Hi, everyone. I'm Fernando Campos, Investor Relations Associate Director at B3 and welcome to B3's results videocast where Andre Milanez, B3's CFO, and I will analyze the results for the third quarter of 2024.

How are you doing, Andre?

Hi Fernando, how are you?

Good. Thank you.

So, Andre will start with an overview of the quarter.

Thanks Fernando. Well, regarding the dynamic of revenues, this quarter was quite similar to the second quarter.

reinforcing the efficiency and resilience of our diversified business model. We saw a 9% growth in our revenues compared to the third quarter of 2023 and advances across all of our revenue lines.

An example of the effectiveness of our diversification strategy is that since 3Q 2019 revenues in the cash equities market has shown a CAGR of 3%, while the other business combined had a CAGR of 15%. Another aspect that is worth highlighting is that the share of trading and both trading revenues in the cash equities market within B3's total revenues reached 30% in 2019.

During the pandemic, it went all the way up to 37%, but only represented 21% in 3Q 2024. And we do have revenues that are cyclical as part of our revenue base, but we also have much more revenues that are not that cyclical as the ones from the cash equities market.

Fernando will now elaborate more on the operational performance, which will help to explain this dynamic that I just talked about.

Thank you, Andre. I'm going to give some highlights from each of the B3 segments.

So, starting with our listed derivatives, we saw another strong performance during the quarter, reflecting not only the volatility in the macro scenario, which helped mainly the interest rate contracts, but also tariffs and product initiatives that we conducted in the recent periods, resulting in a growth of 21% in the ADV of the total contracts. Here, it's worth highlighting as well in the product agenda that B3 has been conducted, the success of the Bitcoin futures, which was launched in April this year, and we saw volumes reaching 120,000 contracts traded daily and BRL19 million in revenue for the quarter.

In the OTC market, OTC, it's benefiting from the strong and the heart corporate credit environment that we are seeing in Brazil and hike in interest rates, which means that investors are seeking for products which have more profitability and less risk. So, with this, we saw important advancements in the outstanding balance of some of our products.

So, in bank funding instruments, the growth was 29% in corporate debt when we exclude leasing inventories was 23% and in Treasury Direct reached 15%. Moving to cash equities where the level of interest rates are still hurting a little bit the business.

Volumes remains around BRL23 million, BRL24 billion for yet another quarter, which has been a trend since last year. Finally, in other segments, I think it's important to highlight the hot vehicle financing market in Brazil, which is benefiting our infrastructure for financing business.

Utilization in the technology line, which has been benefiting from the growth of the fund industry, especially fixed income funds and the growth of 7% in revenue from data, data including our new Neurotech and Market Data and -- which has been a positive aspect in our revenue, given our strategy within these companies that we acquire. I'm going to return the floor to Andre to speak a little bit about expenses and other highlights of the quarter.

Thank you, Fernando. In relation to the expenses, we had expenses of BRL831 million during the quarter, a decrease of 8% compared to the third quarter of 2023, mainly explained by the end of the amortization of the intangible assets recognized in the business combination with CETIP.

Excluding this impact, expenses would have been 14% higher than in the third quarter of 2023. The main reasons for that growth are the following.

We do have seasonal impacts coming from personnel and charges with the adjustment of annual salary and benefits, as you know, during the second half of the year, we had a growth in data processing with the acceleration of projects during the period. Expenses that are directly related to revenue growth.

So, I'm talking about here expenses associated with incentives and programs, for instance, the Bitcoin future and the Treasury Direct. So, expenses that have grown, but as a result of growth that we have seen in revenues.

And we also had some extraordinary expenses related to consultancy projects for some strategic projects that we have. I think it is worth highlighting that despite the acceleration that we saw during this quarter, we do remain fully committed to our guidance of expenses this year.

We still expect to arrive at the year-end at a lower bend -- at a lower range of our guidance. We do have to recall that last year, we had a very, let's say, strong fourth quarter or last quarter of the year in terms of expense growth, and we do not expect a similar behavior this year.

