Linx S.A.
Q4 2020 Earnings Call Transcript
Published:
- Operator:
- Good morning, ladies and gentlemen, and thank you for waiting. Welcome to Linx Conference Call to discuss the results of the Fourth Quarter of 2020. With us today is Mr. Alberto Menache, CEO; Ramatis Rodrigues, CFO and IRO; and Carolina Pontes, Head of Investor Relations. We would like to inform you that this event is being recorded and simultaneously translated into English. All participants will be in listen-only mode during the Company’s presentation, and after that we will initiate the Q&A session and further instructions will be provided. This event is also being broadcast live via webcast and may be accessed through Linx website at ir.linx.com.br, where the presentation is also available for download. Participants may view the slides in any order they wish. The replay will be available shortly after the event is concluded.
- Alberto Menache:
- Good morning. Thank you very much for your interest and trust in Linx. In 2020, we experienced many new things and challenges brought about by the COVID-19 pandemic. Among the many social and economic consequences, we saw the temporary shutdown of stores of sectors deemed non-essential. This movement occurred all over the country during certain periods of time, while at the same time, e-commerce became increasingly pervasive, offering our clients a very unique opportunity to continue to operate their businesses. With this backdrop, Linx, with its innovation DNA was once again able to offer alternatives to help retailers remain relevant and keep their businesses active even when their doors were closed. Some of the solutions that allowed retailers to continue to operate their business include Fast-Farma, Payment Link, mobile POS, and e-commerce platform that enables integration with marketplaces and payment gateway fully integrated with our ERP. According to data from the monthly trade survey from IBGE, even though sales volume was negative in the last two months of the year, in the full-year of 2020, sales were up by 1.2%. It is the fourth time in a row that retail sales are up year-on-year. With the December decline, retail sales were the same as they were in February prior to the pandemic period in Brazil. On the same note, e-commerce grew 41% vis-a-vis 2019, reaching a record figure of BRL 87 billion in sales, according to e-bit/Nielsen. We have yet to see any relevant impact on churn due to the unique profile of our customer base and also the low impact of monthly fees charged over retailer sales. Our Opportunities Committee continues to monitor the impacts of COVID-19. In addition to all the measures to protect our cash put in place since the early days of the pandemic, Linx has also implemented a home office work arrangement for 100% of its workforce since mid-March 2020. And so far, there is no forecast of return to the offices. We reaffirm our commitment to the long-term, ensuring the safety of our team, the service to our customers and suppliers, and consequently the commitment to our business.
- Antonio Rodrigues:
- Thank you, Alberto, and good morning to you all. Looking at the presentation on Slide 3, Linx Core recurring revenue increased 7% year-on-year, and I would like to highlight here a few points. When we look at the delivery app since the acquisition by Linx in February of 2020, the app posted an 135% growth of total recurring revenue, and its customer base increased 85% in the same period. Another highlight is the total recurring revenue of Hiper that grew 42% when compared to the 12 months of 2019. Customer base was up 40% vis-a-vis December 2019, and the Hiperadores network grew 40% in 2020. Big Retail recurring revenue grew 11% versus Q4 of 2019, and the activation of cross solutions was 56% higher when compared to 2019. And Millennium recurring revenue was up 25% versus Q4 2019, with an increase of 94% in the number of e-commerce projects when compared to December 2019. Finally, in December, Linx reached 409 franchisees accounting for 30% of all new acquisitions in Q4 2020. And same franchisee sales were 26% higher when compared to the 12 months of 2019. Still on Slide 3, we show the main highlights of Linx Pay that posted a total recurring revenue annual growth of 26%. TEF increased its share of Linx Pay total recurring revenue, reaching 49% in the quarter, and traded volume was 62% higher in 2020 vis-a-vis 2019. The Payment Link reached more than 14,000 registered customers, and QR Code and Pix together reached 13,000 customers already integrated to Linx's ERP. Another highlight was Gateway's total recurring revenue that grew 15% quarter-on-quarter, reaching 3,400 customers in December. Linx Pay's TPV was 4.5x higher in 2020 versus 2019. Still about Linx Pay, it's important to say that we also identified some unusual operating losses arising from a commercial partner of Linx Pay in the total amount of BRL 40 million, fully recognized in the fourth quarter of 2020. Linx has addressed the vulnerabilities that led to these losses. And this event does not impact the business combination of Linx and Stone as per the conditions set forth in the Association Agreement.
- Carolina Pontes:
- Thank you, Ramatis, and good morning to you all. On Slide 5, we see that the recurring revenue was BRL 228 million, accounting for 84% of gross revenue. Gross revenue was 6% higher when compared to Q4 2019. Year-to-date, Linx gross revenue totaled BRL 1 billion, up 11% year-on-year. This quarter, Linx Core represented 70% of the total recurring revenue, whereas Linx Digital accounted for 17% and Linx Pay, 13%. This variation is explained by the continued growth in demand for digitalization solutions that started last quarter due to the impacts of the COVID-19 pandemic.
- Operator:
- Thank you. Ladies and gentlemen, we will now initiate the Q&A session.
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- Operator:
- We now conclude the Q&A session. I would like to turn the floor over to Mr. Alberto Menache for his final remarks. You may proceed, sir.
- Alberto Menache:
- I would like to thank you all for all your efforts and your dedication throughout the years. And my special thanks goes to Linx's team who have been relentless during this transition phase. We've been enduring this pandemic moment for over a year. And I would like to thank our suppliers. I would like to thank Stone. They've been extremely collaborative throughout this process with CADE. And thank you to all of you who have been covering our performance despite the fact that we are still waiting for CADE's final approval. Thank you all very much. I wish you a very good day and a very good week.
- Operator:
- Linx conference call is now concluded. Thank you very much for joining us and have a very good day, and thank you very much for using Chorus Call.