Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the StoneCo Third Quarter 2020 Earnings Conference Call. By now, everyone should have access to our earnings release. The company also posted a presentation to go along with its call.
All material can be found at www.stone.co on 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 IFRS. Reconciliations of the company's non IFRS financial information to the IFRS financial information appear 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 any 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 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.
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 Marcelo Baldin, our CFO. On today's call, we will present our operational and financial results for the Q3 2020 and we will be available for Q and A after our prepared remarks. I will pass it over to Thiago so he can share with you the main highlights of our performance and discuss the strategic direction we are heading to. Thiago?
Thank you, Rafa, and thank you all for joining us today. Let me quickly share some thoughts here before we start this presentation. First, I would like to say that I'm very proud of our team that was able to adapt quickly to this new reality brought by the COVID-nineteen outbreak, never losing focus on the most important thing for us, our clients, our people and our results. This was the toughest quarter ever in terms of execution, and I think that the team surprised it again with an amazing work, both in terms of organic execution and strategic evolution. We run our business based on our strong culture with a team of entrepreneurs who aim to change our clients' reality with better products and superior services by having focus and a clear strategic direction, giving autonomy to this big pool of talents in whom we trust and implementing a robust management system focused on technology and execution, we were able to post a strong result in our core business while seeing powerful traction of new initiatives, such as banking, credit, software and toll.
These areas, which are currently different maturity stages in terms of their roadmap, enhances our ecosystem and are already contributing to our results. In fact, in the past 3 months, TPV growth accelerated more than 113% with strong net addition of clients and advancements on the penetration of new solutions, resulting in record TPV, revenue and adjusted net income for a single quarter in our history. Even though we are happy with our growth trajectory, we think that we are still far from our potential, and therefore, we will keep investing heavily on technology, team development and channel distribution as we see ourselves still in the early days of our business. We will keep running our business with a young, fast and small company mentality, where we are passionate about customers and obsessed about details, even though we already have some scale. We will continue betting operational leverage, disciplined capital allocation and people development.
Now moving to the presentation, I would like to start on Page 3 with some highlights. As we indicated in the last earnings call, the client base had a strong bounce back with more than 63,000 clients being added in the quarter, a number 26% higher than Q1 2020. Our strong performance across segments led to a record TPV growth in the quarter, with nearly BRL70 1,000,000,000 being processed by Stone, representing 114% annual growth. This includes over BRL20 1,000,000,000 in corona voucher, the government's temporary financial aid to mitigate the impact of the COVID-nineteen, which we process mainly through our Fintech as a Service strategy. When we exclude the corona voucher volumes, TPV growth accelerated, posting 48% in the quarter and 52% in September, taking us back to the pre COVID growth levels.
This strong volume was followed by a substantial monetization with an increasing quarter over quarter take rate of 1.76% when we exclude the direct impact of the corona vouchers and 1.30% for the reported take rate. The combination of high volumes with healthy take rates generated a record total revenue income of BRL934 million, representing a 46% growth when we exclude the other financial income, which is mainly yield on cash. Aiming to balance our long term growth and profitability, we increased investments in the quarter while experienced operating leverage, which brought our adjusted net margins back to pre COVID levels at nearly 31%, generating nearly BRL288 million in adjusted net income. Our brick and mortar SMB operation posted a sharp recovery with TPV growing 48% against the previous quarter and a strong penetration of additional financial solutions. We are quickly advancing in creating our complete financial platform to replace our clients' traditional banking relationships.
And in September, we reached more than 357,000 digital accounts, a 44% growth against last quarter. We also celebrated an important milestone in our credit product, which reached more than BRL1 1,000,000,000 of total outstanding balance, counting with healthy ROA and controlled delinquency rates. As we mentioned in the Q1 2020 earnings call, we are very well positioned to help our clients with the digitization trend, which accelerated this year. Our online CPV growth jumped to 5.70 5% this quarter with a combination of strong cohort economics from the digital SMB and our Fintech as a Service platform, which counted with a tailwind from CoronaValshi. On the software front, we reached more than 340,000 subscriber clients in the quarter with over 20% organic growth against last quarter.
In addition to that, in October, we invested in Quaster, an ERP for accounting offices and SMBs, which brings around 6,000 clients to our base and expands our ecosystem with ERP accounting capabilities. Regarding the Linx acquisition, Linx shareholders meeting to vote on our transaction is scheduled for November 17, and we are very confident we have the best proposal, bringing the best outcome for Link's clients, team and shareholders. So our solution for micro merchants increased its client base nearly 85% quarter over quarter, reaching 65,000 clients. It is important to remember here that we are reporting Ton's client base separately, and these clients are not accounted for in our active client base of 583,000 clients in acquiring. We are increasing investments in this new venture, aiming to have a complete platform to meet the needs of these specific clients with an outstanding service level, backed by technology and self-service.
With the strong growth pace in our core business and the accelerated ramp up of our new solutions, we have continued our hiring activity in Q4 2020, strengthening our team in several areas, including sales and technology. For that, we are happy to count with a vast talent tool brought by over 100 and 1,000 applications for the recruiter program this year, our largest recruiting process, which aims to find the best talent in Brazil to work in different areas of the company. Now let's move to Page 4. We are building 3 highly synergistic platforms under the Stoneco umbrella. The first is a financial platform for SMB, which we are building with the hubs, our ABC platform and our incredible customer service.
Here, we aim to replace merchants' existing relationship with their banks, offering a full financial services platform with local presence, the best customer service and an amazing user experience. The second is a Fintech as a Service platform, where everything we offer for SMBs as a product, we offer as a service in an open platform with simple APIs to digital clients, large accounts, marketplaces, wallets, sub acquirers and software partners. The third is a new strategic front, where we are building a full commerce platform available to merchants of all sizes, both for traditional retailers in the offline world who want to digitize their businesses and for digital native players who want to quickly scale their businesses based on our software platform. We believe that investment in Linx is the best foot forward in the 3rd asset. Although we see a lot of synergy between the platforms, they will have full independence with merchants being able to use them separately, integrated with 3rd party partners if they want or to choose our combined solutions with better value proposition.
As shown on Page 5, the company posted a V shaped recovery in the Q3, driven by continuing economic recovery and strong execution. Our overall TPV grew almost 114%, and even excluding Coronavalsia direct impact, we had higher growth levels than in the Q1 of the year. Also, when we exclude Corona Varsha's impact, we see the growth accelerating every month since April from 9% to more than 52% in September. This robust growth is reflected in our record quarterly total revenue and income and adjusted net income with margins bouncing back to 31%, a level that enable us to continue to invest heavily on growth. Now with that said, I will pass it over to Lia so she can discuss our strategic evolution and key priorities.
