Via S A : Q1'23 Earnings Release Presentation Video Transcript

VIA - Earnings Results Q1'23

Sérgio Leme - EVP People, ESG & IRO

Hello! Welcome to Via's Q1'23 earnings conference call. Please note that this video is made available together with the earnings materials so that we can focus on the Q&A session during the live conference call to be held tomorrow.

I will now present some highlights that we will discuss in further detail during this presentation, which certainly reflect our drive throughout the quarter, evidencing our focus on seizing growth opportunities for all Via's operations, profitably and sustainably.

We increased GMV at our stores, which are Via's most profitable channel. 3P also improved and started to bring in higher margins, as revenue increased. We gained market share both offline and online, breaking the online record, without harming the margins.

Our experience in credit granting has been a competitive advantage, driving sales and profitability, with an improvement in delinquency levels in both installment plans and personal loans.

We are still taking full advantage of our logistics network and bringing in new sources of revenue and profitability through the evolution of services, such as fulfillment and transportation for third parties in the open sea model, whose revenue jumped by 294%.

Our financial discipline enabled us to expand our gross margin by 1.4 p.p., to 32.1%. Meanwhile, our EBITDA margin grew by 0.1 p.p., to 9.2%. However, due to the impact of the increase in the Selic rate on the financial result, we recorded a loss of R$297 million.

As we announced to the market, we were able to extend the maturity of R$1.1 billion of debt. Working capital improved by R$542 million this quarter. It's worth highlighting the acceleration of the monetization of tax credits, which generated R$606 million, double the amount recorded in Q1'22 and virtually triple the cash impact of labor claims in the quarter.

We also reduced the trade accounts payable - agreement line, which is more costly, with a year-on- year change of R$1.7 billion in cash flow.

I will now talk a little more about our 1P performance, which considers the sale of services and products of Via's inventory, both online and offline.

The GMV of bricks-and-mortar stores rose for the fifth consecutive quarter, up 10% vs Q1'22. This improvement was due not only to the net opening of 42 stores in 2022 but also to the performance of the existing stores, as there was a 9% increase in same-store sales.

It is worth noting that this channel contributes to enhancing the Company's profitability given the increased penetration of services and installment plans. As we remained focused on productivity, GMV per store improved by 10.7%, to R$5.4 million.

In the online business, GMV dropped 15%. However, we gained market share for yet another quarter. This movement was driven by our primary focus on more profitable categories. This has enabled Via to reach a record-high online market share, as we will see later on. All this reinforces the value of the omnichannel approach, as we have made good use of the strength of physical retail and its healthy margins. Finally, we closed the quarter with a GMV of R$9.5 billion, in line with Q1'22.

In 3P, we followed our strategy of promoting recurrence while seeking profitability. Food and beverage, supplements, baby products, and tools were some of the fastest-growing categories in the recurrence line.

Despite the strong comparison base deriving from the marketplace escalation, GMV increased by 26%, to R$1.5 billion. In the profitability line, we not only expanded revenue by 56% but also increased and diversified the sources behind the take rate, which rose by 2.4 p.p. year on year, reaching 12%.

In the last few years, we have invested time, resources, and a lot of technology to increase productivity in the day-to-day activities of our stores. This includes improved internal processes and systems; back office and DC automation; new sales tools; stores suited to serve both online and offline customers; and better delivery times.

These drivers have helped our thousands of salespeople increase their conversion rates and be more productive. As we can see in the graphs, this is a consistent trend.

GMV by salesperson increased by 23% over Q1'22 and

41% over Q1'21. This dynamics can also be seen in revenue per salesperson, up 21% over Q1'22 and 29% over Q1'21, clearly higher than inflation. Yet another point to reinforce our focus on profitability.

Our strategy is customer-centric. Customers have the freedom to choose the channel that best serves their needs, and Via will be there to serve them wherever, whenever, and however, they want.

That is why we are always keen on NPS as a measure of customer satisfaction.

As we better control the entire purchasing journey, we have been able to maintain the highest customer satisfaction levels in 1P, with an increase of 9 and 8 points for the stores and online, respectively, in the last 3 years.

