Earnings Call: Q1 2021

May 11, 2021

Good afternoon, ladies and gentlemen. Welcome to Locaweb's first quarter 2021 earnings conference call. Today we have with us Mr. Fernando Cirne, Chief Executive Officer, Mr. Rafael Chamas, Chief Financial Officer and Investor Relations Officer, Mr. Higor Franco, Be Online and SaaS Director, and Willians Marques, Commerce Director. Today's live webcast and earnings release may be accessed through Locaweb's website at www.ri.locaweb.com.br. We would like to inform you that this event is being recorded, and all participants will be in a listen-only mode during the company's presentation. After Locaweb's remarks, there will be a question and answer session. At that time, further instructions will be given. Should any participant need assistance during this call, please press star zero to reach the operator. Before proceeding, let me mention that forward-looking statements made during this conference call are based on the beliefs and assumptions of Locaweb's management and on information currently available to the company. They involve risks and uncertainties because they relate to future events and therefore depend on circumstances that may or may not occur. Investors should understand that conditions related to the macroeconomic scenario, the industry, and other factors could also cause results to differ materially from those expressed in such forward-looking statements. We have simultaneous webcast that may be accessed through the company's website. The slide presentation may be downloaded from the website, and please feel free to flip through the slides during the conference call. Now, I'll turn the conference over to Mr. Fernando Cirne to start his presentation. Mr. Cirne, you may proceed. Thank you very much. I would like to thank all our employees and partners and shareholders, clients, and everyone for their presence. I thank you all for attending, and also, I would like to thank you for the fantastic results of Locaweb in quarter one 2021. Let's start with slide number two. Here we have the highlights for the quarter. I'd like to talk about the growth in our revenue in all segments. We saw consistent growth in Be Online, SaaS, and Commerce. In Commerce, we grew by 186% year-over-year. This is truly a very substantial growth. Here we break this down into subscription and ecosystem. When we talk about subscription revenue, we are talking about subscription of platforms such as Tray, Dooca, Vindi. In this case, we grew by 154.9% versus quarter one 2020. For ecosystem revenue, here by ecosystem we mean remuneration for the usage of our ecosystem. We have our own ecosystem, which is a differentiator of Locaweb, and we also have the part of our ecosystem, which is controlled by our external partners. We grew by 209.7%, a very strong number. We also had a strong expansion in the acquisition of new customers throughout the quarter, whether in Be Online and SaaS, whether in Commerce. In the case of Commerce, we have a record-breaking number. We had a 44.4% increase in the addition of new stores quarter over quarter, so compared with quarter four 2020. Very strong numbers. In just three months, our customer base increased by 22%. Our TPV, for example, is related with the growth in our ecosystem revenue, and it grew by nearly 130% in quarter one. It's also important to highlight, and we're going to have a chapter for that, but the acquired companies already present an excellent performance within our ecosystem in quarter one, considering our very structured process for integration, the high synergy of every company that we buy, and the high gross sell. We had an expressive advance in our acquisition agenda as well. This year only, we completed five acquisitions year-to-date. Since the last earnings release, we announced the acquisition of Bling. So far, the acquired ARR is at BRL 172 million. In other words, we already have an acquired growth for this year, regardless of Locaweb's organic growth of 35%. You see that these are very expressive numbers. Now on slide number three. Here we see the breakdown of our revenue in Commerce for subscription and ecosystem. Last year, we had grown by 32%, or BRL 17.3-BRL 22.9, and now we went to BRL 65.4, a 186% increase. As we said, for subscription, the growth was 154%, and this is very related with the expansion of our customer base, and particularly because this customer base is also selling more. As they sell more, they need to contract larger subscription plans or more complete subscription plans, and this also increases our revenue. Finally, we have the ecosystem growth, which was much greater. It went from 57% to 61%, the total revenue for the ecosystem. This is very related with the fact that Locaweb has very strong external partners. Most importantly, we have this strategy of growing our own ecosystem as well. This also is reflected on the sales increase and the sales expansion of our clients. This shows that this ecosystem that we're building is working. Our clients are selling more and more over time, this is a result of this ecosystem. That's why we have this 209% increase. There's no other number in the economy that compares to this number. It's a very strong number indeed. Moving on to slide 4. This explains the increase in our subscription revenue. We have been continuously and sustainably boosting our marketing efforts to increasingly add new stores. What do I mean by marketing efforts? Let me give you two examples. First, the leads captured in the e-commerce school. We more than doubled this volume when compared to the average of the previous year. If you don't know, the e-commerce school is a website managed by our commerce department, www.escoladeecommerce.com.br. On this website, we teach our clients how to increase their sales, how to expand their business