Everyone, thank you for waiting. Welcome to Magalu's Conference Call to discuss First Quarter 2025. For those of you who need simultaneous interpreting, you just click on the interpretation button using the globe icon at the bottom of your screen, and you can choose the language of your preference: Portuguese or English. We inform that this event is being recorded and will be made available on the company's IR website at ir.magazineluiza.com, where you can find the earnings release in both Portuguese and English. The link to the presentation in English is available on the website. During the presentation, all participants will be in listen-only mode. We will begin the Q&A session. To ask questions, you can click on the Q&A icon at the bottom of your screen, write your name, company, and the language in which you will speak. When announced, a prompt to enable your microphone will appear on the screen, and you should unmute your microphone. Questions received in writing will be answered later by our investor relations team. Now, I'd like to turn the floor to Freddy Trajano, CEO of Magalu. Freddy? Good morning, everyone. Again, thank you very much for participating in our earnings conference call referring to first quarter 2025. I am here again with the whole top management of the company. We have new members, new officers, and I'll be speaking about this during the presentation. I would like to start highlighting what we have been talking about for a while now, that the year of 2025 is the last year in the cycle of building the digital ecosystem of Magalu. The main strategic objective was to make our results more resilient and SELIC rate-proof. I think that this quarter is very symbolic in a way, from the standpoint of clearly showing the evolution of this strategic cycle, very much related to the fact that for yet another quarter, we posted profit despite a very substantial hike of the SELIC interest rate, particularly future interest rates in the first quarter. Future interest rates determine a good part of our financial expenses in terms of debt service and also in terms of trade account receivables. Roberto will speak more about this, but we more than offset this with increasing our EBITDA. We hit a historical margin of 8.1%, growing 10% of our EBITDA, very much due to the contribution of these result line items that we created in our ecosystem. Not just Luizac red, but all financial product operations contribute significantly for this. I'll highlight consortium, Magalu Pay, and other subsidiaries. Magalu Ads has already started to reinforce our margin. We had an increase in revenue of services, not just this, but other line items ended up contributing. In a nutshell, we had an expansion of 70 basis points, a 0.7 percentage point increase in adjusted EBITDA margin, showing that all of this we built over the years, part coming from acquired companies, part from organic expansion, all of that has contributed a lot to our profitability, helping us deal with this hike in the interest rates, which gives us a lot of hope regarding when this cycle finally ends. We had another increase in the interest rates 2 days ago of 50 basis points. Apparently, we're getting to the end of this hiking cycle, which is great news because our business, when interest rates start falling, future interest rates, EBITDA converting into EBITDA rate will be significant. Our business is now more resilient to the worst-case scenario, which is a high SELIC rate. When the SELIC rate falls, our business will be boosted. I'd like to highlight the increase in the gross margin. Like I said, we had an increase in services revenue, but also an increase of the merchandise margin and then service margin. This is because of the price increase and pass-through, and mainly the fact that with higher interest rates, we have higher trade account receivables and have to pass this through. In other words, it's a quarter that comes after we close the balance sheet of 2024 that we published on March 8th, if I'm not mistaken, our last income statement. The speech is consistent. We have a very high GMV annually, above BRL 67 billion, and I believe it's a GMV which is sufficient for us to be building a more stable operation. As regards to growth, more specifically, because we are more focused on monetizing our GMV and increasing our margin to offset the increase of the cost of prepayment of receivables, we ended up opting once again to increase profitability. This is an option that we have made, a choice we have made in other quarters, and it is very much fitting the current scenario. It's not going to last forever. We're going to get to the end of this high interest rate cycle. I see that the moment we get a clearer signaling that the interest rates will drop, obviously, we're going to have a lot more flexibility to re-accelerate our growth. What matters is this: that even with an increase of 0.7 percentage point increase in adjusted EBITDA margin, we defended our sales. We did not give up sales. We had a little trade-off in terms of growth, particularly online, where the impact of the trade account receivables discount is higher and have traction of the credit instruments, which are more interest rate-proof. In the stores, the stores have to be defended because the penetration of financial services is very high. Online, we had to pass through more prices because of this increase in discount of receivables. Online is different from brick-and-mortar stores, and online, we have to pass through more price increases. Still, considering all that, we had an EBITDA margin increase, a margin increase. We had the financial expenses increase, but we were able to offset that. Beto will speak about this increase in financial expenses. We were able to defend our GMV. We continue to be one of the leaders in products above BRL 1,000 both online and offline. Offline, we are the leader, actually. We continue with a very good basis and a very significant scale and room to improve our margin despite growth. We continue with the same strategy looking forward. I would like to highlight specifically the continuity of our sales. We grew 7%. Same-store sales coming from an almost 10% same-store sales in the prior quarter. We had had a good performance two years ago. Sales have been increasing at the brick-and-mortar stores, have shown to be very resilient, positive. In those physical stores, we had the seasonality of the weather. It was not so hot as it was last year. The physical stores tend to sell more durable goods. Still, this market continues very strong. Like I said, we do not have a demand issue. We do not have a consumption issue. I think that, and actually, I am sure that our retail sales will be strong because even if we have inflation pressure on consumption, this is practically offset by the collective bargaining agreements. Even the government aid to the low-income population is adjusted. We have to be able to operate in this high-tax burden environment and high-interest rate environment and convert everything into sales. I still see the physical stores performing well. I would like to stress physical stores. We have multi-channels, and we are taking the brick-and-mortar stores to a whole new level with the inclusion of physical stores of companies of our ecosystem. In the context of the Magalu ecosystem, we had some acquisitions in this cycle, acquisition of purely online operations. However, our model and what sets us apart, we have been growing in home appliances and electronics because we can have inventory at the stores, return at the stores, and store pickup. This was always a differential for Magalu, the controller. We want to take this differential to the companies of the group. We opened physical stores of KaBuM! and Netshoes. Both operations are doing very well. These stores were opened on Marginal Tietê Beltway. We have signed a new location for these