Q2 2020 StoneCo Ltd Earnings Call

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Good morning, ladies and gentlemen, thank you for standing by welcome to this DRONCO second quarter 2020, <unk> earnings conference call by now everyone should have access to our earnings release. The company also posted a presentation to go along with its call all material can be found that w.

W.W. dock sound Dot so on the Investor Relations section.

Throughout this conference call the company will be presenting non I FRS, yet your information, including adjusted net income and adjusted free cash flow. These are important financial measures for the company, but are not financial measures as defined by I'm sorry.

Reconciliations of the company's not I FRS financial information to the I FRS financial information up here in todays press release.

Finally, before we begin my formal remarks.

I would like to remind everyone that today's discussion may include forward looking statements.

Forward looking statements are not guarantees of future performance and therefore, you should not put undue reliance on that these statements are subject to numerous risks and uncertainties that could cause actual results could differ materially from the company's expectation. Please refer to the forward looking statements disclosure in the company earnings passionately in.

Addition, many of the risks regarding the business are disclosed in the company's form 20-F filed with the Securities and Exchange Commission, which is available at Www Dot actually see that God. Please note. This is that is being recorded I would now like to turn the conference over to your host Rafael Martin.

Investor relation to Executive Officer Axtel. Please proceed.

Thank you operator, and good morning, everyone I have here with me today geography out our CEO Lynn Martin our Chief strategy Officer in Marcellus <unk> our CFO.

During this call will discuss our financial and operational results for the second quarter 2020 provide you some updates on recent trends during the quarter and finally talk a little bit all day. Many transaction, we have just announced yesterday with links will be available for acuity after our prepared remarks.

With that I'll pass it over the job. So he can share his view on the main performance highlights and be strategic direction, we're heading to geography.

Thank you Hello, and thank you all for joining us today.

Before we start units presentation I would like to give you some messages.

We all read to say the 2020, we'd be one one of the most disruptive years in order generation.

The Global fund Bendix health and economic impact that two men change in order daily lives behavior and perspective, but it's too we have a great just learn and become better.

The recent months, we saw remarkably positive trends in our business, we for stroke record in TV in a sharp acceleration in check my friend that are beneficial to us as the increase in electronic payments the deepest ization of commerce, an acceleration in the usage of digital banking and others to acknowledge too.

Good to be investments made in the past you never companies keep ability and people we have be able to size the opportunities that arose and the crisis to accelerate our business.

Michelle three examples of that.

First we supposed to be growing 130% less mode as a combination faster than expected economic recovery and by volume brought by the Cortana vouchers. He thinks they're ready governments released program on which we participate directly for the western Europe and indirectly by leveraging our end to end proprietary payments.

That's him to process the volumes from our integrated partners.

Second our proprietary <unk> digital banking platform is experiencing accelerated growth in recent months, we record new accounts to be open high engagement in record revenues coming from the platform. We for stroke contribution from the beginning or for a banking as a service offerings <unk> integrated partners.

Third we provide different tools to help Marcelo line and did you feel like their businesses.

With that we saw revenue coming from our SMB digital clients more than doubling the and its drove engagement trends in our software solutions with some of them accelerating the growth during the recent thing.

We're working hard to keep provide you more merchants with the best service level in the industry, while expanding our product offering.

I'm very proud of our team's dedication during this very challenging times and due to the recent improvements can be economics and are in higher visibility of the near future.

We had extending back the team to meet the couldn't be men heavily investing in our future rules by acquiring new pellets to join our operational and technology teams.

In order to keep providing the best service levels are playing more than 40% of personnel are back to the frontline absorbing all of the recommended procedures, where the health authority.

Our twice in Threeq, you was again reflected in our customer support numbers in the quarter was 87% of the calls rated excellent and 87 for school resolution.

And finally I'm extremely happy that we have reached an agreement to acquire link.

These acquisition is a big step forward for us in the strategy to become the one stop shop for merchants of all sizes supporting them in the online as well wasn't the offline world.

Leases a market leader in the retail management softer market, having a strong presence in different receive verticals with 300 dealing GMB. Indeed also has a strong presence in equal much softer solutions.

With the hard work investments in technology and focus on decline needs. We are confident we will generate a lot of value for merchants in Brazil, as well as for our shareholders and the overall society.

We will discuss this landmark transaction in more detail shortly.

No moving to the presentation I would like to start on slide three with some highlights.

Despite cobiz 90 impact we saw TPV growth, 28% in second quarter, but mostly acceleration within the quarter Richie over 42% rule in July excluding quarter on abortion volumes.

I would take rate, excluding quoting a horse in volumes and find they should really provided to clients due to the Cobiz 90 outbreak was 1.77%.

Roughly flat compared to the previous water, even though we had a higher mix of digital and integrated partners, who have more take rate, which was partially offset by high fixed rate into hubs.

The report the degree of course, the during the course 19, just mentioned effect was 1.67%.

We reported a 14% revenue growth in adjusted pretax margin or nearly 30%, beating the adjusted pretax margin guidance of 20% to 24%, but we have provided in our previous earnings call. Those results reflect both are stronger recovery in order flights businesses, but.

Obviously anticipated as well as their execution capability in claims diversification effects.

Our financial platform accelerated its growth rate was digital banking open accounts, reaching 285000 declines in July and Weve banking services revenue grew nearly three and a half times in just one month between June and July mainly due to the initial traction or a base years of service strategy.

We are seeing declining delinquency rates noncredit offering we counted with more than 56000 planes in July we've been improving our rate of 2.8% remote for the portfolio in July to win.

Our digital business has experienced strong growth in recent months, we've only CPV growing near nine times year over year in July we have a significant impact from quarter to vouchers. However, even excluding all what is related to the government program online TPV grew nearly 95.

Recent year over year during the month of July.

No softer front reaches more than 300000 subscribers clients in July with over 100 million Reais <unk> total annualize it pro forma softer revenue.

Pro forma revenue means 100% of the revenue from the software companies. We have invested then even though we do not all 100% all of them and therefore do not fully consolidate all the revenue is our top line yet.

No by joining forces with Lee, we expect to accelerate the description of the commerce industry, Brazil, making high quality soccer teams they'll be able to all merchants combining it with a full financial platform and creating an integrated one stop shop powerful platform to merchants.

TPV in our brick and mortar smbs and the hubs was already 90% higher in the second half of July compared to the first half on March 20 appeared before Cobiz monkey outbreak.

Considering digital integrated part that is as well the companys overall TPV is already 11% above peak will be levels, even not considering cordano horses volumes.

