GetNinjas provides up progress to save lots of money and monetize base
- August 26, 2022
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Company sees the effect of pressure on income from the population, which hired fewer services in the second quarter
Edward L’Hotellierfounder and CEO of GetNinjas (NINJ3), is determined to make the company grow. But right now, the focus is on “improving the machine” and increasing profitability. It is this strategy, in the entrepreneur’s view, that will make the company survive the path to break the cultural barrier to the digital world in the services market — as e-commerce has already broken.
A courageous decision in the world of startups where the mantra is growth. The company had a 13% drop in revenue in the second quarter of 2021, to R$13.4 million. However, he is not dissatisfied with the number, considering the scenario. “We reduced the investment in marketing by 50% and the retraction in revenue was significantly smaller, which shows the evolution of the recurrence of the platform”, he says in an interview with EXAM IN. The recurrence of users is at 55%, compared to 54% in the first quarter of this year and 48% in the same period last year. “We are controlling the main line when it comes to cash burn.” Total requests on the platform stood at 1.1 million from April to June, compared to 1.3 million in the first three months of 2022 and the second quarter of last year.
But even the effort to oil the operation has its cost. Therefore, gross profit fell a little more than revenue, 16%, to R$ 11.8 million. In addition, there was a reclassification of costs with card transactions and slips, which were previously recorded as expenses. As for Ebitda, there is an improvement in the annual comparison: the loss fell from R$ 19 million to R$ 12 million. Commercial and marketing expenses increased from R$21 million to R$10 million, in the annual comparison. Even so, compared to the first quarter, there is a worsening in Ebitda.
L’Hotellier explains that GetNinjas is working with a consultancy, which has increased expenses. In the first quarter, work did not occur for the entire period, as the hiring took place during the break. Between April and July, the service was fully launched. That is why total expenses grew 50% year-on-year, but when only recurring expenses are observed, the increase is much lower, around 30%, especially reflecting the growth in the post-initial public offering (IPO) headcount.
The entrepreneur explains that the current macroeconomic scenario, with high inflation, high interest rates and a drop in income, are also harmful. “People are putting off renovations and improvements,” he says. For him, this factor even weighs more than a kind of post-pandemic hangover, a period in which many people invested in their homes. “There is a damming. The same thing we saw at the height of the pandemic.” The renovations and repairs category is the largest on the platform, with 36% of requests in Q2 — up from 38% in Q1.
When asked about how to seek growth in such a challenging environment — and L’Hotellier points out that the second half of the year, with elections and the World Cup will also be difficult — , he says that he is studying novelties for the platform, such as the implementation of guarantees for services and also mechanisms so that the match between the client’s request and the professional’s request is better and faster. All movements that help in the race against the habits of Brazilians to live on referrals for services.
This combination of efforts aims to sustain the liquidity of the business. GetNinjas ended June with around R$285 million in cash. The money invested, without financial debt, brought more net financial income: R$ 8.8 million compared to R$ 1.4 million a year earlier. The reason is high interest rates. This line helps to reduce the net loss, which went from R$ 17.8 million to R$ 8.8 million.
Regarding acquisitions, one of the objectives of the platform when it decided to make its IPO and raise funds, L’Hotellier remains cautious and said that it is not yet the moment, despite the adjustment in asset prices. The reason for this is that the company is still valued at B3 below what it has in cash and, at the same time, the cost of money is very high. In this way, there is no way to think about payment with shares, nor in cash for eventual purchases.
In addition, the executive points out that any transaction is practically unfeasible from a technical point of view. This is because acquisitions, according to the Brazilian Corporation Law, could trigger the shareholder base’s right to withdraw (when the company is obliged to buy the shares in the market at their book value, if the investor does not agree with the movement). The technical issue is that, as it is depreciated on the stock exchange, the option becomes very attractive to the market, which chooses the payment and makes the transaction too expensive or even impracticable. Enjoei, for example, had to cancel the purchase of Gringa, a second hand luxury goods sales platform, for this reason.
The moment, emphasizes the founder of GetNinjas, is to “clean up the house, improve profitability and recover pricing on the stock market”. When it made the IPO, the company was valued at R$1 billion and is now worth R$155 million on B3.