Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Stone Company Fourth Quarter and Fiscal Year 2020 Earnings Conference Call. By now, everyone should have access to our earnings release. The company also posted a presentation to go along with this call. All materials can be found at www.stone.co in the company, in the investor relations section. Throughout this conference call, the company will be presenting non-IFRS financial information, including adjusted net income and adjusted free cash flow. These are important financial measures for the company but are not financial measures as defined by the IFRS. Reconciliations of the company in non-IFRS financial information to the IFRS financial information appears in today's press release. Finally, before we begin our formal remarks, I would like to remind everyone that today's discussion might include forward-looking statements.
These forward-looking statements are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from the company's expectations. Please refer to the forward-looking statements disclosure in the company's earnings press release. In addition, many of the risks regarding the business are disclosed in the company's Form 20-F filed with the Securities and Exchange Commission, which is available at www.sec.gov. Please note that this event is being recorded. I would now like to turn the conference over to your host, Rafael Martins, Investor Relations Executive Officer at Stone. Please proceed, sir.
Thank you, operator, and good evening, everyone. Joining us here today we have Thiago Piau, our CEO, Lia Matos, our COO and chief strategy officer, and Rafael Martins, our CFO. Today, we will present our operational and financial metrics for the fourth quarter and 2020 results. I will pass it over to Thiago so he can share with you the main highlights of our performance. Thiago?
Thank you, Rafael. Good evening, everyone. Thank you for joining us in our fourth quarter 2020 earnings call. Before we dive into our 2020 results, I want to talk a little bit about our strategic direction and the moat of StoneCo. As a client-centric company, we are always trying to assess how we can help our merchants to become better every day. I believe our moat is about empowering small and medium businesses to win through three important strategic steps, two of which we are already executing well, and the third one is becoming a new dream for us. First, we want to delight our clients and gain their trust by offering a complete set of financial solutions through world-class technology and service, replacing their existing banking relationship and becoming the dominant financial provider of SMBs in Brazil.
Our Stone and Pagar.me teams are working hard to accomplish this goal every single day, building an amazing culture of talented people and client obsession. Second, we want to offer enterprise-level workflow tools to empower our clients to better manage their business, driving operational efficiency and connecting them to online channels so they can sell more. We started the second phase of the business almost two years ago, and we are happy to see great evolution of our team towards this direction. The investments we made and the acquisition of Linx put us in a unique strategic position to achieve this goal. We are working hard to make sure the team achieves the same level of client satisfaction and disciplined execution we are able to build in Stone and Pagar.me.
The third strategic step, and this challenge we still have to tackle, is to answer a very simple question: how can we drive more customers to our merchants? How can we incentivize consumers to shop in our merchant base? We can now start dreaming about answering this question, and we know that data infrastructure, user experience, and technology integration between our businesses are key elements to make this happen. Moving to results, 2020 has been a year of great achievements despite all the challenges imposed by the pandemic. I believe we balanced disciplined execution with important strategic steps, continuing to deliver strong results. Our teams did a great job, and today we are bigger and much better than we were a year ago. We continue to present strong profitable growth and long-term value generation.
Moving on to the presentation, I would like to start on page four with client base dynamics. We have significantly scaled our client base in many fronts. In payments, we posted on the fourth quarter a record quarterly net addition of clients, and we keep increasing investments, paving the way for continued acceleration in 2021. In fact, even with the negative impacts brought by the COVID-related lockdowns, we reached over 652,000 active payment clients in 2020, 2.4 x 2018 levels. On top of that, now we count on almost 114,000 clients in Stone, our solution to micro merchants, and we see very strong levels of growth in 2021. The number of clients with credit solutions grew to nearly 90,000, almost 4x 2019 figures, and the number of open digital accounts surpassed 500,000, eightfold the number posted in 2019, with over 133,000 clients using as their main settlement accounts.
Lastly, the number of software clients in our ecosystem grew to nearly 390,000, almost 3x 2019 levels. We have evolved fast in the conversion of our solutions. In 2019, 10% of our SMB acquiring clients used at least one other financial product offered by us. By the end of 2020, that number jumped to 34%, with new cohorts presenting even higher numbers. Besides that, the percentage of clients using both our software and payment solutions also increased from 22% in 2019 to 30% in 2020. As Lia will discuss later in more detail, this trend is improving our unit economics on SMB clients, which is the reason why accelerating our client base is among our top priorities today. We had a record addition of TPV in a year, having added BRL 81 billion of TPV in 2020, a similar level to the total TPV processed in 2018.
In fact, the processed volume increased over 150% in just two years, despite COVID impact in 2020. While we are committed to fast growth, and even though we are investing heavily in our business, in 2020, our adjusted net income grew 12%, with an adjusted net margin of 29%, despite all COVID-related impacts. We have also reported our record adjusted free cash flow generation, which reached over BRL 653 million in 2020, growing more than 57%. Finally, we are able to scale while keeping high customer service levels, achieving a first call resolution index of 94% and 91% of the calls rated as excellent by our clients. Stone was created to provide the best-in-class service for its merchants. Even with the businesses growing fast and gaining scale with additional solutions, we will never change the commitment we have with our clients.
We will work hard to keep providing the best customer experience our clients can get every single day. With that said, I will pass it over to Lia to discuss our results in more detail. Lia?
Thanks, Thiago, and good evening, everyone. Thanks for joining us today. I want to give some highlights along our three main businesses, Stone, Pagar.me, and our software business. Let me start first with the evolution of Stone. As shown on page five, the business continues to accelerate and at the same time, improve quality. We saw TPV growth in the hubs accelerate to 45% versus 42% last quarter. Our hubs are also improving unit economics, with higher TPV per client than we had a year ago. Additionally, the productivity of the salespeople in the hubs reached its peak in the fourth quarter, while levels of churn reduced, which helped the company achieve the highest ever net addition of clients in a single quarter, almost 70,000 clients. We also want to highlight the continued evolution of our hub's performance.
As we can see on the graph on the bottom right, even our more mature hubs continue to present strong growth, with number of clients continuously increasing while maintaining the number of salespeople per hub relatively flat since the beginning of 2018. Moving on to page six, we're happy to see the higher activation and engagement within our ABC platform. The graph on the left side of the page shows that the percentage of Stone clients using an additional financial solution increased from 10% in 2019 to 34% in 2020. Also, the number of clients using, at the same time, payments, banking, and credit, the so-called heavy users, increased from nearly zero in 2019 to over 5% of our payments client base in 2020.
As the graph in the middle of the page shows, heavy users have a greatly improved unit economics, and our team continues to work hard to improve engagement. Our average revenue per client increases when they start to use additional features, with heavy users reaching over 2.5 x higher revenue than clients with payments only. The growth and quality of unit economics in our SMB business have made us confident to double down on our investments in 2021 to further accelerate growth and increase our penetration on a growing addressable market of over BRL 120 billion in revenue. Now on page seven, we discuss the evolution of our financial products beyond payments. As Thiago mentioned, in the fourth quarter of 2020, we reached more than half a million open digital accounts, with over 133,000 clients already using Stone as their main settlement account.
