Cielo SA

BOVESPA:CIEL3

Earnings Call Analysis

Cielo Reports Strong 2023 Results, Eyes 2024

In 2023, Cielo saw significant achievements in improving customer experience, profitability, and digital transformation. Customer perception greatly improved, indicated by a historical record in the Net Promoter Score (NPS) which increased 20 points since July 2022, and a 6-point growth in the latter half of 2023. These efforts resulted in a net profit of BRL 2.1 billion, a notable increase from the initial estimate of BRL 1.7 billion. Investments into digitalization, such as the Cielo Tap and POS innovations, are ongoing and aimed at enhancing service and efficiency. Operating in alignment with its core business interests, Cielo is implementing tools like Salesforce and focusing on profitability and market share growth. Despite recent pricing changes, Cielo has not observed any negative effects and maintains positive expectations for 2024.

Strategic Shift towards Medium Businesses and Profitability Commitment

In the quest for increased market share and sustainable profitability, the company has recalibrated its focus towards medium-sized businesses within the SMB (Small and Medium-sized Business) segment, shifting away from predominantly small businesses that exhibited higher churn rates. This strategy is expected to contain the churn while driving market share gains. In addition, enhancing Net Promoter Scores (NPS) and utilizing bank partnerships for expanded distribution are key measures taken to penetrate markets with less competition and achieve better productivity.

Prepayment Products and Revenue Yield Recovery

While the company witnessed a dip in prepayment product penetration, falling from 42% to 40.8%, this was attributed to a strategic choice to understand commercial capabilities and adjust market share strategies correspondingly. The expected direction is to regain balance, emphasizing both client acquisition (hunting) and customer retention (farming), to solidify the company's performance in retail. Notably, a positive turnaround in revenue yield was observed in the last week of January, which was described as the best in the past 2.5 years, signaling an effective response to market pricing dynamics and an ongoing commitment to profitability and efficiency.

Investments in Digitalization and Improved Services

The company has embarked on significant investments to digitalize processes and enhance logistic and client service capabilities. Key initiatives include improving digital services like Cielo Tap and PIX, streamlining client onboarding, and leveraging the CRM system, aiming to reduce churn, offer a stronger value proposition, and elevate operational efficiency. These investments are expected to yield results in the second half of the year and are concentrated on clients with up to BRL 10,000 in monthly revenue, addressing the needs of smaller retail segments to strengthen market competitiveness.

Reflections on Potentially Going Private

In light of inquiries about the potential privatization of the company, executives have suggested that such a move could foster greater agility to compete with nonbank acquirers, enhancing the company’s competitive edge. While the impact of privatization on the company's strategy and shareholder approaches remains speculative, the leadership indicates that current operations will continue with the prevailing focus on market share growth, cost efficiencies, and profiting from banking synergies.

Earnings Call Transcript 2023-Q4

[Operator]

Good morning, and thank you for holding. Welcome to Cielo's conference call for the fourth quarter of 2023 results. With us here today, we have Mr. Estanislau Llobatera Bassols, Filipe Oliveira, and Daniel Diniz.

We inform you that this event is being recorded and live streamed on the Internet via the Zoom platform accessible at the address provided or with the link available on the Investor Relations website, ri.cielo.com.br. [Operator Instructions]

Before proceeding, we would like to clarify that any statements made during this teleconference regarding Cielo's business outlook, projections, operational and financial goals constitute the beliefs and assumptions of the company's management as well as information currently available to Cielo. Future considerations are not performance guarantees and involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur. Investors and analysts should understand that general conditions, industry conditions and other operational factors may affect Cielo's future results and may lead to results that materially differ from those expressed in such conditions.

Based on the presentation published on the company's IR website, this conference call is open exclusively for questions and answers, which will be preceded by a message from Mr. Estanis, CEO of the company. [Operator Instructions]

I will now pass it over to Mr. Estanis for his opening remarks.