online. This increase in sales is also a result of the cross-sell between the companies. We have a history of betting on these companies that we buy. We always buy companies that have a high cross-sell potential, and we already see that in a very concrete way. We see this cross-sell between companies, and this is what is bringing the sustainable growth in our sales and the sales of our customers. Some indicators comparing the first quarter 2020 and first quarter 2021, we had an increase of nearly 140% in the addition of new stores. Quarter-over-quarter, the increase was 44.4%. This is a very representative figure. As I said, this growth is also sustainable. Another important point is the quality of these sales. Our churn rates are still steady. That's why our customer base is expanding. It's not just about sales, but sales that truly impact the customer base and its growth. In the first three months of the year, we saw a growth of 22% in our customer base. On slide number 5. Here we have our agnostic platform integrated with market tools, and it's important to see how much we were able to increase the number of integrations with other solutions in the market. We will always be agnostic. Here we have some examples. We already integrated with price comparison tools, email marketing, marketplaces. We have more than 437 integrations. For those who had contact with Locaweb since the IPO, at the time of the IPO, we had fewer than 200 integrations. In one year and a few months, we practically doubled the number of integrations. This added to the e-commerce school, which helps our clients learn to sell more. We continue this work, allowing our customers to increase their ARPU with Locaweb, which increased seven times in three years. Why is this important? It is important because the volume of stores contracted, and this increase in our customer base will ensure the future growth of Locaweb commerce. On slide number six. This is our last acquisition, which was added to the ecosystem, which is Bling. The last time we spoke, it was under approval by CADE, and now it is part of our ecosystem. This is a very complete ecosystem to help our customers in their e-commerce journey. Here we have in the center Tray and Dooca, and we also have Ideris. To manage this platform, we have Bling, our ERP system. We have Vindi, subscription and recurring billing management. We have Allin and Social Miner for generation of leads. We have Etus for social media. We have Ideris for integration with marketplaces and store in store. We have Yapay, our payment platform. We have Connectplug with POS. We have Credisfera for financial services, and Melhor Envio for logistics integration. These are the components of our ecosystem that will generate the subscription revenue and ecosystem revenue for the company. This clearly explains why we are seeing this very striking growth in our revenue in quarter one this year. Now, on slide number seven, here we see what's happening with Be Online and SaaS. We also see some very interesting growth rates. Our booking for SMEs, year-over-year, we saw an increase of 23% in our SME booking. In the case of Nextios or more corporate customers, we're talking about an increase of nearly 17% year-over-year. For Delivery Direto, we were able to increase our customer base by 150%. We are still selling at very high levels. We are bringing in new clients since last year. We have been seeing some very interesting and consistent results. Finally, another piece of data which is very interesting is that the SaaS revenue went from 30 to nearly 38% year-over-year. This also shows how this strategy of acquiring new companies and changing the profile is also in our favor. On slide eight. This slide is very interesting because when Locaweb started to make these very interesting acquisitions, the first concern and the first question we got from the market was about our ability to integrate all these companies. I can tell you that, yes, in addition to selecting companies with a very high potential synergy, we also have a very efficient acquisition and integration model that can bring results in a very short time. Some interesting results that I have to share with you today, comparing quarter 1 2020 with quarter 1 2021 for Melhor Envio. The labels sent via Melhor Envio, which can be translated into products delivered, there was an increase of 400% year-over-year. The number of Melhor Envio customers increased by 432% year-over-year. The e-commerce GMV grew by 117%. Samuraí's revenue grew by 93%. Ideris customers increased by 104%. Ideris net revenue increased by 176%. Vindi's TPV, 59%, and Dooca's revenue, 231%. This is just to give you a glimpse of half of the companies that were bought by Locaweb presenting, in most of the cases, three-digit growth rates. This shows how we're choosing the right companies and how we are integrating these companies into our ecosystem in the best way possible. On slide number nine. This is a continuation to what we showed in our last earnings release for Q4 2020. This month we're including Bling. Bling will bring an additional acquired ARR of BRL 60 million, amounting to a total of BRL 172 million in acquired ARR for the group, which means a 35% increase. In addition to the organic growth of our operation, which was close to 30-something% in Q4 last year. You see that the companies we are acquiring, they also have their own organic growth. This is what we call the organic of the inorganic. You see that for Melhor Envio, it's 400%, Social Miner 90%, Ideris 176%, Dooca 230%. You see that even with this ARR, which is based on the acquisitions themselves, we also have the organic growth of the acquirees, which is very substantial. We are truly very excited and positive and optimistic about the potential growth of Locaweb in the next few months. Now, on