StoneCo Ltd. Q1 2023 Earnings Call
Today, we will present, our first quarter 2023 results discuss some recent trends and provide an updated outlook for our business.
I will now pass it over to Pedro so he can share some highlights of our performance bedroom.
Thank you Ralph and good evening everyone.
First I would like to say that I'm honored and excited to join this daunting.
And I would like to thank Thiago for all that he has done for the company and to ease my transition into the CEO role.
I am confident that geography will continue to contribute to our success in his new role as a board member.
I'm also pleased to report that stone has continued to build on its solid performance from 2022 and deliver stronger than expected topline and bottom line results in the first quarter of 2023.
Let me provide some quick comments on the strong quantitative results.
There's some initial impressions on the company so far.
In our last earnings call the team outlined our priorities for 2023 and.
I'm quite happy with the results achieved so far.
Would you can follow on slide five.
Our first priority was to grow with efficiency.
I'm pleased to report that we have exceeded our expectations on both fronts.
We grew our revenues, 31% year over year and delivered strong profitability with adjusted EBIT of 324 million highs in the quarter.
2% above our guidance.
As a result, we were able to deliver adjusted net income of 237 million high which was our best Q1 performance in our company's history.
Our second priority was to generate cash.
In Q1, we had strong cash flows from operations and we were able to increase our adjusted net cash by approximately 500 million here is to reach 4 billion hats.
Our third priority was to keep expanding our financial services business.
As you can see we have delivered a very strong performance in our SMB segment.
We grew Msnb PPV two times above the industry accelerated net addition of clients and both payments and banking.
In line with our plans to resume our credit business.
We have taken significant steps on the credit side.
Having this burst or a small number of clients, but most importantly, we have we improve many aspects of the product and operation that we will enable us to grow our portfolio in a sustainable manner.
I want to take a conservative approach towards the expansion of this solution and grow the portfolio depending on market conditions and the completion of the test we are doing.
Finally, we were able to achieve this growth and evolution with a significant increase in monetization with.
With take rates, reaching 239% and.
An 18 basis point improvement over the last quarter.
The fourth priority was to evolve our software business.
On this from results were below my expectations.
The team is working hard to build a foundation that will enable us to deliver a unified experience to our clients integrating software and financial services and becoming the one stop shop solution for small and medium Brazilian retailers.
We're making progress integrating and building of those capabilities, but we're not there yet.
And our software sales our revenue growth was her mainly by a reduction in AD spending by some of our enterprise accounts.
EBITA margin was also impacted by an increase in selling expenses.
While the rest of this year I wanted to put a strong focus on our team integration cost discipline and streamlining of our software portfolio.
And finally, our fifth goal is to build a fit for purpose organization that will enable us to deliver on our long term priorities.
We have to make sure our organization is properly equipped to withstand the additional pressures that come with a high speed growth.
I don't think these guarantee success, but I believe not having the right resources in place is a leading indicator of failure.
As part of this process I want to welcome Louisa <unk> as our New Board member.
His experience as a Google fellow and a seasoned professional in the tech industry will help us on a path to differentiate ourselves and leads through innovation.
Now I wanted to share some additional thoughts on the company and my experience in the role so far.
The first thing I'd like to highlight is the inspiring and fantastic people I have met over the last couple of months.
Whether I've been spending time with teams in our hubs at our distribution centers are within our offices the great ideas, the positivity and enthusiasm for the work we do is really inspiring.
I believe the superior talent in this company will continue to be a great driver for our long term success.
The second is that we have significantly improved the company's governance structure and management systems over the past year.
I see the company is doing a better job offsetting more clearly defined goals.
Scaling these two different layers within the organization more effectively and making compensation more closely to our performance.
This is improving decision, making and I see that we now have a better understanding of the key value drivers affecting our business.
This is certainly a continuous process, but I believe we now have better structure to maximize value and returns over the long term.
The third is the strong foundation of our client centric culture.
I think a key driver of stone success doing its journey has been its ability to identify and ease the points of friction that msnb clients have with traditional financial institutions.
This combined with the last mile and distribution capabilities that <unk> has built over the past few years has become a significant competitive advantage that has enabled stone to disrupt the market.
I think the same attributes can also extend our value proposition into banking and credit and longer term extend our competitive advantage in our software business by solving the vertical specific complexity of our clients and creating a more cohesive ecosystem of <unk>.
Great that software hardware and financial services.
For the short term I believe that focusing nx selling on the basics, where we will emerge stronger and more resilient.
For example, our cost management initiatives are already improving our operating leverage and our pricing discipline is impacting our profit margins.
Longer term I am working with our team to design our strategy through 2030.
Setting clear goals and execution path ahead.
We will provide you with more details on this new long term plan at an upcoming Investor day that we're working towards and we will share more details of the event a little later this year.
And now I'm going to pass it over to Leah, who will discuss our first quarter 2023 performance and strategic updates.
Yeah.
Thank you Pam and good evening everyone.
I would like to begin by briefly going over our consolidated results in slide six.
Pedro mentioned this was a strong quarter with growth and profitability above our expectations.
Total revenue reached $2 7 billion highs growing 31% year over year and our adjusted EBT increased to 324 million above our guidance of 265 million House as a result, our adjusted net income increased almost six times year over year too.
237 million highs with a margin of eight 7%.
Now on slide seven to 12, I will double click on the performance of our financial services segment, which continues to produce strong growth with consistent profitability improvements.
Revenue in this segment increased 36% year over year and was flat sequentially. Despite the typical weaker seasonality in the first quarter.
This was driven by good performance in our SMB client base, which demonstrated strong PPV and client base growth.
This higher take rate and generated more revenue from our banking solution and peaks in.
In addition to this top line improvement incremental cost efficiency gains generated higher profitability with.
With adjusted EBT, reaching 306 million highs in the segment and a 13, 1% margin.
Moving to slide eight I wanted to talk about some of the highlights in our M. S N deeper findings.
And lets them be active things clients reached $2 8 million in the quarter with an acceleration in net adds to 232000.
This good performance resulted from successful marketing campaigns driven in part by our lead sponsorship of Brazil's most popular reality show, which increased our brand awareness in both Don and stone and from a significantly lower churn and all client teams.
By optimizing our commercial strategy and stone offerings across our multiple sales channels. We were once again able to drive client based growth in all client tiers this quarter.
This approach continues to produce good levels of profitable TPG growth as I will show on the next page.
