Morning, ladies and gentlemen. Thank you for standing by. Welcome to the StoneCo Second 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 call.
All material can be found at www.sound.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 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 Martin, Investor Relations Executive Officer at Stone. Please proceed.
Thank you, operator, and good morning, everyone. I have here with me today, Thiago Piau, our CEO Lia Matos, our Chief Strategy Officer and Marcelo Baldin, our CFO. During this call, we'll discuss our financial and operational results for the 2nd quarter 2020, provide you some updates on recent trends during the quarter and finally, talk a little bit about the M and A transaction we have just announced yesterday with Linx. We'll be available for Q and A after our prepared remarks. With that, I'll pass it over to Thiago so he can share his view on the main performance highlights and the strategic direction we are heading to.
Thiago?
Thank you, Rafa, and thank you all for joining us today. Before we start Janis' presentation, I would like to give you some messages. I believe we all agreed to say that 2020 will be one of the most disruptive years in our generation. The global pandemic's health and economic impact led to many changes in our daily lives, behavior and perspectives, But still, we have a great chance to learn and become better. In the recent months, we saw remarkably positive trends in our business with a strong record in TTV and a sharp acceleration in secular trends that are beneficial to us as the increase in electronic payments, the digitization of commerce and acceleration in the usage of digital banking and other technology tools.
Due to the investments made in the past and our company's capability and people, we have been able to size the opportunities that arose amid the crisis to accelerate our business. Let me share three examples of that. First, we saw CTV growing 130% last month as a combination of a faster than expected economic recovery and by volume brought by the Corona Vouchers, a temporary government relief program on which we participate directly through our POS terminals and indirectly by leveraging our end to end proprietary payments platform to process the volume through our integrated partners. 2nd, our proprietary and API driven digital banking platform is experiencing accelerated growth in recent months with record of new accounts being opened, high engagement and record revenues coming from the platform with a strong contribution from the beginning of our Banking as a Service offering to integrated partners. 3rd, we provide different tools to help merchants sell online and digitalize their businesses.
With that, we saw revenue coming from our SMB clients more than doubling the year and strong engagement trends in our software solutions, with some of them accelerating their growth during the recent times. We are working hard to keep providing our merchants with the best service level in the industry, while expanding our product offering. I'm very proud of our team's dedication during these very challenging times and due to the recent improvements in the economic scenario and higher visibility of the near future. We are expanding back the team to meet the current demand, heavily investing in our future growth by acquiring new talent to join our operational and technology teams. In order to keep providing the best service levels to our clients, more than 40% of Hub personnel are back to the frontline, observing all of the recommended procedures by the health authority.
Our client centricity was again reflected in our customer support numbers in the quarter, with 87% of the calls rated as excellent and 87 1st call resolution. And finally, I'm extremely happy that we have reached an agreement to acquire Linked. This acquisition is a big step forward for us in the strategy to become the one stop shop for merchants of all sizes, supporting them in the online as well as in the offline world. Linx is a market leader in the retail management software market, having a strong presence in different retail verticals with 300,000,000,000 GMV, and it also has a strong presence in the e commerce software solutions. With hard work, investments in technology and focus on the client needs, we are confident we will generate a lot of value for merchants in Brazil as well as for our shareholders and the overall society.
We will discuss this landmark transaction in more detail shortly. Now moving to the presentation. I would like to start on Slide 3 with some highlights. Despite COVID-nineteen impact, we saw CPV grow 28% in 2nd quarter with a monthly acceleration within the quarter, reaching over 42% growth in July, excluding Corona Voucher volumes. Our take rate, excluding Corona Voucher volumes and financial relief provided to clients due to the COVID-nineteen outbreak, was 1.77%, roughly flat compared to the previous quarter, even though we had a higher mix of digital and integrated partners who have lower take rate, which was partially offset by higher take rate in the hubs.
The reported take rate considering the COVID-nineteen just mentioned effect was 1.67%. We reported a 14% revenue growth and an adjusted pretax margin of nearly 30%, beating the adjusted pretax margin guidance of 20% to 24% that we have provided in our previous earnings call. Those results reflect both our stronger recovery in our clients' businesses than previously anticipated as well as our execution capabilities and client diversification effects. Our financial platform accelerated its growth rate with digital banking open accounts reaching 285,000 clients in July and with banking services revenue growing nearly 3.5 times in just 1 month between June July, mainly due to the initial traction of our banking as a service strategy. We are seeing decline in delinquency rates in our credit offering, which counted with more than 56,000 clients in July with an improved ROA of 2.8% per month for the portfolio in July 2020.
Our digital business has experienced strong growth during recent months, with online CPV growing nearly 9 times year over year in July, with a significant impact from Corona Vouchers. However, even excluding all volumes related to the government program, online TPV grew nearly 95% year over year during the month of July. In our software front, we reached more than 300,000 subscribed clients in July with over BRL 100,000,000 in total annualized pro form a software revenue. Pro form a revenue means 100% of revenue from the software companies we have invested in, even though we do not own 100% of all of them and therefore, do not fully consolidate all the revenue in our top line yet. Now by joining our forces with LINK, we expect to accelerate the disruption of the commerce industry in Brazil, making high quality software tools available to all merchants, combining it with a full financial platform and creating an integrated one stop shop powerful platform to merchants.
CPV in our brick and mortar SMBs in the hubs was already 90% higher in the second half of July compared to the first half of March twenty twenty, a period before COVID-nineteen outbreak. Considering digital and integrated partners as well, the company's overall CPV is already 11% above pre COVID levels, even not considering Coronavirus volumes. Even though we experienced a small decrease in our payments active client base in the Q2, mainly driven by COVID-nineteen effect, the trends observed in the recent months already indicate we are resuming our trajectory of client base growth in the 3rd quarter, in line with the growth of Q1. On top of Stone's client base, we now count with Stone's client base, Our solution to micro merchant presented over 50% growth quarter over quarter, reaching more than 35,000 clients in the 2nd quarter. We are resuming investment in this new venture with Bispin, and recent trends are encouraging.
Lastly, we expect operating leverage and margins improvement already in the Q3 2020 with a combination of a more robust top line and our diligence in costs and expenses. Now moving to Slide 4, we show that even in the second quarter being the most impacted by COVID-nineteen effect, we were able to keep our adjusted margin flat and grow our TPV when compared to the previous quarter, while increasing our cash flow generation. These numbers show the strength and resilience of our business. Even during the most challenging time in our history, we were able to keep margins virtually flat and above 20% and with TPV not only growing versus last quarter, but accelerating every month. On the right side of the slide, we show our recent dynamics for TPV.