We also saw the total accounts balance increase 92%, and the TPV of prepaid cards jumped 52% against the third quarter. Our credit portfolio reached BRL 1.5 billion, distributed among nearly 90,000 clients, with healthy monthly returns ranging from 2%-2.5%. We continue to enhance our credit scoring model, provisioning, and collection tools, especially as we experience a second wave of COVID in Brazil, with lockdowns being imposed in some areas. For this reason, we are being even more selective while disbursing new credit. We have also started to manage new metrics, such as risk-adjusted return and risk-adjusted return net of funding costs. These metrics better factor in the portfolio profitability as they essentially reflect the total IRR for a series of cash flows at different time frames.
During this quarter, we took a first step towards limiting our risk exposure by raising approximately BRL 500 million in the domestic market through FGIC. We expect to raise more funding for the product throughout the year, allowing us to keep growing this product fast while further limiting our credit exposure. In addition to the great SMB results, we have seen a significant evolution in Ton, our solution for micro merchants. On page eight, we show that Ton's client base has reached 114,000 clients, and our net addition of clients already represents approximately 16% of the organic net adds of the leading player in this market. We see unit economics improving with healthy take rates and TPV per clients, combined with lower client acquisition costs, a key variable to succeed in this segment. Following Ton's DNA, Ton keeps differentiating itself in the segment by providing superior client service.
The level of service perceived by the clients reached 87%, with an upward trend at the end of the year. Just one year in, Ton already shows promising trends, and we expect even more improvements as we accelerate our investments in this new venture in 2021. Even though our focus is to invest in growth acceleration, the strong unit economics we have seen indicates that Ton might achieve breakeven already in the end of 2021. Still related to Ton, we decided to expand the scope of our media agreement with Grupo Globo, which was exclusive to Ton, to the whole StoneCo Group, which gives us flexibility in terms of media allocation. We executed the flip of Globo's ownership in Ton to the StoneCo level, so we now own 100% of Ton. We believe this structure is better aligned to generate bigger returns on media capital allocation.
Let's now move to page nine to our Fintech-as-a-Service platform, Pagar.me. Throughout 2020, we have seen substantial evolution in Pagar.me, with fourth quarter TPV growing approximately 80% year-on-year. Pagar.me revenues from small businesses accelerated, reaching 94% year-on-year growth in the fourth quarter, with take rates considerably higher than what we see in the Stone operations. There are components of Pagar.me small business economics we like and we want to share with you. First, every day we see new digital native merchants being born. Second, our small clients grow while using our solutions, so we have more TPV from the same clients over time. Pagar.me offering is still heavily concentrated in gateway payments and anti-fraud solutions, with still low prepayment penetration and an optionality to drive more revenue per client as we evolve to banking and credit solutions, which we expect to start still in 2021.
The small business operation of Pagar.me is what really drives earnings growth. We believe this is the biggest profit pool opportunity for Pagar.me going forward. On the other hand, in the fourth quarter, we faced headwinds in revenue growth in key accounts, driven mostly by impact from lower take rate levels, which had significant influence from the reduction in the Brazilian CDI interest rates from 5% in the fourth quarter of 2019 to 1.9% in the fourth quarter of 2020, as prepayment pricing for key accounts is usually linked to CDI, and the reduction of share wallet in some of our key account clients. The decline in take rates of Pagar.me key accounts was a main driver of overall take rate reduction in the company. Looking ahead, we are shifting Pagar.me key account operations from a commoditized based on price relationship to a customized based on margin approach.
As we always said, key account operations bring volatility in terms of TPV and revenue growth, has small impact on our profitability. Moving on to page 10, I want to talk about our software business. The number of clients using our software solutions has reached nearly 390,000 at the end of 2020, almost three times 2019 numbers, annualized pro forma revenue has surpassed BRL 200 million as of the fourth quarter, with a 55% organic year-on-year growth, demonstrating the ability of those solutions to drive adoption and monetization. We offer our clients POS and ERP solutions in different verticals, such as retail, food, health, leisure, and beauty, among others, as well as solutions which help our clients to better connect with their customers and sell more.
Despite not being able to talk too much about Linx acquisition, as it is still pending antitrust approval, we see that the combination of our software initiative and Linx will create a leading player in workflow tools for retail, adding strategic vertical presence and enterprise solutions that help clients to increase sales by connecting them to digital channels. We see great opportunities to further penetrate financial solutions into Linx's client base by migrating clients from Linx Pay Hub to our platform so we can increase the value proposition to those clients. We remain very excited with the opportunities in Linx. We firmly believe that the combination of the two businesses will accelerate Stone's goal of empowering Brazilian merchants by offering enterprise level workflow tools to help them better manage their businesses, drive operational efficiency, and connect to online channels so they can sell more and grow.
More than our results and positive influence in our industry, we're very committed to our country and happy to support society through tough times. We think that the best way to improve our country's productivity in the long term is to have good investment in basic education and employability initiatives. Besides our regular support to basic education, like Alpha Lumen, a nonprofit school focused in empowering gifted children from vulnerable and low income families, we have started piloting professional qualification training aimed at improving employability. Those are the two social impact initiatives in which we will be focusing our attention going forward.
In addition, in 2020, we have donated BRL 15 million to the construction of a COVID-19 vaccine factory and the construction of a temporary hospital in Rio de Janeiro, as well as BRL 26 million in subsidies to our clients in order to help them navigate the challenges imposed by the pandemic. With that said, I will pass it over to Rafael, who will discuss our financial results in more detail. Rafa?
Thanks, Lia. Starting on slides 11 and 12, you can see the evolution of the number of active payment clients, TPV, and revenue for the fourth quarter and full year 2020. Despite the COVID impacts, our payment client base grew by 35.7% this year, reaching 652.6 thousand clients, excluding Ton. Our TPV grew by 60% in the fourth quarter, reaching a total TPV of almost BRL 210 billion in the full year. We have also surpassed BRL 1 billion of quarterly revenue for the first time, with our revenue growing by 28% year-on-year, despite the challenges from COVID-19 and the headwinds from a lower CDI interest rate in our Pagar.me key account take rate. Our consolidated take rate, excluding Coronavoucher in the quarter, was 1.64%, 12 basis points lower than the previous quarter.
