Valid Solucoes SA

BOVESPA:VLID3

Earnings Call Transcript 2024-Q1

[Operator]

Good evening, everyone, and welcome to our 2024 Q1 investor call for Valid Soluções as our and Treasury head. Before we begin our presentation, some disclaimers. This meeting is being recorded. The presentation is also being translated simultaneously into English. The slide deck is going to be available on our website for Investor Relations, and the broadcast will be recorded and that it is going to be available there. After the presentation, we have a Q&A session. You can send your questions at any time during the broadcast do that because that makes it easier for us to answer your questions. You just need to use the chat to sending your questions. And it's important to mention that any statements done here regarding our business prospects, projections and operating and financial results, our beliefs and assumptions of our management and also available information. Future forward-looking statements not reflect our beliefs and depend on circumstances that may or not come true. Investors should understand that industry's economic situation and other operating elements can lead to results that are considerably different from the ones presented here. Ilson Bressan is going to be with us and Rafael Ziggiatti the CFO will be here with us as well. So I'll turn it over to Mr. Bressan. Welcome, Mr. Bressan.

[Ilson Bressan, executive]

Good morning or love good morning, everyone, who were in our call this morning. On behalf of our management, I'd like to thank you for your interest in our presentation. And please do send in your questions. Also, I'd like to thank our managers and employees, especially at the beginning of a new mandate. Thank you for advanced support for this moment. We are focused on consolidating our achievements and accelerating innovation so as to have sustainable growth in the future. So let's have a look at our figures. We ended Q1 with a revenue of BRL 484 million. So it's an 8% reduction when compared to the same period last year. This decrease is because of the vertical mobile performance looking at sales performance. Valid mobile had BRL 57 million decrease in net income in last year when compared to the first Q. So that alone would be enough for our total sales to be bigger than that's of 2023 because the difference is BRL 45 million. Valid ID grew 12%, meaning BRL 94 million, which is BRL 21 million more than the same period 2022 ValiD Pay had a 5% decrease. Valid Mobile, again, goes to the normal volume and margins after the ship shortage cycle. But this quarter, specifically, we were in the lower performance limit because the market is oversupplied with chips and is postponing its POs. Later on, we will give you more details on each vertical. In terms of EBITDA, we had BRL 116 million in Q1. It is 19% decrease year-over-year, and the margin is 24%. Just like we saw in sales, the mobile -- the vertical mobile had greater impact to BRL 29 million less than the first quarter 2023. And that's why we have this difference in EBITDA performance year-over-year. In terms of net income, there was BRL 148 million of net income in Q1. This is the largest net income for a quarter in our history, it's EPS of BRL 1.83. So this is a stunning result had a positive impact because of the sale of the minority stake held in the Cubic Telecom, with the IoT company. And that transaction was finalized early in March. And on April 30, we paid extraordinary dividends of BRL 0.30 per stock according to our assembly. So it means that we wanted to focus on one of the pillars we have with our relationship with the market, which is regular and constant payments to shareholders. We keep this policy this year. We're going to use the maximum limit that is permitted by the legislation. Also, the Cubic sale meant an important cash effect and that's why we have a net cash for the first time since its IPO. Our cash availability is BRL 70 million of debt. Later on, we will give you more details about our cash transactions in terms of operating inflow, investment flow and stake sales. We will keep our leverage policy, control, trying to reduce costs, our debt costs and to lengthen our payment terms. The benefit is partial, but is already seen in our financials. Also, I would like to point out that we had our exchange offer for our debentures with the participation of more than 97% of the venture holders and also we lengthen our bioletral terms with Banco do Brasil. And I'll turn it over to Rafael Ziggiatti, our CFO, will give you more details about our financials. Over to you.

[Rafael Ziggiatti, executive]

