Earnings call transcript Q1 2023

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Operator

Good evening, ladies and gentlemen, thank you for standing by. Welcome to the StoneCo First Quarter 2023 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 at www.stone.com.br on the Investor Relations section.

the net be cash. income call, information, non-IFRS conference adjusted including and this company presenting will financial Throughout adjusted net are by for financial measures important but These not are the measures IFRS. company defined as financial Reconciliations IFRS today's information the information financial company's of appear non the release. financial to IFRS press in

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

company's which Form Exchange filed Securities many and available the is XX-F addition, the the of business the In with Commission www.sec.gov. regarding risks at are in disclosed

I your to Investor proceed. conference would host, Finance turn Officer Rafael at like now and the of Please StoneCo. Relations VP over to Martins,

Rafael Martins

you, Thank evening, operator, and good everyone.

call, our results, outlook discuss Today, business. trends the our our XXXX we quarter on Matos. today provide an first and we will Lia Zinner; us CEO, and some Chief Officer, have for Joining present Strategy our updated Pedro recent

over highlights so to pass can share he some I now will of it Pedro? performance. our Pedro

Pedro Zinner

everyone. Rafael, and you, Thank good evening,

board to our First, a role the that to contribute all he and honored Stone my to like his will confident member. success continue I'd join into thank like the in new that transition role. Thiago for I'm has and say excited team. company would to ease that to the as I'm Thiago for to And CEO I done

on stronger results has performance top Stone and than its XXXX. first solid deliver line XXXX I'm also from pleased to that the of bottom continued line quarter expected and in to report build

the on comments quick company far. so some on and some share quarterly strong provide me initial impressions results the Let

you can the the call, X. achieved follow our which earnings priorities with on happy team results XXXX. so I'm last quite far, Slide outlined our In for

priority expectations was profitability grow EBT million efficiency. in to BRLXXX our and our I'm exceeded report with with both our pleased We on year-over-year first grew quarter, to above have guidance. XX% strong of XX% Our fronts. delivered adjusted that we the revenues

we was were BRLXXX best in net our QX a adjusted history. income result, of to million able deliver our As company's which performance

cash. operations Our able from and second to to cash we to priority billion. BRLX our net flows million was adjusted QX, strong generate we had were cash approximately increase BRLXXX reach by In

keep priority our third financial services expanding was Our to business.

very above resume segment. performance As TPV We and you accelerated both are two payments our our with MSMB and of business. net credit plans MSMB to clients a strong can in delivered in our see, banking grew line have times we the in industry, addition

small dispersed a number operation will have side, on clients taken improved we credit of manner. most enable the steps having grow to importantly, to We of sustainable portfolio product in have and that our a us aspects but many significant the

tests I the conditions towards we're the completion the doing. depending take portfolio conservative want the the of a on market expansion grow of solution to and approach and

our a that in quarter. medium last small Finally, over services achieve fourth retailers. we an foundations take increase evolution shop was monetization, The to results and to were priority financial and and able improvement is the clients. basis Integrating XX unified deliver The this with growth to this point solution team my our below working becoming to the with a will to business. reaching X.XX%, rates enable evolve expectations. experience Brazilian us for hard one On were front, build the and significant stop software software

by was put by software but the building to of In on revenue Throughout our some strong I ad was rest our yet. of want our software this enterprise focus impacted sales, hurt an portfolio. of EBITDA year, and expenses. progress of mainly spending streamlining margin discipline our by and our making a selling and in those growth are team our reduction there integrating we capabilities, increase also integration, cost We're not accounts, in a

And finally, that fit-for-purpose long deliver is to to priorities. on enable will our us goal a our fifth build term organization

resources We but have come is high-speed guarantee in the to organization leading I indicator of a our the to pressures failure. make believe this equipped I sure is not that think success, additional growth. a withstand don't having properly with right place

of professional fellow want His Google experience welcome to the Andre member. our and through a lead our board industry this help innovation. I us part process, ourselves tech path As on seasoned in and new a to as Luiz Barroso will as differentiate

want Now some in company on and the far. experience thoughts share so role my the I to additional

The our first and distribution Whether of are and couple to months. a ideas, to over centers is believe at positivity we for our the enthusiasts like for inspiring company offices, the long-term spending be our is I have talent continue thing people our with time I the I'd in teams highlight last do the will hubs driver fantastic superior work met been inspiring. this within great in great really the the I've success.

doing a better understanding returns long our and is we term. over now better now believe see systems the performance. process, This organization company see our The affecting cascading within to clearly more significantly drivers but governance we we second to value better business. over improved is layers decision-making that the have this and to closely offsetting improving the compensation more more the certainly structure value is the a continuous the I structure that I have and past maximize key a of management different goals, job, I company's defined effectively and year. This linking have

client-centric The third foundation is the our of strong culture.

and of mile distribution a last that I years financial to its think Stone MSMB ability capabilities have ease market. a competitive clients of disrupt significant has during enabled points that success built the friction past become institutions. key advantage Stone been the with identify with the has its has driver few to journey has combined and Stone's that This traditional the over

into value and business software, cohesive longer advantage clients solving of can proposition of ecosystem complexity I our more extend and extend integrated financial and the by software and also specific competitive banking think our a creating the our in hardware vertical same our credit attributes services. term,

the more For basics emerge and believe and the short term, that excelling focusing stronger on I we will resilient.

our leverage and clear execution margins. our example, our For our term, profit team already management path and initiatives our with our design ahead. discipline impacting cost is improving am goals XXXX, are I working Longer setting to operating through strategy pricing

this an we at later we're details that provide working Investor event upcoming We little plan a will and new details towards you with Day year. share on more will long-term the this more of

to will now and discuss Lia, I'm our strategic XXXX Lia? performance pass going quarter over first And to updates. who it

Lia Matos

you, going Thank briefly over and X. begin Slide Pedro, good consolidated by everyone. results on evening, would like our I to

mentioned, Pedro and profitability a million. increased with adjusted of was to As BRLXXX million, BRLX.X Total EBT guidance this growth growing our expectations. XX% above above quarter and year-over-year our reached our strong billion, revenue BRLXXX

increased with of As reach a almost result, income our BRLXXX adjusted million X times X.X%. a margin to year-over-year net

continues strong to in X take to of Revenue segment performance will despite the MSMB our quarter. revenue from and by increased good Now which growth, in client seasonality Financial PIX. XX, and demonstrated client year-over-year first the performance segment, was in improvements. produced Services banking generated and from the driven This our TPV which more weaker our rates base was Slide typical base profitability with double-click flat XX% this higher consistent and produce solutions on strong growth sequentially I

with In EBT incremental adjusted in addition top profitability a the reaching XX.X% cost improvement, higher margin. million BRLXXX to this gains generated segment and line efficiency

