apimec/sp - presentation
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APIMEC - SPJuly 31, 2012
DISCLAIMER
The Company makes forward looking statements that are subject to risks anduncertainties. These statements are based on the beliefs and assumptions of our management as wellas on information currently available to us. Forward-looking statements include information regarding ourcurrent intent, beliefs or expectations, in addition to those of the members of the Board of Directors andExecutive Officers of the Company.
Forward-looking statements also include information regarding our possible or assumed future operatingresults, as well as statements preceded or followed by, or that include, the words ''believes”, ''may”,''will”, ''continues”, ''expects”, ''anticipates”, ''intends”, ''plans”, ''estimates”, or similarexpressions.
Forward-looking statements are not guarantees of performance. They involve risks, uncertainties andassumptions, for they relate to future events, thus depending on circumstances that may or may notoccur. Our future results and the creation of value to shareholder s may differ significantly from thoseexpressed in or suggested by these forward-looking statements. Many factors determining theseresults and values are beyond Cielo’s ability to control or predict.
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CIELO | HIGHLIGHTS
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Transaction financial volume , according to market criterion totaled, R$ 93.1 billion,+22.9% and Transaction financial volume, according to accounting criterion, totaled R$ 91.7 billion, +22.9%
2Q12 x 2Q11
Credit R$ 58.6 billion, +25.1%Debit R$ 33.1 billion, +19.2%
Net Operating Revenue + prepayment of receivables totaled R$ 1.5 billion, +31.3%
Net Income totaled R$ 548.9 million ,+29.6% and Net Margin of 37.3%;
Adjusted EBITDA totaled R$ 914.1 million,+26.9% and Adjusted EBITDA Margin of 62.2%;
Equipment Rental totaled R$356.0 milhões, +34.2%
OthersCielo announced an agreement for the acquisition of 100% of the capital stock of U.S. company Merchant
e- Solutions (MeS)
Cielo launches Crediário in partnership with Banco do Brasil and Bradesco
Cielo wins the “Best and Biggest” award from Revista Exame for the sixth consecutive year as the best
Specialized Services company. Also chosen for the second year as “One of the Best Companies to Start
your Career” by the Você S/A magazine guide, in addition to being included for the second time among
the 20 most valued brands in Brazil according to a ranking by BrandAnalytics/Milward Brown released by
Istoé Dinheiro magazine
Crediário is a unique and exclusivetechnology developed by Cielo through
which merchants can offer an
additional payment method that
allows cardholders to pay in up to 48 installments, accessing a pre-approvedcredit line from their checking accounts
through their bank cards.
Banco do Brasil and Bradesco made
available R$100 billion in credit to the
product. In the coming months others banks will join (HSBC and Caixa Ecônomica
Federal).
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CIELO | CREDIÁRIO PRODUCT
MERCHANT• More sales volume: more than 20 million cardholders from BB and
Bradesco with pre-approved lines of credit;• Additional payment scheme without directly financing the cardholder;• Better cash flow as funds are received in D+1;• Increase in average ticket;
CARDHOLDER• Pre-approved credit line from the bank;• Attractive interest rates;• Additional to credit card’s limit;• Simulation at the point of sale;
CIELO• More sales volume;• Merchant Discount Rate similar to credit in installments.
