Audio. After the results presentation, we will begin the Q&A session. To participate, send your question using the Q&A icon on the platform, and it will then be answered by the Wiz Co representatives. If your question is not addressed during the video conference, the IR team will follow up with you afterwards. Before we continue, we would like to clarify that any statements made during this conference relating to Wiz Co's business outlook, projections, operational, and financial goals reflect the company's management current beliefs and assumptions, as well as the information currently available. Forward-looking statements are no guarantee of performance and involve risks, uncertainties, and assumptions as they refer to future events and therefore depend on circumstances that may or may not occur. Investors and analysts should understand that general conditions, industry conditions, and other operational factors may affect Wiz Co's future results and may lead to results that lead materially from those expressed in such forward-looking statements. Introducing the Wiz Co team. Joining us today are Mr. Marcus Vinícius Oliveira, CEO, Mr. Lucas Neves, CFO and IR Officer, and Mr. João Resende, Investor Relations Manager. Now I will hand it over to Mr. Marcus Vinícius, who will begin the presentation. Please go ahead, Mr. Marcus. Good morning, everyone. Welcome to our first quarter of 2025 earnings conference. Before handing it over to Lucas, our CFO, I'd like to share a brief message with you. We began the year focused on our priorities and ended the quarter aligned with our consistent growth strategy. The results you'll see throughout this presentation bring us great satisfaction and reinforce our conviction that we are on the path to solid and sustainable growth. Once again, we've shown Wiz Co's ability to skillfully navigate turbulent macroeconomic scenarios. This is why we remain committed to leveraging our proprietary technology as a competitive advantage, as well as ensuring profitability and capturing synergies across the group's various businesses. I'd like to begin talking about the results celebrating major milestones. We reached the record insurance premium issuance in a single quarter, hitting 976.2 million on Q1 of 2025. This is a result 50.9% higher than the same period last year. In terms of credit and consortia distribution, results were also positive, and we ended the period with BRL 3.6 billion, in line with the same period of 2024. This consistency has contributed to our consolidated EBITDA closing at 179.5 million, 13.7% higher than the same period last year. Our consolidated net profit was BRL 84.1 million. This is 25% above the same period of 2024, while the parent company's net profit was BRL 46.7 million at 24.4% growth when we compare it to the same period of 2024. Now, in our insurance vertical, we reached a consolidated net profit of BRL 81.9 million this quarter, a result 43.4% higher than Q1 of 2024. This performance reflects the excellent work of our business units pursuing results with their own strategies. Highlights include BMG Corretora with Corporate and Inter Seguros, which once again showed strong portfolio growth and now boasting an impressive 8 million active contracts. In the credit and consortia, we closed the first part of the year with BRL 40.6 million in adjusted net revenue, 14.1% higher than Q1 of 2024, with Wiz Parceiros standing out by growing 88.5% in this metric. In EBITDA, we reached BRL 25.2 million, 21.3% above the same period last year, showing a pathway of expansion in a highly attractive consortia segment, especially considering current bank credit rates. We ended the first of our four earnings reports for 2025 with good reason to celebrate. We extended our debt repayment schedule with a second issuance of debentures worth BRL 300 million, reducing our financial cost from CDI plus 2.5% to CDI plus 1.9%, which effectively lowered our cost of servicing debt. In addition, we maintained strict cash management and stayed closely connected to our proprietary technology platform, Wiz Pro, which continues to evolve. I want to express my deep thanks to all Wizards. None of this would be possible without you. I also thank the members of our board of directors, committees, and shareholders. We have a solid foundation to reap good results throughout the year and to navigate whatever lies ahead. I am proud of our performance. Thank you very much. Now over to you, Lucas. Thank you, Marcus, and good morning to everyone. I will begin the financial presentation with slide number 3, where we will talk about the main events and operational and strategic highlights. I'll start by highlighting the progress of Wiz Pro, the Wiz Co's proprietary technological platform. Throughout Q1 2025, we made progress in the four components of the platform. Sales, operation, management, and