Earnings call transcript: CVC Corp Q3 2025 sees revenue growth, stock dips

CVC Corp reported a 3.6% year-over-year increase in net revenue for the third quarter of 2025, reaching 376 million Brazilian Reais. Despite the positive financial performance, CVC Brasil ON shares fell by 2.18% on the latest trading day. The company also highlighted significant improvements in operational metrics, including a reduction in debt leverage and an expansion of its store network.

Key Takeaways

• CVC Corp’s Q3 2025 net revenue rose by 3.6% year-over-year.
• Adjusted net profit surged by 36% compared to the previous year.
• The company’s debt leverage was significantly reduced to 0.5 times EBITDA.
• Stock price decreased by 2.18% amid market reactions.
• CVC Corp plans to open 200 new stores in Brazil and Argentina.

Company Performance

CVC Corp demonstrated robust performance in Q3 2025 with a notable increase in net revenue and adjusted net profit. The company’s strategic initiatives, including the launch of the Connect Us platform for international B2B sales and the expansion of its phygital sales model, have contributed to its growth. CVC Corp’s focus on technology investments and store expansions in small and medium towns has strengthened its market position, particularly in international travel where it gained a 16% increase in passengers.

Financial Highlights

• Net Revenue: 376 million BRL (+3.6% YoY)
• Consolidated Adjusted EBITDA: 130 million BRL (+4.7% YoY)
• EBITDA Margin: 35%
• Adjusted Net Profit: 62.5 million BRL (+36% YoY)
• Take Rate: dropped from 9.4% to 8.6%

Market Reaction

CVC Brasil ON saw a 2.18% decline in its stock price following the earnings report. The stock’s performance reflects investor sentiment amidst broader market trends and the company’s strategic shifts. Despite the positive financial results, the decrease in the take rate and changes in the sales mix may have contributed to the stock’s dip. The stock is currently trading between its 52-week high of 19.3 BRL and low of 18.7 BRL.

Outlook & Guidance

Looking forward, CVC Corp aims to continue its B2B growth and plans to open 200 new stores across Brazil and Argentina. The company is also focusing on technology investments and further reducing its debt leverage. With the anticipation of increased maritime travel capacity, CVC Corp is optimistic about its future growth prospects.

Executive Commentary

CEO Fabio Godinho highlighted, "We have grown eightfold comparing the first nine months of 2024 to the same period of 2025," emphasizing the company’s rapid expansion. CFO Felipe Gomes added, "Our focus remains to be reducing the leverage," underscoring the strategic priority of financial stability.

Risks and Challenges

• Fluctuations in foreign exchange rates could impact international travel revenue.
• Changes in sales mix affecting the take rate and profitability.
• Economic uncertainties in the Center West region pose challenges.
• Competitive pressures from other travel agencies and online platforms.
• Potential disruptions in travel capacity due to unforeseen global events.

Q&A

During the earnings call, analysts inquired about the impact of foreign exchange rates on international travel and the company’s strategy for store openings in smaller towns. CVC Corp addressed these concerns by highlighting its improved working capital management and ongoing digitalization initiatives to enhance customer experience and operational efficiency.

Full transcript - Cvc Brasil ON (CVCB3) Q3 2025:

Conference Moderator, CVC Corp: Good morning, everyone, and thank you for waiting. Welcome to this video conference to present CVC Corp’s third quarter 2025 results. Today, we have simultaneous translation into English available. To access, just click on the globe icon at the lower bar of your screen, look for "Interpretation," and choose your preferred language: Portuguese or English. After choosing the language, there is an option to mute the original audio in Portuguese by clicking on "Mute Original Audio." We’d like to inform you this video conference is being recorded and will be available on the company’s IR website: www.cvccorp.com.br/ri, where you can find complete information about our earnings. You can also download the presentation. The link will be in the chat window, also in English. During the company’s presentation, all participants will have their microphones disabled. After the company’s presentation, we’ll begin a Q&A session.

To ask a question, click on the Q&A icon at the bottom of your screen and send us your question to join the queue. When we call your name, you will see a prompt on your screen to activate your microphone. Please activate your microphone to ask a question. If you have more than one question, please ask all of them. We want to remind you the information in this presentation and statements that may be made during the video conference in relation to business prospects, projections, operational, and financial goals of CVC Corp represent beliefs and assumptions of the company’s management, as well as information currently available. Future considerations are not a guarantee of performance. They involve risks, uncertainties, and assumptions as they refer to future events and therefore depend on circumstances that may or may not occur.

Investors should understand that general economic conditions, market conditions, and other operating factors may affect CVC Corp’s future performance and lead to results that differ materially from those expressed in such forward-looking considerations. Today with us, Fabio Godinho, CEO, and Felipe Gomes, CFO and Investor Relations Officer at CVC Corp. I will now turn it over to Mr. Fabio Godinho.

