Good evening. My name is Nihuge, and I will be your conference operator today. At this time, I would like to welcome everyone to PagBank PagSeguro's Webcast Results for the fourth quarter 2021. This event is being recorded.[Operator Instructions].

This event is also being broadcasted live via webcast and may be accessed through PagBank PagSeguro's website at investors.pagseguro.com. Participants may view the slides in any order they wish. The replay will be available shortly after the event is concluded.

Those following the presentation via webcast may post their questions on PagBank PagSeguro's website..

Before proceeding, let me mention that any forward-looking statements included in this presentation or mentioned on this conference call are based on currently available information, and PagBank PagSeguro's current assumptions, expectations and projections about future events.

While PagBank PagSeguro believes that their assumptions, expectations and projections are reasonable in view of currently available information, you are cautioned not to place undue reliance on these forward-looking statements.

Actual results may differ materially from those included in PagBank PagSeguro's presentation or discussed on this conference call for a variety of reasons, including those described in the forward-looking statements and Risk Factors sections of PagBank PagSeguro's registration statements on Form 20-F and other filings with the Securities and Exchange Commission, which are available on PagBank PagSeguro's Investor Relations website..

Finally, I would like to remind you that during this conference call, the company may discuss some non-GAAP measures. For more details, the foregoing non-GAAP measures and the reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures are presented in the last page of this webcast presentation. .

Now I will turn the conference over to Mr. Ricardo Dutra, Co-Chief Executive Officer. Please proceed. .

Hello, everyone, and thanks for joining our fourth quarter results conference call. Tonight, I have here with me Alexandre Magnani, our co-CEO; Artur Schunck, our CFO; and Eric Oliveira, our Head of Investor Relations and ESG. .

Before I start, we will break this call in 3 presentation sections followed by a Q&A. First, I'll share a brief overview about PAGS milestones in the past years. Then, Alexandre will share the 2021 achievements by segments and 2022 outlook. Wrapping up, Artur will comment about our 2021 financial results. .

Well, we have been living unprecedented times in Brazil and around the world. After 2 years of COVID-19, the global pandemic starts to phase out as vaccination levers continue to grow. However, the consequence are everywhere.

The government's financial aid programs are being reduced or removed around the world, and inflation levels are skyrocketing in many countries like United States and Brazil, forcing central banks to raise interest rates.

In addition, in Brazil, the households' indemnities reached the historical peak, raising concerns in credit offerings and delinquency rates. The political turmoil around the world and the Ukraine war raised additional uncertainties for the future. .

After more than 20 years working for UOL Group, the last 6 as PAGS's CEO, I know that an unprecedented crisis like the current one will be just another for us. PAGS's track record shows that our performance has not depended primarily on the macroeconomic scenario.

Remember that PAGS has been profitable since 2015, 2016, the worst years ever for Brazilian economy. Furthermore, we have been fast and flexible to expand and to adapt, exploring opportunities that arise, always prioritizing businesses with the best balance between growth and profitability. .

We also know that UX and technology, combined with efficient execution, are the core for tech businesses, especially in a digital world where fintechs are pursuing tactics to increase its clients' lifetime value. Our last 4 years revealed how powerful and disruptive PAGS's businesses model is.

Since our IPO, we have grown 4x our revenues, becoming much bigger, profitable and relevant. .

Moving to Slide 5. I would like to start with our main message. Our profitability remained resilient, with unbeatable underlying fundamentals despite a tough 2021. PagSeguro, our acquiring business, captured 45% of Payment's profits, although investing BRL 300 million in PagBank in 2021.

Our ongoing repricing increased our take rates by 15 basis points in Q1 2022 when compared with Q4 2021, and the price increase that we planned will be fully implemented in April 2022. Our bank is much more complete today for merchants and consumers so that we can address the banking profit pool, which is 30x larger than Payments.

For 2022, we have a positive outlook with growing volumes and keeping profitability while we pave the road for PagBank monetization. .

Moving to Slide 6. After 4 years of our IPO, although market has become more competitive, PAGS was able to capture a record lion's share of 45% in the Brazilian Payments profit pool, 27% of revenues and 9% of TPV market share. .

Moving to Slide 7. We ended 2021 with BRL 1.8 billion in net income excluding PagBank. We are the most profitable company among Payments companies and digital banks.

Therefore, we are very well positioned to scale up our banking strategy, diversify our revenues and profits in our banking industry, which is still highly concentrated among incumbents and 35% larger than Payments profits. .

Moving to Slide 8. We see that in less than 3 years, we built up a very complete ecosystem that combines payments, day-to-day banking services and complete card offering and loans. .

On the next slide, we can see we have launched additional features to enhance our ecosystem such as investments, insurance, marketplace and other partnerships. We became a complete bank offering the best UX for consumers, micro merchants and SMBs in Brazil. .

And to finish this first part of presentation, I would like to say that I have been working in the past 7 years with the new CEO, Alexandre Magnani. He is the most prepared person to run our day-by-day operations, to motivate our team and to get the best of them.

I will dedicate my time to build our vision of the future to participate in our Board of Directors and our Executive Committee. .

Before I pass the word to Alexandre, I would like to thank our clients, suppliers, shareholders, stakeholders and especially our PagBank PagSeguro team for all the confidence and support. Alexandre, go ahead, please. .

Thank you, Ricardo. Hello, everyone. .

Before I start, I would like to share a little bit of my experience and some thoughts. .

I have built my career in payments and financial services in Latin America for almost 30 years, 7 of them in senior position at PAGS. Here, I saw things evolved very quickly, transforming our company from a startup to one of the most relevant fintechs in Latin America.

Besides the great achievements in Payments, there is a huge opportunity to be captured in Brazil. The banking industry continues to be highly concentrated. The top 6 financial institutions' net income reached more than BRL 105 billion in 2021, approximately 90% of the banking industry profits.

I'm really excited about this opportunity and count on the next steps to come. .

I would like to start with the 2021 highlights, which is shown on Slide 11. We ended the year with almost BRL 0.5 trillion in financial transactions, composed by BRL 252 billion in Payments and BRL 204 billion in PagBank transactions. Our total revenue and income grew 53% year-over-year, reaching BRL 10.4 billion.

Number of bank accounts totaled 22 million with 13 million active clients, positioning our company as the second largest digital bank in Brazil. Total deposits accounted for almost BRL 8 billion, up 66% year-over-year, and our book loan increased 3x, reaching almost BRL 2 billion. .

