Positivo Tecnologia SA

BOVESPA:POSI3

Earnings Call Transcript 2022-Q4

[Rafaella Nolli, executive]

Good morning, everyone. Welcome to Positivo Tecnologia Q4 and 2022 Earnings Video Conference Call. Here with me today Helium Rotenberg, our Founder and Company CEO; Caio Goncalves Moraes, CFO, and the RI; and Rodrigo Guercio, Vice President of Corporate Markets. He is [indiscernible] will share a brief presentation about our results, and then we will open for the Q&A session. In order to send us your question, just click on the Q&A icon at the bottom of your zoom bar.

Now let me turn it over to Helium, who will start the presentation.

[Helium Rotenberg, executive]

Good morning, everyone. I'm very happy to share these results with you. It demonstrates that our strategy of diversifying the company, which was implemented in 2017 has been proven right. So, when one segment is down, the other one offsets it. So -- and we have been telling ourselves, we should not depend on a single product. This is how we have worked. And today, with this very extended broad portfolio, we can share these very good results. Our revenue increases more than 47%, after 2 years growing and more than 63% growth over 3 years. Our EBITDA BRL 675 million, 97% increase and despite a high interest rate, we have BRL 306 million of net income, and that is based also on the cost of finance. In this quarter, you can see our record revenue, BRL 1.5 billion, particularly leveraged by commercial and consumers. When we talk about consumers, we are talking about end consumers and commercial, all the corporate organizations and Public Institutions. And also special projects electronic ballots that we delivered last year that accounts for 8% of our revenue. The EBITDA of BRL 242 million in the fourth quarter, a strong growth with very profitable projects in commercial segment and also 13.5% EBITDA margin in 2022. BRL 137 million net income leading us to achieve BRL 306 million in 2022, leverage ratio of 1.6x. And what we delivered in the fourth quarter was paid in the first quarter of this year. And there is an increase in indebtedness, when the company grows. But we need to control that indebtedness also over our EBITDA.

This is what we have been doing. You can see increase on the ROIC, the increase in this return, 30.8% above last year. Now, let me talk about 2023. We issued a new guidance BRL 5.5 billion to BRL 6.5 billion against BRL 5.9 billion in 2022. We do not foresee a 47% growth, but as a company, I think we have achieved -- now we're starting from there, and keep on growing. But we saw a very strong growth over the last 3 years. And our different divisions will keep on growing, but perhaps its slower now. I can say that as each division grows and not disruptive as before.

As for our business model, very clear, you can see our special projects and 18%. And we separated them to electronic ballots. So, we achieved 18% of our income coming from that and BRL 1.2 million that should be delivered this year, and part of it will be delivered still in 2023. 176,000 electronic ballots. And the contract foresees up to 220,000. So that contract may go up to BRL 1.6 billion. And we may have more ballots for 2026. So, this is a long-term project. And it's not only electronic ballots when I talk about special projects.

There are also some totems that we classified as a special project. We strive, in order to identify other special projects, and that is related to our engineering capacity, our technology capacity so that we can gain other. So called special projects that can replace electronic ballots projects. Commercial, 64%. And what does that mean? Growth of sales to private and government organizations. That means B2B. So this is [ hardware ] as a service Payment Solutions that are also providing us good results, tax services. We have also settled very good contracts also with better margins vis-a-vis transaction -- sales transactions. We also have education technology, servers and solution servers to Pégaso, the largest computer, a Petrobras tablets. And we continue with Consumer division. There was a drop after the pandemic.

Now in 2022, we saw a slight recovery, particularly regarding Notebooks. And also the Infinix smartphone that starts selling at BRL 1,300, and that's where we also see some growth. And we can see that some other areas increased more consumers accounting for 18%. In the past, it accounted for up to 50%. Now I'd like to turn it over to Guercio, so at every earnings video conference call, we'd like to invite one Vice President, so that they can address their areas. And because corporate segment was very important. Last year, we invited Guercio to talk to us about that.