Fabio Godinho, CEO, CVC Corp: Good morning, everyone. Welcome to CVC Corp’s third quarter 2025 earnings conference call. As usual, we will speak about our highlights in terms of growth, profitability, and improvements in our capital structure. As to growth, we’ve opened 42 new stores in Brazil and Argentina, so now we have nearly 1,600 operating stores despite the challenging volatility in both countries. Thirty-one new franchises in Brazil and 11 new franchises in Argentina. Confirmed bookings had a robust growth overall in CVC Corp of 15%. Brazil contributed 14%, mostly thanks to a robust growth in B2B. Here, our new Connect Us unit and also Trend, Visual, and Rextur Advance, which accounted for nearly 80% of this volume, growing above 20% in Q3. In B2C, despite the challenges in consumption, credit, household debt, and delinquency, we can show a few highlights in Q3.

The Brazilian Civil Aviation Authority, ANAC, added about 7% capacity to Brazilian Airlines, and we grew slightly above this in the domestic market, so that is good. On international, the overall capacity increased 11%, and we added 16% more passengers in Q3 alone. Now we have started to gain share of international travel. Of course, as we mentioned last time, the major stressor was maritime travel. While the overall capacity plummeted 30%, we had a 15% drop in the number of passengers. We have gained market share from other companies in this turbulent scenario. With a 30% decrease in the overall capacity offer, our 15% drop, it ends up being good news. Argentina up 20%, boosting the corporate 15% growth and, showing the Argentine market is recovering. Net revenue up 4%, mostly thanks to our sales mix.

Also in Brazil, with B2B growing faster than B2C, mainly in our customer base, we’ve gained share of domestic customers, and a significant portion of our growth came from international travel sales. Today, Rextur’s largest customer is Trip.com, and Connect Us has increasingly more international customers. This will help boost more growth in B2B, which comes with a lower take rate, but it requires no working capital. With a 15% interest rate currently in Brazil, this is not so bad. Argentina net revenue up 7%, also thanks to our sales mix, where Ola is growing faster than Almundo. In Argentina, we have a positive working capital. That is why we are bringing cash from Argentina to Brazil this year. Now, in terms of profitability, our EBITDA surpassed BRL 130 million, growing nearly 5% compared to last year.

EBITDA margin neared a healthy 35%, and net profit gave us a surprise: BRL 62 million, almost 36% higher than in Q3 last year. The highlight this quarter, I think, is in our capital structure. Our operating cash generation before interests neared BRL 150 million. Again, mostly thanks to our sales mix. When B2B sells more than B2C, then we consume less working capital overall. This is the benefit we can see looking at our operating cash generation, which led to a significant debt reduction of almost BRL 200 million versus Q2 2025. We have recently advanced a debt payment of November 2026, BRL 200 million, including interest and principal, showing the strength of our company cash generation.

Now the company leverage, I mean, considering the balance of debentures, which is BRL 400 million, so the overall leverage of 0.5 times the EBITDA, which is way below the current B3 average. Looking at our B2C strategic pillars, as we usually report in our earnings conference call, we can see progress in three of our four pillars. Alternative payment methods, we are now less reliant on credit card payments, which is really important for us to have better credit control and lower delinquency using our own payment slips and developing a partnership with other banks, Santander, Bradesco, and other financial institutions. The number moved from 31% in Q3 2023 to 37% in Q3 2024 and 42% in Q3 2025, showing clear progress.

By opening more stores in small and medium towns, we are tapping a blue ocean for CVC, confirming our guidance of 200 new stores in Brazil and Argentina this year. The penetration of our phygital sales model neared 60%, confirming this is a successful strategy. Our omnichannel approach features good results month after month. Now, looking at exclusive products, we remained flat compared to last year. The blockings we used to have, you know, because of a weaker demand and airline price changes in Q3 2025, the blockings were no longer competitive. You know, as we’re no longer doing chartering, we could simply cancel the blocking sometime before the flight. With that, we hold no risk. We then had no loss. We ended up flat mainly because of spot price changes in regular airline flights.

As we look at our current blockings for Q4 and then for Q1 2026, and considering the current spot price of air tickets, we will probably go back to levels above 20%, which is really key for our working capital. About preferred hotels, we often say CVC business is based on volume concentration, with 80% of our volume in 20% of our partners. This is what we can see now. We came from 50% of our volume concentrated in preferred and recommended hotels in Q3 2024 up to nearly 80% now in Q3 2025. We can ensure room availability for CVC, more competitive pricing, and a differentiated service reaching the highest NPS of our industry. Again, it is important to mention CVC has become an NPS benchmark in Brazil, according to Reclame Aqui platform.

We’re the only travel agency to have the RA1000 seal with the highest NPS of the industry. Now, this quarter brings important news about Connect Us. Connect Us was incubated under Trend, but now it has become a key element for international B2B sales of Rextur Advance. That’s air products and the distribution of land products, which we can distribute in the whole world. We are talking about general international and domestic products, hospitality services, land products. We’re using Connect Us as a tool to make connections with partners in Brazil and abroad. Obviously, we prioritize international or global customers, and we’ve been working to develop Brazilian customers too. In a few years, we expect our B2B, which currently accounts for 50% of our sales in Brazil, we expect it will be split into 50% foreign customers and 50% Brazilian customers.

