Holding in progress.
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Our earnings release presentation. We'll be discussing the third quarter of 2024. My name is Nicholas. I'm IR Director. We also have Pedro Ripper, our CEO; André Veloso, our CFO; and João Stricker, our VP of Operations for Brazil and LatAm. We are recording this presentation. Everyone can not only listen to us during the earnings release presentation, but also see our panelists, and you can see the slide deck on the screen. We also have the option of simultaneous interpretation into English, so please choose this language should this be your preference.
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Right after our presentation is over, we're going to start a Q&A session for analysts and investors. You'll receive further instructions on how to ask questions when we start this session. Before we proceed, we'd like to say that any forward-looking statements that may be delivered during the presentation regarding our forecasts, our assumptions, or our goals are based on beliefs and assumptions by our board, as well as on information that is currently available to us. This entails risks because it relates to events that may or may not happen in the future. Investors must understand that overall economic conditions and other operating factors could have an impact on our performance in the future, leading to significantly different results. Let me now hand it over to Pedro, who will be starting our presentation. Morning, Pedro.
Morning, Nicholas. Morning, everyone. It's great to be here and to talk to you about the evolution of our results and strategy. To get started, I think we should have a macro overview. We've had significant progress when it comes to geographies. We are expanding our scope of work. We are now in five new countries after a while of working in 52 countries. We are now getting into some European countries. We're having a new experience in a mature country like Switzerland. We have Slovenia, we have Bosnia, and we are attracting new clients. We're going to zoom into that, and we're going to see how this goes well with our different business areas. We're also working with our recurring services in Brazil, and we have nine out of the top 15 largest recurring service companies in Brazil. We want to get the biggest players.
Right now, we have four business lines. Two go hand in hand. They are payments and software. This is what we call vertical payments. We also have the microfinance market, and finally, we have digital subscriptions, which is something original. When we look at these four business lines regarding our accounts and the partners that we have here, we do have some highlights we'd like to touch on. For payments, we made good progress. We have an additional 72 accounts compared to the previous quarter. We have two new big enterprise clients. The Salta Group is the biggest private group for education in Brazil, so we got it a while ago, but now it is operational. And we see its first impact on the results of our company at the beginning of Q4, but we're going to see a lot of results in Q actually at the beginning of Q3.
We're going to see lots of results in Q4 and also 2025. For our utility strategy, we got Light a few months back, but it's now in operations. We still have very minor impact on Q3, but for Q4 and for 2025, we're going to see more contribution from Light. And for telecommunications, for which we have an operation that is focused on CSPs or ISPs, we have Unifique joining us now. Something that is not a bigger highlight, but it's still important, is that we are using the strategy of getting our SaaS clients. Right now, we have around 1,344 clients. But then we upsell payment solutions to SaaS clients. We were able to convert 70 SaaS clients so that they would include payments in the solutions offered by Bemobi.
So we're not only getting new clients with whom we have no relationship for software or payment, but we also have another growth engine, which is upselling or cross-selling, which was the case for these 70 clients. SaaS was also interesting. We got an additional 11 accounts. We got one additional account for microfinance, and another area is digital subscriptions, where we were able to onboard another 14 operators, especially for the five new countries that I mentioned two slides ago. So we have these four business lines. Since we are a B2B2C business, we also use indicators of volume when it comes to the end client. For payments, we always use TPV, which is very common in this industry. We have good growth year after year. We grew 24%. For SaaS, we see the number of licenses.
Usually, companies pay for seats or for use, and we had a 19% growth here. We've been having setbacks with the number of microfinance transactions, which is our indicator here. But we need to explain that this is different from other areas where we have TPV or the number of licenses or the number of paid subscriptions. Here, in this case, even though we did have a setback in the number of licenses, when we see the behavior of our revenue, we actually also had revenue growth here, both quarter over quarter and year-on-year. So there's a mismatch. The number of transactions is going down, but the revenue is going up. This happens primarily because of two reasons. First, under what we call microfinance, we have two different types of transactions. Some are very focused on advance of airtime or data packages for telecommunications.
