Magazine Luiza S.a. · BMFBOVESPA:MGLU3
Magazine Luiza — Q1 2023 Earnings Presentation
31 slides from Magazine Luiza's earnings presentation, May 16, 2023
Slide 1: Conference Call 1Q23
Conference Call 1Q23 May 16, 2023
Slide 2: Simultaneous translation and download information
Esta teleconferência possui tradução simultânea. Para acessar, basta clicar no botão Interpretation através do ícone do globo na parte inferior da tela. O Release de Resultados e a Apresentação, versões português e inglês, estão disponíveis para download no site de RI: ri.magazineluiza.com.br A apre
Slide 3: Above market growth across all channels
Magalu had above market growth across all channels: 25 p.p. online and 6 p.p. offline YoY Growth: Online market vs Magalu online YoY Growth: Offline market vs Magalu offline [%] [%] 1Q20 1Q21 1Q22 1Q23 1Q20 1Q21 1Q22 1Q23 3 Source: Neotrust; GFK; Magalu
Slide 4: Total sales grew 27% CAGR to R$15.5 billion
Over the last 3 years, total sales grew an average of 27% per year, reaching R$ 15.5 billion in 1Q23 Total sales growth [Billion R$; %] Sales grew across all 27% CAGR channels during 1Q23 Online +63% +13% +10% Stores 10% 15.5 Growth of total sales 14.1 12.5 [1Q23 vs 1Q22] 73% 7.7 72% 70% 53% We reac
Slide 5: Physical store sales reached R$4.2 billion
In 1Q23, physical store sales reached R$ 4.2 billion, with 1.0 p.p. of market share gains Growth of physical stores sales [Billion R$; %] 6% CAGR 8% +4% +6% +8% Growth of physical stores sales 4.2 [1Q23 vs 1Q22] 3.9 3.7 1.0 pp 3.6 Market share gain [1Q23 vs 1Q22; GFK] 1Q20 1Q21 1Q22 1Q23 55
Slide 6: E-commerce reached R$11.3 billion in sales
Over the last 3 years, our e-commerce business grew an average of 40% per year, reaching R$11.3 billion in sales in 1Q23 Growth of e-commerce sales [Billion R$; %] 40% CAGR 1P 11% 3P +114% +16% 11% Growth of e-commerce sales 11.3 [1Q23 vs 1Q22] 10.2 8.8 6 p.p. market share gain 4.1 Versus a decrease
Slide 7: Marketplace reached R$4.4 billion in sales
Over the last 3 years, our marketplace business grew an average of 52% per year, reaching R$4.4 billion in sales in 1Q23 Growth of marketplace sales [Billion R$; %] 52% 3-year average annual marketplace 52% CAGR growth [1Q23 vs 1Q20] 98% +50% +19% 4.4 19% 3.7 Growth of marketplace sales [1Q23 vs 1Q2
Slide 8: Marketplace surpassed physical store sales for the first time
Magalu’s marketplace reached a historic milestone, surpassing quarterly physical store sales for the first time Share of sales per channel [% GMV; 1Q19-1Q23] 28% Share of 3P sales as a percent of total sales [%; 1Q23] Physical Stores 39% Share of 3P sales as a percentage of online sales [%; 1Q23] 1Q
Slide 9: Marketplace profitability increased significantly
In addition to increasing sales, we significantly increased the profitability of our marketplace Evolution of 3P take-rate Evolution of 3P logistics costs [% GMV; 2021-1Q23] [% GMV; 2021-1Q23] Decreased 3P logistics Logistics costs with greater logistics efficiency and new shipping policy 39% increa
Slide 10: Contribution margin improved with take-rate and efficiencies
The improvement in the contribution margin was the result of the evolution of take-rate adjustments and cost efficiencies Evolution of 3P contribution margin [% GMV; 2021-1Q23] The marketplace is the fastest growing and most profitable channel Greater efficiency in marketing expenses Increase in tak
Slide 11: Larger ticket categories improve unit economics
In e-commerce, larger ticket categories contribute to more positive unit economics and profitability Unit economics [R$ / order] High ticket, multichannel platform Low ticket, online-only platform 408.7 (100%) 54.0 (100%) 9.7 (18%) -44.3 (-82%) -339.2 (-83%) -30.9 69.5 (-8%) -21.6 -19.7 (17%) (-40%)
Slide 12: Product family strategy drives market share gains
Our product family strategy has resulted in market share gains, especially where we set out to grow Magalu's share of the online market by average ticket range [%; 1Q22 vs 1Q23] 1Q22 online market 1Q23 online market Magalu Market share Others in Neotrust R$ 0-200 R$ 200-1,000 + R$1,000 R$ 0-200 R$ 2
Slide 13: 21,000 new sellers joined the marketplace
We continue to attract new marketplace sellers 21,000 new sellers joined the platform in 1Q23, reaching the mark of 281,000 sellers on the marketplace platform Growth in the number of sellers Total number of offers 1P + 3P [‘000 sellers; on-boarded] [MM offers] +9M 100 +21k 281 91 81 260 73 236 Cont
Slide 14: Best value proposition for each type of seller
We offer the best value proposition for each type of seller, in line with our profitability and growth strategy Large Improved profitability Sellers Traffic, partnership in campaigns More growth and market share gains Medium Sellers Multichannel fulfillment; Integrated 1P and 3P operations; 5x incre
Slide 15: Physical store services for the Marketplace
Physical store services for the Marketplace Drop-off Our physical stores +577 70k play a fundamental Agency Magalu Sellers using the stores enabled stores as postal agencies role in making the ready for drop-off marketplace multichannel, providing our 3P in-store pick up partners with value +1k 22%