To help the populations with the COVID-nineteen outbreak, the Brazilian government is distributing a temporary financial aid named corona vouchers, targeting the most vulnerable part of the population as autonomous and informal workers and people without income. As an acquirer, Stone can participate in Corona Varsha transactions, mainly through its integrated partners, benefiting from this acceleration in payments digitalization. Even though these are debit like transactions with lower take rates, they generate good incremental revenues for the company. Stone processed around BRL 2,000,000,000 in coronavalsures in the Q2 of 2020 and R9.3 billion in July only. However, it is important to notice that even excluding this relevant contribution, Stone's TPV grew 21.1 percent year over year in the Q2 with increased growth every month through July when it reaches more than 42% growth above Q1 2020 levels.
On Slide 5, we'll give a double click on overall TPV, Hub operations and client base performance. Our total TPV in the second half of July was 46% above the first half of March, which we consider here as the pre COVID levels. Even excluding the coronavirus effect, volumes are already 11% above those levels. Besides, as shown in the graph, CPV in the hubs is 9% above pre COVID levels, benefiting from our growth investments, geographic diversification and commerce reopening trend. On the right side of the page, we show the positive trend in our client base.
Since we report our active client base as clients that have transacted over the preceding 90 days, we saw the lockdowns that started in March having a direct impact in the 2nd quarter numbers. However, we expect a significant client base growth for Q3 2020. Moving to Page 6, we have a detailed explanation of our reported take rate. The decrease from the Q1 figures were mostly explained by a 10 bps decrease from the corona Varsha's volume and COVID related financial release offered to clients. Thus, our take rate excluding these effects was 1.77%, 4 bps lower than the previous quarter, explained mostly by the strong volumes from integrated partners and digital key accounts.
However, as we've shown in the graph on the right, take rates in the hubs, which was virtually flat since the beginning of 2019, is increasing even in the current environment with the upsell of new solutions to our client base. Finally, we are receiving many questions from our investors about our perspectives on the regulatory changes that the Brazilian Central Bank is promoting to improve the financial system. And on Page 7, we share with you some of our views. The Brazilian Central Bank set November this year as the expected date for the beginning of 2 new initiatives that I will highlight. And Stone is uniquely positioned to compete in this scenario, leveraging on our differentiated technology and proximity with clients.
1st, fixed launch, the instant payments infrastructure promoted by the Central Bank and operated by market participants. This movement tends to accelerate the secular trend of payment digitalization, increasing our addressable market. Years ago, we decided to build a proprietary API driven banking platform that will enable us to offer peak solutions to SMB and digital clients and provide our banking as a service infrastructure to integrated partners, such as software companies, wallets among others. We will help merchants with technology and security to capture transactions through fixed care codes, enable e commerce transactions and help disrupt boletos. We can then monetize on these transactions made without intermediaries such as issuers and brand fees, offering a value proposition to our clients, which we will accept and use a faster and cheaper payment method.
2nd, the receivables registration platform serves as an opportunity to expand our working capital addressable market by leveraging our hyper local distribution to prepay receivables from all merchants, including clients currently outside Stone Ecosystem. Besides, it gives us more flexibility and security to offer credit to all merchants, significantly reducing risks, regardless of the payment method that they use. As a company created to make merchants happier with great services to help them sell more through different channels and manage their business better, we will continue investing in our technology, distribution and customer service to sustain our long term competitive advantage and evolve our business according to the regulatory environment. Every time we have changes that level the playing field and enable more competition, users tend to experience significant benefits, favoring offers based on value proposition. With all that said, I will pass it over to Lia to discuss updates on strategic roadmap.
Lia?
Thanks, Thiago, and good morning, everyone. Thanks for joining us today. I want to start on Page 8 by talking about our digital and integrated partner business. As Thiago mentioned, the impact of the COVID brought many changes to society and one of them was the acceleration of consumers buying online. We saw our online TPV growing over 130% in the 2nd quarter and even when we exclude corona voucher impact, we were able to grow close to 80%.
Our year over year growth accelerated every month with growth rates jumping to nearly 200% and 760% in June July respectively. Again, excluding corona voucher volumes, we still saw strong growth rates close to 95% in both months. As we observed in our last earnings call, our digital payments platform serves clients of all sizes and different business models from social sellers to large marketplaces. One exciting trend that we saw during the quarter was a significant evolution in our digital SMB clients, who grew monthly revenues more than 2 fold in the year, as shown in the graph on the right side of the page. Page 9 brings an update of our banking platform, which as we explained in previous calls is offered in 2 ways.
1st, through our digital account to SMBs, which was launched last October 2nd, through API integrations, which enable consumer facing apps and other partners to offer banking services to their own clients. We have invested over the years to build our banking platform from scratch with the key elements of an open banking platform, which enables seamless API integrations to our own client facing solutions as well as our partners. Similar to how we did in payments, we are now scaling our banking platform to our client base of SMBs, but also seeing a lot of interest from integrated partners to offer banking services by integrating to our platform and we have started to scale that as well. We have intensified technology investments in this business and now have a proven stable and scalable platform ready to take advantage of the increasing demand from partners looking to integrate transactional banking service onto their offerings. We're seeing solid traction with both the Stone Digital account and the banking as a service platform.
First, we had a record increase in new clients in the quarter, reaching 248,000 clients in June and 285,000 clients in July, with engagement metrics as prepaid card CPG and number of transactions growing strongly. 2nd, revenues are sharply accelerating, boosted by the successful integration of partners through our public APIs. Although still at a small scale, revenue coming from our banking platform in July was more than 3.4x the revenue from June and 8x January level. Moving on to Slide 10, we discuss our credit product. We had nearly 47,000 clients using our credit product in June and over BRL56,000 in July, reaching a credit portfolio above BRL620,000,000 in July.
As shown on the graph at the right side of the page, our portfolio delinquency is trending downwards at mid single digits for the July cohort with a consistent ROA of 2.8% per month. We have a diversified portfolio both in terms of client concentration as well as geographically, with the largest 100 clients representing only 2% of the total outstanding and over 60% of the volume widespread among more than 1600 cities in Brazil. As we already mentioned at the beginning of the year, in 2020, we have a big challenge, which is a top priority for us to become a complete financial platform for our clients. We aim to replace our clients' traditional banking relationships over time, and I think we're on the right track to do so. However, to serve as a real one stop shop for merchants, on top of the financial platform, we want to help our merchants to manage their business with higher efficiency and generate more sales.
