Good morning, everyone, and welcome to Smart Fit conference call to discuss the results of the 2025. This call will be translated in English. And to access the English mode, please click on the interpretation button to the icon at the bottom of the screen and choose your preferred language. There is also an option to mute the original audio in Portuguese by clicking on mute original audio. Percent. Percent. Percent to the primary three mass. Was moving seen. Percent versus. Performance Bank of America. Revenue management. Which obviously, are still to come in next quarters. So there's price increase. It's always for a new entrance, and the rest is attributed to TotalPest, a combination of TotalPest gaining more share within our membership. And also, we're gradually reducing the gap between the revenue per visit in indirect and direct channels. The second question about FitMaster. So this subsidiary that we have that operates especially in Mexico, it's focused on studios. So it was a JV that we started a few years in April. We acquired Control. This level of revenue that you saw for the quarter is a recurring level of revenue. So the company has a subscription base and this volume of members of FitMaster, if it keeps growing, the revenue will keep growing future quarters. And this is a business with a profile of gross and EBITDA margin that are well below the company's margins, but with a net margin that is very similar. So it delivers a net margin that is close to 10% to 15%, but EBITDA margin and gross margin below the consolidated level of the company, but without capital allocation to deliver this level of profitability. So when we think of the share of the EBITDA of this business in this quarter specifically, it was below 5,000,000. Very clear. Thank you so much. Our next question comes from Victor Rogad from Itau BBA. Good morning, Corona, Pesada, Visado, Matteo, everybody. Thank you very much for taking my questions. I have two questions. One is a follow-up on the previous answer. So one, think of profitability of Total Pass members. So can you give us an idea of what is the expected number of units of Smart Fit in Brazil that will demand TP2 plants until the end of the year? And how is this number compared to the end of last year? And still on this theme, when you think of TotalPest economics of TotalPest members, is it more related to TotalPest members that have in SmartFit and will have more expensive prices, more similar to your prices? Or is it because there is more revenue coming from TotalPest customers? So this is the first block of questions. And there's a second question, which is related to the follow-up to a previous question. Vizardo mentioned that there is a gap between check ins and revenue of Total Pass members at 24 was $8.13 and 5 percentage points difference. So today, this gap, is it the same, five percentage points? Is it higher or lower? And does this gap ever close? If yes, how long I'd I don't really want to know the percentage, but the gap specifically. If you could tell me more about that, it would be great. Hi, Victor. This is Diogo answering your question. I'll try and answer all your questions. You need to understand that Total Pest is a business that it gains profitability with scale. So the main cost is G and A. So it's the revenue the revenue of companies. So they pay us a fee, and the package is the difference between transfer and our TPV, there's G and A. So G and A is diluted. And so the broader the scale, the higher the margin also for to pay SmartFit better. So today, we are at we gained a lot of scale, so we are at a much more it's a much better position than we were before. And so this is very good gains of scale. Now a little bit about the logic that we see in terms of tier, t p two. So more we have more than 150 smarts with TP two. So this is a leaving process. Every month, we update the number of SmartFit units with this plan, and we are doing. And this is correlated to TotalPest tiers and is related to SmartFit tiers. So SmartFit in Brazil, talking a little bit about Brazil, which is the largest share of TotalPest, has six tiers. So smart units today have TP2. So we are doing two from. And at the end of the day, we see the channels. So we have two different channels, counter. So one is Tier one and the other one is TP2. So there is a two from also in terms of allocation. So one has six and the other one has variables to make this decision. We always look at that and transfers that TP two is different from TP one plus because the co pay is different. So we are always making this comparison because what matters to us is in the numbers that the market looks at, especially representativeness of Total Pest. We have a smaller number of members and we ended not opening the total pass in terms of business vision. So you see a smaller number, but the ticket is higher. So there is this distortion that is more in Brazil. Now a little bit about the gap that we used to have in revenue and check ins. As we showed at the end of last year, was 13.285 percentage points. What we can say today is that this gap has gone down and is going down. And so we want to break this down and not to give reveal the exact numbers, but at the end of the year, we are going to show that the gap is smaller. We think that the aggregator is not going to close for a reason. So we have the default rates, and there is a gap here. So when I compare total pass to Smart, then this should have that. And then this considers our scale. Just a quick follow-up, Corona. In terms of the improvement of profitability a long time, is it because members will have slightly subscribed to slightly more expensive plans of Total