As seen on slide nine we grew at <unk> B V and M. S N b clients by 25% year over year over two times the industry growth to reach 79 billion house.
We generated this growth while also increasing our take rates on a year over year and quarter over quarter basis.
Our M. S N b take rate reached 239% this quarter up from $2, 21% in the fourth quarter of 22 and 2.6% in the first quarter of 'twenty two.
Our take rate improvement is a result of higher monetization of prepayment stronger growth in our town brands higher contribution from banking revenues and higher credit TBD mix compared to the fourth quarter, we continued to execute pricing discipline across our initiatives.
On slide 10, we will move to the performance of our key account segment.
Given that some acquired volumes have become immaterial to our TPB, we have decided to stop disclosing the breakdown of our key account volumes this quarter to simplify our disclosure overall key accounts PPV decreased 26% year over year to reach 15 billion highs in the quarter as we continue to shift.
Our priority from sub acquiring business the platform services within the segment.
However, as a result of our priority shift our take rates in key accounts increased 31 basis points year over year.
On a quarter over quarter basis, TPG declined, especially due to first quarter seasonality and continued prioritization of sub acquirers take rate remained flattish sequentially, mainly due to lower prepayment penetration.
Now I will give some highlights of our banking performance on slide 11.
As we mentioned in our last earnings call. This quarter, we launched Super can cut down our full banking solution for micro clients.
As a result of this launch we saw significant growth in our banking active client base to $1 3 million in the first quarter of 'twenty three.
Two five times higher year over year, and a growth of 81% quarter on quarter.
It has also led to a quarter on quarter decrease in our pack from 45 highs in the fourth quarter of 22 to 37 <unk> in the first quarter of 'twenty three as micro clients generate lower revenue contribution in comparison to SMB clients.
We have also started piloting debit cards in stone, which is an important step in evolving our banking solution for M. S N B plus.
Client deposits reached three 9 billion highs, which was roughly stable quarter over quarter. Despite the seasonal decrease in TPG, which is an important driver of deposits as it is the main cashing method for clients that use the complete acquiring in banking solution.
With the ramp up of new clients and the launch of New features we expect deposits to continue to grow over time.
On slide 12, I want to give a quick update on the credit front and on the results have so far achieved with our pilots.
We announced that we're working capital loan product by combining a flexible daily settlement mechanism with minimum monthly dosing, which increases predictability for both our clients and for us.
We're in advanced stages of improving our system automation and credit lifecycle monitoring and making our decision models more sophisticated through enhancement of data.
We have also fully integrated our systems with the register of receivables and formalized personal guarantees as a form of collateral which has already been executed as expected.
We're currently working to rebuild our recovery and renegotiation process.
Give our clients the possibility to renegotiate directly through the phone app.
They wish to do so.
Until the end of April we have disbursed around 6 million to approximately 200 clients with keep credit performance indicators in line with our business model and our credit underwriting standards.
We're in line with our plans to test our credit card solution in the second half of this year.
They are as said previously we will take a conservative approach towards the expansion of this solution and grow the portfolio depending on market conditions and the completion of the test we're doing.
Now I'm going to shift to the discussion of the performance and strategic updates of our software business in slides 13 and 14.
In the first quarter of 'twenty three software revenue increased to 358 million house with a 10% year over year growth, representing a deceleration from past quarters, given some weakness in our ads business from large enterprise accounts that we do spending this quarter.
Adjusted EBITDA for software was 40 million highs in the first quarter with a margin of 11, 1%, a 120 basis points decrease compared to the first quarter of 'twenty, two which was mainly driven by the softer revenue growth in the quarter and an increase in selling expenses as we invested in our sales team.
<unk>.
On slide 14, I want to give the main highlights of our performance and priorities.
Revenues this quarter was positively affected by a higher number of U S and European locations and smaller client tiers as well as inorganic expansion.
The growth in number of locations focused on lower tier clients was in line with our strategy to increase our presence in medium and small clients with our software solutions.
This shift towards smaller client tiers is also expected to drive average tickets down while it should open up a broader Tam opportunity ahead.
Looking ahead I would also like to share with you our priorities for software for this year and we emphasize our long term view.
We have five key priorities for this year.
Strong focus on cost discipline, integrating teams and functions across stone cold increasing operational leverage.
Continued to expand our presence by scaling our distribution channels driving growth within medium and small client segments.
Continue efforts to build an end to end value proposition of software and integrated financial services in select verticals and segments.
We believe this is key for us to strengthen our differentiation in some client segments, where we have a relevant opportunity to address.
Streamline software assets to increase strategic focus and expand our addressable market by entering in new retail verticals through M&A.
And the long term our goal is to build a unified commerce solution for our clients and our software business is an integral part of the strategic vision.
We believe we have a lot of work ahead of us, but we're on an exciting path to become the only end to end integrated software and financial services provider for Brazilian merchants.
Now I want to pass it over to hassle. So he can discuss in more detail some of our key financial metrics.
Uh huh.
Thank you Leah I would like to begin on slide 15, where we discuss the evolution of our costs and expenses as we have mentioned in the past.
I have three should be a year with more cost discipline and opex control.
In the first quarter, we have started to see initial results of that approach, especially in and administrative expenses as I will detail shortly.
Cost of services increased 7% year over year to 721 million Reais.
As a percentage of revenue <unk> was 26, 6% in the quarter 600 basis points lower than last year.
Fair to previous quarter. It grew 3%, mainly driven by higher investments in technology.
As we said in our last earnings call, we expected administrative expenses to reduce on an absolute basis and to increase below inflation for the year.
In the first quarter administrative expenses decreased 11, 5% sequentially, mainly explained by lower third party advisory expenses and more normalized levels of personnel expenses that was seasonally higher in the fourth quarter.
As a percentage of revenue administrative expenses improved 70 basis points year over year.
And 130 basis points quarter over quarter to reach nine 7% of revenue.
Selling expenses grew one 6% year over year and decreased 4% sequentially with operational leverage gains in both comparisons. The main reason for the quarter over quarter improvement was lower personnel expenses, partially compensated by higher marketing and sales commissions.
Financial expenses increased 10 basis points as a percentage of revenue to reach 33, 5%.
Due to the market dynamics this quarter, we conservatively decided to hold a higher average cash position during part of the quarter, which indirectly impacted our financial expenses.
