Hello, everyone, and thank you for waiting. Welcome to PagSeguro PagBank's Fourth Quarter 2020 Results Conference Call. This event is being recorded and all participants will be in a listen-only mode during the company's presentation. After PagSeguro PagBank's remarks, there will be a question-and-answer session. [Operator Instructions]. This event is also being broadcast live via webcast and may be accessed through PagSeguro PagBank's website at investors.pagseguro.com, where the presentation is also available. [Operator Instructions] The replay will be available shortly after the event is concluded. Those following the presentation by webcast may pose their questions on PagSeguro PagBank's website. Before proceeding, let me mention that any forward statements included in the presentation or mentioned on this conference call are based on the currently available information and PagSeguro PagBank's correct assumptions, expectations and projections about future events. While PagSeguro PagBank believes that there are assumptions, expectations and projections are reasonable in view of currently available information, you are cautioned not to place undue reliance on those forward-looking statements. Actual results may differ materially from those included in PagSeguro PagBank's presentation or discussed on this conference call, for a variety of reasons including those described in the forward-looking statements and Risk Factors sections of PagSeguro PagBank's registration statement on Form 20-F and other filings with the Securities and Exchange Commission, which are available on PagSeguro PagBank's Investor Relations website. Finally, I would like to remind you that during this conference call, the company may discuss some non-GAAP measures. For more details, the foregoing non-GAAP measures and the reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures are presented in the last page of this webcast presentation. Now I will turn the conference over to Mr. Ricardo Dutra, CEO. Mr. Dutra, you may begin your presentation.

Good evening from São Paulo, everyone. And thanks for joining our fourth quarter results conference call. Tonight, I have here with me Eduardo Alcaro, our Chief Business Development Officer; Artur Schunk, our Chief Financial Officer and André Cazotto, our Head of Investor Relations. First of all, we hope you and your families are well and safe. We have been living in unprecedented time since the outbreak of COVID-19 in Brazil that has started in second half of March 2020. Merchants and consumers have changed their behaviors to face this unknown scenario, where we people stayed at their homes for a while and almost every industry was forced to accelerate digitalization and the adoption of alternative payment methods. Meanwhile, our dedicated employees have been doing an extraordinary job to keep serving our clients both merchants and consumers with excellence, which led us to reach records in several KPIs. Thank you very much PagSeguro PagBank team. Before presenting our achievements, I'm pleased to report that PagSeguro completed the strongest financial performance quarter in our history. Achieving record TPV in both PagSeguro and PagBank record net revenues that surpassed BRL2 billion in a single quarter and a record non-GAAP net income reaching BRL430 million. This results reinforced our execution capability and our confidence to remain focused on democratizing financial services and promoting massive financial inclusion in Brazil, assuring that everyone has access to the best and most complete financial ecosystem in the country. Therefore, we continue to be the most profitable and leading company in terms of attracting and engaging million of clients. Looking forward, our opportunities over the next year have never been great. There will be more online purchasing; more digital banking, stronger migration from cash to digital transactions and the unique possibility to cross sell a very profitable combination of…

Thanks, Ricardo, and good evening, everyone. It is an honor to be with you today for the first time as PagSeguro PagBank's CFO. Certainly, the foundations built by Eduardo during the last years were extremely relevant for now and for the coming years and I am looking forward to lead from here on. Hoping to continue the outstanding work done until now. Moving to Slide 7, we are presenting our costs and expenses, EBITDA and net income performance. Our non-GAAP total costs and expenses ended the quarter totaling BRL1.5 billion, up 48% year-over-year. And breaking by category, sales and services costs grew 54% due to the TPV growth of 61% versus last quarter of 2019. Interchange costs up 37% year-over-year, impacted by the mix change toward more debit versus credit in the period; the growth of 78% in personnel expenses are related to more tech developers and professionals to support the expansion of PagBank, PagInvest and hubs initiatives. Our depreciation and amortization has also increased 188% year-over-year driven by an unprecedented merchant addition during the whole 2020, boosting POS acquisitions depreciation and higher amortization of product development. Marketing allocated in sales and services increased by 40% year-over-year with higher investments to promote digital wallet, PagBank products such as Pix, CDs and marketplace and clients' engagement. Q4 2020 selling expenses reduction of 12% are explained mainly by chargebacks, decreasing 26% year-over-year as a percentage of the TPV, reaching 14 basis points in the quarter. Even with higher exposure to online sales, showing an operational improvement and a credit portfolio more than double compared to Q4 2019 with better delinquency rate performance in the new cohorts. The graphs in the middle of the slide present our results for the quarter. The first is the adjusted EBITDA that reached BRL726 million, up 24%…