engagement. In total, we have six business units using the system in their commercial routines. In the sales module, we advanced the sale of mechanical warranty product and enabled the sale of assistance products in non-logged area, while still ensuring sales were registered in the CRM and portfolio management. In operation, we enabled batch data update, including opportunity status and credential products and management. We improved usability, simplifying routines, and optimizing the commercial team's action. Finally, in engagement, we advanced in configuring and developing functionalities related to campaign missions and badges. Moving forward, we concluded the second debenture issuance in BRL 300 million with maturity schedule for 2030. This extended the company's debt payment schedule and reduced the financial cost from CDI plus 2.5% to CDI plus 1.9%, lowering the cost of servicing the debt. This reflects the company's solid resource management and consistently guides us toward a future of strong results. Now, we will highlight that Q1 of 2025 was marked by the largest insurance premium issuance in our history, totaling BRL 976.2 million in premium issuance, a 5.9% increase over Q1 of 2024 and 4.6% higher than Q4 of 2024. We highlight the performance of BMG Corretora and Inter Seguros, which grew 41.2% and 75.5% respectively, compared to Q1 of 2024. This growth strengthens and scales our position in the market, increasing our relevance. To close this slide, I'd like to highlight Inter Seguros' performance, which delivered the best quarter in its history, surpassing other quarters of excellent results. The company reached a gross revenue of BRL 81.8 million, 56.3% above Q1 of 2024. Net profit also rose to BRL 28.9 million, a 41.8% increase year over year. The base of active contracts now exceeds 8 million, up 50.9% from Q4 of 2024. This winning business model has helped solidify our leadership in the segment. Now to slide 4. Here we have the financial highlights of Q1 of 2025. We registered BRL 259.2 million in net revenue, an 11.9% increase over Q1 of 2024. Excluding the run-off revenue from Caixa, we are talking about BRL 211.2 million in net revenue, a growth of 16.7% year-on-year. We saw consistent progress in insurance revenue, which grew 22.5% year-over-year, and in the credit and consortium revenue, which grew 14.1% compared to Q1 2024. As previously mentioned, we had a record insurance premium issuance in a single quarter, reaching BRL 976.2 million, 15.9% above Q1 2024. On slide 6, the summary of consolidated results. In Q1 2025, the EBITDA was BRL 179.5 million, 13.7% from Q1 2024, due to the strong commercial performance of our units, now consolidated net income. Well, this increased 25% when compared to the same period last year, totaling BRL 84.1 million, driven by the operating results. The net income attributable to the parent company shareholders was BRL 46.7 million, 24.5% higher than Q1 of 2024, plus BRL 9.2 million, driven by EBITDA performance. Now, in slide 7, we see the adjusted considerations. In our adjusted view this quarter, no EBITDA adjustments were made. For net income, we adjusted for non-recurring and non-cash effect below EBITDA. Notable adjustments include depreciation, amortization, and impairment totaling BRL 26.2 million, mainly for amortization of intangible assets from the acquisitions of BRB Seguros, Promotiva, and other business units. We also recorded a write-off of BRL 3.2 million related to Polishop Seguros, reflecting a provision for a loan loss granted in August of 2022. In financial results, we adjusted for present value adjustment, PVA, of future acquisition installment payments, BRL 6.8 million, monetary adjustments of acquisition payables, BRL 3.1 million, and partially offset by foreign exchange gains and financial instruments, minus BRL 3.2 million in income tax and social contribution. The values reflect the tax effects of the above adjustments. Thus, we ended the quarter with an adjusted net income of BRL 108.3 million, up 5.5% compared to Q1 of 2024. Now, slide 8, we assess the composition of the parent company's result. In Q1 of 2024, the parent company posted EBITDA of BRL 82.5 million, up 24.5% over Q1 of 2024. This result was driven by strong commercial performance across multiple business units reflected in the equity pickup MEP. Now, in the first quarter of 2024, the parent company posted BRL 54.3 million in MEP, up 59.3% or BRL 7.8 million over Q1 2024. In net income, the parent company reached BRL 46.7 million during Q1 of 2025. This is an increase of BRL 9.2 million when compared to Q1 2024. This result was driven by solid commercial performance of the company's business units. Now on slide 10, we can see the results per segment. The reconciliation between segments and consolidated results is available in the appendix and earnings release. In