key indicators 1q18 1q17 delta gmv total (r$ mm)¹ … · 3 3 evolution of the marketplace o...
TRANSCRIPT
1
1
B2W DIGITAL ANNOUNCES GMV GROWTH OF 24.1% AND REDUCTION OF R$ 669 MM IN CASH CONSUMPTION IN 1Q18
The Marketplace continues to grow rapidly and reached GMV of R$ 1.4 billion (+87%) in 1Q18, representing a 46.4% share of Total GMV
Rio de Janeiro, May 10, 2018: B2W Digital (B3: BTOW3), the largest and most beloved digital company in Latin America, today announces its results for the first quarter of 2018.
MESSAGE FROM MANAGEMENT
Following the transition (2017) of the three-year Strategic Plan (2017-2019), the Company's 2018 initiatives are focused on accelerating Total GMV through a hybrid digital platform model (1P + 3P + Services), with continued growth of the Marketplace. As a reflection of these actions, the first quarter of 2018 was marked by the resumption of Total GMV growth, market share gain (B2W +24% vs. +11% of the market, according to the e-bit), and by the continuous reduction of cash consumption. The Marketplace continues its rapid development, and with only 4 years of operation has already reached GMV of R$ 5.2 billion in the LTM (100% growth). The Marketplace represented 46.4% of Total GMV in 1Q18, and is expected to represent more than 50% for 2018.
As a result of the evolution of the business model, the Company presented a significant advancement in the trajectory of cash generation, reducing cash consumption by R$ 668.9 MM in 1Q18, which totaled R$ 477.5 MM (reduction of 58% in relation to the R$ 1,146.0 MM recorded in 1Q17). In this sense, the Company will continue in the trajectory of free cash generation in the short term, an important movement for B2W to become self-sustaining. Another important highlight of the quarter was the creation of LET'S, the shared management platform for the logistics and distribution assets of B2W and Lojas Americanas. LET'S is building a flexible Fulfillment model (Flexible Fulfillment Platform) to maximize the capabilities of each company to capture every opportunity for a cross-platform operation. In this sense, several initiatives are already underway, including the acceleration of important O2O initiatives - Online to Offline and Drop Off in Store (as discussed in the "LET’S" section on page 3).
Lastly, in April/18 the soft launch of AME DIGITAL (AME) was carried out, the digital payment account that will revolutionize the way people relate to money. This new B2W business is an initiative from IF – “Innovation and Future”, whose mission is to create and accelerate disruptive businesses. AME will be an important part of B2W's consolidation as a digital platform that connects people, businesses, products and services, always with the goal of better serving customers and creating value for shareholders.
KEY INDICATORS 1Q18 1Q17 Delta
GMV Total (R$ MM)¹ 3,103 2,500 24.1%
Marketplace (R$ MM) 1,440 772 86.5%
Marketplace Participation (% of GMV) 46.4% 30.9% +15.5 p.p.
# Sellers (New) 2,400 300 2,100
# Sellers (Base) 12,100 5,000 7,100
B2W Entrega (# Sellers) 7,700 150 7,550
B2W Entrega (% of Seller base) 63.6% 3.0% +60.6 p.p.
Mobile (% of Traffic) 65.3% 50.6% +14.7 p.p.
¹ Refers to the adjustments of CPC 47 / IFRS 15 and CPC 48 / IFRS9, as indicated on page 6 (Financial Highlights section).
2
2
1Q18 HIGHLIGHTS
B2W Digital reduced cash consumption by R$ 668.9 MM in 1Q18. Cash consumption in 1Q18 totaled R$ 477.5 million, down 58% from R$ 1,146.0 million in 1Q17.
B2W Marketplace connected more than 2,400 new sellers in 1Q18, going from a base of 9,700 sellers in Dec/17 to over 12,100 sellers in Mar/18. The base of sellers increased by 2.4x from 1Q17 to 1Q18 (from 5,000 to 12,100 sellers).
B2W Entrega (Delivery) connected more than 2,800 sellers in 1Q18, totaling a base of 7,700 sellers and representing 64% of sellers connected to Marketplace. In Nov/17, the platform was integrated into the loyalty program (Prime), allowing sellers to make their items available to program members.
B2W Marketplace held Seller Day 2018. The third edition of the event was titled “Changes of Tomorrow – Are you ready?” and was attended by more than 1,500 participants, including sellers, suppliers and strategic partners.
B2W Digital is providing 105,000 m² in Itapevi's DC in São Paulo for Marketplace sellers. The Fulfillment service (storage + last mile) will be free of charge until the end of 2018.
B2W Marketplace launched the “Buy Box Split”. The algorithm, which defines the best offer for the customer on the product page, allows up to 3 offers (with small deviations) to alternate in the Buy Box, increasing the chances for sellers to be included and growing their sales.