Slide 16: Physical stores drive entry of new sellers via Partner Magalu
The physical stores play a fundamental role in the entry of new sellers via Partner Magalu and in the diversification of the platform Share of sellers per region [% total of sellers per origination channel] +55% of the volume of Partner Magalu sellers were prospected by the physical store teams +80%
Slide 17: Increasing 3P conversion through Magalu logistics
Increasing 3P conversion rates by expanding the number of orders which We are already seeing improvements in pass through Magalu’s logistics the 3P conversion rate, as a result of operation, raising service levels and closing the performance gap between shortening delivery times our 1P and 3P operat
Slide 18: Fulfillment and sales conversion for sellers
The physical stores play a fundamental role in the entry of new sellers via Partner Magalu and in the diversification of the platform Sales conversion rate: sellers delivering on their own vs fulfillment [x; 1Q23] 6 DCs +2X currently offering fulfillment +30% deliveries in up to 24 hrs % orders bill
Slide 19: Partner companies improving synergies
Partner companies in the process of improving synergies Ecosystem solutions Logistics network (1P) na na Magalu entregas (3P) na Financial services Search and recommendation Direct to Consumer na na na na Customer service Backoffice Content and Ads Magalu Ads (Platform) Integrated Partially integrat
Slide 20: MagaluAds increases platform monetization
MagaluAds increases the monetization and profitability of our platform, in addition to providing sellers with more visibility for their assortment Active seller advertisers [# sellers] Sponsored product platform ads grew FOUR-FOLD [1Q23 vs 1Q22] 3.3K [#; 1Q23] 10k Campaigns created 152 during the qu
Slide 21: Focus on insurance platform and Cardif partnership
Magalu has intensified its focus on its insurance platform, the portfolio generated R$1.3 billion in premiums in 2022 Extension of the partnership with Cardif until 2033 extended guarantee for products R$850 mi to receive upon the signing of the contract insurance for robbery or theft safe purchase
Slide 22: Financial Highlights
Financial Highlights
Slide 23: 1Q23 Financial Highlights
1Q23 Financial Highlights 11% E-commerce Growth R$15.5 Billion in Total Sales (Growth of 10%) 19% 3P Growth 27.3% Gross Margin (vs 27.8% of margin in 1Q22) 6% 1P Growth R$448 Million in Adjusted EBITDA (4.9% of margin) 8% Physical Store Sales Growth -R$309 Million in Adjusted Net Income (-3.4% of ma
Slide 24: Adjusted EBITDA Margin Evolution
Adjusted EBITDA Margin Evolution 0.6% 0.0% 0.2% 0.5% 0.4% 1.9% 3.2% 0.8% 5.0% 27.8% 27.3% 4.9% 1Q22 DIFAL Price passed Service 1Q23 Gross margin through to margins Gross margin consumers 1Q22 Gross SG&A Equity in Provision for Other 1Q23 Adjusted Margin Expense Subsidiaries Loan Losses Adjusted 24
Slide 25: Improvement in quarterly working capital
Improvement in quarterly Working Capital, with reduction in inventories Financial expense influenced by seasonality in the payment of suppliers Adjusted net financial expense (R$ Million) Adjusted working capital (R$ Billion) CDI 10.3% 12.4% 13.5% 13.8% 13.8% average 2.3 7.0% (2.2) 6.3% 1.7 (2.9) 5.
Slide 26: LTM Cash Flow
LTM Cash Flow Operating Cash Generation of R$1.3 billion *Pro-forma, considering the R$1 billion gain from the insurance agreement LTM Cash Flow (R$ Billion) Receivables Cash 1.3 8.5 0.3 (0.7) 1.0 8.1 (0.5) (0.1) 7.1 (1.5) (0.1) 7.1 4.9 4.9 3.2 2.2 1.4 Initial Cash Cash Flow from Capex Kabum Other E
Slide 27: Luizacred credit card TPV and portfolio
Luizacred 10% growth in credit card TPV, reaching R$13.6 billion The credit portfolio is now R$20.2 billion Growth of the Luiza Card Base TPV [R$ Billion] 10% 13.6 7.3 7.3 12.3 7.1 7.1 7.0 15% 11.7 10.2 -10% 2.1 1.9 1Q22 1Q23 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Luiza Card Outside Magalu 27 Luiza Card
Slide 28: Luizacred revenues and default rate
Luizacred Revenues grew 18%, reaching the R$1.1 billion mark Variation in default rate due to seasonality Percent of the Portfolio Overdue (%) Net Income [R$ Million] 10.2% 10.6% 6.6% 1Q22 1Q23 3.2% 3.3% 3.7% (27) (35) Mar-22 Dec-22 Mar-23 173% 140% 141% NPL 15-90 NPL > 90 Coverage (%) Profit/Loss u
Slide 29: Financial services for marketplace sellers
We also offer financial services for marketplace sellers Highlights R$10 Bi TPV in 1Q23 Tap +26k MagaluPay sellers used Fintech Magalu's digital account Transforms a normal smartphone into a mobile point of sale machine, permitting payment via tap +R$300 Mi transacted in Magalu digital accounts in 1
Slide 30: Magalu Ecosystem
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Slide 31: Investor Relations
INVESTOR RELATIONS RI@MAGAZINELUIZA.COM.BR MAGAZINELUIZA.COM.BR/RI The statements in this document related to business perspectives. projections on operating and financial results and those related to Magazine Luiza's growth prospects are merely projections e. as such. they are based exclusively on