Even though we experienced a small decrease in our payments executed client based in the second quarter, mainly driven by Corbett 19 effect the trends observed in the recent most already inscape, we're resuming our trajectory of plant based role in the third quarter inline with the growth of first quarter.

On top of stones client base, we know tells me stones client base.

Our solution to micro merchant presented over 50% growth quarter over quarter, reaching more than 35000 clients in the second quarter.

We are resuming investments in this new venture would this be and recent trends are encouraging.

Lastly, we expect operating leverage in margins improvement already in the third quarter 20, we have a combination of a more robust top line in our diligence in cost and expenses.

No moving to slide four we show that even in the second quarter being the most impacted by core business banking effect, we were able to keep our adjusted in the margin flat and grow our TPV when compared to the previous quarter, while increasing our cash flow generation.

These numbers show the strength and resilience offer a business.

Even during the most challenging time in our history, we were able to keep margins mutually flux and above 20% and re CPV not only growing for us last quarter, but accelerating every month.

On the right side of the light we show our recent dynamics for TV.

To help the populations, we'd be could be thinking outbreak the Brazilian government distributing a temporary financial aid name in quarter one of officers targets in the most vulnerable part of the population is autonomous and informal workers and people without income.

As an acquirer stone can participate in quoting a horses transactions mainly from its integrated part is benefiting from these acceleration in payments digitalization.

Even though these are debit like transaction with lower take rates they generate good incremental revenues for the company.

Stone processes around 2 billion, realizing cortana horses in the second quarter of 20 to 29.3 billion in July only.

However, it is important to note is that even excluding these relevant contribution stones TPV grew 21.1% year over year into second quarter. We've increased growth every month through July when it reaches more than 42% growth above first quarter two way to twin levels.

On slide five we'll give a double click on overall TPV hub operation in client base performance.

Our total TV in the second half of July was 46% above the first half of March which we consider here as the record levels.

Excluding the Crotona horses in fact volumes are already 11% above those levels.

Besides that's showing the grass should be seen the hubs is 9% above peak will be levels benefiting from our growth investments geographic diversification and commerce reopening trends.

On the right side of the page we show the positive trend in our client base.

As we report our executed client base as clients that have transacted over the preceding 90 days, we saw the Lochs dams that started in March heavy a direct impact in the second quarter numbers.

However, we expect a significant client base growth for third quarter 20.

Moving to page six we have a detailed explanation of what a report the take rate.

The decrease from the first quarter figures were mostly explained by 10 Bips degree from the Cardona horses volume and good related financial release offered to clients.

Yes, our take rate excluding this effect was 1.77% for a bit slower than the previous quarter explain it mostly by the strong volumes from integrated partners in digital key accounts.

However, as we've shown in the graph on the right take rates into hubs, which was virtually flat since the beginning of 29 team is increasing even in the current environment with the Upsells new solutions to our client base.

Finally, we're receiving many questions from our investors about her perspective on the regulatory changes the Brazilian central bank is promoting to improve the financial system and on page seven we share we view so far reviews.

The Brazilian Central Bank sets November disease as expected dates for the beginning of June new initiatives that I will highlight and installed is uniquely positioned to compete in this scenario leveraging on our differentiated technology and Brooks units you with clients.

First speaks launch the eastern payments infrastructure promoted by the Central Bank and operated by market participants.

These movements bench to accelerate the secular trend of payment utilization, increasing our addressable market.

Years ago, we decided to Butte upper burnt there. If there are two different banking platform that we will enable us to offer big solutions to SMB and digital clients and provide our banking as a service infrastructure to integrated partners such as software companies wallets among others.

We will help merchants, we expect knowledge and security to capture transactions through fixed QR codes enable ecommerce transactions in helped <unk> bullets to us.

We can then monetize on these transactions made without intermediaries such as issues in Britain fees offering a value proposition to our clients, which we will accept and use a faster and cheaper payment methods.

Second they receivables registration platform serves as an opportunity to extend our working capital addressable market by leveraging our hyper local distribution to prepay receivables from all merchants, including clients currently outside stone Echo system.

Besides it give us more flexibility into Q2 to offer credit to our merchants significantly reducing risks regardless of the payment methods that they use.

As I think when it created to make merchants have you with great services to help them sell more for different channels and manage their business better. We will continue to invest in our technology distribution and customer service to sustain our long term competitive advantage and evolve our business. According to the blustery.

Environments every time, we have changes that leveled the playing field in the label more competition user centric view a significant benefits favoring offers based on better position.

We've all that said our pass it over to lead to discuss updates on the strategic roadmap Leah.

Thanks, Chad wasn't good morning, everyone. Thanks for joining us today.

I want to start on page eight by talking about our digital and integrated partner.

As Joe mentioned the impact of the coal he brought many changes to society and one of them once the acceleration of consumers buying online we saw our online tpd growing over 130% in the second quarter and even when we exclude Corona voucher impact we were able to grow close to 80%.

Our year over year growth accelerated every month with growth rates jumping to nearly 200% and 760% in June and July respectively.

Again, excluding around about your volumes, we still saw strong growth rates close to 95% bulk month.

As we observed in our last earnings call, our digital payments platform subs clients of all sizes and different business models from social sellers to large marketplaces, one exciting trend that we saw during the quarter, what's a significant evolution in our digital SMB clients, who grow monthly revenues more than two fold and the.

Here as shown in the graph and the right side of the page.

Page nine brings an update of our banking platform, which as we explained in previous calls is offered in two ways first go our digital accounts for Smbs, which was launched last October.

Second through Wakely, I integrations, which enabled consumer facing absent other partners to offer banking services to their clients.

We have invested over the years to build our banking platform from scratch with the key elements of an open banking platform, which enables seamless safety I integrations to our own client facing solutions as well as our partners.

Similar to how we did and payments were now scaling our banking platform to our client base of Smbs, but also seeing a lot of interest from integrated partners to offer banking services by integrating two hour platform and we had started to scale that as well.

We havent Densified technology investments in this business and now have proven stable and scalable platform ready to take advantage of the increasing demand from partners looking to integrate transactional banking service since onto their offerings.

We're seeing solid traction we're focused on digital account and the banking as a service platform.

First we had a record inquiries in new clients in the quarter, reaching 248000 clients in June and 285000 clients in July with engagement metrics as prepaid card TPG and number of transactions growing strongly.

Second revenues are sharply as accelerating boosted by the successful integration of partners through our publicly.

Although still at a small scale revenue coming from our banking platform in July was more than 3.4 times the revenue from Joel and eight times January levels.

Moving onto slide 10, we discuss our credit product will have nearly 47000 clients using our credit product in June and over 56000 in July reaching a credit portfolio about 620 million highs in July as shown on the graph at the right side of the page our portfolio delinquency is.

