Cielo SA

BOVESPA:CIEL3

Earnings Call Transcript 2019-Q3

[Operator]

Good morning, and thank you for waiting. Welcome to Cielo Third Quarter of 2019 Results Conference Call. With us here today, we have Mr. Paulo Caffarelli, Gustavo Sousa and Jean Leroy. [Operator Instructions]

This event is also being broadcast live via webcast and may be accessed through Cielo's website at http://ri.cielo.com.br/en, where the presentation is also available. Participants may view the slides in any order they wish. The replay will be available shortly after the event is concluded. Those following the presentation via webcast may post their questions on our website. They will be answered by the IR team after the conference is finished.

Before proceeding, let me mention that forward statements are based on the beliefs and assumptions of Cielo management and on information currently available to the company. They involve risks and uncertainties because they relate to future events and, therefore, depend on circumstances that may or may not occur. Investors and analysts should understand that conditions related to macroeconomic conditions, industry and other factors could also cause results to differ materially from those expressed in such forward-looking statements.

Now I will turn the conference over to Mr. Paulo Caffarelli. Mr. Paulo, you may begin the presentation.

[Paulo Caffarelli, executive]

Good morning, everyone. First, thank you very much for your time and attention. Our main goal today is to highlight some topics about our results of the third quarter of 2019. I would like to emphasize increase in the customer base. Once again, we went from 1.4 million customers in the third quarter to 1.5 million clients in the third quarter and also regarding the increase in the volume captured in our business market share. We also have an upward trend for the third consecutive time. And this is very important because it's the third time that is in the first, second and third quarters, we had an increase in market share and increase in the customer base as well as the rising volume captured, which has not happened since 2016. So in a way that supports our strategy. What is our current strategy? To keep our leadership and to maintain market share because we believe that as we have market share, especially when the economic growth resumes now, we'll gain scale, and as we gain scale, we'll be more competitive in this market.

So together with this growth in market share and customer base and volume, I would like to reinforce here the significant improvement in the quality of our service. We had a very significant leap and increase in the quality of service. We made several changes so that the customer of Cielo is -- has a better service. Many of these changes are already reflected and others will still reflect throughout this year, especially next year. So quality of service for us is the name of the game. We are part of an industry that is commoditized, where price matters, where technology matters and system availability is important as well as price. But above all, what will dictate, what will make the difference in this game in Brazil is quality of service.

In addition to our everyday business and business as usual that we are highly committed to improve on a daily basis, in parallel, we are creating the new Cielo, the so-called digital Cielo. This is a goal because the digital transformation affects all segments of the economy, but most -- but stronger -- strongly this segment in which we operate. And Cielo has to reinvent itself every day. So in this quarter, when we launched Cielo Pay, which is, so to speak, the main focus of our dedication to digitize our systems, we are making available digital accounts wallets, transfer, processing, paying, payroll payment, many other things that we are adapting Cielo to this new reality. Cielo Pay is the digital relationship platform with our clients. Since the beginning of this launch, it has been -- it has had a very good performance within our expectations.

Once again, I would like to remind you how important it is to continue with this leadership process. Productivity, I've mentioned scale and price already, but more than that, I believe that the main differentiation point of Cielo, when compared to the competition, is our capacity to generate additional information to our clients because we have 42% of the market, almost half of the formal transactions involving cards in Brazil go through our company nowadays. And because we have such data and an engineering area to analyze this data, we can return that to the benefit of our clients, according to the clients' needs to look at the potential of different allocations, their own segment and many other users. So I believe that, in the future, this would be the biggest input because data is really what will matter, and we will revert this knowledge base to the benefit of our clients.

I would like to give my special thanks to our employees, our associates because Cielo is going through a major structural and cultural transformation with the purpose of adapting to this new reality. I was in a press conference just now. And there a question I was asked about competitiveness, whether this war -- price war continues, and my answer is, yes, this dispute continues, but the speed at which it has -- it is happening and the summit of it has been reached already. So now things are starting to adapt, and we already start to see in the market a systematic change in pricing. So I believe that from now on, the horizon of competition will be slightly different from what it has been so far. So I would like to thank our employees, associates and investors that support us every day as well as our analysts that accompany us every day.

I will now turn on the floor over to Gustavo.

