Via S A : 3Q21 Conference Call Transcript

Conference Call Transcript

3Q21 Results

Via (VIIA3 BZ)

November 11, 2021

Roberto Fulcherberguer:

(…), so, Via is still affected by this loss, and we feel a lot of great gratitude for everything she built, and a great honor to have been part of this strong connection with Brazil and Brazilians.

So we would like to state our solidarity with all of the family and fans of Marília Mendonça, this artist that just died last week.

We wanted to also mention this relevant event we disclosed yesterday about our labor claims and our fiscal credits. We had to perform some structural adjustments in order to address our legacy and really reflect the current cost of these lawsuits and claims in our base.

This adjustment reflects the current and recent changes, as well as the scenario of the past two years as a worldwide pandemic that was unprecedented, and it really impacted the social and economic conditions in the country. The adjustments performed in this quarter do not keep us from keeping up a strong pace of growth and profitability at Via.

Now, we want to talk about our earnings in the 9M21. We had a growth in our GMV that was very significant and robust. We reached R$32.8 billion, plus 25% if we were to compare the same period of 2020.

This growth was leveraged mainly by the performance of our digital sales and 1P, 3P and the pickup from store, which represents 60% of the total GMV in the year, with a special highlight on the contributions in the marketplace, which reached R$4.7 billion in the 9M21, with an increment of R$2.5 billion in the same period when compared to the previous year, and a growth of 111%.

The digital sales were set at 60% of the total GMV in the 3Q, even with the stores 100% reopened, reinforcing our thesis that now our customers are omnichannel customers, and they buy wherever, whenever and however they want.

We continue to grow more than the market in GMV online, in line with our ambition of reaching at least 20% share in the market by 2025. We have eight quarters consecutive where we gained market share. This market share could be measured through the ebit and Compre e Confie, which certify these numbers.

Besides this, at the physical stores, these numbers are also certified through GFK, which demonstrates a growth of Via above market levels, with market share gains as well.

Now I want to talk about each of our businesses, and I am going to start off with our omnichannel strategy. We said that 2021 would be the year of the marketplace at Via, and it certainly is the marketplace year. We gained scale in record time, onboarding over 100,000 sellers. And now in the 4Q, we will have another players entering the international cross borders, which will be onboarding with thousands of new SKUs, which will solidify our strategy of an infinite shelf, with the constant objective of increasing recurrence, the lifetime value, adding new customers and reducing our cost of acquisition, our CAC.

When we talk about the online sellers, this is one example of an omnichannel approach and a strong point here Via. The online seller can sell 1P and 3P, and they have

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Conference Call Transcript

3Q21 Results

Via (VIIA3 BZ)

November 11, 2021

contributed to an accelerated pace for the growth of our GMV and our marketplace, as well as the acquisition of new customers.

I want to bring on this next slide some real examples of sales that were performed on WhatsApp in the 3Q. Our strategy here is really to offer the full scope of products, ever since a customer that wants to sell some pastries and need some equipment to fry their pastries, all the way to a small farmer that buys like a mini tractor.

These examples are real. Real sales that over 20,000 sellers performed at our stores, and they are celebrating the major increase in the assignment that they received to be able to relate even more to our customers. More and more, the expanded assortment will gain importance at Via.

Checkout, the long tail share and the 3P that have already increased 10 p.p., reaching half of all of our assortment in the marketplace. This is in line with our plan to increase recurrence, expansion of the base, reduction of the acquisition costs and greater loyalty among our customers.

When it comes to logistics, our participation in our own network and the percentage of deliveries went from 16% in December 2019 to 56% in October 2021, and we did this with gains in efficiency and productivity because the total logistical costs of the year of 2021 is smaller when we consider the percentage of the net revenue. Even with greater share in digital sales, our speed for delivery reaches 92% of the Brazilian GDP, and up to 24 hours.

Still on the logistics, we introduced many different initiatives with the option of exchanging items at a store for products acquired on the website, which came from a better use of our omnichannel approach.

Our logistical services to sellers continued to advance. In the 3Q, 62% of the active sellers used our Envvias system. In the previous quarter, this represented 50%.

Our infrastructure continues to advance to be able to meet the robust growth of the omnichannel approach at Via. We opened a DC at Extrema, in Minas Gerais state. Finally, we also implemented and automation processes for leads to prepare for more online growth and our fulfillment.

