Forward-Looking Statements

Transcription

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2 Forward-Looking Statements This presentation, prepared by Netshoes (Cayman) Limited (the Company ), contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1993, as amended, and Section 21E of the Securities Exchange of 1934, as amended. Statements contained herein that are not clearly historical in nature, including statements about the Company s strategies and business plans, are forward-looking, and the words anticipate, believe, continues, expect, estimate, intend, strategy, project and similar expressions and future or conditional verbs such as will, would, should, could, might, can, may, or similar expressions are generally intended to identify forward-looking statements. The Company may also make forwardlooking statements in its periodic reports filed with the U.S. Securities and Exchange Commission (the SEC ), in press releases and other written materials and in oral statements made by its officers and directors. These forward-looking statements speak only as of the date they are made and are based on the Company s current plans and expectations and are subject to a number of known and unknown uncertainties and risks, many of which are beyond the Company s control. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Company s goals and strategies; Company s future business development; Company s ability to maintain sufficient working capital, the continued growth of ecommerce in Latin America, the Company s ability to predict and react to changes in consumer demand or shopping patterns, Company s ability to retain or increase engagement of consumers, Company s ability to maintain or grow its net sales or business, general economic and political conditions in the countries where it operates. Further information regarding these and other risks is included in the Company s filings with the SEC. As a consequence, current plans, anticipated actions and future financial position and results of operations may differ significantly from those expressed in any forward-looking statements in this announcement. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented as there is no guarantee that expected events, trends or results will actually occur. We undertake no obligation to update any forward-looking statements, whether as a result of new information or future events or for any other reason. This presentation may also contain estimates and other information concerning our industry that are based on industry publications, surveys and forecasts. This information involves a number of assumptions and limitations, and have not independently verified the accuracy or completeness of the information. 2

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4 2Q-2018 HIGHLIGHTS REGISTERED MEMBERS 24.0m +20% yoy INVOICED ORDERS 2.9m +2% yoy ACTIVE CUSTOMERS 6.8m +15% yoy ORDERS PLACED BY MOBILE DEVICES 54% +11 p.p. yoy B2C GMV growth of 6.4% affected by the trucker s strike and warmer winter season Increasing efficiency on marketing expenses Positive Adjusted EBITDA leveraged on SG&A efficiency Net working capital cycle reduction of 16 days, reaching 46 days Operating cash flow generation of R$70 million MARKETPLACE GMV R$70.2m 7.7% +6.0pp YoY GMV Penetration +73% yoy R$200m (+421% YoY) AVERAGE BASKET SIZE R$213 Debt restructuring completed: R$108 million deferred with twelve months grace period and one-year term extension +2% yoy Agreement to sell Netshoes Mexico to Grupo Sierra Capital 4

5 ENHANCING VALUE AS IMPLEMENTATION OF STRATEGIC PILLARS DRIVES BALANCED MIX As % of Consolidated GMV Marketplace Private Label Fashion and Beauty 12.4% 10.8% 12.3% 20.3% 7.3% 11.1% 9.9% 11.0% 18.0% 18.3% 6.4% 16.0% 2Q17 2Q17 2Q17 5

6 2Q / 1H 2018 OPERATING AND FINANCIAL RESULTS 6

7 GMV AND MARKETPLACE GROWTH GMV (R$ millions) % YoY Growth +8.5% % YoY Growth +6.4% INVOICED ORDERS (millions) % % GMV growth of B2C business (FX neutral) 2Q17 1H17 1H18 GMV growth by geography AVERAGE BASKET SIZE (R$) % YoY Growth +4.2% +1.4% 1.4 % in Brazil 8.0 % in LatAm (FX neutral) 1H % in Brazil 7.1 % in LatAm (FX neutral) % % Q17 1H17 1H18 Basket Size growth (FX neutral) 7

