Good morning, everyone. Thank you for attending our earnings conference call pertaining to the second quarter of 2026.

Again, I'm here with all of the officers and leaders of verticals of the Magalu ecosystem to answer your questions at the end of our presentation. As we said on the first conference call this year, in 2026, we entered a new strategic cycle at Magalu after digitalization and diversification and creation of the ecosystem.

In this new cycle, we've defined some value creation pillars. I joined these pillars into two main blocks.

First, to consolidate our AI omnichannel leadership. It's basically dedicated to all of our retail assets.

The second block is to accelerate services monetization through the growth of our services platform, and the companies that we acquired or built during the ecosystem cycle. The first block to consolidate the omnichannel leadership, we have very clear initiatives and we made progress in pretty much all of them in the first half of this year.

The highlight here is to the acceleration of growth of physical stores not only for durable goods, but for other companies in the group, such as Netshoes, Época Cosméticos, KaBuM!, and even Estante Virtual that we opened the first unit at Galeria Magalu. This first, the quarter, the first half of the year was very good.

The second quarter was extraordinary in terms of physical stores. We resumed opening physical stores with a unit in Ceilândia, and we also opened Galeria Magalu at the end of last year and it is doing very well in this first half of the year, with highlights to all of these formats that I described of our partner companies that were only online before.

To resume growth, resume the company's focus on physical stores is a major pillar of this new strategic cycle. The second is to increase or expand online reach with profitability.

We have two paths for that: in the very short term, one, and another one in medium-long term. In the short term, the way we found to resume online growth is through partnerships formed with third-party platforms.

We announced the partnership in this second quarter, specifically. We started to operate in June, but the full month was July, which is our partnership with Amazon.

As I will talk about a little bit later and describe it, we will announce other partnerships in the coming months, or even the coming weeks. We also see a path here by offering all our 1P products in third-party platforms.

We believe we'll be able to resume growth in the online segment that was hindered in this first half of the year with profitability. What is non-negotiable in this resumption of the online growth is to grow with profitability, and we believe there's a way to do that in the very short term by listing these 1P products in these other platforms.

I'll detail this further during the presentation and tell you what specifically we've done in the quarter and how we tend to evolve for the coming months. The third point is to redefine digital positioning with experience, creators-ship, and AI, especially.

At the end of last year, we launched two major things, the Galeria Magalu that I talked about and it's doing very well this first half, and we intend to replicate it going forward. The other point is Lu's WhatsApp, and we've been able to get more than 100 million BRL in funding, the highlight in this first couple months.

We'll also share some figures during this conference. Obviously, it is an initiative more for the medium to long term.

The main products in third-party partnerships is a very short-term initiative to increase or to resume growth online. For the long term, our main focus is Lu and the pioneering innovative AI commerce experience that we created in Brazil via WhatsApp, and we will take it to the app in the second half of the year.

The second block is to accelerate services platforms. We have three major companies: Magalog, Magalu Cloud, and MagaluPay, that are growing quite well, and one that is not a company, but it's a service platform, that's Magalu Ads.

All of them with very positive numbers in the second quarter, and even better with the extraordinary outlook for the segment in this cycle. This cycle now has very well-defined pillars, and we believe strongly that the second quarter already showed we are on the right path, and we have a lot of engines to create value to our shareholders.

Now getting into the quarter highlights specifically, I'd like to make three major highlights, and Beto will give you more details about the financials. Overall, the numbers, the main highlight was the growth of physical stores at double-digit rates in a complex context, an economic context.

It's exceptional coming from a strong basis from last year with 5.2 billion BRL in sales, 9.7% same-store sales growth. I think that's a number that's above everyone in the segment, not only in durable goods, but overall.

We also benefited from the World Cup, and I'll talk more about that later. I'd also want to show that other categories that are not TV sets also performed great in the quarter, and Fabrício Garcia will be here to give you more color on the Q&A.

We had a very strong gain in market share for physical stores. It's important to grow in physical stores because that's the channel where we can achieve better profitability.

We're being very strategic, focusing our growth where we have the conditions to gain more positive contributions. Online has a slightly more competition and without so much rational, but in the stores, we have this possibility for growth, and we are focusing our efforts here, not exclusively, but with a focus in physical stores.

That's why gross margin increased 1 percentage point, actually 0.1 percentage point versus the same quarter of last year. Here we have the highlights of our rationality.

We had moments of price increases in products like memory components that around the world have an impact for telephony, games like PlayStation, for example, and all the IT products, items that impacted Magalu and KaBuM!, and we pass through that. Even accepting a drop in share in the online segment, but with the maintenance of our strategic consistency and tactics, maintaining profitability.

With that, we've been able to present an EBITDA of 709 million BRL with a margin of 8%, even with a higher share of TV sets, overall, we maintained a margin of 8%. Here I'd like to highlight our strict expense control.

We'll be able to give you more details in terms of how we're doing that. We have frozen new hires since the beginning of the year.

We have a strong control of all of the accounts with a matrix management of expenses with a consultancy giving us support, and we have a lot to extract from this expense control. Total expense at Magalu represent more than 10 billion BRL per year, there's a lot of opportunity in pretty much all of accounts for us to continue to work on.

All of the directors and managers are focused to continue executing this agenda. We have not reached the end in terms of expense control.

There's still a lot to be done. Our headcount dropped basically by freezing the workforce both at the controlling company and the other companies, even in the fintech.

There's a highlight here about this control, this rationality that is very clear. We didn't enter any major package for the World Cup, no major sponsorships.

We knew the World Cup was going to be good, but we did not go overboard in marketing investments. In the past World Cup, we sponsored the games, and we joined packages with hundreds of millions of BRL by sponsoring the World Cup.

This year, we were very grounded and sought not to make any major investments. EBITDA is also benefiting greatly by another excellent performance of our financial operations, not only LuizaCred, and we'll talk about that going forward, but also the other operations of our financial product umbrella.

Consórcio went very well, insurance, and the new financial company that operates the CDC, and I'll give you more details about that. Guilherme is here as well to answer any questions you may have.

The next one, those were the main highlights: physical stores, the increase of gross margin, and expense control, and our financial operations. Bringing you more details about physical stores, we grew 9.7% same-store sales in physical stores.

Of course, the World Cup helped, we grew 39% in physical stores in the television segment. We made it a point to show you that it was not only TV sets that increased.

White goods grew 15% in the quarter, even furniture grew 10%. Showing you that the performance of Magalu in physical stores is a sound performance.

It's a performance that is distributed in different geographies and categories. We have innovations in physical stores, such as the implementation of physical stores for our formats of the group, like Galeria Magalu, that has been a huge success.

