Stoneco LTD (STNE) Q3 2022 Earnings Name Transcript

Stoneco LTD (STNE -5.73%)
Q3 2022 Earnings Name
Nov 17, 2022, 5:00 p.m. ET

Contents:

• Ready Remarks
• Questions and Solutions
• Name Individuals

Ready Remarks:

Operator

Good night, girls and gents, and thanks for standing by. Welcome to the StoneCo third quarter 2022 earnings convention name. By now, everybody ought to have entry to our earnings launch. The corporate additionally posted a presentation to associate with its name.

All supplies will be discovered on-line at traders.stone.co. All through this convention name, the corporate shall be presenting non-IFRS monetary data, together with adjusted internet earnings and adjusted internet money. These are necessary monetary measures for the corporate however should not monetary measures as outlined by IFRS. Reconciliations of the corporate’s non-IFRS monetary data to the IFRS monetary data seem in right this moment’s press launch.

Lastly, earlier than we start our formal remarks, I want to remind everybody that right this moment’s dialogue might embody forward-looking statements. These forward-looking statements should not ensures of future efficiency, and due to this fact, you shouldn’t put undue reliance on them. These statements are topic to quite a few dangers and uncertainties that would trigger precise outcomes to vary materially from the corporate’s expectations. Please discuss with the forward-looking statements disclosure within the firm’s earnings press launch.

As well as, lots of the dangers concerning the enterprise are disclosed within the firm’s Kind 20-F filed with the Securities and Trade Fee, which is obtainable at www.sec.gov. I might now like to show the convention over to your host, Rafael Martins, vice chairman of finance and investor relations officer at StoneCo. Please proceed, sir.

Rafael Martins — Vice President, Finance, and Investor Relations Officer

Thanks, operator, and good night, everybody. Becoming a member of us right this moment on the decision, we’ve got our CEO, Thiago Piau; and our chief technique officer, Lia Matos. Right now, we’ll current our third-quarter 2022 outcomes, talk about some latest tendencies and supply an up to date outlook for our enterprise. I’ll now go it over to Thiago, so he can share some highlights of our efficiency.

Thiago?

Thiago Piau — Chief Govt Officer

Thanks, Rafa, and good night, everybody. This quarter, we had sturdy progress with market share positive aspects, doubled our revenue sequentially, accelerated our internet addition of shoppers, and generated sturdy liquidity with enhancing adjusted internet money. Our profitability restoration can also be gaining momentum. 5 issues that I would really like you to bear in mind about this quarter.

First, our enterprise is rising at a really sturdy tempo. Our income grew 71% yr over yr. We accelerated quarterly MSMB internet additions to achieve 2.3 million shoppers, and we accelerated our market share positive aspects in funds. Two, we noticed a constant enchancment in our profitability.

We doubled our revenue versus final quarter, with sturdy margin enchancment and an adjusted EBT of 211 million within the quarter, considerably above our steering of over 125 million. Three, our banking enterprise continues to carry out very properly. We accelerated the expansion of energetic banking shoppers and the quantity of our consumer deposits, leading to a rise within the common income per consumer. Fourth, progress in our software program enterprise exceeded 20% yr over yr, pushed by our core POS and ERP options.

The adjusted EBITDA margin on this phase elevated considerably yr over yr and was steady quarter over quarter. We count on our adjusted EBITDA margin in software program to enhance within the fourth quarter. Lastly, our enterprise continues to generate money. Our adjusted internet money steadiness grew sooner, rising by 350 million reais this quarter and 813 million yr thus far.

I’ll now go it over to Lia, who will present extra particulars about our third-quarter efficiency and strategic updates. Lia?

Lia Matos — Chief Working Officer and Chief Technique Officer

Thanks, Thiago, and good night, everybody. I might like to leap straight to Slide 6, the place we present the efficiency of our Monetary Providers phase. We’re rising at a really sturdy tempo, with income up 84% yr over yr and adjusted EBT up 70% or 111% quarter over quarter, leading to over 400 foundation factors of margin growth within the quarter. These sturdy outcomes had been pushed by TPV progress, greater monetization of shoppers, and extra effectivity in value and bills as we’ll element additional.

Shifting to Slide 7. This quarter, we reached greater than 2.3 million energetic MSMB shoppers with internet provides rising to 248,000. As we’ve got been explaining during the last two quarters, this efficiency in internet provides displays the continued optimization of our business technique to supply stone and stone merchandise for every consumer phase wants leading to constructive internet provides in each micro and SMB segments. I feel this can be a key indicator of the success we’re having in our two manufacturers and multichannel go-to-market technique.

This sturdy progress in our consumer base was the principle driver of our MSMB TPV progress. As proven on Slide 8, MSMB TPV grew 45% yr over yr to 74.7 billion reais, above our steering vary of between 73 billion and 74 billion reais. I am significantly inspired that this progress resulted in MSMB market share positive aspects of 66 foundation factors in comparison with the whole business. Our MSMB take charges elevated 11 foundation factors quarter over quarter, reaching 2.21%, primarily a results of extra repricing within the third quarter.

Shifting to Slide 9. Our banking energetic consumer base elevated 33% yr over yr, reaching 561,000 shoppers with deposits from MSMBs, greater than doubling to 2.7 billion reais. We additionally elevated the monetization on a per-client foundation with ARPAC reaching 44 reais in contrast with 39 reais final quarter. I wish to spotlight an necessary pattern in our banking enterprise that may start to take impact, particularly in 2023.

As we promote extra banking into our TON consumer base, we count on to see a major improve in our variety of accounts, whole accounts steadiness, and total banking revenues. Though the common income per consumer ought to lower as micro retailers have naturally smaller income contribution. I additionally wished to offer you a short replace on credit score. Now we have began testing our new credit score product, and Gregor, our new head of credit score, is already on board.

Our focus with the brand new credit score product is to reinforce our understanding of shoppers’ potential to pay on one hand and on the similar time, allow our shoppers to higher handle their money flows once they use our credit score options. A few of the components that we’re presently testing embody an elevated set of variables inside our credit score fashions, automated processes that makes it simpler to renegotiate the credit score, and the inclusion of our hub operations within the credit score life cycle of shoppers. We’ll begin with the working capital and the credit score card-related merchandise, however we count on to increase our portfolio to supply a broader set of merchandise sooner or later. We’ll take a conservative strategy given the credit score cycle the market is going through and count on to ramp up our credit score consumer base in 2023.