However, we grew even more in 3P, with a 10-point improvement in the last 24 months, deriving from more engaged sellers and an increase in our share of deliveries through our logistics services.

Despite a sluggish online market in the country, Via consistently increased its share, which came to an all- time high in March 2023.

In physical retail, we expanded our share by 1.7 p.p. and maintained our leadership position, according to numbers from GFK.

I stress that this growth is not happening at all costs. We have remained focused on profitability, always seizing market opportunities.

This quarter, we launched Via Geofast, Via's exclusive media platform, showing that it is possible to innovate even in traditional media.

This is an important media tool to drive regional partnerships and contribute to the Company's profitability.

It works as follows: After defining a promotion with the 1P supplier or seller, we run the ad based on geolocation. For Via, this is about expanding the media presence of our brands. The supplier knows how many potential customers it will reach, and it will have even greater efficiency in location, inventory, commercial activation, and conversion.

To help our partners sell, renowned artists will promote their products in advertisements through the media, especially open TV. This content is digitally produced in an efficient way, in a few minutes, customized for each partner.

We have here an example of an advertisement created by the platform.

"Casas Bahia is the go-to place for Mother's Day gifts. Surprise your mother with a brand-new 5G Motorola phone.

Everything that Mother's Day asks for asks for Casas Bahia.

Moto G53 5G for just R$159.90 per month.

Moto G73 5G 128 GB for just R$174.90 per month. Now that's an advantage.

Motorola Edge 30 Neo 5G 256 GB for just R$249.90 per month.

Only at the store, on the website, and the app. Mother's Day asks for something; it asks for Casas Bahia."

As we have shown in our materials, most of our investments have been allocated to technology in the last few years. Our main ongoing projects focus on two essential topics for us: achieving higher sales conversion rates and increasing operational efficiency while spending less.

I will show you some recent innovation that are only the first of the many innovations that we will deliver. As part of our focus on enhancing conversion, I highlight:

• Showing the best price in the shopping cart and customizing the dynamic chatbot, enabling a more fluid navigation and retention.
• Enhancing the app for online salespeople to enable an increase in average spending and long-tail sales;
• Allowing the use of Pix for down payments in the digital installment plan; and
• Launching Bartira's e-commerce in record time; it was the first integration of Via Store not connected to an existing website or app.

I now list two of our many ongoing initiatives that combine the possibility to increase sales and reduce the customer acquisition cost, such as:

• Use of machine learning models in our CRM, improving product recommendations to customers; and
• Use of Google features for promotions with higher returns and lower costs.

Via has a robust logistics network at its disposal. As we have mentioned, we have increasingly explored this asset for customers within and outside Via's ecosystem. This strategy has enabled us to take full advantage of an existing asset, bringing new sources of revenue and profitability, with little need for additional investments. For example, our multimarketplace fulfillment, designed to serve the sales of sellers outside Via's marketplace, keeps growing at a fast pace, with a year-on-year increase of 40% in the number of customers and 29% in the number of orders in Q1'23.

Via's operation as a third-party logistics player has also evolved, as we can see in the graph. As our customer base grew substantially, the number of orders soared by 188% year on year, driving a 294% jump in revenue.

More density helps us have more routes, higher vehicle occupation, greater coverage, and better delivery times. This is already a reality for us!

We managed to reduce by 37% the delivery times for marketplace deliveries not managed by Via compared to the previous quarter, thanks to a more active approach closer to the sellers.

For sellers who use our logistics service program, we managed to reduce the already shorter delivery times by 23% compared to the previous quarter.

Looking specifically at fulfillment, where we have greater control over the delivery journey as a whole, we have the best delivery time, and we managed to reduce it compared to the previous quarter.

Now, Padilha will talk about our progress in Financial Solutions.

Orivaldo Padilha - CFO

Hello, everyone!

I will start by presenting the consolidated numbers of our financial solutions platform, both on-us and off-us.

We kept expanding our customer base, which reached 13.5 million in Q1'23, up 17% year on year.

Our platform reached R$12 billion in TPV in Q1'23, up 6% year on year.

Our credit portfolio totaled R$5.6 billion, driven by the evolution of the personal loan and installment plan portfolio.