Good morning, ladies and gentlemen. At this time, we'd like to welcome everyone to RD People, Health and Wellbeing conference call to discuss its 2Q 2022 results. The presentation can be found on RD's Investor Relations website, ir.rd.com.br, where the audio for this conference will later be made available. We inform that all participants will only be able to listen to the conference during the company's presentation. After the company's remarks are over, there will be a Q&A period. At that time, further instructions will be given. Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the beliefs and assumptions of RD management and on information currently available to the company. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of RD and could cause results to differ materially from those expressed in such forward-looking statements. Today with us are Mr. Eugenio de Zagottis, IR, Corporate Planning, and M&A Vice President, and Flavio de Moraes Correia, Director of IR, Corporate, and Strategy. Now I'll turn the conference over to Mr. Eugenio de Zagottis. Sir, you may begin your conference. Hello, everybody. Welcome to the Raia Drogasil second Q 2022 conference call. I'd like to start by saying that this was amazing quarter for the company. This is a quarter that happens exactly after the 1Q 2022, which proved to be a very challenging quarter for us. The reason why last quarter was so difficult is that, as I mentioned, in the conference call, we had an inflation lag. The problem that we had is, we had four quarters of expenses going up as a function of inflation while sales were flat because the last price increase had been 12 months before. With peak inflation, we saw a lot of pressure in the first quarter. What we see here is the normalization of that process. We applied in the beginning of the quarter the new price increase authorized by CMED. This has corrected our prices and put our sales in tandem with the new cost of the company. Really doing an inflationary recomposition. On top of that, because of how the pricing system works in Brazil, once we apply the price increase, we still have older inventories at hand, and we generate an inflationary gain on inventory. This inflationary gain on inventory pays a lot of the pressure we have seen over the last quarter. If you look at the first semester, our EBITDA margin in the end of the day has expanded by 20 basis points. We had a difficult quarter, and then a very strong quarter just after that as the inflationary effect has normalized. In addition to these whole inflationary dynamics, I think the structural performance was very good. The sales growth, I think was very robust, driven by, again, the structural performance of the company, the fact that digital is driving our mature stores up. We also benefited from the flu season. Last year, during this time, the flu season was very weak because everybody was using a mask because the vaccination for COVID was just starting. Obviously it inhibited COVID, but it also inhibited normal flu. Now I think we had this quarter a very strong flu season, but I think we were very well positioned to take advantage of that. I'll talk more about this during the presentation. To start here with the highlights. We ended the quarter with 2,581 pharmacies in operation. We opened 64 stores. We then closed 13 in the quarter. Gross revenues reached BRL 7.6 billion, 22.4% growth, and mature stores grew by 16.1%, significantly ahead both of CPI and of the authorized price increase. Market share, 14.4%, gain of 40 basis points on a national basis with improvements in every single market. Digital reached BRL 3 billion on an annualized basis, 46.9% growth. Very strong performance here, reaching a retail penetration of 10.5%. Contribution margin close to BRL 1 billion, 12.9% margin, 210 basis points improvement. Adjusted EBITDA, BRL 727.5 million, 46.2% increase and a margin of 9.5%, another 150 basis points improvement over last year. Net income, BRL 343.7 million, 48.2% growth. 4.5% net margin and 80 basis points improvement over last year. A slight negative free cash flow of BRL 58 million with BRL 193 million in total cash consumption in the quarter. Next slide here, we talk about the expansion. We reached 2,581 stores in the quarter. We have opened 64 stores and closed 13 stores during the quarter. Today, 71% of the stores are already mature, while 29% are in different stages of maturation. We are fully on track to deliver the store opening guidance of 260 gross stores in the year. Another thing that it's worth mentioning is that on June 15th, we updated our reference form to expand the guidance into 2025. The guidance from 2023 to 2025 is 240 stores per year. This means 980 new openings over the next four years, a total of 38% increase of the current store base. It's very relevant, the kind of growth we're doing. The focus of the growth will be the same we are doing now. Very diversified, both geographically and demographically. Finally, it's important to mention that this guidance of 240 reflects the fact that we opened 240 stores for five straight years. We have full trust in the space. 260, it's the first time we are doing. Depending on how we do it during this year, depending on our ability to build a nice pipeline for the future, we may or not review this guidance from 240 to 260. We'll see how it plays out. Obviously, there's the possibility, but for the time being, we prefer to be conservative and keep the guidance at 240 stores. Here I'd like to talk about an issue that I think it's not very well understood and causes some distortions in terms of modeling from most of analysts who cover our company, which is store closures. If you look over the last 12 months, sorry, we have closed a total of 47 stores. The first thing to mention here is that there are something like 20 closures that are atypical. six related to Onofre's acquisition, I'll talk more about that, and 14 which are driven by the pandemic. We're talking about downtown stores in São Paulo and Rio, stores in shopping malls that depended a lot on lunch traffic during weekdays. Obviously, these are regions that because of smart working we are not seeing them getting back to historic levels. There is a correction being pursued in our portfolio through the store closures. I don't. We'll see where this stabilizes, but for sure, 47 is not the running rate for the company. Another thing that is important, and here lies the mistake that I was talking about, is that of all these closures, only seven closures relate to maturing stores. These are stores that have obviously been expansion mistakes. We're talking less than 3% of the last 12-month openings. If someone wants to forecast net openings, I think that's okay as long as you assume 3% of mistakes. Take 260 stores in the year - 3%, for me, that makes sense. Because the rest of the bulk of the closures, which are the mature stores, it's a completely different situation. These are stores that are older stores. Average of the portfolio is about 13 years. These are stores that generate positive EBITDA. Why do we close the stores? Because when we close the stores, first thing, we get rid of the full cost base of the store. We redeploy working capital and some fixed assets like IT infrastructure, like shelves, et cetera, to other stores, so we improve our asset base in the company. Then 20%-30% of the sales that the store had gets reabsorbed by other stores in the neighborhood. This means that we transfer 20%-30% of sales. Our gross margin is around 29%. We take some variable costs. We're talking 25% contribution margin. 