We had here first half of the year fantastic with a lot of visits, a lot of spontaneous media, a lot of footfall. It's very difficult to get footfall in physical stores, and with the model that we implemented with Galeria Magalu and the constant presence of influencers, YouTube theater with a series of events.

There was Harry Potter's birthday there last week at the store. We've been able to break this cycle of losing clients at physical stores.

This is a format that I think is interesting worldwide. As I said, we also opened a store in Ceilândia, and we should open new stores in the second half.

Fabrício can give you more details going forward in the Q&A as well. On the other hand, on online, we maintained our consistency.

We raised 9.3 billion in the second quarter of this year. Even if on the online we did well in the TV set category, we maintained our discipline and our focus in growing with profitability.

With commercial performance, we had some impact in some categories, as I said, the pass-through of cost for mobile phones, computing hardware, and games as well. We can give you more details about price changes.

Fabrício and Júlio from KaBuM! can give you more details.

We passed through. I think whenever we have a cost pass-through in the first quarter, there's an accommodation from consumers.

They were there paying 3,200 BRL in an iPhone 16e, and now this phone is at 4,000. There's an accommodation in the beginning.

iPhone 16e is the first price basis under Apple products, but they get used to it and we can capture that. In the first, the same thing with the pass-through for PlayStation, video consoles, and all the hardware, computing products.

That's because of the memory drives, because of the global crisis. Data centers are buying memory.

You saw what happened with the stock market in Korea, the growth of companies that produce memory like Samsung and its competitor there in Korea. These are companies that are having very high results, and they're passing that through to other categories.

We maintained that discipline. We grew in physical stores where we're getting profitability.

We sacrificed a little bit of the share online, but it does not mean we're not working to bring growth, to resume growth. The base of the first half of last year was heavy for the online segment.

The second half is a lot smaller. Looking forward, what was the main solution there, and I want to detail this further, that we found and is part of our strategic cycle to resume growth online.

We believe we will be able to do that in the second half, especially the fourth quarter. Already in this first month of the third quarter is to sell on partner platforms.

What's the rationale here? I just wanted to explain that because I know we're going to get a lot of questions about that.

The idea is for us to position Magalu's own channels or consolidate our leadership in 1P products. Magalu is one of the biggest platforms in Brazil, but it is the main seller in Brazil in 1P.

In addition to other platforms with 1P, 3P, with direct sales channels, we're the biggest 1P operator in Brazil through our brands. Magalu, we're leader in electric electronics; Netshoes, we're leader in sports goods, mostly 1P; Época Cosméticos, we're one of the leaders in beauty products; Estante Virtual; and KaBuM!, obviously, in the gaming category.

We are leaders for 1P in these categories. We were only selling 1P products for 50 million active users at Magalu, people who are always visiting, 500 million visitors, but 50 million unique users that visit our platforms.

We know that the web audience is a lot larger than 500 million users that access or visit KaBuM!, Magalu in the direct channels. We decided to introduce these 1P products into third-party platforms.

We had already done that with AliExpress in 2024, that was a big success. AliExpress is a very good partnership, and we continue to increase this partnership.

What's the rationale for us here? We believe that the audience of Brazilian e-commerce is spread out and will be more and more pulverized.

There are a lot of platforms fighting for the customer's audience. Why not list our products in other platforms that are not only Magalu?

We started these negotiations at the end of last year. In the second quarter, we announced an important partnership with Amazon in Brazil.

Go back to the previous one, please. We will announce others in the coming months.

What's the rationale here in this negotiations? First, these negotiations, since we're the biggest seller in Brazil, Magalu wants to have special aspects and reciprocity.

One of the assumptions for us is that we're only going to list in third-party platforms if the profitability on those platforms is potentially higher than the average of Magalu's online channels. Obviously, it's going to be smaller than when the client goes to our direct channel, but it must be higher than when, for example, we bring a customer through a platform like Google, Meta, Facebook.

A customer that comes through paid media. The profitability of those channels must be higher than paid media, because this customer belongs to the third-party platform in the long term, not in the very short term because it's our sale.

We need to have that rationale. It takes us long to announce partnerships because we want to reach that negotiation that guarantees us a positive contribution margin.

We want to resume online growth, but we will only do that if we have a contribution margin, if it makes sense for the business. Another thing we expect on this partnerships is a minimum of reciprocity for the services of the Magalu ecosystem.

We're focusing strongly on Magalog, both in the sense of everything that I sell on these platforms, the idea is that Magalog delivers them, but we want to try to leverage it. We have a global platform, and I'll talk about Magalog and how well it's doing this quarter.

Magalog is one of the biggest logistics operators in Brazil. It's open to sell for third parties.

We also consider important for us to close a deal to list our products in third-party platforms to bring volumes from those platforms to Magalog, not only from our sales, but from the their 1P operations or other sellers' operations. That expands the density of Magalu's logistics network, generating scale through Magalog.

We need to have that: profitability above our average and a level of reciprocity, especially now focusing on our logistics operation for light and heavy products, also with a potential of product pick-up and the Magalu's physical stores. Now specifically about Amazon, we closed this partnership in June.

We started sales in the month of June. We had the first full month in July with sales above initial expectations.

We approved, Magalog was certified as Amazon's logistics partner. It's a slow process, very complex, but we've been able to certify Magalog as Amazon's logistics operator.

This quarter, we're going to have a full quarter of these sales. Fabrício can give you more details later, of course, without disclosing information that's not public.

The idea is that it's a staged process. Today we are competing in the back office there as a regular seller, but we're going to go in with a model that it's FBA on-site.

Starting in October, maybe slightly before that, we will have our products carrying the Prime badge, with a potential to boost sales even further. We believe this quarter is going to be a full quarter.

It's a a quarter with specific high volume of sales. It's going to make the most of the good moment of our e-commerce.

The last quarter, especially with the Prime badge, will give us a more positive quarter, that's the fourth quarter. Magalog starting in the next few months will be offering logistics services to Amazon, and we expect the entry of both light products, but also heavy items, and we're very positive here about this.

That's going to help, again, our logistics density. As I said, we are in the brink of announcing new partnerships that shall unfold in the coming weeks.

I'd like to highlight that selling in third-party platforms is a very short-term solution for us to resume a positive growth for the online. In the medium term, we believe strongly, and one of the major innovations that we launched in the recent years, that was Lu's WhatsApp.

We disclosed to the market last month that we reached 100 million of GMV. We launched in December, we started in the last few months and we're ramping up strongly this operation.

We've generated more than 18 million conversations since launch. It's a channel where you have authentication of conversations and the post-sales services in the WhatsApp channel.

You don't have to go to the app to make a purchase. This sales channel, agentic e-commerce, was awarded a Cannes Lion now this quarter as one of the most creative solutions for e-commerce, or the use of artificial intelligence in a digital channel this quarter.

