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Welcome to Mangalu's conference call regarding the quarterly earnings. For those who need simultaneous translation, click on the Interpretation button via the globe icon at the bottom of your screen and choose your preferred language, English and Portuguese. We want to inform you that this event is being recorded and will be made available on the company's IR website at ri.magazineluisa.com.br, where the Earnings release and presentation are already available in Portuguese and English. The link to the presentation in English is also available in the chat. During the presentation, all participants' microphones will be disabled. Then we will start the Q&A session. If you have questions, please click on the Q&A icon at the bottom of your screen and enter your name, company, and question language. Upon being announced, the request to activate your microphone will appear on your screen. You must then activate your microphone to follow up with your question. Questions received in writing will be answered later by the investor relations team. Now I would like to give the floor to Fred Trajano, CEO of Magalu. Fred, please, you may take the floor. Good morning. Thank you very much for attending our earnings conference call on the first quarter of 2026. I'm here again with all of the company's directors who will be available to take your questions at the end of our call.

So let's go to the presentation.

This quarter was very much in line with the previous quarters that we've been presenting, the third, fourth quarter of last year, in the same line as our message and our commitment with profitability and margins and rationale. Noting that interest rates remain high, we had an expectation at the beginning of a more ambitious cycle in terms of interest rates reduction, which did not materialize.

So we continue as interest

pressure our financial expenses, we continue to seek to preserve the strong expense control, the operational side, and not getting into the price wars on the online mostly that continue to happen. We've been seeing in the statement published at the Marques that there's still an irrational behavior that Magalu does not want to be part of. So it's another quarter where we preserve our gross margin at 30.8%, a slight increase compared to the first quarter last year. Beto will detail this a little bit more. There's also positive impacts here of the stores. EBITDA at 720 million BRLs at a healthy margin of 7.8 at high historical levels, noting that three years ago this margin was at around 6%. So we continue to increase, and even with all of the online markets pressure, we have been able to maintain margin close to 8%. And again, total cash at 6.2 billion, net of 1.2 billion. So the rationale remains the main guideline for our operation. We believe that throughout the next few quarters, the interest rates will continue to decrease although not as strongly as we expected in the end of the year. But the expectation is that interest rates will continue to go down. And if that happens, I imagine that the market will have to become more rational on the online as well. There will be pressure for that. Things will start to happen. And for us, the second quarter will be the turning point. That's the quarter in terms of growth, also on the online. where we will have the FIFA World Cup that in seasonality terms is always very positive for us. So we have better perspectives, the second quarter, more due to the seasonal aspect of the World Cup and the second half of the year, more related to the reduction of interest rates that we will start to feel and there'll be more flexibility for our sales, for our promotions. In sales, maintaining this argument point, made 5 billion in sales in the first quarter of 2026. Again, with extraordinary results, growth of 6.4% in sales in physical stores. I say it's extraordinary because in this first quarter, the market of durable goods went down due to weather aspects, air conditioning and fans, that's very important for our category, had a significant drop. because it was a cooler and rainier summer than last year, where it was very hot. And we also had some decrease in categories like computer appliances and telephony and cell phones due to an adaptation of the market to the increase in memory chip costs that generated a little bit less aggressiveness from the industry on these categories. Being less aggressive there are fewer sales, so the market overall went down. We've been able to gain share in stores, maintaining the company's total share in the category, including online, but on the online, we lost some share in this category because it remains a segment where competitiveness is more acute, and we preferred to focus our efforts and our sales on that channel where the contribution margin is greater. So instead of growing on online, we grow on physical stores, and we've been able to hold our share of durable goods in the quarter. So despite the overall drop in cost of goods, we maintained our share of durable goods, and we have a good... And we will always seek... to focus on the channel that presents the best conditions for growth at that moment. I believe in the second half, the situation will turn around. We had... I don't attribute this durable goods aspect to the macroeconomic scenario. In my view, it's a lot more related to the weather in the first quarter and the memory chips. Memory chips remain, but the market has already absorbed that aspect.

So I believe that...

We are already seeing an improvement in that sense. And, of course, we have the World Cup, and we'll talk a lot about that looking forward.

So, thinking a little bit more about stores, the growth was over seven.

Same store sales, 6.4. And I'll talk about this, but we resumed opening up physical stores. Galeria Magalu stood out on the quarter, but Irrespective of the opening of new stores, it was only one in the fourth quarter of last year, same-store sales are very sound, and I feel our stores are very well supplied. And we have a market now where we continue to see an opportunity for expressive share gains. The World Cup is always a very positive opportunity. We improved this growth in April. We're starting May with a lot of strength in physical stores. And the 6.4% is good, but it could be even better. As I said, there has been an impact of the weather and memory chips in the beginning of the quarter. But I believe now in the second quarter with the World Cup, And without those impacts that I mentioned that happened in the first quarter, we'll continue to grow. Fabrício can talk a little bit more about the opportunity later. And as I said, the beginning of the year is part of one of our strategic pillars. We intend to resume opening physical stores and we foresee an opportunity in the short, medium and long terms in that sense. Noting that physical retail in Brazil still responds to 85% of the total Brazilian retail. So it's a great opportunity in these contexts.

Next slide, please.

Another trend that remains compared to last year, those companies that we acquired in the previous ecosystem cycle continue to perform very well, so business overall brought positive results, profit, kaboom at 17 in profit, net shoes as well, net shoes in addition to the profit, had good growth in the quarter, 1B, that's their sales with the first pari inventory grew 12% in the quarter. So that shows there's still room for specialized stores, the category killers in the online. And Galeria also had good profit results in the quarter, and the remainder is virtual. So all of these businesses will benefit from the multi-channel aspect. We're opening physical stores. Galleria Bangalus, the second Netshoes physical store, the second for Kaboom, first for Epoca, first for Centro Virtual, we believe that bringing this multi-channel aspect to the ecosystem and our purely online companies we acquired the previous year is also a positive path, not only to expand the market share of the category, if we start to fight for market stores and stores not only online, but also the multi-channels help brand recognition online, so it increases online share as well. I would also like to highlight Magalu Ads. We had revenue growth of 20% in the quarter, with an increase in the conversion of 39%, growth of 43% for new advertisers. That's showing that it is worth it to invest on Magalu Ads. And we had very good performance of multi-channel ads, One of the big points of Galeria Magalu is to get announcers to see that at Magalu, in addition to ads online, they also have the opportunity to invest in advertising on physical stores. Galeria Magalu, as I said in the last call, a lot of the return on investment there and the next ones we intend to open also come from the space available for advertising that we made available. And with all the stores, we have 20,000 screens and also stores in the country.