8 NET SALES GROWTH (R$ millions) Consolidated % YoY Growth +1.4% +2.8% Brazil +0.3% +2.1% -0.3% -2.5% % 89% % % 90% % Q17 Net Sales growth of B2C business 1H17 1H18 International 12% 11% 2Q17 Net sales Brazil as % of consolidated net sales Net sales International as % of consolidated net sales 11% 10% 1H17 1H % +8.4% -8.3% -6.6% Net Sales growth of B2C business (FX neutral) 2Q17 Net Sales growth (FX neutral) 1H17 1H18 8

9 GROSS MARGIN (In R$ millions and as % of Net Sales) Consolidated Gross Profit & Margin Gross Margin key impacts: vs 2Q p.p. 33.1% 30.6% Q % 30.4% 31.8% H17 1H p.p: higher mix of marketplace and operating gains p.p: warmer winter on Zattini s fashion collection p.p: B2B operation p.p: APV reflect of optimization on purchases p.p: lower tax benefits (EC 87) Excluding positive effect in 1Q17 related ICMS (VAT) tax credits on past transactions of R$10.1 million (1.2 p.p. increase in gross margin) 9

10 CONTINUING GAINS OF EFFICIENCY ON SELLING AND MARKETING EXPENSES (In R$ millions and as % of Net Sales) Selling 1 and Marketing Expenses Selling & Marketing Exp. as % of net sales: 26.0% 24.1% 25.7% 25.6% Marketing Exp. as % of net sales: 12.0% 11.3% 10.6% 11.1% Marketing Exp. as % GMV B2C: 9.2% 8.1% 8.2% 8.0% Marketing Expenses Selling Expenses 1 2Q17 1H17 1H18 1. Net of depreciation and amortization. 10

11 CONTINUING G&A OPTIMIZATION AND EXPENSES CONTROL (In R$ millions and as % of Net Sales) G&A 1 and other Expenses G&A key impacts: vs 2Q17 8.2% p.p. 6.5% % 7.4% % p.p.: lower IT maintenance cost based on the implementation of the new platform p.p.: rationalization of administrative expenses Q17 1H17 1H18 Excluding positive effect in 1Q17 of remeasurement of share plan (SOP), which impacted G&A in R$12.9 million (1.5 p.p. reduction in G&A as % of net sales). 1. Net of depreciation and amortization. 11

12 ADJUSTED EBITDA AND EBITDA MARGIN (In R$ millions and % of Net Sales) Consolidated -1.0% 0.0% -0.1% -2.8% -3.4% B2C ADJ. EBITDA % 2Q17 D % 3.0% +0.9p.p 1H17 1H18 D (4.2) (0.6) +3.6 (0.6)% (0.1)% +0.5p.p. 0.2 B2B 2Q17 D 1H17 1H18 D 2Q17 1H17 1H18 ADJ. EBITDA 1.4 (4.2) (5.6) 5.0 (9.7) (14.7) (1.0) % 14.7% (366.4)% (381.1)p.p. 20.0% (131.3)% (151.3)p.p. (4.6) (24.0) (28.7) ADJ. EBITDA % 2Q17 D (11.3) (6.4) +4.9 (21.0)% (12.9)% +8.1p.p. 1H17 1H18 D (19.9) (13.5) +6.4 (21.0)% (15.2)% +5.8p.p. Excluding positive effect in 1Q17 related to the remeasurement of the Company s share plan (SOP) and ICMS (VAT) tax credits on past transactions in total amount of R$23.0 million. Hold. ADJ. EBITDA 2Q17 D (3.2) (1.4) H17 1H18 D (5.0) (5.0)