Trending downwards at mid single digits for the July cohort with a consistent our way of 2.8% per month.

We have a diversified portfolio both in terms of client concentration as well as geographically with the largest 100 clients were presenting only 2% of the total outstanding and over 60% of the volume widespread among more than 1600 cities in Brazil.

As we already mentioned at the beginning of the year in 2020, we'd have a big challenge, which is a top priority for us.

Become a complete financial platform for our clients.

We aim to replace our clients traditional banking relationships overtime and I think we're on the right track to do so however to serve as a real one stop shop for merchants on top of the financial platform, we want to help our merchants to manage their business with higher efficiency and generate more sales.

Here is where the eco system of solutions that we are building in the softer space plays a vital role.

On slide 11, we bring a quick update on the evolution of our software solutions.

As we announced before we make for new investments in our eco system during the second quarter, which combined to our organic growth resulted in an 83% quarter on quarter increase in our softer client base.

Getting more than 280000 clients in June and over 300000 clients in July.

Even though we still don't see all of these numbers in our PML due to the phase of some of those investments our annualized pro forma soccer revenue in the second quarter was over 100 million households, showing an opportunity to bulk use software as a tool to increase lifetime value of our client base, but also to monetize on them.

We saw significant clients organic growth across different segments during the quarter with the customer engagements vertical car payments in marketplace services being the main highlights.

Several of our solutions are contributing to the acceleration of the Digitization of our offline native client base. As an example would have an labs with a number of social media post growing over 70% in July when compared to January and delivery much with GMP growing over 100% during the year.

Finally, I want to highlight the advantages in integrating soccer solutions with our financial platform. DHS is an excellent example of that in the second quarter. They became fully integrated floral acquiring and banking platforms and have started to scale their integrated offering to their distribution channels with July numbers being more.

In four times higher than January with that clients will have a seamless experience to manage their stores moving towards our vision to become an integrated one stop shop for our clients.

This is just one example of technology integration and synergies between our financial platform and software providers that we will continue to invest in overtime now with the agreement to acquire links we opened a new Avenue of cross selling opportunities to explore by providing links with clients with the integrated software payment solutions.

With this I'm going to pass on overtime fail, who will discuss our financial results in detail Huh.

Starting with slide 12, we present, some financial and operating metrics for the company as Chuck mentioned before as we report our active client base on a 90 day basis. We're currently seen in June numbers. The effect often lockdown measures that started to be enforced in many areas in the country in the second half of March.

Even with this effect, we were able to boast a 48% growth for client base compared to the same period of last year, we already expect significant increase in our client base for the third quarter due to positive trends that we're observing over the month of July and beginning of August.

Our TPV grew 28% in the second quarter of 22, any compared to the second quarter up 19, reaching 38.1 billion realize this represents an addition of almost half a billion right and TBD compared to last quarter. Despite the second quarter being the one in which economy was hit the hardest do.

Copied 19 effects.

Total revenue in income was 667.4 million revising the second quarter of 2020, an increase of 13.8%.

Excluding other financial income, which mainly comprised of interest and cash our total revenue and income grew 15.5% to 634.5 million re ice in the second quarter.

As we announced last quarter, we provided some of our clients that were most impacted by Cobiz 19, I financial relief in the form of limited time exemption in subscription and lower prepayment rates.

Those reliefs have had a negative impact of 13.3 million revising the court.

On Slide 13, we show our consolidated CNL and on Slide 14, the evolution of our operating leverage and profitability. We had a significant increase in our total cost and expenses as a percentage of revenue and our finished expenses on the other hand went through a significant decline, which will go over in more detail.

This led our adjusted net margin to stay flat compared to last quarter at 22.5%.

[noise] going over to slide 15, we dig deeper into our operating de leveraging the quarter as total cost and expenses as a percentage of revenue went from 46.8% in the first quarter to 60.4% in the second quarter of 2020, we had a couple of factors impacting this increase we two main nonrecurring.

Items severance costs related to the reduction of our workforce in may which amounted to 15.2 million re ice and a one time fine from a card scheme in the amount of 14 million rights related to the non usage of specific product called treat yes, which was a discussion within the whole payments industry.

These two effects combined contributed in 4.4 percentage points in R&D leverage apart from that we continue to invest into growth and expansion of our new solutions, including banking softer credit and thought this higher investments added 2.7 percentage points in the leverage which also includes marketing from our company look.

Okay aim to help our SMB clients through August crisis.

Also 4.2 percentage points are explained by de leverage related to lower revenue and need Govies 19, and 2.3% comprises of other effects such as for Sealys expenses related to the return of workplaces third party services among others.

With that even though we will keep investing at a growth of our company and the evolution of our business, we expect significant improvement in our operating leverage throughout the rest of the year.

Now going over in more detail on each Biennale line item our cost of services reached 198.7 million re ice or 29.8% of total revenue in income in the quarter, an increase of 12.6 percentage points over the same period last year.

This increase was mainly due to higher investments in new solutions and technology higher personnel expenses related to the severance costs from the reduction of or worked for us in may. The just mentioned one off item related to the card scheme, fine and higher depreciation and amortization as well as provision law and losses.

Administrative expenses were 89.9 million re ice or 13.5% of total revenue and you can broadly in line with the prior year period. Despite the one off expenses from severance costs.

Compared to last quarter administrative expenses increased from 10.3% of total revenue and income to 13.5% mainly due to severance costs expenses from new solutions, mainly new Investees in software and higher third party services.

Selling expenses were 114.7 million revising the quarter, an increase of 31.4% versus last year, mainly explained by marketing expenses related to Tom and the comparator look all campaign and severance costs, which was partially offset by higher efficiency, reflecting benefits from the re.

Side of the executed in May.

Compared with last quarter selling expenses as a percentage of revenue increased by 1.6 percentage points explained by the same factors from that year over year comparison.

Financial expenses were 62.6 memory I've, a decrease of 20.5% compared with the second quarter off 2090, mainly due to the lower CDIY rate, which more than compensated the higher volumes in the quarter.

Compared to the previous quarter finance expenses as a percentage of total revenue and income decreased significantly as pointed out previously from 20.7% to 9.4%.

This reduction is mainly explained by the negative effect from Koby 19 in the first quarter. When we took measures prioritizing short term liquidity lower CVI rates and a higher proportion of own capital to fund our clients working capital solutions.

As we indicated in the last quarter, we took several measures to strengthen our balance sheet position and increase our liquidity generating significant one off impact in our Biennale.

In the second quarter, we saw a much more stable market, which enabled us to keep providing our clients with all the required working capital needs, but with much lower costs.