Next slide.

We also had good performance at Magalog. Magalog is the carrier that we have to operate all of the group's deliveries, plus the deliveries of our seller partners who use Magalu Entregas. And we also open Magalog to provide services to third parties. We continue to gain a lot of customers In this quarter, our revenue with external customers grew 30% compared to last year. We've been gaining a lot of accounts in this scenario. Brazilian Postal Service is struggling. A lot of people know that people are seeking other transporting companies like ours. And Magaluca, the second half of the shop, also offers the delivery of heavy products for third parties. Today, it's done more for Magalu and companies in the group. But in that sense, for heavy products, our competitive edge is incredible, 60% to 70% of more affordable delivery costs. So we're excited with this possibility. It's another company in the ecosystem that has been performing well. Magalupe, Veto will talk about later, that's also had a good quarter. And we can give you more details, and Jorg is available to answer your questions about Magalupe specifically at the end of our presentation. At Magalu Cloud, it's another company as a group that has been moving well. We have more than 1,500 customers. Global Poder 360 joined our customer base. It remains as a cloud option with great costs for great savings, with low latency. we have savings of 50% to people migrating to Magalu Cloud when compared to the main international cloud providers.

And 55% of the customers are at Magalu Cloud.

So we had a good first quarter, especially with the participation of our external clients who are a focus, getting to 55% of the workload We should increase that, but the main focus of Magalu Cloud as Magalog is to seek external customers to be able to monetize these investments that we made in the ecosystem cycle. Now I turn to Beto, who will give you the financial highlights, and I'll talk a little bit more about the perspectives for the second quarter and coming quarters.

Thank you.

Thank you, Fred.