B2W commenced the soft launch of AME DIGITAL, the digital payment account that will revolutionize the way people relate with money. Initially, the AME Digital customer can buy on Americanas.com with many more benefits as well as transfer and receive funds, all in an easy, modern and safe way. This new B2W business will have a roadmap of new service releases and additional features throughout 2018. AME DIGITAL is an initiative of IF – “Innovation and Future”, whose mission is to create and accelerate disruptive businesses.
STRATEGIC INITIATIVES THE LEVER THE DIGITAL PLATFORM
Comercial and Marketing
o Market Share: In the quarter, the Company's GMV growth was 24.1% vs. 11.0% of the market (according to the e-bit). B2W's market share expanded by 2.8 p.p. in 1Q18, from 23.7% in 1Q17 to 26.5% in 1Q18.
o Assortment: The number of items (SKUs) offered on the sites totaled 5.3 million at the end of 1Q18, up 65% vs. 1Q17, driven by Marketplace.
o Prime: With the Prime loyalty program, the customer has unlimited free shipping on products sold by
B2W and by sellers participating in the program. It is the only program in Brazil where the customer can buy more than 1 million products with unlimited free shipping, and without minimum purchase value requirements. In addition, the customer can take advantage of exclusive offers and dedicated service.
The program, which was already available on Americanas.com and Submarino, was launched in Feb / 18 on Shoptime, with broad support from customers of the site and TV Shoptime. In addition to the benefits of free shipping and fast delivery, subscribers also have access to unique and personalized items.
Throughout 1Q18, the number of Marketplace Sellers participating in the Prime program doubled. To participate in the program, the seller must be integrated with B2W Entrega, the B2W logistics and distribution service.
B2W Prime is available in all 2,479 cities in the South and Southeast regions of Brazil. Prime customers spend five times more than clients who have not yet joined the program.
3
3
Evolution of the Marketplace
o Marketplace GMV: In 1Q18, Marketplace registered growth of 86.5%, reaching GMV of R$ 1,440.1 million and with a 46.4% share of total GMV.
o Sellers: B2W Marketplace connected more than 2,400 new sellers in 1Q18, going from a base of 9,700 sellers in Dec/17 to over 12,100 sellers in Mar/18. The base of sellers increased by 2.4x from 1Q17 to 1Q18 (from 5,000 to 12,100 sellers). The feedback from the sellers has been superior sales volume on the B2W Marketplace when compared to other platforms available in the market.
o Assortment: The B2W Marketplace assortment increased by 82%, from a base of 2.7 million items in 1Q17 to 4.9 million items at the end of 1Q18.
o C2C: In 1Q18, the B2W Marketplace commenced new categories in the C2C (Customer to Customer)
operation, extending beyond the sale of Books, Games and Musical Instruments. The C2C operation provides unlimited assortments and contributes significantly to increases in traffic to the sites and expanding the B2W customer base.
LET’S - Logistics and Operations The Shared management platform for the logistics and distribution assets of B2W and Lojas Americanas. LET'S is building a flexible Fulfillment model (Flexible Fulfillment Platform) to maximize each company's competencies to capture every opportunity of cross-platform operation. In this sense, several initiatives are already underway in both Companies, including the acceleration of the following important fronts:
o O2O (Online to Offline)
Lojas Americanas on the Marketplace. In 4Q17, Lojas Americanas was connected to B2W's
Marketplace, making its products available for delivery in the states of RJ, SP and MG. By the end of 2018, deliveries will be extended to all Brazilian states.
Delivery to Store (Click and Collect). Currently available at 400 Lojas Americanas Stores for deliveries of 1P products and will be expanded to 800 stores by the end of the year, and include the assortment from sellers connected to B2W Entrega (Delivery). The offering will be the only Click and Collect operation with presence in all Brazilian states.
Every Store as a Seller. The initiative enables any physical store to be a seller in the B2W Marketplace, with product withdrawal (store inventory) within 1 hour after purchase online. Throughout 2018, all of the current 1,320 Lojas Americanas locations, plus those that will be opened by the end of the year, will be connected to the program.
o B2W Entrega (Delivery): The platform that operates and controls Marketplace deliveries. Currently the sellers connected to B2W Entrega have 3 types of service: Fulfillment (storage+delivery), Pick Up (pick up at the DC of the Seller + delivery), and Drop Off Hub (Seller delivers to one of the Direct Hubs + delivery).
Connected Sellers: B2W Entrega reached more than 7,700 sellers at the end of 1Q18, representing 64% of the total base of sellers and participating in more than 50% of the orders placed in Marketplace. At the end of the year, the platform was integrated into the Prime loyalty program, allowing sellers to make their items available to members of the program.
Drop off in Store. By the end of 2018, B2W Entrega will make available a new order picking template for Marketplace sellers who can post their products at Lojas Americanas.
o Direct: In 1Q18, Direct achieved a 98% share of total deliveries made by the Company in direct
sales/1P. Revenue from external customers accounted for 45% of total revenues in the quarter.