We still have a conversion rate three times greater than our app, and we already have a good number, 20% of the customers who made purchases, the majority of those customers who made purchases in recent months have already come back. This ramp has been going up: January, February bigger than January, and March bigger than February.

June and July were the main highlights of Lu's WhatsApp. So 20% of customers return to shop on Lu's WhatsApp, and it's going to increase even further.

This 20%, considering the crop we have now, is already positive and it's way higher than the app, noting that we work with products with higher tickets than the market, and this recurrence is not usual. It's very positive.

An NPS of 85 that's generating that. Lu's WhatsApp in our e-commerce initiative is one big highlight.

Now going to the service platforms, I'd like to highlight Magalu Ads. We had a growth of CTR sponsored products of 51% versus 2Q25.

Active sellers advertising increased 13%. I'd like to highlight specially here we're a platform not only for sellers and brands that sell through Magalu, but we have all of our audience.

We have our stores, more than 20,000 panels and displays at stores. We have a platform of retail media that works for other brands as well.

The main highlight for Ads in the second quarter was the fact that Hyundai chose Magalu's media platform, Lu of Magalu, to launch i20. That's the big launch of Hyundai in the Brazilian market.

It's the second car produced in Brazil on the platform in Piracicaba to launch their product. They launched it with Lu.

Lu got a driver's license, launched the product. Our efforts to to advertise this new car were not limited to Lu's presence in communication.

We used all of our media channels, social media, and we are using all that. Hyundai i20 is already the third best-selling car in Brazil, and a lot of dealerships, they're out of product.

Showing the possibility for us to monetize our audience and the good work done by our Ads team. This is a strong highlight.

We were very happy with this partnership, and we're happy that they're happy as well with the sale of their car. Of course, they have other communication fronts, but this was one of the highlights here of their launch.

Now this for for Magalu Ads, and I'd like to move on to MagaluPay, as I said, one of the major financial highlights of our business. I'll mention the numbers quickly, but we can get into more details in the Q&A.

LuizaCred, another very good quarter with 15 billion TPV, portfolio of 20 billion, 135 million BRL in income in the quarter, 32% growth year-over-year, and ROE of more than 23%. Our IF, starting with a portfolio growth, we already have 100% of consumer credit originations to the new financial institution.

We also have a portfolio in retail that's going down, and we can explain it later. Our IF started with 17 million net income.

We launched the CDB for our IF this quarter, it operates our CDC, started operating 100% of consumer credit this quarter, a very positive start. I'd also like to highlight the insurance portfolio or operations with 8% growth, with 11 million BRL in premiums in the quarter, and 11 million, actually, insurance contracts.

We have one of the biggest consórcio operations in Brazil. The sales were of 2 billion BRL in the second quarter, 30% increase year-over-year, more than 11 billion of assets, active portfolio under management, and net income of 50 million in our consórcio.

Overall, our financial businesses are doing well with a very positive outlook, especially with the ramp-up of our financial company, and we would like to be able to give you more details in the Q&A. I'd also like to highlight Magalog with an increase of 15% in orders delivered for third parties in the second quarter without considering the volume with Amazon that will start from the third quarter.

We have new clients coming in like TPL Logística, Fini, Nestlé, Samsung. We announced and closed the contract with them.

Very positive numbers here. We increased the number of hubs, in addition of having the stores, we have the pick-up basis, and our main distribution centers, now we have 200 units in operation.

We opened 27 new hubs and the logistics network, and we are working very strongly on operational efficiency and the use of technology. There's nothing as great as increasing volumes.

Magalog is in a very positive context with a lot of opportunities. Very few carriers have its same level of NPS above 95% as Magalog has, and its cost and the fact that these volumes are short shared with Magalu help us have a very competitive offer for the market.

We're excited with this possibility. Finally, before turning to Beto, I'd like to highlight Magalu Cloud, the first Brazilian cloud with a global scale.

We went from more than 1,700 clients, growing 24% with external clients. We also announced this quarter that we had approved funding of 300 million BRL with BNDES for Magalu Cloud.

This number is not going to be disbursed all at once, but it's going to be 100 million starting this quarter, and we'll increase these disbursements in the coming quarters. It will be the invested numbers are mostly in research and development, that is the main focus here of this funding for our team who's creating very good products.

For example, we launched our first AI product at Magalu Cloud. Now we're able to provide our Magalu client inference both for GPUs that are in our infrastructure and for models that are outside of Magalu Cloud, models that we call Bedrock-like, a model to be able to provide that to clients in the central system and have that inference for everyone.

Fatala can explain this further. We expanded three availability zones in the Southeast and expanded data centers.

We are getting more and more certifications as well, such as ISO 27001, NIST, SOC 2, a lot of certificates that are either fully achieved or being activated. That's for us important, especially to sell cloud for public services.

That's one of the biggest focus for the national sovereignty of data. That's more and more critical.

That's the main opportunity for Magalu Cloud that is in this growing aspect of this data sovereignty, and these certifications are crucial for us to be able to provide these services and take part on government bids or regulated private sectors as well that I believe are very important. We're here at a very good moment for Magalu Cloud, and we can give you more details in the Q&A.

I'll turn over to Beto for the financial highlights.

Thank you very much, Fred. Good morning, everyone.

Thank you for being with us in this conference call for the second quarter of 2026. I will briefly go over the financial highlights once again.

We have reached a gross revenue of 11 billion in this quarter, a variation of 2%, a reduction of 2%. A major highlight, I believe the audio was not very good.

Just one second. Resuming our main highlight was the growth in physical stores.

Gross margin, one of the highest for a second quarter, around 30.6%. Our EBITDA with an 8% margin.

Our net result was a loss of 50 million in this quarter, affected by the interest rate that is very high and also the impact in our financial expenses, and we'll be talking more about that. We ended the quarter with a robust total cash position, almost 6 billion and almost 1 billion of net cash.

On the next slide, we have the consistency of our EBITDA margin over the past quarters. For over two years, we have been able to maintain the EBITDA margin close to 8%.

We talked about the gross margin and merchandise gross margin with the share of the stores and also with the help of services revenue, as well as the increase of the CDC buy now, pay later share. Physical stores also growing, the expansion of fulfillment, omnichannel strategy, also very strong SG&A control.

Fred talked about this. We were able to reduce the sales expenses around 3% to 4% compared to past year, considering Brazilian inflation of 4% to 5%.

Also, we were able to maintain administrative expenses basically stable vis-à-vis last year and despite of inflation. We have been able to control well our operating expenses.

LuizaCred and MagaluPay's results, once again, have been very strong. On the next page, we have the breakdown for our EBITDA margin.

Comparing to last year, the gross margin has improved, SG&A also has improved 0.10. Here we have also improved our equity income in 0.20.

