At Locaweb, e-commerce takes center stage

Fernando Cirne, CEO of Locaweb

When it was announced on B3, in February 2020, Locaweb still had services as the main feeder software as a service. At the time, only 22% of revenue came from the vertical of building and managing e-commerce platforms for businesses. After the pandemic and several acquisitions later, e-commerce already accounts for more than 60% of Locaweb’s revenue. And this percentage should increase.

“In the next three to five years, we will become a company that mainly deals with e-commerce,” said Fernando Cirne, CEO of Locaweb during an investor event this Tuesday, October 18. According to Cirne, the vertical is expected to account for more than 90% of the company’s revenue in the future.

The focus on e-commerce was clear at this Tuesday’s event. In her keynote speech, Cirne said that “today is not the day to talk about performance indicators” – although she did show some general business numbers. According to the CEO, the event will be dedicated to showing what it’s like to “set up a store for the end customer.”

Locaweb’s strengthening in e-commerce is mainly due to the acquisitions the company made after the IPO. During that period, 14 companies were acquired, among others Melhor Envio, Bling, Squid, Octadesk, whose focus is on e-commerce.

A recent example was the acquisition made last month. After 10 months of abstinence, Locaweb once again moved the M&A market by acquiring the business of Síntese Soluções, an omnichannel platform dedicated to retail, for R$35.2 million.

With around 50 customers, including companies such as Aramis, Grupo Soma, Reserva, Síntese has generated interest in Locaweb for its platform that has solutions to control logistics and to unify inventory management in different sales channels, whether digital or physical.

“We want to explore the physical world in the e-commerce universe,” said Alessandro Gil, executive director of e-commerce and SaaS Enterprise at Locaweb Company, when NeoFeed during business hours. “The physical store is now a mini-distribution center and greatly increases conversion.”

Síntese and other acquisitions help the company create an ecosystem focused on e-commerce. The idea is that Locaweb is a complete solution for those who want to have an online store. In this plan, the company wants to go beyond just structuring and hosting e-commerce.

With the acquisitions completed, Locaweb has increased its scope and gained strength to work with logistics, financial services, payment platform, business management, customer retention and loyalty tools, payment system, and lead generation and conversion.

Among these areas, two are seen as having great potential for growth. The first is lead generation, in which the company started operating after the acquisitions of startups Squid and Octadesk. Another vertical that Cirne cites as a potential aggregator of new clients is the financial services front focused on credit forecasting. In this case, entry was made with the purchase of Bling, 2021, for R$524 million.

The change of air in business brought results. In the second quarter of this year, the company recorded a net income of R$ 986 million, 53% more than that recorded in the second quarter of the previous year. The e-commerce department alone has doubled compared to the same period in 2021. There are 540,000 customers in total.

The efforts seem to be satisfying the market. Ahead of the second quarter results, Bank of America analysts already had a buy recommendation on the company’s stock. In May, BofA said Locaweb was more mature and differentiated from its technology peers in B3.

After a steep decline from the peak reached in February 2021, when Locaweb shares traded on B3 for almost R$35 each, the company is recovering in 2022.

In the last six months, the company has accumulated more than 25% of the value of its shares. In 2022, however, the devaluation is 17.5%. On Tuesday, shares are traded by 3.8 percent. The company is currently valued at R$6.2 billion.

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