Q1 2020 Earnings Call
[music].
These event is being <unk>, Oh, Gee sapacitabine at least in <unk>.
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Those following the presentation via webcast may pose their questions on boxing website before proceeding let me make sure that 84 warranty state amazing included in the presentation or <unk>. This conference call our base, they don't correctly available information and Black Sea Gurus alright.
<unk> expectations and or Jackson's about that.
While boxing orders believes that there assumptions expectations and projections are was on that but we feel watsco rightfully available information you are cautioned not to play said do reliance on these forward looking statements actual results may differ materially from those include they can actually go this presentation.
Right I guess, they don't this conference call.
Variety of reasons, including those described <unk> forward looking statements like risk factor section was off about see Gordon's registration statements.
Form 20-F, and all of their feelings with the Securities Exchange Commission, which are available on boxing what does Investor Relations website. Finally, I would like to remind you that during the conference call. The company May discuss non-GAAP measures for Marty you take out the forward going Oh, Yeah, Matt.
And the reconciliation off these non-GAAP financial measures to the most directly comparable GAAP measures are presented.
Last page off these webcast presentation now I turn the call for us over to Mr. Ricardo do try CEO Mr. <unk> you may begin your presentation.
Hello, everyone.
Thanks for joining on first quarter results conference call.
Tonight.
Here with me Eduardo Carter, our Chief Financial Officer.
Because all our head of Investor Relations.
First of all I Hope you know families are why wouldn't say.
I also like to say, thank you tool by disagree with your bank team, who have take their focus is fortunate or businesses, our customers and partners as well you all they're doing the best weeks, while almost 100% awards have been working from home. Thank you very much body Super Buckley Bank team.
Oh, starting with an overview of our results then opines towards the Dorado carnivores, CFO and Indiana, well give your perspective about compete 19 in some preliminary data about Q2.
Going to light sweet, we compare bags performance with or at least abuse.
Bags isn't a strong momentum and he is the most resilient theme it's company in Brazil.
Spiky health crisis in higher subsidies offered to our clients through dispute.
Eggs was able to combine growth with profitability.
Comparing Q1 20 with Q4 19.
Oh revenues grew 1% despite the strong seasonality Q4, why or views revenues decreased 8% and 5%.
In year over year.
Our net income grew 13%.
Why or fuse net income decreased 13% in 65%.
These results reinforce these twain's afford broadly consistent.
The resilience of road business model into calibre for professionals in their execution capability.
On slide four.
We highlight the great achievements of the quarter.
Even with schools in 19 impact in Brazil, and in our businesses.
As we have seen the best years, we approached one else one more quarter with solid the results we delivered organic growth in top line.
Both revenues and TPV.
Less than 3% afford if he called me full suite acquirers.
We also delivered use as well.
Both motions and consumers and net income growth.
On the left side of the slides or total revenues and income reached close to 1.6 billion <unk>.
Growing 27% year over year, and 1% quarter over quarter, despite the stronger seasonally in Q4.
Well, we're TPV, reaching 31.7 billion revised up.
30%.
The year.
We were reaching 5.5 million active mortgages up 24% year over year.
Moving to Peg a bank our no acquired TPV to do you still a cult in wallet reach at 8.7 beat already ice growing 190% year over year.
Well, we're active users, but you ended the quarter were 3.7 million.
Meaning we added 1 million new users only discordant.
Now moving towards our nation's on the right side, our take rate ended the quarter at 3.31%.
19 basis points year over year, which is the result of adding healthy TPV no ecosystem.
Our adjusted revenue and income, reaching 1.5 veto rights growing.
33% year over year in or non-GAAP net income in that 367 million rise up 13% year over year.
Now I'll pass the awards Eduardo cargo.
Our CFO, who by the way with his free whose Walmart experience has been doing amazing job and cost control and cash preservation as they navigate through these unique time together.
Thank you for war could widen.
Thank you pick out the when Hello, everyone.
The next slide we show our total revenue and income that's reached almost 1.6 billion railways up 27% year over year. These means an acceleration of our total revenue in income growth of 260 basis points.
Which grew 24% Frontera fourth quarter off 2018 to fourth quarter 2019, proving that we are on the right track as far as investments impact bank.
On the top right.
We show that total net revenue and income growth compared to Q4 up almost 1%.
Let me just pause here for a second.
He is a remarkable achievement. Despite the Covidien 19, pandemic and a strong seasonality Q4 banks was able to bro photo revenue in the income quarter over quarter.
Moving to the sharp below.
Our operational revenue and Nico that reached 1.5 billion rabbis grew 33% year over year.
Talking about net income bags delivered growth year over year.
Our non-GAAP net income in the fourth quarter reached 367 million recognize an increase of 42 medium rare ice and up 13% year over year. Despite the Covia 19 pandemic and investments in fact bank.
Moving to slide six we present here our operating figures.
Our TPV reached 31.7 billion rice growing 7.2 billion ray ice or 30% when compared to the first quarter of last year.
As we show in the next Graf our TPV grew high Thirtys in January and February and low fortys into first half of March better than our expectations for the year shared with you during our fourth quarter 2019 your earnings call.
But decelerating sharply in the second half of March.
These are cure, giving social decency measures implemented several Brazilian cities, resulting in partial shutdown as a consequence else depend dynamic.
We estimate an approximate means of 2 billion rising TPV for the quarter due to the core did 90 outbreak, which means they miss off approximately 40 million Ray ice in the bottom line for the fourth quarter.
On the short below.
We're not to take rate, which is the blended take rates Nat from transaction costs, such as eat the change processing and card scheme fees reached three point, 31%.
19 basis points year on year, and 34 basis points quarter over quarter increase. These increase is explained by a better mix of credit versus Babbitt higher contribution of bagged bank revenues and the resilience of Mdrs in their long tail.
A ball transaction costs, we had a positive impacting scheme fee rebates off nine bips in Q1 active merchants reached almost 5.5 me them growing 1.1 million year over year and 227000 sequentially also we.
More than to say that they've been dynamic impacted from 25 to 30000 net adds into second half of March.
Moving to slide number seven we highlight our strong balance sheets in cash generation despite depend dynamic.
On the top left chart, we present, our solid balance sheet ending the quarter with 8.1 billion rising cash plus our naps position between accounts receivable from card issuers last payables to merchants.