The lower figure is mainly due to seasonal effects, mainly a higher proportion of debit over credit, and the effect from revenues which are unrelated to TPV, including POS subscription and credit revenues, which have a negative impact on take rates in the fourth quarter due to strong volume seasonality. In 2019, we saw a similar behavior in the fourth quarter, with take rates going down 11 basis points when compared to the previous quarter. When compared to the fourth quarter of 2019, take rate excluding Coronavoucher volumes was 16 basis points lower. This difference is mainly explained by the lower take rates of key accounts in Pagar.me, which we already explained previously. Now, let's move to slides 13 and 14 to discuss our operating leverage and profitability.
In the fourth quarter of 2020, we have reached our highest historical adjusted net margin of 35.7%, even with significant investments in our operations, which we will detail shortly. In 2020, we saw a very peculiar dynamic with the COVID impacts being strongly reflected, especially in two occasions. First, the financial expenses in the first quarter, when we decided to reinforce liquidity. Second, in our total cost and expenses in the second quarter, when lockdowns happened and we saw revenue growth decelerating while we kept investing in new products and had one-off expenses related to a team resizing in mid-May. After the first half of the year, as you can see in the graph on page 13, we have regained operating leverage in our business. Our financial expenses have also decreased as a % of revenue, mainly due to lower base rates in Brazil.
This higher efficiency led our adjusted net margin to bounce back to pre-COVID levels in the second half of the year with the record quarterly adjusted net margin of the company in the fourth quarter. Those factors above were partially offset by strong investments, such as building our Ton operation, hiring of technology team in different areas of the company, including Pagar.me and StoneCo, investments in customer service and logistics, hiring of sales team, software expansion, and increase in marketing expenses. Many of our investments appear in the form of OPEX in our P&L and are already factored in our margins. Now, going over in more detail on each P&L line item on page 15, our cost of services reached BRL 213.2 million, or 21.3% of total revenue and income in the quarter, increasing 4.9 percentage points when compared to last year.
This increase was mainly due to higher investment in our technology and customer service teams, costs from our software solutions, and higher transaction and deployment costs to support our operation. When compared to the previous quarter, cost of services as a percentage of revenue decreased one percentage point, primarily because of lower provisions and losses and lower deployment costs as a percentage of revenue. Administrative expenses were BRL 122.5 million, or 12.2% of total revenue and income, three percentage points higher than the prior year period, mostly due to higher third-party services related to Linx transaction and more expenses related to software solutions. When compared to the third quarter of 2020, administrative expenses were 0.9 percentage points higher, mostly due to the higher third-party services, which were partially compensated by lower personnel expenses as a percentage of revenue.
Selling expenses were BRL 139.9 million in the quarter, or 14% of revenue, broadly in line with the 13.9% reported in the prior year period, despite higher investments in marketing, especially with Ton. Compared with the third quarter of 2020, we saw a one percentage point improvement, mostly explained by lower personnel expenses as a percentage of revenue, partially compensated by higher marketing investments. Financial expenses were BRL 64.2 million, a decrease of 40% compared to the fourth quarter of 2019, mainly due to the lower CDI rates, which more than compensated the significantly higher volumes in the quarter. Other operating expenses were BRL 19.2 million in the fourth quarter of 2020, compared with BRL 2.5 million in the fourth quarter of 2019.
This difference is mainly related to donations, including a BRL 10 million donation to support the construction of a factory for the production of COVID-19 vaccines, higher share-based compensation expenses, mostly related to the tax and social charges provisions in relation to the appreciation of our shares in the quarter, and higher POS losses as a result of COVID-19 impact on SMBs. Compared with the third quarter of 2020, other operating expenses were 4.4 percentage points higher as a percentage of revenue, explained by the same factors of the year-over-year comparison. One thing that we would like to highlight is that in terms of social initiatives, we gave fee exemptions to our clients in an amount of BRL 26 million, and we have donated BRL 15 million for the construction of a temporary hospital and a COVID-19 vaccine factory.
If we had adjusted the impact of those initiatives in our P&L, which we didn't, our adjusted net income would be closer to BRL 1 billion. Finally, as shown on slide 16, we have been able to generate increasing adjusted free cash flow despite all the investments mentioned previously. Also, we have kept our diligence in capital allocation aiming at generating great returns. Our adjusted free cash flow grew 86% in the fourth quarter compared to the fourth quarter of 2019 to BRL 345.9 million, mainly due to higher net income and better working capital dynamics, reaching over BRL 653.5 million in the full year. Also, during the year, we have spent BRL 76 million in the repurchase of our own shares with an average price of BRL 29.65, which generated very positive returns.
Besides, we have purchased BRL 1.3 billion in Linx shares in the open market at an average price of BRL 36.5 per share, which is below our offer approved in the shareholders' meeting. Before I pass it over to Thiago, I would like to recall that during our IPO in 2018, we had two expectations over the medium term, a total revenue and income growth above 40% with adjusted net margins between 30% and 35%. Even with the headwinds brought by the COVID pandemic, we are very proud to say that we were able to exceed our expectations with revenues growing at a 45% CAGR in the last two years and adjusted net margins at 29% for the full year 2020 and 35.7% in the fourth quarter. We expect to accelerate growth in 2021.
Now, I would like to pass it over to Thiago so he can wrap up our 2020 results.
Thanks, Rafa. Before I talk about what we see ahead of us, I want to show on slide 17 our assessment of what we did right and where we failed looking back at 2020. We are very proud of some achievements during the year. First, we experienced a solid team improvement while keeping a strong culture, one of our most valuable assets. Also, we saw great evolution of strategy and execution of Stone and Pagar.me, with results pointing to an encouraging future prospect way beyond payments. We were able to rapidly adapt to the new reality with COVID lockdowns as we kept the solid financial management of the company, focusing on liquidity management and efficiency in operation and capital allocation, promptly providing support to our clients, team, and overall community. We were able to balance strong growth and profitability at the same time.
Finally, we took a very important strategic step with the acquisition of Linx and the expansion of our ecosystem of software solutions and the moat of StoneCo. More accretive than highlighting the positive results is to understand our mistakes and where we failed so we can learn and evolve. To start, we made the wrong decision regarding the level of resizing the hubs and customer service operation, as well as cutting short Stone investments too early in the first half of 2020. Given the fast bounce back of our client base, we can now say that it would have been better to hold overcapacity to serve better our clients and to grow more rapidly during the second half of the year. Given the results we are seeing in Ton, we should have maintained investment during the first half.
In addition, we were slow in transitioning our key account strategy to a more customized solution relationship with focus on margins. We kept some relationships based on acquiring prices longer than we should, which is not strategic to our future. We were also slow in launching our ABC platform in our own standards. We could have done faster. Lastly, we believe that we could have invested more in initiatives for digitization of retail in addition to the Linx acquisition. Moving to slide 18, let me share some thoughts about what we expect for 2021, keeping in mind that my comments do not include any effect of Linx acquisition, as we're still waiting for regulatory approval.