So, this year, we had seen a much, let's say, linear trend in terms of expense growth, and that what potentially caused the attention of this quarter when we compare 2024 with 2023, which had a very, let's say, non-linear trajectory of expenses, right? Talking about the financial result, excluding the effect of FX variation, we had BRL60 million positive result, in line with the asset and liability management activities carried out by the company.

In this context, I think it is worth highlighting that the Board of Directors approved the issuance of BRL1.7 billion. And as a result of that, we have revised our leverage guidance from 2 times gross debt to EBITDA to 2.3 times gross debt to EBITDA.

This was a very, let's say, opportunistic transaction, taking advantage of a very favorable environment in the fixed income market in Brazil with very tight credit spreads and a good opportunity for us to reinforce our cash position, providing us with us with more flexibility. Regarding the results as a result of that dynamic of revenues and expenses that we discussed, our EBITDA was BRL1.7 billion during the quarter, a 6% increase with a recurring EBITDA margin of 70% during this quarter.

Our net income also grew again by 6%, totaling BRL1.2 billion during the quarter. In relation to our distributions during this period, we have returned back to shareholders as dividends and interest on capital, BRL516 million.

And also, there were BRL736 million employed in share buybacks during this period. I think it is worth highlighting that since the beginning of this year, we have already canceled 220 million shares, which represents around 4% of the company's share capital only this year.

And finally, there were some important advances in our product agenda which included the launch of futures and option contracts on the small cap B3 index during the month of August, expanding our product offering for the investors. I think it is also worth calling the attention to some changes that we have introduced to the Treasury Direct, featuring new investment limits and the development of a gift card platform, always aiming to make the investment environment better and more accessible to the retail investor.

I think that concludes our comments on the results. Thank you very much.

Hello. Good morning.

This is Lindsey [Indiscernible] on for Tito Labarta. Thank you for taking my question.

I was wondering if you could just provide some more color on cost control going into 4Q? And then on that note, how should we think about expenses going into 2025?

Should we see a ramp up, about the same level, just where are you guys thinking on that level? Thank you so much.

Hi Lindsey, thank you very much for taking the call and making the question. Look, as we discussed a little bit in our remarks, I think what we had this quarter was, let's say, a slightly different distribution than we usually have in terms of expenses between quarters.

I think that has to do a lot with better management that we have been doing in terms of expenditure throughout the year, trying to avoid a higher concentration of expenses only in the fourth quarter. So, having said that, we do -- we will still meet the guidance that we gave to the market.

We are still working and our goal is to arrive at the lower range of that guidance. And going forward, we still remain committed to deliver a growth in terms of expenses, much in line with inflation, meaning slightly above or slightly below inflation.

That remains the case going forward, not only for 2025, but for the following years as well.

Hi guys, good morning. Thank you for the opportunity of taking questions.

My question is related to the new initiatives, that's new Neurotech and Neoway, if you expect that to be positive net margins? Thanks.

Hi Arnon, thank you very much for your question. Look, as we have been discussing, I mean, in terms of Neurotech, Neurotech was a company that was very profitable when we acquired.

If you look at the P&L for Neurotech, you might get the wrong impression in terms of its operation because it has been somewhat being contaminated by a lot of expenses associated with the acquisition. But Neurotech already generates cash, so it's not burning any cash.

It's already a profitable company. And the same now is true for Neoway as we did discuss previously, that was one of our key targets decides resuming growth and launching new products and expanding revenues also to do that in a sustainable way with a healthy generation of cash flow from these companies, which we have already achieved.

So, I think going forward, we do have the expectation to continue to grow revenues from these companies as we advance both in the launch of new products and the expansion of client base for or already existing products upselling and cross-selling opportunities as well.

Thank you.

Hey good morning and congrats on the results and also on the new conference call model. I would like to explore a little bit on competition, as you might imagine.

If you could explore a little bit what -- how have you perceived the news flow. So, over the last month, we got more details on we charge business lines that this new player should operate and also on timing.

So, if you could update your views on this subject would be great. Also a second question, if I may, if there is any potential regulation changes that you are considering on the short midterm that should impact your business?

Thank you.

Thanks Antonio. Look, I think in terms of the competitive environment, I don't think we have seen anything really new in the recent months.