CREDIÁRIO: more advantages to participants
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CIELO | CREDIÁRIO PRODUCT
CIELO | MeS ACQUISITION
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MeS Highlights• Leading e-Commerce payment services
provider with full range of merchant acquiring, e-Commerce & fraud management solutions
• Proprietary, internet-based, next-generation technology platform with best-in-class scalability, analytical capabilities, delivery speeds and cost of services
• In-house development of products and services provides superior transaction economics across the value chain
• Portable platform with upside for expansion
• Good organic revenue growth, margins and free cash flow
• Seasoned management team
Rationale
• Enhancement of Technology Platform
– Opportunity to leverage MeS’ technology to the Brazilian market and Rest of World
– MeS platform designed to achieve maximum scalability, efficiency and reliability at a low cost
• E-Commerce Improvement
– E- Commerce is fastest growth merchant category in payments
– MeS has expertise and proprietary technology tailored to serving e-commerce merchants
• Strong MeS Financial Performance
– High organic growth and attractive margins
Agreement to acquire 100% of MeS for $670 million
• End-to-end payment processing functionality:
– e-Commerce
– Business-to-Business
– Mobile Commerce
– Card present and card not present merchants
– Recurring Billing
– Risk Management
WEB-BASED DELIVERY
• A white-label and fully customizable business solution:
– Transaction Processing & Reporting
– E-Commerce & Mobile
– Risk Management
– Product & Pricing
– Compliance Administration
– Sales Training and Marketing
– Business Analytics
FULL RANGE OF ACQUIRING, E-COMMERCE & MOBILE PAYMENT SERVICES
* Last twelve months ended May 31, 2012
MERCHANTS AGENT BANKS
MERCHANT e-SOLUTIONS AT A GLANCE
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Year Founded 2000
Number of
Merchants
70,000+
Processing
Volume
$14bn+
# of Settled
Transactions
130mm+
LTM Net Revenue of
$124 million*
Financial Indicators 2Q12 2Q11 1Q122Q12 X 2Q11
2Q12 X 1Q12
Financial Volume(R$ million)
91,720.8 74,622.6 88,081.8 22.9% 4.1%
Transaction(million)
1,282.0 1,094.2 1,269.4 17.2% 1.0%
Net Revenue *(R$ million)
1,470.1 1,119.3 1,399.5 31.3% 5.0%
Cost of Services(R$ million)
(407.7) (342.4) (399.1) 19.1% 2.1%
Operating Expenses(R$ million)
(223.8) (115.4) (125.9) 94.0% 77.7%
Unit Costs + Expenses ex subsidiaries
(0.44) (0.38) (0.37) 17.8% 20.8%
Adjusted EBITDA (R$ million)
914.1 720.2 947.8 26.9% -3.6%
Net Income(R$ million)
548.9 423.6 566.6 29.6% -3.1%
Blended Net MDR (bps) 102.6 101.2 105.3 1.5 (2.7)
Credit Net MDR (bps) 116.1 117.5 118.6 (1.4) (2.6)
Debit Net MDR (bps) 78.9 73.7 81.2 5.2 (2.3)
CIELO | FINANCIAL INDICATORS
8* Including prepayment of receivables present value adjusted
CIELO | OPERATING PERFORMANCE
9
13.4%
4.1%
79,775
91,72188,082
22.9%
74,623
91,2531,269 1,282
1,0941,167
1,302
1.0%
17.2%
4.3%
639 678 730 739 751
455 489572 531 531
2Q11 3Q11 4Q11 1Q12 2Q12
Cielo- Number of Transactions (million)
Credit Debit
46.821 50.368 56.034 56.786 58.571
27.802 29.407 35.219 31.296 33.150
2Q11 3Q11 4Q11 1Q12 2Q12
Transaction Financial Volume (R$ million)
Credit cards Debit cards
1.115
1.153
1.1991.212
1.264
2Q11 3Q11 4Q11 1Q12 2Q12
Cielo- Number of Active Merchants (1 transaction in the last 60 days)
CIELO | REVENUES
10
POS 2Q11 3Q11 4Q11 1Q12 2Q12
AverageRental(R$/month)
65 65 67 71 75
