Q3 2024 StoneCo Ltd Earnings Call
Good evening, everyone. Thank you for standing by welcome.
Welcome to stone co 's third quarter 2024 earnings conference call.
By now everyone should have access to our earnings release. The company also posted a presentation to go along with its call.
All material can be found online at investors that stone Darko.
This conference call the company will be presenting non <unk> financial information, including adjusted net income and adjusted net cash.
These are important financial measures for the company, but are not financial measures as defined by <unk>.
Reconciliations of the company's non <unk> financial information to the <unk> financial information appears in today's press release.
Finally, before we begin our formal remarks I would like to remind everyone that today's discussion may include forward looking statements. These forward looking statements are not guarantees of future performance and therefore, you should not put undue reliance on them.
These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from the company's expectation. Please.
Please refer to the forward looking statements disclosure in the company's earnings press release.
In addition, many of the risks regarding the business are disclosed in the company's form 20-F filed with the Securities and Exchange Commission, which is available at Www Dot FCC Dot Gov.
Speaker Change: Joining the call today is stone CEO Pedro <unk>, the CFO and Tiro, Mattel shattered the strategy and marketing officer, Lia Matos and the head of IR Hobart, Donato and I would now like to turn the conference over to your host bedroom Zenon. Please proceed.
<unk>.
Speaker Change: Thank you operator, and good evening everyone.
Speaker Change: We will present, our results for the third quarter of 2024 and provide an updated outlook for our business.
Speaker Change: I'd like to begin by highlighting some of the key milestones from our third quarter.
Speaker Change: Marked by solid performance and significant business improvements, bringing us closer to achieving our annual targets if not already meeting some of that.
Speaker Change: Upon reviewing the quarter I can confidently state that we maintain committed to executing our strategies across various areas of our financial service segment.
Speaker Change: On the payments side, we continue to observe encouraging trends in a healthy competitive environment.
Speaker Change: Msnb's total payment volume grew by 22% year over year, reaching 114 billion highs and serving for medium SMB clients.
Speaker Change: All while maintaining healthy unit economics, a key priority for us.
Speaker Change: In banking demand deposits amounted to $6 7 billion, representing a 50% increase compared to the previous year.
Speaker Change: Having made significant strides in scaling our payments and banking bundles for clients. Our current focus is on enhancing client engagements to achieve this we're improving our clients experience by developing additional solutions, such as our savings product, which despite being.
Speaker Change: In its initial stages has already shown positive results.
Speaker Change: Regarding credit we are pleased to announce that we have surpassed our annual guidance ending the quarter with a portfolio of 923 million patents and.
Speaker Change: An impressive growth of nearly 30% parts are required.
Speaker Change: This portfolio is performing better than expected in terms of NPL levels, indicating that our credit offerings are aligned with our internal expectations and risk appetite.
Speaker Change: Our specialized credit desk, which commenced operations at the beginning of the year has delivered promising results in generating new deals and enhancing our distribution.
Speaker Change: Additionally, we have successfully executed our roadmap for low end products, making advancements in credit cards and launching Juno faster.
Speaker Change: Our revolving credit facility.
Speaker Change: We also continue to refine the experience our clients have throughout the credit cycle with us.
Speaker Change: Yeah, all right of the performances I have just outlined I am proud to report that our MSA. The take rate has reached a record of $2, 58% Unipod.
Speaker Change: Setting a positive trajectory toward achieving our annual guidance of $2, 49%.
Speaker Change: Indicating sustained strong results in payments.
Speaker Change: In terms of software will continue to see significant progress in cross selling our financial service solutions to all our software clients car TPG growth. Among these clients has exceeded twice the growth were observed in MF and PV items on a quarter over quarter basis.
Speaker Change: In addition, we are fully committed to executing our efficiency and cash generating initiatives as a result, our EBITDA margin increased by one six percentage points sequentially now surpassing 18%.
Speaker Change: Given our commitment to acting in the best interest of our shareholders. We are currently evaluating options to maximize value, which Howard will discuss further in the end of this call.
Speaker Change: Finally on the efficiency from we have seen our adjusted administrative expenses decreased by 7% year to date compared to last year positioning us well to meet our 2024 guidance, which implies a 7% growth.
Speaker Change: I would also like to highlight that we have nearly completed our 1 billion share repurchase program in the third quarter.
We recognize that we currently have excess capital.
Speaker Change: We have a strong balance sheet position.
Speaker Change: Continuously evaluate the optimal use of capital to maximize shareholder returns.
Speaker Change: <unk> developed a more structured decision making framework.
Speaker Change: Consultation with our board.
Speaker Change: We expect to provide further disabilities or whether cutting parts.
Speaker Change: As a result of our adjusted net income growth of 35% and the execution of our buyback program.
Speaker Change: Adjusted basic earnings per share increased significantly by 43% year over year.
Speaker Change: Now I'd like to turn the floor over to the year, we will discuss our performance for the third quarter of 2024.
Speaker Change: Clear.
Speaker Change: Thank you Pedro and good evening everyone.
Speaker Change: As further mentioned, we're happy with our performance in the third quarter and with how we have been able to drive value to clients with our solutions and service.
Speaker Change: As presented on slide four we saw good traction in our consolidated financial results. Our total revenue and income grew 7% year over year or 8% when we disregard the change in our internal accounting methodology for membership fees revenues held in the first quarter.
Speaker Change: 24.
Speaker Change: This growth is mainly a result of our performance in the SMB segments, where we continue to grow client base and increased monetization.
Speaker Change: Our adjusted EBIT and net income both grew 35% year over year with margin up four five and three six percentage points, respectively to 21, 8% and 17, 5%.
Speaker Change: This improvement in margins was driven mainly by the combination of our topline growth and lower financial expenses.
Speaker Change: Combining our adjusted net income growth with the significant repurchase of shares in the quarter. Our adjusted basic EPS grew 43% year over year to reach 197 <unk> per share.
Speaker Change: Now, let's dive further into our financial services segment performance.
Speaker Change: Starting with payments on slide five our Msnb client base reached almost 4 million active clients, a 21% growth year over year.
The implied deceleration in the net addition of clients in the quarter results from different factors first so the phasing out of marketing investments made in the first half of the year and second due to a bigger focus on the quality of clients on boarded with healthy unit economics as well as allocating cash.
<unk> towards client engagement, rather than purely increasing our base.