Thanks, Artur. Moving to Slide 12, I want to comment about our new initiatives to move up market in payments, a natural and additional business verticals that will be complementary to our acquiring strategy. In the past years, the small and medium businesses have been proactively reaching PagSeguro to serve them. We know by fact that to compete in the long tail market, PAGS unique strengths such as brand, first mover advantage, online reach and banking ecosystem created a natural entry barrier. Having said that, it is easier to move up in the pyramid than to move down, and after several discussions, we decided to test and roll out a few hubs in 2020, working in an omnichannel model, combining physical presence with our online self-service knowhow. We tested our hubs in all geographic regions of Brazil, evaluating the merchants' profile, their needs, paybacks and returns of the existing investments. Since our IPO, we became a more mature company with an even stronger brand than three years ago. And now we are prepared to increase our penetration SMBs. And PagBank has the most complete digital banking offer among acquirers that serve SMBs merchants. SMBs are still badly served on both payments and banking. And in terms of volumes, the TPV addressable market accounted for BRL700 billion. Cost discipline, combined with our execution capability and our ability to efficiently scale up our payments platform, led us to conclude that SMB segment is a profitable market. We know that current acquiring SMBs margins as a percentage are not as high as long tails. However, SMBs positive contribution margins will be accretive to ours EPS in four to five quarters, which is an attractive payback period, considering only acquiring. And as time passes by and we scale our banking strategy for those clients,…

[Operator Instructions] Our first question comes from Jeff Cantwell with Guggenheim Securities.

Congrats on the results. And as always, you're very detailed in your prepared remarks, thanks for that as well. I just want to circle back on your comments and ask a couple of questions. First off, on your merchant base, you added a record 765,000 merchants this quarter, and that was well ahead of where we were. So can you maybe tell us more about what's happening right now? Can you talk a little more about what's driving that increase? For example, are you seeing merchant demand strengthen due to this one stop shop platform that you build? Is it because of maybe less competition in the long tail? I just would love to hear more about what you're seeing and help us understand how the merchant base is expanding this quickly. And then as a related question, I guess I'm wondering since it sounds like you have real momentum here, and now there's this new hubs strategy with SMBs, which looks like it could potentially be meaningful to TPV, I was hoping maybe you can give us some thoughts about what you're thinking for total net merchant adds in 2021. And any color on the outlook there would be great. Thanks.

Jeff, this is Ricardo. Thank you for the question. Regarding the merchants, we had this more than 700,000 in Q4. But in this figure, we have MOIP. We have more MOIP merchants that we integrated MOIP after November. So if you exclude MOIP, we are talking about 300,000, a little bit more for PagSeguro. So what we saw in January at the beginning of the year, we are having the same pace that we had in the past. We had this close to 300,000 per quarter. So that's what we've seen so far. Looking to this year, we don't have the exactly number for the hubs, for the number of clients of the hubs. That you can imagine is much lower than the long tail clients. Our models, we already incorporated what we expected for that. And the result is this TPV growing more than 40% in 2021.

