StoneCo (STNE) 19 Aug 222022 Q2 Earnings call transcript

Company Profile

Participants

Rafael Martins	Vice President-Finance & Investor Relations
Thiago Piau	Chief Executive Officer
Lia Matos	Chief Strategy Officer
Tito Labarta	Goldman Sachs
Josh Siegler	Cantor Fitzgerald
Mario Pierry	Bank of America
Kaio Prato	UBS
Geoffrey Elliott	Autonomous
Neha Agarwala	HSBC
Pedro Leduc	Itau BBA
Domingos Falavina	JPMorgan
Jeff Cantwell	Wells Fargo

Call transcript

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Operator

Good evening, ladies and gentlemen. Thank you for standing by. Welcome to the StoneCo Second Quarter 2022 Earnings Conference Call. By now, everyone should have access to our earnings release, and the company also posted a presentation to go along with this call. All material can be found at www.stone.com on the Investor Relations section. the net be cash income call, information, non-IFRS flow. conference adjusted included and this company presenting will financial Throughout adjusted free not These company by measures financial financial are IFRS. are defined measures for as important but the of IFRS information the appears information release. financial press the company's today's Reconciliations financial to non-IFRS in

on not not remarks, therefore, we might These statements. include formal like undue guarantees future statements remind and uncertainties subject I put are materially performance, numerous that of before should release. Please Finally, our statements everyone to you forward-looking forward-looking would begin to could that company's discussion press differ earnings forward-looking refer the them. to reliance statements disclosure are today's These company's risks in to the cause and actual from the expectations. results

of would risks in ahead. to conference to Securities Investor go and over business are many of Finance Please Form filed available addition, Relations is now Rafael your I which and at host, the the at with StoneCo. disclosed XX-F regarding www.sec.gov. like Exchange the Martins, company's VP the the In turn Commission,

Rafael Martins

operator, you, good Thank evening, and everyone.

highlights Today, some Joining to will quarter an we so on the Matos. CEO, our our Thiago, over our now our Thiago? Piau; of present updated some our recent performance. he business. discuss trends today for Chief and Officer, XXXX it outlook Lia have results, and second Strategy can will pass us Thiago call, we provide share I

Thiago Piau

credit guidance year-over-year, BRL achieved above product total forma in which growth, operating both in both quarter up combining the this performance We in second the growth and revenue profitability. pro quarter, Thank revenue with produced and revenue for you, we demonstrated everyone. excluding Rafa, XX% strong segments. of and while consistent billion, margins 'XX execution evening, second impact good our In X% X.X from Linx. negative We strong the in improving our TPV of was the improving our

our driven adjusted quarter and front, from profitability quarter, in in the the increased X.X% businesses. our improved in sequentially our services by X% efficiency EBITDA On second margins to operating the software first in financial

following partial in Banco decided second from the expenses stake As bond in Inter, quarter sale the of results our financial noted adjusting stop onwards. the we previously, to we our

As the BRL a Services EBITDA result, million, adjusted over XX our encouraged quarter million. higher in In reached guidance our than segment, XXX especially second X we BRL factors. Financial by our were XX% of

the mark our of crossed an evolution base, payments quarter. million X acceleration the strong the adds net First, with which in client of

XX% our strategy MSMB the and growth year-over-year, of both TON Stone growth improvement base driven active continued Second, by strong go-to-market TPV client a products. and for in

banking to while both able for increasing finally, opportunity generating our and we Fourth, Stone costs our increasing our the average platform, sequentially. expansion were continue we efficiency of and in engagement gains increased more TPV monetize to take And clients products future. and TON expenses. Third, rates, the in

over segment the for in X.Xx growth points though continue result back-off marketing with This the year. was we quarter. driven in with As which the performance software. improvement sequential is the invest X.X% our quarter. reached strong distribution, reached by to excluding same a service evolution margin, encouraged even in continued revenue product quarter a last segment associated XX% In efficiency almost in softer capabilities. in the synergies, customer EBITDA our in core Linx basis gains the pro the XXX% by and margin Financial of I'm XX%, of XXX and forma improvement to effects revenue the in segment, first the EBT increased time, grew year-over-year the mostly second our X.X% At result, and Software Services credit margins

direction and by results year. the continue strong margins second solid second quarter, the the in producing our forward I'm up results to of expect consistency a to this half in think step year-end. and I our is software of pleased the ramping We with

that second it on about to provide the will half With building to now Lia? second I our our strategic year, of Looking will said, over performance the focus Lia, we who will pass and updates. more achievements. these maintain details quarter on

