Q3 2020 Evertec Inc Earnings Call
[music].
Good afternoon, everyone and welcome to the Evertecs third quarter 2020 earnings Conference call.
Today's conference call is being recorded.
As Todd <unk>, Vice President of Investor Relations. Please go ahead.
Thank you and good afternoon with me today are Mac Schuessler, our president and Chief Executive Officer, and Joaquin 'cause trio, our Chief Financial Officer.
Before we begin I'd like to remind everyone that this call may contain forward looking statements and should be considered in conjunction with cautionary statements contained in our earnings release and the company's most recent periodic FPC report.
During today's call management will provide certain information that will constitute non-GAAP financial measures underestimates the world such as adjusted EBITDA adjusted net income and adjusted earnings per common share.
Reconciliations to GAAP measures and certain additional information are also included in today's earnings release and related supplemental slides, which are available in the Investor Relations section of our company's website at www Dot Evertec Inc. Dot com.
Now I'll hand, the call over to Matt.
Thanks, Kate and good afternoon, everyone. We.
We achieved strong results with the highest quarterly performance in our company's history, driven by consumer demand as the economy reopens as well as the impact from new business. Additionally, we have continued to execute on our Latin America initiatives, which will position us for growth over the longer term.
Beginning on slide four total revenue was $137 million for the third quarter.
Increase of 15% compared to 2019 adjust.
Adjusted EBITDA was $70 million, an increase of 26% as compared to the prior year and adjusted earnings per share was 65 cents, an increase of 38% would.
We generated significant operating cash flow year to date $121 million and we returned approximately $18 million to our shareholders through share repurchases and dividends.
Additionally, our liquidity as of September Thirtyth.
It's $246 million.
Moving onto our update on slide five for Puerto Rico.
We continued to see significant transaction revenue as a result of the federal and Puerto Rico government stimulus programs earlier in the quarter timing of tax payments and the further reopening of businesses.
Merchant revenue surge in July to over 30% growth tapering off and the subsequent much for total quarterly revenue growth of 16%.
The Puerto Rico government further reduced coal with restrictions beginning in early September however, consumer demand has been tempered by the expiration of the stimulus support.
That said, we are encouraged by the recently announced release of $13 billion in federal funds to rebuild the electric infrastructure on the island, which will be a longer term benefit to the economy addition.
Additionally, we would expect to see a more immediate impact from the additional $300 per week of unemployment benefit as outlined by the President's Executive order, which was approved by FEMA for Puerto Rico, only a few weeks ago and began to be distributed last week.
Our recent contract with the Department of Education, which we recently provided new computers and support to the public education system produce a onetime revenue increase of approximately $4.4 million in the quarter.
We also continued to benefit from our digital channels relate to the Eightyish network already teach mobile and IDH mobile business continued to deliver superior growth and we are encouraged by the adoption rate of both consumers and businesses.
We all have also expanded the contactless functionality through QR codes from 400 merchants in July over 1500 businesses today.
On slide six I'll review, our Latin American business.
Regarding the environment, we continue to see different responses to the Cove in 19 pandemic and varying levels of restrictions and reopenings.
Chile, and Colombia have stabilized October 19 trends and recently lifted certain restrictions.
Mexico in Brazil are lot of many merchants to reopen with Brazil recently, achieving more than a month of stability.
However, we remain cautious about the outlook throughout the region given the continuing uncertainty surrounding the virus.
<unk> pandemic, we remain focused on executing on our lifetime growth initiative.
We continue to leverage our investment in place today by localizing, the gateway in Costa Rica and Panama.
This platform has enabled our partner banks to transition existing merchants to the new gateway as well as add new ecommerce merchant.
Hey studio acquiring platform is now in production with two new customers allow in Brazil, and and and or away.
As we mentioned on our Q4 2019 call Hello is one of the largest financial services companies in Brazil, specializing in benefits incentives and corporate expense management and is the largest nonprofit in Norway, which serves as a benefits provider for <unk> a wide range of services, such as medical legal travel and other.
Services through employee payroll deductions.
Both clients where term license agreements.
We continue to expect to be in production on our acquiring processing services Santander in Chile, and our collection platform with Citi Banamex by the end of the year.