Net income in non-GAAP basis grew 12% to BRL 1.5 billion, resulting in earnings per share of BRL 4.68, while capital expenditures decreased by 15%, reaching BRL 1.8 billion. .

increase and diversify our revenues and profits by consolidating PagBank; grow above the market in Payments with efficiency and profitability; developing our two-sided ecosystem to gain client preference; execute everything with a 360-degree security approach; invest in our most valuable resource, our people. .

Moving to Slide 12, I want to share some financial and operating highlights of PagSeguro, our payments vertical. Total revenue reached BRL 9.2 billion, up 54% year-over-year, led by a net take rate of 2.19%, which is much higher than the industry.

The accelerated growth in other segments such as SMBs, larger merchants and cross-border has significantly contributed to the solid revenue growth with a healthy net take rate. .

PagSeguro TPV ended 2021 with more than BRL 250 billion in Payments processed, 60% higher than 2020 while excluding the coronavoucher impact, ending the year reaching almost 10% of the Brazilian market share. .

Next slide, we summarize the highlights of this business unit. On the left side, we ended 2021 with more than 300 HUBs, concluding a massive cycle of investments to serve SMBs in Brazil, covering more than 80% of the Brazilian GDP with the best-in-class solutions for these merchants.

Our strategy in Payments is to focus on the most profitable segments, working on margins recovery, reducing subsidies and continue to grow significantly above the industry. .

Our CAGR from 2017 to 2021 was 60%, while the industry was 18%. We also have improved customer satisfaction, which was confirmed by the awards from iBest and Reclame Aqui. Price increase, operational leverage and new markets expansion are our main priorities for 2022 to keep the best balance between growth and profitability. .

Moving to Slide 14. I want to share some financial and operating highlights of PagBank, our fintech vertical. Total revenue grew 63% year-over-year, ending 2021 at BRL 917 million, approximately 9% of total revenue and income of PAGS.

Total Payment volume reached BRL 204 billion, up 187% year-over-year, with engagement TPV gaining traction driven by cash-in, bill payments, card spending and credit underwriting. .

Upper right, we show for the first time our net interest income which grew 142%, totaling BRL 395 million in 2021, and gross profit including revenue from service minus provision for losses grew 20% year-over-year, accounting for BRL 498 million. The PagBank P&L reconciliation is available in our appendix. .

Turning to Slide 15, we summarize PagBank highlights. We reached 22 million bank accounts, more than 24,000 new accounts per workday during the last year with active clients surpassing BRL 13 million, maintaining a high activation rate of almost 60%. Today, 50% of our active clients are consumers not related to our payment business.

PagBank cash-in composed by wire transfers and PIX increased by 9x. 50% of PagBank clients use it as their main bank. In January 2021, this number was 35%. PagBank represents 9% of all Brazilian PIX transactions, which shows the strong customer engagement of a digital bank account. .

For the next years, we expect to foster engagement and revenue growth, prioritizing products with higher stickiness, increasing collateralized credit offerings for consumers, micro merchants and SMBs. .

Banking remains extremely concentrated in Brazil. This reinforces our confidence that through technology, better customer experience and low cost to serve clients, approximately 90% lower than incumbents, we'll be able to gain share in a profit pool that is 30x larger than payments. .

Slide 16. Let me share the evolutions in PagInvest, which is our investment initiative. Our platform is simple, mobile-first and affordable. We reached 1.3 million clients in 2021, 2.7x more investors per day year-over-year and 87% more inflow per client in average, leading our AuC to grow 7x excluding deposits.

PagInvest is another growth avenue that makes our banking offering more complete, contributing to the expansion of our revenues and profits for the next years. .

Finally, let me share some results for the first Q '22 and the outlook for the full year. PagSeguro TPV continues to grow at a very strong pace, 48% in January and 58% in February.

Our price increase partially implemented in first Q '22 has improved our take rate to 2.48% in January and 2.64% in February, 8 and 24 basis points higher than first Q '21, respectively. .

For first Q '22, we expect total revenue of BRL 3.3 billion to BRL 3.4 billion, up 60% to 64% year-over-year. .

PagSeguro TPV of BRL 79 billion to BRL 81 billion, up 58% to 62% year-over-year. .

PagBank revenue of BRL 240 million to BRL 260 million, up 60% to 73% year-over-year. For 2022, we expect to fully execute pricing increases by April 22; repricing will be examined and, if necessary, implemented on a regular basis as interest rate continues to rise. .

PAGS will continue to invest in PagBank in 2022, and we anticipate a better credit portfolio performance. We also expect operational leverage in marketing, SG&A and chargebacks. .

Now, I pass the word to Artur. Thank you. .

Thanks, Alexandre. Hello, everyone. . .

In the top left of Slide 19, adjusted EBITDA in a recurring basis increased by 27% year-over-year despite of the Brazilian interest rate. In the last quarter of 2021, the company decided to stop PagPhone project due to the underperformance of our initial expectations to this product.

We still have the devices in our inventories, and the one-time accounting impact in our adjusted EBITDA was BRL 139 million. .

Moving to the graph below, our consolidated net debt rate decreased by 17 basis points year-over-year, reaching 2.42%, mainly driven by client mix. This impact was partially offset by a higher mix of credit and prepayment volume, which have higher take rates. On top of that, PagBank revenue growth contributed to the consolidated net take rate. .

In the right side, we present our managerial P&L for the last 5 years in recurrent figures. In 2021, our total revenue and income surpassed BRL 10 billion for the first time, growing 53% year-over-year.

Excluding transactional costs related mainly to interchange and scheme fees, financial expenses related to cost of funding to prepayment receivables, exchange expenses and other financial income related to financial investments, our gross profit grew 41% year-over-year. .

Adjusted EBITDA closed at BRL 2.7 billion, up 27% in comparison to 2020. Net income non-GAAP achieved BRL 1.5 billion, growing 12% versus last year, even with the tougher macroeconomic environment and the increase of the Brazilian interest rate.

Earnings per share in non-GAAP measures achieved a record of BRL 4.68, growing BRL 0.49 versus 2020 and surpassing the pre-pandemic levels. .

In the next slide, our Q4 '21 adjusted EBITDA in recurrent basis achieved a record of BRL 751 million. In the chart below, the consolidated net take rate increased 10 basis points versus Q4 '20, driven by our efforts to increase prices to mitigate impacts from the country interest rate hikes.

In addition, better credit mix, higher prepayment volumes and PagBank revenues contributed positively to increased net take rate. .

In the table on the right, the managerial P&L shows a strong quarter versus Q4 '20. Total revenue and income grew 55% year-over-year and 16% quarter-over-quarter. Net income GAAP was BRL 393 million, growing 5% year-over-year and 22% better than Q3 '21. .

