DLocal Limited (NASDAQ:DLO) Q4 2022 Earnings Call Transcript

DLocal Limited (NASDAQ:DLO) Q4 2022 Earnings Call Transcript April 5, 2023

Operator: Good day. Thank you for standing by. Welcome to the DLocal Fourth Quarter 2022 Results Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Soledad Nager, Head of Investor Relations. Please go ahead.

Soledad Nager: Thank you very much, operator. Good morning, everyone, and thank you for joining our fourth quarter 2022 earnings call today. If you have not seen our earnings release, a copy is posted in the Financial section of our Investor Relation website. On the call today, I’m joined by Sebastian Kanovich, our Chief Executive Officer; Jacobo Singer, our President and COO; Diego Cabrera Canay, our Chief Financial Officer; and Maria Oldham, Vice President of Corporate Development and Investor Relations. We are providing a slide presentation to accompany our prepared remarks. This event is being broadcast live via webcast, and both the webcast and presentation may be accessed through DLocal’s website at investor.dlocal.com.

The recording will be available shortly after the event is concluded. Before proceeding, let me mention that any forward-looking statements included in the presentation or mentioned in this conference call are based on currently available information and DLocal’s current assumptions, expectations, and projections about future events. While the company believes that our assumptions, expectations, and projections are reasonable given 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 DLocal’s presentation or discussed in this conference call for a variety of reasons, including those described in the forward-looking statements and Risk Factors section of DLocal’s filings within the Securities and Exchange Commission, which are available on DLocal’s Investor Relations website.

Now, I will turn the conference over to Seba. Thank you.

Sebastian Kanovich: Good morning, everyone. Thanks for joining the call today. We will discuss our business and our results for full-year 2022 and Q4 2022. I want to start by thanking our key stakeholders. It was a challenging quarter in which we were under a warranted attack and I could not be more grateful for the following. First, our customers, through long-term partners who we know choose carefully whom to trust with their volumes. The record TPV of 10.6 billion in 2022, including 3.3 billion in Q4, up 21% quarter-over-quarter is a testament to the trust they place in our solution and our . We are grateful to our team who continue to work very hard and remain committed to delivering against our long-term ambitions. We were tested and passed the test.

Our operations continue to run smoothly and better than ever. Third, to our long-term investor partners. As you can see in the regulatory filings, our main shareholders continue to support us. Recently increasing their positions, showing their confidence in and excitement about the future value creation potential of the local. We strongly believe in the business we are building and we are continuing our share buyback program in accordance with our trading policy. This was our second year as a public company. We have over delivered on our initial expectations since we went public and 2022 was no exception. Before we deep dive into the results, I want to remind everyone why we started the DLocal back in 2016 and how this drives everything we do up to today.

We founded DLocal because we saw a very clear pain point. Accessing and doing business in emerging market is very difficult. Emerging markets in general have much more fragmented payment systems and methods than the vendor markets. They also have more unstable and complex regulatory environment, as well as different tax rules and different consumer behaviors. So, even for large global companies with relevant resources, it is very time consuming and frustrating to set-up just a single new payment method in a single market. When you extrapolate that to the multiple payment method, across the many emerging markets. It is a program that is highly resource intensive to solve, especially when you consider it is non-core for almost all businesses.

This is where DLocal comes in. By doing all of the hard work of integrating over 900 payment methods across 40 emerging markets and making them all available through a single API, we are able to help companies avoid all this hassle. And because we support many hundreds of merchants, we benefit from economies of scale from combining their volumes. Just emphasize here, through our one DLocal model, we provide a seamless experience for our merchants. One contract, one platform, one API, one source of support. From the perspective of our merchants, whether they are receiving Brazilian reais through PIX, a local instant payment method or they’re paying out Nigeria Naira via local bank transfer. They have only one integration. We believe the growth of the company over the past seven years is a testament to the attractiveness of this proposition for the merchants.

Today, we serve some of the largest and best known companies in the world, such as Microsoft and Meta. We allow them to access over 2 billion consumers across 40 markets via 900 plus payment methods for both local-to-local and cross-border transactions, both pay-in and pay-out. And the exciting thing is that there is so much more to come. Many more merchants , new markets to expand to, new products to launch, and new payment methods to onboard. I often get asked if the problem DLocal is solving is really so hard, then how did merchants operate in emerging markets before DLocal existed? The fact is that these merchants manage to get by, but only by expanding a great amount of resources and time and by accepting that many customers would be left behind.