25% contribution margin over 20%-30% of the sales of the store that get transferred without any cost base to the other stores implies a higher EBITDA than the EBITDA that these stores currently delivered. We are qualifying our store base. This helps us accelerate mature store growth, better dilute sales expenses, and the ROIC of the company goes up because there's more sales with less cost base and less assets employed in the business. My point here is if you forecast, let's say the normal openings-closures is 30, 260 - 30, you are leaving behind the potential of the bulk of these new stores, of several of these new stores that will deliver, and you are underestimating the improvement in profitability resulting from this closure. Closing stores when we do it well, it's a good thing and an important thing, and it contributes to our profitability. This is why I'm bringing this subject here and even showing the age of the stores that we are closing. Most stores here have more than 10 years. The average of here is 13 years for last 12 months portfolio. I think another highlight of our recent expansion is the number of small cities that we are entering. We have entered 76 new cities over the last 12 months, increasing our presence to more than 500 municipalities in Brazil. When we look at our store composition over our recent expansion, only 14% of these stores have been upscale stores. 86% have been hybrid or popular stores that serve the expanding middle class. When you look at the full portfolio, 1/3 is upscale, 2/3 is hybrid and popular. It's also important to mention that while this profile has changed over time, the returns have actually improved. We always shoot for an internal rate of return on a real basis, net of cannibalization already of 20%. When we look at our recent figures, they are around 24%-25%. The returns have even improved in recent years, even with this diversification of income profile. The diversification has not been only income profile, it has been geographic as well. We are today present in the whole country. We have close to 1,500 stores branded as Drogasil. Drogasil is the number one pharmacy brand in Brazil by any means, by any criteria. Raia is the number two pharmacy brand in Brazil based on revenues. We own number one and number two chains in Brazil. This is very encouraging. Our growth is a truly national growth. We're growing in every market. We grow the same return expectations, it doesn't matter in what state we are opening the store. We have mature stores, which are performing in terms of profitability and returns at a very similar level all over Brazil. As a consequence, when we look at our expansion, only 18% of our stores, 46 stores actually, have been opened in the state of São Paulo. All the other stores, more than 200 stores have been opened in other states which are not our native state. Again, if you consider as a national chain, not as someone who has a flag planted everywhere, but as someone who makes money on a similar basis, then invest with the same expected returns and actual returns everywhere, we are the only national player in Brazil, and we're opening only 18% of the stores in our native market and opening the remaining 82% all around the country. Today, we can call all the whole country as our core, not as a native, but our core market. Finally, market shares. Market share has grown up by 40 basis points with improvements across every single region in Brazil. Talking about top-line growth. We reached BRL 2.641 billion in revenues in the quarter, a very material growth of 22.4% over the 2Q 2021 year. When we think about mix, obviously the highlight has been pharmaceuticals and more specifically OTC. The reason behind this accelerated growth is first, a very strong structural performance, which has been driven and accelerated by digital. As more customers become digital, they start spending more with us and they drive higher mature store growth. This is driving a strong top line growth. I'll talk more about that. On top of that, we've seen in the quarter a strong flu season, some positive COVID seasonality as well. I think we were very well prepared to take advantage of that seasonality. We are undergoing, on a global basis, a supply chain crisis. Already since the beginning of the year, we have increased our inventory levels to cope with that. Obviously in the quarter, the inventory levels went a lot up to take advantage of forward buying, but this happens mostly in these. Through this year, we have increased store inventories as well to be better prepared for supply chain disruptions. We are taking advantage of our capital structure to protect our customers. Our service level has been amazing despite the challenging moment we are. This is a result of these inventory increases. This is a result from the fact that we are the leading buyer of pharmaceuticals in Brazil from our manufacturers. We buy directly. We do, I think, a better job quantitatively in terms of estimating and preparing the stores and deploying inventory by item and by store. This has translated into us being able to do really well during this favorable seasonality. Obviously, OTC, this is where we see the full effect of the flu season, of the COVID as well, because COVID tests are booked here, both normal tests and self-tests. OTC grew to 28.6%. Brand and generic is 22.7%, 22.8%, sorry, really strong as well. HPC grew 18.7%, obviously, because the mix cannot go beyond 100%. If something's going up, something has to go down. This growth in HPC is a very healthy one, and we're very, very satisfied with this performance. When we break down the growth, 22.4% top-line with 18.1% same store sales and 16.1% mature store sales. Here it's important to mention that our mature stores, they have outgrown both the CPI by 4.2%, and the authorized price increase by CMED by 5.2%. Tremendous performance. Obviously, there is a seasonal component here to 22.4% is a peak. I believe that even after the peaks goes out and the top-line normalizes, we'll still be talking about mature store growth at material levels and a very healthy top-line growth. This is very encouraging for the future. Digital is the main reason behind this strong structural growth. We have reached BRL 3 billion in annualized revenues. We have grown 47% versus last year's figure, and the penetration has reached 10.5% of retail revenues. We are today the undisputed digital leader in Brazil in our vertical and already a very meaningful player in Brazilian retailing overall. I don't know of any other retailer who has this kind of growth. Obviously, the magnitude of the digital operation is unique. Also, we will be the number six or number seven drug chain in Brazil if RD Digital was a separate company. When you look at this penetration, we have to consider we are truly a national