We will reduce our exposure to the volatile Brazilian economy. We have a number of new agreements and partnerships with distributors, hotel chains, and our agreement with Avoris, selling hospitality together with CVC all over the world, except in Brazil. Here in Brazil, we have more than 8,000 agreements for land products, including hospitality and other services. This is a scalable fee-based business, and we have three employees working at Connect Us. We have grown eightfold comparing, you know, the first nine months of 2024 to the same period of 2025, and using no working capital and very little OPEX. Now we have a new General Director there, Bruno Sá, who came from a CVC competitor, but he has had a long track record working with Rextur Advance. He knows the business, and his work has been key for this growth.

If we take the last two, three months, Connect Us sales annualized, the result exceeds BRL 200 million when using no working capital, with very little OPEX, and adding important revenue diversification with more non-Brazilian customers. In conclusion, looking at our capital structure, and this is a top priority, as we’ve clearly told the market in previous quarters, every time we’ve spoken with market analysts and investors, this has been our focus this year. Where do we stand as we close Q3? Considering cash and unencumbered receivables that we can use for financing, we have BRL 600 million. After the payment of BRL 200 million, including interest and principal debt, we have more than enough cash, you know, today, considering cash and receivables.

We have much more than enough to pay for our obligations of BRL 80 million in October 2026 and then in 2027, 2028, which places CVC in a sound financial position and with peace of mind to move forward in the next few years. With that, we witnessed our credit rating be reviewed upwards. From a junk bond rating in December 2022, we now have a triple B rating, which means basically investment grade with a favorable outlook. Even in a difficult economic scenario, you know, for retailers in general, especially for high ticket, discretionary demand, and the interest rate is 15%. As we see it, you know, this management has delivered our commitment to consistently reduce our leverage and improve CVC capital structure. I’ll hand it over to Felipe Gomes now, who will take us through financial details of Q3 2025. Thank you all. Morning, everyone.

Thank you, Godinho. Let us talk about our numbers in Q3 and the first nine months of 2025. On the financial side, we will continue to use the same format adopted in previous conference calls. On the first slide, Brazil sales, revenue, and take rate. On the top left, confirmed bookings had a 14.5% growth between Q3 2024 and Q3 2025, reaching BRL 3.3 billion. The first nine months of the year, BRL 9.5 billion, up 13.2% versus 2024. On the top right, net revenue growing 3% in Q3 2025 compared to Q3 2024, with a take rate reduction from 10% to 9.2%. Godinho has already explained it is related to our sales mix because B2B is growing faster than B2C. We see a drop in the take rate.

Looking at each product line in B2B and B2C, you know, each product keeps the same take rate, but our sales mix in our units and within each unit has brought our take rate down. In the first nine months of the year, our revenue growth neared 9%, reaching BRL 881 million, with a take rate drop from 9.7% to 9.4%, you know, as we mentioned. In the charts below, a few highlights, you know, already explained by Godinho earlier on. Our focus here is on international customers who have driven our year-on-year growth at Rextur Advance and Connect Us. New store openings have also helped, especially as we open more stores in small and medium towns where we see a potential blue ocean for CVC.

We’re providing more detailed information about confirmed bookings in the press release, but our B2B confirmed bookings grew 27% in Q3 2025 compared to Q3 2024. That is mostly thanks to international customers, as we can see in the first chart. The launch of Connect Us platform, as Godinho mentioned, and we have a slide on that. This unit was operating under Trend, and we believe it is very scalable, and so it will drive company growth in the next few years. On the next slide, basically the same numbers now in Argentina. We continue to see growth in Argentina with 19% higher confirmed bookings in Q3 2025 compared to Q3 2024, reaching BRL 923 million this quarter. Year to date, an expressive 47.5% growth in the nine first months of 2025 compared to 2024, nearing BRL 3 billion in confirmed bookings.

On the right side, net revenue and take rate in Q3, we can see a 6.7% growth reaching BRL 58 million net revenue and a drop in take rate explained by our sales mix. Our B2B brand in Argentina, Ola, is growing faster than our B2C, Almundo, so pulling down our take rate. In Argentina, the overall result is quite positive despite a lower take rate because we are using less working capital, as Godinho explained a few minutes ago. Our operations in Argentina require no working capital, so the take rate is lower, but the net balance is favorable. In the first nine months of the year, we’re nearing BRL 200 million revenue between January and September, posting a 20% growth year on year, and take rate moving down from 7.8% to 6.7% because of the sales mix between Ola and Almundo.

The highlights are a strategic position in Argentina, mostly thanks to our blockings that helped boost Ola B2B sales. The blockings were successful, you know, Argentinians coming to Brazil, Maceió, Rio de Janeiro, Cabo Frio, Pernambuco. The second highlight here is Argentina’s EBITDA margin that soared 19% in Q3, reaching BRL 11 million. I’ll give you more detailed information in the next few slides. Eleven new franchise store openings, which is significant in Argentina. Now we have 181 operating stores, which is a record number of active stores since we started our operations. This is a relevant number showing confidence in our brand, Almundo. As we mentioned, the take rate is automatically reduced when B2B grows faster than B2C. Moving on to the slide with our consolidated numbers. On the top left, the net revenue of both operations and then expenses. This is only Brazil.