Moving to the top right. We ended the quarter with 3.5 billion rising cash growing more than 1 billion Ray eyes, when compared to one year ago.
This is explained by higher cash generation higher bags, <unk> clients deposits as well as higher receivables discounting in volume and duration risk.
Resulting in 22 million Ray eyes off additional interest expenses when compared to the fourth quarter of 2019 from a cash management perspective, preserving capital and liquidity are the top priorities for now.
On the short below we present, our non-GAAP total costs and expenses that increased points two percentage points year over year, and the fourth quarter that 3.4% over thought LTV and down <unk> 0.7 percentage points when compared to the previous.
Water.
Related to know gap add to me expenses over thought of TPV reached <unk>, 0.2% down <unk> 0.1 percentage points, when compared to one year ago and stable quarter over quarter.
Important to highlight that approximately 70% of our cost as an expense is our variable.
Meaning that the company has the flexibility to do the necessary expense adjustments to delever healthy margins and solid bottom line growth.
She said April we are revisiting our expenses structure, which should allow the company to maintain the same level off net income margins in Q2 2020 absurd in Q1 2020, now I'd like to turn the conference overthrow he got Lu who will talk about engagement Matt.
Tricks and new products stay all healthy and safe. Thank you.
Thanks into our two.
On slide eight.
We present or highlights in terms of online distribution, Google searches you know at way too.
Starting with Google, So just where do you still banks.
Bank continues to lead and gaining share will reach views with 72% of the total shares or do you still banks have consequences for a multi strategy and product to roll out.
On average.
3% before appliance use at least three product so probably equal system and thank you bank at is open 11 times a week.
Our Buckley bank debt was rated at 4.8, Istars unite ways and 4.5 starts and ends right.
The most we viewed in best weighted at a more do you still banks and payment views also a consequence of for a best in class problems development and user experience oriented strategy.
Finally, with you all well during the quarter broke new audience records in Brazil, reaching.
1.8 billion access.
Andy with 113 million unique multiple users in reaching 94% of the Brazilian tonnage orders just behind Google and Facebook.
On slide nine.
We show some of the most relevant engagement trends in our ecosystem.
We believe engagement easy Hellmanns metric to fall at this stage wants to see to help the company to increase the switching cost of our clients, the stickiness and loyalty, which will enable future monetization revenue diversification.
On the top of the short we reach at 8.7 be nobody eyes, you know acquired GPV toward destock called including prepaid card top ups Kashkari spending credit cards mobile top ups worked for instance, with third parties cashing to Peg bank sleep do payments technical actually.
P to P. QR code in order Super ACTRIMS, ECTRIMS growing 190% year over year.
Chuck below we see the number of new payment transactions that increased 25% quarter over quarter.
Our payroll portability feature he's also ramping up going almost 37% sequentially.
Moving to alternative payment methods or QR code transactions grew more 30% quarter over quarter and think of payments increased 53% year over year, both boosted by coffee 19.
Finally on pegs skeptical.
We continue to offer deposits only to our best motions and you more according to their account history TPV behavior in payment frequency.
Since the beginning of the operations in October 2018, we have done 150000 lending contracts.
We ended the quarter with a total credit portfolio of 338.
Additionally, we ended the quarter with 156 million we ice.
Credit card portfolio.
Credit card strategies also tied into two our best motions.
So far we continue to be careful with questions. Wordsmith. However, the preliminary results are encouraging as we still face control lives of Npls.
We keep our operations on the control, helping all motions particular, Jim Corbett 19 crises and following the central banks instructions. We are offering 90 day Grace period on a case by case basis.
Finally, it is important to highlight the during the first and second quarter of 2020 deferral rates are not showing significant determinations on top of that to manage our credit risk exposure in the meat off a global but then.
We have significantly reduce it catches worsened for now.
Credits as important to create higher engagement with our motion base and we continue to generate additional revenues for the company future.
On slide 10, we highlight or will that type of product already leaving the best two years being Tac and independent allow us to think exclusively on our claims for initial needs and consequently combined growth is profitability.
Since May 2018, we have delivered almost 40, new products, including harder softer banking and services knows who Pat.
In May we launch it or service offers and discounts and that feature wearable clients can fly in that through Geo location close. This 18 games and also motions in these categories such as restaurants pharmacies gases stations in general services to have discounts or cashback.
When they purchase QR codes or by using older cards.
Additionally, we also launched two new cities.
115, and 120% over CDIY.
Thank you bank Cds with him and durations, 30% above this or additional savings account is part of our strategy to expand our investment probably itself as well to acquire new packaging claims.
Despite the current health crisis, we decided to keep investing product development and keep committed with our with method agenda.
We should continue to deploy new product and services on payments banking and softer phones or equal system and its development are key to our core strategy.
Our next slides, we present some of the new products or initiatives launching in the quarter.
We officially started or partnership with show.
Of the largest gas station companies in Brazil.
Additionally, we announced the partnership with the most relevant the drugs.
And we do pharmacies offering incentives discounts in cash Abaxis Birches dawn will likely be kashkari.
This partnership we also reinforce Fagan bank card usage.
Given the health crisis, we also decided to accelerate some new initiatives such as buggy factor.
Our new vehicle shopping to support motions and if you're doing trip the news to sell one line.
On the social side, we announced a partnership with the state of seniors rise in Baghdad Bank became the exclusive do you still bank to distribute new social we'd beat by government for more than 280000 public school students.
Excellent. Thank you Bank has also supporting the most vulnerable clemens by offering to anywhere discussion back for the users are transferring the eight paid by the governments to peg It bank account.
Fitness could you withdraw the money or select a bank to have the voters opposed.
Thank you bank was the eighth indeed, a ranking in terms of deposits the received.
On slide 12.
We present.
Bank Hill.
You should be launching in late April.
Thanks Bank Hill works in a monthly subscription model with pricing between 9.9 in 14.9 rights per month and offers a diversified number of medicals in that though appointments include the remote appointments during the course crisis exams and pharmacies discounts in the whole called three.
At low cost everything in that.
We work not 30 part partnership water with different healthcare companies.
We'll next slide we introduced by different peaking in English bank to small companies.
However sites was launched in doing could be 19 pandemic responsible solutions to help our clients to keep selling remotely even with their doors closed.