I think we know of a few initiatives there going on trying to compete with certain markets where we operate. I think the timeline of those projects are -- remain the same.

So, one of them aiming to be operational and to launch by the end of 2025, 2026, which is possible, although a challenging timeframe. And I don't think we have seen any substantial changes in terms of what their product offering will be or the value proposition that they will bring to market participants.

Our focus remains in ensuring that our client demands are being met on a timely manner that we are bringing innovation to the market with new products, better services, new functionalities. And I think that's what's going to make the difference at the end of the day and will enable us to remain being leaders on those markets regardless of any other attempt of a new entrant in these markets.

The other question was regarding? Sorry.

Regulation changes, if you have anything.

Well, we do have still ongoing. It's not -- technically, it's not a public hearing, but the Securities Commission asking for input from market participants regarding internalization of orders that's a discussion, an ongoing discussion.

We will be presenting our inputs and all the material that we have prepared as part of that request for additional information as other market participants will also do the same, but that's a discussion that we will remain in the radar for a while so far. At the moment, we are not expecting any significant changes regarding that subject.

That's potentially today the main regulatory discussion affecting us. That is ongoing.

Okay, that's super clear. Just a follow-up on the first one.

Would you say that your current pace of investments on the deployment of new products, is it kind of enough to offset a potential to competition? Or would you say that you need to speed up the project development to meet market expectations to face competition?

Look, I think there are certain things that we want to speed up, but very specific ones. But in general terms, I think we have been increasing the pace or the focus on the launch of new products.

If you take the amount of products that B3 has brought to the market in the last seven years. It's much bigger than the new products that were launched by the prior companies in a much bigger time horizon.

So, I think since B3 was created, a lot of that focus was already implemented because we knew we -- the only way for us to remain leaders on those markets and be prepared for a more competitive environment would be to focus on that, on client needs, on service and better services, on client satisfaction, on product and innovation. So, I think, overall, I think we are pleased with the way this has been progressing, even though there might be opportunities for us to improve in specific areas.

That does not mean that we will have to change substantially the level of investments that we already have today for product development and new services.

That’s super clear. Thank you.

Hi, guys. Good morning.

Thank you or taking the question. I wanted to discuss the listed derivatives revenue performance.

While it was still a good one in the third quarter, but we saw the operational figures for October, and it was below the average that we have been seeing in the past couple of months. So, in the last earnings call, you guys mentioned some structural changes that have been implemented into the product -- in terms of product and pricing.

So, I was wondering if those structure changes should help to offset and make this line go up again back to closer today, average that we have been seeing in the past couple of months? Or we could still see it kind of pressured given lower volatility?

I don't know. Just wanted to understand the moving drivers.

Thank you.

Thank you for your question, Maria. This is Fernando.

So, what we saw in -- I think first of all, never you're looking at the operational performance for a month. You should always take that with a grain of salt.

It's -- sometimes it's just a hiccup, some that is not -- could be an obligor. And on the note, we are seeing a stronger month for derivatives in November already and even for cash equities.

So, I think it's always important to be cautious when we look at the operational performance on a monthly basis. Having said that, we are still confident that the derivatives market is on a new level.

So, we expect that to be a strong source of revenue for B3. We do have implemented changes in tariffs for some of our products, which have been super successful, some new strategies, the product development agenda here is also doing really well.

We saw even though all the, I would say, traditional contracts didn't perform really well in October, we did see a strong performance for future of bitcoins in October. So, this agenda is going well.

So, -- and it's important to remember that the way that we look at tariffs in the derivatives market is a little bit different than what we do for the cash equities. So, in the derivatives market, it's -- we do more punctual and more specific tariff changes because we can be more assertive given that the market -- the number of players, it's much more concentrated.

So, in summary, we are still pretty confident that this line will help our revenues and we will stay strong and we are in a new level for listed derivatives.

Perfect. Thank you, Fernando.

Thank you for the question. When I think about the revenues and product pipeline that we've been developing and looking also for 2025, can elaborate a little bit on the front.