[Gustavo Henrique de Sousa, executive]

Now let's go to the Slide 3 in our presentation. I'll go quickly through some metrics without many details. So we have recorded in the third quarter, financial volume of BRL 172 billion. We had an active customer base of 1.5 million active customers. Our credit volume paid in 2 days reached BRL 22 billion in the quarter, our net revenues in BRL 2.8 billion and the net income of BRL 358 million.

Moving on to Slide #4 and starting with the financial volume present data. This BRL 172 billion of volume in the quarter account for a growth of 11.6% year-on-year and quarter-on-quarter, 4.4%. When we look at the active customer base, this number of 1.5 million customers accounts for a growth of 18.9% year-on-year and quarter-on-quarter 4.7% growth. When we talk about credit volume paid in 2 days, BRL 22.3 billion that is an increase of 43.6% when compared to the same period of last year. And then I refer to the growth in volume of 11.6% of the total volume of Cielo. The credit volume specifically has grown more than 16%. So when we reach a record of penetration with 21.3% in credit products, it's a record penetration in a volume that has grown 16% year-on-year. So it's a very important performance in advancement of trade receivables.

Now the highlights of financial goals and net revenue. And now I will refer to the comparison to the third quarter of last year. Net revenue has totaled BRL 2.8 billion, which is a decrease of 5.6%. The EBITDA, BRL 724 million, 37% lower, 29% (sic) [ 25.9% ] is the margin with 13% less in percentage points. And the net income totaled BRL 358 million.

On Page 6, we see the main reason, the main driver for such reduction of profitability metrics that we saw in the previous slides. Caffarelli referred to the strong competitiveness in our market. And when we look at the revenue yield when compared to the third quarter of last year, we had a decrease of 26 base points. And most of it is explained by the price effect directly on the MDR, which is the last column to the right, as well as on rentals. The reduced -- reduction in yield revenue on rental yield revenue has a high amount in our total price. The same dynamic is observed when compared to the previous quarter, a 7%, reduction of 7 base points and also driven by an MDR reduction in the rental variable.

Now moving on to Slide 7. This is like an index of the next sessions we're going to address. I'll make some comments about our Retail segment, Entrepreneurs segment, technology and project developments at Cielo as well as some advancements we had in operations, services and Cielo Pay.

So now starting with Slide 8, I'll talk about the Retail segment and Entrepreneurs in terms of growth. We had already talked about this chart in the last call. In the third quarter, we saw that the combined figure of retail entrepreneurs has grown at a higher pace year-on-year than the segment of Large Accounts. Now specifically speak about -- speaking about hunters and just reminding that hunters are professionals that we have hired as of January this year with 1,000 professionals to acquire new customers. So we have some metrics about their performance.

Starting with the second metric on the slide. In terms of volume of the Retail segment in the third quarter, the hunters channel accounts for almost 10% of the retail segment in this last quarter. When we compare the volume of the third quarter with the second quarter in -- for hunters in Retail, there is an increase of 81.3%. We had already mentioned in the previous call that hunters' job, since it's very recent at Cielo, is developing with time. What we started doing most recently was to prioritize for hunters the larger customers. So in the beginning, we had a major growth in terms of number of clients but with a smaller ticket. And since this is a costly channel, it has an impact on our payroll. As of the end of the second quarter, we changed the compensation calculation and goals calculation for hunters, so they prioritize larger accounts. And then you can see when you compare the hunter channel with the previous quarter.

Now moving on to Slide #9. Some highlights on Entrepreneurs. Since we started with the sales strategy, there has been a 1.4 million POS machines sold. We have make us -- have a strong emphasis on this segment, which is selling terminals. In this 1.1 million equipment -- pieces of equipment sold, ready-to-use, most of them were delivered. And in this segment, we also have several alternatives to make sales easier for clients. We highlight in this slide, payment with QR code, Link and also talking about facilities -- ways to facilitate entrepreneurs' lives. We talk about digital accounts. 9% of our entrepreneurs have a digital account with Cielo. The news for entrepreneurs in the future will be growth in channels. Other partnerships, in addition to the bank channel, will continue to increase access of clients to other business models.