Next slide, I am proud to share our solid financial position built by our extraordinary team. We closed 2021 with BRL 8.8 billion in the cash position which is the sum of the cash and financial investments, accounts receivables from bank issuers and credit portfolio minus payables to merchants, PagBank balance accounts, deposits and borrowings.

The positive position increased by BRL 1 billion year-over-year, mainly due to more BRL 7.7 billion in account receivables partially offset by BRL 4.6 billion, increasing in payables to merchants. This was driven by better TPV mix towards credit cards and volume of same-day prepayment to merchants. .

At the same time, we have been improving our capital structure, ending the year with 66% of our financing position furthered by third-party capital, better positioning our company in terms of tax shield in the cash flow. We have been increasing the APRs and reducing the APYs to manage the higher financial expenses.

At the same time, balance accounts increased, bringing a competitive advantage to PAGS..

In the right chart, our financial expenses reached around BRL 403 million versus almost BRL 30 million in Q4 '20. The biggest impact comes from country interest rate that rise at almost 4x year-over-year, PagSeguro TPV growth, PagSeguro TPV mix and pre-payment average term and APYs on deposits.

Last year, for example, prepayment TPV grew 90% in comparison to the same period of 2020..

Through the yearly redeeming of current receivables with the issuers, we have been rising a relevant portion of our capital needs, which costs a few basis points above the Brazilian interbank rate, CDI.

On top of that, our deposits work as an additional funding source at the same time, being part of our customer acquisition cost strategy, which also impact the financial expenses due to the APYs paid by the company.

We will continue to look for other funding options and market opportunities to manage the financial expenses like the borrowing contract of BRL 1 billion at a cost of 109% over CDI. .

Moving to Slide 22. We present our assets and capital allocation. We ended 2021 with almost BRL 2 billion in credit portfolio, with working capital loans being the most relevant product followed by credit cards. The portfolio increased BRL 1.3 billion in comparison to 2020. .

Since the company has been adopting the IFRS 9 and provisioning up for unexpected losses, we ended the year with provisions for [ 23% ] of our book loan, being 8% related to provisions for write-off. Important to mention that for tax efficiency purposes, we did not do the write-off of them yet, but they are fully provisioned.

This represents an important improvement in comparison to 2020, reducing the balance provision from 19% in 2020 to 15% in 2021. .

This year, our goal is to remain cautious during the first half while increasing our exposure to secured loans, mostly tied to our CDs and payroll. As the time evolves and market conditions improve, we can review our credit underwriting policy for the second half.

At this stage, the economic outlook remains challenging with interest rates surpassing double digits again, while we expect inflation to go down. .

Finally, Brazilian households indebtedness reached the historical record number, and there is no rush from our side to speed up credit underwriting in such a very volatile scenario. .

CapEx per sales ended the year at 17%, 13 percentage points lower than 2020 and much more focused on R&D expenditures.

Also, given the recent market sell-off which has been dragging down stock prices of several tech companies like us, we took the decision to use part of our share buyback program ending January 2022 with more than 2 million shares in our treasury department. .

Finally, I would like to share our ESG milestones, consolidating all the positive impact PAGS has been promoting in Brazil, creating shared value for the stakeholders and establishing the goals to keep increasing our commitment to a more sustainable, fair and diverse society. .

In 2021, we released our first sustainability report, which was our kickoff to look at all impacts the company has been doing in our society. During the year, we created our ESG Committee composed by directors and senior directors. We hired a seasonal team that reports directly to the committee.

We also signed at the Global Compact, conducted our GHG inventory for 2019 and 2020, and we were awarded by Women on Board since 42% of our Board of Directors is composed by women. We also were able to see how impacting our business is in the lives of those who need more. .

In 2020, we reached 100% of Brazilian territory with our services, allowing millions of merchants to accept electronic payments to generate income for the young entrepreneurs, empower women in business and enable elderlies to complement their retirements. .

And this is just the beginning. In 2022, we expect to release our second sustainability report, completely aligned to the GRI essentials. Also, we are in the middle of the process to do the GHG inventory for 2021, audit the data and set our goal to be a 0 neutral carbon company, reporting the data in the CDP.

We hired a consulting firm to help us to address the goal to be a more inclusive and diverse company, as we will also apply for the Great Place To Work. .

Now, we concluded our Q4 '21 presentation and open the Q&A session. Operator, please. .

[Operator Instructions] Our first question comes from Mario Pierry, Bank of America. .

Let me ask you 2 questions. .

First one is related to your client base at PagSeguro. We noticed that the client base declined by 8,000 while you have been growing more than 100,000 per quarter.

Can you discuss a little bit about the trends here in mortality of clients, the churn? Is this churn all related to your acquisition of Moip last year? Or does it reflect the fact that it's more difficult for you to increase prices than you expected? So yes, so that's the first question, is about your client base and how do you think that's going to evolve in 2022?.

And then the second question is related to the repricing, right, that you have underway right now, and you're talking about being fully executed in April.

What does that mean? Does it mean that 100% of your client base is going to be repriced by April? Or the clients that you wanted to reprice are going to be repriced by April?.

And then if you can discuss a little bit about the segments. Are you able to increase prices in the micro merchants versus the SMB segments? If you can discuss your ability to reprice by segment, that would be helpful as well. .

Thank you, Mario, for the question. I will start with the first one about the client base, and then I'll pass to Alexandre or Artur to talk about the repricing. .

Regarding client base, you're right. When you make the math, it's 8,000 decrease versus Q3. But if we exclude Moip from these numbers, if you look only at PagSeguro, we will see something like a growth of 130,000 in the quarter.

So really, what is impacting this number is the clients from Moip that stopped making transactions with us one year ago, so we don't see this churn from these clients affecting our TPV. As you can see, we are growing pretty strong in TPV, so they were clients with very, very smaller TPV per month. But yes, it affects the number. .

What we've been seeing so far, the gross adds keeps being very strong, similar to what we had in the past, I don't know, 10 quarters. So we don't see gross adds decreasing.

But what we see, though, is that we have a base that is reaching almost 8 million clients and the churn as a percentage, to some extent, can make some pressure in this number because the percentage of a big number, right, the percentage of 8 million..

We don't see that as an issue because we had this mortality from many, many clients because of 2 years of pandemic. We don't see that because competition is much more related to mortality and related to Moip.

And we are focusing now in bringing clients with the better relation LTV versus CAC, which means with a little bit more TPV per month than the nano merchants, so to say. .

