Q2 2020 PagSeguro Digital Ltd Earnings Call
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Hello, everyone. Thank you for Radian welcome to bags Sugrue second quarter, two already Twoeighty results Conference call. This event is being recorded in all participants will be now listen only mode. During the call.
This presentation after Brexit Gurus remarks, there will be a question and answer section at the time further instructions will be given surety purchase it bad need assistance during the call. Please press star zero to reach the operator. This event is also being broadcast lie value webcast and may be accessed true bag Siggers web.
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You are cautioned that not took place undue reliance all these forward looking statements actual results may differ materially from those include any bags cigarettes presentation or discuss said on this conference call for a variety of reasons, including those describing the forward looking statements and risk factor.
Her sections off bogs Siggers registration statement on farm it weighty AF and other fillings with the Securities and Exchange Commission, which are available at bags to go to Investor Relations website. Finally, I would like to remind you that during this conference call. The company may discuss known gap.
Measures for more details the forward going no GAAP measures and the reconciliation off these non-GAAP financial measures to the most directly comparable GAAP measures are presented in the last page off. These webcast presentation now I'll turn the conference over to Mr. Ricardo <unk>.
CEO Mr. Andrew threat, you may begin your presentation.
Good evening, everyone and thanks for joining our second quarter results conference call.
Tonight, I have humidity, Eduardo Couto, our chief Financial Officer.
'cause a little over head of Investor Relations.
We hope you and their families as well and say.
Everybody knows best few months has been challenging and we really focus on supporting our clients our business partners. So slightly you know employees.
By the way.
I'd like to thank you again, all Patti bank and single gene.
These important or businesses from their homes do last months.
Thank you very much by the bankruptcy Blue gene.
As you see lapses lives.
Even with all the best in the region, Michael the 19.
Our results show our business, it's actually Lindsay.
Certain their numbers that declined in the core however, the most important operational keep you guys suggests total payment volumes that adds back. Thank uses and so what has been improving each month throughout the quarter.
Growing year over year.
Finally.
Important information, we have developed features and broadens enterprise conference to beauty complete and unique ecosystem to addresses the needs of our clients.
Regardless of the come in a moment, we're confident in our strategy and your opportunities ahead of us.
You keep investing to grow the company and at the same time keep our profitability levels that said in Florida, Alcon and I will present, some slides you have to any session again.
On slide three we highlight the achievements of the seven core a challenging quarter reason by volumes rebel absolutely to growth in stable margin image, social nieces measures and economic slowdown.
We saw strong financial and operational performance, although reflection I get bank and also all and TPV in soften some schools.
Important information, Michael immersion school, which would be more easier and faster adopters of new payment Cheddars any continued to gain scale payments and bank basketball unique align solution. You know then taxes and other seven existing will tell you might muscle.
[noise] TPVG closer toward immediately is growing 11% year over year.
In July and August we saw acceleration of growth year over year, marking 47%, 51% respectively.
When comparing the first half of March which is critical dimension in Brazil.
First half of July 21% or both.
First heard from August is 29% above.
Okay great.
Ended the quarter at two point, 72%.
Now 59 basis points quarter over quarter, mainly due to a temporary impact of mix. Many more debit card transactions less quote instalments directly back to our prepayment weapons. However, our take rate continues to be way above the knee cities.
Our net adds in the quarter, we're close to 300000 up 32% versus first quarter, 2021% hired in second quarter 2019.
Ask emotions, reaching 5.8 million was installed record level gross adds in June and July given the higher demand for new devices.
Transaction activity is another services revenues grew 4% during the quarter.
Reaching pretax margin of 31.6%.
Non-GAAP net income of 307 million reacts with an end margin of 22.6%.
Moving to take a bank, our nor acquiring TPV through banking destock out in one services, which is 10.6 billion rice growing 168 year over year, another triple digit growth.
Hi Bank revenue grew 52% you agree.
The first half.
Hi, Thank revenues with 7% of total Evans and income.
The growth of 105% in combustion same period of 2019.
Yet another record of 1.2 million new broadband users during the second part of 2000, Duane and reached 4.9 million users in Q2.
We also proud to surpass more than one meter impute backed by consumers with the average number of products users growing 36% showing the success of our go to market started doing trials other than acquiring.
4.6 million bike banquette nodes in second quarter accumulate close to 22 million App downloads in July being one of the leaders on these topics adoption.
Moving to all our TPV insult to services.
Last week, we announced we reached an agreement to acquire wildcard M. P. Muslim most complete online payments, but from your Mark would you help us leverage our omnichannel often.
We will talk more about that interruptions.
We also announced the definition of legal he moved cited loyalty and CRM platform.
On TPV grew.
One other thing and 1% you agree in July.
Back by instruction transformation say is genuine payment solutions in the stronger growth of cross border transactions.
So for subscribers reached 311000.
You heard the six 7% versus Q2 2019.
I think of payment transactions grew six 9% in the quarter, while cross border payment volumes increased 2.5 times universe.
On slide four we show the main KBR as I mentioned previously.
Moving to slide fine.
We want to recap the achievements of the first half of 2020.
Despite an expected first semester.
X continue to be leading common.
And any long term strategy for some unique existing opportunity to provide best in class payment information products and services to the Muslim population.
TPV reached close to 62 billion with nice growing 20% year over year.
Total revenue and income grew 11%.
When compared with Q2 2019.
Marking 2.9 billion rights.
Actually motions were 5.8 million by end of June we added 526000 your emotions during the first six months of 2000 Blaine.
Take rate was 3.0 form.
Adjusted pre tax margin of 31.9% with non-GAAP net income, reaching 674 million rise in the first six most on 2021% up versus first half 2019.
Non-GAAP net margin, reaching 22.9% in same period.
[noise] on payment services, no acquiring TPV to banking destock Arlington water services, which is 19.3 million way is growing 178% year over year due to the accelerated pace of new financial engaged a waters products.
Larger to serve both merchants and consumers.
Active users were 4.9 million, meaning that we added 2.2 million new users during the first half of 2000 blend.
With few by bankers, who is accounting for more than 1 million active users.
Slide six we show demand first half 2020 metrics I mentioned before.
Moving to slide seven.
Well who'd like to enforce on focusing going with profitability.
The first half bags net income was 60% higher than Brazil in recent years combined.
Reaching close to 600 Minnery eyes of GAAP net income down only 6% in compressors first half of 2000 team.
Important to mention bags results excludes the provision reversal, we had in second quarter 2012.
Which impacted positively our bottom line.
Well that's implied in closing the initial remarks.
As we said in our last conference call and not interactions with investors community.
Our observing a sharp Cobra TPV since the second half of April.
Year over year or TPV NAGLU, 11%.
In June.
25% using.
Although TPV in Q2 grew 11% when compared with Q2 2000.
In July.
You observed in battery covered in our TPV grew 47% year over year.
We continue to see strong pacing, others growing 51% year over year.
This trend shows the accelerated migration from cash to electronic transactions caused by differently.
The resilience of our diversified motion amazing constituted by micro small and medium immersions any dividend double news over the culture.
Professor adoption of all line card not present, and contactless transactions and also a larger spending back by government solutions.