And then we have a new promising area where we sell scoring transactions. So Bemobi uses alternative data to give accurate credit scoring, especially for fintechs that are issuing credit cards. Thus, they're able to have better forecasts for credit caps or even credit card issuance. This is a newer area. We've been working with it for under two years, but we've seen accelerated growth. Its ticket is significantly higher than microcredit. So even though this is going down in the number of tickets, we have credit scoring, which has a higher ticket, so we have higher revenue. And now the size of this business starts becoming relevant, so it's offsetting the other effect. Finally, we have user-paid subscriptions. In 2023, we saw some setbacks here. There was this perfect storm where the international market was under impact from the Russia-Ukraine war last year.
We also saw Oi being sold, which had a negative impact for us. But now it's been three to four quarters where we've been able to grow this business again. We had a robust growth in licenses here at 19%. I also have another comment on revenue. We grew even more in revenue here. We do not believe that this is the biggest engine for acceleration in our business in the medium to long term, but this quarter, this is the field that grew the most, 26% year-on-year. And we've been asked if we should look at this as a legacy business, and we said that it's not a legacy business. It's a mature business. The difference is that we believe that this business can still grow, and it has got very good longevity.
As I said, we don't think this is going to be a growth driver, but it is a mature business. We're talking about double-digit growth at 26%. This goes to show that this is going to be a segment with higher acceleration or lower acceleration at different points, but in the long run, we're going to see growth. Let's move on to revenue. Maybe this is a better, more neutral way of looking at our revenue, which is the adjusted by FX variation figures. We had 16%. If we adjust it, we have 15% of growth year-on-year. Now, if you've been with us, you know that basically as of the fourth quarter of last year, we've been growing. We're talking about four consecutive quarters where we've been accelerating our growth year-on-year compared to what we had in the previous quarters.
It's good to see Bemobi closer to its historical growth levels after a short term in 2023 where we were having parallel changes. Now, let's break down on our revenue. As I said, we're accelerating this. Year to date, we're close to 10%. For the quarter, we're closer to 15%, which shows that we are accelerating results even within the same fiscal year. For payments, we have a split here. We talk about digital payments, for instance, and here we do have a small legacy business for physical top-up. But even in accrued numbers, we're close to 13% of growth a year. So it's better than the 9.6% for the rest of the company. In this quarter, payment grew a little bit less than the other business lines. We grew at 7.5% here.
But even though payments didn't have as much acceleration as the other fields, we believe that this area will be a growth driver. And in the medium to long term, we believe that in average, it's going to grow significantly more than other business lines. For our mix, we don't have any significant changes, but it's important to highlight that basically half of our revenue right now, even more than our revenue, more than half of our revenue, has to do with payments integrated with software. So when we put payment and SaaS together, we're talking about 53%. It's over half of our revenue. And it is likely that this combination will grow more in one-to-two years. We don't have any major changes in geographies. However, it is great to see our international business going well.
We have the sub-region of Latin America, which had good performance, especially because of Mexico, Colombia, and Chile, which are our biggest countries outside of Brazil. But other regions also had good performance. Let me now hand it over to André Veloso, our CFO, who will break down our gross margin, OpEx, and other financial metrics.
Thank you, Pedro. Good morning. I'm happy to be here. Let's see the results of our quarter. As Pedro was saying, we've had four consecutive quarters of growth, of accelerated growth. This has had a positive impact on the other lines of our P&L. For the gross margin, we grew 11% quarter over quarter and 7% year-on-year. We had a slight decrease of the gross margin because of the acquisition of new clients, especially for digital subscriptions. For OpEx, we can see 7% of growth for the quarter, 4% year-on-year.
This happens basically because of efforts made by our managers. At the end of last year, we decided to hold things down a bit and control our expenses. We also added the companies that we acquired at the end of last year. We had collective bargaining, so we went through an increase, but it's much less than what we had for the gross margin. This is why with the Adjusted EBITDA, we see operational leveraging with growth of around 17% in our EBITDA in the quarter, and we reached BRL 50 million for the third quarter of 2024 and 12% of growth year-on-year. We also had a slight expansion of the relative EBITDA margin, around 33%. As we were saying, we believe that this is an ongoing result for the company. We're increasing our EBITDA margin, but it's non-linear. Here we see our adjusted net income ex swap.
