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Edited Transcript of BTOW3.SA earnings conference call or presentation 9-Aug-19 3:00pm GMT

Q2 2019 B2W Companhia Digital Earnings Call

Sao Paulo Aug 20, 2019 (Thomson StreetEvents) -- Edited Transcript of B2W Companhia Digital earnings conference call or presentation Friday, August 9, 2019 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Fabio da Silva Abrate

B2W - Companhia Digital - CFO & IR Officer

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Conference Call Participants

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* Gustavo Piras Oliveira

UBS Investment Bank, Research Division - Head of LatAm Research & Latin America Consumer Analyst

* Joseph Giordano

JP Morgan Chase & Co, Research Division - Senior LatAm Healthcare Analyst

* Luiz Felipe Poli Guanais

Banco BTG Pactual S.A., Research Division - Research Analyst

* Ruben Couto

Itaú Corretora de Valores S.A., Research Division - Former Research Analyst

* Tobias Stingelin

Citigroup Inc, Research Division - Director

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Presentation

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Operator [1]

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(technical difficulty)

and thank you for waiting. Welcome to the B2W Digital Earnings Call of the Second Quarter 2019. We have Mr. Fabio Abrate Finance and Investor Relations Officer for B2W; and Mr. Carlos Padilha, Finance and Investor Relations Officer for Lojas earlier with us today.

We suggest you access the company's support presentation at ri.b2w.digital to help you follow this conference closely. We would like to inform you that this call is being recorded. (Operator Instructions)

Before we proceed we would like to clarify that statements made during this call regarding B2W's business prospects, projections operational and financial goals, reflect beliefs and parameters of the company's Board of Directors and provide information available which are not guarantee of performance. They involve risks, uncertainties and assumptions as they are related to future events and therefore depending on circumstance that may not occur.

Investors must understand that general economic outlook, industry conditions and other operational factors may affect B2W's future performance and lead to results that differ considerably from those expressed in the statements made during this call.

We will now like to hand this call over to Mr. Abrate who will begin the presentation. Mr. Abrate you can begin.

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Fabio da Silva Abrate, B2W - Companhia Digital - CFO & IR Officer [2]

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Good afternoon, ladies and gentlemen, I would like to thank you all for attending this call. I would like to wish you a Happy Father's Day and that's coming Sunday. And we will now begin the presentation on Slide 3, where we will show the highlights of this quarter.

Total GMV reached of BRL 3.9 billion with the growth 21.8% compared to 10.8% growth in the market according to EBIT, resulting in our market share a gain of 2.7 %age points going from 27% in the second quarter of 2018 to 29.7% in the second quarter of 2019.

Marketplace keeps on growing fast with GMV reaching BRL 2.3 billion, growing 51.4% and with 58.7% participation in total GMV, an increase of 11.5 percentage points compared to the second quarter of 2018. In this quarter, 5,500 new sellers connecting Marketplace and we also connected 5,900 sellers in B2W -- B2W Entrega, I'm sorry.

On Slide 4, cash flow was positive and BRL 6.4 million in this quarter. The best results over the last 9 years in a second quarter. These results represent a growth of BRL 40.3 million compared to cash consumption of BRL 33.9 million recorded in the second quarter of '18. In this manner, we reiterate our goal for 2019 to achieve positive cash flow.

And Slide 5, we would like to highlight the Marketplace growth with the GMV of BRL 9.3 billion over the last 12 months with a growth of 57.3%. The robust performance of Marketplace is a result of these joint efforts of B2W and sellers to offer the best value proposition for customers. In this setting, B2W keeps supporting sellers so that they can keep on growing and have their operations going at sustainable manner to encourage. entrepreneurship and allowing new companies to start.

We will now comment on operational highlights for this quarter. On Slide 7, we would like to highlight B2W Marketplace Summit that took place in July 2019. The event included a 2 days of immersion into the B2W Marketplace universe, with over 100 speakers talking about different topics such as management, sales techniques, innovation and others. The Summit had more than 6,000 participants, among sellers, suppliers, strategic partners, and the developers over the course of the event. Important novelties are launched such as O2O for Marketplace, app VOE for crowdshipping, Drone Delivery, Americanas Lockers, and B2W Analytics.