Thank you, Bressan, and good morning, everyone, in this call. We see here our consolidated figures of year-over-year, representing the results that have been mentioned and the mobile vertical impact, which is a recovery opportunity in Q2 2024. Later on, Olavo will give you more details about the vertical dynamics. And in Q1, we had BRL 160 billion EBITDA and BRL 148 million net income. In the same period, we have a BRL 30 million negative results and BRL 20 million because of exchange rate effect on our assets and liabilities account in Nigeria and Argentina. And also because we've removed resources from Argentina in February and March, the bulk real. We used those operations to -- mostly to intergroup deals. These operations, just for you to be able to have access to FX markets, you need to sell assets below par, and that's why we have this in cost. And it does make sense given the benefit of not paying the currency tax and the risk of greater FX losses. Looking at the net between financial revenue and interest expenses, the result was negative in BRL 1 million. In the first Q 2023, the same account was negative in BRL 15 million. According to what was mentioned before, when trying to have balanced leverage for the company, the negative results of financial results should be reduced significantly. There was a BRL 24 million depreciation and amortization expense. This is aligned with what we saw in the previous Qs and also BRL 24 million in taxes, which represent a 14% tax rate, which is lower because of the impact of -- most of the results came from our sale of Cubic stake, which was registered in Spain and tax rates are much lower than in Brazil. As to the others line, we have a breakdown into 2 lines. One is BRL 4 million, which includes a number of expenses of the company. And the other one is BRL 112 million, which is the net effect of the sale of Cubic stake, which was BRL 137 million added to the decrease in stake in VMC, which was negative in BRL 25 million. With all of these transactions, we achieved a net income of BRL 148 million in Q1. Now let's have a look at some of our financial indicators very quickly. Looking at the 12-month window, Valid had EBITDA of BRL 529 million and net income of BRL 202 million. In terms of ROIC, we see that there was a slight decrease compared to 2023 year end, but the indicator is above the 20% level. And ROE figures show that there was an increase to 1%. In our latest presentation, we pointed out the important conversion of EBITDA into cash in 2023. With indicator coming to close to 95%. On BRL 619 million cash, which was year-end 2023 million, that was operating expenses of BRL 13 million. And then in the first quarter, we kept the CapEx of BRL 13 million as well. And the financial result in the cash flow was negative in BRL 12 million. It's a BRL 19 million reduction in our gross debt. The FX effect had a positive effect of BRL 14 million in Q1, as we saw before, the most important contribution in cash was because of the sales in the Cubic Sumbernado do Campo, together BRL 178 million in asset sales. And so that's BRL 755 million in cash. Cash conversion is one of our priorities in 2024. In our forecast, we expected that working capital movements in terms of inventories and payables would have a negative variation early this year. When we look at the year-over-year figures comparing Q1 2024, 2023, see that Valid has the same position of receivables that we had early in 2023, which in terms of revenue. This means day worth increase. The same analysis for inventories is still more relevant because the level is BRL 27 million below of 2023. It is a 12-day improvement. And in terms of payable accounts, we had a worsening because of imports because of payment terms, they are now less favorable. But our procurement team is being negotiating better terms at every opportunity. In terms of liquidity, we said that the second and the third grapple the analysis considering hence the debenture issuing and the bilateral adjustments with Banco do Brasil, which were completed in April. Today, our net cash is BRL 17 million and only 19% of our debt will come due in the coming 12 months. More than 97% of the venture holders exchanged their position from the ninth emission issue into the 10 and also because we lengthen the terms of our bilateral operations. And therefore, we have an ability to reduce our liability costs. So that shows that we reinforce our position. And in this slide, we see our stock prices in the last 12 months. There was more than 100% improvement and that's much better than Ibovespa and small-caps index. On April 3, is we paid extraordinary dividends for 2023, $0.30 per share. In terms of liquidity, we said that Q1 ended with 8.8% trading volumes every day, which is aligned with the BRL 9 million of the last quarter 2022 and more than 200% above the volume of Q1 2023. Now turning it over to Olavo to speak about our 3 business verticals. Thank you, and I'll turn it back to Olavo.

[Olavo Vaz, executive]