Q1 of the year, 81% of the net revenue came from ongoing operations in the insurance segment units and accounted for 58% of this ongoing result. We continue to see a strong trend of revenue diversification alongside continued growth. This performance is driven by the company's focus on delivering strategic objectives. Now on slide 11, we continue presenting the operational performance by segment, starting by the insurance segment. During Q1 of 2025, we reached BRL 150.8 million in net commission revenues. This is 22.5% above Q1 of 2024. This is a good performance in a number of segments. The highlights include BMG Corretora and Wiz Corporate, that grew 32.6% in the same comparison. I would like to highlight Inter Seguros, which earned BRL 54.3 million in net revenue, a growth of 49.6% regarding Q1 of 2024, and contributed to BRL 10.5 million in Wiz's results. Finally, Paraná Seguros, which totaled BRL 20 million in gross revenue during Q1 of 2025, added BRL 4.4 million in MEP of Wiz. Now, slide 12. Here we see the units in credit and consortium distribution. Promotiva and Wiz Parceiros, we totaled BRL 40.6 million in ex-revenue, ex-commissions and credit and consortium. This is a growth of 14.1% vis-a-vis the same period last year and an EBITDA of BRL 25.2 million, 21.3% increase vis-a-vis the same period last year. This shows the good results of Wiz Parceiros with a growth of 88.5% when compared to Q1 of 2024, reaching BRL 12.3 million in net revenue, ex-commission, and issuing BRL 0.9 billion in credit and consortia, 30% above Q1 of 2024. It's relevant to note Promotiva, which posted BRL 28.3 million in net commission revenue, minus 2.7% vis-a-vis Q1 of 2024, representing 69.9% of the consolidated result of this segment and impacted by the INSS payroll loan block imposed by Banco do Brasil. On slide 13, we have the service segment made up by Wiz Concept and Run-Off Caixa network. On Q4 of 2024, we had a net revenue ex-commissions of BRL 10.8 million, down 12.8% of BRL 3.1 million. The unit closes the period with an EBITDA of BRL 12.8 million, BRL 1.6 million above Q1 of 2024, an expansion of 8.4 percentage points of EBITDA margin, and with an EBITDA margin of 13.3%, maintaining focus on profitability. The Run-Off Caixa network, here we have the stock of revenue of the sales carried out until February 14 of 2021, which contributed BRL 45.5 million in EBITDA, down 5.1% from Q1 of 2024 due to natural revenue decline. Now, slide 14. Here we have the main points regarding the corporate and below EBITDA items on Q1 of 2025. G&A expenses for the corporate segment total BRL 13.7 million or BRL 4.8 million higher than Q1 of 2024 due to seasonal expenses when you compare it to the same period. Now, minus BRL 4.1 million loss in other income and expenses is due mainly to capital losses from investees. Finally, during Q1 of 2025, we recorded an effective tax rate of 35.8%, mainly due to non-deductible expenses such as PVA and capital losses. Now, slide 15. We show our cash flow composition for the quarter. We closed the quarter with a cash balance of BRL 438 million. Cash flow of BRL 168.4 million was driven by the second issuance of simple debentures of BRL 300 million in February and operating cash generation partially offset by dividend payments. In financing, the BRL 55.9 million flow includes the principal of the second debenture issuance in February of 2025 of BRL 300 million net of issuance cost and repayment of the first debenture issuance principal, BRL 225 million, plus interest, BRL 18.3 million. In the quarter, we also paid BRL 18.2 million in dividends to non-controlling shareholders of our subsidiaries. Now we bring to an end the presentation, and we will initiate our Q&A session. Thank you. Now, I will give the floor to João Resende that will initiate the Q&A session. To participate, send your question through the Q&A icon in the platform and will be answered by our present officer. João, you have the floor. Good morning. To count with your participation, should you wish to pose questions, please fill that is we have our Q&A box. Marcus, I would like you to answer a question regarding Wiz Co's expectations for the future. The investors have said that the interest rates continue increasing, and they want to know how we will position ourselves from here on and your expectations for the upcoming quarters. Well, good morning to everyone. It's a pleasure to be here with you. Well, the expectations we have realized that a number of units are like BRB have a more cadence in terms of pace. On Wednesday, the Copom increased the interest rate to 14.75% a year. Now, for some time, we have been navigated in high interest rate scenario, but we've shown consistent results. We would like to remind you that 2024 was not an easy year. Our Selic was high. Now, regarding the mid and long run, our vision is the following. There