Moving on to Slide 8, we will see a seller base progression. In the second quarter of '19, we have expanded sellers in the platform. We have a new record of more 5,500 sellers connected. Since the beginning of this operation at the end of 2014 B2W connected more than 31,000 sellers. For 2019 we would like to reinforce our goals of reaching more than 40,000 sellers.

We would like to highlight that we have very strict selection criteria for sellers in our platform, reputation and quality of our partners are important factors in evaluation and are in line with our goals of creating the best marketplace in Brazil. In this manner, B2W includes the best sellers in the market in a reliable platform in which customers can purchase the products they want. We have information about origin and quality.

On Slide 9, we would like to highlight the progression of our assortment. Over the last 4 years, we have experienced an exponential growth in product assortment going from 1.5 million of SKUs in second quarter of '15 to 12.1 million exiting in the second part of 2019.

Assortment expansion is a vital pillar of our value generation cycle that consolidates the perception that in our brands customers can buy everything. Up to the end of 2019, our goal is to achieve more than 20 million active.

In line with this strategy in Slide 10, we would like to highlight the development of Americanas Mundo, a cross-border operation from B2W that allow customers to purchase products from everywhere in the world. It was launched in March 2019. The operation kept growing fast and already has an assortment of more than 4.5 million SKUs. The operation also allows you B2W to be competitive without carrying leftovers in new product categories. The cross border is an opportunity to offer average items with a lower average ticket with a higher number of transactions and higher frequency of purchase by customers.

On Slide 12, we would like to highlight the important initiatives of O2O and Lojas Americanas in the B2W. With the concept of "Everything. Anytime. Everywhere" these initiatives are transforming the experience of our customers who now have multiple options of purchase and delivery and can choose the more convenient manner according to their consumption desires.

And Slide 13, we would like to highlight the O2O approach. It's aimed at allowing customers to purchase what they want, as they want, where they want when they want.

And on some Slide 14, we would like to highlight the progression of O2O over the last 12 months. More than 2 million customers have purchased via the joint initiative of Lojas Americanas and B2W. Largest service is Lojas Americanas and B2W Marketplace. Up to the second quarter of 2019 we had already recorded orders from customers from more than 3,800 cities. The Click & Collect is purchase online and get the products in physical stores. This program is available in 1,315 Lojas Americanas in all states of Brazil. Also, this model is already available in 102 physical stores of sellers in the B2W.

The Click & Collect Program and Click & Collect Now allows customers allows customers to collect their products and their own stock in the store for free after 1 hour after the online purchase and this is available in all our 1,518 Lojas Americanas stores.

LASA Entrega Ship from Store is when clients purchase online products that are in the closest Lojas Americanas store and get these products in hand up to 2 hours. And this program is available in 12 cities in 82 stores.

On Slide 15, we would like to highlight the integration of O2O and Marketplace initiative, transforming sellers, stores and flexible fulfillment centers. In this manner, the Click & Collect, Click & Collect Now and Ship From Store initiatives can be extended to more than 15,000 physical stores of B2W sellers.

On Slide 16, we will highlight the launching of VOE -- V-O-E, a crowdshipping platform for independent deliveries. The solution is aimed at accelerating O2O initiatives by connecting different models such as motorcycle, bicycle, and others. So that delivery can be achieved in -- up to 2 hours from physical, Lojas Americanas stores and sellers.

Of Slide 18, we would like to highlight the function of AME, i.e. A-M-E which is one of the most important initiative which is a mobile business platform that Lojas Americanas and B2W Digital are developing together. With little more than 1 year in operation, the AME App already has more than 3.2 million downloads. AME has been growing in B2W brands by optimizing discounts offered to our customers’ records and more spending.

On Slide 19, we would like to highlight the fast extension of AME and the physical world, Lojas Americanas by investing in proprietary technology to expand acceptance and improve a purchase experience of clients in the stores.

AME's acceptance has been growing in a short period of time from 6 stores -- pilot stores at the end of 2018 in October to 774 stores at the end of June 2019. Over the course of 2019, AME will be present in all Lojas Americanas physical stores and in other shopkeepers.