All of these positive factors have offset an increase in provisions of 0.4%, and I will go over the details on these variation regarding the provisions. This had already happened in the first quarter, and once again, this is very much related to the improvement of our CDC portfolio, which has grown from June of last year from 1.5 billion to June of this year to 2 billion.

It went up over 30%. Provisions have increased in the same period in 25%.

They have gone up lower than the portfolio, and this is in line with our strategy of measuring sales by the CDC, the buy now, pay later. This portfolio also allowed us to have more interests, which more than offset the increase in provisions.

Most of the interests are still in retail accounted here in this merchandise gross margin. Also here we are transitioning to our financial company, and this is going to be clearer because the financial company portfolio has already increased and interests tend to migrate in the next 12 months totally to our financial services branch, and that's going to be clearer for all of us, in addition to all of the other benefits of the financial services, because we will have transparency, tax benefits for funding costs, and so on.

On the next page, we have our working capital, and I have an observation here. We call it adjusted because these are operating adjusted assets and minus liabilities.

When you compare that to last year, we have a better position. We are going from 1.9 billion to 2.3 billion.

This specific quarter, our working capital was sideways, but there was a qualitative improvement that was very important, and I will go over it. In this quarter, one of the main highlights in terms of working capital was that we were able to reduce inventory levels in almost 600 million reais, one of the main reductions for a single quarter.

Also, we were able to bring down receivables, which is very much related to our CDC, which is migrating to our financial company. Here our receivables in the consolidated has come down over 200 million.

On the side of the asset, we improved 800 million. On the liability side, we reduced the balance of suppliers in almost 800 million as well.

For the assets, we improved inventory turnover. This is very important.

Also receivables reduction will keep on happening on the next quarters as well. On the liability side, the balance for suppliers, it was a reduction and it happened because, as we said in the prior quarter, we purchased a lot in the first quarter so that we could be prepared for the World Cup and also to avoid a stock-out of products that were related to a global scarcity of memory chips.

This was a bet, it worked, to increase inventories. The second quarter, we sold everything, and we reduced the inventory levels once again.

Therefore, we had a payment volume for the second quarter that was slightly higher than usual. Therefore, bringing down the suppliers' balance.

The good news is that we now have room for payments in the third quarter to be lower. To the right, we have our financial expenses and we see that it was basically stable vis-à-vis the first quarter.

Interest rates started to come down. They could have been lower, but we did have some of this effect of higher payments for suppliers, therefore, also a receivables prepayment higher in the second quarter, which tends not to happen in the third and fourth quarters.

The perspective from now on is to have lower payments and we purchased less in the second quarter. We will pay less in the third quarter.

We will have less prepayment of receivables and we will have a stronger cash generation in the third quarter and also lower financial expenses. Combining all of that with interest rates that is now coming down, we have also a better perspective for financial expenses in the second half of the year.

Turning to the next slide, we have our total cash position and we see that the operating cash flow was around 300 million reais. Once again, this could have been much higher if it were not for the concentration of suppliers' payments in the second quarter, but it was enough to cover our investments and also our leasing account.

Now, the cash variation here is associated to the payment of interests as well as dividends, which have been paid in the second quarter. We paid interests that were provisioned in the quarter for prior quarters.

Our total debt basically came down from 5.1 billion in March to 4.9 billion in June. Therefore, reflecting in the cash variation here.

On the next slide, our total liquidity here, 1.8 billion of cash and 4 billion in receivables available minus 4.9 billion of gross debt. Then we ended with net cash of 800 million.

We are now reporting here the position for CDC of our financial branch and also CDB for our financial company. We have new accounts in our balance sheet so that it is more transparent to all of you.

Here we also include in the capital structure the credit portfolio and also the funding from CDB. Our net cash goes up to 1 billion.

We ended the quarter with 450 million in net portfolio and 250 million in CDB. There's a difference here of 200 million that increases our net cash plus credit portfolio.

Finally, our debt schedule. We have here a final amortization of the 10th debentures issuance in the fourth quarter.

We will end the year with basically 4 billion. We started the year with 5 billion.

There is a downward trend here for our debt schedule of 1 billion for this year. On the next slide, we have information on LuizaCred.

A portfolio of 20 billion, growing 2%. A base of clients of 5.7 million with our ROE of 23.5%.

LuizaCred is a very well-capitalized once again. It ended the quarter with a Basel ratio of almost 15%.

I mentioned that starting based on this Basel ratio, it already has to pay dividends and to return this profit to shareholders. Delinquency has come down year on year significantly, both the short-term as well as the long-term one.

It did have a quarter that was significant with a net profit of 135 million, growing more than 30%, even with the increase of the social contribution tax rate on the financial company. On the next slide, to conclude, I have some highlights for MagaluPay, the credit portfolio growing significantly since May.

We have turned a key and we started to originate 100% of our CDC in the stores within our financial branch, and a portfolio already has reached an amount. Considering interests to compare that with retail, we migrated six over 600 million out of the total portfolio of 2 billion gross.

This is how it is accounted for in retail. We already have around 600 million in our financial branch and 1.4 billion in retail, we have migrated around 30%.

This portfolio should briefly go over 1 billion. Funding in CDBs over 250 million in very few months.

We also capitalized our financial company in the beginning in 200 million, we have a Basel ratio of over 50%. Also, we have posted results for this quarter with a net income of 17 million.

These figures will increase, but in this quarter, analyzing this quarter, we have already had an ROE of over 30% in our financial institution. These were the main financial highlights.

Now I turn the floor back to Fred. Or

better yet, we will start the Q&A and we are all available to take your questions. Thank you.

Good morning, Vanessa, Beto, and Fred. I have two questions.

The first one, Fred, is if you can go over the partnerships once again with the 3P partnerships. How can we think about the unit economics of these partnerships compared to your 1P?

I understand that we have a number of opportunities here with services, as you mentioned, with Magalog. If you can break that down so that we can understand the potential of this unit economics.

Now a second question, talking about the increase of monetization of traffic that you also talked about. If you can give us more color on the advertising platform performance and progress and what can we expect for the performance of unit economics also for Ads.

Good morning, Luiz, and thank you very much for your question. Now, regarding the first question, the rationale is very similar to what I said in the presentation.

The sales in third-party platforms has to give us a contribution margin that is higher than the one that when I say I sell via a media channel like they click on Google, for instance. I have two large groups: those that come in organically and purchase and those that come through media channel.

I consider these platforms equivalent to the media platforms. The channels are similar to these media platforms.

The assumption that we have been executing is that this has to be higher than the media channel. Why?

Because that client not necessarily is a recurring client because the partner has information on the client. When someone comes to us via Google, we can have the whole information on the client.

As an assumption, this has to be high and then the media channel, and it is lower when the client comes to us and purchases directly from us. This is what we have in terms of a healthy partnership and sales process.