units. This place, this location is going to absorb stores of Época and Estante Virtual. Our goal is to take these companies that live purely online to the physical world. The KaBuM! and Netshoes stores not only are they performing really well in the brick-and-mortar stores, but they're also contributing a lot to the Magalu store that is right next to it. Where we used to have Livraria Cultura bookstore, we are going to have the first physical space of the Magalu ecosystem of our whole universe, with all of the brands of the group physically present there, with full integration. I am sure that this initial success of these stores, KaBuM! and Netshoes, they both contributed to our net income and increase in EBITDA in Q1. With the expansion of physical stores, we see a very promising market for both brands. These businesses amount to about BRL 4.5 billion-BRL 5 billion a year. They are leaders in their segment as well as Época. I am sure that this expansion to physical stores and multi-channel approach in practice to all of the companies of the group will boost our ecosystem. For this year, in addition to profitability, which we have been showing very consistently since the beginning of last year, this is the fifth consecutive quarter with a lot of evidence that the cycle was absolutely successful. I believe that for this last year of the cycle, 2025, the physical presence of these brands of the group that used to be just online will be fundamental. Still, in the context of the ecosystem, I would like to highlight our ads. We had a 53% of the ads revenue. The whole focus we had, the team of Célia Goldstein, and now André Fatala, and I'll speak more about that, have been focusing a lot on increasing, improving the platform. We improved a lot the click-through rate for the advertisers. We had also space for ads in a whole navigation. I'd like to remind you that we have almost 500 million visits to all companies of the group. The Netshoes audience is gigantic. The audience of KaBuM! is gigantic. And the same for Época and Magalu. Sometimes we tend to look just at the audience of Magalu App, but we have to look at the audience of the whole ecosystem, Magalu Ads and others. The idea is that we'll monetize all channels of the group. Of course, the focus now is Magalu, but we intend to expand. We had unprecedented partnerships with big brands, which are not sellers of Magalu, Uber, Zé Delivery, Mastercard. They all invested in our digital assets in the period. Obviously, we have the brick-and-mortar stores to deliver ads, have the commercial locations there that are more and more prepared to absorb this. We have this multi-channel approach. We had a 53% increase in the revenue of MagaluAds. That was very helpful to increase the 0.7 percentage point increase in EBITDA margin and in our services revenue, which grew above expected. I guess that a big highlight, and this has been so for a while, is our financial services operation. Of course, we have to highlight Luizacred, which once again had a very good quarter, a very good return on equity. I think that financial operations run really well in the context of high interest rates. Our banks are doing well. It is not different here. I would like to highlight not just Luizacred in this process, but also the other operations of the group. MagaluPay had another positive quarter. It's an operation that is not so well known by the market. Our consortium with about BRL 5 billion in the quarter had a BRL 5 billion. We had another positive quarter, BRL 12 million consortium, BRL 14 million MagaluPay, BRL 84 million Luizacred. A total of BRL 110 million total net income. Again, in a very good segment. I guess that the big opportunity we have here is a very high penetration in the physical world, which accounts for about one-third of our sales, with a very low penetration online, which accounts for 2/3 of our sales. We are far from getting to the limit of our growth. We do not even have to grow GMV to improve our business. We just have to increase the penetration of online. We have some news here, just like our MagaluPay IF, which was approved now by the central bank. Some digital products are now under this structure. Other businesses. We intend to increase our penetration in the digital world. I'll speak about the new announcements of our structure, but we have a new CEO for the business, Jörg Friedman, who will be leading these strategic initiatives. He joins us in a very good moment in terms of earnings. At a moment of strategic inflection, we're going to have a huge opportunity to increase the monetization of our client base and our digital channels with financial services. He will be available during the Q&A session after this presentation. I guess that still on that topic, we started reaping the fruit of the first public or global public cloud in Brazil, Magalu Cloud. We had 40% of the workloads of Magalu Cloud already migrated to Magalu Cloud, and more than 400 SMEs have been using Magalu Cloud. We released now five zones in two regions, excellent latency. We've had an excellent performance of costs. We had a number of organic posts of clients complimenting on the service, saying that they had significant savings. I guess that now with AI, companies, either small, medium, or large, will be able or will have to implement AI models to optimize their work. Players not using AI will lose space to those who are using it. AI will require more and more computing capability in the cloud, more and more need to do this in a cheap way, in an economically viable way, and with low latency. We have all of that. This is what sets Magalu Cloud apart. We are feeling a lot of traction, positive traction. We're very excited. It's not contributing so much yet to our EBITDA, but I'm sure that it's going to be a big cash cow for the group. It will generate a lot of revenue for us, in addition to the savings that it brings to Magalu itself. In terms of our expenses, which are hundreds of millions in our business. It is a very positive moment for us. André Fatala is also here to give us more on that. It's another pillar of the ecosystem, which is evolving really well. Another point that shows consistency in our strategy. I would also like to highlight Magalo g. On the next slide, I think that we're evolving our fulfillment. Almost 25% of 3P orders. In the same period last year, it was 16%, 4,200 sellers. We have just enabled another DC for 3P. We opened this DC in Rio Grande do Sul. We are covered in the three main e-commerce regions in Brazil, South, Southeast, and the Northeast. We have operations in all three regions. The idea is to start populating these DCs, particularly those in the South and in the Northeast for our fulfillment operation. We have a very high 1P e-commerce market share in the Northeast and in the South of Brazil. With fulfillment, the idea is that we'll increase the market share of 3P sales. This is a big differentiator. Our fulfillment is multi-channel. Once the product is there, we have the benefits of multi-channels, store pickup, and other advantages, such as multi-channel reverse logistics. We have just enabled the marketplace so that shoppers buying in the marketplace can return products in all of the Magalu brick-and-mortar stores. This was limited to 1P products. Almost 100% of the merchandise returns were done via the post office. Most market players need the post office for that. Now all Magalu stores are enabled to get merchandise return. Almost 50% of 3P sales and products are being returned in brick-and-mortar stores of Magalu. We have stores everywhere in Brazil, which is a big differential. This has helped a lot our NPS levels, which continue to evolve a lot. In the fourth quarter, we are growing 10 points in our NPS. In Q1, 76 points in our NPS. 1P operations above 80. Brick-and-mortar stores, 83%, 3P 69. As you know, we work every year with one