In Argentina, we still have foreign exchange issues. To keep our numbers clean, we continue to show our performance in the same form. There is more information in the press release. In the chart on the left, CVC Corp revenue growth of 3.6% this quarter, reaching BRL 376 million. The overall take rate dropped from 9.4% to 8.6% because of our sales mix change, you know, between B2B, B2C, and also between Argentina and Brazil. Argentina is growing faster than Brazil. In the first nine months of 2025, our revenue growth neared 11%. We hit BRL 1.8 billion compared to BRL 975 million in Q3 last year. Up 10.8%. The take rate dropped from 9.3% to 8.7%, as we already explained. The other two charts, they feature our expenses. You know, this is a relevant figure for us, which we track daily.

When we look at G&A expenses in Brazil, and then we look at our net revenue, we can see an increase of 3.3% from BRL 140 million to BRL 144.8 million, which means we’ve delivered our commitment to grow expenses below the inflation. Our G&A expenses have been kept flat at 45% of the net revenue, very close to the number we pursue, which is to keep it below 50% and as close as possible to 45%. In the first three quarters of 2025, our G&A expense increased 3.4%. You know, again, in line with our commitment. It starts to come down, you know, in relation to our net revenue because last year it was 52.3%, now 49.7%. The seasonal effect, you know, in Q4, it tends to help further improve this ratio because it dilutes expenses compared to revenue. We expect this number to further improve.

The last chart on the right shows sales expenses compared to confirmed bookings. We track this ratio because it shows our sales. In Brazil, in Q3 2025, we can see a 13.4% growth and the same ratio relative to sales, 1.8%. Our sales expenses are growing in line with sales, which makes sense. When we look at the first months of 2025, the growth was 17%, moving from 1.8% to 1.9%. This is because of a few marketing actions following our strategy to gain market share for the company. It is in line with our plan for this year. There are three highlights we have already mentioned. A higher net revenue, mainly thanks to a strong B2B performance in Brazil, G&A growing below inflation. Again, as we explained, leading to a significant reduction year on year.

The first nine months, 2.6%, moving to 49.7%, which means our sales expense have remained stable in relation to sales in Brazil. Next, more consolidated information, and then Brazil and Argentina EBITDA and adjusted profit. Now, the top block shows our EBITDA and the EBITDA margin, first in Brazil, then in Argentina, finally the consolidated number. On the first chart on the left, Brazil EBITDA in Q3 2025, the adjusted EBITDA hit BRL 119.5 million, growing 1% compared to last year with a 37.8% EBITDA margin. As we look at the year to date, we’ve grown 13.5%, nearing BRL 280 million in the first nine months of 2025. EBITDA margin moving up from 30% to 31.5%. Now, I want to make a comment about last year.

Last year, we made a foreign exchange hedge adjustment, and it had a positive impact last year, which distorted a comparison between 2025 to 2024, but it’s diluted in the nine-month view. So this 13.5% EBITDA growth is even more significant. In Argentina, we can see a significant growth in Q3, hitting BRL 11 million versus 6.5% in 2024, and 19% EBITDA margin compared to 12% in 2024, a 30% growth versus the first nine months of 2024, reaching BRL 50 million EBITDA. Both countries combined, Q3 posted a 4.7% growth, hitting a 35% EBITDA margin, which is significant for the company, reaching BRL 130 million consolidated adjusted EBITDA in this Q3. In the first nine months of 2025, the consolidated EBITDA neared BRL 330 million with a 30% EBITDA margin.

This is a number we pursue, 30% EBITDA margin, you know, and that is what we delivered year to date compared to BRL 280 million EBITDA last year with 28.8% margin. Further down on the left, our adjusted net profit and a description of the calculation as in previous disclosures. The press release has more details. In this Q3, we delivered BRL 62.5 million adjusted net profit, 36% more than in Q3 2024. Year to date, the number is BRL 70.6 million compared to 45% last year, growing 56% between 2024 and 2025. Two other charts. We have already mentioned the EBITDA evolution year on year, the margin, and the adjusted net profit in Q3, BRL 62.5 million. Now, our last slide today, as Godinho mentioned in the opening, that is information about cash generation and capital structure.

On the left, operating cash generation in the last few years showing the seasonal effects that we experience usually in Q3, which we know so very well. BRL 145.9 million operating cash generation this year versus BRL 141 million last year versus a consumption of operating cash of BRL 61 million in 2023. The progress is clear, and it helped reduce the leverage. On the right, the overall debt, including information about cash and debt, comparing Q3 to Q2 2025. On the first line, a reduction of BRL 266 million in the company overall debt in one quarter only, mostly thanks to a prepayment of our debentures. Part of the amount also came from an acquisition or an out that we posted, but then we crossed out. It also helped reduce the overall debt.

Next, the net debt and deducting cash equivalents, BRL 198 million net debt, which shows a significant reduction compared to the last quarter of almost BRL 200 million, a significantly lower net debt now in the company. The company leverage had a huge improvement, and this is the net debt over EBITDA moving from 0.9 to 0.5 times in the last 12 months. That is how we measured the company debenture covenants. Here, additional information we usually disclose because we believe it is relevant for the market: BRL 422 million credit card unencumbered receivables and BRL 1.12 billion credit card receivables already used as financing. That is the number at the end of the third quarter. Our debt repayment.