What we pay of take rate and receivable terms and delivery. We consider all of that.

In addition to that, we have to have some level of reciprocity with the group services, for instance, Magalog, or another possibility of reciprocity are the categories that we mentioned. We got that with the AliExpress and in these new platforms, we also might have this reciprocity in the catalog.

The second question about advertising, if you can go over the size of the opportunity to you. The fact here is that we have an audience of 500 million visits a month and also stores visits.

For us, for the expansion on physical stores with the CDI still high, of course, that retail media Galeria Magalu was feasible because of retail media. We signed contracts.

This was a store that was developed to be a brand place. We have closed the whole year with advertising.

The Ads team worked hard to sell physical areas, physical spaces there, also packages that can make the best use of the store. The store has a lot of LED panels.

Both in the physical and the online, that is very important for us. It's very important to have this participation of Ads.

As I told you, we had 13% growth in active sellers, and we have a higher CTR, specifically about 3P, which is where we have an effort to improve profitability. That's where things are more challenging.

We have been able to double the footprint of Ads year on year, which helps us improve our contribution margin for 3P. Specifically for 3P, this is very relevant, and for the stores as well.

Here we see the main opportunities. As I said, sometimes we have opportunities that we call non-endemic.

These are brands that are not in the platform, such as Hyundai that we mentioned, which is something that is an added value and it contributes to our results.

Excellent, Fred. Thank you very much for your answers.

Good morning. I hope you can hear me.

I would like to ask about something that it might be too early about this partnership with Amazon. Can you tell us about learnings or what has surprised you in terms of client profile or type of product?

Maybe the journey of this client in the platform and also in terms of operations, this integration. The second question also, the consumption environment, we have seen a few companies and we have seen also data pointing to a potential deceleration in the second half of the year.

I would like to hear from you about your expectations regarding that and obviously I know that there was a demand peak because of the World Cup, but things now are normalizing. How do you see the second half of the year?

Thank you very much.

Good morning, Irma. This is Fabrício.

Thank you for your question. I will be answering about Amazon and the second half of the year as well.

At Amazon, sales have surprised us in the beginning. We started at Amazon and we do not have the Prime seal yet, that badge.

It will be there in October. We are delivering an average term of delivery that is not the final one.

The main highlight here is on the white line, as we expected. The heavy items that we operate very well, I think better than everybody else in the market.

It has been a highlight. The category is performing well: TVs, furniture.

We are very happy about this partnership and we believe that as we get this Prime badge, we will have an even better performance. This is a very positive perspective for the second half of the year.

Again, for the upcoming months, we are very confident because now we should go back to growing online with our partner platforms and we will have El Niño this year. The warm weather makes a big difference for us because that line of air conditioning really moves the needle, also refrigeration.

When the weather is warmer, this helps us. We are very well planned.

We are already receiving those items that should help us in the second half of the year. We believe that the coming months will be good.

We will have a good performance.

Thank you very much.

Good morning Fred, Beto, Vanessa, and the whole team. I have two questions.

The first one is about agentic e-commerce. I think you talked a lot about this on the release, and I would like to know how you foresee the future of e-commerce, agentic e-commerce based on proprietary platforms such as Lu, or if you believe that the foundation channels will be the main channels with the clients, and how Magalu intends to maintain that direct relationship with clients and tap into value from this ecosystem.

A second question more related to profitability. In the last two years, you have prioritized profitability rather than growth.

When do you believe that the company will be comfortable to go back to accelerating digital without letting go the margin discipline, and if you have a specific trigger for that? Thank you.

Hello, Lucas. This is Fatala.

Thank you for your question. I will address the e-commerce question.

Yes, we believe that major platforms are developing experience on top of a purchasing experience for clients. We have seen an initiative of OpenAI that tried to do the check-out as well, and then they went back, they took a step back with the movement.

They learned a lot from it. We already see a model with Google as well, and some different retail fronts developing their own experience.

We believe that the asset that we have with Lu that has been created over the years is a differential, and also the development of an experience, which is very much focused on details. Many of these major models that are doing something that is more generic end up not having this detailed work of the experience, and that hinders conversion.

Since the beginning of this work with Lu, we are focusing on it. We try to understand the consumer journeys and we remove friction so that we increase conversion.

This is what we have been looking for, and Fred was talking about it with the figures that we already have that are very good compared to what we have seen in the market. There is a lot to be developed in the process.

In our case, what we want to do with Lu now is that she can have the full understanding of the consumers' preferences, to store a memory of everything that they do of Lu and also in the sales channels. Based on that, we can have a customization level very much directed and focused on that person.

Understanding the preferred brands, the categories, and what is the shopping moment of that client, and therefore delivering that experience that should be more customized and keep on growing in order to have a higher e-commerce conversion when compared to traditional channels.

Good morning and thank you for your question. About the second part of your question regarding online growth, as I said, we truly believe that especially in the fourth quarter, but also starting on a few months in the third quarter, we will be harvesting the fruits of these platform listings, and third-party ones.

As I mentioned, we will be announcing at least another one in the very short term. We're very quick in implementing our catalog in these platforms, and we have a very good penetration with our logistics all over Brazil, also inventory levels all over the country.

In the very short term, the way that we can go back to growing on online with the profitability that is our prerequisite is by these partnerships. According to our estimates, there is a great possibility of being able to switch this trend already in the fourth quarter and in a few months of the third quarter.

We are confident about it. When you go in, like Fabrício mentioned, you start with a solution that is an intermediary one, but then you learn how to sell in these platforms or if you increase the possibility of gaining buy box in these platforms with a number of things that will be announced from now on, I believe we can do that.

The possibility of selling and of having great volumes in platforms is great because we are a seller that have a national penetration. We have good prices and our service level is excellent.

We are going to get these buy boxes. There's a great chance that we'll be able to make this reversion in the second semester.

Great, Fred and Fatala. Good morning to you.

Good morning. Thank you for taking our questions.

The first is about the sales performance after the World Cup, how it's been and how do you imagine the same-store sales evolution going forward? The second, you talked about the impact of memory chips prices.

I'd like to understand your expectation for this scenario going forward and how you see the margins evolving in coming quarters.

Good morning, Giovana. This is Fabrício.

Sales after the World Cup, the TV category, of course, has a bit of a hangover, but our store sales continue to grow. This quarter should grow a high single digit, and the trend is for it to continue to grow in the physical stores until the end of the year, which is also benefited.

We should continue to see growth in stores, increasing market share, and we're very confident with that. As for the memory chips, we already had part of the cost pass-through in the coming quarters.

We see that the mobile phone category should see a small cost pass-through, and notebooks, we imagine should remain stable till the end of the year. It's not that predictable because demand remains high from the big techs, and the scenario shall stabilize in terms of prices at the beginning of next year.