Pass? No. It's actually due to scale. The GNA. So we build a major GNA that exceeds your company fee, especially so you need lots of company for the scale. I think that the easiest way to show there, we compare SG and A of total pass with the revenue that we have from companies. So this ends up being a cash generator. So we build the team to support that. So patients or rather, if the person changes the plan, this doesn't change. The breakage, which is related to transfer, so there is a way in and way out. So more expensive plants are not necessarily more profitable. We look at the co pay. So more companies and more fees from companies and scale and G and A. So what we've been doing to make this clear too, Yes. The efficiency of having many plans, you can be optimized allocation in the units, but this is something that is very alive. So in the beginning of Total Pes, we used to have five plants. Today, have a total of 10 plants. Despite the complexity for members, it makes you more efficient in terms of pricing, But the scale is more on the side of company. Just one last point, complementing what Diogo said. When we look at Total Pest, their trajectory over the past few years, we've been able to combine very fast growth in Total Pes, and this has improved the profitability of the business unit together with a market share gain of that business unit at the same time. We have a smaller and smaller difference between check-in and revenue. So all of this has been going on over the last few years, and ideas for it to continue in the future. Thank you very much. Our next question is from Felipe Hussain from Citibank. Good morning, everyone, for taking and thank you for taking my question. It's about the expansion. What is the level of flexibility that you have between geographies to keep the pace of expansion? If one geography is slightly more difficult, how fast can you reallocate the growth to other geographies? Thank you very much. So this is Diogo saying, so we have local structures in each country. We can accelerate one country and reduce the other whenever we want. But a little bit about the optics. And so we look at profitability project by project, unit by unit. So we have a macro. So in Peru, project may provide more return than one in Brazil. Well, so regardless of the country, this is important. So one thing that we said in the presentation of the benefits of being diversified, of having presence in many different countries that in addition of having white space and have a large number of units in terms of quality and criteria, we can handle better the more challenging times in a country. So we can use the more challenging times to gain market share. So different times, different countries have problems. Sometimes it's Colombia, Mexico, world. This is Latin America. It's a living thing. So looking back, maybe at difficult times, at challenging times, we should have invested to gain market share. Well, you can look at from different points. If we look at in the long term, we shouldn't accelerate or decelerate. Expansion is not something that you can change the pace so fast. There is a pipeline. There is a major benefit of being diversified in many countries in Latin America as we are. So in a nutshell, we don't prioritize one country or another. And we also see that whether the project is profitable or not, and we're always looking at the white space in each country and to provide return at the right time. Thank you very much. Our next question comes from Julia Rizov from Morgan Stanley. Hello, good morning. Thank you for taking my question. I would like to explore a little bit the average ticket in Brazil and the competition. So the average ticket went up by seven to 12 if we take out total pass. In that regard, I have two questions. The first one, what is the churn receptiveness in terms of the price increases that have been going on for a few years? And thinking of total bets specifically, how can we analyze it? Because one of the things that affects in addition to the average ticket is members per unit. What would be the number of members per unit for considering TotalPass? Not to understand the TotalPass potential, but also related to NPS of the units. Is it full? Is the the gym full or not? And lastly, when do you expect the TotalPest to breakeven? Julia. Well, Julia, this is Diogo. Thank you. I'll talk a little bit about Total Pass members. If we look at sales channels, so regardless of one thing or any other, it's important that their price that they don't have a very wide gap. And I showed it to you last year, this gap has been going down. There is a from to, from counter prices, total pass prices. So more than 150 units in Brazil already have TP2. When you look how full it is and we look look at the tickets on both channels here, we don't disclose, but to us, it's very clear. You look at one unit, see how full it is, NPS, and then we work with the prices. We do a from to, and we try to balance it while Total Pest gains scale and improves its financials, as I said before. And this and the situation is incredibly better than we had last year, and we are more confident. And this is because of scale that it has been improving. Now talking a little bit about churn and price increases, we don't see, the difference in churn. So it's the same thing for all our plans. It doesn't change because of price increases. Just complementing. We do revenue management, Julia. So regardless of whether it's an individual, Total or what, we want to have margin. So that number in the number of students, this is not very easy to do. So TotalPest, there is a very significant competitor, and so it's important. This is the