Speaker Change: As you might also remember we usually start the relationship with our clients with a payments and banking bundle, which opens the door for higher engagement with our multiple payments banking and credit solutions.
Speaker Change: We're proud to see that our focus on improving such bundled and products to our clients has driven positive results illustrated by our heavy user metric, which shows the percentage of IMAX and <unk> clients with more than group product with us heavy users had been growing consistently growing from 21% a year ago.
Speaker Change: To 34% this quarter.
Speaker Change: Regarding payment volumes and mix in BCP V grew 20% year over year to reach 114 billion highs in the quarter.
Speaker Change: This growth is composed of a 12, 4% growth in card TPG and a two four times growth in fixed QR code volumes as fixed continues to gain ground and cannibalize on debit volumes with net positive economic benefits for us and for our clients.
Speaker Change: As a result of a stable competitive environment in payments, allowing for healthy take rates our focus on growing with good unit economics, and the increased engagement of our clients with more solutions. We have reached a record take rate for msnb's of 258% in the third quarter.
Speaker Change: Nine basis points higher year over year, and three basis points higher than the second quarter of 'twenty four.
Speaker Change: Moving to slide six we highlight our banking performance in the quarter, our banking active client base grew 47% year over year to $2 8 million clients as Peter mentioned, our efforts to sell bundled banking and payment solutions to new clients has it.
<unk> a good maturity level since the majority of new clients today onboard with our payments and banking offer thus our focus has shifted towards increasing engagement within our ecosystem.
As a result total deposits from clients reached $6 8 billion highs in the quarter, 53% higher year over year. Our final set of license received at the beginning of the year has allowed us to expand the array of solutions that we can offer to our clients.
Speaker Change: The $6 8 billion Reais total retail deposits in the quarter $6 7 billion referred to demand deposits and 121 million relate to on platform time deposits from our savings product.
Speaker Change: Which we haven't actively marketed yet.
Speaker Change: Though still in its early stage, we've been carefully managing the balance between time deposits and demand deposits and have seen accretive results, while offering our clients a new alternative to manage their money within our ecosystem.
Speaker Change: In addition to on platform time deposits, which are directed to our clients. We're also issuing time deposits distributed in third party platforms outside our ecosystem, which we're calling off platform time deposits. Those deposits have shown strong growth in the quarter, reaching $1 7 billion.
Speaker Change: And funding for the company.
Speaker Change: Now lets move to credit on slide seven.
Speaker Change: We have 923 million <unk> and credit outstanding with our clients, which is already 15% above our annual guidance with still one quarter left to go.
Speaker Change: Out of this portfolio 864 million is related to merchant solutions, which currently comprises our working capital solution and our revolving credit facility solution Judah facet launched at the beginning of this quarter.
Speaker Change: The other 59 million reais relate to our credit card offer which we're currently focusing on scaling within micro clients as it is an important part of the credit value proposition for this segment.
Speaker Change: When we look at provisions we have been slowly converging the provision of the working capital solution to reach levels closer to the expected loss in our models.
Speaker Change: Thus provision related to the working capital portfolio has been decreasing from 20% in the beginning of the year to 14% in the third quarter.
Speaker Change: As a result of this convergence and since working capital is still our most relevant better solution by far total provision expenses have reduced to virtually zero this quarter compared with 19 million Reais, one year ago, and 18 million highs in the second quarter of 'twenty four contributing positively.
Speaker Change: <unk> results when compared to previous periods.
Speaker Change: Regarding npls the NPL 90 days for merchant solutions continues to increase as expected while the portfolio matures, reaching three 7% in the quarter compared with two 6% for the previous quarter.
Speaker Change: The decrease observed in the NPL 15 to 90 in the quarter was due to the better vintages when compared with the second quarter.
Speaker Change: Finally on slide eight we summarize the performance of our financial services segment.
Speaker Change: The strong evolution of our main strategic drivers coupled with a stable competitive environment in payments has led to solid financial performance as such financial services revenue reached 3 billion, 8% higher year over year with an EBT margin of 22, 8%.
Speaker Change: Five one percentage points higher over the same period.
Speaker Change: Now, let's talk briefly about our softer performance on slide nine.
Speaker Change: We see positive trends from our cross selling initiative of offering financial services to our software client base the strategic focus for the software settlements.
Speaker Change: This can be seen by the car TPG of our clients that use both our financial services solutions and software solutions, which has reached $5 8 billion <unk> in the quarter growing more than twice the sequential growth seen in our Msnb car T V.
Speaker Change: This result was boosted by our financial services specialist team, which has been doing a great job driving this cross sell to strategic verticals within our software segment.
Speaker Change: Regarding software revenues, we have seen relatively stable performance year over year growing two 5% sequentially on the Bottomline software adjusted EBITDA reached 72 million has in the quarter with a margin of 18, 3% one six percentage points higher.
Speaker Change: For over quarter, as we continued to manage the business for efficiency and cash generation.
Speaker Change: Now I want to pass it over to Mike deals to discuss in more detail some of our key financial metrics Matteo.
Speaker Change: <unk>.
Mike Deals: Thank you Leah and good evening, everyone I would like to start on slide 10, where we discussed the first little Big Burger evolution of our costs and expenses and I know just a bit.
Mike Deals: Cost of services decreased as a brisk vintage of revenue from <unk>, 2% in the second quarter of 24 to 25, 6% in the third quarter of 24 due to the reduction in loan loss provisions.
Mike Deals: Excluding credit provisions the costs remained relatively stable as a percentage of revenue.
Administrative expenses increased 5% year over year, our 90% Brexit over quarter, resulting in a sequential increase of 30 bps as a percentage of revenues.
Mike Deals: This increase was mainly attributed to higher provisions for variable compensation, which are seasonally higher in the second half of the year.
Selling expenses increased 13% year over year and be creative FERC percent quarter over quarter or 150 basis points as a brief image. Our fragrance. This decline was mainly driven by reduced marketing expenses considering that in the first half of the year, we sponsored a reality can be sure which ended.
Mike Deals: In the second quarter.
Mike Deals: Financial expenses decreased to 13% year over year, an increase of 7% sequentially or a 50 basis points as a percentage of revenues.
Mike Deals: The sequential increase was driven by higher funding you need to do to TBD groove lower share of equity in order for any following significant share buybacks this quarter and a higher number of working days.
Mike Deals: These effects were partially offset by lower average funding spreads.