13 NET LOSS (In R$ millions and % of Net Sales) Consolidated B2C 2Q17 D 1H17 1H18 D -7.6% -8.5% -8.5% -11.6% NET LOSS (17.5) (13.7) +3.8 (67.6) (48.6) % % (4.4)% (3.4)% +1.0p.p. (9.2)% (6.5)% +2.7p.p. 2Q17 (35.2) (38.1) 1H17 1H18 B2B NET LOSS % 2Q17 D 1.4 (4.6) (6.0) 14.7% (407.2)% (421.9)p.p. 1H17 1H18 D 5.0 (10.1) (15.1) 20.0% (137.6)% (157.6)p.p. (72.9) (95.9) (98.4) NET LOSS 2Q17 D (14.6) (10.5) H17 1H18 D (25.6) (20.1) +5.5 % (27.1)% (21.3)% +5.8p.p. (27.1)% (22.8)% +4.3p.p. Hold. 2Q17 D 1H17 1H18 D Excluding positive effect in 1Q17 related to the remeasurement of the Company s share plan (SOP) and ICMS (VAT) tax credits on past transactions in total amount of R$23.0 million. NET LOSS (4.5) (9.3) (4.8) (7.8) (19.5) (11.8) 13

14 IMPROVED NET DEBT PROFILE (R$ millions) Consolidated DEBT (In R$ Millions) 2Q Q Q Q Working Capital Short-term Long-term Debenture Short-term Long-term Other Short-term Long-term Highlights: Total debt reduced from R$365.1 million in 2Q17 to R$239.1 million. Debt restructuring: R$107.7 million deferred with twelve months grace period and one-year term extension (until September 2021). TOTAL DEBT (R$) Short-term (%) 31% 37% 40% 46% Long-term (%) 69% 63% 60% 54% (-) Total Cash (459.4) (430.4) (100.1) (110.7) Cash and cash equivalents (419.9) (396.0) (60.7) (75.3) Restricted cash (39.5) (34.4) (39.5) (35.4) NET DEBT (R$) (94.3) (144.4)

15 WORKING CAPITAL CYCLE Consolidated In Days 2Q17 4Q17 1Q18 Trade Accounts Receivable Inventories Trade Accounts Payable / Reverse Factoring Cash Conversion Cycle HIGHLIGHTS: Lower volume of outstanding receivables from the B2B operation; Inventory cycle decreased 17 days when compared to 1Q-2018 mainly due to our efforts to reduce the B2C inventory level. B2C inventory reduced 11 days from 115 days in 1Q-2018 to 104 days in 2Q-2018; 18 15

16 OPERATING CASH FLOW Consolidated Cash Flow Statement (In R$ Millions) 2Q Q H H-2018 Adjusted Net Loss (13.0) Trade accounts receivable Inventories (1.9) 44.5 (40.8) 27.0 Trade accounts payable / Reverse Factoring (2.8) (8.9) (51.2) (188.7) Changes in Working Capital (7.1) (157.0) Total Changes in Assets and Liabilities (43.9) 25.1 (102.5) (21.0) Net Cash Provided by (Used In) Operating Activities (28.3) 69.6 (106.8) (190.9) Net Cash Provided by (Used in) Investing Activities (24.2) (20.4) (26.4) (49.1) Proceeds / Payment of debt (26.9) (20.3) 71.0 (48.2) Payments of interest (16.9) (15.1) (61.0) (32.7) Proceeds from issuance of common stock Net Cash Provided by (Used in) Financing Activities (35.4) (80.9) Effect of exchange rate changes on cash and cash equivalents Change in Cash and Cash Equivalents (320.7) Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period Restricted Cash Total Cash and cash equivalents, end of period Q Q H H-2018 Net Cash Used In Operating Activities (28.3) 69.6 (106.8) (190.9) (-) Credit card factoring (accounts receivable) (27.1) (30.5) (42.6) 51.5 (-) Reverse factoring (accounts payable) (11.3) (30.5) (1.5) 57.3 Adjusted Cash Used in Operating Activities (66.7) 8.6 (150.9) (82.1) R$75.3 million YoY improvement in operating cash generation if not considered the effects of factoring arrangements in