As we look at our net debt and we add up the balance of receivables, our net debt fell almost BRL 85 million, reaching BRL 896 million net debt plus the balance of receivables in Q3 2025. We are also disclosing the overall debt over EBITDA in the last 12 months, a significant drop from 2.3 to only 2 times in Q3. That was it on my side. We are now ready to answer your questions. Thank you all. We will now open the Q&A session. If you have a question, click on the Q&A icon in the lower bar of your screen and write your question to join the queue. If you want to ask on the microphone, write your name. When your name is called, you will see a prompt to activate your microphone. Please unmute and ask all your questions at once.

Our first question comes in writing. Can you please speak about what we can expect with the recent foreign exchange fluctuations? Is it going to impact international travel in your view? Hi, this is Godinho. Thank you for your question. I believe now, with more stability and the recent drop of the US dollar in relation to our currency, around about $5.3, which is what we see now, international travel has become a good surprise for us in Q3. I believe if we do not see a change in this trend of our foreign exchange, I believe we will continue to grow at the same pace in Q4. As we mentioned, we have added capacity. You know, international travel has 11% more capacity in terms of international airline seats, and CVC has grown 16% in the number of passengers, showing we have gained share. This was across the board.

We’re talking about 17% growth in Europe, you know, in European destinations, 11% in South America, Caribbean destinations, a growth of almost 70-70% in terms of the number of passengers, and other destinations, you know, Asia and Africa, also a growth of almost 30%, showing the robustness of our services combined with our omnichannel approach. We expect a very positive outlook, you know, now in Q3, but also in Q4 on the international travel market. Our next question comes on the chat window. Godinho, what is your view on the air market capacity for next year? Thank you for this question. Now, on domestic travel, the capacity is growing about 8%. In international travel, the capacity growth will be around 12%. I do not believe this capacity addition will change next year.

I mean, on national travel, domestic travel will continue to see an 8% growth approximately, and maybe the international capacity can grow a bit more. Especially, I mean, I believe maybe it can grow 15%. I believe that’s possible, especially if the foreign exchange rate remains stable at the same levels we see now. Now, what I think, I mean, I think we’ll have a different mix, a different sales mix in terms of domestic and international. Also, airlines, you know, the sales mix between airlines will probably change. We can see that in the documents of, you know, Chapter 11, that their CAGR in the next five years, their CAGR in the next five years will be around 3%. Whereas GOL and LATAM will certainly grow much faster.

I think that’s good news for CVC because these two, they don’t have an operator, whereas Azul has Azul Viagens, and we could see that they had growth in the first half of this year through Azul Viagens, you know, through their operator. Azul Viagens grew in domestic travel and also in international Azul flights. Azul Viagens grew 60% and the market grew 7%-8%. Why? Because of price dumping, because they killed the price, because they needed cash to invest in their airline before the chapter 11. When you see this change in sales mix, and because we have a partnership with GO and LATAM, all of this will be favorable for CVC next year. I mean, of course we grew CVC, you know, before our management never even had any relationship with Azul.

Today we even share chartering with Azul Viagens, their travel agency. Of course, they will always give priority to their own operator, and they’re now doing price dumping in the first half of 2025. Also, Azul introduced a new member of the board, Aircap, and so the other lessors decided to work with other competitors, you know, so as their agreements expire, they are changing and they’re more like working with GO, and GO will continue long-haul operations with the A330 that are coming from Azul to GO. I believe we’ll see a big growth of ASK in GO long-haul products. That will be basically for leisure travel or vacation travel. I believe that CVC will be able to contribute with sales, with significant sales, you know, for our big partner GO.

That is what we see on the national, the domestic and international market for 2026. Our next question comes from Victor Fuzihara from Santander, and your microphone has been enabled. Hello, good morning, Godinho, good morning, Felipe. Thank you for taking my questions. The first one is about leverage, which was reduced in this quarter. What is your guidance for the end of 2026? Are you going to change your plan in terms of using receivables financing? Now about store openings, I think you have opened 100 stores in the first nine months. I would like to hear about the performance of your new stores. Hi Victor, it is Felipe. Thank you for your question. Yes, we had an improvement for sure in the company leverage in line with what we have announced to the market. This was a decision that we made with shareholders and the board.

This was our focus. We will continue to reduce our leverage, and also we expect the interest rate in Brazil to come down, which will help the company as a whole. About our closing of 2026, we’ll continue all operating cash generation. All improvements we may have with working capital will be channeled to deleveraging the company. We will continue to do that. We want to reduce the leverage. It’s not a guidance, I mean, specifically, but the expectation is to continue to reduce leverage. You asked another question about receivables financing. Look, we’ve obtained very interesting negotiations. You know, the cost of our credit card receivables, loans, or loans secured by our credit card receivables has been very favorable. We’ve been working to further reduce the spread of our debentures.

If that does not happen, the idea is for us to continue to try and obtain good negotiations to obtain loans secured by our receivables, provided that we get attractive rates. That is what we will continue to do. The other question I think Godinho will answer. Hello Victor, thank you for your question. That was an excellent question. Also because after we took on the management of CVC, we have opened more than 450 new stores. The performance of these new stores is something we track daily. I look at that weekly, but in detail, you know, state by state of Brazil, kind of store, you know, the different formats. Of course, our performance teams look at that every day. These 450 new store openings, I mean, remember that most of these new stores, they are not in capital cities.