On Slide 20, we would like to show the progression of products and services available in AME. We have highlight for the launches that occurred over the second quarter of 2019. AME customers can now buy credits for Cabify and for public transport by recharging Bilhete Único in Beta version. In Beta version, we have also launched service marketplace. The sale of gift cards -- digital gift cards and the possibility to cash out in Lojas Americanas.

Over the course of the second semester, as part of the business plan and now we will have an incredible roadmap of novelties that will represent an important contribution for the future over Lojas Americanas and B2W.

And finally, I would like to make use of this opportunity to thank our team for their work and dedication. I would like to thank our supplier for their partnership, marketplace sellers for choosing our platform, our market shareholders for their trusting us, and in particular, our customers for their preference.

These were the most important highlights of the second part of 2019 regarding our performance and I would like to open for the Q&A session for clarification of your doubts. We request you to be brief in your comments so that all can participate.

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Questions and Answers

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Operator [1]

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Ladies and gentlemen, we'll start the Q&A session. (Operator Instructions)

Our first question comes from Mr. Guanais from BTG Pactual.

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Luiz Felipe Poli Guanais, Banco BTG Pactual S.A., Research Division - Research Analyst [2]

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My question has to do with only digital. You did mention about the progress of other functionalities, what we can relate going forward. I'd like to have some more color on the services marketplace. I [don't think] this will help the company expand its digital portfolio. If you could explore that up a little bit I'd appreciate it.

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Unidentified Company Representative, [3]

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Good afternoon, thank you for your question, for participating in our call. AME has been expanding up its user base. As I mentioned, we already have 3.2 million downloads in only 2 months and then have been continue to improving the user experience for both -- for B2W's brands, trying to create a industries through Lojas Americanas sites.

And at LASA we already available at 774 stores as we mentioned, and on top of paying for their purchases, customers can also work with cash-in and cash-out possibilities by using the points of sale. In line with this strategy of taking the company towards a mobile platform option, we are also speeding up our launches of new functionalities. Out of which I could highlight the purchase of ride-sharing credits for apps as the Cabify example. For public transportation, people can load the public transportation cards.

In the first half of the year with service Marketplace also advanced and we saw the sale of digital gift cards and also the possibility that working with cash-out at points of sale, at LASA. So this is just the first step of the platform in terms to come across as a broader platform for the merchandise and services -- service that can be either financial or not.

In this context of increasing user frequency for AME app, we see a big opportunity. And has been happening through more optimized ways in both granting discounts, to have already -- little (inaudible) with our key functionality which was the cashback option. In addition to be able to make purchases using AME app, we can actually transform that business into something bigger, to the next level and include the series of other services and functionality so that AME could offer possibilities to customers from the time they get out from the bath to the time they go back to bed at night, whatever their needs might be.

Another important point about the platform is that they start with the year 2019 with a high acceptance we have than other brands -- our own brands and in that respect, we launched a specific solution for merchandise which has been gaining significant traction in the past few months. And an important landmark for this industry was the definition of the corporate structure. That was quite important. So we'll have the creation of the new company in the coming weeks, by the end of August and this will allow us to speed business plan even further with new partnerships which are already in a very advanced negotiation phase. Just about ready to be implemented. This will be announced in the near future.

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Operator [4]

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The next question comes from Thiago Macruz from Itaú.

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Unidentified Analyst, [5]

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This is (inaudible) speaking. The results surprised us positively and I'd like to have some more color on the (inaudible). What category has increased most or decreased the within the one we're seeing. Second question would be about the performance of the app. We saw a very interesting growth in terms of active users for the app. And the question is, have you been analyzing data to identify migration of customers -- customers who are now migrating to the app from the physical stores. Have you identified the higher frequency of those users using the app? Those are my 2 questions.

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Unidentified Company Representative, [6]

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As for the results which were positive as result we mentioned. I think we were able to deliver good results in Q2. We have accelerated total GMV by almost 50%. In other words, grown twice as much as the market did which was our objective. Driven mainly by the growth in Marketplace, which grew above 50% and also with a strong contribution of a normalized 1P early on the year.

As we mentioned, we have been working hard at something 1P which has been continuous, ongoing in terms of watching it closely and regionally of fighting issues and we are now seeing the benefits of that work.