It's still a slightly uncertain scenario in terms of the memory costs.

Thank you for the answers.

Good morning Fred, Beto, Vanessa. Thank you for this opportunity.

I'd like to explore a little bit MagaluPay. I think you've made great progress at MagaluPay with positive results in the quarter, and as you mentioned, it's still not at its full potential since the CDC at the new financial company is quite recent.

I'd like to understand a little bit more how far it can go, where it can reach, and already linking it to profitability, it all moves towards a good fourth quarter with a partnership with the platforms going well, there's Black Friday, MagaluPay scaling up. Do you think it will be possible to resume a profit level in the fourth quarter or 2027?

Those are my questions. Thank you.

Thank you. This is Jorg for MagaluPay.

I'll start talking about MagaluPay overall, and then more specifically of the financial company. As Fred said during the presentation, we have four verticals at MagaluPay at different points, but which are all going well.

LuizaCred, that is a more mature operation, we focused over the last 12 months a lot more in quality control of the portfolio, and you see the reflection of that in improved provisions and efficiency with a decrease of administrative expenses. We have a growth challenge, and we are also implementing platform improvements.

There's an important platform change now in the second half of the year going towards microservices that will definitely improve the exposure of products and client monetization. We're also focusing on evolving a better value proposition for the cards, leveraging the synergy with the ecosystem.

We have IP with all of our digital accounts, processing and insurance. This is also doing very well, a major engine for results.

This aspect of this vertical is insurance that's going quite well, especially in terms of digital penetration with growing more than 20% year on year. Stores, that is also very sound.

Quickly about consórcio, consórcio is strongly benefited by the interest environment in Brazil, but we are growing through platform improvements and a strong focus on residential and auto consórcios, and we expect this to continue hitting record sales. The financial company itself, finally, that's a major point here of your question.

We have both financial benefits with the new structure, and I think in the last quarters, we've run a lot with the tax efficiency. We are able to capture with the replacement of the portfolio coming from the retail where we incurred on ICMS, PIS, and COFINS taxes at a higher level.

For the financial company, we only have IOF, PIS, and COFINS that are at lower rates. There's a tax improvement close to 20%.

In addition to having the funding of third-party resources and operating at a higher leverage, there's a financial market that's naturally supported by this change in structure. We also have operational benefits that you will be able to see over time.

One of the improvements we've already been able to start to implement, that's the much better seller experience for exposure and payments. The second part that I believe you start to see more towards the end of this year, beginning of next year, which is this strong focus on portfolio quality with an upgrade of credit intelligence and collection.

We are implementing a new credit engine. We have a new team developing and starting to implement in August the initial tests of the new models that are machine learning-based, operating with data from our ecosystem, and the new collection system that we believe will also bring a lot of synergies to the operation in the coming year.

Thinking about all of that and looking at what we had of results in the financial company and retail, we operated with ROE of 20%, ROA of 2%. I don't have a lot of ROE because since we're going to operate with a focus on capital, this can impact the metrics.

ROA, we believe that without a doubt, we can unlock a lot of value. This 2% maybe more than 3% 3%, for example.

I don't want to be too focused on numbers here, but this is only going to come when we have the operations stabilized. We have regulatory implementations in the coming half year, and I believe starting in 2027, you'll be able to capture a lot of this potential already.

Thank you.

Pedro, good morning. Thank you for your question.

I'll talk a little bit about this topic. We don't provide a guidance, unfortunately, we can't be as specific.

I'd like to reinforce this. We turned a profit in the last two years.

We talked a lot about everything we're doing to resume sales growth with discipline in terms of gross margin, selling more at healthy gross margins. We can dilute our operating expenses even more.

We've been able to keep them in control, like you've noted, very strictly. With more sales, we have more room for operational leverage and to be able to improve operating margins overall.

With more sales, we can also generate better inventory or have a better inventory turnover. We believe that in order to meet all of these new platforms, we are able to sell a lot more with the inventory we have today.

We'll also see a dilution in inventory. We'll improve inventory turnover through sales increase.

Increases cash generation, which, as a result, also helped reduce the exposure that I mentioned that we also believe, combined to future interest rates, are already lower. Note that this last quarter, future interest rates increased a lot due to the war in Iran, the price of oil, but that also impacted financial expenses in the second quarter.

Future interest rates now are pointing down, and we believe that's the trend. We'll start to benefit in the prepayment of receivables line with this level of future interests at a lower level.

We have LuizaCred delinquency remains very low, very healthy sustainable profits, and what Jorg mentioned about the financial company. We have the good ingredients, and we're doing everything to strengthen this trend of profitability that you mentioned.

Thank you, Pedro.

Excellent. Thank you, Beto and Jorg.

for the question. I'd like to understand just maybe an update on the strategy for your own marketplace.

I know a lot of focus of how Magalu is selling elsewhere, but what does this mean for your own 3P strategy? Then just a related question, as we think about fulfillment, I'm curious the characteristics of your fulfillment sellers versus non-fulfillment.

Do you see them in any specific kind of seller sizes, categories, how they concentrate sales with Magalu or elsewhere? These updates on your marketplace would be helpful.

Thank you.

Good morning, Andrew. Thank you for your question.

I will start answering it and then I'll turn the floor to Garrido, he is in charge of 3P. First, we continue having significant efforts for 3P.

Our decision, when I said in the beginning about something important of our creators-ship, is that we are going to concentrate on the categories in which we have a competitive advantage or some type of right shoeing in these categories. We have here in durable goods a strong focus and a wonderful performance for 3P.

We'll keep on going over sellers for these categories. Same thing for sports products, Netshoes, also Época with beauty, gaming with KaBuM!.

In these categories, we wanted to leave that one-stop shop concept and to go to a concept where we are a brand place, a company that sells products with added value, the high perceived value, and we have reviewed the categories in which we believe that we have a good potential and we'll be focusing investments on those, both for hunting as well as investments and marketing for direct channels. This is just an overview and I'll turn to Garrido so that he can go over this answer and also talk about fulfillment.

Thank you, Fred, and

good morning, Andrew. As Fred mentioned, we are prioritizing profitability and avoiding going into a margin destruction.

We are also working on two other fronts. One of them is what Fred mentioned about choosing categories.

We have prioritized in our analysis here categories where we have a sales maximization there that is to which we are already leaders, and also bringing this to other categories such as home, not only furniture and white line, but also portables, and this also has a strong distribution and a high recurrence for clients. We are working on these categories and starting to focus investments of these categories where we have less margin, less recurrence, and less location to the categories where we have more of those so that we have good margin to invest in them.