We anticipate all of these wins to contribute to growth in 2021 for Latin America payment segment and over the longer term.
As always we have continued to invest in our employees and communities recently, we completed an employee engagement survey and despite the challenges of working through the cobot endemic we saw a 13% increase in participation and engagement survey to 85% as well a significant improvement in many areas and employee satisfaction.
While we were delighted with the engagement and the feedback we still have areas of opportunity that we will focus on this year and next in Puerto Rico and across Latin America. We continued our commitment to the scholarship program, which is in its sixth year and we awarded over 160 scholarships an increase of almost 20% from the previous year.
This year, we were particularly focused on gender equality and through specific initiatives, we were able to achieve a balance of 50% female and 50% Mel stem scholarship recipients and Puerto Rico.
Further over the past year, we have focused on our environment, social and governance efforts and we have seen increases in the scores provided by various rating agencies.
We are proud of our progress on these important areas as corporate citizenship with that I will now turn the call over to working [noise].
Thank you, Mike and good afternoon, everyone.
Turning to slide nine you will see the consolidated third quarter results for Evertec.
Total revenue for the third quarter was 136.5 million up 15% compared to 118.8 million in the prior year, reflecting the strong bounce back in consumer demand positively impacting all our transactional revenue as Mike mentioned, we also benefited from one time revenue of 4.4.
A million with our new department of education contract.
Total revenue for the nine months was $376.4 million, an increase of 4% year over year.
Adjusted EBITDA for the quarter was $70 million, an increase of 26% from 55.5 million in the prior year.
Adjusted EBITDA margin was 51.3% and this represents a 460 basis point increase compared to the prior year. The increase in margin primarily reflects the higher transactional revenue and additional services provided to the government.
Additionally, we benefited from nonoperating income of approximately 2 million due to foreign currency gains related to balance sheet remeasurement.
Year to date adjusted EBITDA was 176.5 million, an increase of 3% from 170.9 million in the prior year.
Adjusted net income for the quarter was 47 point to me to an increase of 37% as compared to the prior year, primarily reflecting the higher adjusted EBITDA lower cash interest.
This was partially offset by increased operating depreciation and amortization driven by capital expenditures in the prior year as well as key projects that went into production this year. Unlike last year.
Our adjusted effective tax rate in the quarter.
Was 13.6%, reflecting the mix of business in Q3, we now expect our tax rate in Q4, two range from 13% to 14% depending on the mix of business.
Adjusted EPS was 65 cents for the quarter, an increased to 38% compared to the prior year.
Year to date adjusted net income was 108.5 million, an approximately flat with last year.
Adjusted earnings per common share was $1.49, an increase of 1% from $1.48 in the prior year.
Moving on to Slide 10, I'll now cover our segment results starting with merchant acquiring.
In the third quarter merchant acquiring net revenue increased 16% year over year to approximately 30.6 million driven by the impact of increased sales volume.
The quarter began with over 30% year over year revenue growth in July and moderated to a high single digits averaged for the remainder of the quarter.
The quarter results were driven by the reopening of business pent up consumer demand as well as extra funding from federal programs as a result of COVID-19.
The merchant mix during the quarter shifted to a more normal distribution and we continue to benefit from a high average ticket, although transactions were down approximately 8% for the quarter.
Spread was up primarily due to the higher average ticket benefit from card mix shifting from credit to debit as well as from international cards total parts.
Adjusted EBITDA for the segment was 15.9 million up 42% adjusted EBITDA margin was 51.8% up approximately 940 basis points as compared to the last year, reflecting the impact of the higher revenue and lower operating expenses, primarily due to lower transactions were like.
We see these elevated margins decline as average ticket normalizes in the fourth quarter.
For the nine month period merchant acquiring revenue increased 2% to 80.5 million.
Adjusted EBITDA year to date for this segment was $40.6 million up 14% and adjusted EBITDA margin was 50.4% a 560 basis point increase as compared to the last year.
Slide 11, you will see the results for the payments services, Puerto Rico, and the Caribbean segment.
Revenue for the segment in the third quarter was $33.3 million.