On Page 10, in the technology and projects slide. It's important to compare 2 realities of Cielo. Whenever we talk about a player that has been established in the market for a long time with a major -- with a long background of transactions, we say this is a legacy system that's hard to customize, but let's look at the robustness. This legacy system is what grants Cielo the larger processing capacity in this industry in Brazil. We have very high availability and the settled amount of -- is huge. So almost 7 billion transactions per year, and we can deal with peak of sales anytime during the year, Christmas, Mother's Day, Father's Day. So we do have a legacy that robustness of its systems. That doesn't mean to say that new projects and new platforms and products will have a problem because of that. No. On the contrary, Cielo uses all new platforms and programming languages, and most of its projects in progress, 90% of it are in agile methodology, which means a reduction of time to market. So digital account was delivered in less than 100 days. Cielo Pay, less than 100 days, instant payment, less than 60 days. So the gain in productivity that Cielo had with the adoption of this methodology is undisputable. And it's been demonstrated in recent deliveries.

Now moving on to Slide 11, looking at operations and services. Here, I would like to go back to this discourse we have used since every call during the year. The customers, the focus of our attention, is the center of our attention. So we have reorganized the -- our customer service center with using a lot more analytics and automated tools. And the first results have arrived. We'll continue to share these developments of Cielo. First, we had a reduction in the volume of calls to the relationship call per customer of 18% year-on-year. Complaints by clients have dropped 15% year-on-year. When we look at numbers per day, business day and time to solve complaints, there was a drop of 74%. So we'll always go back to these service metrics because the -- we have always this industry also always talks about price, competitiveness, and we always mentioned these service efforts, and now we start sharing the first results of such efforts.

And to wrap up our presentation, we talk about Cielo Pay, a product that provides -- gives our customers a series of possibilities. It's a map that allows you to pay via QR code, Link, transfer your telephone contacts through the system as well as using physical card and virtual cards. It's been recently launched and new developments and functions will be added as it is developed in its road map.

Thank you very much for your attention. I will now start the Q&A session.

[Operator]

[Operator Instructions] The first question comes from Giovanna Rosa of Bank of America.

[Giovanna Rosa, analyst]

I have 2 questions. How is the price behavior at the end? Is it still dropping? Last quarter, please correct me if I'm wrong, but you mentioned that you had repriced 50% of your base. So I would like to understand the central price today? And how much have prices dropped year-to-date? And I'll ask my second question later.

[Gustavo Henrique de Sousa, executive]

You are right. We mentioned the 50% in the conference call, the second quarter. Now with the data of the third quarter, that amounts to 60%. So we'll talk about price at the end. Let's talk about origination of new clients. As Caffarelli mentioned, if we look at the path of reduction throughout this year, yes, there has been a strong movement concentrated in the end of the second quarter, throughout the third quarter. This continues but at a slower pace. So to summarize a bit, the answer is yes. We continue to observe competitiveness and fight for prices at the end but at a lower pace than we observed in the first and second quarters.

[Giovanna Rosa, analyst]

Okay. That's very clear. My second question is about the strategy of hunters and farmers. Today, you have new 1,000 hunters and 500 farmers. And I would like to understand whether this number is adequate to maintain the net equity level in this last -- of the last 2 quarters? And how much do you expect this figure to grow? I would like to understand the dynamic of sales with your own sales force and bank channel and how this will evolve towards the future.

[Unknown Executive]

Giovanna, now I would say that right now, we're not planning on increasing the sales force. We have shown you some metrics of the first results, which are satisfactory from the sales force. So going back to what we mentioned in the presentation, in the third quarter, almost 10% of Retail volume came from this channel, which is quite a good volume. So the developments we tend to do with hunters are to qualify this team more and more, have qualified leads for them, continue with goals and incentives that they would bring larger accounts. So I would say that for a new initiative, the new -- the next step is a lot more about training and -- rather than changing the number of people in the sales force.

As to the other channels, we continue to count on the most powerful channels in Brazil, 2 large banks, Banco do Brasil and Bradesco and a strong partnership with Caixa Economica and other banks. So the bank channel remains very important for us. I won't give you figures about that because it's a small effort still. It's starting now. It's too spread to other channels such as small entrepreneurs, partnerships, digital channel, but that's a topic to be discussed in the next quarters. Right now, we continue to count on this bank channel, which is very strong, and we want to train and improve the knowledge of our hunters team and the classify part of our sales team as farmers.

[Giovanna Rosa, analyst]

Okay. This is very clear. I would like to -- could you give us a follow-up on the growth of Retail? If you could give some color regarding the growth of Retail in micromerchants, please.