Also the second front, which is also very important, is that we have been working in improving the foundation so that we have organic scale to the platform. To recover growth, we have to have logistics and sellers, and as we have mentioned here, not only price subsidies.

We are working on scales for this platforms, and in June, we have 13% higher Ads with visits than we had in the prior year. In the prior year, we were going down in this number.

We grew a number of sellers, now we have 2% higher sellers with sales than what we had last year and with all-time level of sellers with sales in active sellers. The main drive here has been really the continuous growth of logistics programs and the full is ahead of them, which has 25% of orders, 2 percentage points higher than last year, driven by two main things: one, the higher inventory levels for sellers, 26% more inventory in sellers compared to what we had a year ago, and also with a higher coverage of orders that are delivered from distribution centers that are closer to clients.

We have reached our all-time level, 2% up 2 percentage points compared to last year, and this is logistics intelligence very close to what we have with 1P. Naturally, there is a limit in growth here because this is a program in which we spend more.

We have been controlling it in around 30%. It will continue growing, but not much, and we are investing in other programs as well.

For instance, we have reduced the number of 3P deliveries that were done by post office from 10 to 2% from one year to another, and we are investing a lot in the very fast delivery program, we call that Vapt. Here we have delivery areas that are close to buyers.

If they close nearby, they will have a delivery on the same day that's paid by the client. Therefore, we have a protected margin.

We have been able to reach 16% of São Paulo to São Paulo deliveries using this program. In the second half of the year, we'll be expanding that to five more capitals in Brazil.

We have been able to improve the foundations of marketplace to grow organically. That's it.

Thank you, Vanessa. Good morning Beto, Fred, and the whole team.

I have two questions here. The first one is related to how you have been able to keep profitability, dilute expenses, and I would like to understand if when we look ahead, you have opportunities to reduce expenses and costs.

Where do you see more opportunities there? How we can look ahead so that we can understand profitability?

I also have a question related to the World Cup behavior. Do you think that there was a anticipation of electronics, or people purchased ahead of the time, maybe Black Friday purchases and end of the year, because the consumption might be more cautious now?

These are my questions. Thank you.

Good morning. Thank you very much for your question.

Yes, we are working to map opportunities to reduce expenses, and I think most of it has not been implemented yet. I believe we have a lot to implement in the second half of the year.

We are working on our organizational structure and also all of the accounting accounts of the company, small ones and also hiring consulting services, software licenses, cloud expenses, logistics, deliveries. We have a number of opportunities here to be tapped into in the second half of the year.

We believe that we'll be able to improve that. Even marketing has opportunities that I believe it will be delivering good numbers in terms of the dilution of SG&A.

It's always difficult because we have indexation, we have inflation. Inflation is now more controlled, and that will help us.

As Beto mentioned, in reducing interest rates, I believe that the market is more positive in reducing expenses. Also it helps in least pass-throughs, also in the collective bargaining agreement.

If we can have a lower indexation of the economy and also tap into everything that we are projecting, and I cannot give you details because all of these data are sensitive in no projects to cut down expenses. We are confident that we will be delivering on that front as we have been doing in the last quarters.

The core of the project has not been tapped into yet. About the sales in the second quarter, as I mentioned, TV category always has a hangover after World Cup, especially now August and September.

Third quarter, I believe it will go back to normal. This is common to happen in a World Cup period.

We have things that will be helping us in the second half of the year. First is the warm weather, also the partners that we will have in the platform, and also will be very well planned for the end of year.

I believe our Black Friday will be strong. Our perspective for the last quarter is very good.

Perfect. Thank you very much.

Good morning. Thank you for this opportunity.

You answered my question in part, but I'd like to understand about the evolution of sales month-by-month in the second quarter and how you saw July specifically about the quarter, if there's any change in demand or the behavior of consumers. Also, on limiting to the second quarter, the FIFA World Cup was beneficial for the company, but we had that huge issue in the country of the increase of betting from June to May compared to May, there was a 300% increase in the number of gamblers on betting.

If you can comment if there's a perception of the effect of betting in the consumption of the quarter in any category or whether the World Cup offset this impact. Thank you.

Thank you for your question, Guilherme. This is Fabrício.

In July, we were not that benefited by the World Cup. Brazil was eliminated before that, we had the expectation of get to the quarterfinals at least, but we lost about a week of TV sales, mostly.

In physical stores, even with this less aggressive TV sales, we maintained growth at a high digit in physical stores in July, starting the quarter well, and the online has a similar dynamics from what we've been presenting. We should improve.

August should be better than July, and September should be a lot better than July and August, and the last quarter will probably ramp up. The scenario of sales is that.

The World Cup was very good in June. The quarter's sales dynamics is very much based on what was said before, and it's going to start warming up in August 20th and our sales start to improve.

Now Fred.

For bets, it's natural that when there's World Cup, the volume of betting increases. Betting in Brazil, 70% is not actually sports-related.

It's more like online casinos than sports. I'm the vice president of IDV in addition to being Magalu's CEO.

IDV is very local. All Brazilian retailers have been very vocal about the fact that betting addiction kills in addition of being an economic problem.

Almost 300 billion BRL last year were moved by the bets. Although part of that goes back to gamblers, we saw recent data that the volume of losses was dozens of billions of BRL for bettors, for gamblers.

Even what goes back to gamblers is still tied into the betting system. There's a lot of gamification so that they keep their money there, and this money is leaving.

It's moving away from consumption for the families. It is a serious problem, and that is growing exponentially with very few actions taken to control it.

It's a problem not only economic, but it's a public health problem. We should be acting more on that.

We should already have advertising restrictions, we should have more betting controls. The best regulation in the world for betting is the one implemented in England, in the UK.

They have a regulatory agency monitoring these companies. I see a situation that is growing.

There is a serious economic problem, but I believe it's even bigger because, as I said, betting or gambling kills. It's an issue we have as Brazilians, and it's an election year, and we should demand a commitment from our candidates to the presidency and Senate and Congress about their position, because I believe we should be more proactive in the sense of demanding concrete measures, concrete proposals about gambling.

Thank you, Guilherme, for your questions.

Good morning. Thank you for the opportunity to ask questions.

I'd like to get into two points. First, I think was detailed by my colleagues previously, but I'd like to go a little bit deeper, maybe, about your capacity to reduce expenses, especially in a more challenging macroeconomic scenario or more challenging as it is for a longer period of time.

With a flat revenue, you've been able to maintain margins. How these two scenarios would make it more difficult to maintain margins at that level or what would maybe lead to operational deleveraging?

Another point is that I'd like to understand, I think that the company or the value of the company is less in retail itself, but more on everything retail allows or enables, everything that you have that is connected to retail. How much do you intend in the medium term to open the numbers more proactively about other segments, about Magalog, about MagaluPay's different initiatives, because then we can understand this dynamic of a flat revenue, but other segments with more added value growing?

