Vivo posts profits of R$1.2 billion in the second quarter, an increase of 8.9%

This is a machine translation of a press release by Telefônica Brasil

São Paulo, July 2024 — Vivo continues to post robust results this quarter, with growth in the main financial indicators. The company expands its fixed and mobile connectivity infrastructure, in addition to evolving into the most complete ecosystem of digital services in the sector. During the period, Vivo recorded a profit of R$1.2 billion, an increase of 8.9%. In the semester, the value reaches R$2.1 billion, an increase of 8.2%. Total revenue for the quarter reached R$13.7 billion, increasing 7.4% year-on-year. In the six months of the year, total revenue totaled R$27.2 billion, an increase of 7.0%.

Mobile service revenue rises 8.8% in the quarter and reaches R$8.9 billion, with postpaid as the highlight, whose revenue grows 9.7%, totaling R$7.4 billion. Fixed revenue shows the biggest increase in the last nine years, 3.9%, reaching R$4.0 billion. The highlights of this segment are fiber, which, in the second quarter, increased its revenue by 17.1%, reaching R$1.8 billion. This result is greatly influenced by the advancement of Vivo Total – a convergent postpaid and fiber offer – which already has 1.8 million subscribers, more than double the previous year, contributing to the 4% increase in FTTH ARPU . Revenue from data and corporate digital services also stands out in the fixed segment and reaches R$1.1 billion, an increase of 8.3% in the annual comparison.

Vivo delivers efficient financial management to the market, with an EBITDA of R$5.5 billion, a growth above inflation of 7.3%, with a margin of 39.9%. When excluding the Other Operating Income (Expenses) line, which is volatile in nature, EBITDA grows 10.6%, with a margin of 40.8%, an increase of 1.2 pp

Free Cash Flow reached R$3.1 billion in the quarter, an increase of 23.1%, due to the growth in EBITDA, the maintenance of the level of investments and lower expenses with financial payments, taxes and leasing . In the semester, the value reaches R$5.5 billion.

“Once again we grew consistently, especially revenues, EBITDA and profits. There are repeated quarters with solid numbers and strong financial returns for our shareholders. This is due to the strategy of offering services that enhance the digitalization of customers, whether consumers or companies, maintaining our leadership in the mobile and fiber segment. We strengthen Vivo as a reference in the digital ecosystem, in areas such as finance, entertainment, health and well-being, education. We are also the main choice for companies that choose digitalization to grow. In line with this strategy, we have advanced in partnerships, mergers and acquisitions, including recently announced ones”, explains the president of Vivo, Christian Gebara.

The wide range of electronics, from smartphones to smart home devices, increases revenue from appliances and electronics by 9.9%, which ends the quarter with revenues of R$817 million. Highlight is the sales of cell phones compatible with 5G, responsible for 87% of the total number of smartphones sold in the period.

Investments reach R$2.3 billion, aimed at strengthening the mobile network, with a focus on 5G coverage, present in all municipalities with more than 200 thousand inhabitants, representing 50% of the Brazilian population. The resources were also invested in the fiber network, which has 6.5 million homes and businesses already connected, which means an expansion of the base, in the quarter, of 12.7%. Vivo's fiber infrastructure reaches 27.3 million homes, 10.7% higher than the same period last year. By the end of 2024, coverage should reach 29 million homes and businesses.

Vivo ends the quarter with a total base of 114.7 million accesses, 100.9 million of which from the mobile network. Postpaid customers stand out, totaling 64 million, an increase of 7.2%, with the highest ARPU in the last five years and churn at historically low levels, of 0.99% per month – excluding machine-to-machine ( M2M) – guaranteeing the company continued leadership in this segment, with 43.1% market share (ex. M2M – May/24) .

Operational management

Total costs for the quarter, excluding depreciation and amortization expenses, reached R$8.2 billion, an increase of 7.5% due to greater commercial activity in the period, partially offset by operational efficiencies and greater adoption of digital channels. Highlight the recurring use of the Vivo app, and payments via Pix, which represented 34% of the total received by the company from April to June.