slide number 10, here we have our M&A process. It's not just because we made several acquisitions that we're going to stop now. We are always seeking new opportunities. We are always shopping for companies. Since the IPO, we have mapped more than 1.9 thousand companies. We're always paying attention to that. Right now we have 11 MOUs signed or under negotiation, and these companies always have the same characteristics: recurring revenue, very well-consolidated products, a very high potential for cross-sell and upsell within our ecosystem, and we always want to retain the talents in these companies. We are not stopping, and we have shown the market that we know how to make good acquisitions and that we know how to integrate them right. This is what's happening right now. This is one of Locaweb's characteristics, and this is what we will continue to show to the market. Now to show you some details about these integrations, and not so much numbers, but give you some examples of how we are integrating these companies really fast and efficiently into our ecosystem. I will hand it over to Mr. Franco and Mr. Marques, our Commerce and SaaS Be Online directors, to talk a little bit more about our synergies and integrations. Thank you, Fernando. This is Igor. As you heard from Fernando, our integration strategy is very robust, and it's generating some very expressive results. Let me talk specific doing in SaaS and Be Online. Here I'm talking about Delivery Direto and Etus, and then I'm going to hand it over, and he's going to tell you how those are taking place for the Commerce area. In terms of the integrations that are already running, we have Delivery Direto with Yapay. Delivery Direto clients have as their priority payment medium Yapay, and this is more than half of Delivery Direto's customer base that is making transactions using Yapay on a daily basis. This is a very impressive number, and the results are very high financially speaking. This is an integration that we are already offering our clients and which is working really well. Another integration in Be Online and SaaS is Etus, which is very present in Be Online and SaaS. Here I'd like to go for a brief deep dive with you to explain what is our focus and strategy in this case. The customer's journey with us starts when they purchase a solution, and then they are granted access to the system, and then they start using the product or the service. At this point, they'll enter the use journey, the journey of utilization of our products and services to scale up their operations. Now, looking at this entire journey, the focus of the integration between Etus and Be Online SaaS is very related with the moment of the purchase. In the past few months, we focused a lot of our efforts on solidifying Etus' presence within the purchasing journey for these products, and the results are really good. Today we already have Etus as an offer, which is present in Tray, in Delivery Direto, in Allin, in Yapay, and the adherence is really high. The adherence is so high that we can see that in any structured effort that we make, we see a conversion rate of nearly 15%, and this is a natural process. Naturally, the customers that are on these platforms, they have a very good conversion output to Etus. This journey represents for Etus' numbers about a 10% booking. When we look at the new entrants, the new entrant customers, these integrations are already boosting 10% of Etus' booking in the past two months. This is very impressive. These are very strong results and with very little effort. Another example here is Delivery Direto with Connectplug, which is known as CPlug. This is another integration that took place not just at the time of the purchase, because today at the time of the purchase, we have been offering Delivery Direto with Connectplug and vice versa. This is something that takes place on the website and also with our sales teams. There's also an integration that happens at the time of the utilization of the product. The CPlug client already has available to them within the POS, the possibility of receiving Delivery Direto's order within the POS. We are turning the CPlug POS into a POS with all the features and functions that it needs to be an order manager. There we have Delivery Direto and many other players connected there. CPlug clients have a cockpit to manage their sales and control everything related with the POS in a much more centralized and robust manner. This offer is already running and Delivery Direto with Connectplug, it's been operating for about two months, this integration and this offer, and this already accounts for a booking volume of about 10% for both operations. These are very strong integrations that take place at the time of the purchase, and in this case, also at the time the customer starts using what they purchased. Another integration that is ongoing, the beta is already in progress, and we are just doing the final calibrations, is Etus within Tray's dashboards. The clients that have Tray's commerce dashboard, when they want to boost their commerce content in social media within the dashboard, they will have Etus' functionalities. They'll have the Etus dashboard inside the Tray dashboard to work with social media. The beta is already in progress, and this integration should be launched in the coming weeks. Willians, now I hand it over to you. Thank you, Higor. Good afternoon, everyone. Just adding to what Higor just said, and now focusing more on commerce, of course, I must highlight that we're working in two fronts. The first one is much based on the customer experience during all these integrations. The main point here is that we want the customer to have a unified experience when they're starting using, for example, the market connection services of Ideris. There's no friction when they