Thank you, Ziggiatti. Let's have a look at the results of each one of the verticals, beginning with ID and digital government. In Q1, we issued BRL 7.2 million documents, which similar to last quarter 2023. In the first Q last year, we had a much more favorable calendar with more business day. The positive surprise in this segment is the issuing of RG documents since the beginning in 2024 -- January 2024, there's been an increase in volume. And year-over-year comparison, there was a 14% increase in issuing document. But there was a drop in drivers licenses issuing that was forecast because in 2023, there was 2 documents that had not been issued because of the pandemic. The increase in volume in ID documents. And because so the use of more polycarbonate IBDs might have a positive impact for us. I'd like to speak about some of the initiatives and services in this vertical. In the first Q 2023, the issue of documents was 77% of these verticals sales. In the first Q 2024, the services accounted for 67% of sales. Year-over-year, we see that sales of issuing were stable, showing the growth capacity for other services and products. And in Q1 2024, the sales of digital government services in Minera Parana, Rio Grande dose and Seara added to BRL 12 million, is it EBITDA of BRL 4.7 million, which represents a nearly 40% margin. The revenue of our onboarding and document rent unit, which was the FlexDock acquisition in 2023 was responsible for sales of BRL 10 million in the quarter and EBITDA of BRL 4.4 million and a 42% margin. When we add all of the services, we ended the quarter with BRL 194 million, which is a 12% increase compared to last year and EBITDA of BRL 61 million, which is an increase of 6% in the year-over-year comparison. In terms of margins, there was a slight reduction of 33% to 31% because of the volume mix when we compare the quarters. Now let's have a look at the payments vertical. After Q4 with many accounting adjustment because of hyperinflation and Maxi devaluation of the Argentinian currency, we can say that the beginning of 2024 was easier. The year-over-year comparison shows slight negative variations in revenue and EBITDA and stability in terms of volumes. I'd like to point out that the numbers that we show in the graph referring to the first Q last you include printing activities of safety and digital marking services. So these activities were discontinued or sold in the past few months. And therefore, in 2024, they are not there. When we look only at the most representative segments, that is parts in Brazil and Argentina, we see that there is a sales increase of 17% comparing year-over-year. And Argentina is a highlight. And therefore, in Q1, those revenues of BRL 191 million and EBITDA of BRL 41 million and that means a margin of 21.5%, which is aligned with what was presented in a year ago. For the next quarters this year, we believe, according to what we mentioned before that there might be some price pressure in Argentina, especially in the second half of the year. The scenario in Brazil still has a time card volume, which can increase with the interest rate reduction. Now let's have a look at the mobile vertical, the last one. It's no news for everyone that early this year would not be good for this vertical. And so the results were weak and a decrease in volumes and decrease in average price, leading to a decrease in revenues. There's a 37% decrease in revenue, which was BRL 99 million and 66% drop in EBITDA, which was BRL 14 million. A positive point here is that margin is aligned to what we had in second half of 2023, which was 15% roughly. We believe for the second Q, we might have better results because our efforts of optimized chip allocation are still in the countries where we operate. I'd like to conclude my presentation with a very quick recap of the subsequent events that we mentioned before. So early in May, we had the exchange offer of the debentures and more than 97% of our debtors exchange their debentures. Also, we extended our terms with Banco do Brasil, and we reduced spreads when compared to what we had before. And finally, on April 17, we had our assembly and approved the payment of extraordinary dividends for 2023. And on April 30, we paid $0.31 per share of dividend. We'll now turn it over to Bressan and later on, I'll be here with you for the Q&A session and you can send your questions in the platform chat. Bressan, over to you.

[Ilson Bressan, executive]

Thank you, Olavo. I'd like to conclude this 2024 Q1 call with the following messages. We saw Q1 without growth because of the mobile vertical. The vertical results were disappointing, but we can expect a recovery already in Q2. We saw in April results aligned with the budget. We had approval in a global Tier 1 customer and that with a more ECNM and OEM revenues indicated that the second half it's going to be more promising. And that added to the good behavior of IID and pay verticals this year. All in all, we have the tools that will help us show our ability to generate earnings. And then the second point is the new focus of the company in stimulating revenues through new business and innovation, which already shows to be significant. When we add revenues from digital government digital boarding and ECNM and OEM platforms, we already have revenues of more than BRL 32 million in Q1 this year, which is more than 6.5% of our total net income in products that were not available in 2022. And that ramps up every quarter we wanted to achieve in 2024, a percentage of 80% of the year's net revenue. And also wanted to give transparency to shareholders and investors in this beginning of management in April 2024 on the way that our exce's and employees are being measured assessed and giving incentives. Indicators are based on demonstrating capacity to generate earnings that sustain the company's growth to the ability to create innovation and generating net income from new businesses and greater portfolio. Three people and talent indicator and four customer satisfaction indicator. Our internal goals are there to accelerate new revenues, trying to grow based on innovation. And new growth cycles will be the consequence of making the most out of an internal opportunities and co-creating solutions together with customers and also inorganic opportunities that we are also always looking at. Finally, as to capital allocation and considering our current net cash position, we are committed to paying JCP according to the legal limit and Valid wants to go on being a company that pays back to shareholders in the present and the future. We're always looking for opportunities with them organic or inorganic to grow based on innovation. Our capital allocation policy is always going to be based on these 2 elements, present and future. So balance out shareholder payments and having a very consistent look for new and sustainable revenue generation sources. This is going to help us continue relevant in this increasingly digital future. Thank you, everyone. We can now take your questions. And back to you, Olavo.