[Rodrigo Teixeira, executive]

Thank you very much, Helium. Okay. So I'll try to be brief and to shed some light, I believe that Helium gave us a very important summary. He already highlighted the key points. But as for commercial, please allow me to stress some points. So the diversification of our client portfolio. When you talk about different types of sectors education, health, finance, amongst many others. These are the sectors that we approach in a more structured way. And I'm firmly convinced that also contributed to our success. We examine our performance, we were able to persevere and grow.

Another important point is the expansion of our portfolio, considering or targeting rather than B2B client. And our portfolio of services also supporting this demand of this specific group that are now being broadly used, i.e., hybrid work. And this is how we see and provide services to companies that are operating under hybrid mode. Another point I'd like to highlight is the diversification of business just as mentioned by Helium before. It gives us the opportunity to increase our revenue at the same client going beyond the device, beyond the hardware that we traditionally sell. So, it has been already properly demonstrated that we can increase our revenue and also achieving healthier margins.

As for different channels, I'd like to highlight that because of that portfolio diversification, our partners find us more appealing, and that allows us to also gain more partners. So, we were able to gain more than 500 new partners all over the country, and they also support us in selling our products in other parts. And besides, what Helium already mentioned about the solutions, so high-performance solutions to the oil and gas sector and also [indiscernible] we are very skilled and very capable of providing that. We also ran a pilot -- and today, this is used at the clinical teaching hospital, which is a means for them to run some remote imaging studies, and we expect to expand that to other segments.

Also the launch of PSS Connect, which is a project for partners, for partners that require digital transformation projects and also the unit of digital transformation in order to support our clients to navigate in this continuously changing world with the use of technology. So going over IoT, 5G, data center and related services. As for services, keep on diversifying our portfolio in order to support our clients so that they can work under hybrid working mode. And obviously, solutions that require full outsourcing. As for Payment Solutions, we keep on growing in this segment, too, just as Helium mentioned, because of our engineering capacity, technology capacity. And this is very important to different sectors, but specifically to Payment Solutions. And now we have gained a 3 [ major ] acquirers in Brazil, and that is directly related to how we work with them.

So now let me turn it over to Helium so that we can continue with the presentation.

[Helium Rotenberg, executive]

Well, 87% growth in the market of private companies. And this is a very relevant growth, and we intend to keep on growing in this path. Now let me talk to you about government organizations, those that are sold via public bids. So you can see, very important growth at BRL 2.2 billion in 2022. So you can see that we have really achieved great numbers and consistently. I'd like also to highlight education. The pandemic proved how important it is to have some type of device in the hands of students and teachers, and is still on. And we believe that this tend to stay. So the importance of digital inclusion of students accounting public schools as well as of their teachers. And what we see is that, state and municipal secretariats of education are buying these devices. And our presence is very strong. Today, before yesterday, we participated in a request for proposal for thousands of tablets in the state of Ceará, 65,000 for the state of Rio Grande do Sul. So major bids in quantity and amount. So just to give you an idea, the opportunity is out there, and we are very well positioned. Our very broad portfolio of products allows us to work, and to present our quotes for these bids.

So we have a very good positioning in order to participate in these public tenders. 59% of the business in which we participate in, and we have been participating in public bids for many years. So we prepare our product and then we present our tender. And you can see that the pipeline is very strong in 2022 that accounted for BRL 7.2 billion and the BRL 5.7 billion, a slight drop, but that just show that we intend to work on this segment, this year. So we have already issued BRL 1.2 billion in contracts that have already been signed that bid that we won last year, and this year. And the results in the pipeline of BRL 5.7 billion in January of 2023.

As for Consumer, this segment was impacted all over the world in Brazil to everybody bought a computer during the pandemic, but last year, we saw this drop because those computers were still being used [indiscernible] will replace that new 1 in 3 to 5 years. So in 2023, we see already an increase in sales of computers, but we believe that -- the sales in this segment was even higher before compared to what we had before the pandemic in 2019. But we -- that is related to replacing the old ones.

