Cielo S.A.

Good morning and thank you very much for participating. I would like to refer to the results and our strategy.

Let's begin with the results in the second quarter. We had R$180 million in net revenue, something that is non-recurrent and a growth of 33% vis-à-vis the first quarter this year.

This is the third quarter in which we report this type of growth on a year-on-year comparison. We had a 30% growth and the growth of the SMB and long tail growth was 49%.

I highlight in this quarter, the strong discipline in terms of our expenditures with a drop of 5% in the year-on-year comparison with normalized expenditures. Let's speak about our strategies and priorities.

The Cielo strategy has not changed. We continue to have the same positioning.

We're working with credit and value added services and offering excellent services, improving cooperation and especially the quality of the services that are rendered. Having said this, we are trying to accelerate measures, so that we can offer our customers the very best experience.

I would like to highlight some initiatives that have been taken. The use of our commercial model.

We had the addition of 500 employees at the end of the year with a focus on SMB and this is a team that is already trained and working with technology. We had an impact because of the pandemic, somewhat stronger than we had expected.

And this, of course, had an impact on our credentials. But we are now going back to normalcy.

Important changes are being implemented in the strategic part of the company. We have made contracts with partners.

We have improvements in the last mile. And we have a new source of service which is in person for our customers.

And we're also maintaining and installing equipment. We have very well trained people who go up to the clients' establishment.

And this is a new initiative. We have tested this hero pilot in six locations with very good indicators and with satisfaction of the main indicators in the market.

We are expanding this to 153 companies, which represents 60% of our clients. We're investing to improve the service of our call center.

And we're bringing in house some key factors like quality and data analysis. Our clients will have more agile and efficient service.

Now, all of these steps are underway and should be completed in the coming months. I hope to be able to give you more results in the coming call.

To service our customer better is our absolute priority besides our other priorities. Now, we have had a great deal of innovation and new business.

And once again, we have captured money to improve the services for our customers. It is our understanding that this will be worthwhile only if we have excellent service and if we maintain our customer base.

Our mission is very high in terms of products and customer satisfaction. Thank you very much for your attention, and we will now go on to the question-and-answer session.

We have two questions. First, regarding the receivables registry, you did make some comments in the release.

If you could share with us which are the challenges that you are facing. And along these lines, which is a timeline that we should expect for you to overcome your problems.

The second question, somewhat more specific about your term product, when we look at the degree of differentiation, this product has grown, but somewhat less than in previous quarters. If you could speak about the main reason regarding why you had a certain slow down in these term products.

Thank you very much. These are our two questions.

The first one refers to the receivables registry. In our vision, while we do have a learning curve to learn how to tackle this platform and to better service our customers, our service continues to be normal.

Now, of course, this learning curve will go through all of our customers. And very soon, we will see the success of this initiative.

Now regarding your question about the term product for the SMB and the question regarding penetration, we continue to have growth, but somewhat below the growth we observed in previous quarters. The pandemic had a very strong impact.

And we still had this impact in the first months of this quarter, impacting our access to our customer base. Now this continues to be a priority goal for the company.

We have captured capital for this. And we will go back to working on this and recover levels in the fourth quarter.

Congratulations for your results. You made some comments on the cash and volumes.

If you could give us a highlight of what will happen going forward.

Let's begin with the – and I will give the floor to Filipe. What we have done is significant capture of capital to offer working capital products.

And we still have not had a relevant return. But at the end of the quarter, we implemented our receivables table.

We're teaching the customers on this new system. And we do hope to have more relevant disbursement with this new brand.

And I don't have any big highlight to share with you. But we have captured resources and these resources will be spent in the coming semester.

Some of these resources are already underway.

Regarding our contract with Caixa, we have made a comment in terms of our strategy. Well, there are two main points in terms of Caixa.

Initially, we stopped paying what we use to pay to the Caixa bank because of the results in the short term. Now, in the long term, we expect an improvement in churn that will offer us a savings that we want.

We haven't observed great changes in the churn because of Caixa. This is something that will happen in the long term, but we have created a retention strategy for those clients.

I have two questions on my side. The first, if you could give us more color in terms of your growth strategy.

We seem to observe that you have come to a normalization. You're balancing out these levels, sometimes you're below them.

And if you could give us a hint in terms of your innovations and initiatives in the second quarter that you highlighted in your presentation of the Heroes and the new commercial models. And finally, if you have anything regarding Merchant e?

I would like to begin with our growth strategy. And then I will give the floor for the second question.

Our traditional acquiring business has an absolute focus on SMB segment and long tail. We are going to recover market share in that segment.