Quarter on quarter, we basically had the same results. This happens because we had more expenses for depreciation and payments because of the companies that we acquired. We also had labor related to last year. We also had a lower average interest rate in 2024. We were working with 10.5% this year compared to around 13.5% in 2023. We also had a lower cash position in 2024 compared to 2023. But for the year-to-date results, we had a 31% of growth for the net income, almost BRL 90 million. This is the fruit of better performance and the effect of interest on this year. I would also like to say that in the fourth quarter, we're going to offset the withholding tax. So we expect performance for the fourth quarter, but we also expect income to be closer to the behavior that we expect for this year-to-date result.
Consequently, we're going to see growth because this is what we saw for the third quarter. When we look at the operational cash flow, and in this case, we use the Adjusted EBITDA minus CapEx for the quarter, we saw 10% of growth, BRL 37 million. We had a slight decrease in the cash conversion rate. This happens because of our level of CapEx, which last year was very low. It was actually an outlier. By isolating this effect and by looking at the year-to-date results, the growth is bigger and more consistent with our performance, 14%. We got to BRL 107 million. It's a very solid, robust cash conversion rate at 73%. Finally, we can look at our cash balance. We're now comparing to the previous quarter, which could be a big highlight. We had a cash generation of almost BRL 70 million.
We now have BRL 570 million until the end of September 2024. And this happens not only because of better operating performance, but also because we were able to unlock working capital at the end of the second quarter. We used BRL 9 million for our account installment operation. It's a fee of BRL 65 million. The other business lines had very robust behavior, very normal. And we have the non-operating cash, which was a positive swap adjustment at almost BRL 6 million in the rollout of our swap contracts. But everything else was normal, and we have a very, very robust cash balance. This is why we are still focusing on the tripod of using this cash for M&A, profit distribution, and also share buyback. Let me hand it over to Pedro for his final remarks.
Thank you, André. Let me give you an overview. We're happy this quarter, maybe because of two or three main things. First, we love to manage your expectations and to show consistency. As I said, it's the fourth quarter where we have consecutive growth. This is in alignment with what we've been discussing in our assumptions and expectations. At the beginning of the year, we said that this year we would have gradual acceleration and improvement, both for revenue and EBITDA, and this is what's been happening. As I mentioned quickly, the fact that we have a very balanced result for these four business lines and this is growth quarter over quarter and year over year is good.
According to geographies, we also saw Brazil carrying international operations for a while, but now these two macro regions were doing well, so I believe we're doing very well, and it's very balanced. Business is going well, and we see good results, whatever the breakdown we choose. This is in alignment with our promise and our assumptions, and this is in alignment with our business model. We believe that there's still leveraging for this business, and we can accelerate it even further within a one to two-year window. And even though we had 8% for payments year-on-year, so a shorter window, when it comes to leading indicators, we have indicators for commercial traction.
Usually, you have a timeline because you find the client, you acquire them, you sign a contract, you implement the operation, and sometimes you have indicators that actually have an impact on results, maybe three quarters down the line. So these financial results are late, happen later. But we have good traction here. This value proposition of integrating software and payment and resolving problems that are very specific and offering a competitive edge is good. We were able to get some very good clients. And we are now mentioning new clients when they go into operations, but we got very good, very big contracts here, so we're going to see its results in 2025. This is another highlight. We know that this is going really well because of the new clients and new contracts that we're getting.
We can go to the Q&A section, and then we can end the call.
Excellent. We have two options here. If you want to ask a question, you can raise your hand. We have somebody who is already queuing up. And you can ask a question through the Q&A button. If you're not comfortable asking a question here, you can also go to our IR website and send us a question because we'll get back to you. So let me now unmute Maria Clara from Itaú. Maria, please go ahead.
Hi, good morning, Pedro and Nicholas. Thank you for taking my question and congratulations. I have two questions. First, regarding payments. Could you please delve into the acquisition of this new payment group that you mentioned? I'd love to hear about your idea of growth in this category. Also, what do you think is Bemobi's growth potential for new standards of solution for this industry, for instance, using biometrics for the Pix Brazilian transfer? Now, here's my second question. Could you please talk a bit more about your international expansion? What is your plan for growth in other regions?
