Q3 2020 Linx SA Earnings Call
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Good morning, ladies and gentlemen, and thank you for waiting.
Welcome to the links conference call to present the earnings result of the third quarter of 2020 today with us are Alberto. May I ask how much is hold that he could CFO and i r o and karolina punches investor relations director. We also have the links vice-presidential seen a handsome from life or gentleman from links digital Dennis Silva's. I'm from links pay and fly view missus from marketing and people we would like to inform that this event is being recorded and may be translated in English. All participants will be on listen-only mode during the presentation soon after we will start the Q&A session went further instructions will be provided. Should you need assistance during the call, please press
Star zero to reach an operator for assistance. This event is also being broadcast simultaneously over the Internet by a webcast through. Where are the presentation is available slides will be controlled by participants. And the replay of this event will be available shortly after it's dead before proceeding. We would like to clarify that remarks made regarding business prospects projections operating and financial goals with the beliefs and assumptions of links is management as well as information currently available to the company future remarks are not a guarantee of performance package involve risks and uncertainties and assumptions as they refer to future events and therefore depend on circumstances that may or may not occur investors and analysts should understand job.
That macroeconomic industry and other operating factors may affect links as future results and may lead to results that differ materially from those expressed and suck future considerations. Now, I give the floor to Alberto penashue will start the presentation, please Alberto, go ahead.
Good morning.
And thank you very much for your interest and Trust in links this by the Numbers impacts of the pandemic. We are seeing a recovery in the retail Market wage. According to the most recent monthly survey of Commerce from the idg the month of August of 2020 presented a growth of 6% Visa V. 2019 making it the fourth consecutive month in retail growth since the beginning of the pandemic.
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According to the web Shopper survey by ebit Nielsen e-commerce has registered $39 billion in sales during the first semester of twenty-twenty. This is 47% above the first six months of 2019. And of course, we are also following the gradual opening hours of malls and stores within the scenario links has been capturing a number of opportunities in the off-market leveraging the growth of links digital and links pay which now represents sixteen and fourteen percent of the total recurring Revenue off.
Of the third quarter of 2020 as we have already discussed in previous calls are intense investment in R&D wage and the recently signed Partnerships have allowed the growth of these two areas even in a very challenging scenario for retailers such as this one. We are experiencing the proof of this is that the gmv of the e-commerce platform more than doubled When comparing the third quarter of 2020 to the same period last year this volume is above the prepend emack level.
I would also like to highlight The Accelerated adoption of solutions such as payment link Gateway and QR code and it is important to say that we are ready. I'm ready for the interests of pics in September. We bought home and news which is a payroll and HCM human Capital management software company and Sir that serves a mid-sized companies in different sectors of the company as a result. We have strengthened our portfolio of back Office Solutions on our own platform since retail is highly labor-intensive and there is a growing demand for people management tools all of these contribute to the results. We released yesterday a recurring Revenue growing 19% year-over-year a net revenue of $200 a month.
T 1 million barrels with an organic growth of 7.5% and an epitome margin of 26% In other words, even in this office environment. We are growing robustly and sustainably as expected. However, we had a sequential increase.
Vision for long classes something that remedies will comment. It is important to know that we continue with no significant impacts on churn despite the retail sensitivity in the current scenario. This is due to the differentiated profile of our customer base in our portfolio. In addition to the low representativeness of monthly fees charged on retailers Billings. Finally. I want to say that our opportunity committees formerly called cross this committee remains active in monitoring the impacts of COVID-19. And in addition to the the various measures that have already been discussed in our conversation. It only guided us to return to the office in 2021 when the situation will be reassessed with that. We reaffirm our commitment to the long-term birth.
Team the safety of our teams to service customers and suppliers and consequently shareholders and the business before we proceed with the call. I would like to stress that next Tuesday on the 17th at 2 p.m. We will hold an e g m exclusive virtual to deliberate on the S and the stone proposal for the incorporation of all linked shares in addition to the other matters.
You may find more details in subsequent events section of the earnings release and I emphasize that all documents related wage to the subject are available on our on our website. It is very important that all shareholders participant since as we are a dispersed Capital company and without Define controllers, the decision of the minority shareholders in the meeting is Sovereign. Well now I would like to give the floor to ramatici talk about the results of the third quarter of 2020. How much is please go on? Thank you, Alberto and gold and good morning to everyone piggybacking on Alberto's comment. I would start talking about the provision for loan losses which reached a 2.8% level over the net revenue of the quarter that is 6 million. Rise. Despite this at them.
End up September about 96% of the invoice with an extended term. We're up to date a much higher percentage than the 87% that we had at the end of June. It is important to remember that we have a comfortable cash position 245 million Verizon net cash and excluding the grass-fed the amount link to the lease resulting from the IFRS 16 and the net turn out for of accounts payable for acquisition. The adjusted net cash of links would be $430 off the third quarter of 2020 now on slide three we have the main highlights of links core course recurring Revenue down 3% year-over-year Nemo delivery app tripled its recurring Revenue when compared to the third quarter of 2019 closing September with four thousand active Club.