Before working with us, if a global merchant wanted to do business in, let’s say, 10 markets they would have needed to integrate with at least 10 different providers, sign at least 10 contracts, and at least 10 different partner relationships. Even then they would often write-off some markets or some payment methods altogether because the burden of serving them was just too high, meaning they were leaving many customers behind. We are very proud to say that now, once a merchant connects to DLocal, they are able to immediately increase their reach to 40 countries and 2 billion plus users and have everything they need to operate in all the markets we offer. Our merchants benefit from rapid expansion in reach, reduce cost and complexity, and other benefits of the DLocal solution, including higher acceptance and conversion rates, reduced friction, support for regulatory and tax compliance, and FX translation and fraud prevention.

We believe that for companies that want to sell across multiple emerging markets, going with DLocal solution rather than doing their own integrations is a no brainer. We are proud to share with you that we partner with and serve some of the largest and most successful enterprise global merchant and marketplaces, including Meta, Microsoft, Shopify, Spotify, Salesforce, Deal, Wish, Expedia Group, among many others. We partner with other world-leading names that we cannot share with you as well due to the disclosure restrictions. Together with the largest players operating out of the U.S. and Europe, we also serve leading companies born in emerging markets such as Tencent, Telegram, . We believe these are testament to the value our solution delivers.

Even companies from emerging markets that have local knowledge find it way more convenient to leverage our solution rather than creating their own integrations. Our ability to bring onboard the world top companies and retain them as loyal clients, while consistently growing our business with them is powered by our technology and highly customer centric approach, which also drives our continuous and rapid product innovation pipeline. Our sales teams are highly responsive and get to know our clients businesses in-depth, allowing us to understand our clients’ challenges and solve them together. This often results in the creation of new products and features that are useful to our broader merchant base continuously increasing the value that our platform provides.

Now, I will share a couple of examples of our partnerships with large global enterprise merchants. Our first example is Salesforce, a customer we recently onboarded. From our close partnership with Salesforce, we came to learn a problem they were facing. Processing payments and expect in emerging markets is complex due to local regulations, micro volatility, and currency fluctuations. We work together with Salesforce to develop a new solution for B2B cross-border payments. This solution solves the complexity of B2B payments managing currency volatility, enabling local payment options, and assuring the processing expatriation and settlement of funds. With this solution, DLocal enables B2B payments that typically have a higher average ticket.

Merchants such as Salesforce currently rely on DLocal’s infrastructure to access different payment methods and FX markets, ensuring success in payments processing expatriation and improving the reconciliation process. Without our solution, Salesforce would have eventually stopped taking payments in this market. We have now expanded the service to other global markets and have several of our largest clients using this new solution. On Slide 8, the case study shows the power of our solution allowing Meta to access a broad range of payment methods across many markets. We have been working with them for more than four years, and now we serve them across multiple geographies and products. Through our close relationship with large global enterprise clients such as Meta, we came to learn the challenges of receiving and sending payments via non-traditional payment methods.

Companies were finding that they were losing conversion given their inability to receive non-traditional payments or through high friction user experience for these payment methods. By integrating non-traditional payment methods, such as smaller money transfer and cash like payments, we enabled Meta to deliver a smooth and frictionless payments experience in Africa. Taking mobile money as an example, this non-traditional payment method has been growing rapidly, reaching 346 monthly active users in 2021 globally across all payment providers. In markets such as Kenya, mobile money transfer has a 60% penetration versus 6% for credit cards. We opened up this payment method to Metas to allow them to increase their customer reach in these markets.

Now, moving to the financial results. Let me give you a quick overview of 2022. Last year was an exceptional year for DLocal. Our TPV grew 75% year-on-year and surpassed $10 billion. Our revenue grew largely in-line growing by 72% year-on-year reaching $419 million. We have over delivered against our ambitious NRR target with NRR of 165% in 2022. We continue to focus on growing our absolute gross profit and EBITDA dollars. Gross profit grew by 55% year-on-year to $202 million and adjusted EBITDA grew by 54% year-over-year to reach $153 million. Despite the noise caused by the short seller report, we continued to grow the business in Q4 delivering strong TPV growth of 78% year-on-year and 21% quarter-on-quarter. We believe this demonstrates a consistent support of our existing clients as they continue to grow their business with us, as well as our continued ability to sign up new merchants.