Lastly, other expenses decreased 17, 5% sequentially and 90 basis points as a percentage of revenue as our fourth quarter results were affected due to the impairment of proprietary software and write off of some non core assets.
Moving to slide 16, I would like to talk about our cash generation.
This quarter, we have increased our adjusted net cash position by almost 500 million Reais to reach 4 billion Reais.
The main driver for this was the strong cash flow from our operations as well as the sale of our stake in bunk winter for net proceeds of 218 million Reais.
Compared to the first quarter of last year, adjusted net cash increased by $1 5 billion Reais.
Now moving to our second quarter 2023 outlook on page 17.
We expect total revenue and income above $2 billion, and 875 million reais in the second quarter, representing a year over year growth above 24, 8%.
For Msnb PPV, we expect volumes between 80 384 billion Reais in the second quarter compared with $69 9 billion Reais in the second quarter of 2022, representing a year over year growth between 18, 8% and 22%.
Finally, we expect adjusted EBT of more than 375 million reais compared to 324 million Reais for the first quarter.
This number is not adjusted for any share based compensation expenses.
With that said operator can you. Please open the call up to questions.
Thank you we will now begin our question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
And the first question will come from Shadrick Sumatra from Evercore ISI. Please go ahead.
Hey, Thanks, a lot for taking.
My question.
On the take rate front can you provide us some color as to how should we think about for Q.
And <unk> and even <unk>.
And in terms of how much more pricing upside can we see and I think the current economics break the average is expecting.
Decline in the re paint in the Selic rate going forward. So can you remind us as to.
How should decrease was if interest rates are going to go down in the back.
Half of the year and in 2004 as with.
Hi, Gerrick. This is Lee thank you Sir.
Regarding take rates. The first message is we continue to see positive take rate trends going forward I think regarding repricing as we've said many times before this is dynamic and continuous process. So we always take into account.
Where we are and the opportunities that we have to reprice the base based on our return hurdles. So I think thats the message and that we can expect to continue to see a positive trend going forward.
Sure Rafael here just to add to <unk> answer over time over the coming years, what we do expect is that our new revenue streams like banking credit. They should also contribute more and more to take rates over time, so not only the pricing in acquiring alone, but also the monetization and other fronts.
Got it and just one more.
Follow up on the banking front.
This new macro led this new product or this new offering for the macro clients can you talk about what's the cost of acquisition for the clients and the profitability of that putting forward and the main reason I ask is is there a way in which you could increase your.
Sure.
So from these accounts to kind of drive better margins for the overall business.
Thank you for the question I think regarding trends and talking a little bit about sort of comfort zone for the full banking solution for micro clients. This is a solution that is completely bundled to the acquiring solution. So there's no incremental tax when we sell the banking.
Solutions for micro clients, it's one completely.
Regarding <unk> trends as we have been saying for a couple of quarters already our pack will trend.
Trend downwards, basically due to a mix effect right because the economics of a micro clients is naturally smaller than the economics of an SMB clients. So as we grow faster in the micro segment. This will contribute to <unk> overall.
Trending downwards due to a mix effect, but the important message is that overall because this is incremental to our <unk>.
Banking business and stone overall deposits.
Oh.
Both as we grow banking clients itself in stone and phone product, but also as we expect to as we advanced on the banking portfolio and the banking roadmap, we expect to increase engagement with our clients with banking. So I think those are the trends that you can expect.
Thank you that's helpful.
Thank you Suri.
Next question will be from Tito Roberto from Goldman Sachs. Please go ahead.
Hi, Good evening. Thank you for taking my question and congratulations Pedro.
Hello.
A couple of questions also I guess first on your TV continues to be pretty healthy, particularly in a decelerating environment, but just kind of curious.
If you can give any color on I know you don't break out.
Micro merchants versus SMB, but just to understand a little bit the competitive dynamics in those two segments.
I don't know of any color you can give us how much of your growth is coming more so from growing faster and micro merchants.
How does the competitive environment, there and similarly, how youre seeing that on the SMB side.
And then my second question.
A little bit more of a regulatory question you know there's been a lot of discussions about potentially capping.
Having credit card rates.
So its under discussion and I've talked about.
Maybe reducing interest free installment.
Have you been involved at all in any of those conversations at all but just kind of curious your thoughts on some of the regulator regulation, that's being discussed and potential impact on your business. Thank you.
Yeah.
Hi, seatbelt ear here. Thank you for the questions I'm going to take the first one regarding CTV trends and then I'm going to pass it over to hotspot.
So overall transient TPG you thought is that.
Looking ahead, we expect to continue to see.
Growth in F&B business above the.
The industry over time, while of course, we maintain our pricing discipline. When we look at consolidated volumes, we have to take into account the effect of the de prioritization of sub acquirers right, but within SMB, we expect to continue to grow and gain market share so grow above the industry.
<unk> market share isn't the goal in itself, but it's it's a consequence of everything that we're doing.
The value proposition to our clients the investments that we make behind all of our distribution channels.
And on your question regarding mix between micro and SMB.
What we can say is that we've seen positive net adds so growth in client base and all client tiers and we continued to execute on this strategy of course always focusing on bringing the best clients with pricing discipline, but continuing to grow and balance that growth with profitability.
Javier you want to take on the question on macro on on regulatory.
Sure so.
We know that there have been discussions with.
Brazilian authorities about the possibility of implementing a cap on interest rates for our revolving credit cards. This is not a new topic in Brazil and.
It's been carefully considered by rig later in consultation with different industry participants.
Particularly large banks.
Some players argued that high revolving rates are only necessary because they subsidize installment transactions in Brazil. The so called parcel allows us.
They suggest that reducing rates would require a deep freeze and installment transactions.
However, based on the profitability of the card business in Brazil. It does not appear to us that the revolving credit business relies on the FERC allowed us to be profitable and this is especially true considering that Brazil has one of the highest interchange fees in the world.
And that those fees also.
Remunerate the institutions for the risk they take.
Additionally, one other.
Consideration is that significant part of the consumption in Brazil.
<unk> is based on credit and first allowed us rates of 50%.
Credit card transactions in the country are doing that.
In that type.
And this is especially true for lower income people.
So basically I think that.
Before implementing any changes that we don't have any visibility we're not directly participating in this discussion because we are not directly involved as we are not.
Issuers, we believe that Brazilian authorities will consider various economic and social aspects of that measure.
Okay. That's great. Thanks for all of our clinical and thanks, Leah just one follow up I guess on <unk> response.
