Why Itaú can’t shut up about Locaweb

Itaú BBA’s analysts met with Locaweb’s CEO and CFO — and apparently, the conversation flowed.

“It was just an hour of conversation, but it was worth a month,” wrote analysts Thiago Kapulskis and Christian Faria. “We could have saved the surprise for our coverage restart report, but the conversation was so interesting that we couldn’t wait and decided to post a note now.”

Analysts noted that after a series of M&As, Locaweb built an end-to-end solution that touches the entire customer workflow. — from the generation of leads (the top of the funnel) to payment and delivery.

This complete offer of solutions allowed Locaweb to leave a lifetime value/CAC from 4x in 2012 (when it only had the Tray ecommerce platform) to over 12x today.

(This metric measures how much revenue a customer drops over the course of their relationship with the company compared to the cost the company incurred to acquire the customer.)

“Locaweb’s multiple solutions also increase its addressable market, making room for the company to deliver solid growth,” say the analysts. “This strategy also led to a churn very low, a key profitability metric for any software company.”

To give you an idea: 95% of Locaweb’s cancellations are because the companies went bankrupt.

Itaú also praised Locaweb’s sales model, which they compared to PagSeguro’s.

“Software companies selling to SMBs need to control costs very closely, otherwise their profitability is compromised,” the analysts wrote. “In the case of Locaweb, 95% of sales are closed through digital channels, and in a very low-touch. The product is highly standardized, which means customers deploy the platform very quickly and on their own.”

Itaú also noticed that, despite having a complete solution, Locaweb is very open to third parties, having integration with more than 700 APIs.

“That mindset allows her to do something very similar to what Satya Nadella has been doing at Microsoft since 2014, and that was a key turning point behind the company’s success. big tech.”

The bank intends to resume coverage of the paper soon.

The share closed up 1.4% to R$10.88, with the company worth R$6.4 billion on B3.

Pedro Arbex

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