As far as smartphones, particularly the entry smartphone was also strongly affected. Smartphones become or present rather more features and the entry smartphones, we see this drop. And this is a drop we see in general, but particularly in the entry smartphones. And besides that drop, there was also another fact that happened in Brazil, the increase in interest rates and retailers, the large retailers and small retailers. They decreased their inventory levels because of the finance costs. So, we can see that there was a decrease in inventory to -- from 100 days to 60 to 70 days of inventory. So we missed 1 month of sales over 1 year.

Now we are going back to normal levels, and we expect to have sales under constant levels. Let's talk about Infinix. Infinix sales increases month after month, but we know, there is a large market. So from BRL 900 to BRL 3,500. That accounts for 75% of the total market. So we have presence in this range. Infinix is very well accepted by consumers, all reports coming from specialized media are very positive. Failure rate is very, very small, excellent camera, excellent quality, and we have the good, the right entry price. And that allows us also to increase [indiscernible] 62,000 points of sales. As for smart homes, we have also launched products with increased value added, such as the robot vacuum and smart lockers. We have already more than 900,000 users enrolled registered in our app. And their assessment is very good, 4.8 out of 5. So smart homes, is also another segment that is providing us with good results.

Now I'd like to turn it over to Caio. Caio is going to give us more details about finance.

[Caio Moraes, executive]

Thank you, Helium. So, let me start with gross revenue. That has already been addressed, but I find interesting to say that in 2022, we saw increased sales for corporate our commercial B2B. And that allows us also to see recurrent revenue. We can also see increase in servers, both in recurring revenue and also high performance. POS 200% increase with new acquirers. Today, we operate with 3 major acquirers and sub-acquirers has 190% increase and when we consider everything we saw [indiscernible] with new corporate contracts. As for government organizations, 76% year-over-year with a very good mix of clients. And that offset the drop in consumers 43% and even within that in Consumer, Infinix presented the strong growth, meeting our expectations.

In the fourth quarter, HaaS and services, BRL 92 million and for project special projects, also very strong revenue coming from that area. EBITDA, margin EBITDA. Because of this strong revenue coming from commercial, we see good margins. So you can see continuous EBITDA growth. You can see BRL 675 million, a record and a margin also 13.5% margin. And as for the fourth quarter, because of public projects, our margin was very healthy, 19.1% against 8.6% in 2021.

As for our net income, Helium already mentioned, another record BRL 306 million, very import (sic) important growth. And you can see an increase by 51%. And you can see that -- you can see how net income also increased. And there was an increase in finance cost because of increased indebtedness related to our growth, we need to increase our indebtedness in order to grow.

So that's related to growth growing with profitability. So from BRL 540 million to BRL 1.1 billion. This is our indebtedness and also the SELIC rate that went from 4.4% to 12.4% in 2022. And there is also the impact of the bankruptcy of a large retailer. But despite of that, our net income was up 6.1% in 2022 and 10.8% in the fourth quarter, compared to the previous year.

Now let's talk about ROIC indebtedness. It's very important to address working capital. Since the third quarter, we have been mentioning that we saw a decrease in our inventory levels. And that's true. There was a decrease in more than BRL 300 million in inventory. And, we also had also a decrease in more expensive inventory for consumers. And then, we replace inventory for accounts receivable. So we sold a great deal of many projects, particularly in December. The good news is that part of that sales in large projects was already paid in the first month of 2023. That allows us to decrease our net indebtedness in the first quarter of 2023. More still about indebtedness. I mentioned that we increased in debt as [indiscernible] our growth, but this is under control. Most of them in the long term, 57%, very good diversification of instruments. And also you can see our ratio of 1.6% of net indebtedness over EBITDA, by keeping this growth in corporate -- in commercial and also strong presence in Public Institutions. And also the cycle of capital, I am sure that our indebtedness will allows us to keep leverage close to the current ratio.