Here is where the ecosystem of solutions that we are building in the software space plays a vital role. On Slide 11, we bring a quick update on the evolution of our software solutions. As we announced before, we made 4 new investments in our ecosystem during the Q2, which combined to our organic growth resulted in an 83% quarter on quarter increase in our softer client base, reaching more than 280,000 clients in June and over 300,000 clients in July. Even though we still don't see all of these numbers in our P and L due to the phase of some of those investments, our annualized pro form a software revenue in the second quarter was over BRL100 million, showing opportunity to both use software as a tool to increase lifetime value of our client base, but also to monetize on them. We saw significant client organic growth across different segments during the quarter with the customer engagement vertical, core payments and marketplace services being the main highlights.
Several of our solutions are contributing to the acceleration of the digitization of our offline native client base. As an example, we have mLabs with a number of social media posts growing over 70% in July when compared to January and delivery much with GMV growing over 100% during the year. Finally, I want to highlight the advantages in integrating software solutions with our financial platform. VHCs is an excellent example of that. In the Q2, they became fully integrated to our acquiring and banking platforms and have started to scale their integrated offering through their distribution channels with July numbers being more than 4 times higher than January.
With that, clients will have a seamless experience to manage their stores, moving towards our vision to become an integrated one stop shop for our clients. This is just one example of technology integration and synergies between our financial platform and software providers that we will continue to invest in over time. Now with the agreement to acquire Linx, we open a new avenue of cross selling opportunities to explore by providing Linx's clients with integrated software and payment solutions. With this, I'm going to pass on over to Rafael, who will discuss our financial results in detail. Rafael?
Starting with Slide 12, we present some financial and operating metrics for the company. As Thiago mentioned before, as we report our active client base on a 90 day basis, we are currently seeing in June numbers the effect of the lockdown measures that started to be enforced in many areas in the country in the second half of March. Even with this effect, we were able to post a 48% growth for our client base compared to the same period of last year. We already expect significant increase in our client base for the Q3 due to positive trends that we are observing over the month of July beginning of August. Our TPV grew 28% in the Q2 of 2020 compared to the Q2 of 2019, reaching BRL 38.1 billion.
This represents an addition of almost BRL 0.5 billion in TPV compared to last quarter, despite the 2nd quarter being the one in which economy was hit the hardest due to COVID-nineteen effects. Total revenue and income was BRL667,400,000 in the Q2 of 2020, an increase of 13.8%. Excluding other financial income, which mainly comprises interest and cash, our total revenue and income grew 15.5% to BRL 634,500,000 in the 2nd quarter. As we announced last quarter, we provided some of our clients that were most impacted by COVID-nineteen a financial relief in the form of limited time exemption in subscription and lower prepayment rates. Those reliefs have had a negative impact of BRL 13,300,000 in the quarter.
On Slide 13, we show our consolidated P and L and on Slide 14, the evolution of our operating leverage and profitability. We had a significant increase in our total costs and expenses as a percentage of revenue and our financial expenses, on the other hand, went through a significant decline, which we'll go over in more detail. This led our adjusted net margin to stay flat compared to the last quarter at 22.5%. Going over to Slide 15, we dig deeper into our operating deleverage in the quarter as total costs and expenses as a percentage of revenue went from 46.8% in the 1st quarter to 60.4% in the Q2 of 2020. We had a couple of factors impacting this increase with 2 main nonrecurring items: severance costs related to the reduction of our workforce in May, which amounted to BRL 15,200,000 and a onetime fine from a card scheme in the amount of BRL 14,000,000 related to the non usage of a specific product called 3DS, which was a discussion within the whole payments industry.
These two effects combined contributed in 4.4 percentage points in our deleverage. Apart from that, we continue to invest in the growth and expansion of our new solutions, including banking, software, credit and ton. These higher investments added 2.7 percentage points in deleverage, which also includes marketing from our Compre Locale campaign to help our SMB clients throughout this crisis. Also 4.2 percentage points are explained by deleverage related to lower revenue amid COVID-nineteen and 2.3% comprises of other effects such as facilities expenses related to the return of workplaces, third party services among others. With that, even though we will keep investing in the growth of our company and the evolution of our business, we expect significant improvement in our operating leverage throughout the rest of the year.
Now going over in more detail on each P and L line item, our cost of services reached BRL 198,700,000 or 29.8 percent of total revenue and income in the quarter, an increase of 12.6 percentage points over the same period last year. This increase was mainly due to higher investments in new solutions and technology, higher personnel expenses related to the severance costs from the reduction of our workforce in May, the just mentioned one off item related to the card scheme fine and higher depreciation and amortization as well as provision and losses. Administrative expenses were BRL 89,900,000 or 13.5 percent of total revenue and income, broadly in line with the prior year period despite the one off expenses from severance costs. Compared to last quarter, administrative expenses increased from 10.3% of total revenue and income to 13.5%, mainly due to severance costs, expenses from new solutions, mainly new investees in software and higher third party services. Selling expenses were BRL114,700,000 in the quarter, an increase of 31.4% versus last year, mainly explained by marketing expenses related to Ton and the Compre Locale campaign and severance costs, which was partially offset by higher reflecting benefits from the resizing executed in May.
Compared with last quarter, selling expenses as a percentage of revenue increased by 1.6 percentage points explained by the same factors from the year over year comparison. Financial expenses were BRL62.6 million, a decrease of 20.5% compared with the Q2 of 2019, mainly due to the lower CDI rate, which more than compensated the higher volumes in the quarter. Compared to the previous quarter, financial expenses as a percentage of total revenue and income decreased significantly as pointed out previously from 20.7 percent to 9.4%. This reduction is mainly explained by the negative effect from COVID-nineteen in the Q1 when we took measures prioritizing short term liquidity, lower CDI rates and a higher proportion of owned capital to fund our clients' working capital solutions. As we indicated in the last quarter, we took several measures to strengthen our balance sheet position and increase our liquidity, generating significant one off impact in our P and L.
In the second quarter, we saw a much more stable market, which enabled us to keep providing our clients with all the required working capital needs but with much lower costs. As a result, our adjusted pretax margin was 29.9%, higher than management's perspective given at the last earnings result of between 20% to 24% as the economy recovered from the COVID-nineteen pandemic is trending better than anticipated. Our adjusted net income for the quarter was BRL 150.3 million with a margin of 22.5%, flat quarter over quarter and already factoring in COVID related impacts as severance costs from the reduction of our workforce in May, financial relief given to clients and the construction of a temporary hospital totaling BRL 33,500,000 in the period. Finally, on Slide 16, we show our adjusted free cash flow, which was BRL141.4 million in the 2nd quarter, 77.7% higher than the same period in 2019. Now we would like to share with you some details about the acquisition of Links we have just announced.