They are in small and medium sized cities or towns. We’re not cannibalizing. We’re not opening stores where we already have five, as is the case of Moema neighborhood in São Paulo City. We’re opening stores in small and medium sized towns with a very low Capex in this format and very low OPEX. I mean, these new stores, they cost between BRL 50,000 and BRL 70,000, I mean, for the franchisee. They invested very little capital, or if they needed loans, then the leverage is not so big. Basically, this is a couple of franchisees plus one employee, as we saw with the CITIC model in China. You see, these 450 new stores are split into two groups: stores between 0 and 12 months, the first year, which we call the nursery school, and then from 12 to 24 months, which is the ramp up.

After that, it goes into the group of same store sales. Now, these two groups, they’re performing 90%, 90% of the average performance, the normal performance. If you consider that they may be paying interest on their leverage, this was already expected. If you look at the cost of these stores, it’s very low. The payback will take perhaps one, two, three more months. I mean, stores that are losing money, the performance compared to our projection would have to be below 55%. We don’t see that because today it is an average of 90%. Perhaps they’re not making so much money as they could or as we planned, basically because of economic, macroeconomic conditions. These stores, they are absolutely not losing money, no.

These stores, you know, the phygital sales performance in these stores is much higher than stores located in capital cities. If you exclude maritime travel, that is Brazil-wide. The stores in Brazil, in Brazil. That is Brazil-wide. The stores in small and medium sized towns, they grow five times faster in sales than stores located in capital cities, which again shows that these lower cost format stores using the phygital sales model with the low Capex, with the low OPEX in small and medium towns, this is a winning strategy for us and for the franchisees. Thank you. Thank you for the answers. Our next question comes from Wellington Santana from Bank of America. Wellington, your microphone’s been enabled. Hello, good morning, Godinho. Good morning, Felipe. Thank you for taking our questions. I have two questions on my side.

First, focusing on B2C in Brazil, can you tell us the main headwinds you are facing in terms of consumption and competition? That would be interesting for us. What strategies of mitigation would you have, you know, for these two points? Again, about your pilot project you have announced this year, what is the performance? Thank you. Thanks for the question, Wellington. I think, I mean, what I see happening, in fact, the domestic market is performing well in line with the capacity we have for domestic travel. International, we are gaining share in relation to the overall market capacity, but maritime is still a challenge, as we mentioned in the last conference call.

The same thing will continue in Q4 and possibly in Q1 2026, because now you cannot change, you know, this 30% capacity reduction that we had in maritime travel for the next season, the summer season. Excluding maritime travel, we’ve had an excellent growth both in domestic and international travel. International, there’s more capacity of partner companies for next year, you know, partner airlines. We have redesigned our international operations with a new director, Renata. She has more than 25 years of experience on international, in the international market as one of the main executives in negotiations for hospitality on the international market. She will help us improve the competitiveness of our international products for 2026. In the domestic market, we have more blockings. Also, we have a new director of activities, which we did not have before.

I believe that business front can help bring a significant portion of sales. These are, you know, trends for services, other partners that we sell very little, or tickets for different events. The take rate is very interesting. We’re taking initiative in this sense. The major stressor this year is maritime travel because, you know, the other units are performing in line to what we expected and gaining share. Yesterday, I had lunch with the world president of MSC Cruises and also the director of the company in Brazil and the whole local team of MSC. They have already ensured we will have one more cruise ship for next year. That will grow capacity by 10%. Now, Costa Cruises, we’re still negotiating with them, but they will probably also increase capacity for next year.

There are three other maritime companies interested in beginning operations in Brazil, not through chartering by CVC. CVC will not charter these cruise ships. If a few players reduce capacity, maybe other international players are interested in investing and starting operations in Brazil. CVC accounts for one third of all maritime sales in Brazil. Of course, we can also help newcomers to the Brazilian market. Only two maritime operators is not perhaps enough for Brazil. Maybe we have room for another player. Again, as I said, CVC will not be chartering cruise ships. We believe we will certainly have more capacity in the next season, more than in this season of maritime travel. Now, consultants, I mean, we are now concluding the business plan. We believe it’s going to begin next year.

We have already presented that to the franchisee network, you know, to the master franchisee. They are really excited. Let me give you an example. We looked at the whole of Brazil, and we have data from 4,000 municipalities below 15,000 inhabitants. Look at Sorriso municipality in the state of Mato Grosso. Our stores, they’re 84% of the customers live in Sorriso. However, there are a number of small towns around Sorriso. Then we can have a consultant in each one of these villages. For example, Feliz Natal. This is a small town very close to Sorriso, and we do not sell very much there. Why? Because they buy from independent travel agents who live locally. And so they do not buy from Sorriso store. Even though we have the phygital sales model, that is why we are thinking about having these consultants. And we already have the numbers.

In these, you know, 4,000 small towns that have fewer than 15,000 inhabitants, our sales penetration is still low. There will be value in having these consultants. Twelve master franchisees applied to participate in the pilot project. I believe it will begin early next year, and I think it has a potential to add value to CVC. That’s great. Thank you. Our next question is on chat. Congratulations for your performance this quarter, growing confirmed bookings and growing the EBITDA margin by 34.6%. Now, the pressure on take rate that is now 0.8% lower with B2B growing faster than B2C, what do you expect in terms of profitability in the next quarters? Do you think you can recover the take rate and recover margin with digitalization initiatives?