Shifting to Slide 10. I wish to remind you that during the last yr, we’ve got been repeatedly deprioritizing sub-acquired volumes due to their low profitability, however we stay targeted on platform providers. Because of this, sub-acquired volumes decreased 56%, whereas platform providers TPV grew 63% yr over yr. The online outcome was that key accounts whole TPV decreased 20% yr over yr.

We count on key accounts TPV progress to pattern upwards as soon as we’ve got rolled off extra sub-acquired volumes. Attributable to this combine shift and better prepayment costs, take charges elevated sequentially to 0.95% from 0.86% within the second quarter of 2022. I’ll now shift to software program on Slide 11. Software program revenues elevated 22% yr over yr, reaching 366 million reais.

Adjusted EBITDA greater than doubled yr over yr to 55 million reais with a margin of 15%, comparatively steady versus final quarter and roughly 830 foundation factors greater yr over yr. This quarter, software program margin was affected by nonrecurring cloud prices, which we count on to normalize within the fourth quarter of ’22. We count on our EBITDA margins to enhance within the quick time period. On Web page 12, I wish to spotlight a couple of factors on the evolution of software program.

Core POS and ERP options proceed to drive the expansion within the phase, rising income by 23% yr over yr primarily because of the improve of the variety of POS and ERP places, in addition to common ticket. Digital options returned to progress this quarter, rising revenues by 10% yr over yr, benefiting partly from the acquisition of Plugg.To, an answer that helps shoppers promote on-line via integration with marketplaces. The mixing of our monetary providers and software program merchandise continues to progress. We built-in funds and stuck acceptance in all software program verticals and Stone banking into the ERPs of 12 verticals.

Whereas we’re nonetheless evolving our go-to-market technique, I imagine that this shall be a robust differentiator in the best way we deliver monetary providers and software program to our shoppers, and we’re monitoring our progress right here very carefully. Now, I wish to go it over to Rafa, so he can talk about in additional element a few of our key monetary metrics. Rafa?

Rafael Martins — Vice President, Finance, and Investor Relations Officer

Thanks, Lia. In Slide 13, I want to spotlight our trajectory of strong progress, mixed with a robust restoration in our profitability. Our income grew 71% yr over yr to 2.5 billion reais, and our adjusted internet earnings greater than doubled sequentially to 163 million reais. As Lia talked about, our MSMB TPV grew sooner than the business, however we additionally gained market share on a consolidated TPV foundation though we proceed to deprioritize sub-acquire volumes.

Primarily based on business knowledge, our MSMB phase gained 66 foundation factors of share this quarter, and our consolidated cost enterprise, together with key accounts, gained 41 foundation factors of share. As proven in Slide 14, our adjusted EBT reached 211 million reais, 69% above our steering, representing important year-over-year and quarter-over-quarter progress. The outperformance relative to our steering was primarily pushed by better-than-expected income internet of funding prices in monetary providers together with a profitable repricing technique. In Slide 15, I will discuss our prices and bills, targeted primarily on quarter-over-quarter tendencies.

Price of providers as a share of income decreased 40 foundation factors to 26.8%. This achieve in effectivity was pushed by sturdy progress in income, which greater than offset a nominal improve of 45 million reais in value of providers within the quarter. The rise was a results of greater investments in know-how and logistics, elevated prices with cloud and knowledge middle, and depreciation and amortization. Price of providers embody upfront prices associated to acquisition of latest shoppers and regardless of sturdy progress in our consumer base, this line decreased as a share of revenues, each yr over yr and quarter over quarter.

Administrative bills as a share of income had a slight lower to 10%. Nominally, it grew 20 million reais sequentially primarily as a result of greater personnel bills. Promoting bills had a rise of round 80 foundation factors as a share of income primarily as a result of investments within the gross sales group, largely targeted on the hubs, in addition to advertising and marketing bills. Lastly, monetary bills decreased 1.4% quarter over quarter.

This was primarily as a result of a decrease and extra normalized length of receivables offered to fund the prepayment enterprise and the usage of money generated by our operations to pay down debt, lowering debt ranges from 6.8 billion reais within the second quarter to six billion reais within the third quarter. These two elements greater than offset the upper prepayment volumes and better rates of interest quarter over quarter. Along with our P&L evolution, this quarter, we continued to generate money and enhance our liquidity. Our adjusted internet money steadiness improved by round 350 million reais within the quarter, reaching 3.1 billion reais.

Within the first 9 months of 2022, adjusted internet money elevated by 813 million reais. As I simply talked about, we’ve got used money generated by our enterprise year-to-date to pay down a part of our debt given our already very sturdy money place. With that, let me flip again to Thiago, so he can remark a bit on our efficiency for the reason that IPO, discuss in regards to the latest modifications in our administration and our outlook for the fourth quarter 2022. Thiago?

Thiago Piau — Chief Govt Officer

Thanks, Rafa. This quarter, we’re finishing 4 years as a public firm. I feel that what the group has completed since then is exceptional. As proven on Slide 16, within the final 4 years, our energetic consumer base elevated tenfold, reaching 2.4 million shoppers.

Regardless of that progress, we nonetheless have solely 11% market share in funds in Brazil, and we see an addressable market of greater than 13.5 million MSMBs within the nation. So, there’s nonetheless loads of room to develop. Over that very same interval, we grew TPV by 4 occasions our income, six occasions our adjusted internet earnings by 83%. In 4 years, we have additionally created our banking enterprise from scratch and presently have over 560,000 shoppers actively utilizing our banking options.

There’s nonetheless loads to do in banking when it comes to new merchandise and options and we’ve got a giant alternative with our credit score merchandise. Whereas we’re within the early days of our monetary platform evolution, I am very excited for the way forward for this enterprise. Since 2018, we’ve got additionally advanced from having a really small presence in software program to changing into the No. 1 participant for retail workflow instruments in Brazil, reaching roughly 1.5 billion reais in annualized income.

The mixture of our monetary options and software program is a robust differentiator available in the market and places us in a novel place to supply a superior worth proposition to our shoppers. Whereas we’ve got expanded our enterprise considerably, we’ve got stored our devotion to serving shoppers with the best requirements of service. We additionally imagine that our folks and our tradition are our most dear belongings. As you’ll be able to see on Slide 17, we’ve got continued to reinforce our group to help our growth, attracting extra expertise and strengthening our firm for the following decade.

