Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cielo SA (CIOXY, Financial) has made significant progress in its transformation agenda, focusing on cost reduction and competitive capabilities.
- The company has seen productivity gains and healthier yields, particularly in the prepayment products segment.
- Investments in product and technology have reduced time to market by 70%, leading to new customer solutions.
- Cielo SA (CIOXY) has maintained expenses growth below inflation despite expanding its sales team.
- The company has improved its operational strategies and customer focus through the Pra Cima Cielo program.
Negative Points
- Short-term results are pressured by intensive investment cycles and a challenging environment in the SMB segment.
- There has been a decrease in credit card volume for SMBs, with a 3% decline quarter-over-quarter.
- The prepayment segment saw a substantial decline, despite efforts to increase penetration.
- New competitors in the SMB segment are creating pressure, with some offering aggressive pricing.
- The company is still working on improving sales force productivity and has not yet reached optimal levels.
Q & A Highlights
Q: Could you provide more details on the volume decrease in the SMB segment and the future outlook for sales efforts? Also, what are the dynamics in prepayment results?
A: (Estanislau Mendes Llobatera Bassols, CEO) The SMB segment's changes transcend commercial aspects, involving system, logistics, and service improvements. Recent investments are yielding medium-term results, with initiatives like D1 proving critical. Sales expansion is now showing results, with improved productivity and healthier yields. (Filipe Augusto Dos Santos Oliveira, CFO) Despite a decrease in prepayment volume, the spread increased, leading to a 26% year-over-year managerial result increase, reflecting a successful financial strategy.
Q: How is the competitive landscape affecting pricing strategies, and what should we expect moving forward?
A: (Estanislau Mendes Llobatera Bassols, CEO) The market is expected to grow by 8-10%, focusing on new features rather than pricing. Major players are enhancing product quality, emphasizing safety, simplicity, and ubiquity. Cielo is investing in technological advancements rather than competing on price, especially in the SMB segment, where rational pricing decisions prevail.
Q: Can you explain the slight decrease in prices and the reduction in staff expenses this quarter?
A: (Filipe Augusto Dos Santos Oliveira, CFO) The pricing adjustments are minor, aimed at channel-specific balance, with no strategic change. Personnel expenses reflect a previous quarter's one-off increase and line item reclassification, maintaining overall expenditure growth below inflation.
Q: How is Cielo preparing for potential changes in strategy due to the upcoming OPA bid, and what are the plans for new solutions like D0?
A: (Estanislau Mendes Llobatera Bassols, CEO) The strategy remains focused on leveraging synergies with partner banks, enhancing distribution channels, and improving processes. For D0, Cielo is working on technological and risk management aspects to ensure secure and efficient implementation, prioritizing fraud prevention.
Q: What is Cielo's stance on the new PIX features and potential exclusivity in payment acceptance?
A: (Estanislau Mendes Llobatera Bassols, CEO) Cielo supports PIX growth, with dynamic QR codes leading the way. The company is ready for tokenized payments and tap-to-pay PIX, emphasizing simplicity and security. Regulatory clarity from the Central Bank is awaited to streamline market operations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