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A 51% increase in the customer base vis-a-vis September 2019 and it's total recurring Revenue increased 50% year-to-date compared to the same period a 2019 Millennium recorded a 41% increase in recurring revenues in the year accelerating the integration of its solution with links OMS, the fashion vertical had a sequential increase of 68% and the level of signing new contracts with 200% greater activation flow customers compared to the second quarter of 2020. Finally. We added forty-seven links franchises to our base totaling 381 franchises in September responsible for thirty 1.5% of new activations in the quarter reinforcing or cross-sell selling strategy still on slide three, we have the main Hai ye
Some links paid that presented an important growth of 72% in total recurring Revenue with where there was a decrease in the representativeness of EFT, which now accounts for 44% of total recurring Revenue while other Solutions such as payment links Gateway and QR codes showed a significant growth in the third quarter of 2020. We also have an update of the POS which was five times higher in nine months of 2020 compared to last year now going to slide for we have the highlights links digital where the total recurring Revenue grew 55% is a quarter when we compare it to last year the e-commerce platform and GMB double size compared to the third quarter of 2019 with the volume above prepay endemic levels link Simple Solutions represented 66% of the total digital birth.
Revenue growing 90% in the third quarter of 2020 versus the second quarter of 2020 and the volume of ads was 204% higher when we compared to the third quarter of 2019. Omni o m s ended the quarter with twenty customers and 6,800 rollout stores in the same. 326 retailers published their stock Sun Lakes partner Marketplace Andre reach the approval of 24 branches in the quarter for the sale of our links digital solution. Now, I give the floor took at all links by our director to continue with the presentation. Thank you how much he is and good morning to everyone on Slide Five. We see that recurring Revenue reached 216 million b r l representing 85% of the gross revenue 19% higher than the third quarter of 2019 and 4% off.
Then the second quarter.
Twenty-twenty in this quarter link score represented 70% of total recurring Revenue links digital 16% and links paid 14% This variation exists is exposed by the constant growth and demand for digitization solutions that started in the last quarter due to the impacts of COVID-19. Now on slide C6, we can see a growth of 12% of the net revenue compared to the third quarter of 2019 and a 4% compared to the second quarter of 2020 moving to slide seven. We show that the adjusted ebitdar total fifty-seven million in the quarter 22% higher than the third quarter of 2019 with an adjusted ebitda margin of 26% in the third quarter of 2020 210 BPS higher in the year on your comparison. Finally on slide eight. We show that non-recurring expenses for the quarter which totaled $30 off.
This amount is mainly composed of legal and financial advisory expenses arising from links as proposal by Stone and Link stock option plan the impact of revenue from prepayment of receivables offered by Links payhub allocated to the financial results and expenses related to due diligence process took choir companies and net earn-out reversal involving a company acquired by list in 2019. Thank you for your attention. And now we will go to our Q&A session on the quarter's results.
In this moment, we will initiate our Q&A session regarding the the links results of the quarter to pose your question, please press start off withdraw your question, please press star to we would like to remind you by the egm of November 17th can be carried out six subsequent lead to the IR Department of the company.
Our first question. So then you said that Ali Credit Suisse Danielle you may proceed.
Thank you for taking my question. The first one would be regarding pics. Do you have a way to monetize the pics and the name and you can link receive this in a digital account has this been authorized by the central bank and
And and is is that the same level as at the acquirers and I don't I didn't understand if we can pose a question regarding a GM. I would like to know about the scenario of receiving a second Advantage proposal.
Oh, okay. Can you or if you receive a good proposal will you postpone this this do you have this flexibility if you have faith even offer offering between today and the egm, then they are good morning. This is Alberto speaking. Thank you very much for your question. As we mentioned in the beginning when we spoke about the egm. We are not going to answer questions on the EEG and we are going to focus our Q&A on the company's results on our strategies and I are is at your disposal to to answer any questions regarding the egm. I will give the floor in a dentist so he can answer your question about pics and thank you for your question. Good morning, Daniel. Thank you for the question now regarding the text log.
Yes, we will monetize, you know, according to the limits established by the central bank. We have a strategy for each one of our verticals. We are working with the links cord team for this offering. We have a significant amount of customers that adhere to our solution together with the p d v v
there is an advantage and it is simple when we compare it to a non-integrated solution that comes from other competitors. So we do have a solution where we will monetize and it will be better integrated and the competition we are very optimistic and we are ready to start as of the six very clear your answer. Thank you very much.
We would like to remind you that to pose a question, please press * 1.
As we have no further questions, we will bring our Q&A session to an end. I would like to give the floor to mister Alberto menache for his final remarks. So you have the floor. Once again, I would like to thank all of you for your attention. Our results has given us great satisfaction because we have a team that is highly committed. Therefore. I think my team because they have worked exceptionally, I think all of our shareholders and I strengthened the invitation so that can so that everyone can participate in the egm on the 17th that will deliberate on the orders of the day. Thank you very much. And until I talk to you on our next earnings result call.
The links conference call has come to an end. We would like to thank all of you for your participation. Have a great day, and thank you for using chorus call.
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