Cielo (ticker: CIEL3.SA) has announced a net profit of BRL2.1 billion for 2023, setting a historical record in their Net Promoter Score (NPS) with a 20-point increase since July 2022. During the earnings call, CEO Estanislau Bassols highlighted the company's focus on client experience, profitability, and digital transformation, including the launch of new products such as Cielo Tap and urban mobility solutions. Cielo is investing in technology to improve its time to market and plans to hire 300 more staff in the second half of the year to support sales and focus on banks. The company is also reorganizing its sales channels to target smaller retail clients and expects further operational efficiency and better price control to increase volumes.
Key Takeaways
- Cielo achieved a net profit of BRL2.1 billion in 2023.
- The company recorded a historical high in NPS, indicating improved client satisfaction.
- New products launched include Cielo Tap and urban mobility solutions.
- Cielo is investing in technology and processes for faster launch of new solutions.
- Plans to hire 300 additional staff in the second half of the year to support sales.
- The company is reorganizing sales channels to focus on smaller retail clients.
- Operational efficiency and better price control are expected to increase volumes.
Company Outlook
- Cielo aims to focus on new products and the small and medium enterprise (SME) segment in 2024.
- The company is in the process of digital transformation and operational efficiency improvement.
- There is a strategy in place to balance hunting with farming to improve penetration in prepayment products.
Bearish Highlights
- The company faced short-term investment pressures.
- There has been a reduction in penetration of prepayment products due to a strategic shift towards larger clients.
Bullish Highlights
- Cielo reported record high revenues and a strong portfolio.
- The company has over BRL1 billion in cash reserves.
- Price competition in the large accounts segment has become more controlled.
- The SMB segment has seen stable prices and consistent market elasticity.
Misses
- Despite positive outcomes, there is still room for improvement in channels, sales force volume, and process management.
Q&A Highlights
- Questions were raised about the public buyback offer and productivity in the SMB segment.
- The company discussed the potential privatization and integration with Cateno, indicating no change in strategy and no operational synergies between the two companies.
- A third wave of hiring is under consideration, depending on the results of the current strategy.
Cielo's earnings call revealed a company in the midst of transformation, with a strong financial performance and a strategic focus on improving its position in the SMB segment. The company's leadership expressed confidence in their strategy and the measures being taken to enhance operational efficiency and market share. With new products and a strong commitment to digital transformation, Cielo is poised to maintain its growth trajectory in the coming year.
InvestingPro Insights
Cielo's recent performance and strategic initiatives have positioned the company as a compelling case for investors, particularly when considering the latest metrics from InvestingPro. The company's Market Cap stands at a robust $2.73 billion USD, backed by a notably low P/E Ratio of 7.26. This valuation suggests that the company is trading at a low earnings multiple, which may appeal to value-focused investors.
In addition to the attractive valuation, Cielo has demonstrated a strong commitment to shareholder returns, maintaining dividend payments for 16 consecutive years. The current Dividend Yield is at 3.65%, with a recent dividend growth of 8.14%, which could be a reassuring sign for income-seeking investors.
InvestingPro Tips further highlight Cielo's prominence in the Financial Services industry and its ability to remain profitable over the last twelve months. Moreover, the company has experienced a substantial price uptick of 20.49% over the last six months, indicating a positive market sentiment.
For investors interested in a deeper dive into Cielo's performance and potential, InvestingPro offers additional tips. There are 6 more InvestingPro Tips available that could provide further insights into the company's financial health and future prospects. To access these tips, visit https://www.investing.com/pro/CIOXY and consider using coupon code SFY24 to get an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 to get an additional 10% off a 1-year InvestingPro+ subscription. These insights could be invaluable in making an informed investment decision about Cielo.