Lia?
Thanks, Thiago, and good evening, everyone. Thanks for joining us today. Let me start with the evolution of our financial platform for SMBs on Page 6. Our client base is back to a healthy growth level, even excluding PON, with 26% more net adds when compared to the Q1 of 2020. Looking at TPV, our growth was not only higher than in the Q1, but also accelerated every month from April to September when it reached 52%.
As Thiago mentioned, we continue to foster a long term relationship with our brick and mortar SMB clients, helping them to manage their business and sell more. For that, we recently began to scale our new financial solutions. The graph on the right side of the page shows that the percentage of clients using more than payments jumped from 12% in January to 27% in September by either taking credit, being an active user of our digital banking account or both. The successful penetration of new solutions is driving a positive impact in monetization. And despite the COVID effects, we are seeing take rates in the hubs going up again.
We see plenty of opportunities to upsell our new solutions to SMB clients by offering the best customer service and simple intuitive products at fair prices. As we show on Page 7, a huge step forward in this direction will be the full launch of our ABC platform in the Q4 when we expect to migrate all our SMB clients to the platform. With this, our clients will have access to a comprehensive set of financial services through a single integrated experience, including all payment methods, prepayments, credit, wire transfers, bolero issues and bill payments, prepaid cards, payment links and a virtual shop. We will also enable our clients to accept fixed transactions directly on the POS using a dynamic QR code, bringing more security and convenience to retailers. Moving to Page 8, we show our banking platform's fast ramp up with the number of digital accounts jumping to 357,000 clients, nearly 3 times more than in the Q1, including over 88,000 merchants receiving their sales directly into a Stone Digital account.
In addition, due to a combination of the high engagement of digital banking clients and the initial strong traction of our FinTech as a service platform, the number of transactions increased eightfold with revenues jumping approximately 3 70% in the quarter when compared to the 2nd quarter. Slide 9 shows the evolution of our credit solution, which achieved a significant milestone last quarter, surpassing over BRL1 1,000,000,000 in total outstanding volume. More than 73,000 merchants now use these working capital loans, which they seamlessly pay by deducting a small percentage of their sales every day. Our product remains fairly conservative with a small duration of 7 months and an average ticket for new loans of BRL19000, the equivalent of roughly a month of their TPV, we remain very focused on balancing risk and profitability, which is reflected in our relatively stable ROA and low expected losses despite the COVID impact. We see a huge opportunity ahead of us, and we will leverage our distribution and proprietary credit scoring model to continue to serve merchants with our working capital solutions.
Also, as we have already indicated, in the coming months, this operation will start to be funded with 3rd party capital through a FIDB structure, which will allow us to limit our credit exposure while maintaining good economics. Moving on to Page 10, we show the traction of our TON initiative, our new venture to serve micro merchants and autonomous workers. In the 3rd quarter, we reaccelerated investments in marketing campaigns for the product, and we saw the client base grow nearly 85% quarter over quarter, reaching 65,000 clients at the end of September. The compound monthly growth rate for TPZ from April to September was 40%, which shows the product's strong initial traction. Now I want to talk a little bit about the evolution of our Cintiq as a service business.
In Page 11, we illustrate the current and future capabilities of our platform and how we serve different types of clients offering financial services according to their business model needs. First, let's talk about the digital SMBs. Here, we enable payments as a feature embedded in commerce platform. With a very easy setup, clients can start selling with complete abstraction of the complexity of managing online payments. Secondly, we serve more digitally mature merchants that look for increased conversion rates through a direct integration with our platform and need the ability to customize the functionalities according to their needs.
Through our APIs, it is easy for them to connect and the features of our platform such as authorization retrial, split payments, prepayments, chargeback disputes, reconciliation, anti fraud and analytics. The combination of the capabilities of our platform enables such large clients to greatly streamline the way they manage their financial service operations, improving their productivity. Lastly, we enable tech companies such as marketplaces, sub acquirers, wallets and fintechs in general to provide financial services to their own clients as part of their product offering in a white label manner, such as a branded POS device, a white label digital account, prepayment services to their clients, among other services, which can all be achieved through simple API integrations. The capabilities of our platform result in improved conversion rates, high availability and a complete suite of services, which simply put, lead to increase in our clients' sales and success. We continue to work hard in evolving our platform to serve the evolving needs of our clients.
On Page 12, we show some highlights of the results of our Fintech as a Service business. Our online TPV jumped nearly 5 75% in the quarter, growing 4x more than the previous quarter. It was a powerful contribution from CoronaVoucher volumes processed through our platform for different integrated partners such as wallets and subacquirers. However, even excluding the government programs impact, volumes grew about 76% in the quarter, 4 times more than the growth experienced in the Q1 of 2020. As we have just indicated, our digital solutions are not exclusive for large or more digitally mature players.
Our platform also offers simple features to connect smallecommerce, social sellers and brick and mortar SMB clients to the digital world. As the graph on the right side of the page show, our digital SMB cohorts represent high revenue retention, which speak to the power of our business model, allowing us to grow as our clients grow and mature. On Page 13, we show our evolution in software. As you can see, in the Q3, we had strong fully organic growth in our software client base, which increased more than 20% when compared to the previous quarter, reaching over 340,000 subscribed clients. We remain focused on helping our merchants digitalize their business.
For instance, the number of posts in our social media management solution and labs grew more than 160% in just 1 year, reaching over 50,000,000,000 post impressions through the platform per month. Lastly, on top of the organic growth, we're happy to welcome a new company to our ecosystem, bringing new solutions and more entrepreneurs. Questor is an ERP for accounting offices and SMBs. Their accounting clients serve more than 450,000 businesses across the whole country and process 1,500,000 individual paychecks monthly. With this strategic update, I will pass it over to Rafael, who will discuss our financial results in detail.
Rafael?
Thank you, Lia. Starting with Slide 14, we present our top line evolution in the quarter. We reached 583,000 clients excluding Ton, mainly due to the strong performance in the hubs. With our bricks and mortar SMB operations showing promising trends and additional investments to grow, we do expect to keep a strong net addition of clients at the end of the year despite the seasonal effects accelerating into 2021. Our TPV grew 114% in the Q3 2020 compared to last year, reaching BRL69.7 billion.