We have uploaded a separate presentation specifically about the transaction in our website. You should have access to it already. Now I will pass it over to Thiago so he can share more details about the transaction. Thiago?
Thank you, Jaffa. This day marks a significant milestone for our company. We were born in 2012 with a clear purpose to help merchants to thrive through the offering of best interest service and products delivered by an amazing and talented team of hard working people who always put our clients at the center of everything they do. We are excited to join Efraut with Linx in this journey and are looking forward to combining Linx deep expertise in vertical software and omni channel solutions with strong powerful technology and financial services capability, our strong culture and powerful distribution channels. I believe this will help us to become the one stop shop for merchants of all sizes, supporting them in the online as well as in the offline world.
We will continue to focus on building solutions by applying best practices in technology with constant client feedback and the use of data to drive product improvement roadmaps. Stone has already established its positioning as a complete financial platform for brick and mortar SMBs and a full stack digital payment solution for SMBs digital clients, marketplaces, wallets and subacquirers. More recently, Stone has advanced its strategy to become an integrated payment and software provider for SMBs by investing in modern ecosystem of software solutions in different verticals and horizontals. By investing in Link, we will strengthen our offering by combining both companies' assets and technology capabilities to create a go to commerce enabling platform for clients of all sizes, capturing value from the digital commerce revolution in Brazil. We are very happy with the chance to welcome Link's team to our strong green culture.
We know we have a lot to learn together, and we have the opportunity to create an amazing value to both our clients, our team, our investors and our overall society. Now moving to the presentation. We start on Slide 3 with the view overview. Linx is a leading software company, which process over 300,000,000,000 GMV, comes with more than 70,000 retail clients and has a named 99 retention rate. With this transaction, we believe we will generate value in multiple ways.
1st, we will combine the leading retail software solution with the best in class platform, which is the number one independent fintech in Brazil, moving towards a unified e commerce platform, driving the integration between software and payments and exploring synergy opportunities. 2nd, we will be able to provide links more than 70,000 clients with the access to Stone's payment and financial solutions. 3rd, the deal expands Stone's suite of software verticals and solutions, enabling the company to serve more businesses, more verticals and further penetrate its addressable market. Finally, this transaction accelerates our strategic roadmap to become a one stop shop for merchants of all sizes and verticals. Moving to Slide 4, we highlight some numbers of the combined company.
Excluding synergies, we will have a total LTM annualized revenue of $3,600,000,000 and over $800,000,000 of adjusted net income. Also, Stone will have the opportunity to penetrate the over GBP 300,000,000,000 GMV of Linx clients. We are very happy to give this strategic big step in our evolution and will be great to discuss in more details during the Q and A. First, I will pass it over to Lia to discuss how Linx will help us to accelerate our strategic roadmap. Lia?
Thank you, Thiago, and this is indeed a very exciting moment for us. Moving on to the presentation. On Slide 5, we present how we view the strategic complementarity between LYNX and Stone. We believe the acquisition will be a significant step forward in the direction of creating a complete omnichannel platform to accelerate the digitization of offline native commerce in Brazil. We want to achieve that by combining Stone's financial service capabilities and the differentiated aspects of our business model with Linx's strength in software solutions and as an already comprehensive suite of digital enabling solutions.
On Page 6, we describe the value drivers which will be unlocked by the acquisition, allowing Stone to progress on its strategic roadmap and create shareholder value through 3 main avenues. 1st, we expect to generate significant operational synergies and top line growth by exploring cross selling opportunities of financial services into Link's client base. 2nd, we will help our merchants modernize and automate their core processes, providing them tools to adapt to an omni channel world and increase their sales by bridging the gap between in store and online and capturing a relevant share of the economics of the digital commerce market growth. 3rd, we think we can further penetrate the software SMB market by bringing into links the operational distribution core capabilities of Stone's business model, namely its client service focus, hyper local distribution and advanced technology and combining that with Linx's deep ERP and omni channel expertise to create tailor made products for SMBs. As a result of this combination, we believe we can further penetrate the software SMB market with integrated solutions.
Moving on to Slide 7, we highlight the evolution of our strategy to invest in and acquire great software solutions. Since 2016, we brought on to our ecosystem fantastic entrepreneurs that developed great solutions to help clients simplify and automate multiple parts of their workflow, as well as better engage their consumers and sell more. We invested in different verticals and horizontals such as POS and ERP for food, general retail and beauty, food delivery, loyalty and CRM, digital media platform among others. Stone has over 300,000 subscribed Telstra clients as of July 2020, growing 2 fold compared to the Q1 of 20 20, mainly driven by investments in new portfolio companies. The acquisition of Linx will be a big step forward in our journey.
Together, we will reach 375,000 clients, further penetrating the software segment. As shown in Slide 8, Link serves its merchants through an end to end platform comprised of 3 product lines. The first is LinxCore, which provides integrated business management software such as ERP, CRM and POS Management solutions across more than 10 industry verticals. 2nd, Linx Digital provides an e commerce platform designed to improve the omni channel shopping experience, enabling retailers from the core verticals to engage, interact and transact with their clients and manage their inventories across physical stores, mobile application and online channels. Finally, Lynx Pay Hub provides payments processing solutions integrated with its core and digital product lines and provides electronic payments and financial solutions, QR code aggregators, working capital solutions and digital accounts.
As shown on Slide 9, Linx has a 99% retention rate in its diversified client base and over 900 stores use its omnichannel solution. More than 1200 R and D employees are in charge of developing, operating and improving the solutions that give Linx more than 45% market share in retail management software and nearly 14% of market share of the e commerce solutions market, With nearly 85% of its growth operating revenue coming from subscription revenue, Linx generates more than BRL 800,000,000 in annual revenue with over 25 percent EBITDA margin. Now moving on to Slide 10. The combination of both companies' capabilities will enable us to further penetrate our addressable market in 2 different ways. 1st, by establishing a leadership position in the software and payments retail space, strengthening Stone's presence in medium and large clients with integrated software and payment solutions and creating significant opportunities in financial services.