Moving our X.X performance. campaigns, by with active million talk resulted some successful reality an in the clients in adds show, performance reached sponsorship in our XXX,XXX. about Brazil's payments to the This awareness Slide to highlights both our want increased lead driven from most which part in X. in brand marketing of acceleration and offerings levels net on MSMB from popular multiple tiers good across I as the I once good we in commercial to significantly MSMB of This Ton to Ton of a channels, in produce approach our TPV our of tiers. sales client continues this next again quarter. profitable lower and will growth and base client churn strategy growth, all Stone By show Stone to quarter drive optimizing able page. all were client

take on Slide industry by the grew MSMB seen clients growth to a in basis. our We and on generated As we year-over-year billion. rates X X, over while TPV increasing XX% also times BRLXX this growth quarter-over-quarter reach year-over-year,

from rate quarter MSMB of XXXX X.XX% the Our this in X.XX% XXXX. fourth X.XX% reached quarter, first in of take up and quarter the

and revenues the stronger Ton from result higher take of compared Our mix brand, our higher TPV improvement growth in fourth higher prepayment, contribution banking rate a of credit quarter. is to monetization

our initiatives. execute across to continue We pricing discipline

Slide of we the to our account will XX, On move performance segments. key

services become to quarter to to year-over-year sub-acquiring BRLXX segment. the simplify we volumes immaterial our platform volumes sub-acquire decided decreased in our within XX% we reach our the business Given quarter key TPV this that TPV, breakdown to the account from disclosure. stop shift as disclosing to to Overall, key accounts of have have billion our continue priority

prepayment flattish result due of a rate seasonality penetration. XX increased continued due a points deprioritization in to our basis, especially to basis quarter priority take of mainly TPV first sequentially, However, Take On lower our accounts declined, key shift, as remained year-over-year. quarter-over-quarter and rates sub-acquires.

will some of Slide highlights give XX. I Now on performance banking our

we Conta launched our in Ton, full call, As banking this micro Super solution earnings quarter mentioned our we clients. last for

we to quarter year-over-year in micro of first quarter also the SMB active BRLXX XX% growth in in generate XXXX, a led as a lower the has of in launch, clients. clients revenue As to quarter-on-quarter of base this of XXXX banking to quarter-on-quarter. in the times BRLXX contribution our from saw fourth million XXXX, in BRLX.X growth ARPAC comparison quarter of to first and decrease result a X.X significant This client higher

important also of important roughly which decrease quarter-over-quarter as the driver banking it We in for solution. seasonal step in cards MSMB. an for billion our debit BRLX.X reached complete is in is that Stone, despite method deposits solution evolving clients banking started the deposits which TPV have and cash a acquiring main was Client stable in in piloting which an use

the the of expect ramp-up time. to and we of new launch clients continue grow to over new deposits With features,

the on which and we through product We're give enhancements improving more results system and of our combining making payments, of automation On clients down models update credit predictability I sophisticated credit so daily pilots. decision and monthly our our front flexible quick working a stages capital to minimum for by monitoring Slide settlement in with with life cycle advanced mechanism our both enhanced have our the increases on data. want far for a We and us. achieved loan XX,

the register personal renegotiation guarantees has do receivables if collateral, with already systems Stone have recovery which to working give We our of and renegotiate through executed to so. possibility also form our of currently to integrated as fully been rebuild as they wish app and to clients a the formalized We're expected. the process directly our

to April, million plans We're to credit with standards. with in model indicators of line of BRLX have we our test credit second half business our approximately around end credit the in XXX this our the card our underwriting clients line Until year. disbursed in key and solution performance with

this we depending will we're of previously, completion market doing. solution on approach conservative of the towards expansion test said Pedro portfolio and and the take grow conditions, the the As a

in updates quarters to the for of representing with large quarter deceleration revenue team. quarter this the driven XXXX, XX% shift enterprise sales quarter, business XXX XX. basis BRLXXX an software our I'm a XXXX, ads was to software given of software the to in million point first adjusted in increase of spending the BRLXX business in we Now quarter and decrease weakness XX.X%, our from strategic in mainly which reduced invested increased the expenses discussion accounts a past our XX a margin as that from In by EBITDA software with the compared million, selling first was a and quarter, going growth of revenue first in performance of some growth, to Slide the year-over-year and

XX, priorities. the main want On I performance Slide to highlights of give our and

smaller client to strategy medium This software should also and on locations this tier inorganic with in revenues ERP was expected tickets in of locations our tiers and focused TAM affected down, a client by small our with was as solutions. while quarter positively a in line as well number open number in our Software higher The smaller towards is clients growth it up drive expansion. lower clients of average opportunity POS increase shift presence ahead. tiers broader to

Looking emphasize would you long-term also view. software our we to for ahead, year, our I priorities like for this share with and

select client a entering to teams focus channels, in cost strengthen continued presence leverage, services priorities have end-to-end key client our value discipline, across assets segments through by growth believe segments. year. for expand to verticals is and focus addressable We efforts of M&A. some us financial verticals within to and driving continue strategic this integrated software proposition have key small scaling and five opportunity medium on market We StoneCo, an our to integrating operational increase in relevant to our retail functions address. differentiation A increasing we for expand this strong Streamlined where by and distribution in and new segments, software our build

integral for our believe to the end-to-end an financial part on the but merchants. and and In have we an the goal lot is of provider vision. We of software our work us, is build a ahead we're path software to of only solution long integrated services commerce strategic exciting business clients, our unified term, Brazilian for become a

Now, our financial key I can metrics. it Rafael? Rafael, discuss he so pass to want some in detail over more of to

Rafael Martins

discuss on Thank you, Lia. where like to and costs expenses. the would evolution of Slide our we I XX, begin

we the approach, past, initial X% detail a As mentioned especially OpEx services BRLXXX first and control. as I million. year expenses, to the Cost we more in have in discipline results with increased will should quarter, shortly. have that XXXX year-over-year see of In to of administrative started be cost

was quarter, by investments XXX Compared the last XX.X% year. previous higher X%, points grew it percentage it in technology. basis quarter, of than revenue, a lower mainly As to driven in

on and to earnings below absolute said reduce we in an we As our call, last administrative expected increase for basis the to inflation expenses year.

quarter, higher third-party and decreased In advisory seasonally sequentially, in first personnel XX.X% expenses the fourth expenses explained was expenses by normalized mainly levels of the administrative that more lower quarter.

points a leverage gains quarter-over-quarter was improvement XXX percentage both partially of X.X% administrative and X% of sales quarter-over-quarter for revenue. lower As year-over-year points revenue, marketing The and the expenses grew XX by operational X.X% main Selling personnel compensated expenses basis reach decreased and with basis higher commissions. improved year-over-year to in reason expenses, sequentially, comparisons.