company, which has just entered a lot of new markets, which operates in a lot of faraway markets with less digitalization. If we consider the percentage of digital penetration in more mature markets like São Paulo, Rio, Porto Alegre, Belo Horizonte, and Curitiba, we are talking a digital penetration from 15%-20%. We are a leader in the segment across every single dimension we look at. The mix of channels within digital is also very unique, and for two reasons. First, the fact that 86% of these digital sales is comprised of channels that are, at the same time, proprietary and modern. The exception here is our super apps like Rappi and iFood. They account for 11%. It's part of our digital sales, but it's not proprietary. All the rest is proprietary. We have 3% here, which is a Jurassic channel, which is telesales, phone sales, which in reality shouldn't even be considered as digital even though we do consider it as digital. The difference here is when you look at our competitors, most of our competitors have a big reliance on third-party apps and have tele phone sales ranging from 20%-30% of their total sales, while for us it's only 3%. The flip side here is the app. The app means for us 51% of the digital total digital sales. We're talking 10.5% digital penetration. We're talking more than 5% of the total revenues of the company being achieved through the app. Our app is becoming very strong. As the productivity of our squad has improved, the quality of the app is going up, the reliability, the functionalities, and the net promoter score is also improving dramatically. We are now undergoing a virtuous cycle relating to digital. Nobody else has more than half of the sales done through the app. Finally, when we compare the web traffic, us versus the others, our web penetration, according to Similarweb, is growing 23%. The players two to six summed up are only growing 8%. Our total traffic is more than the sum of players two, three, four, five, and six in the industry. This shows the point about our sector leadership. When we look at the overall retail landscape in Brazil, we are now the eighth brand in digital access, and I believe it won't take long for us to be one of the top five players in terms of digital access. We are already a very meaningful player in the overall retail landscape, not only in the pharma industry. Gross margin. This has been one of the highlights of the quarter. The effect here is very straightforward. We have a margin which is imbalanced. The day we increase prices, we still have old inventories sitting there. We achieve in the quarter an inflationary gain on those inventories. This margin gain happens every second quarter, but it is highest depending on how high the price increase. The higher the price increase, the higher this seasonal gain here. We had a very substantial price increase. The authorized adjustment from CMED was close to 11%, so this generated a major gain in gross margins, which went to 20%. Last year, obviously, 28.8% is higher than normal, more like 100 basis points higher than normal. This year, for much higher price increase, I mean, we reached 250 basis points higher than normal, something like that. We gained 150 basis points over last year here. Obviously, this margin will normalize, but this one-time gain help us pay for some of the past pressures, especially the one we saw over the last quarter. Finally, I think we have a cash cycle that is better than last year, 65.3 versus 68.8. Second quarter is the most demanding quarter in terms of cash cycle because of the forward buying. This cash cycle obviously goes down. It's important to mention that we have a peak inventory level because of the measures we have taken to protect our service level and our customers against supply chain disruptions. This will go on for a while, not at this level, 'cause seasonally it normalizes now, but it, I think we will navigate in the coming quarters with some pressures too, and at some point when the supply chain normalizes, we get fully back to normal levels. This is the power of having the kind of balance sheet that the company has, which is being used to the advantage of our customers and to advantage of our business as well. Selling expenses as a result of a very high top-line growth has diluted significantly 50 basis points improvement. When we combine this 50 basis points improvement in selling expenses with 150 basis points improvement in gross margins, this means our contribution margin has gone up by more than 200 basis points in the quarter. This is an amazing number here. G&A has been stable, 3.4%. This is a number that has been growing. Obviously, year-on-year, there is still 50 basis points pressure here, but this number has been stable for the last three quarters. Obviously, that the peak sales here helped this dilution, but even if we had sold at normal levels, we'll still be around 3.5%. This is in line with what we have been saying to the market. We are now maintaining G&A flat. It's not no longer growing, and at some point it has to go down. I don't know if it goes down, if it starts going down in the second semester of next year, but it's not going up, and at some point it will go down for sure. With this, we have an adjusted EBITDA of BRL 727 million, 9.5% margin. We're talking about 150 basis points in margin gain, and we're talking about an absolute growth of 46.2%. The same happened with the net income, which has grown 48.2%, 80 basis points margin increase to 4.5%. Finally, it's important to mention that we have posted BRL 43 million in non-recurring tax gains that are related to previous years. We did BRL 343 million in net income plus BRL 43 million that we have taken away as an adjustment because of the competence. We're very, always very diligent in how we deal with non-recurring gains or expenses when they happen. The reality is that we have seen way more non-recurring gains in recent quarters than we have seen non-recurring pressures. Finally, cash consumption, free cash flow consumption, BRL 58 million in the quarter. It's related to the fact that inventories are higher than normal, and total cash consumption after interest, after dividends, et cetera, BRL 193 million. We have a leverage of 1x EBITDA, which is very comfortable, especially if we consider that we are in the peak quarter in terms of working capital, so this will go down to some extent, and especially if we consider that we are paying a 50% payout ratio we're distributing to the market. It shows how comfortable our position is. Well, our stock has suffered in the quarter. It has gone down by 21% versus 6% for the Ibovespa, so a negative alpha of 15%. Very good daily liquidity. Obviously, when we look at the long-term performance, it's been amazing. Now summing up some of the things we have said during the presentation before we go to Q&A. This is a quarter that was really strong and the strength has lain in the combination of a very robust structural performance with a high level of capacity from the company to take advantage of the seasonal opportunities that presented themselves. There were seasonal opportunities related to forward buying. There were seasonal opportunities related to the flu season, and