Some of the solutions, our interest payments a non car.
Present transaction that can be showing via social media your mail or SMS.
Thank you fossil.
They deliver yet.
Medifast is a complete omni channel that combines payment with softer and align the new and online ordering.
We also offer in view of fossil a partnership Debbie said with the post office with promotional price or clients less bureaucracy in fester shipments.
And QR code.
We are offering zero percent MDR fuse to our emotions and 10% cashback throw buyers.
Additionally, we are offering from now ward.
And the limited the white transfers at no cost to all or by giving claims for merchants and consumers.
No.
I'd like to shed management perspective is that you all to break of coffee 19, including our initiatives with our clients employees community investors.
I would like to enforce bags has a highly valuable cost structure mailing to change in cards can fees combined with this cable platform. So then we are able to manage cost and expenses accordingly to sustain that equal margin levels reserved in Q1 20 during Q2 20.
Enter described the Lindsay definition inclusion in the 20 theme in adoption with 5.5 million active motions and 3.7 million pegged being uses.
Our employees, our first and main priority.
A few days, we were able to set home offices for almost 100% Afourteen any continued to hire people for positions in our product development in software in the near departments.
Important to make sure there were no impact to north sea since our operations as he transitions or team to work from home status.
To our investors community. We recognize you would appreciate as much information lower performance as possible in to that end, we disclose some second quarter preliminary numbers in the next is light.
However.
Due to obvious reasons suggests poor visibility in high uncertainty led was around the duration of Lucknow measures in the near term economic effects of coffee, 19th we have decided to either all or full year 2020, Soc guidance for absolute TPV growth take rate isn't that margin shared in the previous conference call.
[music].
Or clients as we saw in previous slides, we launch in many services such as spiky rupee, Ken and also helped the government industry and financial aid to population.
Communities matter for us.
Thanks, Sigrid donated thousands of masks to probably cost us donated more than 200000 put baskets and promoted online courses with donations of cash food and health items to UNICEF, Brazil.
All the initiatives to our claims in community, we reached 30 million already ice.
Finally on slide 15, we can see since Q2 preliminary data.
We saw a stronger impacting your second half of March with a sharp decline in sales for two consecutive weeks due to initial should dolls in Brazil retail.
However, since April we started to see recovering seats will say small decline a 43% year over year, when compared to almost 37% decline in retail sales in Brazil in same period.
Also imports to see we're observing growth year over year beans seems to second half of April.
I just by calendar effect, meaning fewer working days due to national volume 2020, or TPV, Naples would have been up 2% year over year.
In May we are seeing two last week, a growth of 11% year over year or 18%.
I just about tell anybody that wants in May we also observed one less working days due to national holiday begin of demo.
This trend shows the resilience of over diversified motion base considered by micro small and medium motions and also by and you'd be doing to printers, the do or less impacted by the crisis.
In short below we can see healthy TPV trends.
TPV has been improved weakest two weeks ended the first half of me we reach it 86% of the TPV of the first half of March we cheese, we compete 19th.
Right now seven states in Brazil are reducing socially insulation in retail volumes are gradually improve.
Imports into nation that or lack of concentration in segments or geography, I, 100% corners of the Brazilian seats in the you know over one third of or TPC coming from large captains in our airports threatened to adapt and deploy omni channel products are a key toward TPV recorded.
The right side of the slide as May 23, active emotions, reaching 5.7 million back it by healthy trained up a 106 7000 that adds in April and May.
Meanwhile.
Bank, reaching 4.6 million active users maintaining to accelerate the self net additions off.
826000 in same period.
In summary, we are prepared to increase our leadership them until market, which is a few huge due to large number of micro motions and former employees.
And you do rule due to a synergy shelf shift from cash to plastic.
Important to mention semaphore peers decided to reduce the investment long tail segment.
Having said that reinforce our plan to have 30% of or revenues coming from taking bank, meaning services beyond acquire enough to five years. We've acquired is to grow your they have space.
Although we are probably met me understand in managing short term impact of coffee tea.
We are confident about the strong fundamental all four businesses.
This train the for brain and ecosystem has butte so far.
We will keep investing or long term strategy in people products and grow.
We believe bags, who live described is uniquely positioned to lead the diesel transformation off initial simpson's in Brazil.
Having said that we finish our presentation. He was started Q any session.
Operator please.
Thank you we'll now begin the question answer session. If you'll have a question. Please press star wine.
Our first question comes from Waghmare Autonomous Research you May proceed.
Hi, and thanks for all the good detail Tonight.
Two questions for you first.
Our own.
We're trying to pay attention to the competition from what we can see it looks like competition has pulled back significantly.
Through the early part of the pandemic and is that creating an opportunity for you second should we expect financial expenses to normalize in second quarter following the.
Need or perceived need for short term liquidity in late March. Thanks.
Hi, Greg Thank you very much.
So.
Regarding competition.
We have seen central bankers, reducing them now is really smart investments.
When you read this netcomm.
Some of them.
Increasingly by some of the terminals.
We agree to double time then.
Promotions, so we see that some similar grades that try to come to a day or they are trying to.
We will be.
And then the market and try to focus on the larger dolphin lessons. So.
You're right we have seen that's something we should start with several other players. We always said that's over a long tail.
Requires a larger phones investment platforms the branding.
Yes.
The next somebody in so we started doing that in 2000 seats.
Very logical season rapidly. So that's why we are able to gain one platform and we.
We could see a plus thousand new merchants or not.
And he brought that same time, so, but thats progressing our assembly competitors decided not to best deal and we used to.
Yes.
Regarding.
Financial expenses regarding the Big Hi, Greg.
Although we.
We expect ventures back to me.
The lower than Q1 of the new because.
In Q1, we had to deal is.
As a result.
Going straight to your question, we should expect lower interest expense is financial expense.
You see the Coburn you want.
If I could just ask one follow up.
Could you discuss your ecommerce business because I know you do have a significant or meaningful ecommerce business and you can discuss where that's focused and how it's been performing.
So we know there.
Okay.
First of all our first of all of our bikes main both score.
All that transaction.
Morning.
That said.
Maybe.
Number two is actually Marty.
Because the average tickets and bank.
Sure.
We are taking advantage so to say because as we go eat healthier. So we buy ins for emergency due to several line to leverage our online or ecommerce platform. So.