Imports information.
All these volumes are related only to payments transactions.
Due to could be 19.
Brazil involvement disbursed in relief you can call Corona Orchard.
Approximately one third of the Muslim population.
In some of the beneficial decided to top up and transfer their balances to some things, including taking them out.
However, you stop our bonds are not included in our TBD seats.
The chart below.
You can see Helsinki, TV trends when compared to the first half of March which is equal retrenching in Brazil.
The TV has been good.
In the first half of July we're reaching 121% of the TPV of the first half of March.
No 129% in first half August.
By now most of the stages in Brazil are reducing to social insulation, so important Cds or reopened suggest some polynesian here.
We'll take one zone could.
On the right side of the slide into August Wayne.
We see we already added more than 250000 emotions, surpassing more than 6 million active motions protected by another incredible consecutive historical record gross adds for in most in July which cooperates our view that yet vessel Walmart is increasing and accelerating after differently.
According to white BG since the beginning of the Moneymaking late March the number of new individuals professionals increased by 20% year over year end in parallel close to 9 million visitors lost a formal jobs millions and millions of people became immunosuppressants Tony or.
Opportunity.
Additionally, we continue to accelerate the pace of net adds for pegging already reaching more than 900000 users into August 20.
And so by selling more than 5.8 million active users expanding our addressable market beyond merchants.
Finally on the border Rightside them dislikes.
We can see similar to Q2 trends.
A record of POS sales, new light in daily TPV record in others acceleration of no. According to TV and growing above 200% year over year back and by the quantum auto parts or vitro cards and net revenues growing high teens no year over year basis.
Because of could be 19.
Continued you're seeing higher participation mix of debit transactions, reaching levels higher than those who live in fourth quarters.
Consequently, we do have a lower mix of quite an installment transactions, which we continue to temporarily impact negatively our take rate in months.
Now I'll pass the word to other Carl.
Our CFO, who continues to manage our costs and expenses verticals. So that he can navigate through these unique time together.
Thank you in order to please go ahead.
Thank you pick out the Hello, everyone.
All the necessary line, we present, our operating figures.
Total payment volume reached close to 30 million rice growing 3 billion rise or 11% when compared to the same period lot of last year.
Our diversified commercial base no geographic concentration resilience of the micro merchant segments.
In the adoption of online in card not present transactions supported this strong rebound that continues in July and August.
In the next where we break down or mix.
Like regardless said earlier, our take rates are being taper readily negatively impacted by this mix effect.
They acceleration or TPV is coming mainly through a debit cards supported by the government subsidies no escrowed ulcers.
A 600 railcars paycheck for the most vulnerable families.
In addition, as a consequence of the pandemic.
Lower consuming consumer confidence in higher unemployment rates are impacting personal credit card leverage.
In driving financial institutions to reduce credit limits.
These impacts the regular and credit card transactions installments, which is the main driver of our financially.
Additionally, economy, sackers or credit installments or more rather than such as general merchandise retailers growth in stores, among others, where more impacted during the partial shutdowns in Brazil.
Yeah that makes reached an unprecedented level of penetration surpassing 50% of our total TPV in seven weeks of Q2, even higher when compared to the highest seasonality observe it in Q4.
Again, we expect this mix effects to be temporary and it should normalize after the call. These 19 been damage and the good news is that we continue to gain market share and increased volumes on a year over year basis.
Well the sharp below our net take rate, which is the blended take rates net from transaction costs, such as either change both assay in card skiing fees reached two point, 72% down 59 basis points quarter over quarter in 25.
Basis points in comparison to Q4 2019.
All the next Brad we break down the three they take rate composition quarter over quarter, highlighting the most relevant impacts which are temporary as a consequence of the Colgate 19th and then Nick.
Well first the most relevant is the mix effect impacting 36 basis points with 23 basis points explained by the product mix due to lower installments transactions and 13 basis points as a temporary promotional.
Discounts to support our clients during the pandemic.
Second 13 basis points out transaction costs remember that in Q1, we had a positive impact coming from eight carts key rebate.
And last 11 basis points related to others.
Mainly due to our temporary decision to reduce our credit exposure during the crisis.
As discussed earlier, the largest negatively impacts our paper area and should recover as a comedy and the consumer confidence improves.
Driving or credit instead of them or state.
Well then active line we show our total revenue in income that reached almost 1.4 billion realized double supersite year over year.
Operating revenue in Inc. and remain flattish down <unk>, 0.6%.
Transaction activity is another services grew almost 4% year over year.
While financial income decreased 8% in the same period due to lower installment transactions.
Bottom right GAAP net income reached 296 million railways.
A decrease of 8% year over year non-GAAP net income in the second quarter reached 307 media rail is down 10% year over year.
In this quarter, we had a positive impact or 56 million recognize after tax due to a tax provision reversal.
Thank you all and now I'm passing their work Ricardo who will comment on the latest business developments.
Thanks door.
Moving to slide 11.
I want to share some figures about our online volumes.
Actually go to was border line in 2006, starting as a new warrant people like model for millions of Brazil has to be online in a safe and easily.
On the left side of the slide we can see or online ecosystem.
Over time, we'd be at new services and became a very complete online payments platform.
Could you features such as.
Different checkouts cross border transactions aligned to our codes link of payments speech payments and also logistic support to our emotions two third part partnerships.
More recently, we also launched our off with the Liveramp.
Our online results are encouraging.
Year over year, the number of online transactions doubled in Q2 2020 in online TPV grew more than 70%.
Transactions offering of payments a solution easily share to any social networks, such as what's up Facebook Messenger and also three may or SMS grew six 9%.
In our cross border TPV increased 2.5 times.
Below in the chart, we see that in July 2020, overlying TPV grew more than 120% year over year.
It's important to say, we have very low exposure to super acquiring confidence, meaning that almost 100% the for online transaction would refer to our own versions using our payment solutions.
Pandemic is driving a faster adoption of all line card not present and contactless transactions.
According to a visa probably study.
7% of Smbs are moving to additional force mindset had in Brazil, as one of the leader Scott.
We are investing to promote the best omni channel experience to millions of micro small and medium businesses many of them setting a life for the first time.
On slide 12, we presents some highlights in terms of online distribution, Google searches in our operating.
Starting with Google searches for digital banks.
Big Bank remains at the top.
With six 6% of total shares over digital begs a consequence of our marketing efforts and product Rollouts.
Thank you Bank App also continues to be top rated at the moment diesel banks, maintaining a 4.8 istars, an iOS and 4.7 stars in Android.
In the most we view that promote diesel banks and payment is also a consequence of our best in class product development and user experience oriented culture.
Since its launch like bank had to reach a 22 million downloads.
In terms of revenues you observe an increase of 50% from revenues from motions that in addition to acquire use three bank products.
If the Mercent use five products its revenues are 108% more.
Finally, some yourself heaters in June you'll ever reaching 113 million unique users or 92% of the Brazilian turned audience.
As you can see chart below you oil has a third largest orders Nicole just behind Google Facebook and audience reach and brand awareness Hep spicy will impact bank distribution.