during percentage higher Financial expenses expenses. hold the reach part we increased the average cash to XX revenue a basis indirectly points impacted of to XX.X%. quarter, conservatively as dynamics quarter, market a of this Due to financial decided position which our

Lastly, some a were of percentage sequentially due and as write-off proprietary as software our decreased assets. quarter revenue points other XX XX.X% expenses fourth of basis of affected results noncore impairment to the and

XX. Moving our to like would to talk Slide about I cash generation.

BRLX.X we have increased stake from flow million the by net the almost The sale Inter BRLX of the to year, BRLXXX cash Compared by our billion. for our was of our last quarter, proceeds this adjusted cash well driver first main reach increased for as position net operations billion. in adjusted BRLXXX cash million. This quarter Banco strong as net to of

outlook moving XXXX Page XX. Now to quarter our on second

billion the above a growth quarter, revenue second XX.X%. income year-over-year expect BRLX.XXX representing total We above in and

MSMB BRLXX quarter the billion quarter in For between the billion and between of year-over-year growth we representing billion compared second a expect with volumes and BRLXX XX.X% in XXXX, BRLXX.X XX.X%. second TPV,

not we adjusted BRLXXX This expect expenses. for million compared is of Finally, than share-based EBT more quarter. any million for compensation the BRLXXX first adjusted number to

the questions? open please operator, you said, call that With can up to

Operator

you. Thank

the begin Sheriq first Evercore Sumar We question [Operator Please will go ahead. question-and-answer will now ISI. Instructions] from from our session. And come

Sheriq Sumar

question. Hey, taking thanks for a lot my

see I we expecting as the XQ stake, upside XQ of decline in even in On well. [indiscernible] for and to can the as current can the XQ provide the we and terms much rate front, about a some And economic should rates think more average the you how rates pricing is forward. color in take think us how and -- going

well? in to as us rates go in should year back rates remind going the half you XXXX evolve can are and to if of as So how down take the interest

Lia Matos

Hi, [Technical positive take take going Sheriq. first is, message we continue the This to Difficulty] is you Lia. for regarding see rate trends rates, Thank forward.

like and we've repricing, process. before, dynamic regarding times think is continuous I many this the said as

always reprice our we take based So are the the base return opportunities that we on account we to into have where hurdles. and

think the we going forward. positive trend message that's see to that can a continue and So expect I to

Rafael Martins

here. Rafael Sheriq,

to time, is answer. expect banking Just do also the we add what contribute time. that, years Over revenue take Lia's over to more streams more over like they and should coming new rates to credit,

monetization other in pricing the So also alone, fronts. not acquiring and only the but

Sheriq Sumar

one just follow-up. And it. Got more

going banking you what's clients the profitability Can acquisition macro the these of and cost this reason a overall from could there is new is, for On front, about business? led ask you in for that the margins new this product which for I clients. these increase of talk way new accounts this the macro the kind to better The or of offering forward? main ARPA drive your

Lia Matos

the Sheriq. Thank for question, you

Super trends This regarding bit completely clients. that is talking think solution I bundled is little solution and solution. Conta acquiring to a a so banking micro the for full Ton, about the

no incremental one solutions banking clients. there's Difficulty]. sell we So [Technical It's to the tax micro completely when

as ARPAC trend the for already, economics due Regarding will of than naturally the we of right? economics smaller a trends, quarters mix downwards been the ARPAC couple have saying clients. Because is an clients of micro SMB basically to effect, a

expect is to segment, as Ton clients as in we the to the a expect this So banking. as Stone map, but increase with downwards banking portfolio, itself will our we Stone, on engagement advanced incremental both overall, mix [indiscernible] of we products, our we deposits to to overall business we grow as banking -- also that trending in grow banking and road clients the faster message is in this ARPAC But contribute effect. overall, important banking the micro to due because

the So can I those trends expect. you that are think

Sheriq Sumar

you. Thank

Lia Matos

Sheriq. Thank you,

Operator

will Goldman Tito question from Please next Labarta ahead. go The be Sachs. from

Tito Labarta

congratulation questions first Hi. decelerating curious give I A SMB. your kind out of But just evening. Thank to any of I break pretty question guess, on micro Good environment. new call can is competitive any the segments. micro much a the know for growth also. faster be similarly, my can taking those I on there? you side? on coming continues don't you from and role. bit Pedro seeing And and color like how give, in merchants dynamics little to your of so particularly know couple in if a merchants? in is But healthy, the you're the environment how TPV color, you that How if don't SMB just versus growing understand more the competitive two

And little have bit more lot revolving discussions a been credit potentially reducing maybe There's interest then some question, at talked question. my you've any of about business. I installments. second rates your a on just and if discussions involved kind all know about don't of of a regulations on some your regulatory cost capping thoughts just the those of you. impact of Thank been potential the and all, at but in curious conversations card being

Lia Matos

Thank I'm to then TPV regarding Lia for to going first trends, here. and Tito. take I'm over one questions. Hi, the you to Rafael. the going pass it

in business the to growth looking see continue in expect we above MSMB So over industry overall that, is time. trends ahead TPV, Tito, to

look our we it's discipline. to in that above expect make have share within the a but all MSMB, take course, to consequence that proposition market we of distribution into everything we clients, consolidated While, we deprioritization of volumes, grow our the doing is itself, of the behind to the investments to of grow we're and gain goal maintain so the continue When channels. of right? in value the But to sub-acquirers, industry. share, Market we effect account pricing at

you course, to but profitability. mix so on in that always And pricing regarding question that, focusing micro question say and between we the want on positive can adds, the of on with on we base on we've balance this client discipline, bringing is your grow execute take What clients on strategy, growth regulatory? to continue micro tiers. -- Rafa, best all client growth net with in and SMBs. seen And to continuing

Rafael Martins

Sure.

possibility by particularly in of revolving rates interest that card. it's for topic with know implementing Brazilian This a been carefully a considered different we is on authorities in industry been have there regulator banks. discussions large consultation participants, with new cap Tito, about So not Brazil the credit and

[indiscernible] revolving are high in require Some in necessary players argue decrease the installment would installment transactions. subsidize rates that reducing a only because they rates Brazil, so-called transactions

in institutions on on profitability also considering based the the that remunerate allowed is one of those the of parts revolving us interchange it business world for be the the Brazil, take. appear to card in Brazil does highest [indiscernible] the the risk us has this true fees they the to that profitable, relies However, and fees not that business especially and credit

other type, of this Brazil are part So based lower-income is significant is the transactions that card is done right? people. and credit additionally, in on the and XX% one in in So [indiscernible], consideration credit for a of that country true consumption especially

So basically, changes any don't that we any before that I visibility. have think implementing

we We are authorities not consider involved are participating Brazilian as because of not directly measure. this issuers. believe We that social economic various and directly will that aspects we big discussion not in are