This quarter, our proactive liability management played a key role in optimizing our funding costs. After you purchased 60% of our 2021 bond issuance, our most expensive debt instrument and refine us significantly lower spreads through the issuance of new financial views.
Mike Deals: Our other expenses increased by 12% year over year, but remained relatively stable sequentially.
Mike Deals: Our revenues grew other expenses as a percentage of revenue decreased by 20 basis points.
Finally, our tax rate was 20% in the quarter down from 23, 8% in Q2.
Mike Deals: This reduction was primarily due to the repurchase of approximately 60% of hormones and the transfer of the remaining portion to a local entity, allowing us to benefit from our next shoot on the associated interest expense.
Mike Deals: This operation had a partial impact in Q3 and is expected to further benefit the company from Q4 onwards.
Mike Deals: Turning to slide 11, our adjusted net cash position and recent FERC, one 9 billion by the end of the quarter a decrease of zero point to be down on a sequential basis.
Mike Deals: The main reason for the reduction was the execution of our 1 billion share buyback program with an outflow of 700 furniture media and in the third quarter and 979 million year to date.
Mike Deals: Finally, let's move to slide 12 to discuss our guidance.
Mike Deals: We are very pleased with pharmacy pharmacy. This nine months of 2024 on the financial front I feel we are well positioned to deliver our guidance. Despite factors that impacted our P&L lines, our decision to make a favorable share buyback. Thank you.
Mike Deals: There are no changes in the methodology of membership.
Mike Deals: And macroeconomic headwinds with the unexpected ranks of the yield curve.
Mike Deals: Although operating sites and I'm excited to share that we have already met our guidance for the credit portfolio, while maintaining mpls completely under control and within our expectations or even better.
Mike Deals: On the banking fronts. The business is also evolving as expected with clients engaging with our solutions and keeping their deposits to begin our ecosystem leasing is on the right path to reach our targets.
On the payment science Msmbc TPB continues to be the most challenging keep SPX continues to grow at a faster pace than anticipated, we're still seeing the impact on our debit volumes via this is accretive to our P&L. It shows a negative impact on our <unk> metrics.
Mike Deals: Additionally, as the outlook for interest rates significantly changed in this quarter, we decided to prioritize on the side of profitability versus growth.
Mike Deals: <unk> in our lives are short term CTV growth, we continue to believe in our ability to grow above market longer term as we continue to strengthen our value proposition towards a complete solution for our clients.
Regarding industry growth, we continue to see significant growth opportunities in the Brazilian market, we have a very dynamic and innovative environment and we see electronic payment methods extending well beyond private consumption.
Mike Deals: While the pace of growth may differ from previous years by engaging our clients with a broader suite of solutions, we establish a foundation for achieving our long term targets.
Mike Deals: To that end.
Mike Deals: On monetization our year to date results, reflecting an SMB take rate of 255% exceeding our guidance of <unk>, 49% with significant contributions from banking credits and continued healthy pricing, particularly in payments.
Mike Deals: We have successfully bundled our products and maintain the dynamic pricing strategy, allowing us to increase the level of engagement with our solutions, while improving our target returns.
Mike Deals: Important to note that our maintained Fred solutions are already playing an important role in our P&L, providing us with more tools to engage and monetize the relationship with our clients.
Mike Deals: With that said, we posted yet another partner of consistently low and continue to focus on these strategic priorities set forth in our Investor day.
Speaker Change: Before we wrap up I would like to hand, it over to pivot them to discuss what with Super to software business on it.
Speaker Change: Turning to my peers.
Speaker Change: Before we move into the Q&A session I want to take a moment to address some recent developments by sharing our perspective on our software business.
Speaker Change: Outlook for this asset and our strategic decisions as we move forward.
Speaker Change: As we have consistently communicated we are fully executing our strategy focus on cross selling financial services to our soft declines in priority works.
Speaker Change: Our approach also emphasizes efficiency and cash generation and refinery believes this strategy model creates substantial value for our clients, but also drives long term success for us.
Speaker Change: We remain steadfastly committed to this strategy and I am pleased to report that we are on track with its execution power.
Speaker Change: <unk> resulted in the growth of bundled software and financial services solutions that address critical client pain points within key strategic verticals.
Speaker Change: While we have made significant strides with our financial services specialist distribution channel, we acknowledge the opportunity for further engagement with the links Salesforce.
Speaker Change: Success of our execution is reflected in our unwavering guidance and the strategic framework, we established during our Investor day, both of which remain firmly in place.
Speaker Change: At the core of our mission is.
Speaker Change: We've built <unk> to maximize shareholder value now let me approach this with an open minded towards innovative strategies.
Speaker Change: A key area. We are exploring is whether we can achieve our cross selling objectives through a commercial partnership instead of directly owning the software assets.
Speaker Change: This approach would allow us for a light asset footprint and better allocation of our capital.
Speaker Change: So that then we have engaged advisors, who are diligently analyzing and exploring potential alternatives for our software business.
Speaker Change: I want to emphasize that there is no set time frame or predetermined outcome. At this stage, we are thoughtful when considering all options with our shareholders' best interest.
Speaker Change: Our top priority.
Speaker Change: We are committed to keep you informed about our progress as we navigate these assessments.
Speaker Change: Before we begin our Q&A I want to express my sincere gratitude to each of you for your ongoing support.
Speaker Change: We're excited about our long term goals and our commitment to delivering value for our shareholders.
Speaker Change: With that operator could you. Please open the call for questions.
Speaker Change: Okay. At this time, we are going to open it up for questions and answers. If you have a question. Please read it down into Q&A session or a click on raise hand for you for a question to be taken we.
Speaker Change: We do ask that when you pose your question that you pick up your headset to provide optimum sound quality. Please hold while we poll for questions.
Speaker Change: Our first question comes from Tito <unk> with Goldman Sachs.
Speaker Change: Hi, Good evening. Thank you for the call and taking my questions. A couple of questions. If I may.
Speaker Change: First just to thank them.
Speaker Change: TPG.
Speaker Change: Very strong growth on the QR code on the <unk> code offsetting maybe a bit slower growth on the card PPV than you had originally guided for.
How do you think about that continuing to evolve.
Speaker Change: The growth in the card PPV and picks QR code. Because also you had a very nice improvement in the take rate.
Speaker Change: We would think of as the Pik QR code could have a lower take rate. So just help us understand.
Thats impacting the take rate.
Speaker Change: And then I have a second question after that thank you.
Speaker Change: Hi thought.