There is a significant contribution of BRL21.6 billion here of corona voucher volumes. Corona voucher is a government financial aid program targeting the most vulnerable part of the population as autonomous and informal workers and people without income. Those individuals receive the amount in a prepaid card and many of them use the cards to transfer money to different digital wallets and to buy goods. So when those digital wallets use Stone's Fintech as a Service platform to process the cash in transactions, we capture the related TPV. If we consider only volumes apart from corona voucher, TPV was BRL48.1 billion in the quarter, nearly 20% higher than our highest historical quarterly TPV, which had been reached in the Q4 of 2019, a seasonally stronger quarter.
Total revenue and income was BRL934 million in the 3rd quarter, a 39% increase year on year. Excluding other financial income, which mainly comprises interest on cash, total revenue and income grew 45.5 percent year over year. As shown in Slide 15, the massive TPV brought by the coronavirus led to a reported take rate of 1.3% in the quarter. However, the take rate in the hubs continued to increase, contributing an additional 4 basis points in the take rate this quarter, resulting in a 1.76% take rate excluding the effect of corona voucher volumes, a 2 basis points increase from last quarter comparable metric. Moving to slide 16, we show our consolidated P and L and on slide 17, the evolution of our operating leverage and profitability.
This quarter, we experienced a significant increase in operating leverage, reaching record adjusted net income of BRL287.9 million. In addition to the usual adjustments in net income related mainly to the share based compensation program launched at the IPO, this quarter we included a BRL13.5 million effect related to LINKS M and A expenses and present value adjustments related to earn out of companies we have invested in. Our operating costs and expenses decreased by nearly 12 percentage points from last quarter, representing 48.6 percent of our total revenue and income. Financial expenses declined from 9.4% to 6.9% of total revenue and income, mainly as a result of the lower base interest rate and higher efficiency. This combination resulted in a sharp increase in our adjusted net margin which went from 22.5% last quarter to 30.8% this quarter, and our adjusted pretax margin, which recovered from 29.9% in the previous quarter to 45.2% this quarter.
Now going over in more detail to each P and L item, our cost of services reached BRL 208.1 million or 22.3 percent of total revenue and income in the quarter, increasing 5.5 percentage points when compared to last year. The increase was mainly due to higher provisions and losses, which does not include provisions for delinquency related to our credit product, significant investments in technology and customer service, higher card grant fees and variable compensation. Compared to previous quarter, cost of services as a percentage of revenue decreased 7.5 percentage points, primarily because of a lower depreciation expenses due to a change in the POS depreciation period from 3 years with a residual value of 30% to 5 years with no residual value, lower provisions and losses, gains of scale in transaction costs and lower brand fees. Administrative expenses were BRL106.2 million or 11.4 percent of total revenue and income, 0.8 percentage points higher than the prior year period, mostly due to higher third party services and higher personnel expenses. Selling expenses were BRL139.5 million in the quarter, an increase of 37.3% versus last year, mainly due to higher investments in ton and variable compensation.
Compared to last quarter, the line presented a 2.2 percentage points operating leverage, mostly explained by a lower average number of salespeople and severance costs accounted for in the Q2 of 2020, which were partially compensated by higher marketing investments in Tono. Financial expenses were R64.7 million dollars a decrease of 36.1 percent compared to the Q3 of 2019, mainly due to the lower CDI rate, which more than compensated for the significantly higher volumes in the quarter. And finally, on Slide 18, we show our adjusted free cash flow, which was BRL288.6 million in the 3rd quarter or 7 times our Q3 'nineteen figure, mainly driven by a higher adjusted net income and better working capital. With that said, operator, please open the call up to questions.
Our first question comes from Tito Liberta with Goldman Sachs. Please go ahead.
Hi, good evening. Thank you for the call. A couple of questions. I guess first on the Lynx, just to get the latest update. And you announced this morning that you eliminated the breakup fee and you increased the bid a little bit.
If you can just tell us kind of the rationale for that and kind of what's the latest that you're hearing from CASA? Do you still expect to hear from them in November? And then on the second question, very strong growth on the TPV, obviously. But how do we think about that TPV, I guess, once the corona voucher goes away? So should we think of it sort of excluding that?
Like when does that go away? Do you think that after 4Q, then TPV should decline back to ex corona voucher levels? And following up on that, if we think about the margin expansion we saw this quarter, like how much of that was related to the corona voucher? Like without the corona voucher, what would your net margin have been like? Thank you.
Hi, Tito. Thiago here. Thank you very much for your question. So I will start here with the LINKS update. So as you said, we did 2 updates this morning, working together with the Board of Linx and independent board members of Linx.
So we decided to waive the breakup fee in the shareholder meeting that will take place on November 17 and increase the bid by $0.50 And the main reason here is that, although we know that the breakup feeds are valid and legal instruments, and we have discussed it proactively with CVM about this, we saw the opinions of P3, which is the regulated of Brazilian market about the Novo Mercado rules. And we respect the opinion of B3 and decided to waive all the fines related to or the break of fee related to the shareholder meeting of November 2017. And we think that this will be very well received from Link's shareholders. And regarding the bids, we think that we already had many discussions about the process. But now we would like to turn our focus into clients, team and the roadmap of technology and projects that we have to create.
And in that sense, we decided to give an incentive for the meeting to take place on November 17. And we make sure that we have the best proposal in the table, both for clients, the team, for shareholders. So we are very, very confident in order to make sure that we can conclude the process and focus on product, technology and team, we decided to put this incentive at this time. So those are the reasons for the updates that we did. Regarding growth, it's difficult to talk about COVID volume, Tito, because mainly here we depend on the government's ability to give corona voucher for the population.
And we noticed that now the volumes of Coronavirus will decrease from BRL600 to BRL300 for the Q4. And we still depend on the share of wallet of our integrated partners inside the Coronavirus volume. So it's very difficult to say what will be the volumes. But when you see the TPV excluding corona voucher volumes, we still expect to keep accelerating our growth in terms of TPV for Q4. So we are very happy with the growth levels that we have and we will continue to invest heavily on our growth in the hubs and in the Fintech as a service platform that we have built.
I think that regarding margin expansions, I will pass it over to Rafa.
Hi, Tito. Rafael here. Thank you for the question. So when we look at the coronavirus volumes that we had in the Q3, it's accretive, right, for our revenue and it's positive for our P and L. It's not a big, big amount.
So we do have when we look to the 4th quarter, you have an effect of in the Q3, we still have some effect of COVID, right, because some lower sales were accompanying the hubs versus what they could be. And when we look at the Q4, I think that you should have less of the corona virtual volumes, but also more recovery from COVID. So we don't see our margins being impacted because of lower corona voucher volumes. In the short term, they shouldn't change much. So that's what we are seeing here in terms of margins.
Okay, great. Thanks, Thiago and Rafael. Just two quick follow ups. First on the links, in terms of the sorry, I think I was struck there. On the ruling from Calle, do you expect that still to happen in November?