[Estanislau Llobatera Bassols, executive]

Good morning, everyone. Thank you for being here for our conference call. Before I make my remarks about our earnings for 2023, I have some points on the material facts we filed yesterday. We received information about the decision to make a public buyback offer. About that, we'd like to inform you that all the information we received in the company are the ones in the documents that have been published. We're waiting for this topic to advance, and I'd like to emphasize that we are limited to the information published in the material facts. Any additional information will be communicated to the market properly following legislation and best practice.

Moving over to some highlights from 2023. We've had great results in 2023. We advanced in the 3 topics that we selected as priorities for the year, improving client experience, focusing on profitability, and reaching new advances in digital transformation and new products. In Customer Experience, we reached a historical record in the NPS indicator. A 20-point growth since July 2022. In the second half of 2023, NPS grew by 6 points. This was extraordinary for such a short time. Our clients have a better perception about our services, factors which are reflected in our churn that now have a downward trend. We've improved a lot. We know that there's still a lot to improve, but we are on the right track. Our goal is to position Cielo as the best-in-class in service, service quality and user experience.

To dazzle our clients will have to go beyond doing things well. We need to continue improving our solutions portfolio. PraCimaCielo is doing everything we need to accelerate our innovation agenda. In 2023, we found great results. We launched The Cielo Tap. We developed Urban Mobility Solutions, and we also brought in innovation for receivable advanced products and other improvements to our portfolio. We are investing to improve our technological book and our processes, which will improve our time to market and will allow us to launch new solutions in the payment core or in added-value financial services. So everything we're doing to improve client experience has required investments. We've been transparent with the market as we are in a relevant investment cycle, not only to improve operations, optimize processes and service quality, but also to expand our commercial team.

We've started to capture benefits from the churn and costs. We're confident that we can capture benefits in revenues and expenses, especially in the second half of the year. Even with the short-term pressure of these investments, we have been delivering consistent results. Cielo is focused on optimizing results and generating cash. We started 2023 with estimates pointing to a net profit of BRL 1.7 billion. We're reporting recurring results [ of BRL 1.5 billion. ] Net profit reached BRL 2.1 billion in 2023. Market expectations have gone up over 2023, reflecting the advances we had in the last few years, and there are challenges so that we can continue reaching new levels in value generation.

Looking towards 2024, I see important challenges. We need to take new leads in products and continue to ramp up the small and medium enterprise segment. We have to find new service levels in advance in new solutions, emphasizing integrated solutions. And we need to continue accelerating our transformation process, always keeping our commitment to profitability, results and operational efficiency.

I'm confident that we're prepared to overcome these challenges. Once again, thank you for being here. And now we can continue with the Q&A.

[Operator]

Thank you, Mr. Estanis, and now we'll begin the questions-and-answer session. The first question is from Guilherme Grespan from JPMorgan.

[Guilherme Grespan, analyst]

Hi, everyone. I have a question about the material fact that you published. Yesterday, you published a second one. I'm sure that you have discussed it with your controllers, but I'd just like to understand what the process will be from now on? About two things. First, if the tender offer price that was announced by them and by you will be adjusted based on the [indiscernible] rate? and if you have 2/3 approval in your minority shareholders' meeting? I'd just like to confirm that.

My second question is about productivity and headcount. I'd just like to go into that and how that's gone in the SMB segment? We saw that TPV went up, and SMB is still underpaying. And we've seen across the board a movement in headcount focused on SMB. That has also been announced by some of your competitors. So I'd just like to hear a little bit about what, how that has been going on in the SMB segment.

[Daniel Diniz, executive]

This is Daniel. Let me answer the first part of your question about the material facts that were published yesterday, and then Estanis will tell you a bit more about the SMB segment. So, to answer your question on price, the answer I can give you is what is in the material fact that was published yesterday. So the base price is that, and it will be deducted and adjusted based on the [ JCB ] that were announced by the company. To answer your specific question on, on the rate, I cannot answer. I don't have that information. The second point is about requirements for approval. So, we have 3 possible outcomes for this operation. The first is that -- well, there's a possibility that nothing will happen. It's natural in this kind of process. The second step is if it is approved by 1/3 of the minority shareholders, the company would remain listed, but would not have its shares negotiated in the Novo Mercado. The third possibility is that this offer can be approved by a minimum of 2/3 of the minority shareholders.