Due to the improved unit economics we are seeing, we are aiming to accelerate our net addition of clients. We expect to cross the mark of one million clients in payments in 2021, excluding Ton. We also expect strong growth rates in Ton on top of that. To support our growth, we'll keep investing heavily in our operation. We expect to grow our commercial and technology teams by at least 60% during the year, continue to provide the best service of the industry while we expand our product offering to more and more clients. Also, due to the increasing usage of additional products for our clients, take rate should go up throughout 2021, both at Stone and Pagar.me.
With that, despite having larger scale, we expect our revenue growth to accelerate significantly from 2020 levels due to the powerful combinations of a bigger client base and increasing monetization per client. Despite the heavy investments, we do not expect our adjusted net margin to be very different from what we saw in 2020. We are always pursuing the long-term value generation, and we are investing to grow as fast as we can. However, our business model allows to generate strong operational leverage, and even during times of massive investments, we expect to observe healthy margins. We expect tax rates to be at similar levels as in 2020.
To finalize the first part of our earnings call, I would like to say that we were born in 2012 with a clear purpose: to help merchants to better manage their businesses and sell more by offering best-in-class services and products delivered by a talented team of hardworking people who always put our clients at the center of everything we do. This is our commitment with all our stakeholders. Our strong culture and client centricity are the pillars that will support us in the exciting journey that we are just starting. Operator, please open the call up to questions.
Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble the roster. Our first question will come from Thomas Peredo with BTG. Please go ahead.
Hi. Good night, everyone, and thanks for the opportunity. First, I would like to know if you could share how has been the TPV in this first quarter. You usually give some color in the presentation, but this time we didn't see anything. Just try to get a sense of how you are looking at TPV take rates and the credit book in the first Q. Also if you could give us a little bit more of detail on this revenue growth for 2021. You mentioned it as significant acceleration, but if you could tangibilize a little bit what would be significant, because revenues are growing at 30%, 40% this year, and in 2019 were growing much faster than that. Do you expect significant to be revenues doubling or less than that, or more than that?
If you could give us a bit more color, it would be great. Thank you.
Hello, Thomas. Thiago here speaking. Thank you for your questions. Let me start with the first question, which is about the first quarter dynamics. I think that what I can say is that despite this new dynamics of restrictions that we are seeing in commerce activities in March, the company's performing well, and we continue to make great investments in growth, as we have said before. When you look to January and February, we were pointing to growth acceleration both in top line and earnings, mainly driven by the growth in client base and the take rate evolution. We continue to have operating leverage. It's still too difficult to talk about March, but from what we have learned in the past, we expect strong growth for 2021, as we said. We are very confident in our business.
When we think about revenues, I would separate the conversation about revenue in four different parts. First, let's talk about the hubs. As we have disclosed, the hubs is growing faster than we was first expecting in the beginning of the year, mainly because of two effects. We have the client base growing fast, and we have a new dynamic in terms of revenue per client because of the additional revenue that we have from new products. We are now disclosing more information about what we call heavy users, and we expect the percentage of heavy user to grow over time. We expect to continue to accelerate growth on the hubs. When we talk about Pagar.me, there's basically two operations with two different dynamics. You have the SMB in Pagar.me, and you have the key accounts.
In the SMB, basically, we're growing at 94% rate at fourth quarter, and we expect to keep this level of growth for 2021, mainly because the market it's big and every single day you have more clients. Your clients grow with you. We still have the optionality to better manage risk operation, to do more prepayments, and to bring credit operation for those clients, which we still don't bring. In the key account operation, there's a huge effect from the CDI, because mainly the prepayment is indexed to the CDI. That's why we saw some decrease. In the same way, the cost of that operation decreases too, because our cost of funding has decreased. That's why we decided to put more data for you to see the revenue adjusted by the cost of funding.
In revenue, I think that the pro forma revenue is growing, basically what we are more happy about is the organic growth. I think that our initiatives in software is performing well, and every day more we enhance our management system to operate our software initiatives with the same level of discipline that we operate Stone and Pagar.me. We are happy to see that in 2021, despite the trends that we can see now in March, we really expect great levels of growth, considerably bigger than what we have in 2020. You know that we don't like to give too much guidance, I can say that we are very happy to see the level of growth that we expect for 2021.
And Thomas-
Okay. Thank you.
Rafael here.
Thank you very much. Sure.
Hi. Thanks for the question. Just complementing what Thiago just said. We gave the guidance of one million clients, which represents a little over 50% increase compared to the client base of the end of this year, 2020. Of course, as Thiago said, we remain very excited of the revenue growth of the company for the full year, and we see an acceleration within the year, right? I would just like to add that additional point to give more clarity. Thank you.
Okay. Thank you very much.
Our next question will come from Tito Labarta with Goldman Sachs. Please go ahead.
Hi. Good evening, Thiago, Lia, and Rafael. Thanks for the call. Maybe following up a little bit on Thomas question on the revenue growth. To think about, I guess, the TPV growth, it was 39% excluding a Coronavoucher. Given what you're saying, so that should accelerate, should we think about that excluding the Coronavoucher? Is that the right way to think about it? On the take rate, we see an upward trend. You're still below sort of pre-COVID levels. One, can you get back to those pre-COVID level take rates? If so, when do you think you would get back to that? I guess last question, just on the margin guidance that you're saying is stable for the year.
Is that stable for the full year of 2020, which is around 29%, or stable with the fourth quarter as the 35%, just to make sure I'm clear. Thank you.
Hi, Tito. Rafael here. Thank you very much for the question. Regarding your first question of take rates, what we see is when we look at our hubs operations, for example, we see an upward trend in the take rates there, right? What we expect for 2021 is a continued expansion of revenue per client in the hubs. That, of course, has a positive effect in take rates. Being very direct to your question, I think, yes, we can reach the pre-COVID levels at take rate and surpass them, actually. What we see is an upward trend. As we increase the percentage of heavy users, they are only 5% today of our payment client base, we usually see that take rate going up. Regarding your second question, we mentioned for the full year, so it would be close to 30% levels.
We have seen close to that in 2020, we expect a very strong growth in 2021 with a lot of investments. Despite that, we do see very healthy margins. Also, we see the TPV growth accelerating.
Great. Thanks, Rafael. Just to clarify on the TPV growth accelerating, that we should consider the 39% excluding Coronavoucher? Is it accelerating from there?
Yes, that's correct, Tito.
Okay. Somewhere in the 40+% range is reasonable.
Pardon me.
I think we can move to the next question. Operator, please.
All right. Our next question will come from Rayna Kumar with Evercore. Please go ahead.
Hi. Thanks for taking my question. It's good to see the record net adds in the quarter. The average spending per merchant, though, that only grew mid-single digits in the quarter. I'm just curious, what was the driver of that, and how could that look into 2021 as you continue to add more smaller merchants?