And then following up on the margin, so that means so we should think of margin as your net margin as a recurring margin going forward and perhaps there's some upside as you continue to grow?
It's Thiago here back again. I think that regarding LINKS, we have to wait for the analysis of CADE. We are not worried actually about the analysis of CADE because we think that we have a complementary solution with financial products and software products that will increase the value proposition for clients. And as we said, our platform, they always operate independently and the client has the ability to choose what are the partners that they want to use integrated. So we do not expect an impact from the CAGNY analysis of the deal.
I think that the deal is accretive for clients and will be very well received for everyone. I think that this process should take around 3 to 4 months. That's the time line that we are working here. And during this period, we will be planning the integration and all the projects that we can create together, respecting the rules and the guidance of CAGI. Regarding margins, C2, we like this level of margins that we have, but we are always pursuing better avenues of growth in which we can deploy our capital, both in terms of OpEx and CapEx.
So if we see a way to increase the growth and if we have to give away some margins to increase growth, we will gladly do it. We have our minds focused on the growth. We think that our opportunities ahead are very big, both in terms of the whole financial platform and the Fintech as a Service and the software one. So we think that we have healthy levels of margins. We always talked about around 30% margins.
But once we have a new avenue of growth that we can deploy more energy, we will gladly do it. So that's the main rationale here.
Our next question comes from Craig Maurer with Autonomous Research. Please go ahead.
Yes, hi. Thanks for taking the questions. First, could you repeat quickly the number that you gave regarding corona voucher expectations for Q4 in terms of TPV? Secondly, I assume you're wrapping up the work on your FADIQ funding structure for credit. And we know that the credit opportunity is more than 4x that in terms of revenue of the acquiring business.
So how quickly do you think you can attack the SMB market displacing the bank creditors that are already in place with those merchants?
Hi, Craig. Thiago here. Thank you for the great questions. About the COVID, the coronavirus numbers that I just said, so in the Q3, the amounts that the government keys to the population was BRL300 BRL600 per elected person and there's a rule of the elected person. And now this amount is BRL300 per elected person.
So that's the change that happened in the government's financial aid. So that's the first question. And about the physics structure and how fast we can grow in credits, I think that you are looking to the right direction. The reason why we are accelerating our process of selling the credit outstanding balance to 3rd party capital locator is to increase the speed in which we penetrate credit in the SMB operation. We are in the final stages of this process here, both to our own outstanding credit balance and the process of raising capital of the BNDES as we have talked about this.
So we seek to raise in the next month something around BRL900 to BRL1 billion in additional volume to credit that we will deploy over time. So we will be very aggressive and fast in terms of scaling the credit product because this creates a lot of value to our clients. So the feedback that we are receiving from the clients are very good. So we will increase the speed in which we can penetrate the credit in our client base.
Our next question comes from Mariana Padayo with UBS. Please go ahead.
Hello. Good evening, everyone. Congrats on the results. My question is on the pace of net adds that was quite strong this quarter.
Could you share with us the
main reasons for that? Have you resumed the hub openings? Or was it a reflection of increased productivity with sales people returning to the hubs? How is the competitive pressure in the SME segment? Can we expect you to keep the same pace on coming quarters?
Thank you.
Hello, Mariana. Thiago here. Thank you for the question. Regarding the pace of net adds, there's 2 factors here. 1 is we are improving productivity in the hubs, as we said.
So during the COVID outbreak, we learned how to improve productivity by changing processes and investing more in our technology in terms of operation. So I think that now we have a better team and we have a better operation and that give better productivity levels to our sales force. We are back at the hiring process. So we are hiring our team as fast as we can. We are now further penetrating people in the hubs that we already have.
So we have more operational leverage in terms of our growth. And the big surprise was the control in terms of churn that we have this quarter. So we decreased churn levels considerably when we compare churn levels this quarter against the last quarter. And that's the 2 combined effects give us the strong net adds. We expect net adds to work as you can see in last year that in the Q3 and Q4, we have kind of the same level of net adds.
So expect to keep this trend because of seasonality that happens in Q4, but we will grow aggressively the net adds space throughout 2021 as was the plan for 2020. So we still have a lot of room to grow net ads. We think that next year, we will be able to increase sales force around 60% or more. So we are deploying capital and energy to grow our hub operation as fast as we can. And we still have a lot of room to grow in Brazil with our own distribution.
So 2021, I think that we will have great results in terms of increasing the pace of net adds.
That's clear. Thank you.
Thank you, Marianna. I would just take the second question actually that you made about the competitive pressure. We are not seeing competitive pressure being harder than it was before. I think that now the market is much more stable in terms of competition and prices. And I think that we are not in the level of competitive pressure that we had in Q4 next year, Q1 this year.
I think now the market is much more rational and stable, so we are not seeing any additional pressure in terms of competition.
Thanks.
Our next question comes from Rayna Kumar with Evercore ISI. Please go ahead.
Hi, this is Josh Siegal calling on behalf of Raynett Lamar. So I know you guys have talked in the past about the synergy possibilities of Linx. So are there any immediate or near term synergies you hope to generate?
And if
so, can you provide some color on these opportunities?
Hi, Josh. Leah here. Thank you for the question. So as we've mentioned before, this is really a scope transaction. So we see a lot of strategic complementarity in this acquisition.
And we see really 3 value generation avenues. So the first one is our ability to penetrate the base of Linx clients with financial services, mainly acquiring and transactional banking services by integrating to our fintech as service platform. The second is really to combine Linx's powerful set of digital assets and our FinTech as a service platform to offer the ability of linked clients to go digital and have this real omnichannel experience by being able to sell not only in the physical store, but also in digital channels such as marketplaces, their own commerce websites or social commerce. And the 3rd value generation avenue is what we think is a little bit more long term, which is our ability to streamline and simplify the solutions that Linx has developed for different verticals and bring those down to SMBs and to really develop this powerful distribution model for SMBs in software, built upon the same concepts that we did, with hub distribution. So I think those are the 3 value creation avenues.
Of course, the first one is more of a shorter term time horizon and the second and the third are a bit more medium to long term time horizons.
Great. Thank you very much. And can you help us quantify the negative impact on take rate in 4Q from corona vouchers and the seasonally debit heavy mix?
Hi, Josh. Rafael here. Yes, we have shown in our presentation the effect on Slide 15. It was around 46 bps of negative impact of corona voucher volumes. You had a smaller debit mix effect.