We really help base faster than the last of course.
And we see opportunity future.
Ben.
Take market share.
It's too.
Just one follow up you're correct Sungard speaking we are just like we said the presentation, we decided to accelerate some news like.
Back to our regional shopping bags file suit I love kind of mobile channel four.
We agree publication. So so we should be that should help the company to let's say capture more than 20 transactions to online channels one point.
Thank you.
Our next question comes from Bryan Keane of Deutsche Bank You May proceed.
Hi, guys two questions I guess first on the product. Thank you your growth it continues to be solid an impressive.
Talk a little bit about these new users any change and under banked are they coming from other competitors.
Both I guess from a physical branches or even the digital competitors and kind of what engagement you're seeing out of these new users.
To start and then secondly, the take rate was also impressive in the quarter.
Can you quantify the impact that pack bank by the pad there and what take rate might look like as we go into second quarter. Thanks.
Hi, Brian Ritchie here, Thank you for glass.
Regarding branding.
As we can see presentation, we grew 1 million new users volumes quarter.
The majority of these growth, we see probably promotions, but department so for the consumer.
Considering.
Well up there so.
So we already have hundreds of thousands so consumers make thanks.
It's going fast.
That's a good through Q1 and we.
We are having more into some people because of the legacy media.
Because we will just ordinary where most of the seats are they can't go. So that same side do you don't know seven to one we are using for several smaller suggested means you're right.
Yes again.
Benefits for the population. So we are talking about 200000 they started.
In April.
Number of March yet, but based on April.
So the message brand the funny thing that is the more more no 40 people.
Also we are launching some new products. Some seasonally season is going to work better for you book.
So I think the answer to aggressively we have seen more from consumer.
The best.
It is growing.
Faster than the.
Regarding bakery divested Arctic enough for big data.
Hi, Brian.
Thanks, Greg is a combination.
Thanks.
We have lower more transaction costs.
We also expect at a higher math take rate because because of the seasonality remember that in Q4 years in a way you have a higher the higher mix of that and.
Because of their holiday season, and the third salary.
To to Q1 and although they may we do have a higher engagement of our users now our banking strategy, which is already showing seven monetization.
In our no effect.
Got it got it thanks, so much as they say.
You're right.
Next question comes from Jargon Kerry Morgan Stanley.
Hi, everyone.
Congrats on the numbers.
Two questions if I may.
You know.
Maybe talk through what's driving that Brazilians youre micro merchants.
It's pretty impressive Iraq, 86% or pre called it levels in terms of PV.
Can you just help us understand dogs.
Geographically breadth and is it industry verticals.
Yeah, I can merchants to people that go do different things is it that they simply didn't locked down.
Any color that he can provide.
Provide without it will be helpful.
The second question is.
You and you continue to talk about.
30% of your revenues not coming from our.
And acquiring someone something it but I really where are we in that.
Hi, I clearly with tight right now.
Hello.
Almost 5 million clients I'm, assuming it's already bring it in.
Sometimes some percent cuts to the top line at least could you tell us where are we in that pathway to getting there.
Our revenues already have a meaningful portion of those pipelines say, 5% to 10%.
Any any quantification around that will be very useful. Thank you.
Okay.
Okay.
Would you view so the question about three years ago will prove up is one I agree with you.
The question.
Alright had 86% apart.
So type of me, who Ben but March.
Part of that well see that first of all we don't have exposure to reduces that were there Michael binetti such as airlines.
No.
With that so.
As we will have these exposure units.
Let's just talk wonderful years Mark.
Brian every cbres new modern.
Hi.
Oh that 500 seats you have right.
Brazil.
These are spread out geographically our E commerce, nearly one third control capital to deleverage due diligence somebody's most you didn't call just side.
We don't have defensive.
You'll see the largest study that is.
Bars, and restaurants closed to 50% so that is spread out I don't have consideration dues.
Our there's.
I also want to see that Oh the CBD.
So again like we only 2% apart is coming from suppliers. So we are not let's say certainty.
You need from other companies that are let's see certain no deal claims are that that foods, our Lenny all 90 connect to us what happen do see gold. These.
We saw some changes as as leaves that's advice on the first we saw.
The conference supermarkets, and also we pharmacies again stations went down.
And we saw some changes that.
Gas stations coming back to estimate also coming back.
So do some but since then but as you know have too much situation.
Good.
Let's see as easy coming there maybe 6%.
She is that.
Many many meetings are.
Michael.
But people you're going to war, so they cannot sell going into the beach, new work as well, but they were Ben.
Something but they need to work so at some point, the our transaction and they see the buyer.
So thats part of the Gansu why alerts the as you would you didnt.
So I don't know legend.
Maybe.
Working to say that we also saw let's see a faster adjustment or faster adoption of those let's say micro turbine yours.
And finally, Jim.
Program that we launch it pretty much all through alternative methods for those clients might recall payments like you are cold like delivery services. So no service that usually these guys. They just faster judy's, new reality beefed up faster some of those cities you could observe.
Last week payments North presentation grew more than 50% year over year QR code more than 30%. So also reinforces let's see good awards that certainly to also offer new channels for our clients even working remotely.
Hundreds environment.
Hi. This is this is as long as they did a nice to hear voice.
So in terms of the additional revenue this quarter, one weekend say that we grew almost three times when we compare year over year. So when we compare Q1 90 to one point.
Those additional revenues they will.
Year over year and.
We expect this fast approaching 80000, Bonnie I think despite the potential impact our goal.
Which has really have being an upside to do their larger adoption of the time payments by 500 proceeds.
And then really helping our clients during this sometimes jorge.
We are offering for example, we eat and wire transfers that first and cash back through you our goals aspects for people who.
Choose back bank as they are back to receive for example, they occur on the granite wash as or even the standards in the state of means you're right. So we are really cost that we can reach the 30% of our total revenues and he can.
In five years.
Thank you.
Congrats again.
Uh huh.
Next question comes from Marriott P. area Bank of America.
Hi, everybody congratulations on the results. Let me ask you also two questions first one is related to piping right. When we see here that you you added 1 million clients and you brought your base up to two to 3.7 so.
[laughter] royalty wheel client base by your bank you one quarter.
Can you maybe a little bit more specific then about your your acquisition costs.
Your client acquisition cost it by bank.