And in that situation, the company would no longer be on category A, but would be recorded in category B according to the CVM. So these are the possibilities depending on the approval of the minority shareholders.

[Guilherme Grespan, analyst]

Daniel, let me just go into that before we move on to SMB. Is there a trigger for approval? If it is approved, are all minority shareholders obligated for this...

[Daniel Diniz, executive]

In general, 95% would be the trigger, okay?

[Guilherme Grespan, analyst]

All right. That's what we thought.

[Estanislau Llobatera Bassols, executive]

Before we answer that question about SMB, I'd just like to highlight something here. First, thank you for your question. And all the answers we gave about yesterday's material fact, we'll follow the same line. So, if we could focus on that, that's better because we received this communication after the market closed. We are giving you the best answer we can according to the legal requirements. And I think the main element here is that, the company is very well known for its corporate governance. So we are following best governance practices. We received a grade 9 in [ SMB ] from [indiscernible] magazine. So we have excellent governance practices. So we follow all the different procedures required by law and so on. So we're going deeper into this topic. We are having a call -- we see, as we've always had, we have attorneys here so that we can give you the right answers about this topic. But obviously, we can only answer what we know based on what the information we have.

And this means what's in the regulations, what's in the law and what was informed yesterday. So of course, we want to answer your questions, but we're limited to what we know. Again, this only happened last night. We did as much as we could to learn about it for the last few hours, but it's still recent for all of us.

Thank you again for your question. And I think that gives us a good starting point to answer them. So to answer about the SMB segment, I'll answer it broadly if you'll allow me. In SMB, we were going in a direction that I had mentioned in my second call. The company -- let me tell you this as a story, I think it will help you to understand it. So about 1.5 years or 2 years ago, we started focusing on small businesses, and they have some very positive effects. For example, a higher revenue yield at a higher penetration, which would mean that we would have higher profitability. But these companies also have a higher churn in our operation.

Throughout last year, our intention when it comes to small and medium companies was to increase our proportion of medium businesses, larger businesses, but still in the SMB segment, but focusing on larger companies in that segment. We thought that, that would be the best way of containing a reduction that we have been seeing. And we came to an inflection point in the third or fourth quarter when it came to TPV.

So did we reach the level we'd like to be at? No, because we would like to reduce market share and transform it into a gain in market share. But what was the strategical steps that we decided to do that? The first thing is that is connected to the SMB segment is that we have to improve NPSs, processes and products because, we need to dilute the churn to continue to get clients in a healthy way. And this is [indiscernible] that advanced significantly. So that was the first one, NPS. The second element we worked on was that we have a kind of distribution that is still sort of the proportions that we should get based on our market share.

So we should have higher distribution capacity. To increase that, we made a strategical effort last year to use the two controlling banks. We saw that there was a higher productivity level by doing that, and that would give us the potential of working in markets that would have less competition because these banks are very spread across the country. So we did that. We started -- however, I'll mention some numbers here, and Filipe, Daniel and the Investor Relations team will help us with that.

We had 250 people coming in throughout the second half of last year who were working on this channel, supporting sales, ensuring that we would be able to focus on using the banks, we planned to hire 300 people on the second wave that was approved in the second half of the year. And I can tell you in advance the results we found from that led to a higher [ VPL, ] but they're still short of the potential that we still are seeking. So we still have a long way to go.

That's the reason why at the end of last year, we also reviewed the incentives contract with the banks so that they could also work on selling not only Cielo, but also Receba Rapido, which is an essential effort to make our sale easier. It makes easier to sell both products. So we believe that this change that took place at the end of last year has reflected over the first half of the year on how the banks work, and that will allow us to expand our volumes without suffering any losses in capturing smaller businesses, smaller clients. So the first, everything we did to capture medium businesses in the SMB segment, is something that we believe was correct in our current situation.