As a result, our adjusted pretax margin was 29.9% higher than management's perspective, given at the last earnings result of between 20% to 24%.

As the economy recovery from the Koby 19 pandemic is training battered than anticipated.

Alright, just and then you can for the quarter was 150.3 million re eyes with a margin of 22.5% flat quarter over quarter in already factoring in copied related impacts as severance costs from the reduction of our workforce. He may financial release, leaving two clients and the construction of a temporary or hospital total.

33.5 million realizing that period.

Finally on slide 16, we show our adjusted free cash flow, which was 141.4 million realizing the second quarter, 77.7% higher than the same period in 2019.

Now we would like to share with you. Some details about the acquisition of links we have just announced we have uploaded to separate presentations specifically about their transaction in our website you should have access to it already.

Now I'll pass it over to job. So he can share more details about the transaction geography.

Thank you how far does they marks a significant milestone for our cone pretty.

We were born each way to 12, we've a clear for oppose to help merchants to thrive fruit the offering of best in class service and broad it's delivered by an amazing Intel it's a team of hard working people always with or clients at the simple or everything they do.

We're excited to joint effort Weve links in this journey and they're looking forward to combine elite deep expertise in vertical softer an omnichannel solutions with stones powerful technology in financial services capabilities, our strong culture and powerful distribution channels.

I believe this new help us to become the one stop shop for merchants of all sizes supporting them in the online as well as offline worlds.

We will continue to focus on building solutions by applying best Sprouts isn't technology with constant Glenn feedback and the use of data to drive product improvements roadmaps.

Stone has already established its positioning as a complete financial platform for brick and mortar smbs and a full stack digital payment solution for SMB digital clients marketplaces, wallets and sheep acquirers.

More recently stone hasn't Vincent <unk> strategy to become an integrated payments and softer provided for smbs by investing in more the eco system will soften solutions in different vertical and horizontal.

By investing in link we've strengthened our offerings by combining both companies assets and technology capabilities to create a golf course, enabling platform for clients of all sizes capturing value from the digital Commerce Revolution in Brazil.

We're very happy with the chose to welcome link themes 12 Stone Green culture. We know we have a lot to learn together and we have the opportunity to create an amazing value to both our clients our team our investors in our overall society.

No moving to the presentation, we start on slide three the deal overview.

Link is the leading software company, which process over 300 billion GMB challenge with more than 70000 retail clients and has a name nine nine retention rates with this transaction. We believe we will generate value in multiple ways.

First we will come by Bill leading retail softer solution with the best interest platform, which is the number one independent feedback in Brazil, moving towards a unified commerce platform driving the integration between softer in payments and exploring synergy opportunities.

Second we will be able to provide links more than 70000 clients, we've the access to stones payments and financial solutions.

Third the direct spend stone suite of software verticals and solutions, enabling the company to serve more businesses more vertical stunned further penetrate it's addressable market.

Finally, this transaction accelerates our strategic roadmap to become a one stop shop for merchants of all sizes and verticals.

Moving to slide four we highlight some members of the combined company.

Excluding synergies, we will help us total LTM into a license revenue or 3.6 billion in over 800 million of adjusted net income.

Also stalled who help the opportunity to penetrate the over 300 billion GMB uplinks clients.

We're very happy to give the strategic big step in our evolution and we'd be great to discuss in more details during the couponing.

Oh pass it over to Leah.

This whole links we will help us to accelerate our strategic roadmap Leah.

Thank you Chad when this is indeed, a very exciting moment for us moving onto the presentation on slide five are present, how we view the strategic complementarity between links install.

We believe the acquisition will be a significant step forward in the direction of creating a complete omni channel platform to accelerate the digitization of offline native commerce in Brazil.

We want to achieve that by combining stones financial service capabilities and a differentiated aspects of our business model with links it strengthens soccer solutions and as an already comprehensive suite of digital enabling solutions.

On page six we described the value drivers, which will be unlocked by the acquisition, allowing stone to progress on its strategic roadmap and create shareholder value through three main ads.

First we expect to generate significant operational synergies and topline growth by exploring cross selling opportunities a financial services into links client base.

Second we will help our merchants modernize and automate their core processes, providing them tools to adapt to an omnichannel world and increase their sales by bridging the gap between in star and online and capturing irrelevant share of economics of the digital commerce market growth.

Third we think we can further penetrate the softer SMB market.

By bringing into links the operation that distribution core capabilities of stones business model, namely its client service focus hyper local distribution and advanced technology, and combining that with links deep ERP and omni channel expertise to create tailor made product for SMB.

As a result of this combination we believe we can further penetrate the softer SMB market with integrated solutions.

Moving onto flight seven we highlight the evolution of our strategy to invest in an acquired great software solutions.

Since 2016, we brought on to our ecosystem Fantastic answer partners that developed great solutions to help clients simplify and automate multiple parts of their work flow.

As well as better engage their consumers and sell more.

We invested in different verticals in horizontal searching such as Pos an ERP for food general retailing beauty for delivering loyalty and CRM did digital media platform among others.

Stone has over 300000 subscribed thought to clients as of July 2020.

Growing twofold compared to the first quarter of 2020, mainly driven by investments in new portfolio company.

The acquisition of links will be a big step forward in our journey.

Together, we will reach 375000 clients.

Further penetrating the software segment.

As shown in slide eight link serves its merchants to reinvent when platform comprised of three product line.

The first is links core which provides integrated business management software such as ERP, CRM and Pos management solutions across more than 10 industry verticals second linked digital provides an ecommerce platform designed to improve the omni channel shopping experience, enabling retailers from the core.

Verticals to engage interact and transact with their clients and manage their inventories across physical stores mobile application and online channels. Finally links pay hub provides payments processing solutions integrated with its core and digital product line and provides electronic payments and financial solutions Q.

Our code Aggregators working capital solutions and digital account.

As shown on slide nine links has a 99% retention rate than its diversified client base and over 900 stores use its omnichannel solution more than 1200 R&D employees are in charge of developing operating in improving the solutions that give links more than 45% market share in retail.

Management software and nearly 14% of market share of the E Commerce solutions market.

With nearly 85% of its growth operating revenue coming from subscription revenue links generates more than 800 million has an annual revenue with over 25% EBITDA margin now moving on to slide 10, the combination of both companies capabilities will enable us to further penetrate our addressable market in two different ways.

First by establishing a leadership position in the softer and payments retail space strengthening stop stones presence and medium and large clients with integrated softer and payment solutions and creating significant monetization opportunities in financial services.

Second by strengthening our focus on helping merchants of all sizes to sell more through digital channels with a fully integrated platform by combining our strength in digital payments with links his leadership in the retail softer markets.