Good morning, everyone. Thank you for being here with us in our earnings call. I'm going to go over the financial highlights. Once again, we have reached over $15 billion in total sales growth, and as the stores of almost 7%, we reached the gross margin of 30.8%, which was one of the highest gross margins for a first quarter in our history. Also, we have reached EBITDA of 718 million, 7.8% of EBITDA margin. At the bottom line, we had an adjusted net result that was slightly negative in 34 million that was affected by financial expenses, which have been apparent affected by the increase of the CDI. Maybe this is the last quarter where we are going to have an unfavorable comparison vis-a-vis last year regarding the CDI. The average CDI for last year in the first quarter was at 13%. It started the year at 12%, and it ended the quarter at 14%, and the average for the quarter was 13% last year, and this year it was 15%. So this was a challenging scenario in terms of interest rates in Brazil. Nevertheless, we have been able to deliver a sound total cash position, 6.22 billion, and adjusted net cash of 1.2 billion. On the next slide, we bring the consistency of our EBITDA margin. In the last five quarters, we were able to maintain the EBITDA margin very close to 8%, and despite of the CDI, been growing over the period. And we highlight here the main levers that explain this EBITDA margin, including the merchandise growth margin. I'll talk more about that. Also, physical storage performance, our fulfillment and omni-channel, our SG&A census control, and this order we have been able to reduce operating expenses and basically 3% compared to inflation that was around 4%. So operating expenses have been diluted, once again, as we have been doing for the past two years. And once again, Louisa Craig posted positive results. On the next slide, we have the EBITDA margin comparison. Here, last year compared to this year, we did have a slight reduction of from 8.1% to 7.8%. But we would like to highlight once again the increase of the gross margin, specifically the merchandise gross margin, and I'll be talking more about that shortly. Also, the dilution of SG&A, which also has contributed with 0.1%, and we did have robust provisions regarding loan portfolio for retail. Still on retail, I will be talking about the migration of this portfolio to the financial one, but just to make it clear, over the past year, and I'll have some comments here, over the last year, we increased the share of our CBC portfolio, the consumer finance. This is one of our strategic dealers we have been increasing the cdc portfolio share and the e-commerce and that ended up bringing more interest rates which are accounted for in the retail and the invoices and also in the merchandise gross margin therefore the increase of provisions from 0.5 percentage it was more than offset in the merchandise gross margin by the interest rates revenue, and I can give you more color on that topic later, but I would like to just start by saying that just in interest rates and the gross revenue for merchandise for the last 12 months, we did have around one billion of interest rates revenue. This is a managerial number. You can see it in the accounting But you will start seeing it when we transition that to the financial branch. That's going to be clearer. Then, and for that portfolio that went from 1.5 billion and went to 1.8 billion and generated 1 billion of interest rates revenue, you then can see in our result statements that the low loss provisions, what our results were, so just to make it sure, we had 500 million in provisions, so a ratio of provisions and interest rates of 50%, which was already happening in retail, and once again, that's going to migrate for the financial branch. About the long portfolio, which still is mainly located in retail, we had 1.8 billion, 1.7 billion still and retail 100 million already in the financial branch. We also disclosed that portfolio. We talked about it and the overdue portfolio. The NPL 90 days improved one point and the NPL over 90 went from 9.3 to 7.8 of the total portfolio. So when you compare March against March, we see that the quality of our consumer credit portfolio has improved a lot. And for this total portfolio of 1.8 billion, we have a total provisions balance of over 500 million reals, a coverage of around 30% of the portfolio, and we understand that this is very robust, a very high coverage ratio. And finally, on that topic, as we now start the transition to the financial branch, this portfolio in retail will be received. It's going to be turned into cash. And the provision that we just mentioned also is going to be naturally reverted. So it's just to give you more visibility on this topic. So the gross margin for merchandise has increased. It is offset with increase of provisions. And that explains the variation of the EBITDA margin. Here we had also the share of services, which is in the middle of the chart. It went from 7.3. Its contribution was 7.3. Now it's contributing with 7.1%. This 0.2 here is explaining the EBITDA variation in the quarter. Now turning to the next slide, talking about working capital. In the quarter, we all always have a seasonality, so the working capital came down from $3.9 billion to $2.2 And remember that these are liabilities-less assets, so the lowest, the best. But this variation has taken $0.6 billion of cash in the quarter. But this is seasonal. That has to do with suppliers' payments from purchases for the last quarters, as it happens every year. What is important here is to analyze March last year. There is a progress in 600 million RELs. This progress is related to the inventory turnover and average term for purchases, which we have been able to improve. And also, in terms of average purchase time, we have been able to get better negotiations, from extensions with suppliers. And in this quarter, specifically, we had an inventory anticipation, both related to the World Cup as well as to the risk of lack of products, like Fred mentioned, because we are seeing a scarcity of memory chips all over the world. So we anticipated ourselves We bought more inventory, so our goal this year is to improve inventory turnover. We'll be doing that this quarter. Specifically, we did have this specific effect, the World Cup and the lack of chips, but they will go back down after the World Cup. And also with this negotiation, this purchase anticipation, we also were able to get extended payment terms. Finally, still on the working capital, as we purchase more, we also have more tax credits, so we monetize less taxes, and this trend also should be reverted in the next quarters. As inventories come down, we will have less tax credits and we'll be offsetting more. Therefore, we will have a more positive dynamic of cash generation starting on our working capital. Now, talking about net financial expenses here, Basically, we see it growing in 16% year on year in line with the CDI variation, which went from 13 to 15, once again, and it was a 14% variation that was associated to the interest rates in Brazil. And as it starts to come down, we will see the benefit from the drop of interest rates in our financial expenses from now on. On the next slide, we have our total cash positions for the last 12 months. Once again, the cash flow from operations, very strong, around $2 billion. It could have been higher as we had last year, and this is the trend because of the improvement of the working capital that we expected to see from now on. with the normalization of inventories, taxes, and everything else that I have already mentioned, even then $2 billion already considering an EBITDA of $3 billion and all the expenses of receivables, prepayments. And also we invested $1 billion, a little bit more than the depreciation, considering capex and also funding for Louisa Credit. And an observation, LouisaCred has already reached the base ratio of 14%. And from now on, it tends to go back to paying dividends. In the last three years, we had fundings in LouisaCred, and we retained profits. So the situation should change now because it's now capitalized and profitable. And our leasing accounts, you know, it's very stable, around $800 million. interest related to our debt, also $800 million. Also, we did have net borrowings of $400 million, and we paid dividends at the end of last year regarding 2024, ending with $6.2 billion. So, in summary, the explanation for the variation are the investments and the payment of dividends on the next slide. We have our total cash position, once again, 6.2 billion minus 5.1 billion of gross debt, 1.2 of net cash. Our gross debt is distributed once again over the next five years. The next maturity that is relevant is the final amortization of our 10th adventures issues, which should happen in October. So we will be paying $1.1 billion this year. We will end the year with $4 billion of total debt, reducing our total indebtedness. Well, now we go over some highlights for Luisa Craig. Delinquencies coming down both last year and now, so considering the end of the year, which is not typical, Considering the pressure that we have in delinquency in the beginning of the year, LuisaCred has an improved portfolio. The short-term indicator is better also compared to last year. The portfolio is growing over 20 billion in credit portfolio, high coverage, and again, net profit is very consistent, 75 million reals in this quarter, showing... a very consistent history of profitability and return for Luisa Credit. Now, Magalupe. With the consolidation of our Magalupe financial branch, we consolidate our regulatory structure. We do have a full regulatory structure to scale all our financial services according to our strategic pillars. Here we have four companies. All of them are regulated by the central bank. All of them are Here we are, capitalized and profitable. Louisa Craig is focusing on credit cards. Magalu, a financial branch, is focusing on the CDC portfolio, the consumer finance. Magalu paid IP, focused on digital accounts, acquiring and insurance. And our Magalu consortium also is growing with a record performance actually in this very profitable quarter. Well, we have started the migration of the CDC to the financial branch in October of last year with 10% of the CDC volume. We maintained that percentage over November, December, January, and February. And over March, we started to scale this percentage, reaching 30% at the end of March and going over 90% at the end of April and this month of May, we will be then concluding the rollout of the migration of retail CDC to the financial branch with all the benefits that we have already discussed and fiscally going from PIS and SOFIN going to IOF and more than that with all of the benefits regarding funding costs, diversification of funding, and also transparency in the results. Once again, all the interest rates and provisions, that is going to be on the financial statements of the financial branch consolidated by Magalun. And by the way, they are already available, the financial statements. They are available at the central bank regarding the last year. and they will be also available regarding the first quarter of this year. We already have a summary of that and the release of the performance of our financial branch, still with only 10% of its production, but it's already there. You will see that the financial branch is capitalized, 200 million RELs at the financial branch. We have reached 100 million in portfolio for March position, and this portfolio is quickly scaling, starting in April. in april we highlight that we have already raised 145 million as cdbs we started a pilot project for raising funds in march but we scaled in april and this funding is already accounting for 80 of the production of the CDC origination in this period. So our idea is to maintain a base of ratio that is very sound to finance around 20% of the CDC with our own capital and 80% with third-party capital as CDBs and also financial securities or our FDICs. But this has been a very flexible, competitive, and efficient instrument. And here we have a showing what is the client's view that we are paying 103.75% of the CDI for two years and 102.5% of the CDI for one year. This is a very flexible instrument which was very well accepted for individuals. And to conclude, very soon we will be launching the possibility of investment in our app. This is already available for our employees. We are testing it and very soon this is going to be available for our clients. In our digital account, we will have the possibility of investing in the investment area and then to pay up to 105% of the CDI in our app. Therefore, I now turn the floor back to Fred, and thank you very much.