Now I'd like to turn it over to Helium again, so that he can talk about guidance for 2023.

[Helium Rotenberg, executive]

Okay, our guidance, BRL 5.5 billion to BRL 6.5 billion for 2023 against BRL 5.9 million in 2022. That number is given because of the strong sales to [indiscernible] also growth in tax services with [indiscernible] is margins also rentals, leases and also Payment Solutions. In the past, we were presenting 3 major acquirers and today we're not present only in 1 acquirer, but we can foresee growth in this segment. Also a very broad operating capacity with 5 factories, our offices in Asia. And all the structure to support our growth. So very consistent corporate sales. As for government organizations, we have already sold the BRL 1.2 billion of revenue for 2022. So we may have levels that are slightly below last year. As for future pipeline BRL 5.7 billion in January of 2023. As for special projects, we have a contract that accounts for BRL 1.2 billion, and we need now to say how much of that will be actually paid in 2023, or so. And that's where consumers -- there is an indication that we will see better results, not at the level of 2022, but increasing computers, especially and also is stronger growth of Infinix, more than last year.

So this is what makes us believe in this guidance, indicating the possibility of growing year-over-year. The only thing I'd like to highlight about the guidance is that there will be a swap coming from the first to the second half of the year. Based on this large projects, we believe that this will be actually billed in the second half. For example, for electronic ballots because we need to receive the parts and then assemble them, and also for other projects, it seems that we will build them the clients in the second half.

So we foresee stronger, better results in the third and fourth quarter of 2022. This is our guidance for 2023. Well, this is what we had to share with you. We are very happy. I feel really good for being able to share such results, and to know, that we got the right strategy, the diversification strategy. So, I'm very happy to be here, to share these results with you. And I'm very happy to have been the leader of this company and to support the company in promoting this portfolio diversification. So this vision that will take the company to another level, a more profitable company, not only today, but also for the future. Thank you very much.

[Rafaella Nolli, executive]

Thank you, Helium. Thank you, Caio. So now let's start our Q&A session. Once again, in order to send us your question, you can found them by using the Q&A icon, or by using the same icon. Just let us know that you want to ask your question live and we will have your mic open. We do have some questions. First, from Luca Savi, he's analyst with UBS, a live question.

[Unknown Analyst]

Hello, everyone. I have a question about margins. What about margins achieved in the fourth quarter. If we were able to distinguish what came from special projects and how much came from other channels? Can you give us an idea about that breakout?

[Helium Rotenberg, executive]

I'd say that there were some more profitable projects because the price of components dropped, and they were older projects. So I'd say that we saw some increased margins in some segments compared to what we can expect for the future. We have large projects, special projects, both for commercial as well as for public government organizations in which the margin was higher than the average. And I'd say that we see healthy margins. And, as that really matches our vision for the future, if I can tell you what can happen.

[Rafaella Nolli, executive]

Next question from Marco Nardini, XP Analyst.

[Marco Nardini, analyst]

I have two. The last one is a follow-up. But first, can you please talk about negative working capital. So, we know that inventory levels decreased and the accounts receivable increase. After Caio's presentation, I understood that, that was due to special projects that you are working and that you already paid, at the beginning of 2023. But, we have this project in which the working capital scenario is not that good. So what can you do, in order to improve the working capital of the company? Can we expect this negative number to be seen over 2023. And also, I'd like to also understand the drop in fourth quarter, about this line of business, what can you tell me?

[Helium Rotenberg, executive]

I can answer the second question. Okay Marco, thank you. So you're talking about Payment Solutions, right, in that drop. Well, but what we see is constant growth. Just to remind you, we had just 1 acquirer, 1.5 years ago. That exclusivity term ended and now we are present, especially in smart Payment Solutions, Android solutions. So our value proposition is very good for this March Payment Solutions. We are presenting major acquirers, but the approval process is very long. It takes a long time for you to have it set, at different acquirers.