Lia Matos

Thank everyone. you, Thiago, evening, and good

As Thiago our of Slide deeper main just summarized I focus on I Starting financial the and a client on highlights, trends. operating dive into X, drivers performance. will the bit will base our

of from MSMB and clients our During TON driven we in over some reached commercial churn products pricing initiatives. the quarter, impact continuous adds strong by XXX,XXX, with million both X net Stone performance despite

have strategy the focus more smaller bigger our TON needs addresses SMBs. clients' effectively our for and to optimizing product, We unit onboard superior our approach Stone product on we onto economics provide clients us. continued commercial while This

the banking the performance XX of client banking rates As billion, on of X% on legacy to mostly our to in for BRL rates base you to combined of On driven resulted account, to month Page grew this X, Xx quarter strategy update continued higher clients same see and and and of growth Stone At I quarter. client portfolio. TON, quality X.XX% both which digital top higher by our quarter our take compared per bank want has better higher an XX.X improved base TPV BRL of our and interest last our want improvement deposits year-over-year, above growth, our on from from accounts. platform. sequentially also BRL can ARPAC, average you quarter led actively number for the this On using monetization Slide over clients This, briefly XX% in with X, X.XX% TPV our the to highlight MSMB second expansion which guidance XX year-over-year. average sequential increasing reached the we highlight with I XX% the year-over-year. in the time, in we in with engagement

our we move portfolio sheet to BRL we quarter, our On XX, business. credit which cash inflows, accounts XXX This BRL to of key on XXX balance received value on fair will million. the the of million decreased Slide

show to period continue deprioritize the accounts TPV decrease of we side on As the we slight during key as sub-acquires. a from left page, had the

the hand, the On shift rates, Services CDI to of platform this XX% at was strong take increase sequentially year-over-year. Due have rates and to TPV in X.XX%. the mix other increased growth

on our shift Slides and XX. to let's Software Now segment XX

revenue quarter 'XX EBITDA the and in XX.X% XX improved, Software for XX.X% pro 'XX BRL for EBITDA growth the in second also At XX% time, representing Linx. of the compared forma year-over-year BRL pro Linx. first adjusted with reaching of the second X.X% to XXX million adjusted margin million, in quarter quarter reached forma same

drivers throughout capture this and cost continue on highlight XX, while synergies we On efficiency to these software performance We of Slide expect I we profitability of the as progress year improvements gains the even strategy. to continue invest and to our fronts. the want main several

order huge their helping marketplaces. become we multiple clients by our to of software of channels, our up through We which First, acquisition increase higher software as [indiscernible]. digital opportunity was XX% which by revenue number growth integrations to by Plugg.To, offset was omnichannel that business, driven the was growth truly clients have driven believe by sell partially and locations with decreased our core year-over-year, the In ticket and the mainly This average X%. ERP a result the POS revenue concluded we and strategy to sales. streamlines consolidation of here of as well help revenues strengthen

we we're generate this is year. and efficiency want improving of costs and The expenses, of billion, revenues to in and integration we trend continue to the second With highlight BRL half and point scale leverage from annualized I to that gains expect in our gaining second X.X margins. continue operating efforts this

Finally, and sell we room to through help grow financial our clients existing see cross-sell more our multiple investments products, and channels. base organically and in POS through ERP our client core to services significant new

like some metrics. can in would I pass Now over Rafa? Rafa it financial so to of detail our to more discuss he key

Rafael Martins

Lia. Thanks,

XX, numbers our would I Before longer few to points. financial the we clarify to I material like historical same financial our earnings our in That for second To adjust our are results our to that in the results, Slide included for anticipated highlight now will quarter a release we criteria onwards, bond. that as like-to-like no expenses last go on earnings key XXXX from the allow I over we related would adopting. said, starting comparison, in like have

see, and Software are Services our you consistently increasing As segments our from margins results improving Financial can both with revenue sequentially. and

Our million income BRL adjusted compared XX% last net a quarter, XX.X was with XX.X sequential million BRL improvement.

growth For profitability year, the we it while keep of healthy levels. with increasing rest expect balancing to the

line we cost our on expenses Slide already top move pro for Linx. XX to our to forma directly detailed trends, I As have focus and will

selling lines year-over-year expenses our both quarter. last quarter, we gained with trend, of in the services cost and we and seeing for the cost highlights most and quarter-over-quarter expenses the Following started being of leverage

shows percentage quarter-over-quarter basis registry and XXX of in as had data our gain focus a current trends. revenue. to as better decreased points, by lower related gains mainly will evolution, of small revenue expenses, cost, lower We efficiency In driven our D&A. our on percentage we business Cost administrative services center of which a efficiency a