Full transcript - Cielo SA (OTC:CIOXY) Q4 2023:
Operator: Good morning, and thank you for holding. Welcome to Cielo's Conference Call for the Fourth Quarter of 2023 Results. With us here today, we have Mr. Estanislau Bassols, Filipe Oliveira and Daniel Diniz. We inform you that this event is being recorded and live streamed on the Internet via the Zoom (NASDAQ:ZM) platform accessible at address provided or with the link available on the Investor Relations Web site, ri.cielo.com.br. Please note that questions will be received via audio on the Zoom platform and will be answered shortly [Operator Instructions]. Before proceeding, we would like to clarify that any statements made during this teleconference regarding Cielo's business outlook, projections, operational and financial goals, constitute the beliefs and assumptions of the company's management as well as information currently available to Cielo. Future considerations are not performance guarantees and involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur. Investors and analysts should understand that general conditions, industry conditions and other operational factors may affect Cielo's future results and may lead to results that materially differ from those expressed in such conditions. Based on the presentation published on the company's IR Web site, this conference call is open exclusively for questions and answers, which will be preceded by a message from Mr. Estanis, CEO of the company [Operator Instructions]. I will now pass it over to Mr. Estanis for his opening remarks.
Estanislau Bassols: Good morning, everyone. Thank you for being here for our conference call. Before I make my remarks about our earnings for 2023, I have some points on the material facts we filed yesterday. We received information about the decision to make a public buyback offer. About that, we'd like to inform you that all the information received in the company are the ones in the documents that have been published. We're waiting for this topic to advance. And I'd like to emphasize that we are limited to the information published in the material facts. Any additional information will be communicated to the market promptly following legislation and best practices. Moving over to some highlights from 2023. We've had great results in 2023. We advanced in the three topics that we selected as priorities for the year, improving client experience, focusing on profitability and reaching new advances in digital transformation and new products. In customer experience, we reached a historical record in the NPS indicator, a 20 point growth since July 2022. In the second half of 2023, NPS grew by 6 points. This was extraordinary for such a short time. Our clients have a better perception about our services, factors which are reflected in our churn that now have a downward trend. We've improved a lot. We know that there's still a lot to improve but we are on the right track. Our goal is to position Cielo as the best-in-class in service, service quality and user experience. To dazzle our clients we’ll have to go beyond doing things well. We need to continue improving our solutions portfolio. PraCimaCielo is doing everything we need to accelerate our innovation agenda. In 2023, we found great results. We launched Cielo Tap, we developed urban mobility solutions, and we also brought in innovation for receivable advanced products and other improvements to our portfolio. We are investing to improve our technological book and our processes, which will improve our time to market and will allow us to launch new solutions in the payments core or in added value financial services. So everything we're doing to improve client experience has required investments. We've been transparent with the market as we are in a relevant investment cycle, not only to improve operations, optimize processes and service quality, but also to expand our commercial teams. We've started to capture benefits from the churn and costs. We're confident that we can capture benefits in revenues and expenses, especially in the second half of the year. Even with the short term pressure of these investments, we have been delivering consistent results. Cielo is focused on optimizing results and generating cash. We started 2023 with estimates pointing to a net profit of BRL1.7 billion. We're reporting recurring results of [BRL1.5 billion]. Net profit reached BRL2.1 billion in 2023. Market expectations have gone up over 2023, reflecting the advances we had in the last few years, and they are challenges so that we can continue reaching new levels in value generation. Looking towards 2024, I see important challenges. We need to take new leaps in products and continue to ramp up the small and medium enterprise segment. We have to find new service levels and advance in new solutions, emphasizing integrated solutions. And we need to continue accelerating our transformation process, always keeping our commitment to profitability, results and operational efficiency. I'm confident that we're prepared to overcome these challenges. Once again, thank you for being here. And now we can continue with the Q&A.
Operator: The first question is from Guilherme Grespan from JP Morgan.