Tito Labarta

That's Okay. thanks the for Lia. Thanks, color great. and Rafael

Lia's and Just response on follow-up, I one on SMB. the [indiscernible] guess, micro

that micro competitive perspective? merchant base different can space segments? you're relative Any a the the two Just you from within those differences any in comments the give SMB seeing environment on competitive to

Lia Matos

are I if anything, mentioning? think entrants that three Tito, overall increased of industry to in yes, year. more the for new over [Technical been First come happening adjusted makes the stable and worth the capital, competition, landscape Difficulty] industry, market. Cost the into the is that more has to upwards it right, competitive prices compared so has trends regarding important of has last course, difficult

more players we financial future. strategies market And a more third, pure beyond that And from go-to-market perspective. have that from players and like better to client perspective offering. into positioned taking a a more services more services And and that overall, this share a gain win ourselves, right, think evolved, see broadly, the to complete are and overall in complete we stable from offering relationships market So a will financial is financial the acquiring account product offering, mindsets. both more be integrated

are that's perspectives our I on main -- those So industry. the think what

Tito Labarta

Okay. Lia. Thank That’s great. you

Operator

The next Juan Please will come Recalde Scotiabank. go ahead. from question from

Juan Recalde

on software result you thank the opportunity Hello, related to Pedro, extraordinary the is business. congratulations the and Lia, ask My to Rafael, question. for question

that we there accelerated revenue compressed. EBITDA growth the at the saw So margin

So see I what segment was going deceleration if drove was and wondering, of first, for this what you line the and deterioration? top third, the this profitability expected? profitability And do kind Second, growth forward?

Lia Matos

Hi, Juan. Lia here. to I'm going on to and start answering give pass more color maybe some regarding evolution. to top margin it line Rafa

So of core tickets the core ahead. investing in stable. ads but while our remained the we revenue driven us locations while an a POS of as weaker and positive XX% small This average revenue and I side, this was dynamics deceleration our behind of performance Pedro as still did in That's this growth year-over-year, of expect revenues a terms grew was as by increase on year-over-year. declined relatively market digital see growth mainly consolidation growth segments. we growth, business and And opportunity where ERP mentioned, client mentioned, in biggest by the actually And X.X% the business, driven [indiscernible] the expectations. came result medium number in

our of plans. in that performance smaller here So line is client in growing with terms in

discipline. defending mainly but side, in tiers trends or weigh to enterprise medium we And the growing that I maybe… revenue on to the you the scenario growth, on software going top smaller the complement cost priorities more clients, on revenue both but in inflation the margin the continue a is think to execute Rafa, on on and we digital of have continue should lower also focusing line volatility and forward and client want message business in

Pedro Zinner

jump margin middle Juan, the inbound going think in quarter, both investing we remain I I'll software behind because a opportunity, the to the expected I this of that's to seasonality grow terms our you in and regarding focused we're of pyramid where think of channels asked, I especially margin cross-sell. already due in. looking see and the I to franchise lower think the maybe Yes, we ahead, that biggest revenues. on think And the

expected main a However, lower factors. bit combination two than the margin of we was as a

the first for selling costs of as dilution fixed think the which headcount, revenue higher expenses the on invested selling also this which, is quarter course, weighted software. and one of I expenses we in growth, commercial reduces lower

initiatives important But It Stone of should to back-office will -- not with I initiatives have across are during associated to we are implementation in to really functions that be challenge. take short-term [Technical improvements worth company improvement the the I that The of we our think integration revamping efficiency have pipeline. it's a Difficulty] service margins the shared center, by be executed the other driven rewards that amongst call, as time. confident highlight are the mentioned it. the we The

believe replicate this through all questions We of services. And if know don't and really other hard the to are by you is competitor. we aiming to merchants better bring I very Brazilian together the software and we the financial address services type products any had. to

Juan Recalde

the helpful. comments. Yes. you very Thank for That's

Operator

Kaio go Prato the ahead. And you. from next from Thank question will UBS. come Please

Kaio Prato

TPV two Hello of ask only I earnings the And BRLXX questions of guidance your one to expectation that quarter. before cards fees and a the be the SMB, increase here. and on. the an quarter, start the positive. caps we quarter-over-quarter effect tend of have the look guidance, evening. you growth I to the everyone. with so prepaid on on which related for is second Thank this And may the BRLXXX guidance, addition I question. interchange taxes debit this million in opportunity on the bottom to will we that, in to of understand of to see If first million is Good in healthy but basis. plus continued if second

up could more thoughts So your and the about expense, with to the just price reduction what that Just can on This hear reduce have higher next more competition? investments if that to you. conservative type of can financial of due the EBT? follow were wondering quarter. or the you like you would first, Is then guidance. in ability type this any consider Thank impacts is to dynamics second. Or a I your

Rafael Martins

the Okay, Kaio, you for thank question, here. Rafael

to last So the of look which you see have guidance. we right? TPV our you XX%, you quarter, and it's as when been expansion, providing. a mentioning over moment BRLXXX have implies. implied positive that's this a looking above as for, to the we as cap, this that's floor comfortable margin We been healthy grow an said, we And is while, level. is guidance is the what at you growth So and million, XX%, think do we do from what second the with in in guidance calls said, profitability between effect we what And as this said, see keep are the few you

course, keep profitability. in with we'll discipline Of growth

So any industry. cap not we providing is whole impact. This guidance us, net are positive about for the specific and believe we the for

and first industry in TPV, We we you -- that was first regarding look of the XX.X% this see have XX%. our half at quarter. growing the around if TPV you -- TPV So guidance, the be year, growing should

more it's a increasing improving profitability and and the between grades. So growing time, than at industry, good balance the the same

Kaio Prato

you can the order second to please to And the And quarter, reporting. you But sub-acquirers? mentioned, down between services us TPV, how in the was lot of platform down forward. you accounts, didn't terms in moreover, in you, it and around landscape and a going if is account please expect Thank and understand Okay. share the if as this the went break key key the one you drop competitive could and simplify quarter-over-quarter could services sub-acquirer to Rafael. we what segment platform TPV much us growth of this help related

Rafael Martins

majority of big sub-acquirer. The the again. to drop Rafael, related Kaio. is Sure,

significantly you year-over-year. if at have very quarter-over-quarter look they and sub-acquire So dropped both volumes,

marketplaces, -- relevant I it's said, key versus you but As they other to at if overall, to company why bottom lower-margin accounts, or a the like accounts not SMBs we nor think look are we it. micro. And obviously players business look anymore key TPV retailers, you -- That's e-commerce, big and when at it's decided simplify line.

also penetrate course, opportunities competitive with So is see not there. payments we do hand software, only it of alone. a in to environment there And

when think key I strategically the So to the that's accounts payments. regarding we main look focus

Kaio Prato

very you much. Okay. Thank

Rafael Martins

Thank you.