As had in the the absolute main line. for third-party this we our growth responsible expenses, higher business kept growing, services was which

growth, G&A to in continue over time. expect this gaining line we we As continue to rationalize leverage

levels. XXX expenses, almost marketing selling our as as normalized expenses basis a returned more Regarding revenue this of decreased points percentage line to

expenses, X a with and the larger CDI through keep increase a will growth decision of further bond lines. around included of the previous quarter-over-quarter; of to growth XX% revenue, mainly increased, for in commercial to that We in percentage in the prepayment increases factors: average, second investing of quarters presented points in mix on our comparison half funding the Financial second, efforts basis the year. XXX finally, due our a sequential of the purposes, as first, duration our rates revenue;

in by of from of amount BRL Lastly, write-off XX.X increase the revenue an as Pay write-off million, of expenses XXX a other mainly and discontinued Linx explained effects. of of the the percentage basis had POS other equipment the business points, smaller almost assets

seeing, second trends efficient for the to be and opportunities by half the the of more keep are encouraged are We year. will looking we we in

evolution, to to addition and quarter, this we liquidity. cash P&L generate continued improve our our In

net to you he BRL will the for With year, in quarter third team of that XXX.X and said, Thiago? billion. back additional reaching the X.X I adjusted provide million first our Our about half can quarter. improved BRL outlook and the our it cash million by so Thiago, updates pass XXX.X in the BRL

Thiago Piau

Thank you, Rafa.

move including finance to out has and new execute Stone Tatiana as in our functions for as about for of you the capital after and Chief role building endeavors. give services I'm will update developing Financial I finance, be Chief institutions join finance. Executive quarter, Baldin by is from Marcelo to well in Legal like serve will temporarily Committee. controller third as his valuable and Legal would interim CFO. the Silvio which counsel from serving will who Silvio the I who We welcome markets. Officer, our over to in forward years departing an new different for and appointed role from him his years our of to for to Morais, new of IPO. Before would team, as have company new the like to management part as XX-plus Ambev, down outlook extensive past the wish Malamud in would critical Baldin thank was X our to X team its as his Also, contributions this has Head the Officer, step our named like our experience financial Baldin, of duties. some changes Also, in-house on replaced team. years additional to and we his our a helping our at Board to the was assume experience company executive her years company. Silvio, Tatiana significant experience benefit Tatiana look success excited department to XX deep experience

we let's Slide move to quarter outlook business. where Finally, the share with third will XX, for you our

revenue billion, representing total XX.X%. and growth a income X.X year-over-year above BRL expect a above We

between XX billion, between For we year-over-year volumes billion growth expect BRL XX.X% with and MSMB XX XX.X%. BRL and TPV,

in still continue to than without first track million long consistent half outlook of of the in the XXX can up while right for With keeping second Finally, us, that on we have to with the EBT, the year more call are XXXX, achieved to said, a expenses believe you an we margins, the operator, please growth levels. we financial expect half open of encouraging for BRL regarding questions. XXX.X We results but bond for ahead BRL which the compared demonstrates million expand the path strong quarter. we adjusted the adjusting second

Operator

question Sachs. from [Operator Labarta first Instructions] Goldman come with And our today will Tito

Tito Labarta

on the guess, of questions. rate. on MSMB take I couple take rate A first

quarter. bit expansion little this more a So

-- the Is to should us help adds that Just accelerate. from this room are Is think take margin any you there? with reprice? also we rate you here? more Because repricing about there done expect saw kind of net

us and adds merchant second expenses, there. more Just allow margins from costs here? on can add that like from job how definitely with us save think and help seeing And Is question, about versus some your evolve good environment more merchants, is still do to do? cost that? on Help expenses to you control competitive about improvements and to improve to the of else there here, can where ability repricing sort how you think

Thiago Piau

all the something, for the me to here with of start Tito, remind question. all you help first please If part Thiago I Thank the miss points. questions. your I here. will

we regarding a repricing did first, bit first third than to the clients efforts. smaller we these quarter. second reprice now intensified we rates, were have what continued have efforts CDI. quarter, in according repricing to take the In in But So little quarter, the

doing we very far, are so And well.

the the We greater be take in third will improvement rates second the than the we that in expect that improvements quarter. quarter, in had

that we quarter, So adds TON to client I well, this ability of policy and our time I value environment. think had both pricing I shown the adjust the are net And think performing is this proposition the we to to proves navigate we products. well, think base that Stone that performing and that our have the

of We terms are activities that commercial seeing expecting. better performance we in a were

net So adds better too. expect third we for quarter the

been the market credit, incumbent good. capabilities regarding banking as always. is build same which to to see Regarding to say we has compete competition, the is us rational the what here banks. the I being in in it can We with dynamics X main that the payments, allow In prices, continue players head-to-head

a additional specific to lot and vertical So tends And we fragmented, to have services in clients. our still financial more competition these of in software, very room be Tito.