there were seasonal opportunities related to the COVID, and we took advantage in a very strong way of all that. We opened 64 pharmacies in the quarter and 254 in the last 12 months. As I mentioned before, returns have been amazing, certainly consistently above 20%, despite the diversification in terms of income segments and going into a lot of new and small cities, which is working beautifully for us. Store closures has also contributed very positively to the improving mature store performance, to increasing the ROIC of the company. And the ratio of expansion mistakes is only 3%. If you want to forecast net openings, consider 97% of our guidance, and that's conceptually correct. All the rest of the closures, they improve the performance. If you net out, you eliminate a lot of new stores who create value and you don't consider the benefit of these store closures in terms of our overall economics. This is very important. I think I made the point clear in the chart that I explained earlier. We have grown the top line 22.4% in the quarter, 16.1% mature stores, 5.2 percentage points above the CMED increase, 4.2 above the CPI of the period. Market share gaining good gains on a national level as well as in every region. Digital has reached BRL 3 billion on an annualized basis, 86% via channels which are modern and proprietary versus only 11% of third-party channels and only 3% of this archaic channel named call center that I don't know for how long it will exist. Our net promoter score has been amazing in the physical network. It's a record of 90, and it's evolving really well on the digital side as well. We are not publishing it yet, but the number has been very encouraging. Finally, our competitive gap versus the whole market has only gone up. Our total revenue is close to the sum of the next five players in the industry. Our digital sales are higher than the sum of the next five guys. We are investing in execution capacity in terms of our corporate structure at a level that nobody else is able to replicate. We're talking about the leading company in the market spending 3.5% of sales in the structure. Now, of course, this number will start going down, but this is an unmatched capacity of execution that shows up in our digital sales. Digital is not about tomorrow. Digital is about today. Digital is already significantly driving our mature store growth. Our mature stores in the quarter have reached the milestone of BRL 1 million per mature store per month in terms of sales. Digital is a huge contributor to that, and this investment has been paying itself handsomely. Finally, when you talk about the forward buying and the season opportunities, I think we have done really well in terms of maximizing the capture of these opportunities. We invested working capital and we benefited in the gross margin. We benefited from less stock out than the whole market. We are selling 2.3 million COVID tests between normal tests and self-tests in the quarter. This has helped 50 basis points in the sales growth. Last quarter it was a negative contribution because you had seen a peak in 1Q 2021. Finally, we see now an inflationary composition that has boosted our profitability. It's helping us pay off for past pressures, and it's supporting a very healthy 2H 2022 ahead. Margin expansion of 1.5% in the quarter. If we look in the semester, it's 20 basis points margin increase despite the difficulties we had in the first quarter. Now with considering this price recomposition, considering the G&A stabilization, we believe we'll post a very good performance, very healthy performance for the rest of the year as well. Finally, we are advancing a lot in our strategy across all dimensions. The new pharmacy is already a game changer for us, with huge focus on customer centricity, digitalizing the relationship of the customer. We have 8% or 8.8% of the total customers which are already omni-channel. The digital channel accounts for 10.5%, but the digital customers already account for close to 17% of total sales. The digital onboarding starts in the store. This is driving higher spending from the consumer. We measure consumers who adopted digital, how much they spent before, how much they spend after, and we compare to a control group of people who didn't go digital. The delta is 20%-25% after they go digital. This is a function of our high capacity to engage with customers, send purchases with promotions, better experience, more channels to buy from. For me, it's a very expected phenomenon. Click and collect represent more than 50% of digital transactions with amazing economics. Of three customers who go to the store to collect, one buys something else. This is amazing from this perspective as well. We have click and collect across the full channel. Every single store does click and collect. 700 stores do ship from store, and 93% of the digital orders are filled from the store. 50%-51%, I think, click and collect, and the rest is ship from store. 85% within four hours. The marketplace is also advancing. We are increasing the number of SKUs and sellers. I think the focus from now on will be the quality, not only quantity. We have to improve the engagement of the sellers. We have to qualify the base. This is the focus right now. The other thing is that we are implementing the seller center solution from Conecta Lá, which is a startup we invested in last year. This will improve a lot in the robustness of our marketplace operation, which will support growth as well. The idea here is that we are focused on 6 million loyal customers, and the view here is lifetime value. The customer will come through the 1P and will buy from the marketplace and will buy through the health platform, or the customer will come from the marketplace and buy 1P or from the health platform. These will be very synergistic businesses as well. Finally, with health platform, we're still in the initial stages here, but we already have a huge focus on content generation, more than 50 million visits in the year. We are now launching in the second semester the first two solutions for chronic patients. Vitat is based on a company named TechFit that we bought last year. They had amazing content, amazing programs, an amazing team, but more lifestyle-oriented, like let's lose two kilos for the summer. We are taking these assets but focus on the chronic patient, supporting the health journey of chronic patients. The first two initial programs for chronic patients will be unveiled in the second semester, and they involve a digital solution and a lot of the service being provided in the health hub. These were our prepared remarks. Let's go now to Q&A. Thank you very much. Thank you, Eugenio. Now we'll start the Q&A session. The first question is from Joseph Giordano from J.P. Morgan. Please, Joseph, go ahead. Hello, good afternoon, everyone. Eugenio, thanks for taking my question. It's actually like a follow-up from the questions you had in the conference call with Eddie Borges. My question to you is that with. So at this point, we are outpacing inflation in the mature stores, let's say on a recurring basis at around 4%. You mentioned that G&A may have reached its peak and maybe it actually goes down