This quarter, we’re happy to welcome Andre Monteiro as our chief threat officer; and Pedro Zinner, our subsequent CEO. As we beforehand introduced, I’ll turn out to be a board member of StoneCo subsequent yr to focus my consideration on growing key strategic and monetary initiatives to drive the longer term growth of the corporate. Pedro Zinner will be a part of the manager group no later than March 31, 2023, and he’ll start working carefully with me and the administration group in a transition interval earlier than taking up the CEO position. I’ve a deep belief in Pedro, and I am excited to work with him as we proceed to evolve the enterprise.

I stay strongly dedicated to Stone as a accomplice and stay up for supporting the group on this new a part of our journey. With that stated, I wished to maneuver to our fourth-quarter outlook. Whereas the World Cup and the macroeconomic atmosphere might influence our outcomes, we proceed to count on sturdy core progress and enhancing profitability in our enterprise. We count on a complete income and earnings above 2.6 billion reais, representing a year-over-year progress above 38.8%.

For MSMB TPV, we count on volumes between 78 billion and 79 billion reais, in contrast with 74.7 billion within the third quarter. Lastly, we count on adjusted EBT of greater than 250 million reais, in contrast with 211 million for the third quarter. With that stated, operator, are you able to please open the decision as much as questions?

Questions & Solutions:

Operator

We’ll now start the question-and-answer session. [Operator instructions] And it appears to be like like our first query right here will come from Geoffrey Elliott with Autonomous. Please go forward.

Geoffrey Elliott — Autonomous Analysis — Analyst

Properly, whats up. Thanks very a lot for the decision and for taking the query. May we get a bit of bit into the TPV numbers and outlook? Possibly to start with, may you simply verify the TPV numbers that you simply report? Do they comprise PIX? And what is the contribution from PIX within the third quarter? After which fascinated with MSMB TPV progress going ahead, there’s clearly a little bit of a slowdown implied by the steering for the fourth quarter if we have a look at the year-on-year progress charge. Are you able to give us any preliminary ideas about what kind of MSMB TPV progress we needs to be anticipating in 2023?

Rafael Martins — Vice President, Finance, and Investor Relations Officer

Thanks, Geoffrey. Rafael right here. Thanks for the query. I’ll begin the reply, after which I’ll transfer it to Lia to enhance the reply.

So, concerning the second a part of your query of the MSMB TPV, as we’ve got talked about in our launch, our steering does have some adverse influence from the World Cup between 2 billion and three billion reais. And I feel that in the event you have a look at a year-over-year perspective, final yr, within the fourth quarter, we had a really sturdy comp as we grew TPV by 87%. So, it is pure to see that slowdown that you simply talked about. Trying forward, we count on that the expansion in 2023 ought to stabilize at the next degree than within the fourth quarter as we’ll proceed to steadiness progress and profitability and don’t anticipate additional headwinds such because the World Cup.

So, I feel that’s, trying quarter over quarter, we proceed to see continued progress in our MSMB TPV. Lia, do you wish to add?

Lia Matos — Chief Working Officer and Chief Technique Officer

Yeah. Simply complementing on the query associated to PIX, Geoffrey. So, this quantity doesn’t comprise PIX. And just some phrases about large tendencies inside our base, the — we see two major teams once we discuss PIX.

First is the PIX substitute wire transfers, which we don’t monetize. And second is PIX that we see as a cost methodology as an acceptance methodology, which will be reconciled and is built-in to the POS, and this mode of PIX we do monetize. We see it gaining important traction in our base. It is rising loads.

And when it comes to monetization, it is roughly according to debit internet MDRs. It is nonetheless small in comparison with total bank card TPV, however we see it gaining a number of traction.

Geoffrey Elliott — Autonomous Analysis — Analyst

Nice. Thanks very a lot.

Operator

Thanks. And our subsequent query will come from Josh Siegler with Cantor Fitzgerald. Please go forward.

Josh Siegler — Cantor Fitzgerald — Analyst

Sure. Hello. Good afternoon. Thanks for taking my query.

I might love to begin by diving a bit of deeper onto what you are seeing within the aggressive panorama, particularly for MSMB. I am curious in the event you may present some extra shade on the drivers behind your market share positive aspects this quarter whereas all the business continues to expertise greater take charges. Thanks.

Thiago Piau — Chief Govt Officer

Josh, Thiago right here. Thanks very a lot in your query. We see no large modifications right here when it comes to competitors from what we stated within the earlier quarters. We see that the market is far more rational, and the business nonetheless adjusted costs within the third quarter, given the extent of the volatility in rates of interest.

We proceed to be very disciplined when it comes to making pricing selections primarily based on minimal unit financial hurdles, and we’re all the time balancing progress and profitability. I feel that over this yr, we’ve got constructed new distribution channels. Now we have entry in new markets just like the micro service provider phase, and we’re targeted on enhancing our pace of progress within the MSMB. So, I feel that the mix of focusing ourselves is on creating extra distribution channels and having the self-discipline to create the minimal return hurdle in the best way that we allocate capital towards progress has produced these outcomes.

And when it comes to competitors, I feel it is extra of the identical, however the business is being very rational and being attentive to rates of interest volatility and adjusting costs as I feel that occurred final quarter.

Josh Siegler — Cantor Fitzgerald — Analyst

Understood. That is very useful. Thanks. And the way are you fascinated with the M&A atmosphere proper now in Brazil, particularly within the software program vertical? Thanks.

Thiago Piau — Chief Govt Officer

Josh, Thiago right here again once more. I feel that when it comes to software program, we’ve got alternatives when it comes to the core POS and ERP answer in new verticals. However we expect that valuations nonetheless have to regulate on this new rate of interest atmosphere. So as to produce returns, we expect that we nonetheless have to attend for valuations to regulate.

And whereas we’re observing the market, we’re targeted on our natural evolution. So, mainly, the expansion that you simply noticed this quarter was primarily based on natural execution. So, we’ll hold paying consideration, however we nonetheless need to see valuations adjusting higher right here in Brazil.

Josh Siegler — Cantor Fitzgerald — Analyst

Obtained it. Thanks for answering my query.

Thiago Piau — Chief Govt Officer

Thanks very a lot, Josh.

Operator

Our subsequent query will come from Sheriq Sumar with Evercore ISI. Please go forward.

Sheriq Sumar — Evercore ISI — Analyst

Hello. Thanks loads for taking my query. I’ve a query on monetary bills. It got here down sequentially.

Simply wished to get a way as to how ought to we take into consideration going ahead. And a second half to that query is that on the final name, you had talked about decrease capex within the second half of the yr. So, can we assume that you’d be utilizing this money to pay down your debt? And the way ought to we take into consideration the usage of money in 2023 versus — in capex versus paying down debt? Thanks.