On slide 13, we show some relevant engagement trends in our APAC bank ecosystem.
We believe engagement is irrelevant magic to for me to stage. Once you have the company's increases switching cost of our clients and increase the stickiness in order to which will enable feature monetization and revenue diversification.
In terms of tightening users who each at close to 5 million type. They actually uses adding 1.2 million new active users during the quarter.
Driven by motions conversion the by paying users and acceleration off net adds of consumers surpassing more than one media. Thank bank asking consumers show your ability to expand our banking engaged award addressable market through the launch of new products and services combine it with marketing and online.
Sure.
No not acquired it can be reached 10.6 billion up.
106, eight year over year.
Our total credit portfolio combined in lower in credit cards, reaching 465 million Ratchets down 6% part on record.
Since the beginning of funding, we decided to more new credit disbursements in order to limits or credit exposure in dispute.
In Q2, our focus was to support and run appreciate or portfolio in our case by case with our emotions.
Or part of our emotions, we offered a 90 day grace period for repaid.
Both measures help us to control NPL levels.
Despite the current environment heavily impacted by can give me main in late March and April the majority of the motions operationally spikes kept them continue to sell in our record 'em horns.
In July we started gradually to make new credit in offers to our best motions.
Crediting as an important to create higher engagements our motion based in will continue to generate additional revenues for the company's future.
On financial services, we reached 2.4 billion, realizing pack bank deposits, 41% when compared to the same period of 2019.
Mainly driven by enlarging for operators, our bankers leaps and wire transfers.
QR code transactions grew 40 times when compared to Q2 2019.
Moving higher usage of alternative payment methods NFC transactions grew 450% year over year boosted by differently.
On the top rights in the first half of 2020.
Like bank revenues increased it other than a 5% year over year already represent 70% of total revenues income on track to reach 30% of total revenue coming in five years.
Lastly, we are expanding our investment products through the terms of new certificates of deposits my bag.
With daily liquidity and higher industries.
For our clients holding passed an impact bank cities, we offer a free buying a bank credit car with credit limited link it to their investments.
On slide 14, we highlight or roadmap of products already delivering the past two years.
These tech and independent allow us to think exclusively on our clients financial needs and consequently, combined growth with profitability.
Since May 2018, we have delivered almost 50, new products, including Harbor software banking in services in our spec.
In June we launch ability when you could talk about feature.
As many clients can top up their public transportation he could impact your banquette using the balance of the de stocking up.
These new feature brings more convenience and helps with the slides in ticket count is up versus seven waste and train stations.
We also margin Harsha rental car the option to our user top park and transfer the call on abortion paid by actually can uncover here now.
Finally, we signed a new partnership with whole daughter and Easter.
Fostering the use of QR code offer and 10% cashback kept on the realize first social security number.
In July we announced acquisition UBS equal in most decided customer engagement in Lloyds platform.
Lastly, we launch in more options of our proprietary cities with different durations and interest rates that ranges from 100% Tryone hundred 50% over Brazilian interbank rates.
Despite the human health crisis, we decided to keep investing in product development and keep committed with our roadmap agenda.
Constant development of our ecosystem Husky, and we'll continue to deploying new products and services on payments banking and softer fronts.
On the next slide owns like to share some thoughts about the acquisition of wildcard point.
As we remain confident about our long term growth opportunity.
We took advantage to move forward and the strength of oral and payment solutions.
Worldwide and why.
He's an independent institution related by personal central bank, providing an inch way payment processing for ecommerce and marketplace.
With the closing of the deal packaging combined its best in class offline business model with the most relevant online platform for meals of motions strengthen its omni channel strategy and accelerating our growth in online sales.
Online sales in Brazil was assuming early stages with only 4% penetration of the total retail sales. However, it is expected to keep growing as a consequence of the funding.
Worldcom, what has 200000 clients is expected to reach close to 5 billion my eyes.
2020.
King of almost 40% in last five years.
Its revenues reached close to 120 media rights it CAGR of almost 30% in same period.
Important to say wildcard wipe has positively.
Our next slide we show a softer initiatives.
We have several initiatives to help motions to manage and grow their businesses.
In June we reached 311000 softer subscribers.
206, 7% year over year.
In July we are Nelson deposition of Ziegel, a moot side in Lloyds platform that enables micro small and medium size and motions to acquire engage and grow their customer base by offering customized marketing and loyalty programs and providing consumers insights and analytics.
We believe software offerings, one of the key value added services to keep adding engaging and monetizing our clients.
On the next slide.
We show some of the new products services and partnerships.
Some of them already described before such as believe when you go or the other calista and the Corona Moshe people car.
Additionally, we include Immersions embedded fossil including brass pizzeria, a famous watering Brazil.
Thank you fossil has been support them thousands of clients to several line by providing payments softer online menu in orders and even supporting with synergistic to partnerships with third party competence.
Finally, we are happy to announce we sign in partnership with ticked up.
He talk is most popular video sharing social networking sense, surpassing 2 billion app downloads around the world.
Can you talk influences in content developers may generate revenues by developing short eagles product promotions and et cetera.
With this partnership.
Hi, Good bank by Sea World offers a very simple and fast cash output them. So that users can transfer that tick tock balances directly to a banking bank account in up to one day.
Any use all the banking in warrant services that we provide.
This partnership will help us to scale, our bank account with millennials have usually will stick talk quite starting their financial lives.
Finally.
Moving to slide 18.
I would like to comment about these leasing opportunities in Brazil, and help peaks could unlock massive financial volumes to be captured and incorporate it into financial system. Consequently, boosting the usage of timing.
Pigs presents new opportunities to boost electronic transactions and leverage financial services to millions of them bank and underserved in Brazil.
Additionally, we believe that it should be volatile into our transfers.
The most impacted by peaks due to the nature of the fast payment transactions being efficient up those products in terms of pricing user experience settlement period also because of the size of each market, which is five times larger than cards Martin Brazil.
We believe peaks will be complimentary to card payments, mainly because of the my two cents of cartons in Brazil already establishing our consumption culture with roughly two debit cards in one credit card products.
Presenting 41% of our total PC.
I would consumption expenditure.
Thank you banking privacy world.
Our position to capture peaks opportunity as a payment and banking provider for both motion and consumers offer an integrated end to end and flexible platform relative integrating several stakeholders to already ads.
In conclusion.
We are prepared to increase and consolidate already there. She didn't know tail market, which is two huge due to his line number of my promotions and former employees in growth due to a generational shift from cash collateral pools action and increase our addressable market into the consumer virtuoso type thing.
Although we are a pragmatic in understanding in many in short term impacts of can be 19.
We are confident about the strong fundamentals of our businesses.
The strength of our band.
And the fact debate, but square ecosystem has been so far.
We will keep investing our long term strategy.
People products services and growth.
We believe parts is leaving described is uniquely positioned to lead digital transformation of payments in financial services in Brazil for both versions and consumers.
Having said that we finish our presentation that we started to any section.
Thank you we will now begin the western answer session. If you'll have a question. Please press star widen.
Our first question comes from Mr., Greg murderer Autonomous Research you May proceed.