go from the platform to the connector. Everything we design today in terms of cross-sell and integrations is very focused on providing customers with this unique experience and unified experience. When they purchase a platform, this includes the complete package integration with marketplaces, integration with other tools. On their daily work, there's no friction at all when switching from one dashboard to the other. This is something that has been guiding all the integrations that we are designing. Either those that already function really well between Tray and Yapay, for example, all e-commerce stores already have Yapay enabled by default, and now we're applying this to Melhor Envio, Ideias, and all the other solutions. Second look that we're giving to is, of course, the technology. Everything related with technology, how to achieve the right speed for these integrations. A very good demonstration of how all these integrations are taking place in parallel, having already been launched or with a beta in progress or at final stages of development. This is only possible because we already have these products natively developed with APIs. These are modern products that already have their interfaces for connection with other solutions. We have all the teams working in parallel. While the Ideris team is building connections to the platform's APIs, the Melhor Envio team is also working in parallel. We have these simultaneous efforts which allow us to launch all these initiatives really quickly. All these cross-sell initiatives. This allows us to bring our clients who purchase our platform a more and more complete solution. Just to give you some examples, we see that Delivery Direto with Yapay is already running and is very successful so far. We already have more than half of the customer base of Delivery Direto processing their payments with Yapay. Very positive results in a few months. In addition to increasing the revenue, Delivery Direto's clients are much more satisfied as well. We also have the Vindi with Yapay integration already running with great results. More than half of the Vindi customers that contract the solution will already receive an offer and accept to use Yapay as their payment process solution. We're also in parallel migrating the active Vindi customer base. We already have a very good performance for this customer base that was in the past using other payment processing tools. These are very expressive results in a very short period. We also have Ideris with Tray Corp. The beta is in progress. As Higor said, we also have the beta in progress for Etus with Tray. Melhor Envio with Yapay, we already have some customers in beta, and then Melhor Envio will offer Yapay as the top payment processing method for their customers. Dooca with Ideris and Melhor Envio, we already have some integrations ongoing, and now we are performing a beta to improve this experience to our clients so that customers that get to Dooca already have the complete solution. Dooca is following the model that we have already applied for Tray. Dooca will now also have this complete offer. We also have some other launches planned for the coming months. We have Social Miner with Tray. We have Ideris with Tray. We have Credisfera with Tray, which is something that the market is very anxious about looking forward. The Melhor Envio with Tray integration, which is planned to launch in July. With this focus on the customer experience, the customer journey, and with all the modern technology that we need and everything being developed in parallel, that was the only way we could do so much in so little time, and this is what makes us comfortable to share these results with you today. Now I hand it over to Rafael Chamas, who is going to talk about our financial results. Back to you, everyone. Thank you, Willians. Let's start on slide 13. These are the highlights of our financial results for Q1 2021, both operational and financial. Just to recap some of the information that we already mentioned today. We had a more than 50% increase in our net revenue, 53.9% to be more exact. We closed the quarter with BRL 160.9 million in revenue. We had an increase of 186% in our net revenues for commerce, accounting for nearly 40% of the revenues of the group. We also have two important indicators here that will give you a dimension of this growth. We have the commerce GMV, which with a pro forma growth. This is important. For everything that was acquired, for example, Ideris in Dooca. We are considering the numbers they had in their Quarter 1 2020 operations. Here we're talking about an increase of nearly 117% in the GMV. The TPV, and this is totally for Yapay, increased by 129.9%. We closed the quarter with nearly BRL 600 million in TPV. We didn't grow just in the top line. As you can see in commerce, the adjusted EBITDA grew by nearly 86%. The adjusted EBITDA increased by 44.8%. We had a cash generation of BRL 15 million and a net cash position of BRL 2.4 billion. Of course, the results from the movements that we put in place in the first quarter and our follow-on raising. Now on slide number 14, here we see the breakdown of the revenues and the contribution of each of the areas. In the 3.9% increase, as I said, commerce accounts for 40% of the group's revenue, nearly doubling its share, which went from 22.9% to 65.4%. At this pace, one may guess that commerce will be a predominant part of the group's revenue. Be Online and SaaS also had an important growth rate of 17%. I go back to what Fernando shared with us because this is important for the company's configuration and how Locaweb is building its ecosystem. This breakdown is very illustrative of how our ecosystem works. Our recurring revenue and subscription revenue grew by 154.9%, reaching BRL 25 million, accounting for 39% of the total