Approximately 9% as compared to last year, primarily due to the higher peach mobile and engage mobile business transactions and other new services.
We saw in over 200%, increasing 18 mobile revenues, which contributed an incremental $2.3 million in the quarter. This benefit was partially offset by a decline in ATM transaction volumes.
Adjusted EBITDA for the segment was $18.5 million.
1% as compared to last year.
The EBITDA margin was 55.5% down 490 basis points as compared to last year, primarily due to higher operating expenses driven by higher cloud expenses, Pos repair and maintenance and other project related expenses.
Year to date revenue for this segment was $90.6 million down approximately 2% as compared to last year.
Year to date, adjusted EBITDA was 47.8 million.
Down approximately 20% and adjusted EBITDA margin was 52.8% down approximately 11.8 percentage points as compared to last year.
On Slide 12, you will see the results for our payment services Latam segment.
Revenue for the segment in the third quarter was 21.2 million or approximately 3% as compared to last year.
The increase was driven by the acquisition of placed two bay as well as revenue related to the implementation of Orlando, partially offset by COVID-19 impact on transactional revenue the negative effect of anticipated accretion of approximately $1 million as well as negative foreign currency impact of approximately 700000.
Adjusted EBITDA for the segment was 9.5 million and adjusted EBITDA margin was 44.9% of approximately 810 basis points compared to last year, driven by higher revenue and the benefit of balance sheet remeasurement in nonfunctional currencies of approximately $2 million.
Excluding the Remeasurement adjusted EBITDA margin would have been approximately 34% generally consistent with our expectation.
Year to date revenue for this segment was 62.7 million approximately flat as compared to last year.
Year to date adjusted EBITDA for the segment was $23.9 million, an adjusted EBITDA margin was 38.1%.
On slide 13.
We'll find the results for the business solutions segment.
Business solutions revenue for the third quarter was up approximately 19% to $63 million the revenue increasing the quarter was primarily due to the department of education contract of 4.4 million New services for popular an increase as related to government contracts, coupled with delays in last year's Goldman.
Renal sales.
For the quarter adjusted EBITDA was 33 million and adjusted EBITDA margin was 52.4% approximately 500 basis points up compared to last year.
The adjusted EBITDA margin increase was primarily driven by higher revenue, particularly the department of education, One time revenue, which was recorded net of expenses.
If we normalize for the one time revenue the adjusted EBITDA margin would be in our normal percentage range of the mid Fortys.
Year to date with a solution revenue was $174.5 million up 9% and adjusted EBITDA for the segment was 84.5 million with a 48.4% margin.
Moving on to Slide 14, you will see a summary of corporate and other.
Our third quarter adjusted EBITDA was a negative 6.9 million, an increase of 1% compared to prior year.
Our adjusted EBITDA as a percentage of total revenue of 5% was favorable by approximately 70 basis points as compared to prior year, primarily due to higher revenues in the quarter.
Year to date, our corporate and other adjusted EBITDA was 20.2 million or 5.4%. That's a percentage of total revenue unfavorable approximately 30 basis points compared to last year.
Moving on to our year to date cash flow overview on slide 15, our beginning cash balance was approximately 131 million, including restricted cash of approximately $20 million.
Net cash provided by operating activities was approximately $121 million.
Hey, 50 million decrease compared to prior year, which includes an increase in our accounts receivables as a result of the new computers provided under the department of Education contract. Most of these receivables were paid by the government subsequent to the end of the quarter.
Capital expenditures year to date were approximately 37 million.
We continue to anticipate approximately 45 million of Capex for the full year.
We paid approximately $28 million in long term debt payments.
3 million and withholding taxes on shared based compensation and 2 million of other debt Paydowns, which resulted in a total net debt decreased approximately 33 million.
Year to date, we paid cash dividends of 11 million although.
Although we did not repurchase any stock in the quarter total repurchases of common stock year to date were approximately $7 million.
We have approximately $23 million available for future use under the company's share repurchase program.
We recently announced another five cents dividend to be paid on December 4th 2020 to shareholders of record as of November seven 2020.
Our ending cash balance as of September Thirtyth was 162 million and this includes approximately $18 million of restricted cash.
