So that’s why longtail at the end of the day I would say is losing clients because they’re churning or they’re going up for the SMBs. So that’s why it’s hard to give you the exact number how is longtail performing. But I would say it keeps in a very healthy way with new client activation, it’s very decent levels. And if you look at the whole MSMBs growing 10% in the second quarter, which is very impressive, if you look at — if you think that the market is growing like 5%. So that’s pretty much — I mean, many moving parts here, tried to answer your question. If not clear, let me know.
Neha Agarwala: No, that’s very helpful, Ricardo. Thank you so much.
Operator: Our next question from Kaio Prato with UBS. Please go ahead.
Kaio Prato: Hi, everyone. Good evening. Thanks for the opportunity. I have just one question here related to your mix shift strategy on payments. I understand when you mentioned that you are moving towards larger merchants and it is positive in terms of EBITDA growth. But what we are seeing is that actually your TPV is growing slightly below industry, I think, on a year-over-year basis. And more importantly, total revenues excluding transaction costs are declining year-over-year. So your EBITDA indeed increased, but seems to be much more related to expenses control rather than revenues. So having said that, just would like to understand your view about this dynamic, if we are missing anything here? And what is the strategy going forward in order to reaccelerate the revenue tax transaction costs split? Thank you.
Alexandre Magnani: Hi, Kyle. This is Alexandre. Thank you for your question. I think there is — we are going through an optimization cycle since second semester last year where we started important repricing movement going up our price. And also we implemented very strict risk management policies in order to control and reduce our chargeback losses. Going over this cycle from last — at the end of last year into the beginning of this year, these slowed down our growth in the acquiring business in general, affecting longtail and affecting large accounts especially. Obviously moving forward as we have all these risk management program in place and better balance as we have went through the repricing cycle and now we see opportunities to further growth in the future as we have been experienced these in the beginning of the third quarter.
So moving forward, we see an acceleration. We didn’t lose focus on keep growing longtail segment even though we grow SMB faster right now. And we see opportunity to keep growing faster till the end of the year, our TPV and consequently our revenues.
Kaio Prato: Okay, thank you very much.
Ricardo Dutra: Thank you, Kyle.
Operator: Our next question comes from Josh Siegler with Cantor Fitzgerald. Please go ahead.
Josh Siegler: Yes. Hi, guys, thanks for taking my question today. First of all, I’d like to talk a little bit about the potential long-term expansion on the payroll loan side of things. How are you thinking about the total growth opportunity?
Ricardo Dutra: Hi, Josh. I mean the market is very big. Our market share is very, very small. If you look what’s going on in our credit portfolio, we are growing like — in terms of mix shift, we’re shifting like 8 percentage points from unsecured to secured credit portfolio every quarter. So — and, of course, part of that is because we are growing in this payroll, but it’s a huge market. And our — to be honest, our market share is very, very, very small. So we see lots of room to grow. We found a way to bring these clients to us also through our app, through digital. And yes, that’s definitely is going to be a credit portfolio or credit product they are going to increase in the future, but it’s huge. The size — the total addressable market is huge.
Josh Siegler: Understood. Looking forward to tracking that progress over time. And then secondly, how are you thinking about capital allocation as we progress through the back half of 2023? Do you expect to continue buying back shares at the rate that you’ve been buying it back or perhaps accelerated move forward?
Artur Schunck: Hi, Josh, it’s Artur speaking. Related to capital allocation, we have three things that we’re doing because we are generating a positive cash flow. The first one is reinvesting in the company. So we are not planning at this point to have any dividends or other type of firms to back to the shareholders this money in that way. The other point is changing to funding lines cheaper, so we can use part of this money to move from here and there and reduce the financial expenses that we have. In terms of buyback, yes, we are doing every quarter some buybacks. Now we have 7.5 million shares in the treasury. The plan is to continue doing that because of the low price that we’re seeing in comparison to what we expect to have in the company. So we believe a lot that this company is a great company, especially for the future because it’s a solid company, solid balance sheet and we are growing this company for the future, not just for one quarter.
Josh Siegler: Understood. Thanks very much for taking my questions.
Ricardo Dutra: Thank you.
Operator: Our next question comes from Tito Labarta with Goldman Sachs. Please.
Tito Labarta: Hi, good evening. Thank you for the call and taking my question. A couple of questions also. Maybe just thinking little bit high level in 2024, maybe how you thinking about revenue growth. You mentioned your TPV growth maybe hit bottom and then can begin to accelerate. So, maybe take rates are coming down a little bit as you are shifting the mix. Just maybe PagBank starts to contribute more as also as you get past some of the impact from the prepaid interchange. Just high-level thoughts on revenue growth for 2024 would be helpful. And then my second question, just following up on the take rate impact from the shorter duration of the receivables, are you seeing any pressure from the banks there? Lot of talks about ending revolving cards and banks maybe pushing for doing less interest free instalments. Any colors on how you think that revolve? Are you seeing any pressure from the banks already offering less instalment period than in the past? Thank you.
Ricardo Dutra: Hi, Tito, this is Ricardo. I’m going to start backwards again and then someone can answer the first part. Regarding this discussion about the revolving credit card interest rates in Brazil, which is around 15% per month and compiled is going to be like 140% per year, there are many discussions at this point with Congress and politicians and so on. As a matter of fact, the text for — for the law that is under discussion about this credit card was published today afternoon. There is no relationship or no mention in this law about installments or things like that. So we’re not seeing any pressure at this point. Remember, we are a credit card issuer as well and then we are following the discussion. We are part of the discussion with the government and regulators.
But at this point and the text of the law is focused on decreasing the revolving credit cards, which again in Brazil is close to 440% per year. But no updates at this point. I mean, everything is just being under discussion how it is possible to decrease this 440% to a lower level.