over time. My question to you is like, what can we take from the second quarter and kind of like extrapolate for the upcoming quarters. That's my first question in terms, like, of operating leverage, particularly. Then the second question goes into the expansion plan, right? You guys like shaded a little bit like the openings, 240 stores a year, moving forward. My question to you is like, is it like a comfortable number? I know that like opening 240 stores a year is quite a challenging feat, particularly if you're doing that on a national basis. My question to you is like, if it's like, you're taking like more of a conservative stance or, you think that the digital from now on becomes increasingly more relevant to the extent that maybe we don't need that much, as many stores as we did back in the day when we started to think about higher digital presence. Thank you. Joseph, thanks for the question. The audio was not great, but I think I understood. If I misunderstood something, please correct me later. I think first in terms of the trends going forward, I think we have to look at the numbers one by one year. The gross margin, this is obviously a peak because of the inflationary gain on inventories. The gross margin will go back to normal. That's business as usual. When you look at the G&A, I believe the G&A will be stable going forward. I think that the second semester will be similar to where we are today and probably similar or much closer to where it was in the second semester of the year. Not increasing G&A considering the investments we're making, I think it's a good advancement. Over time, it goes down, but I don't know if they can go down in the second quarter already. I don't think it's the most likely scenario, not in a meaningful way at the very least. At the end of the day, I think where the margins will be will depend on where the sales will be and where inflation will be. At the end of the day, we're talking here about the sales expenses. This quarter we grew 22.5%. This is not a normal number. There is a strong seasonality behind. Having said that, the number we are seeing in July is still a number similar to that. If you look at the quarter, it's funny because April was not a brilliant month, then May and June we were flying way more than this average. The average was 22.5. What we're seeing in July is not far from that. It's possible that August and September, if the seasonality fades away, this number goes somewhere down. I think we have at least one very good month in the third quarter. Even when we go to the fourth quarter, where obviously there'll be no seasonality, I still believe we'll be posting very good top line numbers. Because first, I mean, just the inflation pass-through has to move the bar upwards in terms of top line growth. The other aspect is that on a structural basis, the performance is very good. Digital is helping, it keeps expanding. I think that we will generate mature store growth ahead of inflation for sure. This is what we believe. I don't know what will be the inflation for the second semester, because obviously the second quarter is the quarter where I have an upgraded price and a certain expense level. The price will be frozen now for four quarters. The expense will grow up. If inflation is under control, this going up is not that meaningful, so it's not a problem and we navigate better. If inflation stays at a very high level, obviously we'll see mounting pressure on the coming quarters. In the end of the day, if we have higher inflation in this coming quarters, we also have a higher price increase next year. Overall, the system takes care of itself. If inflation is easier now, the price increase will not be as high next year. One thing for the next year will probably compensates the other. For this year, it depends where inflation will be and where our top line will stabilize. It's difficult to call now, but I think we'll be looking at a good performance. About your second question that I didn't hear that well, but I believe I understood what it was. We have a guidance for BRL 260 for this year, which is fully on track, and the performance is amazing. We have a guidance for the next years, which is 240, because it's the number we have done five years in a row, the number we were 100% confident when we put the guidance in place. Depending on where we are later in the year in terms of the expansion, in terms of building a pipeline, et cetera, it is possible that this guidance be revised, or maybe not. We'll see. There is the possibility that this guidance can be revised just as there is the possibility that it stays where it is. I think digital is becoming increasingly more important, but I don't think digital changes our expansion because our expansion is happening in new markets for the company, in new cities, in new neighborhoods. We need the stores there to execute with digital. I think it's easier to see a scenario depending on how meaningful digital becomes, that we have more opportunities to close stores and to increase returns as a result, selling, having higher EBITDA with less stores. If we have that opportunity, obviously, it creates a ton of value for the company. Maybe digital at some point can help with that. I don't think it's helping already, even though we have a mature portfolio of stores that we are constantly revising, and we are closing stores where we believe we can do better without them, as I explained. Now our next question is from Lucas Dias from Aster Capital. Good afternoon, everyone, and thanks Eugenio for taking my question. I actually have two. First, the number of cities in which Raia is present is a metric we look closely, because it shows how much space there is in Brazil for the company to expand. My question is if you guys have mapped how many cities are left in which makes sense to open a Raia store with a 20% real IRR as is your hurdle rate. If you guys have mapped how many cities are there? Because I guess it isn't the 5,000 cities there are in Brazil. If you guys have an idea and you can pass to us, which is the range approximately. Second question is regarding the receivables discount in the quarter. It was, I think around BRL 350 million. I'd like to understand what was the rationale behind it in financial terms, if you can. Thanks. Okay, Lucas, thank you for the question. I mean, in terms of the sales, I mean, I don't know the number here in my mind, but obviously there is a number that we consider. The good thing is that this number is a moving target, because over time, cities get bigger. Over time, we are testing frontiers every time. Once we see that, okay, we can do well in this kind of market that is slightly smaller, this opens many other markets at the same time. At any step in the scale that we go down, in terms of our capacity to enter smaller markets, the opportunity goes up a lot because there are many cities that are just in the border. This is one thing. The second thing is that some of these cities where we are opening the first store, we will have at some point a second store or maybe even a third store. I don't believe we are anywhere close to the limit that we can do. We are testing new waters. Obviously, this testing