Okay. Great. And that was my follow-up question. I was hoping you could talk a little bit about the guidance. Your acquiring TPV guidance is for growth of 40% plus this year. And that looks pretty strong especially when we consider how much TPV increased in 2020? So can you walk us through that guidance, just help us understand where that incremental will come from? Is it rebound in your existing merchant base? Is it new online volumes? Is it the move you're planning to make up market? Is it merchants you're adding here in the fourth quarter? Any additional color that can help us unpack the thought process about your TPV guidance would be great. Thanks.

Jeff, well, just going backwards. The hubs TPV, as you saw in the presentation, we expect to be between 6% to 11%, so of course, it's going to help. But the main driver is the base that is growing the long tail that we are adding. Hubs TPV at this point are not relevant and you could see that we grew already more than 50% in January and February. So it's part of the dynamics, the base, the net adds that we are putting here. You are right in your previous question. You asked about the competition long tail. That is not the same that it used to be in the past. And you're right, some of the players that try to come to long tail decided not to compete with us anymore, not to compete in long tail anymore. So we are strengthening our position in long tail and also taking advantage of that to go up a little bit in the pyramid to serve these kinds of the hubs. But going back to your question, hub is going to be between 6% to 7%. The majority of the growth is going to come from the base that we have, as you could see already in January and February, growing more than 50%. André Cazotto: Just one additional commentary here, Jeff. André speaking. We should expect online volumes to continue to be extremely strong. We just completed the acquisition of MOIP, so now we have the operation up and running. We continue to see a very strong demand for small and medium businesses to going online for the first time and we're prepared to serve them. So we're also expecting a good contribution from online TPV in our total guidance.

Okay, great. Thanks for all the color and congrats on the results.

Our next question comes from Jorge Kuri with Morgan Stanley.

Congrats on the numbers. Could you please expand more on the hub strategy? What type of size of SMBs are you trying to go after? Is this sort of like an overlap of where stone [ph] operates, merchants that process BRL350,000 to BRL400,000 a year in cards? Or is it smaller merchants? Is the hub strategy based on boots on the ground? Is this an intensive people strategy? How many people you're going to hire to run the hubs? And if you can tell us what the pilot hubs that you've been operating in 2020, what type of results are you getting in terms of volumes and take rates? Just overall, I guess it's a big announcement and so more details around exactly what type of businesses and how you're going to run it will be great. That's my first question.

Jorge, this is Ricardo. Thank you for the question and good to hear you. So I'll try to address the points come up here. So well, the first one the size of the merchants, what we've seen so far, they are not as big as the competition at this point. But I could say you that's between five to seven times larger than what we had in long tail as an average. The volumes and take rate, I would say that is very similar to what competition operates. We see the similar take rates. As I said in the presentation, they are smaller than long tails however, it is additional to our business plan and as they have a TPV that is five to seven times larger, it is accretive to our business in four to five quarters, as I said before. So the results that we got in the pilot are exactly those, similar take rates from competition, TPV five to seven times larger and paybacks between four to five quarters. That's what we're seeing. This calculation about payback considers only acquiring. If we cross sell some banking products, we could anticipate that. It's too early to give some guidance on that. And the way we're going to work is going to be very similar to what competition does, but we are going to try to make a hybrid model or omnichannel that we also try to take advantage of our size, our online, all the know how to serve these clients in the hubs. We will add some people in the suites that we imagine. It is important to have local presence. But we try to mix the way we get the clients and the way we serve them afterwards is going to be a combination. I'd say, is our secret sauce. And important to say, we are today probably the only one serving to hubs that deliver the device in the very same day. So that's something that we try to put on the streets and is working very well. So that's what we have at this point.

And a follow-up, thanks Ricardo for that. That was very useful. And a follow-up is, are these merchants already operating with existing acquirers? Or are you taking market share from any of the competition? Or these are still small enough SMBs that you're finding many of them who don't have terminals or accepted cards before? Or this is outright, I need to take market share away from the existing players?