[Unknown Executive]

Giovanna, I understood your question, but due to competitiveness issues, we do not disclose these volumes because this is a very competitive market and time. So we're not disclosing that -- the volumes by segment. This is the reason why we show on the chart a trend view of overall behavior, okay? But to complement on your question, I will turn the floor to Jean.

[Jean Philippe Leroy, executive]

Giovanna, I would add to your first question that the price at the end is more aggressive. Yes, but it's not irrational. It's not destructive. The hunter is a new sales channel that improves every day because the salespeople improve and develop. And the channels that are growing more, the lower cost ones, and these 3 points are very favorable towards the future.

[Operator]

The next question comes from Thomas Peredo from BTG Pactual.

[Thomas Peredo, analyst]

I would just like to have some more detail about how the sales of equipment affects the P&L of the company? What is the impact in terms of subsidies in the sale of such machines?

[Gustavo Henrique de Sousa, executive]

Thank you for your question, Gustavo. Between the disclosure and now, we received several teams from our RI team. When the subsidy is made, I have a cash impact, which is a financial impact, which is the funds that come from our cash and banks. And we amortize the subsidies in 15 months. So you know that this entrepreneur segment is new to us. The sales of machines is also new. So we use 15 months, and our inference is that the average life of customers is 15 months. This is why we amortize subsidies in such period. To compare and give you a more complete answer, how do I compare that to the depreciation period of Cielo's equipment that is used in the rental modality? Rented equipment is depreciated in 5 years, in the -- with the criteria of useful life of the equipment. I hope this is -- has answered your question, Thomas.

[Thomas Peredo, analyst]

Yes. This is very clear.

[Operator]

We continue now with Felipe Salomao from Citibank.

[Felipe Salomao, analyst]

I have a question for Caffarelli. You have mentioned in the beginning of the call that, in your view, the competitive environment is becoming more rational. I would like to understand why he believes that? Is that the evidence of price and the margin? Or it's because you look at the possible result of some players that decided to be more aggressive in the beginning of the year, and you come to the conclusion that it's not worth it because they have lowered the prices? So could you give some color on why do you think that is rational? What are the lessons learned by the industry lately that will cause competitors to be less aggressive than they were in the beginning of the year? And my second question is, could you disclose the percentage of net additions of customers that come -- came from entrepreneurs compared to small and medium-sized companies?

[Paulo Caffarelli, executive]

Felipe Salomao, it's good to talk to you. When I mentioned that, I didn't say we won't have competition. Competition will remain. That's very clear. And this is why we're trying to preserve our market share to the detrimental of margins, but it's important to divide that. Let's speak about Large Accounts, Retail and Entrepreneurs. When we speak of large accounts, you've seen some comments by our competitors saying that, in some cases of large accounts, they are no longer working because prices were less than acceptable, so to speak. So in this segment of Large Accounts, people are revisiting the pricing strategy. That's not happening only here at Cielo, but in other companies that operate with large accounts as well. That is a clear trend. And I think that's very healthy because there should be a limit to that. So we observed that -- we see that this is adapting because we have to make ends meet, right? As for Entrepreneurs, I believe the competition will continue, no doubt about that. But that flattening of rates, rates were decreased considerably, and I believe that readaptation of prices or changes will happen at a lower pace than they used to happen. I think that this -- for next year, there will be some good news. And I'm here really hoping that Brazil will recover its economic growth and will have a direct impact on our business. And as so, we'll have an increase in sales in the country overall. And because Cielo is all over the country and in our investment in capillarity and market share growth, we'll be able to have a reflex. The reflection of this resumption of economic growth will be very big. So we do not disclose figures by segment, so I cannot tell you that. This is a strategy issue for us, but not us -- not only for us, but for our competitors as well. And thank you for your question.

[Operator]

We continue now with Eduardo Nishio from Plural.

[Eduardo Nishio, analyst]

Could you help me by -- helping me to understand your differentiation point? The take rate when -- in terms of new entrants. For example, [indiscernible] has a PPV of 16% of your volume and is able to generate 80% of revenue of Cielo Brazil. So I would like to understand whether there's more than just the mix in this differentiation point. And I will try to look at the half glass -- the glass half full here, whether there's any gain you can obtain to improve your take rate throughout time because looking at your market share strategy, you already have 40% of market share. It's quite significant in the market. It's hard to increase this market share significantly. So I would like to understand whether we could have some surprise in this take rate in time. And whether merchants’ agreements have this price increase clause because whether we'll have this lower-priced world forever? And my second question, in terms of regulation, we're expecting new regulations for instant payments in 2020. What will change? How do you see this peer-to-peer market 5 years from now? There -- acquirers were launched, IT was launched today, banks are launching features. There are several strategies from several banks and acquirers in the same environment. So I'd like to see how you see this development of the industry or segment in years to come?