So this churn, just to be clear here, there is no relation with price increase at all because mainly we are measuring this churn of the clients that we made repricing, that Alexandre will talk later. And even if you had the churn, it would appear only one year from now.

So we don't see the churn increasing because of repricing, Alexandre will talk later, but just to be clear here. .

But going back to your question, if we exclude Moip, we would grow something like 130,000 in this quarter in PagSeguro. We are looking for clients a little bit larger than the nano merchants. And again, we don't see that as an issue because it's part of the business mortality after 2 years of pandemic.

So, Alexandre?.

Okay. Mario, this is Alexandre. .

Speaking about price increase, we have been doing price increase since November last year. We have planned our price increase in different waves, and we're supposed to conclude these waves by April this year. We are increasing prices across all client segments, from long tail to SMBs and larger merchants.

And the impacts -- the full impact of this price increase will be observed during the second quarter. This means that, depending on the macroeconomic scenario and future adjustments of the rates -- the interest rates, we can still do some other increase moving forward. .

Okay. Now, that's helpful. Let me ask then 2 follow-ups. .

On the price increases, right, you showed that in the fourth quarter, your net take rate was 2.4%. You are at 2.64% by February.

How much higher can we see this net take rate? What is the level that you think we're going to reach by April?.

And then the other follow-up is on the net adds, on the churn and Moip. Is this complete now? Like basically, it seems like you lost 130,000 clients from Moip. I think when you bought them, you added about 400,000 clients, so it's a big chunk of clients that have left.

If you can be a little bit more specific for the reasons why they're leaving, and if you think that this is complete now, that whoever was going to leave has already left. .

Mario, I will start with the last one and start backwards. .

Regarding these clients from Moip, what we used to have there. Let's say, if you have a marketplace and then you have many, many thousands of smaller sellers below this marketplace with very, very small TPV per month. The base of Moip, we also reactivated some clients. We added some new clients at the base.

But when you look at the churn, part of that is of the legacy that we got from the company that we bought in 2020. So part of these clients, it is still related with the transition period between July and November 2020 that the company was, let's say, without management, so to say, in Brazil. So that's why we had this impact. .

But again, this is not a concern because they were very, very small merchants below some smaller marketplaces. And it seems that it's over, the impact from Moip, because we already had this impact in the past quarters. And if you look at the core, which is PagSeguro, we keep growing.

And most important for us as a main metric is the TPV per merchant that is growing again, so..

And even if you look at the guidance that we gave for Q1, it's very, very positive. If you think that in Q1, we will probably have the same TPV or even slightly higher TPV than what we had in Q4 because Q4 is the high seasonality in the industry, and usually, the TPV goes down in the first quarter.

And with the guidance that we gave, the TPV is going to be -- there is a change that's going to be even higher than what we had in Q4, so it's super good trends for us. .

Okay. .

And for the second part, going back to repricing. Moving forward, we want to recover the margins as much as we can. And again, increase our margins moving forward according to the interest rate rises.

But also, we want to be very competitive in the market, so we'll do all these moves very carefully in order to keep increasing our profitability but also serving the competitors and the environment so we can still grow in an accelerated way. .

Okay, guys. I'll let the other analysts ask questions as well. .

Our next question comes from Tito Labarta, Goldman Sachs. .

A couple of questions also. .

Maybe first on your margins, right? Just looking at the guidance you gave for 1Q, it implies margins around 10%, 10.5%, 11%, so a bit lower than what we see in 4Q, yet your take rate is going up.

So just to understand a little bit that dynamic, is that just higher financial expenses? I mean, at some point, will you be able to offset those higher financial expenses? Or it's just more investments in HUBs or PagBank? Just to understand that dynamic.

And is there any color or guidance you can give maybe for the full year, either margin revenue or TPV like you gave for 1Q?.

And then my second question on PagBank. Initially, you guided for PagBank reaching 30% of revenues in 3 to 5 years. That was now about 2.5 years ago. Do you think that's still a reasonable assumption? Particularly, you mentioned you probably will be more cautious on credit, given the macro environment today.

Will that delay things in terms of monetizing PagBank? Just how you think about the PagBank growth in this current macro environment?.

Tito, well, starting with the first one regarding margins, you're right. If you look at the guidance and the TPV, it's a little bit smaller than what we had in Q4, and the main reason is financial expenses. There is this time mismatch between the growth of interest rate versus the speeds that we increased the prices for our clients.

So that's why we said that it's going to be the first wave or the first increase that we planned is going to be fully implemented by April. So that's why in Q1, you're going to see still this pressure from financial expenses because we didn't have the price increase fully implemented. So that's the main driver for the margins. .

Just to give some idea here for those who are not familiar, the interest rate in Brazil in March 2021 was 2.75%, and now in March 2022, it's 11.75%. So it's 9 basis points more. So that's why we're saying that we didn't increase the prices in the same pace that the interest rates increased in Brazil. .

Regarding the PagBank being responsible for 30% of the revenues by 2024 or 5 years, we do still believe it's feasible. Right now, we have the situation in Brazil with the families with the highest debt in their indebtedness ever with this inflation hikes in Brazil. So the credit operation, we are not accelerating the way we expected, but that's fine.

But we do think that in the medium term, it's going to be possible for us to close this gap and have this 30% of the revenues coming from PagBank. .

And also just worth to say here, looking at perspective, we launched PagBank in 2019, in May 2019, as a very basic account. And then in 3 years, we built a very complete ecosystem. And of course, we had the plan to give more credit.

But in March 2020, we had this pandemic for 2 years and we had this, in my opinion, very, very right decision not to speed up credit. We didn't hurt our P&L by being anxious to keep giving credit in a macro scenario. That was not favorable for that. So -- but going back to your question.

The medium term, it's totally feasible to have these revenues being responsible for 30% again. .

Okay. Great. That's helpful. .

Maybe if I can ask a follow-up on the margins a little bit. Just going back to your Investor Day, you had mentioned that margins could be kind of flattish, maybe even a little bit higher in 2022. Now I know rates keep going up maybe faster than expected. But I think in December, we probably still expected double-digit rates.

Did anything change significantly since then other than rates have continued to gone up?.

And any color you can provide also on the impact on margins from the investments in HUBs? And when do you think you become profitable on those HUBs?.

the first one is that -- let's say, three ones, but the first one is that the rates increased faster than what we had previewed in November last year, and everyone was caught on surprise in Brazil. Today, we saw a report from a big bank saying that Selic by the end of the year, could be close to 14%.