On the messaging micro and SMB just any comments you can give on the competitive environment within those two different segments.
Any differences that you're seeing in the micro merchant space relative to the SMB space.
From a competitive perspective.
Yeah. So I think regarding competition, if anything the competitive landscape has been more stable compared to.
If there's three important trends happening in the industry right that are worth mentioning.
First is the.
The industry overall has adjusted prices upward.
Words over the last year.
Year.
Our cost of capital of course has increased and that makes it more difficult for new entrants to come into the market. So are we.
We see a market that is more stable from that perspective.
And third.
Overall, our players have evolved right beyond a pure acquiring for a more complete financial services offering and we think that strategies are more and more taking into account this complete financial offering mindset and more broadly players like ourselves.
That integrated financial services offering both from a product and from a go to market perspective will be better positioned to win clients relationships and gain market share overall in the future. So I think thats what that both our main perspectives on the industry.
Okay. That's great. Thank you Leah.
And the next question.
Next question will come from one recall D from Scotiabank. Please go ahead.
Hello, Good Giulia raffo, congratulations so distal result, and thank you for the opportunity to ask questions.
My question is related to the software business.
So we saw that the revenue growth decelerated there at the.
EBITDA margin compressed so.
I was wondering first if this was expected.
Second what drove the top line deceleration on the profitability deterioration.
Third what kind of growth and profitability do you see for this segment going forward.
Hi, Juan Lia here I'm going to start answering regarding top line and maybe pass it over to <unk> to give some more color on margin evolution. So we did expect a deceleration in terms of growth, but as I said their maintenance.
The performance.
Revenue performance still king behind our expectations. This weaker growth was mainly driven by our ads the digital business as I mentioned this.
This business declined.
Eight.
7% a year.
Year over year, while core Pos and ERP revenues actually grew 12% year over year.
And on the positive side our core.
Core revenue growth was driven by the increase in the number of locations and Uh Huh.
Consolidation of Hikma Mckee, while average tickets remained relatively stable and this dynamics as a result of us investing in the growth in my and medium and small client segments, that's where we see the biggest market opportunity ahead.
Oh that.
That performance in terms of growing in smaller clients peers is in line with our plans.
And I think the message going forward is a scenario of lower inflation and more volatility in the digital business should continue to weigh on softer topline growth, but we continue to execute on the priorities that we have both on the revenue side, mainly growing in medium and smaller clients yours and defending the.
Revenue.
In the enterprise clients, but also focusing on cost discipline halfway you want to complement on margin trends or maybe yes, maybe it maybe I'll jump in high one.
Looking ahead I think we are going to remain focused on investing behind our franchise.
Inbound channels to grow in the middle of the pyramid, because that's where we see the biggest opportunity both in terms of software and cross sell.
And I think regarding the margins that you asked.
I think we already expected the lower margin this quarter, especially due to the season seasonality.
Of the revenues.
However, the margin was a bit lower than we expected as a combination of two main factors I think the first one is a lower revenue growth, which of course reduces dilution of fixed costs.
And also higher selling expenses this quarter as we invested in commercial head count, which weighted on selling expenses for the software.
They're revamping margins should be driven by efficiency initiatives.
Associated to the integration of our back office functions across a strong company.
To be executed with the implementation of our shared service center amongst other initiatives that we have in the pipeline.
The improvement I think it's important to highlight that the improvements that we have.
I'm not sure I'm not a short term challenge.
It will take time, but as I mentioned during the call. We are confident that the rewards really worth it.
We are aiming to bring together the software and financial services to the Brazilian merchants through better products and services and we really believe business.
Hard to replicate.
By any other type of competitor.
Yeah.
Okay.
I don't know if we address all the questions you had.
Yes, that's very helpful. Thank you for the coverage.
Thank you and the next question will come from Kao Prato from UBS. Please go ahead.
Uh huh.
Hello, everyone. Good evening, Thank you for the procedure to ask questions.
I have two questions here, if I may start as to.
One related to the guidance if we look to your guidance of 376 5 million plus or has it been.
For Texas in the second quarter.
Understand that this is the bought off the guidance, but to his and only $15 million increase on a quarter over quarter basis and in this second quarter, we will see the first effects of the caps on interchange fees of prepaid and debit cards, which tend to be positive and in addition to that expectation of continued healthy growth on <unk>.
<unk> and <unk>, So just wondering.
What type of impact could reduce your ability to have a higher EBT.
Financial expense more investments or any type of price reduction due to competition.
To hear your thoughts about the tendency for the next quarter.
Or if you can consider that you were more conservative on that guidance.
This is the first and then I can follow up with the second thank you.
Okay got you. Thank you for the question how far out here. So when you look to our guidance of the second quarter you do see.
And the implied margin expansion, while as as you said, we keep TPB growth between 19, and 20%, which we think it's a healthy level and what we have been looking for as we have been mentioning over the last few calls is to grow with profitability and Thats. What this guidance implies we do see a positive effect.
From the GAAP as you said.
In the guidance and as you said, it's above 375 right. So this is a floor and.
That's what we are comfortable at this moment in providing.
Of course.
We'll keep disciplined growth with rough stability. So we are not providing any specific guidance about the cap impact business.
Net positive for us.
And we believe for the whole industry. So.
And regarding <unk>, if you look at our PPV guidance you have that the first half of this year, we should be growing CTV around 22%.
We see that industry was growing 10, 7% in the first quarter. So it's a good balance between growing more than the industry and at the same time, improving profitability and increase in take rates.
Okay. Thank you.
And the second one is around the key account CTV.
As you mentioned $800 a lot this quarter and it didn't breakdown between the Sip requires input from services in order to simplify the reporting but if you could please help us understand how much of this quarter of request.
Quarter over quarter drop was related to platform services and to some requires and Moreover, if you could pressure the competitive landscape in the key account segment and what we can expect in terms.
TPG growth going forward.
Sure Kai file again.
Big majority of the drop is related to some acquired so if you look at Super quiet volumes.
They have dropped very significantly both quarter over quarter and year over year.
As you said it.
Theyre not.
Relevant anymore to the company and Mark <unk>, our Bottomline, that's why we decided to simplify it.
And.
But overall when we look at other key accounts I think.
If you look at key accounts players like E Commerce marketplaces big retailers, it's obviously, a lower margin business versus smbs in micro.
So it is a competitive environment and payments there and of course, we do see opportunities there.