Operator

Elliott the go is question Autonomous. Please And Geoffrey ahead. next from from

Geoffrey Elliott

much taking Thanks very for Hello. question. the

business. a are weakness times of clients? why What that look ads give just you. Can in business mentioned does you bit it Who more was weak in like? detail? the us And couple the the a Thank the You quarter?

Lia Matos

Geoffrey. Hi, This Lia is here.

So our within business Linx a digital of is ad is -- business that basically its is nature transactional. our portion

its -- isn't recurring nature it revenues. not So is

less what their compared this are. clients that So Most our as are clients of what can clients. basically depending effect volume enterprise clients quarter. more was larger or their is saw means that using bigger have are volumes, demands enterprise and -- ad there And this what the those that, on needs to we quarter last

business compared [Technical software. the part in like a essentially, core to it of but -- that's in So that Difficulty] recurring we have, software we mostly digital,

So those messages main think are the I ads our in business.

Geoffrey Elliott

squeeze Thanks. I one another could And in. if just

your what's this than year? TPV the growth faster view industry latest growing TPV but You've on industry, talked about

Lia Matos

Yes.

We like growth this So this at [ABAC's] going of saw XX% year. to it's in end range. quarter. to said, industry and pointed think we (ph) XX% be this between the around lower Rafa XX.X%

So the on market. that's our view

out, ABAC's they the lower continue observe come but guidance. have of we We on numbers as end to the expect to

Geoffrey Elliott

Great. very much. Thanks

Lia Matos

Thanks, Geoffrey.

Operator

The from from next question go Coffey Please is Barclays. John ahead.

John Coffey

taking my you call. much for very Great. Thank

actually had was the part industry or question So of the regarding the echoed first just growth. had reminiscent you was I

you what or around would anything think QX question the to said the that comps or or might that there of higher declines the that that you're actually expecting might again? out So as year, to get rate at which When specific do point pain grow If that you half TPV as key lower? second second seeing you the when go, extend And the push that anything we the bottom on any or is when to tough first is, I QX of does we were for to be I far caution us end? XX%. think were of half, to starts accounts

Rafael Martins

John. here. Hi, Rafael

right change percent levels those the year. So significantly the the now half TPV that of our that calls regarding XX-ish there's [Technical Difficulty] in attention nothing second growth MSMB should in

control. levels. from or as that can factors question activity accounts, But those macro repeat there changes you big is please on inflation not have course, we big economic said, do regarding second do that and of -- Of as When the and we indication -- retail part factors like we in key please? now, different your of rely no it,

John Coffey

Well, and again to does mean thought volume TPV When you due sub-acquire the that has or become volumes lower start sub-acquirers. TPV to that the Yes. is the see year-over-year? I lot to start a then quarter-over-quarter been negligible really a declining for from I grow while. of

Rafael Martins

perfect. Oh, yes. Yes,

you in And in payments strict I that in pricing negative key look think in course, of that, think have does has strongly, TPV, sub-acquire but our the effect overall, and been accounts. I we some key at policy more if have declined accounts TPV. that policy

still [Technical of say year-over-year depressed you the so or acceleration And we should an that But the in see Difficulty] sort levels course, key end now. at so. of those would and I see we year, that had you there. might being Difficulty] that quarters, this coming But accounts at [Technical growth then we of believe see

John Coffey

you. Thank

Operator

And next from question ahead. Please Cantor go from is Siegler Fitzgerald. the Josh

Josh Siegler

for Yes. results this my Congrats quarter. thanks question. taking strong the on Hi,

year. to remarks, think the you churn what the drivers your first the mentioned on lower my some retention if behind curious being and expect I'm you I quarter question, of were in strong MSMB prepared persist throughout this For vertical. that the significantly

Lia Matos

here. Josh. Lia Hi,

saw Stone a think we yes, tiers of this churn we of that It's Ton So across the also brands. will life cycle monitoring. expansion greater result offering, our product lower in significant continue. and is and trend And the focus client a client both on all that a

terms base. in actions lot of a done towards we've the So

more cannot visits, So ignore also client term. life -- cycles. that our agents positively life visiting And more engagement we So much making impacts also, that more throughout right? rational, is industry cycle fact the

have So main to continue. trends that those regarding are that think and we the trends, three we these going churn messages are

Josh Siegler

roll follow-up, banking active And product? Ton Thank the consist sizing acceleration my cross-sell helpful the you. expect very Conta in Do clients then banking solutions color. customers. That's Super the out for you Understood. to increased I'm curious to new you about as Ton how continue to opportunities thinking you're

Lia Matos

question great Josh, there. Yes,

clients, some because Super Ton quarter that contribution Conta this. give full Ton, There clients was this on grew to the a but incremental banking had the color we to migrated new Just also I can in the we not big with only simple and clients banking both solution, Super looking that, So line so right? Ton single will in in acquiring be every Conta is growth itself. Ton think ahead solution, an will have growth a we what say wallet Ton

Josh Siegler

very Lia. Perfect. Thank you much Appreciate it.

Lia Matos

products, And actually of Thank reality is also clients this. the a think bundle XXX% much I just it's not as as emphasize acquiring Stone. comment another in you, banking in Josh. right? That's the important So Stone to also use where

very We have of as clients solutions penetration well. acquiring in Stone a high banking to

looking So that's also going drive banking to in growth clients ahead.

Operator

Thank next James from you. Please And go question be Friedman ahead. the Susquehanna. from will

James Friedman

are world say step thinking how wondering and Yes, know Susquehanna. welcome thinking -- you it changed could strategy Jamie the if in Linx? I but the what's your you what the wit now that about software originally have you XX, was changed Slide acquired for versus when it's What's and just articulated at now? are how higher [indiscernible]. And Slide Hi. process? may has back layout. Greetings, changes, question Pedro about A level, XX in Lia, strategy -- a I

Lia Matos

to then his take question pass this maybe hear Pedro and I'm also thoughts. Jamie. to to Thanks, going it first over

software in I combine integration strongly intensifying right? financial efforts the services, year. always think we've We very opportunity are to this our and believe

of the on We right? times last overall Perhaps really there focusing in with XXXX, changing lot we year think all is the a the such the that I a reason the there business about system. of then and management wasn't was many credit, and before. mentioned big issues turnaround focus focus, started sort

course, a Of for financial putting integration really that on and services software for platform the platform. emphasis now efforts. true more we're But was lot

And the so, same. strategically, the is thought

back Pedro we're there's I talked We focus threefold, I lot the bit would say it's that think right? how just lot the around around did where integration, already. is to done. prioritizing think one I but a a really a that and still our putting this about office. already is we're be of Number work year, on about little last And focus.