So that scenario, there was kind of -- no one was talking about that last year. So just to give an idea, the inflation is coming very strong and then the interest rate is growing faster than what we expected, first. .

Second, we didn't make the price increase at the same speed. And we thought that we could do it faster, but we decided to be more cautious. That's the second reason. .

And the color that -- you're asking about the margins that we're going to have. It depends how it's going to be successfully our price increase. And I guess we are doing, let's say, in the right manner.

We are accelerating price increase in the clusters that we think is not price sensitive, and increasing basis points that we think is feasible and makes sense..

And the good news is that the industry as a whole is making this repricing. So it's not a movement that only PagSeguro is doing because, as we said last quarter, the interest rate in Brazil is the raw material for everyone. So when you have your raw material that was 2% going to 14%, you need to increase prices. So everyone is repricing.

That's a movement that we are seeing in the industry. And then we plan to recover, even if partially, margins in the following quarters. .

Okay.

And just anything on the HUBs?.

Regarding the HUBs, Tito. The HUBs, we gave this information that it pay backs between 3 to 5 quarters, we keep executing very well. Of course part of our TPV growth is because of the perfect execution we are having in HUBs. But we don't give too much color on HUBs because of strategic reasons, Tito.

That's we have decided here, but I mean, the more we can say, we can give you color in the following weeks, but we give the HUBs TPV usually and then the payback, which is between 3 to 5 quarters. .

Okay. Great. That's very helpful. .

And sorry, just one quick follow-up on PagBank. You had initially mentioned probably profitable by year-end 2022.

Is that still feasible?.

Tito, let's wait for the following quarter. But if it's not breakeven, that we said it's going to be breakeven, and not exactly profitable -- if it's not breakeven by the end of this year, it's going to be by the beginning of 2023.

And that's fine, it's that one quarter more or 2 quarters more, it is not a big deal when we are doing things very carefully. If you can see our slides, you can see that the net income margin is growing in a very healthy way. It was BRL 140 million, now it's BRL 280 million, if I'm not wrong. So I mean, it's growing very well. .

PagBank and the foundations, the fundamentals of the business is very strong. You can see that in net income margins and the number of clients that we're having, and we keep following the credit portfolio very close to avoid any bad surprises. .

Okay. Great. .

Our next question comes from Jorge Kuri, Morgan Stanley. .

Congrats on the numbers. .

I wanted to get a little bit of -- sorry, just a follow-up on the questions that were answered before. And I ask specifically on the repricing.

What percentage of the total repricing that you plan to do by April do you think you've done so far? Are you half the way, 2/3 of the way, almost done? And I'm asking this obviously to understand what is the potential upside on your take rate vis-a-vis the 2.64% that you had as of February? And also to understand as well the issue of the net margin, which you're guiding for 11% in the first quarter, and so to what extent that still has room to go? That's my first question.

.

And the second is on PagBank. And I guess you've said this before, I just want to be specific. The revenue earning TPV of PagBank was flat for the quarter.

And so I just want to understand why? If you're growing the business so rapidly, why would it be flat? And I guess you mentioned something about the leverage of the families, et cetera, but there's other ways you generate revenues through TPV other than lending.

So I just want to understand why is it flat with all of the -- at least on the number of clients, you're really expanding that business very rapidly. .

Jorge, it's Artur. .

And so related to pricing, I would like to say that we are working to adjust prices for almost every client, but in stage by states. But for strategic reasons, we prefer not to share with you the percentage of clients that we have already adjusted.

And so we are adjusting prices as the market conditions allow us to do that and also taking a look in the competition, taking a look in churn, taking a look in external KPIs that we need to be looking for, and cautious to adjust price and try to avoid increased churns as we are not seeing until now.

So we are continuing the process to adjust prices, and in April, we believe we will have a big adjustment. .

We -- just to give more color, George -- Jorge. In March, the take rate is higher than February, just to give you an idea that take rate keeps going up. We -- I know some people are asking about margins and it is expected that. But we -- we gave the guidance for Q1 2022, and considering our price, will be fully executed by April.

We see this positive impact from Q2 onwards for the rest of the year..

We don't just -- are not giving some color on that right now. But let's say, the trend is that the margins will be better than what we had in Q1 because we're going to have this price increase in April. We are seeing, let's say, strong revenue growth. We keep investment baggable. But the main driver, of course, is the financial expenses.

That's why we're doing the repricing. But in March, we had -- so far, the previous numbers, it's better than what we had in February in terms of take rates. .

Great.

And the issue of the revenue earning TPV at PagBank?.

Jorge, if I got your answer correctly, you're comparing the percentage of PagBank versus the total revenue of the company, which is around 8%. .

No, no, the revenue earning TPV in PagBank was flat quarter-on-quarter. So I'm trying to understand why the revenue-generating TPV was flat quarter-on-quarter, given all the growth in clients..

I'm assuming just ramp up in users, et cetera, not only growth in clients in the quarter, but actually just the maturity of the clients you added a month ago or 2 months ago, 6 months ago, et cetera.

Why aren't we seeing the revenue generating TPV go up quarter-on-quarter?.

No, that's fine, Jorge, I got it right now. So just you're comparing quarter-by-quarter. Just for those who are in the call, in Slide 14, we have that for the full year. We increased 8 basis points from 136 to 144, but your question is about quarter-by-quarter. .

What happened is that we are adding, as we expected and as we planned, much more consumers than merchants at this point, and consumers take a while to make this monetization because of reasons that we already know. The cash-in takes a little bit more. They don't have the automatic cash-in the same way you have for the merchants.

They don't have the same amount of cash-in that we see in the merchant, so that's why monetization takes a while. We also took this decision to be more careful in credit concessions in the past months. So that's -- those are the 2 main drivers why the revenue versus TPV in PagBank was kind of flat, it was a little bit smaller. .

But when we look forward, it's unavoidable that we are going to have more credit in this company. That's what we have in the plan. But the macro scenario needs to help us. We will not make, let's say, crazy movements here just because we need to give credit. We'll give credit for those.

We have the confidence we will have good results and, of course, adjusting risk and return all the time. So -- but the reason that we are going to be able to expand is because we're going to have this leverage related to credit for the PagBank clients. .

And Jorge, this is Eric..

I think when we look at the NII of the company disclosed for the first time and the trends in the gross profits, I think we have been getting more and more sophisticated in credit underwriting.

And nowadays, it's much more a matter of being cautious and diligent in capital allocation, credit underwriting instead of just speeding up very rapidly and poise additional risk into our balance sheet and company. So this is why the monetization is stable, but the engagement is coming stronger and stronger. .