name. So there is a market, 27. And today, the market has two players rather than just one. And this has an important contribution to take out the vulnerability. So sometimes there is 190% of the market. This was very good, and it's very good for the market, too. I don't know about the solutions. But at some point in time, there are some adjustments, and they will be able to zero down their operational costs. But this is all within our numbers. So you have 30,000 units. So there's a potential. How many units do you need to have so to have a significant competitive advantage to take the aggregated to breakeven? So Peceta will complement the previous one, but scale in Brazil Brazil. Brazil and Mexico and Brazil, we are we have more than 26,000, and we have about 1,800 cities in Brazil, which is similar to IFFOOD. So the metric of states, we should more like the number considering the number of states in Brazil. We used to suffer a lot in the past. We had a gap with the most capillarity, but this gap disappeared. Today, there is no company that has more capillarity than us. Whether it's 26%, 28%, that doesn't change much the decision of the company. So if the risk capillarity is the same. What we can discuss is about brands on one side, on the other, and brand awareness. So in the way we understand it today, we are very well very well positioned in the market. Giulio, just to in closing your question, trying to combine everything that has been said. This is Andre Peceta answering your question. Well, actually breakeven depends a lot on the transfer that we make to SMART. So I think that the right way to look at this to facilitate analysis is what we published last year of the total pest percentage that has in utilization and the percentage of total pest in revenues of SmartFit. So as Diogo said before, this gap has been getting narrower and narrower, and we do not have the intention of bringing it down to zero. But we can continue to reduce the gap until the end of this year to a satisfactory level when we can keep total pass close to zero to zero and with not such a big gap as we used to have last year between Smart Fit revenue and the use of Smart Fit by Total Pass members. Our next question comes from Ruben Cotto from Santander. Good morning. Thank you very much for taking my question. Can you give us an update about the internal work that you've been doing about efficiency optimization of CapEx and the opening of new units? Diogo talked a little bit about Mexico, but I would like to hear about this topic in Brazil and other LatAm. So I understand this is a continuing process. You're always after that, but there was the idea of leverage that could be more significant. I would like to hear you a little bit whether there is something with that regard, whether this has evolved, and we should think that these efficiency efforts may provide some reduction in CapEx per store in terms of face value? Or it's more having a similar CapEx offsetting the growth of inflation? I would like to hear an update on that, not just for this year, but for future years too. Thank you very much for the question. So we did the first relevant work in Brazil last year for CapEx reduction. It's been implemented already, so it's included in our numbers. We have also been working to take the work from Brazil, first taking it to Mexico, which is number two region with the highest CapEx and also starting to take this work to other countries. Each country has a different system or dynamics and one country is more easy or difficult to work with CapEx. But looking at the company with a macro approach, looking into future years, we have our CapEx. So we can do this in the short term, but looking in the mid and long term, we should keep growing together with the inflation. This is right. Now if if I may say something else, I think that interest rates in Brazil are very, very high, but the company's leverage is under control and good cash status. What do you think about appetite for buying back franchised units? Are you thinking about that? So some countries have been cutting down interest rates, and we've been trying with higher interest rates in Brazil, the lowest net debt possible in Brazil. So our opinion about franchised units is very opportunistic because most of our franchised units are in Brazil. So looking at buying back franchised units, we're thinking about Brazil and we might buy back one or another. But we do not have the intention of accelerating this plan because the main thing is for to open stores in new regions to increase SmartFit's capillarity further and further to our program of franchise buyback is always open, but we do not have the intention of accelerating it right now. Thank you for your answer, Pazeta. Our next question comes from BTG analyst, Iain Siskin. Good morning, Corona, Diogo, Andre, Rizardo. I have just one question. It's about profitability of your units in the last few years. We have been giving us a positive surprise with the Vintage 2023, and I would like to understand what are the main drivers for this gain in margin? And what do you see looking into the future? Thank you. Hi, Diogo. Hi, Joseph. This is Diogo answering your question, and we have a few reasons for that. We've been negotiating better rents. So the Vintage 23 in our processes in terms of purchase and analysis has helped us to set records in expansion, keeping quality in the company as a whole. There is a structuring, know how, history and care, and we are very confident to be much more accurate in choosing where we locate our units. Just as a reminder, something we've been seeing the ramp up of the new vintage units that is very similar to what we've