Do you think also that this growth is probably bank has benefited from from from the disruption that we have had people then I'm moving more into the digital.
Thanks.
Also when you know some prior question that you are revenues are up from.
Business. The your revenues are up.
Three times a year over year, it can be a little bit more specific about what product is driving this growth is it related to two you. Your credit book what is really driving is there's big increase.
Revenues year over year. Thank you.
Hi, My now thank you that's a good to hear.
Regarding button bank we.
We of course, all the capital solutions.
Almost they want to see today's sometime.
But let me see we had very messy healthy.
Okay.
For by men, but if you also maybe his way.
At least we knew that too much.
So it's.
It's hard for us to see why didn't we let me walk back then we use Egypt because right now.
Well I'd say things any need for bugs he will.
2014.
So.
You can make it very low and I would say because we leveraged Brian.
He was he said.
Well.
She has been challenged.
Good morning, guys as much as possible beside the point.
The majority of the emergence of the bank they quite as I said.
Our motion, but consumers are going fast.
And is also because Cody 19 that people are more detail I see too.
We made some changes in the past months. It also helping bank one of them.
Glass in a discrete.
Right.
So.
Right and one that you signed they have to life Sciences, we added two new Cds, the 50% down 20%.
For the new media.
MCR extraction and I'll leave you rollover from et cetera.
We launched.
So hard for people they can use.
No card why isn't the plastic likely post office. So what's moving on now you can have a vehicle by right after that in using so there are many things happen.
Well that helps us.
Thanks.
Okay.
Well I think is at this point our related searching and he said before interchanges level business.
In Brazil so.
The revenue like 100 change.
It's going to transactional is low and the credit portion also please note.
Okay. Thank you for that let me ask then a follow up.
Related them to to the mortality of your clients can give us some color.
On the mortality that you've seen both it finally bank and budgets.
Yes.
Yes.
It is growing fast because as we normally don't charge, let's say anything big he is the account to see quite transparent.
Bang Bang, let's see more died so there is our privacy will what he saw is we saw.
Let's see too early to talk about January.
After these two markets have but we saw.
It's not increase national numbers people that started.
Making transaction.
Well see some maybe cycle emotions and the answer is they just don't because their business our growth already decided not to losing more and we will come back after the.
Right. So it's a temporary lets say, let's say churn the temperature. So we don't see mortality now were nowhere motion they accelerating or maybe for now because majority of them. They are seven removed as I said before R&D work needs to make money.
To survive so for me the most of them. So they they said they are not selection because these are good but it will be back as soon as possible. We saw divorced number in April but he.
Maybe we have seen some.
Overall as you would see so one cross sell the motions that he has been delayed.
You just can't take over 50 baby.
At 86% what he had imports have mark so use are coming back as well I will see that chose going again should just temporary let's see the stopping for what yeah. Mario just one last year, we do believe that probably the addressable market could increase especially.
Right.
We are seeing let's see the same example than we had the best crime is back in 2016.
Meaning you give you know professionals, let's say that increase in Britain employment rate, probably will cause a larger number of formal Johnson portal entrepreneurs and probably we're going to be able to capture these additional addressable market that is expected to let's say we created the commitments.
That's very clear.
Yeah.
Next question comes from into our to Rasanen BTG Pactual.
Hi, everyone. So so two questions here first on the TV I just want to two under stand.
Do you have seen.
In the last two months snow clients, who were only using the machines you know as a part time job.
Our increasing their usage right now right. So my question here is trying to understand here is it may be you know you pull off their job and their income you know right now and so they need to use a lot more as a full time job.
When compared to before so the first question you are seeing something like that you know a lot more usage on machines.
And the second question is on Piggy Bank right.
We can see here that the bank has been a very clear beneficiary of the equivalent of ocean right and as far as I understand and please correct me if I'm wrong. One of the challenge is right that you had this too.
Right, Okay to know clients on how to use you know the functionality to the bank quite which probably is much tougher than to understand the Pos machine in all four for merchant acquiring right. So so do you think that up these describe more force in a way I know the low income part of the population you know the long tail to two to two.
Learn how to use that happened and to learn how to use a digital bank and this could be very good news for you. So did have to get your questions. Thanks.
Hi.
Yeah. Thank you for question so learning.
[music].
We didn't see let's say these trends.
No that people that lost their jobs today's new devices, they're both income I guess is expected to happen.
And then why goes up and we intend to let me review, but at least one.
Yes, it's coming out of course, we must be we there no me, but probably not since then.
Came up situate eloquently, let's say the station to that we have dozens of millions of people use known by so bone is too low.
There is more.
Regarding Bang Bang.
Given these.
But as you said.
The for those who won all the way I wasn't quite on Brazil development is giving 600 realize or close to piecemeal 6 million people in Brazil, minimizing six under the rights for two months.
People can we see two development bank or people can select a bank to happen money.
It was in another bank in basketball wasn't number eight desert deposits. We just launched by May add one year ago, Let me say.
One year, where the number eight disciplined I've, often but really what we're very proud to two that not only because of the need to look both for us to help.
So sites, but now it's been showing but we are people that use our at very simple you can just sign up in claim units and then after that it's very quickly.
People are you they too have mobile order use other apps. So I don't think this initial but youre right. There are some people today that may have some ecos using technology mobile phones and get more important too. So so we will generate a new let's say addressable market for us people there were more.
Resistance to two adults in retail banking Aldi and of course, it's often they try and diesel vacancy that you saw that works very simple.
So we try to more were now ready to do way large holds for people to do see very clear what's going on what happened screen. So.
We would do is going up University Park.
Okay. Thank you very much.
Our next question comes from our yeah, not ideal bancorp, you'll be yes.
Hi, good evening, everyone I have some questions related to tax capsule.
Given station you mentioned that redemption, so that you reduced your credit origination why do I believe it today compared to the level the before 'cause. It 90 outbreak and then what can we expect in 10 Bucks credit portfolio at the end of the also how he's NPL training.
In thinking in the current scenario and have you done incremental provisions are places more challenging. Thank you.
I wanted I will talk about the little bit what part of them in our Carping Ken.
Coming to market.
I think before but I think would you use though we don't see more urban immediately I spoke with volume and now in Q1 code 330. So.
52 million realize if you look at the pace this quarter.
