3Q10 Results Presentation November 04, 2010
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3Q10 Results PresentationNovember 04, 2010
The Company makes forward looking statements that are subject to risks and
uncertainties. These statements are based on the beliefs and assumptions of our
management as well as on information currently available to us. Forward-looking
statements include information regarding our current intent, beliefs or expectations, in
addition to those of the members of the Board of Directors and Executive Officers of the
Company.
Forward-looking statements also include information regarding our possible or assumed
future operating results, as well as statements preceded or followed by, or that include,
the words ''believes”, ''may”, ''will”, ''continues”, ''expects”, ''anticipates”, ''intends”,
''plans”, ''estimates”, or similar expressions.
Forward-looking statements are not guarantees of performance. They involve risks,
uncertainties and assumptions, for they relate to future events, thus depending on
circumstances that may or may not occur. Our future results and the creation of value to
shareholder s may differ significantly from those expressed in or suggested by these
forward-looking statements. Many factors determining these results and values are
beyond Cielo’s ability to control or predict
Disclaimer
3Q10 Highlights
3
Transaction financial volume up 24.1% over 3Q09, to R$ 67.3 billion
Adjusted EBITDA up 20.9% over 3Q09 to R$ 760.6 million, and up 3.4% over 2Q10
Net income up 23.0% over 3Q09, to R$ 488.1 million, and up 6.6% over 2Q10
Cielo announces partnership with CEF and Safra
Cielo announces partnership with the brands Amex, Ticket, Sorocred and Policard.
Cielo announces joint-venture with Oi to offer acquiring and transaction capture services usingmobile devices
Cielo elected the “Company of Value 2010” by Valor Econômico; ranked first in the Valor 1000award in the Specialized Services category for the fifth consecutive year; elected one of the fivebest companies in people management by Valor Carreira; chosen as one of the best places to workby Exame Magazine for the 10th consecutive year
Macroeconomic Scenario - Brazil
4
1 2
3 4
5.7
3.24.0
6.15.1
-0.2
7.6
2004 2005 2006 2007 2008 2009 2010(E)
GDP Growth ( %)
Source: IBGE(E) Market Estimative- Focus Report - BCB (10/29/2010)
6
7
8
9
10
11
12Unemployment Rate- %
Source: IBGE
10.4
0
2
4
6
8
10
12
14
16
18Retail Trade Sales- %
Source: IBGE
41% 44% 45% 46% 43% 44% 40%59%56%
55%
54%
57%56%
60%
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
40,0
45,0
0
200
400
600
800
1.000
1.200
1.400
1.600
2004 2005 2006 2007 2008 2009 sep/10
Credit/GDP (%)Credit (R$million)
Credit Evolution
Individuals Legal Entities Credit/GDP
499607
733
936
1,227
1,414
1,612
Source: BCB
Cards Market- Brazil
5
1 2
3 4
17,1%18,9%
20,7%22,5%
2006 2007 2008 2009
Penetration of Card as means of payment in the Private Consumption Expenditures (PCE)
Source:ABECS e IBGE
244
301
375
444
111136
2006 2007 2008 2009 3Q09 3Q10*
Volume Growth (R$ Billion)
CAGR 22.0%
22.1%
Source: Abecs(*) ABECS Estimates
388
452
514565 553
612
2006 2007 2008 2009 3Q09 3Q10*
Number of the Cards Issued (million)
Source: Abecs(*) ABECS Estimates
CAGR 13.4%
10.8%
69.0
71.9
74,9
77,577,2
81.0
2006 2007 2008 2009 3Q09 3Q10*
Average Ticket (R$/Transaction)
(*) Source ABECS( Considering only Credit and Debit)
4.9%
Cielo – Financial and Operating Highlights
6
Financial Highlights 3Q10 3Q09 2Q10 3Q10 X 3Q09 3Q10 X 2Q10
Financial Transaction Volume (R$ million) 67,256.8 54,176.8 61,567.4 24.1% 9.2%
Number of Transactions (million) 1,037.7 860.7 965.1 20.6% 7.5%
Net Operating Revenue (R$ million) 1,137.4 924.4 1,048.9 23.0% 8.4%
Total Cost of Services (R$ million) (317.1) (244.3) (257.5) 29.8% 23.2%
Operating Expenses (R$ million) (108.8) (91.7) (102.6) 18.7% 6.1%
Adjusted EBITDA (R$ million) 760.6 628.9 735.3 20.9% 3.4%
Net Income (R$ million) 488.1 396.7 457.7 23.0% 6.6%