is working given the returns we are seeing. It could not work then maybe to be more difficult, but it is working. We keep encouraged, and I believe we can. I mean, we have set a guidance until 2025. I think this shows the confidence that we have in the capacity of the company to keep expanding. I don't think the opportunities exhaust in 2025. The market is getting bigger every day because of the aging of the population. Every year there is more pharmaceutical demand. I believe every day we are testing more our frontiers and pushing the envelope of what we can do. These two things together help us a lot. In terms of discounting receivables, I mean, what we do is we use receivables when we have very short-term pressures. If we have, for example, sometimes in the end of the month that we have a peak in cash consumption, but then the cash normalizes, it's. We believe it's more advantageous sometimes to discount receivables to do it. Okay. Thank you. Thank you. Irma Sgarz from Goldman Sachs is here with us too, and she has a question. Irma, please go ahead. Yes. Hi. Thanks, Eugenio for taking my question. Just a follow-up on, and I know you've discussed it on prior calls, and I think I know most of the answers to this, but I think it's just beneficial to just hear it from you. When you think about sort of the competition from digital platforms, be it through marketplaces or obviously that could be the resurgence, and we've seen it sort of come and go in the past of sort of pharmacy-specific, vertical-specific, online-only players. Aside from the delivery infrastructure that obviously can be a hurdle, what are some of the other factors that we should think about that are hurdles currently, whether it be from, so again, on logistics, customer acquisition, regulatory, I think in the logistics, also very specific regulation, right, on how stuff can be transported, and whether you see any movement in terms of Anvisa potentially considering any regulatory changes, or any discussions happening there to open up competition more from the online side? Thank you. Irma, thanks for the question. Let's separate in, I think in two different aspects. I mean, one, the pharmaceuticals and the front store. Obviously, the front store is an open market. There is, for example, diaper, skincare, several of these categories that we sell. We compete with many other players, we compete with supermarkets, we compete with digital platforms like Mercado Livre, Magalu, et cetera. They are an open market. There is obviously increased competition. But on the other hand, we are also being able to expand to new categories that we couldn't sell before because of the digital technology. I'll give an example. We think about beauty. We already have beauty, and obviously in some categories, we're seeing more competition than before because we're competing with other players. If you think about beauty, there are categories like cosmetics like makeup. We have almost nothing in the stores. Fragrance, we have zero in the stores. Even haircare, we have a good haircare selection, but we have no professional haircare in the stores. All of a sudden, we are able to put a marketplace under operation that allows us to enter a bunch of new categories that we couldn't access before. And the main traction we're seeing in the marketplace is in beauty. There's also in other categories related to healthcare, et cetera, but beauty has been the main category. The marketplace opens up competition both ways. There is opportunity for other competitors to try to get some of our sales, but we are also able to fight back and get some of the sales that we didn't see before. Yeah, in the end, I think it's a positive dynamics. It's very good for the consumer, and we are managing well because not every category works well with the marketplace. I think where the marketplace has done better, it's probably on skincare because it has a high average ticket, so the logistic cost gets better diluted, so it's a category that works well. But when you think about all the low-cost categories, a lot of basic shampoo, deodorants, and a lot of other categories, soap and et cetera, it's very difficult for a digital platform to compete because the cost is low and the delivery cost is prohibitive, for example. Even in categories like diapers, logistics is very expensive. The marketplaces can only compete in diapers when they have a 1P operation, and I don't think they make money. I think they use it as a loss leader, but it is competition. The competition that we see from marketplaces in the front store is not all across categories. I think it's focused on specific categories. I would say skincare is one category, and the other, maybe it's diapers. The rest, I think it's pretty well-protected because it's very expensive to deliver those products considering the fact that the average ticket is low. When you talk about pharmaceuticals, it's a completely different ballgame. There's a lot of barriers. One of the barriers is regulation, but I don't believe regulation is not even the only barrier, the main barrier. I think regulation is a secondary barrier. When you think about pharmaceuticals, the first thing to mention is that every pure play pharmacy that ever existed in Brazil, most of them have died. The best example I can give you is Netfarma that once belonged to Netshoes, but even Onofre, at some point, had a small pharmacy chain and a big pure play operation. The problem of the pure play operation is that they have a very high customer acquisition cost because they have to pay Google, Facebook, Instagram, et cetera. We don't do that. Our customers are already with us because of the stores. The store is the customer acquisition machine for us. Obviously, when you look at our fulfillment, a motorized delivery is expensive for everyone, but we do only one-third of motorized deliveries. Two-thirds is click and collect, which is the customer coming to us with zero marginal cost and even neighborhood deliveries, which is our store personnel delivery on foot in the immediate neighborhood. This costs zero or very close to zero. In the end of the day, delivery cost for us is minimal. For any pure play platform, they have to have a low price because it's price driven, they have to have a high customer acquisition cost, and they have to have a very high logistics cost. They have died. When you think about platforms doing that, it's also very complicated because imagine, think about this for a minute. Branded pharmaceuticals has an average gross margin of 17%. Imagine an independent or a small chain or a large chain trying to sell through a marketplace. They start the day paying 12%, 11%, 10% of take rate. They have to pay or subsidize the delivery. They have to have a competitive price. There is no way you can make money if you have to pay motorized delivery and if you have to pay more than 10% in take rate for the digital platform. It's just impossible to make a profitability in that way. The other thing is that our operation is very specialized. We have a lot of partnership with manufacturers like adherence programs. We have partnerships with health insurers. We have partnership with companies. A lot of these products we sell, they can only be sold in store, like controlled medicines. We have the pharmacist's advice. In the end of the day, we are so happy that digital is 10%. Let me tell you something that maybe not be obvious. 