Good morning, and welcome to Valid's Earnings Conference to present the results of the first quarter of 2022. I am Julia Araujo, Supervisor of Financial Activities and Investor Relations, and I'll be the moderator of this webcast. Before we begin our presentation, let me remind you that this event is being recorded and that all participants will be in a listen-only mode during the company's presentation. This webcast is being provided with simultaneous interpretation to English, and the presentation will be available at our webcast platform at Valid's website. You will be able to control the slides in the order you wish, and the replay will be available shortly after the event is concluded. After the presentation, there'll be a Q&A session.
Questions can be sent at any time during the presentation using the chat of the platform in the left side of the page, and it's indicated by a blinking light. We'd like to clarify that statements that may be made in this video conference regarding business perspectives, forecasts, and financial and business goals are based on the beliefs and assumptions of our management and on information currently available to the company. Future statements are not guarantees and involve risks and uncertainties and assumptions because they relate to future events, and therefore depend on circumstances that may or may not occur. Investors should understand that the overall conditions of the industry, in addition to other operational factors, may affect the future of the company and materially differ from those results expressed in the statements. Having said that, I would like to introduce the participants of this conference.
Ivan Murias, Chief Executive Officer, and Renato Tyszler, Chief Financial Officer and Investor Relations Officer. Now I turn over to Ivan, and at the end of the presentation, we will answer the questions sent through the chat. Good morning, Ivan. You may proceed.
Thank you, Julia, and good morning, everyone. I would like to thank each and every one of you for your presence. I hope that you're fine and healthy. I would like to go over the main points of the results of our first quarter of 2022. We completed this quarter with BRL 580 million revenue, an 18% increase vis-à-vis the first quarter of 2021, and BRL 103 million in EBITDA, a significant growth vis-à-vis the first quarter of 2021. For the third consecutive quarter, this is the highest quarterly EBITDA of Valid's history.
This was only possible because in VGS, the Government Solutions, our revenue grew by 39% and our EBITDA reached BRL 300 million with stable volumes and aligned with the levels we had before the pandemic. In the VBS, the Business Solutions segment, the demand for smart cards and the competitive situations between banks, neobanks and fintechs keep leveraging our revenue that grew by 17% vis-a-vis the first quarter of 2021. Our quarterly EBITDA margin close to 13% because we improved our efficiency in production as we constantly keep you abreast of in our calls. In Digital Solutions, VDS, the revenue grew by 24%, and in the past twelve months, the accumulated revenue goes over BRL 200 million with the maintenance of the EBITDA margin.
This shows that we keep focusing on pursue initiatives that makes strategic sense to the company without burning the money of our shareholders, something that would not have traction with our business. In International Business, we had a major highlight in Telco Global with 20% growth in revenue and 30% growth in EBITDA, with a total EBITDA of BRL 39 million. This is because of the improvement in price mix of chips and also geography allocation, and also because of our operational costs. Even with a negative currency exchange rate in this period vis-a-vis the first quarter of 2021, our United States business was improved because of an improvement in the operational efficiency of cards, because we closed one of our plants in that region. Telco Global and United States units had a 65% growth in EBITDA combined.
As a result of this delivery, our net debt/EBITDA indicator was reduced to 1.5x , which allowed us better possibilities in negotiations of rates, also debt extension. It is easier for us to convert EBITDA in earnings per share to our shareholders in upcoming years. As soon as the current financial difficulties are reversed. Now Renato is going to explain the details, the results of the first quarter. At the end, I will come back for my final remarks and to open the Q&A session. Good morning, Renato.
Thank you, Ivan. Moving to slide four.
Once again, we present the quarterly evolution of our business units compared to the first quarter of 2021. Here you see that we had revenue growth in all business units vis-a-vis the first quarter of 2021, and also growth in margin and EBITDA, except for VDS, which was stable but still lower than the first quarter of 2021. We had a 39% growth in VGS, 17% in VBS, 24% in VDS, and 20% in telecom, showing a very strong and sustainable results for the first quarter. On slide four, we show a significant increase in revenue and EBITDA vis-a-vis the first quarter of 2021 in our consolidated results, 18% and 69% respectively in revenue and EBITDA. For the third consecutive quarter, we've had the highest EBITDA level with R$ 30 million.