When you look at debit mix and the other effect is 2 bps, and we have a 4 bps positive impact from the increase in take rates from the hub. So that's the effect. We have decided to break it down of the magnitude of it. And so analysts and investors can understand how is the logic between the two volumes, right?
Great. And finally, given that your marketing has become more efficient for tone, do you plan on expanding that marketing in 4Q?
Yes. So, yes, so what we did, we started investing in marketing in TON. And just after we launched the solution on March 1, we had to step back a little bit because of COVID impacts. And then we resumed those investments in marketing. So we are very careful.
We're doing in different phases, but we are increasing slightly the marketing investments as we have the unit economics improving, and we learn the CAC equation of that market. So as you can see, the solution is gaining more and more traction. And as it gains more traction and we see the unit economics works well, we will invest more in marketing expenses.
Great. Thank you very much.
Thank you.
Our next question comes from Jamie Friedman with Susquehanna. Please go ahead.
Hi, thank you. Congratulations on the results. I'll just ask my 2 upfront and they're both in reference to the slide deck. So, Leah, in Slide 7, you had discussed the broader rollout of the dashboard and platform. I'm just wondering what do you anticipate as the potential penetration for that?
You used to give a metric about the, I think, the number of cross sells or the number of products that each client took. So is this part of that? That's the first one, that's Slide 7. And then on Slide 15, yes, I can't so maybe for Rafa, what just why is it that the corona voucher is dilutive to the margin? Is that just a 0 take rate like gateway type product?
So the first on Slide 7, the second on Slide 15. Thank you.
Sure. So Jaime, let me take the ABC question and then Rafa will take the next one. So regarding the launch of our ABC platform, like we've said before, we started this year piloting this integrated solution. And the way to think about this is the following. Once a client on board onto the platform, there is this whole set of features and functionalities that the clients can choose to use, right?
And we've worked very, very hard in making sure that this solution is well fit for the clients, that they like it and that they use it and the onboarding and operational process is seamless. We are ready for that rollout, so which is why we are on track to really fully deploy the ABC platform to all clients in the Q4. What this means is, we will migrate all of our clients in the hubs to this platform and all of new onboardings of new clients that we onboard into Stone, they will already onboard onto the platform. So we have disclosed this number, of the penetration, where, those clients they use a combination of those solutions within the ABC platform. Of course, once a client onboards, they can choose if they want to use just banking, acquiring or banking, acquiring and credit.
Over time, we work hard to also upsell solutions to the same clients. So that's kind of how to think about penetration, right? Over time, we will penetrate the number of features that clients use within the platform, and we will make sure that 100 percent of our clients are onboarded onto that platform.
Yes, just to compliment on that, there is a great information here that we are already seeing in the clients that are using our payment solution and then to settle transaction into their Stone bank accounts and they use the prepaid card as a cash out methods and they pay some bills and do some wire transfer through the platform. So when they use the whole cycle of the product from the payments to the bank account to the credit card and paying some bills, we are now seeing a little bit more than 2x take rates on those clients when you compare to the clients that use only the regular payment solution. So it's incredible to see how they become more stickiness. So the churn decrease on the use all the solutions and the credit solution too. And you have the NPS going up and take rates a little bit more than double the take rates that you have only on the banking platform.
So that's for us is a big win win. So we are very happy to see the dynamics.
Hi, Jamie. Rafael here. Going to your second part of the question on Slide 16. So we the corona voucher volumes, they are more similar to debit volumes. The take rate here is lower than debit because most of those volumes, they come through partners in our FinTech as a Service platform.
And because they're larger partners, usually the take rate is lower. But those volumes, they are accretive for us in bottom and top line. So that's an interesting demonstration of how our Fintech as a service platform can work and deal with big volumes. But and despite lower take rates, it's accretive in dollar amounts for the company. So that's why you see that big effect here is because of the nature of those volumes.
Got it.
Thank you, both. Thank you. So to complement, just to complement, so Corona Varsha is not a gateway type of transaction, it's an acquiring type of transaction, but the economics is comparable to the debit economics. That's why it's dilute a little bit the take rate, but it's very accretive for us. And it's important to highlight that we only disclose TPV of acquiring product.
So we have more TPV of that because we have the gateways, but here all the TPV that you're seeing, it's all acquiring TPV.
Got it. Thank you all. All the best.
Thank you, Jamie. Thank you, Jamie. Our next question comes from Jeff Cantwell with Guggenheim Securities. Please go ahead.
Hey, thank you
for taking my question. And this is a very thorough presentation. You also gave us a lot of detail on your prepared remarks today, so thank you for that as well. I want to circle back. Can you tell us about what you saw in terms of your net adds this quarter?
It certainly seems like the pace of recovery is happening very quickly for you. So maybe could you comment a little more on that and tell us about what's driving that? And maybe which industry those ads are coming from? Is it specific to an industry? Is it more broad based across many industry verticals?
And then can you also help us think about how sustainable the menhards are going forward? Any color there would be great. To us, it seems like you have 60% of your hubs personnel back right now. So just curious about the timing of when you think that can get back to 100% and how that might impact the number of net adds from here. So appreciate any comments there.
Thanks so much.
Hello, Jeff. Thiago here. So regarding net adds, we have really 2 effects here that is driving this base of net adds, which is increasing productivity, and we are decreasing churn levels with the company. So that's why we have this level. We have now 60%, as we said, of the hub personnel back at the streets around Brazil.
We are not concentrated in any type of industry or location. The net adds coming from the whole regions that we are present across Brazil. And we expect that by the end of this year, by the end of the Q4, we will be back at the peak in terms of number of people in our sales force that we had prior to the COVID effect. And we will grow very fast our hub team throughout 2021. As I said, I think that we will have at least 60% more people in our sales force as we have now with the same powerful economics that we have.
So it's interesting to see that as we deploy more energy and capital in growing the hubs, we keep the same level of cost of acquisition and lifetime value of the clients And we seek to drive lifetime value up once we penetrate credit, banking, the prepaid cards and the whole solution of the ABC platform that we are now rolling out. And we expect to have 100% of our clients rolled out to this new solution until the end of Q4. So we expect to increase considerably the pace of net adds throughout 2021. That's where we are driving the company and the energy that we are putting here.
Okay, great. Appreciate all the color there. And then appreciate all your disclosures on FinTech as a service. Can you maybe help us understand how does driving your merchant platform and help us understand what those economics look like? Perhaps there's more durable customers, are they secure?
What types of products are they interested in? Meaning, are those ABC customers? I just want to I guess, I just want to understand how that piece of the strategy is enhancing the mix or enhancing the revenue opportunity
that you
have as a company? Thanks very much.