Let's go to my coming right. So were slaughtered here, we went down to if you could you add in Q2 will be less than that we aren't the needle is.
He duration we.
19, so we're very careful about credit origination.
So it's hard to give you another deal Hudson are either.
You guys depends when we look down maybe over and always going to be the rebound decline so right now.
It's hard for me go for cats.
We ended the year, but I can see you very are very very cautious then you will be even smaller number one we had.
Regarding galvanizing dark in common.
Yeah.
My inability outrageous cannot show, yes, rather than the duration.
We are offering great spirit for retaining them I case by case, the banking depending on that line and then regardless.
We.
We are managing our exposure to immersion bolstered is spend anyway, and we slowed down the credit originations.
So far.
But as you know.
Right here in new business for Us is very small.
In your presentation.
And our before to help right as we continue to scale. It brought a two hour bass versions Cherokee their ones are going to TV account need to repayment frequency so on and so forth.
That's why we are on on NPL right.
Thank you that's clear.
If I may ask another question related to your net add it remained strong in this quarter and based on data provider, but to date I suggest that seen or even higher level in Q2.
No. It could you share and beat on the profile of the relation or are they need those that did not affect cod before where we tailor the increasing their Pos before I believe right from a is incremental margin coming with lower aggregate spending than the ones.
Thanks.
Oh, yes for sure I can answer that we you're right we had close to one Saturday evening.
Equally.
Pardon me.
She does not need strong quarter better than Q1.
We don't see any difference the profile of new merchandise to our.
There is no rent submergence come to was buying additional invites because of the neighborhood.
But that's the minority of than it has been the much harder than we have an hour net adds today. They are similar to what he has enabled us more people come to the system. According to also leads Jews goes to the 80% they've come to us.
But before joining us.
So even in terms of he does a BBB.
Let's see similar to what has the best but it's hard because we don't these.
92.
It's lower today, but we just because the mystery should be going not because of the profile the merger.
I just want one channel commentary here.
We also were keeping the same subsidies or decline right and just like Ricardas at the beginning of the presentation. We are serving some of our beers Baxter is reducing the level marketing campaigns.
No no players are just starting these markets. So they rely more marketing bains number timing. So the other peers also decided to increase the price they harbor and when it comes to price that's exactly where these kind of merchant more sensitive so a combination I bring that just.
Is that having over two years also reducing the level of let's say subsidies or marketing, we will help bags to get increase market share in either shipping them anymore.
[music].
That's clear thank you.
Next question comes from.
Jamie Friedman so scared Hana you May proceed please.
Hi, Thank you and congratulations on the numbers I'll just ask my two up front.
No.
I realize a with the Q2 margin you're guiding to net margin to be flat sequentially.
I'm just wondering are you comfortable do you think that it will be at those levels for the remainder of the year.
And then.
You also mentioned in your prepared remarks, 70% of the costs are variable.
So what would it take you know because since the cost structure. So variable I mean, what would it take to see us significant deterioration in the margin.
Thank you.
Hi, Thanks, Thats important part for the question.
As you know if we can see our our cost our cost structure is he is 70% variable, meaning transaction costs as either change karkhi needs marketing advertising and charge backs.
We are also a company that is no people intensive. So you just can't walk at all or our 20 have to see how.
No the going back and we are.
And we didn't see right now I mean, we have visibility on arms using the that's that's why we guided.
Hi, everybody.
In terms of maintained an anchor margin that we haven't you want to the same levels then.
To do.
It's important to say that Oh, we continue to higher easy years, three backing that platform. So.
And then they have very weird way he does jump year off reviewing every single line of expands period during Q2 and of course any slowing down we bass as that did not make sense.
Sage.
Well.
Going forward looking at Q3 Q4, we prefer to have more visibility of those quarters.
And well do we can say that's going to mean is saying level or you want.
Great. Thank you very much.
Well.
Next question comes from she talked about that Goldman Sachs. You May proceed.
Hi, Good evening I think it for the call couple of questions. The also following up going back on your it take rate yeah, I understand the seasonality in the quarter compared to last quarter.
We said if you look you know it was higher than every single quarter last year, and you know with AG bank or anything else going after that is this a sort of a new level for the take rate.
I mean do you think it can increase higher over time, particularly as you do or with high Bank just wanted to get offensive in Wanna get the long term.
Look for for the take rate and then my second question on marketing expenses, you mention you spend around 67 million I think marketing for pipe Bank.
Did you reduce that a lot so I guess in the second quarter.
You know just given that the lock down.
And you know there's no revenues.
Would that have any impact on the future growth Act bank Macau.
Have you did reduce how sensitive could that be to 52 growth. He gave some color on that would be very helpful. Thank you.
Hi, Thank all of our decision.
There are lot allow offtake, where do they have seen this quarter is really a combination combination of Oh really.
Okay.
Cars, we know we do have a better mix you more compared to do for mens that's number one.
Number two we have also work transaction transaction costs.
And and number three we have more additional revenues compared to Q1 2009 Mercury sand, we we grow those additional revenue for yes.
Our compared to last year.
Of course, we resuming that well going forward.
We will have a those additional revenues five years, representing 30% of the total business and they should contribute more to the take rate going going forward.
[noise] regarding marketing expenses Ricardo Thank you for a question.
We agreed to me wrapping my Q2, but we try to control.
<unk> costs as much as possible to to see remixes or not.
We also have been both these partnerships that happen number up by many new users.
But the investment the market in Q2, you crews for sure as Don said, we are geared up almost you know they made is to keep the margin decent levels and that same level than it had 81, so everything that let's see where related to blame you mean like that we are trying to.
If you think it makes sense. So we're very much for performance and trying to take advantage of situation that people are.
Looking more for retail banks.
That's why even we've done a lower investment of Mark we already had 826000, new ambiguous mid two months, so but when that too aggressive.
You want expenses.
And looking better performance only view and try to keep the care no levels that makes sense for.
Okay. Thank you northern technical and just to go back on the take rate. So once you get the 30% of additional revenues related to tag Bank. So I guess it wouldn't be fair to assume that the take rate should eventually over time, the higher because of the contribution.
I'm paying banking is that fair assumption.
Hi, yes.
You'd expect to go up or do you are talking 20% five years or let's say four years from now or maybe you happen to them, but of course, we would expect paid back to our noteworthy great.