Lia Matos: Lia here. Thank you for your question, so regarding TPB trends and how <unk> impact that so we continue to see fixed growth ahead of expected and now we can say that there is visible cannibalization from debit volumes, but as we've said many times before that's accretive for.
Lia Matos: US because big substitutes debit and substitutes.
Lia Matos: Physical mining so it's accretive both from the perspective of payments monetization, but also increased deposits and more money within the ecosystem. We expect this trend to continue so no reason for us to believe.
Lia Matos: That fix loans continued to gain ground, especially as our efforts even within the central bank roadmap to improve usability of peaks.
Lia Matos: We'll probably even improve adoption in the future, but as we've if you were to consider.
Lia Matos: The impact of peaks in our overall PPV naturally take rates.
Lia Matos: Would be smaller but again, it's important to highlight that this is all accretive because not only this is income substitutes debit, but it's also incremental because of substitutes physical money.
Lia Matos: Yeah.
Speaker Change: Great. Thank you and then just as my second question I, just wanted to understand the provisioning on the credit portfolio.
Speaker Change: It's Greg near Zero I know you mentioned that the expected credit losses improve then we see the early npls improved but the 90 day Npls are going up I think maybe you're still growing the loan portfolio quite a bit I mean, 30% quarter over quarter growth. So I'm not sure I completely understand why provisions would.
Speaker Change: Go to zero in a quarter when you're doing that type of growth, even if the expected losses may be improving.
Speaker Change: And CFO Mark <unk> here. Thanks for the question. So I think we've mentioned is in a couple of quarters ago boats. When we resumed our credit offering we started to provision of 20%.
Speaker Change: Even though our expectations for expected credit losses were in the 10% range.
Speaker Change: What we're seeing right now is that as the results are evolving according to our expectation we are reducing our new Texas in terms of <unk>. So we're basically converging the level of provisions with our expected credit losses.
Speaker Change: And the way to look at that is that last quarter, we had 18% of the portfolio provisions and now we're getting to 14% this quarter and is that an ongoing process. So over the coming quarters, we're going to continue to.
Speaker Change: We will have this convergence of both models and Thats why your CLO provisioning in the quarter.
Speaker Change: Okay. So this low level should probably continue as you continue to adjust to get closer to that 10%.
Speaker Change: Yes, that's correct.
Speaker Change: Okay, great. Thanks.
Thanks Tito our next question comes from Danielle <unk> with <unk>.
Speaker Change: Hi, Hi, everyone My bedroom Villa Mattel's congrats on the results and thank you for the opportunity to ask questions.
I wanted to get your view on the car to PV for 2025.
Speaker Change: Looking into the new stone retail index data for September and October.
Speaker Change: It looks like physical.
Speaker Change: Kind of struggling to show relevant growth months over months so.
Speaker Change: Is there any concern on your side I see the digital growing well, but.
Speaker Change: Probably about lower breakdown on the ARY revenues. So how can we cross that data from from the stone index to your expectations for 225 on the card, especially on the <unk>.
Speaker Change: Carr to PV for tubes certified thank you.
Lia Matos: Hi, Danielle Lia here. So thank you for the question.
Lia Matos: No, we're not going to point.
Lia Matos: Point out numbers for 25 at this point, but in terms of trends what we can say is that we.
We see the growth levels that we are at right now at 20% a very healthy naturally there is this shift between debit volumes and fix volumes in that shift for us from an economics perspective is accretive.
Lia Matos: As we've mentioned several times before and what's important for us to highlight is as long as Mccain maintained its healthy and solid pace of growth in clients and TPG. This is really the driving force for the monetization cycle within our business as it drives not only.
Lia Matos: Famous monetization, but also deposits growth and engagement with our overall overall banking and credit so as much as we continue to see.
Lia Matos: This shift between fixed and debits, we don't think that that's going to go away as I, just mentioned and we will take that into account when we talk about 2025 TPG guidance because I.
Lia Matos: Remember that when we set the guidance last year for <unk>, we will have a very different place in terms of peak penetration in the overall industry.
Lia Matos: So picks is here to stay we will take that into account in our when we talk about 2025, but that's.
That's all I had and that's what we can say right now.
Speaker Change: Okay. Thank you and if I may follow up you mentioned a shift in the Panama fix a penetration, but we also have a shift in the macroeconomic environment. So how does that impact your maybe sales force capacity that you added like marketing expenses are still on a high level. So.
Speaker Change: And it changes the way you want to run your business in 2025 due to the macro economic deterioration in Brazil.
Speaker Change: Thanks for the question Neil.
Speaker Change: In terms of sales force planning it doesn't really change the outlook.
Speaker Change: The wind that we plan sales for instance, or any of these more towards a bottoms up approach. So looking at the markets at a very granular level and making sure that we have the time to address.
Speaker Change: When we talk about the change in the yield curve I think the other side of it is the pricing side.
Speaker Change: And Tibet <unk>.
Speaker Change: I think we've been emphasizing this on a couple of quarters as well, but the pricing has become a upward dynamic within the company.
Meaning that we continuously evaluate the profitability of our cohorts and then we adjust price accordingly.
Speaker Change: And once the new interest rate environment, what we're going to basically were going to graduate incorporates Disney would curve in our decision, making and evaluate the economics of passing through the shifts so our clients. So it should be a natural progress.
Speaker Change: No. One important note here is that we tend not to make big price movements in the first Q given the strong seasonality.
Speaker Change: Maintenance Williams of passing through the new yield curve should be stronger from the first part of 'twenty five onwards.
Speaker Change: Okay. Thank you very very cooler and thank you again for the opportunity.
Speaker Change: Thank you. Thank you.
Speaker Change: Our next question comes from Mario <unk> with Bank of America.
Speaker Change: Hey, guys.
Speaker Change: Good evening, congratulations on the quarter I wanted to explore a little bit more exactly on the take rates.
Speaker Change: I think you answered part of the debt.
Speaker Change: Question.
Speaker Change: In the previous question, but basically when we look at your M. S. N B take rates, Brian like you were running at $2 58, you were guiding for 249.
Speaker Change: The mix has been weaker than expected given.
Speaker Change: So why is your take rates higher than what you were expecting is it because you already started to implement.
Higher prices for your clients.
Speaker Change: Fed a lot by the competitive environment is very rational or is it because the banking product is more profitable for you.
Speaker Change: Okay.