[Gustavo Henrique de Sousa, executive]

This is Gustavo speaking. Thank you for your question. Now starting on your first point, you mentioned 2 variables of take rate differentiation. Customer profile, so the concentration of Cielo versus other participants and new entrants in different segments as well as incentives. First of all, I would have to give you broad subjective answers rather than quantitative. We have a concentration of volume in major accounts, large accounts, 2/3, and we've been very clear in saying that with time, we'll prioritize an inversion of this pyramid with the Retail and Entrepreneur segment. That doesn't happen overnight. It's a gradual and incremental process. I would -- the term you used, could we have a positive surprise, I'd say this change in the mix will be -- will take place gradually. The incentives contract has a 2-year term. It expires in December. I cannot give you any details because we are discussing these agreements now. And at the end of the year, it will be disclosed when it -- we come to a final agreement. But yes, there is a possibility of improving results. So new entrants with different concentrations, some with a major emphasis on entrepreneurs, where the take rate is higher, although marketing expense and heavy subjects. This market is more and more competitive because of incentives. So this comparison with Cielo is difficult to make because we are present in all segments with greater concentration in large accounts, which gives us scale, but does have a take rate, which is lower when compared to the other 2 segments.

Now in terms of regulatory aspects, I think this is the most difficult question, any player in the market sees it that way. Let me try to talk about something that's more practical and is a consensus. The instant transfer starting next year, will facilitate B2B transactions and increase volume in debit transactions. Not immediately, but it's very practical and convenient to use a debit card. But when you ask me to look at projections for the next 5 years, I find it very, very difficult because we see some movements of the competitors and tell what everyone is looking at is, well, we don't know how this world will be in 2 years, rather than 5 years, but we must have a digital wallet that allows for instant transfer. And this is what's behind the launch of Cielo Pay and the development of Cielo. It's hard to say how the market will be in the next 5 years, but Cielo will -- it's certainly showing the market that it's ready for whatever the new environment will be.

Okay. The idea would be not only looking at the next quarter. But let's look at how the company was 1 year ago. If you look at Screens 4 and 8, you will see that there has been a major growth in penetration of credit as well as in the change of the portfolio mix. If you looked at this 1 year ago, you wouldn't possibly think it would be where we are today. So we are growing to increase and grow even more.

[Operator]

Next question from Marco Calvi, Itaú BBA.

[Marco Calvi, analyst]

I have 2 questions. First, it's a follow-on question on the first question. What do you expect in terms of timing for base repricing? It is at 60% now. How much should we expect this pricing -- when will this pricing happen for the 100% of the base? And second, since the decrease -- there will be a decrease in the expenses of margin and sales, what is the reasonable level to work with for the next quarters?

[Gustavo Henrique de Sousa, executive]

Thank you for your question. In terms of timing of repricing, this is very important. First, how much do we expect to have 100% of our portfolio running at new prices? This new price criteria to make it clear is new prices starting as of October last year, that's when Cielo showed that it was more aggressive in its price policy to fight that loss of market share that it experienced in 2017 and 2018. Today, 60% of our portfolio has been repriced. I believe that until the first half of next year, we'll have 100%. So when we look at the price of the portfolio that has not been repriced, and the price at the end of origination of new clients, the delta is not so big. Let's just isolate some factors. First, this comment of the base, which is a base with prices that date 2 period before October 2018 is in a level that's close to the origination of new customers. Now going back to the environment, prices continue to move, not as radically as we saw in the first and second quarters, but gradually moving. So in terms of change in the portfolio, we are at the final route. We are reaching the end of that, but we believe there will be a gradual reduction of price and competitiveness. As for marketing, Caffarelli will ask -- answer the question.

[Paulo Caffarelli, executive]

What happens is that our segment throughout the year experiences large changes. Each company has a different market strategy. People said, well, you didn't spend so much in the third quarter. Yes, but we can spend that in the fourth quarter. So it depends on the strategy we adopt at that moment regarding that. What is the audience we want to target? What's the type of machine we want to sell or rent? How do we want to conduct our prospecting efforts, so we had lower expenses and margin lower than expected? But in the fourth quarter, for example, we'll stress the campaign. So that's the answer. It's hard to fulfill exactly everything.