Moving to slide 16, you will find a summary of our debt as of September Thirtyth 2020.
Our quarter ending net debt position was approximately $361 million.
Price of approximately 144 million of unrestricted cash and approximately 505 million of total short term borrowings on long term debt.
Our weighted average interest rate was 4.5% our.
Our net debt to trailing 12 month adjusted EBITDA was 1.9 times. This multiple below the two times threshold will provide a 25 basis point improvement interest rate on approximately 40% of our debt in the next quarter.
As of September Thirtyth total liquidity was approximately $246 million.
This balance.
Excludes restricted gosh that includes the available borrowing capacity under our revolver, which remains fully available.
Now moving onto our thoughts on the remainder of this year as well as some initial comments for 2021.
Although we're not providing guidance given the continued uncertainty of COVID-19.
We believe we could see low to mid single digit revenue growth in Q4 21, if there are no significant changes in the impact of the pandemic.
We expect to see sales volume growth slowing in Puerto Rico as well as the average ticket normalizing we.
We would anticipate modest BSS oceans revenue growth and let him should be delivering mid single digit revenue growth driven by the new contracts, partially offset by the continued impact of COVID-19, an attrition.
Margins should move to more normal levels between 46, and 47% of the average ticket comes down and unlike Q3, we do not anticipate any significant onetime revenue benefits in the quarter.
Now turning to 2021 I would like to comment on several considerations first we are pleased with our new agreement with them, which are anticipated to contribute to high single to low teens growth in Latam, assuming some normalization of the COVID-19 impact on recovering currencies that have been a headwind in 2020.
We are pleased with the place a big Gateway and anticipate further expansion as we cross sell this product to other clients in broader geographies well.
While we had some delays in client attrition in 2020, which will now be realized in 2021, we plan to stop updating these given that 2021 attrition will likely be at similar levels to 2020.
Second in Puerto Rico, we will continue to monitor the flow of federal funds under but potential positive impact to the economy.
From rebuilding an investment, but the timing still remains unclear as is the impact of Kobe 19, we believe our focus on innovations on digital solutions will continue to benefit us in 2021 Lastly, the CVI index for September was announced on October 13, and was 1.4%, which will benefit our Buffalo revenues as part of the MSR sales.
Remained largely affecting the business solutions segment.
In summary, it is gratifying to see the results in Q3.
And we are executing well against our longer term initiatives. We look forward to updating you with our full 2021 outlook next quarter. We will now open the call for questions. Operator. Please go ahead and open the line. Yes. Thank you. We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If you are using a speakerphone please pick up your hands up before pressing behaves so.
I'm sorry. Your question. Please press Star then too.
At this time, we will pause momentarily to assemble the roster.
And the first question comes from Bob Napoli with William Blair.
Okay.
Thank you good afternoon.
Nice job on the quarter.
The what do you expect from Chile, and and city Citigroup in 2021.
Yes, we're not giving back and.
Good to talk to you. So we are still very focused on getting those implemented this year and in fact in Chile, we already have some margins that we are processing transactions for.
So we believe that those will contribute to 2021.
And we have been able to continue to get those projects done on time in the year, but we're not giving guidance of about one doesn't contribute.
Until we give guidance.
At the next call.
Okay.
Very good and that it's included I guess in the Latam high single to low teens revenue growth.
Right, but it is included in it.
Okay and then.
The.
Growth in the merchant acquiring segment that the high higher ticket what are you looking for in the fourth quarter sales for the emerging segment as far as growth in the merchant acquiring segment and just Banco popular had some pretty strong growth in and spend I think 27% for the core.
Peter.
Debit and credit card spend.
Does that not.
Match up with.
With Evertecs business.
I mean, the way that we.
One I mean, the numbers for what we are doing good start and John sometimes though we don't necessarily see right. So so important as seventyk already and perfectly I mean, we saw and then as we said on the call very strong sales volume across the board.
Across the border always the dairy auto stimulus that was impacting Q3 as we go into Q4 I think we're trying to avoid any confusion. We got information on some of the thing. We had five you have come down from the levels that people were receiving aim is still how uncertain just whether there's going to be another package coming from.