So now we have already done that. We are present in 5 out of the 6 major acquirers, and we should see very robust deliveries in 2023. Besides that, we are also -- we are launching a selling projects for sub-acquirers. So for small of acquirers and also directly to retailers that can buy their machines, payment machines, devices directly. So we are present in the 5 of large major acquirers, and we also have this project to reach and to increase our penetration at retailers and smaller sub-acquirers. Now just to add, in 2021, the entire POS payment led took place in the fourth quarter. So in the quarter, you can see there was a drop. But when you analyze the year, the revenue was very positive, just to add and just to add Helium's answer, as for working capital. Firstly, it's very important to say that the company's revenue increased, increased by 3x. So we came from the historic level of BRL 2 billion to BRL 6 billion. Obviously, that needs to be from debt, from debt was [indiscernible] -- and for 2023, we expect a consolidation of revenues that we obtained in 2022, but we are not going to grow 50% again, as Helium mentioned.

So this already allows us to also have a healthier working capital scenario. And also, with regard to indebtedness in the sales of the fourth quarter, that was already paid in the first quarter of 2023. We will have to fund projects in 2023, particularly projects that will take place in the second half of the year. But we are not going to grow 47%, this year. This is already -- this will already allow us to have a different approach to working capital, and also to decrease our indebtedness.

[Marco Nardini, analyst]

Thank you. It was very clear. Thank you very much.

[Rafaella Nolli, executive]

We have one more question, a live question from Alex André with SaraInvest.

[Alex André, analyst]

Kudos to further results. But I'd like to know about the mix strategy. Helium mentioned, that they can see that the company really got the approach, right, the strategy right. I'd like to ask you to please elaborate on that about the mix. We know that you also talk about tax services.

[Helium Rotenberg, executive]

Obviously, we do not want to depend on the segment, only on one segment only. That does not mean that we want to keep retail at 18%. That is an outlier because Consumer segment did not present good results. But, how are we going to work around? Well, not to stay at 18%, but not to go back to more than 45%. So somewhere between perhaps 25%, 30%. This is the right share, we believe, for consumers. And we also see an increase in commercial, corporate, private companies. And we are focusing on that segment. So, we are hiring the best talent in the market and we are also expanding out our portfolio. So that we can increase our presence in this segment where we were small and we are increasing. We are increasing our market share, and we are now present in some areas, in which we were not. That also turn positive or more coming from different solutions by the entry point computers to a very comfort [indiscernible].

[Caio Moraes, executive]

And just in answering your second question. We start with breaking fix, so by fixing maintenance providing a maintenance, So in the past, we would provide services only to our own devices within the warranty period. But I don't know why we did that [indiscernible]. Our services was only a call center. We've just provided services while that [indiscernible] equipment was under the warranty period. So, why not use that offering services after the warranty period and why not offer that kind of service to other devices from other brands -- so first the breaking fix, with that we gained no confidence, but we expanded on that.

So not only breaking fix. We are also now installing software, call consulting. We installed the Microsoft product, corporate security. So, comprehensive solution servers, networks. So we have roadmap at Positivo Tech services. And we are also increasing our competence in order to provide more services.

Guercio, would you like to add anything.

[Rodrigo Teixeira, executive]

I believe that Helium is great to summarize everything much better, than I do. I'd like just to add one more thing. Something that is very close to our -- we find opportunities to develop for example, hyperconvergence also to guide our clients for some public, private [indiscernible] they will face HaaS. So, what do they need to in order to migrate, not part of requirement do they need, what kind of support do they need. So we have developed solutions for that, and even Positivo HaaS. Very often, when we talk to our clients who wants to buy hardware and services, they also ask us a package for services. And when we add a tax services component within that offer, that we represents to our final client of [indiscernible] which company operates in a unique way, and we are very flexible and this model is based on what because the future business [ station ], how we deploy the infrastructure of the point that migrating its infrastructure without actually involving a large number of defaults. So technologies and services that we've taken to our clients considering our reach and that is certainly competitive and that's a positive HaaS. And today, we can provide this kind of services all over the country made a very large number of municipalities and that certainly unique to us. And our clients have backed together with us on the success of this kind of service.