Revenues grew 55% year-on-year and 6% quarter-on-quarter with this lower revenue growth related to TPV, driven by geographic and product mix. We reached a gross profit of $202 million in 2022 and $55 million in Q4. We continue to focus on absolute dollar profit growth even with lower margins in the short-term. Now, Maria will discuss our operations and performance in 2022.

Maria Oldham: Thank you, Seba. Hi, everyone. Our key axis of growth are threefold: products, merchants, and markets. Regarding the first, product, our solution enables pains and payouts, both cross-border and local-to-local. The broader the payment methods coverage we have, the more value , as these methods become available to all our current and future customers and the wider remote. As Seba mentioned earlier in the call, one great benefit of DLocal solution is their ability to allow merchants access to non-traditional payment methods. In 2022, 67% of our TPV came from non-credit card payment methods, including non-traditional payment methods such as local debit cards, bank transfers, digital wallets, mobile payments, and cash alike methods.

Exempt of this payment matters include PIX and Boleto in Brazil, mobile money in South Africa, UPI in India, and Oxxo in Mexico. Many of these payment methods have vastly higher penetration than credit cards. For example, in Nigeria, only 3% of the population have a credit card according to statistics. Focusing on cross-border volume, the weighting of non-credit card payment method is higher, accounting for 72% of our total cross-border transactions in 2022. Credit card volume, including local schemes as well accounted for €“ they remain 28% of our cross-border volume in 2022. Now, moving on to the merchant access of growth. Our solution is industry agnostic. This allow us from board margins from diverse businesses, providing us with a robust natural hedge of business cycles and seasonality.

Photo by Nathan Dumlao on Unsplash

Currently, no single vertical accounts for more than 20% of our TPV. Our largest vertical in 2022 was financial services. In this vertical, we mainly served payment service providers that use our to reach our emerging markets and remittance companies. We also serve wallets with 1% of our total TPV and crypto with 0.2% of our total TPV. Other important verticals include commerce and advertising, streaming and on-demand delivery. In 2022, we drove growth across every single vertical with the fastest growth rates observed being travel, commerce, and on-demand delivery. During 2022, we continued on-boarding new merchants to our platform. We have more than 600 enterprise merchants on our platform. And we currently actively manage more than 200 key accounts.

We work extremely closely with merchants to help unlock new payment methods and new markets for them besides continued enhancement in our platform. During 2022, our enterprise margins on average processed payments in eight countries compared to six countries in 2020. In 2022, they accepted on average 79 payment methods with us, compared with 44 payment methods in 2020, an 80% increase. We are very excited about our sales pipeline in 2023, and we hope to share more about great new partnerships soon. The growth of our business with our top 10 markets has been significant. In 2022, our revenue coming from Top 10 merchants amounted to $211 million versus in 2021. At the same time, we continue to diversify our revenues with respect to our merchants base.

Our top 10 client concentration has been decreasing year-over-year, dropping to 50% of our total revenues in 2022, compared with 56% in 2021 and 64% in 2020. Moving on to the third axis of growth. Geographies. Since our inception, we harbored global ambitions, we dream big, we started with a single, very localized payment method in Brazil. Our early success encourage us to expand to other emerging markets and our highly scalable solution allowed us to do so rapidly. This has enabled us to grow our operations to 40 countries across Latin America, Africa, and Asia. With the latest addition being Honduras in Q4 2022. In 2023, we will continue to pursue our expansion strategy based on two factors: the needs of our merchants and the attractiveness of the potential new markets.

In addition, we will continue to balance the demands of adding new countries with deepening our presence in the country in which we already operate. All these drives towards our goal being the partner of choice for our global merchants across emerging markets in which they wish to operate. Now, I will pass on to Jacobo to discuss our achievements in the different geographies.