The merchandise doesn't grow, but Magalog grows, MagaluPay grows, consórcio grows. What's your initiative about that?

Those are my questions. Thank you.

Good morning. Thank you for your question.

About the expenses, I just talked about that, but I'd like to stress the following. If there's something that does not depend on the macro scenario is expenses.

It's fully in our hands, it's our decision. Maybe it's one of the few accounts in our balance sheet that depend only on us, on our capacity to be efficient.

There is a strong agenda now that we didn't mention that is important, which is to diversify AI and processes. We ran a test of AI in the company, and I believe that all of the company's leaderships have the incentive to use AI for process improvements, either increasing productivity of programmers, it may not even be optimizing and automating processes, it's doing better the control of the call center with greater automation and customer service, all the processes.

Even audit is using that. I think there's a huge opportunity to use artificial intelligence for more efficient processes.

Expenses do not depend on the macro scenario. They depend on the discipline and focus and the determination of our team to make decisions that are not focusing only on a vain metric like having a large team, having a lot of people here, it's a lot of responsibility, but we need to think about efficiency.

Working on the cultural aspect as well for expenses is important. I think that when you have more and more people and leaders concerned about it, and now with the possibility of having tools that help them become more efficient, which is brought by AI.

Why are we putting so much money in AI in the world? Because there's a significant share of those investments that are focused on increasing productivity.

That's precisely what we're seeking at Magalu. We have hundreds of initiatives here developed by our leaders for automation and improvement of expenses, not to mention all the other traditional works in the sense of containing the expenses in these cases.

That does not depend on macro scenarios. It depends on our discipline and our determination.

Antonio, thank you for your question. I think talking a little bit about our earnings release and what we disclose, we seek an ideal balance between providing a lot of information and maybe sometimes making it more difficult to understand the details from our investors versus not providing enough information that, on the other hand, would also hinder understanding or a full understanding of our ecosystem.

I thank you for your question. This is something that we're always looking at, always seeking to evolve.

This quarter specifically, we started to provide more color about the financial company, MagaluPay, that I think is an evolution. Before that, all of the interest in our CDC portfolio were mixed with a merchandise gross margin.

Just to give you an idea, in a portfolio of 2 billion BRL considering an interest rate that we charge and the average duration, we have a revenue of interest in this portfolio of more than 1 billion BRL that was before within the margin for merchandise subject to ICMS, PIS, and COFINS taxes. Now with this migration, we'll have more transparency, more tax benefits, a stronger results in the financial company, MagaluPay.

The other platforms in our ecosystem, each of them is at a different point in their maturity, and we believe that at the right time, we will begin providing more information, for example, about the performance of Magalu Cloud, the performance of our Magalog as well, and so on. We are seeking the right time to give you the ideal volume of information, seeking to have a balance between complexity and simplicity and depth for you.

Thank you for your question, Antonio.

Thank you.

Thank you very much, Vanessa. Good morning, Beto, Fred, and the whole team, and thank you for taking my question.

I would like to talk about working capital. We have seen improvements in the inventory levels, and now in the second quarter, we had a good influence from the World Cup, and I would like to hear about your perspective for the year because you have that metrics that you expect to settle by the end of the year.

What is the level of inventory for the second half of the year and also receivables prepayment? How this volume should perform now?

Thank you.

Thank you, Nicolas, for your question. I will go over about each one of the working capital accounts.

In inventories, we have been able to reduce and we reduced it significantly in this quarter, and we reached a level which was the lower inventory levels under 7 billion in the last five years. Now, the natural trend is to have it increased because of the Black Friday sales in the fourth quarter.

Maybe you will see that going up in September, but mainly in October and November that we will have an inventory peak, and naturally, we should bring that level down and we should finish the year at very healthy inventory levels and with inventory turnover that should be the best one in the year and better than last year, considering what I mentioned before, that we should resume growth without having to increase inventory levels to meet the needs of all platforms. Also, we are very well supplied, we have good quality of inventory distribution, we are well prepared for the sale acceleration and to improve inventory levels.

For payments, we intend to keep that. We do not have that much room to increase it much more, but we will maintain that term and improving inventory levels.

We also improved that ratio between inventory levels and suppliers. I talked about receivables and the migration to our financial company.

In retail and working capital, we should see a significant improvement. In June's position, we still had 1.4 billion of receivables in retail that tend to be amortized in the next 12 to 15 months, and that will bring more cash to retail, and this portfolio will grow in the financial company, which is going to be financed by CDBs, financial securities.

We are in financial bills, and we are aiming here a Basel ratio of 20%, and we'll be financing this portfolio with 80%, especially with CDBs and financial bills. We tend to have a deleveraging here.

We still have 1.4 billion to deleveraged in the retail for the next quarters. I have not talked about taxes, but we also have here a significant opportunity to accelerate taxes monetization.

In this first half of the year, we maintained the balance rather stable, offsetting the monetary restatement of these balances. In the second half of the year, we should have a reduction in the main balance as well.

In addition to turning the monetary restatement in cash, also we will have a reduction in the principal balance, increasing the contribution of taxes for cash generation. Just last week, we had a good news, over 100 million in court deposits that have been released and approved.

We have 3 billion of ICMS, PIS, and COFINS that we are monetizing organically. With the tax reform, we also expect that the tax cash flow improves even more, because it's going to be easier to offset, that we won't have this current dynamic of the tax replacement that we end up paying taxes ahead of time, we prepay taxes.

I believe that in the next quarters and maybe in a year or two, we'll be monetizing this taxes to be recovered, a balance of 3 billion, and also we have court deposits in 2 billion to be monetized, and I believe most of that has already been fully approved, especially Difal and Difap. This is already in a final court decision.

We have a lot of opportunities of cash contribution and contribution for our working capital to generate more cash, and with all of that, we have more resources to keep on reducing our indebtedness level. You also asked about that, and we should be reducing indebtedness level by the end of the year.

Also, with this cash generation, we bring down the volume of receivables prepayment that is very much related to working capital. This happened in the second quarter.

It should not happen just as the same in the second half of the year. This receivables prepayment should be lower in the second half of the year.

Also the cost will be lower because there's going to be a lower term here and also lower interest rates. We are also aiming to reduce financial expenses on top of our results.

With a reduction of the debt and also of the interest on the debt and interest rates on the debt and also the prepayment of receivables, we have a positive trend there, Nicolas.

Very clear, Beto. Thank you very much.

Thank you all very much for being with us in this conference call. I would like to stress that we end another quarter aware of our challenges, but also very confident about what we are building.

We will move on with discipline, the urgency, understanding, with also relying on retail and in Brazil, and in the best version of retail, which we consider to be the omnichannel. Thank you all very much, and have a nice weekend.