commerce revenue. Our ecosystem revenue, everything related to transaction take rate involving Yapay, involving connections and so on and so forth, increased by 209.7%, reaching BRL 40.2 million in this period. On slide 15, as I said, our growth was not just in the top line. We also had an expansion of 44.8% in the company's EBITDA, closing Q1 2021 with BRL 36.6 million. Commerce accounted for 48%, so it's nearly half of the EBITDA coming from commerce. We know that this segment is less CapEx intensive, so this makes this contribution even more relevant if we think from the standpoint of cash generation. Commerce grew by 85.6%, reaching BRL 17.5 million. Be Online SaaS, 20.6%, reaching BRL 19.1 million. When we look at margins of each of these sectors for Online SaaS, we have a margin that expanded quarter-over-quarter. In commerce, there was a decrease from 41.3% to 26.8% in the consolidated results, which also is reflected on the consolidated results. This is totally justified by our acquisition. Now I skip to slide number 16, where this movement becomes more clear. Here we have a comparison between Quarter 1 2020, Quarter 1 2021, and Quarter 1 2021 only organic. Excluding the EBITDA change and also the recent acquisitions. As you can see inside the yellow circle, all our operations expanded their margins year-over-year. Be Online and SaaS at 21.3% against 19.9% last year, and this is organically. Commerce 41.3% last year and 42.5%. The organic commerce operation, the Tray Corp, and Yapay platforms expanded their margin. The organic consolidated results had an expressive gain of nearly four percentage points. This can be easily explained because we know that the operations have a maturity of timeframe, a maturation time. This is part of our capacity to accelerate companies and bring these companies profitability. We will always have these dynamics. We will always state very clearly what is the organic result and what is the contribution of the inorganic growth in this margin so that we can follow the maturation of these business over time just like every company that we bought so far. Now on slide number 17. Also from the standpoint of net income, we see the dynamics of a company with so many acquisitions when we think about the accounting net income with non-cash effects. The expense was 78%, from 5.1% to 9%, with a margin of 5.6%. Here in yellow, we highlight two adjustments which actually account for most of the adjustment made. Added together, they represent about BRL 11.8 million in our numbers. These are exclusive effects of the acquisition. I call them non-cash effects from the standpoint of our DRE or financial statements. First, intangible amortization, which is the amortization of all assets that have no accounting value attributed at acquisition, but their value is attributed through a report considering their client base and their technology. They are intangible in our balance sheet, and consequently, they have an amortization. If the purely accounting effect here is amortization in our financial statements, accounting for BRL 4.5 million. The second point here, also related with acquisitions, as I said, is what we call adjustment to present value of acquisition earn-outs. If you had the chance to read our financial statements, we have in the company's liabilities the expectation of all the earn-outs of all the companies that we acquired, and these liabilities are always recorded at a value that is reduced as a banking liability. It is as if we had a reduction in that amount and the accrual of interest from now to the time of the payment, and this is a financial expense. This is the classical adjustment that we make to the value of a liability. From present to the payment of any of the earn-outs, this is something that we need to highlight to make it very clear to everyone. This is not related with the company's financial statements, but it has to do with the company's dynamics, either because of the cash value paid or because of the expected future earn-outs. Now on slide number 18, here we see the company's cash position. We closed quarter one with a cash position of BRL 2.4 billion, and discounting all the loans, both bank loans and also those resulting from IFRS 16, we closed with a net cash position of BRL 292 billion. We still have a lot of cash to continue with our acquisition strategy. Now I hand it back to Fernando Cirne. He's going to talk about our next steps. Hello, everyone. Now on our last slide, we see our strategic positioning. Not just our strategic positioning, but this is how we see the next months for the company. The first point is that our strategic leadership and our product leadership in the market allows us to increase our margin despite the higher marketing investments. We're selling more and more. The synergy between the companies, our product leadership in the market, they have been differentiators, and that's how we have been maintaining our margins and even expanding them. We know that our commerce environment is the most complete for SMEs in Brazil. We have reached record-breaking sales in all operations, regardless of the economic environment, and this is very important. We have been achieving record numbers in sales due to our commercial efforts, due to the synergy in our operations, and this is very important. These are achievements of the company, and these achievements will be sustained over time. We showed growth rates above market indicators, either in terms of sales or profitability. They're well above the other market indicators. Our commerce operation is gaining space within the group due to its exponential growth. We know that commerce EBITDA already accounts for nearly 50% of that of the group. We are building a more complete offer of financial services, sub-acquirer, recurrence, management system, and