Earnings Call: Q4 2024

Mar 21, 2025

Summary

FY24 gross revenue reached BRL 1.9bn and EBITDA BRL 686m, both records; net profit rose 25.8%. Growth spanned insurance, credit, and consortium, while 2025 priorities center on deleveraging, efficiency, and proprietary channels.

Good morning, everyone. Welcome to Wiz Co's video conference on the results for the fourth quarter of 2024. For simultaneous translation, the tool is available in the globe icon named Interpretation, located at the bottom center of the screen. When you select it, choose your preferred language, Portuguese or English. For English listeners, there is the option to mute the original audio in Portuguese. Simply click Unmute Original Audio. After the presentation of the results, we will start the Q&A session. To take part, send your question via the Q&A icon on the platform, which will then be answered by the Wiz Co's representative. In case your question is not answered during this video conference, the Investor Relations team will contact you later to answer your questions. Before proceeding, we would like to clarify that any statements made during this conference call regarding Wiz Co business outlook, projections, operating and financial targets, constitute beliefs and assumptions of the company's management, as well as information currently available to the company. Forward-looking statements are not guarantees of performance and involve risks, uncertainties, and assumptions as they refer to future events, and therefore, depend on circumstances that may or not occur. Investors and analysts should understand that general conditions, industry conditions, and other operating factors may affect Wiz Co's future results, leading to results that differ materially from those expressed in such forward-looking statements. Including the Wiz Co team here with us today, we have Mr. Marcos Vinicius de Oliveira, CEO, Mr. Lucas Neves, CFO and Investor Relations Director, and João Resende, Investor Relations Manager. I now turn over to Mr. Marcos Vinicius, who will begin the presentation. Please, Marcos, you may proceed. Good morning, everyone. Welcome to our conference for the results of the fourth quarter of 2024. Before turning over to Lucas, I would like to share with you the results. We closed 2024 very proud of our achievements. The feeling is that we have accomplished a lot, and the figures you will see throughout the presentation represent records on several fronts and reaffirm our commitment to the consistent growth of our business, consistent with what we have been doing. We have kept a tight rein on cash management and progress in generation. We have been disciplined with our costs and haven't stopped investing in proprietary technology because we know that this is our guiding principle for the future. We also know that 2024 was full of macroeconomic uncertainty and geopolitical tensions. However, we were able to navigate this adverse scenario and strengthen the brand in the insurance, credit, and consortium markets. To reinforce this, I would like to start by highlighting two figures. We issued 3.6 billion BRL in insurance premiums, 26.2% more than in 2023, and 16.9 billion BRL in credit and consortium in the Brazilian market, 13.9% more than in 2023. In other words, between credit, consortium, and insurance products, we will distribute over 20 billion BRL in 2024. These important figures led the group to a record gross revenue of 1.9 billion BRL in the year, up 9.3% over the same period last year. Consolidated EBITDA closed at 686 million BRL, surpassing 2023 by 18.3%. Our consolidated net profit reached 296 billion BRL, 25.8% higher than in 2023, and the parent company's net profit totaled 160.1 million BRL, 13.1% higher than last year. When we disregard the non-recurring effects of Polishop in 2024, our profit was BRL 174.1 million, 23% up over last year. In the insurance segment, we achieved a consolidated EBITDA of BRL 477.16 million, a performance 33.8% higher than in 2023, and consolidated net profit of BRL 270.1 million, 41.7% higher than in the same period last year. Highlights include Bmg Corretora, BRB Seguros, and Wiz Corporate, as well as Inter Seguros, which not only saw its net revenue EBITDA and net profit grow, but also its base of active contracts reaching 0.3 million more, than triple what was recorded in the previous year. In the credit and consortia segment, the progress made in 2024 also fills us with pride. When compared to 2023, we grew adjusted net revenue by 22.2% to BRL 155.3 million. In terms of EBITDA, we grew by 34.6% and delivered BRL 96.1 million. Net profit closed at BRL 47.6 million, 72.8% higher than in 2023. As reinforced, we believe that investments in technology will be one of the main factors in taking us to the next level, and has taken us very far. As we look back, I see 2024 as a year of great transformation. Our proprietary technology platform, Wiz Pro, has already been used in the routines of the group's six units. We have four modules that are