But to the extent that that does not happen and we go back to a more normalized aim and Connolly, let's say we thought at the end of it we are expecting average ticket to start to come down and normalize which is actually something we saw throughout the quarter as well.
And that's a big driver in what we are seeing that in that segment are being back to margin as well. So we would expect that margins will also start to normalize for the reason I bring segment as we move into Q4, considering everything is about two things are certain one is the.
$300.
Stimulus for the unemployment the Puerto Rican government has approved there they've already started putting those into the into the onto the system. The second thing is the shift to digital just like probably every other company are falling weve seen a huge shift.
So we saw significant growth that we talked about an 88 megawatt AC mobile business on both PDP transactions in the business transactions were up I think over 350%.
Quarter, but between the two and it was over 200% increase between PDP NBV and then as we've talked about to the demand for the QR codes the ability to go in to Starbucks to Mcdonald's to Burger King and actually not pass car and someone else. We have increased the number of locations by 275% since our last call and we're still.
Nothing significant demand so 5% of the merchants now that are used for now that that former and QR codes and some of the higher higher activity Park and we feel we are we're rolling out.
Significant number of margins every week is the digital shift.
Yes that was my next question it seems like Puerto Rico is set up for a massive did.
Digital shift.
And again, thank you for the color on that and Dth. The 2.3 million two is that the revenue in the quarter for May th.
So that was the contribution of both the B to B on new business and for growth in Q3, so not not not be actual revenue generated by by those products.
So that the 2.3 million was the growth in dollars over the prior year or the prior quarter.
In the prior quarter.
Okay can you tell me what drove the growth over the border.
Okay from the prior quarter and what is the total revenue from that in the close to easier from the prior year quarter. Okay.
Okay.
Yes, Gary you're okay.
Okay.
Okay. Thank you appreciate it thanks Bob.
Thank you and then I suppose a constant John Davis with Raymond James.
Hi, good afternoon, guys. Thanks.
Encouraging to hear the $13 billion being released.
How how that's close to layer in over the next I assume couple of years and also any update on the $8 billion of HUD funding. That's still I think in Limbo and then last one here the $300 a week how long is that supposed to last.
Puerto Rico.
Employment.
In terms of that 300 that started last week and there was actually a retroactive payment going back to the beginning of August and the program is pretty much the same as in the U.S. and.
Our understanding is that that will go on for about another month.
And then you are asking about the 13 billion on the electrical grid, that's going to be over a theory that time, that's going to do two things. One is you guys have workers I mean, there's going to be stimulus to the economy and the direct investment rebuilding the electrical grid and then you also have the trickle effect to that.
On our economy, and then hopefully long term one of the biggest cost of doing business here is the utilities and the electric hopefully continue to make us more competitive place to do business.
Okay now that's.
That's helpful and then as I think about outside of Puerto Rico, I think Chile.
Beginning to ramp here towards the end this year and so next year what are some of the other markets that you're potentially are targeting for growth outside of Puerto Rico.
Has there been any further progress or any.
Any any I guess.
Events of note and some of the other markets, whether it's bank. Unfortunately, breaking all four were just focused on Chile at this point, maybe just a kind of an x., Puerto Rico broader uptake would be helpful.
Sure. So we're seeing a couple of things one we are seeing as we've talked about for.
Several calls we are seeing the monopoly either getting broken up or sold by our team in Argentina, and then Trans bank.
We've talked about with Bob we do have Santander, Chile on track to implement by the end of the year were already processing transactions for the summer, but have now open. So you are seeing sort of a shift where people are willing to move outside of the monopolies or do I believe the second thing. We're seeing is really regulators issuing new licenses defense.
So they can provide and the banking services and those that are becoming some of our customers as well. So we talk about I think at the beginning of this year and last that we're very focused on local.
Localizing our platforms in Chile, Colombia, Mexico comes to recur as we've talked in the place to pay acquisition, we'd now like to pay which is our E Commerce gateway.
We're going to continue to invest in going forward is in Colombia, and Ecuador at the time of purchase now Weve localized in Central America, and Panama, and Costa Rica for some of our existing client because frankly the product that they had was not.
The level that we really wanted to provide to them and we've now give them a product whether existing there.