Guilherme Grespan: I have a question about the material fact that you published. Yesterday, you published a second one. I'm sure that you have discussed it with your controllers, but I'd just like to understand what the process will be from now on, about two things. First, the tender offer price that was announced by them and by you will be adjusted based on the SELIC rate, and if you have two thirds approval in your minority shareholders' meeting? I'd just like to confirm that. My second question is about productivity and head count. I'd just like to go into that and how that's gone in the SMB side? We saw that TPV went up and SMB is still underpaying. And we've seen across the board a movement in head count focused on SMB, that has also been announced by some of your competitors. So I'd just like to hear a little bit about how that has been going on in the SMB segment?
Daniel Diniz: Let me answer the first part of your question about the material facts that were published yesterday, and then Estanislau will tell you a bit more about the SMB segment. So to answer your question on price, the answer I can give you is what is in the material fact that was published yesterday. So the base price is that and it will be deducted and adjusted based on the [JCB] that were announced by the company. To answer your specific question on the rate, I cannot answer, I don't have that information. The second point is about requirements for approval. So we have three possible outcomes for this operation. The first is that, well, there's a possibility that nothing will happen, it's natural in this kind of process. The second step is if it is approved by a third of the minority shareholders, the company would remain listed, but would not have its shares negotiated in the Novo Mercado. The third possibility is that this offer can be approved by a minimum of two thirds of the minority shareholders. And in that situation, the company would no longer be on category A, but would be recorded in category B according to the CVM. So these are the possibilities depending on the approval of the minority shareholders.
Guilherme Grespan: Daniel, let me just go into that before we move on to SMB. Is there a trigger for approval? If it is approved, are all minority shareholders obligated for this?
Daniel Diniz: In general, 95% would be the trigger.
Guilherme Grespan: All right, that's what we thought.
Estanislau Bassols: Before we answer that question about SMB, I'd just like to highlight something here. First, thank you for your question. And all the answers we gave about yesterday's material fact, we'll follow the same line. So if we could focus on that, that's better because we received this communication after the market closed. We are giving you the best answer we can according to the legal requirements. And I think the main element here is that the company is very well known for its corporate governance. So we are following best governance practices. We received a grade 9 in SMG from [indiscernible] magazine. So we have excellent governance practices. So we follow all the different procedures required by law and so on. So we're going deeper into this topic. We are having a call -- we see, as we've always had, we have attorneys here so that we can give you the right answers about this topic. But obviously, we can only answer what we know based on what the information we have. And this means what's in the regulations, what's in the law and what was informed yesterday. So of course, we want to answer your questions but we're limited to what we know. Again, this only happened last night. We did as much as we could to learn about it for the last few hours, but it's still recent for all of us. Thank you again for your question. And I think that gives us a good starting point to answer them. So to answer about the SMB segment, I'll answer it broadly if you'll allow me. In SMB, we were going in a direction that I had mentioned in my second call. The company -- let me tell you this as a story, I think it will help you to understand it. So about a year and a half or two years ago, we started focusing on small businesses and they have some very positive effects. For example, a higher revenue yield and a higher penetration, which would mean that we would have higher profitability, but these companies also have a higher churn in our operation. Throughout last year, our intention, when it comes to small and medium companies, was to increase our proportion of medium businesses, larger businesses, but still in the SMB segment, but focusing on larger companies in that segment. We thought that that would be the best way of containing a reduction that we have been seeing. And we came to an inflection point in the third or fourth quarter when it came to TPV. So did we reach the level we'd like to be at? No, because we would like to reduce market share and transform it into a gain in market share. But what was the strategical steps that we decided to do that? The first thing that is connected to the SMB segment is that we have to improve NPS processes and products, because we need to dilute the churn to continue to get clients in a healthy way. And this is an [agenda] that advanced significantly. So that was the first one, NPS. The second element we worked on was that we have a kind of distribution that is still sort of the proportions that we should get based on our market share. So we should have higher distribution capacity. To increase that, we made a strategic effort last year to use the two controlling banks. We saw that there was a higher productivity level by doing that and that would give us the potential of working in markets that would have less competition, because these banks are very spread across the country. So we did that. We started it. However, I'll mention some numbers here, and Filipe, Daniel and the Investor Relations team will help us with that. We had 250 people coming in throughout the second half of last year who were working on this channel, supporting sales, ensuring that we would be able to focus on using the banks. We planned to hire 300 people on the second wave that was approved in the second half of the year. And I can tell you in advance that the results we found from that led to a higher VPL, but they're still short of the potential that we still are seeking. So we still have a long way to go. That's the reason why at the end of last year we also reviewed the incentives contract with the banks so that they could also work on selling not only Cielo but also [Receba rápido], which is an essential effort to make our sales easier, it makes it easier to sell both products. So we believe that this change that took place at the end of last year has reflected over the first half of the year on how the banks work, and that will allow us to expand our volumes without suffering any losses in capturing smaller businesses, smaller clients. So the first -- everything we did to capture medium businesses in the SMB segment is something that we believe was correct in our current situation. On the other hand, it's also important to improve the current situation. What can we do to do that? Well, having a 100% digital journey, having solutions that help us in working in the lower part of the segment, and we've discussed this with the market. Meaning the smaller part of the SMB segment. And adding capacity to work on medium sized clients, this is essential to us. I think that will bring us some additional capacity. Of course, some of these things are short term and other things will take six months to a year. So that's what I can tell you for now.