On the other hand, it's also important to improve the current situation. What can we do to do that? Well, having a 100% digital journey, having solutions that help us working in the lower part of the segment, and we've discussed this with the market, meaning the smaller part of the SMB segment. And adding capacity to work on medium-sized clients, this is essential to us. I think that will bring us some additional capacity. Of course, some of these things are short term and other things will take 6 months to a year. So that's what I can tell you for now.

[Operator]

The next question will be asked by Pedro Leduc from Itau BBA.

[Pedro Leduc, analyst]

Thank you for this call. I'm going to focus on the business at hand. So Filipe mentioned a new agreement to increase incentives for prepayment products. So we looked at the penetration of financial volume on prepayment products going down, especially in comparison to last year. I don't know if you had other institutions who might have affected you, but if you could tell us a bit more about how this works? And looking at the business as constant as it is right now, with only this incentive, given this percentage of 40.8% at the end of the last quarter, what would be the ideal level or the ideal direction throughout the year? Would it be closer to 50%? With this arrangement of incentives.

[Filipe Oliveira, executive]

Thank you for your question. So yes, I didn't mention this to answer the last question. So, the first aspect is, where are we? Well, as we saw this reduction in the 40.8%, that happened for two reasons, especially. So throughout the second half of 2023, we did more hunting than farming. So that was a decision we made. We wanted to understand our commercial capacity, and we wanted to, as we had expanded it we wanted to understand if what we did was enough or we should continue expanding them to gain in market share. So this was a trade-off that we had. But we were aware of it. So the smaller company is, the higher their need for prepayment products. They have a higher requirement for cash. So they consistently seek prepayment products.

But the opposite happens when you have bigger clients in retail. So with more traditional clients that operate with less prepayment products, with fewer prepayment products, we have clients who became our targets as we're trying to generate volume. And the consequence is that usually, our penetration in this segment is lower than what we see in larger clients. So this combination of the two factors led to this reduction from 42% penetration to 40%. Are we happy with that? No. It was a strategical movement. We knew that we had to do it in our sales effort throughout the first half of the year. And from now on, we want to balance that out. So balance hunting with farming. So this is an essential element for us. We also want to find capacity in smaller clients, as long as we have a lower churn. This is what's going to make the company's results more permanent. So with that being said, we're working with the same message that we've always had with the market. We try to focus on prepayment products, especially Receba Rapido.

[Pedro Leduc, analyst]

So what is the value expectation we have to conclude the year?

[Filipe Oliveira, executive]

Well, we can't provide a guidance because this is a variable, but the company is focusing on changing the results in retail in this area.

[Pedro Leduc, analyst]

Great, Filipe. So if I can ask you a follow-up question -- sorry, yes, Estanis, considering yielding Cielo Brazil, there was a sequential drop.

[Estanislau Llobatera Bassols, executive]

We can hear you. Can you repeat your question?

[Pedro Leduc, analyst]

Yes. So in Cielo Brazil yield that is net revenue split by TPV. If we were to imagine 2024 in this effort to recover market share, revenue will probably be drawn by, is it, will it be drawn by volume or the take rate yields looking at 2024. Are you expecting more volume or yield?

[Estanislau Llobatera Bassols, executive]

Leduc, this is Filipe. So yes, there was a seasonal drop in comparison to the previous quarter. There's the -- reason for that, the mix between credit and debit. There's also a seasonal change at the end of the year with major accounts. So we usually see that during the Black Friday week. There is that change in mix that was mentioned by Estanis. We tried to find bigger clients that have a different level of churn and that led to a reduction in yield at first, but not in the profitability for the company long term. So, if we look ahead, one of the points that we also saw in the last 6 months was a pressure on price. We believe that if we didn't have that, we would have higher volumes. Our conclusion is that churn is low, so this is positive for the market. As we mentioned in our presentation, the last week of January, our revenue yield has increased in comparison to the fourth quarter.

So, this is the message that we have told the market that it would make sense for it to be more controlled when it comes to price. Just to add to that, of course, we don't give a guidance. And I'd just like to say, the yield in the last week of January has been the best in the last 2.5 years in yield. And it demonstrates what Filipe said that our commitment to profitability and efficiency continues to be there. So we're adding a capacity for a profitable volume, especially in retail, which would make for a good strategy for the company.