Thank you, Beto.

To conclude our presentation and open for the Q&A, I would like to quickly talk about the new strategic cycle, as I did in the last call, and to say that we are facing a cycle of large potential to generate value to the company. And I'm sure that for the last years we are going to have a tailwind, not as fast as we wanted, but for the next five years we are going to have a reduction and a macro scenario in that sense that's going to be more favorable. In that cycle now we have the pillars that we brought to you, and I would like to highlight them. The object of these pillars is Yes, and three main objectives.

One is nominal core and extended core. That's what we have, durable goods and sports, finance, beauty, epoca, gaming and kaboom. So here in the cycle, we want to resume growth and resume growth, especially in the categories where we already have... or stand out in the market with inclusion of 1B, 3B, of course, and I'd like to emphasize a lot about the stores. A lot of these, the domain of the core business will come from resuming growth of physical stores. So here what we want to seek in electronics, a share of durable goods of 20% online and offline. We want to resume our market share gain process, expanding these number in coming cycles. We'll have a strong focus on that. Second objective of the ecosystem is to expand and to monetize the assets we've built in recent years, especially the financials and non-financial services, Magalog, Magalog Cloud and Magalog Pay. I think they have a lot of potential as assets that we've built over the last five years with a lot of potential for monetization and to help us increase our operational margins, our results. We've built this assets in the ecosystem cycle. Now we want to expand and monetize them. We talked about the growth in customer base at Magalog, at Magaloo Cloud, and Beto talked a lot about Magaloo Pay gaining share in our business. Magaloo Pay slightly not as much looking out, but with strong potential and increase of penetration, especially on the online, but not exclusively. There's still a lot of opportunity to distribute financial products at the stores, and we'll capture and resume opening physical stores, certainly. Finally, it will be, certainly, a strategic cycle with a lot of impact by the evolution of artificial intelligence. In all segments, especially in retail, this is very prevalent evolution, and we must keep in mind that there will be a very significant change in the way people make purchases, and with this agentic aspects, it will gain more and more penetration. To give you two little examples or details of this new cycle, I'd like to mention two things we've launched. Lou's WhatsApp that we launched at the end of last year, we have very good relevant metrics to share with you. It has already generated more than 9 million checks in the first month. Conversion remains three times higher than other channels. even the app. So the conversion at Lou's WhatsApp is three times higher than the app, even with all the scale we've gained in this period. It's not a small channel anymore. It's relevant for the company. Our NPS is 85. We broke the record in number of orders this quarter. So we've been evolving the experience more and more. Customer satisfaction is great. So we are really revolutionizing this. Obviously, we launched in December, there's still a lot to grow, but there's already a lot to celebrate. I'd like to highlight two things, and I wanted to bring you a little bit more color about Lu Suatak. It's been helping us, for example, in long-tail categories, where we're having more challenge growing over the last year. Even if we don't get into price wars in these categories, has been very helpful as a market category, 18%, home utilities 14%, small appliances 8%, beauty 6%, sports 5%. We brought this last year with information of the pre-sales. We sold almost 5,000 Chrome sticker albums about the World Cup. 1,800 cases of beer, 1,500 diapers, so that's special about this category, especially on the WhatsApp. The Greenox pot and pan sets. There's a lot of cases, success cases and situations in the business that promises to grow significantly in this next cycle. No competitor has anything like this in Brazil or in the world. This is a successful experience, and we haven't even made a major launch In terms of advertising, lose WhatsApp. Basically, we're doing it with a customer base which already uses its 20 million customers on WhatsApp, and we're sending them releases about this. We didn't run any major advertising campaign. And organically, it has been growing exponentially, very positively. And I think that, without a doubt, will be the main online growth. And as it grows, it will gain relevance. Now, I'd like to talk about galeria as well. That's an important part of this new cycle. It is to take the multi-channel aspect to the ecosystem as a whole, resuming our strength in physical retail. We have been filling a lot of room for growth in physical stores. Physical stores are still a large market, and it has been growing. There has been less of a competition. It's not so much of a fight. There's a huge opportunity, and we know how to operate this world more than anyone. So we're taking all of this experience not only to Magalu, but to the other companies in the group, like Epoca, Kabum, Netshoes. And I'd like to highlight some numbers about the gallery. The Galleria Magalu, it was a very innovative concept combining physical and digital, a reinvention of a department store. It's already the third largest store at the company, under four months old. It's even bigger than the Store 1 in Franca. That's our first store that's been there for almost 70 years. And we have a huge share in the city. We have some interesting numbers to discuss. More than 1,100 articles published in the main newspapers in the country about Galeria Magalu. More than 1,400,000, no, rather, 1,400 posts. and social media with 15 million views on social media, a lot organic of people who are going there, influencers covering the store with such a different concept, 15 million views of videos at Galleria Magalu. The YouTube theater is also a big hit, 124 events, 18,000 people in general audience. We had some cases, like personalizing the São Silvestre brand medals with 2,500 people, the launch of Iberê's book, 300 books sold. He has a lot of followers on YouTube, and we've been having lives, Magalu lives, like payday lives, and

based on the store.

So that helps the online as well, combining physical and digital. So these are examples of important pillars in this new cycle that's AV for e-commerce. And the other is the multi-channel aspect, to bring multi-channels to the ecosystem. These are just a couple of examples. The others are the expansion and monetization of our ecosystem, growing Magalu and Magalog. So it's a cycle that tends to be very positive. I also think, to conclude, I'd like to highlight that we are now facing a very favorable quarter, that's the World Cup quarter, that really helps, not only in the more traditional Magalu category, that's electronics, we always had excellent performance in this category in World Cup years, both in physical and online retail, but some of the group's companies, like Netshoes, for example, that also benefit from this world, this universe, selling soccer jerseys and shoes, boots, everything focused on the World Cup. So we have a quarter that I consider to be very positive, especially in that line where we've been more conservative, that's the GMV growth. Physical stores have already accelerated, and the online tends to have a more favorable quarter than the past few quarters. Fabrício can talk a little bit more about that later, but we believe this quarter, in terms of GMV, will be a turning point. So now I open to your questions.