Operator: The next question will be asked by Pedro Leduc from Itau BBA.
Pedro Leduc: I'm going to focus on the business at hand. So Filipe mentioned a new agreement to increase incentives for prepayment products. So we looked at the penetration of financial volume on prepayment products going down, especially in comparison to last year. I don't know if you had other institutions who might have affected you. But if you could tell us a bit more about how this works? And looking at the business as constant as it is right now, with only this incentive, given this percentage of 40.8% at the end of the last quarter, what would be the ideal level or the ideal direction throughout the year, would it be closer to 50% with this arrangement of incentives?
Filipe Oliveira: So yes, I didn't mention this to answer the last question. So the first aspect is, where are we? Well, as we saw this reduction in the 40.8% that happened for two reasons especially. So throughout the second half of 2023, we did more hunting than farming. So that was a decision we made. We wanted to understand our commercial capacity and we wanted to, as we had expanded it, we wanted to understand if what we did was enough or we should continue expanding them to gain in market share. So this was a trade-off that we had, but we were aware of it. So the smaller a company is the higher their need for prepayment products. They have a higher requirement for cash. So they consistently seek prepayment products. But the opposite happens when you have bigger clients in retail. So with more traditional clients that operate with less prepayment products, with fewer prepayment products, we have clients who became our targets as we're trying to generate volume. And the consequence is that usually our penetration in this segment is lower than what we see in larger clients. So this combination of the two factors led to this reduction from 42% penetration to 40%. Are we happy with that? No. It was a strategical movement. We knew that we had to do it in our sales effort throughout the first half of the year. And from now on, we want to balance that out. So balance hunting with farming. So this is an essential element for us. We also want to find capacity in smaller clients as long as we have a lower churn. This is what's going to make the company's results more permanent. So with that being said, we're working with the same message that we've always had with the market. We try to focus on prepayment products, especially [Receba rápido].
Pedro Leduc: So what is the value expectation we have to conclude the year?
Filipe Oliveira: Well, we can't provide a guidance, because this is a variable. But the company is focusing on changing their results in retail in this area.
Pedro Leduc: So if I can ask you a follow-up question -- Estanis considering yielding Cielo Brazil, there was a sequential drop…
Estanislau Bassols: We can hear you. Can you repeat your question?
Pedro Leduc: So in Cielo Brazil yield that is net revenue split by TPV. If we were to imagine 2024 in this effort to recover market share, revenue will probably be drawn by, will it be drawn by volume or the take rate yields looking at 2024? Are you expecting more volume or yield?