Rafael Martins — Vice President, Finance, and Investor Relations Officer

Thanks, Sheriq, in your query. Rafael right here. So, concerning monetary bills, we’ve got a lower this quarter, as you talked about, for 2 major causes. As we stated in our final earnings name, final quarter, we’ve got determined to extend the length of our funding.

And on this quarter, we’ve got a extra normalized degree of length. And likewise, we’ve got paid down debt, which decreased monetary bills. We imagine that within the quick time period, there may be nonetheless area to have monetary bills rising lower than income. Over the medium time period, like we stated, our monetary bills ought to develop extra according to pay as you go TPV and common rates of interest.

We all the time optimize our funding value, probably the most environment friendly for any traces, so it is pure that in our enterprise, we promote shorter or longer length receivables from quarter to quarter. Over time, such fluctuations shouldn’t be related. So, I feel that — and to your second level of your query about capex, as we anticipated beforehand, the capex ranges for 2022 needs to be decrease than final yr, 2021. After all, subsequent yr, this tends to normalize.

Now we have determined to make use of a part of our money technology during the last yr to pay down some debt, as you stated, on condition that we’ve got already a really sturdy money place in our steadiness sheet. We’ll proceed to spend money on the expansion of our enterprise improvement of latest options subsequent yr, however we’ll all the time consider these kind of selections and monetary selections relying on the price of rates of interest and our debt so we are able to turn out to be an increasing number of environment friendly.

Thiago Piau — Chief Govt Officer

Rafa, Thiago right here. Can I complement?

Rafael Martins — Vice President, Finance, and Investor Relations Officer

After all.

Thiago Piau — Chief Govt Officer

So, Sheriq, Thiago right here. Simply to offer a bit of bit extra shade on 2023. Though we’ll proceed to speculate closely on our progress, we expect that the corporate will proceed to generate money moreover to the investments we’re making to develop, and we’ll use that money technology to strengthen our capital construction subsequent yr. So, I feel that this impact or perhaps lowering a bit of bit, the extent of liabilities of the corporate will proceed as a result of we count on sturdy money movement technology subsequent yr.

Sheriq Sumar — Evercore ISI — Analyst

Thanks a lot. And only one follow-up. On the macro entrance, it looks as if, clearly, the forecast for Brazil GDP and inflation has been enhancing, I might say, barely although. However are you able to discuss as to the place are you seeing tendencies change? And the place are you seeing nonetheless weaknesses occur within the spending sample in Brazil?

Thiago Piau — Chief Govt Officer

Sheriq, it’s extremely tough for us to touch upon that entrance proper now. I feel that the macroeconomic atmosphere modified loads within the final three weeks. What I can say is that we’re paying consideration very carefully to inflation in an effort to modify our contracts in software program, and we’re paying a number of consideration to rates of interest to regulate the value in our monetary phase options, and we’ll mirror the macroeconomic atmosphere in our pricing instantly. So, we’re managing costs very carefully, and we’ll create far more dynamic into the following quarters.

However I feel that now it is a time to paying consideration and transfer as quick as we are able to to regulate all the firm, however tough to say the place this may finish. Now we have to attend and see a bit of extra.

Sheriq Sumar — Evercore ISI — Analyst

Thanks a lot. Recognize it.

Thiago Piau — Chief Govt Officer

Thanks very a lot, Sheriq.

Operator

And our subsequent query will come from Tito Labarta with Goldman Sachs. Please go forward.

Tito Labarta — Goldman Sachs — Analyst

Hello. Good night, everybody. Thanks for the decision and taking my query. I wished to get some extra shade on form of the credit score’s outlook, and also you talked about some form of in pilot mode.

However are you able to discuss to us a bit of bit a few of these pilots? When do you assume credit score may turn out to be an necessary a part of the enterprise once more? What would you want to see to get extra aggressive there? Simply to grasp when that may be a contributor sooner or later. After which simply second query, simply any shade you can provide in with the cap on the pay as you go interchange, do you count on to comprehend all the advantages of that? How a lot may you profit from it? Would you give a few of that to your clients to assist offset form of the decrease interchange in any manner? Thanks.

Lia Matos — Chief Working Officer and Chief Technique Officer

Tito, Lia right here for the query. So, first, concerning credit score, I feel no large replace aside from what I simply stated within the name and what we additionally highlighted final quarter. We’re nonetheless in take a look at mode, and we’ll hold you posted as we’ve got extra updates. Our plan trying forward is de facto to be able to relaunch towards the primary half of subsequent yr.

However we actually wish to take a conservative strategy to have the ability to take a look at the total credit score cycle with shoppers earlier than making the choice to scale additional, which is able to most likely occur extra towards the second half of subsequent yr. Now, we’ve got Gregor on board, which is de facto nice, and the group is in place and dealing actually onerous towards this plan. So, I feel that is the replace that we can provide concerning credit score. We nonetheless assume that that is a giant alternative forward, like Thiago stated, and we’re actually targeted on implementing this plan.

I feel concerning interchange cap, the influence is de facto going to be very depending on aggressive dynamics. We do imagine that gamers shall be extra rational, and it’ll take some extra time till the total impact of that is handed to retailers. With that stated, we imagine that this profit could possibly be someplace between 100 million and 200 million in our EBT for 2023.

Tito Labarta — Goldman Sachs — Analyst

Thanks. That is useful.

Thiago Piau — Chief Govt Officer

Tito, Thiago right here simply to enhance Lia’s reply in regards to the interchange modifications. I feel that if we go something to our shoppers, it will likely be a small quantity. We’re specializing in enhancing margins with that. I feel that we gave away our margins in an effort to profit our consumer base over time.

I feel that this variation creates a extra steadiness within the business and needs to be acknowledged as an enchancment when it comes to margins for our business. So, we’ll be targeted right here on attempting to maintain as a lot as we are able to to learn our margins.

Tito Labarta — Goldman Sachs — Analyst

Nice. Thanks, Thiago. If I may, one follow-up on the credit score. Any replace on the receivables market? And do you propose to ultimately ever use that, the collateral to again the credit score? Have all these points been resolved? Is that one thing that you simply will not contemplate once more? Simply curious, any updates on that?

Thiago Piau — Chief Govt Officer

Tito, Thiago right here. Sure, they’re a part of our execution and our plans, however I feel that the massive evolution we’re doing right here is rising the extent of information that we are able to take from different suppliers of our shoppers and together with the data relationship that we’ve got in our hubs. So, sure, we’re contemplating the receivables as collateral. We have outlined our technique beforehand primarily based on that.