continue strength the We and the consolidate team. of strength given industry the of solution the to our

news in majority of X everyone. there's the is this market think that the players positive think in that So I competition, being that the in the but pricing, terms main market for share no of I rational big are dominate and

allocation the cost In improving terms expenses, we our in business. are way in and OpEx of we in discipline manage capital

to So leverage gain we to continue our in lines. expect

OpEx. So a half we better year terms expect second of the in of discipline in managing

Tito Labarta

Great. environment. That's on competitive just one clear. Maybe follow-up very the quick

rational aggressive How You rates mentioned in you evolve term the do everybody think how rates? kind interest Is just can once is more people down, us rationality that start it's everybody get of higher being again? do Just long that mean, kind I long to of for more help come does think how now. competition just normalizing given past. been competitive last? the

Thiago Piau

other way. think in of terms capital are very, in by There day, impacted moving the end that were CDI some were rates trying what are our and see the are pricing players. on behind all are now is competitors products But on doing, were I of to some pricing we think competition. us, delay the this based the in interest between the players. of But up structure fast same the very that I almost there not players All when the difference the strategies each

with to their clients more solutions pricing based in our are our we strategy. the players them. products But we evolution stable on that of other seeing price relationship the have the for and our are relation We and are

goes to interest But it clients. some will rates margins interest down, we the have So that ease. when I what will keep of course, industry will of moved dynamics continue. think I be If I think rate That’s that, today that these expect.

Operator

And Josh will Siegler come Cantor next question from with our Fitzgerald.

Josh Siegler

rates XXXX active client So to room it banking half expand you the there's back in revenue as trend per believe of more higher. the interest average in for continues elevated? to remain Do

Lia Matos

Lia. Josh, you Thank question. the this is for

answer I yes. short is think the

think course, deposits continue average the So is just is engage clients to few see impact banking in there, I the rates. Number of with one ARPAC, evolution are, that And mentioned, our drivers as in right? we quarter. there's solution, with as further big our correlated a interest a the I

as monetization. long monetization also interest in that and up, trending also improve, rates solutions And are positively average go upwards. as also, deploy but clients as So more to contribute features will our deposits new banking we will help that

it banking we the very in think monetization see positive I forward. So going as trend in is

Josh Siegler

Great. And that Or spending surpassed this MSMB per higher expectations adds? original by outlook? also driven did in your could came Was your then if a just merchant TON follow-up. quarter. above I largely TPV average have

Thiago Piau

Thiago Josh, here.

clients, I the are products. both the was merchant adds and positive adding expecting products We Stone average merchant net we tiers was the in all little all net a improvements But per positive. from were on have a spending expectations, SMB surprise medium net positive average the TON our clients. client came micro think and the in a already above and add. tiers adds to bit that and In both on this these TPV we the space of

now. has that better base I think the quality client a

for the Let’s year. see how of movement second will the half this continue

and think continue are of I sales addition clients I the managing improving new now. our said, expect we because that client better As net much to we base the

that will see [indiscernible] let’s but this I will So trend average think continue. behave, how the

Operator

Bank our next of question come will Pierry And America. from with Mario

Mario Pierry

the Congratulations results. on

you more is much base on of cost right. this here reduced Linx's right, much assume talked us to much about talk just coming savings efficiency is how related to there the how a a of to Let the peak. incorporation has But better that gains per quarter And lot of you financial now. Can or we get a can me gain been Brazil that from expenses, are feel trying X second and Linx, close ask BRL billion the expect questions. They you are to running in question is significant close would for you a X do see. the One And I overlap. was how interest cost about. to rates to seems it reduce?

you will can in to That Brazil? of just So helpful. some sensitivity financial type of movements -- expenses give interest in rates very your be us

Rafael Martins

Mario, for Rafael the Thank you here. question.

I that also efficiency, the but business, think question highlight Services not in first only front. your efficiency in and regarding of it's are Software Linx to important gaining So Financial we

look So we efficiencies from if are OpEx margins quarter. right? have in The in there. we at segments, software, improvement XX% this to having both an We went EBITDA margin XX% do up

are had. yes, So software we cost in we some front. also cost the if capturing efficiency the savings of But

we example, For efficiencies business also cost data cost with banking registry had our business, our center efficiencies. some lower

something So our to we And rates Stone also as the related do refers whole that as both increase have cost our expenses, tend financial Brazil the business. the the in Thiago to we said, with and business. growth is average think about financial of efficiencies said, this whole goal. When expenses, interest they to you

