How did Lavoro's revenue and expenses shift in Q1 2025 compared to previous quarters?

Lavoro's revenue and expenses in Q1 2025 exhibited significant challenges compared to previous quarters, reflecting broader market pressures and internal strategic adjustments.

1. Revenue Decline: Lavoro's revenue decreased by 13% year-over-year to R$2.05 billion in Q1 2025. This decline was primarily driven by lingering effects of input price deflationary headwinds in Brazil Ag Retail and currency depreciation, despite strong growth in the Crop Care segment.
2. Expense Increase: The net loss widened by 274% from Q1 2024, reaching R$248.5 million in Q1 2025. This increase was largely due to changes in deferred tax assets and higher finance costs, which more than offset gross profit improvement.
3. Gross Margin Recovery: Despite the revenue decline, Lavoro saw a gradual gross margin recovery in Brazil Ag Retail, which expanded by 350 basis points year-over-year. This indicates a strategic shift towards profitability in core segments despite external headwinds.
4. Expense Management: The adjusted EBITDA decreased by 5% to R$54.4 million in Q1 2025. This decline reflects the need for Lavoro to enhance cost management and operational efficiency to mitigate revenue-related challenges.

In summary, Lavoro faced a tough quarter with revenue declining and expenses increasing, primarily due to market conditions and financing challenges. However, the company showed signs of recovery in certain segments and improved gross margins, suggesting potential resilience and strategic adaptation.