I feel that what we’re doing is enhancing our potential to entry the flexibility of our shoppers to pay again the loans and enhancing the information that we are able to take from third-party companions and enhancing our potential to entry our shoppers via the hubs.

Tito Labarta — Goldman Sachs — Analyst

Nice. Thanks.

Thiago Piau — Chief Govt Officer

Thanks very a lot, Tito.

Operator

Our subsequent query will come from Kaio Prato with UBS. Please go forward.

Kaio Prato — UBS — Analyst

Whats up, everybody. Good evening. Thanks for the chance for questions. I’ve only one right here on my aspect, please.

I want to discuss a bit of bit extra in regards to the future tendencies. So, I feel this yr, you had been vocal about mentioning that internet earnings and profitability would regularly get better all year long. So, I simply want to perceive if this speech is maintained for 2023, if we must always proceed to see greater revenue sequentially additionally in 2023. And what needs to be the drivers for this going ahead, please? Thanks.

Thiago Piau — Chief Govt Officer

Kaio, Thiago right here. Sure, I feel that this continues — this pattern will proceed to 2023 primarily based on two results. We proceed to allocate capital towards progress. And we’re finalizing a really — how can I say, there is a very straight zero-based price range made by our group that’s rationalizing the best way that we see COGS and SG&A.

So, I feel that the self-discipline when it comes to opex of the corporate is enhancing loads. So, income ought to develop sooner than opex. And I feel that this operational leverage will happen in 2023 higher than what we did this yr. So, we count on that the pattern of enhancing total outcomes and margins continues for 2023.

Kaio Prato — UBS — Analyst

OK. Thanks. And only a fast follow-up in your reply. You talked about like value self-discipline.

Simply to have a view, in the event you can discuss a bit of bit extra your hub technique for subsequent yr, in the event you foresee any further investments to identify market share positive aspects, or given what you stated you contemplate that at this present stage, you’ll be able to proceed to achieve share with out accelerating investments. Thanks.

Thiago Piau — Chief Govt Officer

Kaio, sure, we see area to proceed to spend money on our hubs. I feel that we’re creating extra density within the places that we have already got presence. With this self-discipline that we stated that we’re calculating minimal hurdles of return and pricing is one thing that we’re utilizing to regulate our pace of progress. However within the steadiness that we’ve got right this moment, we see area to proceed to allocate capital towards the expansion of the SMB utilizing our hubs as the principle technique.

So, we’ll create extra density subsequent yr and proceed to develop.

Kaio Prato — UBS — Analyst

OK. Thanks very a lot.

Thiago Piau — Chief Govt Officer

Thanks very a lot, Kaio.

Operator

And our subsequent query will come from Mario Pierry with Financial institution of America. Please go forward.

Mario Pierry — Financial institution of America Merrill Lynch — Analyst

Hello, everyone. Initially, congratulations on the outcomes. Let me ask you two questions, OK? The primary one is, once we have a look at your steering, you met your steering for revenues in TPV. However mainly, these are two variables the place you do not have a lot management.

And also you stunned us on COGS and opex, so — and that is what you management. So, I am attempting to grasp like why had been you stunned on COGS and opex. Are there any particular initiatives to — that you’ve underway right here to enhance effectivity? Or are we seeing any synergies from the Linx transaction? After which I will ask my second query.

Rafael Martins — Vice President, Finance, and Investor Relations Officer

Hello, Mario. Rafael right here. Thanks for the query. So, I feel that once we look to the outperformance versus our steering, I feel the principle driver of that was that we underestimated a bit of bit the extent of influence of the repricing waves we’ve got performed within the quarter.

So, I feel it was much less associated to prices and bills, however extra associated to the extent of the pricing wave as we’ve got performed. Now we have even performed some further pricing in September. So, I feel that that was motive behind the outperformance of the steering, which led to a income internet funding prices greater than we anticipated.

Thiago Piau — Chief Govt Officer

Rafa, if I could complement. Mario, simply concerning synergies with Linx. We’re doing two issues right here when it comes to opex. One is integrating the portfolio of firms that we’ve got invested over time into the Linx administration system and the opposite one is integrating the again workplace of Linx into Stone.

So, I feel that that is creating extra effectivity, and we’ll see extra outcomes of that subsequent yr. So, these are the issues when it comes to opex that we’re targeted proper now.

Mario Pierry — Financial institution of America Merrill Lynch — Analyst

OK. After which my second query then, Thiago, is expounded proper to the change that you’ll the board, you are bringing in Pedro, somebody that has a really completely different expertise, proper, like in a very completely different business. So, what attracted you guys to search for Pedro? How do you assume the technique modifications? And as you guys pointed proper on Web page 16 of the presentation, pretty profitable final 4 years for the reason that IPO, we’ve got overdelivered. So, how ought to we see the technique change? And what precisely do you assume Pedro brings to Stone on condition that the expertise is totally completely different from what you guys do?

Thiago Piau — Chief Govt Officer

Nice, Mario. I met Pedro in March, between March and April, and it created a really sturdy relationship with him since he joined the board, in search of his advices, speaking in regards to the alternatives and the challenges of our firm. And I feel that over that point, it was clear to me that Pedro has the capabilities and the non-public values required for the following section of our firm. I belief him loads.

I’ll stay dedicated as a accomplice to help the corporate and the group on this new position as a board member. And I feel that we’re all the time attempting to evolve, bringing in new folks with further capabilities to help the growth of the corporate. And that is what we’re doing. I feel that we’re including extra skills.

Pedro shall be, I feel, an excellent chief for the corporate. And I feel that we are going to be stronger, so we’re very proud of this motion. And mainly, that’s the rationale of it. He has the capabilities and the non-public values for this subsequent section.

Mario Pierry — Financial institution of America Merrill Lynch — Analyst

And the way do you assume the technique modifications then? Once more, as you highlighted on Web page 16, you elevated the presence in software program, you had been capable of develop market share. What — in the event you had been to consider the following like three years, how do you see the corporate evolving during which segments?

Thiago Piau — Chief Govt Officer

Nice, Mario. I feel that we advanced loads each in monetary platform and software program, and I feel that we are going to proceed to execute on our progress plans however with extra self-discipline. And I feel that the capabilities when it comes to management, administration, we transfer over loads, and Pedro shall be a really large contribution on that entrance. I feel that when it comes to technique, as soon as Pedro is right here, 100% on board, I feel that it is possible for you to to hear from him.