Hi, Rayna. Thiago here speaking. I think that about your question, we have disclosed it on page five, the expanding per merchant or the TPV per client in the hub operation. Basically, the hub operation is focused on the SMB, so we don't have a wide difference in type of clients. You are seeing that we now have a little bit bigger clients than we had before, so it's a 4% up TPV per clients while we are growing fast our client base. This is basically only the SMBs. All the TPV and all the revenue that comes from Stone is on top of that. It's a separate operation. We manage it separately. Yes, it has a low expenditure per merchant but has a bigger take rate dynamics.
When you see the Pagar.me operation, the expenditure per client or the TPV per client in the SMBs in Pagar.me, they are considerably bigger than what you see in Stone. The take rates in the payment operation of Pagar.me has a better take rate. It's a bigger take rate than you have on the SMB operation in Stone. It's important to understand the dynamic of client base on those three separate operations. That's why we're increasing disclosure of both operations for everyone to understand the dynamic of client base in each one of those initiatives. On top of the dynamic of TPV per client in the hubs, we expect to have a better revenue per client in the hubs than what we have today because of the increasing solutions that we are offering to them.
Today, we already have 20% of our client base in our new ABC platform. We expect to increase the pace of migration of our client base, and we are migrating the new process of sale to this new platform. We expect to have the launch of the registry of receivable in June. This is important because from that moment onwards, we will have the ability to offer credit and to offer prepayments for the volumes based on the volumes that the clients process may be in other players. You can advance the client base based on products that Not only payments, based on the other products we have. That will be an important dynamic for 2021.
That's very helpful. If I can slip two quick ones in there. How could the take rate look if we do have a second round of Coronavouchers? Secondly, if you can talk a little bit about the cadence for your net income margins for 2021 by quarter. As in, what is the timing for your sales force and technology investments that you expect to make this year?
Hi, Rayna. Rafael here. Regarding your first question of Coronavoucher volumes, it's difficult to estimate exactly, but actually, when we have the Coronavoucher volumes, the take rates go down, but they are incremental to our margins and they add gross profit dollars, right? Usually when the volume from Coronavoucher comes, it's accretive to the company overall, despite you having a smaller take rate. If it happens, that's why we have broken down in the results the volume of Coronavouchers. You can see more the effect of take rates without the Coronavoucher effect, right? Regarding your second part of the question, we don't see a lot of volatility in margins. We are already investing heavily at the beginning of the year, and we will continue to invest along the year.
Usually, you have the end of the year with a little higher margins due to more operating leverage in the fourth quarter, but not big moves in the margins along the year.
Thank you.
Thank you.
Our next question will come from Craig Maurer with Autonomous. Please go ahead.
Yeah. Hi. Thanks and good evening. I was hoping you could comment on the expansion of growth in the SMB credit business. I know that you're moving to a net present value on accounting on the revenue stream, if you're moving to accelerate originations through the year and you're going to NPV the revenue stream off of those loans, shouldn't we see a dramatic acceleration in financial revenue throughout the year? Thanks.
Hi, Craig. Rafael here. Yes, that's right. The way we book the revenues, they are at fair value as we have been disclosing. It does have the disbursement effect. Basically when we have a disbursement, we have the NPV of that disbursement. When you look at the growth in our credit portfolio, you can pretty much calculate the net disbursements in the quarter. Just remind that there is many clients that they have a rollover credits, right? We disburse if the client pays down the loan, they have additional disbursements over time. That provides some continuity to the credit revenue streams despite the NPV calculation. We see overall that line becoming more relevant as we add additional financial solutions in the SMB clients.
We expect the heavy users of SMB clients to increase over time, and we should see that revenue going up.
Okay, thanks.
Rafael.
Sorry.
Craig, just to add some comments here about the credit operation. First, we are not changing the way that we book this operation. We have exactly the same methodology since the beginning. What we are doing here is that we are showing new operational metrics in order to help everyone to track this operation. Basically, going forward, we will talk about the risk-adjusted return because it shows the internal rate of return net of losses on the best way possible for the whole standing balance. We are showing the risk-adjusted return net of cost of funding for everyone to understand internal rate of return net of the funding process that we are undertaking now. We are showing the duration of the outstanding balance. We will show the outstanding balance and the outstanding balance net of the sale that we did to third-party partners.
Everybody will understand the size of the outstanding balance, how much we have sold, risk-adjusted return, and risk-adjusted return net of cost of funding, and the duration of the outstanding balance. I think that with these KPIs, everything can track the performance of our credit solutions. We are very positive. We are very happy to see the healthy level of the returns and the growth of this balance. I think it's a way that we are really helping our clients who have access to capital so they can invest more in their operation to buy more goods to sell. At the same time, it creates a positive take rate dynamics for the company.
The duration on the loans is still roughly six to nine months, correct?
Yes. The duration is eight months.
Okay. The balance that we see at the end of period actually underestimates the level of originations that are happening over the course of a full year, correct?
Yes.
Okay. Thank you.
Thank you, Craig.
Our next question will come from Mario Pierry with Bank of America. Please go ahead.
Good evening, everybody. Thank you for the opportunity to ask a question. Let me focus also on the revenues and the take rates. First question I have is when you talk about the take rate in the hub segment going up, part of this, as you explained, is because you're adding new products. If you can discuss a little bit the competitive dynamics in this segment. If we're comparing apples to apples, what do you think is the evolution of your take rates on your hubs? My question is because, right, we saw one of your competitors announce a big move into the SMB segment. Also, we know that another competitor wants to IPO later this year. I was just wondering, right, if we're going to see more competition and pressure on the take rate in the hub segment.
Second question related to revenues also is, you disclosed here, and thank you for that, your take rate at Ton at 2.2%. This seems to be lower than your competitor in the micro merchant segment. This, for me, seems a bit aggressive, especially considering that your TPV is roughly half, or your TPV per client here is roughly half of your main competitor. If you can disclose a little bit about your pricing strategy in this segment. Finally, also related to revenues, on the credit segment here, thank you for sharing this 1.6%-2.1% return. I was wondering if rates in Brazil continue to go up, are we then talking about a number closer to 1.6% rather than the 2.1%? If you could give us a sensitivity of your returns if the Selic rates goes up in Brazil. Thank you.
Hello, Mario. Thank you for the great questions. Thiago here. Let me try to break down the answer in pieces in here. Rafael, help me here if I forget something. Let's start on the dynamics of the hubs and the revenue per client and take rate in the hub. Basically, Mario, we don't see difference in terms of competitive environment on the SMB operations. I think it's the same competitive environment as always. What we saw, if you compare the level of take rates on a payments-only client, and if you compared 2018, 2019, and 2020, there was a small decrease in take rates on payments-only clients, basically because as the basic rates in Brazil went down, so prepayments rates went down a little bit.