Could you please talk about the markets that you believe are the biggest opportunities? Thank you.
Thank you, Maria Clara. We didn't highlight this, but you saw this in our letter. We had a small acquisition. In practice, their only asset is a license. They are a payments institution. This is a way for us to skip some steps in becoming regulated and in performing operations with the Central Bank. This deal is still pending approval by the Central Bank. We're talking about a regulated business, so they need to approve it whenever there's any control change. You asked why we decided to do this and how this relates to our payment strategy. At the beginning, Bemobi focused on the biggest payment method, credit card. Not many people are aware of it, but in Brazil, we have as much credit card use as the U.S.
It is like a first-world thing. Per capita numbers are lower. But the Central Bank has been deregulating operations or fostering new options like the Pix Brazilian transfer, and they are fostering Open Finance too, so we see a small disruption happening here. This is a payments solution business which is vertical, which doesn't care what payment method is used. We want to use the most competitive payment method when it comes to cost conversion and reducing default. So we accept many different payment methods, including the Pix transfer, but we believe that the Pix transfer is very promising, especially when we see the evolution of new standards. We have automatic Pix transfers, which should be rolled out in June next year, and Bemobi will be ready to offer this mode in the pre-regulated industry.
We'll face some restrictions, but as soon as regulations are up and running, then we'll be ahead of the competition. We have other transactions that are going to make for an even more frictionless process. This has to do with something that we're acquiring for payment initiators and some journeys in open finance, and you mentioned this. You have biometrics for the Pix transfer, and we have another similar journey of making a Pix without having to use your bank app, which is another point of friction, so I know this is going to sound cliché because somebody here always says this, but it is true. The future of payments is no payments. The future of payments is no payments. Not in the sense that clients are not going to pay their bill, but in the sense that it's going to be so transparent that it's going to be frictionless.
We need to think about the increase in churn or the reduction of working capital for clients who are delinquent. So using these tools is really very good. Among other things, for these transactions, usually we have lower costs and we have less friction and more transparency. In our core, Bemobi wants to be pioneers with these new standards. I know this is a long answer, but you asked about our idea of growth. This is a means. This is more of a means, not an end. We want to be competitive, so we need to embrace every payment method. But we are a challenger. If you look at the payments industry, in Brazil alone, it's a big industry, and we hold a very small slice of it. So when you have one payment method disrupting other payment methods, we don't have as much legacy.
So we can be bolder. We can cannibalize a few things to make the most out of other opportunities. So we believe that this disruption is going to be exciting for us. And you also asked about what we expect from abroad. We are also very cautious when it comes to that. Contrary to other areas where we lag behind in progress, it's actually the opposite with payments in Brazil. Brazil has been ahead of other countries for a few years, and it's a huge market that is maturing and that is organizing its players. So a good problem at Bemobi is to figure out how to use our energy. Right now, I think we want to focus more on Brazil than on international operations because Brazil is more ready, and we have a small share.
In other markets, there's a delay, and if we take another year, the window is still going to be open. Their ecosystems are also different, but the way we manage things here varies. We have two clients. We have Metrotel in Colombia, and they are starting to work with payments. It's very similar to what we did with top-ups. It's been a good process because we're figuring out a new country and learning how to scale it up, and I don't want to mention names, but we have another country in Latin America where we're getting our first utility, an energy distribution business, very similar to what we do in Brazil, so this is, in the short term, a growth driver. Of course, we're going to see growth, but we actually want to use these two clients to learn about regional differences or differences in geographies.
So if we go to the conclusion that this is going to be good, we're going to move on to two or three new countries, or we can double down in Brazil because this could be five to 10 times bigger than what it is. And we don't have a huge share in Brazil. We could grow it. So I know it's a long answer, but I do hope I was able to answer your questions. You were.
Thank you, Pedro.
Thank you. We have other questions in the chat. Let me start with the first one. Our first question has to do with the capital structure and the pace of share buyback.