Filipe Oliveira: So yes, there was a seasonal drop in comparison to the previous quarter. The reason for that, the mix between credit and debit, there's also a seasonal change at the end of the year with major accounts. So we usually see that during the Black Friday week. There is that change in mix that was mentioned by Estanislau. We tried to find bigger clients that have a different level of churn and that led to a reduction in yield at first, but not in the profitability for the company long term. So if we look ahead, one of the points that we also saw in the last six months was a pressure on price. We believe that if we didn't have that, we would have higher volumes. Our conclusion is that churn is low, so this is positive for the market. As we mentioned in our presentation, the last week of January, our revenue yield has increased in comparison to the fourth quarter. So this is the message that we have told the market that it would make sense for it to be more controlled when it comes to price. Just to add to that, of course, we don't give a guidance.
Estanislau Bassols: And I'd just like to say, the yield in the last week of January has been the best in the last two and half years in yield. And it demonstrates what Filipe said that our commitment to profitability and efficiency continues to be there. So we're adding a capacity for a profitable volume, especially in retail, which would make for a good strategy for the company.
Pedro Leduc: Thank you very much, and congratulations regardless of the result of this event. I think you're very transparent here. So I hope that you'll do well in the next chapters.
Operator: The next question will be asked by Antonio Ruette from Bank of America.
Antonio Ruette: I have two. The first one is about costs. If you could tell us a bit more about investments as well. Estanislau mentioned that we'll probably see some results for these investments in the second half of the year, especially revenues and costs. So if you could tell us a bit more about that, the return on these investments? And also TPV, we've talked about this. But if you could give us some more color on what size company are we talking about? You're focusing on SME, but who are they, how big are they? And if you can tell us a bit more about your competition in these different segments?
Estanislau Bassols: So let me start with your first question. We've been making significant investments to make our processes more digital and automatic. So throughout last year, especially, we improved our capacity to do logistics and servicing clients significantly. But we still have an opportunity, especially when we look at client pyramid to increase digitalization, improve the onboarding process and ensure that we have digital services, making POS more material. So with Cielo Tap, which works with smartphones, the products that we have with Pix allow us to work with smaller retailers who might not have as much access to POSs. So this is a significant investment that we're working on and it will have effects on all segments, because not only will it improve our performance and churn but it will also have a better value proposition and improve our performance and costs. But this takes some time to develop. So it's not something that will be happening in the first quarter but it will happen throughout the year. Still on investments. We're working to make our clients onboarding journey, especially in comparison to partner banks, to be more automatic and have less friction. So we're working to keep this short so that we can continue to expand our commercial strengths. There are several changes in systems that are enablers for new products to be launched quickly and they're all ongoing. I'll mention a few just to give you some examples. One of the changes that we are implementing is the market CRM system. So we're consolidating a number of other things and we announced them in the recent past. So we're implementing sales force for the next months and so on. On the other hand, we're trying to consolidate all of our databases and our registration process that will allow us to launch products faster and more focused on what the market wants. Improvements in Pix are significant and important, so we're doing that and capturing our clients. We improved our product and usability but we still haven't concluded that. So these are some investments that we're making, and all of them help us to capture clients and also churn. And we believe that that's the most profitable thing we can do to affect the company's results. You had also asked about segments, or segmentation. When we're talking about smaller retail clients, we're referring to clients who have under BRL10,000 in monthly revenue. So this is split into a few other subsegments based on client size and their use of products. So we haven't disclosed this to the market. We haven't told you how we split this. But what I can tell you is that with smaller clients under 10,000, when an entrepreneur becomes a retailer and when they become a big account. It's very similar to what is done elsewhere. There are clients who use e-commerce and digitalization at a higher proportion. We have clients who advance reimbursements and we have traditional clients that work with less prepayment products. So we have a few quadrants and we're organizing ourselves to service them differently as we have a broader range in our sales channels.
Filipe Oliveira: Just one final point to add to Estanislau’s answer considering costs and investments. There is some evidence that most of our investments have given us positive returns. When we look at the reported costs normalized according to card brand, we've seen significant drops in the company's costs. I think that's only the beginning and what we're delivering new and more sophisticated operational abilities, and the company will continue to become more operationally efficient.