Direct Day: The event brought together more than 240 participants from all over the country with the goal of promoting synergies and engagement among logistics and associate partners. In addition, during the event, the 2018 Direct Excellence Program (PED) was launched, whose mission is to enable all parties involved in the logistics and distribution process to support sustainable business growth. Lastly, an award was also given to the drivers and operational bases that had the best performances in 2017.
4
4
Mobile and Technology
o Traffic: During 1Q18, traffic from mobile devices accounted for 65.3% of total visits, an increase of 14.7p.p. compared to 1Q17.
o Apps: 2.5 million downloads in 1Q18, up 121% over 1Q17 and totaling approximately 21 million downloads since inception.
o Artificial Intelligence: As a result of 2 years of research and development, B2W created Marvin, an
artificial intelligence (AI) system. In late 2017, the decision was made to make Marvin an open source AI system for the global developer community, allowing for a robust and innovative platform to use the technology and in turn accelerate the knowledge of Marvin. Marvin is instrumental in enhancing B2W's Last Mile, Buy Box, Pricing, and Product Search (SEO) systems, among others.
Digital Services
o B2WAds: The B2W Marketplace native ads platform connected 332 new sellers throughout 1Q18, totaling a base of more than 1,600 advertisers. B2WAds allows Sellers to have greater visibility of their products within B2W sites and drive increased sales.
o BIT Services: Provides complete technology solutions to support the operations and sustainable growth of Marketplace sellers and major online operations
Sieve: Pricing Intelligence – Online Stores Site Blindado: Security and Virtual Credibility Infoprice: Pricing Intelligence – Offline Stores Admatic: Digital Marketing Skyhub: Marketplace Integration
Financial Services
o Credit Promotion: In 1Q18, B2W and Cetelem’s joint venture (Submarino Finance and Digital Finance) recorded volume of R$ 824.1 million in approved transactions, representing an increase of 15% compared to 1Q17. In the same period, the receivables portfolio for these operations was R$ 1.26 billion, up 15% compared to 1Q17.
As of March 31, 2018, the operations registered 2.7 million cards issued (1.756 million for Submarino Finance and 980 thousand for Digital Finance, which includes the brands Americanas.com, Shoptime and Sou Barato).
The operation of the Credit Promoter is profitable for B2W. Net income in 1Q18 was 3.5 times higher than in 1Q17.
o BNDES Card: The BNDES Card is offered as a means of payment on the B2W Empresas website (corporate sales), which became the first e-commerce website to accept the Card. The BNDES card has R$ 55.4 billion in pre-approved credit and transacted R$ 2.9 billion in 2017 and R$ 441 million in 1Q18. At the end of 1Q18, the assortment available for purchases with the BNDES card on the B2W Empresas website was 5,000 items. In addition, on April 18, the BNDES card became a payment option for items of the Marketplace on the B2W Empresas site.
Customer Service
o B2W Digital’s main brands are regarded as industry benchmarks in customer service, having received the highest levels of evaluation given by the Reclame Aqui website.
o Americanas.com received the highest honor champion E-BIT award, being elected the "Loja Diamante Mais Querida".
The average score given by customers on Reclame Aqui website for B2W’s brands is 7.0 while the main competitors have an average score of 5.0.
71% of customers who registered complaints on Reclame Aqui website indicated their intent to buy again from B2W’s brands, while only 54% of customers indicated that they intended to buy again on the main competitors’ websites.
5
5
The average solution rate of B2W’s brands on Reclame Aqui website is 87%, while the average solution rate of competitors’ brands is 78%.
These achievements are the result of the Company's commitment in optimizing the quality of service and attentiveness offered to its customers.
Digital Talents
o Applied Data Science: In Feb/18, the researcher Michael Brodie (MIT) presented at the software auditorium of BIT (B2W – Innovation and Technology), RJ, for all the software engineers of the Company. The presentation was focused on an Applied Data Science project, a topic which originated in his book in partnership with Professor Michael Stonebreaker (also of MIT). The presentation featured an analysis of B2W's position on the subject and a comparison of B2W against several of the largest global companies. Finally, presentation included mechanisms for how the Company can benefit from the approach used by other companies.
o Brazil Conference at Harvard and MIT and Hack Brazil: B2W supported and participated in the fifth edition of the Brazil Conference at Harvard and MIT. Held by the Brazilian student community in Boston to promote the meeting with leaders, this mission was to find innovative solutions for the future of Brazil. We also supported HackBrazil, a competition for innovation and technology, which nominated five finalists to take part in the final on April 6 and 7, 2018 in Boston, Massachusetts.
o Summer Job: In January 2018, B2W held the Summer Job Program for the sixth time, to recruit
students from the most prestigious Brazilian universities both in our São Paulo and Rio de Janiero offices.
o Hackathon: As a stimulus to the development of entrepreneurial technological projects with potential to create new businesses, we promoted 3 editions of the IronBIT event, where important initiatives were developed through the practice of hackathon (programming marathon). Altogether there were more than 200 registered, and 40 innovative projects developed.