[Pedro Leduc, analyst]

Great. Thank you very much, and congratulations regardless of the result of this event. I think you're very transparent here. So I hope that you'll do well in the next chapters.

[Estanislau Llobatera Bassols, executive]

Thank you, Leduc.

[Operator]

The next question will be asked by Antonio Ruette from Bank of America.

[Antonio Gregorin Ruette, analyst]

I have two. The first one is about costs. If you could tell us a bit more about investments as well. Estanis mentioned that we'll probably see some results for these investments in the second half of the year, especially revenues and costs. So if you could tell us a bit more about that. The return on these investments? And also TPV, we've talked about this, but if you could give us some more color on what size company are we talking about? You're focusing on SMB, but who are they? How big are they? And if you can tell us a bit more about your competition in these different segments.

[Estanislau Llobatera Bassols, executive]

Okay. So let me start with your first question. So, thank you. We've been making significant investments to make our processes more digital and automatic. So throughout last year, especially, we improved our capacity to do logistics and servicing clients significantly. But we still have an opportunity, especially when we look at client pyramid to increase digitalization, improve the onboarding process and ensure that we have digital services, making POS more material. So with Cielo Tap, which works with smartphones, the products that we have with PIX allow us to work with smaller retailers who might not have as much access to POSs. So this is a significant investment that we're working on and it will have effects on all segments because not only will it improve our performance in churn but it will also have a better value proposition and improve our performance and costs.

But this takes some time to develop. So it's not something that will be happening in the first quarter. But, it will happen throughout the year. Still on investments. We're working to make our clients' onboarding journey, especially in comparison to partner banks to be more automatic and have less friction. So we're working to keep this short so that we can continue to expand our commercial strengths. There are several changes in systems that are enablers for new products to be lodged quickly. And they're all ongoing. I'll mention a few just to give you some examples. One of the changes that we are implementing is the market CRM system. So we're consolidating a number of other things, and we announced them in the recent past. So we're implementing Salesforce for the next months and so on.

On the other hand, we're trying to consolidate all of our databases and our registration process that will allow us to launch products faster and more focused on what the market wants. Improvements in PIX are significant and important. So we're doing that in capturing our clients. We improved our products and usability, but we still haven't concluded that. So these are some investments that we're making, and all of them help us to capture clients and also churn. And we believe that, that's the most profitable thing we can do to affect the company's results. You had also asked about segments or segmentation. When we're talking about smaller retail clients, we're referring to clients who have under BRL 10,000 in revenue -- monthly revenue.

So, this is split into a few other subsegments based on client size and their use of products. So we haven't disclosed this to the market. We haven't told you how we split this, but what I can tell you is that with smaller clients, under 10,000, you know when an entrepreneur becomes a retailer and when they become a big account. It's very similar to what is done elsewhere. There are clients who use e-commerce and digitalization at a higher proportion. We have clients who advance reimbursement, and we have traditional clients that work with less prepayment products. So we have a few quadrants, and we're organizing ourselves to service them differently as we have a broader range in our sales channels.

[Filipe Oliveira, executive]

Just one final point to add to Estanis' answer considering costs and investments. There is some evidence that most of our investments have given us positive returns. When we look at the reported costs normalized according to card brand, we've seen significant drops in the company's costs. I think that's only the beginning and what we're delivering new and more sophisticated operational abilities and the company will continue to become more operationally efficient.

[Operator]

The next question will be asked by Kaio Prato from UBS.

[Kaio Penso Da Prato, analyst]

Good morning, everyone. I have a couple of questions actually. The first is Estanis has mentioned the first answer about the first wave. And I'd just like to ask about the third wave. I understand that, this was short of what you expected, and I'm just wondering what you're expecting from the third wave if we'll have anything that will change the strategy? And my second question is a follow-up about your yield. We saw an increase in the last week of January. I understand that there's a seasonal pattern that there's a change in mix. But I'd just like to know if there was any price effect, if you made any adjustments after December. What's the competitive environment when it comes to price?