[Rafaella Nolli, executive]

Next question with [indiscernible] Futoro. I believe he has a connection issue. So, let me move to the next question Flavio.

[Unknown Analyst]

Congratulations for the results. We invest in the company for some years. So, we underwent [indiscernible] and now we see this recovery -- we feel very proud and [indiscernible] the investors, they was very good. They are positioning other projects also. I thought that many investors were very happy with what you shared. Our only issue is about a financial result. When you think about the macroeconomic scenario and downturn, you can see that the company today has a lot of interest rate. Do you expect to decrease your net indebtedness? I have already mentioned that in the first quarter, you should repeat some accounts -- some sales. And what do you consider to be a healthy level for the company to work and also finance costs that is very important to be monitored all the time?

[Helium Rotenberg, executive]

We already addressed that little bit. Obviously, we want to reduce our finance cost, our indebtedness level. The fact that we don't need to fund working capital for [indiscernible] growth and if that happens, we know that instant growth will not be as highest, last year. So that is very important. And we already received some of us was helped and that has already improved and we [indiscernible] more positive scenario, working capital scenario that would negative last year, should be positive this year. That would also help us to reduce finance cost. So as for the investment approach, it should go down this year.

[Rafaella Nolli, executive]

Next question, live [indiscernible] with [indiscernible] Capital.

[Unknown Analyst]

Please let me know, if I am being too lengthy, but first of all congratulations for the company's results and also thank you for always having a very good RI team. You have [Indiscernible] HaaS account for 50% of new contracts. Which contacts are these? And, when you think about HaaS, how much has HaaS helped in your margins from the fourth quarter? And as for HaaS, do you -- when you talk about hardware, are you talking only about computers, or are you talking about some other pieces of equipment as your clients may need? And are you talking about new pieces of equipment, or some new release and piece of equipment that another client is just returned to you? and [indiscernible] will ask another question.

[Helium Rotenberg, executive]

Guercio, can you please talk about HaaS.

[Rodrigo Teixeira, executive]

So about HaaS, it's important for you to understand is that we do not, but only device the PCs, Notebooks, tablets today, which is common, we also [indiscernible] and which as -- and the same the service. So let's say that the customer needs to build a private cloud. So they can come to us and then we add of the input [indiscernible]. Some talk about hardware [indiscernible] and execution on that project and we provide that as a package. So, I can give you some other examples. We also promote the integration to third party products that is very common in this market. And they also promote the integration particularly in education. We also promote the integration of our platform [indiscernible], which is our software as a service. So to support learning and also deliver other products as service. So many times [indiscernible] comes to us and they asked, they want the devices, they want services. I also want, for example to have centralized [indiscernible]. They want the projectors, and I may also needs self services or programming [indiscernible] as a service. So we can now deliver a full solution. So what this [indiscernible] the clients want to have a just one vendor to provide everything. Based on that, we play a role of technology integrator. So we deliver all the solutions or services with support with a single [indiscernible] to positive. And as for HaaS, we have what we call customer success. So within services, we have a team that examines major KPIs, and they also deliver a book of indicators to these clients, just to prove how that had a positive impact on their businesses. And we established a very strong partnership, once we share these indicators. Because after that, we participate in their business. And we understand what also helped them in their management, and also in increasing their revenue. Well, I don't know, if I gave you a comprehensive now answer, but this is what we can deliver.

And last point I'd like to mention is about refurbished products. This is something that we already do. So at the end of a contract, clients usually extend that contract. And if that does not happen, we certainly also use those products in short-term contracts, or we sell them. And the last point I'd like to mention to the audience is that recently, we also launched HaaS [ aero carbon ]. So this package of products and services with 0 carbon footprint. So that's what, we are also offering to clients that acquired directly from positive, and this is a very unique initiative, pioneer initiative. So this is the third year of growth, 199% growth in this segment, so annually above BRL 200 million.