Speaker Change: Mario Thanks for the question Mark out there so when we look at the Delta between the decrease that we are required from the $2 50, 802 point 49 that was the guidance basically the whole Delta is explained by a higher penetration of both credit and banking banking of course, we're going to start to have an impact of the yield curve over to depart.
Speaker Change: But when you look at the actual level of deposits were also ahead of guidance right.
Speaker Change: And in terms of credit again in the third QE oriented bet the guidance. So the contribution that we're seeing in the P&L.
Speaker Change: Is bigger than what we anticipated. So I think it has less to do with the mix of <unk> versus prior to Covid and Mark to do is the penetration of new solutions in the company.
Okay, that's clear so and based on your previous answer them.
Speaker Change: Even though we're still seeing higher rates in Brazil that you could implement that we're going to see write a shift in your pricing to reflect this higher yield curve. So.
Speaker Change: What are you, saying basically is that the take rate should be going higher from these levels correct.
Speaker Change: Yes, that's right. So when you look at third Q <unk>.
Speaker Change: You don't see a big impact from re Brian since because the yield curve is expected to rise from Q4 onwards.
Speaker Change: This will probably take place from the first quarter of 25 onwards.
Speaker Change: That's correct. So the take rates should go up as a result of this repricing weights.
Speaker Change: Perfect and let me ask your second question unrelated.
Speaker Change: We saw it right that the credit card portfolio is growing at a faster pace.
I read somewhere that you said that you increased the attractiveness of the credit card.
Speaker Change: Product can you explain.
Speaker Change: What do you mean by that.
Speaker Change: What changes have you made to the credit card product.
Hi, Milo Lia here so essentially.
Lia Matos: Essentially the message here is we're still at the beginning of a scaling our credit card product. We've launched it now for both Tom and phone, we do believe that credit card has.
Lia Matos: A strong value proposition for the micro segment.
Lia Matos: And we're taking a similar approach here in terms of carefully increasing our offer according to what we observe in terms of performance, making sure that we maintain a conservative approach with regards to risk so pretty similar to what we did at the beginning of the scaling of our working capital solution.
Lia Matos: Ah, we're still fine tuning from the perspective of the offer so basically what is the right value proposition for credit cards within SMB versus micro we know what is different they have different needs. These are different segments that have behaved differently. So the message here is that it's a <unk>.
Lia Matos: Very much at the beginning of the of the growth of this product and we're still kind of learning with these early stages and naturally as we evolve we will provide more visibility.
Lia Matos: As we continue to scale.
Speaker Change: Perfect. Thank you very much.
Speaker Change: Thank you Marty.
Speaker Change: Our next question comes from Neal I got along with HSBC.
Hi, graduations on little Jonathan. Thank you for taking my question. If you can dive a bit into fix them right. Now you mentioned that the data that you get some fixed is pretty similar to what you have on debit cards. So they can get any cannibalization of that Scott.
Speaker Change: Does not really have an impact on your overall take rate do you expect this dynamic to change would you see expect as big schemes turbulence, but do you see competition in terms of pricing among among <unk>, which leads to lower pricing.
Speaker Change: For base that makes it a bit less attractive.
Speaker Change: And on that we have.
Speaker Change: More new features coming on bank side, we have the automatic ended up getting fixed payments.
Speaker Change: What is your expectation as these new products are launching adopted.
Speaker Change: Would you think that this could cannibalize, thank god knows well and if so what are the ways that it could impact your business. If you can just talk about that first thank you.
Lia Matos: Hi, Neil Lia here so.
Speaker Change: Let me elaborate a little bit further on on fixed QR codes and our perspectives on monetization. So it is very clear that peaks QR codes, the dynamic QR codes integrated to the Pos machine.
Speaker Change: Is it very different user experience, especially for SMB clients.
Speaker Change: Because it allows reconciliation there's a big difference in terms of fraud, we know that picks a PDP. So the types of static QR code or other chapter methods and peaks that are not dynamics. They tend to have a much higher level of fraud. So we firmly believe that this is kind of.
Speaker Change: Our value add in terms of offering a new payment solution for our clients.
And that is here to stay right. So big finish C is just another step in that direction, we do believe that as big for NFC improvement improve the user experience, especially on the side of the consumer that is willing to likely accelerate the trend where fixed cannibalize on debit volumes.
Speaker Change: We do not see fixed cannibalizing on credit volumes I think the.
Speaker Change: BACS data on car TPG growth kind of point to that direction right. We continued to see healthy growth in our credit card PPV.
Within our base, we do not see any evidence of a fixed cannibalizing on credit volumes.
Speaker Change: Especially because of the nature of install is right. So we havent seen this as a relevant trend at all within our base. Our base case scenario is really fixed continuing to grow and adoption versus debit volumes.
Speaker Change: Volumes and because this is a value added solution that we offer our clients in terms of all the features associated to any payment method.
Speaker Change: We don't believe that monetization is likely to change.
Speaker Change: But then again a very important aspect of piece for us is that it substitute the cash and that's all accretive right. So more deposits within our ecosystem everything I've already said.
Speaker Change: But that kind of summarizes the picture in terms of how we see things.
Speaker Change: Yeah.
Speaker Change: And youre not seeing any pressure from your peers in terms of pricing for fixed processing.
Speaker Change: No no.
Speaker Change: No news around that.
Speaker Change: If I may add.
Speaker Change: Remember thats, how we priced it.
Speaker Change: It's closer to the dynamics of net congested debits.
And if you think about the pricing of debit transaction. It was a few that were supposed to cover the distribution costs. A reconciliation features and social work and.
Speaker Change: And that pricing stable firm quite a while now in the market. So we're not really worried about this trend started as.
Speaker Change: Challenges in terms of price and parked fleet. So I think it's quite stable environment Nowadays.
Yeah.
Speaker Change: Okay.
Speaker Change: No more questions first on the take rate in the key accounts segment. There was a big 14 basis points quarter on quarter jump. So if you could.
Speaker Change: Just explain what led to that improvement is the take rate for key accounts and my second question is on the credit book you mentioned that you expect about a 10%.
Speaker Change: The expected loss and that's why you wanted to bring those reserves as percentage of your loan book to around 10% just got into 14.
Speaker Change: I looked at some players like for instance, in Macau to the brain, who kind of breaks down.
Speaker Change: By segment and they do credit to the margins, but on and off platform that.
Speaker Change: That's both in digital loan book is around 30, 40%.