When we first migrated back in 2017 from 1P to 3P for those categories we understood made no sense infused through the Marketplace option. From that point on time, we started looking at those issues for many more expert point of view and we concentrated the number of categories where we understood what's the best option and compare it to the sellers option. We have a great relationship with the providers, with the suppliers and we are now, as I said, seeing the benefits of all that hard work.

And this will be important going forward for the second half of the year where we have our main sellers' event. Next week we have Americanas.com anniversary to celebrate and we have other indications that it was a very promising event. After that, we have Back Friday, the largest and most important event of the year and then Christmas. And our platform is running really well. We are ready to roll and we are moving strong towards our target of growing at least twice as much as the market in 2019.

As for your second question, the app question. We have been increasing our share within the whole of the company. It accounts for something like 75% of the traffic on the Internet -- talking about the app, and an account for 50% of all sales. So we see a migration from where we are from the website to the app. We have been working with our developers to make the app easier, and more friendly to navigate, and also increasingly lighter. And that's what apps are all about.

Once you have the app downloaded in your cellphone there is a process linked to loyalty, which leads to a higher purchase frequency. So we'll see a positive uptrend within this mobile dynamics as a whole within those B2W.

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Operator [7]

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Next question comes from Joseph Giordano from JP Morgan.

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Joseph Giordano, JP Morgan Chase & Co, Research Division - Senior LatAm Healthcare Analyst [8]

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The question about the progression of Marketplace. We see a very important growth in the number of sellers and the platform itself has been growing. GMV growing at 50% rate. What I would like to ask is the following. When we look at this marginal growth, Americanas Mundo, B2W, Americanas Mundo gain in relevance what's for share -- what's the stake Americanas Mundo in that sale?

Also in terms of frequency, because we have some categories and some items which are aspirational, which have a -- slight competitive when compared to the market value. And the second question about Marketplace, I'd like to know about the ecosystem around Entrega option. You add those 3,000 sellers to the platform in the last quarter. I would like to see how is they going to play out items of consumers by their B2W. When you have a seller with an inventory at the distribution center, then we have the whole logistic process to be carried out. How is this going to be playing out going forward?

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Fabio da Silva Abrate, B2W - Companhia Digital - CFO & IR Officer [9]

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Joe, thank you for both questions. As for the first one, yes, you are right. Marketplace has been growing quite fast and we have managed to maintain a growth rate of above 50% and we expect to maintain that rule number in that space in the coming quarters and that, of course, is driven by the progress of the platform itself. We have managed to attract more sellers, as we mentioned. And we did that in a way that sellers been selling also advance within the platform. We have been offering field services, so everything we put together early on for B2W and 1P, today it can be offered to sellers in the marketplace.

Specifically, about logistics, which is your second question, we also have all the intelligence services, advertising. We have our own commercial know-how which is very, very important. The knowhow we have been acquiring throughout the years in negotiating with suppliers and so on. So now we are bringing sellers around the table to plan -- sellers plan, items plan, SKU, helping them buy from suppliers as well.

So it is not one single factor to explain that a fact in Marketplace. It is a sum total of field initiatives that led us after sales have a very mature marketplace reaching a number of BRL 9.3 million, exceeding -- surpassing other online competitor.

As for the cross border option, it is part of our strategy and marketplace. That actually opens up a new avenue for growth and profitability. As you saw all our initial expectations have been exceeded. We launched it in March and now by the end of June, we already have 4.5 million SKUs out of which 2 million or half were added to the platform in June. So cross border (inaudible) market which was dominated by international players. B2W was not part of that market before.

And Americanas Mundo, as you ask, allows us to get into that market in a very competitive way and very asset light, if you will, and contributing to aspirational categories as you also mentioned. In particularly those with a lower average ticket, but of course, generates -- leads to a higher number of transactions and also helps increase purchase frequency on the part of customers. So all those members are very positive around the marketplace and also around cross-border.

So your second question about B2W Entrega, which is our server logistics -- servers logistics and distribution service for sellers at the marketplace. So Ship To Store numbers have been growing fast. We are talking about 90% of all sellers base -- 90% are already using the Ship To Store or Entrega function.