The on second offerings. and integrated really product integration is

was So last lot of our a around product effort integration. year

is software perspective, we combination, our from of this how and efforts, combined that shifting services. best go-to-market really we're around integrated can we and Now offering go-to-market incentivize third and coordinate the how and really software really and things in the really do both client to the services maximize financial financial payments so build we right? And

rationale bit So we've the strategic But on initiatives. I more the to you about think little we've want to what. the opposed The Pedro, do how changed. think hasn't been changed it's comment. I how really as focusing a

Pedro Zinner

Yes.

reason, huge, is Brazil's financial are within might I we penetration if opportunities software is GDP into -- one Linx points point of is and which have the that another of the low trillion, right? a the my payments still equivalent to Lia is business those the services we that I But -- view X% really If and that believe around clients sell of focus. BRLX.X clients. do important think key really I add, -- think that which is is raised

is really software us. all clients. if that another focus to point (ph) put the our be the the solutions haven't we it offering capital bring And think very focus needed that are we So I allocation optimize highlighted will is. should more [trends] that proposition a differentiated may there and we within to on effort integrated strategic select trying the value business, to

James Friedman

the back jump you context. the in Got it. queue. for I’ll Thank

Lia Matos

Thank you, Jamie.

Operator

go ahead. of Pierry Mario Bank question next from the Please America. And from is

Mario Pierry

Hi, for my guys. question. Thanks taking

first you're the taking that the you cost ask look I talked And a discipline speech, because and headcount, us peers. your some about of ask some lot -- on measures measures? about me Can larger during headcount. have help question at expense your your Let peers talk and you these seen of we of than reducing your benefits the when much we of some And quantify it's control.

second ask question. or costs? indirectly, And control any the are initiatives I'm what then plans reduce to any that there I'll you if So have asking are to headcount

Rafael Martins

Hi, here. you Thank for question. Mario, Rafael the

are think been many I initiatives the company. in we have that So there implementing

to more bring and We office shared service tends for back activities incorporate in center, future the example, created, have a gains. which

the efficiency are structural also technology, improvements, We on platformization focused of business.

headcount, the model business at which about a look model think our talk thing, you you other bit verticalized. when if I to that is there is business Pedro compare and can think companies, I a little this, more

So our companies in internally headcount. in-house, we part of do outsource, reflects what of and all, other course, might that

expenses to But last expect last earnings inflation we below we go do call, -- mentioned administrative as have in year. this

customer So and say I so technology, [indiscernible] structural cloud in that different in would efficiency, more towards measures and so have forth. on we logistics measures, working operational service, we are

of that the So difference to I the say is difference players. a want part add? versus big headcount would -- model do -- reflects but you business other Pedro,

Pedro Zinner

Yes.

and point think I forth. mentioned important KPIs highlight, of terms really is to so in that one you

the main I think expenses you in a was had year, package huge put effort the within last company. process, place within for owners there [indiscernible] to and the the

control in better and should growth visibility attack, and its expenses we actually company set we the we we us where terms move for terms ahead should in and So attack that strategy. streamlining having how as brought of of should attack when

of I setting I the that think headcount, stage call of throughout mentioned the at really the beginning we're to position terms Stone In XXXX.

people right have the at to right before. a have I we make to mentioned we build organization, fit-for-purpose so, as And sure that roles the

I people. will manage of place So want to in to how do how hiring want in ahead. we back terms an review we over as we and couple years, say, next terms be and forth of ZBB move the finding having be tool the headcount understanding Difficulty] can we tool headcount [Technical All where in and important of

organization building really right? move ahead, we a as it's So fit-for-purpose

Mario Pierry

bit, a events How seeing question, are recent second Okay. little My third-party you your Thanks funding, subject talk let ability given to you costs. in Can Brazil? then the that. the on change focus your about funding for me market? tap

Rafael Martins

Mario. Hi,

because are tapping has especially we company generating So sources, seeing not liquidity. in funding cash, increasing problems the been

So robust sheet. we very have balance a

not there. industry not slight a anything you the funding it was P&L. are problems that did that can we in We seeing cost in see as see, reflected increase our very any So in

will sources in coming -- are believe I different we diversified, company, that and even those we mean, funding future. So in be have we more the the

So not us. something it's worries that

Mario Pierry

Rafa, of be And reduction impact in your sensitivity basis [indiscernible] would XXX if a the environment, lower points what can all e-com. us remind assuming to you just Okay. rate else

Rafael Martins

is think theoretical as Mario, [indiscernible] that change so there well. might that that a answer hard consider the we when this because question know answer but I could dynamics to be change, like commercial rates

guidance around that don't we sensitivity. to So a like specific provide

If you look CDI. sorry, evolving at our interest TPV our basically rates, they financial over time and with expenses, been have

you'll So for players a Difficulty] do otherwise very they pretty because say net hard decrease, to are that CDI believe the competitive of assume activity if And you same. today. us course, prices it's really see can [Technical simple to But much a percentage it there. a math and if but rush and hard it's for is will a do number for guarantee to on decrease, not We would us be decrease where positive that. environment that decrease rates would commercial we us

can some and there So if relevant bps XXX impact. with a do over you XX%, math at expenses, see, almost financial you BRLXXX is million look little our CDI

Mario Pierry

Okay.

come case you're it be if first behave, competitors prices. mean the basically, in but down, depends are your -- reducing first -- So doesn't that to saying to in so that going that you it not on necessarily mover how mover are going rates

Rafael Martins

Mario. Yes,

not in prices. will down movers be we bringing So first

what of environment course, -- is goals. not that something do internal we're come down. our we reliant to It's going what not bringing competition do decide down on proactively think we have but do if at do. will competitors our will do, and and our to look internal rates hurdles, I prices XXX% But this return that

Mario Pierry

much. you Thank very guys. Okay,

Operator

Agarwala Neha the from And ahead. next be question go will HSBC. Please

Neha Agarwala

for Hi. Thank question. my taking you

to opportunity to that your services Linx. you from would your you to cross-sell for software bringing SMB thought mentioned the that penetrate and it easier presents a First, the able payment if correctly, a Linx the clients it's opportunity, them. come Why have Linx software huge to mean segment. you've the on business, that versus fruit not understood your Linx clients low-hanging while large to -- been been cross-sell business expertise I an since be to from you payments a I integrated I

been related you that's integrate haven't to part? my that as And why on TPV question So able well. to

mostly TPV So reasons TPV your you the from are growth terms see twice of the that we in Whom gaining as strong with most to they What almost because to low segment the share the in talk numbers, of teens are industry peers for been close we has a and growth. whole. market are this the growth? when them of SME

stronger growth growth what larger driving you. has shed in have strong terms TPV? next some could in And change is -- If question. your there's my the there contribution mix? growth? light been case you from TPV might led which the So in in then I'll to some Is of Thank accounts, a ask