[Olavo Vaz, executive]

[Operator Instructions]. So the first question here was asked by Pedro, and I'll ask the question to Ziggi. Congratulations on your performance. We saw the cash used in operating activities in the initial 3 months of the year. For the coming quarters, what are your expectations regarding working capital.

[Rafael Ziggiatti, executive]

Good morning, Pedro, and thank you for your question. Considering our working capital, our expectation is that it's going to improve in the coming quarters. Indeed, there was an inventory increase that was significant in Q1 that had been forecast. It was part of the plan, and we expect to use this inventory by midyear. So there will be an improvement in working capital.

[Olavo Vaz, executive]

The next question is asked by Filipe and it's addressed to Bressan. Could you give us more details on your digital government initiatives and expectations for 2024?

[Ilson Bressan, executive]

Thank you Olavo, and good morning, Filipe. So digital government is very promising for us in the ID vertical. Our efforts now focus on 2 things. First, sale pipeline conversion in addition to the projects we already have in the 4 states that we mentioned before, there's always a pipeline in another 6 states where we are in advanced negotiations to introduce our products there, be their digital ID or the digitalization of government portals and interoperable. So effort #1 is pipeline conversion. And #2, portfolio complementation. Last year, we announced the partnership with Cybernetica and then we are going to have a more complete platform with better access and customers' access to interpretability platforms, which enable us to work more closely with sites with an access to the databases of the different government department or work. So one thing is pipeline. The second thing is portfolio. So over 2024, we expect that what last year was 0 revenues, BRL 4 million, which is already BRL 12 million in Q1 this year and accounting for 6.5% of this quarter's net revenue. And we think that by the end of the year, it's going to be 8% of the ID vertical.

[Olavo Vaz, executive]

Third question asked by Fabio addressed to Ziggi. Not taking into account the sales of assets, what would have been your net income in the Q1 of 2024?

[Rafael Ziggiatti, executive]

Thank you for your question, Fabio, and good morning. The net income was BRL 146 million. If you reduce the sales of assets, which is BRL 112 million, it would be BRL 34 million of net income without the asset sale effect.

[Olavo Vaz, executive]

Pablo ask another question addressed to Bressan. Bressan, what is the strategy for operations in Argentina?

[Ilson Bressan, executive]

Argentina was an excellent surprise in our performance last year, a very positive surprise last year. When we look at the previous years, we see the 2023 Argentina performance in cards was similar to Brazil's results in terms of net income. So it's not natural that we expect that this 50-50 ratio remains in terms of net revenue. So in Argentina, we wanted to go on being the most important local player. We are absolute leaders in that market. We are a local player, which throughout the period where there was chip shortage and other economic policies before Malays administration enabled us to capture value in Argentina, which was outstanding. This year, the first half is going to perform similarly, but we see signs that volumes and average prices tend to go down both. But our strategy is, first, to defend our market share position. This is a very important point. And second, defend against effects on our balance sheet and trying to recover and increase our cash in poster operations that Ziggi mentioned will go on. And on the other hand, we are going to make sure that we are going to be managing the operation there in such a way that the performance is going to be the best possible for us. So make the most of our leadership position in that market and be careful with these 2 elements that I mentioned.

[Rafael Ziggiatti, executive]

And Fabio, just adding to what Bressan was saying, during the presentation, we mentioned that the beginning of this year in Argentina was easier when we look at exchange rates and dollar blue, which is more similar to the official exchange rates, we are less subject to devaluation effects as we saw in December, which is very negative for those who are there because you have to adjust your balance sheet considerably. But now the 2 figures are more parallel to each other. So we shouldn't see the same effects that we saw last year.

[Olavo Vaz, executive]

Now another question asked by Fabio to Ziggi similar to a previous question regarding working capital. But again, what were the reasons why you had lower cash generation in this quarter when compared to Q4 2023 to Q4 was BRL 159 million, and Q1 was a use of BRL 13 million.