This is a fixed rate-based type of operation. Competition has the trend of bringing a little bit down as the base rates of Brazil is going down. Our dynamics in take rates is in the opposite direction. Our take rates is going up because of the penetration of additional products that we have. That's why we decided to disclose here for you in terms of unit economics, what's the take rate comparison when you see payments plus banking, and then the ABC user, which is basically all the banking activities and the credit activities in the payment client.
That's the rationale why we continue to drive take rates up, because the level of offering we bring to our clients with a complete product, with one single client experience that we can take that phone call in 3.5 seconds now, we answer 90% of the problems in the first call that we receive for our clients. We are close to the counter inside of Brazil. We have a pretty fast logistics. This level of client satisfaction that you can give, it's difficult to replicate. We can drive client base and take rates up at the same time. We are not worried with the SMB operation. We think that all the trends are in our right direction. When we talk about the micro merchant initiative, Stone, actually, we are very happy to see unit economics.
When we see the LTV to CAC ratio, we were incentivized to invest more. You can see that we already have now 48,800 net adds in a quarter. We expect to increase this. We expect high growth level in Stone in 2021 as we keep investing more and more. We have now positive unit economics, and the unit economics in January and February are actually going up. We will invest more. I think that this level of take rates and TPV per clients, they make sense. We expect to increase a little bit over time, but for the solutions we have now and the operation we have, I think that it makes sense. We'll continue to invest more in this operation. It's only micro merchant initiatives, and I think that this is the key difference in the way that we disclose our metrics.
You have the pure SMB operation within Stone with a clear value proposition for clients and all the unit economics there. You have here a clear value proposition to micro merchant with its own unit economics. You can understand pretty much the dynamics of the business. We are very happy with the growth. Talking about the credit operation, I don't think that the main component in terms of risk-adjusted return, net of cost of funds, is the base rate in Brazil. I think that the main component is our ability to keep NPLs low. Those are the main components when we think about returns. We are increasing our credit scoring methodology. We're increasing our technology in terms of understanding data and drive our credit offering for the best type of clients we have in our client base.
We expect to keep this level of returns. We think they're a healthy level of returns, and we don't see the base rates of Brazil impacting too much this level. What we have to be focused here is to control NPLs while we grow the outstanding client base so we can keep a healthy operation and we keep selling the client base to third-party investors exactly as we do with prepayments.
Okay. Now very clear, Thiago. These loans that you're offering, I know it's only eight months, but are they fixed rates or are they variable rates?
They have fixed rates.
They have fixed rates, but your funding is variable, right? It's CDI + 4%. I think you showed that.
Yes, the duration is small.
Right.
We have a growth in the outstanding balance in the pace that you're seeing. We have pricing decisions every single day. We can adjust pricing based on cost of funding and NPLs on a very fast pace.
Right. No, perfect. When you talk about the 1.6%-2.1%, can you give us the evolution of the ratio, how it has been behaving? Was it closer to 1.6% and it is going up to 2.1%, or are we at midpoint?
Hi, Mario. Actually, when we look at the evolution of the credit solution, we have learned a lot and improved a lot our accuracy. If we look at older cohorts, we were lower than that. If we look at newer cohorts, we are closer to the top of the range. That's why we put a range there, because as the business is growing fast, we might see that vary a little bit. What I can tell you is that we are improving the learnings that we have, and we are getting better and more accurate in the credit scoring.
Okay. Thank you very much, guys.
Mario, just one additional comment. I would say that we are using ranges because when you have this COVID scenario that we have here in Brazil, and I think that you're seeing, it's very difficult to be precise in our expectation in the short to medium term. I would say that around 2% risk-adjusted return net of cost of funding is a very healthy level. We expect to really increase the client base as we increase our ability to sell this outstanding balance to third-party investors. We just did the first movement in the fourth quarter. We are now in the process of getting a new round between first quarter and second quarter this year. We expect to see a big increase in the credit outstanding balance given the client base we have.
Great. It was very clear. Thank you very much.
Thank you, Mario.
Our next question will come from Jeff Cantwell with Guggenheim Securities. Please go ahead.
Hey, thank you, and appreciate all the details you've given us in your prepared remarks. As you were talking about the revenue per hub client, the strategy really seems to be working. I was focusing on slide six, and there were a couple things there that stood out. The 34% of SMB clients are now using more than one financial solution, and the 5.3% of SMBs are now heavy users, and the unit economics are clearly strengthening. Can you talk some more about that? I know you have been, but the reason I ask is because it looks like a massive revenue pool, and you're about 3% penetrated at this point. It appears like there's a lot of work you can continue to do there and keep driving more products into your client base.
Maybe related to that, I was just curious what you think a non-COVID, a truly post-pandemic year might look like. Maybe thinking further out. It just seems to me like some of your payment clients might be maybe holding back on some of their own investments given all this macro uncertainty. I was hoping you could just give us your thoughts, thinking a little further out in terms of how revenue per client can trend from here. Thanks.
Hello, Jeff. Thiago here speaking. Jeff, I think to comment on the dynamics of the hubs. Let me say this. When we begun our operation, we were specialized in finding the right customers and get in touch with the owner of that merchant to do the sales process of a payment solution, and deliver the best-in-class service that we could build here in Brazil. We earned the trust of that client to talk about additional solutions. We built from the ground up the banking operation and the credit operation. We started to sell both banking and credit on separate avenues for our clients. We became confident in our ability to really replace the existing relationship that they have with incumbent banks. We decided to create a new platform, which we just launched, which is the ABC platform.
Through that platform, it's basically a matter of activating new products for the same client. We are increasing the convergence of our solutions because basically now we can sell to our clients based on payment or based on the banking activities, and we can upsell payments and credits for that same client. We are seeing that the level of engagement of the client is going up. We just disclosed the number of clients that now settle transactions from payment-related methods directly into our bank accounts. That's what is driving really the revenue per client up. Yes, there's a massive revenue opportunity for us to address while we keep improving our ability to have heavy users inside of our client base.
The goal is to have a massive part of our client base as heavy users, and we really want to replace the existing relationship that they have with incumbent banks. If it wasn't for the COVID, yes, I think that the revenue per clients would be a little bit bigger than what we are seeing here. Let me tell you that we are very happy to see the trends in take rates in the hubs, and we will continue to invest on these two fronts. We want to grow our client base as fast as we can, and at the same time, we'll keep investing to upsell solutions and to activate clients into banking and credit. Lia, do you want to add?
Yeah. Jeff, if I can just complement what Thiago mentioned. I think there's two very important trends to highlight here.
Number one, as we continue to migrate onto the ABC platform, this is something that we're advancing quickly now in 2021. 100% of new sales are already happening onto that platform. What it means is that a client may initially decide to use only acquiring solution, and for example, banking domicile, like Thiago mentioned, settling the receivables from acquiring into the Stone account. That may be the first step, right? Over time, this client will activate more and more features. Because all new onboardings are already happening onto the platform, this becomes a very strong avenue of growth, in terms of selling more beyond payment solutions. I wanted to just mention one aspect of your question related to the COVID dynamics of our merchants.