constantly evolving: sales, management, operations, and engagement. The tool is now the main stakeholder in our digital transformation strategy, and it will remain so in 2025. It is inspiring to look back and recognize so many achievements in 2024. For the second year in a row, ISO 27001 certification, a seal that proves that we follow the highest standards of information security. Also, for the ninth consecutive year, we were included as a Great Place to Work, ranking the GPTW as one of the best companies to work for in the Midwest and among the 150 best companies to work for in Brazil. Also, in this sense, last year we had more than 40 events reinforcing our presence in the market. We also kept our Selo Pró-Ética and joined the Pacto Brasil pela Integridade Empresarial. For 2025, we remain confident in the potential of our business to go on even further. We've done our homework and are ready to navigate the macroeconomic scenario that lies ahead. I highlight, for instance, the capacity we had to issue in January 2025, the second issuance of simple debentures in the amount of BRL 300 million maturing in 2030. This move extended our debt payment schedule and puts us in a positive position, so that we can maintain strict cash management and achieve our goals. To wrap up, I'd like to express my deepest thanks to all the Wizards who have been part of the development of these beautiful results. I especially thank the members of our board of directors, committees, and shareholders who were with us on this journey. We remain determined to turn Wiz into a company that positively influences the insurance, credit, and consortia markets in Brazil. Thank you very much. I now turn over to Mr. Lucas Neves, our CFO and Investor Relations Director. Thank you very much. Good morning, everyone. I'm going to start the presentation of the financial results, where I will talk about the highlights in operational and strategic events in the period, and the various features delivered last quarter on our proprietary technology platform Wiz Pro. In the sales module, we've improved our lead capture, as well as making progress in offering life insurance and a multi-brand consortium simulator. In operations, we evolved our omni-channel service by including new chat screens and categorization of service via WhatsApp. On the management front, we applied artificial intelligence to read invoices and deliver automated notifications for commissions and reports. Finally, on the engagement front, we implemented improvements to authentication flows, making the user journey easier and safer. Moving on with highlights. We ended 2024 with a net debt of BRL 445.6 million, BRL 162.9 billion lower than in the previous year. The consistent reduction of this indicator is mainly due to the payment of installments of accounts payable for acquisitions. Also saw Wiz Corporate evolve in the main lines of results, setting constant records in different indicators. We made progress in gross revenue, reaching BRL 139.9 million, 36.6% higher than in the previous year, consolidating the best year of the company in this regard. Net profit was also a record, reaching BRL 33.5 million in 2024, 64.6% higher than in 2023. This is an important milestone for the unit and was supported by a diversified portfolio and customized offers. Still on our business unit, Inter Seguros closed the best year of its history in 2024. Gross revenue throughout the period was record, reaching BRL 247.5 million, 43.2% higher than in 2023. Net profit for the year was also a record at BRL 91.1 million, 53.3% higher than in 2023. The active contract base grew more than three times compared to 2023, reaching BRL 5.3 million. Inter Seguros' business model has allowed to consolidate its leadership position in this segment, combining a diversified portfolio, integrated experiences, scale, and profitability. To conclude with the operational highlights, the largest insurance premium issues and credit and consortium distribution in our history was concluded. In total, BRL 20.5 billion was distributed during the year, 15.9% higher than in 2023. The progress reflects the good results, seeing the business units throughout 2024. Now moving on to slide 4, I will talk about the financial highlights for the fourth quarter of 2024. We had a record BRL 259.4 million in revenue, down 3.5% on the same period last year, excluding the net revenue from the Caixa Run-Off, where we had BRL 208 million in revenue. The result was mainly impacted by the positive non-recurring effect of BRL 10.1 million for the reversal of the provision for the cancellation of revenue. Credit and consortium revenue was BRL 41.2 million, 17.6% higher than the same period the previous years, and premiums issued were BRL 933.2 million, 16.2% higher than in the fourth quarter of 2023. In slide 5, we present the highlights of the year. As Marcos Vinicius de Oliveira commented, we achieved strong results in 2024, strengthening Wiz Co in the insurance, credit, and consortium markets. In