Let’s remember that in the enterprise business specifically, we already have a very high market penetration. And our focus there is a lot more towards, driving efficiency and cash generation. And I want to also highlight that, yes, we do monitor top-line growth, and it is important for us. And we are allocating capital to grow where we see opportunity. But there is also a disproportional value to be captured in installed base of software clients. So, more and more, we are driving our execution towards providing software and financial services bundles and really capturing the financial services opportunities that exist within the software clients that we already have. And there is a very attractive opportunity in the priority verticals that we will have a chance to talk more about in the Investor Day within the MSMB segment, which is our focus.
So that’s a little bit on trends on top-line. Maybe Mateus can elaborate more on the efficiency side.
Pedro Zinner: Yes. For sure. So regarding the margin evolution on software, you are correct. I think most of the evolution quarter-on-quarter came from more normalized levels of personal expenses in the Software segment. And I think this is related to something that we disclosed last quarter, which was basically reduction in headcount that had a negative impact on the second quarter of 6.5 million in severance costs. And now we are basically collecting the benefits, from this reduction. Now, when we look ahead, I think it’s important to highlight that we still see additional room for improvements in software margins overall. It’s not necessarily a 100% related to personnel expenses. But I think in general, we see more benefits to come from the integration between the two platforms.
I think the second question regarding credits. So, you’re also right. We scaled the portfolio from 19 million in the second quarter to a 113 million this quarter. In terms of who we’re focusing at this time, I think the offering is mostly focused on our SMB segment. So, when we look at that volume of around R$30,000 per operation. We’re basically talking, about around 1 month of the client’s TPV. So it’s still a very conservative approach. But regarding the evolution in terms of sizing of the portfolio and the rates that we’re charging, I think the idea is to provide more color on the overall performance and strategy of the credit business on the Investor Day. So, I think we have to wait a little bit to give more details on that.
Operator: Our next question is from Geoffrey Elliott.
Geoffrey Elliott: In terms of the debit share increasing, what was behind that? Is that seasonality? Is that an industry trend? Is that specific to you? And is that something that continues — I know you have more debit in the fourth quarter, but looking further ahead, I’m just curious why debit, was higher this time?
Lia Matos: So, this is a market trend. It hasn’t to do with us specifically. We believe that this — from what we have seen in terms of other players releasing their results. This has been a trend in the market. Our hypothesis for this is credit delinquency is still limiting credit limits on credit cards. We think that this trend will improve going forward.
Geoffrey Elliott: And then, if I could squeeze it in on the buyback, you did the R$300 million very quickly. Do you kind of see that as the beginning of a process? Should we be looking out for more of these going forward?
Pedro Zinner: Yes. So good question. Maybe taking a step back to give you some context on how we think about the topic. So, when I look at the third quarter results, we can see that the Company is generating strong cash flows. We generated R$530 million net cash in this quarter, even after increasing the credit portfolio and also even after investing for future growth. And as our business evolves, we do expect our profitability to continue to increase, and this should drive even more cash generation. So, I think the decision of how we’re going to allocate this cash is becoming increasingly important for us. And if you look at the past few quarters, our decision was basically to reinvest most of this cash generation towards strengthening our capital structure.
And when we look ahead, we still see a lot of room to reinvest in the business in general. So, even when we expand the credit business or the banking solutions, there’s still room to move money towards debt. But whenever we feel there’s a good opportunity to allocate excess cash, for example, towards repurchases, we’re certainly going to evaluate this option. And, again, I think this is a common trend in the call, but we’re going to share more details about our philosophy for capital location in the Investor Day, but it is an option that we are constantly evaluating here.
Operator: Our next question is from Gabriel Gusan from Citi.
Gabriel Gusan: Hey, guys. Good evening. I hope the answer to my question is not that you talk about it in the Investor Day next week. But, can you please share, if you have plans to go full banking in your release and in our discussions? It seems that having this service become bigger and bigger to our client base makes sense at this point? You probably have above 2 million clients in the micro-merchant segment? So, going for banking wise and all makes sense.
Pedro Zinner: Yes. So I think in terms of the banking license, we are in the process to obtain this license. We don’t control the full road map, but I think we are in the last stages of the regulatory approval, and we should have access to the license soon. Now, when I think about what does that license allow us to do, I think it’s mostly using the deposits that we have as another funding lever. In terms of the products, we’re going to discuss a lot in the Investor Day the road map and how we’re thinking about the banking product evolution. There’s certainly a lot of potential there. But I think the license itself is not a restriction in our road map. It’s more about enabling us to use the deposits going forward.
Operator: Next question from Neha Agarwala from HSBC.
Neha Agarwala: Hi. Congratulations on the results, and thank you for taking my questions. My first question is on CapEx. You saw a nice decline quarter-on-quarter in your CapEx. Despite strong jump in your net adds, could you give us some color as to how can you break down the net adds between SMB and long tail? And, is the CapEx trend that we saw in this quarter, should that be maintained? Should they continued without trend or this level, is what to expect in the coming quarters? And my second question is on Linx. Could you give us a sense of, what percentage of the Linx clients, Linx merchants are now using Stone acquiring? How, are you trying to cross-sell bundles to some of the large clients which came from Linx? So, some granularity on that would be helpful. Thank you so much.
Mateus Scherer: Thank you, Neha. I’ll take the first question regarding CapEx, and then maybe Lia can give some color regarding Linx.
Lia Matos: And net adds, I think there was a question on net adds. I’ll take it too.