Jacobo Singer: Thank you, Maria. Africa and Asia accompanying on growth for us. Our merchants continues to find a strong demand for our solution in these geographies and these markets also call attractive economies. The result of our push into these regions speaks for themselves. Revenue in Africa and Asia in 2022 grew by 259% year-over-year, reaching $74 million in 2022 with significant opportunities ahead of us. In 2021, Africa and Asian revenue represented 8% of our total revenue. In 2022, this grew to 18% of total revenues. In Q4, revenues increased by 5x year-over-year and grew 4% quarter-over-quarter reaching $26 million. This is more than the $21 million were recorded for the 12-months of 2021. We were able to further grow revenues in the region in Q4, despite the current comparison of 80% quarter-over-quarter growth in Q3.

This geographic diversification complements our business vertical diversification, as well as upgrading more value to our platform for current and future customers, widening our mode. It is still early days for us in these regions, and we are very excited about what we believe to be a significant opportunity ahead. In Africa, we are seeing strong in Nigeria, South Africa, Egypt, Morocco, Turkey, and Kenya in particular. Meanwhile, in Asia, we are seeing in India, Indonesia, Malaysia, Pakistan, and Philippines to name a few. We are excited to see how these regions continue to grow as we both cross-sell to merchants that originally started the relationship with us in Latin America, as well as from merchants that are based in Africa and Asia.

Among those regions, I would like to call out Nigeria. We experienced higher than expected growth in Nigeria, which already accounts for 12% and 8% of our revenues in Q4 and full-year 2022, respectively. We are very positive about the growth opportunity there. From the perspective of our merchant, it is a market that is large, but complex to operating. We believe they can benefit strongly from our solution there. Growth in Nigeria is to the local, albeit with lower gross profit margin. Over the medium-to-long-term, as we go deep in the region, developing more integration of some payment methods and getting more efficiency in accessing the fixed market we believe the gross profit margin will expand. We look forward to keeping you updated on our growth in the region over the following periods.

As we always emphasize, we focus on absolute dollar profit growth even with lower margins in the short-term, maximizing absolute dollar profit will create the most value business in the long-run. Moving on to Latin America, we continue to see solid growth across the region in 2022 with revenue growing by 54% year-over-year to $345 million in 2022. Going into more detail, in Q4 2022, revenue grew by 30% year-over-year and by 6% quarter-over-quarter to $93 million. We continue to be very excited about our growth prospects in the region as we onboard new merchants and cross-sell to our current base. Our revenue is well-diversified across the markets with no country accounting for more than 20% of total revenues in 2022. Key highlights were, very robust revenue growth in Mexico, 100% and growth of 44% in our LatAm market, mainly from Peru and Colombia.

Despite the challenges, accessing foreign exchange markets in Argentina, we delivered strong revenue growth of 55% year-over-year. The situation has largely normalized and we have been able to operate with no . Important to highlight that the revenue distribution by market is a result of our merchant strategy. Our commercial teams are internally organized by merchant and we do not optimize for targets by geography. We have global agreements with our merchants and we offer them access to all the emerging markets in which we operate supporting them in the markets in which they wish to grow. Slide 19, we continue to invest thoughtfully in expanding our global team. We have hired new talent, particularly in the areas of sales and marketing, take on product and operations to pursue the opportunities we see in the market and to drive towards our long-term objectives.

Tech related roles continue to represent around 40% of our FTEs, supporting our rapid innovation of new products. In 2022, we grew our team by 191 FTEs or by 36% year-over-year to 726 employees, while our gross profit grew 55% over the same period of time. Our credit count has significantly expanded outside of the Americas as we focus on hiring locally to leverage on the ground knowledge and develop deep understanding of DLocal marketing deals in process. We reached 159 FTEs in Africa and Asia by the end of the year 2022, representing 22% of our workforce. We will continue to invest in talent in a disciplined ways staying lean and always ensuring that we are more talent that has a strong . We are proud of our team and believe it is a strong observer.

Diego will now review our financial highlights.

Diego Cabrera Canay: Thank you, Jacobo, and hi, everyone. We continue to scale our business rapidly. We saw record TPV during 2022 surpassing the $10 million market increasing 75% year-over-year. In Q4 2022, we saw strong growth in our TPV, reaching $3.3 billion, up by 78% year-over-year and a strong 21% quarter-over-quarter. Our cross-border and local-to-local volumes showed solid growth year-over-year and quarter-over-quarter. Following the trends seen in Q3, in Q4, we also experienced high growth in local-to-local TPV, increasing by 125% year-over-year and quarter-over-quarter, due to the strong performance of some of our merchants. Cross-border volume increased by 50% year-over-year and by 13% quarter-over-quarter. Cross-border accounted for 53% of our total TPV in Q4 2022 and 58% for the full-year 2022, driven by the ramp up of recently onboarded merchants with a high mix of local-to-local.