90% of the sales are physically in the store. We're talking about a competition in 10% of our sales, which for the market is much lower than that. 90% this is a sector with unmatched capillarity. There are 80,000 pharmacies in Brazil. We have 2,600 pharmacies all across the country, only ourselves in the best corners, easy access, parking, great service, great experience. For a digital player to become a disruptor, in my view, it's impossible. Maybe at some point, if regulation allows, the digital player can have an operation. One thing is having an operation, another thing is becoming meaningful. I believe the execution barriers, they are way higher than the regulatory barrier that also exists. Very interesting. Thanks for the complete answer. Thank you. Now the last question is from Robert Ford from Bank of America. Please, Robert. Hey, thank you very much. Hi, Andrea, Flavio, Eugenio. Thank you. Congratulations on the quarter, and thanks for taking my questions. Eugenio, can you expand a little bit on the difference between your replacement concepts versus the mature stores that are being closed? You know, how do those models differ in terms of size, assortment, service layout, as well as CapEx and sales per square meter? And then on digital, as things evolve, how are you thinking about the evolution of your marketplace and digital services, both in terms of revenue and profitability? And when it comes to the app-based CRM elements, how are the younger vintages of app users evolving versus the older vintages in terms of frequency and ticket? Thank you. Hi, Bob. I don't know if I understood well the first question. I'll answer the second and third, and then I'll ask you to rephrase the first, if you don't mind. I mean, in terms of digital, obviously we are in the early days of the marketplace. I think we are going through a steep learning curve. I think we are advancing. I think the marketplace is gaining traction. We already have a pretty sizable offering. So, if you think about, I mean, now our digital pharmacy used to be a pharmacy of, I don't know, 14,000, 15,000 items. Now we have a pharmacy of 100,000 items because we have a lot of 3P items complementing our offering and making us a one-stop shop channel for health, beauty, and wellbeing. This is very important and we think. Obviously, I believe we can get to a point in which the economics of the marketplace becomes relevant, but the most important thing is when you think about the customer lifetime value. The customer by using the marketplace will also become a better 1P customer and more loyal 1P customer. They will be able also to use the digital platform. All of a sudden we have three businesses that complement each other and that will increase the engagement, the loyalty, and the spending of the customer. In the end of the day, let's say we have zero profitability in the marketplace, but the fact that we have a much better pharmacy with 100,000 items will mean our 1P will be much stronger than before. Obviously, the marketplace is still in its early days. I think at some point we will have to provide logistics services to our sellers. This will take time. At some point, there'll be the opportunity for financial services. Media is an avenue that I think it will be very important for the future of our marketplace. I think there is a big shift taking place to retail media because of the ability of not only understanding customer behavior, but understanding the actual conversion of the customer, the effect if the customer bought or didn't buy. These will open a lot of opportunities that spend way beyond just the take rate we're able to get from our sellers. In terms of digital, I think we keep seeing similar behavior from new cohorts of customers, so we are measuring that very carefully. I think the evidence is the fact that our mature store keep on accelerating, keep on growing ahead of inflation. If the first cohort was much better than the rest, we would have seen an initial acceleration, but now, that customer will still be there, but we wouldn't be seeing as much marginalization from new customers. In which case, the mature stores wouldn't be growing as much as they are. I think even the empirical evidence of the mature store growth, I think, in my view, it demonstrates the point. Bob, if you could repeat the first question, I would appreciate. Oh, absolutely, Eugenio. The first question was really trying to understand how the new stores compare with the mature stores that are being closed in terms of the size of these stores, the assortments, the services, the layout, but also, you know, the productivity rates and the spend or the investment that you're making into these locations. Okay. Thank you. We have reached in this quarter a milestone which is BRL 1 million per mature store. This is a really important figure, unique figure in the market. Part of this result has also to do with store closures. We are closing stores that are closing, they are transferring sales to the surviving stores and helping these stores grow. This is very, very important. The mature stores now. This may be a slightly peaky quarter, but right now it's BRL 1 million. Even if it's not BRL 1 million, it's BRL 950,000, it's something like that. It's close to BRL 1 million. We will be around there anyway. When we look at the stores that we're opening, I would say most of the stores are doing what? On average, around BRL 800,000 per mature store. It's slightly below BRL 1 million, but very accretive because it comes on top of a pre-absorbed structure that the company owns. The stores that we are closing, we're talking generally stores that are selling BRL 400,000, BRL 500,000, BRL 550,000. These are stores that are breakeven to positive, but just by getting rid of the store structure and transferring 30%, 20% -30% of those sales to surviving stores and redeploying assets, we are improving the profitability of the chain and the returns of the chain. This is something very, very, very important. The other element that I would like to mention is the Onofre acquisition. We had six closures in the last 12 months that were related to Onofre. When we bought Onofre had 50 stores. Those stores were selling around BRL 400,000 per month. Onofre had huge negative EBITDA every year. We paid BRL 1 for the company and a company that had a positive net cash position. Today, we have 28 stores from Onofre. The stores that we have, they are selling on average or if you look last six months data, they are selling something like BRL 820,000 per store per month with a store EBITDA north of BRL 100,000 per store per month. Plus the fact that we have reallocating something like BRL 2 million-BRL 3 million in profitability from stores that have been closed to surviving stores. Onofre is a prime example. Our driver is not stock out. We got 50 stores, we closed 22, we have 28. The 28, because of the natural selection of the ones that survived initially from BRL 400,000, that was already north of BRL 