the year, Wiz Co business units sold BRL 3.6 billion in insurance premiums, with growth of 26.2% compared to 2023, reinforcing our relevance in the Brazilian insurance market. Throughout 2024, our units expanded and renewed their product portfolios, focusing on the improvement of the value proposition for the customers and promoting greater profitability in their channels of operation, reflecting the good result we present today at Wiz Co. We reached a volume of BRL 16.9 billion in credit and consortium sales, 13.9% greater than last year. Promotiva, incorporated at the end of 2022, accounted for a large part of this growth, adding BRL 9.4 billion in the period. As a result, we reached the BRL 1 billion mark in net revenue, ex-commissions, 9.8% higher than in 2023. Moving on to slide seven, we have the consolidated results summary. For the fourth quarter of 2024, we achieved EBITDA of BRL 174.5 million, down 4.5% over the same period in the previous year, mainly impacted when comparing to 2023 by the positive non-recurring effect of BRL 10.1 million related to the reversal of a provision for the cancellation of revenue. In the annual review, we achieved EBITDA of BRL 686 million, up 18.3% when compared to 2023. Turning to consolidated net profit, we had a growth of 25.8% year-over-year, with a total of BRL 296.8 million, driven by the operating result of the parent company. Net profit reached BRL 160.1 million, which is 13.1% higher than in 2023, driven by the better financial result recorded in the year. In Slide 8, we can see the adjusted results. In this quarter, we made no adjustments to EBITDA, presenting only the adjustments made in the first quarter of 2023, which are related to severance costs. In net income, we adjusted the non-recurring effects with no impact on cash that occurred in the lines below EBITDA. We highlight adjustments to depreciation, amortization, and impairment, which in the period amounted to BRL 43.0 million in expenses with amortization of intangible assets recognized by the acquisitions of BRB Seguros, Promotiva, and other business units. In the period, we advanced in the cycle of write-offs related to the subsidiary Polishop Seguros, recording an adjustment of BRL 7.8 million related to the write-off for impairment of intangible assets and BRL 5.8 million related to the provisions for loss of loan made for payment of the loan contracted by the subsidiary in August 2022. In financial results, we adjusted the effects of present value adjustments of future installments of the acquisition costs for the company's investees. In income tax and social contribution, the amounts presented refer to the tax effects of the adjustments made to D&A and impairment and financial result lines. We closed the quarter with a net profit of BRL 115.8 million, which is 1.4% lower than in the fourth quarter of 2023, with a year-to-date total of BRL 439.2 million, which is 19.2% higher than in 2023. In Slide 9, we evaluated the parent company's results. In the fourth quarter of 2024, the parent company recorded BRL 16.9 million in EBITDA, 9.2% higher than in the same period of the previous year. For the year, the parent company had an EBITDA of BRL 272.9 million, up 8.5% for the year of 2023, mainly driven by the record business performance of several of the company's business units. In the year, the parent company recorded BRL 161 million in equivalência patrimonial, a result which is BRL 42.8 million higher than in 2023, due to better performance and participation in the results of subsidiaries as a counterpart to the recognition of equity in the identifiable assets previously recognized in D&A. In net income, the parent company reached BRL 160.1 million in 2024, representing a growth of BRL 18.5 million or 13.1% compared to 2023. When the non-recurring effect of BRL 14 million is excluded, and this is related to the partial write-off of impairment and provision for mutual loss at Polishop Seguros, the parent company's net income would have reached BRL 174.1 million in 2024, a growth of 23% compared to 2023. This is driven especially by the good business performance of the company business unit and better performance in financial results. In Slide 11, we will open the results by segments. The consolidation of the results is shown in an attachment to this presentation. In 2024, 80% of revenue came from our current operations. The business units consolidated by Wiz Co in the insurance segments accounted for 56% of our current result. We continue to see a strong movement towards diversification of results, coupled with continued revenue growth. This performance was only possible due to our focus on delivering the company's strategic objectives. Now Slide 12. We remain present and, starting with the insurance segment. In 2024, we reached BRL 559.9 million in net commission revenue in the insurance segment, up 19.4% over the previous year. The effect of a year with record business performance in different units of the segment. The performance of Bmg