2nd, by strengthening our focus on helping merchants of all sizes to sell more through digital channels with a fully integrated platform by combining our strength in digital payments with Linx's leadership in the retail software market. With integrated solutions, Stone will be able to provide more compelling offerings, creating significant competitive advantages. These two elements can unlock further penetration of a BRL120 billion revenue addressable market, comprised of acquiring banking, credit and software, where the combined company today holds only around 3% market share. With that said, I'm going to pass on the word to Rafael, who's going to talk a little bit more about synergies and details of the transaction. Rafael?
Moving to Slide 11, we see many synergy opportunities arising from this transaction. On the revenue side, Stone has the opportunity to penetrate linked clients with financial products, including its payment services through Stone's proprietary end to end platform and banking services leveraging on Stone's proprietary API driven banking platform. Besides, Stone will grasp on Link's know how and existing software offerings to develop new solutions to SME clients, including omni channel and O2O products to digitize these merchants. In terms of cost synergies, we will leverage existing R and D to create combined solutions to merchants of all sizes, streamline overlapping G and A expenses and improve negotiation with suppliers and third party providers. Important to say that we expect this deal to be EPS accretive already in 2021.
Finally, I would like to give you some details about the transaction. Total consideration to be paid to Link's shareholders is BRL 33.76 per share with 90% paid in cash and 10% in Stone shares. For each Links share or ADR, Stone will offer a cash amount of BRL 30.39 per share plus BRL 0.0126 77 StoneCo Class A Shares. The offer implies a premium of 41.6% over the volume weighted average price for the preceding 60 days and 28.3% premium over the average price over the last 30 days. Regarding governance, after the merger, a new software business unit will be created and will be managed by Stone's leadership and Link's management team.
An advisory board will be created to guide and monitor the key strategic priorities, integration process and capture of synergies. Alberto Menace, current LINK's CEO, will be Chairman of the Advisory Board, which will also include Stone leadership. Following this announcement and after appropriate filings are made, Links will call a shareholders meeting to effectively approve the merger subject to the approval of Brazilian antitrust authority, CADE. With that said, operator, please open the call up to questions.
The first question is from Tito Livarda of Goldman Sachs. Please go ahead.
Hi, good morning everyone. Thank you for the call. A couple of questions. I guess first on the take rates, we saw some pressure in the quarter to be expected. But when do you think, I guess, that normalizes?
Do you think the impact of the corona voucher maybe to impact Q3? Like when should that get back to normal? And do you still expect the take rate to be stable to higher in the longer term? And then second question regarding the merger with Linx. You mentioned synergies.
Just wondering if there's anything you can quantify there in terms of how much you expect from synergies. You mentioned you expect it to be EPS accretive in 2021. Does that mean you would capture all of the synergies by 2021? Or I don't know if there is a time frame for how long it would take to capture the synergies. Any color you can give on that would be helpful.
Thank you.
Hello, Tito. Thiago here speaking. Thank you very much for your question. So first with take rates, actually the way we are seeing our numbers, we are managing our core business in the same way as always and seeing the coronavirus impacts in a separate bucket. Let me tell you why.
We are seeing the take rates in the hubs are going up, mainly because of the upsell of the banking and the credit solution. So I think that the traction in the hubs and the economics are pretty strong. And in the digital, we are seeing take rates on a very healthy stable levels too. So we're very happy with the balance between growth and profitability that we have in our core. And we are seeing CoronaVoucher as almost as a separate number because we know that corona voucher is not be here for the entire time.
So that's made by the government and that volume is accretive when you think about revenues and yields and results. So that's why we're separating both. I don't know actually for how long we will have this Correnavirus impact and what would be the volume because that depends on the government program. But when you see the take rates on the hubs, we are very happy to see that our upsell strategy is working pretty well. And I think that our team is doing an amazing job to offer those solutions in a simple way and the merchants are understanding how the platform works and the results are good.
The second question about the merger and the synergies, it's too early to talk about the special numbers, but let me tell you this, we are not expecting to have all the synergy in 2021. I think that this is a long term investment that we made, but we see the deal accretive in 2021 forward. So for the 1st year onwards, it will be accretive, mainly because our strategy has 3 main points that I would like to highlight. First, more than the synergy in terms of cost, Linx has 300,000,000,000 GMV, but 250,000,000,000 payment volume. And I think that they are doing a great job in Lynx Pay.
But the combination of the projects that we have in our playbook, I think the penetration of payments will be much higher. As you know, and I think that we already proved through our integrated channels and the digital big accounts that we serve, we know how to offer great solutions and create relationships with bigger clients too. So I'm pretty confident that we will have good penetration with good margins in that 250,000,000,000 dollars volume. Number 2 is that I think that the combination between their digital platform with our Fintech digital platform we'll create a big value proposition for merchants. There is secular trends in terms of the digitalization of commerce in Brazil.
I think that COVID accelerated that. This is something that we will be very good in a very good position to take advantage for the future. And the 3rd step, which I think is a more medium term time frame, they have a great vertical expertise. And I think that with the combination of the knowledge of our company and Link's team, we can adapt solutions to the SMB and replicate the distribution channels that we have here to help to distribute those solutions to the SMB market and take advantage to the digitalization of SMBs too. So I think that this deal will be very accretive.
From the 1st year onwards, it will be accretive. It's still too early to say the exact numbers. So we will provide some colors as the time goes by, but we are very happy with the deal.
Great. Thanks, Gabriel. Very helpful. Maybe if I can, a couple of follow ups. I guess with the merger in terms of penetrating linked to payment volume of $250,000,000,000 given that those would be more likely larger merchants, do you think that the take rate on those could be lower or with the software being provided just to get a sense of how you think the take rate for linked merchants versus your current merchants?
And then a second follow-up on, I guess, take rate or more net margins and you gave some good guidance for this quarter. Just thinking if you think margins go back to the levels we saw previous the COVID-nineteen impact or how long you think that would take to get back to the more normalized margins you had in the past? Thanks.
Great question, Tito. So let me start with the margins. Yes, margin is going up. So we are already seeing the results on July August, and we will get to the normalized margins by this year. We are not very worried about this to tell you the truth.
I think that we have a pretty stable business model and margins are coming up. So we have the same level of margins that we had pre COVID levels this year still. Regarding take rates and opportunity with this Linx merger, I believe the take rates in this strategy will be between the take rate that we have in the integrated partners channels and the digital channel. So I think that this midsize market that links us very well positioned in the large markets is a market that we already understand by how we operate in digital and with some big integrated partners. So there's good profitability there.
Okay. Thanks. That was very helpful.
Thank you, Tito.
The next question is from Jorge Curran of Morgan Stanley. Please go ahead.