To penetrate also with softer not only with payments alone. So.
I think thats the main focus when we look strategically to the key accounts regarding payments.
Okay. Thank you very much.
Thank you.
And the next question is from Geoffrey Elliott from Autonomous. Please go ahead.
Hello, Thanks, very much for taking the question you mentioned a couple of times.
Weakness in the AD.
Business can you just give us a bit more detail what does that business look like with the clients and why why was it weak in.
In the quarter. Thank you.
Hi, Geoffrey this is <unk> here, so our AD business is basically a portion of our digital business within <unk> that it is its nature it's transactional.
Its nature is not recurring revenues.
So what that means is that our clients can have more larger or bigger volumes.
Depending on on what their needs are and what their demands are most of the clients. There are enterprise clients and this effect that we saw this quarter was basically those enterprise clients.
Using less AD volume ethical as compared to last quarter. So essentially that's a mine like remain.
Okay.
Compared to the recurring software business that we have part of it in digital but mostly in core a software so.
I think those are the main messages in in that in our ads business.
Thanks, and if I could just squeeze another one then you've talked about growing <unk> faster than the industry, but what's your latest view on industry TPB growth this year.
Yeah, So like <unk> said, we saw industry growth around $10.
At 10, 7% this quarter.
Apex pointed to.
<unk> 14, and 18% this year, we think it's going to be in the lower end of this range.
So that's our view on the market we have to continue to observe.
The numbers as they come out, but we expect on the lowering and <unk> our guidance.
Yeah.
Great. Thanks very much.
The next question is from John Coffey from Barclays. Please go ahead great.
Great. Thank you very much for taking my call. So the first part I had it was actually echo.
Or is reminiscent of the the question you just had regarding the industry growth. So when I think of what you are seeing where we are expecting for the first half I think you said around 22%. If we were to extend that out to the second half of the year is there anything that you would caution us on any tough comps or anything that might be specific.
Q3, or Q4 that might actually push that rate higher or lower and the second question is as far as key accounts go when does the pain of the declines and when do you get to that bottom point at which TPB starts to grow again.
Hi, John Rafael here so regarding.
Pardon.
There is nothing that calls our attention right now that should.
Change significantly those 20 ish percent growth levels in the <unk> in the second half of the year of course ethylene that.
We do rely on different factors and micro factors that like inflation and economic activity in retail that we do not control, but as of now there is no.
Big indication of big changes.
From those levels.
Your second part of the question regarding key accounts can you. Please repeat it please.
Yeah, well I mean.
<unk> has been declining for a while I thought a lot of that is due to lower volumes from the sub requires when does that sort of acquire volume become negligible and then you really start to see the TPB start to grow again quarter over quarter or year over year.
Perfect I think that if you look at our key accounts policy in payments and TPG are forced the Sim acquire has declined strongly but overall, we have been more strict in pricing in key accounts and I think that.
That policy it does have some negative effect in CTV.
So I would say that the coming quarters, we should still see.
Year over year growth in key accounts being sort of a depressed at those levels that you see now.
But of course at the end of this year, we believe that you have the name.
And then we might see an acceleration there but.
Yeah.
Alright, thank you.
<unk>.
Thank you.
And the next question is from Josh Sigler from Cantor Fitzgerald. Please go ahead.
Yeah, Hi, Thanks for taking my question Congrats on the strong results this quarter.
For my first question you know I think in your prepared remarks, you mentioned being significantly lower churn M. S. N. The vertical I am curious with some of the drivers were behind the strong retention this quarter and if you expect that to persist throughout the year.
Hi, Josh you here, so yeah, we saw a significant lower churn.
Across all client tiers, and bolstering in stone and tone brands and we think that this is a trend that will continue. It's the result of the expansion of our product offering also a greater focus on client lifecycle monitoring. So we've done a lot in terms of actions.
Towards the base, so agents visiting making more lifecycle visits.
More engagement through our client lifecycle and also we cannot ignore the fact that industry is much more rational so that also impacts positively our term. So those are the three main messages that we have regarding current trends and we think that these trends are going to continue.
Okay.
Understood. That's very helpful color. Thank you and then for my follow up I'm curious, how you're thinking about sizing the opportunity to continue to cross sell the banking solutions to telling customers.
Do you expect increased acceleration bank getting active clients as you rollout the new Super concepts one product.
Yeah, Josh Greg.
Great Great question, there just to get some color on this there was a big incremental contribution this quarter because not only we grew.
Sort of comfort zone for new clients, but we also migrated clients that had the simple our wallets to the full banking solution right. So I think what we can say looking ahead is that every single some clients. We will have both in acquiring and our banking solution so growth in <unk>.
Don will be in line with growth in stone itself.
Yeah.
Perfect. Thank you very much I appreciate it.
Thank you John and I think another important comment is.
Just to also emphasizes.
That's also the reality in stone projects right. So.
As much as it's not a bundle where 100% of the clients actually use our acquiring banking and stone, we have very high penetration of banking solutions to acquire two acquiring clients and phone as well. So thats also going to drive growth in banking clients looking ahead.
Okay.
Thank you and the next question will be from James Friedman from Susquehanna. Please go ahead.
Hi, it's Jamie at Susquehanna Greetings, Pedro and welcome Hi, Thiago.
A question for you about slide 14, the software strategy there.
I was just wondering if you could step back and say.
At a higher level, how the strategy articulated in slide 14 has changed now versus when you originally acquired links.
I know the world changes, but how are you thinking about it now and what what May have changed your thinking in that process.
Thanks, Jamie I'm going to take this question first and then maybe pass it over to Pedro also to hear his thoughts.
I think we've always been.
I believe very strongly in the opportunity to combine software and financial services right.
We are intensifying our integration efforts this year I think.
The reason is is is about focus right.
Perhaps there wasn't such a big focus before we mentioned many times that in <unk>.
2021 there was all the issues with credits and then we really started sort of.
Focusing a lot on the overall a turnaround of the business last year in that.
Changing the management system of course that was true for financial services platform and for software platform, but now we're really putting a lot more emphasis on the integration efforts and so strategically decided the same I think it's just about how we are prioritizing and where we're putting.
The focus and I would say around integration. Our focus is really threefold right number one is around back office you already did a lot on that less here, but I think that there is.
Still a lot of work to be done pivotal talked a little bit about this already.