We will now start the Q&A session. To ask a question, click on the Q&A icon on the bottom of your screen. Write your name, your company, and the name of your company upon request. You will see a pop-up to activate your microphone, and then you follow with the question. Our first question is from BTG, Luis Guanais. Luis, please. The floor is yours. Good morning, Vanessa, Fred, and Beto. I have two questions on my side. You well said it on the presentation about the operating gains of efficiency in the first quarter. I would like to go over if you have room for operating efficiency and the fulfillment and the monetization of the system that you mentioned in the past. And the second question, I was talking about the financial branch. I think we have seen credit indicators, and I know that they are healthy, but in a macro scenario, that is still challenging, I would like to understand how we can look at it if we, in the future, if we look ahead, how do you see the possibility of credit assignment and also for new products, as you mentioned? Good morning, Luis. Thank you for your question. Now, about your questions, in regards to the first one, we have a continuous work for, of aiming at operating efficiencies. This year, specifically, we are looking for new opportunities to increase efficiency, to reduce costs, as we have been well-succeeded in this agenda in the past few years, and we still see opportunities to improve, and to improve the expenses control and all of the , logistics, fulfillment, efficiency, and marketing expenses, and also really productivity, sales per employee. We see room in all of that, and we are working on it. We have exclusive and dedicated teams for that, because this is a large project this year so that it can keep on tapping into gains. And as we have shown in the first quarter, we are able to do it. Of course, there comes a time when we need to build bring in operating leverage of the growth of the GMV. And I believe that I am more optimistic for the next quarters that we will be able to continue growing in the stores even more in the first quarter. And with a number of initiatives that we have here in the online world, we will go back to growing as well. Obviously, in this quarter, we will have the support of the World Cup. But in the next quarters, again, already, harvesting the fruits of these initiatives that we are already doing. About Magalu Pay, Magalu Log, and of course here, opportunities are in improving margins. All of these services have higher contribution margins, not only efficiency, but it's more, you know, contributing with higher growth in the consolidated, greater contribution in the consolidated area, and we have been those initiatives that are successful, and we will try to accelerate them for the next quarter. Now, about the second question, I will turn to Yari, and he will answer.

Thank you, Fred.

Also, thank you, Luis, for the question. Yes, you are right. We share here our level of attention, and we are watchful because the investment level, according to the last CNC survey, are high, but increasing three percentage points year-on-year, reaching all-time high. We also see interest rates of 14.5%, which also affects the payment capacity for individuals, and the unemployment rate are at very low levels of 5.5%. These are March numbers. We will continue adopting a conservative policy approach but i do not see why we should change our risk appetite we'll keep on growing with quality and in a sustainable fashion i would like to draw your attention to our your our opportunity to grow in our base when we have penetration levels that are just as low as the ones that we have and here we are talking about our cdc portfolio in terms of 10% of sales happening in the physical channels and less than 2% of sales in the digital channels. This allows us to use our database and look at the micro and to be selective and even then to be able to grow with quality in our better clients, the recurring clients, the ones that like Magalu, that prioritize payments in our channels. in spite of the macro-challenges scenario. And I can also say that our vintages, the recent vintages, do have that behavior. And as you stressed in your question, they have been in line with our expectations, allowing us to be confident on the strategy we chose to follow. Excellent. Thank you very much, Fred and New York.

Thank you.

Thank you for your questions, Luis. The next question is from Alexandre Namiaka from Morgan Stanley. Alexandre, please. Good morning, everyone. Thank you very much for taking our question. I have two on our side. First, Fred, you mentioned some initiatives to reaccelerate the e-commerce growth even after the World Cup event. and the second quarter, so I would like to have some more color on those initiatives and what we can think about the development of this growth starting on the third quarter and after that. And my second question is regarding loose WhatsApp. I found very interesting the metrics that you shared, but I would like to have more color on the percentage of the purchase journey in the online from Lou's WhatsApp, and if you can also compare the level of conversion rate when consumers use Lou's WhatsApp compared to the users that do not use it, that would be interesting. Thank you. Well, thank you very much for your question, Alex. Well, the conversion rate, and I will start by Lou's WhatsApp, when that's compared to other channels, it's three times higher. That's a great conversion rate because in the purchasing journey, there is a context identification because Lou talks to clients, asks questions about context, and when it brings to you the offers, you know, the purchasing suggestions, it is much more assertive than the client and what's actually looking for product with a keyword. So this is the idea of the agentic e-commerce that is going to be very relevant from now on. Well, today we have a little WhatsApp journey, which is exclusive. So the client checks in WhatsApp and buys it. They don't start on the app, so they are in the app and they're already buying. And there's a lot of recurrence. A person... purchased once and will purchase again because they like it. NTF of 85 there is very high. But anyway, we intend to bring part of this WhatsApp experience to our app as well. So what we are doing for the online, and this was your first question, is to bring this agentic experience to the companies' own channel, which is our app. So everything that we have been able to develop on WhatsApp, we will be bringing to our app, all these capabilities. So we are going to improve the conversion of the app itself, which is very relevant. We are also repositioning the app and focusing on the categories that we have, the right to win, and this is a project that we are calling Brand Place, and I'm not going to go into the details here. I'd rather show you when the experience is ready, but we are going to have a very positive experience for the categories in which we are strong and have brand recognition. Consumers do not trust buying products in the competitor's website because it's not their calling. We want to have a much better and superior experience here, and we call it a brand-based project. Finally, we have communicated that we intend to expand our online B2B partnerships. We have launched AliExpress two years ago. We have all B2B partners, the bank, and Itaú, new bank. Also, we have sales and external marketplaces that are very successful, and we are talking to other platforms to list our 1P in these platforms, and we believe that this will allow us a gain in the short term, already calculating and considering everything that comes from the outside that could cannibalize our inside sales. But we have run robust and deep analysis, and we see that we are going to have great opportunities in the short term to have this growth by listening in these platforms with a mixed pricing, intelligence also, catalog, But anyway, this is a strategy to recover growth, to reposition our B2C with all of these initiatives.