And one of the options includes the B2W fulfillment which has been performing quite well. Then sellers now, they already changed level right off the back, because we provide a complete fair solution, and that at the end of the day translates in better payment terms. Expedition and shipping happens in a shorter period. We have a priority list and the expedition list. And then, of course, results in lower delivery time. So everybody is happy at the end of the day -- customers, sellers, they sell more at a better service. And at the end of the day, it's also good for B2W of course, because we're able to meet all the needs of all the stakeholders in the process.

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Operator [10]

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The next question comes from Gustavo Oliveira from UBS.

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Gustavo Piras Oliveira, UBS Investment Bank, Research Division - Head of LatAm Research & Latin America Consumer Analyst [11]

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One additional question if I may, a question about fulfillment. You did mentioned performance has been quite positive. Last year, if I recall well, you opened a new distribution center which was quickly filled. Do you expect a need of additional CapEx on the fulfillment front? And if you could give us an estimate of how much would that entail for 2019 and 2020?

A second follow up question is about AME Digital -- A-M-E Digital. From what I understood, you said that by the end of August, you'll have a license from a payment entity, and from then on, you will be able to give a little bit more detail in terms of revenues, the economic indicators for the business that I understand. And you did mention you're going to announce something. Are you talking about some strategy for the funds that operation?

And the one last question, you've been talking -- haven't been talking a lot about the Prime option that we realize there's been a consistent growth in Prime users. Could you give us some more color on why that is happening?

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Fabio da Silva Abrate, B2W - Companhia Digital - CFO & IR Officer [12]

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Thank you Gustavo for [reputation] and your questions. For B2W fulfillment, today we have 11 distribution centers, 200 hubs. When then we look at the platform from end-to-end, we've got about 15 distribution centers. So we have been trying to strike a balance between what we are turning over and the distribution centers.

And also, we wish to breakdown between the different categories of deliveries that we have. So by the end of 2019 and including 2020 as you asked, so we do not have -- or we do not expect to be opening new distribution centers.

As for the AME app in your second question, as I mentioned in the previous answer, we have given an important step towards changing our corporate structure. So in the coming weeks, a company will be created. We will have a new corporate identity number, and that would unlock a series of new opportunities, which include an opportunity to request licenses from the Central Bank. That can only start once we have a company which is operational. Just to clarify your question.

As for the funding question, this operation is a lot of B2W to 57:33 to breakdown the percentage points. All funding needs for AME will be supported by both companies following their respective stakes.

As for the third question about the Prime option, the Prime has been growing throughout the years. It is an operation which started under the Submarino brand. It was limited to a few items, to a few cities. And then we proceeded to expand to other brands. We include assortment, we included sellers from the marketplace and it has no learning curve with Prime. And very soon, we hope to be able to announce a positive change in this program. And that's as much as I can tell you right now. But I can assure, it will be good news for the market and for the customers.

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Gustavo Piras Oliveira, UBS Investment Bank, Research Division - Head of LatAm Research & Latin America Consumer Analyst [13]

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One last question if I may, out of those 12 million SKUs that you already have for the end of this year, how much of that is covered by Prime?

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Fabio da Silva Abrate, B2W - Companhia Digital - CFO & IR Officer [14]

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Around 2 million estimates.

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Operator [15]

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Next question is from Ruben Couto from Santander.

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Ruben Couto, Itaú Corretora de Valores S.A., Research Division - Former Research Analyst [16]

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I would like to go back to a previous question about the fulfillment. You've talked a lot, Fabio, about assortment division growing categories. But can you give us some examples? I don't really know what has changed between both quarters of this year. Just to clarify, what had changes?

And my second question, can you give an update about Credit Seller, how this is being adopted? What's the size of the portfolio and how it is growing? And I would like to know how it talks to personal loan by AME? Because they have a credit initiative that may come to be concentrated in AME. And I would like to know what's going to happen in this area, so could you give us an update?