Sure, Jeff. I'm going to start here talking a little bit about how we see the FinTech as a Service strategy. So first of all, we disclosed a little bit on the presentation how we serve clients, right? And the way that you can think about the behavior of those clients onto the platform is when we talk about the SMBs, right? The SMBs, they need a very streamlined way to accept payments in their e commerce operations.
And our platform provides that, right? And when you saw the cohorts that we displayed, what you see is that we as we onboard clients and that they mature on their digital operations, we grow as our clients grow. So that's why we see such powerful cohort economics. When we talk about larger clients, what we're speaking of is more of the capabilities of the platform to serve to all of their business model needs. And we see this opportunity in 2 ways, right?
First is that digitization trend that we are seeing now that was greatly accelerated due to COVID. We don't think it's a COVID specific effect. We think that COVID actually accelerated a trend that was already happening in Brazil. So now more and more consumers are looking to buy online. And as more consumers are looking to buy online, you will have more and more different players trying to establish their own line operations.
So merchants will want to sell not only on the physical store, but also on online channels, be it marketplaces, their own e commerce websites or social commerce. And that trend is for sure will continue and it will be strong. So that's the first big avenue of growth that we see ahead of us and we see it as a very exciting avenue of growth. The second is beyond retail itself, this trend of many different business models wanting to embed the Fintech strategy within their strategy is also a trend that we're seeing very strongly. So not only retailers looking to go beyond the physical store and going online or digitally native retailers establishing their digital operations.
There are many different business models that want to embed financial services in their offerings. And we see these 2 very strong trends happening ahead of us, and we're very excited about that. When you think about economics, overall take rates here, when you think of an SMB client, overall take rates are higher because you see more of a relevance of credit volumes and also installments and higher duration, right? So overall, you see this on a comparable volume basis between brick and mortar and these types of clients, take rates tend to be higher.
Lia, can I give my 2¢ here? Sure. About the Fintech as a Service Platform. So regarding the SMBs, in terms of distribution channels, we have really 3 avenues here. So we have our lead generation that brings clients to our inbound team that close the sale by the phone.
It's a direct distribution. We have self-service clients that goes to our website because the brand is very well recognized in Brazil and they take the product in a self-service mentality. And we have partnerships with e commerce platform in which they helped us to distribute our financial solutions to their client base and we have a partnership with them that works pretty well. And we have several partnerships with e commerce platforms here in Brazil. And in the SMB, what's interesting to see is actually this market, the online SMB, this market is growing a lot.
So each day more, you have more digital native clients, clients starting. Those clients the unit economics are very powerful because as time goes by, you have more revenue per client because they grow and you grow alongside with them. And the take rates in the digital area is bigger than the take rates in the hub. So that's very promising. We didn't started to offer credit product to the SMB clients in the digital space yet, but we are piloting now.
So we are seeing the whole economics of the credit in the SMB clients in digital, and we expect to roll out the credit solution for them soon. When we talk about the big integrated partners and wallets marketplaces and all the big players that want to use our solutions on a white label manner, Here, we still have a very, very big potential because we built our solution based on modules. So they have many type of features that they use to increase conversion rates to manage chargeback disputes, anti fraud solutions, split payments and split settlements because you can split the transactions in 2 payment methods or you can take 1 transaction in split in 2 different settlements and prepay separately. So there are many functionalities that we built to serve them. And I think that by the credibility that we have built with our partners, I think they're now being trusted to use our banking as a service too.
So we can help them with white label accounts in order for them to offer white transfer, bullet to payments, bullet to issuance and all the banking solutions to their clients using us as a white label manner. And I think that soon, we will be able to offer credit as a service for them too in terms of credit scoring, collections and all the functionalities that helped us to have the strong economics that we have in the Hut. So we will be able to disclose to them part of that as a service too. So we really believe in the growth avenue of the FinTech as a Service strategy. We decided to integrate our gateway PSP and core platforms into one single team.
And I think that now our solutions are even stronger and the market is growing fast because of the COVID trend and the digitization in Brazil. So I'm very excited with this
opportunity. Okay, that's great. Thanks very much and congrats on the results.
Thanks, Jeff.
Thank you, Jeff.
Our next question comes from Mario Pierry with Bank of America. Please go ahead.
Hello, everybody. Congratulations on your results. I have two questions. First one is on TORM. You're showing very strong growth.
But I was wondering if you are planning on providing financials for us on TORM anytime soon. When do you expect TORM to breakeven? Just so that we can monitor how the performance has been going, right? Because the growth seems very good, but I was just wondering how is TORM performing based on your expectations? And my second question is related to all the regulatory changes taking place in Brazil with fixed becoming operational now in November.
We have the receivables platform as well. Can you just remind us of your expectations from all these regulatory changes, how they should be impacting your business? Thank you.
Hi, Mario. Rafael here. Thank you for the question. Yes, as you mentioned, Tongue is getting more traction now. I think that's still very small compared to the overall size of the company.
I think when it gets more representative, we'll provide more details or breakdown. And just a reminder here that Tono is contributing negatively to the bottom line at this moment. So we do have investments in that solution in our P and L, but still very small. So we have 65 1,000 active clients in the Q3. Of course, the average TPV here is much smaller than the F and E space, as you can see by other players in the market.
So as it gets more relevant, we'll provide you more detail. Regarding your second question, Lee will take it. So, Lee, thank you.
Hi, Mario. So I'm going to start talking about the registered receivables, and then I'll talk a little bit about peaks. So first, as we've said before, right, the way that we see this regulatory evolution is that this opens up a vast opportunity for us in terms of addressable markets for prepayment and credit because we will be able to offer our clients prepayment and credit based on their full receivables agenda, right? And in terms of our business model and how we plan to capture this opportunity, I think there's 2 things. First of all, we really believe that owning distribution will be a big differentiating factor because once we obtain our clients' consent, be it through our customer relationship team, our distribution team or even digitally through the platform, we will be able to offer them these products in the same way that we do today, but looking at a much higher addressable market, right?
So our product is ready to do that. Our business model is really fit for this opportunity. Operationally speaking, we don't know yet. The expectation is that it will go live soon, right, on November 3. And we will be ready once it goes live on November 3.
So our team is working very hard, and we are fully ready for that go live. Talking a little bit about peaks, I think the way that we see peaks is the following. So peaks has 3 main use cases, right? The first is the use case regarding substituting riot transfers, the second is alternative to debit transaction and the third is alternative to boletas, right? When PIX goes live, it's more likely to substitute users cases regarding wire transfers and debit transactions, and we see this opportunity in 2 main ways.