[Rafael Ziggiatti, executive]

Thank you, Fabio for your question, You have to be careful with that comparison. There's different effects you must take into account when you look at Q4 and compared to Q1. Q4 2023 was very good. The EBITDA was BRL 30 million above. Q1 2024, there was a number of cases of payment that were made earlier than expected. And in Q1 this year, there was the effect, which was the opposite effect that inventory effects that I mentioned and the purchase of inventory had worsened our accounts payable indicator. Accounts receivable also were worse because in -- there was payments made earlier in Q4 2023 and payments of taxes on higher revenue that we had last year in addition to the payment of bonuses profit sharing bonuses that were made in March. So this all have an impact on our first quarter. You should compare Q1 2024 to Q1 2023, not against Q4 2023 because of seasonal effects. In Q1 2023 had nearly BRL 60 million of positive cash. So I think this would be a fair comparison. Of course, there wasn't the working capital effect back then. I hope I answered your question.

[Olavo Vaz, executive]

Gustavo Araujo, has the question to Bressan. How can your product management strategy help leverage your performance?

[Ilson Bressan, executive]

Thank you, Gustavo, for your question. There's 2 things I'd like to approach here. First is the beauty that we operate in 3 ecosystems, ID and digital government; second is payments and banking. And the third one is secure connectivity. And we have important customers in the 3 verticals, and that's helpful for us. We can manage our product portfolio in such a way that when we look at the performance of each one of the verticals, we see that the 3 ecosystems are not always synchronized in terms of going up and when everyone is going up and the 3 verticals are positive. We have outstanding results. Sometimes when the mobile vertical is recovery in the actual was the case of Q1, we can balance out our performance and still have a very good capacity to generate earnings and to grow. A second aspect of the same question, the same way that we saw that in the first 3 years, we had a turnaround of the company of its economic and financial principles. And today, we have net cash of BRL 70 million as a result of that. And from now on, we have a different focus on our mandate. We needed to have a product portfolio turnaround. We are already investing heavily in technology and product development to expand our capacity to be more connected to customers so as to coporete solutions that will grow our future revenues consistently. So there's always opportunities to enhance our products and product portfolio. In each vertical in ID, for instance, we are investing in intraperbility and the government's digital journeys and expanding offering there and also their initiatives in pay vertical. In addition to the card journey, also digital journey and information between bank and clients and starting to operate with products around the card ecosystem so as to make sure that that we can deliver more services to the end class through the bank. And also in the telecom vertical, we already have a portfolio that, as we sold in new revenues in Q1, accounting for BRL 10 million in OEM platforms. So there's the internal dynamics of each vertical that is speeding up, and we will be expanding the internal portfolio more quickly. And at the same time, we look at cross opportunities in the 3 verticals so that we can viewed on them. And then in '25, '26, '27, we will see more positive results. Just like we started investing in mobile 3 years ago. And now as of this year, in this transition from Simcard to e-SSim and OEM, we will be able to be present there very strongly in that front. So this evolution is based on this portfolio strategy within the BUs and in the cross sector activities, always trying to be the trusted player in Brazilian society, where you need platforms for our customers in the 3 ecosystems connectivity, mobility and telcos and banks and governments and wants to be always the important player to ensure integrity of all of the processes where we operate.

[Olavo Vaz, executive]

There's another question here. Asked again by Pablo but also Mattel. Are you considering any M&As in the future, considering your net cash position Fabio and Mateos are asking the question.

[Ilson Bressan, executive]

So we are always looking at M&As, always looking at opportunities in the market. So very careful and very consistently. We're always looking at opportunities for us to complement our core business and grow portfolio. When we look at the product portfolio, and I mentioned our organic capacity to grow into vertical and cross vertical. There's another element which is complementation through M&A. So we are always looking at that. We are always looking for opportunities. At this moment, there's nothing we can disclose with that. But our policy is that we are always looking for opportunities, looking for things that make sense and that will help us increase our ability to be increasingly relevant in this ecosystem where we already have an important position, and we wanted to go on being there as society becomes more and more digitalized. So in the coming months and quarters, we will update you on these initiatives. Does add into that? None of these initiatives, nothing that we've been looking at are M&As that will jeopardize our leveraging or financing capacity in any way. So I think it's important to point that out. Some cash position will remain and our M&A strategy is not going to negatively affect that.

[Olavo Vaz, executive]

Mathes asks a question, no answer. Can you give us more details on the impact of Argentina and Nigeria in your financial performance? And what do you expect in the coming quarters?