This shows sustainable performance along three consecutive quarters, both in percentage terms and in absolute terms. As highlights for this growth, we had higher volume of document emission, higher production of smart cards, increases in revenue and margin in Argentina, increases in SIM cards and industrial commercial and operating improvements that led to an EBITDA performance improvement of 18%. In this next slide, we see the analysis per business unit, starting with VGS. In the first quarter, we maintained a strong and stable volume of issuance, even with a low seasonal demand because of holidays. We grew 70% vis-a-vis last year in issuance, 39% growth in revenue, and 105% in EBITDA. In 2021, we had a significant impact on this period because of COVID.
We also renewed important contracts in the South, started our operations in POE, Espírito Santo, and we expect to start operating in Minas Gerais. On slide seven, we talk about the VBS unit that had a strong demand for smart cards with a 70% growth in volume vis-à-vis the first quarter of 2021. This strong growth in volume and resumption of business in Argentina have led this unit to have a 70% increase in revenue and 50% increase in EBITDA, with a contribution of operating efficiencies in the factory and also the difference in the costs of chips abroad. In addition to smart cards, we also had improvements in other VBS business that have led us to an EBITDA margin of 12.8% in the period.
On slide eight, we show the VDS unit that is gaining traction and has had revenue superior to BRL 253 million in the quarter, with a 24% growth vis-a-vis the first quarter of 2021. The main growth leverages are from Valid Pay solutions for banks and fintechs, and a growth in Colombia and in several Valid Cidades. We focus on this business in 2022. The next slide, we see our continuous growth in our Telco Global business, both in revenue and EBITDA. We had a 15% growth in the volume of SIM. With that, we had a 20% growth in revenue and 30% growth in EBITDA in the first quarter of 2022, even with a small negative exchange rate factor. The EBITDA margins have maintained between 20%-25% in the past seven quarters.
In the US, we recovered revenue by 5%, but mainly a recovery in the EBITDA margin that was negative in the first quarter in 2021 and today is BRL 6 million positive. Also in our international business, our EBITDA grew from BRL 27 million- BRL 45 million, 10.5%- 15.4% in EBITDA margin. Now moving to net income on Slide 10, we see a significant operating results, but it is more than offset by a temporary loss in our intercompany mutual funds in euros. This effect does not have a cash effect in the period. Now on Slide 11, we see that these financial effects offset themselves, while operational effects are positive, with a net cash generation minus CapEx. We also have a negative exchange rate effect because of the assets kept abroad.
Our policy is very conservative, and we will keep on monitoring our political and economic situation. On Slide 12, we show the continuous evolution of our level of leverage represented by our net debt/EBITDA. We started with 3.5x, and now it's 5.5x, and the EBITDA twelve months is BRL 373 million year to date. We should reinforce our continuous efforts with the capital structure, renegotiation of debts with old creditors with longer extension. In the second quarter of 2022, we'd have a high volume of amortizations, but after the end of this quarter, we were successful in extending our debt with our subsidiary in Spain, and you can see that by the indication in red in the chart. There's also the payment of the seventh and eighth issuance.
In 2023, there's also a high volume that we are working on in, on an issuance that we're going to make in an upcoming month. Last but not the least, some subsequent events after the end of the quarter are shown on Slide 13. We have a debt extension with Santander in Spain, as I mentioned the previous slide. We also communicated the ninth issuance of the debentures totaling BRL 250 million and a deadline of five years. We conducted our general assembly, and we also activated our share buyback program and a subscription bonus. With that, and once again, thank you for your attendance, I would like to turn over back to Ivan for his final remarks.
Thank you, Renato. Before we move to the Q&A session, I would like to reinforce three key messages with you.
First one regards the deliveries in the first quarter of 2022. We are delivering the highest quarterly EBITDA level in the history of Valid. It's important to highlight the evolution of the operational margin reaching approximately 18% in the first quarter of 2022. Above all, we show consistency in the delivery of our results. In the third quarter of 2021, when we reached the first record quality results in EBITDA with BRL 98 million in the history of Valid, we shared with the market that we back then believed that the company had reached our top level of EBITDA that would range from BRL 90 million-BRL 100 million. That seemed sustainable, almost a baseline to future quarters. Some shareholders funds called us asking whether that comment had slipped or whether this was an actual perception of the management that had been shared with the market.
We repeated that in the fourth quarter of 2021 with an EBITDA of BRL 100 million. Once again, in the first quarter of 2022, we showed BRL 103 million in EBITDA, even at the worst quarterly seasonality of the company. Because we truly see a company that can leverage, operationally speaking, the results of the markets where it operates as a consequence of an effective implementation of efficiency in operations, in business of our core assets. We believe that this is sustainable and has come to stay. Let me reinforce that this is the third consecutive quarter where we deliver consistent results within the range that we mentioned back then. The second point has to do with the capital structure.