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Fabio da Silva Abrate, B2W - Companhia Digital - CFO & IR Officer [17]

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As regards that, I think it's important to understand the movement that happened in 2017. From a deep analysis of the company assortment, it's our final contribution margin including all variables -- financial variables, to come in 1P or 3P particularly. And at that time, we decided to move it to within our sales -- 1P to 3P to try to do what we make sure there will be a better balance in terms of distribution. And this is the process that occurred mostly in 2017. But it's a continuous process of planning.

Now what we saw between the first and second quarter is that, in fact, we had an adjustment of regarding the lot of goods, which is an excellent benefit that we had, particularly regarding telephone rather. Then this benefit has another at the beginning of this year, in 2nd of January, we could not only get content, and this had a negative impact of the IP growth in the first quarter. But we have done the adjustments that are required in this category. And we've seen an expansion in the second quarter that took us back to growing in terms of total GMV of about more than 20% growth and a very good rhythm in the market. So this is the movement that we had regarding 1P. And this is what we have been doing with the help of specialists.

As regards to the second question, is the Credit Seller, this is more a solution that we can offer our sellers from the very beginning of marketplace in 2016. We already offered one financial product. And this was the discount that was given. And over time, we noticed the need of sellers regarding these sort of products. So only the examples no longer enough for sellers to grow within our platform and this is why we developed Credit Seller. Its operation is going to complete 1 year in the near future, and the results have been very surprising.

In particular, with the sales that has been helping sellers to sell more. So basically, sellers will optimize the use of with this cash to purchase more merchandise and now that there are certain amount of increase the volume of products that they already operate with. They also end up in promotions, competitiveness and price. And some of them use this money to invest in structure because as sellers grow, they need to reformulate their structure. They need more people, more training. So basically, these financial resources are for these aims. And what we see is that this is one important point for our revenues and these help us to accelerate marketplace. And sellers are then going to be able to sell more and this is a case in marketplace. We have an analysis done in the first year to evaluate the results those sellers that have used this service and comparing to sellers that did not. So we compared bananas to bananas.

And those used the financial benefits have had a sales growth of about 40 points more than those who did not and this is a very positive result. Obviously, this is an argument that we can use just as part of the sellers or sellers that didn't have the opportunity to contract this service.

Finance, as regards to that, there will be the personal loan within AME. This credit seller is for companies. And there is no credit or people through AME. So they are talking about people and for us, this is a complementary approach.

And another important point is that the expertise that we have gained by acquiring credits for companies that we will be being offered to sellers in marketplace. Based in the near future will also be directed to motion up earning. These are complementary approaches, using complementary channels which are very good.

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Ruben Couto, Itaú Corretora de Valores S.A., Research Division - Former Research Analyst [18]

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Fabio, can you tell me something about the size of the portfolio of Credit Sellers.

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Fabio da Silva Abrate, B2W - Companhia Digital - CFO & IR Officer [19]

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This is a very strategic point for us. We generally -- we do not disclosing this sort of data.

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Operator [20]

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The next question is from Tobias Stingelin, Citibank.

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Tobias Stingelin, Citigroup Inc, Research Division - Director [21]

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The first question, I would like understand the growth you had -- this type of performance that you had in 1P, you had as result of several (inaudible) and there is something we didn't see over the last few years, so drop of several margin in the second quarter, is this related to categories that you have included or just the -- is it just the participation -- a big, greater participation that has decreased this 3P margin, I would like to understand a sequential drop in the credit margin?

And the second question is, that you had the good performance as a company and we have seen that in the second half of the year, the expenditure should drop because the last year you have started more robust investment process. Should we really expect this to happen in the second semester of the year? And the third question is about our sellers.

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Fabio da Silva Abrate, B2W - Companhia Digital - CFO & IR Officer [22]

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Tobias, thank you for your participation. As regards, we have seen an extension of good percent -- good margin in 2.2 percent points and we reached a balance between 1P and 3P in the first quarter. We had a greater percent progression. We saw that in the first quarter. Marketplace was experiencing a greater representativeness within our total GMV. So I think we should think about in [nominal product] and we have a greater participation of 1P and this has represented BRL 33 million more in the second quarter compared to BRL 9 million of the progression of 2019 compared to 2018. So the effect is what we saw in our expectation over the course of the year, should keep on progressing as regards the company's growth margin.