Yeah, Hi, Thanks, a lot couple of questions for you.
First are you would discuss the impact that stimulus is having on volumes are there what's your expectation going forward for stimulus to be to be renewed and how important is that for continued acceleration in TPV.
Secondly.
In this in looking at Lloyds Lloyd seems to play across the spectrum in terms of merchant size for E Com show.
If you are being if you're if you're getting into large merchants through E com a by E com through Lloyd.
Well that lead to an omni channel opportunity that might pull paxar girls traditional acquiring opt to large merchants. Thanks.
Hi, Craig there's a ricardo thank you for the question good to hear you first part of the again sort about volumes di di emergency relief for Corona. Both for the government is is giving two part of the population.
The discussions that we are having at this time in Brazil was that is gonna be extended.
Two until December that's what the discussions are our leading to.
So we're going to have this this money coming to the economy just to give an idea is close to 50 billion way I spent months. The government is the pausing for one third of the population, Brazil, So it'll probably be continuing to December that's the discussion right now between the minister for economy and also.
The presentation in the Parliament so its going to how can this next month for sure after that it's hard to choose to answer you because it all depends I was going to be the rebound whos going to be the unemployment so but we're going to have this this money into next months.
About more types, you're right. They have the solution that suits clients from from all sides. Even if there is more E commerce or a large ecommerce.
Not to say marketplaces, so for sure they're going to open up a door for us to to have this omni channel solutions for ecommerce and large motions. They want to have Pos or a little solutions, such as conciliation things like that so.
It's not secret for anyone that the towards becoming more deals to offer discipline. They make so now wildcard is going to help us to leverage. This this trend and have a better solution for promotions of all sizes in Indian line Arena and also for those who are clients from wildcard already and then want a offline solution with piece.
Yes, and so.
Thank you very much.
Our next question comes from Rayna Kumar of Evercore.
Hi, Good evening. Thanks for taking my question is really good to see that strong acceleration TPV growth or you're seeing in July and August.
How much it back do you think it's sustainable we now coming back obviously being benefited from the Brazilian stimulus plan, but you're going forward, how should we think of that sustainable TPV growth outward plastic or out and second and secondly on we've added in Latin American that at 200.
99000 in that quarter is that a sustainable rate.
American ads going forward. Thank you.
And in a thank you for the question.
We think this this volume start of the volumes of course are coming from this.
Financial relief that government is essentially economy, but it's a small part of that I'd say the majority of these TPV is the insulation that right. We are having a having more net adds as you said so close to 300000 in Q2 when more than 250000 already in Q O Q3 in part of the gate.
Okay. So it's a deceleration of more people come into our ecosystem.
The recovery of the our emotions when you compare with the first half of March what's happening in July and August Derrick overnight and Oh, let's say part of that is related to the governor relief, but the majority of that is only.
With overall people there are coming towards solution not to say that during the pandemic as we presented in this feels like it's a more people are using online solutions anymore online TPV is coming to us. So there's this strength from cash to electronic transactions in more digital transactions our way.
We are happening, Brazil, when I guess or untoward. So I guess it is sustainable to have this levels and in terms of net adds we gave some some brief you about Q3 already so 250000 in 50 days, so it's being strong pace.
Okay, and just one follow up for me out what gives you confidence that after the third quarter. They you get back to that pretty cold that 19 net take rate.
Well, let's say lets me as a as as a part of the keep if this coming fully furnished relieves the other parties, because we are adding more emotions and.
As we have more lotions has more TV so.
That's why I'm confident that are going to have a strong pace in the de following months just won't commentary you arena as we said in a conference call the presentation.
We saw an increase of 20% off you in devito professionals in Brazil since the beginning of the Atlantic.
Many of these merchants, probably because they needed to do that because they probably lost or for the jobs, but you can be shared that also created an opportunity window for people to start to become interpret numerous in Brazil, and we're going to take advantage over that so we feel that is the right moment to keep adding merchants are we think that.
To be sustainable, we're seeing more people migrating to electronic transactions, a new kind of merchants the larger presence of all our online business, even now better with the a wild card acquisition. So we're pretty comfortable that those positive trends are sustainable going forward.
Great. Thank you.
Okay.
Our next question comes from Bryan Keane Deutsche Bank.
Hi, guys good to see the recovery here.
Wanted to ask about not acquiring volumes I know there were up 190% in first quarter.
The revenue is look like they're up about 158% in that first quarter.
And second quarter, non acquiring volumes up 168% with revenues up 52, so much larger gap between volume and revenue growth.
In the in the second quarter. So just trying to understand the deceleration in non acquiring revenues considering the volumes are still significant and then second question. It's just thinking about this sequentially on take rate you know given the mix changes you guys you're seeing for the first two months.
Should take rate continued to deteriorate a little bit with mix in the third quarter and same question on on net margins what about net margin to not third quarter as a result of that mix change and investments. Thanks.
Hi, Brian. Thank you for the question good to hear or you're right. When you look at the gap between the growth in in the likewise and also the the revenues growth.
Part of day, we explain because we've seen more people working with wide transferring this quarter.
ER so using products that are not generating generates revenue in Q2 and also because as we show the presentation. We decreased the exposure that we had in terms of credit. So we we did not give new laws for debates that affects the revenue and also as we'll have a lower TPV.
We people use less or card. So we have a lower interchange revenue, but we expect that within a week over the full corridors.
Yes.
So to the lights to complement yes, or part of the clients in the past capital probably Brian. We also lets say a decided to give a larger agree spirit of repayment nine today. So for sure that for those clients are not capturing the interest of the transaction. So these also helps to explain why we saw lets say last month.
It is issuing the credit product in this quarter and again, a temporary decision given the pandemic, we're more conservative skin in the credit originations, but as we said we are starting to see let's say the environment improving our best merchants are recovering their sales.
They are transacting more so it brings more confidence true to gradually let's say recovered the credit activity with those merchants.
And Brian This is a broker speaking about your question on take rates.
First let me back in our take rates I mean is related to our TBV mix.
The industry as a whole saw an increase in dabble transactions, three myday Corona washers and consumer trends.
Consumer are focusing only station, it's so reducing reducing their purchases in installments, especially in segments. There are done installments. So when you talk about apparel electronics are white goods.
Travel and among other products there are there any installments.
And people were focusing more on on that on the basic needs, which we have more babbitt debit transactions.
The second thing here is about a number of online transactions that though during the quarter boosting online TPV, 60% year over year. So take racism, though those payment methods like league of payments are slightly lower in comparison to the today average so in a short.
Uptake rates will continue to be under pressure as a result of the mix. We see this the same level uptake rates in Q3 compared to Q2, but again.
In the long term we.
We see we see TPV.
Normalizing and bad Bank revenues should also be drives a healthy trends for our take rates.
Got it and what about them and then income margins Eduardo when you think about them sequentially from Q2 Q3 Q.
I would say, saying eight net income margin levels.
Same thing okay, great. Thanks basic thank you.
Mario Pierry make if America you May proceed.
Good evening, everybody. Thank you for the presentation.
Yes got two questions then as well.
Again, we talked a lot about the growth online transaction it will give us.