is a scenario where interest rates increase, where restricted credit supply, but we have to specifically analyze the banks that make up our results. Therefore, we do not analyze the market as a whole. We see our niche. What does this mean? BRB, BMG, Inter, Paraná, and Omni. This shows the true result, and origination expectations end up being positive. In addition to this, we have followed a strong avenue of growth regarding other channels and other product offerings that our business units have focused on. We've improved products, we've improved journeys, we have made progress in our performance and penetration. Also, we also see that the institution's commitment regarding the result that makes up of this, the insurance results of these institutions, they are extremely committed. So we see a result coming, although we will have to face a number of difficulties. This is a positive message in this sense, and there is no doubt that as we did in 2023 and 2024, we will do the same in 2025. I hope I was able to answer your question. Thank you, Marcus. Now, Lucas, I have a question from Ricardo Bacigalupo from BTG Pactual. He says that the maturity of the contract of Promotiva is in 2027, and that during our last contract, we signed a partnership of BRL 80 million. Are there discussions to renew this contract? If the duration is 5 years, should we consider the value that was agreed in 2022? Ricardo, thank you for your question. It is important to show how important Promotiva is in the Banco do Brasil PF structure. Last year, Banco do Brasil developed BRL 2.5 billion. They originated over BRL 7 billion of credit. There are 30, 40 agreements that we service in Promotiva, and that we have under BRL 120 million in channels. So the bank is more concerned with the relevance. How can we impact this channel in a relevant fashion? How we can increase our relevance and the acquisition last year was to buy Promotiva from the BV Bank, not Banco do Brasil. We've been talking to them. The contract will mature in 3 years. It will end in 3 years. But the value that you generate for the bank is much more important than a check. So what we have focused in the past 3 years has been to generate a lot of value to this chain. We increased our penetration in less relevant agreements so the bank can sell credit to agreements that aren't as relevant. We can talk to correspondents and what we're doing, we're meeting the needs of the bank, that is to have a more relevant channel. Another question regarding private consignment. Could this drive the premiums of lenders' premiums in our subsidiaries? If possible, when can we see this? We are very excited with private consignment. We believe that it's a good credit line for the Brazilian market. Perhaps not all banks. That has been our view that in the past 60, 90 days, all the banks were testing the functionalities. They wanted to see how the tool worked. There are some units that have focused more on this matter. It's too early to see in our channels. The partners of the bank are trying to understand the program. Remember, it started with digital hiring, and now there's physical hiring. You can do this through bank correspondence and branches. We expect to see a result throughout this year. This will not change the look and feel of Wiz, but this will change gradually, and this will be a new revenue line because if the client uses the bank, use it and our insurance product will adapt to this new product. Marcos, now a question from William Barranjard from Itaú BBA. He wants to know about new partnerships and with the cash that Wiz has generated, will we look for new partnerships? Anything under the radar? Thank you, William, for your question. Yes. We have focused our energy on four major fronts of our business. One would be the optimization of the profit of our business. Two would be to strengthen our competitive advantages through proprietary technology, that is Wiz Pro. Three, generation of new businesses. Restlessly, we've been focusing on this and for proprietary sales because we want to originate businesses within the group. Our cash position currently is extremely comfortable. An excellent job was done by Lucas because he reduced our debt in such a way that today we would be able to think about an inorganic growth. We deleveraged our business at around BRL 387 million to BRL 387 million. The result is a drop of BRL 178 million when you see Q1 of 2024. So if we focus on this throughout time, you can see that we have dropped significantly. Yes, we would be able to carry out investments. Despite all of this, we can only highlight that we will only achieve the inorganic strategic growth if we see a target called a saddled horse, because when you see the rates and when you see our price in the exchange, we have to be very careful when we carry out these type of investments. This has