Good evening. My name is Priscilla, and I'll be your conference operator today. Welcome to PagBank PagSeguro's webcast results for the first quarter 2022. At this time, all lines have been placed on mute to prevent any background noise. Should any participant need assistance during the call, please press star zero to reach the operator. This event is also being broadcast live via webcast and may be accessed through PagBank PagSeguro's website at investors.pagseguro.com. Participants may view the slides in any order they wish. Today's conference is being recorded and will be available after the event is concluded. I would now like to turn the call over to your host, Éric Oliveira, Investor Relations and ESG Director. Please go ahead. Hi, everyone. Thanks for joining our first quarter 2022 earnings call. Today, we have with us Ricardo Dutra and Alexandre Magnani, our co-CEOs, and Artur Schunck, our CFO. Speakers' remarks. There will be a question and answer session. Before proceeding, let me mention that any forward statements included in the presentation or mentioned on this conference call are based on currently available information and PagBank PagSeguro's current assumptions, expectations, and projections about future events. While PagBank PagSeguro believes that the assumptions, expectations, and projections are reasonable in view of currently available information, you are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those included in PagBank PagSeguro's presentation or discussed on this conference call for a variety of reasons, including those described in the forward-looking statements and risk factor sections of PagBank PagSeguro's most recent annual report on Form 20-F and other filings with the Securities and Exchange Commission, which are available on PagBank PagSeguro's investor relations website. Finally, I would like to remind you that during the conference call, the company may discuss some non-GAAP measures, including those disclosed in the presentation. We present non-GAAP measures when we believe that the additional information is useful and meaningful to investors. The presentation of this non-GAAP financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered separately from or as a substitute for our financial information prepared and presented in accordance with IFRS, as issued by the IASB. For more details, the foregoing non-GAAP measures and the reconciliation of these non-GAAP financial measures to the most directly comparable IFRS measures are presented in the last page of this webcast presentation and our earnings release. With that, let me turn the call over to Ricardo. Thank you. Thank you, Éric. Hello, everyone, and thank you for joining our call. I am pleased to announce we reached another set of record numbers this quarter, almost all of them higher than the top of the Q1 guidance and market consensus. Also, as you'll see our Q2 guidance in next slides, we have been seeing strong momentum in Q2 as well. Our performance reinforces our core strategy of delivering the best balance between growth and profitability, strengthening our lion's share in payments while we create one of the most relevant digital banks in Latin America. Our management is extremely dedicated, committed, and aligned to take decisions oriented to the business success, not only in short term, but also in long term, as we see huge opportunities to be explored in Brazil. Going to Slide 4, we can see the Q1 main messages. During the first quarter of the year, our payments platform, also known as PagSeguro, had its first wave of repricing, which led to an increase in merchant acquiring take rate of +35 basis points in comparison to Q4 2021. Our successful strategy to also serve small and medium businesses continues to outperform expectations, with Hubs TPV reaching 25% of the PagSeguro volumes. The unbeatable combination of the migration from cash to plastic in Brazil, the best-in-class execution in Hubs, and the lion's share in long tail led us to have the largest cards TPV market share during Q1 2022, increasing 70 basis points versus Q4 2021. These results reinforce our ability to increase prices and at the same time, keep churn levels under control. In our financial services, also known as PagBank, our net adds marked 1.7 million, almost 19,000 new clients per day in Q1 2022, achieving 24 million clients, of which 14.3 million were active. PagBank has also been diversifying its revenue streams, mostly driven by interest income. We also plan to launch new secured loan products to be deployed in the second half 2022. Going to slide five. Aligned to our mission to keep disrupting and democratizing financial services and payments, primarily in Brazil, while creating value to investors and stakeholders in a sustainable and diligent way, this quarter we reached BRL 3.4 billion in total revenues