For example of how much online transactions represent of your total transactions today.
How do you feel good.
Moving over time, especially right now.
I guess all of your.
Uh huh.
Your strategy here is really to grow seems to me is to grow more on online transactions and what do you mentioned right. They do have a lower take rates. There. So so just if we can give us some color than what percentage of your volumes today are coming online and what you do you see this going.
Second question.
It's related to your financial income right on.
It took a big hit it can you give us any sense, if there's any dress shirt, though.
So you shouldn't come from the lower rates environments, right I will see historically low levels in Brazil.
Is that also impacting or should that impact youre your take rate on our financial income. Thank you.
Hi, Mike. Thank you for the question and also good to hear you.
We don't give the exactly disclosure about de participation of aligning the whole mix, but I'd say you that.
We know as I said before the word is becoming more de still and people are some people were forced to do online transactions do we just pandemic Oliver the ward and also in Brazil. So it was a great time for us to have this agreement with wildcard. They have a good solution to serve motions for all size and Omar and also marketplace.
So are we.
We will grow online much faster than than Pos because first our Pos basis is bigger so.
As a percentage it it is impossible to all the simplicity of the online.
And also because we are seeing people using more line here in Brazil, when they talk about the take rate or they're two different solutions for July and environment. First one is think of payments and this is really let's say a lower than the offline solutions. The Pos but if you look at pure.
Ecommerce the take rate is higher than the Pos because we have more if there is an online transaction. So we charge more you short or fewer E commerce or a marketplace. So yeah link of payments. This is a smaller is lower than Pos, but the other solutions they have a higher take rates. So it's.
It will be accretive to the take rate, we expect to be accretive take rates in the future yeah, and also larger whereas in self credit installment transactions, especially commerce and marketplaces, Mario so overtime. They should could this could be something let's say important for as also in the mix of product can take rate.
And I might have disease OCO speaking are related to your question about financial incomes are they impact is purely coming from the mix.
As you can go straight to our web sites and you can check the price.
We're charging the exactly same prices that we charge a last quarter or last year. When the last the last two years. So adding up. The day is is really is really a function of of mix, having more than other transactions and being Brazilian.
You know that other Brazilians are more focused now on the very basic needs and very basic needs are not sold in installments things. There are sold in installments are usually our payroll general merchandise travel all those areas where we.
We saw a slow down the Hollycon [noise].
Okay. This is very helpful. Just then a follow up cobbled you think eventually you're going have pressure, though like you know the ability to maintain your same prices, even though interest rates have declined sharply is there something that you should do you know tried to lead dance tried to reduce.
The rates before someone else does.
And then they also had a follow up on the previous question. After the call. It before me in all the revenue from private banks are growing at a very good pace, but they're going much slower write them be glad ads. So if you can give us an idea then up is net adds from find your bank.
How many of them are coming from this government.
Packages.
Yeah.
If you can give us in our break down what the revenue that you're getting from by New Bank. You know you mentioned it was the interchange and also some of the credits just again give US an idea you know what percentage of these revenues come from wireline.
Oh my.
Me, Let me answer your first question about pressure on me on the on the on the discount rates.
I mean, we're not seeing pressure actually you can see that prices have been stable. If you compare to our prices to through our competitors. For example that also they are online I mean, it's exactly same rates. They also haven't haven't changed so we don't see.
A reason to two to change just because I mean, we don't see we don't see pressure here and is still if you compare to the kind of credit facility that we provide comparing into for example, two or two or three or three revolving through revolving credit or even.
During the the shacks. This you know I mean charging eight per cent per month is clearly a very very attractive rates.
Yeah My regarding the new revenues of thank you make the majority of the revenues control interchange.
So today when we see the acceleration of net adds impact bank and the your revenues are not falling let's say the same.
Speed on same train is because it takes a while for the consumer that is coming to start generate revenues any do grow as time passes by.
So we gave the example, when we gave the example in your presentation that the motion that use three study based products have 50% more revenues then acquired if these different they use five brothers, it's a 100% more so.
I'm going to give example, I can sign up for a bug you make accounting three minutes and then it will receive the card in a few days and to the point I do see would occur I don't generate injured CIT interchange.
Revenues I need to put money there to invest in a CD for Easter season, West, Tennessee de Oh, we receive a credit card in a few days. So it takes a while for the revenue to come is not a year, but it's not that same time is different when you think about similar to having acquiring when they received the device they start selling and then b.
The grow in the first months, but I guess impact you make it takes a while for the consumer to generate revenues and but I mean, we will we are making cross selling we are making promotions try to people to keep more the solution in the U.S more than one product. So it is happening is happening, but it takes a little bit to generate revenue.
Same velocity of de nuts.
Okay, guys now very clear thank you very much.
Our next question comes from Coty, Curried Morgan Stanley.
Hi course equity Morgan Stanley.
Congrats on the numbers at two questions if I may.
The first one on expenses you did a pretty good job on a person's on marketing expenses during the quarter.
Centering on a normal quarter.
Can you talk about.
<unk> expense projection for the remainder of the young for 2021.
As revenues pick up or are you still going to continue to invest into business about the revenue growth and should we expect expenses hands to grow up rather than it was can you grow both on the same time and and what does that mean for EBITDA margins.
My second question is I'm, sorry to go back to this but on the other take rate.
Possible that the Debbie can be.
Is it is it's actually a permanent change in the ways or cards are used to Brazil, because they're substitution of cash which everything has been very stronger applause Corbett, it's really a substitution by David I'm, not really credit and that may not come back.
And so maybe we have just a more debit.
Picks in in your business I think you're doing all the places that have you know higher penetration Norwalk overall electronic payments versus versus cash. So what what gives you pause to to say that Ah, that's if coronary and not potentially permanent thank.
Sure.
Hi, George Thank you for your question go to view as well.
I will talk about the first question we.
As we as you said, we controlled expenses very 11 second quarter and we're gonna than same in Q3.
The only thing that I'll see you there's going to be different in Q3, as we see the opportunities to grow we need to accelerate and have the growth of course balancing growth its profitability something that we always say so what I'm trying to say here's the multi expenses in Q3 will be between Q1 in Q2 will not be same as Q.
One is not only between these two quarters, because we see opportunities here to grow both of the business motions and consumers.
In terms of personnel is gonna be kind of similar that's what am I have the information. This point, so we invest a little bit more in marketing and.
Try to grow fast as you saw the printers in Q3 that some of the numbers in terms of net adds 250000 900000 consumers.
But as it wireless said before keep the margin levels at the same keep the net income margin at the same levels I guess the take rate Delcarlo can talk a little bit Tonight I can complement if it's necessary yeah.
Hey, good good to hear you we are seeing them it transactions if we go back.
Like 40 years of all a with a deep economic crisis.
So the same same trends I think not as dramatic as here because now we have 50 billion Ray nice.
Being provided two to two people every month and this is a normal this is a normal bathroom. If you see people with more cash on hand.
Obviously spend more on that basis and at the same time, we do have a credit compression in Brazil. So in our view, we don't see it is a permanent permanent change.
We see credit compression in Brazil, right now, we see if you didn't recognize being being dumped into Brazilian economy.