We can measure.
The revenues is going to me rather than particularly as well.
I mean, essentially means plan for 45 year plan, so to see things that we thought even faster we didn't see change overtime. We are just plain. According to two results that hasn't been pauses or having sold some why we saw that Cogs will be one side to be smaller.
And then or even higher number depends on the situation all the municipal form, but and sort of question in switchboard.
We units, yes, 30% is going to help take away can you do right now he is.
Not that he has ocado just that.
Alright, perfect. Thank you very much.
Thank you.
Next question comes from Victor Chabot, Bradesco BB I.
But you can ever everyone. Thanks for taking my question first congratulations on all the initiatives of the company has been carry out on the social side. So I think it's it's worth highlighting that and second I would like to hear from you guys, a Bobby strategy going forward regarding Ethan.
Payments, what do you guys see as an opportunity coming from the new infrastructure that is central bank is developing depicts a is it more if an opportunity for your argued bank it sort of a threat for like a signal acquiring business. So how do you see that evolving.
Or are you guys not that excited toward that concerned about that.
Functionality. Thanks.
Hi, Thank you for questions.
Just.
You about what's happening to deal with them, though transactions.
See sooner rather than I had biggs so quickly.
Mark because they seem to make a debit transaction.
She is far more culture to pay to then parks the seaborne the safety was action and.
Merchants.
Is that.
Yeah Adventist, let's set peaks.
Size.
How it's going to be goossens, whose departments, if they know that off peak.
Probably you want me successfully that's gonna because here, we got signed four or the solution to the trash.
The UK case for instance, do go wild to get traction we've got traction that cartons actions was growing 10%.
So the cannibalization, we things and I had one cash checks and why accidents.
Just remember one third of the Brazilian LIBOR, mostly cash.
As part of these investment that we expect third shift from cash west starts when it's going through that.
In addition to that we'd be does best payments do help punishment.
Yes, Thanks again the seven.
We will start adopting the joint payments.
So that's why we see a growth in debit card transactions, even golf is that a lot to some things we see more than a routine then a threat.
Got it then how do you consumerism going up or not.
We need today, which is not easy to better that cut production people are used to do that are you happy with b.
To get your mobile phone unlock moves on that.
Bank and welcoming so let's see hasn't happened when we see margin approach in everything that is going to turn cash neutral it's running the.
Plastic transaction.
Yes.
Perfect. Thank you.
Next question comes from Philly Pisello Mount Citibank you May proceed.
Hi, do Paul Coghlan, Dan, Thanks, and hope to walk you all know.
Have you question because it's the then quickly so I didn't report yet to come.
<unk> decreased.
Uh huh.
Yes positively affected by injection of 80 management production costs.
Could you please explain what led to the jets.
Absolutely should we expect she just needs to take place.
Block is known to address.
A walmart.
And my second question it's related.
You bet marketing budget for two different.
I remember that.
Let's leave it will be fair to expect 607, the minimum wise in Bakken.
The previously.
Hi, good members to mix and we've been out all that everything is changing.
Or should we expect it little bit less more.
I know that you're going to they've done that in Cologne back would be great. Thank you.
Hi.
So far is taking a opaque I'll take this of course I think it first class so they immediately east et cetera.
Neither company.
So I need a call buy backs that we have yeah.
I am happy for me.
Yes, that's a company that acquired that her house and sells and sell those terminals is a bicycle or is that neither company transaction and the reason the reason why we do that because we do we do have tax incentives. So that you a harder for you.
You see only to the they either they are quite taxes, but.
We do that because we do have facts seconds and we have a.
He is lower and lower taxes on the total cost soccer tournament, we acquired.
You bet is good so thank you for question would you.
Thank you I would say I hope I won't say.
Talking about marketing, we are decreasing the marketing space.
As we said before.
Sure we did not hurt our group and also.
Mark.
Laterals.
Furthermore, we are working not succeed now the baby legit that upwards and perform so it's very cool to mark.
You guys are eager people need situation you.
Regarding Q3 Q4, we cast now it was the same or might invest that we plan for you.
Of course, we do exist.
Necessary. According to what happens next month, we have seen some bottlenecks.
Now my views on board meeting slate that someone sees will definitely do come back. So we need to to all that is he needs. They see my best.
But again.
For the performance emotions again, you better uses.
Insights.
We do you guys were just bought so knock it out so.
Answer the question Q2 almost fine.
Q3, what we are keeping the same way then we'd be for for this year and we were just business. We can adjust to go up or to go down to 10 watts and all the of the person's mercy once things get worse. We we've always looked for group, we probably will not be theory group, but.
We always like to put some years, which is possible.
As far as said before in Q2 see margins then.
Q1, and we are confident we can do that vertical not duties to almost two more so now we saw the football. So do you see performance. So oh by the Bad news I didn't see less mark and we're confident that you're doing well.
That is has that they like US we are taking advantage of situation PBC hopefully more shows.
So that's that's already had four.
Okay can you give them which were programs.
Next question comes from Jeff Cantwell, Good Hi Securities.
Hi, guys. Thanks for taking my question Unpack Bank.
Although the may update in the slide deck, and you know how 4.6 million active you should probably back which serve process. The number of users. It still seems like it's early days, if we think about the size of your addressable market.
A couple well what about.
Hi, Thanks market share double over the next year or two years potentially.
It just seems like Thats the pace a pragmatic is obviously if somebody had good momentum.
Impact Bank users right now you should also be plenty of stickiness to the platform.
Let's look at slide 10, which shows the pace of product development, which again is a good.
So just wanted to hear your thoughts if you try to think a year triggers out could you maybe talk to us about your level coverage for pack Bank go to user base from here. Thanks.
Hi, Jeff were present good to hear.
Yeah I've been thinking.
So.
As you know people come to us.
We see Buddhism.
Continues.
You can start using line.
That's part of our then this makes it is too.
So even for people they are not let's see the Dom.
Well use digital solutions, and we everything but.
Yes.
We.
[noise] along the rule from sometime.
We know that we'll be launching these binding.
Needs some angie.
On the ground lease can now and then we started actually features to memory September 19.
Starting with no January this year, we started off with more and more cash back to do on both.
Last week, we launched the read it also gives me more so people can get these include the bank.