Hi, good morning everyone. Congrats on the transaction. I wanted to ask a little bit more detail on the TPV at Linx. I think you said 150 or 15, if you can clarify that. And then out of that number, what percentage is already processed by LinksPay?
And if you can help us understand how is that split between large customers, medium sized customers or SMBs? How much overlap is it your core business? And this large corporate space has relatively low margins, highly competitive, dominated by big volume companies like Rede and Cielo. Is that a market that is less interesting and we wouldn't expect you to penetrate on the payment solutions there, but rather focus more on the software and banking? And potential in the EPV that you can capture over a certain number of years out of the total that is processed by linked clients today?
Thank you.
Hi, Jorge. Can you all hear me? Okay, great. So to your question about TPV, what Thiago mentioned, the $250,000,000,000 This is TPV but not necessarily processed through LinkedPay, right? So just to make it clear.
And we do have the TPV, significant TPV coming from medium and larger clients. Of course, in those clients, you have lower take rates, but we do see big opportunity there. I think when we look at our capabilities, we have very low transactional cost. Our sort of fixed cost nature of our platform is a big advantage, and we are able to be competitive there, right? Of course, again, it's lower take rates, but a huge pool for us to try to improve what they already have.
So this is the first point. I don't know if Lia want to add a little bit to the other parts of your question.
Yes, Jorge. Just to complement what Jafar mentioned, I think to the second part of your question, due to the nature of our open banking platform, we think that we can also be successful in integrating a Linx platform to our transactional banking platform. So that will give us an opportunity also to penetrate with other transactional services in banking and eventually credit. So we think that there is more opportunity beyond just penetrating Links' base with payments.
And Jorge, just to complement, I'm really sorry that we are not talking too much about Linx numbers. We think that the Linx management team does an incredible job in their strategy and their numbers. They are a public company. So we have numbers that take close publicly, but once this deal is closed, then we will have the ability to talk more about the numbers and how we see the numbers. But from in this moment, we think that Linx management teams, they are the best one to talk about Linx numbers until the closing of the transaction.
Thank you, Jorge.
Great. Thank you. If I may just the $250,000,000,000 which is what is processed through the retailers of Linx, I understand that's not the amount that is already in Linx pay. Is that a number that you can disclose what percentage of that $250,000,000,000 is already TPV of links pay and then I think it would immediately transfer to you?
Hi, Jorge. I think that they disclosed the LinksPay volume. So I think that you can see by the disclosures that they do and by the investor presentations and the Investor Day, the LINKS Investors Day, the numbers that we have here, just to be clear, is that they have 300,000,000,000 GMV in a total and 250,000,000,000 TPV in electronic payments in processing through their clients. And they I think that they disclosed the linked pay hub volumes in their numbers. So I think that with the public material, you can have more information about the links pay hub.
All right, great. Thanks, everyone. Have a good day and conference again.
Thank you, Jorge.
The next question is from Mariano Tadeo of UBS. Please go ahead.
Hi, good morning. I have a couple of questions. First is a follow-up on Tito's question on the potential synergies. I think the revenues opportunities here at LINKS deal are more clear. I understand it's still early to quantify, but could you tell you a little bit more on the potential for cost synergies, where this could come from?
And my second question is regarding the hubs. Now that the restrictions are reducing, could you please comment on your strategy for the second half of the year? How many hubs do you expect to open? And also, do you think after the layoffs announced back in May, you can work in the hub with a linear structure and keep the same productivity? Thanks.
Hi, Mariana. Thank you for your questions. Thiago here. In terms of cost synergy, I think that we have we are planning here regular cost synergy by the merging of both companies. As you know, Linx made many investments and acquisitions over time.
So I think that they have a great capability in terms of planning these cost synergies. We did this move once in Stone 2. We will not be aggressive in terms of cost synergies
because we
think that they have a great and talented team. We want to be sure that we will protect the knowledge, the relationships and the good assets and people and talents of both companies. So we are much more focused on the value creation in terms of the products that we are going to offer to our clients, then manage EBITDA and only the cost. You know our financial discipline, but I think that this question. We are back in our hiring process in the hubs.
So we are expanding our team. We are almost I think that next month, we will be back in the speed in terms of increase of team that we had prior to the COVID. And yes, we will open more hubs because we already have cities in which our team is fit on the streets and the health situation is better. So we expect to open more hubs through November December if the health dynamics allow us to do. And while we are still waiting for this, we are increasing our team in the hubs that we have to create more density.
So I think that those are the points regarding the hub traction. In terms of the structure of the hub, during this pandemic, we learned how to have better processes. And I don't think that we will have a leaner structure in terms of the size of the team, but actually we're improving productivity. So when we compare the productivity that we had prior to COVID and the productivity that we had nowadays, I think that the change in processes that we made and the way that we are executing now give us an advantage that we will keep, so we expect better productivity going forward.
Thank you.
Thank you, Mariana.
The next question is from Jeff Cantwell of Guggenheim. Please go ahead.
Hi, good morning and thank you for taking my questions. You've talked about the resilience in your It certainly seems like things are continuing to improve here in July. You mentioned the TPV is 46% above the margin level, which is great. I just wanted to ask if can give us your thoughts about the outlook for TPV and how you're thinking about the back half of the year. It looks like your hubs are coming back and there has been more workers and more activity over the course of the quarter.
And your client adds sound like they're moving in a positive direction as well in July. And it certainly feels like you should continue to see a rebound in TTV in the back half of the year. Can you maybe talk about that? Any thoughts you could give us there would be great.
Thanks. Hi, Jeff. Thiago here. I will start answer your question and then I will move to Rafael, okay? So first talking about TPV and focusing on the hubs, as you said, we are seeing some movements that are very interesting here.
1st is that the speed of current clients being onboarded is increasing. So productivity of our team and the onboarding process of clients is in a level that we were surprised, so we are very happy with that. And the average TPV of our merchants is much better than we thought in the beginning. So when we see the cohorts, we are actually getting more volumes from our clients that we were expecting. So the average TPV per client in this new cohorts are better than the older cohorts, and that's a very positive effect that we should keep.
So the combination of the acceleration in onboarding clients that we have shown to you in this presentation with a little bit bigger average TPV per client is making our TPV react on a positive trend. So we're happy to see how the hubs are the results of our hubs. More than this, we believe that this trend of digitalization of commerce relationships is very strong. So we're very happy to see that the assets that we've built in the past with the K2 and TSP, Mojipag and Pagarmi, they have great results. So we decided to merge those solutions.