We have seen large merchants tend to have a combined strategy. 55% of our top 20 merchants used both local-to-local and cross-border services. During 2022, we drove growth both in pay-ins and pay-outs increasing by 91% and 39% respectively. We have seen a steady increase in TPV quarter-after-quarter. Specifically, in Q4 2022, pay-ins increased by 65% year-over-year, among 14% quarter-over-quarter. In Q4 2022, payout increased by 119% year-over-year and 40% quarter-over-quarter. We are product agnostic. All our products bring incremental profit and when we combine them, they bring synergies both for our merchants and for us. Depending on which customers we onboard under strategy in the quarter, the share of pay-ins versus pay-outs may vary. We see product diversification as one of the strength of our business.

Going forward, we are very positive about the continued growth of our products. Pay-ins accounted for 71% of our total TPV in Q4 2022, and 75% for the full-year 2022. Revenues also reached a new record high of $118 million during Q4 2022. And $419 million for the year 2022, having grown 55% and 72% year-over-year respectively. Compared to Q3 2022, revenues increased by 6%. Our revenues over TPV, our gross take rate was 3.6% during the quarter, compared to 4.1 in Q3. Fluctuations from quarter-to-quarter are mainly driven by changes in the business mix. In Q4 2022, we had a combination of higher local-to-local payouts, some large global retail merchants with lower than average take rate growing faster, and a decreasing revenue in Argentina with higher than average take rate.

Summing in our revenues, we continue delivering strong revenue growth both from our existing customers and from our new customers. During 2022 of the 72% year-over-year revenue growth, 65% of $158 million came from existing merchants. And 7% or $17 million came from new merchants. For Q4 2022, of the 55% year-over-year revenue growth, 46% or $35 million came from existing merchants and 9% or $7 million came from new merchants. We delivered strong net revenue retention, reaching 165% for the full-year versus our expectation of 150% plus. This is the result of having almost no churn, less than 1%. The organic growth of our merchants in emerging markets and are ability to continue bringing them to new countries, products, payment methods, and to increase share of wallet.

Moving to Slide 25, we remain focused on growing gross profit dollars. During the year, we were able to scale our gross profit to $202 million, up by 55% year-over-year. In Q4, our gross profit reached $55 million, up 42% year-over-year and 2% quarter-over-quarter. We continue to focus on incremental gross profit dollar amounts as we have been consistently delivering on. From a gross profit margin perspective, we maintained healthy margins at 47% in Q4 and 48% for the 12-months of 2022. Particularly in Q4, our gross margin was impacted by higher volumes from global merchants in certain geographies and a decrease in revenues in Argentina. Some of the decrease in gross take rate is mirrored in lower cost take rate, but not all. We expect further optimization of our cost to be realized in the upcoming periods.

We also remain focused on growing our EBITDA. During the year, we were able to scale our adjusted EBITDA to $153 million, up 54% year-over-year. Our adjusted EBITDA was $40 million for the fourth quarter of 2022, increasing by year-over-year. Compared to Q3 2022, adjusted EBITDA dropped by 3% as a result of continued investment in expanding our team, marketing and travel expenses related to two main annual commercial events, and higher legal fees. As a result, our adjusted EBITDA margin was 34% in Q4. For the year 2022, our adjusted EBITDA margin was 37% and delivering on our expectations for the year of 35 plus. Before handing the call back to Seba for the closing remarks, I will briefly touch on our net income and liquidity. Reported net income totaled $109 million during the year, compared to $78 million in the full-year 2021, an increase of 40% year-over-year.

Reported net income in Q4 2022 totaled $19 million. During Q4, we incurred expenses of $8 million related to FTX loss provision of $5.6 million and short-seller related legal and advisory expenses of $2 million. Excluding these expenses that we believe are non-recurring in nature, net income would have been $116 million in 2022, an increase of 49% year-over-year and 27 million in Q4 2022. Besides non-recurring items, net income in Q4 2022 was impacted by net financial losses of $3 million, mainly driven by negative exchange differences and higher income taxes in the quarter. The annual income tax was 10% in-line with previous years. Regarding our cash position, in Q4, we took extraordinary short-term measures to bring additional comfort to our merchants and partners using our own funds as we have constantly maintained a healthy balance sheet, we have the flexibility and could comfortably absorb this short-term impact with our own funds.