Total Net MDR ( bps) 121 123 120 (2) 1
Credit Net MDR (bps) 146 150 145 (4) 1
Debit Net MDR (bps) 79 78 79 1 0
Operating Highlights 3Q10 3Q09 2Q10 3Q10 X 3Q09 3Q10 X 2Q10
Active Merchants in 60 days (thousand) 1,147 1,088 1,153 5.4% -0.5%
Total POS (thousand) 1,657 1,532 1,606 8.2% 3.2%
Employees 1,096 1,075 1,058 2.0% 3.6%
Cielo – Operating Performance
7
1
3
2
1.142 1.4021.720
2.003
510 598
836987
1.232
1.424
351 440
2006 2007 2008 2009 3Q09 3Q10
Cielo- Number of Transactions (million)
Credit Debit
CAGR: 20.1%
20.6%
1.9782.389
2.952
3.427
8611.038
71.197 87.966
110.897 134.792
34.189 41.556
39.552
48.534
64.655
79.166
19.988 25.701
2006 2007 2008 2009 3Q09 3Q10
Cielo Transactions- Financial Volume (R$ million)
Credit Card Debit Card
110,749
136,500
175,552
213,958
54,17767,257
CAGR: 24.5%
24.1%
716
872
1,055
1,207 1,1621,250
679
824
996
1,133 1,088 1,147
2006 2007 2008 2009 3Q09 3Q10
Cielo- Number of Active Merchants (thousand)
Active Merchants ( transactions in the last 180days)*
Active Merchants ( transactions in the last 60 days)*
Cielo – Revenues Performance
Credit and Debit Revenue (R$ million)
8
18.8%
1
3 4
3,5% 3,0% 3,0% 3,1% 3,8%5,5% 8,4%
26,1% 24,7% 26,1% 26,2% 23,4%
15,2% 17,4% 15,7% 15,4% 16,2%
49,8% 49,8% 49,3% 48,4% 48,2%
3Q09 4Q09 1Q10 2Q10 3Q10
Operating Revenue - Activity (%)
Other revenues Prepayment of Receivables POS Rental Debit cards Credit cards
5,9%5,2%
5,9%
5,5%
1.945,1
2.402,2
2.892,9
3.627,8
924,4 1.137,4
2006 2007 2008 2009 3Q09 3Q10
Net Revenue (R$ miilion)
23.0%
CAGR 23.1%
596,0
745,9
903,1
1.067,1
268,1 295,7
2006 2007 2008 2009 3Q09 3Q10
Equipment Rental Revenue (R$ million)
10.3%
CAGR: 21.4%
512,3
608,6
3Q09 3Q10
Credit Revenue
155,9
204,2
3Q09 3Q10
Debit Revenue
30.9%
Cielo – Prepayment of Receivables
9
1
3
2
1.604,7
2.009,42.193,3
2.460,42.669,6
4,7% 5,3% 5,8%6,3% 6,4%
0,0%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
7,0%
8,0%
9,0%
10,0%
-
500,0
1.000,0
1.500,0
2.000,0
2.500,0
3.000,0
3Q09 4Q09 1Q10 2Q10 3Q10
Prepayment of Receivables
Financial prepayment volume
% Prepayment over Credit Financial Volume
54,4
61,866,1
69,7 72,0
3Q09 4Q09 1Q10 2Q10 3Q10
Average Term (days)
49,7
65,5 73,3
97,1
113.3
3Q09 4Q09 1Q10 2Q10 3Q10
Revenue of Prepayment of Receivables ex Adjustments (R$ million)
127,8%
Cielo – Financial Performance
10
1
4
2
3
18.7%
690,2771,0
851,1
936,3
2006 2007 2008 2009
CAGR 10,7%
Total Costs of Services (R$ million)
23,4%
29,8%
Adjusted EBITDA(R$ million) Net Income (R$ million)
1.038,8
1.409,5
1.764,3
2.450,7
53%
59%61%
68%
45,00%
50,00%
55,00%
60,00%
65,00%
70,00%
75,00%
80,00%
0,0
500,0
1.000,0
1.500,0
2.000,0
2.500,0
3.000,0
2006 2007 2008 2009
Adjusted EBITDA
628.9760.6
68%67%
5,00%
15,00%
25,00%
35,00%
45,00%
55,00%
65,00%
0,0
100,0
200,0
300,0
400,0
500,0
600,0
700,0
800,0
3Q09 3Q10Adjusted EBITDA Margin
657,9
883,9
1.115,3
1.536,7
34%
37%39%
42%
25,00%
30,00%
35,00%
40,00%
45,00%
50,00%
55,00%
60,00%
0,0
200,0
400,0
600,0
800,0
1.000,0
1.200,0
1.400,0
1.600,0
1.800,0
2006 2007 2008 2009Net Income
396,7488.1
43%43%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
35,00%
40,00%
45,00%
0,0
100,0
200,0
300,0
400,0
500,0
600,0
3Q09 3Q10Net Income Margin
351,5 353,9
427,4401,1
91,7108,8
2006 2007 2008 2009 3Q09 3Q10
Operating Expenses (R$ million)
244,3
301.5*
3Q09 3Q10
* Excluding the aditional brands fee
317,1
Mobile / eCommerce
Card Present Card Absent
Payment Transactions
Non-PaymentTransactions
STRATEGIC MATRIX
VAN* Services
* Value Added Network
Cielo – Strategic Planning
11
Big
Merchant
s
Medium Merchants
Small Merchants
50 –
55%
% Volume
Cielo – Competitive Landscape
% Revenue In Negotiation
20 -
25%
20 -
25%
30 -
35%
30 -
35%
35 -
40%
• mainly MDR
• MDR and
equipment
rental
• mainly POS
12
Cielo – Our Competitive Advantages
• RELIABILITY
• DISTRIBUTION
• INNOVATION
• DIFFERENTIATED RELATIONSHIP
• DIFFERENTIATED PRODUCTS
Our advantages:
13
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