topic. Not that we do not do other things, but we always have a focus for the year. The company has a lot of discipline. In this strategic cycle last year, our focus was to resume a level of service that would delight our clients, our customers. Last year, as a whole, we increased our level of service. This year, we'll maintain this year with a very high NPS. A very high, the highest NPS in the segment in Brazil, both 1P stores and 3P. For this year's theme, our focus will be conversion. Speaking about what we are prioritizing this year, we are prioritizing resuming growth for the company, but with discipline, i.e., doing this, having effective investments. We have almost 500 million monthly visits across our digital channels, desk, app, mobile sites for all of the brands of the group. We see that there's a big opportunity to increase conversion of the shoppers. The whole organization, the whole company is focused on optimizing every step of the process. This is a change after three or four years when we focused exclusively on improving the margin and efficiency. Now we are focusing again on growing sales with a disciplined concept of increasing conversion. Not just having low return on our investments, but getting the most out of them, selling the same thing with less marketing, and where there's room, we'll sell more with just a little higher investment in marketing. That's the kind of conversion we're looking at. The company now has this new theme starting in Q2 2025. We are more focused regarding delivery times. We are investing in broadening the routes, more shifts in the DCs, working with more sales in Q1. We have started feeling the effects of that at the DCs. First, we create delivery routes. We reduce delivery time, and conversion comes later. We are very much focused on pricing, working with sellers and suppliers alike to have price competitiveness. We were focused on margin. Now we have to deliver margin with the best price for the customers. Doing strong work at the company to raise awareness that we have to have the best experience in the market. We have to improve search engines and recommendations, having a more assertive marketing, modeling, and so on and so forth, and payment options. Again, broadening payment options, mixing payment options. The Digital CDC is also important to increase checkout conversion. All of the reports of the company now are more focused, not just in after sales, but before checkout. In other words, what modern shoppers are looking at, what they're searching. I'm sure that we're going to have a year that will bring us a lot of benefits in terms of increased sales, but with sustainable results. That's what we are focusing this year. Last year was the year of Encanta Magalu. We had a brilliant year in terms of these indicators. In this year of conversion, I'm convinced we're going to have a very positive year. For this, I think that in such a big and complex operation, and so digital, as is the case of Magalu, we needed some structural reinforcement. I would like to stress this. I am a leader that has a characteristic of having a lot of longevity. I don't like changes very much. Many of my officers and VPs started with me when I became the CEO in 2016. I've been the CEO for almost 10 years, and I saw now the need to make some changes in our organizational structure. The biggest change since 2016, we had the arrival of new people, two executives that we brought in, and we're very happy to have them join us, Jörg Friedman to be CEO of MagaluBank, and Ricardo Garrido to be Marketplace Executive Officer. These are two extremely strategic units for the company. Garrido comes with 9 years' experience at Amazon, and Jörg Friedman has experience in the financial sector in the last 3 years at Nubank. We are very excited. We made a change, which I think is very significant in terms of the structure. We merged the areas of digital channels and technology. Now we have a single platform VP under the leadership of André Fatala, who's been with us for a long time. He was responsible for Magalu Cloud and others. In my view, in order to have quantum leaps and significant leaps in terms such as conversion and everything I said, pricing, word of mouth, searching, marketing assertiveness, all of these quantum leaps have to be algorithmic and not empirical manual leaps. It is really important that technological platforms, many of them use sophisticated models of artificial intelligence or automation models in general. These platforms need huge technological expertise. In changing the organizational structure, the technology organization and the business organization will be much more integrated. This will add speed, and the management philosophy will be one of automation rather than decisions, which are non-automated decisions. Of course, automation with sophisticated algorithms. That is where we are going. I believe that we brought in the right people. We made the necessary organizational structure changes that will help us to continue to operate, growing margin, gross margin, or gross profit, and return to our investors. To resume a path of growth, particularly online, I would like to remind you that the physical stores are doing quite well. We want to do all this in a sustainable fashion, which I believe is very important in the current scenario. I will turn the floor to Beto, and then I will come back for the Q&A. Thank you. Thank you, Fred. We will go over the financial highlights very quickly. We spoke about more than BRL 16 billion in total sales, same store sales growth of 7%, gross margin above 30% since the first quarter, which normally is a quarter with more sales, with more promotions. EBITDA growth and adjusted net income of BRL 11.2 million. Accounting net income, close to BRL 13 million. A very small difference. We did not have any relevant non-recurring expense or revenue. The numbers are very similar. We ended the quarter with a total cash position and adjusted net cash, which are very robust. Total cash of BRL 6.7 billion. On the next slide, we show the quarterly evolution to reinforce the consistency of our EBITDA margin. Last year, we started EBITDA margin at 7.4% that evolved during the year. This year, we started at a higher level. As Fred said, service revenue growth was a highlight. It grew between 4% and 5% this quarter, driven by the marketplace, MagaluAds, and the sale of insurance. We had an increase in merchandise margin, which was also important. I would highlight also fulfillment expansion, market share gain of physical stores, and the profitability of the brick-and-mortar stores growing. The big profitability highlight at Luizacred. On the next slide, we explain the evolution of EBITDA margin, 7.4% to 8.1%. G ross margin contributing with a 0.7 percentage points. I would highlight the merchandise margin, 0.6%, again reflecting the pass-through of CDI increase to our end prices and increasing our merchandise margin and service margin, contributing also to the consolidated gross margin. Our operational expenses, general and administrative expenses, remain kind of flat, as had been the case last year, at a very stable level this quarter. These were stable. Selling expenses grew a little. As Fred mentioned, these were investments we made, primarily to increase the fulfillment operation, expanding our delivery routes to have a faster delivery time. All of this tends to translate into sales conversion and more results in the future. We highlight the result of Luiza Trad, which contributed with a 0.4 percentage points, as well as the reduction of delinquency, loan loss provision, particularly of consumer credit, which contributed with another 0.2 percentage points. We got to a total of 8.1% EBITDA margin. On the next slide, we speak a little about working capital. Here we have the variation in the first quarter, which is very seasonal. We had about BRL 1.5 