Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Enjoei SA (BSP:ENJU3, Financial) reported its third consecutive quarter of positive EBITDA from recurring operations, showcasing consistent financial improvement.
- The company achieved significant growth in GMV, net revenue, and gross income with increases of 56%, 68%, and 87% respectively, leading to a gross margin increase to 56.4%.
- The Enjoei platform saw a 9% GMV growth relative to the previous quarter and 19% year-on-year, supported by a 42% increase in annual uploads.
- The launch of new pricing functionality and platform improvements have enhanced seller support and improved sales conversion rates.
- The offline operation is progressing well, with the Frederick store exceeding revenue expectations by 30% and plans to expand through franchises underway.
Negative Points
- Despite positive EBITDA, the company experienced a cash consumption of BRL12.6 million in recurring operations, indicating ongoing investment needs.
- The core EBITDA, excluding Elo seven, decreased relative to the previous quarter, partly due to expenses related to new brick-and-mortar stores.
- There is a need for continued investment in platform improvements and physical store installations, impacting short-term cash flow.
- The company is still working towards achieving a sustainable positive free cash flow, with expectations set for more consistent results next year.
- The expansion into offline operations and franchises involves significant upfront costs and strategic planning to ensure successful execution.
Q & A Highlights
Q: Can you discuss the sustainability of Elo7's positive EBITDA and the reasons for the drop in the parent company's EBITDA in Q2 compared to Q1?
A: Guilherme Almeida, CFO, explained that Elo7's positive EBITDA is sustainable due to the reorganization and operational adjustments post-acquisition. The drop in the parent company's EBITDA was partly due to the costs associated with opening brick-and-mortar stores, which amounted to BRL1.5 million.
Q: Will Enjoei continue to deliver positive EBITDA, and when do you expect to achieve positive free cash flow?
A: The company expects to maintain positive EBITDA, with improvements in equity income. Free cash flow generation is anticipated in the second half of the year, particularly with contributions from franchise sales and stronger Q4 sales.
Q: Can you provide more details on the franchise contracts and expected payback periods?
A: Joel Queiroz, COO, mentioned that they have engaged with 15 multi-franchisees and expect to sign contracts soon. The payback period is projected to be 20-24 months, which is below the market average, with CapEx around BRL750,000 and monthly revenues expected to be BRL250,000.
Q: What is the profitability of the first Enjoei store, and how does it compare with Cresci e Perdi's maturity curve?
A: Joel Queiroz noted that the first Enjoei store has shown accelerated growth, with monthly revenues equating to one-third of the CapEx, leading to a favorable payback period. The brand's strong recognition contributes to a faster maturity curve.
Q: How are the new initiatives expected to impact future results?
A: Tie Lima, CEO, emphasized that initiatives like improving physical store operations, expanding franchises, and enhancing product offerings are expected to drive sequential improvements in operating results and profitability in the coming quarters.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