Installed POS (thousand) 1,351 1,402 1,484 1,524 1,586
MDR 2Q11 3Q11 4Q11 1Q12 2Q12
Net MDR Debit
74 77 81 81 79
Net MDR Credit
117 118 119 119 116
24.7%
1.4%
34.2%
9.5%
955.4927.8
941.2
823.1
754.9
550,1 596,6669,0 673,7 679,7
204,8226,5
286,4 254,1 261,4
2Q11 3Q11 4Q11 1Q12 2Q12
Commissions Revenues (R$ million)
Credit Debit
265,1 272,3
296,1
324,9 355,8
2Q11 3Q11 4Q11 1Q12 2Q12
Equipment Rental (R$ million)
CIELO | PREPAYMENT OF RECEIVABLES
11
54.2%
11.7%
3.376,9 3.894,6
4.899,2 5.289,9
6.162,2
7,2% 7,7%
8,7%9,3%
10,5%
0,0%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
7,0%
8,0%
9,0%
10,0%
11,0%
12,0%
13,0%
14,0%
15,0%
16,0%
17,0%
18,0%
19,0%
20,0%
21,0%
22,0%
23,0%
24,0%
25,0%
26,0%
27,0%
28,0%
29,0%
30,0%
-
1.000,0
2.000,0
3.000,0
4.000,0
5.000,0
6.000,0
7.000,0
8.000,0
9.000,0
10.000,0
2Q11 3Q11 4Q11 1Q12 2Q12
Prepayment of Receivables (R$ million)
Financial prepayment volume % Prepayment over Credit Financial Volume
58,5 56,0 55,8 55,7 57,7
2Q11 3Q11 4Q11 1Q12 2Q12
Average Term (days)
137,7
159,9
193,1 190,1
212,4
2Q11 3Q11 4Q11 1Q12 2Q12
Revenue of Prepayment of Receivables ex Adjustments (R$ million)
CIELO | COSTS
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Reduction of 5.3% of the unitcost excluding the subsidiariesand the additional brands fee
If the impact of depreciation is eliminated in the sameanalysis, the reduction wouldhave been 8.7%
Costs of services rendered
Depreciation and amortization
0.318 0.261 0.276
Unit per transaction
0.040 0.017
Increase of 2.0% of the unitcost excluding the subsidiariesand the additional brands fee
If the impact of depreciation is eliminated in the sameanalysis, the increase wouldhave been 2.0%
0.318 0.283 0.2780.040 +0.005
407.7
334.9301.8
407.7
352.3362.8
11.0%
-5.3%
3.0%
2.0%
333,9
261,1 244,1
73,8
50,7
22,1 73,8
57,7
2Q12 Reported Costs related to subsidiaries
Additional brands fee 2Q12 Adjusted 2Q11 Adjusted
Costs Comparison 2Q12 X 2Q11 (R$ million)
333,9 289,0 280,5
73,8 50,7
5,8 73,8 71,8
2Q12 Reported Costs related to subsidiaries
Additional brands fee 2Q12 Adjusted 1Q12 Adjusted
Costs Comparison 2Q12 X 1TQ2 (R$ million)
CIELO | EXPENSES
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In both comparisons (2Q12 x 2Q11 and 2Q12 x 1Q12), the main impact for the increase was due to sales and marketing expenses (with the realization of some initiatives and campaigns that were postponed from 1Q12 and the incentives paid to partner banks due to shared sales and marketing expenses.)125,9
223,80,0 0,7
20,822,4
54,0
1Q12 Depreciation and
Amortization
Personnel General and Administratives
Other Expenses Sales and Marketing Expenses
2Q12
Operating Expenses- 2Q12 X 1Q12 (R$ million)
115,4
223,80,6 2,615,4
33,9
55,9
2Q11 Depreciation and Amortization
Personnel General and Administratives
Other Expenses Sales and Marketing Expenses
2Q12
Operating Expenses- 2Q12 X 2Q11 (R$ million)
CIELO | FINANCIAL PERFORMANCE
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-3.6%-3.1%
Adjusted EBITDA (R$ million) Net Income (R$ million)
29.6%26.9%
423,6457,5
504,5
566,6 548,8
38% 38%37%
41%
37%
25,00%
30,00%
35,00%
40,00%
45,00%
50,00%
55,00%
60,00%
0,0
100,0
200,0
300,0
400,0
500,0
600,0
2Q11 3Q11 4Q11 1Q12 2Q12
Net Income Net Margin
720,2 747,0
839,8
947,8
914,1
64%
62% 61%
68%
62%
45,00%
50,00%
55,00%
60,00%
65,00%
70,00%
75,00%
0,0
100,0
200,0
300,0
400,0
500,0
600,0
700,0
800,0
900,0
1.000,0
2Q11 3Q11 4Q11 1Q12 2Q12
Adjusted EBITDA Adjusted EBITDA Margin
[email protected]+ 55 11 2596 1701
CIELO S.A.