And I think that those investments are really paying off in this new scenario. And the decision to offer everything we do as a product, as a platform for partners is yielding results in terms of volumes too. Think about our strategy this way. So we decided to create a core financial platform that serves as a product SMBs and as a platform digital clients and integrated partners. So this combination of the PSP and gateway integrated with our payment platform give us the ability to capture volume with all these commerce trends that is going on.
So we're very positive on that. I think that the corona vouchers volumes that we are getting, both the POS and the integrated partner, shows how our business model is prepared to adapt to the reality of the market. So I'm very positive with our numbers in the Q2 and the expectations for TPV going forward.
And Jeff, Rafael here. Just to complement Thiago's answer. So when you look at TPV in the Q3, for example, we have mentioned in our presentation that we had BRL 9,000,000,000 of TPV only from corona vouchers in July. So the dynamics in the Q3, you should see a bigger take rate sorry, a bigger TPV and a lower take rate because of those additional volumes. But as Thiago mentioned, this is important to highlight that despite a very low take rate, we have incremental revenue, right?
So if you look at the growth in our TPV, excluding corona vouchers, it was 40 2% already year over year in July. So we are seeing acceleration in the business regardless of the corona vouchers, but you do have that dynamic of big volume, which is incremental
in revenue.
And Jeff, by 3rd quarter just a second. Okay. So Jeff, by Q3, we will show you the volumes of Corona Voucher separately and we will show you the take rate separately for you to understand the dynamics. So I think that the yields and the take rate trends in the core is pretty strong, and Coronavirus by itself has good economics, that's why we decided to process those transactions. So I'm very positive with the yields of the solutions, both in the digital and the hubs.
Okay, great. That's very helpful color. Thanks a lot. I just wanted to I wanted to ask you a second one on the LINX combination. And from our standpoint, it's been very interesting to watch the past several months really for your company as you're increasingly focusing on software.
And now here it seems like you're really moving beyond payments in a meaningful way. So can you maybe discuss for us the opportunities that you're envisioning from the StoneLink's synergies on Slide 11 of the presentation. I just wanted to see if you can maybe give us an example or 2 about where those synergy opportunities will come from? Is it the 70,000 linked software clients that you think will use, maybe they were using a competitor for payments in the past and so the opportunities that you'll be doing the payments fees going forward. Is it SMB client that comes to you through Hub and you sell links software to them?
I guess I'm just trying to understand that a little more. And is it fair to say that we should be thinking about it as a combination that increases revenue per client for Stone? Is that fair? Any color there would be great. Thanks.
Thanks, Jeff. Thiago here. So I will start and then I'll pass it over to Lia. So I think you're right. This deal with this investment in Linx, it's about our best foot forward in terms of the software strategy.
So as you can see on Slide 7, we have made investments in software over the prior 2 or 3 years. And over the last 12 to 18 months, we decided to invest and watch and learn more about these combinations of software and the financial solutions. And now we see that these combinations of the retention of clients and the stickiness of the software solution with the yields of the payments and the financial solution is something very, very strong. We think that Linx has a talented team and great solutions in the retail. So we will keep our focus on merchants and retail.
So I think that in terms of priorities and strategic priorities, we are very aligned. So for us, the strategic rationale makes all the sense. And this investment, it's only about creating better solutions to merchants in the retail here in Brazil. We are seeing a big change in the way that merchants want to have solutions and access the digital channels, integrations with marketplace, with e commerce platforms, with social commerce platforms and by merging with links, I think we have all the tools required to help our merchants to take advantage of this digital transformation of the retail. So for us, it makes all the sense.
And by seeing Link's execution and products and our team's capabilities, our entrepreneurs, we decided to make these investments and we are very comfortable with that. I think that it was made with discipline and a lot of courage because the strategic road map makes all the sense. Lia, do you want to complement?
Yes, Thiago. Jeff, just to complement a few points of what Thiago mentioned. I think there's 3 big avenues of value creation here, right? So the first is pretty clear. It's about penetrating Linx's client base with financial services, which you already described, I guess, in for his question.
The second is really about combination of digital assets. So there's 2 important points that I think it's worth highlighting. The first is that we believe in Brazil, a lot of the digital commerce growth is going to come from those offline native players digitalizing, and we want to be able to give them access to increase their sales by accessing different digital channels, so be them marketplaces, their own website or social commerce. When you think about the set of digital assets that Linx has developed and the set of digital assets that Stone has through its Pagarmi platform. This combination is something that we think is really powerful because we can combine the e commerce platform, the gateway to connect to marketplaces and the order management system to Stone's API platform of payment services, right.
So when you think about the combination of these 2, there's a powerful offering that we can offer clients. And when we think about economics, we're really layering the economics of payments on top of the economics of an e commerce platform. So that's something that we think that we can evolve in a 1 to 1.5 year timeframe to really have a powerful offering for Linksys client base. But then of course we want to take the next step, which is to simplify that to bring down to SMBs, right. And then that's what we're calling our 3rd value creation avenue, it will happen by both at the same time simplifying the core solutions from Linx to be able to offer those to SMBs and to really strengthening and developing a distribution platform for software, which is going to take into account the operation that Linx already has today and the knowledge and expertise that Linx has in distributing software with the elements that Stone has developed in its hub strategy.
So all of the elements that we have developed in terms of client service, proprietary distribution, culture, are elements that we want to bring in to really transform the distribution model for software in Brazil, which is something that we think that we can really it's a challenge that we really want to take on that we think that we can really over the next 2 to 3 years really achieve significant results.
So just one additional comment, I'm sorry, just one additional comment, Jeff. So think about this combination as we are moving financial platforms and services upstream, while we are trying to learn with links teams and bring POS and ERP solution downstream to SMB. So this combination for us is very powerful.
Okay, great. Thanks very much and congrats on the results.
Thank you, Jeff.
Thanks, Jeff. The next question is from Thomas DeRado of BTG. Please go ahead.
Hi, good morning, everyone. Congratulations on the acquisition. And I have 2 questions, if I may. The first one is touching on this point that you guys mentioned a lot that it is an integrated payment platform for all sides. So for us, the strategy for SMEs and the loan pay with it's more clear.
But if you could share a bit more detail on what is the strategy for going up the pyramid for large accounts. So Linx has a good representation of this and indeed has a lot of clients that come from Hayden. So how you guys are thinking that this strategy, how will you tackle large accounts and what is the niche that you are focused more, is more in commerce and large retailers or if you intend to go to a more broad strategy? And my second question is related to the ABC platform. The extension of the number is impressive.