The second is really on product integration and integrated offering so a lot of our effort last year was around product integration now we're shifting to really think from the client perspective, how we can really build the best combined offering of software and integrated payments and financial services and.
And the third is really around go to market and how do we really incentivize and coordinate our go to market efforts, both in financial services and software. So that we maximize this combination right.
Oh I see.
It's more about the how as opposed to the what the strategic rationale hasnt really changed but I think we've changed a little bit how we've been focusing on the initiatives whether you want to jump in here I think if I might add I think our.
I think one of the points that you raised is really my view is the key reason which is focus.
But another point that is really important is that we.
We do believe that the opportunities within the software business are huge right.
Zinc clients sell around half the Chilean highs, which is equivalent to 5% of Brazil's GDP.
And we still have a low penetration of payments and financial services into those clients.
So we haven't put all the effort and the focus we need it.
Is that the offering the integrated solutions will bring a very differentiated value proposition.
To our clients.
And I think there is another another point that it should be highlighted.
We may optimize our capital location within the software business really trying to focus on select.
That are more strategic to us.
Mhm.
Got it thank you for the context I'll drop back in the queue.
Thank you Jamie Thank you.
And the next question is from Mario Perry from Bank of America. Please go ahead.
Hi, guys.
Thanks for taking my question, let me ask the first question on during your speech you talked a lot about cost discipline and expense control can.
Can you talk about some of the measures that you're taking and help us quantify the benefits of this measures M I ask.
When we look at your head count it's.
Much larger than some of your peers and we have seen some of your peers.
Reducing head count so indirectly I'm asking if there are any plans to reduce head count.
Or what or any initiatives that you have to control costs and then I'll ask second question.
Okay.
Yeah.
Hi Mitra.
File here. Thank you for the question. So I think there are many initiatives that we have been implementing in the company.
We have created for example, a shared service center with paint, which tends to incorporate more activities in the future.
Bringing back office gains.
We are also focused on the structural efficiency improvements.
Apology, a flatter organization of the business I think that if you look at the head count there and I think they're broken can talk a little bit about this.
There is a business model of <unk>, which when you compare to other companies our business model is more vertical lives. So part of what other companies might outsource we do internally in house and that of course reflects in our head count.
But as we have mentioned last in the last earnings call.
We do expect administrative expenses to grow below inflation this year.
So I would say that we are working towards more structural measures, we have different measures in operational efficiency and customer service logistics and technology cloud costs, so on and so forth. So.
But I would say that the head count reflect a big part of the difference is business model difference versus other players.
Do you want to add I think one point.
It's really important to highlight you mention in terms of.
<unk> and so forth I think last year, there was a huge effort put in place too.
Within their process you had the package illness for the main expenses within the company. So that brought us visibility in terms of where we should attack how we should the second win we should attack in terms of.
Streamlining expenses.
And actually having better control as we move ahead.
Set the company for its growth strategy.
In terms of head.
Head Count I think.
Mentioned at the beginning of the call.
Really setting the stage to position stone throughout 2013.
So we have to make sure that we have the right people at the right roles to build a fit for purpose organization as I mentioned before so having the <unk> in place and understanding where we want to be over the next couple of years will be an important tool in terms of how we manage our.
Head count as we move ahead or we want to do it.
So kind of a.
Uh huh.
How can I say, a back and forth review.
Our review in terms of head count hiring and hiring people. So.
It was really building a fit for purpose organization as we move ahead right.
Okay. Thanks for that.
My second question and then let me change the subject a little bit focused on your funding costs.
Can you talk about.
Your ability to tap third party funding.
Given recent events in Brazil.
Are you seeing the market.
Yeah.
Hi, Mike.
So.
We are not seeing problems in tapping funding sources, especially because the company has been generating cash increasing liquidity.
So we have.
A very robust balance sheet. So we have not seen any problems. There we did see in the industry a very slight increase in funding cost that as you can see it was not anything that reflected in our P&L. So what we are we are we have different funding sources in the company and we believe that those will.
B, even more diversified I mean.
In the coming future so.
It's not something that worries us.
Okay.
You can just remind us.
Your your sensitivity to a lower rate environment.
What would be the impact of a 100 basis points reduction in <unk>, assuming all else equal.
Yeah.
Hi, Mike So I think that this this question is hard to answer because it.
There could be like a theoretical answer that consider set there is <unk>, but we know that when rates change the commercial dynamic might change as well. So we don't like to provide a specific guidance around that since it sensitivity. If you look at our interest rates our financial expenses, sorry, they have been evolving over time basically with TPG in CDI.
So you can pretty much do a simple math on where they are today.
And if CDI decrease youll see a percentage decrease there but of course it is a net positive for us if rates decrease but it is very hard for us to say a number because.
We would otherwise assume that commercial activity and competitive environment will be the same we do believe that players.
I would not rush to decrease prices.
It's really hard for us to guarantee that so.
If you look at our financial expenses, a little over 900 unit.
With CDI almost 14%.
You can do some math there in and see that.
100 bps.
Relevant impact.
Okay, so, but basically you're saying then it depends on how your competitors are going to behave not necessarily so it doesn't mean that you are going to be the first mover in case.
If rates come down that first mover and reducing prices.
Yeah.
Yes, so we will not be first movers in bringing down prices.
I think that and of course, we do have our internal hurdles or internal return.
Goals, it's not 100% relying on what our competitors will do but we do look at competition and the environment to decide.
But we're going to do but.
This is not something that rule.
Do proactively.
Bringing down prices if rates come down.
Okay guys. Thank you very much.
And the next question will be modest.
Oh heck or wala from HSBC. Please go ahead.
Hi, Thank you for taking my question first on the software business. If I understood correctly, you mentioned that you've not been able to penetrate the large client that has come from links and that presents a huge opportunity for you to cross sell your payment services to them.
Well I mean, it's it's been or why isn't your integrated links.
I thought it would be in an easier opportunity or low hanging fruit to cross sell your payments business to the to the linked clients versus bringing the software expertise from links to the SMB segment.
Why haven't you been able to.
To integrate so that that spike and that's related to that question on keeping is the.
30 babies north has been almost twice that of the industry as a whole.
What are the reasons for this strong growth with whom I have gaining market share in the SME segment, because if most of your peers when we talked to them and you see the numbers there mostly close to the low teens in terms of keeping the growth. So what is driving the strong growth in terms of.
ERP BV is has there been some contribution from growth in larger accounts.