When you look at our SMB clients, we will enable our clients to accept PIX as a payment method directly in their POS machine through a dynamic QR code, which for them is greatly improves the transaction security, right? And this will be a very simple and streamlined process, because they can a simple setup within minutes in the POS machine or in the ABC dashboard, they can be ready to accept payments, picks as a form of payments. And we will reconcile this as a form of payment just like we do with credit and debit and all of the other payment methods. So we will enable our clients to accept PIX. And on the other hand, we see an opportunity in the context of our FinTech as a service strategy to offer PIX transactional services for indirect players in the market, given that we are a direct player with directly integrated to the Central Bank infrastructure.
Regarding the economics, we will apply market rates, but we believe that the economics in these transactions will be preserved according to whatever the use case is. So we believe that the economics will be preserved, and we will apply exactly whatever the market rates turn out to be.
Mario, can I add some topics here very quickly? So about the registry of receivable, the direction of the central banks that everyone should be ready on November 3, right? So we are ready. So we will be 100% ready for what the Central Bank has asked everyone. So but we are seeing that some players may not be ready.
There's some discussion about a potential delay. Let's see. I think the register of receivables is a good opportunity for the whole society, both clients, new players, everyone, because in the end of the day, makes all the process more efficient. So I think that by having the registry of receivable, we will have a better avenue of growth to provide credit for our clients that still don't use our payment solution with the same level of security and NPLs that we have today. So we're very excited about this.
We can't wait to see the register of receivable happening. We made all our product offering and our operations to take advantage of that. And we think that this is a big evolution of the industry and a big improvement in terms of how you deal with collaterals and credit based on collaterals. Regarding peaks, I think that there is a question about the take rate of PIKs and pricing of PIKs. So what we have in mind now is that we will simply follow the market.
So we will see what's the price of the market we will use, we will simply follow the market. But at the end of the day, as we have said, we have 3 different applications here. So Peaks as a debit like type of transaction. So what we expect is that you have a debit transaction without interchange, so part of that economics should be moved to the merchant, but margins in acquiring should be the same. So that's what we expect.
But let's see what will be the average standard in terms of pricing of the market. You have Pizza's OI transfer and that should be OI transfer cheaper to do because the SPI infrastructure provides as a resource, a better infrastructure and a cheaper transaction. So that should decrease the price of wire transfer. And I think that you have the 3rd application that should be pretty much like the bollet when you can put a due date in the future, but we still have to see how it will work with interest rates fines that you can pay put these declines on payment, things like that. But that should be a bollieto like transaction, but now for every company authorized to work by the central bank.
So I think that economics should be in line with the market in those 3 applications, but we'll wait and see how the market will behave and we'll simply follow in terms of
pricing. Very clear. Thank you very much.
Thank you, Mario.
Thank you, Mario.
The next question comes from Neha Agarwal with HSBC. Please go ahead.
Hi, congratulations on the results and thank you for taking my questions. My first question is on links. Today, you revised some of the agreements, but the breakup fee, if the transaction does not go through at the shareholders' meeting is still there. And some market participants have been saying that this is somewhat high. It's about 7% of the deal value.
So why not reduce or completely do away with this breakup fee and make the transaction even more lucrative for the linked shareholders, which will probably make it more difficult for them to reject your offer. Your thoughts on that would be appreciated. My second question is on revenues. Could you give us some sense of how much of your total revenues is generated from non acquiring business? Last quarter, you gave us a sense of how much do you get earned from your software in terms of revenues.
So any color on non acquiring the shared in your total revenue would be helpful. And last question is on churn. You mentioned that churn has reduced dramatically versus last quarter. But how is churn behaving versus last year? And
what is
the reason for an increase or decrease in churn versus last year? Thank you so much.
Thank you, Nira. Rafael here. Thank you for the question. So regarding your first question on LINKS, what we announced today is that we are waiving the breakup fee of BRL112 1,000,000 in Linx shareholders meeting if they do not approve some transaction. So Linked Shareholders, if they decide not to go with Stone transaction, there is no burden on Links on that.
What we kept is if there is a concurrent offer approved after that the breakup fee is maintained, right? So and just to remember that we understand that the breakup fee that was there and is there, the one that remains is valid and legal. So we expect to spend over BRL270 million in the transaction overall, including the follow on expenses. So but we decided to go, as Thiago mentioned, to have the 17th discussion so the shareholders of Linx will have no breakout fee if they vote against our transaction. Regarding the second part of your question on revenue, we are seeing increasing trends in terms of penetration of new solutions.
As we've shown in SMB, the 27% of number clients in SMB with Financial Solutions. If we look at the software, for example, we have mentioned in the previous quarter that we had over BRL100 million of pro form a revenue and that means the pro form a means that as if we owned 100% of the companies that we invest in, which is not the case, we can sometimes invest 20%, 30% stake in those companies, so we don't necessarily consolidate those. If we look at financial solutions, we also see an increase in penetration, and we expect over the coming years, of course, that to be more and more relevant. And as it gets more and more relevant, we might discuss disclosures and additional disclosures for you guys. Regarding your third question on churn, we saw a decrease in churn both on a quarter over quarter and also on a year over year basis.
So I think that some of the reasons that we believe it might happen is new solutions, as Thiago mentioned, contributed to reduction of churn. And we do have a statistical analysis that show that this churn reduces in all the solutions and especially when they are combined. So as our customer service and SME keeps very important as well the new solution. So we believe that over time we'll have stickier and stickier solutions not because of course we are sort of locking the clients, but because they are opting for our combined solution and an integrated experience. Thank you.
Thank you so much, Sharma. That was very helpful.
Thank you.
Our next question comes from Domingos Falavino with JPMorgan. Please go ahead.
Thank you. Good evening, everyone. Congratulations on meeting the high quality results. I had a question, I think, I guess, is more accounting wise. You guys had a very, very strong financial income result €460,000,000 booked as financial income.
And again, I haven't had the time to really go through in detail the full release. I apologize if there is data on that. But anyway, like you have €460,000,000 and 20.70 million of the financial income, you have 2 operations that I'm aware of. 1 is the prepayment of performed sales, which there is no credit risk and you have the credit operation, right, which does vary credit risk. I would like the breakdown of this financial income, how much stems from the traditional prepayment, how much stems from credit related operations.
And if you could, as a second portion of this answer, just explain to us a little bit how it works, these credits. So an example, you originate usually 30% a year, you set aside as provisions 5%, 7%, I'm having a hard time here looking at the asset quality of that. And the last one, I'm sorry for running a little long, you did mention you plan on securitizing the loan book in a few months. How do you plan the credit risk will be within the security? So like let's assume you do package the full SEK 1,000,000,000 dollars and like you're taking 20% of the total, 80%, who is the barrier of the first losses?