Great. That's very clear. .

And just a follow-up on my first question on the repricing and the impact that, that has on take rate or margins. So if I understand correctly, you don't expect net margins to be flat for the year, as you pointed out during the Investor Day.

Is that right? Am I understanding your answers correctly to those questions?.

Jorge, you're right. We don't expect to be flattish because of the 2 reasons that I mentioned to Tito..

First, interest rates increased faster than what we expected. I know it seems that it's not too much, but it is and it impacts the P&L very fast, very strong. And if you -- again, as I said, a big bank in Brazil today said that it is expected for the Selic to reach close to 14% by the end of the year.

That's a scenario that no one was talking until, I don't know, 2 weeks ago. So that's the main reason. .

The second one is related to credit. We thought the macroeconomic scenario would be better so that credit could help us to have more revenues, and of course, help the margins, and that's not the case. But you're right, we will not be flat the same way we mentioned before.

And because of the time mismatch between repricing and the increased interest rate that it was faster than our repricing. .

Great. Thanks for your detailed responses. .

Next question comes from Bryan Keane, Deutsche Bank. .

I also wanted to ask about the price increases.

When I think about -- how much does the price increase offset the higher interest rates, so the 9 basis points you're calling out? I mean, do we get 50% there by the time we're fully implemented? And then do you plan to get the full rate increase impact sometime in the future? Or is that going to be -- you're going to have to eat that higher rate as a loss? Or do you finally, at some point, pass it through in 2023 or '24? Or when do you get back to fully pricing through the higher rates?.

Bryan..

Our intention is to reprice the biggest portion of clients, but it will take a time to do that because, as we said, we are adjusting step by step. We defined some stage for the clients, and we are going to adjust those prices. .

It will take time. I don't know exactly if we could cover all the impact coming from the cost. But the big portion, we believe, we can cover during the year. And maybe for 2023, we can have the biggest portion of the cost offset by the repricing of our clients. .

Right.

And so if the rates do go higher to 14% as maybe some are suggesting, does that mean then we should expect further price increases in '23 or even in '24 to get back to where we fully have passed through the higher rates at some point in the future?.

Yes. Exactly, you are right. If the interest rate in the country continues to grow up, we have the ability to adjust prices 1x, 2x, 3x, no problem. And also could impact 2023, and we have some adjustments in the coming years, if the cost continue to increase, and will affect all the industry.

So we believe all the players will adjust the prices going forward, if it's necessary. .

Great. That's helpful. .

And then my follow-up is just on Moip.

How fast is the revenue growth in Moip versus the industry? Are people still adopting an e-com and just thinking about how that business is positioned for revenue growth in this year versus the churn? I understand, with some of the smaller base coming off, but how much of an impact is there to the actual top line?.

Bryan. The -- What we saw in Moip was a very accelerated growth during the pandemic. And now we see that it keeps growing, but not the same pace that it used to do in the past, the same behavior that you can see in big marketplaces in Brazil. There are some other public companies here and they say that, of course, they increased it a lot.

They grew a lot during the pandemic because people stay at home and buy online. And now with people getting vaccinated and going back to the normal lives, the e-commerce keeps growing, but not at the same pace as it used to do in 2020, 2021. ..

Of course, we got Moip, we made some changes there in the structure and also in the systems. The business is, I would say, is in a very good shape compared to what we had a few months ago, and it's ready to grow.

I mean, we are going to be aggressive by getting new clients in this e-commerce that we had some features we had to fix and to launch at Moip, but we are ready to go and to approach new clients right now to keep growing Moip faster than the industry is growing in Brazil. .

I just -- go ahead, yes. .

I can add some color here. .

We are working in a more integrated way between our 3 e-commerce platforms on BoaCompra, which is our cross-border platform, and PagSeguro, e-commerce platform and Moip; so we can get the best of each platform. So we can grow faster in e-commerce and card-not-present transactions moving forward.

This is one of the areas that we are investing a lot, and we are certain that we will [ extract ] a lot of value from it. .

Yes. I mean, it will be great if you guys are still taking share versus the overall Brazilian e-com growth, and that's probably the most important point there. All right. .

We now proceed with Neha Agarwala, HSBC. . .

Could you just help us break down PagBank revenues? What percentages roughly interchange, how much comes from credit, et cetera? And do you have any update on the prepaid interchange regulation? And then I'll ask my next question. .

Neha, this is Eric..

Since 2021, [indiscernible] 2021, the revenues from the credit products has increased its share. Why? Because the credit portfolio increased from BRL 600 million to almost BRL 1.9 billion by the end of 2021.

So for strategic reasons, I cannot break it up to you, but you can assume that credit revenues or interest income coming from credit offerings is already or almost reaching half of PagBank reps..

Neha, related to the change in the regulation. You talked a little bit about the public hearing in [ '78 ] that there are some changes in the capital requirements for payments in institutions. .

So in our opinion, the Central Bank continues to foster competition in the industry, reducing potential regulatory asymmetry and also adjusting it to tie to company volumes and raise competition; market remains very concentrated in terms of credit, like 70% or in profits, more than 90% is concentrated in the top 6 big banks in Brazil.

And so maybe Central Bank is trying to grow financial inclusion in the sector. .

And we believe the scenario for PAGS is positive. This implementation will take 3 years, starting '23 and fully implemented in '25. And as we acquired a banking license in January 2019, we have already complied with the capital requirements regulation. Just to give you an idea, our Basel index is more than 60% right now.

And so we are very comfortable with these new requirements that the Central Bank launched in the [ '78 ] public hearing. .

My next question is on the financial expenses, which almost doubled quarter-on-quarter.

Given that the rates continue to grow up, what should we expect the financial expenses to look like? Is there any way that you can optimize the financial expenses during 2022?.

And I believe this financial expenses also include the amount that you pay for the deposits at PagBank. So could you just break it down a bit for us or maybe explain how should we think about financial expenses? You know, I think that is key for profitability for this year. .

Yes. Neha, as we said, working capital is our raw material. And especially in high-growth cycles, we need to add capital to the company. The biggest portion of our credit TPV is prepaid. As you know, we have a product that is an advantage to us in the market. That is the payment -- the prepayment right after the transaction is approved.

And as we are growing very fast in our TPV, we have a huge volume, and this is one big impact in our financial expenses. So I would like to say that we have a very good performance in our company, and it brings pressure to us in our treasury to fund this operation. .