[Estanislau Llobatera Bassols, executive]

I'll start by talking about the third wave. So we split this into three waves for a couple of reasons. First to make sure that we would have, the ability of going to the next wave whenever we saw a positive [ BPL ] from the previous wave. And the second one was to be able to understand if we would have the capacity of absorbing that increase in sales force and also how the portfolios would be adjusted. Right now, what seems more cautious and correct would be to continue measuring just as we had the first wave, I mean throughout the first wave, we measured everything before we launch the second wave. And we're going to do the same thing for the third wave. So we want to ensure that we have good processes, we're improving them and that all the investments that we're making in automation an improvement and synergy added to incentives will generate results.

So we understand if the third wave should be partial, should be expanded or should not happen. So there is a relevant thing I need to mention about, in the company, although we published this material fact very recently, yesterday, is that the operation will continue as it always has. So I don't see any decision. I mean, no decision is being made that doesn't follow the current business's interest, which is increasing our capacity of gaining share in retail and major accounts, continuing our profitability pattern, having synergy with banks. All of this will continue because the company needs to continue operating. So nothing will change that in the second wave. Quite contrary, the company will continue operating in the same fashion.

[Filipe Oliveira, executive]

About yield, you're correct. There were some changes in price, and this has been mentioned to the market. We're trying to find the optimal point and we so far have not seen any adverse effects. Everything is going according to plan. But we see that they are a little bit more one-off than last year.

[Kaio Penso Da Prato, analyst]

Great, and Estanis briefly about the third wave. Currently, is it on hold? Or are you still concluding the second wave? Just so I understand.

[Estanislau Llobatera Bassols, executive]

We're continuing with the second wave. So it's still underway. It will continue -- it will finish at the end of the first quarter and the beginning of the second. And from my first call, I've always said that the term for our sellers performance to reach the top, especially the ones that work with a more executive area usually takes about 6 months. So we're looking at the best performing companies that started in the second half of last year, we're still assessing and accelerating this growth curve, training them, and we're going to do this, for those that are starting at the first and second quarters of this year, but it is continuing, yes.

[Operator]

Ladies and gentlemen, we will now have questions in English. The next question Mr. Tito Labarta of Goldman Sachs.

[Daer Labarta, analyst]

One question on the potential privatization. Just thinking about it from the competitive environment in acquiring. Do you think potentially being a private company could position you better to compete with some of the other sort of nonbank acquirers? I mean we saw, you had good TPV growth in the quarter, some of that was seasonality, but -- and pricing seems to be stable. But just how do you think about your ability to be nimble potentially as a private company versus being publicly traded? Does that, would that change anything in your strategy and how you're controlling shareholders could approach the business?

[Estanislau Llobatera Bassols, executive]

Thank you, Tito. Nice hearing from you, especially. I will split my answer into two parts. The first one, the current strategy is not going to pass through any kind of change. We do believe that what we are pursuing is what we need for the acquiring company that we have right now. But what you have mentioned, yes, given that we will be a private company with 2 controllers that our banks possibly can open new avenues of growth for the company in terms of products or in terms of easy processes to incentivize the sales force and some others. We do believe that we are doing the best efforts that we can to have the same results with the current operational mode of the company. So we are doing the best proxies. But yes, it's better to do something more direct than proxies.

But given this, this answer, what I can say straightforward is I cannot see any kind of change in what we are doing for the next 6 to -- 6 months to 1 year. So because everything that we have been working, especially in terms of technology, products, processes, and sales force, it's what we need as a company. So I almost would say that we are doing a turnaround in operational terms. And so far, we have been successful jumping to endpoints in NPS, it's a good measure that we have been successful. But being successful, it's not enough, what we have seen is we need to have another jump. That's why we'll be working this year to achieve it.

[Operator]

The next question, Mr. Jorge Kuri of Morgan Stanley.