Corretora up 37% compared to 2023, and Wiz Corporate up 35.1% compared to 2023. Also noteworthy was the performance of Inter Seguros, reaching a record BRL 167.6 million in net revenue in 2024, recording BRL 36.1 million in equity for Wiz Co in the year. In Slide 13. Consortium and credit, Promotiva and Wiz Parceiros. In the quarter, we reached 41.1 in ex-commissions, a growth of 17.7% or BRL 6.2 million compared to the same period in the previous year. In the consolidated year, we reached BRL 155.3 million in revenue, ex-commissions in this segment, 22.2% higher than in 2023, and EBITDA of BRL 96.1 million, 34.6% higher than in 2023. This result also reflects the good performance of Promotiva's operation, showing growth of 34.3% compared to 2023, reaching BRL 120 million in net revenue, ex-commissions in the year, representing 77.7% of the segment's consolidated revenue in 2024. Slide 14. Here we have the service segment, including Wiz Concept unit and the Run-Off Caixa operation. In the fourth quarter of 2024, the service segment showed a 17.4% drop in net commission revenue compared to the same period in 2023. The EBITDA closed at BRL 10.6 million, a growth of 19.5% compared to 2023, and an EBITDA margin expansion of 3 percentage points, reaching 11.5% in 2024, maintaining the focus on business profitability. On the Run-Off Caixa, we present the result of the stock of revenues relating to sales up to February 14, 2021. In the quarter, this line added BRL 48.9 million, a result which is 15.5% down compared to the fourth quarter of 2023, reflecting the non-recurring effect we had in that quarter, arising from the restatement of the financial statements, where a reversal of the realization of provision reversals was recorded. In slide 15, I would like to highlight the main points about the Wiz Corporate. When we look at the results, we can see a total of BRL 13.1 million, which is BRL 1.4 million higher than in the fourth quarter of 2023, due to a seasonality of expenses in the quarter in relation to the comparative period. The evolution of Wiz Corporate is best reflected in the accumulated review of expenses, with growth of 5.3%. On the other hand, the result of minus BRL 12.5 million in other income and expenses stems mainly from the recognition of capital losses in invested companies. Finally, in the fourth quarter, we had an effective tax rate of 35.9%, mainly due to effective expenses that are not deductible. In slide 16, breakdown of cash flow for the quarter. We ended the quarter with a cash balance of BRL 270.1 million in consolidated, and BRL 18.7 million in cash in the parent company. The cash flow of BRL 19.7 million in the period was mainly due to operating cash generation, partially offset by the payment of dividends. In investments, the flow of BRL 14.7 million refers mainly to the adjustment to present value of the acquisitions made by the company. In the quarter, we also disbursed dividends to the non-controlling shareholders of our subsidiaries. Last slide 17. We present the company's outlook for 2025. As Marcos Vinicius de Oliveira mentioned in his initial message, we are confident in the potential of our business for the future. Our financial discipline will continue to be our core for 2025, with action directed at deleveraging the company, reinforcing the sustainability of our growth, and optimizing our capital structure. We will continue to make progress in capturing synergies between our operations, extracting greater efficiency, and generating business value. Our Wiz Pro platform will remain as a competitive differentiator, improving our operations and increasing our relevance in the market. Furthermore, we will focus on expanding proprietary sales, consolidating our direct channels as a lever for growth. Finally, we will remain committed to making our operations profitable, guaranteeing solid and consistent growth. We now conclude our presentation, and we will start the Q&A session. Thank you very much. Thank you. I now turn over to Mr. João Resende, who will begin the Q&A session. I would like to remind you that to take part, all you have to do is send your question via the Q&A icon on the platform, and it will be answered by the Wiz Co's representatives. Good morning, everyone. It is once again a pleasure to have you here for Wiz Co's conference call on the results of the fourth quarter for 2024. We will start with a question from Ricardo, BCG Pacto, and it will be directed to our members here. Could you give us further detail on the rates of the new debenture issued by Wiz Co compared to the first issuance, and explain if we should expect a prepayment of the old debenture in the beginning of the year, or is Wiz Co going to wait for the deadline? In addition, now that the debts have been extended and the debt to the company is not high, do you intend to use your generation or cash? Well, before I answer this question, I would like to remind you that we are very happy with the results for 2024. We have units such as Wiz