All results that were accumulated in this past three or four quarters have allowed us to significantly reduce leveraging, closing the quarter with 1.5x. This has allowed us very favorable conditions for renegotiating our debts, extending the debt payment terms, and reduction of rates differently from last year. The final point, and I've been saying that frequently, has to do with cultural transformation. We have constantly highlighted the return of our focus to the core activities of the company as part of this cultural transformation. Without losing focus to our future and to other business verticals. In the beginning of the year, we started paying again JCP, but at the end of this quarter, we paid PPR, profit sharing and bonus to the teams, and reinforcing the pride being proud to belong to the company.
That helps us attracting new talents and retaining the good talents in the company that know the company so well. Finally, I would like to invite all of you for a Valid's Capital Markets Day that is going to take place in June. Soon we are going to tell you when this is going to be. We plan to share with you and potential investors our vision for the past twelve months in the sense that what was promised, what we actually delivered. We also want to show you how we structure our capital in dealing with our debt, how we see the way we're dealing with our assets, and how we perceive the future perspectives of some of our main products. We've been talking to many of you about the impact on VRG. We'd like to give you more details about future plans.
Also talking about Telco Global. We have ended the quarter with great results, but people asked us about the situation on chips and our expectations for future quarters and how that has shaped our internal culture. Before turning back to Julia, I would like to thank and congratulate Valid's team for the results achieved. Everything we explained this morning is the result of the dedication of everyone from different geographies and different business verticals. I personally, and same is true for the management team, like to thank each and every one of you. Myself, Renato, and Julia are now open to your questions or points you would like to get more details about.
Thank you, Ivan and Renato. Now we will open for questions and answers.
Questions can be sent through the chat of the platform on the left-hand side of the page indicated by a blinking light, or you can send that by ri@valid.com. The first question is from Fabio. Good morning, Renato. Congratulations. Why did you have loss in the quarter? Were we going to have profit again, as we had in 2021 in the second half of the year? What about the integration of the operations in Sorocaba?
Good morning. This is Renato. I will answer this question. Regarding the first point relating to loss in the first quarter, this is 100% connected to the exchange rate variation. We have mutual operations between our headquarters and our subsidiary in Spain. This mutual fund is like an accounts receivable in Brazil.
Maybe it's counterintuitive because when you think about variations in currency exchange, you think about Brazil taking debts, but when real is appreciated it's better, when it's devalued it's worse. In our case it's the other way round, so it's counterintuitive because it's like accounts receivable in Brazil in euros or dollars. When real is appreciated, we would receive fewer reals, so that will have a negative impact on our results. This effect totals BRL 56 million in this first quarter. 6.39 EUR, $5.47 of the dollar exchange rate back then. We had a 14% appreciation rate of the real. Very high appreciation rate, and because of that, we had a lower result.
Except for that, I say that this is an accounting impact, not a cash impact, otherwise our profit would have been significant in the first quarter. Regarding the second quarter, usually EBITDA and operating profit has a positive perspective that we have shared in our previous quarters. The exchange rate impact will depend on the exchange rate of the last day of the quarter on June thirtieth. Today, the exchange rate indicates that the real has lowered. It's less appreciation than the last day of March. That is for today, but it's hard to say how it's going to be because it will depend on the exchange rate for the last day of the quarter. The operational perspective, which is more important, is something that we feel very strongly about and we're very positive about that.
Regarding the integration of operations in Sorocaba, the São Bernardo part has been completed and also we are in the final phase. We are very glad with the results of São Bernardo and Sorocaba integration.
Next question is from Marcio. Good morning, and congratulations on your results. Now that we're close to the end of the subscription bonus and the price of the minority shareholders is lower than the current value, do you consider an extension on this date and going beyond the times of elections and maybe with a better appreciation and lower impact of inflation?
Good morning. This is a great question. We still believe that the market hasn't had the opportunity to digest the results of the first quarter we've just digested, let alone the second quarter, because this is ongoing.
We still believe that in the second quarter probably we're going to see more economic and political stability. Because of consistent results that Valid has delivered, and that we expect to keep delivering good results, we hope that we can increase the price of the shares. A few weeks ago, when we communicated the results of the fourth quarter, our shares was above BRL 10.67, which is the threshold you mentioned, but we are still very optimistic. With good, consistent results and a more stable market, we hope that by September we can reach this level. Having said that, we could, and of course we follow closely the market and we could study the possibility of following the suggestion you have just mentioned, if necessary.