However I feel that the corporate is properly set when it comes to the outcomes we’re delivering and the course we’re heading, however all the time evolving. So, I feel that we are going to proceed to evolve. As soon as we’ve got our investor day, we can give extra shade about what we’re planning for the following 5 years. We’re simply finalizing our five-year plan revision now.

So, I am very excited with the enterprise. And I feel that we are going to be joyful to hear extra about this from Pedro within the subsequent coming months when he’s right here 100% on board.

Mario Pierry — Financial institution of America Merrill Lynch — Analyst

OK. No, that is good. Thanks very a lot. And good luck along with your new position on the board.

Thanks.

Thiago Piau — Chief Govt Officer

Thanks very a lot, Mario. 

Operator

And our subsequent query will come from James Friedman with Susquehanna. Please go forward.

James Friedman — Susquehanna Worldwide Group — Analyst

Hello. Thiago, let me congratulate you. It has been an amazing 4 years, and we appreciated your management and accomplishments. So, I had two questions, first for Lia after which for Rafa.

So, Lia, did you — I heard you say the call-outs about Pagar.me key accounts. However did you — I do not see it in right here, perhaps I missed it, I apologize, however did you decompose the relative progress charges of Stone, TON, and the important thing accounts? And if not, may you simply discuss qualitatively in regards to the relative progress charges?

Thiago Piau — Chief Govt Officer

Hello, James. Thiago right here. I might similar to to say thanks very a lot in your sort phrases, and I will go it on to Lia.

Lia Matos — Chief Working Officer and Chief Technique Officer

Hello, James. Yeah. So, concerning TPV progress and breakdown, so the TPV progress in MSMB accommodates each TON and Stone merchandise. And key accounts, we break down between sub-acquire volumes, which had a lower as we have been speaking during the last quarter that we have deprioritized sub-acquire volumes inside key accounts.

And the opposite a part of key accounts is platform providers. So, platform providers accommodates our built-in partnerships which can be software program suppliers, that promote software program built-in to our funds platforms, marketplaces, e-commerce platforms. So, a number of these platform integration options and embedded cost options are contained inside platform providers TPV. So, I feel that is the breakdown that I simply wished to make clear.

James Friedman — Susquehanna Worldwide Group — Analyst

OK. Thanks. After which — I am sorry. Go forward.

Rafael Martins — Vice President, Finance, and Investor Relations Officer

Simply a few — James, sorry, to your query is that, once we have a look at our consumer tiers, SMBs and micro, we proceed to develop the consumer base in all these years. So, I feel that though we report MSMB, we do have a spotlight to supply the correct product for the correct shoppers, the best-suited merchandise for them. And I feel that form of a twin model technique has been very profitable, and we’ve got been capable of develop each in SMBs and micro.

James Friedman — Susquehanna Worldwide Group — Analyst

After which, Rafa, if I may simply observe up. So, whenever you’re increasing the monetary and credit-specific merchandise once more. How do you view the relative significance of margin as you lean into the credit score enterprise subsequent yr? [Technical difficulty]

Operator

Pardon me. Women and gents, it seems we’ve got misplaced connection to our speaker line. Please stand by whereas we reconnect. Thanks very a lot in your persistence.

Excuse me. That is the convention operator. I am sorry, everybody. It appears to be like like there was a technical problem.

I will go forward and hand the convention again over to the presenters for the StoneCo.

Thiago Piau — Chief Govt Officer

Whats up, everybody. I am sorry. We’re disconnected via the decision, however now we’re again. Let’s proceed.

Operator

All proper. As soon as once more, it is from James Friedman. Mr. James Friedman, if you would like to proceed along with your follow-up there.

James Friedman — Susquehanna Worldwide Group — Analyst

Thanks. And thanks for that prior reply. And I used to be simply going to ask Rafa, as you lean into credit score subsequent yr, how ought to we take into consideration the significance of margin? Is {that a} key standards for you as you roll that out additional? Thanks.

Rafael Martins — Vice President, Finance, and Investor Relations Officer

Hello, James. I feel that, as Lia stated, the — we’re being very conservative with the credit score relaunch charge, so I do not assume that credit score shall be related to our outcomes subsequent yr in the event you look on a — like a bottom-line perspective. I feel that one of many measures, in fact, is we’ve got to have good high quality credit score with the NPLs that we wish. So, I feel that is necessary.

That, in fact, ought to result in margin contributions to our enterprise. However I feel that what’s necessary for us is to see the credit score cycle of shoppers, good high quality, us serving to the consumer to handle their money flows and have very wholesome cohorts of credit score shoppers. So, I feel that over time, this could deliver further contribution margin to the corporate.

Thiago Piau — Chief Govt Officer

Hello, James. Thiago right here simply to assist to enhance. So, in abstract, low influence on margins on 2023, nearly no influence on margin of 2023 from credit score. Margins ought to proceed to enhance due to the tendencies we’re already seeing.

After which we count on constructive contribution for 2024, 2025, and onwards.

James Friedman — Susquehanna Worldwide Group — Analyst

Understood. Thanks. Thanks, Thiago. Thanks, Rafa.

Thiago Piau — Chief Govt Officer

Thanks very a lot, James.

Operator

And our subsequent query will come from Soomit Datta with New Avenue Analysis. Please go forward.

Soomit Datta — New Avenue Analysis — Analyst

Two for me, please. One is simply on the funding value. I feel you’ve got talked about normalizing the length of receivables. I imply, this appears to make fairly a giant distinction to the funding value.

I puzzled simply whether or not there was any distinction within the degree of form of prepayment of TPV. And likewise puzzled, I feel whenever you talked about adjusting the length of receivables within the second quarter have been round a barely extra cautious macro outlook. However once I have a look at your TPV steering, we have form of mentioned on this name and once I have in mind what’s occurred to the buying TPV market in Q3, which I feel was down on Q2, it appears like there is a cautious outlook on the macro. However once more, that does not appear mirrored fairly in the best way you are form of funding the prepayment.

So, it might be useful simply to get some readability round that, please.

Rafael Martins — Vice President, Finance, and Investor Relations Officer

Certain, Soomit. Rafael right here. So, I feel that first, if we have a look at our liabilities, they’ve longer length than our belongings in prepayment enterprise. So, I feel we’re already conservative in the best way we take care of our capital construction.

Additionally, we’ve got generated important money during the last yr. And if we take into consideration the amount of money steadiness we had sit on steadiness sheet was a bit of over 6 billion final quarter, and I feel that we had, and we noticed an area to maintain being conservative and excessive liquidity ranges but in addition be a bit of extra environment friendly in the best way we fund the prepayment enterprise. So, I feel that we’re all the time to be extra environment friendly in that capital construction administration. And naturally, within the fourth quarter TPV tendencies that we noticed, it does have some results that should not be recurring results concerning World Cup.