Corporate, Inter, BMG, Omni1, which have grown over 50% this year. Paraná Seguros also multiplied the profit we had in the previous year, demonstrating Wiz Co to generate more value in the channels we work with. We go from net profit of BRL 140 million to BRL 170 million, and even with a reduction of 15% in Caixa Run-Off. Even with the important results of Polishop, we still grew over BRL 15 million. If we remove all these factors, it is as if we had grown BRL 175 million this year, which makes us very enthusiastic for this year when all of these factors will no longer be in consideration. We are very optimistic. We have already prepaid, Ricardo, the first debenture. We captured a debenture of BRL 300 million. We paid the debenture of BRL 205 million, generating some money left for us, and we also reduced the financial cost of the first debenture. We reissued the debenture, and that indicates a healthier company with less leverage. This answers your second question. As we have generated cash, what are we going to do with the exceeding capital? M&A is not a priority for us. We continue looking for opportunities, but it must make sense to the company in terms of price and value per return. We must have a clear value. We are in the middle of this discussion. When we had our discussions for the beginning of the year, we had a change in management. We are discussing with the board to define what we are going to do with capital allocation in the short term. We have decided that this process will be concluded with the debenture, and then we will be able to give you a better answer. Thank you, Lucas. I would like to make a comment and Emerson, an investor, has also asked a question. He wants to know if Wiz Co has any plan to rebuy shares. We also have a question from William Barranjard, Itaú BBA. He thanks you all for the presentation and opportunity. He asks, first, could you explain the non-recurring effects of Polishop and the impact of the exchange rate? Should we expect any further effect of Polishop in the future? Thank you very much. In this scenario, where CDI is at the levels they are at, the faster we can do this, the sooner will we have better results for the company. Regarding Polishop, we had two effects. We had an intangible asset in Polishop. We had an impairment of this asset, so this effect will not be seen in the future. We also have a loan that was hired, and we are considering the default with an impact of BRL 5 million per year if nothing else happens from now on. The impact was much lower than the BRL 17 million we had this year, and therefore, Polishop will not be as relevant from now on. Second question by William regarding sales. The premiums continue growing well, and the credit environment still seems benign in the first quarter. Does it make sense to consider a good performance of sales? Reinforcing what I've said, we are very optimistic with the beginning of this year. We are in March. Our business have grown in the first month. Also, to reinforce it, 2025 is a challenging year, but 2024 wasn't a wonderful year. We had a very harsh comparison basis. We launched new products. We considered business strategies, diversified our performance. It's very important to reinforce that our comparison base is not super benign. The scenario has been complicated for a while now. Number two, we have to evaluate Wiz Co's universe, not the credit market. It's not homogeneous, but when we look at this combined, we can see some growth in the beginning of the year. Thank you very much, Lucas. To wrap up cash and capital allocation generation. You continue generating a lot of cash, which is positive. Has there been any change in the way you see capital allocation? Well, we've been able to quickly reduce the net debt of the company. This year, we had a decrease of BRL 160 million. We did BRL 40 million in dividends and made a purchase, which cost BRL 26 million. So the way I pay the shareholders and what or the extent of debt reduction. We had almost BRL 160 million in cash for 2024. It's quite impressive. We have non-cash expenses in Wiz Co. Also, in terms of capital allocation, this is a priority in my agenda now, and we will discuss that with the shareholders. But I don't think M&A is not an obvious thing with such high interest rates as we have now. Rebuy is something that should be a goal for every company now that we have such high interest rates, but everything should be seen very carefully. William, I thank you for the questions, and I will go back to a second question by Ricardo, BTG Pactual. He says we have an expectation of de-acceleration, as we've seen in the results of Brazilian banks. He wanted to understand if the decrease in revenues is a reflex of that, and what can we expect in terms of revenue growth for this year. Ricardo, this is Marcos. I will make a disclosure about this. In Wiz Co, we have to consider a mix of our business. BRB has a significant representativeness for us. But keeping in mind the five businesses we have, only one business has