Might have led to this target does include if you could shed some light.
He is a change in mix and then I'll ask my next question. Thank you.
Thank you and you ask your.
Your question got a little bit in the middle, but I think I got it all let me say.
Take it and then if there's anything missing let me know okay.
So I think your first question was.
Mhm statements and financial services penetration within linked clients.
And where our focus is so our focus is really on the middle of the pyramid I think thats the best way to describe it those are medium and a little bit the operators here of Smbs right.
A larger small clients in the medium clients and a little bit the large clients as well, that's where we see the biggest fits in terms of offering both the offerings that we have on the financial services side as well as the product portfolios that links has so.
No.
Just to clarify this point our focus really is.
The initial focus really is on cross selling financial services to software clients.
Theres actually a convergence in terms of our strategy when we consider software in financial services because links is very highly penetrated already on the very large clients and the opportunity for us to grow in software itself is going.
Lowering the pyramid right to go into the medium of the pyramid with software, but that's going to be continue to be done through links with channel links with franchise channel and leases.
Inbound channels. So there is a convergence there I think that's the important message regarding software and where we're looking at in terms of cross sell.
I think on your TPG question.
We take market share from pretty much every competitor right and we have actual actually pretty granular view of who we're taking market share from in which clients tiers and in which regions of course, the dynamics changes a little bit region by region and tier by tier with the messages we take.
Market share from from all competitors right and the growth in CPG trends that we see is both driven by our growth in the micro segments that was also a big driver of our net adds in the quarter, but let's remember that our strategy within the hubs has been to focus on large.
The clients right, so more and more we're shifting our hub strategy to look at the top tier of the SMB segment, and we're seeing pretty healthy growth there and that's driving CTV growth.
Did I get all your questions.
Alright, yes, yes in the allergy. So there has been some move upmarket not particularly large accounts.
But maybe somewhere in between the large accounts and the F&B. So more Hyatt is smbs.
That's the first that's exactly highest curious within SMB exactly okay.
Okay. My second question is on the credit 70 finally.
Are you finally think no credit.
Product.
You mentioned that you've been fully integrated it with the senior registry could you talk a bit about that still is that it doesn't mean this couldn't be operationally.
Is that a complete transparency in terms of data and do all of that but just couldn't make it.
Each other well.
And secondly on.
What are the hasn't been integrated with the hubs and what are the other product changes that you can see in the coming quarters and when do you think you can deduct it. Thank you.
Yeah, Yeah, great questions about credit let me start with your question on the registry for the messages with this initial group of clients, we already did them with the integration to the registry system working it's working but we're using it as an extra data point not as this.
Single mechanism of collateral I think that's an important message and regarding on your question of how we're evolving the hub. This is something that we're starting to SaaS the level of involvement of the hub and the lifecycle.
Of our clients.
Initially we have been distributing the product multiple digitally.
But remember.
Group of clients still and so we're running several tests.
In terms of the involvement of agents in the <unk>.
Credit lifecycle overall.
We think that where we have a very big edge to leverage there, but the way in which we're going to do it it's still a learning process.
Yeah.
Thank you and the next question is from Sumit data from New Street Research. Please go ahead.
Yes, hi, there a couple of questions. Please.
Just on the balance sheet.
There's a there's a nice slide in the deck showing cash position.
Just steadily rising and obviously the businesses moving into greater profitability. So how are you thinking about use of cash.
Going forward is that that number presumably continues to.
In play are there any.
Acquisition opportunities you would be considering at this time.
That's the first question. Please and then just a quick.
To follow up if I could just back to industry to PV I know, it's come up a couple of times, just curious that the 10, 7% growth.
There's a little bit softer than when we were looking for as you look through to the rest of the year would you.
I expect that to increase are there any kind of comp.
But you can think of which could be <unk>.
Correcting that and I say that because it feels like.
Context.
Tough to digital shift.
Impressive as it might be.
So just curious your thoughts there. Thank you.
Okay.
Thank you. Thank you for the question.
I assume it's Rafael here so regarding your first part of your question.
We do have a.
Our strong balance sheet as I said 4 billion Reais in adjusted net gas.
This enables us to have flexibility to grow.
Faster whenever we want and to invest in different fronts of the business.
One of the as we have been mentioning for a couple of calls already one of the use of that cash is to reduce a little bit of that.
<unk> that we have in the balance sheet as you can see over time, that's why financial expenses. They have stopped increasing a lot mid last year.
But we also look very carefully capital allocation opportunities and of course it's.
It's better to have that flexibility one other element here is.
The environment scenario any more uncertainty.
Microsoft area, we do have cash to keep growing the business for example, independencia mix.
We had our prepayment business working.
During even the worst week of Pandemics, because we have flexibility and cash on hand, So I think thats sort of a policy of the company and we are closely looking to different capital allocation opportunities with a lot of discipline.
Regarding the industry I think that 11% growth.
Sort of is coherent with our review of that.
The industry growth in the year should be more closer to the bottom of the range of what the Opex Association guided to which is 14%.
So I think thats hard for us to estimate for the whole year, but.
It's close to the bottom range. So it's not something that calls our attention.
Yeah.
Got it thank you and just to reinforce one point, having said that that business for the industry right. When we look at our CTV as we have guided it's running a little over 20% in the first half of this year and we expect that those growth levels should continue to be above industry. This year.
Of course, we're looking at pricing discipline always not growing.
By growing yeah, absolutely. Thank you.
Yeah.
And thank you the question will be from Pedro Leduc from <unk> BBA. Please go ahead.
Thank you guys, a little bit on financial on pricing dynamics.
So this.
This quarter, we saw a little bit.
Last the routes that you have got to implement that when you look at your take rate.
If you noticed some competitors moving recently some are.
Saying that they're moving up.
Hence if we're seeing room for for maybe another rentals there given the lower churn that you mentioned.
And if until Q, we should see a little more pricing effects or just the better take rate coming from the interchange cap. Thank you.
Thank you Pedro Rafael here I think that the.
We did reprice clients in the first quarter, we do expect to reprise clients in the second quarter. I think this is a continuous process.
<unk> optimization.
It's not as I said before it's not a big price change as we saw in the beginning of last year to two.
Just for higher interest rates in the country, but it's a continuous optimization process that we do see opportunities to optimize prices further.
As I said that there.
There is a cap of prepaid.
Cards. This also helps in the take rate. So I think that the message here is very disciplined pricing policy.