This is certainly an increase in other assets of $53 million, which mainly includes $19 million in cash collateral for standby letter of credits required by merchants, $20 million in cash collateral for credit lines with banks, $13 million of advancements from merchants and increasing $2 million in guarantees for credit cards and processors. We expect this situation to normalize over the next quarter. As of December 31, 2022, we had consolidated cash of $468 million with $248 million of own funds. We believe our strong cash position remains a competitive advantage. Seba, the floor is yours.

Sebastian Kanovich: Thanks, Diego. Exceptionally for Q1 2023, I would like to share our expectation based on how the business is tracking. For the first three months of 2023, we expect TPV between 3.5 billion and 3.6 billion, revenue between $135 million and $138 million, and gross profits between $57 million and $59 million. For the full-year 2023, the outlook is revenue between $620 million and $640 million with an implied NRR between 140% and 150% and adjusted EBITDA in the range of $200 million to . We believe these are solid numbers that show we can keep growing the business rapidly. As we always emphasize, we focus on maximizing absolute dollar profit growth, which will create the most valuable business in the long run.

We are very proud of what we achieved in 2022 and even more excited with the runway ahead of us. We remain humble and focused on providing the best and most comprehensive solution for our merchants in emerging markets. Big thank you to our global team, our customers, and our investors for their continued support. I’ll now hand it back to the operator to open it up for questions.

See also 25 Wealthiest Countries in the World by Assets and 12 Best Dividend Stocks For Rising Interest Rates.

Q&A Session

Operator: Thank you. Our first question comes from the line of Tito Labarta with Goldman Sachs. Your line is now open.

Tito Labarta: Hi, good morning. Thank you for the call and taking my question and thanks for all the additional disclosures that are helpful as well. A couple of questions. I guess to start, just to understand a little bit the use of the cash in the quarter, I know , kind of went over it a little bit, but was this, kind of at the request of your merchants? I mean, did you need to do this to retain some of these merchants? And you said, you expect this to normalize in the next quarters, did it normalize already in 1Q? I don’t know if you can give some color on cash. And then in 1Q or will it take longer, so just to understand a little bit the need to continue to do this and if that’s some type of retention tool to keep your clients?

And is it directly related to the issues with the third party report that we saw? And then my second question, I guess, on the net take rate or your gross profit margin that net take rate has continued to fall, the gross margin has been declining. You mentioned, Jacobo, I think as you continue to grow in Africa, there should be some increase in that. But yet, you’ve grown in Africa a lot and that gross margin has fallen just on over the last year or so and even in 1Q that’s going to fall again. So, just to help us understand a little bit, what’s driving that pressure? I mean, is it just mix? Is there anything else competitively putting pressure on those take rates? Any color you can give on that would be helpful? Thank you.

Sebastian Kanovich: Tito, thanks very much for your question. Sebastian here. So, starting on the cash point, we are very proud of what €“ of the results we posted in Q4 and Q1. Many of our merchants bought with their volumes. You’ve seen record volumes for us in Q4 and the flash numbers in Q1. Obviously, this has been a stressful time for us at DLocal and we wanted to make sure we use our balance sheet during these stressful time to share up content with our merchants. This is, we believe, a short-term impact, if you will, and it’s a we’ll continue to use. We offered both advancement in the settlement period and bank guarantees for some of our merchants. We don’t expect those to be sustained over the long run and those customers that will require.

So, we’ll intend to charge for that because if anything that’s a revenue opportunity. I think the fact that we are a public company and there’s the level of scrutiny there is on us, obviously, placing our advantage. And we’ve always spoken about the importance of having a strong cash position, which in a situation like the one we went through in Q4, I think has proven to be the right strategy. Jacobo? Okay. On the gross profit point, Tito, we continue to optimize for our gross profit dollars and if anything, we are extremely proud of saying that our gross profit grew over 50% year-on-year. That’s a key metric. We’ll continue to accrue and bring those customers onboard, provided that they’re accretive to our platform. This is a long-term , we are not optimizing for a given quarter.