So, in this quarter alone, as we expanded the book from 19 million in the third quarter to a 113 million in this quarter, we’re provisioning at 20% because we don’t have enough data in our models to provision more aggressively. So, when you look at this effect alone, it impacted negatively our cost to serve by R$18 million, which is around 50 basis points as a percentage of revenue. So I think overall, when we look forward, the idea is to continue to gain efficiency in all the main lines, but we have to bear in mind that we’re going to have this effect from credits as we scale this business.
Sheriq Sumar: I just wanted to double click on the previous question on the — on the MSMB. Is there any particular vertical that you saw, any particular strength, or is it like prior to the holidays coming in, you had more people sign up for that. And what is the early read for fourth quarter? Like, are you seeing the same level of activity, or has it kind of slowed down?
Lia Matos: Sheriq, you were dropping up a little bit. So if I didn’t understand your question, please repeat it. I believe it was about net adds, correct?
Sheriq Sumar: That’s right. I’m sorry about the background noise.
Lia Matos: No, no. That’s okay. So, I talked a little bit in a prior question that we had made, I believe around, net adds evolution. So, our main sort of objective function here is to continue to grow and gain share in a profitable way. So it is true that net adds may, fluctuate from quarter-to-quarter, but that’s going to be our driver. As long as we can continue to see opportunities to allocate investment in growth in a profitable way, we’ll continue to do so. So, I think this is, more or less we can say in terms of color around net adds evolution. The metric that we like to track really closely is the evolution of our TPV and market share and that this TPV comes in at healthy level, providing the healthy levels of return.
Operator: Next question from Yuri Fernandes from JP Morgan.
Yuri Fernandes: I would like to ask on taxes here. It was lower this quarter, you mentioned more revenues coming from entities abroad among other things. What are those results coming from abroad? I’m asking this because we see some peers booking, having some FIDCs [ph] abroad. So just would like to check if that’s the case for you also. And on taxes, what should we think about this line? Should we remain low? What is your view here? Thank you.
Pedro Zinner: So regarding taxes, we mentioned in the past that we see our normalized tax rate has been between 20% to 25%. But over the past few quarters, we were operating closer to 27%. So I think what happened in the third quarter is that we basically reverted back to what we see as the normalized trend for the business. What’s also worth mentioning here is that in this quarter, we had a one-off effect also in taxes related to the recognization of deferred tax assets in the amount of 23.5 million as we reverted losses in some subsidiaries that had accumulated tax credits related to losses during previous periods. I think the footnote 7.1 and 7.3 of the financial statements bring more detail on this topic. So, the first part of the question, we basically see when we look ahead, the effective tax rate continue to be within the 20% to 25% level.
As for the second part of the question, we do have a part of our FIDCs, [ph] offshore as we are a Cayman entity, and this, indeed, contributes to a bit of our tax rates. But when we look at the general trend, I think our tax rate is not, unusual when we compare to all the benchmarks.
Yuri Fernandes: Can you share how much is FIDCs [ph] abroad and how much are local based?
Mateus Scherer: I think we do have this disclosure in footnote, 7.1 until 7.3. But, basically, when you show the profits on offshore entities, it’s all related to FIDCs. [Ph]
Operator: Next question from John Coffey from Barclays.
John Coffey: So, I saw one thing, one new disclosure you had in your press release was PIX TPV R$5.5 billion, which is quite a bit of your overall TPV, about 5% or a little bit more. I was wondering, if — and if you could just sort of provide some general comments about where you’re seeing those PIX volumes, any kind of verticals or kinds of merchants? And furthermore, could the PIX volumes be one contributor to the higher take rate? Because as I understand it, you don’t include PIX TPV in your overall TPV numbers, but you do include the revenues that do come from PIX?
Lia Matos: Hi, John. So yes. Giving a little bit more color on PIX, more and more, we believe it is important to provide visibility to the impact of PIX because it is becoming more and more significant. So I think, big message is on where it’s relevant. So PIX P2M is more relevant in the SMB space. Why is that so? Because, PIX P2M is essentially a payment method that our clients need to reconcile just as any other payment method. So, the capture method that we offer in PIX P2M is a dynamic QR code that the transaction can be reconciled in the dashboard. So, that for larger SMBs, more sophisticated clients that have multiple SKUs that’s important. And, that’s a monetization driver for us, like you mentioned. You are correct that because we don’t consider PIX P2M TPV in the overall TPV, that this does have a slightly accretive impact on take rates.
So we see PIX as an important driver of overall market growth going forward. The way that we look at it is overall household consumption and mix by payment method. And we do see PIX P2M taking away not only from cash, but from growth in debit volumes itself. For us, this is sort of net neutral because we monetize PIX P2M in line with debit net MDRs, but for our clients, it’s much better. Because for our clients, they get money settled instantaneously and they do not pay interchange. We think there is evolution to happen around the UX and the user experience, it’s not fantastic yet because for example, PIX NFC doesn’t exist. But, as product, usage and functionality evolves and the central bank is likely pointing that roadmap forward in the next years, PIX will become more and more relevant.
And for us, we’ve said this many times before, more and more we see PIX as an opportunity and a way in which we can leverage the PIX rails to develop new products, new offerings to our clients. So to us, the message is that we see this as a positive trend.