And for that, we have added 500 new employees to our sales team. And it's a sales team with a new way of acting.

And we have business consultants that are hired for two different roles to originate clients and to maintain and retain these clients. And this is what these professionals are doing.

They're going to bring in a certain number of clients per portfolio. And this, of course, will allow us to gain traction.

And we should see results in the third and fourth quarter. The company growth will arise from this segment, the SMB.

And we do have other businesses that are being developed within the company. And we're working, of course, to create the working capital that we created during the first semester.

And to respond to your question on new business as value added services. I would like to give the floor to Filipe, who will speak about what will happen during the coming semester.

As we mentioned last quarter, we had very interesting things happening here in the company. We had an in-house initiative, with participation, with convertible events, as we announced in the first quarter.

Now, this strategy will continue on in the coming quarters. We will seek this type of solution to integrate into our ecosystem.

We have also made several partnerships with Google, with WhatsApp. Of course, we have already referred to this.

And we're trying to conclude our ecosystem through acquisitions and partnerships, depending on the market situation and depending on what is available in the market to fulfill our services.

I just recall that we had a question on multimedia. Now, when we look at this asset, the first step was to provide the turnaround of our operational goals in the company.

And we understand that this process is now mature. And in this type of meeting, it is our understanding that Cielo has to acquire or become acquirers in Brazil.

We are having a very mature turnaround and we're coming up with strategies to once again allocate to this asset.

I have a single question. And it seems that you have grown somewhat more in terms of margin.

Now, if you could refer to the dynamic of competitors, it seems that this loss of share is focused on the large accounts. And if you could give us some more color in terms of your strategies for this.

We only have the growth data from the competition and the results that they have had. Now, this applies to this semester, but more precisely applies to previous quarters.

And I'm going to take a look here at the data about competition. What has happened in the last quarters is that Cielo has lost market share, especially in the large accounts sector.

We have seen enormous appetite of our competitors for very large accounts. And this appetite translates into prices that are much too tight.

And this has impacted profitability in the large account segment. But we have been able to maintain several active accounts.

But in many cases, we have lost these accounts to the competition. We're referring to negligible volumes.

And this results in this negative variation of market share for Cielo. We're going to once again gain share in the SMB sector and long tail.

We have gained ground especially in this segment. And the dynamic that we have observed in the last quarters is a total reduction of share for Cielo because larger competitors are taking away the large accounts and focusing on that segment specifically.

I would like to take advantage that I have before going on to the next question and refer to some of the questions we received in our chat. The first question is a comment on the central bank regulations to match the capital for the payment institutions.

Last year, the central bank opened up a public consultation with a proposal of changing regulatory capital for payment institutions. And there was a division in three categories with different criteria in terms of the amount of capital they should have.

We're waiting for the final version to work with more quantitative protections. We have worked with our accounts, and Cielo will have no need for additional capital requirements.

But once again, we're awaiting the final standard issued by the regulator to be able to offer you more precise comments and share them with the market. Another question from an investor, specifically referring to the rationale to participate in the debentures, and I think we should have a broader discussion in the first semester.

We carried out important fundraising of almost R$7 billion for several purposes. The first purpose was to prepare the company to become stronger in its short-term activities in the situation of receivables or also enhancing our Receba Rápido which is geared to the SMB sector.

We also captured funds for liability management. We have senior quotas from our issuance of R$3 billion and we're going to settle R$3 million of debentures beforehand mid-2022, which means we are anticipating the payment of these debentures because we were able to raise funds in a competitive situation.

We have also made very competitive investments. And we're avoiding having to settle debentures in the middle of an electoral year which will be 2022.

So, this is a step of prudence to anticipate the settlement of these debentures at present because we were able to raise funds in the market at a very competitive price. These are the questions we received in the chat.

We will now return to the questions from that call.

In truth it is a follow-up of a previous question. Considering the dynamic of competition and the great participation of retail, the loss of the large accounts, what are your expectations for margin going forward until the end of the year?

Antonio, I think that's the most difficult question we have received. We speak about the trends in each of the items, but it's very difficult to speak about general trends.

In the SMB, we do have a promising thing, especially because of the addition of Receba Rápido. The faster we receive, more revenues can we get from the SMB segment, but we do have an enormous competitive pressure and a price struggle in this segment.

In the large account segment, we have dynamic for the gradual profitability earning in the segment. We have accounts with low margins and a recovery of the margins in that segment.

It's very difficult to say when this will become stable in the third or fourth quarter. And the result is that it is ever more difficult for us within the company because of this.