Well, Jorge, just before I answer your question, we decided to go after this market because we've been receiving inquiry from this type of SMBs for PagSeguro to serve them. So of course, we cannot make a general statement here. But usually, still today, SMBs are badly served. Some of them non-acquired, and some of them in both in banking, some of them in both. So the idea here to put the hubs to up and running is because we got some requirements from these SMBS, inquiries from them, and then we try to go after them. The majority of them, not to say - I mean, very close to 100%, they already have another payments provider and to answer your question, as we are taking market share from others in this hubs strategy.

Thank you, Ricardo. And my second question is on the net take rate. There seems to have been stabilization on the transaction part of the take rate, as you pointed out with debit mix being now more normal. The compression seems to have been mostly on the financial income. Is this related to something temporary, something cyclical or this is just related to more competition and lower benchmark rates and just difficult to continue charging the same level of prices? Or what explains that 10 basis point contraction in the take rate of the financial income?

Well, Jorge, it is hard for us to say when it's going to have the recovery because we still have a lot of uncertainty here. But when you look back to what happened in Q4 is that we saw kind of a stabilization, as you said, in terms of mix of TPV of debit and credit. The point is, there are some other variables that compose this take rate. One of them, for instance, is duration. We are not changing the prices, we are not decreasing prices. But as I said, people in Brazil receive an additional salary, so they may keep buying through installments. But with lower duration, that also impacts the financial income. Important to say, if we look to Q4 2019 versus Q3 2019, we decreased 20 basis points in our take rate from 3.17 to 2.97. And this year, we had just increased 5 basis points from Q3 to Q4. When you look at what happened in January, it's interesting because we are growing 50% TPV as we never gave the disclosure. But the revenue growth is similar to what we had in Q4, close to 30%. And in Q4, TPV was growing 60%. So the revenue yield so far in January, it's healthy. So let's see. It's too early to celebrate, lots of uncertainty here. We don't know how's going to be the vaccination, how is going to be the deployment of vaccination for the population as people can see through the news. Government is talking about second round of coronavouchers starting in March. So I mean there is still lots of uncertainty, but this stabilization is good news. And going straight to your question, we are not decreasing prices. That's not the reason for this decrease in financial income.

Thanks Ricardo and congrats again to everyone.

The next question comes from Rayna Kumar with Evercore.

So starting off with your margins, you gave some very good detail on really investing in your hub strategy in 2021. How is that going to play out for your net income margin in the first quarter and for 2021 as a whole? And then separately, the potential March second round of coronavouchers, is that included in your 40% plus TPV guidance for the year? Or would that be incremental? Thank you.

Rayna, thank you for the question. Also starting from the end, going backwards here. The guidance that we gave that is above 40% TPV growth expected does not include coronavoucher starting March, that would be an add-on to our business plan. And also worth to say that, on the one hand, we have the TPV will grow. But on the other hand, we have the change in the mix. So we have this tailwind that is TPV growth and the headwind that is the change in the mix and may impact take rates. So just to be clear here, the guidance does not include a probable second round of coronavoucher. Regarding the impact of hubs in our P&L, what I can say to you at this point is that hubs in 2021 will be slightly negative. So they will impact net income in 2021 slightly negative. But as I gave the payback for you during the presentation between four to five quarters, we expect to be positive by 2022. Let's say if you don't sell banking services to the aggressive or better than our assumptions that you have in our plan. But just what we have today will be slightly negative in 2021 and positive in 2022.

Is that a net number you're speaking about? Or would operating leverage in your own business to offset that potential decline in your margin that you could see from the hub strategy in 2021?

Rayna, important to highlight here and to be clear. The platform that we use for long tail and for SMBs that we will serve to hubs, they are exactly the same. So I just want to be clear here, we're not transforming the company and moving the company around to serve SMBs. The platform is exactly the same. What changed a little bit is some of the features that they may use in the accounts, some of the features they may require in the acquirement and the way we come to them. The distribution channel, of course, is different than the online that they use for long tail. So the investment we are doing some of the processing sales person, so this is investment. We are not talking about large investments in platform to serve them. Of course, we also have some investments here and there. But the majority of the investments are related to salespeople and some process, that we need to have back office to serve them. But that's why we are going to impact the P&L this year because we're going to have the salespeople here. They're going to get the client. They will start making the transaction and we're going to have payback between four to five quarters. That's why it's going to surpass 2021. It's going to be slightly negative this year, and then we'll be positive by 2022.