billion variation in Q1. It is totally related to payment to suppliers. Our suppliers' balance reduced practically by the same amount. As you know, this is very seasonal. This will tend to come back during the year. The balance of suppliers tends to end the year at the same level of last year, slightly above. The highlight here is that a trend. We improved the inventory turnover and a big highlight to taxes. We reduced the balance of taxes recoverable both in the quarter, about BRL 200 million, and compared to last year of more than BRL 500 million of recoverable taxes. This is a trend that should continue throughout the year. The working capital tends to continue to evolve during this year. It will improve a lot as it improved last year. This year tends to be even better. The consequence of all that would be a reflection on financial expenses on the right. In Q1, financial expenses grew by 27%, mainly due to payment to suppliers, which was seasonal. Of course, they need to have a prepayment of receivables in this quarter. We increased the volume of prepaid receivables compared to the same quarter last year. We had had an increase in our private capital in the first quarter of last year. Without the increase of private capital, the volume of prepayment of receivables would have increased. The future interest curves increased from 11% to 14%, also increasing 27%. The total increase of financial expenses is a consequence of this higher future interest rate. If we look at the expenses of interest loans, there was a drop even with a higher CDI. This is because of the debt reduction that we had last year. Last year, we reduced our debt by BRL 3 billion in the last 12 months, BRL 2.1 billion debt reduction. The trend of interest on loans is a downward one. Now I detail a little our total cash flow. We started with about BRL 2.4 billion cash, practically record level for this period of the year. I'd like to remind you that last year we had an operational cash generation that was very strong. We converted a lot of EBITDA into operational cash. The trend this year should be exactly the same. After the cash flow of the operations, we had investments of about BRL 700 million. We had the payment of leasing, about BRL 800 million, and gave us a free cash flow of almost BRL 1 billion, BRL 900 million. Deducting interests on loans and borrowings, about BRL 600 million, we get to an adjusted cash flow of BRL 300 million, which is very similar to our last 12 months' net income. In other words, we are converting net income into cash generation at a very high proportion. In addition to the cash flow, we had two events that are relatively non-recurring. The first was Luiza Trade Capital contribution, almost BRL 600 million, and the debt payment, which explains all the variation in our total cash position. We pay debt, we reduce cash, we reduce the debt. It does not change our capital structure. In the last 12 months, we paid BRL 2.1 billion of our debt, including the buyback of our debentures. We are trading in the secondary market. The spread of this operation has been dropping a lot, and it is converging to the price of our securities. Before talking about capital structure, we communicated this last year. We communicated a very important deal for us. We announced some fundraising with the IFC, about $130 million, about BRL 750 million. This is the first deal we have with the IFC, and it is the first IFC deal with a Brazilian retailer with these characteristics. It is a five-year totally clean deal with two years of grace period. It is our first transaction with a focus on financial sustainability and the evolution of sustainability indicators, specifically in our case, collection and recycling of electronics and home appliances. Again, this is a very special operation for Magalu, and the funds will be used to invest in technology. With this operation, we practically guarantee all of the investments we will be making in technology in 2025 and 2026, in addition to increasing our liquidity with our capital structure in the short run. Here we show our capital structure. We ended the year with BRL 6.7 billion, considering cash and receivables available, with a net debt of BRL 4.6 billion. This gives us a net cash of BRL 2.1 billion. Here, as I was saying, in September, this position of BRL 2.1 billion was BRL 1.8 billion. In the last quarter, it increased. In the first quarter of the following year, it normally drops given the seasonality of working capital, as I explained. It is important to note that from September of last year to March of this year, we increased our net cash position from BRL 1.8 billion to BRL 2.1 billion, meaning that now we have BRL 300 million of net cash. Now, speaking about our debt of BRL 4.6 billion, it was already distributed throughout the period of four years. It was a very elongated profile. We had done some of the elongation or the extension at the end of last year for 2027 and 2028. In April, we concluded and we communicated the issuance of the 13th issuance of debentures for BRL 1 billion for a period of 3 years, with 3 years of grace period, at a rate of, you know, 1.7% a year. This was, you know, an exceptional transaction. Together with IFC's transaction, our liquidity increases substantially, ensuring all the necessary funding for us to honor all the payments for this year. Not only that, we can also guarantee investments in technology for next year. Our capital structure is even more robust. In a moment where we are generating cash, given all of the investments already ensured through that IFC transaction, we will have the opportunity to generate more operating cash and by the same token to increase our total liquidity. Finally, here we have Luizacredit's results. It was a highlight of the period once again. Luizacredit has a portfolio of almost BRL 20 billion, more than 6 million active customers. Delinquency is dropping significantly, both in the long and short range. The coverage ratio increased to 162%. This is a very robust and conservative view. The levels are much lower than that of last year. Because of that, Luizacred was able to increase its profitability. We were able to reduce the cost of funding, reduce provisions, increase in capital. Also, we increased total service revenue this quarter because we increased that revenue. Now we have BRL 84 million of net income. Once again, this is a very special moment for Luizacred. Luizacred is now prepared to expedite its growth going forward. With that, I conclude my remarks. I would like to first thank you all for joining us, and we'll now start our Q&A session. We will now initiate the Q&A session. For questions, just click in the Q&A icon in the bottom of your screen, write your name, your company, and state your name to get in the queue. Once your name is called out, you will see a pop-up to activate your microphone and proceed with your question. Our first question comes from Luiz Guanais from BTG Bank. Luis, you may proceed. Good morning, Vanessa, Fred, and Beto. I have two questions. My first question, Fred, you put a lot of focus on the conversion in the platform as one of your indicators and the indicator that you've paid more attention to. What was the evolution of this conversion in the quarter? What are the main KPIs to leverage that conversion? You mentioned financial services. Can you please elaborate a bit more? In terms of margins, could you also tell us a bit about margin expansion after you hit 8% of EBITDA margin, both within e-commerce and physical retail? Thank you. Good morning, Luis, and thank you very much for your question. Speaking about conversion, I mean, you and the other analysts, you're very familiar with Magalu because you've been following us for quite some time. Conversion is a very crucial topic for the company, especially at that moment of the strategic cycle. Last year, we chose service level, so