Right now we are still optimistic that we are going to have the subscription in September. Next question is from Fabio. The war between Russia and Ukraine could have an impact on chips like the ones used in the automotive market. Could Valid go into this market to supply, OEMs in the automotive industry? Good morning, Fabio. This is Ivan. From the revenue perspective, right now we do not serve any operator in Russia or in Ukraine. We don't see any impact on revenue related to that. In terms of supply, we've mapped the supply chain. Apparently, there is one supplier of a glue that is used on the chip that we use to supply. But we have different sources that could replace the supplier. Even from the supply perspective, we don't see any potential impact.
Our concern, and I think this is true not only at Valid, but overall, it's a disruption of the supply chain, logistics supply chain as a whole. I think all of us should pay attention to that. Regarding the second part of your question, although it makes sense theoretically, it doesn't make sense in terms of business. Operators use a chip that is developed above 90 nanometer, and in telco and bank cards are chips that are developed between 20 nanometer-30 nanometer. As you work with more powerful and more modern devices, if you can also work under 20 nanometer. The smaller it is, the higher the value added, the higher the average price. In a scenario of scarcity, usually companies have directed their production capacity to serve the industries of chips that use lower levels of nanometer, smaller ones.
Although there is global scarcity, the automotive industry is having a higher impact than other segments. Right now it does not make sense for us to use our capacity and our partnership with producers that are focused on telco and banks to serve markets with lower average ticket and lower value added.
Next question is from Carlos: Despite a reduction on net debt on EBITDA, the cash distribution is going to be used to reduce the gross debt?
Let me see if I understood your question correctly. I think that maybe your question is whether we are going to use our cash to reduce the gross debt in a continuous reduction of leverage, or whether we will invest in generating cash to get additional cash and use it in CapEx, M&A, or other initiatives that could strengthen the future growth of the company.
We've been working, and since last year and also in the first two quarters, we've been working to increase the generation of operational cash so that we can reduce that from our leveraging. We were 3.5x EBITDA, now 1.5x EBITDA. This is a major evolution, and we will keep on that track. We've also been working on some potential options of investments. Something that may be not part of our core business or not in the regions where we operate, and we are constantly assessing potential for growth, whether it is in our core business or in other opportunities. We'll always measure leveraging versus potential growth in CapEx or M&As.
We make this analysis constantly, and as Ivan mentioned in his presentation, any investment made in the future will be done in a very responsible way so that we can put the money of our investors where we believe this money is going to be well invested. Right now we are working to reduce gross debt and deleveraging as a consequence. We are constantly assessing projects, also thinking about the future growth of the company.
Next call, also from Carlos: Do you see any impact on the issuance of cards and increase in delinquency? Do you think that digital banks are more conservative now in the second quarter of 2022?
Hello, Carlos. Good morning. I think I can answer your questions in two different ways. If you think about the first quarter of 2021, you can compare ourselves against that.
We have grown the number of issuance by 17%. On the other hand, when we consider the volume of the fourth quarter of 2021, there was a decrease ranging between 15%-20% in the volume of cards that were our perspective. This represents an effect of delinquency, and of course, we can control it. There was an increase in the Selic rate. That also has an impact on banks and other financial operations. When cost is higher, naturally, I think that the attitude of all banks is to be more conservative relating to its CAC. So I think that we had a Selic rate above 13%, and that changes this attitude. The average ticket to open new accounts changes.
From volume by 15%-20% vis-à-vis the fourth quarter of 2021, you see that our absolute EBITDA quarter this year because of improvement in business. Related to scarcity of chips, and also that helps in terms of business relations and also because of the fact that we are more efficient in our manufacturing operations. Although banks might suffer delinquency and also because of the Selic rate, they've become more conservative. We need to be the first option to incumbent banks or neobanks or fintechs. When you think about manufacturing cards, we should be their top choice. I think that the business team has been able to implement this strategy very successfully. I hope that we can keep this position in the upcoming quarters.
Let me remind you that you can send questions through the platform chat on the left-hand side of the page indicated by a blinking light, or you can send your questions by email at ri@valid.com. If there are no further questions, I turn over back to Ivan for his final remarks.
I'm sorry. I was on mute. Once again, I would like to thank you all for attending this call. I'd like to thank you for the questions you sent. Let me reinforce that our RI team, led by Renato, Olavo, and Julia, as well as all the executive directors are open for you for individual sessions if that's necessary, or any meetings you'd like to know with further details. Finally, let me reinforce how confident we are to face the challenges ahead of us. Thank you very much for attending. Have a great day.