With integrated solutions stone, we'll be able to provide more compelling offerings, creating significant competitive advantages.

These two elements can unlock further penetration of a 120 billion has revenue addressable market.

Comprised of acquiring banking credit and software where the combined company to date holds only around 3% market share.

With that said I'm going to pass on the word to how FAEL who's going to talk a little bit more about synergies and details of the transaction hoffa.

Moving to slide 11, we see many synergy opportunities arising from this transaction on the revenue side stone has the opportunity to penetrate lakes clients with financial products, including its payment services through stones proprietary end to end platform and banking services leveraging on stones proprietary 80.

Driven banking platform. Besides stoner grasp on links know how an existing softer offerings to develop new solutions to SMB clients, including omni channel and no two old product to digitize these merchants.

In terms of cost synergies will leverage existing R&D to create combined solutions to merchants of all sizes is streamline overlapping DNA expenses and improve negotiation with suppliers and third party providers.

Important to say that we expect this deal to be as accretive already in 2021.

Finally, I would like to give you some details about the transaction.

Total consideration to be paid to links shareholders is 33 point 76 re ice per share with 90% paid in cash and 10% in stone shares for each links chair or HDR stall will offer a cash amount of 30 point 39 rice per share plus.

Your 0.01 to 677 stone cold class a shares the offer implies a premium of 41.6%.

Over the volume weighted average price for the preceding 60 days and 28.3% premium over the average price over the last 30 days.

Regarding governance after the merger a new softer business units will be created and will be managed by stones leadership Enlinks management team and advisory Board will be created to guide and monitoring the key strategic priorities integration process and capture of synergies I'll break them and I see Kerry links CEO.

Well be chairman of the Advisory Board, which will also includes don't leadership.

Following this announcement and after appropriate findings are made.

Links will goal as shareholders meeting to effectively approve the merger subject to the approval of resilient and pay Crystal Dorothy God.

With that operator, please open the call it two questions.

At this time, we're going to open it up for question and answers if he would like to ask the question. Please press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before passing the key to withdraw from the question can you. Please press Star then to one moment.

For the first question.

My first question in turn Tito Labarta of Goldman Sachs. Please go ahead.

Hi, Good morning, everyone. Thank you for the call a couple of questions I guess first on the take rate we thought some pressure in the quarterly or do you expect that but when do you think I guess that that normalizes is there anything the impact to the qunar about to meaningfully impact third quarter like when should that get get back.

Normal and do you still expect the take rate to be able to higher in the longer term and then second question in regarding the merger will link you mentioned synergies just wondering if there's anything.

You can quantify there in terms of how much do you expect some synergies you mentioned you expected to be accretive in 2021 does that mean, you would capture all of the synergies by 2021 or I didn't know if there is a timeframe for how long would take to capture the synergies any colleague and given that would be helpful. I think it.

Hello to juggle here speaking thank you very much for your question. So first we take rates actually do we we are senior or numbers, we're managing our core business in the same way as always in seemed to Corona varsha impact in a separate buckets, let me tell you why.

We are seeing the decrease in the hubs are growing up mainly because of the up sell of the banking in the credit solution. So we think that the traction in the hubs and the economics appears strong and into digital reducing take rates when a very healthy stable levels too. So we're very happy with the abella.

<unk> between growth and profitability that we have in our core and we are seeing corona varsha as almost as a separate number because we know that couldn't have washers not be here for the entire at a time. So that's a made by the Gordon elements and that in that volume is accretive when you think about revenues and here.

And resorts. So that's why the separating both I don't know actually for how long we will have this quarter anniversary impact.

And what would be the value to the volume because that depends on the government program, but when you see the take rates on the hubs, we're very happy to see that our Upsells strategy is working pretty well and I think that our team is doing an amazing job to offer those solutions in a simple way in the merchants are understood.

The how the platform works and the results are good.

The second question about the merger and the synergies.

Its June two week to it's early to talk about the special numbers, but let me tell you. This we're not expecting to have all the synergies 2021, I think that this is a long term investment that we made but we see the do accretive into any.

21 forward spokesman for the first year onwards, it will be accretive mainly because their strategy has three main points that I would like to highlight.

First more than the synergy in terms of cost.

Links has 300 billion GMB, but 250 billion a payment volume and I think that their agreement great job in link space, but the combination of the products that we have in order payments playbook I think the penetration of payments would be much higher as you know when I think.

As we already proved through our integrated channels in the digital big accounts that we that we serve we know how to offer great solutions and credit relationships with bigger clients to some pretty confident that we will have good penetration with good margins in that 250 billion volume none.

<unk> choose that I think the combination between their digital platform with our Fintech digital platform will create a big value proposition for merchants. There is a secular trends in terms of the digitalization of course in Brazil, I think that could be accelerated that these.

Is something that we will be very.

Good in a very good position to take advantage.

For the future and the third step, which I think that stuff I'm more medium term timeframe.

They have a great vertical expertise.

And I think that with the combination of the knowledge of our company and links team, we can adapt solutions to the SMB and replicate the distribution channels that we have here.

To help to distribute those solutions to the SMB market and take advantage to the digitalization smbs too. So I think that this deal will be a very accretive from the first to your owners will be accretive. It's you too early to say the exact numbers. So we will provide some some callers or the time goes.

By which we are very happy with the deal.

Great. Thank you have a very helpful. Maybe if I can a couple follow up.

I guess with the merger in terms of penetrating lynxes team in volume was 250 billion given that those would be more likely larger merchants do you think the take rate on those could be lower or with the softening of the provide just to get a sense of heightening the take rate for links merchant what's your current.

Searches and then second follow up.

I guess take rate or more net margin that you gave some good guide and for this quarter.

Thinking if you think margins go back to the levels. We saw previous the cobot 19 impact the how long you think that would take to get back to the more normalized margins you had in the past.

Great question too so let me start with the margins, yes margins going up so we're already seeing the results on July and August and we'll get to the normalized margins by this year, we're not very worried about this.

Well, it's a true I think that we have a pretty stable business model and margins are coming up. So you have the same level of margins that we had prequalified levels. This year steel.

Regarding take rates and an opportunity with this links a merger I believe the take rates in this strategy will be between the take rate that we have indeed in the integrated partner share owners in the digital channel. So I think that this mid size market that links is very opposition in.

The large markets, it's a market that we already understand by how we operate in digital and with some big integrated partners. So there's good profitability there.

Okay. Thanks, there was very helpful.

Thank you too.

Your next question is from Jorge Kuri of Morgan Stanley. Please go ahead.

Hi, good morning.

On the transaction.