our goals were very robust to increase NPS because with all of the monetization focus and the focus to simplify the operations, you know, increase efficiency, etc., we needed to improve service levels, placing Magalu at a historical level because we've always had the best NPS in the market, and we were able to resume that position. Once that was achieved, we decided now to change the focus and focus on conversion. These annual cycles, they follow the West Balance Sheet calendar. It was as though we would use the first quarter to do all the planning, to build up the indicators. Now, all of the company's indicators are of visualization. They are not after sales. I'm not looking at the client just at the moment when he made the purchase, but I have a whole journey. So we improve the company's reports regarding all of the potential factors that can help us convert more visits into sales because this will allow us to grow with a good margin. This is a challenge if you consider the current state of the company. We are looking at several avenues. Delivery timing is one of the aspects. Fulfillment is another. Pricing for 1P and 3P. We have to make certain to be assertive in terms of the algorithms. We have pricing automated robots. The same thing goes for freight costs because we increase freight charges. We are now, you know, looking at freight where there is conversion. You save on marketing if your freight cost is lower. All the bidding algorithms are being used for marketing campaigns, NTA, etc. We do incrementality tasks. The agenda is very complex, involving the entire organization, not only marketing alone. Even the legal department is involved because it has to do with financial products. You have the conversion of the cart when you are already at the checkout, but maybe your credit card is not approved or you are buying with a credit card, but the approval rate is low for maybe some issues related to integration with a credit card company. For checkout conversion, we are focusing with some, a lot of improvements, improvement in conversion rate, approval rate, you know, financial instruments, you know, limits, payment means. There are a series of initiatives that they're focusing on conversion, on converting at checkout. All of that involves payment terms, price. We're just expanding our digital platforms. This is one of the goals of the FinTech team to help convert more people because a lot of people do not have enough limit on their credit cards. Some people only have like BRL 300 or BRL 400 as a limit in their credit cards, and they cannot buy anything more expensive than that because they have to buy food just to survive. Sometimes with a digital platform, we find ways of helping them to pay for more expensive things without exceeding the limits on their credit cards. This is a very, very nice agenda. I will then tell you a little bit more about penetration and additional margins and how you see the FinTech possibilities. I mean, he just started working on that soon, but you'll see all the possibilities. Thank you, Fred. Thank you, Guanais. I think we find ourselves in a very privileged and favorable position right now because we can grow and at the same time, we can improve profitability. We can leverage our ecosystem and we can also leverage sales both on digital and brick-and-mortar stores. If you look at the financial service strategy as a whole, obviously, I mean, we have the challenge to integrate everything into our ecosystem and at the same time, increase service penetration, especially in the digital sphere. When I refer to our favorable position, I was saying that we have a very good banking infrastructure. We have a very robust licensing system that also allows us to grow efficiently with efficiency and better scalability of products. Also, we have the necessary raw material that allows us to increase principality in our ecosystem. Let me mention five highlights. I mean, Fred already mentioned that. Brand is something that brings more robustness. Scale is another factor: 500 million visits and 35 million customers buy consistently in our ecosystem. Service level is record: 67 NPS points. The entire system is very efficient. Multi-channel, multi-channel is something very unique of Magalu because we can offer financial services in more than 1,500 stores. All of that combined leads to principality. As we pointed out, we have all it takes to favor or to grow our margins in a timeline. Great. Thank you, Jörg. Thank you, Fred. Now, a follow-up on my second question about margins. Could you please now mention expansion with all of the initiatives that you recently took, both e-commerce and brick-and-mortar stores? Again, we do not give any guidance, but I think you've realized that most part of our EBITDA delta comes from financial services, not only Luizacred. Once again, I would like to highlight Magalu Pagamentos, Consortium. It is very easy when you look at our apps that they have been great contributors. I think it's still far from our goal. Jörg just talked about penetration. Penetration is still very low, low on, you know, both on and off. I'm sure that we will be able to reduce the penetration online, the online penetration gap. Thank you. Thank you very much, Fred. Thank you for the question, Luis. Our next question comes from Lucca from UBS. Luca, you may proceed. Bom dia, pessoal. Good morning, and thank you for taking my questions. First of all, speaking about, you know, profitability gains that you've been posting in the last few quarters, could you please comment on how much of that margin gain comes from the mix of channels? I mean, brick-and-mortar stores gaining more penetration and how much indeed came from better profitability of the channels. If you could also share something about the margin evolution per channel. I mean, Luis just said that every, you know, channel is gaining margin, but which is gaining more margin? My second question is about your partnership with AliExpress. Could you please give us an update about that partnership and how is that contributing to your sales? Also, I would like to hear about the expansion of this partnership for logistics and iCloud. Thank you for your question. Speaking about margins, we have gains across the board. All the channels had margin gains in terms of online 1P, as we said last year. Part of that margin gain was done to compensate for last year's default. We had 5 percentage points in addition, I mean, more in 1P. So that margin gain was used to offset that increase in taxes. Even then, I mean, not only that compensated for Magalu, but Netshoes, Época, and KaBuM!. All of them have relevant 1P operations, and 3P of, you know, all of them is also very, very strong, but all of them had that impact. Therefore, much of that gain, that gain in margin was used to compensate for that. 1P had margin gains and 3P as well. We had increase in take rate. There were changes in freight bonus. There was a change in that policy. The stores are performing quite well, positive performance. There was a slight increase in the share as a whole, which also contributed, but that margin gain was across the board. All channels, all of the executives at the company were entitled with the objective to increase the margin as a whole. About AliExpress, I would like to call Garrido to talk about that because now this operation is under his wings. Thank you, Fred. Thank you, Fred, and thank you, Lucca, for your question. The partnership with AliExpress started in the fourth quarter of last year. We are very pleased with the result so far and the potential that this partnership can bring us. I think the most important thing is to ensure the excellence of processes, to ensure that all of the times are complied with and the operation runs smoothly. The first phase was concluded very successfully. We think that this kind of assortment that comes through this