I think there's one behavior that happened last year when the crisis hit for the first time, is that we did see this mortality rate. Right? When you look at the evolution of our growth, you see that impact that happened when the crisis hit at that time. I think the clients, the merchants that we see and that are active today, are those merchants that were resilient and that overcame this crisis moment. We expected the level of that same impact to be much, much smaller. The merchants that are active now are much more resilient as an effect of what happened. I think a third important comment is we see a very important trend in consumers buying more online. We're very positive and we're very excited about the opportunities in continuing to grow small client base within Pagar.me.
I just wanted to make those highlights because I think they're very important.
Lia, just one more comment. Sorry. Jeff, just one more comment here. One dynamic which will be very important this year is the registry of receivables, because our credit product is based on data. In order to offer credit to our clients, we have to see usage in a data for a certain period of time, and then we are inclined to give credit based on the level of information we have and that steady flows of payments. Right? Once you have the registry receivable, and you have the open banking infrastructure of central bank evolving, then you can access information if your client gives you to give credit based on what they have in terms of volume in different payment methods, electronic payment methods. With the lock of receivable, you can replicate the same risk type of operation that you have from a payment client.
We expect to increase our ability to offer credit in the same level of risk that we offer today to our client base, and that should be very accretive for us. In the other hand, in order for us to do this, we have to increase our ability to sell the credit outstanding balance because we don't want to carry too much risk in our balance sheet. That's why we are executing on those two fronts, to have more access of data from our clients, and the register of receivable and open bank infrastructure help on that front. In the other hand, to sell the credit outstanding balance to the market to get funding to keep growing the balance that we have.
That makes perfect sense. Thank you for all the color. Appreciate it.
Thank you very much, Jeff.
Our next question will come from Victor Schabbel with Bradesco BBI. Please go ahead.
Good evening, everyone. Thank you for taking my question. I have only one simple question here. It's about the NPS. In the past, you guys brought to us a lot of information about the quality of customer service, bringing some data about the NPS of Stone and how good it was trending. In the last few quarters, we haven't been seeing anymore the NPS figures. I just wanted to check with you guys if you plan to bring it again to us, the reasons why not disclose the NPS, because this was, in our view, one important part of the investment case. Having a better or above peers customer service that we still believe that you guys have. Because of that, we just wanted to double-check why not disclose anymore the NPS figures. Thanks a lot.
Hi, Schabbel. Thank you very much for your question. A good question. No worries in terms of NPS. We are always increasing the level of disclosure to make everyone understand more the dynamics of the business. We are disclosing here the first quarter resolution rate and the level of service, they continue the same. Actually, we are now answering our clients' needs faster than we were before. The average waiting time on customer service was in the past around five to six seconds. In January and February, that decreased for 3.5 seconds. Actually, we are now adding more self-service type of relationship through the new platform with our clients. No worry regarding NPS. I think that as we said before, our commitment towards client satisfaction, our commitment towards serving the SMBs in Brazil, is the biggest commitment we have and keep focusing on that.
I think that the level of service that we offer to our clients continue to be the same, and we expect to have even happier clients when we have more products to them. No worries regarding NPS.
Okay, thank you guys.
Our next question will come from Jamie Friedman with Susquehanna. Please go ahead.
Hi. Thank you for taking my question. Lia, in your prepared remarks, you mentioned that you're buying in consolidating the Globo partnership. I was just wondering what the logic was in consolidating that now and if there's any financial implications that we should consider when we're trying to model that, Rafael?
Yeah. Thank you for the question. The logic we explained is we think that we will have much better return on this media allocation if we can look at the scope of this beyond just Ton. I think there's a lot of value to be created if we think more broadly within the group, within Stone, within Ton, within Pagar.me. That's a very important reason and rationale for this move. I think, Rafael, if you want to comment on the modeling.
Yeah. Lia, can I add some comments here? Thiago speaking. That's a great question. I think the first, I would like to say that when we see the growth of Ton, the improvement in unit economics that we have, we're very happy that now we own 100% of the business, and we can bring more synergies in the operation of Ton and Stone. I think that that was a very good movement. It's an accretive deal, and we are happy with that. The second is that, as Lia said, the main rationale here is to maximize return in capital allocation in media. By expanding this relationship to StoneCo, we can use that partnership for all the brands, both Stone, Ton and Pagar.me.
The way that we can manage investment through different channels, I think that maximize value for Stone, maximize value for Ton and for StoneCo too, and as well maximize value for Grupo Globo. We just flip up the shares in a market transaction, and we are very happy that now we can bring more synergies between Ton and Stone, with Ton being a product of Stone, and we can allocate capital in media with better returns. Those are the two rationales.
Jamie, Rafael here, just complementing to your question. We already consolidated Ton, right? You don't see any impact there in top line. You will see a different non-controlling interest in our net income as you don't have the minority stake there. As we mentioned in our release, you will see that we issued 1.3 million shares for that transaction, so that should increase a little bit our number of basic and diluted shares.
Got it, perfect. I'll drop back into the queue. Thank you very much.
Thank you.
Our next question will come from Neha Agarwala with HSBC. Please go ahead.
Good evening, everyone, and thank you for taking my question. Two quick questions. First, on credit book. You mentioned that you're going to grow the credit book very strongly this year. What is reasonable level that we should expect? We are currently at BRL 1.5 billion. Could you double or triple the size of the loan book in 2021? Also, if I understand, all the revenues from the credit book goes to your financial income. Would it be possible to strip down your financial income into what is from prepayment and what is from the credit operation, so that we have a better view of how the yields are evolving? My second question is on cost growth. You will continue to invest in your business by hiring more people.
Is most of the increase in the personnel already accounted for in your OpEx in the fourth quarter, or should we expect a bigger part of the hiring to be done in 2021? Are you also looking to open more hubs during this year? Thank you so much.
Thanks, Neha. Rafael here. Regarding your first part of the question, we still see opportunity to increase multiple times the credit portfolio, right, as we have mentioned previously. Despite being conservative in the credit disbursements, we think that there's a huge potential here, and we still see a big potential to increase that portfolio multiple times. In terms of revenue, our financial income is around 50% of our revenue when you look in our P&L. We don't break down the numbers there in credit and other types of financial income, especially because we manage the relationship of clients and on LTV basis, as we have mentioned in the past with the MDRs and prepayment. It's been accretive for revenue. We are managing this on a combined basis, take rates and LTV, and we should see that revenue increasing over time.