Of course. We are at a comfortable position. We have mainly three uses for this capital. As André was saying, we are in a challenging environment when it comes to the cost of capital. So it's better to have cash than to have debt. Of course, this goes without saying, but it does make us sleep at night. We are doing okay as a business. We are still very excited with the opportunities that we see in M&As. I know that the market maybe could expect that we bought four to five businesses a year, but with M&As, you have to think about so many variables: cost, fit, strategy. So our priority is still M&As. And we do have opportunities. Before you ask me about it, to use all this capital, maybe not in one single opportunity, but maybe in many opportunities.
And right now, they are focused on payment solutions and the evolution of this ecosystem. Of course, we see opportunities in other business lines, but we are focusing increasingly more in this vertical. So this is a priority. If we have to work on capital allocation, this is going to be our priority. So given our very high level of comfort, we can start using this cash for two other things. We had a larger payment of dividends to our shareholders last year, and we can do that. We also have the possibility of interest on your own equity, which has its fiscal benefits. And finally, we had a large share buyback. We bought 11%-12%, and we're going to keep on doing that.
If we remain at this level, we're sure that this is another very good option. We just need to be careful because even though this is a good investment, it also has an impact on liquidity. So we need to be aware that this medicine does have side effects. So the answer is all of the above, but we are clearly prioritizing M&As because we believe we can unlock better value with these synergies and with the acceleration of the growth that we see today vis-à-vis other times and other areas.
Excellent. Finally, we have a question regarding our work in utilities. What is our value proposition here? How can we reduce delinquency by these players?
This value proposition has been evolving. It's getting more mature. We did have a hypothesis in the past. We're talking about utilities overall, but first, we have energy distribution, and it's going through a deregulation that is very similar to what happened with telecommunications 10 years ago. We've been helping our telecommunications partners digitalize payments and will be better prepared when it happens in utilities. We had a positive surprise here. They agreed with this hypothesis.
We are well positioned to be partners of basically every big energy distributor. And right off the bat, our value proposition was very focused on sub-opportunities when it comes to collection. So we were talking about the opportunity of using a payment method that is not historically used in utilities. Because usually with utilities and basic services, they use payment slips. And these clients didn't know how to negotiate in this case. However, we have a country where we have high penetration for credit cards. We can offer clients the flexibility for clients to pay their bills in installments, and they can manage their payments according to how much money they have at a given point in time. So let's say they want to buy a new phone or a new refrigerator. We'll be able to use this important credit tool for Brazilian families.
And I'm not talking about rotating credit. In Brazil, you have 28 months before you have to pay your credit card. There's no cost to it. And they have not been transferring the cost of these installments to Brazilian consumers. And this wasn't used for utilities, but we found a way to do it. And we are reducing delinquency by using a credit that already exists in this market. This is how we are bettering relationships with delinquent clients, and we are working on working capital too. So this was wave number one. This was our point of entry. Now, what we see is that very similar to other sectors, this sector wants to digitalize collections. For instance, most of us still receive a paper bill, a printed bill. You have a barcode, and then you pay your payment slip. However, right now, you have texting. You have WhatsApp.
WhatsApp is a phenomenon in Brazil. Almost everyone who has a phone has a WhatsApp account. Basically, everyone has access to banking services or has a Pix account, or actually, everyone who has access to banking services has a Pix account, so these payments combined with Pix, which is very efficient, create an opportunity to replace payment slips, which have more friction, with something that is better, so you reduce costs, you digitalize your process further, and you start fostering dialogue between these businesses and the end client because usually they were not having a conversation, so this uses very interesting solutions, not only credit cards, but also Pix transfers and other payment solutions. We've been doing this for 10 years, so it's great for us to see this new industry that clearly needs to digitalize its processes because we can be their partners and we can accelerate this process.
So utilities is going beyond the credit card solution and is actually working with a more thorough scope for which we play a bigger role. We're excited. When we think about 2025, we know that this is going to be something that is relevant for the total business at Bemobi.
Excellent, Pedro. I believe this is the end of our earnings release presentation. Thank you for being here and enjoy your day. Excellent. Thank you, folks. Take care.