Very helpful, thank you.

Our next question comes from Craig Maurer with Autonomous Research.

I wanted to ask about the credit opportunity in SMB. We see that competitors that are disintermediating incumbents are showing extraordinary growth in credit with very positive ROAs in the SMB segment, so will entering the SMB segment significantly accelerate the growth in your credit portfolio? Thanks.

Craig, thank you for the question. Good to hear you. What you have in our business plan at this point, the focus for the credit is in long tail. We started serving hubs. We are having good results in terms of acquiring. I would say it is too early to say how it's going to be the credit offering for the SMBs at this point in our base. We know for sure that we can disintermediate incumbents, that's for sure. There's going to be some dynamics in the industry starting in June with the receivables, the chamber of receivables. So it is an add on for our business plan. There is a lot of potential there. But I just don't want to make it here, let's say, the promise or generate expectations that we are going to explore that aggressively because we are still evaluating. But for sure, it's a good opportunity. In our business plan, we are considering to serve long tail the way we've been doing since last year; offering credit for them, charging through Square Capital, through the MDRs and so on. So that's what we have at this point. There is still a lot of uncertainty down here in Brazil with the COVID-19 and so on. So that's why we are trying to give you the best estimates or the best information that we have at this point and we may update you as time passes by.

Just one follow-up on what you said. Can you discuss how the receivables marketplace is going to work? If you know, I mean how you'll be able to pursue receivables within the marketplace? Is it daily? Is it monthly? Is it batched? I mean how is that process going to actually work considering merchants in Brazil, I would imagine are generating hundreds of thousands of requests for prepayment on a daily basis?

Yes. Craig, so just to try to explain here for everyone, quick for everyone. In terms of long tail, we see that we don't see risk in our base for the simple reason that once they started to work with PagSeguro, they need to prepay their sales, and they need to receive in D plus zero, D plus 14 or D plus 30. They are not price sensitive. They don't have the sophistication to have this type of discussions about chambers of receivables and so on. What we see that - the type of the merchant that is looking for this chamber of receivable are large accounts and large SMBs. They have the sophistication. They have their - let's say, the financial manager that can try to bargain some basis points here and there. At the end of the day, the chambers of receivables is a centralized hub with information that everyone in the market, that once the merchant gave this receivable a guarantee for a credit, no one else can take it. Today, there is no centralized chamber, so that's why it's kind of inefficient. We see that a huge opportunity. If you look to our market share, we are close to 8%, so there is 92% of large clients making transactions out of PagSeguro ecosystem, that we could go over them, we could go after them and after then anticipation regardless of the acquiring the work today. So it is a huge opportunity and the expected launch date is going to be June 7.

So this is about visibility not necessarily about mechanics. This is showing you where to go, but it's not facilitating you actually making that credit?

I guess I would say it is both, Craig. Visibility that you can see the receivables there and of course, we can offer through your ecosystem. You do not offer the lending through the chamber of receivables. You should do by yourself in your ecosystem, in your app, in your website and so on. But you have the visibility in the mechanics. I would say that it helps both because through the receivables, the collecting is more efficient. So that's why you have the information, you offer them the lending, and then the mechanism to make the collection is efficient, which is not today.

Okay. Thank you. That's very helpful.

The next question comes from Mario Pierry, Bank of America.