Similarly, in growth, the sequential drop is -- you had a growth in the year, but this is the first time it dropped sequentially with marketplace growth. So we read is that 1P is what has a greater impact, is that -- am I correct.

Yes, you're talking about mix. But I prefer to emphasize that the margin is still extending in percent basis and we analyze the nominal we have BRL 33 more compared to BRL 9 million that was in the first part -- in the first quarter as regard to mix.

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Tobias Stingelin, Citigroup Inc, Research Division - Director [23]

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So if 1P is improving -- you are improving your 1P performance, so 1P is going to grow and it's growing marketplace, but what that mean is that this growth margin has growth compared to the first year. Is this going to increase again sequentially, this 30.8% will go to whatever figure that is.

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Unidentified Company Representative, [24]

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What I can tell you about the gross margin, again if first compare 2019 and 2018 regardless of the balance that we have between 1P and 3P, I think the expectation is to have margin extension.

As regard to your second question, expenditures, we tend to analyze a percentage of total GMV. So over the course of the first quarter of 2018, we had higher volume of investment to provide an assortment for customers compared to 2018 where this represent a 10.2% of the total GMV and this has dropped over the second semester of 2018 and over the course of the first semester of 2019. So this 10.2% that we saw last year are now less than 9%, so 8.9% to be more precise to what we have communicated which is the trend of SG&A. This is something that we're really seeing and its reflecting in the extension of EBITDA nominal and EBITDA margin.

As regards your third question, the same stores sales of sellers, we do not disclose this sort of information that results having very positive and sellers have plenty of opportunity within the B2W platform and it takes some time to mature this sort of thing, for these things to develop and to understand how we'll have a complete view of the opportunities that are available for operation in a broader scale and we tend to support sellers in different fronts and in this manner we're able to extract over time some value or in greater and greater value from sellers so to speak. So we keep on growing in a very good rhythm in same-store sales. So this is a combination of growing more with our previous sellers and connect larger number of new sellers to our platform.

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Operator [25]

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The next question is from (inaudible) Bank of America.

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Unidentified Analyst, [26]

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Fabio, just to clarify, how do you expect to escalate B2W as part of your platform? There were several competitive efforts. Do you expect to have a growth boosted by (inaudible) greater functionality, financing or sources, see the partnership that will contribute you to gain sale.

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Fabio da Silva Abrate, B2W - Companhia Digital - CFO & IR Officer [27]

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Thank you for your participation. We have been creating traction in the first moment through earnings in what we call B2W brands and also within Lojas Americanas. We have more than -- a bit more than 12 months of operations and our business base is growing fast. The next step is Mundo as you have alluded to and we have several merchants operating with our solution which is a AME Plus and something it has been created about 3 weeks ago. We expect to accelerate even more the AME performance, which includes an expansion to Mundo franchise. And as customers in this platform -- with the client in the platform it's much easier to reach acceptance by merchants in the Mundo (inaudible). So we're creating this company as I have mentioned. We should be ready to start up to the end of August and we're in an advanced state of negotiation with other partners. So the creation of this company is hallmark that will help us to accelerate in our entry in Mundo franchise.

As regards financing I have talked about it in the previous questions. The most important a new source is a companies or partners Lojas Americanas and B2W partners, which was a even proportion. And if we understand it at some time it will make sense to accommodate other investors who will think about it, but the idea is to what is the perspective of knowledge. We have lot of good people all around the world working very well with sort of initiative. And based on my commentary I could decide to bring a strategic partner with our business.

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Operator [28]

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We'll now the close the Q&A session. I'd like to turn the conference back over to, Mr. Abrate for his final remarks. Please, Mr. Abrate you may carry on.

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Fabio da Silva Abrate, B2W - Companhia Digital - CFO & IR Officer [29]

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I got to thank you all for participating in our earnings call. And I would like to invite you all with largest internet festival, the party, a fest for Americanas.com, which will start next Monday, August the 13th. We will be celebrating 20 years of the brand on the internet in 90 years of Lojas Americanas. If you have any additional questions or comments our IR team remains available. Thank you and have a nice day everyone.

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Operator [30]

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B2W's conference call is now over. Thank you all for participating. Have a nice day and thank you for using Chorus Call.