Earnings Call: Q4 2020

Feb 3, 2021

Good morning, good afternoon, everybody, and welcome to the Veth Year End and Q4 2020 Results Call. I'm Dave Nangle, I'm the CEO of Veth. I'm happy to have you all here with us today. What I'll do as per usual is a 15, 20 minute presentation, update on the year gone by and what to expect in the year coming forward more importantly, and then open up for any questions and answer questions that anybody has, as per usual, at the end of the call. Our slide deck is online on our website and it's also via the video at chapter we're doing right now, the video bar. So highlights for Q4 'twenty. Getting into the key points on Slide number 2. I think what I'd say is we came into 2020 very optimistic for all things FinTech, Emerging Markets, NFF. And we ended the year on a very strong note. Obviously, there's a lot of movements in between, given the movement in COVID into macro, into digital. But what I'd say is Q4 was a very strong way to end the year across the board, us as a company and our portfolio companies through which we benefit are really benefiting from the step change shift to digital financial services and a tailwind, which goes with that to the emerging markets. That was obviously helped by COVID, one of the positives we saw from a structural change point of view. And from a numbers point of view, NAV share price, All at record highs at year end. NAV per share at 3.83 dollars in SEK0.47 dollars in U. S. Dollars. It was a 24 year on year growth in our NAV per share. Obviously, a lot of movement within that over the course of the year. I'll get into that. But also from a total NAV, we ended the year at $388,000,000 part of which was the Q4 capital raise, which helped to drive the total NAV higher, but a lot of that was actually incremental value added growth coming through. So we're at the biggest size and shape that we've ever been, We continue to add value and grow in terms of any of your fee per share and share price. Kind of the highlight of driving that is our portfolio Northstar, which is Creditas. It's now 44% of our NAV, so some concentration there, and we're very happy with that. They had a benchmark Series E funding round in Q4, $255,000,000 of which we took part with a stake of $25,000,000 That values the company now at $1,750,000,000 after that round. So the first, I guess, unicorn, and we like to use that word too much, but it's our 1st multibillion dollar company of note and having invested in a first back in 2017 and watching it grow into the size and shape that it is today. And it's still at a very early innings in the story, which is probably the most exciting part for Creditas and for us as investors. The share placement was a first in Q4 since our inception back in 2015. With support of current and new shareholders, we raised just over $60,000,000 via direct replacement to continue the mandate. It's been 5 years in going. It's been working. We're creating value. We're in a very strong place to continue to do that. And we like the fact that our shareholders stepped up and supported us in this window and was very gratefully received. And the final point was the name change. It was a busy quarter on many fronts, but we changed our name officially from Hostok Emerging Finance to VEF, just shortening it up. And given the fact that we're a much broader investment company than our Russian history had us in its focus, we have seen more ideal and apt for the stage of our development. Looking at some of the numbers in a touch more detail, as I said, the NAV from a U. S. Dollar point of view, nearly $400,000,000 $388,000,000 in Q4, up from $268,000,000 in Q3. So the NAV increased $120,000,000 approximately half and half of that, half was through growth in the valuation of the portfolio and half of that was through fresh capital coming in from the place, which I mentioned. And from a share point of view or from Menivipa share point of view, obviously, focused on the SEC move and the dollar move because we have investors in both geographies. The dollar move was indeed stronger and north of 20% year on year from a NAV per share, whereas SEK on a year on year basis was 8%, quarter on quarter 6%. Obviously, the SEK has been strong visavis the dollar and hence the disparity in movement there. And then our share price was up nearly 40% in ZEC, who were quoted in Sweden last year. So a strong year, albeit a lot of movement in that as to where with a lot of our peers given that the COVID hits early on into the trends through this positive trends through the second half of twenty twenty. Maybe getting into that a little bit more detail on Slide 4, just a slide, which shows the evolution of our NAV, this is total NAV in U. S. Dollars And since inception, it's a nice chart, obviously, gradually growing and adding value over time, capital raised back in 2015 and then the red part of the last bar on the right was capital raised in Q4 'twenty. But effectively, we've been adding 25% to 30% NAV per share and share price value growth per annum over the last 5 years. So the track record is healthy and strong and long may it continue. But I guess there is a narrative, a clear narrative through 2020, which we've been talking to and it's really played out in