Now, as we talk about innovation and new business opportunities, many of you have heard about open banking and open finance. Great. Going beyond retail was also a mantra that we launched at the beginning of our transformational process, that Via ecosystem's would be constantly growing, and this translates this vision.

We are going to establish associations, invest, acquire and accelerate, and work with whoever can transform our business through this open Via Next innovation program, where we were able to incorporate four companies: gopublic, Poupacerto, byebnk and Uffa. These are companies that are focused on facilitating access to credit, debt payment and financial education for our customers.

We have our eyes open to focus on investments in all types of companies that have a fit with our businesses and the lives of millions of Brazilians we relate to.

Within this innovation vertical, here at Via, we have squads that really focus on accelerating our digital transformation and really disseminate this open innovation

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Conference Call Transcript

3Q21 Results

Via (VIIA3 BZ)

November 11, 2021

culture, as well as connecting us with all of the startups to deploy immediate solutions in the Company.

Now I am going to talk about customer-centric approach. We continue to advance in our strategy to really be customer-centered with a focus on increasing the value of this relationship over time, our LTV, through engagement generation initiatives with the brands, through unique offers, content, streaming, music, game platforms, partnerships with fast foods, partnerships with mobility apps and others. All of these benefits are added to our constant offer of products, the Infinite Shelf and greater ease to higher financial solutions through digital.

So, this entire portfolio of solutions and improvements in customer experience contributes to an increase in engagement, recurrence and loyalty. Our active customer base had an increase of 27% year over year, reaching 28 million customers by the end of September 2021.

The apps of the brands are the devices that can concentrate all of the initiatives with a app-first mentality. So customers can take their platform for relationship in their pockets.

And this strategy is on a crescent. This year, we will be launching our loyalty program for Casas Bahia, Vip, which will now be part of this offer of benefits. About 75% of our accesses on e-commerce in the 3Q came from our apps side, which are mobile our mobile site, an evolution of 10 p.p. in the comparison with the same period last year, a constant evolution in the level of service, which is fundamental to support our evolution and the growth of our business platform.

By the end of September 2021, our NPS consolidated for Via reached 75, confirming a positive trend and a growing trend in customer experience and accesses in the past 24 months. The NPS targets are part of the variable compensation policy for the entire Company. Ponto and Bartira already have the RA1000 classification on Reclame Aqui, and we are following the right direction in these brands.

So we also had a clear evolution in the scores for all of our marketplaces, going from a good to excellent assessment in September 2021, with a growth of the marketplace volumes at about three digits per year.

Our partnerships really established this vision of an increase in recurrence rates with the use of our app. Customers that use the Casas Bahia Play, which is focused on streaming partners, or the Advantage app, which considers of other partners from different categories, have conversion of about 1 p.p. above average, with the use of the app being 3x greater than the average, they open the app 3x more, besides reducing our customer acquisition cost.

And this works in a very simple way. As you perform a purchase customer, receive gratuity in streaming services, music, or discounts, and other services from partners. We already have gratuity with Paramount Plus, Microsoft with games on the Game Pass app, and in the month of November we will also have gratuity for HBO Max and for music app Resso, besides discounts on fast foods and mobility apps. These and many other partnerships will come through 2022 follow.

Now, as we talk about Black Friday, we are really prepared to sell a lot on this Black Friday, with our good commercial negotiations, our good inventory levels, which are all guaranteed. We have a strong volume of supplies. This will not be a problem for Via.

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Conference Call Transcript

3Q21 Results

Via (VIIA3 BZ)

November 11, 2021

We are more and more phygital, more than ever actually than in the previous Black Fridays, which will contribute to make this edition even better. This entire revolution will lead us to have a Black Friday that is even better than the previous Black Friday editions, with all of our stores opened this year.

When it comes to mobility, 100% of our sellers have smartphones on their hands to be able to perform the entire customer journey anywhere in the store, with a lot more agility and service level for the delivery of these sales.