Corporate Governance and Sustainability
o Transparency: B2W is among the most transparent companies in Brazil for the quality of its financial statements, being one of the winners of the “Transparency Trophy” at the 21st ANEFAC (Associação Nacional dos Executivos de Finanças).
o Communication with the Market: Reflecting the search for efficiency in communication with the
market and in the best practices of Investor Relations, B2W was selected in two categories in the Latin America Executive Team 2017 ranking, promoted by Institutional Investor Magazine. The Company ranked among the top 3 companies in the categories “Best IR By Team, Small Cap” (Consumer/Retailing) and “Best IR Professionals Small Cap” (Consumer/Retailing).
o IBOVESPA: The Company's shares (BTOW3) were included with a participation of 0.344% in the theoretical portfolio of the Ibovespa, which became effective on May 7, 2018. The index is considered the most important indicator of performance of the Brazilian stock market.
o ISE: For the fourth consecutive year, B2W was selected to the Corporate Sustainability Index (ISE) 2018, the B3 S.A. – Brasil, Bolsa, Balcão.
o Social Projects: B2W will support another 8 projects listed on the BSE Social Investment Exchange (BVSA) and will reinforce its partnership with Galpão Aplauso to offer the logistics operator course to young residents of Barueri, Itapevi and surrounding areas.
o Ethics: In April 2018, B2W became a signatory of the Integrity and Anti-Corruption Business Pact, an initiative developed by the Ethos Institute, which aims to unite companies and promote a more ethical and rational market and to eradicate bribery and corruption.
o Awards: The result of the work carried out by B2W can be recognized through market benchmarks,
which attest to the credibility and strength of the brands. In 2018, Americanas.com ranked first in the "Online Sales" category at the Marcas Mais do Estadão Awards. In the Reputation Pulse, the Company
6
6
won first place in the category "Electronic Commerce" and the Chico Mendes Socioambiental award recognition for "Green Seal Certification".
FINANCIAL HIGHLIGHTS
The financial information serving as the basis for the comments below refer to 1Q18, and are in accordance with international financial reporting standards (IFRS), with the standards issued by the Securities and Exchange Commission of Brazil (CVM), as well as the listing rules of the Novo Mercado and in Brazilian reais (R$). Definitions for adjusted financial metrics can be found in Annex III and Annex V. Beginning in January 2018, the Company's income statements reflect the new accounting practices implemented by CPC 47/IFRS 15 and CPC 48/IFRS 9. Therefore, in order to maintain the comparability of results (1Q18 vs 1Q17), the income statement for the quarter ended March 31, 2017 (1Q17), which can be verified in Appendix II (page 10), is being restated. The main effects of the new accounting practices are on GMV and Gross Revenue, which are presented net of conditional discounts (previously accounted for in the financial result) and deducted from sales with related parties (without effects on Adjusted EBITDA). With the change in accounting for conditional discounts, Adjusted EBITDA is reduced by the same amount as the positive effect observed in the Financial Result, without change in Net Income. Accordingly, Total GMV for 1Q17 was adjusted by R$ 167.8 million, from R$ 2,667.8 million (presented in 1Q17) to R$ 2,500.1 million. Gross Revenue in 1Q17 was adjusted by the same amount, from R$ 1,976.3 MM (presented in 1Q17) to R$ 1,808.5 MM. Adjusted EBITDA for 1Q17 was adjusted by R$ 66.7 MM (conditional discounts in 1Q17), from R$ 109.0 MM (presented in 1Q17) to R$ 42.3 MM, while the Financial Result presented a positive adjustment in the same amount, going from R$ -282.4 MM to R$ -215.8 MM. The reconciliation of the result reflecting the accounting changes referred to are available in Appendix II, page 10.
Total GMV: In 1Q18, the GMV was R$ 3,103.1 million, an increase of 24.1% when compared to the R$ 2,500.1 million recorded in 1Q17. B2W's Marketplace continues to develop rapidly and reached GMV R$ 1,440 million in 1Q18 (86.5% growth), representing 46.4% of total GMV.
Gross Revenue: In 1Q18, gross revenue totaled R$ 1,810.0 million, compared to R$ 1,808.5 million recorded in 1Q17.
Net Revenue: In 1Q18, net revenue totaled R$ 1,476.6 million, compared to R$ 1,455.0 million in the 1Q17.
Adjusted Gross Profit: In 1Q18, adjusted gross profit totaled R$ 399.4 million, compared to R$ 307.0 million in 1Q17. Adjusted gross margin increased 5.9 p.p., from 21.1% in 1Q17 to 27.0% in 1Q18.
Adjusted Selling, General and Administrative (SG&A) Expenses: In 1Q18, adjusted expenses totaled R$ 331.9 million vs. R$ 264.7 in 1Q17.