Is it like senior bond, junior bond or proportional losses? Just to understand a little bit given the obvious concerns around asset quality nowadays.
Hi, Domingos, Rafael here. Thank you for the question. Yes, so if we look at the financial income revenue line, we do have the prepayment operation and the credit revenue there. If you look at the $27,000,000 that you mentioned in other financial income, this is mainly comprised of interest and cash. So basically, we the $460,000,000 is those two line items.
The credit revenue is increasing, as you can see. Of course, the majority of this is prepayment, and the prepayment is much more relevant still. But I think that the credit is also helping us in the hubs to gain traction in that line. And if you look at interest rates in Brazil going down year over year like 2 thirds, and we still were able to grow that financial income line. We do intend to fund the credit in the future, mostly with 3rd party funding, as I mentioned.
So we already have FIDC in place that now today Stone is the only investor there. And I think it will be pretty much just the same structure we did in prepayment back in the past, right, where Stone keeps investing in the FIDIC and you have senior quota holders having senior quotas of that fund. So we started that process just before COVID and we held it back and we believe that soon we'll have more of the 3rd party funding there, as Thiago mentioned. Besides that, we also have the BNDF that could lead up to BRL500 million of funding. So I think here that this is we mentioned, I think it was in the last presentation regarding the deal with the links.
We provided a little bit of detail about our TAM. And when we look at the TAM in the credit space, only consider SMEs, it's a huge market. So we believe we have like 1%, 2% of market share in the business of providing funding to SMEs. And I think that also as Lia mentioned, we are putting this together in a fully integrated platform, which is the ABC platform, I mean, with a friendly dashboard, integrated solutions that we see a big potential here. And just to your question regarding the risk, when we account for credit revenue, the revenue is already netted of expected delinquency.
So we do take into consideration the credit risk of clients already, and it's already netted into our revenue. And also, if you look at our balance sheet, the credit that we have there, it's already booked at fair value that already factors in the risk that we have in that portfolio.
Perfect that you mentioned that actually. I didn't want to go that deep, but if I actually look at that for September, the FDIC looks the book value at €4,555,000,000 with the fair value of 4,479, as if you are carrying an embedded loss, the difference between fair value and Bocariello. Is that the provision? Is that an expected loss because of the crisis? Why is this difference?
Yes. So this is the liability part. So this is the part of the senior quotas, Domingos, that we have in the balance sheet. This is like a debit like FIDIC, right? It's not related to the credit portfolio, right?
So this is not related to delinquency or anything like that. This is basically the senior quota holders part of our FIDIC that we recognize as a liability in our balance sheet just like as a debt rate. Okay.
Well, I just let me help you with some good information here. So we have 2 separate FIDIC structure. 1 is the FIDIC in terms of accounts receivables, that we sell account receivables and we take the money to do prepayments, right? And I think that when we're talking about the numbers that you said about the BRL4 1,000,000,000, you're talking about the FIDIC made for prepayments. What Rafael was saying before, the FIDIC structure to fund the credit, so it's a whole different FIDIC, but we intend to use the same type of mentality in which we generate the outstanding balance and then we sell this to the market.
I think that we can't talk too much unfortunately about this because now we're in a quite period moment about this structure. But after we conclude the upgrading capital process, we can give much more detail about rating process, all the structure and everything that goes on. I think that the main data that we have disclosed it to you and I think it's the best way to see is the outstanding balance, which is around BRL1 1,000,000,000 or BRL1.1 billion. We have the ROA, which is basically the rate less the NPLs on a monthly basis, and you have the duration that we have disclosed to you. So those are the main lines.
And as Rafael said, when we book the revenue, we book it at a fair value and we have expected delinquency rate. So once we raise the capital with the market, we don't expect to have any type of impact in our revenue in the way that we account for that and that should happen in the coming months, will be shortly. So once we complete the process, we can give you much more information about the whole structure of the fund, the risk profile and the rating and all that.
Perfect. Congrats again on the call. It's just this is gaining a bit of share and it's a big upside. And the disclosure is a bit different than what we're used to. And given obviously COVID and all that, the more we could see as like provisions and etcetera, I think would make it more clear to us.
But again, congrats.
Thank you very much, Domingos.
Our next question comes from Victor Chabot with Bradesco BBI. Please go ahead.
Thanks for the opportunity, guys. Well, congratulations on changing the terms for the transaction with length. I think it's improved again the level of corporate governance related to the transaction. So this is pretty much welcome from our side. I have just a couple of follow ups, if I may.
1 on Domingo's questions. Would you guys come out and obviously, you probably will, but with more information about the PPA for credit transactions, not for the receivables, for the credit itself or the loans, about, for example, the minimum level of subordination, right? So for us to have a sense on what it should be. So when do you guys think you could come out with this type of information for us to get a sense on how you guys are viewing a structure to leave investors comfortable, fixed income investors, right, with a minimum level of subordination of X percent, whatever? This is one question.
And the second question is, I was, I would say, positively surprised by the fact that you guys captured a lot in terms of corona voucher volumes during the quarter, right, way ahead of some of the other peers. And I would like to understand whether this came from entirely from you guys, right? So I mean directly from your POS group or if there is a big chunk, if you can just give some color, not a lot, but give some color, if it came from some partners like sub acquirers, right? So just to get a sense from where it came from, if it was Stone really capturing a big chunk of the CoronaVulture payment in the period or if there is some greater capitalarity due to the sub acquirers you guys work with? Thanks.
Hi, Sabo. Rafael here. Thank you for the question. Regarding your first question on the FIDIC subordination, we can't talk much, as Thiago said, the subordination should be very low, right? But there is some, right?
But as soon as we are able to provide more details on that, we'll definitely do it and we can follow-up with you in more detail. Regarding your second part of the question, the corona voucher, the biggest part of the corona voucher volume that we have in our TPV is really coming from our Fintech as a Service platform, so through partners. And we have a small volume in the hubs, but the biggest part is through our Fintech as a Service platform. And also just to be clear that when there is the cash in, in a partner or in a wallet, in a digital account with the prepaid card, that's where we transact and we capture that part of the TPV. And that's why we are able to separate it and disclose it to you guys.
Perfect. Very precise. Thanks for the answers.
Thank you.
There are no questions at this time. This concludes the question and answer session. I will now turn over to your host for final considerations.
Hi, everyone. Thank you all for the great questions this quarter. We are very happy to see the level of engagement of our team, the energy here and see you next quarter. Bye bye. Thank you.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.