Considering the new level of leverage, 0.5 times, and your triple B rating with a positive outlook, then what do you expect in terms of capital allocation in the future? Can we expect more investment in technology and international expansion, or will the company continue to prioritize deleveraging and financial efficiency? Hi, thank you for the question. It’s a, I have a lot of information about this. Look, we will continue in the next quarters. We will continue to see a sales mix change with B2B growing faster than B2C. Our competitor, our digital competitor that was acquired recently, and Expedia, now recently said exactly the same thing. Across the board, all travel companies in the world that work with these two divisions, B2B is growing much faster than B2C. This is widespread on the market.

I believe we will continue to see this kind of pressure changing our sales mix. Now, gaining operating efficiency to recover margin. I will break our digitalization initiatives, operating gains, in three blocks. Everything happening in IT. Today we have two important initiatives with CI&T. I think you probably know CI&T from Campinas. They did all the digital transformation of a number of companies, including Itaú. We have two large projects with them. Now, concluding, now in the last week of the IT assessment, looking at the whole organizational structure. We hired three new directors. That was not a replacement. These are three additional directors, one coming from 20 years of Itaú, the other one from DOR Network, and the other one from Patria, who had also a long career at United Health Group.

These three directors will bring lots of experience and with also lots of experience with M&A, piling up systems that have to be simplified later on. Anyway, CVC is also working to improve and to modernize project management. We have a number of initiatives for next year so that we have a more lean production with more IT initiatives. Today, we have more than 200 IT initiatives that will have to fit our CapEx and our OpEx. That will bring efficiency gains to CVC. The second project we have with CI&T is the digital CCO, which is our post-sales activities. When we took on the management of CVC two years ago, we only had 100 employees and the lowest NPS in the travel industry in Brazil, measured by Reclame Aqui.

Today, CCO has 550 employees, and we are the only company holding an RA1000 seal, the highest NPS in the industry. This was great work, you know, improving quality, reducing cost. And we hired CI&T to digitalize and implement AI, artificial intelligence, in most of our processes that can be automated, of course, in our CCO, in our post-sales. That will also bring cost gains, cost savings for us. The second block of IT initiatives is using artificial intelligence in phygital, both in SDR, that is when we receive the lead before we send the lead to the store. We look at the customer, we look at the credit scoring, we prepare that lead before we send it to the store.

We will have sales copilot, where AI together with a human salesperson will help find the best options, you know, of destination package, flights, hotels, and also financing options. The third major initiative in technology is training our digital team. Finally, now we have concluded the training. We now have the whole team. We have the director who came from Magalu, Department of Store, Hafa Baga, who takes care of digital plus phygital, and three executive managers, one dealing with CRM, e-commerce, and growth. I believe that in the next few years, this will also bear fruit for us, for CVC. Let me remind you that if you have a question, you can click on raise hand or send your question in writing on chat. Let me go back to the second part of the question. Thank you.

That is about leverage and capital allocation. As Godinho mentioned, we’re very much focused in technology, innovation, growth, but we continue, I mean, it’s still very relevant for us, and it will remain relevant, you know, because we want to deleverage the company. We want to reduce our leverage, so we’re making the investments we have to make. Our Capex level goes all to technology to support these initiatives that Godinho just described, but our focus remains to be, you know, reducing the leverage. I believe we can still continue to do that in the next quarters. Yes, we will continue in the same process of reducing leverage. Thank you. Our next question is in writing on chat. Considering the impact of lower maritime travel sales, what about regional sales in Brazil? Godinho, thank you for the question.

I think we’ve already answered the small and medium towns is growing five times faster than capital city sales, basically because of new store openings, but also because we know that the presence of our franchisees, you know, our forms of financing, the CVC brand, our service, our level of service, that makes a big difference in small and medium towns. That’s very clear in the numbers. Now, when you look at origination, the Southeast Brazil is growing strong. The South Brazil is growing also strong. The North and the Northeast are growing high single digit. In the Southeast and in the South, we are growing double digit, excluding maritime. The only region that is not growing sales is the Center West region. For two reasons.

One, because of Azul decrease in terms of flights to Mato Grosso, Mato Grosso do Sul, I mean, because Azul was strong in that region. Also, the agriculture had a difficult performance, had a challenging performance this year. That is why the center west region is not really growing. That is it about the regional growth. Our next question comes from Victor Rogati from Itaú BBA. Victor, you can already begin. Your microphone’s been enabled. Hello, Godinho, Felipe. Thank you for taking my questions. Three on my side. Three, a follow-up on your comment about excluding maritime. Is that growth consolidated with new store openings, or is it only same store concept? What is the percentage for marketing in terms of the revenue for the next quarters? Thinking about working capital in Brazil, what do you expect? I mean, maybe with B2C growing less than B2B.