Adjusted EBITDA: In 1Q18, Adjusted EBITDA, with the realization of changes in accounting practices, reached R$ 67.4 million, compared to R$ 42.3 million in 1Q17. Adjusted EBITDA margin varied from 2.9% in 1Q17 to 4.6% in 1Q18, an increase of 1.7 p.p.
Net Financial Result: In 1Q18, net financial income was R$ -120.6 million, representing a 44.1% reduction in
relation to the R$ -215.8 million recorded in 1Q17.
Net income: In 1Q18, net income was R$ -115.1 million, representing a 34.9% reduction in relation to the R$ -176.8 million recorded in 1Q17.
7
7
Cash Management:
o Cash Generation: Reduction of R$ 668.9 MM in cash consumption in 1Q18. Cash consumption in 1Q18 totaled R$ 477.5 million, a reduction of 58% compared to the R$ 1,146.0 million recorded in 1Q17. As a way of capturing all effects, cash generation / consumption is measured by the variation of net debt in relation to the previous quarter, always disregarding possible impact of capital increase operations.
o Working Capital: Improved 14 days (1Q18 vs. 1Q17), mainly due to the strong acceleration of 3P (Marketplace).
It is important to remember that Marketplace (whose credit card transactions are approved on the B2W platform and make up the gross balance of receivables) does not demand Working Capital (B2W is an intermediary and receives a commission on realized sales).
o CAPEX: B2W uses its cash generation prioritizing investments that present optimal returns to shareholders. Accordingly, consolidated investments in property, plant and equipment and intangible assets (development of websites and systems) in 1Q18 totaled R$ 77.5 million, representing 2.5% of total GMV.
Financial Debt: B2W’s cash balance, excluding FIDC consolidation, at 03/31/2018 totaled R$ 4,884.1 million, covering 3.1x the sum of the Company's short-term debt, which totaled R$ 1,578.3 million. It should be noted that this indicator is not used in debt restrictive clauses (Debt Covenants and Cross Default) in the Company's loan and financing agreements.
8
8
ANNEX I: ABOUT B2W DIGITAL
B2W Digital is the leader in Latin America and its purpose is to CONNECT PEOPLE, BUSINESS, PRODUCTS
AND SERVICES IN A DIGITAL PLATFORM.
The Company has the largest and most beloved Internet brands (Americanas.com, Submarino, Shoptime and Sou
Barato) and the fastest growing Marketplace operation. The platform built over the years allows B2W to also offer
technology, logistics, distribution, customer service and payment.
DIGITAL PLATFORM AND B2W VIRTUOUS CYCLE:
9
9
ANNEX II: FINANCIAL STATEMENTS
EXCLUDING THE EFFECTS OF B2W DIGITAL’S TRANSPORTATION SUBSIDIARIES
Effects of the consolidation of B2W Digital’s transportation subsidiaries.
NON-EXCLUDING THE CONSOLIDATION OF B2W DIGITAL’S TRANSPORTATION SUBSIDIARIES
B2W - Companhia Digital
Income Statements¹
(in million of Brazilian reais) 1Q18 1Q17 Variation
Restated
Gross Merchandise Volume (GMV) 3,103.1 2,500.1 24.1%
Gross Sales and Services Revenue 1,810.0 1,808.5 0.1%
Taxes on sales and services (333.4) (353.5) -5.7%
Net Sales and Services Revenue 1,476.6 1,455.0 1.5%
Cost of goods and services sold (1,077.3) (1,148.0) -6.2%
Gross Profit 399.4 307.0 30.1%
Gross Margin (% NR) 27.0% 21.1% 5.9 p.p.
Operating Revenue (Expenses) (437.8) (355.2) 23.3%
Selling expenses (295.8) (245.3) 20.6%
General and administrative expenses (36.1) (19.4) 86.1%
Depreciation and amortization (105.9) (90.5) 17.0%
(38.4) (48.2) -20.3%
Net Financial Result (120.6) (215.8) -44.1%
Financial revenues 124.6 126.1 -1.2%
Financial expenses (245.1) (341.9) -28.3%
Non-controlling shareholder participation 0.1 0.1 -
Other operating income (expenses) (11.1) (6.3) 76.2%
Income tax and social contribution 54.8 93.4 -41.3%
Net Result (115.1) (176.8) -34.9%
Net Margin (% NR) -7.8% -12.2% 4.4 p.p.
Adjusted EBITDA 67.4 42.3 59.3%
Adjusted EBITDA Margin (% NR) 4.6% 2.9% 1.7 p.p.