credit. We have a consolidated process for the acquisition of new companies with a constantly renewed pipeline, which will certainly bring on very interesting opportunities in the company for the future. Finally, we have an internal integration process for the acquired companies, which already presents some very strong results and shows that this is actually functioning in a very interesting way. Thank you all for being here today, for taking the time to attend this conference. I would also like to thank all of the people that are directly or indirectly involved in these excellent results. Congratulations to the team, to all our partners, and everyone that helped us achieve these excellent results. Thank you very much. Now we can open the floor for questions. Ladies and gentlemen, we will now open the floor for questions. To ask a question, please press star one. The first question is from Bernardo Guttmann, XP Investimentos. Good afternoon, Fernando, Rafael, and the rest of the team. I have two questions. The first one is about your positioning. Now that you have a very complete and integrated ecosystem, particularly after this recent acquisition of a very important chain and this very important link in this chain, which was your ERP Bling. What now? What are the next steps? Are you looking into digital shopping or digital marketing? This is my first question. The second question is about Credisfera. I want to understand better if it would make sense to enter the segment of direct credit to retailers. I'll answer this one. Bernardo, good afternoon. Thank you for your question. Let's start with the M&As. We still have a lot to do, Bernardo, when we say that the pipeline is very robust, and we still have many companies that are being mapped and assessed by us. We already have these 11 targets that are in more advanced stages, but we certainly have many more things that could be strengthening our ecosystem. For strategic reasons, of course, we will not announce what these segments are. When we think about the journey of a retail company on the internet, there are many new industries, many new segments coming up. We have tools that can substantially improve the quality of our service or our customer's ability to sell more or better service to their customers. There are certainly other segments that we can focus on. Financial services certainly is one of these opportunities, and we have been strengthening our offer in this sense. I always say that today, Locaweb with Yapay, Vindi, and Credisfera already has a very interesting portfolio of financial services. The TPV that we have and the operation of all these different companies, including Ideris as well, is very relevant and allows us to continue advancing in this strategy, and it is certainly one of the possibilities. You asked about Credisfera. Well, I think we made this clear in our earnings release, but for Credisfera, we expect to have the go live of this first part of the credit services and, of course, this focusing on merchants in June. We are at an advanced stage of integration and credit operations with partners. To your point, it could be a possibility. It's not how we plan to start, we're very excited about Credisfera. We know it has a very high potential. We know the demand for credit is very expensive in our customer base. Our capacity to make this offer at the right time to the right customer is very interesting. I think that Bling came to strengthen even more this idea. Certainly Credisfera will be one of the great growth and acceleration pillars for the company. Thank you. The next question is from Eric Wong, Eleven Financial. Good afternoon, everyone. Thank you for taking my question. I have two questions. The first is about Credisfera as well. Could you explain in more specific terms how this go-to-market will take place and also the funding part of the business? I want to understand what this structure will look like. The second question has to do with the capture of synergies from your acquired company. From the standpoint of commerce, you talked about the EBITDA margin. What is the speed that you expect for us to start seeing some convergence of your current EBITDA margin to an organic EBITDA margin? Let me start with the part about Credisfera. Thank you for your question. Let's start with the funding question. Locaweb will not put its own balance in this operation. Credisfera is a technology and a credit processing platform that is very competent, and it is this platform that will be integrated to our operations, either Tray or Yapay or any future operations. This is a technology-based connection, so totally integrated in dashboards with all the touchpoints through which customers can interact and perform financial management of their own business. However, we do not plan to use the company's own balance in it. Of course, I'm not going to give you names because we don't have any contracts signed, but we are already at advanced stages of negotiation with providers and who are going to be granted these rights. The idea is to do the offer in the operational flow of our platforms. We will also manage the credit operation in-house, so this credit scoring and everything related with the management itself. However, the granting of the rights will be to a few private players that will be our partners in this offer. This is the first point. Your second question, Fernando, would you like to answer that one? Yes. Eric, as for your second question, we are acquiring companies with different ranges of EBITDA. We have companies of EBITDA of nearly zero, and we have companies with EBITDAs of nearly 20%, 30%. The most important to us is that these companies will continue to grow at a fast pace and an even faster pace after we acquire them. You see that when we showed that slide with Melhor Envio