[Operator]

Next question from Daniel Vaz from Banco Santander.

[Daniel Vaz, analyst]

I have 2 questions. We've seen growth in 2-day payment increase over the amount of credit with a direct impact on revenues, how is your price policy being executed on that line? Is there any subsidies on prices? And at what level should we see that stabilized? And continuing with the company's strategy, you are readjusting the MDR for the second half, staying now at 10% of the base will be sent in the first quarter. Do you see any movement in the market regarding that? Could that result in the new price war for 2020? And so that would be more of a qualitative opinion in that case.

[Gustavo Henrique de Sousa, executive]

Thank you, Daniel, for your question. As for advanced prices, I would like to make a more qualitative comment because we do not disclose prices and policies due to competitiveness issues. There is no subsidy to the advanced rate or advance fee to any segment or modality. So rate positioning, of course, it must -- we must cover our cost of capital, but practices -- prices practice is a function of the relationship and size of clients, but we don't have any subsidies for advances. Such fees and rates as well as MDR rental prices are part of competitive movement as well. So if you compare to previous periods, these fees or rates are lower. It's hard to say where that will stabilize, but I would like it to be very clear that we have to cover our capital cost, and it should be adequate to the size of the client and the relationship they have with Cielo.

Your second question, which is also related to competitive movement of prices is the following. The competition continues. We saw that in the third quarter as well as today and something that we always say and Caffarelli mentioned in his comments that we had a strong movement. It's almost a degree or in the -- almost a -- in -- the change of prices in this. Now this is more gradual. It's not as steep a change, but it's hard to predict how this will be for next year.

[Daniel Vaz, analyst]

Okay. It's clear. Would you allow me to ask another question? The subsidy to sales of terminals of POSs, how much is that? And do you see a high churn rate or low given the subsidies?

[Unknown Executive]

Thank you for your question. The calculation we make here is the following, Daniel. As we mentioned before, the financial impact of the subsidy is that this is made when the sale of equipment happens. The churn is right. We project the average customer life useful life, which is quite conservative, of 15 months that customers will stay with us. So customers that didn't go through the churn are profitable. So in our assessment model, we say -- we speak about first year negative due to subsidy, then the second year, we come very close to the breakeven point. And as of the third year, this -- return of the strategies begins. This is a recent segment for us because what we have seen recently is a greater customer retention. The average life is better than what we had projected. The percentage of activation of our enabling of equipment is higher as well. But we made projections based on market variables because we didn't have any history of that type, but it's a model, basically, in which the first year, the profitability is consumed by subsidies. The second year, you come close to breakeven point. And it becomes profitable as of the third year.

[Daniel Vaz, analyst]

Okay. It's very clear.

Now improving services and quality of service. And once the prices have been corrected, the trend is to have more loyal customers.

[Operator]

[Operator Instructions] Next question from Mariana Taddeo from UBS.

[Mariana Taddeo, analyst]

My question is about the credit initiative that you had started last quarter. If I'm not mistaken until the end of the second quarter, BRL 40 million had been granted in credit. How is the development of that in the third quarter, a number of -- amount of credit, the rate, what is the main target of that credit?

[Unknown Executive]

Thank you for the question, Mariana. This is a product that's still running in a pilot stage. We will continue to assess that at the end of the year. We have currently close to BRL 100 million in concessions and credit granted. The average ticket of BRL 40,000, and the product is doing well. The focus of these customers are retail customers, and since it is a pilot project, I do not have a lot of information to share. What's important is that customers where we offered this credit, the acceptance was good. And at the end of the year, we'll assess the overall figures to see how the strategy will continue for 2020. But the first metrics we have are very good in terms of customer acceptance and the possibility of expanding that more significantly next year. And also, the risk, the risk level has been according to the expected metrics.

[Operator]

This concludes the Q&A session. I would now like to turn the floor over to Mr. Caffarelli for his final remarks.

[Paulo Caffarelli, executive]

Well, thank you very much for your questions, for your participation. I would like on my name on behalf of those present to say that Cielo is completely available to you. If you have any questions, our Investor Relations area is available to answer any questions you may have as well as we.

Thank you very much, and have a good afternoon.

[Operator]

The conference call of Cielo has now ended. We thank you all for attending. Have a good afternoon.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]