Every month and the good news here is that we have be adding volumes grow we are in August above 50% of our our TPV and adding more merchants. This means that we we continue to gain market share and we're continuing to.
Heavy and opportunity to expand our addressable market here.
Just one will complement your holiday.
We still have some sectors like bars, and restaurants and tourists, where we have a larger presence of credit card transactions or let's say are also being impacted all are still under pressure, we're seeing that activity in bars and restaurants is recorded in little bit, but not 100%.
The tourism is still not happening. So we also believe that some sectors, where we have a larger presence of credit transactions or even installments.
Just to be impacted by the virus and in should recover as we have the end of the pandemic.
Oh.
Clearly details on congrats again.
Our next question comes from Tito Labarta that Goldman Sachs.
Hi, good evening, thanks for the call.
A question in a couple I'm costs. If you look at your cost they went up in the quarter, even though volumes were down just understand you would expect them to prevent I'm going in mind with volumes. So they have been a specific there that you called it services actually.
Went up in the quarter and along those lines I mean looking at your net margin if we back out there that when time the provision reversal.
Let you mentioned you asked me your margin was actually close around 19% to just understand because you had given that you thought you had mentioned the margin would remain relatively stable or little bit lower in the quarter, but so would that factoring in this provision reversal and when we think about you mentioned in the third quarter. Your margin should also be.
Stable should we back out that provision reversal, so the margin to be stable at about 19%.
So just to understand a little bit the costs and the impact of that provision reversal on margins and how to think about them. Thank you.
Hi, Peter This is obviously very good question.
Actually when you're talking about more same level net income margins I mean, its considering that they reoccurring the recurring operations of the company taking out any extraordinary items. So a little today the tax provision reversal is something extraordinary so.
To to compare a stable margin for next quarter. It should be excluding these one time events that we don't expect to have in the next quarter.
Okay.
[music].
It's.
About costs are actually here, we have very it's good news.
Because you may remember that we have taxes on the either on the intercompany transfer of the devices and seats. We are selling more devices, we're having a higher either company taxes on the on the devices and as a result, you're seeing there.
Cost of other costs of transactions going up but it's it's far for really for a good reason as we're adding more merchants and you could see that we surpassed a until August 20 odd.
Other than 50000.
That adds.
Okay. Thank you that's helpful. So just understand a little bit on the margins because when you gave the guidance in in the last quarter.
Yeah, It seems that it's a bit lower than that so just with anything surprising in this quarter with maybe the net the take rate.
With lower because of the mix why do you think the margin maybe fell more than you originally thought.
Oh, yes, as we wish we mentioned before we saw Ics specially in the end of May and June acceleration of the debit transactions enormous having a higher share.
In our in our total mixed so I mean, he game he came down from originally expected due to the.
The product mix that would that we're having but we're not seeing eight you three nothing different from what we find what do we saw in Q2 and again this should be stable earnings.
This is a result of.
The sectors of the common you where we have.
Graduating installments I mean, they are slower than sectors, where for basic needs, where we have more than the transactions and again I mean, we're having the whole commentary a credit compression.
Okay. So mostly a function it makes it just to understand and then if I can act is one follow up question on the fee payment.
With the receivables market that's expected in November I mean, do you think back it puts some pressure on pricing, maybe maybe offset by higher volume, but I do you think that could impact the prepayment fees.
Hi, So this is ricardo at the prepayment de chambers of receivables.
It's going to be we think is gonna be use it I mean, we believe is going to be used for more large motions because remember our emotions cells 2000.
Realizing cards per month, if you consider the mix in a normal situation. We are saying that 30% of that is is related to installments. So we're talking about 600 realized per month. So they're very small they don't even have sophistication to two years, just kind of chimera receivables and seems like that and also remember when they use ourselves.
So as they need to to choose if they want to receive the money.
He is simply already 30 in the majority of then use should choose to receive essentially because you're talking about long tail. They just want them on as fast as possible. So.
Once they make it transaction, we read make the prepayment so I see the receivables Chimera is an opportunity. If you want them go there in lead for someone else receivables.
And less as a threat. So I see is neutral to positive for us.
Alright, thank you.
Next question comes from Anyhow Agarwalla HSBC.
Hi, congratulations on the strong results and thank you for taking my question I'm really good question is on PPV and they got some of the people will include other one in some respects undergoing a larger but it wouldn't be able to segregate that.
And there are some sense.
How much of the TPV do if you exclude these volumes ensure BPP English is quite strong.
Well, even close to half of August.
It's already won 29% of that and the fact that much but what what this number it looked like if you exclude the chronological order.
And my second question is on on thick.
And then that some of that having isn't doesn't oxygen Natick foundation to collect those and calatlantic like this could be accessed it typically takes a little implementation uptakes how much.
Oh I see revenue is generated from from two sources.
Thank you promote.
And he had thank you for the question.
ER.
Let's just explained here the first Oh, let's see explanation is we're not considering the top of Corlanor motion to know GPP, we're only consider payments that happened in our system. So the top up there's some other players consider as TPV or they some point.
The discount or make disclaimer, we don't have this these volumes here in basically so it's only payments that are happening through or our ecosystem.
It is hard to say what would be the TPV without all the definitional relief or grow nevatia, because lets think someone gets the money deposit in no bank and then they decide to use the debit card from this bank so.
It is impossible to say what is the back the exact impact of Corona harsher too. So the answer you in a different way, let's say the we are growing much faster than the whole industry. We are taking market share from the whole industry. If look at the first semester.
In Brazil, the industry grew three or 3.5%. We grew 20%. If you look in Q2 dangerous as a whole decrease it close to 80% we are growing 11%. So we're taking share we are adding new merchants, we are bringing new people to the system, a and b straight to your question. It is impossible to say.
This is going to Avastin is not going up or should I would say you. Then we are having a strong trends, putting new new motions, new consumers and taking share from from some other players.
The other question regarding became the new asking about volatile.
We also see that has a positive thing because.
We don't have debit card transactions in online environment in Brazil, It's a very bad experience in today people do use debit card some of them decide to use a volatile we can now have this.
Solution that people are going to use peaks and we can take it can get to take rate of that and also part of the people that decide to is believed to they do that because they want to paying cash.
Whenever they want to go to a brain showed in another took place weve the bulletin paying cash in half D. You confirmation of the payment is similar that so I see that in terms of will lead the peaks is a huge opportunity. He's a good deal because bolaitos doesn't generate too much revenues for us and there is no debit cards in online transactions in now.
We'll speak to still be able to have this transaction so it'll be positive.
Okay. Thank you so much if I can ask one last question.
In terms of competition.
That in and past few months Mercadopago has been quite the classic in terms of topline apply tends to be a thing that their parents machines.
Could you.
Telethons, you'll get a good how you see competition in the past, Finland and watching your segment.
But anyhow.
As we we also targeting some previous calls and since the IPO.
The long tail Martin Brazil's is still growing or I don't know how much difficult, but the competition is growing when compared to as bird seed that we are very happy with 250000 net adds the only 50 days in Q3, we had the records of sales in July in June and then in July we had records of of.