And of course, the revenue-linked expense line has been going in tandem with a lot of these new things that you've been ramping up. From what you see for 2025, how should this line look like?

Thank you.

Hi Pedro, Thank you. Thanks for your question.

I think there are a very, let's say, robust pipeline of new products and new things that we will continue to bring and try to launch to the market. I think we are very excited with what we have been seeing on the fixed income market.

I think that opens new opportunities for us with pricing solutions, data solutions, solutions to help improve liquidity and new revenue pools that are, let's say, presenting themselves as we see that market growing and developing. We are also very excited with products such as the Bitcoin future, which has been doing extremely well.

We do believe that there is room for other products, not necessarily only from the crypto, let's say, family, but other products that are, let's say, more focused on retail investors and things like that. So, there's a lot of interesting things planned for next year.

Some of those will do -- will have incentive product programs associated with them. And I think the more successful these products are, we will see a growth in that particular line of expenses.

But, in my opinion, that's a good problem. That's a growth directly associated with revenue growth that benefits us and the player that is sharing those incentives with us as well.

So, I think there is a lot of interesting things for next year. I don't think there is a single 1 that will be like a silver bullet.

But as it is the case for most of the things that we ended up doing, the combination of all these things is that what will make the difference in our top line and in a sustainable growth for the company.

Thank you.

Thank you. Good morning Andre, Fernando.

Thank you for the presentation. My question will be on the crypto products, more specifically Bitcoin futures.

Good revenue, right? The ramp-up was pretty fast.

You were making almost BRL100 million now with the product. So, my question to you is, how much potential do you see in the product?

I think the best way to compare here that we can see as a bull case would be the futures of Index, which today generates almost BRL1 billion in revenues to you. Of course, this is a super bull case, but I just want to get your views on how large this product can get.

There was a fresh ramp up, but in the last month, specifically, there was some stabilization on volume. So not sure if we are already on a mature level of trading volumes or not.

And if you can just provide a little bit more color on the incentives rebates. I understand crypto was part of the reason revenue-linked expenses grew.

If you can share a little bit how much you pay in rebates out of the BRL19 million revenues you build up this quarter just to get a sense on how much P&L effectively the product is contributing to you? Thank you.

Thank you for the question, Grespan. I think we are, as I said, satisfied with the progress that we have seen on this particular product.

But I think we still see a lot of potential from that. It's hard to tell you how much potential we still have on the product.

But if you compare the number of individuals trading that product compared to the mini future. If you look at the level of institutional investors that we have in that product, I think there are -- by several metrics, there are still -- I don't think we have yet reached a point of maturity.

It has been only seven months since the product was launched. So, I don't think we are at a maturity, but I cannot give you a precise number of how much further that can go.

What I can tell you is that we still see a lot of potential for further development. And more recently, that has been the case, right?

I think that will become more clear as we disclose the numbers for the month of November. But if you look at the daily statistics that we published, we will see there has already been some improvement to the figures that you saw during the last quarter.

Regarding the incentives, there is currently a program whereby we are paying, if I'm not mistaking, BRL1 per contract to the intermediaries, that's not -- this level of incentive is not -- it will not remain at that level forever. At some point, it starts to reduce, but that's the current level of incentives that we have associated with that product.

That's clear. And if I may follow-up just to be sure.

Out of the clients that trade the product today, it's fair to assume that it's 100% retail -- almost 100% retail?

There is a good proportion of the clients trading retail, then you have, of course, high-frequency traders and liquidity providers also trading. But the number of institutional investors trading that product is still small, but has been growing.

So it's not 100% retail. But today, a significant portion it is retail.

That’s clear. Thank you.

Thank you very much once again for joining our call, for your support. I would like also to take this opportunity to thank the whole team for preparing our earnings release and all the materials.

As always, you've done a very good job. And finally, I would just like to remind you all that we will hold our B3 Day on December 18th.

So, I hope to see a lot of you in person at our offices and for those that could not be able to attend, we will have live transmission of the event as well. So, please save that date in your calendars, and I hope to see you all in December to discuss a little bit about the opportunities and our main initiatives strategically speaking for the next years.

Thank you very much. Have a nice day.