500,000, the ones that survived. With our operation, with our brand, et cetera, they went north of BRL 800,000. The stores that we closed, they contributed to the system by recirculating BRL 2 million-BRL 3 million in revenues that were monthly absorbed by those stores. I think it shows the mindset here. Eugênio, just to follow up. You're telling me that there's really no change in the concept, size, assortment, service, layout. No, no change. I mean. Just a better location then, or how should we think about this? No, because I mean, over time, our store density has increased. The average age of the stores we closed is 13 years, of the mature stores, it's 13 years. Imagine a neighborhood in São Paulo or Rio where we had stores and then we keep populating. At some point, the density grows a lot. At some point, a store which was initially great, it becomes just okay. If the proximity is closed, we have the chance of closing that store, which is the weakest of the neighborhood, and recirculating revenues and making transferring a higher EBITDA than the EBITDA the store makes on its own with a full expense base there. It doesn't mean that the store will be bigger or smaller, that the store, will provide more or less. It's similar. Obviously, the locations we are closing, it's either the worst locations or in the case of Onofre, there may be some reasonable locations, but which were very close to another store. But so there is a natural selection in terms of location quality, but not in terms of. Obviously the revenues are much smaller, but doesn't mean the profile of the physical or service profile is different. Understood. Thank you very much. Thank you. Now the Q&A session is over. Now, Mr. Eugenio will present the final messages. Okay. Thank you all for attending this call. I would just like to summarize some of the messages here. I think this was an amazing quarter that shows, I think, the strength of the company. This is a quarter that comes after a very difficult quarter. When we presented the first quarter, we talked not about expense pressure but about an inflationary lag. It was a timing issue. We had revenue which was frozen for four quarters, but we have an expense which had gone up by low double digits. There was no way the margin could be the same. Now, what we see is the inflation normally pass through to the prices. We see a recomposition that has normalized, has put back sales in tandem with expenses. Dilution has improved. I've because of how good the pricing system, how interesting the pricing system is, we generate every year this one-time gain in the second quarter that pays for some of the past pressures. Another point that is interesting here, obviously, as you know, I think we are a safe harbor in Brazil in terms of the economic situation because our demand depends on the age of the population, not about the GDP. Likewise, we are safe harbor in terms of inflationary protection because we have a pricing system that passes down the prices, the inflation to the prices. Even if there is a timing issue like we saw in the first quarter, this one time gain of the second quarter pays back for that. It's a very, very healthy situation. Now, if we see inflation still high, this will mean more price increase next year. If inflation is easier, this will be better this year, but it will mean less price increase next year. This is how this whole system balances out. Another thing that is important, I think we presented a very strong top line growth. Obviously, 22.5% is a peak. I don't think this is the number that should be going on. There, there's a lot of seasonal elements that I think we were very well-positioned to take advantage from. The structural side is what matters. I think with high inflation passed down, with mature stores sustainably growing ahead of inflation, I think we will keep on going at a very good top line growth, which is not 22.5%, but I think which should still be very healthy for the rest of the year. The reason behind this the structural performance, I think is digital. Digital is not about the future. Digital is about today. Digital is already a game changer. Digital already separates us and what we do from our competitors. We have an unmatched execution capacity. We are a company which is more than twice the size of our main competitor, investing percentage-wise more than all our competitors. If you look what the execution capacity that these dry powder buys is absolutely unmatched. We are seeing this converted in value creation and when we see mature stores outgrowing inflation on sustainable basis, when we see a quarter like this. We are raising the bar in terms of execution in a way that our competitors cannot match. I think this is just starting. I think we'll see more of this going forward. Obviously, we talk about the spending improvement, customer lifetime value growth that digital entails because of better engagement, better convenience. The fact that our digital net promoter score is improving a lot and the customer sees the app getting better, new functionalities, more robustness. We know we don't have a state-of-the-art app still, but we have a strong and robust app today, which we didn't have one year ago. I believe over time, we will have. We already have a best-in-class app, but I believe we will have a state-of-the-art app like Nubank, like Mercado Livre, like Magalu. This is our benchmark. This is what we're trying to achieve. This is our aspiration. It will take time, but we're getting there, and we're getting every day better, and the customer sees that, and the customer pays us back in loyalty and spending. Finally, we keep advancing in the new strategies. The marketplace keeps advancing. The implementation of the seller center will be very important for us. I think a focus on qualifying our sellers, not only keep growing sellers, will be very important also going forward. I think in the future we'll be talking about seller services as well. I think Vitat is launching the first two lines of services that are in line with what we expect for the future and not in line with what the company we bought was doing in the past. I believe the future is good, and I think we're just starting to see it. Finally, I would like to finish by thanking all our long-term shareholders, both from the majority group and investors from our free float. As I always say, I believe the company chooses its investors based on its strategy, based on its communication. We have a relentless focus on long-term value creation. We are not in the game of optimizing the quarter or making the year at any costs. Any long-term trajectory has and like the one we are thinking about, has some noise along the way, has some volatility along the way. It's made of tougher quarters, and it's made of stronger quarters. Despite this volatility, our share suffers way less than any comparable shares in Brazil because of the trust that our long-term investors have had in the company. We are very grateful about that. I'd like to thank you all for supporting us, and we believe the best, as I said, still lies ahead. Thank you very much. Our conference call is now over. We thank you all for participating and wish everyone a great day.