Lia Matos

you, Thank Neha.

all. I Your question cut a little bit in the but middle, I think got it

it then question penetration first focus me missing, services know, in take okay? anything I was Let our payments me financial and there's within clients So your and let if where is. think Linx

So the our really focus pyramid. of middle the on is

larger, product way it. right, clients small to medium bit services best tier side the in where and little a financial SMBs, little on both upper the of offerings describe offering clients Those a that's medium think of fit That's Linx large the are of well and bit the we we and I that as that the see the clients have terms as the well. portfolios has. biggest as the

actually So initial our really because is in cross-selling Linx very going just us convergence and clients. services to highly that's be channels. to the software. on when Linx's Linx's pyramid, focus opportunity going to software software But already our be penetrated terms is on going very for with inbound in large to channels, this of is to software medium is of grow services -- right, franchise really a lower the we in But the channels, focus financial and Linx's consider pyramid continue the the to through clients itself the and done financial clarify point, -- there's strategy

a convergence there's So there.

important software we're the and at of in where cross-sell. regarding that's message looking terms think I

regions. is, share I we take TPV every question, share we're right? actually of And market market message taking we your much client from, which in tiers on from in competitor, think who pretty which view granular have and pretty

focus quarter. strategy remember bit tier we changes the and in Of from message by on market that micro region competitors, in SMB strategy to is seeing larger we're driving TPV shifting by all has a hub there, of our see dynamic the take also more, region course, in pretty the growth get And and of trends So little at SMB But I both right? the the was within growth and look growth tier, is, the share your to TPV hub tier net and driven Did more clients, growth. our let's our segment, the big we're we but that's that by a adds that the right? segment, all top driver been healthy questions?

Neha Agarwala

largely. Lia, Yes, Yes.

upmarket, move but somewhere has not accounts, So some large between particularly been the large the SMB. there maybe accounts in and

SMBs. higher-tier That's more the focus. So

Lia Matos

within Higher SMB, That's exactly. tiers exactly.

Neha Agarwala

My on is question Okay. second credit. the

piloting So we you see finally product. your credit

a it changes has You what think receivables fully it that data all the transparency with with you that bit when the the the you. the Thank hubs? And quarters? each we about to Is And a fully -- that do complete see with integrated as the other? debated Could terms fully and you've you what do receivables you it. in communicate coming registered registries other are -- been been And is operational? in on other talk can secondly, product there of registry. can mentioned launch

Lia Matos

Yes. questions credit. great Neha, about

your registry. question Let the me start with on

it registry a It's with working. this with already So but point, the an is, we're as not to working, integration of group clients, the system did them single message initial using mechanism we data of as the collateral. extra

regarding of we message. test the still. we're of your level Initially, an how involvement clients. But we're digitally. remember [Technical that's mostly And I of the clients distributing of important the hubs cycle been something life this have our the hubs, the that group current Difficulty] of product starting in question think involving is to on

a to but the credit going so agents tests running do learning to is which terms we're in still we of process. in in we of there, involvement And a think have leverage we're edge way cycle several very that big the overall, life it the

Operator

ahead. the next is Street question you. Research. Please from New go Datta And from Thank Soomit

Soomit Datta

the Yes. One, Hi in business the cash a A of rising and steadily into showing there. the just couple There's sheet. position nice is obviously, balance please. greater questions, just profitability. moving slide on deck

continues thinking about of you this Has would use there are opportunities first cash question, be please. presumably to time? going acquisition Are how So considering number inflate? you any forward? that That's at the

follow-up, a quick then And know if I a could, just it's industry I to back up couple just of come TPV. times.

a curious, looking little for. Just softer we XX.X% the than is growth bit were

to be feels the it's of be. not kind increase? like of would might shift, that? the cash which context through you there comps of you it because as would think As look year, to the to as you rest the say of that impressive And can that any that Are of, impacting kind in expect digital I it

curious So thoughts of there. just your

Rafael Martins

for you the Soomit. Thank question, here. Rafael

to do BRLX in have to and invest we of a you net part of adjusted sheet, faster said, the different we to us first your question, balance as want regarding enables have This cash. flexibility strong the fronts whenever So business. grow in billion

opportunities. reduce couple use been for we of of of one That's that as a we mentioning in calls lot to you balance it's allocation also flexibility. -- the as a but very have that better mid-last we the look already, course, financial bit that stopped of And the to why expenses year, see have capital have of little sheet, increasing debt is can over time. a One the have of cash carefully

environment we during even pandemics, is more our cash business, for because and hand. keep have uncertain in the pandemics scenario, do any of scenario, had flexibility One other we here on growing week we element example, the business prepayment micro working worst the to cash have

And we're looking allocation the think of that's to a of policy with of I discipline. So opportunities capital sort closely lot company. a different

to, growth view our the Regarding the industry bottom of be the which sort closer with the guided association year XX% to should in is industry, XX%. that the I what think that of the growth coherent range more is of ABAC

think the for I hard to us for year, bottom it's that's the but to close estimate range. So whole

attention. calls that something not it's our So

Soomit Datta

Got it. you. Thank

Rafael Martins

a have as it's over that industry first the one our half little this running When above is guided, we just point, And having this the that, TPV expect of at right? to look to year, reinforce Soomit, -- levels be those and said we growth industry, in year. XX% should this for continue we

but pricing at looking always, rate. growing course, discipline growing Of by not [indiscernible]

Soomit Datta

you. Yes. Absolutely. Thank

Operator

go be from Pedro Leduc And question the Itau next will from Please ahead. BBA.

Pedro Leduc

bit financial you, little guys. Thank A -- pricing dynamics. on on sorry,

little So last have when that rounds implemented you bit the you look a quarter, take this at saw we your rate.

are a given the you. just rate if the some more pricing XQ, And recently, from saying see moving they're Hence, for moving should Thank competitors or some up. take noticed coming in maybe mentioned? round effects we cap. if you've room you you're little If seeing another better churn there the lower that interchange

Rafael Martins

Pedro. you, Thank Rafael here.

we did the second in We expect I quarter. think the reprice in that clients quarter. do first clients reprice to

a see process of higher but opportunities for further. we I a think do as not optimize last price continuous is beginning it's said change we of in before, it's not that pricing big prices the interest optimization rates It's year -- process optimization. this saw a to continuous as adjust to the in I country,

is As This rate. of also I the helps said, prepaid take cards. there the gap in

between message and here think balance very is that policy I and a So pricing growth healthy. we think is profitability that the disciplined

Pedro Leduc

see have ending been But impressive mid-quarter. I you bit should taking three we course that I'm remember been think what the if been that second XQ. a quarters we've bit? guidance Things consistently it. that than upside is a How what it about a also an it. for of that, And seeing guidance Thanks, back is just wondering strong better upcoming Again, you Rafa. figure up beat on scenario quarter. beating least have at for

Rafael Martins

Yes, Pedro.

in look guidance, for the that, achieving. are both have market deviations provide when we number or -- around quarter, and confident the the we we So see the potential at a that when forecast try we we the look we we define upside downside to to

the the really control in involved on so that be to Of is we the But always course, that given I precise we there's number. idea the that don't upside cannot control. of course, macro think of scenario timing -- scenarios macro our results

So Pedro, do you want to add?