and income, the highest level ever in the company, a net income of BRL 371 million. I'd like to highlight the most relevant KPIs for the quarter. Beginning from the left side, our payments platform highlights. We reached BRL 80 billion in total payment volume, TPV, BRL 3.1 billion in total revenue and income, more than BRL 10,000 per quarter in TPV per merchant, and BRL 769 million in Adjusted EBITDA. On the right side, our financial services highlights. We reached BRL 72 billion in TPV, BRL 305 million in total revenue and income, BRL 2.1 billion in credit portfolio, and BRL 86 million in gross profit. On the next two slides, we can see some payments platform achievements. Beginning with slide six, we are happy to announce that PagSeguro was a TPV market share gain winner this quarter, growing 70 basis points in Q1 2022 versus Q4 2021, while the most relevant players lagged. Look back to 2016, went up from 1% to 11%, which reinforce our thesis that is much easier and profitable to move upmarket, creating the competitive advantages and scale, which can be easily adapted to larger merchants. Going to next slide, we present important KPIs about our payment businesses. Creating a unique scale backed by superior logistics infrastructure and leveraging our marketing and advertisement through UOL, our customer acquisition costs, adjusted by inflation, decreased 5% in 2021 in comparison to 2020. With a rational pricing strategy combined to the strong migration from cash to plastics in the country, our paybacks continued to be very short, between 4 and 6 quarter, with 2021 cohort presenting the best performance in terms of return on investment in comparison to the previous cohorts. In 2022, we expect that higher take rates due to repricing, focus on TPV per merchant increase, lower POS device subsidies, and efficiencies in market expense continue to support the compelling returns we have been obtaining so far. The beauty of this business is that we do not rely only in number of merchants to keep growing very rapidly. Differently than business that relies completely on subscriptions with flat fees, we have several market growth opportunities in payments, such as growing approximately 80% more than the industry on average. For example, in Q1 2022, the industry grew 36% year- over- year, while PagSeguro grew 60% year- over- year. Cards PCE in Brazil reached 50% in 2021. According to estimates, the country can reach more than 70% by 2025, increasing the share of wallet per merchant. E-commerce penetration as a percentage of total retail sales is still below the global average, and with our complete online payments offerings, we believe we can now take advantage of it. We have been consistently gaining TPV market share, adding new merchants and volumes to the system and also attracting underserved merchants to our solutions. Finally, having created the lion's share in number of merchants with multiple times more merchants than the second player, allow us to be rational and to keep focused on our strategy to prioritize high quality merchants in our gross adds while cross-selling and upselling our products and services. Our execution has been very successful, which is also reflected in our lion's share in the profit pool of the industry. On the next two slides, I'll show you why we believe payments is one of the ways to build a profitable digital bank and how the value proposition is created for merchants and consumers. On slide eight, the left side, we can see three charts comparing merchants that do not use PagBank with those that use. The PagBank value proposition for long-tail merchants is clear here. Merchants that use PagBank have 4x more revenues, higher NPS, and much lower churn when compared to those that do not use PagBank. We also aim to increase PagBank penetration in SMBs and have been launching new features to serve these clients. For instance, in this quarter, we launched corporate accounts, direct deposits from other acquirers, and debit cards. Our confidence is consolidated when we look at the market growth opportunities for banking in Brazil. Looking at the opportunities, our cost to serve clients continue to be 10x lower than the incumbent banks in a country where top five banks concentrated 91% of the total credit portfolio. As I mentioned before, we also see opportunities to cross-sell and upsell financial services to our SMBs clients. There is no other acquirer that serve SMBs with a complete digital account that include transactional cards, investments, et cetera. Brazil has a young population that is very active online, which creates a perfect landscape for a digital bank like PagSeguro. Slide nine, we can see more numbers to reinforce our successful PagBank execution. In less than three years, we were able to create the second-largest digital bank in Brazil with almost 24 million clients, adding