Thank you. Thank you for the questions, Alexandre. The next question, Pedro Caravina from XD. Pedro, please, you may go ahead. Good morning, Vanessa, Beto. So I think I have two points, please, I'd like to address. First, the financial company at Magalupe, I think you've already talked about during the presentation about the changes in P&L as you roll out all of the origination into Magalupe with the CDC. But I'd like you to please explain a little bit more of what you expect in terms of direct P&L impact with the change once origination comes entirely 100% from the new financial company. And the expectation, is it right? Should we already see that relevantly in the second quarter? And then starting in the third quarter, it's 100%. Or is that going to be some time for us to see improvement? For example, in the change in the taxes included for sale, if there's any change in the revenue or what's cost of revenue, if you could explain that a little bit more. And also, if you can update us about the strategic cycle

I think there are two KPIs that stand out, right?

The two pillars that stand out. The first I'd like you to comment about is the partner platforms, if you had any progress in that. We saw partnerships with Amazon and MercadoLibre. You also have a partnership being developed. So I'd like to see what you see in that. to hear what you see in that and what can be done going forward. And on Magalupe, I think I already included on my first question, but the evolution of that is obvious. The metrics that you could share.

Thank you, Pedro, for your question.

I'll start talking about the P&L lines that may be impacted in this transition to the finance company and a little bit of what we are seeking in terms of KPIs for Magalupe. Also, maybe starting with the KPIs, we are seeking As I had already mentioned in previous calls, doing a base ground work, improving the capture of our information in the ecosystem overall, so that we can build our proprietary credit models. And with that, increase penetration over time of CDC, both in physical channels and digital channels. And I think that is going to be the North Star that we're going to pursue, as well as transforming our relationship with customers. I think today we have a relationship that is very transactional, and we are trying... to make it so that we can look at the customer more as in the center of all of their relationships in the ecosystem. So turn that into an actual relationship movement. All of the indicators that may contribute to cross-selling, up-selling, recurrence, we are going to look very closely in, as well as obviously quality indicators of that interaction. Moving to your first question about

the economics, it's important to note that you have the tax benefits that are very relevant.

Initially, they were the trigger for us to decide on this transition. We have savings of around 16% in the taxes. You had fiscal things, ICMS of merchandise and retail, and that would add up to 26 to 28% and now we're gonna have something below 10% combining IOS, BIS and COFINS taxes in this financial company. So this is an important driver for the improvement in profitability over time. And we'll start to capture that on day zero as the stores migrate. And we also have an improvement in the funding or the cost of funding. As we showed in the presentation, after a testing period in March, we launched our CDB in April, and we get $250 million already raised at a cost lower than 104% of the CDI. So that underscores the strength of the market when the investors, but also the rating, that we have and put CSFI at an investment rate despite its recent history. In addition, there's also the effects of the model improvements that I think will be seen more in the long run. But on the other hand, We have a negative effect of the transition at the first moment, which are the increase in provision for loan loss, especially considering the drop in the retail due to the requirement of Resolution 4966 that's expected, that was more conservative than what was historically done on retail, as well as the gradual recognition of the revenue accruals. So I would say we can capture benefits on the bottom line that will reach double digits once this portfolio is fully under this regimen, but we will have to go through a transition period that's going to last for another two, three quarters, and this regimen will probably be reached within the next nine to 12 months. Excellent. And about the partnerships, I'd like to add something in retail. This, adding to what Jörg said, I think is an important fact, is that considering payment means and cash, since now that we started this migration, we start to receive on retail upon purchase, and for retail, it's an important point. We are more asset-light with this migration. So, we sell on pigs, we receive up front, Everything on CDC is also received up front and Louisa cards and third-party cards. We can discount at any moment. So that gives us lighter working capital and retail, more cash generation. This transition has started that balance of accounts of receivables that I mentioned of $1.8 billion. To give you an idea, big numbers, it starts to go down and should get to the end of the year at around 500 million and by next year it should be close to zero. So we're going to receive that portfolio of accounts receivables and we'll reverse that provision for doubtful accounts that we bought in the past of more than 500 million. So this is going to happen in retail and it's going to grow in the finance company and then we're going to make this more clear in the coming quarters in the financial statements as well. We will start to report the credit portfolio in the finance company and the funding of the finance company, for example, in the capture of CDB and in a very clear way in our balance sheet. I'm sorry, the audio was breaking up. We'll make it very clear. So the equity effects of the credit portfolio and the assets, funding and liabilities, the credit portfolio because it generates so much interest per month and funding and CDB and financial securities that was going to cost 1% a month, that's going to be very clear in our statements. And that's also going to be, we're going to make this very clear. As Jörg mentioned, the finance company interests are adequate for RADA over time during the duration of the contract. On retail, we have a similar mechanics, but it's adjusted to present value. And we bring the revenue on term to the present value. And there's another balance, another provision in our balance sheet of 400, 500 million. That's the adjustment to present value that will also be reverted as this portfolio starts to be received. So this difference in the accounting of interest in the finance company versus the present value in retail will be evidentiated and the impact that will have is going to be small. And accounting changes are minor. For example, the finance company, there's a provision for interest up to 90 days. In retail, interest are provisioned for differently. But these are relatively small differences that we will evidentiate for the consolidated companies especially now starting in the next quarter, and the financial company will have more color. And just to add, the member that I mentioned, Pedro, already considers the difference in the social contribution at the bottom line that is bigger in the finance company, but even so, in this regimen, with everything in place, we will have a potential capture of low double digits or high single digits and the increase of profitability. About your questions of external partner sales, we have conversations that are ongoing. We are having these conversations for some time. Some are more evolved than others. But I think that soon we will be able to bring an update about that. We'll make some announcements soon.