17 LOOKING AHEAD: STRENGTHENING FOUNDATION FOR SUSTAINABLE GROWTH 1.Reassessing product portfolio and pricing strategy to optimize gross margin and inventory management; 2.Continued migration from 1P to 3P with positive impact on margins and inventory cycle; 3.Streamlining SG&A expenses: preparing a Zero-Base Budget to eliminate inefficiencies as we enter 2019; 4.Specialization of Barueri warehouse to fashion operation, improving operating and fiscal efficiency; 5.Increasing penetration of NETSHOES ENTREGAS on Marketplace improving system effectiveness; 6.Continue to reduce losses from the international operations. 8.1 p.p. EBITDA margin improvement in 18 17

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19 APPENDIX

20 GMV RECONCILIATION (in R$ millions) GMV - Reconciliation 2Q17 1H17 1H18 Net sales Add (subtract): Sales taxes, net Returns Marketplace commission fees (8.7) (14.3) (13.6) (27.1) NCard activation commission fees (0.4) (0.6) (0.7) (1.1) Sub-Total: , ,054.0 GMV from marketplace GMV , ,

21 FINANCIAL RESULT RECONCILIATION (in R$ millions) Net Financial Result Reconciliation (In R$ Millions) 2Q Q H H Financial Income Financial Expenses (33.1) (23.1) (71.4) (43.2) Net Financial Result (23.0) (20.2) (56.2) (35.7) Subtract Certain Other Net Financial Result: Certain Other Financial Income: Foreign exchange gain (0.3) (0.5) (0.7) (1.0) Derivative financial instruments gain (0.0) 0.0 (0.8) 0.0 Other Financial Income (0.0) (0.1) (0.0) (0.2) Certain Other Financial Expenses: Foreign exchange loss Derivative financial instruments loss Bank charges Other Financial Expenses Net Adjusted Financial Result (18.7) (14.4) (51.4) (27.6) 17

22 EBITDA RECONCILIATION (in R$ millions) Consolidated EBITDA Reconciliation 2Q Q H H Net loss (35.2) (38.1) (72.9) (98.4) Add (subtract): (-) Income tax expense (-) Net Financial Result (-) Depreciation and Amortization Adjusted EBITDA (4.6) 0.2 (1.0) (28.7) (+) Certain Other Net Financial Result (4.3) (5.8) (4.8) (8.1) EBITDA (8.9) (5.6) (5.8) (36.9) Net Sales Adjusted EBITDA Margin % (1.0)% 0.0 % (0.1)% (3.4)% EBITDA Margin % (1.9)% (1.2)% (0.7)% (4.3)% 1 -Includes holding expenses 17

23 EBITDA RECONCILIATION (in R$ millions) EBITDA Brazil Reconciliation 2Q17 1H17 1H18 Net loss (16.1) (18.3) (39.6) (58.8) Add (subtract): (-) Income tax expense (0.0) (-) Net Financial Result (-) Depreciation and Amortization Adjusted EBITDA (10.3) (+) Certain Other Net Financial Result (3.8) (4.5) (4.9) (6.4) EBITDA (16.7) Net Sales Adjusted EBITDA Margin % 2.4 % 2.0 % 3.1 % (1.3)% EBITDA Margin % 1.5 % 0.9 % 2.5 % (2.2)% EBITDA International Reconciliation 2Q17 1H17 1H18 Net loss (14.6) (10.5) (25.6) (20.1) Add (subtract): (-) Income tax expense (-) Net Financial Result (-) Depreciation and Amortization Adjusted EBITDA (11.3) (6.4) (19.9) (13.5) (+) Certain Other Net Financial Result (0.5) (1.4) (0.7) (1.7) EBITDA (11.8) (7.7) (20.6) (15.2) Net Sales Adjusted EBITDA Margin % (21.0)% (12.9)% (21.0)% (15.2)% EBITDA Margin % (21.9)% (15.6)% (21.8)% (17.2)% 17