been seeing historically. And those vintage units in the short term also have a benefit as compared to mature units. Because as they are new vintage, we don't have a significant maintenance OpEx for those units. But when we look at our average maintenance OpEx over net revenue on mature units, we are talking about something like three percentage points of cost over revenue. So the structural cost is lower in terms of rental, but as these units mature together with the revenue increase with the maturity, there's also an increase of cost, which is the maintenance cost of the units. So with that regard, we aim to have a level of mature stores of 51, 53%. It might be slightly up depending on the vintage and country that we are talking about. It's very clear. Thank you so much. Our next question comes from our an analyst from JPMorgan, Joseph Giordano. I would like to talk a little bit more about Total Pest. If you could share with us a little bit the initial analysis about what is the difference in lifetime value of a member that goes through TotalPass or a member that goes directly into Smart. So is there a major difference in churn? So it's 7% in the gym. Total pest must be much lower because this is corporate. This was the first question. The second question is related to Mexico. So many people still worry that Mexico would be a major problem, and we are not seeing the number of members that we'd like to see, but it wasn't catastrophic either. So do you see any market opportunities to capture slightly more market share and to accelerate in that market that should go back to normal? And lastly, in Brazil and Sao Paulo, we are starting to see a much more intense expansion of smaller groups of gyms. So how do you see the competition and the competitive environment? How do you see this? And how does this affect the profitability? Thank you. This is Diogo talking. I'm going to answer the first question, the first total test. So we don't see that the best metric is to look at as a lifetime value of members. So it's different from B2C customers, but the best way is to look the ratio between what they pay and how much we transfer in and out. So this is a better way to see this than looking as lifetime value. The best way to look at it is the end users. So there is more churn, but it's a company, right? But we don't think this is the ideal metric, the best thing for us to monitor. We monitor profitability, how much they pay, how much is transferred, not necessarily the transfer is higher. The difference is how much stays, what goes in and out, and this has a seasonality. So depending on a month, there is more or less. So just to set the context of how we analyze this. In this business model that is slightly different with different dynamics, then we look at SmartFit. About Mexico, as we said in the presentation, Mexico is going through a time that we are accelerating. We are gaining market share. We grew twice. We doubled our network of units in the last five years. We we have increased membership too. We have about 80 stores in the country or 80 units, and we are at a growth of about 20% considering the base of units. So this is a country where we are advancing. We see opportunities for growth, but this is related to our dynamics of high growth. So our prospects remain the same. So has the market grown? Has demand grown much more Brazil and United States? And everything that has been going on in terms of social media. So there has been a growth in Europe, in US, and in Brazil in terms of the number of gyms. This is part of the growth. People are exercising more. This is one thing. The other thing is that there are more offers close to where people live. Convenience is a factor. And there is a coordinated growth considering the growth of the market. So there is more competition. Sometimes the market is better or worse, but the thing is we need to be consistent. It's increasingly more consistent, more focused and more accurate in the choice of our points of sales. And we thought that the best stores and the best points would be taken and should go to worse points with worse results, and it's just the opposite that is happening. So '23 season in Brazil is very good, '24 better, and 25 even better in terms of design cost. So the entire product is much better. So this gives us a skill to do it. When we see the whole thing, the package, everything that is being implemented is that many units with no parking, no air conditioning, no structure that would make it possible for everyone in the future to compete with what we have. It's also important to emphasize looking at how we find it, you need to be reminded. And in some of our conference calls in 2021, 2022, that we explained to the market that we thought that there was a change in culture with more people going for bodybuilding and less for cardio. We started making this transformation in our units to meet customer demands in 2021, and this is like a ship. It's more than 1,000 units for reset everything. So we should get to '25 competitive. And it's even more competitive. We are still making adjustments. And just as a reminder, the main player in the world in 2025 has woken up in their explanation to investors saying, well, we are changing. We went from 3,000 to 2,000 square meters. We see that there is a trend. They they kind of woke up. The alarm clock went off. Well, looks like bodybuilding is serious. So in '25, they they are starting to do what Smart Fit did in 2122. This is why since 1996, when situation is much more difficult than The US, keep in every quarter, every half year, every year, we grow with consistency. And now we are in 16 countries with different formats, and