Thank you, Pedro, for your questions.

Next question, Gabriela from Goldman Sachs. Gabriela, please, you may go ahead. Good morning. Thank you for taking my questions. I'd like to explore a little bit of the 1P dynamics on the online that slowed down this quarter. You mentioned the impact of the memory chips and price pass-throughs, but I'd like to understand how much of this job you attribute to price pass-throughs versus what's a more competitive online market and how you're seeing the 1P trajectory looking at the second quarter, considering that the World Cup should be an important driver for this category that was impacted by the chips. But the second question is to explore a little bit of the physical store performance that remain above market. So if you can give us more color of how you see the competitive environment in physical stores. If you feel you are being more aggressive compared to the rest of the market and on the same line, How much of your share do you attribute to the evolution of CDC? Thank you. Good morning, Gabriela. This is Fabricio. Thank you for the question. I'll ask you about online, and then I'll talk about stores. So, online and 1B, we had a difficult first quarter. The category that was the biggest offender was computer devices that was affected by memory, and there was also air conditioners. That's a seasonal category that's climate dependent. Last year was hotter than this year, so it did not perform that well. So there is some aspects of market aggressiveness, but we have these categories affected by pricing, by memory.

For this quarter now, we feel that we are evolving.

The month of May, started much better, and we have synergies between 1P and 3P and the core business that's been quite well explored. We're being able to work the core categories very well on the two channels. We are being more aggressive in some areas that have very good results. We have the media from the top of funnel. The work's been very well done. And this quarter, there's also the World Cup. We came in very well prepared. We received some inventory in the first quarter precisely to avoid that aspect of the memory chips and TVs. We're well-positioned, well-priced. Our share here, we are gaining share on TV sets. We're doing very well in line with our plan, and it should wrap up even more during the month of May. The national team will be released in the 18th, and then the press will only talk about the World Cup, so sales should accelerate further. Our expectation for this quarter online is to try and at least match that lineup and then resume growth. So the idea is to improve performance compared to the first quarter. In physical stores, we are very resilient. It's the third consecutive year where we're presenting growth over growth in all regions. We are gaining a lot of share. And we will have, we'll continue

to maintain growth in this quarter.

As Fred said, a lot due to our consistency in the operations. It's a very consistent, efficient operation. We're not working on one channel to the detriment of the other. We want to resume growth in the online without offending physical stores, and that's how we're doing it. We're very optimistic. And the World Cup at physical stores tend to be very strong, and we have our World Cup campaign As Fred mentioned, we have draws of 600 rooms per day and 100 per day. That helps a lot in the conversion of physical stores. And we expect to maintain this growth in physical stores as well. That's it. Adding about CDC at the physical stores, I would say that one or 1.5 of same-store sales come from CDC share only. So it's not a major factor for store growth. We're growing as stores because we are actually gaining market share. And we are with very positive operations with all the conditions in place. And as I said, the second quarter has already started better than the first in physical stores.

Excellent.

Thank you.

Thank you for your questions, Gabriela. question from from Bank of America. Wellington, please.

The floor is yours.