our NAV. As I said, we came into 2020 quite optimistic after the back of 2019, which we thought was a banner year for us as a company, 2 exits, 1 from Tinkoff, 1 from EasyCo in Turkey, both at 60% IRRs. Creditas and Compu had raised substantial Series C, Series D funding rounds. And our portfolio was in good shape coming into 2020. So we are optimistic for the year ahead. Obviously, with the onset of COVID mid Feb and the impact of that directly. I guess the forecast impact in March is what led us to take down our NAV in Q1, partly market led with comps down, FX down and then also our forecast feeding into companies and getting more conservative at the early part of COVID when one didn't know what was going to happen in terms of debt, longevity and type of crisis that it would be. But Q2 was the kind of the gradual return at some levels of confidence and clarity and outlook, markets, currencies and then obviously the forecasts of our companies. And I guess through Q3 and Q4, it was almost back what we would see or back to what we would expect to see that we're predicting at the start of the year, strong growth across the board, whether it was digital first or digital first at a macro overlay, which is some of the credit companies in our portfolio. So strong growth coming through in NAV and NAV per share in the second half of the year. Moving on to Slide 5, which is a bit more detailed breakdown of our portfolio and the NAV evolution over Q4 and over year end. What is of note here is versus the start of the year, you see the Q1 or the step down into Q1, but then the recovery throughout the year. And in Q4 across the board, parking gear ball still wasn't up quarter on quarter for our companies. Credit half is obviously strong in size and shape in terms of the NAV and we'll see the concentration a little bit later on. And also we're sitting on $52,000,000 as of year end in terms of cash. Getting into some of the portfolio names because this is obviously an important part of what we are. We are a company at the end of the day. We talk a lot about credit task and we talk a lot about it for very good reason. I guess one is it's our portfolio North Star. It's everything in a company that we want to invest in. 2, it's 44% of our NAV. So If you understand, know, like and Creditas, you know nearly 50% of what we're about, at least as we stand today. Also, Creditas is a company which has started to report quarterly information. So we have a high or growing degree and both transparency on this asset versus some of our others where we have less transparency. And that's not by design, it's by default the nature that we're investing in private companies. But we see with the likes of Creditas as they mature, get bigger and are starting to move towards IPO and that ideology transparency comes with it and they start to share numbers. And with that sharing, we can then openly talk about those numbers. And I'm very proud to talk about the year they had in 2020, nearly doubling originations, nearly doubling revenues year on year. That's despite Q2 almost turning off the taps in terms of growth in a wait and see mode. So it's impressive to deliver that kind of growth in a year that we've just seen, and it shows how strong the second half of the year was in terms of originations, in terms of revenue coming through, which bodes well as we look into 2021. Now this is a company in the core you secured lending against homes, against auto, against payroll. We would be expecting a 2x minimum growth in that originations into 2021. The company always pitches a 10th and higher and it looks to achieve more. So there could be a spread north of that, albeit we like to be logical, confident, but somewhat conservative in our forecast. But I'd say 2x minimum will be the outlook growth for originations, all other things equal, at that story. And also, I think the interesting thing with Creditas is it's gone from this One dimensional is a bit harsh, but very focused, secured consumer lending machine, which has a serious amount of growth to go in terms of the lending book today is still only between $250,000,000 to $300,000,000 and playing into a multi $100,000,000,000 opportunity. So the ability to grow that monoline business across 3 pillars is very clear multiple years into the future. But now they're deepening into a broader ecosystem play across those three pillars, broadening the product range and also they've moved the business into Mexico as a new fresh growth driver. So in terms of Creditas is a success, we would argue Creditas is only getting started. And probably the most exciting thing about Creditas is it's getting started and compounding from a bigger base for us. The smaller end of the portfolio companies doubling from $5,000,000 to $10,000,000 to $20,000,000 is all very good and welcome. CreditFast is now $169,000,000 of value and in a portfolio of $388,000,000 You can see what can happen and should it continue to grow and obviously market multiples valuation feed in and do their work thereafter. Maybe I'll just touch on the Q4 raising from credit tasks. Remember spoke about it. It was after the last quarter results session. What it says is just Series C or Series E. We've come into the story since back in Series C, as you can see from the chart on the right hand side, and this is on Slide 7. I think what this also attest to is and this is very similar with EZCO in the past where We've been very we always say we're true and fair with our valuations, but they always have a conservative hilt. And then when it comes to funding rounds or it comes to exits, There always does generally seem to be money on the table. And that was again what happened in Series D. You can see the conservative nature of Q1 2020. We didn't know a lot of uncertain moving parts. We pulled back valuation irrespective of Series D being valued at a higher level back in 2019. And then the uplift into Q4 was very nice to see. So a very positive evolution in mark to model, mark to last investment round a very positive evolution in that story and there's a lot more to come in that. I'm going to touch on 3 other companies within the portfolio, less in detail, less numbers given. That's today, but the story will be slightly different tomorrow. The 2nd biggest name in our portfolio is Confio. This is evolving now into a digital bank or small business financial services ecosystem for the Mexican market, which badly needs one. They started with a credit first offering. And what we've shown on Slide 8 is something from their own board decks that they've allowed us to share. It's the evolution of the strategy from and how they're going about it from Credit first and then they're doing credit as a service playing on their skill set, but bringing in tech or fee revenue generations. They're moving into the whole ERP space, counting SaaS, areas like Debo's in our portfolio and Fort Knox, just feeding the small business. They've done that by an acquisition already bought last year. And they're also moving into payments. And then the application for full banking license is underway. You see this happening in many markets, whether it's Square in the U. S, iZettle obviously came out of Scandinavia, Stone is the benchmark in Brazil, where they come at it from other payments or some angle and then it slowly evolves from that core hook product into a broader product suite for the small business, which has been fundamentally under or badly served by banks forever. And that doesn't look like changing. And if these companies which are grabbing that customer, that market share, that grab, that value. And as a company, if we would say 2020 versus say, so my credit task, because this is A credit pass in the making story for us. But 2020 was a sideways year in terms of numbers, a lot more conservative unsecured lending small businesses in Mexico. Was worse hit than Brazil last year, at least from a GDP point of view. So we're very conservative with a very strong crisis for the company in terms of managing the book asset quality. And what we really liked is that they put the foot down on growing at the ecosystem And basically, for the defensive management in a crisis, they were very much progressive forward management in a crisis, so hence the movement of the ERP and hand payments and other areas. And I would expect 20% plus of their revenue base to be non interest income as I look forward into 2021. And also the growth in Confio should be stronger than that, I would expect, versus credit half. On a like for like basis, Confio can grow anywhere between 2x to 5x in terms of their book this year, given the opportunity they're first out of the blocks, the bulk of conservatism in Mexico on the banks and the opportunities there for them to grow. 2 other names. 1 is Justpay. We touched on that because it's their first Indian investment and it's There are only new investment last year. A lot of work, but only one where we wrote the check. Mobile payments in India effectively, I think The chart on the right paints a clear picture on how it's kind of like an index for what we look at or indicator of where Justpay can go. Is the UPI government backed, P2P bank backed and payment system, UPI transactions in India. And then obviously, the curve is very sharp up and to the right. It's an indication of the growth in digital payments in India. Justpay actually processes a lot of this for bank partners. So it's actually directly linked to this chart and the growth in it. And also, it's mobile payments infrastructure sitting inside and apps like Amazon, Uber and a lot of the big Indian ones like Flipkart and etcetera, where it processes payments or aggregates all the other payments, and at least for a small clip, is obviously growing very fast. And this is one we've broken off to mark to model from previously we've been mark to last investment round. And we're still only at about 10x forward revenues on this and it's growing its revenues 2x to 3x a year. So I think even though we moved up the valuation, I think conservative is still well baked in, in that one. And the final point Is NEBO our final company? And I could talk about them all. But with NEBO, on our recent marketing roadshow, we got a lot of Interaction and debate back and forth with Nevo versus Fort Knox because Nevo plays in the accounting SaaS space, albeit in the more sizable but less penetrated Brazilian market. And we own 20% of that company. We're big fans of the management, the business and where it can go. And we've seen companies like Xero, like Free out of Japan, like Fort Knox out of Sweden. And the comparison is very clear in terms of very similar sized customer base in terms of small businesses, albeit the addressable market for NEBO is 20x that of Fort Knox, and that's no offense to Fort Knox. And the Fort Knox today has a market cap of $3,000,000,000 to $4,000,000,000 and we're marking Nivo at $65,000,000 And there's a very real reason for that, obviously, because of Nivo's traction revenues, And it's all cross referenced against market multiples. But you can see where Nevo can go versus where Fort Knox has gone. And we love companies like Fort Knox who provide a playbook for companies in our portfolio and an analogy and a crossover. And we see the same very much with Finanxero into what Lendo has done in the Scandinavian market and Pinon Xero is the number one digital loan broker in Brazil and even for REVO in Russia and what McLaren has done. So Those read across are great, the learnings are great, and we do our best to connect these companies in for mindshare and for upside. Coming back a touch to the portfolio itself, this is just to summarize. I said Creditas 44%. IT and Confio now are nearly 60% or 57% of our NAV. So top 2 companies are 57% and top 5% or 72% as of year end, albeit there is a concentration held towards credit tasks. As I said, we always we're very comfortable concentration risk. Once it's the right kind of concentration risk going to tend to be when they get to this size and shape. And from a geographic perspective, it's still heavily weighted towards LatAm and that is CreditAss and Compu, obviously, in a nutshell, but we have 7 of our 12 companies today in LatAm, albeit we've been very encouraged by, I guess, our early foray into India and the trends that we're seeing in markets like Pakistan, Egypt, etcetera, which I'll talk about it in a second. What's coming up? Pipeline. Pipeline is healthy. I'd say the first half of last year, We were more quiet than normal on pipeline because we were working with our portfolio companies through early parts of COVID. And the ideology of spending more dollar outside the portfolio just didn't feel or seem right and with the lack of certainty in the market. But We had a big push in the second half back to business as usual effectively. We turned over about 130 companies through our profiling and to our system and our playbook as we do. We did one deal last year in Justpay in India. But that said, the benefits of that work, and it's always ongoing, is and should play through into the first quarter, in the first half of this year. There's a number of deals that we're working on, albeit smaller in nature across markets like India, Pakistan and Mexico. And I would be surprised if we weren't announcing in the near future some additions to the portfolio given all the work we're doing. So it's a good time in FinTech in Emerging Markets. There's a lot of opportunities that we're seeing In the key markets that we look at, and we kind of boil it down to Brazil, Mexico and India at the larger end, Pakistan and Egypt specifically in the frontier markets that we like. But we have an open eye with markets that we know well historically like Russia and Turkey. We're getting deeper into Nigeria. But those 5 are getting a lot of our time right now. And by being focused, albeit it is quite broad and having good partners on the ground in these markets and internationally and a good track record of being good partners and adding value. That has come into the fore and showing a good opportunity to us at the back end of the pipeline. Into share price NAV per share discount, what I'll say even we take care of the business and the share price should take care of itself. And it's been good to see the evolution of the share price now catching up and moving north thereof to the NAV per share. So it is an in focus space, FinTech and obviously across emerging markets. But the macro ideology of what we do is very good and strong and it's in focus at the moment. And then you add to that our delivery on it, whether it's exits and real returns, whether it's mark to market, whether it's benchmark names like Creditas and a track record of NAV per share and share price growth. So there's a lot of micro level traction to that. And I guess what we're seeing now is the market is trying to reward that and look through our NAV into the future and starting to price that at a premium. It's something we obviously would have argued for, but then we're biased in nature. And we know our portfolio inside out, and we're obviously big believers in what we're doing. But when you do quarter on quarter of NAV per share growth, when you do 5 years of Now for share and share price growth, the market starts to give more trust and confidence in what you are and starts to reward that which we clearly like to see. Final slide before I wrap up is just on the ESG front. Look, personally, I'm a big fan and support of our ESG overlay to everything we We have a focus on sustainable investing. It's always been there. If it's not ethical, it's not scalable, and it's not scalable, But we don't want to invest in it because it doesn't give a good return on capital. And I think very much like FinTech in itself, SG is the way of the future, so we marry those two forces and that's only good for us, good for business and good for returns on capital. We never We are capitalists at heart and that won't change. We like to maximize returns, but these narratives go nicely together. So there's no conflicting forces here. It's a nice tailwind to everything we do. And then there's a number of our companies, which effectively do a lot of the hard work for us on this and because they are at the forefront of sustainable investing. We've got Jumo, which is bringing access to finance across Africa. A lot of people's first Financial product is via Jumo. Credit us bringing on the cost of consumer loans dramatically in Brazil. Confio inclusion on the small business front, you aren't getting credit or financial services across the Mexican banking spectrum. And Infinja and its mobile wallet and small business loans is the very first in an unserved market on mass. So very proud of what these companies are doing. But as I say, ESG, FIMO Investing and maximizing returns can and do go together. Final slide before I open up to questions. Just some points, I think our NAV, it's a strong basis for continued growth. We're very happy where we've got to over the last 5 years. We're now at a decent size and shape, but we're very encouraged by everything that we see in the portfolio and in the pipeline ahead of us to continue that journey of value added growth and from this bigger base. Investment companies like ours have a North Star. It changes over time. CreditAss is that. And the exciting thing for us, as I mentioned about credit task, is that it's now starting to compound from a bigger base. And that obviously means bigger and better things for us from a NAV share price and market cap point of view. But it's not all about Creditas, but obviously, it's the one that's the biggest and the most transparent. I think the most exciting name for us this year is Confio. And partly it's because of the size and the impact it can have on our NAV and hence our market cap and share price, but also because of what we saw in Confio and through Confio in 2020, which is a phenomenal crisis. I know a company has been very well positioned for a much broader win across small business financial ecosystem in 20 2021. Names like TransferGo and Justpay also at the upper end of our NAVA are in very strong positions to compound from here. So It is an exciting time for the portfolio. And I don't mean to not mention names, but you have to pick and choose, but it's towards the top end of the NAV that the ones will have more of an impact clearly going forward. The corporate activity in the market, IPOs, M and A and just the amount of capital in the space Just breathe opportunity and transparency and then focus for everything we do and the ability to exit and raise companies, I raised money for a lot of our companies, which is all supportive of the mandate, so we welcome that. And then obviously for The pipeline, we've been very strict on what gets into the portfolio over the last 2 to 3 years. We have a benchmark. We have names in the portfolio that have been there before. So the checklist is high. The bar is high. But I would expect we're starting to make some smaller investments and smaller tickets coming out. So expect some names to come through, and I'm excited for the year ahead about what can come through and then what we can add from there. I think that the key risks, as always, don't really change. It's more on the macro and the market side. They bounce us around much more than anything we've done on a micro level, at least at least so far. I'll stop there. Operator, can you open up the call for Q and A, please? Thank you. After you announced, please ask your question. Our first question comes from the line of Joakim Goonel from DNB Markets. Please go ahead. Thank you very much. Good afternoon, Dave. So I have a couple of questions and perhaps it's easier if you take them 1 by 1. But with regards to a solid net cash position here, I mean, obviously, it adds a new dimension to what you can do with such financial flexibility. Can you provide just an update here on, say, funding needs of your existing portfolio ex Creditas, obviously, for the coming year? And in that question, I would also like to ask, I mean, because the new investment opportunities that you see, it seems like they are tilted towards more, say, frontier mark gets slightly, say, smaller ticket sizes than your average, say, SEK 10,000,000 to SEK 20,000,000. So any thoughts there? Yes. No, it's fair. Thanks, Joakim. Thanks for the questions. Look, I think it's we're in a good place from a cash and capital point of view. And we've always said we don't like to carry capital because it hurts performance, but we don't like access to capital. And we only pull the trigger as and when we need it. And obviously, the markets were supportive of that back in November. And then we were quick to deploy some of that capital, the $60,000,000 plus we raised, albeit we had cash at bank. We did deploy $25,000,000 into credit costs and another $500,000 of small ticket into Finja. Entering the year with $52,000,000 Now we're looking at about $20,000,000 It could be more plusminus that we will put into the portfolio this year. And that's At this stage, obviously, things can change, parts can change. And I guess, Compu is a classic case in point, the name that we like a lot, Depends how much they look to raise this year and then us wanting to take our rights plus and minus depending on the valuation and the partners. But I think we've earmarked about 20,000,000 and of that $52,000,000 at this point for current portfolio needs. And then outside of that, the nature of what we do is We could find a great company and it could be a $30,000,000 ticket and that could happen as soon as April or May. So there's nothing in the pipeline right now that fits that bill, But that can happen. And if we have conviction, we will definitely go at it. And if we need more capital for it, there is ways and means to do that, obviously. So I guess 52 leaves us comfortable, 52 with the follow ons for the companies that we have in our portfolio, very clear and it's there to be supported. And then on the smaller side, yes, we have a number of small investments, say a number up to 3 and small investments coming through the funnel or the pipes right now that we've got a decent level of conviction will close in the near future. Some are small because they're just in smaller countries in the earlier stage. So places like Pakistan, it's actually hard to spend money and you shouldn't be writing at least in Fintech today, dollars 10,000,000 tickets because the country isn't there yet. And others is just we found a way to get into some very exciting companies, but any smaller state than normally. We target 10% to 20% stakes on average. But if we get an entry ticket that's smaller to a company that we really like and we can work from the inside to build that position as and when they prove themselves out a bit more and get more performance, then we'll do that. So we're I guess we're slightly opening the strategy a bit from being tied to we ought to get 10% to 20% in our first ticket, so we could take a smaller ticket and then build up. That's clear, Dave. And Perhaps a follow-up on that. Can you talk a bit about what you're seeing, say, regarding later stage deals? In CreditAss, it was quite obvious here that I mean, as the fintech ecosystem matures in emerging markets, funding seems to go that way. So with a lot of, say, money chasing assets, can you comment a bit on So exit opportunities for some of your holdings? Yes. Now look, there is a healthy amount of capital in the venture world and private equity world for sure. And that's coming locally in markets from funds and internationally from funds like us and also the U. S. Has a lot of capital. And then as corporate VCs, every corporate in Financial Services, whether it's PayPal or Visa or Mastercard, Citibank have their own venture arms and are running their own venture ticket. So there's a lot of capital going around for every stage of investment, albeit Some countries are less hot than others, and you put the Pakistan and the Egypts versus, it's like Brazil and India in that category. And then some stages are less busy than others. We always said this, the Series B into C is generally less busy. Early stage is busy locally, late stage is busy because everybody's picked the winners and the Bally comes on mass to write big checks and SoftBank and Tencent and all their friends. So the Series B2C is generally a sweet spot we've continued to find quite nice. And then on exits, you're okay with is it a good time to exit? It's with IPOs, like Russia is a market that I know well, but we're seeing IPOs in Russia, Ozone, the e commerce company, we've seen IPOs in Kazakhstan, Caspi, never mind Brazil and some of the more Expectant emerging markets were true to cyclically see IPOs and then there's M and A as well. We're seeing a lot of M and A from I guess we're getting breakout winners in FinTech in a lot of And Creditas is a case in point in this. They had made 2 acquisitions in last year. 1 was Credit 2 in the payroll lending and this year, B Credi in the home equity lending. So Some of the bigger, I think the winners or breakout names in FinTech are mopping up some of the smaller names to add on product and function as they go. Thanks for that Dave. And final question for me and then I'll jump Okay. Or 2. Just if I did I hear you right that the ambition for Confu is to grow 3x to 5x in 2021? Yes, look, what I'd say is we the broadly didn't grow last year in terms of originations. That's been originated the same in 2020 that they originated back in 2019. And my apologies for not being able to share too much information. And I'd back in 2019. And my apologies for not being able to share too much information. And I'd like for that to go that way with Compu like it is with Creditas. But given what we see with Compu where it's positioned, given where we see with the Mexican market, where a lot of the banks tend to be sitting on their hands And large parts of the small business, the better part of the small business community needing credit, it seems like a great window for Compuio to grow this year, credit and beyond. So we have a number of models which we've laid out with the company and we generally have 2 or 3. And with most companies, low, medium, high to be quite basic. But it would be a year where we would be expecting at a minimum 2x, but it could be 3x to 5x in terms of growth of a loan book about $100,000,000 today. So it's still small given the $16,000,000,000 ish small business lending opportunity in Mexico. So It could be one of those big years after a sideways year last year. We'll do that. Well, just a final one then. I mean, this is perhaps an old question. But I mean, If we just look at the fintech ecosystem, say Alipay in China, you alluded to the fact that, okay, we are seeing a number of players also in Brazil, etcetera, adding a Pretty extensive product suites around a super app where you can do everything. Say in the U. S, obviously, PayPal is doing something like that with its wallet. But on this, When you think about Brazil, where do you see, say, the consumer ecosystem going in the next, call it, 5 years? And if there is a risk here that I mean, obviously, Confu and Credit cards have different target customers with consumers and SMEs, etcetera. But Can these types of separate ecosystems starts to collide even more? Look, I think there's going to be lots of collision, lots of value creation and lots of value destruction over the next 5 to 10 years, digital is the way of the future, that's for sure. The Fintech companies and the new economies are coming at this with a digital online first mindset and skill set. The incumbents are struggling with that, albeit when I talk in banking, they have the capital, the regulatory support, and they have the customers on average today. But they are going to struggle and they continue to struggle of moving to digital as much as they try and shadow over it. I guess within FinTech, you're getting and every country is different. We always say this. There's no one rule of thumb. But the bigger entities and I think offers a great playbook for this and was years ahead of everybody else. So they were a monoline, a credit card, consumer loan, lending monoline and look at what they are today, a multi product financial services and beyond financial services ecosystem with daily active users, financial services firm with daily active users, never mind monthly or weekly or monthly. So the Chinese have done the same, obviously. So there is a playbook out there and we're seeing entities coming out of on a Southeast Asia with ridesharing and Brazil, Mercado Libre is doing it very well coming from the e commerce point and obviously this new bank and other entities doing it as well. A lot of these entities are going from the strong and I love companies that focus and get a strong one aligned business, building customers, equity, franchise, branding. And then they expand from there like what we're seeing with Creditas, like what we're seeing with Confio. Specifically with Confio and Creditas clash, And less obvious small business, Mexico, consumer, Brazil, albeit Creditas is touching into Mexico. And then you got the crossover that these are massive markets, so they're going to be many winners of different types and shapes. And I think the incumbents have the most to lose. And then you've got unlike developed markets, these are growth markets as well. So there's so much upside in the pie as opposed taking up the pie from one part to the other. That's clear. Thank you very much. That's all for me. Super Our next question comes from the line of Hermann Batalff from Pareto Securities. Please go ahead. All right, perfect. Good afternoon, David, and thank you for this presentation. So just a couple of questions from my end. I think I have one on Kreditas and one on Justpay. So first off with Kreditas, great to see some actual KPIs released from the company. I mean, I think it's very much Appreciate it from my side and also from the VEST shareholders for sure. If I'm just looking at these historical KPIs, it seems like the kind of overhead costs and taxes. So basically, I'm talking about the difference between the contribution margin and the net income. It seems like that cost base sort of reached a 4 during 2020. And if I just look at Q4 2020, I think it's actually down a little bit since Q4 2019. So I was just wondering if you think that this sort of flattening out of the overhead costs during 2020, if it's sustainable in 2021 Or if you think that there's something in there that was maybe related to COVID or something that we can't see from the outside. So just wondering, kind of what you think about the costs in Credit Dust going forward? And maybe also, if you think if you have a view on when you think that Credit Dust could reach breakeven on a net income level. Yes, that's my question. Yes. No, no. Super. Thanks, Herman. I appreciate it. And Let me share what I can. Look, with this, I think what's more forecastable at CreditAss is definitely the balance sheet side of it, the originations. That's going to be easier to guide and then see and they deliver. They either meet or they beat Or they missed or they beat on that. And that's going to be a clear indication. I think what feeds nicely from that is obviously the revenues number, which is there in a percentage of average credit or average origination, part of which is fees and part of which is the interest overlay and their share of it. And I think it gets Obviously, you're getting 5 numbers, which is welcome from the analysts and from the investor community, but then the more you get, the more you want the more questions you have on the data that you get. So, Anand, I fully respect being a former analyst. And what I'd say is under the revenue line, it's going to get a lot more complex to give understanding and guidance for it. But what I'd say is what has been what's the movable feast in that? There is SG and A, which has been Obviously, consistently invested in that gradual over time as they expand. The biggest movable fees probably in that is the marketing expense, the CAC, And that's something that they wound right down, obviously, that's acquiring customers, acquiring flows of loans of revenues for Into the Future. They wound that down in Q2 and aggressively and then ramped that right back up in Q3 and Q4. And sometimes they ramped that up in a quarter And it benefits the top line in the proceeding next 2 quarters and you ramp it down again. So it's not consistent per se as a cost item. And that obviously affects the net income on a quarter by quarter basis, but then it's probably easier to look at it on a year on year basis. But 2020 was an exceptional year in terms of plans at the start of the year and then what happened in Q1 into Q2 and how CreditAss reacted to it. But The biggest movement, they slowed down all aspects of cost in the early part of the year and ramped them back up in the second half of the year. But the biggest moving part on that was the CAC, the customer acquisition, the marketing costs versus anything too dramatic in the other areas, albeit cost of funding maybe pushed up a bit in the early part of the year and then came down, which is all above contribution margin level. And after quality, it would have got slightly worse and then better. And that's also above contribution margin level. So That's a bit of color. And I guess what we like about CreditAss on the profitability question for that is the fact that they've proven it out. When COVID the onset of COVID in March, CreditAss on a monthly basis went cash flow positive. As it just basically eradicated CAC or a new customer acquisition and lived off the existence of this portfolio and the revenues feeding in. So It was a great stress test and proof point that should they want to go profitable, they can almost in a heartbeat. But in terms of forecasted profitability, The aim for them on the current models and there's a couple of them is more towards the back end of 2022 at this stage. All right, perfect. That's very clear, I think. All right. And then my second question is on Justpay. So I was Wondering if you can maybe just give an update and maybe touch on this, the recent developments regarding this data breach that some media outlets that I've been reporting about? And what do you think about that? Yes. No, it's a fair question. Something that Alexis, my investment partner, one of our investment partners here, is on the board there and he's very close to the management on this and he's been living and breathing that data breach and the communication around it. It seems to have obviously, it happened as a fact. I think all these companies in this space, whether it's financial service, social major e commerce and has their data breach moment and not that it's a welcome moment, but it's more how you deal with it when it comes. It seems so far that it's been dealt with and that it's not the it's not an issue that's going to extrapolate into a bigger issue. It is a data breach. You're talking very closely with the RBI, that's the Central Bank in India, very close with them on the just a full review and analysis external Tech has come in and counseled to have a look through everything to do a report for the RBI as far as I'm aware. And so it's a process as opposed to the process and the learning, I'd say, at this stage as opposed to an issue that's fundamentally going to affect the business. I'll probably stop there though on it, Herman. I'll let you speak. I'll get Alexis on a call with you because he's living and breeding or has lived and Brad, the details on that one. But I guess when we heard the we get these hiccups in our companies a lot and they're still early stage private companies. And when you get the 1st iteration of the news, it can be quite dramatic and then you deal with it and then these companies on average move on. But this seems one of those situations where it's being managed and it's not back on the front foot. But I'll get Alexis on the call just to get a bit more detail on that front for All right. Yes, that sounds good. I'll speak to Alexis. Okay, that's it for me. Thank you. Super, Herman. Thanks. And as there are no further questions, I'll hand it back to David for closing remarks. Super. Thank you. Look, thank you everybody for joining our call today, for supporting and following our story. Look forward Many more quarters years of continuing growth and delivery. And if you've ever any questions about our company, what we're doing or any details, feel free out to myself or Henrik Stendlung, who is our CFO and Head of Investor Relations. But thank you very much for your time today. Take care.