almost 9 million new clients only in the last 12 months. In addition, when you go deeper in our numbers, in two years, we reached 7.6 million active clients being composed by consumers, which is incredible since our credit offering is still limited for consumers, and PagBank is much more a transaction account at this time. Our confidence increased when we ran our internal research with our clients to know how engaged they are. Look at the chart on the right side, we see that for new cohorts, more and more consumers are using PagBank as their primary bank. Before I turn over to Alexandre, I would like to reinforce we are very encouraged by the momentum in both businesses, PagSeguro and PagBank, and all the opportunities ahead. We keep working to grow our businesses and to create value in a sustainable way for investors and other stakeholders. Our controlling shareholder is convinced that PagS will continue to consolidate payments and financial services in Brazil, and holds approximately 40% of the shares since 2019. Thank you very much for those who have been supporting us throughout the journey. Our shareholders, suppliers, partners, other stakeholders, and also our PagS team. Thank you very much. Alexandre, please go ahead. Thank you, Ricardo. Hello, everyone. Moving to slide 11, I will start the segment highlights with PagSeguro's overview during the quarter. PagSeguro's total revenue income grew 63% year-over-year, reached BRL 3.1 billion, and reflecting the TPV growth of 60% year-over-year, totaling BRL 8 billion. I would also like to remember that this growth happens even after a quarter of strong volumes due to the holiday seasonality. As a result, PagSeguro was the TPV market share winner, as Ricardo Dutra mentioned, reaching almost 11% of Brazilian acquiring industry market share. In the next slide, we show PagSeguro's net take rate evolution since October 2021, when we started the repricing process following the interbank rate hikes. We were able to increase our net take rate by 34 basis points since October, maintaining stable levels of churn on our client base. This stable churn, even with higher pricing policy, shows the importance of our superior value proposition, which consists in a complete bank offering through PagBank, instant settlement offering with same-day prepayment, and our best-in-class SLA with a robust logistic distribution. We ended the first repricing cycle in April and will follow closely Selic's behavior in order to determine if other repricing rounds will be needed. I would also like to highlight the successful execution on Hubs operation that was even better than our best estimates. Hubs reached 25% of PagSeguro's TPV in Q1 2022, showing the results of our assertive sales strategies for the SMB segment. Slide 13. I want to share some updates about PagBank operation. Total revenue grew 95% year-over-year, ending the quarter at BRL 305 million, approximately 9% of total revenue and income of PagSeguro. Total payment volume reached BRL 72 billion, up 129% year-over-year, with engagement TPV gaining traction driven by cash-in, bill payments, card spending, among others. In the upper right, we show our net interest income, which grew 164%, totaling BRL 142 million in Q1 2022. Gross profit, including revenue from service minus provision for losses, grew 83% year-over-year, accounting for BRL 86 million. PagBank net take rate reached 1.54%, an increase of 61 basis points, reflecting the increase of monetizable TPV and higher float revenues due to the increase of deposits and the higher Brazilian interest rate. Moving to slide 14, I would like to recap our milestones in credit underwriting. Since 2018, we have launched several products such as credit cards, working capital loans, supply chain finance, payroll loans, and overdraft credit line within PagBank accounts. Given the challenging scenario that Brazil has been facing now, we have focused our development into collateralized products such as credit cards backed by CDs and FGTS early prepayment. On the first quarter, our credit portfolio surpassed BRL 2 billion with working capital and credit cards representing around 90%. Other initiatives such as payroll loans and FGTS or the prepayment reached 10%. We are very focused on the consolidation of our credit offerings since we know that this is fundamental piece to become the customer primary bank choice. We have been executing this in a very consistent way, making sure that our underwriting, credit policies, collection process, and delinquencies provisions are under control and well-priced, guarantee that any major change in asset quality in the near term will be adequately provisioned. We are highly confident that Pag will consolidate the credit business in Brazil through PagBank by cross-selling and upselling strategies for our existing clients. Moving to slide 