Speaker Change: So is the difference in the kind of margin. What are you seeing that makes you think that to have themselves of 10%.
Speaker Change: Why not I mean, given that visit is a difficult market and a different than doing David why not maintain a higher level of provisioning that then what do you expect to still have some safeguard thank you so much.
Speaker Change: Okay, Nihon think that quickly the Q&A are the key accounts.
Speaker Change: A question and then pass it over to <unk> to elaborate on NPL dynamic so.
Speaker Change: Within our key accounts it was a 11, 3% sequential reduction in PPV, that's basically because we lost remember that there is volume concentration within the segment. So we lost a significant volume from one specific sub acquire.
Speaker Change: And evidently a lot because this is a large player that counts positively towards shift mix in terms of take rates. So this move was also happen with an observed take rate improvement of 14 basis points. So.
Speaker Change: It's simply a mix effect.
Speaker Change: So Marty I, just want to elaborate a little bit on Npls for sure. So on the question of why we're talking about 10% as a level of expected credit losses. When other peers are reporting on the 30% level I think were spoken on both a different mix of clients here. So you can look at there.
Speaker Change: Average ticket of our current credit portfolio. We're talking about 30000 are nice leverage loan size. If you look at the peers, we're talking about maybe 10 times lower.
Speaker Change: And I think if you were to look at the profile of clients that just other players are targeting it would be more similar to a micro merchants and lots in SMB merchants.
Of course, we have initiatives to test and learn on that segment, but when I talk about our current working capital offering is mostly signed it.
Speaker Change: Smbs so that's the difference.
Speaker Change: Understood. Thank you so much leann that that was very helpful.
Speaker Change: Thank you anyhow.
Speaker Change: Next question from Jamie Friedman with S. G.
Speaker Change: Hi.
Speaker Change: Congratulations guys. If they have one <unk> and one for the first one is how should we think about financial expenses going forward because those.
Speaker Change: We're a little bit below it is what we were anticipating on a sequential basis in Atlanta.
Speaker Change: In terms of the bundling strategy is that potentially impacting merchant growth bundling strategy in Richardson.
Speaker Change: Hey, Jamie So I'll start with the financial expenses question, and then pass it over to you.
Jamie: In terms of financial expenses, when you think about the drivers of that line, but are basically firming factors. Our funding needs are the first one the mix of funding sources funding from third parties versus equity.
Jamie: Also interest rates and the funding spreads right.
Jamie: When you look at the third Q.
Jamie: Financial expenses rose by 7% quarter over quarter basis.
Jamie: Basically given the following impacts from first to enhance and increasing the number of working days in the quarter on which were 5% higher.
Jamie: Second is related to the funding needs. So we had growing CPG and therefore bigger funding needs.
Jamie: Third we did a sizable buyback in the quarter as well so our mix of equity versus debt of course was lower.
On the other hand, we're talking a lot about the new financial instruments that were issuing because if you don't see the license and what we're seeing overall in our financial expenses that you have a reduction in the funding spreads so thats still setting factor here.
Jamie: We just again.
Jamie: Now when we look ahead.
Jamie: The only difference is we're going to see them.
Jamie: Starting the first SKU is that interest rates should start to rise rates. According to the yield curve. So when we think about the dynamics of financial expenses in relation to revenues I think that's the big shifts. So we should have a more challenging scenario in terms of financial expense solely due to the yield curve, but.
Jamie: All the other factors of <unk> on a positive trend. So we're going to continue to generate cash funding spreads are also showing a positive trend and funding needs are basically the result of GDP growth. So those are the main factors there.
Speaker Change: Yep Yep.
Speaker Change: Jamie So just taking your question on bundling.
Speaker Change: Bundling strategies and how that has affected client base growth.
Speaker Change: So.
There is not a direct relationship so our net adds in the dynamics of client base growth is really a result of two main factors first what might those mentioned that is the effect of the sponsorship and our marketing investments and the sponsorships and the reality show that happened in the first half of the year.
Phasing out so theres a seasonal impact in terms of client base grows and second our decision to really weigh on the side of profitability versus growth, so really paying attention on the quality of the clients versus the actual number of clients that we on board.
Speaker Change: Speaking more broadly when we think about bundling I think theres too.
Speaker Change: A slightly different dynamics there number one is bundling when we talk about cross selling financial services to our software clients. We disclosed the cross sell CTV metrics I think that's a good guy that evolution it doesn't impact so much.
Speaker Change: Our client base grow because of the mix.
Speaker Change: Effect basically those are larger clients right. The nature of those software clients is a medium clients, who then smbs. So in actual number of clients, it's not that relevant but it is significant in terms of TPG growth and were seeing pretty good performance of our specialist sales channel within financial services.
Speaker Change: Cross selling financial services bundled the software it's more softer clients. So that's one part of the strategy, we're happy with the evolution, there and when we think about our micro and SMB client base, both with stone and tone offerings.
Speaker Change: We're basically at the point now that are the vast majority of science already on board with a payments and banking bundle that's been the reality for awhile.
Speaker Change: I would say that that part of the strategy of bundling payments and banking that's already reached.
Speaker Change: Relative maturity and that's really driven a big part of the deposit growth in the past now naturally that's going to be more about engaging further with the banking and the credit etcetera, but I would say that those bundling strategies.
Speaker Change: We'll continue to evolve naturally as our roadmap evolves, but.
Speaker Change: That's not what's driving the dynamics in terms of client base.
Speaker Change: Got it thank you both so much.
Speaker Change: Thank you Jamie Thank you.
Speaker Change: Next question from Gilead, <unk> with J P. Morgan.
Speaker Change: Good evening, everyone. Thank you for the Q&A.
Speaker Change: My question is gonna be on capital allocation.
Speaker Change: I think because you started the call talking a little bit.
Speaker Change: The guys are studying a little bit more to the.
Speaker Change: Requirements of a location for the business that.
Speaker Change: Maybe you have excess cash.
Speaker Change: And I think it's a fair discussion we discuss a lot do you basically you're sitting at five beat on the excess cash you generate almost 2 billion net cash per year.
Speaker Change: And when we discuss here, we basically see two restrictions I think towards the capital distribution. The first one would be capital.
Speaker Change: But when we do our math here you you were already sitting in our estimates more than 40% kept duration in Brazil.
Speaker Change: And the second would be the working capital funding needs, which our impression is that the securitization market in Brazil, it's already fairly.