Operator: The next question will be asked by Kaio Prato from UBS.
Kaio Prato: I have a couple of questions actually. The first is Estanislau has mentioned the first answer --about the first wave, and I'd just like to ask about the third wave. I understand that this was short of what you expected, and I'm just wondering what you're expecting from the third wave if we'll have anything that will change the strategy? And my second question is a follow-up about your yield. We saw an increase in the last week of January. And I understand that there's a seasonal pattern that there's a change in mix. But I'd just like to know if there was any price effect if you made any adjustments after December, and what's the competitive environment when it comes to price?
Estanislau Bassols: So I'll start by talking about the third wave. So we split this into three waves for a couple of reasons. First to make sure that we would have the ability of going to the next wave whenever we saw a positive VPL from the previous wave. And the second one was to be able to understand if we would have the capacity of absorbing that increase in sales force and also how the portfolios would be adjusted. Right now, what seems more cautious and correct would be to continue measuring just as we had the first wave. I mean throughout the first wave, we measured everything before we launched the second wave, and we're going to do the same thing for the third wave. So we want to ensure that we have good processes, that we're proving them and that all the investments that we're making in automation and improvement in synergy added to incentives we’ll generate results. So we understand if the third wave should be partial, should be expanded or should not happen. So there is a relevant thing I need to mention about this. In the company, although we published this material fact recently yesterday, is that the operation will continue as it always has. So I don't see any decision. I mean, no decision is being made that doesn't follow the current business's interest, which is increasing our capacity of gaining share in retail and major accounts, continuing our profitability pattern, having synergy with banks. All of this will continue because the company needs to continue operating. So nothing will change that in the second wave. Quite contrary, the company will continue operating in the same fashion.
Filipe Oliveira: About yield, you're correct. There were some changes in price and this has been mentioned to the market. We're trying to find the optimal point and we so far have not seen any adverse effects, everything is going according to plan. But we see that they are a little bit more one-off than last year.
Kaio Prato: And Estanislau briefly about the third wave currently. Is it on hold or are you still concluding the second wave, just so I understand?
Estanislau Bassols: We're continuing with the second wave. So it's still underway. It will finish at the end of the first quarter and the beginning of the second. And from my first call, I've always said that the term for our sellers’ performance to reach the top, especially the ones that work with a more executive area usually takes about six months. So we're looking at the best performing companies that started in the second half of last year. We're still assessing and accelerating this growth curve, training them. And we're going to do this for those that are starting at the first and second quarters of this year, but it is continuing, yes.
Operator: Ladies and gentlemen, we will now have questions in English. The next question Mr. Tito Labarta of Goldman Sachs.
Tito Labarta: One question on the potential privatization. Just thinking about it from the competitive environment in acquiring. Do you think potentially being a private company could position you better to compete with some of the other sort of nonbank acquirers? I mean we saw you had good TPV growth in the quarter, some of that was seasonality, and pricing seems to be stable. But just how do you think about your ability to be nimble potentially as a private company versus being publicly traded? Would that change anything in your strategy and how you're controlling shareholders could approach the business?
Estanislau Bassols: I will split my answer into two parts. The first one, the current strategy is not going to pass through any kind of change. We do believe that what we are pursuing is what we need for the acquiring company that we have right now. But what you have mentioned, yes, given that we will be a private company with two controllers that our banks possibly can open new avenues of growth for the company in terms of products or in terms of easy processes to incentivize the sales force and some others. We do believe that we are doing the best efforts that we can to have the same results with the current operational mode of the company. So we are doing the best proxies. But yes, it's better to do something more direct than proxies. But given this answer what I can say straightforward is I cannot see any kind of change in what we are doing for the next six months to one year, because everything that we have been working, especially in terms of technology, products, processes and sales force, it's what we need as a company. So I almost would say that we are doing a turnaround in operational terms. And so far, we have been successful jumping to end points in NPS, it's a good measure that we have been successful. But being successful, it's not enough, what we have seen is we need to have another jump, that's why we'll be working this year to achieve it.