And I was wondering if you could share a bit of detail of how much of these clients are coming from the core SME business and how much is coming from other channels and partnerships and the integrated partner? Just so we can kind of understand how is the evolution in each of these two channels to grow the strategy? Thank you.
You, Thomas. Great question. Thiago here speaking. I think that in terms of the strategy with the payments and the financial platform moving upstream to this midsize and larger clients, over time, we proved our ability to combine payments and software in a way that you create value proposition to your clients with good economics and we did it in digital. So if you think the combination of the gateway and the payments or the PSP and the payments is pretty much the combination that you do with software and payments.
And you know that we serve big marketplaces and big clients on digital. So I think that our strategy here with Linx will be trying to create the same rationale. So by integrating the software with the payments, you create better value proposition to your clients and by unit by seeing the unit economics of each one of those clients, you can have a bundle offer that will be interesting to balance yields and results for our company and value proposition to our clients. I think that there's only there's another big factor here was that this last month we started our banking as a service strategy. So we have now integrated partners doing wire transfer integrated for our APIs here.
So this Bank as a Service strategy is something that we really believe. So when you think about all the transaction activities that linked clients have to do, if they can help them to do by their dashboards in linked and 100% integrated, I think that, that will create great results. When we think about the transformation that it will happen in Brazil with PIX, I think that this position still put us in a good position to take advantage of that. So there's many layers here in which the combination of software and financial solutions can create good value to clients with good economics to us. And about the UBC, I will let Aliya get your question, Thomas.
Sure, Thomas. I believe your question was related to the traction. So let me speak a little bit about where we are on the ABC strategy. So we really made a lot of developments and are really evolving and deploying the integrated platform to our SMB clients. As you saw, we disclosed a number of 67,000 clients already migrated to the fully integrated platform by July.
But I guess the really exciting evolution is that now we are really being able to penetrate a very significant part of new sales in the hubs with the complete ABC offering. So I think that we're making very significant advancements there and that is what explains the increase in the activity levels of our accounts, right, because the more that our clients use the combined banking credit and acquiring solution, Of course, they use the banking as a domicile for their acquiring and then that naturally increases the activity levels of the banking solution. So we're really excited and seeing very good traction there. The revenue increase that you saw is largely related to what Thiago just mentioned, which is that we are seeing a lot of interest also from integrated partners who want to integrate to our Open Banking platform to offer transactional banking services in their own solutions, right. So we've had good traction from that part of the business recently and we are really excited with the opportunities of that part of the business as well.
So Thomas, just to complement that. So every time that we think about a business or a product that we are creating, there are 3 pillars that are very important. 1 is we will always keep this culture of client centricity to decide on the roadmap of features to our clients, given the feedback and the learning loop that we have to be in touch with them. And that's why we decided to create our banking solutions and integrating the ABC in the way that is best for our SMB merchants. So when you see the evolution of number of accounts by Q1, Q2 to July, it's all driven by the penetration of the banking in the SMB market and the ABC numbers that you saw, the 67,000 is all ABC within the hub strategy and our channels that we do marketing in, it's all the SMB.
When you see revenue, it's about the 3rd pillar that we every time that we understand what is needed and we think as a product to the SMB, we released this as an open platform for integrated partners. So that's why we now have integrated partners using our Bank as a Service platform. So the increase in terms of revenue is because we have some big partners that transact a lot of wire transfer and use many of the services. So this strategy is really taken off. So that's why we have these good results in terms of the growth of revenue.
Okay, great. That is very clear. Thank you very much.
Thank you, Thomas.
The next question is from Craig Maurer of Autonomous Research. Please go ahead.
Yes, good morning, everyone, and congratulations on the acquisition. Couple of questions. First, how quickly do you think once the deal closes, you could move the TPV off of Peggie's platform onto your own that's associated with Lynx Pay? And secondly, with this acquisition, Stone is clearly becoming the by far the most integrated commerce capability provider to retailers, SMB and above, combining both financial services and retail technology. And as well as obviously banking offerings.
How do you think the regulators will approach their view of the banks and their integrated acquirers going forward now? Do you think that they will allow again banks to start bundling offerings to compete with what Stone can now present as competition? Because clearly the argument seemingly around bundling has fallen apart now and banks will likely push aggressively to get the regulator to allow them to bundle again to compete with what Stone has?
Hi, Craig. Thiago here speaking. That's great question actually. So let me tell you in 2 parts. 1st, about the TPV of LINKS, I think that we have to be very disciplined here in the way that we articulate about this.
I just want to be very clear that this transaction is subjected to the antitrust authority approves. So I think that we should not talk too much about Linx and the way that Linx the business. I think that Linx has to protect its relationship, its partnerships, it's very important. So I think that we cannot say anything about the Linx relationships with their partners and suppliers and we have to make sure that we follow all the rules when you have a process of investment like this. Just hello?
Can you hear me now? I can hear you now, yes. Sorry, I'm in the backup line. I dropped from my first line. So I think that we cannot say too much about this.
And in terms of the regulators and the rationale about the banks and I think it's completely different the way that we approach our strategy. So I think that bundle offer is completely different than type offer, right? So we always want our software solutions to work with all financial platforms, and we want our financial platforms to work with all software solutions. That's why we believe that and when you see 3 years from now, we will have 3 great assets under the same umbrella and strategic rationale will be Stone as an SMB focused platform, financial platform for SMBs here in Brazil. We will have Pagarmi, our digital platform that serves as a Fintech as a service for digital clients, and we are building here a full omnichannel commerce platform to serve merchants in Brazil, and we want each one of those platforms to work with any providers that our clients want.
So for us, the opinion and the decision of our clients is the thing that matters the most. So if our clients want to use our financial solutions with a different software solution, for us, it's great. If our omnichannel software platform and our clients want to work with different financial provider for us, it's great too. Our mind here is to create value proposition, to help merchants to have better products and not create a way for our clients not to use the partners that they want. So we will be always focused on this client centricity and putting the needs of our clients in 1st place.
This concludes the question and answer session. I will now turn over to Thiago Piau for final consideration.
Thank you. Thank you all once again for these great questions. We are very excited with this new phase of Stone and the great opportunity in front of us. I'm sorry that we cannot take more questions. We would love to have here more 1 hour, 1 hour and a half of questions and answer.
But unfortunately, as you know, we have launched our follow on, so we have to move for our roadshow. But we just want to thank you for all the support and see you next quarter. We're very excited with the future ahead of us. Thank you very much.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.