grown in all of them, and one makes up for the other. Our performance in this segment has been very robust. For 2025, we expect that things will move on pretty much the same way. We already have a budget hired. We do not expect it to be different, even though we are aware that we had a very challenging year. To note, within the business line we operate with, we don't have this as a main focus. We have other products being launched. We have other sources of revenue, all of them related to security. This mix is always going to be aimed at growth, and this is what has happened in the past two years, which were also challenging, as Lucas mentioned. And yes, Ricardo, I would like to add that this is not the single company's product. We have units which are less dependent, so it's not a one-to-one ratio here. And 2024 is an example that this is not true. All of the answers you gave us now have to do with a question asked by Caio Barbosa, Latin Capital. He asked us to detail the BRB results. I will read a question by Leonardo Piovesan from Quantzed. He asks if the number of the negative impact of Polishop was 100% for the controller only, and what would have been the net profit of the first quarter, taking away the impact of Polishop. I would like to remind you that we had two impacts. We had Polishop Seguros, which comes to the controller as equivalência patrimonial, and we also have the impact of the default, which is in the results. When we combine these two impacts for the controller, they represent approximately BRL 10 million. If we excluded that, it would have been BRL 48 million net profit, very close to the third quarter, which was the company's best quarter ever. It had an important participation for this quarter and opens an opportunity for much better results in 2025 since we will no longer have these effects. Analyzing the consolidated profit, the amounts reported for this quarter were approximately BRL 58 million. Thank you very much, Lucas. Leonardo Roma, investor. Congratulations for the results. I would like to know what is the payout going to be for 2024. Also, could you let us know what is the leverage level of the controller for debt, et cetera? Leonardo, the company payout is 25% of the net profit. A year ago, we wanted to keep more cash in the company so that we could go through this de-leveraging process. We reprofiled our liabilities for this year, leading to better cash generation, opening an opportunity for us to potentially increase the payout. Today, the payout is 25%. When we talk about net profit, debentures and banks that work with Wiz, they like to analyze the net debt. About BRL 450 million divided by the EBITDA by participation. They don't like to use the consolidated EBITDA, nor the controller EBITDA, because the equivalência patrimonial is a net of it, not the EBITDA. When we look at this leveraging metric, and there is an attachment of our release, you can see that we have one time the EBITDA. This is very healthy. We had a significant reduction over the past year. Wonderful. Thank you, Lucas. I have one question regarding BRB. Would you like to add anything else? They ask what the expectation for BRB is for the fourth quarter of 2023. Considering the results compared to the fourth quarter of 2023. One of the things that really makes us enthusiastic, this is an open capital bank, and it's going to be an important leverage for the bank over the future quarters. We don't know exactly if it will be in the first, the second, or the third quarter. When we look ahead, this capital increase will play an important role for the company to continue growing. Another point to complement what Lucas has just said, the expansion process of BRB assures us that in 2025, they will be able to carry out their strategic planning. 2025 will be a very successful year for BRB. Wonderful. Thank you, Marcos. Would any of you like to make any additional comments, leave a final message before we close? I don't think so, but there's one last question there. One other question came up in the chat. William, an investor by Terra Asset. He asks, "What are the other expenses item which had a significant increase?" William, thank you for your question. We had a Run-Off Caixa effect, but it is minor compared to all of the other positive results. We had BRL 3 million of CapEx. This was identified in the audit and is one of the main responsible factors. Also, we had capital changes. We have a disproportional dividend. Finally, at the end of the year, we had important gains. We discussed a lawsuit that we won, and therefore, this has to do with the lawsuit. We have a very good opportunity to grow in 2025, and this makes us very optimistic. We have no further questions. I would like to thank you all for your participation. Wiz Co is available to any of you in case you have any further questions after this Q&A. Thank you very much, and I wish you a wonderful day. Wiz Co's video conference is now over, and we thank you all for your participation. Have a wonderful day.