[Ilson Bressan, executive]

So these are different things actually. In Argentina, there was the impact -- financial impact because -- when we remove resources from the country using the Boreal operations, were required to sell papers below par. Service bonds are 100%, you sell them at 80% and you have the financial expenses related to that. So even with the financial expenses, as Ziggi mentioned, there is a benefit of those operations because first, you take cash out of the country. And second, you're not subject to the same taxes that are there in regular operations. So you bring cash to Brazil, Spain or Singapore and it's more beneficial. The government has been doing lots of these operations. There have been some over the year. There are always on the lookout to see if that it would make sense for us to be there in the coming ones. In the case of Nigeria, the situation is similar to Argentina, late last year the currency in Nigeria Naira devalued this year. And because of the currency devaluation, what you have to receive locally is worth less in USD, and we have to adjust our balance sheet accordingly. Going forward, as I mentioned before, we don't see a scenario of currency devaluation in Argentina. Now as to Nigeria is more difficult for you to forecast what's going to happen. But these are 2 countries where the economies are weaker and more volatile. And we try to protect ourselves as much as possible against those effects. Olavo I just wanted to add to that regarding Nigeria, specifically, we changed our sales dynamics there in Nigeria. Of course, we are exposed to the currency fluctuations. But the way we work with our local partner is that we are going to be linking our sales to USD. So that's what we can control. So we reduced our exposure to FX variations there. This is -- so we've made progress in this business sales negotiations with our customers there.

[Olavo Vaz, executive]

Eduardo Nishu asked a question here. Given your net cash position and your gas generation. How do you see the possibility of increasing your payout to more than the current 50%? What is the payout that would not affect your potential growth opportunities? Can you pay more than 100% of the profit.

[Rafael Ziggiatti, executive]

Thank you for your question, Eduardo. Everyone is asking this question all the time because, indeed, our cash position is very favorable. But our strategy is to not discuss payout more than what we committed, which is the legal limit of JCP, which is BRL 86 million of payout that we expect this year. So -- but this is something that we are always discussing and there are different strategies that we can use to sustain our growth and foster our growth. And this is what we've been focusing on mostly. Going forward, this year, we may consider changing the payout for 2024, but not now.

[Olavo Vaz, executive]

The next question is asked by Eduardo Nishio. Eduardo says that the company is being -- having a hard time growing revenues in 2 verticals. The margins are more normal. How can you grow more and sustainably, which are the most promising products? Is it digital government? Can you accelerate growth in these products?

[Ilson Bressan, executive]

Thank you, Eduardo. Ziggi answered your previous question. And I think it's connected to the second question. So when you invest organically or inorganically, you use your cash and that has only future results. So when you invest in increasing portfolio or new MVPs internally, you have revenues that will come in the future. So our policy is to be very careful and consistent in selecting the MVPs, the new opportunities and projects with our customers so as to have sustainable revenues. So we always have to balance cloud presence in the future. And in the present, you also have different payouts. And this is all part of our balance. And the why is this decision here of the management team and the Board regarding how to balance out these 2 aspects in the present and the future. But on what's most promising in terms of portfolio, well, it's clear that in the telco dynamic as we saw in Q1, we see the impact of our core business related to SIM cards, but we are very well positioned to play an important role in terms of revenue and EBITDA and this migration, this transition from Simard to e-Sim and OEM platforms. We already have representative volumes in Q1, but then we look at the adoption metrics for telcos or device manufacturers, and we have good contracts with good approvals. And as that grows mobile vertical will pick up again because the product portfolio we have today helps us to be -- we have a very good position in terms of incumbents according to independent studies. So mobile vertical in the future I can tell you that we are very well positioned, and we will go on working on that front. And the digital government front is also very promising. We've been able to convert, and we are working on our contract with [indiscernible]. So pipeline conversion will bring in new elements -- new revenue elements. Recently, we participated in a new bidding process. We haven't yet been approved and there's a process, but in terms of price, we had a win in Brazilian, where we add new functionalities and biometric validation journey. This is going to boost this digital. So it is very clear that we will have significant revenue growth in digital government with new connects and establishing connectivity with the interoperability platforms. In the payment vertical fortunately, we have the best customers and the Brazilian banking industry. We acquired a digital onboarding company, and we are going to be working hard in this for us to make it the best in the market. And so we will also acquire new customers there. So in the 3 verticals, and the 3 ecosystems, our portfolio will help us ablish greater traction this year. As we mentioned earlier, we expect the revenues of new products, products that were not there, in 2022 and were introduced in 2023, we will account for 8% of our sales by the end of this year.

[Olavo Vaz, executive]

So that brings us to the end of our Q&A session. Once again, thank you for your interest. And our IR channels are available. In case you have any questions, do get in touch with us. Thank you, and have a great day. Have a great day, everyone.