I I wanted to us.

A little bit more digital on on the TV at links I think you said 260 or 15, if you can clarify that and then I don't have that number what percentage is all ready crosses by Lngs pay and if you can help us understand.

Outside split between large customers medium size because those are SMB is you know how much overlap.

Core business I'm.

Does large corporate space has relatively low margin.

Hi, there.

Dominated by Big volume companies like Oh.

Rather hello.

It's not a market that is less interesting then we wouldn't expect to penetrate on the payment solutions their foot rather focus more on the software.

[noise] potential.

The PV, but you can capture over certain for years out of the total dots process.

By links claims great. Thank you.

Yeah.

Hi, Jorge.

Well hear me.

Okay, great. So up to your question about TPV, what juggle mentions that 250 billion. This is a this is a TPV, but not necessarily process through leaks Bay right. So just to make it clear and we do have the TPV significant TPV coming from a medium and larger clients of course in.

Those clients you have lower take rates.

But we do see big opportunity there I think when we look at our <unk>.

Capabilities, we have effect I mean, very low transactional cost our our sort of fixed cost nature of our platform is a big advantage and we are able to be competitive there right of course.

Again, it's a lower take rates, but a huge pool for us to try to improve.

What they already have no. So this is the.

First point I don't know.

If FLIR one to add a little bit too to the other parts of your question.

Yeah, I had just a complement.

Well, it's half a mentioned they think to the second part of her question due to the nature of our open banking platform. We think that we can also be successful than integrating.

Links platform to our transactional banking platform that so that will give us an opportunity also.

To penetrate with other transactional services in banking and eventually credit. So we think that theres more opportunity beyond just penetrating lynxes base with payments.

In the whole hedges to compliment I'm really sorry that we're not talking too much about links numbers, we think that the the links management team, there's an incredible job in their strategy and better numbers the public company.

So we have numbers that they disclosed publicly but we will once this deal is.

Is closed then we have the ability to talk more about the numbers and how we see the numbers but.

In this moment, we think that.

Leaks management teams. They are the best one to talk about links numbers until the closing of the transaction.

Thank you hi.

Thank you if I may just the the 250 billion, which is what.

This process suitable to retailers of links I understand that's not the amount that is already in links pace is that a number that you, but you can't disclose what percentage of that 250 billion. He's already TPV of links Bay and then I assume you would immediately transfer through.

Hi, I think that they've disclosed the linked space a volume. So I think that you can see by the disclosures that they they do and by the Investor presentations and the Investor day. The links investors day, the numbers that we have here.

Just to be clear is that [noise].

They have 300 billion GMB in a total and 250 billion TPV electronic payments.

In a processing through their clients and they I think that they've disclosed the links pay hub volumes in their numbers. So I think that with the public mature you can have more information about the links Bay.

Alright, great. Thanks, everyone else is bankruptcy, so I guess.

Thank you Uh huh.

The next question next time Mariana today, we'd be at please go ahead.

Hi, good morning.

Question first is I'll follow up on tickled by action on that potential synergies.

I think that revenue opportunities here.

Deal or our clear.

I understand it's too early to comply but clearly to play a little bit more on the potential for cost synergies, where these could come from.

My second question is regarding the hub now that the restrictions aren't we did see could the police comments on your strategy for the second half of the year, how many how should we expect soon.

To open and also there think after bill layoffs and opened like May.

You can work in the hub group's on leaner structure and keep the sense of activity. Thanks.

Hi, My Deanna. Thank you for your questions Chicago here.

In terms of cost synergy I think that we have a we are planning here regular cost synergies by the merger no well both companies as you know links made many investments and acquisitions overtime. So I here I think that they have a great capability in terms of play.

And in this cost synergies we did this move its once in stone to a we will not be aggressive in terms of course synergies because we think that they have a great intelligent team, we want to be sure that will protect the knowledge the relationships and Oh, the good assets and.

People in thousands of both companies. So we are much more focused on the value creation in terms of the products that we are going to offer to our clients then manage it'd be die in the and an older costs you know order for our financial discipline, but I think that this merchant is about creating more value to clients.

Than anything else.

It was of the hub actually this is a great question.

Back in our hiring process into hubs, so we're extending our team.

We are almost I think that next month, we'll be back in the speed in terms of.

Increase of team that we had prior to the cool V. and Yahoo open more hubs, because we already have Cds enrich our team is more feet on the streets in the health situation is better. So we expect to open more hubs through November and December if the.

If the health dynamics.

Allow us to do and while we're still waiting for this we're increasing our team in the hubs that we have to create more density so.

I think that those are the the points regarding the hub traction in terms of the structure of the hubs. During this been damage we learned how to have better processes and I don't think that we will have a leaner structure in terms of the size of the team, but actually improving productivity.

So when we compare the productivity that we had prior to closing and the productivity that we had nowadays I think that the changes in processes that we made in the way that we are executing now give us an advantage that we will keep so we expect better productivity going forward.

Thank you.

Thank you my Deanna.

Your next question is trend just can't well Guggenheim. Please go ahead.

Hi, Good morning, Thank you for taking my questions Abhi.

You've talked about their resilience in your business certainly seems like things are continuing to improve here in July.

You mentioned the TPP is 46% above the merger, which is great I just wouldn't ask if you can give us your thoughts about the outlook for TPV.

And how you're thinking about the back half of beer. It it looks like your hubs are coming back in there has been more workers and and more activity over the course, you the quarter.

And your client adds found that the living in a positive direction as well in July.

Yeah. It certainly feels like you should begin to see rebound in TV in the back property or can you maybe talk about that any thoughts you could give us there would be great. Thanks.

Hi, Jeff Chicago Here I will start answer your question and then I will move to how Fi. Okay. So first talking about CPV and focusing on the hubs. As you said we are seeing some movements. There are very interesting here first is the speed of card clients being on board and is increasing so product.

With your our team in the Onboarding process of clients is in a level that we were surprised so we're very happy with that and the average TPV or merchants is much better than we thought in the beginning so when we see the cohorts will actually getting more volumes. So our clients that we were Expo.

Next thing so the average TPV per client in this new cohorts are better than the older cohorts and that's a very positive effect that we should keep so the combination of the acceleration in on boarding clients that we then we have shown to you.

In this presentation with a little bit be bigger average TPV per client is making our TPV reacts on a positive trends, so happy to see how the hubs or or or or or the result, so far hubs more than this we believed that this trend of digital.

Position of Commerce relationships is really strong so we're very happy to see that the assets that we've built in the past it was the gates in peace PSP moons Riphagen Pug Army. They have great results. So we decided to merge those solutions and I think that those investments are really paying off in this new scenario.