Speaker Change: <unk> developed so my question to you is basically out of the five beat them better we're sitting nicks as cash.
Speaker Change: There are no analysis that you guys are Kerry how much you think you can distribute or.
Speaker Change: Or out of the to be the net cash that you generate for you.
Speaker Change: How much can you distribute and the second question is basically the management incentive to that I think part of of the alignments of your comfort on the Kpis.
Speaker Change: If you are planning to change the management kpis from nominal profit to our ROE.
Speaker Change: Or at least Cps.
Speaker Change: Profit per share. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you again.
Speaker Change: So I'll take the first part of the question regarding the framework of capital location.
Speaker Change: So I think in general.
Speaker Change: It was the right one.
Speaker Change: So when we look.
Speaker Change: Capital structure of the company and all of these recent weakness we are maintaining a silence and conservative capital structure with room for optimization.
Speaker Change: And I think we can see that not only by their just a net cash position that you mentioned, but also when you think about capitalization levels and the level of diversification diversification in our funding sources.
Speaker Change: We're in a good shape on this.
Speaker Change: Like <unk> mentioned the company continues to generate cash each quarter.
Speaker Change: Even after accounting for the growth of the credit book.
Speaker Change: And based on those factors.
Speaker Change: Again, we think thats going to have some excess capital.
Speaker Change: And our mindset here is not to accumulate capital within the company info, Josh definitely have kept in excess of what we need to execute the plan.
As to develop a frame framework to distribute that to shareholders in one way or the order that's fairly specific to seniors.
Speaker Change: Given that we're still finishing this framework, we're not going to Miss sharing right now how many business we've seen theyre available to be distributed so muscle for both.
Speaker Change: Both like Pedro mentioned in the call a few days you used to provide this visibility to the markets in the coming quarters. So we're working on desk right now.
Speaker Change: On the incentive question around the <unk>.
Speaker Change: On the incentive side I think you raised.
Speaker Change: A fair point and I think it's part of the whole framework in terms of the discussion on how are we going to allocate our capital and make the decisions over time.
Speaker Change: I think.
Speaker Change: The discussion is as of today is really centered as you mentioned more on the EPS side, rather than <unk> itself.
Speaker Change: But it's part of the whole framework discussion that we're having and I think we're gonna be providing more.
Speaker Change: Visibility on that on the first quarter of next year.
Speaker Change: Okay.
Speaker Change: Okay. Thank you.
Speaker Change: Our next question comes from here not to Maloney with autonomous research.
Speaker Change: Hi, everyone. Thanks for the call here and taking the questions. So my first question was on the software business and thinking here of Federal's comments last call. It seemed like he was still.
Speaker Change: Let's say more convicted on owning the assets to benefit from the cross selling opportunities. So I wonder here what drove the.
Speaker Change: Our strategy change here.
Speaker Change: Here now that you are considering a potential sale of the asset and then if you allow me for a quick second question. Just wondering what you expect to be the recurring effective tax rate now that you might have some some benefits here on the bond repurchase. Thank you.
Speaker Change: Hi, Thank you for the question.
Speaker Change: I think we remain confident that our offerings software to our clients is a key pillar of our strategy as we highlighted in Investor day presentation.
Speaker Change: But now the.
Speaker Change: Product integrations are established.
Speaker Change: We believe that we can drive cross selling opportunities through commercial partnerships without necessarily owning the asset and I think this is what I tried to highlight in the call.
Speaker Change: So why were very confident in terms of our ability to execute our strategy that way Andrew.
Speaker Change: The transaction will only be pursued if it yeah.
Speaker Change: Add shareholder value.
Speaker Change: And we believe that.
Speaker Change: So we believe that the.
There's no big change in the strategy at all I think the way we want to move.
Speaker Change: Really in terms of a more asset light strategy using commercial contracts to actually re.
Speaker Change: Our balance sheet in some ways and improve our capital location. So the strategy remains pretty much the same.
Speaker Change: And in terms of the tax rate question I think we've mentioned in the past that we see the range for our tax rate has been between 20% to 25%.
Speaker Change: Of course this is a range right.
Speaker Change: The change that we have not always been bond buybacks. This is basically because.
Speaker Change: The lower end of that range, but I think in terms of expectations going ahead that remains quite the same.
Speaker Change: Of course, you may remember that we also have some seasonality on the tax rate so far for <unk> tends to be lower than the remainder of the year, but as a benchmark I think the 20% to 25% range remains in place, but we should be on the lower end of that.
Speaker Change: That's good thank goodness.
Speaker Change: Thank you very much.
Speaker Change: Yeah, sorry, if I might come back just to reinforce I think the core message that I wanted to convey is on our belief that we.
Speaker Change: We have an unica is sort of asset light.
Speaker Change: While we are confident in our ability to execute our strategy without necessarily owning the asset.
Speaker Change: We really believe that the transaction would add shareholder value.
Speaker Change: Thank you okay.
Speaker Change: Our next question comes from <unk> <unk> with UBS.
Speaker Change: Hello, everyone. Good evening, thanks for for the Q&A I have two on my side. Please.
Speaker Change: The first one.
Speaker Change: I want to touch base again on your cards to PV growth and especially for the M. S N B's.
Speaker Change: I understand the shift from cards to peaks, but if we look at the quarter on quarter.
Speaker Change: Growth was slightly below the guards industry that was out a few days ago. So just would like to understand in your view why we saw this implied market share loss. If it was related to some specific segment or no.
Speaker Change: And what's your expectation going forward thinking about market share, especially as you probably have one of the largest sales force in damn smbs industry Nowadays.
Speaker Change: And the second one just following up from Chris Bohn Christmas question on capital allocation and the last one given your evaluation about the potential option for the software business.
Speaker Change: When you say advisors and so on.
Speaker Change: Is it fair to assume that if you decide for a sale of the monopoly to maximize shareholder.
Speaker Change: Shareholder value today would it be exactly distributing this capital.
Speaker Change: Or if you are looking for it on a specific allocation in a specific product or project. Please.
Speaker Change: Please thank you.
Kai: Hi, Kai earlier here, let me talk a little bit about TPG dynamics in Europe.
Kai: Your question regarding our growth versus industry. So what do we think about market share we prefer to look at our market share dynamics.
In a longer time horizon than only on a quarter over quarter basis, So our long term target.
Kai: It doesn't imply continued market share gains over the long run.
At a lower pace than we had in the past naturally just because of the scale of the business right.