growth at 40%, Ideris and Vindi, we wanted to show you that our first and utmost goal is that these companies will continue to grow at a very fast pace and even faster after we acquire them. We don't want them to gain EBITDA. Even Locaweb, for example, Tray for the commerce area. What's happening is that our product is so much better than the others in the market, and even if we put more money, the growth has been elastic, and that's why the profitability is not dropping. Our objective is indeed to generate growth. This convergence is more in the long term. We're talking about a timeframe of three to four years. We are focused on growth, but it's important to mention again that these companies already have some EBITDA. None of the companies that we are acquiring has a negative EBITDA, but our focus is growth. Another important point is that even with this ARR volume that we call acquired ARR of BRL 172 million, even if this ARR converges into an EBITDA that is closer to our organic EBITDA, we must remember that we're expecting within two or three years to make many other acquisitions, which will bring additional inorganic EBITDA. These companies that we acquired will converge and others will come, and so on and so forth. It is natural that this inorganic part is always slightly lagging behind when compared to the organic part. I don't know if I answered your question. Yes, very clearly. Thank you. Thank you. I look forward to the next calls and your next results. To ask a question, please press star one. The next question is from Enrico Trotta, Itaú BBA. Good afternoon, Fernando and team. I have two questions. You talked about the commerce margin and the integration of your M&As. Focusing more on the online and SaaS, you shared with us some interesting data showing the evolution of your revenue mix between the online and SaaS and how your SaaS solutions have been growing faster and gaining representativeness inside your mix. With this said, what is your view of the organic margin of the online and SaaS? Should this margin expand because SaaS is becoming more representative? How do you see the composition of this revenue mix for the later part of the year? This is my first question. The second question, more focused on the addition of new stores and new sellers. You had already shared in the results of Q4 that Q1 was already very strong. The results are very strong. What preview can you give us for Q2 in terms of new additions, addition of stores? Are you continuing with this very strong trend that we saw in the Q1, or should we naturally expect a deceleration? Hi, Enrico. This is Rafael. Now, regarding the margin, you're right. This is an inherent characteristic of this SaaS, the online operations, these very high margins. The LTV over CAC dynamic is very favorable. It certainly contributes to that. The SaaS operation went from 30% last year to nearly 38% now. Certainly when we think organically speaking, these are operations that should have a margin expansion, and not just the margin, Enrico, but also we're talking about operations that are less CapEx intensive. At the end of the day, these are operations with a higher growth. The SaaS of the company grew by nearly 45% in the first quarter this year. It improves the margin, improves the mix, and improves cash generation of the business. This is a very relevant component in terms of profitability and growth. Your second question, Willians, would you like to answer that one? Yes. Of course. Thank you, Enrico, for your question. A little bit about the commerce booking. What we see, Enrico, is that our booking is somehow detached from the economic indices and the COVID circumstances, and also the marketing investments that we have been accelerating. These are effects of the change in behavior in companies. Companies suffered greatly last year with their stores being closed, and now they are going for digitalization. Regardless of what happens with the economy and with the pandemic, we believe that the volume of new customers will continue at the same levels of the first quarter, if not higher. We have been making increasing marketing investments. We have new initiatives with partners. We have strengthened our partnership and referral programs, and we have been expanding the number of partners and with better and better performance of these partners. Another initiative that we will have with Dooca, the platform that we recently acquired, is to launch a trial plan. Dooca also reduced the prices of its first entry plan. We have some initiatives that are being put into in place in quarter two, and we believe will bring good results. If not the same booking level, we expect to see a higher booking level, and this is for the rest of the year. As I said, we see our trends detaching from any macro trends, and they're much more related with our efforts and the initiatives that we're putting in place. Thank you. The next question is from Diego Aragão, Goldman Sachs. Hello, everyone. Good afternoon. Thank you for answering my question. My question is actually a follow-up regarding your competitive environment. It is very clear that Locaweb, through all these acquisitions and all the internal investments that it is making, is creating an ecosystem which is more and more differentiated, and this is reflected on its growth and competitive advantage. I'd like to hear your perception about some recent movements of marketplace companies to expand their support business or support to digital stores. How do you see any eventual competitive pressure from this type of player? Also, if there are other segments, for example, other payment processing platforms, if there is any ambition of these competitors that could take away some of your core market. Your perception on that. Thank you. Yes, go ahead, Willians. Sure. Good