TPV daily TPV in August so we are doing very well I.
I don't always competition is the same base as us, but we're not suffering we do see our churn going up too we do research all the time as our basically people those those say they are leaving us to boost your competitor part of the motions that did stop transaction is because they didn't have the bidders open because of the pandemic or things like that.
So now we're not feeling the competition. So it's we are growing faster than what do we grew in Q2 last year.
Well they can't thank you so much.
Our next question comes from Tomas period to BTG Pactual you May proceed.
Okay.
Hi, everyone. Thanks for taking my questions I have to the first one his own that add see in their motion is before the crisis you were indicating a similar net and this year then let here, but with the 300 and educate and thousand net adds until mid August.
This indicates a much stronger Trent needs. So I just wanted to try to get an i. I view. If you will have on your expectations for how how much net adds could be in Q3 in Q4, if they can continue the same.
Same store base says we are see in mid August and also what is the expectation for next year.
And the second question is if it's killed in net net adds but if you could share with birds, how much up then that adds.
What we're using the payment leaks kind of Chile, Joe have an idea of how much merchants you already have without using the Pos machine just using the opinion leaks and how was that churn. If you had the any different dynamics in.
In the churn in Q2 and more recently in July and August. Thank you.
Oh, Hi, Thomas Thank you for the question what you view.
Regarding net ads, where you're right we had an expectation for this year now we are surpassing the next visitation by far.
Part of that we see.
The distributor for Brent people coming to us because they know by disagrees, a bicycle and bike bank. It's a trust company. They can make the transaction here. They don't article said about the money coming here. They know it's it's a serious company and it works very well. There is already is word of mouth that people talk to each other.
That solution is good and it's easy to work with and also we see part of the competitors deciding not to two competing will tell you anymore. They were vocal saying that they will not investing long tail, because it's hard to sue to to make money because they don't have the scale when they do have the complete ecosystem, we always see here.
People come to us because.
The she is a more complete solution not only di di Pos but also they receive the money right. After transaction they receive a card to access the balance of the account. So we as I said before where we are in a really really strong pace wouldn't have a situation like that that some people also decide to work by themselves some of.
Then because they need we also see more demand for our services in our device. So that's why we had records of sales in June and then a new record in July.
We see de de marketable until March is expanding so yards addressing this march 10 decelerated to try to grow as fast as possible to to gain share as I said before the industry in first half the industry. Good three 3.5% and we grew 20%.
When we make research with the motions that come to US is to today, 80% of the most of that come to us did not accept cards before joining us. So it's not a zero sum game here, we are bringing new people into the system some of them come because they want to sell with legacy where some of them come because pega bank. So I mean, we.
In a very good position.
Looking to Q3.
Right now I guess, what do you can say is 250000, we can make this.
Projections is gonna be let me more than 300000 in Q3, that's what do you expect because we had 250000 only if 50 days.
I do see why Q4 would decelerate.
But it's hard to give a projection for 2020 on I guess, we're not in a in a position to give a projection for 2021, a lot of uncertainty looking forward and volatility in these times, but I mean, we have a strong brand we invest in March two we are investing a little bit more marketing Q3.
I've seen the result so.
We look forward. We we are confident it's going to be able to your in terms of net adds in terms of di di new versions and new TPV coming to us.
Okay, and just a follow up on Internet and how much of them are are.
Clients using the payment link and if you have any any different dynamics in churn how did turn behave in the Q2 and early July and August.
Yeah.
So in terms of think of payments, we have many motions I decide to his legacy payments, but I'd say in these 250000.
We don't have a large number of motions that came to us only to use link of payments I would say that the majority of them not to say Marlin close to 100% of those are the board device is of course. They can also using of image because of some situations they have or they just want.
So good clients, but it's not boosted by link of payments. This 250000 is not boosted while you can make of course, it's people that the people there are coming towards in buying devices and choosing the Pos so as mark to estriol to sell with us in terms of churn.
We see that is very culminating in bicycle that people come to as they make a transaction for one month of lending falling off the stopping it come back again. So you have this back and forth in low deal.
We had this let's say decrease in April and May but when looking in June.
We recover more than 100% of the D base that we saw the do it is actually in February March so.
There is no churn the no no, let's say spiking churn because of the pandemic people just sold less because I mean did diseases workload, where schools or some situation when they are coming back they're coming back and you see that recovery is being very strong in very fast.
Okay and any one final follow up if I may is if you you already see a friend of clients. They started using Pega Bank and then became like merchants are our bikes headwaters did you see like this.
Yeah reverse trend.
Yes, so as we have this this situation.
People that come to us the they can they sign up for bank at some point they buy a device and decide to become a motion its not the majority of the new merchandise. Despite what do you have.
Most of that come to us first because if they get bank and then afterwards, they decide to buy a device and start selling with bicycle. So it's that's why you say that when events and the platform for Pega Bank is not a blood from little for consumers, but from the serves both merchants and consumers and you have this situation people coming to us because if I.
Bank and then become emotional after awhile.
Okay very clear thank you very much.
Our next question calm.
Cantwell Guggenheim you May proceed fleet.
Hi, Thanks for taking my questions. Thanks for squeezing me and apologies if I missed on some of this earlier. This certainly has an impact to call I just wanted to see if I can circle back and asking what unpack bank I can you talk a little more about the growth that you think into your space. Specifically you now have over 1 million consumers.
Hi Bank.
And Youre talking about another 900000 net adds August 20, it sounds like you're on track for another record quarter in the third quarter. So what's driving that and do you think are those consumers are you think pack bank I hear primary account I just want to get appeal for how in French that is second.
You know it certainly interesting to watch your strategy partnerships are making tag banks I got my question that I have for you is here do you think.
[laughter] talk.
That grow into something meaningful eventually okay that help accelerate the number correct.
Thank you would be greater your thoughts on that thanks.
Hi, Jeff. Thanks for your question you're right when it does that we will probably have another record of bag Banco should take bank net adds the in Q3.
In Q2, we reaching more than 1 million consumers using Pega bank.
We also make research with these days, we have a let's say a descent percentage of this consumers that users as a primary bank.
We're not disclosing that at this time, but it is.
Getting better as time passes by and why is that because we launch it take banking may 2019, he was a very basic account.
Then we started rolling out new products just to give some examples in September last year. We started the interest in the balances. So after that in November December we offer a few credit card for some consumers and then we launch in Cds and then we launched new partnerships now people can have a CD here that they.
150% die.
So that's why people are coming towards and see that do have the complete a decent account of course is not compete yet, but we are rolling out products and that's why we invest in blood from there are many things that need to do we launch it some micro assurance.
In Q1 this year Pega Bank health there are some orders that we launch as well. So we are making this does account for more complete so people, we will use as a primary bank more and more.
Are they come to us part of the because the Dcs if we account with a lot of services and that our for free that's first thing in the second one is because doing the pandemic people saw the needs to use more diesel banks in Brazil. That's a trend that is happening here in probably 70 are underway.
So the branches were close people could do not go there to make some basic operation. So that is just demand for people to use more.