And the decision to offer everything we do as a project as a platform for partners is using resorts in terms of volumes to.

Think about our strategy. This way so we decided to create our core financial platform that serves as a product smbs.

As a platform digit, though clients and integrated parts and so this combination of the PSP engaged to integrated before payer platform give us the ability to capture volume.

With all these comments or trends that is going on so were very positive on that I think that the corona vouchers volumes that we are getting both the Pos and the integrated partner shows how our business model is prepared to adapt to the reality of the market. So I'm very positive with our numbers in the second quarter.

And the the is the expectations for TPV going forward.

And Jeff Rafael here just to complement Chuck was ER answer. So when you look at TPG into third quarter. For example, we have mentioned in our presentation that we had 9 billion re eyes of TPV only from Corona vouchers in July so the dynamics in the third quarter, you should see a bigger.

Our take rate, sorry, a bigger TPV and a lower take rate because of those additional volumes, but as Chuck mentioned this is important to highlight that.

Despite very little take rate that we have incremental revenue right. So if look at the growth in our TPV, excluding corona vouchers or it was 42% already year over year in July. So we are seeing like acceleration in the business, regardless of the Corona cautious, but when you do have that dynamic of a big volume.

Which is incremental in revenue.

And Jeff by third quarter.

Just a second.

Okay. So Jeff by third quarter, we will show the volumes of quarter Novasure separately, and we will show you the take rate separately for you to understand the dynamic. So I think the yields in the take rate trends in the core is free to strong and current of our shared by itself has good economics, that's why you decided to prosper.

This dose transaction, so I'm very positive with the use of the solutions both in the digital and the hubs.

Okay, Great that's very helpful color. Thanks.

I just wanted to I wouldn't ask your second one on the links combination and.

From our standpoint, it it's been very interesting to watch the past.

Several months really for your company Uh Huh.

Your your increasingly focusing on software and I'm not here reflects it seems like you're really moving beyond payments in a meaningful way. So so can you maybe describe for us the opportunities that you're envisioning from from the strong links our synergies on slide 11 of the presentation I just wanted to see if you can maybe give us.

An example, fourq or true about where those synergy opportunities will come from or is it. The 70000 links up or claims are you know that you think will use you know maybe they were using a competitor prepayments actually took the opportunities that you'll be doing the payment squeeze going forward. You know is it isn't as required a computer Harbin and you show links software today.

I guess I guess I'm, just trying to understand that a little more and there's a fair to say that we should be thinking about it.

It's a combination that increase each revenue per client for stone or is it is is that fair and any color there would be great.

Thanks.

Thanks, Jeff Chicago here, So I will start and then I pass it over to Leah.

So I think you write this does this deal with disinvestment in links it's about our best foot forward in terms of the software.

Strategy. So as you can see on slide seven we have made investments in softer over the prior two or three years and over the last 12 to 18 months, we decided to invest in a watch and learn more about this combinations are softer in the financial solutions.

And and now we see that these combinations off.

The retention of clients and the stickiness of the softer solution with the yields of the payments in the financial solutions something very very strong.

We think that links has a talented team and great solutions in the retail so we'll keep our focus on merchandise and retail so I think that in terms of priorities and strategic priorities. We're very aligned so for us the strategic rationale makes all the sense and busy.

Investments, it's only about creating better solutions to merchandise in the retail here in Brazil, we are seeing a big change in the way that merchants want to have solutions and access the digital channels integrations with marketplace with E commerce platforms with social commerce platforms and.

By merging with links I think we have all the tools required to help our merchants to take advantage of this digital transformation of the retail so for us It makes all the sense.

And by seeing links execution in products and our teams capabilities. Our entrepreneurialism, we decided to to make this investments and we're very comfortable with that to think that it was made that this spleen and a lot of courage because the strategic.

Roadmap makes all the sense.

Do you want to complement.

Yes.

Jeff just to complement a few points of a travel mentioned I think there's three big avenues of value creation here right. So the first it's pretty clear is about penetrating.

Links is a client base with financial services, which already described I guess and for his question.

The second is really about combination of digital assets. So.

There's two important points that I think it's worth highlighting the first is that we believe in Brazil, a lot of the digital commerce growth is going to come from those offline native players digit digitalizing and we want to be able to give them access to to increase their sales by accessing different digital.

Channels, so be them marketplaces their own web site or social commerce. When you think about the set of digital assets that link.

Has developed in the set of digital assets that stone has through through its pack Army platform. This combination is something that we think is really powerful because we can combine the ecommerce platform the gateway to connect to marketplaces, and the order management system to stones Apiay flat.

Form of payment services right. So when you think about the combination of these two there was a powerful offering that we can now offer clients and when we think about economics were really layering the economics of payment on top of the economics of any commerce platform. So that's something that we think that we can evolve in a one to one and a half your timeframe.

Really have a powerful offering for links is client base, but then of course you want to take the next step which is to simplify that could bring down to SMB is right and then that that's.

What we're calling our third value creation Avenue it will happen by both at the same time simplifying the core solutions from links to be able to offer those two two smbs and to really strengthening in developing a distribution platform for software, which is going to take care.

Into account.

Operation Ducklings already has today and then knowledge and expertise that links has in distributing software would be elements that stone has developed and its hub strategy. So all the elements that we have developed in terms of client service proprietary distribution culture, our elements to do want to bring in.

Really transformed the distribution model for software in Brazil, which is something that we think that we can really.

It's a it's a challenge that we really want to take on that we think that we can really over the next two to three years.

Really achieved.

Significant results.

So just one additional common I'm sorry, just one additional comment Jeff. So think about this combination as we're moving financial financial platforms and services upstream why are we are trying to learn reflects teams in brink Pos in ERP solution downstream to SMB. So.

This combination for us it's very powerful.

Okay, great. Thanks, very much and congrats on the results.

Thank you Jeff.

Thanks, Jeff.

The next question is from tonnage carried out of BTG. Please go ahead.

Hi, Good morning, everyone. Congratulations on the acquisition and I have two questions. If I may the first one is catching on this point that you guys mentioned a lot to that it is an integrated payment platform for all sides. So social plans that they started for us.

She needs in the long tail with going with it it's Mike here, but if you could share a bit more detail on what is the strategy for of course for going they are amid the floor for larger account so.

[laughter] has.

With presentation updates and indeed has a lot of clients that that that come from head. So how are you guys have thinking that the strategy.

Tackle lag accounts and what is the niche that your focus more is smart E commerce and large retailers are you sure you tend to go to a more broadly strategies.

And my second question he is related to the platform. They the extension of the number you should be brat Andy.