So, I feel that that is form of the monetary bills dynamics this quarter. I do not know, Thiago, do you want so as to add?

Thiago Piau — Chief Govt Officer

Sure, Rafa, please. So, Soomit, Thiago right here. Simply that will help you perceive tendencies, our prepayment enterprise continued to carry out very properly. And as Rafa stated, we expect that within the quick time period, we nonetheless have area for funding value to develop lower than income from prepayments.

However over time, we expect that the funding value ought to develop according to TPV and the CDI charge. So, quick time period, we expect that it’ll develop much less in income. Over the medium time period, it ought to develop according to TPV and CDI charges.

Soomit Datta — New Avenue Analysis — Analyst

OK. That is very useful. Thanks.

Thiago Piau — Chief Govt Officer

Thanks very a lot.

Operator

And our subsequent query will come from Pedro Leduc with Itau BBA. Please go forward.

Pedro Leduc — Itau BBA — Analyst

Thanks. Good night. Thanks for taking the query. A little bit bit on the banking aspect of issues, fascinated with your broader ecosystem there for SMEs.

You have talked about deposits, 2.7 billion. When you can provide us a bit of little bit of shade on what the profile is, how briskly they flip. And naturally, you bolstered the banking group, you’ll improve product options as we take into consideration Stone financial institution in 2023, what can we take into consideration merchandise, the consumer profile, SMEs I think about? And also you additionally reignited your credit score, you are still piloting it. However in the event you can provide us a tough sense on how large of a mortgage guide it could possibly be in 2023 by the tip, assuming it goes properly, that’ll be a lot appreciated.

Thanks.

Thiago Piau — Chief Govt Officer

Pedro, Thiago right here. I’ll begin, after which I’ll go it over. Thanks for the query. I feel that concerning banking, what we are able to say is that right this moment, banking is mainly targeted on the SMBs.

We nonetheless have area to proceed to develop our banking consumer base within the SMB area due to the consumer base we’ve got in funds, and we nonetheless have room to extend the engagement of our shoppers with our options as we rolled over extra functionalities. Right now, our shoppers, they nonetheless have to make use of financial institution accounts from different gamers as a result of we’re nonetheless missing some functionalities. I feel that after we’ve got the total function that we’ve got deliberate to the phase, the engagement will improve, and this may produce higher outcomes. Greater than this, we at the moment are shifting our consideration to supply extra banking options to micro service provider area.

As a result of Stone right this moment has a really restricted account, so we’re not taking account in our numbers, shoppers from micro-merchants. As soon as we increase our providing of banking to micro-merchants that we create constructive results each on whole standing steadiness revenues from interchange from the playing cards and activation of PIX. So, there’s a constructive motion towards subsequent yr of shifting banking towards the micro service provider area. So, we see this as a really large avenue of progress for 2023.

Lia, do you wish to complement, please?

Lia Matos — Chief Working Officer and Chief Technique Officer

Yeah. Just a few fast further feedback. I feel Thiago stated most of this, Pedro. The evolution in deposits got here from naturally the expansion within the variety of accounts, but in addition common excellent steadiness per consumer rising as properly.

So, a number of work to do there to extend the function set, to extend engagement that we’re already seeing very constructive traction inside SMB. I feel one further shade concerning alternative is we’re excited in regards to the alternative inside Linx area, so integrating banking to the ERP of Linx shoppers. It is nonetheless early levels. So, though absolutely the variety of shoppers is small, we’re seeing very constructive suggestions from shoppers as a result of that is an integration that actually provides tangible worth to facilitating consumer workflows, serving to them higher handle money flows, automate their monetary processes in a a lot better manner.

So, that is the one further shade that I might give. I feel our focus — our large focus proper now’s on SMB consumer base and promoting banking into TON consumer base, however we see a giant future alternative inside PIX consumer base as properly.

Pedro Leduc — Itau BBA — Analyst

That is very useful. And a fast follow-up simply on the potential quantity in the event you guys have budgeted mortgage guide goal for 2023 already. However on the banking aspect as properly, understood very attention-grabbing. Thanks.

Lia Matos — Chief Working Officer and Chief Technique Officer

Pedro, sure, no particular steering on that. I feel that the message that we gave on credit score is the best way that we see how ’23 will play out proper now. After all, we’ll give extra shade as we evolve. So, I feel that is the message there.

Pedro Leduc — Itau BBA — Analyst

Tremendous. Thanks, guys, a lot.

Thiago Piau — Chief Govt Officer

Thanks, Pedro.

Operator

Our subsequent query will come from Domingos Falavina with Banco JPMorgan. Please go forward.

Domingos Falavina — JPMorgan Chase and Firm — Analyst

Sure. Hello, everybody. Thanks for taking the query as properly. First, congrats, very good to see the — I suppose the pricing dynamics.

It has been some time we see TPV rising 3% Q on Q and revenues rising 16%, I imply, an enormous improve, particularly including the price of funding. We see mainly a 20 bps enchancment in implied take charge, all-inclusive, Q on Q. My query on that entrance is, I do know issues are fairly unfold, however in the event you needed to simplify when did you go the value changes, particularly on the prepayments, like during which month of the quarter in order that we form of can estimate how a lot has been baked in, within the total quarterly volumes. Second one is on taxes.

Such as you guys reached a 20% tax. You talked about mainly the mark-to-market had an influence. We’re eradicating valuation from the EBT, and we get to love 36% tax, which appears fairly excessive. And once we have a look at the tax reconciliation, we really see a line-seeing impact of tax creep on mark-to-market of fairness, about 37.9 million, 38 million.

So, I am just a bit curious like what precisely is the shifting components round this tax bracket that appears excessive in the event you take away, I suppose, it.

Thiago Piau — Chief Govt Officer

Domingos, Thiago right here. I feel that the value initiatives we did had been unfold across the quarter. We see area for some slight improve for fourth quarter, however we’re not specializing in that. I feel that the spreads will proceed to evolve on fourth quarter as a result of as we stated, we expect that value of funding ought to develop lower than income, so that may produce higher spreads for fourth quarter.

That is why we’re giving stronger steering for 4Q. And we nonetheless need to see the dynamics within the business between debit and credit score as a really seasonal quarter. However I feel that the pattern of enhancing spreads will proceed from fourth quarter and to 2023. And concerning tax, I feel that you’re proper in your evaluation.