We still back so we we see a I would trade in a good opportunity for us as I said before the award is becoming more d. So we thought that we were leased already but now with the pandemic. There was a deceleration more people using more digital services.
Regarding kicked off is it still too early to give a.
Let's say the number we started a week ago. It stick talk is very very use for millennials.
Some of them they don't even they cannot have a bank account. So you should too early to give a let's say a preview what's going to happen maybe in the next goal. We can give more color about that but for sure is a good partnership is a strong social networking services, even if people don't do come to us to create an.
Out at least we're gonna have let's say disposition of for brand for these millennials and it will help us new feature for sure.
Okay, great. Thank you.
Next question comes from James Friedman of Susquehanna You May proceed.
Hi. Thank you. This is a good investor relations presentation I just had a couple of follow up questions from the first one is.
When would you suggest that we start to layer in wire occurred is this year too soon or is it more 21 of them.
And then.
In Slide 18. This is the one where you talk about.
Picks Ricardo.
No. We do in this example by the Bar code replacement. If you could just elaborate on that and then.
How should we be thinking about the financial model is there any like take rate observation you would have oh, what picks might look like if it's a funding source for you.
So those are two questions wildcard and then picks thank you.
Hi, James This is one of the I'll take the first question. So they they worker leveraging acquisition now is only subject to antitrust and central Bank approval, which we don't envision.
Any difficult here so.
Probably Q4, or we started to consolidate their their numbers.
Yeah.
And go to slide 18, James first of all thank you for the question, which if you live.
How does it work today, let's say if one if one of pay someone or E commerce to a volatile in this volatile have a barcodes and then you can generate this bank slipped there's a barcode and do you go to your bank add for you can print that you're paying cash and then the money is gonna come to the.
C D motion in the next day and only after that there is there going to have the confirmation and send you the products or I mean.
Make make the search is available for someone that is buying or for some of the Spain.
We'll be it's a this could happen automatically so people just can go to a a website or a screen and then make the transfer it's going to be 24 hours a day seven days a week.
Regarding the how is gonna be the economics for that's for sure is gonna be source of funds because by the bank is a an account that people can send them money. They received two peaks. So they want us into my it was and also we can offer solutions with charging take rates for our emotions if they accept.
Peaks what is defined it is that people that is buying will not pay anything the people that are receiving if it is a business, regardless, if youre, a small business or not or the company that is making this connection can charge. So for sure. We are going to offer these for our emotions.
And we can even we we will have to take rate in this type of transaction, that's something that already have a very small take rate today or maybe we are out of this market. At this time. So it's it's a little opportunities to reach this market that is five times larger than credit cards market those cards markets.
Great. Thank you very much.
Next question comes from Josh back Keybanc.
Thank you for a for squeezing me and I I just have a higher level.
Justin Obviously, you were all started to get a lot of information on Ali pay and China, certainly what the Super App can look like.
And you know the U.S., we have paypower, yeah, that's a pretty good.
Example of a really powerful a wallet. So I'm just wondering you know when you pick about Brazil, where do you see that consumer.
Your system going to in the next you know call. It five years and and also how do you think about the importance of QR codes within this kind of new.
Consumer.
Digital ecosystem.
Hi, Josh. Thank you for the question good to hear you.
That's that's a discussion that people always bring to us the making the parallel with China. It's worth to say that we we went to China many times to understand what's going on there.
And what we all assays, there's only one shining a word it doesn't mean that why works in China is going to work.
In order.
Immersion commentary, but I guess the difference the main difference here is that in China. They didn't have the G penetration of cards or plastics.
If you issue before that you have in Brazil today, 40% of Pcs already happening in the cards. So in China. The only had the cash the paper and then they went straight to de mobile phone. So they didn't have this plastic culture that we have in Brazil first second they didn't have the.
Credit that he had in Brazil people use credit card a lot. So it's different people is only as it did debit so.
We have also disclosure of credit and credit do with installments. So we are let's say much more.
In front of China in terms of plastics or cars or things like that so they went straight from the cash to paper to the mobile phone that supports in second one is about SUPRESS. We are always building. This hour at two to try to be a super happened or have additional services.
Similar companies doing that down here.
The conclusion is it's hard to change consumer behaviors people keep using the cards of course some of the early adopters used to spread but some people used to the card. So I see a very different situation. When when do you think about that Super I'm, just going to come to Brazil will be successful in terms of disrupting di di industry that you have.
So even if you think about some of the social benefits the government paying in cards. So it's very common here for people choose cards.
We gave some information the presentation in on averaged an adult here in Brazil have to them cards in one credit card and they use credit card a lot because you have 30 day Grace period without any interest so different situation different environment.
Thats why we keep selling thousands of devices of Pos in Brazil, because people used car and if the consumer once used the card. The motion leads accepted that's why Didnt you have a Pos there and that's why we are selling.
Records of devices in June July.
Really helpful. Thank you for the the context or on the market there really appreciate it.
Next question comes from the Laramie Greenspan JP Morgan.
Hey, guys. Thank you for the presentation opening for questions.
On our side is that your follow up from the previous one on the evil toward that.
It was not fully clear to work with Sanofi a stake in the last time, we discussed this conference call. It was expected to be.
A little bit lower the impact from this this transfers and we would just wanted to dig a little bit flipper, albeit on the dynamic of what is happening and we are trying to understand here to force.
You have a one off or.
Inventory there in the subsidiary that Ed as you sell more Pos.
This is back in terms of backs it starts to happen and if that's the case can you provide US then it's soft guidance on what is the size of its inventory or eventually how long you've got a less those impacts.
Or if there's a second situation in which the new Pos acquisitions that are guys are buying from suppliers. If it's happening on the subsidiary and then you were selling on the holding.
And if that's the case, which was not clear to us what is the benefit of or make it a district. Thank you.
I'll start with the there the last question of the benefits, we do have a band I tax benefit of doing that.
Through this subsidiary.
Comparing to the to the so they're holding to the holding company of bikes era I think we mentioned dialing the in the last in the last call.
It's not really a one off I mean, we're actually.
These two what happened we also record devices sales in June and fashion in July. So we are not see a this this figure coming down for for a very good reason.
Okay, just as a follow up ocado, so just to be clear as long as you continue selling Pos.
Is there any pets is going to take place I mean, the following quarters.
Yes, if we keep selling more it should increase if we sell lives should we agreed to me. It's a it's simple it's simple is that because we're doing that through through a subsidiary company.
Okay. Thank you.
Once again, if you have a question please press star one.
It is concluded the question answer session for today I would like to invite Mr. do try to proceed with the his closing statements. Please go ahead Sir.
Hi, everyone I just want to thank everybody for a time today, we hope all of viewing our families are safe and healthy and we look forward to being able to see all of you in person as soon as possible. Thank you. Thank you very much for time.
Thank you pack cigarettes conference calls is concluded. Thank you very much for your purchase the patients have a nice evening.
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I know feedback that you can read.
On slide 10 net savings that.
I will go from Cleveland.
Do you get a drag.
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Oh, Yeah, Karen that yeah.
That sounds very minimal yeah, most of them, they're saving that care 'em horns Bang cow no form.
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Hi, Dan.