afternoon, Diego. It's a pleasure to be talking to you again. Regarding the competitive environment, we haven't really seen any major changes with these acquisitions. We have been delivering a stronger and stronger environment and ecosystem. We believe that we will see a network and chain effect of these acquisitions because in addition to the platform, we have these new channels which will turn into acquisition channels. For example, Bling. Many of the customers go to Bling to have a digital presence without having any store, and now they're going to find a more complete offer and a complete platform for that. The same happens for Ideris. In addition to Tray's offer, which is becoming more and more solid with everything well-connected and a unified experience, we also have these new customer acquisition channels that, through cross-sell, will strengthen our positioning. Now, from the standpoint of the competitive pressure, we still have some global competitors or global platforms that are not so much focused on Brazil. We don't see any major short-term changes with these competitors. We have smaller competitors, and they're usually not focused just on Brazil, but in Latin America as a whole. That's why we understand that the focus that we have on Brazil is what makes us able to deliver a connected platform with our own solutions and a unified experience in one single journey. For the Brazilian market, which is a very large market and expanding really fast, we are the company that can deliver the most value and the strongest results. As I said, Dooca is an entry platform, and we want to accelerate it further, and Dooca is going to have a trial plan now. We're also testing other formats, sales formats with the recently acquired platforms. We are getting stronger before our competitors in terms of the platforms that we offer. In terms of payment, we don't see any movements of Yapay's competitors to focus more on the online market, which is our core. We see that they have a good presence in closed ecosystems, or they're very strong in the offline ecosystem. They're moving more and more to fight with POSs and credit card machines. Due to their strategy and the size of the market, they're putting much more effort on the offline market than online. For now, we haven't really seen any signs that the competitive pressure in payment processing solutions will increase, and we haven't had any pressure on our rates. Our take rate is stable. Our processing volume is very high. This is a reflection of the level of competition, which is not increasing. We haven't really been suffering any additional pressure to lower our prices or lower our take rates. Our offer is very complete. We haven't seen any major changes in this sense. I hope I've answered your question. Yes. Perfect. Thank you. Very clear. Thank you very much. Just a follow-up question or maybe a provocation, I would say. Today, when you look at some commerce platforms, we see that some companies have a business model that start to go into distribution, logistics and even some fulfillment factors. Would it make sense to say or to envision something similar to Locaweb? If we get to a point where you think this can make a difference or create a competitive edge, would it make more sense for you to work with specialty companies or create your own environment for that? Well, Diego, what I can tell you is that we have taken the first step in that direction with the acquisition of Melhor Envio. Although Melhor Envio's core business is still the technology and at the best shipping price, with Melhor Envio itself, this was also in our earnings release, we have the launch of Drop, which are points of pickup of goods. This would be a physical point for Locaweb's operation. The role of Drop within Melhor Envio's operation is for customers that have five or six carriers available on the platform can choose the best offer and take the product to one single point of collection. They don't have to distribute the products they sold in different points of collection according to the carrier they choose. This is very common because if they sell to the entire country, sometimes the national post service is the most competitive, or you have some locations where air freight with the airlines is more competitive, or for large packages, perhaps a traditional carrier will have the best price. It's very common that customers will have four or five different carriers they have to deliver their goods to on the same day. The first step with our Drop service is the convenience of having one point of collection for all the packages to be shipped. Yes, in the future, we want to be present in more steps of the logistics itself. Very often we will do that through specialized partners. We don't have in our plans the vision to invest capital in warehouses or trucks or having our own fleet. The Drop service already brings us the possibility of consolidating cargo. We have the cargo consolidated, and perhaps we can have more specialized partners for some types of deliveries. Also, we will work through our partners to be able to offer other logistics operations, such as fulfillment, drop shipping. What I can tell you is Melhor Envio will add these capabilities to Locaweb, and this is very strategic to us, and the launch of the Drop service goes along those lines. Excellent. Thank you. Have a great weekend. Thank you. Now I hand it back to Mr. Fernando Cirne for his final remarks. Once again, I'd like to thank you all for your presence here with us today, our employees, our partners, our shareholders, technical team. Thank you very much for this partnership, and thank you all for helping us deliver these excellent results. The Quarter 1 2021 Earnings Conference Call of Locaweb is now closed. Thank you all for attending, and have a great afternoon.