¹ Reflecting adjustments to CPC 47 / IFRS 15 and CPC 48 / IFRS9, as indicated on page 6 (Financial Highlights section)
Consolidated
Period ended on March 31
Operating Result before Net Financial Result and
Equity Accounting
B2W - Companhia Digital
Income Statements¹
(in million of Brazilian reais) 1Q18 1Q17 Variation
Restated
Gross Merchandise Volume (GMV) 3,103.1 2,500.1 24.1%
Gross Sales and Services Revenue 1,810.0 1,808.5 0.1%
Taxes on sales and services (333.4) (353.5) -5.7%
Net Sales and Services Revenue 1,476.6 1,455.0 1.5%
Cost of goods and services sold (1,122.7) (1,203.9) -6.7%
Gross Profit 354.0 251.1 41.0%
Gross Margin (% NR) 24.0% 17.3% 6.7 p.p.
Operating Revenue (Expenses) (392.4) (299.3) 31.1%
Selling expenses (250.4) (189.4) 32.2%
General and administrative expenses (36.1) (19.4) 86.1%
Depreciation and amortization (105.9) (90.5) 17.0%
(38.4) (48.2) -20.3%
Net Financial Result (120.6) (215.8) -44.1%
Financial revenues 124.6 126.1 -1.2%
Financial expenses (245.1) (341.9) -28.3%
Non-controlling shareholder participation 0.1 0.1 -
Other operating income (expenses) (11.1) (6.3) 76.2%
Income tax and social contribution 54.8 93.4 -41.3%
Net Result (115.1) (176.8) -34.9%
Net Margin (% NR) -7.8% -12.2% 4.4 p.p.
Adjusted EBITDA 67.4 42.3 59.3%
Adjusted EBITDA Margin (% NR) 4.6% 2.9% 1.7 p.p.
¹ Reflecting adjustments to CPC 47 / IFRS 15 and CPC 48 / IFRS9, as indicated on page 6 (Financial Highlights section)
Consolidated
Period ended on March 31
Operating Result before Net Financial Result and
Equity Accounting
10
10
INCOME STATEMENT WITH RECONCILIATION OF ACCOUNTING CHANGE CPC 47 / IFRS 15 E CPC 48 / IFRS 9
Effects of the consolidation of B2W Digital’s transportation subsidiaries.
B2W - Companhia Digital
Income Statements
(in million of Brazilian reais)1Q17 Adjustment 1Q17
Restated
Gross Merchandise Volume (GMV) 2,667.8 (167.8) 2,500.1
Gross Sales and Services Revenue 1,976.3 (167.8) 1,808.5
Taxes on sales and services (375.6) 22.1 (353.5)
Net Sales and Services Revenue 1,600.7 (145.7) 1,455.0
Cost of goods and services sold (1,227.0) 79.0 (1,148.0)
Gross Profit 373.7 (66.7) 307.0
Gross Margin (% NR) 23.3% -2.2 p.p. 21.1%
Operating Revenue (Expenses) (355.2) - (355.2)
Selling expenses (245.3) - (245.3)
General and administrative expenses (19.4) - (19.4)
Depreciation and amortization (90.5) - (90.5)
18.5 (66.7) (48.2)
Net Financial Result (282.4) 66.7 (215.8)
Financial revenues 126.1 - 126.1
Financial expenses (408.5) 66.7 (341.9)
Non-controlling shareholder participation 0.1 - 0.1
Other operating income (expenses)* (6.3) - (6.3)
Income tax and social contribution 93.4 - 93.4
Net Result (176.8) - (176.8)
Net Margin (% NR) -11.0% -1.2 p.p. -12.2%
Adjusted EBITDA 109.0 (66.7) 42.3
Adjusted EBITDA Margin (% NR) 6.8% -3.9 p.p. 2.9%
Consolidated
Period ended on March 31
Operating Result before Net Financial Result and
Equity Accounting
B2W - Companhia Digital
Income Statements
(in million of Brazilian reais)1Q17 Adjustment 1Q17
Restated
Gross Merchandise Volume (GMV) 2,667.8 (167.8) 2,500.1
Gross Sales and Services Revenue 1,976.3 (167.8) 1,808.5
Taxes on sales and services (375.6) 22.1 (353.5)
Net Sales and Services Revenue 1,600.7 (145.7) 1,455.0
Cost of goods and services sold (1,282.9) 79.0 (1,203.9)
Gross Profit 317.8 (66.7) 251.1
Gross Margin (% NR) 19.9% -2.6 p.p. 17.3%
Operating Revenue (Expenses) (299.3) - (299.3)
Selling expenses (189.4) - (189.4)
General and administrative expenses (19.4) - (19.4)
Depreciation and amortization (90.5) - (90.5)
18.5 (66.7) (48.2)
Net Financial Result (282.4) 66.7 (215.8)
Financial revenues 126.1 - 126.1
Financial expenses (408.5) 66.7 (341.9)
Non-controlling shareholder participation 0.1 - 0.1
Other operating income (expenses)* (6.3) - (6.3)
Income tax and social contribution 93.4 - 93.4
Net Result (176.8) - (176.8)
Net Margin (% NR) -11.0% -1.2 p.p. -12.2%
Adjusted EBITDA 109.0 (66.7) 42.3
Adjusted EBITDA Margin (% NR) 6.8% -3.9 p.p. 2.9%
Consolidated
Period ended on March 31
Operating Result before Net Financial Result and
Equity Accounting
11
11
BALANCE SHEET
B2W - Companhia Digital
Balance Sheet
(in million of Brazilian reais)
ASSETS
CURRENT ASSETS
Cash and banks 2,556.5 1,469.5
Marketable securities 2,327.6 2,987.2
Accounts receivable 328.8 414.7
Inventories 1,053.3 1,207.3
Recoverable taxes 477.0 397.8
Prepaid expenses and other accounts 532.8 483.0
Total Current Assets 7,276.0 6,959.5
NON CURRENT ASSETS
Deferred income tax and social contribution 1,012.7 953.7