Congratulations on the results. I have two questions. First, on your TPV growth guidance of more than 40%, I just want to understand that this number, 40%, if we take 40% as the bottom of your guidance, it just seems to me too cautious. Your volumes are already growing over 50% year-on-year. You have easy comps over the second quarter of last year. You added 1.1 million clients in the second half of 2020 alone. And you're adding the SMB volumes. So just trying to understand then why you're going to say TPV growth of more than 50% rather than 40%? And then my second question is related to your CapEx, right? You're given guidance here, CapEx of BRL2 billion, which is basically your CapEx in 2020, even though you're doing this hub expansion. So trying to understand if the hubs costs, they show up as OpEx and there's no CapEx associated with that. And then when we think about your hub strategy, are you targeting a specific region of the country? Or are you going to go nationwide right away? Thank you.

Mario, thank you for the question. Good to hear you as well. So we have three questions here. I'm going to answer the first and the third, and then Artur can handle the CapEx question. Again, going backwards, the plan here is to serve all regions of the country. Of course, we will not be able to cover the 5,500 cities that you have in Brazil, but we'll prioritize those that you see more potential, less competition and where we can we judge [ph] that it's is going to have the better performance. So yes, and the idea is to serve all regions of the country. Regarding the guidance, you're right, 40% is the bottom. That's why we put in this slide higher than 40%. Some people may think that is conservative, as you mentioned. But remember, we're still in the middle of the pandemic in Brazil, so lots of uncertainty here. Just to give an example, the city of São Paulo are going to have partial lockdowns. There are some cities in the countryside of São Paulo today having full lockdowns. As I said before, vaccination is happening, maybe not in the speed that we expected - so there is still uncertainty. We can update that as time passes by, but lots of uncertainty at this point. We see many things going on, lockdowns here and there. So that's why we decided to give you the guidance that we do believe is going to be the best information that we have at this time. And you're right, 40% is the bottom. In January, we grew 50%; in February, 50% as well. So let's see. We can update you as time passes by.

And then the question on the CapEx?

Yes. Mario, I will follow with the second question. It's a pleasure to talk to you today. And first of all, in 2020, we had BRL2 billion in CapEx. Part of this CapEx is related to the POS that we purchased to support the growth of the company. We had a record of 1.8 million net additions in 2020, so we need to buy POS to support this addition. And also, in our CapEx, we include R&D investments. And as we are accelerating our product road maps, so we had a huge amount in R&D investments in our CapEx. Related to hubs, we don't consider CapEx for hubs. It's not necessary, just the purchase of POS for hubs, okay? And in 2021, we consider the same amount of 2020 as a guidance because we think we will continue to grow our company and accelerate the net additions for 2021. André Cazotto: Just one additional commentary here. Mario, just like Ricardo said in the guidance for 2022, we expect CapEx as a percentage of our total revenues to go back to regular levels that we had in 2019, for instance. So it's like a one off that we had to support the growth that we observed it, unprecedented demand for terminals like Artur explained, additional terminals for active clients because of takeouts and delivery. So that's part of the growth, right?

Okay, thank you. Very clear.

The next question comes from Bryan Keane with Deutsche Bank.

I just wanted to follow-up on the net margin question. I get the investment in the hubs and investment in PagBank. What I'm trying to figure out is what should we expect for that first quarter in net margin. And then for the year, what will net margins do? Because you got some puts and takes with hopefully the pandemic getting behind us, which will increase margins but also the investments, so just looking for some thoughts there.