So pretty financial if those you if look at it's up CDI you X% you'll average quarter-over-quarter. much The increased see what our TPV, increased. our that And the X consolidated changes, TPV XX% expenses quarter-over-quarter. grew on add

adjust the policies Thiago said, flatten, expenses. as accordingly. to CDI course, do rate But also benefit of tends of financial pricing it course, does have we So a into as

as percentage that as have year revenue a think the flattens. seen time, I the stop CDI expenses of last of you should we over financial So increasing when over sort see

Thiago Piau

XXX% we interest are if you interest we just Mario, add here comments the rates as in to contribution we direct Rafa, rate to down, When that margins. peak, rate happens, some the make down, close goes here? can and speaking, POS goes clear. expect it said. change our I If trend to interest Thiago expect

our ease results. So in our an if capture to in expect rates, we we have interest as in benefits this margins

Mario Pierry

Okay. That's clear.

about your you integrated ago quarters your like then. when total today headcount follow-up year versus headcount, ago X you Linx? can a talk or Just X versus On

Rafael Martins

Mario, Rafael here. Yes.

But over we the the pretty little So the commented It's pretty today This on much OpEx flattish is flattish. count right? we increase legally last is you XX,XXX much that half The year. is a to pretty discipline, headcount personnel result head a much So over do is senior people. and and expenses flattish. much in the in see results people. more bringing pretty overall, headcount talents both new have is adjustments our

Mario Pierry

go you Thiago, ahead. -- see sorry, Do

Thiago Piau

Thiago here.

comment. Just a

productivity we logistics, As last projected told I for attend processes. that we products our improving you quarter, and to the of people, in in a have our that clients growth, base, that customer wave already now term, our we need think the of the are service people. we not of And our more our medium growth have client to that way adding short terms we we to and have distribution, I design new increase the infrastructure in we number both have

personnel to expect line. we leverage expense gain continue So the to in

Operator

question will next come our And from with Kaio UBS. Prato

Kaio Prato

have here I my side, So please. two on

I stake partial quarter. sale a new of think Inter completed your in you Banco this

What year-to-date. cash was one close is, confirm your to stake is And second, us? forward? going we was current million this can on XXX see and today? first your what BRL in our earnings please And Banco cash? And it's is and in cash your burn to generation The again, quarter Inter that strategy in impact negative this the the this what you

main what's what can these with drivers to So return just you to generation? When wondering please? positive share that. your for should a view if be do about going please the you forward, And expect us cash

Rafael Martins

you for thank Kaio, your question.

the in right. the you're partial sale regarding stake So of Inter, Banco

We little Banco have Inter. a had under stake we X% -- of

around X%. We have today

June. stake basically, that sold proceeds This X% we the those received we we end that at had was So before. of --

in have refers small sold, have, mark-to-market look course, have the we stake mark-to-market that And when of the those the very we proceeds. a at you is effect terms we there of to So remained. after

And past, at this strategy to we this in the is it. made core an right as back look our like the mentioned investment So have now is then. of we not have

team, now. the a we And this in have we focus have is We but Inter stake keep for Banco the big the not Inter. admiration

cash liquidity this Regarding almost your part second have increased generated year, we the actually billion. X.X of question, and BRL

has led BRL adjusted our X.X to net cash billion. So position

So the of to of continues our second first And the half that's the business is we to continue half. that CapEx generate our generate when year cash. lower this the -- to course, expect, cash, in versus idea

Thiago Piau

Kaio, Thiago here.

color. additional just an We option Just to when made Banco sale to partial X cash Inter they when the receive migrated NASDAQ. choose of we

remain – there news we position we to So was the Inter. We Banco no investment at have in market our the in same earnings in had, call. and we talked last the

their So we only when and sale in X in choose updates no the that. there’s option cash migration NASDAQ, on

Operator

And our come with next will question Geoffrey Elliott from Autonomous.

Geoffrey Elliott

you X% at the given into You in you that you at being of had and provided. ahead June because guess, really the good were outlook But start May kind of sense, and pretty was outlook ahead point, in mentioned April June, numbers. the the further of I the visibility

there we better a And it June? strong did we read help where you was anything into expected? than understand perform you then can out the look as particularly can is quarter? third So And us that into

Rafael Martins

Thank question. here. Geoffrey, the for Rafael you

we think, mentioned performance much than lines yes, saw why delivered previous reason we a than the you that a a pretty number the higher I I think mentioned. that that's what is did And the strong expected, along So Thiago the June, as better regarding we that guidance. see TPV

revenue, what came expected. initially and they So above yes, line, both we look when we top TPV at

Geoffrey Elliott

can June? you I And anything can you we performing given were from June, And is guess, read into there better we that? the from July, extrapolate of kind expected August, through that in in September? strength than