On top of that, the country interest rate grew very fast and also impacted our financial expenses in Q4. As Dutra said, we moved it from 2.75% in our account interest rate to 11.75%, and the projection for the year is 14% -- almost 14% in the end of the year. .

And so in terms of deposits, obviously, deposit is the best option to fund the company because it's more cheaper than other options. And we are investing a lot in PagBank to have a more complete offer that engage more clients.

And then they can consider us as the primary bank, concentrating their wealth with us, and we can use these deposits to mitigate the high cost that we have in other funding options. .

Understood. .

I think last question, if I may ask. You mentioned that you focus more on collateralized products in the first half. Could you give us more color on what sort of products you are looking at? I know you mentioned payroll loans.

What is the kind of model that you're looking at for payroll loans? And what are the other loans that you can maybe provide during the first half?.

Neha. While we have this payable loans that you said, and we also have the product related to credit card with CDs, that's another product that we are making some changes and we see some potential there. But the idea is, of course, to have some collateral that we can use in case of delinquency from the client.

We just want to make it easy for them to hire the credit with us and also force to give the collateral in a very easy way. We don't think that today, we have the frictionless process in some of these products, so we are focused on that. And also in the salary backed loans that we have, we expect to have this product grow in the future. .

So those are the main products that we already have, and we are making some changes to improve and to grow in a more fast way in the following quarters. .

Our next question comes from Jason Mollin, Scotiabank. .

Can you hear me?.

Yes, we can hear you. .

Great. I have 2 questions. .

My first is on PIX, the instant payment platform. You stated that 9% of PIX transactions are done through PagBank.

So can you talk about the implications for PAGS, specifically its profitability?.

And my second question is on your 2022 guidance. When management thinks about that or even the first quarter expectations, can you talk about the upside and downside risks to revenue and profitability expectations? Perhaps some comments on the macro and the competitive scenarios. .

Jason, thank you for the question. .

Well, regarding PIX, the number that we gave that we have 9% share with 727 million transactions in PIX in PagSeguro -- in PagBank, I'm sorry, it does not affect our profitability. Because this is more like replacing wire transfers, making people to use more electronic transaction rather than cash, so we are growing 58% in TPV year-over-year.

So that -- we gave the disclosure of this number, this 9% more to show the strength of PagBank, how people are using us. And from all the transactions in the country, 9% of that happens to us, if you think about wire transfers, people sending and receiving money. .

So it's more like for the PagBank perspective, it's a very, very good number, and that doesn't mean this is cannibalizing, acquiring. So that's not the case here. It's more like people using PagBank more and more. .

Related to the margins that you asked, the -- we are doing this repricing that we said, the first wave is going to be done by April. We expect that from April onwards, we're going to have positive impact in our bottom line because of the repricing.

The repricing we have done so far didn't in fact, churn, so that's why we kept doing that in waves and we don't see that increase in churn. The industry as a whole is increasing prices. We see more rationality out there, with other players also increasing prices. .

So to be sincere, we see upsides on April onwards. If we have some change on that, we're going to give you more color. But the idea is to increase the prices and have this positive impact from April onwards. .

Regarding the macro, I guess, we already mentioned pretty quick. So inflation in Brazil, when inflation also around the world, in U.S. and also the central banks in order to keep inflations under control are increasing base interest rates. The expectation of the interest rates is to be close to 13% by the end of the year, some bank saying about 14%.

But we have the ability to pass this to our clients. Maybe not in the same pace or at the same speed that the interest rates grow, but we can offset that, at least a big part of that, if not 100% but a big part of that, by repricing our clients. Because at the end of the day, everyone will make repricing, our competitors and so on.

So we see the positive impact from April onwards. .

I appreciate your comments. .

Our next question comes from Domingos Falavina, JPMorgan. .

Congrats, I guess, on the ability to pass through the cost of fund increase, I guess, the Selic, I think this was a major concern. .

My question is more, I guess, on a little bit of an accounting adjustments you guys are doing. I realize you adjusted by BRL 142 million associated with PagPhone. And when looking through the presentation, it seems you adjusted revenues by BRL 3.4 million, but then the expenses by BRL 142 million.

Sorry if I'm not very familiar with this, if I missed [ on something ] but just want to understand kind of the history behind it. Like basically, you spent BRL 142 million buying cell phones and only sold BRL 3.4 million and you're basically writing this off, and you're not going to use these anymore.

Or why would you consider research and development projects then recurring?.

And then, I guess, linked to this one, my second question is when you -- soft guiding to about BRL 360 million in non-recurring earnings.

What adjustments are you doing to this non-recurring that is not share-based compensation? So ex share-based compensation, what else are you adjusting?.

Domingos, it's good to talk to you. .

Related to PagPhone, it's important to mention that it was a project whose acceptance has been lower than expected, so we decided to write off the assets. Part of the devices are in our inventories yet, but 100% of the write-offs was booked in our financial statements.

Look -- following the best accounting requirements to be conservative as we are -- we always are conservative in the company. The impact going forward is 0 because we did 100% of the write-off. This is the reason that we consider it as one-time because we do not expect any impact going forward. .

Related to revenue, it's because we have -- we had some devices sold by the company. And to be fair with anyone that is analyzing our income statement, we are excluding also the revenue that we had with these devices sold.

So it's just to be clear and to be fair, that we have positive impact in our revenue and we are excluding, and also the negative impact in our expenses, we are also excluding from the result. .

The other 2 effects that we had in Q1 '21, one is related to the digital losses that we had. Probably you remember that we gave this disclosure in Q1 '21 that we have some issues related to product that we launched.

And there was some chargebacks on that moment, and affected -- heavily affected -- it had affected our Q1 '21, and we do not have any other impact related to this product going forward. So it was a one-time on that moment. .

And also, we had a tax reversal in Q1. .

Sorry if I misspoke. So super clear, thank you for adjusting both ends. But I mean, more like the first Q '22, you're giving like BRL 360 million.

So I'm assuming there is no PagPhone impacts in the next quarter? Anything else that...?.

Yes, there is no impact in BRL 360 million in Q1 '22, so yes. Just to make sure that this write-off of the PagPhone, we executed the full inventory, and this is why we considered as a non-recurring effect. So investors should not expect further adjustments related to PagPhone anymore. ..

And also, there is no adjustment that we are expecting for Q1 '22, okay?.

Fantastic. .

We now proceed with Sheriq Sumar, Evercore. .

So hopefully, the last one on pricing..

So when I think about your pricing and the expectations for further increases in the Selic rate, are your pricing actions all done manually? Or are you adding like a CDI escalators, which is pretty common for like the larger merchants in the market?.