Recoverable taxes 1,151.1 1,142.2
Escrow deposits and other receivables 117.9 110.7
Plant, property and equipment 457.1 469.8
Intangible assets 2,970.8 2,987.2
Total Non-Current Assets 5,709.6 5,663.6
TOTAL ASSETS 12,985.6 12,623.1
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Suppliers 1,329.3 1,766.6
Loans and financing 1,667.0 1,563.7
Debentures 4.2 0.3
Salaries and social contribution 52.5 52.3
Taxes payable 38.5 51.2
Deferred income tax and social contribution 3.8 5.9
Other accounts payable 263.9 257.4
Total Current Liabilities 3,359.2 3,697.4
NON-CURRENT LIABILITIES
Loans and financing 5,197.7 4,478.1
Debentures 200.0 200.0
Related parties 222.8 126.9
Provision for contingencies and other accounts payable 211.3 215.0
Total Non-Current Liabilities 5,831.8 5,020.0
SHAREHOLDERS' EQUITY
Capital 5,709.2 5,709.2
Advance for future capital increase - -
Capital reserves 56.5 52.3
Equity valuation adjustment (0.9) (0.9)
Accumulated income (losses) (1,969.8) (1,854.6)
Minority interest (0.4) (0.3)
Total Shareholders' Equity 3,794.6 3,905.7
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 12,985.6 12,623.1
3/31/2018 12/31/2017
Consolidated
12
12
CASH FLOW STATEMENT
B2W - Companhia Digital
Cash Flow Statement
(in million of reais)
Operating Activities 3/31/2018 3/31/2017 Variation
Net Result for the Period (115.3) (176.9) (61.6)
Adjustment to the Net Result:
Depreciation and amortization 106.6 91.2 (15.4)
Deferred income tax and social contribution (59.0) (97.6) (38.6)
Interest, monetary and currency changes 124.4 138.5 14.1
Others (14.5) (3.0) 11.5
Adjusted Net Result 42.2 (47.8) (90.0)
Change in Working Capital:
Accounts receivable 128.9 141.8 12.9
Inventories 158.8 302.2 143.4
Suppliers (461.0) (1,012.1) (551.1)
Change in Working Capital: (173.3) (568.1) (394.8)
Change in Assets:
Prepaid expenses 2.9 5.4 2.5
Escrow deposits (7.2) (1.3) 5.9
Recoverable taxes (88.1) 2.5 90.6
Other accounts receivable (current and non-current) (52.8) (51.9) 0.9
Change in Assets: (145.2) (45.3) 99.9
Change in Liabilities
Salaries and social security charges 0.2 (4.8) (5.0)
Recoverable taxes (current and non-current) (12.7) (40.4) (27.7)
Other liabilities (current and non-current) (2.9) (81.8) (78.9)
Accounts payable/receivable (related companies) 95.9 (44.2) (140.1)
Change in Liabilities: 80.5 (171.2) (251.7)
Interest Expense on Loans and Debentures (56.6) (75.0) (18.4)
Paid Income Tax and Social Contribution - 1.8 1.8
Cash Flow from Operating Activities (252.4) (905.6) (653.2)
Investing Activities
Marketable securities 659.6 (10.0) (669.6)
Purchases of property, plant and equipment assets (2.2) (1.6) 0.6
Intangible assets (75.3) (63.9) 11.4
Value paid for the acquisition of subsidiaries (1.7) (23.1) (21.4)
Cash Flow from Investing Activities 580.4 (98.6) (679.0)
Financing Activities
Funding 1,000.0 589.0 (411.0)
Payments (241.0) (111.4) 129.6
Capital increase in cash - 752.2 752.2
Advance for future capital increase - - -
Cash Flow from Financing Activities 759.0 1,229.8 470.8
Change in cash balance 1,087.0 225.9 (861.1)
Beginning Cash Balance 1,469.5 224.2 (1,245.3)
Ending Cash Balance 2,556.5 450.1 (2,106.4)
Consolidated
13
13
ANNEX III: NOTE REGARDING THE FINANCIAL STATEMENTS
Effects in the consolidation of B2W Digital’s transportation subsidiaries Click-Rodo and Direct (subsidiaries of B2W Digital) provide merchandise distribution services to the Company, generating an elimination effect in consolidated gross revenue and selling, general and administrative expenses (distribution expenses), according to the present accounting rules. The consolidated gross profit is reduced in an amount equal to the positive effect observed in the selling, general and administrative expenses, but with no effect on Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA On October 4th, 2012, Brazilian Securities Exchange Commission (CVM) enacted Instruction 527/12, regarding the voluntary disclosure of non-accounting information such as EBITDA. The Instruction aims to standardize the disclosure, in order to improve the understanding of this information and make it comparable among publicly listed companies. In order the maintain consistency and comparability between previous periods, we present the reconciliation of EBITDA. In 1Q18, Adjusted EBITDA was R$ 67.4 million. Including other operating income and expenses, EBITDA, according to CVM Instruction 527/12, would be R$ 56.3 million in 1Q18 (3.8% of NR) vs. R$ 36.0 million in 1Q17 (2.5% of NR).