So you can see that the share is increasing, and the margin is also above the average. Because we give the client a possibility not to invest. And in our finance modeling -- we can also provide funding. We talk about interest. So that is contributing and that has been increasing. So -- but it's, in general, BRL 200 million against BRL 6 million just to give an idea on the market share. And 50% of sales of computers to mid- and large companies, just to make sure that we have everything very clear.

[Rafaella Nolli, executive]

Last question. We have another question now sent by [indiscernible] with Kenya. The company had a gross margin that is well above the previous quarters. How much of that is a recurring margin? And what should we expect of gross margin for 2023.

[Unknown Executive]

As we have already indicated, in the fourth quarter, we had a backlog of projects. And even for the quarter, with a high margin in public or government organizations and corporate. So, in order to give you a projection of recurring margin, well, but when you consider the equivalent gross margin achieved in this year. This is a number, that we can perhaps consider is a new normal level to the company. We have consolidated an increased EBITDA margin, and we believe that we can have the same performance. So for the quarter, it was a more specific scenario. But, when you consider the entire year, I think we can consider that.

[Rafaella Nolli, executive]

Last question, Ronaldo Caselli, about EBITDA margin that was -- has always been around 5%. But after 2020, it's increased and now it's around 12% to 13%, be it because of retail in 2020 or government organizations later on. Can we expect convergence of EBIT margin to historic levels. Currently, the margin of government organizations is higher. But because of competition, can we see a drop in the future years?

[Unknown Executive]

Obviously, there's always the impact of operating leverage because our expenditures did not increase the income. But we saw increasing corporate services with increased margins.

We also saw an increase in our share at government organizations. But despite the drop in Consumer segment, we were able to keep a higher margin. So for 2023, we expect to see a scenario that is similar to 2022, a strong presence in government organizations also in corporate. We may see an increase in consumers, but we should never look back. The past is not going to repeat itself, because the company portfolio has changed to the great deal.

[Rafaella Nolli, executive]

Great. So one more question. I think that this can certainly be the last one. [indiscernible] Rodriguez with [indiscernible].

[Unknown Analyst]

Congratulations for the results. About vendors external market, foreign market, there was a drop and that certainly had also a relevant impact. Can you please add some color about that?

[Helium Rotenberg, executive]

Well, let me talk about vendors in general. It's true that we saw a drop. So more payments than drop in our inventory levels. That's true. There was also a drop by BRL 300 million in inventory levels. But we still have some inventory -- and right now, we are being able to sell that in the first half of 2023 of products to consumers. Considering the scenario we had last year. But we believe that we will be able to sell in the first half of 2023, and then get to normal levels of inventory. And after that, we will be able to also buy at normal levels, too. So because of that phenomenon, we had that what we saw, but we believe we're going to be able to solve that by the end of the first half.

[Rafaella Nolli, executive]

Do we have time for one more question, or not. Okay. One more question. Leonardo Audi with TesiResearch. What do you expect considering the mix and revenue? And which segment do you expect to see positive impact or negative impact?

[Helium Rotenberg, executive]

Well, I believe I have already addressed that during the presentation, but we expect to keep special projects, we may see a decrease in public organizations, an increase in corporate and a slight increase in consumers. This is the revenue mix considering the guidance that we have just shared with you.

[Rafaella Nolli, executive]

Great, We have more questions, but unfortunately, we do not have time to answer all of them, but our IR team will answer all your questions after this video conference. So, with that, I'd like to turn it over to Helium for his final remarks.

[Helium Rotenberg, executive]

I would like to thank our audience. Thank you for your questions. Always great questions that allows us to clarify any issues. And once again, we are very happy to share these results with you today. Thank you very much. Have a good day, everyone.

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