What can we say about working capital? Can working capital improve its performance because of the sales mix in the next few quarters? Hey, Victor, this is Godinho. Thank you for your question. Look, growth, I mean, this is consolidated. All the numbers that I mentioned are consolidated. Same store sales growth was a bit negative. You know, when we exclude maritime, then it is 2% positive. Overall, I think it is 2% negative. 1% negative this quarter, but you know, excluding maritime, it is 2% positive. New store openings will keep the guidance of 200 stores in Brazil and Argentina, even in a challenging scenario. Because we changed, you know, the Capex and the OPEX for the stores, and because of the high number of leads, there is a lot of interest in opening stores, especially in small and medium towns where we do not have a presence.

I mean, new store openings in Moema neighborhood in São Paulo, we do not really have franchisees interested, and we are not interested even. In small and medium towns, we have mapped 2,000 potential stores in towns with less than 15,000 inhabitants. In some cases, we even chose a location. I mean, we had a level of 300 stores, so now 200 stores. Obviously, next year, I believe that we will open fewer new stores. The profile has changed also. I mean, if you look at the current profile and new franchisees, because the first, you know, 24, most of them were existing franchisees who were reinvesting in their business. Now these 200 new store openings this year, it is, you know, basically new franchisees joining our business. That is good. That is good, you know, because we do not want to have franchisees with more than two or three stores.

We want the presence of the owner. We want the regional knowledge, the friendships of the owner at the store. We believe this is key for a successful store. You have a new franchisee, he has one store. New franchisees, you know, if you already have a store, then you open the second and third store, you need a manager. You will not have the owner all the time at the store. It is good to have new franchisees. I think 50% of the 200 new store openings are new franchisees. These guys, you know, of course, there is a learning curve. It takes a while, but the focus of these guys is there in their store. It is usually a couple of franchisees and one employee. The rental of these new stores is less than BRL 1,000.

The OPEX is low, the CapEx is low, very much in line with this format of the Trip.com stores. Trip.com is the largest travel agency in Asia. It is a $40 billion company in Hong Kong foreign exchange with sales of $70 billion. In their vertical of tourism, because they have a super app, their tourist travel, they have 6,000 travel agency stores. Half of them opened after the corona pandemic. I spent two weeks in China, and for two days I was visiting stores opened less than two years before in Shanghai. It is exactly the same model that we are using in small and medium towns. Low CapEx, low OPEX, and lots of digital sales. Hello, that is Felipe. The other two questions about marketing expenses. We believe, I mean, we will continue as we have been doing in the last few quarters.

Marketing expense, specifically as a function of sales, it will grow a bit faster than the company top line because we believe we can still gain share. We will be growing 15%-20% a year. When we look at sales expense as a whole, including marketing, we will continue at the same ratio between 1.8%-2% of sales, you know, confirmed bookings. This is our target, and it will continue in the next few quarters. That was what we delivered this year. Now, working capital in Brazil, you mentioned B2C growing slower than B2B. Yes, we expect an improvement. Actually, this quarter, on page 14 of the press release, we bring more information about working capital. We believe it will improve, you know, after Q4 last year.

We began to see a recovery, an improvement, and that will continue not only because of the sales mix, but also because of a few initiatives we have. That we will continue negotiations with recommended and preferred hotels, also negotiations with a few of our customers, you know, B2B customers who had more time to pay, and now we were able to reduce that time. You know, adding up all of these initiatives, the idea is for us to release more working capital. Yes, we expect an improvement in the next quarters. Thank you. Thank you, Victor. Thank you, Felipe. Thank you, Godinho. The Q&A session is now closed. We’ll now hand it over to Mr. Fabio Godinho for his final comments. Thank you again. Thank you again for your time, for the time you’ve spent here with us.

This was another quarter of clear progress in sales in Argentina, growing strong, B2B. Oh, well, B2B, you know, the numbers talk by themselves with sales growing 23%. It means our strategy is quite assertive in our B2B units. So the restructuring has taken time, I know, but now we are bearing fruit. B2C, everyone knows. I am not going to repeat what we have already said, you know, about the 15% interest rate, high household debt in Brazil. We begin to see delinquency of payments and, you know, also the reduction of 30% in maritime travel. The numbers are not exactly what we expected. However, when we look at each unit, we grow 16% in the number of passengers in Q3, with SK growing 11. I mean, that’s good news.

17% on domestic, coupled to the demand, which is positive because domestic airlines are adding capacity, and we also see price increases, price increases in Q3. In general terms, we are aligned in terms of working capital management, and we saw a huge reduction in the company debt. Remember that when we took on the management, the debt was eight times the EBITDA in terms of leverage. Now we are at 0.5 times, I mean, but if we include debentures plus receivables, then it’s 1.8 times. This is the same level of debt of LATAM, and they had to go to Chapter 11. We did not. I mean, if you look at Azul, they’re now trying to conclude their Chapter 11. Even after all the haircut with bold actions, they’re now 2.5 times, you know, their leverage.

Now we did not have to do any disruptive movements, no delinquency, and we’re now at 1.8 in terms of leverage. This was hard work, but we now see the good results for the company. As the interest rate is reduced, again, that will bring a positive effect and free cash generation for the company shareholders. Again, thank you. Have a great day and see you next time. Thank you. CVC Earnings Conference Call is now closed. Thank you all for being with us. Have a great day.

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