Hello. Good morning, everyone. Good morning, Vanessa, Fred, Beto, and the whole team. Thank you for taking our questions, and I have a few. Now, still on the online topic, considering you went over 1P, now let's focus on 3P. I would like to understand how you see the growth dynamic looking ahead. We've seen a huge competition. I would like to understand your position. You did mention that you are now increasing the promotional actions with coupons. I would like to know if you are going to intensify those. And you also took a commission of news sellers by the half, so I would like to know if You were thinking about similar initiatives for the future, and on the fulfillment, you mentioned that penetration increased five percentage points. I would like to understand the breakdown here. What was a greater adoption by the sellers to your fulfillment, and what is related to lower sales of categories and sellers that are not in your fulfillment? Thank you. Thank you for your question, Wellington. This is Fabricio. I will address the 3P part of the question, and then we'll talk about fulfillment. About 3P's performance, as I said, we have the core world, and I think we are working very well aligned with the 1P industry, so we are bringing in the large sellers back to our base. We are working on freight with them. We have seen a growth in this month, and I'm confident on this work. And on the long tail, high consumption, as we say it, we are working to increase our seller space. We realize that the categories are growing on a monthly base. We should go back to growing next month, as we started to grow last month. We are working on assortment and on our seller space. This reflects on sales. We have been doing strong work on the categories such as home, garage, sports, and this is a consistent work. And we don't have a silver bullet, of course, but this is an interesting work, and especially on special dates here, we already see those reflected on our sales, so the objective is to grow and increase volume. Now, as we go to our partner platforms, we expect to have a higher growth. So in terms of performance for 3P, this is what we have. And also on 1P online, I'll turn to Garrido so that he can talk about fulfillment. Thank you, Fabricio. And hello, Wellington. Well, just to compliment Fabricio's answer, you have seen on the release, that we said that in other categories, as Fred defined the right to win, we are prioritizing strategic sellers, categories that fit the brand-to-place, that add to our core. You see that we are talking to categories related to home, Tupperware, beauty, and so we have Dyson, iArno with appliances, also Tramontina. As another seller, we are complementing the assortment. Tarantino is a one-piece supplier for a long time, so now they will be also there as VP. Now we signed with eHappy with toys. They should start in June. So we are increasing the number of sellers. As the incentive is concerned, as you mentioned, we want to – provide incentives as we keep them, and the sellers adopt the growth levers, which are full automated promotions, ads, because then we can have a higher margin. That's what we are focusing on. We see that in March, for instance, the GMV of new sellers was higher when compared to last year in 8%, and the sellers that we maintain in the program also do. So we are talking about optimizing GMV quality, not necessarily the volume of GMV, because the lower tickets are the categories that are not as strategic. In a way, we are letting those go, but we are focusing in growing in this concept. And one of the main levers is full. And this is the other question that I will explain to you. Full is not only growing in five percentage points, last year in 29%. Also, it's growing in absolute figures, so GMB of sellers selling by full growth in March, which is a growth of 3.5% year-on-year compared to last year. This is a growth that is gradual, and it is enabled as we enable new areas of the distribution centers and also new strategic sellers, and we'll keep on growing and accelerating full. We are with inventory levels higher than last year, maintaining a higher conversion than others, and privileging these categories, especially home and groceries. And in addition to food, we have another logistics node that we started last year that is same-day delivery. This is a ship-from-store that went from 0% to 2% of the delivery. So when we add full delivery, to VAPT, we have 32% of deliveries and sales. Therefore, a growth of 7 percentage points in these gray channels. So we do have room to grow there, and we are talking about prioritizing full and VAPT, and also adds, also allows us to complement the margins and to go to and get to this growth in a sustainable fashion. So adding to what Fabricio and Garrido said, I have a few comments here. We made a decision in the beginning of the year and we have made this change over the first quarter of having an integration of 3P and 1P areas in the organization structure. So this is the first time in a long time that these channels have grown separately in terms of the main leadership. And starting on March of this year, 1B and 3B are under Fabricio's management, who also manages brick-and-mortar stores. And so we are working on synergies among the areas, planning, promotional, marketing. That's also under Fabricio now, and marketing of Magalu. So I'm very optimistic. They seem to be secondary topics, but bringing together marketing 3P and 1P under the same management will allow us to get more synergy. And I am very optimistic to see all these channels working in a synergic fashion and also allowing us to grow as a whole. This is a game that we will be having, and that's why Fabrício is talking more about 3P now. So he is running that in Magaluchano, just as Julio and Trajano work on Cabone and Gra on Natchew, Sabrina on cosmetics. All of them have 3P, 1P, and now the stores as well, with a great synergy of the teams and the planning areas. I do have a positive vision. And on comparison basis, which is also relevant, the war on 3P started in June of last year when we had the news of not charging freight, accelerating investment subsidies, and we started seeing it in July of last year when 3P started accelerating, and in the second half of the year we already see a base of comparison that is much easier, so to speak. It's never easy, but it's easier than what we had in the first quarter and in the fourth and third quarters of last year. We believe that, as Fabricio said, that we have everything to have a turnaround in 3B, as Fabricio mentioned. Perfect. Thank you very much. Thank you for your questions, Wellington. Next question is from from Itaú BBA. Good morning, Fred. And thank you for taking our question. We have one here. The same store sales of your physical stores draw our attention. In this quarter, when we look at the comparison base of the first quarter of 2026, taking into consideration the last two years, you had a comparison base of same-store sales of 16%, and now in the second quarter, the comparison base goes up to 19%. Having said that, is it expected to see a deceleration of same-store sales for physical stores in the same-store sales? Thank you.

Good morning.

Thank you for your question. This is Fabricio. Good question. We have had two good years in physical stores, and everybody asks if we can still keep on growing. We are gaining share year on year in the last three years. I can tell you that we still see a great opportunity to have good performance in physical stores. The second quarter, I'm sure that we will be growing. And we also have World Cup here. We are very well prepared. And the store sales has a good performance during this period of the year. So we should have a good growth in the next quarter. And also in the upcoming ones, our goal is to maintain fiscal source growth, not only now with the World Cup, but also until the end of the year, gaining share once again. So we should be maintaining that performance over the year. I don't see why we should stop growing the stores. And it has already started strong, yes. Thank you, Fabricio.

Thank you for the question, Rogatis.

Next question from Nicholas J.P. Morgan. Nicholas, if you may go ahead. Good morning. Thank you, Vanessa, Fred, Roberto, Tina. Thank you for the call and taking our question. I had one as well on the store side. But in terms of expansion, we expect that this should drop over the coming quarters. Physical stores is the channel that's performing better. So I'd like to understand a few things. First, what's your mindset to resume store opening in the same pace or maybe faster? And the second, Fred, I think you mentioned about last call, last quarter's call, some pilot programs that you were going to test over these months. I would like to know if you have any, I mean, pilots based on the Galleria model, do you have any conclusion about those pilot programs? Nicolas, good morning. This is Fabricio. Thank you for the question. I'll answer those as well. About opening stores, we should start opening stores again, resume opening stores. We're going to open now In June, in Ceilândia, that's the largest store in the federal district, and in the second half, we have mapped some stores to open, always complementing the regions where we're already present. For example, the south of São Paulo, stores in Mato Grosso, federal districts. We will not disclose how many stores are going to be open. We don't provide a guidance, but it should be resumed in the second half. At the same time, we shall run two pilots in two stores with the Galeria model. One will transform, probably transform into a Galleria as well. It's a large store that we have with good revenue. And in another store, we're going to run a pilot like the Marginal Tietê store, where we have all brands, but without the Galleria Magalu name. We're going to have open box products and outlet, maybe new products as well. So we're going to run these two pilots in these two stores. I believe until the end of the year, we should... reopen these stores and modeling them. And once they work, we have a lot of stores, as we mentioned, with more than 1,500 square meters that can be transformed into the Galleria Magalu model or multi-brand Magalu stores with all of our stores in the ecosystem. So these are the ideas for the stores. Excellent. Thank you, Fabricio. Thank you, Nicolas, for your question. We now close the questions and answers session. I would like to turn the floor to Frederico Trajano for his closing remarks. Please, Fred, you may go ahead. I would like to thank you all for attending our earnings conference call and continue to underscore our good expectations for the second quarter. Thank you. Magalu's conference call is over. The investor relations team remains available to answer any questions you may have. Thank you all for attending. Have a great day.