partnership with AliExpress also brings a very important offering to our customers. So far, things have been moving quite successfully. We are very competitive in this cross-border operation. As we gain confidence, we are also adding that to our promotional calendar. We traditionally have promotions every week. We have Mondays and Sundays and Pay Day that happens every day. Now on the 11th, we have another promotion where we will bring assortment coming through this partnership. It will be a one-day focus on that. We are very confident with that partnership, and we believe that there is great potential for further growth, also involving other services offered by the company. So far, the focus is much more on e-commerce. Perfect. Thank you for your answers. Thank you for the question, Lucca. Our next question is from Gustavo Senday from XP. Gustavo, go ahead. Good morning, and thank you for taking my questions. I have two questions. My first question is on fulfillment. I mean, 25% penetration on 3P. I would just like to get a better understanding of how much more penetration could grow and understand your investment need. How much you need to invest in the P&L to gain more scale? This is my first question. Second question is about MagaluAds. There was a great expansion in the quarter. What will be the next steps for 2025? How much it contributed for the expansion of 3P? Thank you. Bom dia, muito obrigado. Good morning, and thank you very much for the question. I think I missed your last question. You were talking about fulfillment and all the roadmap of MagaluAds. Okay, I'll start with the first question on fulfillment, and then Fatala can talk about Ads. About fulfillment, you saw that you went from 16% to 24% of total share of Magalu, and I think this year it should convert even more. Conversion of the visits of products that are already in our DCs or sellers that are in the fulfillment operation is significantly higher when you compare to conversion of products and sellers that are not in the fulfillment. For us, one of the major leverages to increase conversion is the increase of fulfillment in the total scheme of things. We are working hard to get that done in the first quarter. Part of these investments are already being done. That's an important part of this increase of sales expenses that we had in the first quarter. It was not a marketing increase, but it was an increase in the structure. We would have more DCs receiving fulfillment products. DCs in the Northeast for fulfillment operation. We are expanding the area so that we would have more availability of products in regional DCs. We are still investing in these things, and these investments will generate more conversion going forward. Therefore, we are not giving any guidance, as you well know, but if you look at that 24% stake today and comparing that with other companies that already talked about their fulfillment, looking at the curve, we're much ahead of other operations that started from scratch. We started that less than 2 years ago. This is an operation that will certainly make us very happy going forward, and our sellers will be happy as well. About the Ads roadmap, I will then turn the floor to Fatala. And Garrido, if you want to add, please go ahead. Gustavo, good morning, and thank you for your question. About the Ads, as Fred was saying, we grew 53% of our revenue, but we still see more room for improvement related to our Ads platform. Just to give you an idea, we grew CTR by 47% comparing, I mean, the last quarter of last year. This was due to improvements in the platform and improvements in terms of the general experience of users in our channels due to all of the Ads integration. Now, we will increase the density of the ads as part of user experience, as you know, as long as something that is very relevant compared to what we have in terms of organic ads. We are also focusing on partnerships with large brands or advertisers, and this will grow throughout the year. This will help us build other projects. Not only do we have a large number of visits in our digital channels, but we have Lu, and she is a major influencer. She can certainly help us do the collab with other brands because this is a source of major opportunities in terms of ads investments. Another important activity is that we were working to promote a larger integration in the MagaluAds platform with what happens in the physical stores. From now on, we will simplify the ads in the platform. We should have a more advanced technological process that can help us escalate much quicker. The main points in our roadmap are to leverage the growth of ads in the company. Maybe Garrido can talk about fulfillment. Gustavo, just to add to Fred's comments, you talked about the need to invest more to grow fulfillment. There is one thing that is very peculiar to Magalu, which is the multi-channel differential. We mentioned that in several fronts, even financial service. In terms of fulfillment, we started with a big network of distribution centers that are spread throughout the country. We could go into 3P without necessarily having new distribution centers. This means that the investment is much lower. As we, you know, release our results, and even if you look at other companies that have a fulfillment program, the growth is by expansion zones. We have fulfillment in 9 DCs out of the 21 DCs of 1P, I mean 10, because we have one in Rio Grande do Sul as well. There is still a large concentration in São Paulo. We believe that this year's growth will come from the fact that we will grow the inventory to other DCs. Another interesting aspect is store pickup in all of our delivery channels that we manage: 29%, almost 30% of deliveries that occurred in March were done through customer store pickup. It is certainly a much cheaper channel because the customer goes to the store. With that, we were able to increase our offering of free delivery or free freight. This is just, you know, to show that this potentializes the growth of fulfillment. That's very clear. Thank you very much. Thank you for your questions. Our next question is from Tales from Safra Bank. You may proceed, Thalys. Good morning, Vanessa, Fred, and Beto. I would like to hear more about demand. I think Fred said that there is no problem with demand, but I just want to understand it by category. I mean, your white line, how do you see demand? I mean, how is demand in terms of that exchange cycle? I mean, we haven't seen a consumption boom for a while. How is that related to Luizacred? Luizacred posted good results, but I think SELIC shouldn't go up any further. What is your position in terms of granting loans? What about the new cohorts that you had more recently? Okay, you want to answer it first, right? Go ahead. Good morning, Tales here. Is Fabrício. In terms of the performance of the categories, out of the main Magalu's categories, we had very good performance in furniture. Telephones has been flat in the last 2 years. I mean, sometimes we are gaining share. The white line is going through this, you know, exchange process. We had good performance in this category, and this should also go on throughout this year. This is what we see in terms of the categories. Now, speaking about credit, I'll turn the floor to Jörg. Thank you, Fabrício. Okay, Beto can add to whatever I'll say. We will remain vigilant, looking at the macro scenario. Magalu's track record has been of being very conservative when it comes to loan granting. In this last quarter, I think it would be fair to say that we have not seen any changes in the risk appetite. Looking forward, we will continue to be vigilant. As Fred said during his comments, this is a cycle that seems to be coming to an end. We continue to see the main KPIs performing in a very sound way. I mean, NPL of Luizacred remains stable, even though there is a historic negative seasonality. There