The remuneration paid to shareholders in 2024 has, to date, reached R$4.1 billion, of which R$2.2 billion in interest on equity, R$1.5 billion in resources resulting from capital reduction, while R $447 million was invested in buybacks of the company's own shares. For the years 2024 to 2026, Vivo intends to distribute to its shareholders an amount equal to or greater than 100% of the net profit for each fiscal year.

“Vivo’s strong operational performance, combined with efficient investment allocation, results in increasingly robust cash generation, with a focus on shareholder remuneration”, states David Melcon, Chief Financial Officer (CFO) at Vivo.

Digital business

The digital ecosystem dedicated to companies, composed of cloud services, cybersecurity, sale and rental of IT equipment, IoT, big data and messaging, achieved, in the last 12 months, revenue of R$ 3.6 billion, an increase of 19 .0%, representing 6.7% of Vivo's total revenue in the period.

With the growing demand from the corporate market for digital services, especially cloud solutions, Vivo advances with its strategy for the segment and signed a contract to acquire IPNET, a company specialized in cloud computing and the main integrator of Google's cloud services in Brazil . The negotiation was carried out through Telefônica Cloud Brasil (TCloud Brasil), a company controlled by Telefônica Brasil (50.01%) and Telefónica Tech (49.99%), and could reach an amount of up to R$230 million.

With the acquisition, Vivo will increase the number of specialized professionals at TCloud Brasil and accelerate its growth plan in this segment with the incorporation of the entire team (management and operations). Today, IPNET has more than 260 specialized employees, 140 of whom are certified by Google, and has a base of 1,400 customers. The company's skills will be combined with the scale, capillarity and expertise of Vivo's sales force. In 2023, IPNET generated net revenue of R$218 million, with growth of 35% when compared to 2022.

Vivo also began to operate in renewable energy, in partnership with Auren Energia. The two companies announced the start of operations of GUD Energia, a joint venture created to capture the opportunities generated by the opening of the free energy market. Focusing on the commercialization of customized renewable energy solutions throughout Brazil, the new company operates in a consultative manner, with products and services to simplify the way of contracting energy, offering up to 30% discount on the bill.

In Financial Services, Vivo's personal loan reaches a portfolio of R$446 million, an increase of 62.4% compared to the same period of the previous year. Considering the last 12 months, Financial Services revenues, which also include insurance for cell phones and other devices, such as tablets and notebooks, grew 26.9% in the annual comparison, with revenue of R$450 million. The area is strategic for Vivo, which recently announced two new credit products: Pix installment, which allows purchases made using this modality to be paid in up to 12 months; and anticipation of the FGTS anniversary withdrawal – a loan that uses the Guarantee Fund anniversary withdrawal resources in active or inactive accounts with a positive balance. In the case of Vivo, it is possible to withdraw from R$500 and advance the amount of up to 10 years of the available balance.

In Entertainment, Vivo distributes the main music and video providers on the market to its customers, totaling 2.7 million subscribers to these services, with revenue of R$635 million in the last 12 months, an increase of 29.4%.

In Health and Wellbeing, Vale Saúde, a monthly subscription service that connects customers to clinics and laboratories across the country, reached 321 thousand subscriptions. In the first half of this year alone, through the platform, more than 30 thousand medical consultations, exams and procedures were carried out in the Vale Saúde partner network. In the last 12 months, Vivo com Saúde e Bem-Estar's revenue amounts to R$ 37 million.

Vivo highlights that its revenues from Electronics (excluding smartphones ), music and video OTT's, Health and Wellbeing, and Financial Services increased by 34.6% in the last 12 months, representing 2.8% of the company's total revenue. company.

Vivo Ventures, a Corporate Venture Capital fund, committed, in June, to acquire a minority stake worth US$5 million in CRMBonus Holding. CRMBonus is a platform that uses artificial intelligence to maximize relationships between companies and their customers, popularizing the giftback concept in the Brazilian market. The contribution deepens the existing partnership between the startup and Vivo, which since the beginning of the year has included Vale Bônus, one of the company's solutions, in the benefits offered to its customers.