Bryan, thank you for the question. Talking about what you saw so far, as I answered to Jorge before. What we saw in January and February, although the TPV is growing 50%, revenues are growing the same, 30% that you saw in Q4 last year. So we are seeing a better revenue yield. We always say here that maybe it's too early to celebrate. As I said before, some ups and downs, lockdowns here and there, coronavouchers that might come starting in March. But what we saw in January and February, a good revenue yield at this point so far. Talking about the overall margins for the year, I know it seems to be repetitive, but we will keep investing in PagBank. Of course, we have our plan how much we're going to invest. But we have today eight million active PagBank client, seven million active merchants, a record number of downloads, acquiring volumes growing 50% only in these first two months. So the idea here is not to decelerate. We need to keep investing, take advantage. We said before, the market we are looking for is at least 17 times bigger than what you have only for the acquiring. But the margins are dependent on the economy recovery. If the economy does not recover and we have the same debit mix, the margins are going to keep at the same level that we've seen in the past quarters. If the credit installments come back and people get back to their lives and start traveling and going to restaurants, buying clothes, going to shopping centers, traveling around, we're going to see a better take rate. For sure, we're going to have EPS accretion this year. The plan is to grow and of course, grow our profits. We just don't want to make, let's say, any forecast or any guidance on that because it still had some short-term uncertainty. So we are confident that we can have the guidance for the three items that we gave in the last slide, TPV, CapEx and investment. So as of now, the focus is to grow the company and we decided not to give you the exact guidance for the margin and net income because of the uncertainty that we have. But again, if things are getting better, we will give you more color on that. And important to say here that we plan that PagBank is going to be profitable by 2022. We are investing here. We are creating a platform. As you can see, we are launching home broker. We are launching treasury bonds. We just launched our distribution of crypto funds. So we are in the investment mode for some of the business units of the company, PagBank, PagInvest, insurance and so on. We expect that 2022 starts to be profitable. So I mean that's the best answer that I can give you at this point.

No. That's helpful. Those factors are helpful for us to understand the impact on margins. And then my second question is, looking at PagBank revenue, it was great to see the acceleration in the revenue growth. I think it was close to 146% growth, something like that. But I noticed for 2020 in general, the card revenue looked like it declined a little bit. So will that card revenue, should that pickup in growth as we go into 2021? And can we expect still that triple-digit growth rate in PagBank revenues?

Well, Bryan, just the participation in the mix for credit cards or for cards in the PagBank went down, you're right. When you look at the slide, you see the participation went down. But the main reason for that is the lockdowns and all the COVID impact that we had in Brazil last year. So people stay at home, they don't use cards, they don't withdraw money, they don't use cards a lot. So that's why the spending go down, so that's why we see the decrease in revenues of cards as a participation of the mix. And part of that we offset with our credit offer. As you could see, we are not being aggressive either here. Our credit portfolio closed Q4 with BRL600 million. So we are not talking about billions of real here. I mean, we were cautious last year from March until August and September. And then we start giving some credits after that. So I mean we see a lot of traction. Even being cautious, we grew the company revenues for PagBank and reached more than BRL540 million. So absolute figures are up in all the lines, in cards, in credit and the transactional.

And should we see a bounce back especially in the cards portion in 2021? Or is it just still dependent on the economy and the comeback and the recovery?

It depends on the economy, Bryan, because if people stay at home, they don't use card very often, and the money doesn't go away. I mean you don't see the money in the economy. So that's why. So we're going to see increase. That's for sure. We are adding one million PagBank clients each quarter, so it will grow. It's just hard to say you how big or how strong it's going to be that growth.

Got it. Thank so much. Congrats on the quarter.

The next question comes from John Coffey with Susquehanna.

I guess two questions. And the first one is, on your projections for the hubs. Now I guess if I look at your 2020 TPV and grow at by the 40%, and then I think you used the high end of the range in which you thought the hubs could contribute about 11% of your TPV, if I compare that to the BRL700 billion, I think, you had for the SMBs, it seems like that would be maybe you would be expecting by the end of 2021 to have about a 4% market share in the SMBs. I just wanted to see if my math was right there.

Well, John, let me see if I understood your math. We had BRL162 billion this year. If we add 40%, we are talking about BRL227 billion for 2021, times 11%, we're talking about BRL25 billion.

Yes. So BRL25 billion over BRL700 billion, it seems like it's about 4%. Does that sound right to you?

Yes. It is right. We are starting. As we said, the hubs in 2021 were not relevant. We are just starting. So that's why we have this projection between 6% to 11%. And we've got this 11% that is on top of the - let's say, the guidance, but you're right.