So, we’re seeing precisely the identical manner. We predict that we nonetheless have area to enhance our effectivity, each on our entities and our treasury. So, we’ll be targeted on that. And we’ve got a particular plan when it comes to tax in our zero-based price range.

So, we’re being attentive to that line very a lot. However we’re seeing precisely the best way you see it.

Domingos Falavina — JPMorgan Chase and Firm — Analyst

Excellent. And simply to substantiate, so that you’re mainly saying you are beginning in August — July, August, and September. So, it was equally unfold, it was not concentrated towards the tip of the quarter — value changes, I imply?

Thiago Piau — Chief Govt Officer

Sure, you are proper.

Domingos Falavina — JPMorgan Chase and Firm — Analyst

All proper. Thanks, guys. Congrats on the outcomes.

Thiago Piau — Chief Govt Officer

Thanks very a lot, Domingos.

Operator

And our final query right this moment will come from Nicolas Riva with Financial institution of America. Please go forward.

Nicolas Riva — Financial institution of America Merrill Lynch — Analyst

Thanks for the prospect to ask questions. So, my first query is on the decline in your money place by 1.4 billion reais. So, you talked about you paid down some debt within the quarter. When you can talk about what kind of debt it was, if it was financial institution debt, debt to insurers.

And if it was mainly since you could not refinance this debt at a superb charge. And in the event you’re paying down debt, then my query could be, why not purchase again a number of the 2028 bonds given they’re buying and selling properly under par? When you can discuss the best way you consider shopping for again debt. And eventually, in your adjusted money place, so that you make a number of changes to the money and their place. However I discover a brand new adjustment this quarter, which is included within the money place, the deposits from the banking clients, which has an offset legal responsibility for roughly — for mainly, the identical quantity.

So, there isn’t any influence on the web debt place. However my query is why this modify — why this new adjustment? Why the change in disclosure now? Thanks.

Rafael Martins — Vice President, Finance, and Investor Relations Officer

Hello, Nicolas. Rafael right here. Let me attempt to reply all components of your query. So, first, when you consider the lower within the money place, as I stated, this was our choice to be extra environment friendly in capital construction, proper? So, if you consider one of many money owed that we’ve got pay as you go was 400 million of our debenture on the start of July, proper? And likewise, another CCBs that we have not pay as you go.

It has nothing to do with our potential to refinance. By the alternative, I feel that as the corporate has generated extra liquidity, we’ve got an increasing number of funding traces from completely different counterparties. So, I feel that was — it was actually a choice to be extra environment friendly there. And if — as you stated, the adjusted internet money place that we’ve got has elevated.

That adjustment that you simply talked about in regards to the banking is definitely, our choice to be much more conservative in the best way we glance internally and managerially about that money as a result of we’ve got banking deposits with us. We do contemplate this as our adjusted debt, proper? And we’ve got banking belongings as properly that we contemplate as an asset. There’s a technicality that a part of the banking deposits which can be in transit, we do have the flexibility, for instance, to take that money for ourselves. We do not want regulatory sensible to place that in treasury.

However once we have a look at the adjusted internet money place, we do contemplate this as a debt. So, I feel that we determined to try this manner to not like have the phantasm that money that belong to the consumer in transit is our money. So, I feel that we are able to go intimately with you, however this displays our strategy internally of how we handle the liquidity.

Nicolas Riva — Financial institution of America Merrill Lynch — Analyst

Thanks very a lot. Yeah, go forward, Thiago.

Thiago Piau — Chief Govt Officer

I am sorry, Nicolas, simply to enhance and attempting to summarize a bit of bit, in the long run of final yr, in the course of the third quarter and fourth quarter once we see our margins lowering, we determined to extend our money place in an effort to give consolation for our debt holders. And I feel that that was an excellent technique. However within the different manner, we created some inefficiency carrying a really large money place. We determined to higher handle and higher steadiness these at this quarter.

So, we’re very snug with the extent of money and the capital construction we’ve got. And really, what is occurring right this moment as our outcomes are enhancing is that the spreads that debt holders and the legal responsibility traces we’ve got right this moment, they’re lowering. So, I feel that because the outcomes of the corporate are enhancing, we’re accessing extra traces with higher costs, and that is why we’re snug to lower a bit of bit the money place and higher steadiness to hold an excessive amount of inefficiency on our treasury. However it’s a really conservative strategy.

Nicolas Riva — Financial institution of America Merrill Lynch — Analyst

Thanks very a lot for that, Thiago, Rafael. Only one follow-up then if I could. As you pay down a few of this debt within the quarter, was there any thought given to purchasing again a number of the 28s given they’re buying and selling at 0.75?

Thiago Piau — Chief Govt Officer

Not but. We’re being attentive to the alternatives concerning our bonds, however we’re not — we did not began to purchase again our bonds but.

Nicolas Riva — Financial institution of America Merrill Lynch — Analyst

OK. Thanks very a lot, everybody.

Thiago Piau — Chief Govt Officer

Thanks very a lot, Nicolas.

Operator

This concludes our question-and-answer session. I might like to show the convention again over to Thiago for any closing remarks.

Thiago Piau — Chief Govt Officer

Whats up, everybody. Thiago right here. I might similar to to say thanks very a lot in your help. I am very joyful to see the evolution of our enterprise.

And right this moment, I want to go the ultimate remarks to Lia. Lia?

Lia Matos — Chief Working Officer and Chief Technique Officer

Thanks, Thiago. I wish to say thanks for everybody for listening in. Huge thanks to our traders for his or her continued help. And I simply wish to say that the group is proud of the outcomes this quarter and actually trying forward for an amazing 2023.

Thanks, everybody.

Operator

[Operator signoff]

Period: 0 minutes

Name individuals:

Rafael Martins — Vice President, Finance, and Investor Relations Officer

Thiago Piau — Chief Govt Officer

Lia Matos — Chief Working Officer and Chief Technique Officer

Geoffrey Elliott — Autonomous Analysis — Analyst

Josh Siegler — Cantor Fitzgerald — Analyst

Sheriq Sumar — Evercore ISI — Analyst

Tito Labarta — Goldman Sachs — Analyst

Kaio Prato — UBS — Analyst

Mario Pierry — Financial institution of America Merrill Lynch — Analyst

James Friedman — Susquehanna Worldwide Group — Analyst

Soomit Datta — New Avenue Analysis — Analyst

Pedro Leduc — Itau BBA — Analyst

Domingos Falavina — JPMorgan Chase and Firm — Analyst

Nicolas Riva — Financial institution of America Merrill Lynch — Analyst

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