14
14
ANNEX IV: INDEBTEDNESS
The level of leverage of B2W (net debt / EBITDA) is not used for covenants purposes in the Company's loan and financing agreements. ¹ Excludes capital increase effects
Accounts receivable are mainly composed of credit card receivables, net of the discounted value, which have immediate liquidity and can be considered as cash. The breakdown of B2W’s accounts receivable is demonstrated in the following table:
Consolidated Indebtedness - R$ MM 3/31/2018 3/31/2017 3/31/2018 3/31/2017
Short Term Debt 1,667.0 574.1 1,578.3 574.1
Short Term Debentures 4.2 8.4 4.2 8.4
Short Term Indebtedness 1,671.2 582.5 1,582.5 582.5
Long Term Debt 5,197.7 3,885.1 5,197.7 3,416.3
Long Term Debentures 200.0 200.0 200.0 200.0
Long Term Indebtedness 5,397.7 4,085.1 5,397.7 3,616.3
Total Debt (1) 7,068.9 4,667.5 6,980.2 4,198.7
Cash and Equivalents 4,884.1 2,062.9 4,884.1 2,062.9
241.1 489.8 152.4 21.0
Total Cash (2) 5,125.2 2,552.7 5,036.5 2,083.9
Net Debt (Cash) (2) - (1) 1,943.7 2,114.8 1,943.7 2,114.8
Net Debt (Cash) / Adjusted EBITDA LTM (477.5) (1,146.0) (477.5) (1,146.0)
Average Maturity of Debt (days) 805 790 814 840
Including FIDC
Effects
Excluding FIDC
Effects
Credit Card Accounts Receivables Net of Discounts
Consolidated Accounts Receivable Reconciliation - R$ MM 3/31/2018 3/31/2017 3/31/2018 3/31/2017
Gross Credit Cards Receivables 3,318.1 2,741.5 3,318.1 2,741.5
Discounted Receivables (3,077.1) (2,251.7) (3,165.7) (2,720.5)
241.1 489.8 152.4 21.0
Present Value Adjustment (3.0) (0.7) (3.0) (0.7)
Allowance for Doubtful Accounts (34.9) (25.9) (34.9) (25.9)
Other Accounts Receivable 125.6 162.2 125.6 162.2
Net Accounts Receivable - Consolidated 328.8 625.4 240.1 156.6
Credit Card Receivables - Net of Discounted Amount
Including FIDC
Consolidation
Excluding FIDC
Consolidation
15
15
ANNEX V: DEFINITIONS
Adjusted EBITDA: Operational earnings before interest, taxes, depreciation and amortization and excluding other operational revenues/expenses and equity accounting.
Adjusted Gross Profit: Gross profit excluding the effects of the consolidation of B2W Digital’s transportation subsidiaries.
Adjusted Selling, General, and Administrative (SG&A): SG&A excluding the effects of the consolidation of B2W Digital’s transportation subsidiaries.
GMV (Gross Merchandise Volume): Sales of own merchandise, sales realized on the Marketplace, and other revenues (excluding commissions from Marketplace sales), after returns and including taxes.
Marketplace Participation: Marketplace sales as a percentage of total consolidated GMV.
Market Share: Total sales on B2W sites, including those made on the Marketplace, divided by total market sales (source: e-Bit).
Net Debt (Cash): Calculated as the sum of short-term and long-term indebtedness, less the sum of cash & equivalents and credit card accounts receivables (net of the discounted balance).
New Customers: Increase in active customer base during the trailing 12 months.
Working Capital: Calculated as the sum of days of trade accounts receivable (using GMV as a basis) and inventory days, minus vendor days, considering GMV and CMV in the last 12 months.
16
16
INFORMATION ABOUT THE WEBCAST AND THE CONFERENCE CALL
Conference calls with simultaneous translation into English, followed by a bilingual Q&A session, will be held as followed: