Something PagBank clients already used to do. You can pay your bills and boletos at any time and day of the week, something PagBank clients already used to do. To do all of this, switch to PagBank and download the super app now. CDB has always meant complicated, slow, bureaucratic. Here at PagBank, CDB means the C stands for credit card with no service fees and up to BRL 100,000 credit limit. The D means it yields double in savings accounts. That's right, it yields twice as much. There's also the B for a complete and free of charges bank, so you can do everything through the app without fees and without complications. Unlock your investments and invest in the PagBank CDB. Pix is the big news, except for PagBank customers.
With Pix, you can send and receive unlimited and free wire transfers, something PagBank clients already used to do. You can send, receive money within 10 seconds, something PagBank clients already used to do. You can pay your bills and boletos at any time and day of the week, something PagBank clients already used to do. To do all of this, switch to PagBank and download the super app now. CDB has always meant complicated, slow, bureaucratic. Here at PagBank, CDB means the C stands for credit card with no service fees and up to BRL 100,000 credit limit. The D means it yields double in savings accounts. That's right, it yields twice as much. There's also the B for a complete and free of charges bank, so you can do everything through the app without fees and without complications.
Unlock your investments and invest in the PagBank CDB. Pix is the big news, except for PagBank customers. With Pix, you can send and receive unlimited and free wire transfers, something PagBank clients already used to do. You can send, receive money within 10 seconds, something PagBank clients already used to do. You can pay your bills and boletos at any time and day of the week, something PagBank clients already used to do. To do all of this, switch to PagBank and download the super app now. CDB has always meant complicated, slow, bureaucratic. Here at PagBank, CDB means the C stands for credit card with no service fees and up to BRL 100,000 credit limit. The D means it yields double in savings accounts. That's right, it yields twice as much.
There's also the B for a complete and free of charges bank, so you can do everything through the app without fees and without complications. Unlock your investments and invest in the PagBank CDB. Pix is the big news, except for PagBank customers. Because with Pix, you can send and receive unlimited and free wire transfers, something PagBank clients already used to do. You can send, receive money within 10 seconds, something PagBank clients already used to do. You can pay your bills and boletos at any time and day of the week, something PagBank clients already used to do. To do all of this, switch to PagBank and download the super app now. CDB has always meant complicated, slow, bureaucratic. Here at PagBank, CDB means the C stands for credit card with no service fees and up to BRL 100,000 credit limit.
The D means it yields double in savings accounts. That's right, it yields twice as much. There's also the B for a complete and free of charges bank, so you can do everything through the app without fees and without complications. Unlock your investments and invest in the PagBank CDB. Pix is the big news, except for PagBank customers. With Pix, you can send and receive unlimited and free wire transfers, something PagBank clients already used to do. You can send, receive money within 10 seconds, something PagBank clients already used to do. You can pay your bills and boletos at any time and day of the week, something PagBank clients already used to do. To do all of this, switch to PagBank and download the super app now. CDB has always meant complicated, slow, bureaucratic.
Here at PagBank, CDB means the C stands for credit card with no service fees and up to BRL 100,000 credit limit. The D means it yields double in savings accounts. That's right, it yields twice as much. There's also the B for a complete and free of charges bank, so you can do everything through the app without fees and without complications.
Good evening. My name is Victoria, I will be your conference operator today. Welcome to PagBank PagSeguro's webcast results for the third quarter 2022. At this time, all lines have been placed on mute to prevent any background noise. Should any participant need assistance during the call, please press star zero to reach the operator. This event is also being broadcast live via webcast and may be accessed through PagBank PagSeguro's website at investors.pagseguro.com. Participants may view the slides in any order they wish. Today's conference is being recorded and will be available after the event is concluded. I would now like to turn the call over to your host, Eric Oliveira, Investor Relations and ESG Director. Please go ahead.
Hi, everyone. Thanks for joining our 3rd quarter 2022 earnings call. Today, we have with us Ricardo Dutra, CEO of UOL Group and board member of PagBank PagSeguro, Alexandre Magnani, CEO, and Artur Schunck, CFO. After the speakers' remarks, there will be a question and answer session. Before proceeding, let me mention that any forward-look statements included in the presentation or mentioned on this conference call are based on currently available information and PagBank PagSeguro's current assumptions, expectations, and projections about future events.
While PagBank PagSeguro believes that the assumptions, expectations, and projections are reasonable in view of currently available information, you are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those included in PagBank PagSeguro's presentation or discussed on this conference call for a variety of reasons, including those described in the forward-looking statements and risk factors sections of PagBank PagSeguro's most recent annual report on Form 20-F and other filings with the Securities and Exchange Commission, which are available on PagBank PagSeguro investor relations website. Finally, I'd like to remind you that during this conference call, the company may discuss some non-GAAP measures, including those disclosed in the presentation. We present non-GAAP measures when we believe that the additional information is useful and meaningful to investors.
The presentation of this non-GAAP financial information which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered separately from or as a substitute for our financial information prepared and presented in accordance with IFRS as issued by the IASB. For more details, the foregoing non-GAAP measures and the reconciliation of these non-GAAP financial measures to the most directly comparable IFRS measures are presented in the last page of this webcast presentation and earnings release. With that, let me turn the call over to Ricardo. Thank you.
Hi, everyone. Good evening from São Paulo, and thank you, Eric. Going to slide 3, I would like to begin our presentation with the main messages for Q3 2022. We reported the highest EPS in PagBank's history for third quarters, achieving BRL 1.16, up 20% versus the same period of 2021. PagSeguro TPV reached BRL 90.3 billion, growing 35% year-over-year, and one more quarter outpacing by far the industry growth. Our successful repricing led to a net take rate 24 basis points higher than Q1 2022. PagBank deposits reached BRL 19.4 billion, 171% higher than the same period of 2021.
PagBank net adds accounted for 1.1 million new clients, leading to almost 26 million clients, reaffirming PagBank's position as the second-largest digital bank in Brazil in number of clients. CapEx to revenue ratio was 12.4%, lower 230 basis points when compared to second quarter 2022 and trending down moving forward. Going to slide 4. Once again, our successful strategy on democratizing the access of financial services and payment solutions in Brazil resulted in record numbers in all main KPIs this quarter. In payments platform, TPV was BRL 90.3 billion, and our revenues reached BRL 3.7 billion, growing faster than TPV and reaching almost 50% growth year-over-year. Monthly TPV per merchant grew 39%, reaching BRL 4.1 thousand, and our gross profit reached BRL 1.3 billion.
In financial services, PagBank TPV outpaced acquiring TPV for the first time, totaling BRL 105 billion with BRL 339 million in revenues. Our gross profit was BRL 76 billion, increasing BRL 35 million in comparison to the last quarter due to our cautious approach in credit underwriting given the macro uncertainties. In Q3 2022, 100% of credit underwriting was secured, which helps the company to balance the asset quality at the same time explore a safe entry point in loan for consumers. Our deposits reached the impressive number of almost BRL 20 billion, 171% growth year-over-year. Overall, at the center of the slide, total revenue and income reached BRL 4.04 billion, 45% higher than Q3 2021.
Net income on a non-GAAP basis reached BRL 411 million, while the GAAP net income reached BRL 380 million, 18% higher than the same period of 2021, and the highest net income of PagBank's history for third quarters. I'll pass the word to Alexandre to share some views about our business units. Thank you.
Hello, everyone, thank you, Ricardo for the initial remarks. Moving to slide 5, we compare our performance relative to cards TPV market. I'm proud to say that we have been able to keep growing with profitability, which reinforce our successful repricing initiatives and unique value proposition for our clients. The chart on the left, we are the TPV market share game winner in this quarter when compared to Q4 2021, growing 92 basis points considering the Brazilian Cards Association criteria for TPV market share. As we can see in the second chart, although every player has been increasing prices, our repricing initiatives were the most successful. By focusing on creating a strong relationship with our clients and having a unique value proposition, we were able to increase our net take rate much more than our peers over this year.
Finally, in the chart on the right, to compare profitability in a fair and easy way to understand, when we look at how much profit each company can extract in net comm over TPV, we can see that Pag's is 3 to 5 times more profitable than peers. Moving to slide 6, I will start the segment highlights with PagSeguro's overview during the quarter. PagSeguro's total revenue and income grew 49% year-over-year, reaching BRL 3.7 billion, faster than TPV, thanks to the successful repricing process over the year that resulted in an increase of 24 basis points on PagSeguro's net take rate since Q1 2022. TPV grew 35% year-over-year, totaling BRL 90.3 billion, negatively impacted by deflation during the quarter. With it, our market share in payments reached almost 11% from 8% in Q3 2020.
On the next slide, we have been prioritizing recurrency and profitability versus merchant cross addition. We have been more selective in our acquisition strategy during 2022, reducing subsidies and focusing on the best sales channels to improve new merchants acquisition quality. As a result, we grew the new merchants average TPV by 36% through online channel, and we also increase it by 39% the overall average TPV per merchant on a year-over-year basis. Our number of active merchants, excluding MEI, reached 7.2 million in September 2022. This strategy results in a higher activation of POS device, higher TPV per merchant, and higher upselling and cross-selling opportunities for PagBank.
Consequently, the positive results to be expected are lower CapEx to revenue ratio, lower POS depreciation per sales, and higher LTV over CAC ratio for the new merchant cohorts, which will contribute to margins rebound and cash flow generation in the future. Moving to slide 8, I would like to update you all regarding our business diversification initiatives. Hubs reached 31% of PagSeguro TPV in the third quarter, maintaining a strong growth as our operation covers approximately 90% of the Brazilian GDP. This accelerated growth is explained by our unique value proposition that combines banking and payments experience through a single app and customer care operation, provides faster POS delivery, instant settlement, and a complete value-added service offering, as presented in the right side of the slide.
As we see a growth opportunity in the online payment segment, we have been improving our operation and completing our set of solutions for our clients. We always focus on omni-channel sales, integrating different payments in the physical and online channel, also adding payment options beyond cards such as Pix. I would also like to update you that our cross-border operation, previously called BoaCompra, was rebranded during the third quarter and now is also recognized as PagSeguro. This is an important step since PagSeguro brand awareness is very strong, and as a result, it should reinforce our cross-border payment business. On slide 9, I'll give you some updates about PagBank operation. PagBank reached 25.9 million clients, being almost 16 million active clients, which around 58% are consumer clients.
Moving to the bottom of the chart, primary bank choice keep increasing for both publics, consumers and merchants, reaching around 60% for consumers and 50% for merchants. PagBank cash-in totaled BRL 41.9 billion in through Q2 2022, an increase of more than BRL 10 billion compared to Q2 2022, and most of the cash-in was driven by Pix transactions. I am happy to share that our market share over Pix transactions has been increasing and reached 9.5% during the quarter. Deposits totaled BRL 19.4 billion, an increase of 171% versus the same period of 2021 and almost BRL 4 billion increases versus Q2. This increase is really important for our business since it helps us to be more competitive by lowering funding costs.
Moving to slide 10, I would like to do an update regarding our credit products. Total credit portfolio reached BRL 2.7 billion, up 71% year-over-year, mainly driven by the increase of payroll loan and FGTS early prepayment, which are consumer-focused products representing now 31% of the portfolio. Asset quality remains a priority for our company, and since last quarter, we decided to increase our exposure to secured products, balancing our portfolio mix. Doing so, secured products reached 35% of the credit portfolio, up from 5% in Q3 2021. Also, as Ricardo mentioned, we just launched our security credit card backed by PagBank balance account and have been vocal on advertising this product as it addresses consumer and merchant needs. We expect to keep growing our portfolio gradually while making important investments to improve our models and the overall credit cycle pillars.
These are our top one priority, and we have been seeing NPLs trending down since July 2022, and we expect to keep this downtrend for the coming quarters. In addition, we are also making important progress in our collection processes to decrease delinquencies rate. On slide 11, we see how PagBank total revenue grew 31% year-over-year, ending the quarter at BRL 339 million, stable versus Q2, mainly explained by our focus on secured loans. Total payment volume reached 105 billion, growing 79% year-over-year. As Ricardo said, higher than the acquiring TPV for the first time, reinforcing the increasing engagement of our customers on PagBank account, resulting on strong deposits growth and the use of other features such as bill payments and marketplace. Having said that, I pass the word to Artur, our CFO.
Thanks, Alexandre, for the segment's highlight. Hello, everyone, and thank you to joining us tonight. I will continue the presentation in the slide 12 with our Q3 2022 consolidated results. In the left side, total revenue and income reached a record of BRL 4 billion, growing 45% year-over-year. Net take rate achieved 2.84% this quarter, increasing 9 basis points versus last quarter, as shown in the bottom right side of the slide. Important to say that this value excludes one-time effect related to PagPhone adjustment in the amount of BRL 53 million. On a GAAP basis, net take rate totaled 2.9%. Gross profit neutral of effects grew 7% year-over-year, impacted by financial expenses growth and the higher chargebacks, mainly related to additional provisions for credit losses.
The repricing in acquiring and credit products helped to offset those impacts, leading to higher PagBank gross profit in Q3 2022 in comparison to Q2 2022. This quarter, again, our operating expenses grew less than total revenue and income growth, showing the cost-driven approach of the company. Controlling costs and expenses is part of our culture, and the diligent way we work is a key component of our superior execution. Adjusted EBITDA closed at BRL 770 million, up 4% in comparison to the same quarter of last year. Net income non-GAAP achieved BRL 411 million, and net income GAAP increased 18% year-over-year, reaching the highest level for third quarters in our history, totaling BRL 380 million.
This represents an earnings per share of BRL 1.16 in the quarter, BRL 0.19 or 20% better than Q3 2021, as shown in the top chart of the right side. PagSeguro continues to better balance growth and profitability, focusing on improving shareholders' return. Moving to slide 13. In the first chart of the left side, operating expenses reached BRL 615 million in Q3 2022, up 11% year-over-year. These amounts represents 15% of PagSeguro revenue versus 20% in the same period of last year and stable compared to last quarter. The improved efficiency has come from personal and marketing expenses leverage, even with more investments to advertise PagBank's new products, as well as the contribution of PagBank and Hubs revenue growth.
This amount excludes POS write-off and one-time effects related to software disposals, write-off of our investment on BoletoFlex, and payment agreement with our POS supplier related to PagPhone. In the right chart, financial expenses closed at BRL 921 million versus BRL 210 million in Q3 2021. Around 90% of this increase is explained by the hike of Selic, the remaining portion of 10% was related to higher TPV volume, prepayment of receivables to merchants, and credit card mix. These effects were partially offset by repricing in acquiring, APRs increase on credit underwriting, and lower cost of funding through deposits growth, combined to lower spreads negotiated with capital markets. We continue to focus on improving our funding process, diversifying sources, and extending terms to leverage our banking license and support the company growth.
Financial expenses was our biggest challenge during the past quarters. The Central Bank of Brazil has been keeping interest rates stable for a while. The last interest rate increase was in August this year. September and November meetings kept the counter interest rate stable. The next slide, CapEx to revenue ratio reached 12.4% this quarter versus 16.8% in 2021. 14.7% in Q2 '22. This decrease is driven by lower CapEx related to strategy of being more selective in merchants acquisition to leverage PagBank and the increase of hub and PagBank's revenue. We expect to keep this ongoing downtrend in CapEx to revenue ratio over the coming quarters.
In the following chart, adjusted EBITDA minus CapEx reached a positive amount of BRL 268 million, more than double of Q4 '21, and slightly better compared to last quarter. It reflects Pag's focus on maximize LTV to CAC ratio and improve cash earnings by reducing POS subsidies and adding more valuable merchants into our ecosystem. On slide 15, Pag's net cash balance ended the third quarter at BRL 9 billion, improving BRL 400 million quarter-over-quarter. This was mainly driven by TPV growth, higher share of credit card transactions, and larger penetration of same-day prepayment to merchants. At the same time, we have been improving our capital structure, and it is querying with 74% of financing position funded by third-party capital. On top of that, Pag is diversifying funding sources to support volume growth, lowering funding costs to consolidate a strong balance sheet.
To conclude our presentation, I will turn back to Alexandre for the final remarks.
Thanks, Artur. I would like to review our guidance for Q3 '22 and establish a ballpark for the full year 2022 results. Total revenue in Q3 '22 was BRL 4.04 billion, higher than the guidance low end. For 2022, we expect to reach between BRL 15.36 billion-BRL 15.46 billion. Net income non-GAAP was higher than the guidance high end, totaling BRL 411 million. For 2022, we expect to deliver a net income non-GAAP between BRL 1.57 billion-BRL 1.6 billion. Net income GAAP reached BRL 380 million.
For 2022, we expect to reach between BRL 1.45 billion-BRL 1.48 billion, the highest of our history, mainly due to efficient capture on marketing and personal expense in a year with high pressure over financial expense due to the hike of Brazilian interest rate. Before we move to Q&A, I would like to share our priorities for the coming year. Our focus is to keep the consistent execution of our strategy, balancing growth and profitability to deliver EPS growth while we keep the development of the capabilities that will enable our banking and acquire businesses to capture even more value in the future. The key components of this consistent execution are very diligent cost and expense control to leverage OpEx and CapEx to revenue ratio. Relevant chargebacks and loss reduction.
Consolidation of PagBank business by growing deposits, cards TPV, secure credit portfolio, and usage increase in the merchants base. Grow faster than the market in payments in a profitable way. Lastly, to reinforce our one-stop-shop value proposition by merging, banking, and acquiring. We ended our presentation, and we'll open for the Q&A session. Operator, please.
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your headset before pressing the star keys. One moment please while we pull for questions. Our first question comes from Mario Pierry with Bank of America. Please go ahead.
Hi, everybody. Good evening. Congratulations on the results. Let me ask you 2 questions. One is, how are you seeing the competitive environment in Brazil and your ability to continue to reprice your product? Then second is related to your guidance. We noticed you did not provide guidance for TPV growth, something that you normally do. Also when we look at the net income in the fourth quarter implied on your guidance, we're getting BRL 385 million-BRL 450 million, which would be down to flat versus the third quarter. Just wondering why would net income fall or remain flat in the fourth quarter? Thank you.
Hi, Mario. This is Ricardo. Thank you for the question. Good to hear you. Regarding the competitive environment, just sometimes we forget here to point out the accomplishments that we've been reaching in PagSeguro, which is the Summary is slide 5 that we showed in the presentation. I mean, with less than 40 days for the end of the year, this year is gonna be the year that we're gonna have the highest net income for the company overall. If you look at the first 9 months of the year, compared to
Other listed companies such as Stone, Cielo and Getnet, we are 3-5 times more profitable than our peers. We have 3.2 times more clients than the second player. Even with that, we've been able to increase prices and with no additional churn. Combining with that, we also were the market share winner in the first 2 quarters, plus 92 basis points. I'm making this, let's say, a little bit long answer to you here just to show how solid and resilient our business model is. It's very difficult to duplicate it. Having said that, the competitive environment is not different than what we've been seeing in the past quarters. I guess the competitive environment was even harder right after our IPO in 2018, 2019.
Nowadays, we've been seeing that competition is not as tough as it used to be in the past, and we do have the ability to keep repricing if necessary. We think that repricing is an ongoing process, depending on how it's gonna be the dynamics for the macroeconomic scenario next year. If necessary, we'll keep increasing and raising our prices. We do believe we have a powerful combination that is acquiring plus banking, all the value proposition that we have that is very unique. If necessary, we will keep repricing. Also important to say that to reach the net income that we have in Q3, if you look at the numbers, we had an increase of more than BRL 700 million in financial expenses versus last year. Even with that, we were able to reprice our base.
If you do the math, financial income minus financial expenses was even better than last year in absolute terms. Just to show that we are able to keep repricing, if necessary, we will do it. Regarding the guidance, you're right. In the bottom of the guidance, the implicit net income non-GAAP for Q4 is BRL 385, and the top of the guide is gonna be BRL 415. Of course, we do this range because we have many moving parts here. Just to give an overview what's going on in Brazil here. We have some moving parts that can help TPV, such as the additional salary that people receive the thirteenth salary and also the holiday season with Black Friday and Christmas season that people usually spend more money.
This year is kind of weird because we don't know how it's gonna be the usage of this additional salary. All the population is very varied with debit at this point after the pandemic. We see some consumptions constrained due to the lower credit offer in the market from bank issuers. We also have right... We had right after the elections, we had this truck drivers strike right after the second round of the presidential elections for 2 or 5 days, depending on the region of Brazil. They also create a little bit of mess. Not to say that we just see the beginning of the World Cup, and we don't know how it's gonna be the impact. We estimate here that could impact us between BRL 3 billion-BRL 4 billion.
It's gonna be a one-off situation with this World Cup in the fourth quarter. Fourth quarter, we have more debit transactions than the rest of the year. Usually, net take rate in Q4 is lower than the rest of the year. Although this year, the Q4 is gonna be higher than last year Q4. Usually, there is a decrease between Q3 and Q4. Those are the moving parts, and that's why we are giving this range between BRL 385 and BRL 415. That's why we're giving this range.
Okay, Ricardo Dutra. Let me follow up then. The first one is on the take rate. Have we seen the full impact of all the repricing they have done? Is that already reflected on your numbers, or did you do any price hikes during the quarter there not yet reflected? The second, I understand why you have less visibility on TPV, but this is a key metric that you normally provide guidance on. I was just wondering, you know, when you come up with your bottom line estimates, what kind of growth are you expecting on TPV?
Mario, there is gonna be growth against Q3. We are not disclosing exactly growth for TPV in Q4, but there's gonna be growth. When we have this, as I said, this estimate that World Cup impact, not to say the other events that I mentioned before, but yeah, there will be growth in TPV. Answer your question in repricing, we did made some repricing in Q4 as well. We did some increase in repricing in Q4 as well. What you see is some decrease in net take rate. When we make this math, net take rate minus financial expenses, the decrease between Q3 and Q4 is lower than the net take rate before financial expenses because we increased the prices. That's we've seen so far. We have still, I mean, 40 days to the end of the year.
Of course, we have some visibility, but as a Brazilian that you are, you know that World Cup and soccer in Brazil, it's kind of people pay attention to that. That's why you have this uncertainty about TPV. There's gonna be growth. We just are not disclosing exactly growth at this point, Mario.
Okay, fair enough. Thank Thank you very much.
Thank you.
Next question comes from Bryan Keane with Deutsche Bank. Please go ahead.
Hi, guys. For the third quarter, I think you got it acquiring TPV to BRL 91 billion-BRL 92 billion. It fell a little bit below that. We've been used to you guys kind of beating numbers. Anything to call out in the quarter in particular that had you fall a little bit below expectations in acquiring TPV?
Bryan, yes. I would say to you that there are two main variables here that impacted the Q3 TPV. One is deflation. Surprising as it might be, but we had deflation in Brazil in Q3 in 2 months out of 3 in Q3. Also we see some bank issuers decreasing the credit offer for the consumers. We are seeing that the scenario for consumers with debt is kind of hard, so banks are decreasing the credit offer. That's why we see this, let's say a little bit below than what we thought before in our Q3.
I'd just like to highlight that, and you know that TPV is one of the metrics that we have, but of course, we are working on to keep growing the company in terms of revenues and also grow in terms of net income. Although we stay a little bit below in TPV because of the reasons that I mentioned to you, we are beating the other two metrics that are very important in our view related to P&L, which are revenues and net income GAAP and non-GAAP.
I think this is Alexandre. Bryan, it's important also to mention that during Q3, the Brazilian cards industry has shrunk from 2Q. We normally grow our total TPV comparing to 2Q. While the industry grew 20%, we grew 35% on a year-over-year basis
Got it. When we look at the fourth quarter, I know we talked about net income and some of the same factors are going to obviously apply, but the total revenue and income growth, I think we got it at 23%-26% for the fourth quarter, which is quite a bit below the run rate you guys have been doing this fiscal year. It sounds like World Cup and maybe some economic factors to consider there. Anything else to think about? How much of that is one time so when we get into first quarter next year, can we see a re-acceleration of that total revenue and income growth?
Bryan, in absolute terms, we estimate that World Cup could impact us between BRL 3 billion or up to BRL 4 billion. That's one-off. And just to reinforce here that when we look at the percentage, the growth as a percentage, Q4 last year is a hard comp for us because at least in Brazil, last quarter, 2021 was when really the economy was reopened in Brazil. People spent a lot in Q4 last year. When you look as a percentage, it could look at that we are not growing that much, but we had a hard comp from Q4 last year. As a one-off, I would say that World Cup mainly is the main, I would say, headwind in this quarter.
How about when we jump off into next year? Obviously, we won't have the World Cup headwind, but is there possibility we can re-accelerate in the first quarter on a total revenue and income basis?
Bryan, it is possible, we cannot be, let's say, disconnected that we are growing much more than the industry. If you look in the past six years, we are growing 60%, 80% more than the industry. This quarter, industry grew 20%, we grew 35%. 7% more than the industry. What I'm trying to say here is we cannot be disconnected from what's going on in the industry as a whole. If there is gonna be growth in the industry in Q1, re-accelerating, we will re-accelerate even more. If we have this credit consumption constraint and the industry doesn't grow that much, we will grow more than the industry, but not as much as we'd like to. That's the macro overview.
I mean, the best answer to give it to you is we plan, and we do believe that we are able to keep growing more than the industry as we've been doing the past 6 years. Of course, we cannot be disconnected from the industry as a whole.
Got it. Yep. Market share gains are obviously important, so that's the best you can do. All right. Thanks, guys.
Thank you, Bryan.
Next question comes from Domingos Falavina with Banco J.P. Morgan. Please go ahead.
Hi, good afternoon, everyone on the call. Thanks for taking the question. My question, twofold question here as well, or less on, I guess, non-controllable items like, you know, industry TPV and more on the pricing which you have more control. When we look at the MDR revenues, you know, ballpark, it grew low 1%, similar to TPV quarter-over-quarter, which is perfect, right? I mean, no major price contracts or anything. When we look at the net financial result, however, and we do add all the lines, as you guys know, it shrank by 8%, quarter-over-quarter. We look at your deposit base, it grew massively, right? Especially the banking side, like BRL 5 billion in deposits.
The cost of your funding, I think, went down 2 percentage points from like 119 to 117. I guess my question to you here is a twofold, that it seems obviously the deposit impacted part of it, maybe BRL 20 million, BRL 30 million, but out of BRL 100 million you shrank in Q on Q on financial result.
There was some squeeze in pricing. On that front, why pay so much for deposits, growing so much the deposit base and impact the negative net financial result? Question within that as well, why did this shrink? Why not, you know, increase more? One of your peers that was the latest one to pass through had 50% increase in net financial results Q-on-Q. What can we expect on this? Like do we wanna see price increases, I guess? This is not consistent with the TPV growth and is on the opposite direction. The glass half full, during the second one already is on OpEx. OpEx was very good, basically down even Q-on-Q 1%, especially cost of services.
Can we expect this, you know, sort of cost discipline going forward, basically in growing below TPV? Thanks.
Hi, Domingos. I will start with the answer. Thank you for the question. Good to hear. I will start with the question in regard to repricing and your question about that you said paying the interest that is paying deposits. Artur can get in details of the numbers with you. We are not discarding to keep making repricing in Q4. We made at the beginning of Q4 a little bit, if necessary, we can do more. We are happy with the growth that we've seen and the net income that we have been presenting so far. Answer your question, could we increase price a little bit more? Yes. We will do it. We don't know. We are growing more than the industry. We are 2 times more profitable than our peers.
To some extent, we think that we are in good levels, and we need to keep growing and taking advantage of the acquiring as a mean for people to use PagBank more and more. That's also important for us to use this powerful combination between Acquiring and PagBank. Regarding deposits, yes, we did grew a lot. When you make the mix between what we pay in the balance accounts and what we pay for the CDs, on average, we are having a cost that is a few basis points below CDI in our deposits. It's still high than we think, but it should go down because as time passes by, deposits will be more and more important, and it was gonna take share from CDs. It used to be higher two quarters ago.
Now it's a little bit lower, a few basis points below CDI. That's why we are still growing this base. The average cost for deposits, of course, is not at the level of other big financial institutions have in Brazil. We are decreasing quarter after quarter, a few basis points here and there. Regarding the numbers, I guess Artur can give you more data. Also important to say, I guess Artur will said about that, but in Q3 we have 5 more working days than compared to Q2, and that creates an impact in financial expenses and Artur can explain.
Yeah, I think, Domingos, thanks for your question. I think 2 things here. The first one is exactly what Dutra said. We have 5 days, working days more in Q3 than Q2. This impacts our cost because it's based on working days. Okay? The TPV obviously is a whole month, not exactly by working days. So this is the difference and create this gap when you analyze the growth of TPV and the growth of financial expenses.
Sorry to interrupt here, but doesn't the prepayment revenues also take into consideration working days?
Yes.
The net down, right? It's not like you increase prices. In a way or another, you shrank, like results in nominal terms shrank Q-on-Q.
No, no. The price that we have here is based on the transactions that we have for the month, not exactly for working days, because our prices are pre-rate instead of a rate linked to CDI. This is the point I'm getting-
Okay.
The point. Also when we think about the cost, the cost is based on the CDI. The CDI moves up or down depending on the working days for each month or each quarter in the case of Q2 versus Q3. Regarding to expenses, as you mentioned, we have a very good approach on expenses. It's part of our future control costs, investments and everything that we need to do. It's more under our control, taking this attention on expenses. As you know, we are moving up. We had deflation from July to September. We have inflation in October. We are paying attention a lot in these movements related to inflation because affects our costs.
Also we are at, we're pretty close to the movements of interest rate in the country because it was the biggest expense or cost that we have in our P&L.
Super clear.
Pretty quick here that you mentioned about one of the other companies that increased the financial income. If I get it right, your question, if you make this math between financial income minus financial expenses, you're gonna see that year over year, they grew BRL 34 million and we grew almost BRL 50 million. Maybe we didn't grow at the same pace that they had, but if you look at this net financial expenses minus financial income, we had an increase as well. In
No.
This is-
Certainly, I think, like the delta last Q-on-Q is especially important given Selic is moving up, right? We went from a scenario of Selic expected decreasing, I don't know, 150 to 150 basis points. Certain days, a couple of weeks back to, so they keep increasing. I think it's important to understand what management had is as far as, you know, doing more price increases. If we don't have those rate cuts, especially if we have rate increases, right? I think it's something they should be vocal about.
Okay. going back to our question, we are able to reprice if necessary.
All right. Thank you, guys.
Okay, thank you.
Next question comes from Neha Agarwala with HSBC. Please go ahead.
Hi, congratulations on the result. Thank you for taking my question. On the funding cost, how much are you paying on average for the customer deposits that you're gathering? Should we expect a similar increase in customer deposits next quarter, a strong increase which should lead to higher financial expenses? My second question is on your funding structure. Could you please elaborate how are you funding the prepayment business? What % is coming from factoring of receivables with the large banks? How much is coming from your deposit base, so on and so forth? My last question is on taxes. The tax rate was quite low this quarter, and you mentioned the two specific benefits which led to a lower tax rate. What should we expect going forward in the coming quarters? Thank you so much.
Neha, it's Artur speaking. Thank you for your three questions. I think regarding funding costs, to be very straight to the point, the cost that we have related to deposits is few basis points lower than CDI, okay? The second point related to funding structure that we have, first of all, we use the equity position that we have. It's like 10 billion BRL. The second point that we use is deposits, the balance account from the clients. The third point is factoring to the bank issuers. The third one is issuing CDs in the market, in retail investors or also institutional companies. The third point related to tax income, we have 11% of effective tax rate this quarter compared to 17% last quarter.
It's related to incentives to R&D investments that we do. Since the beginning of the company, we have this incentive from the government. The second point is related to revenue that we have abroad. So those two benefits helped us in this effective tax rate. Going forward, you can expect something from 10%-15% for Q4, and something below 20% in the coming years.
Neha, this is Eric. Just 2 cents here. This positive impact on lower tax rate is offset by higher tax collections in the top line, okay. Financial income should be higher, excluding taxes. Since the Central Bank of Brazil changed their regulation, and there is a full disclosure in our earnings release about that, we are collecting more taxes in the top line, primarily in financial income. By the end of the day, this is a net event because the positive effect on lower tax rate offsets the higher tax collection in the top line on the financial income.
Perfect. If I can just quickly follow up, regarding the funding cost, should we expect you to continue gathering deposits at a similar pace? Or could you think about maybe lowering the remuneration a bit and lowering your funding cost for the deposits in the coming quarter?
Neha, we don't see that decelerating, at least at this point. We are keeping growing in our deposits. I don't have it on top of my mind if it's gonna be the same 170%, this astonished number that you had in Q3, but we don't see that decelerating. We still keep growing, getting new clients and getting new deposits and CDs.
Okay. Thank you so much.
Thank you, Neha.
Next question comes from Tito Labarta with Goldman Sachs. Please go ahead.
Hi. Good evening. Thanks for the call and taking my question. A couple of questions also. I guess first, just to think about your ability to grow earnings for next year. You know, when we look at your margins, you know, they kind of continue to come down, and your guidance looks like margins could begin to stabilize perhaps next quarter. When we think about the margins, should that be just mainly a function of interest rates? You know, once interest rates start to come down, your margins can go up. I don't know if there's any color you can give on how your margins, you sort of the difference in margins between your SMB clients versus micro merchants, if that's gonna have any impact, as well?
My second question, going back on your market share. I know you've gained a lot of market share this year, when we look at the quarterly evolution, most of that market share gain came at the beginning of the year, and then the last couple quarters you've gained, you know, more like 10 basis points per quarter or so. Just to think about, is that mainly a function of your repricing and that has slowed your market share gains? How should we think about your ability to continue to gain share, you know, going forward? Thank you.
Hi, Tito. regarding the margins, to be honest here, we are not looking for margins expansion. We are looking for EPS accretion, EPS growth because we are three to five times more profitable than our peers. When you reach this kind of position, it's kind of we have a very decent EPS. If you look last year, our EPS was around BRL 0.90 per quarter, and this year is BRL 1.10. BRL 1.15 this year. We are growing EPS. That's what we're looking for. Keep growing the company and keep growing EPS. Margins is not a main focus for the company at this time, and I don't think it will be in the short term because for us, these two main drivers are very important.
To keep growing the company and keep growing EPS. Regarding market share, you're right, we grew like 10 BPS in the past quarter or a little bit more than that. We have been consistent gaining market share. I don't think that we're gonna see a change in the trajectory. There could be a quarter that we could gain more share, a quarter that we're gonna gain like 10 BPS, as you mentioned. I guess the trajectory that we've been having so far is a very consistent trajectory of gaining share quarter after quarter. To be honest, market share is a consequence of what we've been doing here. We also don't see that we need to grow market share at any price. We don't go to big clients decreasing prices to gain market share and to hurt our profitability.
The market share is a consequence of what we've been doing at this point, getting new clients, profitable clients and growing EPS.
Thanks, Artur. That's helpful. Sorry, just to follow up on the margins. I mean, I understand, yeah, the target is to grow EPS. I think that would just help us understand how much your EPS can grow. Would potential margin expansion come mostly from lower interest rates? Also just trying to think how the mix impacts the margins. Just to think how much earnings can grow, sort of kind of longer term from here.
Hi, Tito. This is Eric. I think company's profitability, we think here, does not rely only in lower interest rates moving forward. We have some tailwinds here that we expected to unlock moving forward already in 2023. The first one is revenues growth on PagBank. Revenues growth, remember, as the duration of the new credit products that we have been underwriting are 4 times longer in comparison to the working capital loans. Naturally, the NII 2023 onwards tends to be stronger as we underwrite more, but with a longer duration products. The market share gains in payments naturally should lead revenues growth in combination with PagBank revenue. Revenues growth is the first tailwind.
The second one is when you look the operating expenses as a percentage of revenues, this decreased from 20% last year in Q2 and Q3 to 15% in Q2 and Q3 2022. Necessarily we are getting operating leverage and investors should expect this level or even a lower level of our operating expenses as a percentage of revenue. This would be the second tailwind that we have here. Third, it's important to mention that there are no cash effects mainly related to the depreciation amortization that impacts profitability, but there's no impact in cash flow generation. For example, when we look at Q3 cash flow, operating cash flow minus investing cash flow or capital expenditures, we had more than half billion reais in cash flow generation.
Depreciation amortization should be higher in 2023 on the back of previous capital expenditures that we had. Having said that, these are the main tailwinds that we see. Naturally, we are working to see EPS growing in 2023 in comparison to 2022.
That's great. That's great color, Eric. Thanks for that. Just one quick follow-up on that. With the SMB segment, should that be a headwind or a tailwind? Just, I mean, as the Hubs become maybe more profitable, can that also be a tailwind? Just to think about how the mix impacts it as well.
We expect it to be a tailwind. This tailwind is captured by revenues growth and operating expenses savings as a % of revenues.
Great. Perfect. Thank you, Eric.
Thank you, Tito.
The next question comes from Jeff Cantwell with Wells Fargo. Please go ahead.
Hey, thank you very much. Just wanted to follow up on a little bit on that last round of questions and was hoping we could focus on slide 7 of the presentation. If we look at the active merchant base over the past 3 quarters, it's gone 7.7 million, 7.5 million and then 7.3 million. I guess the question is, and clearly, you know, this is in the context of what you're discussing which is you're focusing on the quality of merchants, which is completely understandable. Was just hoping you could help us out and think through where that merchant base potentially might go over time. I mean, in other words, just to ask, like, very intentionally, you know, kind of like barbells type of pressure. It won't decline perpetually, will it?
You know, meaning at some point the thinking would be that that merchant base would level out so and then, you know, start to increase again. I was hoping you might be able to provide us any type of color in order to help us calibrate some expectations for 2023 and beyond. Thank you very much.
Hi, Jeff. I'll try to answer your questions with the data that we have so far and we've been seeing in the company the past quarters and what we plan for the near future. We said a few quarters ago that it was the conscious decision not to focus on nano-merchants at this point. Because with the services that we offer for the POS and so on, it was very hard to get profits from this kind of merchants. We took this conscious decision to get merchants a little bit higher than nano-merchants to get the year one, the long tail merchants.
It is working because the TPV per cohort in this slide 7 is growing 36% in the fourth month after the merchant come to us. That's one why we took the decision not to keep investing in the number of merchants and focus more on the quality, as you said. Also important to say, when you look at the 90 days, although we don't give the disclosure, the base is growing on 90-days base. It's not decreasing. When you look at the merchants that we've been losing, let's say the 7.5-7.3, it's a very small amount of TPV that we have. As you can see, industry grew 20%, we grew 35%, even losing some clients.
It's really conscious decision that we took to grow our base. Or not to grow our base, to focus on bringing gross adds or new adds with higher TPV per month. We may be losing some small nano-merchants. I don't have here the answer to say to you when it's going to be growing again, but I would say that as we measure these active merchants in a 12-month base, I guess part of the churn is already happening. Maybe in 2023, in the first quarter 2023, we can give you more color about that. Or when it's going to be the churn decreasing. Because the gross adds, we are having decent number of gross adds with decent TPV per merchant.
The number that is the dynamic that is impacting this number is because we are having churn for smaller merchants that we had in the base already. Again, very small TPV from these merchants.
Okay, great. Appreciate all the color. Then just moving further down the slide deck to your net take rate. When we look at that, it's up 48 basis points over the past year. It looks like about 15 basis points over the past quarter. I was hoping could you walk us through. There's so many puts and takes to that number these days and we're just trying to get a little more color. We're all trying to think about 2023 and, you know, obviously beyond. How should we think about the net take rate given what you're clearly expanding in PagBank, you know, other value-added services, such a big piece of the puzzle these days. Clearly we're also looking at, you know, financial income and so forth.
I was hoping you can kind of walk us through any type of high-level thoughts on the trajectory of the net take rate from here. Thanks very much.
Hi, Jeff. You're right. We've been increasing our net take rate because of the repricing, of course, part of that to offset the increasing financial expenses. The way we look here, looking in short term and with all the uncertainties that we have at this point. In short term, it's gonna be flattish or a little bit low. Not because we are decreasing prices or because we are going to decrease prices in the near future, but just because of a mix of clients. As we get a little bit larger clients than we used to have in the past with the SMBs growing, in the mix, the net take rate is a little bit low, but of course they have five to six times more TPV than long tail.
This is the moving part here that may affect net take rate. Increasing mix for SMBs and a little bit larger clients than long tail. Going back to your question and straight to the point, it's gonna be flattish or a little bit lower. Of course, we will try to work to offset that through OpEx leverage, as Eric mentioned, and other lines that we can control in the financial expenses or in other costs that we may control here.
In the financial expenses, Jeff, this is Eric. Let me remind you that as we replace factoring receivables against the card issuers, which impacts upfrontly our financial expenses to deposits growth, naturally we can manage better the spreads moving forward. Necessarily, this is what we expect, not only relying on lower interest rates to get operating leverage in 2023, but also work much more in the spreads, balancing deposits and factoring receivables against the bank issuers.
Okay. Thank you very much. Appreciate all the color, and congrats on the results.
Thank you, Jeff.
Next question comes from Josh Siegler with Cantor Fitzgerald. Please go ahead.
Yeah. Hi. Thanks for taking my question this evening. I was wondering if you could provide a little more color on the market forces at play that allow you to have the best-in-class take rate gains, right? Like, how were you able to achieve the highest repricing in the industry? Thank you.
Hi, John. Thank you for the question. I will not say there is one silver bullet here to answer that, but I'll tell you that one advantage that we have that is very, very powerful, it is the fact that we have a combination between acquiring and banking. That's something that clients really use. They give value. They understand the value proposition. By the fact that we have this acquiring plus banking also allow us to make this automatically or instant settlement right after the transaction. When you have a sale in a Sunday, in a Sunday morning, you have access to this money 2 minutes after the transaction. It doesn't matter if it's a week and holiday and so on. It's a very powerful combination that we leverage.
The fact that we also have a huge base of long-tail clients also helps us because we are able to, let's say, cut some promotions that we had in the past. These clients, they are much more focused on getting the money as fast as possible than to the price itself. I would say this is the main reason why we are able to increase prices and still gaining share and be more profitable than others. Not to say here, it's not a, let's say moral, like the DNA of the company is a tech DNA, self-service, and so on. I'll tell you that the value proposition that we have with banking plus acquiring and the instant settlement, not to say the execution customer service, one app, one-stop shop also help us.
The combination of all of the things make us a different company and allow us to increase price in a very successful way.
Got it. That's very helpful. Then for my follow-up, I was wondering if you are currently expecting traditional seasonality between debit and credit mix as we had in the four Q, especially considering the World Cup impact.
Yes, we do expect a little bit increase in debit, for the fact that people receive an additional salary in Brazil, so they have liquidity. We don't know how it's gonna be this year. That is said at the beginning, John, because people after the pandemic, they have a lot of debit, so we don't know if they're gonna use this additional salary to pay back their debits, to pay down their debits or if they're gonna use for consumption. We do expect a little bit increase in debit as a % of our volumes in Q4.
That's helpful. Thank you for answering my questions.
Thank you very much.
Next question comes from Kaio Prato with UBS. Please go ahead.
Hello, everyone. Good night. Thank you for the opportunity. I have 1 question here related to CapEx. It reached close to BRL 250 million this quarter, while you continue to show negative net adds. I understand the moving parts on nano-merchants that you mentioned during the call, but I was wondering if you can give a little bit more color about your gross adds, how this has evolved during this year and more specifically in the third quarter. Moreover, how should we think about CapEx moving forward? The second part of my question, if I may, if you can talk a little bit more about your expectations on the purchase of intangibles as well, if we should expect the same pace of growth in 2023 or not, and what should be the drivers for that?
Thank you very much.
Hi, Kaio. Regarding the CapEx related to POS, if we exclude the nano-merchants, we are growing our base. When you look at these numbers, the total number may be decreasing 12 months, but if you exclude nano-merchants, we are growing double digits more than high double digits here, high teens, if we look at excluding the nano-merchants. That's why we're still investing in CapEx. That's the first thing. The second one is usually the merchants that we are getting different than what they had in the past. Today, as they are SMBs, they usually require POS with higher prices. That's why in volumes they are a little bit small, but in absolute terms, in reais, we don't see this impact.
The average price of these devices with printers and so on, they are a little bit higher. But it's fine because these are the clients that we are looking for, clients that really use. They buy the device, they use the device with printers because they have some volume. Are 100% aligned with the strategy that we had. That's the main explanation I would say for the CapEx in terms of POS. Regarding the IT investments and so on, I can ask Arthur to give you more color on that. Thank you. Yeah. Kaio, thank you for your question. Regarding to IT investments that we are doing is part of the control of expenses that we also are doing.
If you take a look on the trend Q1, Q2, Q3, we are pretty flat, I would say, in the investments that we are doing. We do not expect to grow too much next year, these investments of R&D. It's an important part of our business to develop new features, new products to launch for PagBank and PagSeguro.
Okay, thank you. I understood that probably, regarding to intangibles, it should not grow in the same pace. Please correct me if I'm wrong. On the CapEx side, if you could mention your expectations for next year, we should see, growth, but not at the same pace as well. Is that right?
Exactly. You're right. We see some growth basically in IT, but not the same rate that we saw in the past. For the POSs, we see more stable than growth. I think it's more flat than what we see this year.
Okay. Thank you very much.
Thank you, Kaio.
Next question comes from Geoffrey Elliott with Autonomous Research. Please go ahead.
Hello. Thanks very much for taking the question. Quick one on Pix. First of all, could you confirm whether Pix is included at all within the acquiring TPV that you report? How big has Pix become in terms of the acquiring side of the business? Any insights you can share on the profitability that you're generating there? Thank you.
Hi, Geoffrey. Yes, Pix it is in these numbers of the acquiring. We have footnote, every volumes that we have in our ecosystem that generates revenues, regardless if it's MDR, prepayment, or even if it is fixed fee, we do include in our acquiring TPV because that's we understand where we make some revenues, and we should report. Pix is there. Pix is very small. Pix QR code that goes to our POS is still very small. It is growing quarter after quarter, it's very, very small. The profitability of this type of transaction is very, very good for us because we charge it an MDR that's a little bit lower than debit, we don't have the costs that we have in a debit transaction, such as interchange and card scheme fees.
That's the dynamics and the economics of this transaction. More profitable than debit. It is growing quarter after quarter, but very small.
Jeff, the market share gains in the slide 5 is on a tax criteria considering only debit, credit, and prepaid cards.
Yeah, that's a good point. These volumes regarding Pix and other payments that we have, even online, such as boletos, bank slips, they are not in this market share calculation that we did in slide 5.
That's great. You read my mind on the follow-up question. Thanks very much.
Thank you, Jeff.
Next question comes from Soomit Datta with New Street Research. Please go ahead.
Hi, guys. Yeah, couple of questions, please, if that's okay. Firstly, on the Hubs contribution, which is 31% of TPV, I think up from about 28% in the last quarter. You know, one of the dynamics we're thinking about as we're looking forward with the take rates is the mix of TPV mix between micro and SMB. I just wondered where do you think we are in terms of that Hubs contribution? Are we close to it leveling out, or do we just think it will continue to expand as a percentage of total? I guess as a result that will have a dilutive effect on take rates going forward. Be interested in your perspectives on that one. A quick follow-up, please.
Just on the credit product. We've seen a nice lift in the loan book this quarter, increase coming through from secured lending. Just trying to get a sense as to the underlying yield on that credit book. Obviously, it must be declining as the secured lending becomes a higher component. Just sort of curious how that underlying credit revenue is evolving. Loan book is going up, yield is coming down in the near term. Is the underlying credit revenue expanding? Little sort of help there would be really appreciated. Thanks.
Hi, Sumit. Starting with the Hubs question. We are not opening new Hubs as we used to do in the past. Maybe there could be a new Hub here and there to serve a part of the city or a neighbor of the city with a high concentration of merchants and so on. The majority or the largest amount of investments in Hub is already done. As Alexandre said in their presentation, we are covering with our Hubs 90% of our GDP. We are growing. Productivity of sales people in the streets is very well. I guess we reached a very good point of productivity from our people, from our sales people. How big Hubs can be?
Well, I don't have here the final answer, but if you look at the past quarters, it's been growing like 3%, 5% quarter after quarter in the mix. Last quarter was 28%, now it's 31%. I don't see that decelerating in the short term. If hubs will be... how's it gonna be the percentage of the hubs? I guess we need to wait a little bit. We see that growing in Q4, and we see that growing in Q1 and Q2 next year. You're right when you say that in terms of net take rate, it could be a headwind. If we, if we consider that they have 5 to 6 more volumes than long tail in nominal margins, it makes total sense.
With all the products that we've been launching for SMBs in our PagBank accounts, such as debit cards that we launched recently, we also see the opportunity that we can not only bring these SMBs for our acquiring, but also expand the penetration of the PagBank in the SMB base. That's the dynamics for the Hubs. Regarding this, the lending, what happens here is that in the secured products, we have the duration much longer than what we had in the working capital. Is to give a sense to you, it's like 3 to 4 times longer than the working capital in terms of duration. The yields, it's kind of half of what we had in the working capital.
We can imagine that in the short term, the revenues are not as big as they used to be for the working capital. When we start to stack different cohorts, this revenue will keep growing, and we are bringing these clients that will guarantee the revenue, so to say, for a longer term when compared to the working capital. That's the dynamics, and that's why maybe we don't see the revenue in PagBank growing as fast as we expected before. We are changing the mix to have this asset quality a little bit more shift to secure lending. Again, they have four times more duration and half of the yields.
It's not secret for anyone that the payroll law in Brazil for public employees is limited to 2.14% per month. That's the top of the yield that any financial institution can charge from the clients in this product.
Okay, that's great. Thank you.
Thank you.
Next question comes from Pedro Leduc with Itaú BBA. Please go ahead.
Thank you guys so much for taking the question. First, on cash flow. I would like to pick your brains a little bit as you're cooling off on TPV. We already saw a better cash flow dynamics this quarter. As we look into 2023, you know, even if it's macro driven, is it reasonable to expect a more meaningful cash flow picture here? If so, you know, what do you believe is the best way to deploy it? You know, this quarter we saw you paying down some debt, you bought back some shares. Cash flow outlook and ways to deploy it. Thank you.
For the cash generation, obviously we are in a positive side right now, and we expect to use this to also help us to fund in the operation. It's a good way to use the money to help us in the growth of the company. Obviously we have a repurchase of shares program. We use it almost 40% of this program until now. For now, I don't have any answer to buy or not buy any shares, but it's a possibility in the future. The price is pretty low in our under-understanding. It's a good price range to buy more shares, to have in the treasury and use this money to do that.
The most important thing is the generation that we have in our cash flow right now, is important to us to support the growth of the company.
Got it. Then the second, unrelated question on credit. Not sure if you commented a bit on credit quality this quarter, how your provision expenses evolved, if they're, you know, we're seeing it peaking already. Just to pick your brains a little bit on credit quality. Thank you.
Pedro, I'll start here, and then Artur can complement. Well, 100% of the credit that we had in Q3 was secured. Of course, that helps in NPLs. If you look at the NPLs are trending down. We plan to give more disclosure on that once the credit portfolio grow in the following quarters. That's what in terms of disclosure that I can give to you at this point, Artur can give you more details about the numbers and provisions and so on.
Yeah. We have everything that we understand that is necessary is provisioned. If you take a look in the income statement, we have some write-off there that we not executed because it's not efficient in terms of tax. When we think it's efficient, we will do the write-off. Regarding to provisions, we have everything provisioned. Based on the quality of our book right now and going forward, we understood that the level of provisions that we are taking every quarter can be reduced going forward.
Super. Thank you. I look forward to the higher disclosure. Appreciate it.
Thank you.
Thank you. I would like to turn the floor over to Mr. Ricardo Dutra for his final remarks. Please, Mr. Dutra, you may proceed.
Hi, everyone. Thank you for investing the time to listen to us for the questions that you had. Happy holidays to all of you. Talk to you in the call the beginning of next year with the full year 2022. Thank you very much.
This concludes PagBank PagSeguro conference call. Thank you very much for your participation. You may now disconnect and have a great rest of your day.
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You can do everything through the app without fees and without complications. Unlock your investments and invest in the PagBank CDB. Pix is the big news, except for PagBank customers. Because with Pix, you can send and receive unlimited and free wire transfers, something PagBank clients already used to do. You can send, receive money within 10 seconds, something PagBank clients already used to do. You can pay your bills and boletos at any time and day of the week, something PagBank clients already used to do. To do all of this, switch to PagBank and download the super app now. CDB has always meant complicated, slow, bureaucratic. Here at PagBank, CDB means the C stands for credit card with no service fees and up to BRL 100,000 credit limit.
The D means it yields double in savings accounts. That's right, it yields twice as much. There's also the B for a complete and free of charges bank. You can do everything through the app without fees and without complications. Unlock your investments and invest in the PagBank CDB. Pix is the big news, except for PagBank customers. With Pix, you can send and receive unlimited and free wire transfers, something PagBank clients already used to do. You can send, receive money within 10 seconds, something PagBank clients already used to do. You can pay your bills and boletos at any time and day of the week, something PagBank clients already used to do. To do all of this, switch to PagBank and download the super app now. CDB has always meant complicated, slow, bureaucratic.
Here at PagBank, CDB means the C stands for credit card with no service fees and up to BRL 100,000 credit limit. The D means it yields double in savings accounts. That's right, it yields twice as much. There's also the B for a complete and free of charges bank. You can do everything through the app without fees and without complications. Unlock your investments and invest in the PagBank CDB. Pix is the big news, except for PagBank customers. Because with Pix, you can send and receive unlimited and free wire transfers, something PagBank clients already used to do. You can send, receive money within 10 seconds, something PagBank clients already used to do. You can pay your bills and boletos at any time and day of the week, something PagBank clients already used to do.
To do all of this, switch to PagBank and download the super app now. CDB has always meant complicated, slow, bureaucratic. Here at PagBank, CDB means the C stands for credit card with no service fees and up to BRL 100,000 credit limit. The D means it yields double in savings accounts. That's right, it yields twice as much. There's also the B for a complete and free of charges bank. You can do everything through the app without fees and without complications. Unlock your investments and invest in the PagBank CDB. Pix is the big news, except for PagBank customers. With Pix, you can send and receive unlimited and free wire transfers, something PagBank clients already used to do. You can send, receive money within 10 seconds, something PagBank clients already used to do.
You can pay your bills and boletos at any time and day of the week, something PagBank clients already used to do. To do all of this, switch to PagBank and download the super app now. CDB has always meant complicated, slow, bureaucratic. Here at PagBank, CDB means the C stands for credit card with no service fees and up to BRL 100,000 credit limit. The D means it yields double in savings accounts. That's right, it yields twice as much. There's also the B for a complete and free of charges bank. You can do everything through the app without fees and without complications. Unlock your investments and invest in the PagBank CDB. Pix is the big news, except for PagBank customers.
With Pix, you can send and receive unlimited and free wire transfers, something PagBank clients already used to do. You can send, receive money within 10 seconds, something PagBank clients already used to do. You can pay your bills and boletos at any time and day of the week, something PagBank clients already used to do. To do all of this, switch to PagBank and download the super app now. CDB has always meant complicated, slow, bureaucratic. Here at PagBank, CDB means the C stands for credit card with no service fees and up to BRL 100,000 credit limit. The D means it yields double in savings accounts. That's right, it yields twice as much. There's also the B for a complete and free of charges bank.
You can do everything through the app without fees and without complications. Unlock your investments and invest in the PagBank CDB. Pix is the big news, except for PagBank customers. With Pix, you can send and receive unlimited and free wire transfers, something PagBank clients already used to do. You can send, receive money within 10 seconds, something PagBank clients already used to do. You can pay your bills and boletos at any time and day of the week, something PagBank clients already used to do. To do all of this, switch to PagBank and download the super app now. CDB has always meant complicated, slow, bureaucratic. Here at PagBank, CDB means the C stands for credit card with no service fees and up to 100,000 reais credit limit.
The D means it yields double in savings accounts. That's right, it yields twice as much. There's also the B for a complete and free of charges bank. You can do everything through the app without fees and without complications. Unlock your investments and invest in the PagBank CDB. Pix is the big news, except for PagBank customers. With Pix, you can send and receive unlimited and free wire transfers, something PagBank clients already used to do. You can send, receive money within 10 seconds, something PagBank clients already used to do. You can pay your bills and boletos at any time and day of the week, something PagBank clients already used to do. To do all of this, switch to PagBank and download the super app now. CDB has always meant complicated, slow, bureaucratic.
Here at PagBank, CDB means the C stands for credit card with no service fees and up to BRL 100,000 credit limit. The D means it yields double in savings accounts. That's right, it yields twice as much.