Operator: The next question, Mr. Jorge Kuri of Morgan Stanley.
Jorge Kuri: I wanted to ask if you can help us understand how Cateno and Cielo Brazil are integrated? To what extent they are fully integrated, to what extent they shared technology and sales people, back office? How difficult, given the level of integration, how difficult would it be to split the company in two, particularly on the technology side if you can help us understand how Cateno and Cielo are or not integrated technologically? That's what I'm trying to understand.
Estanislau Bassols: About Cateno, I do believe that Cateno is one of the most smart, the smartest diversification approach that the company has had in our market. What you could see is when we had any positive movement coming from interchange affecting sell or to be the opposite in Cateno, and the opposite when we had increase in the interchange it benefits Cateno instead of benefits Cielo, to give you one example. So the diversification is working very well. The results from Cateno is being almost like a clock growing constantly during the last quarters and the last years. But having said that, we don't have any operational synergies with Cateno. When I think about the [acquiring] businesses it’s separated from Cateno, they operated separately and we do believe that it was an investment opportunity and nothing else. I don't know if, Filipe, you would like to add something.
Filipe Oliveira: No, I think it's perfect.
Jorge Kuri: So I don't want to put words in your mouth. But basically, it will be very easy to split the companies into because they're not really integrated, it's just two different divisions under one running separately under one name, that's right?
Estanislau Bassols: There is a low level of integration. So hypothetically, you can be correct.
Operator: The next question of Mrs. Neha Agarwala from HSBC.
Neha Agarwala: Just a quick one. We saw a good turnaround in terms of volumes, which particular segment is that driven from? We know that you were losing a bit of market share in the large accounts as well as the SMB. Has that reduced and which segment particularly you would like to highlight? And second part, just quickly on price competition. We saw more price competition in the larger accounts where you've been more disciplined. Where are we today in terms of price competitiveness, both in large accounts and in the SMB segment?
Filipe Oliveira: I'm going to start with the second question about prices. I'm going to divide this in the two segments. In the large account segments, we have seen the price competition become a little bit more behaved. So that's a very good sign for the industry in our view, especially in the second semester. The first semester of 2023 was tough, it was really tough in competition, especially for the very, very large corporates. By the way, we've seen that competition and become a little bit more behaved across the year, right, especially in the second half of the year. In the SMB arena, we haven't seen any changes over the last year. We have seen the entire market quite well behaved in prices. And I actually answer in a few questions before yours about our price strategy for SMBs and we have seen a little bit of lowering yields on our side on the last quarter of the year. We haven't seen enough incremental TPV to make this worth it. So we have seen quite constant elasticity in this market so it's a very good sign for the industry overall. About TPV I'm going to pass the question to Estanislau.
Estanislau Bassols: Let me try to give you this answer in a different way from what I have answered in the first question. When I think, about Cielo of two years ago, we possibly had space to improve in user experience, in products, in processes, in IT, in channels and sales channels, in the volume of the sales force and all the process across the company to fulfill what we needed in the commercialization process. I do believe that in terms of UX, products and processes, we have improved a lot. We still have room to improve. But in terms of channels, especially digital channels, in terms of sales force, especially volume of sales force, in terms of process, especially the process to manage this new sales force, I do believe that we still have room and working as we are planning for this year. I do believe that in the second half, we will see different results coming from the share in small and medium businesses.
Operator: This concludes the questions-and-answer session. We will now hand it over to Mr. Estanislau, who will make his closing remarks. Go ahead, sir.
Estanislau Bassols: Thank you, everyone. Thank you for your questions. Again, we have had record high revenues, the best portfolio in the company, a cash base of over BRL1 billion and the second consecutive quarter on with growth. So we have been reaping the results from the efforts we made in the previous years. The company will continue to focus on doing this throughout the year, and I think this is the spirit of our entire team. Everyone has been doing a great job.
Operator: This concludes Cielo's conference call. Thank you for listening, and have a great day.
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