All right. Good. I just want to make sure I was thinking about it right. And the other question I had is what do you expect for MOIP in 2021? I just wanted to understand your thoughts there a little bit better.

Well, we acquired MOIP back in August last year, but we only could integrate them in November, that we had all the authorizations from the regulators and so on. So since then, we've been working here to integrate MOIP in PagSeguro ecosystem and structure. We will have lots of opportunities for cross selling throughout this year. As I mentioned before, we can offer MOIP serve some marketplace and large clients. We can go after these guys and offer them POS and solutions for physical stores. And we also have some clients here that were looking for online solutions. Some of our clients, they're looking for online solutions, and our online solution was not that good as MOIP is, so we will also cross sell in our base the MOIP solution. We expect MOIP to grow faster than the whole company because it is online, because they're going to have these cross-selling opportunities. And that's what I have in mind at this point. We just added there 400,000 merchants. We start to work globally and we have all these teams already integrated to go after these clients.

Great. Thank you very much.

The next question comes from Victor Schabbel with Bradesco BBI.

Just a follow-up on the strategy of opening up hubs, smart hubs this year. How do you see this strategy impacting your expenses going forward? Do we see any additional pressure on these lines going forward? Or shouldn't we expect anything much different? Thanks.

Victor, thank you for the question. As I said before, this year hubs will be slightly negative, so that's going to pressure expenses, that's for sure because we need to make the setup and hire people and then start selling. There's some time to mature, people to get productive and so on. We have training. But the long-term view on what we see so far with the hubs that we already have, that we are running, we have this payback between four to five quarters, only talking about acquiring and without banking services. So that's why we think in 2021 is going to be slightly negative. It will be positive in 2022 if we do not anticipate some banking revenues and banking results that we may have and it could be an upside for the plan. So that's what we have so far.

Perfect. Thank you.

The next question comes from Tito Labarta with Goldman Sachs.

A question following up, I guess, on PagBank, you continue to add clients there at a strong pace. Do you think that one million to 1.2 million clients is that sustainable for how long? How big can you get in terms of the number of PagBank clients? And then thinking about the revenues, in the quarter, it was roughly 10% of total revenues. For 2021 is a reasonable assumption maybe something like 15% given the target of getting to 30% in the next three to four years. Just to get a sense of how quickly PagBank will continue to grow sort of in 2021.thank you.

Tito, thank you for the question. Just a quick story here, when people asked us, how would be the net adds in 2019, we gave the guidance about one million. We surpassed that. We were close to 1.2 million. Last year, we didn't have the official guidance, but we gave the soft guidance about 250,000 per quarter, we're one million in the year, and then we have 1.3 million. Just to say you that we have some sense in the size of the market, but sometimes you get surprised that is bigger than what we thought or our performance is better than what we thought. So we keep adding one million per quarter for PagBank, we didn't see a decrease in the demand in January, so we are having the same pace. If you look at the downloads, we are probably the number one in terms of downloads for bank apps. We had more than 8.6 million in Q4. So we don't see deceleration. It's hard to say when it's going to be over, but I just told you the story about merchants, and we are seeing the demand in the past two years. Remember, in Brazil, we have 30% of the population that don't have bank account. We have this digitalization trend not only in Brazil, but all over the world. So people get more digital banking. They know it works. They know it's safe. So we don't see deceleration in demand. In terms of revenues, Tito, to be clear, I don't have it top of my mind. We are not giving this guidance. We had this 10% in Q4. It depends how it's going to be the takeover [ph] of the cards, how is going to be the spending, and then we can give more and more information for you in the future. But at this point, we are not giving this exact number. I mean you can do the math and have some assumptions by yourself. And that's what I can say at this point.

Okay. No. That's helpful. Thank you.

Hello, everyone. So here, we conclude our Q&A session. Thanks for your time. See you next quarter. Thank you. Bye.

PagBank PagSeguro earnings conference call has concluded. Thank you for your participation, and have a good night.