And a balance between growth and profitability that we think is healthy.
Thanks.
Taking back a bit on that question impressive guidance for the upcoming second quarter.
But you also have been beating guidance at least three quarters that I remember.
Things have been ending up better than what you see mid quarter.
How should we think about that.
It is a strong figure for Q I'm just wondering at what.
But as an upside scenario like we've been seeing consistently beat it.
Yes, so when we look.
When would you find the guidance we look at our forecast we have for the quarter, we see potential deviations around that both.
Outside our downside.
And we tried to provide a number to the market that we are confident in achieving.
Of course, there is always upside on the number but of course macro scenarios that we don't control.
So I think that the idea is really to be.
Precise given the timing of the macro scenario involved in our results that we cannot control. So bill do you want to add.
Yes, I think.
In terms of the guidance I think it's important to highlight that we do not expect to change our policy of quarterly guidance through the next quarter.
However in the future we do plan to provide a longer term perspective on the business rather than a quarterly number.
We believe is more in line with our long term value creation strategy.
Super Thank you both for the answers.
And the next question is from Nicholas.
Nicolas Riva from Bank of America. Please go ahead.
Thanks, very much for the time for those questions.
A few questions on your third going back to <unk> questions.
So I appreciate your comments about saying that you're continuing to see access to be able to tap from many sources, but I did see that in the quarter youre better with the CD keys.
It declined a bit over 300 million reais in the quarter on its been down even more over the last year. So if you can comment on your access to financing in the in the CDK market and maybe it's the reason why we are seeing less <unk> in the balance sheet, just because you are using more off balance sheet.
Finally, 90 seen what do you do not keep equity stakes in the future.
And then also similar question on your bank debt if I look at your short term bank debt declined by about 500 million arising in the quarter. So if you can comment a bit on your access also to bank financing after the vehicle of Americanas and also many ought to be stressed.
Corporate right now and then I always have a separate question. Thanks.
Thank you Niccolo Rafael here, so I think that the effect that youll see as I said when.
Someone asked about the allocation of gas is part of that is because we are increasing cash generation right and we are using part of that to both amortize. The <unk> that you mentioned and also short term debt.
Remember that in the first quarter, we did sell our stake in Banco means or for 218 million Reais.
So the health of the half billion <unk> increase in adjusted net cash. So I think that this has nothing to do to access to funding lines, but rather.
Cash on hand debt.
We see good capital.
At all locations.
To reduce leverage and reduce debt given where interest rates are.
Yeah.
Okay. Thanks, Ralph and then my other question is on your financial expense so.
In the income statement you book, a very large amount of financial expense subdued over 900 million reais, a quarter or about $3 7 billion reais over the last 12 months.
But if I compare that with your total debt side. So if I. If I include the 2028 bone bank loans <unk> did on deposits for the banking product I get $8 5 billion Reais in total debt at the end of March I'm, not including the payables to the merchants. So again about a $3 7 billion rising financial expense in a year compared.
$8 5 billion Reais in total debt it seems very large amount of financial expense.
I believe the financial expense you booked in the P&L also include some of the noncore should this come from receivable sort of fatigue is about if you can tell us why that's the case why such a large amount of financial expense in the P&L compared to that site.
Yeah.
Thank you Nicolas for the question very good question I think it's a good to clarify so whenever we sell receivables card receivables.
And transform them into cash, we incur and finish expenses right.
If you look at our adjusted net cash position, that's why we look.
Both as an asset and cart payables as liabilities.
We still have a surplus so we have more receivables Dan payables, and it's basically our option to convert them into cash as this is a very liquid.
Market to help investors understand that dynamics, we have provided started providing in our financial statements and notes 16, the breakdown of our financial expenses, how much of it comes from sale of receivables how much of it is interest related to that did you see in our balance sheet. So I think that is very detailed there.
And this is basically the dynamics, which is important to remind everyone.
Is that whenever we sell receivables.
And we incur finish expenses we decided.
Every day.
If we want to incur those expenses are not basing it based on the spreads we have in our prepayment business. So we incur in financial expenses, but we have financial income related to those expenses that are appropriate for us in terms of returns so it's not something that.
We are we have those financial expenses at any cost we will only incur them. If we think the spreads are attractive and you'll see the net result in our P&L as it is an attractive one.
Thank you very much for that and maybe just one last follow up on the subject.
Would you have a kind of a proxy or I guess ballpark for your cash.
If I compared to these 900 mineralized plus of interest accrued interest expense in the P&L, but it will be kind of a ballpark for your cash interest payments. I mean, there are three lines that you use us for reconciliations in the cash flow statement.
Using those three lines I'm getting cash interest payments of about 423 million reais in the quarter roughly less than half the size of the accrued interest expense in the P&L, which would mean funding calls of about 18, 7% does that make sense or if you can give us an idea of your cash funding costs, our cash interest expense payments right now.
Per quarter.
Sure.
Yes, Nicolas So I think that if you look at our cash flow, we do have that.
The amount of interest paid there and I think that one one additional element is that our cash flow we have interest paid.
And we have the net effect of the interest income received from prepayment business and how much of the funding cost for that only for the sale of receivables that we have so I think that if you look in our cash flow.
Statement and you'll see that interest income received net of cost and Youll see the income the interest paid.
You'll have pretty much the information to do the reconciliation you wanted to so I think that if you want go offline as well of course, we are fully available.
To make those details for you sure.
Just one last one since you mentioned generating cash and in some cases using these additional cash level to repay some of that debt would therefore digitally.
Know that we have asked this question a few times in earnings call. So would that potentially include buying back some of your 28, given they are trading at about <unk> 80.
Yes, So I think we answered that question last time I think.
It doesn't change the answer we are looking closely to a different capital allocation opportunities including debt.
Just had.
As I said, we like to have flexibility in terms of cash.
And if we look at the bonds.
You have to look at the discounts we have to look at the cost to unwind the hedge of the bond which is.
Negative right now so I think there is many factors that we have to take into consideration.
When deciding to do that and we are always looking very closely to that.
So that sort of alternative.
Thanks, very much Rob.
Ladies and gentlemen, there are no further questions. At this time. This concludes our question and answer session I would like to turn the call back over to Pedro Zinner for any final considerations.
Yes.
Well just want to thank everyone for participating the call and hope to see you again soon in our next quarter.
Conference meeting. Thank you very much and thank you Sir the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Okay.
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Okay.
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