Migrating their distant margins for this new platform, that's allowing them to sell new merchants as well because the platform is much improved and we also are looking at plans for localized platform in both Puerto Rico in Chile as well.
But those are sort of the key countries and we're now have the great thing is that we've now got that product between the risk products.
This product across issuing and acquiring and then the gateway.
We're making the investments to localize it based on where we're running but.
Okay. That's helpful and the last one for me do we have do you have any sort of stats are more than just directionally. What you think card penetration either wasn't Puerto Rico or what the the increase has been I mean can you see like same store sales basis, you're seeing it down X percent increase in transactions.
Volume.
Yeah for example.
The pop is up 27, so just anything to help us kind of dimensionalize that the shift to electronic payments, it's clearly happening Puerto Rico any stats at all would be super helpful. Thanks, guys.
I mean, I think John.
Really there isn't one stores, where we're taking into consideration on many different data points that we have here to kind of give some direction. Obviously, we're seeing every category in terms of and consumption going on from a sales volume perspective, and we're seeing the bonds here also reported that they're seeing.
In volumes across credit on David increase we're seeing in the U.S. So on digital channel increasing as well on these are all driven by by the use of guards at the end of the day and so we continue to see.
I barely got where do you need to continue to make inroads into kind of the cash business here in Puerto Rico, which continues to be a big part of the economy and Mack said 18 mobile mobile business for also is.
Kind of the.
Best way for us to continue to do to get these open interracial yes.
Yes, and John I think I would say theres still this looked a little bit more like a more sophisticated Latin American country. When it when you look at our penetration rates versus the space because you still have a large underground economy and you still have.
That's sort of an unofficial economy, so even our crop condition traditional category.
The gas stations or supermarkets or restaurants, you might have a lower level of penetration than you would see in the U.S., but the big opportunity is where we're breaking into new markets with Ptv with a huge mobile business, where you're paying service contractors food fraud.
Which is a significant opportunity as well, so thats, where were saying well and as I told and that's all Bob earlier I mean, if you look at PV for the quarter. It was up 70% right and if you look at 88 mobile business, which that is primarily new electronic payment volume that was up over 350% for the quarter. So theres still a lot.
Operator.
All right very helpful. Thanks, guys.
Thank you and the next question comes from James Friedman with Susquehanna.
Hey, guys good results bye.
<unk> team.
I just wanted to ask in your prepared remarks, you called out the $300 a week stimulus I know you referenced that in a prior question, but if you could just give us some sense of.
How enduring you see that and.
How long is it going to last and I'll just ask my second went up front.
Keane you said that in 21, the client attrition would be similar to that in 2020 can you just remind us I don't mean to beat a dead horse could sounds like you're not going to focus on that but what what was it in 2020. Thank you.
Yes, so on the $300, it's the I.
I think youre right familiar with the amount that was approved by the present by executive order that the local government has done to.
Match, a portion of that and it's less than the previous unemployment funding coming out with the federal government.
The duration of that currently is probably a couple of more weeks.
But we do think that's going to be helpful. If this continues though I mean, the economy still remains open here.
You know, it's a smaller amount and.
But for the next couple of weeks.
It will have an impact.
Well the other part of your question on the capital.
Can you talk yeah Christian.
This year, we said we for this quarterly increase about OEM.
We're going to see three or 4 million. This year. We had originally expected 45 on Thats why we made a reference to.
Thank you Layne attrition, which as we said in previous calls and has been coming on for a few years, we're expecting an additional three to four next year.
Given guidance at the same level and we're trying to move away from kind of keeping updating that on a quarterly basis.
Got it okay. Thank you guys all the best overall, thank you.
Thank you and the next question comes from transfer also with Morgan Stanley.
We're already concern in terms of getting back on.
In in terms of Loving America.
No, but I mean, we can do to focus on on the foreign countries that we mentioned about Chile, Colombia, Mexico and Costa Rica.
<unk>.
And getting our processing, but form of a running making sure that we're putting ourselves in a position looking to expand margin into the future.
As we said, we sat down there and it's kind of our first.
Clients onto this platform and then showing the success that we can bring by having a cough processing software coders.
Oh, okay.