Despite that, when you look year-over-year, the transactional revenues grew even faster than the financial income. The business continues to grow overall. It's not sort of dependent on that revenue to grow. Regarding your third part of the question of the cost, as we mentioned in our release, we expect to increase our sales force and technology team by at least 60% this year. We have already started hiring in the first quarter. We are investing since the beginning of the year. We have learned in the past that we have to invest so we can accelerate along the year, and that's what we are doing. I would say that the cost should increase as our investments go within the year. Not a specific quarter that we invest more or less.
I forget I left a comment.
Any plans with the new hub?
Yes, Neha. Thiago here speaking. Thank you for the great questions. We will continue to grow our hub operation, both by having new locations and by creating density in the locations we are. In terms of the way we think about our strategy in pricing, we will always look to revenues per client. We are increasing revenue per client on our hub operation. The way that we manage our solutions in terms of monthly subscription, MDRs, the level of prepayment we use, and the level of credit used, they're two different products and two different operations. The margins in the credit product are a little bit bigger than the prepayment, but you have to manage in a way that it's best for your clients. You have to see segments, size, location. It's deferred.
What we are doing is we're maximizing pricing strategy in a way that we can drive more revenue per client without diminish NPS. If you try to push too much, take rates, you can have an impact on NPS and the perception of the client. I think that we are being very assertive in the way that we decide pricing based on many metrics that we decide once we make the onboarding of the client. Once our salespeople put all the data of the clients within our app, within 35 seconds and 40 seconds, we have to come back with a price based on the KPIs that we are seeing. The upsell that we do of products are based on the data and activation of the products we have.
The goal is to maximize revenue per client in a way that the client feels that it's the best way for them not to hurt the perception of service, not to hurt the NPS.
Thank you so much.
Thank you, Neha.
Our next question will come from Guilherme Grespan with J.P. Morgan. Please go ahead.
Hey, good evening, everyone. Thanks for opening for questions. Just two on my side. Just to refresh views in Pix, we have been now four months live on the initiative. From the data from the central bank, it seems that the traction on people to merchant is low. I want to confirm with you how the initiative has been impacting Stone, and get your refreshed views if you believe this is a risk either to the positive or to the negative in the short term. Just a second question on stock-based compensation. If you believe it's fair to assume this quarter, this BRL 40 million-BRL 50 million level per quarter as reasonable in 2021 given it increased a little bit in the last two to three quarters. Thank you.
Hi, Guilherme. Rafael here. I will start answering your second part of the question. Just to highlight that in this quarter, we had some effect of mark-to-market of our shares. When our shares increase, you have the taxes related to share-based compensation we have to mark them to market. You have a significant effect at this quarter. Going forward, so that's why going forward, we expect a little less than that. Of course, we still expect new grants and the share-based compensation to be there. We had that one-off effect in the fourth quarter.
Hi, Guilherme. Thiago here speaking, just adding some comments. When we think about share-based compensation, remember that before our IPO, we have reserved a pool to incentivize our partner here in the company, and we're still using that pool that we have reserved pre-IPO, and we still have space to incentivize young talent in the company. I think that we are doing well on that front, and that's why we adjust, as we said prior to our IPO. You continue to show all the adjustments on a separate note. Once we have the need to provide more share-based compensation that we have previously separated from the IPO, we will not adjust. You will see that in the P&L as a regular expense, right? That's what we have disclosed before. We continue with the same trend and with the same strategic direction that we said before.
The biggest change seen in the fourth quarter, as Rafael said, is about the mark to market in the tax part of the share-based compensation. In terms of Pix, that's a very great question, what we are seeing is that Pix is still not relevant yet in the payment methods in our merchant base. We see that Pix is gaining traction in terms of replacing wire transfer. When you compare Pix as a payment method from consumers to merchants, in our operation, it is still very mild. It's still 0.1% of the debit volume. We see net take rates of Pix actually better than the net take rates of the debit transaction.
We still have to see as the information that I can tell you is that by today, if you compare the volume of Pix to the volume of debit transaction, it's 0.1% in our client base.
Super clear. Thank you.
Thank you very much, Guilherme.
Once again, if you'd like to ask a question, please press star then one. Our next question will come from Marco Calvi with Itaú BBA. Please go ahead.
Hi. Good evening, everyone. Just a quick question from my end. It was clear during the call the negative effect in revenues associated with the company focusing more on smaller clients in Pagar.me. Therefore, from my understanding, revenues in the prepayment from key accounts dropped materially. That being said, how does that reconcile with the TPV growth in the quarter? Of course, it was a very positive figure, but the growth pace was slightly below on a yearly basis compared to what we saw in the third quarter. Is it fair to say that from a client segmentation standpoint, that this lower growth in TPV came from key accounts? If so, what is the rationale behind it? Thank you.
Hi, Marco. Thiago here speaking. Let me try to answer your question. Let's focus on the Pagar.me operation. We gave you some information here in order for you to reconcile the dynamics. The overall TPV in Pagar.me grew 80% on a year-over-year comparison the fourth quarter. You can see that on a revenue perspective, the small business operation grew 94%, while the key accounts revenue decreased 10%, mainly because of the CDI impact. If you adjust the CDI impact, then you see almost the margin of the key accounts, they increased by 36% in the quarter, bringing the overall growth of Pagar.me net of cost of funding at 46%. You can see that yes, the growth in terms of TPV in the small business are considerably higher than the growth of TPV in the key accounts.
What we are changing, the way that we address key accounts needs here is that we don't want to have more of those type of relationship based on payments only, where clients are creating competition and beating four or five different players at the same time for a commodity type of payment relationship. We really want to have deep relationship based on the quality or ability to have better conversion rates, our ability to provide chargeback disputes, the fraud prevention. We are now moving our banking as a service operation for some of our key accounts. We have customized relationship based on revenue and not only based on volume. Yeah, there was a decrease in terms of growth in the key accounts of Pagar.me . That key account operation brings volatility to top line.
When you have top line adjusted by the cost of fund, you decrease a lot the level of volatility, but there is no impact to the overall earnings of the company. That's why we decided to increase the level of disclosure to show how healthy the operation in Stone SMB and Stone micro merchant, the digital small business of Pagar.me , and the software operation, and show exactly the dynamics and the volatility that the key accounts brought in the Pagar.me operation. You can see the difference in take rates of both the small businesses and the key accounts compare to the average hub that I think that people know better. I think that with this level of disclosure, you can understand more the dynamic. When you have more share of wallet of some clients, when you have Coronavoucher volume, this dynamic changes, right?
Because of this type of volatility, we decided to increase disclosure so everybody can understand the trends.
Great. Very clear. Thank you.
Thank you very much, Marco.
This will conclude our question and answer session. I'd like to turn the conference back over to your host today for any closing remarks.
Hi, everyone. Thiago here. I would just like to say a big thank you for all our shareholders and the support they give to us, a big thank you to our team that has provided an amazing work this quarter. Let's continue to work every single day more towards our clients and see you next quarter. Thank you, everyone. Bye-bye.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.