none of them very successful. So what needs to be done and what we are always doing? The first one to get I'm the first one to get on Monday, the last one to leave on Friday. The competitors need to respect and to see everything that is going around the world, see whatever is new and the trends, and the competitive spirit of the team makes them implement before and better than others. So we are humble, but we will continue being challenging for the competition. Thank you very much. Just for your reference, we have another two questions here on the list. Our next question comes from Dani from XP. We are almost saying good afternoon. Thank you for taking my question. I have one that addresses two different angles in terms of options for growth. We've been seeing more in the news or you being more vocal in terms of the growth of Bioritmo. What has led to this growth, the resumption of growth? Is it more of, complementing Total Pest to have something more Brazil based because you're negotiating with bigger companies, or is it a niche that you see that there is a lot of space in the premium segment? And the other thing is that the thing of going international. Could you give us an update in terms of what is the operation like in Morocco and so that we know the midterm potential. Hi, Danny. This is Diogo speaking. So about BioRhythmo, complementing what I and Edgar said, we noticed a higher demand in the industry as a whole and in every layer, both in low end and high end. So people are prioritizing exercise. So it's a priority in how to spend money. People who didn't go to the gym, they prefer the gym over other things. And people who used to pay x in mid gym are paying 2x. So the demand goes up proportionally in every tier or range. It's Smart Fit, It's Smart Total Pass, Studios. And so this is an agenda that for a long time, we didn't focus very much on. We it was kind of on the side. But then last year, all the reasons that I have mentioned here, We placed focus on Bioritmo again and with opening of stores. And it takes a while for us to make the decision and do everything for them to open. So we have a pipeline of 10 stores this year, and this is the result of what we did last year. And there is more demand on the high end and also the evolution of products, but low end products have also evolved and smart too. So we needed to evolve a lot in terms of our product. Our product evolved a lot in our scenario. So profitability and return is very good. We look at that. So we see project by project. So we are keeping a look at that. And also the strategic component for Total Pass. So it makes full sense, everything. So the entire return for individual growth and strategic complement for Total Pass, this is very important to have a robust offer for the high end, And we are focusing on that in addition to expansion. And we need to assure a delivery that no one in this industry is working on high end. We need to improve delivery, improve services. And with all the know how that we have of different countries. We have lots of know how to get all of this and to make an effort and to differentiate ourselves in the high end. Now about Morocco. We expect the first unit to open in Morocco will be this year. We are really looking forward to that in what we are going to learn once we open our operation in Morocco. Our next question comes from Vinicius Trano from UBS. Good afternoon, everyone. Thank you very much for taking my question. Can you tell us a little bit about the attendance of members to the units and the cost dynamic looking to the future? And I would like to relate this to the weather. In Brazil, the winter was slightly colder than last year. So could you tell us how this affects, new members, frequencies, attendance costs in Mexico? It's been raining a lot. Does the weather affect, attracting new customers? Well, we haven't ended the quarter yet, but the experience, the rain is a bit of a problem, but the cold weather is a little bit of a problem. But rain really affects a lot. It is a bad traffic. It's difficult to get your car, to go to the gym. So dry weather is better for our business. About the winter in Brazil, people are kind of used to that, and it's worse in the south of the country and in Rio too. But in Rio, people are not so much used to the cold weather, but frequencies may be slightly worse. Once people create the habit and they are working out, they never want to stop. Whether it's cold or hot, they always go to the gym. It's only the rain that affects a little bit. Considering Brazil and Mexico, it affects a little bit more. And complementing it, Garza's answer, Vinicius. When we think about the other variables that you addressed in your question in our cost base, it's fixed mainly, but usually when temperatures are milder, not too cold that you need to turn on the heater in colder winters. This, improves a little bit, the electricity in the unit. So we spend a little bit less than we usually spend or would spend in where it's much hotter weather. And so this is what we see in the cost dynamics. When we look at attendance, usually talking about Brazil, June is usually a month of lower attendance. There's vacation. It's cold. In Mexico, the dynamics is different. It's a month when, there is a high attendance. And when we think about attendance through the quarters and months, when attendance is lower, this is usually more positive for the business unit. Thank you very much, Edgar and Ze. Thank you, Vinicius. We now end our questions and answers session. Thank you very much for your attendance. The Investor Relations team is available to answer any further questions. Have a good afternoon and a good Friday.