<unk>.
Thank you and the last question constant George My Hellos with talent.
Hey, guys. Thanks, Thanks for taking my questions really yup, just just two clarification points out but from you wanted to make sure and thank you for that.
Correctly. So just just on the on the the acquiring side I think you said July was up 30% and then it had moderated to kind of high single digits in in September I've, just just curious have those high single digit friends.
Continued in in October or have you seen any sort of moderation from there and then just as it relates to the EBITDA I think you called up the 4.4 million one time from the D. O N and then another $2 million anything else that we would need to adjust to kind of come up with a with a normalized Martin.
And I think I'm I'm kind of backing into like a 48% margin if I do the math.
That's correct.
Lean items, where you know we go down and that usually they're getting alteration I'm kind of one dining back to to have that.
The higher margin that we reported.
In terms of.
And what was the first part of the question George.
As it relates to the the the acquiring segment I think you said in in yeah kind of up high shingles Yep No. So October I would say that there has been some site moderation in terms of sales volume, we can do to see.
Very strong sales volume, we have seen the I receive it however, calmed down a transaction will continue to be no-one under prior year boy, but we said before those usually go to any times, we have seen a lighting improvement or recovery from this unfashionable side, we have been the average tickets start to go.
Down so it's something that even though the high sales volume that we found July was there a while.
John basis, we have some numbers to get calmed down and that is reflecting in sales going on bill Russell.
Thank you I appreciate it.
Thank you and the next question comes from Korea, Musalo towards your bank.
Hey, guys. Thanks for taking my question, you mentioned, 5% of the a T. H merchants have the cure code now and that's kind of ramping quite quickly I'm. Just curious if you could just give some high level of thoughts on kind of where you see that penetration going forward and more importantly, do you guys see a lift on kind of QR code transactions.
Per merchant versus other transactions, just trying to think about that a little bit deeper.
Sure. So we lost this product.
During the previous quarter, so cute too.
We've seen.
The velocity of the adoption in the first of all.
Pretty rabbit and when I was.
Trying to understand how that changes the volume within a merchant where now analyzing because we want to do two things one is we'd like to convert more of the transactions to electronic transactions because of us and we'd also like to convert more of a transactions to aviation versus other types of electronic payments.
So we're in the process of analyzing that and we are noticing yes, we've increased by 275% the number of locations and within the love each location. It appears that the volume.
Or the tendency to use that uarco is increasing as well.
Our goal is to get by the end of 2021.
As much of the volume so focused on the larger chains the largest merchant.
Sort of hold our hands and get them.
Up and running and then we're in the process of finding an easier way for smaller merchants they were already in process.
Thing so that they can sort of implement the product on their own but it's a significant bogus for us because we think it reinforces.
Relationship with these merchants and it will increase.
Not only the electronic payments, but when it is electronic payment it will be in th payment.
Got it that's very helpful.
And then I'm just curious if you could talk a little bit more about just E com in general in Puerto Rico, and some of the market you serve like what what are you seeing there in terms of you know a trend E com and how is how is ever tech position to take take on the Econ E com opportunity over the next couple of years.
Yeah.
Again, as we talked about whether it's abba's, whether it's our gateways a trend that we're we're sad.
Like all of the other payment providers our focus.
Has really been the place of a product is our ecommerce gateway we have.
And volume growth in Ecuador.
During the quarter and then like I told you now that we've localizing Costa Rica, Panama, we're seeing those bank because they are adding new markets matches going so spat with existing base.
Add the previous product because the previous product we had it again.
A product that we felt like we could really grow the regulator across the region.
Puerto Rico will also from parts of that product.
But it is the.
The place to pay product an acquisition has been incredibly successful.
And that will be the future gateway for the company.
Okay. Thanks, guys.
Thank you.
Thank you and is there aren't all questions I would like to return to afford them extra store for any closing comments.
Thank you and I want to thank everyone for joining the call of each of you and your families remain say, we look forward to connecting with you virtually over the coming months and really look forward to seeing you again in person once we get past the pandemic, Thank you and Goodnight.
Thank you the conference. That's all concluded. Thank you for attending today's presentation, but not as furniture lines.
Yeah.