You are sticking to that solutions, we weren't abrasive incentives for button Bank uses you have some offers on these calls with respect to be brining that maybe launches is we need is all country.
Why transfers, we see needs. So we're kind of rolling out new product so cost increases the with rents on these.
Uses.
Well.
Good.
Very aggressive within that is sorry, let's see really because the thing about the b twice as much Nancy drew we will see choice when of course easy somewhat.
Lets say use less but just because the cost so it's important de stocking and then they come back we'll look greater because.
So.
We see our transformation, we really don't often indeed, so nothing for exactly we are supposed to have these days.
This is rich why we have today and then monetize aside because we're actually brothers.
Not only do slow motion for legal soon but also for the solutions designed cuomo promotion to start using QR codes for but it makes you because it has zero percent DDR and legal soon that had been person dish that.
Yes at this point, we're not making money transaction, let's remember.
Yes. It was actually there is no cards no Uh huh, we should make these days because we are issue that so we certainly musical season and its big alone strategy.
Okay. Thanks, very much stay safe.
Next question comes from Marco Marco Colony, It I will be a.
Hi, good evening.
So so can you share your your view on the.
Oh stability of purely online clients how different is that.
Itself from the racks off your active client base.
And second question. If you may can you confirm how much of field force Q TPV came from from the online client. Thank you.
[music].
But.
[laughter].
Yeah, no need to be a comes online offline.
[laughter] here.
Also to do of course, we're not even has certainly been those actions so to say that.
Really what we have less depreciation in online offline.
Well I see this if you order.
Let me repeat your credit card.
Line or is it looked like it depends because they're buying online forget the product supply ordered online and be able to see hamburgers.
Yeah [laughter] bye.
Well again learn more complex, but we of course you divide this one speaker line, but we're not disclosing that [laughter] distinguish the same does memory will tell you. When we have rates that are profitable for us because long do you they don't care about the.
Please feel much more fulsome equal season, and all the rest is even had my I sell new device.
Thanks.
So then you've got too much about.
The take rates are in the art because it did they never be they sell 2000, who has the ability to sell 2002 as per month.
So.
It's not 10 basis points or 15 basis points.
And they all were motions to change what I know there compared to that so many online.
You see more she's saying because no one we have.
Well still have debit transactions, it's almost 100% described it and there's a lot of transaction install it so it's softer ruling in 13.
Oh.
Thank you very clear thank you.
Next question comes from Anyhow, I go Rolla HSBC.
Hi, good to hear from you.
Thank you.
I think that's making them.
Oh, My Gosh Unpacked capital.
Sure.
Got it will supplement headquarters.
More information on the long.
Given out all the amount of it.
Could you give us any indication on the profitable.
Then on that getting getting outright.
But.
Thank you problems.
I mean.
I think at first.
First question about it and yes, it is hard to say.
Hello.
Closures and social networking managers there, although there are a lot.
Course, yes, they they last longer they wish [laughter] back higher higher yes, you reimburse you for for example, but there's so much uncertainty right now in terms of one of things.
No they reopen and how the and then actually walls in Brazil, but is it is it's hard to say we ever widening the visibility that we have right now.
Where we we are making biking.
Hey needs are each client and trying to help them as as as much as we can and anything else, we're not make did not materially affect our take rates.
We do too and we have regarding the Bible grants that we offer two or two hour grants.
Well now the only offer for the motion. So we are not open credit for consumers are you talking for consumers just more violence small that said, we do but we can see that he said one of the offers only promotions first so we only offer for the best promotions, we all would have on that he's still elsewhere.
[laughter] TV shopping bags and many others I have already have you know or no database and then we scored its motion than we are growing for the best promotions and usually the majority of them. They just like square capital unless we get yard and they they back we each and every transaction.
Loose, although its credit we know.
The Luis quite so to say you got going forth.
Isn't there transaction. We know these he had a also important to say that the coalition that he had told his merchant you cannot find anywhere in the Mark you cannot buy information for one of the view because you guys were out of we know the weather for me. The you didn't have to do is actually there was only two months.
They used to sell through cash so it's kind of de lets say exclude any probationary hair.
So then we can offer when it today, but only for the merchant owned for foreign investment.
Well, yeah just on loans.
Next question comes from Josh Beck Keybanc.
Thank you so much after the color and all information it's very helpful.
Just wanted to ask about a payback you had mentioned that the engagement can be 11 times a week. So that is quite high, especially when you look at that.
On a monthly basis. So I'm just wondering if you look at your existing.
Hi, good big clients.
You know are there some of them that are effectively completely replacing.
Those traditional banking relationships and just using the argue becca.
Hi, Joe Thank you very aggressive which have you.
Right and bringing that up and so we can tell us because as he said before we we are not only offered there let's say baby.
Well, that's all solutions, but we also increasing that to some services like they can get some offer some cash back. So they can you go to a Mac see 70 offers close to where they are not cash better to be less. This will give an example, we have a partnership with the larger.
As far as much is changing bongivengo store chain in Brazil.
Thank you that can go there and then once it gets back so we've been by these type of focusing on that so that's why people use a lot because you're up against our car and then you also have then we added back so yes, not wanting to make the baby food that suggests like transfers or page views or cobalt mobile phone, but also.
We have this battle SUPRESS feature that people use more on could you speak as well.
Nothing double their line.
Very much people are using banking bank and replacing the make did we see that that's weighing in on base is getting higher must Emma people come due to trying the best DC works they get comfortable with the App and then part of that use as their main thank you.
It is going.
So of course, not the majority of them. The plans at this point burn we see more about them up that people have.
But you think isn't bank and we are also as we said before we are having when people come into the system because of the koby 19 and by being a national bank with a very good choice courses on sign up and you. This we are getting people that are in this national banks doing this we stopped buying slow.
I want you.
Okay.
Thanks, so much stay well everybody.
Once again to ask a question please press star one.
Police Ho.
Once again to ask a question please press star wide.
Thank you that concludes the question answer session now I'd like to turn the floor overture Mr. Ricardo do try for his closing statements.
Hi, everyone. Thank you very much hard work lessons and both support.
Doing fine.
Well to meet you all of Universal very soon or as I spoke to.
And talk to next quarter.
Conference call. Thank you very much.
That concludes back Secularists conference call. Thank you have a nice night stay well and safe.