Rafael Martins

expectations. third I that have versus of improvements already some Yes, initial the think those provided we the we for has guidance -- the quarter

example, as the So now second bigger when first. from the in for rate compared the we a evolution quarter evolution, take at had we the see versus look, Thiago second versus we evolution the mentioned, third the to

effects I guidance. in our incorporated So committed to very think are those already have guidance, we and we that

Thiago Piau

great Thiago a speaking. a That’s Can I Jeffrey, here? add here comment question.

quarter, the base be saying on pace we our quarter, at comparing in total that be for same third X% of are to outlook assuring think although the top the to because but of growing the would guidance. I that TPV, comps the what range, to MSMB it harder we we’re we big. of that the at is TPV our growing But at continue is XX.X% will at tougher revenue is every the here grow growth are because top

I take that think rates of the to committed our here, the we show range So this to top guidance, of improve ability and we through the are guidance.

Operator

Neha question our come Agarwala And next with HSBC. will from

Neha Agarwala

that product Is coming second going? a How something and Could an is business. SMB your the pilot. process your Linx some on business? update that client a design And indicating your And already are is How software -- you is you us base? credit you base? your along? question the please to that you products mentioned give on to own that products you are client do Have started to cross-selling trying how

Lia Matos

I questions, Lia X credit, Neha, X software here. understood right? regarding you and X made regarding

Neha Agarwala

Perfect. Lia. Yes,

Lia Matos

Good. Good. Good.

Okay.

of software start into and me with first penetration let So base. our client software financial see how services evolving we

account client base year-on-year the growth we but evolved acquiring, positive services a on impact for clear, on when lot in banking the still integrating in only right, time within XX% sequentially, a has But of to in So opportunity services not the be base. And TPV, of our TPV ERP. credit. the our is because client growth see software to software that's the the had this platform and into penetration TPV, where of platform financial we services

side, few updates the Neha. product a on So

advancements product We have recent made good integration. in

reconciliation payment coverage we integration and of can PIX greatly Linx which for method a POS So be to enabled. regarding as big PIX a as the it facilitates fixed have integrated POS, which is is reconciled payment method, the when clients, with a

have is a cash it workflow. ERP. -- into the clients' we that second the integrated banking Stone recent of This majority management made. native point advance to In banking, really integration The our we verticals, is and a is facilitates in strong of ERP the have advancement the

we have checkout And to our integration made of this POS We where improves store verticals also in of mobile the in most by really ERPs. streamlining platform vertical also productivity integrated have advancements in reconciliation some the process.

because little So expect help our offer naturally these an about software Linx of recent I that in these big you -- strengthen we we've there. the to address the at base, on made Stone right of think think look this that integrations, talked clients that you base, fraction a are will SMB opportunity about our software think them. this there and credit term focused we is the middle examples are client credit the we When clients is proposition But now advancements a priority pyramid we've in longer If in we product. the of within before, is verticals within value that if bit right?

what call itself, that clients. those last to credit and be is the And think opportunity think to software the quarter. in space, gave same more to we I there an regarding we there's within credit where leverage So are we message that we SMB data on assertive giving the the

systems, on right that we small product and a test made. the have we in to now We're improvements in testing test started very capital So actually the product. continue And we've product, the mode scale, working we system to a these is experience, scale. to full user tests run features the in some and to before enhancements the the collateral, cycle done idea that decide really

plans. the our credit So of I the start pilot and on this are changed, track soon very track a with regarding throughout pilot products year. half we second also card continue our to and We're haven't on those plans think

and are credit, those main the think I regarding Neha. So software messages

Neha Agarwala

that working also the us is that how keeping you some which Could are is had operations that that see eye on registered Is better you improving? problems, to an receivables, update something now? if

Thiago Piau

here. Lia? Thiago go on I Neha, Can

Lia Matos

Go ahead.

Thiago Piau

Okay.

update regarding Neha, registry think big the I of So no here. receivables,

of closely. continue X the evolution We the follow to players main

We to have enough create clients register. with for we are of in X the in integrated acquirers. receivables the incur only order feel being system stable the looking that in don’t to we processed in by But risk us them, using that receivable are our with that is starting that pay more and prepay of attention the are both for to we projects terms registry receivables the to credit our now products to

we half, with credit and big very of the improve think example, receivables being evolve, will So industry have a Linx, for acquirers, that still that the on big in opportunity prepaying careful that in second for is both our and it opportunities in But are us, collaterals for and will other to open that. clients I this terms project.