Our pickup from store process was completely remodeled with the pre separation, and this reduces the delivery time to customers. The online seller will also have the possibility of selling extended warranties through the Me Chama no Zap platform, 'call me on WhatsApp'. This gives us a possibility to increase profitability, where the average penetration of the sales of services in the physical store is about 10%. When you sell through Me Chama no Zap, it is 1%. But now, after this evolution, we have the possibility to scale up even more the penetration of service services sales through the Me Chama no Zap, increasing our profitability

This will be the first edition with the real infinite shelf in our marketplace. We already have 34 million items, and we will have all of the possibilities and opportunities that Calabró will share with you when it comes to financial services as well in just a bit.

So we started working on live commerce this year, and this will be a very important tool for this edition of the Black Friday. This is a live that is transmitted through the app, and customers can perform the purchase through the app directly. So we have our sellers to help leverage this sale through the networks, bringing content that is more humanized, demonstrating products and their benefits.

Our lives have reached engagement rates and conversion rates that are a lot higher than what we have seen in the app through our natural or normal purchase chain.

This year, our logistics have major evolution in 1P and 3P. All of our stores are already integrated with our logistical structure, and it is important to mention that we have a strong expansion plan this year. Up until the Black Friday edition, we will have 65 new municipalities having physical stores, accelerating our service level, our deliveries and capturing even more online GMV. By the end of the year, we will have 109 new stores, which will leverage the GMV growth in 2022 as well and in the future years, as we plan to keep this pace of growth and store openings in the next two years.

We have invested a lot with automation and automation systems to reduce the displacement and transportation time for products. We added some sorters, as well to have the correct disposal of the products to the transportation companies or stores. We already have this operation in Sao Bernardo, Rio de Janeiro and Jundiaí.

Now I will pass it on to André Calabro, the banQi CEO, to talk about our fintech and all of the advances that we have had in our financial services field.

André Calabro:

Thank you, Roberto. Hello, everyone. Good morning. I am Andre Calabro, the CEO of banQi. I am really excited to participate in this earnings call and to share a bit of what we have done as we evolve in our platform for financial solutions.

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Conference Call Transcript

3Q21 Results

Via (VIIA3 BZ)

November 11, 2021

In a year and a half, we have had our physical Buy Now, Pay Later, very strong, our digital Buy Now, Pay Later that is scaling up quarter over quarter, with a solution that can really leverage our capacity for acquiring customers and to expand our e-commerce.

We have our digital account that is complete, and it is more intuitive and user friendly, using simple and adherent language.

We launched our personal loan system with another offer for engagement and loyalty for our customers. Our Super App has over 60 offers that are all unique, and our mini app for Casas Bahia, which was already responsible for over R$132 million in transactions in a few months.

So our portfolio has been filling a gap that is very relevant and not very serviced by the Brazilian market, which is the low income population, in a very clear and inclusive way. But what I want to highlight here is that banQi is the vehicle, or instrument that will consolidate all of these initiatives, in order to generate additional value for the Via ecosystem.

We have already acquired the licenses for IP as a payment institution and also SCD, which would be a direct credit society, or corporation.

We have FIDCs, which are for investments in personal loans, and soon credit cards as well. We have also had some investments with partners and fintechs that helped to accelerate our strategic roadmap, and we have also started the project to have licenses through acquirer, so we can provide our solutions to all partners, such as our marketplace sellers.

In order to reach our value proposition, we have five verticals that are clearly under development: consumer support for our Super App, which we call Shopping banQi, with broad offers in products and services, possibilities for payments with credit cards from other brands, installments with our own Buy Now, Pay Later system, and even the balance of the banQi account and other credit cards.

Our credit vertical already has our personal loans and our digital Buy Now, Pay Later system, and soon with our own credit card. So besides, all of these possibilities will be available for our partners as well with the use of our credit as a service solution, as well as at the physical and digital POSs for these partners.

Our segment for companies and small businesses with our digital accounts for small companies, with credit payment solutions that can support many microentrepreneurs to sell more products and develop their own businesses.

All of this is supported by our digital account, which is complete with banQi services, using clear language and an intuitive approach to have greater engagement among our customers, with some tools to support financial education, personal finances, budgeting and investments.

On this slide, I am presenting a quick summary of our roadmap for the development of banQi. In 2020, we focused on making our account 100% transactional and user friendly, with the possibility for deposits, cash outs and perform payments, as well as QR codes and instant payments, like Pix, as well as the onboard for the seller with their first credit experience as they open up and start the first purchase.

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