Pedro Zinner

Yes.

to policy next of guidance, terms not that quarterly it's important the do our in guidance to the in we I highlight think change expect quarter. I think of

with of our strategy. creation plan long-term we provide value is However, in a quarterly future, aligned the longer-term we the do believe perspective business which to rather more a number, than

Pedro Leduc

both the Superb. answers. Thank for you

Operator

And the from of next America. question is Riva Bank Nicolas from

Nicolas Riva

to the questions. on your Thanks few for question. going questions to ask A back debt Mario's very much chance

about BRLXXX in be comments year. it's even So over down to you million the the in to been and did see that a I quarter, see to over appreciate access able top the the bit last funding But that your more quarter, continue declined I [indiscernible] sources. with saying your bet

you're maybe using the you you in can is we financing equity [indiscernible] to in the stakes not off-balance And keep more do financing are market? [indiscernible]? in sheet because where your on why the seeing sheet if is less access reason So balance [indiscernible] the comment

by also look BRLXXX question a quarter. bank at debt, similar about your the bank in short-term your on it declined debt. And then I If million

[indiscernible] a the can have bank other corporate So of stressed and also will a access many then also if to right Americanas on comment bit I your Brazilian Thanks. you And financing question. after separate now.

Rafael Martins

you, here. Nicolas. Thank Rafael

[indiscernible] using increasing think I right? effect that for you that the billion adjusted in quarter, short-term cash. and stake help we first did are allocation of see, to we So that in of the sell mentioned of the that both debt. about generation, part also BRLX.X you because someone our they so is amortize as I cash, is the are net that part Remember And that BRLXXX cash we in when the Banco asked said, million, Inter increase

on are. reduce So hand where I to lines, funding nothing interest to that given to think good do rather reduce leverage allocation a debt this with cash access and has to rates capital but

Nicolas Riva

question And my other your expense. Thanks, then is Okay. financial Rafa. on

income if the the the very over million quarter of for statement, including I total that banking March. I to in compare end financial debt XX billion with amount booked bank your if over BRLX.X the you I loans in the product, and a size, or BRLX.X XXXX at the But about BRLXXX include merchants. last a large So a bonds, expense, [indiscernible] get bit I'm total billion the debt not debt of deposits payables months.

total discount amount a believe in I financial the to about P&L such of It compared sold large expense expense can in very to some [indiscernible] P&L you this debt. if again, in why financial -- BRLX.X billion in you seems case? in on your debt includes a BRLX.X receivables compared that's also expense. a noncash us billion but Why amount the financial of financial year of side? the to book expense large tell the the So

Rafael Martins

Thank you, question. Nicolas, question. the for good Very

to good clarify. it's think I

very cash in started have dynamics a of comes how To financial is expenses, receivables, is understand it XX, you much financial cash, see have whenever statements if our Difficulty] we sell related asset that's So still card payables breakdown help our we as to to a transform of it providing in have why that and liquid net balance at our investors an we Note receivables, as that card it's into [Technical our payables. sheet. you much are option that, liabilities. -- convert this of them as look right? provided we than adjusted and market. we them our more in interest We financial sale And into receivables So incurring basically of, expenses, of receivables from how look surplus cash position, the

think that So there. I is very detailed

expenses are remind our incur based in And important we have every sell everyone basically and spreads dynamics want we decided whenever business. not we this the -- to incur expenses, if those we financial that the is we day receivables is to which on is prepayment how

in -- we appropriate of we terms have expenses, in income expenses incur but So returns. those related us financial to for that are financial

expenses think only net we we result one. something spreads P&L those them as are incur see cost, So the are our it's and not we will we the have in if attractive an that attractive you'll financial -- any at

Nicolas Riva

Rafa. or of very interest accrued payments? Would you for the in cash have compare So one a mean BRLXXX cash now, for And interest make those you guess, so three reconciliations BRLXXX ballpark quarter, I of follow-up of you interest last about use a million that and -- a are I of Or if size I would the much as P&L, or quarter? the cash Thank the funding maybe kind lines using the your that bit P&L to of the this getting in plus expense accrued if cost interest kind roughly interest payments Does of payments than of idea that just And on cash? there statement. flow which ballpark you costs million will in about an be lines in half less expense sense? your us mean per cash if for proxy subject. Thanks. three your what XX.X%. interest can give right cash funding this

Rafael Martins

Nicolas. Yes,

you how the element prepayment I much interest we that one interest business have we there. the is for income the that for have. our amount net and that that the have of paid, cash think interest cost paid receivables do of we effect sale our we funding only flow, if is received and of additional that from the cash at look have And flow, think I So

see -- the that do. our you the interest flow do in of I costs you to cash much the want interest think income So pretty see if have you statement, you to the look net and the and income paid information you'll reconciliation received

go are if to So I think we course, of details that well, those available fully as make off-line for want you. you to

Nicolas Riva

Sure. to in include and of back generating have Maybe that BRLX.XX. given additional earnings some we debt, using a level few just buying at times some question this they some repay cash cases, about this one. I trading [indiscernible] and one that mentioned potentially that your last know potentially you cash are Since that would -- in calls, asked would

Rafael Martins

Yes.

think answer. doesn't it question the change that think last I answered time, So I we

We are different to said. opportunities, you capital looking allocation closely including that

in the if to like have we have at discounts. flexibility And look of we said, bonds, you terms cash. I the look to As at

the hedge We unwind of now. negative have bond, right to which look to at the the is cost

to many that. consideration closely think have factors to that to we I is So looking sort there deciding we are into do of that take alternative. always when And very

Nicolas Riva

All Thanks right. very much, Rafa.

Operator

at Ladies our This there questions considerations. and time. for call the Pedro I no session. are would back concludes to gentlemen, this any final like Zinner further question-and- to over turn

Pedro Zinner

the Well, very our call, in for participating you quarter conference to Thank you everyone in next just to again hope meeting. thank much. I want soon and see

Operator

concluded. now Thank sir. thank presentation. attending The today's And you, has you for conference

You may now disconnect.

StoneCo (STNE) 17 May 232023 Q1 Earnings call transcript