was a significant improvement of 130 basis points year on year. This is what makes us feel confident to move ahead despite this macroeconomic environment, which is a bit more challenging. Okay, thank you. That is very clear. Thank you, Tales. Our next question is from Irma from Goldman Sachs. Irma, you may proceed. Good morning. Thank you. I would like to revisit the fulfillment question. My question is about logistics unit costs. Would it be fair to think that in the short term, that cost is slightly higher given the fact that you increase your logistic coverage? What about the inflection point? Because usually that inflection point also needs scale and needs increase in sales. I would just like to confirm whether you're giving some subsidies to bring sellers to fulfillment or maybe not so much so. Still on fulfillment, I would like to get a better understanding. I mean, when you expanded your geographic coverage, I mean, you just added some support points in the north and northeast, or you just increased the number of routes. That's it. Thank you. Good morning, Irma. Thank you for your... I think there is another microphone open. He says, as I said, not only fulfillment, right? To prepare for that conversion year, one of the major conversion items is the improvement on delivery times, not only in the São Paulo region, but throughout the country. Therefore, we expanded some storage areas. We added... We expanded four areas from last year to this year. We have an exclusive DC, which is something that we did for Pernambuco because there is a relevant tax issue. We added one exclusive DC and four other areas in the first quarter. We believe, and we are certain that these expansions will be fulfilled with different sellers' products. You will look at the product pages. These are pages that have fulfillment. In these pages, conversion will increase. This small investment, which was a very marginal investment in the first quarter, will be converted in sales going forward. We will be able to see very positive dynamics. In addition to fulfillment, we are also working on different DCs schedules, and especially Fridays and weekends. The delivery timing was a bit different, but we decided to add more people and more schedules. We used to lose a little bit of share on the weekends when compared to weekdays. We are fixing that this year, and we are making, you know, other changes. We do not have seller subsidies for fulfillment operation today. For some operations, we are not charging for the service. I would like to remind you that the cost is very marginal. We added, you know, some areas, but in other DCs, they were running idle. The area increment, it was very small, very minimal. That is why we decided not to charge it today. Eventually, we may charge it in the future. Our operation is much more economical. We have only one exclusive fulfillment DC, and all of the others are shared because you can share the DC, you can share, you know, the security system, fixed costs to control inventory in the DCs. Therefore, our model has many synergies. We will have another one with a specific operation. Even though the same DC in Pernambuco is multi-channel, we have the benefits of store pickup. Therefore, I still see an operation that tends to grow, and it will pay a very good contribution to our margin, especially in this year, which is a conversion year. Thank you. It's very clear. Thank you, Irma. Our next question is from Victor from Santander. You may proceed, Victor. Good morning, Fred, Beto, and the team. My first question is about growth. Your focus, I understand, is more towards improving margins. I would just like to understand whether you feel like you are going, you are approaching a stronger growth phase. My second question is about the competitive environment. I mean, the TikTok Shop is now officially in Brazil. How do you see the platform and whether you are already thinking about operating in a partnership, be it in payments or logistics? Good morning. Thank you for your question. We usually do not talk much about competitors, but the competitive environment, I think it is stable. The same players that compete in our industry are still here. In terms of their specificities and categories, it is important that we understand how TikTok's operation works outside Brazil. I mean, TikTok, you know, is present in China and some countries in Asia. I do not see any short-term impact to our business. It's another player, another option for sellers. They tend to have, you know, operations with lower tickets. I see it more like a future opportunity to engage in partnerships rather than a threat. I don't know whether you guys want to say anything else. I mean, Victor, we've been talking to them, the TikTok shops. There is a part where Magalu wants to use the integration of this partnership so that we could use the network of creators in our catalog so that we could have our items within the platform. We want to imprint a more native experience than the TikTok shop offers so they could generate the ad and they could also put a direct payment link. This could happen inside the platform. We've been talking to them. This is a model that was previously used in the U.S. with Amazon and Walmart. We could also control the user experience in the checkout. We are looking at both things. We want to facilitate content creation through our products and also help with marketing. While at the same token, we will facilitate user experience because a conversion will occur within the platform. Victor, thank you for your question. Our next question comes from Bob Ford from Bank of America. Thank you and good morning, everyone, and welcome, Jörg. What is your long-term positioning on e-commerce? Do you still think about everything in a story? Do you see other opportunities that could come ahead? When you consider your strategic partners, are you going to give more room to Alibaba or other partners? If yes, where do you see further opportunities going forward? Hi, Bob. Good morning. Thank you for your question. Now, speaking about the competition and long-term position, obviously, I think also because of all of our efforts in building our ecosystem, we want to be a player, not exclusively on e-commerce, but a multi-channel with several categories. We have Netshoes, you know, gaming products with KaBuM!. Our position is very significant with Época in the beauty sector and a good position in the book segment with our virtual, you know, bookshelf. We have competitive advantage with electronics, with a presence in our brick-and-mortar stores. Therefore, we do have an omnichannel strategy as well. I think you're very familiar with the group. Omnichannel has always been our strategic differential. We want to take that to the entire ecosystem. The idea is to strengthen these operations further. Magalu has the second, you know, food delivery in Brazil, second to AiQFome. This is accelerating local e-commerce. Local, we are not only delivering food, but we are also focusing on delivering products from local merchants, local retailers through our platform that will be integrated to Magalu's app. We have many initiatives of hyperlocation via e-farming. This is a huge opportunity not yet exploited by any other large platform in the market. Therefore, we see great opportunities going forward to, you know, to grow in many categories. We are very excited with all of the possibilities. The idea, and it's good to remember that whenever we look at Magalu, even because, you know, the controlling company is Magalu itself, we have to remember that we have many assets. Netshoes is the largest operation in Latin America, and they have lots of physical stores in Brazil. KaBuM! also has a very significant presence in its subsegment, and Época the same. When we have, I mean, we will have a very competitive advantage in this multi-channel operation. This is