Just to explain a little bit. For the larger merchants, we have already negotiated the cost for them linked to the CDI, so it's -- it's almost automatically. Obviously, we have an agreement, we need to negotiate and discuss with them. But the adjustment is more -- is mostly that for micro merchants in terms of being linked to CDI. .

For small merchants, we have a pre-interest rate, so it's not linked to CDI. And we have this negotiation with them because it's more simple for them to understand the price, when we have a stable price across the year, across many years, and so it's easy for them to understand. And for them, we need to adjust in the system. .

And obviously, we are following all the conditions of the market, competition and the ability to adjust, we have. We just defined at some stages to do that, and we are doing a big portion right now in March that we will [ affect April on ]. .

And my follow-up question is for Alexandre.

Just wanted to get a sense of what's our top priority for 2022 as to how do you think, like, as to what changes do you think that could be implemented in the organization to kind of drive better profitability for 2022 and beyond as well?.

Well, our priority -- sorry. First one is to diversify our revenues and profits by consolidating PagBank. And secondly, we want to grow profitably in an efficient way in payments and above the industry.

Also, we are focused on developing our 2-sided ecosystem to provide much better experience for our consumers on both business, on the acquiring business and on the banking business. And we want to execute all of that in a 360-degree security approach, which we consider critical for our business, payment and banking business moving forward. .

And also, we want to invest a lot in our human capital, which is our most valuable resource. .

That's helpful. Appreciate it. .

Our next question comes from Jamie Friedman, Susquehanna. .

This is Anita calling in for Jamie.

Jamie has a question about the credit debit spend mix that you guys are expecting for 2022? What are your assumptions around that, and how it might impact the take rate? And if we should be aware of any seasonality in that mix?.

What we see between the mix between credit and debit, we see a credit getting some share back mainly because of the behavior of the clients, right? People are going out, people are going to restaurants, people are traveling, buying clothes again, using installments.

So usually, when people stay at home during the pandemic, the behavior for those who are at home is not to make the consumption of large tickets with installments or so on. So what we see that people going back to the streets, traveling again. And of course, all these things -- use -- usually people use credit cards and they use installments.

So we see the mix going back to what we had before pandemic with more credit card transactions, again, versus debit. So it's a good sign. .

And of course, we are doing the repricing to offset the increase in the interest rates that comes with the transactions through installments. .

Our next question comes from Kaio Prato, UBS. .

So my question is related to PagBank. We see that in your guidance for PagBank revenues in the first quarter, it ranges from around BRL 240 million to BRL 260 million, which implies a decrease in revenues quarter-over-quarter.

So in that sense, can you give more color about the drivers of this expected reduction?.

And moreover, to complement, we saw in recent news that card networks already indicated that would reduce interchange fees of prepaid cards.

Could you please clarify if fees are already lower today? And if this means that we can see further reduction on a quarterly basis going forward?.

And then I will follow up with my second question, please. .

Kaio. The main driver for the BRL 240 million to BRL 260 million revenues in PagBank is because of our cautious behavior in credit, so that's the main driver. That's what we did in January and February. We were more cautious in credit, so that's why the revenues are not growing maybe the same way they used to grow in the past. .

And that's fine. That's fine because at the end of the day, we have 13 million clients. The base keeps growing, people keep making transactions, and we just need to do credit in the right moment, in the right size for the right clients. So that's not an issue for us. That's not something structural.

It's something that we are just waiting the best time to do so. .

Regarding the interchange for the prepaid, we saw some networks making some change. There is no dates to be implemented. There is no execution plan in a very clear way so far, how it's executed. And for us, for the company as a whole, it's a neutral impact because we have this natural edge.

If the interchange goes down in one of our businesses, it also goes down in the acquiring so that you have lower cost there. .

But we need to wait to see how it's going to evolve this definition. It's good that some card networks decided to be proactive in making some changes, but I mean, we are fine with that because we have this natural edge at the end of the day. .

Okay, great..

And just a final one, it's actually related to it.

If you can share with us at least around the numbers, what is the percentage of this PagBank TPV today come from prepaid cards, please?.

Kaio, to be sincere, I don't even have this number on the top of my mind. We don't give too much disclosure on that. But again, this should not be an issue. Mainly because if we have, by any chance, some decrease in this revenue here, we're going to have a decrease in cost in the acquiring.

So from the borderline perspective, it is going to be the same, okay? Someone could say, but the revenues, in fact, in PagBank could go a little bit down, yes.

But at the end of the day, the company is going to have the neutral impact and it could be even more -- even positive because sometimes the prepaid cards in the acquiring, when you get some transactions there, grows faster than our prepaid card issuance. So it could be even positive for us.

But I mean, again, I don't have the number here to give you the exact number. .

Also worth to say that we have credit cards as well. We don't only have prepaid cards. We have credit cards, and we recently launched debit cards. So we are having this full portfolio of cards, and prepaid is going to be one of these three cards that we have in our company. .

Our last question comes from Geoffrey Elliott, Autonomous. .

Just in the context of the discussion on repricing. When we look at the advertised pricing that we can see for micro merchants on your website, it really doesn't look like much has changed at all.

So how does that fit into the discussion? What would it take for you to change those headline advertised rates that we can see up on the web?.

Well, Geoffrey, you are right. As you can imagine, we need to be -- we need to have this price increase in a very cautious and smart way. We didn't change the price in the website.

It doesn't move the needle because when you compare the 8 million clients that we have versus the website, the website means nothing because people that comes there still need to receive the device in the next following day because we have very good logistics.

But when you compare the TPV that the new cohort will bring versus what we already have from the 8 million merchants, it's nothing, so that's why we decided not to change there. .

It is important for us to keep getting new clients, that's what I said earlier in this call that the gross adds keeps strong. So we always balance between the return you're going to have by increased prices versus, let's say, if we get less clients or the amount of clients go down. So that's why we didn't change in the prices.

And we are doing this in a very [ surgical ] way, so to say, in our base so that we don't have the impact in churn and we have the positive impact in our financials. So -- but you're right, we didn't change the prices in the website. .

And Geoffrey, remember that the online sales channel is just one of the many that we have. So since we didn't change yet the price in our website, it's just one of the channels, okay, so make sure that. .

This concludes today's question-answer session. I would now like to invite PagBank PagSeguro for its closing statements. .

Hi, everyone. Thank you very much for your time for the questions. Looking forward to meet you in person and for those who we don't see, we can talk next call. Thank you very much. . .

And this conclude PagBank PagSeguro audio conference for today. Have a great night. Thank you..