[Jorge Kuri, analyst]

I wanted to ask if you can help us understand how Cateno and Cielo Brazil are integrated? To what extent they are fully integrated, to what extent they shared technology, salespeople, back office, how difficult given the level of integration, whether -- how difficult would it be to split the company into, particularly on the technology side? If you can help us understand how Cateno and Cielo are or not integrated technologically? That's what I'm trying to understand.

[Estanislau Llobatera Bassols, executive]

Thanks for your question. About Cateno, I do believe that Cateno is one of the most smart -- the smartest diversification approach that the company has had in our market. What you could see is when we had any positive movement coming from interchange, would affecting sell or to be the opposite in Cateno and the opposite when we had an increase in the interchange it benefits Cateno instead of benefits Cielo, to give you one example. So the diversification is working very well. The results from Cateno is being almost like a clock growing constantly during the last quarters in the last few years. But having said that, we don't have any operational synergies with Cateno.

When I think about the acquiring business is separated from Cateno, we operate it separately, and we do believe that it was an investment opportunity and nothing else. I don't know if, Filipe, would like to add something.

[Filipe Oliveira, executive]

No, I think it's perfect.

[Jorge Kuri, analyst]

Great. So I don't want to put words in your mouth, but basically, it will be very easy to split the companies into because they're not really integrated. It's just two different divisions under one -- running separately under one name, that's right?

[Estanislau Llobatera Bassols, executive]

Yes. There is a low level of integration. So hypothetically, you can be correct.

[Operator]

The next question of Mr. Neha Agarwala from HSBC.

[Neha Agarwala, analyst]

Just a quick one. We saw a good turnaround in terms of volumes. Which particular segment is that driven from? We know that you losing a bit of market share in the large accounts as well as in the SMB. Has that reduced and which segment particularly you would like to highlight? And second part, just quickly on price competition. We saw more price competition in the larger accounts, where you've been more disciplined. Where are we today in terms of price competitiveness, both in large accounts and in the SMB segment?

[Filipe Oliveira, executive]

Neha, this is Filipe. I'm going to start with the second question about prices. I'm going to divide this in the 2 segments. In the large account segments, we have seen the price competition become a little bit more behaved. So that's a very good sign for the industry in our view, especially in the second semester. The first semester of 2023 was tough, it was really tough in competition, especially for the very, very large corporates. By the way, we've seen that competition and become a little bit more behaved over the -- across the year, right, especially in the second half of the year.

In the SMB arena, we haven't seen any changes over the last year. We have seen the entire market quite well behaved in prices. And I actually answer a few questions before yours. About our price strategy for SMBs. And we have seen a little bit of lowering yields on our side on the last quarter of the year. We haven't seen enough incremental TPV to make this worth it. So we have seen quite constant elasticity in this market. So it's a very good sign for the industry overall. About TPV I'm going to pass the question to Estanis.

[Estanislau Llobatera Bassols, executive]

Let me try to give you this answer in a different way from what I have answered in the first -- in the first question. When I think, about Cielo of 2 years ago, we possibly had space to improve in user experience, in products, in processes, in IT, in channels -- sales channels, in the volume of the sales force and all the process across the company to fulfill what we needed in the commercialization process.

I do believe that in terms of UX products and processes, we have improved a lot. We still have room to improve. But in terms of channels, especially digital channels, in terms of sales force, especially volume of sales force in terms of process, especially the process to manage this new sales force. I do believe that we still have room and working as we are planning for this year.

I do believe that in the second half, we will see different results coming from the share in small and medium businesses.

[Operator]

This concludes the questions-and-answer session. We will now hand it over to Mr. Estanis, who will make his closing remarks.

[Estanislau Llobatera Bassols, executive]

Thank you, everyone. Thank you for your questions. Again, we have had record high revenues, the best portfolio in the company, a cash base of over BRL 1 billion and the second consecutive quarter on -- with growth. So we have been reaping the results from the efforts we made in the previous years. The company will continue to focus on doing this throughout the year, and I think this is the spirit of our entire team, everyone has been doing a great job.

[Operator]

This concludes Cielo's conference call. Thank you for listening, and have a great day.

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