Kai: Given that we phased marketing and sales investments differently throughout the year. This may mean that we slightly lose share one quarter, but gain on the other to compensate for that what's important for us is to maintain a consistent pace of growth and market share gains in the long run that is also implied in our over all.
Kai: Overall guidance for for PPD right that we pointed out in the Investor day, we do need.
Need to consider when we talk about TPG guidance for 2025, and even longer term the dynamics of fixed because that's played out differently than we had anticipated last year, but nothing changes in terms of our perspective, and our ability to continue to win clients and game market.
Speaker Change #101: Sure overall.
Speaker Change #102: Regarding a shorter time right.
Speaker Change #102: Recent CPG growth dynamics, nothing structurally different happened this quarter other than what we have already said so picks growth ahead of expected with visible cannibalization from debit volumes our decision as Matt mentioned to prioritize on the side of profitability versus growth.
Speaker Change #102: Which may have an impact in short term current TBD.
Speaker Change #102: And Theres also some negative seasonality in the quarter since we had a September with less Saturdays and he was also I mean be three where the main effect shorter term, but that it doesn't change our perspective on the longer term dynamics.
Speaker Change #102: And we see our third quarter growth levels at 20% year over year, considering peaks are very healthy.
Speaker Change #102: And driving the overall monetization possibilities.
Speaker Change #102: Banking and through credits in the future throughout the lifecycle of our clients. So.
Speaker Change #103: Yeah, that's that's our satcom on the overall dynamics of TBD.
Speaker Change #103: And on the second question around the software abuse.
Speaker Change #103: This and a potential use of proceeds.
Speaker Change #104: Okay Alexa domains in principle, we have not even made a decision yet on whether a transaction will take place or not we're evaluating options.
Speaker Change #104: So to that and I think it's premature to discuss potential use of proceeds.
Speaker Change #104: But in general like I mentioned in my answer regarding capital allocation I feel good we feel comfortable in terms of our capital structure no updates.
Speaker Change #104: So of course, if we have excess cash from a potential transaction.
Speaker Change #104: Either buying back our distributing that excess cash would be a plausible auction the three months to evaluate.
Speaker Change #104: Okay.
Speaker Change #105: Okay. Thank you very much.
Speaker Change #105: Next question.
Next question from Williams back in charge with Ito Libya.
Speaker Change #106: Thank you everyone and thank you for your time My question here is quite frankly, so regarding your software is lives.
Speaker Change #107: Regarding the possible sales of the assets I just wanted to ask.
Speaker Change #107: A little bit into which players you could be looking at to sell it so.
Speaker Change #107: As you as you mentioned that you were looking to a commercial partnership if the sales really happened so cannot exclude.
Speaker Change #107: As potential buyers.
Speaker Change #108: Every player that has acquiring capabilities or has already.
Speaker Change #108: Partners on the acquiring space.
Yeah.
Speaker Change #109: Thanks for the question so I'll take the first part.
Speaker Change #109: Regarding the commercial agreements.
Speaker Change #109: So I think the idea here is that when we look at our operational or these were currently collaborate with various software companies through our partner program.
Speaker Change #109: And we have some of those partnerships.
Speaker Change #109: Zebedee agreements as well.
Speaker Change #109: So if we decide to proceed with any transaction.
Speaker Change #109: Indeed, maintaining those agreements would be a very important condition and of course, we're going to factor that into the decision making process.
Speaker Change #110: I think the second question if you could repeat.
Well I think it's it's just one question really regarding like the tissue buyers.
Like automatically issue exclude automatically.
Players that already have like.
Speaker Change #110: Payments capabilities and so on.
Speaker Change #111: I guess, it's clear.
Speaker Change #111: Yes.
Speaker Change #111: At this stage, we really cannot share the specific details.
However, what we can confirm is that has been a strong interest in the asset from from a diverse group of more than 20 players and that include both financial investors and strategic companies. So at this point it's really.
Speaker Change #111: It's an open discussion.
Speaker Change #112: Okay perfect. Thank you.
Speaker Change #112: Okay.
Speaker Change #112: Our next question comes from John Coffey with Barclays.
John Coffey: Thank you very much this is John.
John Coffey: One of the questions I had for you is on the impact of the Salique right in pricing I think we look back a number of years ago sleek started climbing to like I think it was $13 75.
John Coffey: There were some pricing changes that you made and some of your competitors as well and I think there was some concern later that when the rates started to decline that you would actually have to maybe reduce price. So now that we seem to be in a bit of a rising interest rate environment in Brazil.
What are your thoughts on changing prices raising prices, maybe what you've done already in Q3, if you have done any.
John Coffey: And going forward, maybe particularly as we get into 2025.
Thanks for the question, Jon So I think I touched on this on the <unk>.
The other question, but.
John Coffey: The emphasis here is that pricing is really becoming a dynamic process within the company and on this.
John Coffey: So when you're trying to evaluate the unit economics of the whole client base every single month.
John Coffey: And we think a lot of factors into that calculation, both product usage and of course, the macroeconomic conditions and then we make a judgment on whether we're going to adjust prices earn outs.
John Coffey: Of course, now that we're seeing interest rates are rising implied into the curve.
John Coffey: That goes into the calculation and what ends up happening is that we're going to have.
Most likely a higher level off repricing an adjustment going forward.
So to answer your question I think the idea of using it to pass through some of the increase that we're going to see.
John Coffey: This is a process that usually has some legs and takes a while so if you look at the numbers from a third fuel and also for Q, we shouldn't see a big impact from repricing weeds.
John Coffey: But as time goes by I think the expectation is indeed.
John Coffey: Pass through some of those increases.
Speaker Change #114: Alright, Thank you very much.
Speaker Change #115: There are no questions at this time. This concludes the question and answer session. The questions that have not been answered in this conference call will be addressed later by the stone co team I will now turn the turn over to Pedro Zinner CEO at stone cold for final considerations.
Pedro Zinner: Well, thank you very much for everyone for participating the call.
Pedro Zinner: Hope to see you in the next quarter. Thank you.
Pedro Zinner: Okay.
Speaker Change #117: This does conclude today's presentation you may now disconnect.
Speaker Change #117: Yeah.
Speaker Change #117: [music].
Speaker Change #117: Okay.
Speaker Change #117: Okay.
Speaker Change #117: Yeah.
Speaker Change #117: Okay.
Speaker Change #117:
Speaker Change #117: [music].
Speaker Change #117: Goodbye.