something that we can replicate for other categories in the future. We will certainly look at all of the possibilities and opportunities very closely and with good rationale, but with consistency and persistence in the long run. It's not a sprint, but it's a marathon. When we look at our, looking at our P&L 5 years ago, 100% of my online sales would come from Netshoes, but today it's just half of it. This is a very significant evolution for a company that at that time only had, I mean, after 60 years of existence, only focused on that platform. Again, I like multi-channel e-commerce. I favor that. I think that the frontiers between physical and digital will shrink in the future. If we look at the Brazilian market, still 90% or 85% of this market is still concentrated in brick-and-mortar stores. We see huge opportunities with online. Even online being what it is today, it is still 15% of the business. Therefore, we have to focus on this relationship between channels. I am very excited about the first experiences we had with multi-channel and the new categories. I think these new categories will leverage even more our operations that are already relevant in the online space. Physical stores help Magalu to be leaders in, you know, tangible goods. Online will help us even further to be leaders in different categories. Sorry, I failed to talk about our online integration with Alibaba. We are working with lower tickets below BRL 100. None of our operations today, Época, KaBuM!, and Netshoes, maybe hyperlocal with AiQFome, that are below BRL 100. I mean, they are important, strategically important in any partnership that can add to our offering in these categories and that can help us increase penetration. They will certainly be welcome as the one with AliExpress. Thank you, Bob. Our next question is from Nicholas from JPMorgan. You may proceed, Nicholas. Thank you, Vanessa. Good morning, Fred, Beto and the team, and thank you for taking my question. I would like to refer to CDC. What in your view is the appetite and adoption? Maybe you would have some target that you could share with us in terms of the goals that you have in mind. Also, I would like to understand what was the contribution of CDC in your gross margin this quarter? Thank you, Nicholas, for your question. This is Jörg. I would like to start with the strategy, and then I will turn the floor to Beto because he can give you more details about that direct credit to consumer. Speaking about the strategy of their product, I mean, throughout the last few years, CDC has gained momentum in our financial strategy, the financial strategy of the Magalu Group. This is also due to the success of the partnership with Luizacred because this used to occupy the space of direct credit to consumer in the past. We are looking at distribution of CDC as an additional product. As I was saying before, this helps with principality. The distribution of the offering as a product is important, and it is an additional option. Certainly, I mean, depending on the ticket, this can also help the conversion of the product. Here we have a product that will benefit from the new financial license, and it will bring more efficiency to the product, allowing for further scalability. Today, the product is backed by securitization, so you have potential gains in scalability without even considering the leverage, as we mentioned during my first question. We will benefit from the digital side. We believe that this product has an important fit with digital. If you think in terms of sales, it should be less than 2% of our digital sales. Therefore, we still have a lot of room to grow. With that, you can also improve margins and contribution in general. In general. Now I'll turn to Beto. Good morning, Nicholas. I would just like to add to Jörg's comments. In fact, CDC's contribution in physical stores was slightly lower this quarter when compared to the first quarter of last year. If you look at a total share of all of our means of payments in total sales, they were relatively stable because the share of Luiza Card increased a bit and occupied that space, especially repurchases. You know, customers buy more and generating more sales with credit cards. I mean, specifically speaking about direct credit to consumers, we reduce our credit approvals a bit, as Jörg was saying. It was marginal. It was nothing very relevant. I mean, we reduce approvals. I mean, we started doing that in the second half of last year. I think you realize that the growth of the CDC portfolio in our balance sheet was a bit lower. CDC is a very profitable product. It was profitable before, and now with this more conservative approval rate, it's even more profitable. This profitability is in retail. As Jörg said, we will soon start to originate CDC in our financial operation. It will be even more profitable because the tax burden will be lower. The tax burden from retail, you know, we pay PIS and COFINS on interest. Even then, it is still a very profitable product. The new cohorts are even more profitable because NPL of CDC in this year's vintage is much lower when compared to last year. This is an ongoing trend. I think this is it. I do not know if you also asked, but effects on the gross margin. The effect is very minimal because we work with the present value of all sales. The interest is appropriated throughout the period. The biggest effect that I am referring to is more in relation to the sale itself. The trend is to resume growth, particularly inside our new financial institution. Thank you. Thank you all. Thank you for your question, Nicholas. Our next question comes from Felipe from Citibank. You may proceed, Felipe. Good morning. I think we had many questions, but I would just like to get an update on your macro landscape. I think, I mean, I know you're more optimistic than most. You improved most categories in this first quarter. They are more positive. I would just like to know whether there has been any change in your view for the remaining of the year. Thank you. Felipe, thank you for your question. I mean, the results you mentioned, they just add to what we've said. I said in previous calls that demand is not an issue. The purchasing power of those who receive social benefits or are employed, their salaries are corrected according to inflation. It's not only the demand, but if you look at banks, their results are okay because delinquency is under control. It's not only Luizacred that posted good results. It's just a basic issue. The problem is that interest rates remain high. You know, the tax burden is high, so you just have to revert sales into results. Results with, you know, that brings positive things. That's why the focus of the company remains the same: to exploit all possibilities to increase GMV. We are now focusing on conversion. Either we will sell more with just marginal marketing investments, or we will sell more with higher marketing investments. In both cases, we will continue to leverage our results. This is the current scenario. We still have the same view. I don't see anything that could change things substantially. I think it would be correct to say that Brazil has a problem, I mean, with income and consumption, but this is not a reality. Many of my colleagues who work in this industry today, I'm Vice President of the IDV. And therefore, I say that I don't see a problem with income that sometimes we read in the press. Thank you. We now conclude the Q&A session. I would like to turn the floor back to Fred for his final remarks. You may proceed. Once again, I would like to thank you very much for joining us today. I would like to thank my colleagues and the entire Magalu team for delivering another quarter of excellent results. Magalu's conference call is now concluded. The IR team is available to answer further questions. Thank you very much for joining us, and we wish you a very good day.