to be something that makes sense and that matches our core and our pursuit for result. There is a study that demonstrates that we have more or less 30 or 40 business opportunities that have been cataloged that would fit our business. Now, does this mean that we're going to materialize this? Well, not necessarily, but this does not mean that we are abandoning these opportunities. It is a matter of opportunities. It has to be something that adds a lot of value to our company. In a nutshell, yes, we have the conditions to invest inorganically, but this will be done very carefully because this is something that this moment requires. Thank you, Marcus. I have a question for Lucas regarding Promotiva and private consignment. Now, Promotiva, William wants to know about the INSS consignment block. How will we see this line in the upcoming quarters? Are you dialoguing with Banco do Brasil to resolve this? Just in a matter of context, Promotiva does not only sell INSS, it has other. INSS accounted for 20% or 25% of Promotiva's production in the Banco do Brasil channel. We had this block since the end of last year till March. The bank is operating as a bank corresponded. We are not back to our past levels last year. I believe that the recovery will be more gradual. What was positive was that in the past three years, we worked with other agreements. We were able to replace an important part of the INSS drop, and now we have had a gradual recovery in April. Yes, we have been able to replace part of this. You can see this in our net revenue. We will see an improvement, but during the second quarter, the levels will not go back to the same levels last year's. Lucas, Ivo Silva, an investor, he wants to know if the company has a payout forecast in the future like other insurance companies, and what about the penetration of other institutions in the insurance industry? I think Marcus answered this. I believe that Marcus answered both questions. How we will use the surplus of the companies you talked about M&A. Well, there are four pathways to follow. One is to pay the debt of our business. This is the option that we used in the past two years. We dropped almost 15% our cost, a CDI plus 2% each cash real generated. We have a 60% result. It is difficult. This was what we decided to follow in the past two years. We have improved a lot our capital structure. We have a cheaper debenture, and we have been able to reduce the company's financial expenses. There is cash and expenses to drop. M&A, share buyback or increased payout. As Marcus mentioned, M&A has to make a lot of sense because there is an opportunity to deleverage, and this cost is 17%. This is something where Wiz can clearly contribute and something that will increase our channels. This is the M&A, this is the type of M&A that would be interesting for us. Now, regarding payout and buybacks, the discussions regarding capital use, they take place now because Integra consolidated their participation in our control block, and our board of directors changed like 20 days ago, and we will conclude this with the board perhaps during the next quarter, and we will give a clear response in the market regarding what we will do in terms of capital allocation. Evandro Medeiros from Suna wants to know about the current SG&A levels of the ad. Is there space for more gain in expenses? As I am, each real that I save in expenses gives me a 17% return. For eight consecutive quarters, we have been reducing Wiz's headcounts. We have been restless for profitability. Our main agenda is not to cut costs. There are partnerships, new products that we can launch, and this is a way to grow consistently our profit. If you analyze last year's administrative expenses, this year was more or less this year. If we have a growth agenda, this will be the normalized level for the upcoming quarters. Now, if the credit scenario is more difficult, we will reduce things a bit. This doesn't change our bottom line significantly. When Hernandez Ferreira, the investor, he wants to know about CapEx perspectives for 2025, anything under your radar. Hernandez, if you see Wiz's CapEx history in the past three years, gradually, we have dropped our CapEx investment because we have acquired less and the channels are maturing. As a group, we spend BRL 4 million or BRL 5 million in CapEx per quarter, and this is a level lower than in the past quarter. In 2025, we will reduce our CapEx. This is something that we saw 2024 vis-a-vis 2023. As our businesses mature, we need to invest less in them. Thank you, Marcos, Lucas. We have no further questions in our chat, so I thank everybody for your participation. Thank you very much, and we expect you during our next earnings result call. Thank you very much. Thank you. Wiz Co's conference call has come to an end. We thank all of you for your participation, and have a very good day.