So second what the year see let’s of half will bring. the

Operator

Pedro our from Itau with Leduc And question BBA. will next come

Pedro Leduc

of key like you Two your just almost BRL because drop it's guys mid-single, at respect add in revenues, conservative single-digit in really XQ we for evolving. the repricing It's come. there's this flat maybe It a accounts figure expansion unless business what heard seems net low for reconcile to me, to just further billion. X.X have which deceleration, been strong, just most, big please. guidance One, XQ, can't I them seeing

So I or if just brains pick so like around you're this, That's it's what in far to the your maybe conservatism that. seeing quarter. just

Rafael Martins

you Rafael question. for here. Pedro, the Thank

an at it's think our you -- we we as I revenue, the services. key revenue do So I in revenues said, When look MSMB think we important accounts and financial have point. that

we revenue, more also they and are sub-acquiring some key accounts volatile, discontinuing are business. course, Of

XX% in that at guidance confident pace to over revenue a But that when we we it's of very we they a that reach make the improvement to And that have. more are is X.X%. this year-over-year, will now that the look above growth of this guidance is course, we strong be number I And we right have healthy best So very guidance we can profitability reach. the we we'll growth still that want But the the that is overall, volatile. implies, in we that course, growth versus think sure think give. want

second we Lia growth are and as in Thiago profitability the and of balancing So we year still, half want pace. consistent to keep that mentioned, this and

the all sort of our is of this elements So business. in those effect net

Pedro Leduc

question is Super strategic little clear. And side. a the on the more other business

you BTG -- or banking lead. bring banking, in saw like recently You Cury, guys Rodrigo digital former retail

future? budget in major part be a you for bank And banking well. you thinking Am a of I point of this in was maybe as services retail he big that line avenue can't to that the well. avoid have global, of spend boost I this near you a that, before should the this mention attention I've as thinking in guys that couple guys to correct seen times all call. -- Former with

Thiago Piau

are We Brazil. you Yes, here. protagonist merchants line the right in in in of a for want thinking. be Thiago services to financial

main steps big efforts are provider creating the transform for clients new main team clients. from that, projects. to big we very financial our We with improving And create a their to the perceived being our one integrate improve client doing improving top our our to of ability all are our way base needs. as But simple on and company the it of in is products, the

the So the I the team the to and think distribution, execute. how have capability, culture we

talent for JoÃ£o, with boost see year. the X a the in the evolve months pool Marcos a next strategy are thing of how Gregor will evolution. combined and So we with have be new But that here we we Redrigo, believe big and our and I out that let's will bringing our

the direction heading. we are that's yes, So

Operator

question next will our Falavina JPMorgan. Domingos come And with from

Domingos Falavina

My question to trying the you what on pricing consideration. take pick brains guys into of your and kind is just

TPV but So we we X% when existing in I say shrink what based margin, part hearing which in from Q-on-Q, relationship basically improvement what with based struggle basically the at Q-on-Q. is with on competition, add line bit your X% MDR But about little we your good, about it growth. on the revenues, is is it And financial clients. hear, which when saw we grew you a price your not expenses, that has, look instead

your you're of to baking versus a adjustment, it's average you're to really adding rise this my hard guess, is or because expenses pricing And other guess where prepayment or I inclusive, like financial weighted not is, rate hard in of lastly, financial this managerially, we management's that's is that And kind you're funding. because in if a did that seeking inclusive what kind all position? main obviously, costs, this seeing of sentiment TPV take shift like goals profitability you're -- If if good go allocate exactly pretty I expenses, when is a on because compression on? in big booking figure cost investor senior Q-on-Q. see debentures or satisfied all you're if and on if price or I'm question is you're pushing the that on extent, So on we're remunerated certain it in growth

Rafael Martins

Domingos, the Rafael very Very, question financial here. expenses. regarding good

second So less when contribution. look saw we in quarter, the we

and in contribution revenue, net the from was financial OpEx look profits, improvement you profitability at saw our pretax mainly from expenses of less in we If the change discipline.

we to clients to the revenue -- see evolves at tack hurdles your I have lagging our pricing. we question how third And in expenses think about the of different we our look it, from What look better look. CDI economics because of versus the these investing some unit always returns will of we financial some the we try and do the and we to we be how -- that always dynamics brings is we a there financial there. quarter, effect our have that dynamics have expenses and between is net the a little and expect

we the CEI after to adjust adjust do So accordingly. prices increases,

may effect that some there. have lighting impacts So I think

have you decision this other one little have longer funding think the line. quarter, we a effect I have taken in financial to expenses that

So there. this some effect also has negative

XXX% the clients. not funding we that cost in have our it's So

to So I answer. this that there. has to add think impacted also And Thiago would like

Domingos Falavina

on understood little bit positive here adjustments comes right, But behind the basically, still, congrats surpassed OpEx the if that. you're of So slake. a to wave if I price so

take I when is if of it nothing financial expenses, moves look inclusive rate expectation at that up. drastic So happens, that the

that recompose So you continue to margin.

