Linx S.A.

Good morning and thank you very much for your interest and trust in Linx. Despite the numerous impacts of the pandemic we’re seeing a recovery in the retail market.

According to the most recent Monthly Survey of Commerce from the IBGE, the month of August of 2020 presented a growth of 6% vis-à-vis August of 2019, making it the fourth consecutive month in retail growth since the beginning of the pandemic. According to the Webshoppers by e-bit/Nielsen ecommerce has registered BRL39 billions in sales during the first semester of 2020.

This is 47% above the first six months of 2019, and of course, we are also following the gradual opening hours of malls and stores. Within this scenario, Linx has been capturing a number of opportunities in the market, leveraging the growth of Linx Digital and Linx Pay, which now represents 16% and 14% of the total recurring revenue of the third quarter of 2020.

As we have already discussed in previous calls, our intense investment in R&A and the recently signed partnerships have allowed the growth of these two areas even in a very challenging scenario for retailers, such as the one we are experiencing. The proof of this is that the GMV of the e-commerce platform more than doubled when comparing the third quarter of 2020 to the same period last year.

This volume is above the pre-pandemic level. I would also like to highlight the accelerated adoption of solutions such as Payment Linx gateway and QR code.

And it is important to say that we are already ready for the interests of Pix. In September we bought Humanus, which is a payroll and HCM, human capital management software company and that serves a midsize companies in different sectors of the company.

As a result, we have strengthened our portfolio of back office solutions on our end-to-end platform since retail is highly labor intensive and there is a growing demand for people management tools. All of this contributed to the results we released yesterday, our recurring revenue growing 19% year-over-year, a net revenue of BRL221 million with an organic growth of 7.5% and an EBITDA margin of 26%.

In other words, even in this adverse environment, we are growing robustly and sustainably. As expected, however, we had a sequential increase in provision for loan losses, something that Ramatis will comment.

It is important to note that we continue with no significant impacts on churn despite the retail sensitivity in the current scenario. This is due to the differentiated profile of our customer base in our portfolio, in addition to the low representativeness of monthly fees charged on retailers’ billings.

Finally, I want to say that our opportunity committees, formerly called Crisis Committee remains active in monitoring the impacts of COVID-19 and in addition to the various measures that have already been discussed in our conversation, it only guided us to return to the office in 2021 when the situation will be reassessed. With that we reaffirm our commitment to the long-term guaranteeing the safety of our teams to service customers and suppliers and consequently shareholders and the business.

Before we proceed with the call, I would like to stress that next Tuesday on the 17th at 2 p.m. we will hold an EGM exclusively virtual to deliberate on the Stone proposal for the incorporation of all Linx shares in addition to other matters.

You may find more details in subsequent events section of the earnings release and I emphasize that all documents related to the subject are available on our IR website. It is very important that all shareholders participant since as we are a dispersed capital company and without defined controllers, the decision of the minority shareholders in the meeting is sovereign.

Well, now I would like to give the floor to Ramatis to talk about the results of the third quarter of 2020. Ramatis, please go on.

Thank you, Alberto, and good morning to everyone. Piggybacking on Alberto’s comment, I will start talking about the provision for loan losses, which reached a 2.8% level over the net revenue of the quarter that is BRL6 million.

Despite this at the end of September about 96% of the invoice with an extended term we’re up to date a much higher percentage than the 87% that we had at the end of June. It is important to remember that we have a comfortable cash position BRL245 million in net cash and excluding the gross but the amount Linx to the lease resulting from the IFRS 16 and the net earn out for -- of accounts payable for acquisition the adjusted net cash of Linx would be BRL413 million [ph] in the third quarter of 2020.

Now, on slide three, we have the main highlights of Linx Core. Core’s recurring revenue grew 3% year-over-year, Neemo delivery app tripled its recurring revenue when compared to the third quarter of 2019 closing September with 4,000 active customers.

Hiper had a 51% increase in the customer base vis-à-vis September 2019 and its total recurring revenue increased 50% year-to-date compared to the same period of 2019. Millennium recorded a 41% increase in recurring revenues in the year, accelerating the integration of it solution with Linx OMS customers.

The fashion vertical had a sequential increase of 68% and the level of signing new contracts with 200% greater activation of customers compared to the second quarter of 2020. Finally, we added 47 Linx franchises to our base, totaling 381 franchises in September, responsible for 31% -- 35% of new activations in the quarter reinforcing our cross sell selling strategy.

Still on slide three, we have the main highlights of Linx Pay that presented an important growth of 72% in total recurring revenue with -- where there was a decrease in the representativeness of EFT, which now accounts for 44% of total recurring revenue, while other solutions such as Payment Linx, gateway and QR codes showed a significant growth in the third quarter of 2020. Here we also have an update of the POS, which was five times higher in nine months of 2020 compared to last year.

Now going to slide four we have the highlights of Linx Digital where the total recurring revenue grew 55% in the quarter when we compare it to last year, the e-commerce platform and GMV doubled in size compared to the third quarter of 2019 with a volume above pre-pandemic levels. Linx Impulse solutions represented 66% of the total Digital recurring revenue growing 19% in the third quarter of 2020 versus the second quarter of 2020 and the volume of ads was 204% higher when we compare to the third quarter of 2019.

Omni OMS ended the quarter with 20 customers and 6,800 rollout stores. In the same period 326 retailers publish their stocks on Linx partner marketplace and we reach the approval of 24 branches in the quarter for the sale of our Linx Digital solution.

Now I give the floor to Caro, Linx IR Director to continue with the presentation.

Thank you, Ramatis, and good morning to everyone. On slide five, we see that recurring revenue reached BRL216 million representing 85% of the gross revenue, 19% higher than the third quarter of 2019 and 4% higher than the second quarter of 2020.

In this quarter Linx Core represented 70% of total recurring revenue, Linx Digital 16% and Linx Pay 14%. This variation is explained by the constant growth and demand for digitization solutions that started in the last quarter due to the impacts of COVID-19.

Now on slide six, we can see a growth of 12% in net revenue compared to the third quarter of 2019 and a 4% compared to the second quarter of 2020. Moving to slide seven, we show that the adjusted EBITDA totaled BRL57 million in the quarter, 22% higher than the third quarter of 2019 with an adjusted EBITDA margin of 26% in the third quarter of 2020, 210 bps as higher in the year-on-year comparison.

Finally on slide eight, we show that non-recurring expenses for the quarter, which totaled BRL13 million. This amount is mainly composed of legal and financial advisory expenses, arising from Linx’s proposal by Stone and Linx stock option plan the impact of revenue from prepayment of receivables offered by Linx Pay hub allocated to the financial results and expenses related to due diligence process and acquire companies and net earn out reversal involving a company acquired by Linx in 2019.

Thank you for your attention and now we will go to our Q&A sessions on the quarter’s results.

Once again, I would like to thank all of you for your attention. Our results have given us great satisfaction because we have a team that is highly committed.

Therefore I thank my team because they have worked exceptionally. I thank all of our shareholders and I strengthened the invitation so that can -- so that everyone can participate in the EGM on the 17th that will deliberate on the orders of the day.

Thank you very much and until -- and see you on our next earnings result call.