And I was wondering if you could share a bid up the tail off how much of these clients that are common for home decor, and rebuilding and how much is coming through other channels and partnerships and integrated partner just so we can kind of understand how is the bill Lucia you Chuck.

Just to add.

I know some chip to grow that say Scottish thank you.

Thank you Tom as quick question geography of speaking.

I think that in terms of the strategy with the payments in the financial platform.

Moving upstream to this mid size in larger clients overtime, we prove our ability to combine payments and softer in the way that you create value proposition to your clients with good economics than we did in digital so he's you've seen the combination of the gateway ER and the payments or the.

PSB in the payment is pretty much the combination that you do it softer in payments and you know that we serve big marketplaces and be clients on digits, though so I think that our our strategy here with links will be threat to create the same rationale so by doing by integrating the.

Softer with the payments you create better value proposition to your clients and by unit by seen the unit economics or east of each one of those clients you can have a bundle offer that will be interesting.

To balance huge.

Results for a company and value proposition to our clients I think that there was only there's another big effect through here was that this last month, we started our banking as a service strategy. So we have now integrated partners doing wire transfer integrator for our APC ice here. So this.

Bank as a service strategy something that we really believe so when you think about all the transaction activities that links clients have to do if they can help them to do by their dashboards in links into 100% integrated I think that that will create great results. When we think about the transformation that is that it will.

Happened in Brazil with picks I think the disposition is to put isn't a good position to take advantage of that so there's many layers here in which the combination of software and furniture solutions can create good value to clients with good economics to us and about D.V.C. I will at the get your question Tom.

Sure Tom I I believe your question was related to the traction. So let me speak a little bit about where we are on the APC strategy. So we really made a lot of developments and are really evolving and deploying the integrated platform to our SMB clients. As you saw we disclose a number of 60 so.

1000 clients already migrated to the fully integrated platform by July, but I guess the really.

Exciting evolution is that now we are really being able to penetrate the very significant part of new sales in the hubs.

With a complete or you know a b C offering so I think that we're making very significant advancements there and that is what explains the increase in the activity levels of our of our accounts right because the more than our clients use the combined.

Banking credit and acquiring solutions of course, they use the banking as a domiciled for their acquiring and then that naturally increases activity levels of a of the banking.

Of the banking solutions. So we're really excited that seem very good traction there. The revenue increase that you saw is is largely related to what Chicago just mentioned, which is that we're seeing a lot of interest also from integrated partners, who want to integrate to our open banking platform to offer transactional.

Sir banking services in their own solutions right. So we've had.

A good traction from that part of the business recently, and we're really excited with the opportunities of that part of the business as well.

So Tom is just.

Just just to complement that so every time that we think about a business or a project that we are creating the three pillars that are very important one is we've always keep this culture of clean syntricity to decide on the roadmap for features to our clients given the feedback in the learning loop that we have to being touch with them.

And that's why we decided to create our banking solutions and integrating did you see in the way, but it's best for our SMB merchant. So when you see the evolution of number of accounts by first quarter second quarter to July it's all driven by the penetration of the banking.

In the SMB market in the a B C numbers that you saw the 67000 is also a b C within the hub strategy and our our channels that we do marketing. It's all the SMB. When you see revenue is about the the the third pillar that we every time that we understand what is needed.

We think as a product to the SMB. We released this as a open platform for integrated partner. So that's why we now have integrated partner using our bank as a service platform. So the increase in terms of revenue is because we have some big partners that transact a lot of wire transfer and.

Use many of the saw the services. So this strategy has really taken off so that's why we have this good results in terms of the growth of revenue.

Okay, great that that that is very clear. Thank you very much.

Thank you Thomas.

The next question is from Craig Tomorrow.

Limits research. Please go ahead.

Yeah, good morning, everyone and congratulations on the acquisition.

Couple of questions first.

How quickly do you think once the deal closes.

Could move the TPV off of of PEGI platform onto your own that's associated with links pay.

And secondly.

With this acquisition stone is clearly becoming the by far the most integrated.

Commerce capability provider to retailers, you know SMB and above.

Combining both financial services and and retail technology.

And as well as obviously banking offerings.

How do you think the regulators will approach their view of the banks and their integrated acquirers going forward now do you think that they will allow again, thanks to start bundling offer offerings to compete with what stone can now present as competition because clear.

Really the argument.

Seemingly around bundling.

Has fallen apart now and banks will likely push aggressively to get the regulator to allow them to bundle again to compete with what stonehouse.

Great Hi, Craig Chicago Here speaking, that's that's great question actually so let me tell anything in two parts first about.

The TPV of links.

I think that we have to be very discipline here in the way that we articulate about this I just want to be a very clear that this transactions is subjected to the antitrust authority approves. So I think that we should not talk too much about links in the way the links to busy.

Yes, I think that links has to protect its relationship its partnerships. It's very important so I think that we cannot say anything about the links relationships is there a partners in suppliers and we have to.

Make sure that we follow all the rules when you have a process of investments like this.

Just hello.

Okay can you hear me now I can hear me now, yes, sorry that topline I dropped so from my first line, so I think that.

We cannot say too much about this and in terms the the the the regulators in a rationale about the banks that are quite I think it's completely different the way that we approach our strategy. So I think the bundle offer is completely different than died offer right. So we always want.

Our software solutions to work with all financial platforms, and we want our financial platforms to work with all software solutions. That's why we believe that.

When you see three years from now we will have three great assets under the same umbrella and strategic rationale will be stone as an SMB focused platform financial platform for Smbs year in Brazil, We will have a bug army hour did.

Sure. So platform that serves as the things that as a service for digital clients and we are building here, if who omnichannel commerce platform to serve merchants in Brazil, and we'd won each one of those platforms to work with any providers that are clients want so for us the opinion.

In the decision of our clients is the thing that matters. The most so if our clients wants to use our financial solutions. We for different softer solution provides its great you far omni channel software platform in our clients want to work with different financial provider for us it's great to Eric.

Our mind here is to create value proposition to help merchants, who have better product and not create a way for our clients not to use the partners that they want so we will be always focus on this client centricity and putting the needs of our client in first place.

Okay. Thank you so much.

Thank you Greg.

It can create the question and answer session I will now turn over kids Jago PL for final consideration.

Thank you.

Thank you all once again.

For this great question, we're very excited with this new phase of stone and the great opportunity in front of us I'm, sorry that we cannot be more questions. We would love to have more one hour Warner warrant a house of questions answered, but unfortunately as you know we have launched at the follow on so we have to move for.

Our road show, but we just want to thank you for all the supports and see you next quarter. We're very excited with the future ahead of us. Thank you very much.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.