Thiago Piau

here. Yes. Thiago it’s Domingos,

Let add that. me on

to talk and create in cadence quarter, and stress too we much about both our significant repricing. me of our let the in base first, We first client the team. a So did improvement don’t want

we longer second July was quarter hard on did for And we August, why that well. new keep the but that improving reality. did the and clients That’s another in improvements client took to to stressing I now we think frequently did significant prices we because base movement it for on your already. it’s the without in basically smaller you relationship. this So And adapt to August, the

think that the X from team. to base movements I So those big was good to space creating and some client the

now we And that predictability way base, are I that’s client a the So creating our more really execute think with important. big price that strategy. in we

I it and a that, strategy at commercial we smaller now think was the in first on in little pace back in And in well, third is the improved that bit the both a again the So base activity. the quarter, second jump big performing and quarter quarter.

basically little duration we bit mainly that our in funding our lines the just less little when of you we was in because bit And So a that duration improve effect quarter. it good we was conservative cost right that's actions scenario the so the too, mentioned. last in you're Rafa and Brazil, of increased you microenvironmental did But this revenue seeing. lines, are it. a with see there’s line that to funding And think be funding

So of too. there’s effect some in line, that that

effect. quarter You see third different in a will

see in faster will you So funding. third the quarter, revenues growing than

you and we of Domingos, quality of management, the last We I what – it’s client the TPV your appropriately. focus comment if the question, base or are profitability. sorry, managing we just think, one last Domingos, focused profitability? asked this, on on are focused revenue So is are or

grow to pace. continue at will a We fast

today I have with that see are choose delivering we growth You better focus, But are to that profitability, our net is profitability, to to and our balancing committed adds. focus we we if improve think that. our

we to on continue will our So evolve pricing.

where answer to that that’s have So sorry I’m here. we I our minds forgot previously.

Operator

from the Jeff with come will Wells And question Fargo. Cantwell next

Jeff Cantwell

XXX looks software about ask basis XX%. really it's about I up wanted like which to and points about your your it revenue to sequentially EBITDA, software you

from us great? us for you on give software be color can you a would then driving perspective what's margin just it forward any margin color So a little that can of more of in go sort expansion give on there? And the the the piece

Thiago Piau

integrating Two are. big us things. companies the think that our are management we system, units And into here. software businesses. business creating ability X we at Thiago I Jeff, One, that of our combines Linx to grow this pace continue of provides to an main all portfolio

can to the at continue about at pace, expect improved to XX% have get margins to expect year. to we term, got was grow margins. news medium -- think that I the in this I to which but of to end the We positive EBITDA, quickly. that XX% XX% think close we I

So products our all to invest and of I improve provide software performing think in clients growth our continue that that customer is well. to the has behind to and the really efficiency to discipline software team service

our pace, to is I So the in a if to get to and margin, XX% close medium which to improve continue we this grow help and ability think at term to continue believe level it's improve the I in be next the in our first to our good improve to it continue continue we margin our will And have EBITDA base. and to cross-sell step. a efficiencies very end year, year, of in

main So the I things. X are that think those

Jeff Cantwell

aware the a And explain to XX% are that efficiency growth? just Is down I sort on drivers Can or to what prioritize best Great. we area that. that just to can. get line we should of from the Is Okay. with be the top follow-up it you something drill to wanted biggest on that XX%? of?

Rafael Martins

here. Jeff, Rafael

of a So elements. I combination it's those think

does to have expenses. growth organically to able -- dilute G&A strong grow help So that fact the we are

I is X. number this think

in cost have for able improve efficiency some to costs, example, negotiation. cloud like, We been

when not only I there think mature those and mature of So itself, that our to and solutions as grow are think And and software integrate have them that course, of we margin. Linx business, less higher main we contributes solutions Linx. in also And the this drivers expand the margins those I do into see. a we

were in big also basically mature we we to in the increase more margins. are that invested in And we remember get and software that solutions, as those evolve able margins. past have So X traction, solutions

us of some I there. are think help main the those should that So elements

Operator

our conclude back will closing the this conference like question-and-answer turn I'd to session. for Thiago any remarks. to And over

Thiago Piau

team and thank shareholders. a to amazing work the for the in big our I support our you would like say just of to for the quarter

We good very expect a second half.

We our Bye-bye. next are you Thank excited and business you much. very quarter. very of see

Operator

for now presentation. today's has Thank conference attending you The concluded.

You this may time. lines at now your disconnect

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