15, I want to share some facts regarding Pix impacts on our operation. As we can see on the left chart, Pix has been promoting the PagBank cash-in growth in 250% year-over-year, totaling BRL 24 billion in 1 Q 2022. PagBank accounted for almost 10% of Pix transactions market share on this quarter. Pix has been key to boost the opening of new accounts since we offer an easy and simple onboarding process for the population to have access to this instant transfer network. Another positive effect of Pix is the increase in the average balance of new accounts. Consequently, this is leveraging a cheaper funding source for prepayment operation and promoting the growth of monetizable cash out throughout card spending, bill payments, and top-ups. Furthermore, this is an important tool to collect additional client behavior data to improve customer knowledge and assertiveness of new offerings and products. Finally, before I turn over to Artur, I would like to review our guidance for Q1 2022 and establish a ballpark for the Q2 2022. Total revenue in 1 Q 2022 was BRL 3.42 billion, higher than consensus. For the second quarter 2022, we expect a ballpark between BRL 3.5 billion and BRL 3.6 billion. PagSeguro TPV grew 60% year-over-year in 1 Q 2022, reaching the top range of the guidance. For the Q2, we expect something around BRL 84 billion to BRL 85 billion. Net income non-GAAP will be higher than Q1, around BRL 370 million to BRL 380 million. Having said that, I pass the word to Artur, our CFO. Thank you. Thanks, Alexandre, and hello, everyone. I will continue the presentation with our Q1 2022 financial results. In the top left of the slide 18, our consolidated net take rate reached 2.60%, representing an increase of 21 basis points year-over-year, even with changes in the client mix due to Hubs' operation growth. The increase reflects the company's ongoing pricing process for all segments, whose second round was fully implemented in April. In the table on the right side, we present our P&L for the first quarter of 2022. Our total revenue and income reached a record of BRL 3.4 billion, growing 66% year-over-year. Excluding transactional costs related mainly to interchange and card scheme fees, financial expenses related to cost of funding to prepayment receivables, exchange expenses, and other financial income related to financial investments, our gross profit grew 28% year-over-year. Adjusted EBITDA closed at BRL 665 million, up 16% in comparison to Q1 2021. Net income non-GAAP achieved a record of BRL 371 million for all first quarters in our history. Net income GAAP increased 29%, reaching BRL 350 million versus the same period last year, despite the hike in Brazilian interest rate. Back to the left side in the graphic below, as a result of our TPV market share gain, revenue growth and expenses leverage, we delivered an earnings per share of BRL 1.05 in the first quarter of 2022. It is BRL 0.23 Or 29% better than the same period of last year of shareholders' return. Moving to slide 19, in the top left side, operational expenses and other costs excluding chargebacks reached BRL 560 million in Q1 2022. This amount represents 16% of Pag's total revenue and income versus 20% in the same period of last year. The improvement of 400 basis points reflects operating leverage mainly from personnel and marketing expenses. On top of that, Hubs and PagBank revenue growth helped to dilute our OpEx. In the bottom left, financial expenses reached BRL 621 million versus BRL 44 million in Q1 2021. 50% of this increase is explained by the hike of Selic from 2.1% per year in Q1 2021 to 10.4% per year in this quarter. The other 50% was related to higher TPV volume, prepayment of receivables to merchants, and credit card mix. These effects were partially offset by ongoing repricing in acquiring APRs increase on credit underwriting and lower cost of funding through deposits growth. In the next slide, CapEx per sales reached 20% this quarter versus 17% in 2021. This increase reflects an additional POS purchase to recover the inventories coverage ratio and to prevent a potential new lack of semiconductors due to lockdowns in some geographies. For 2022, we are focused on reduce POS subsidies, keep healthier LTV to CAC, and maintain our best in class SLAs on PagSeguro operation. In the graphic below, depreciation and amortization are under control and total BRL 244 million in Q1 2022, representing 7.1% of Pag's total revenue income, with a slight improvement versus full year of 2021. In the next and final slide shows our cash position, which ended the first quarter at BRL 8.3 billion, improving BRL 400 million year-over-year. This was driven by TPV growth, higher share of credit cards with larger penetration of same-day prepayment to merchants. At the same time, we have been improving our capital structure, ending this quarter with 68% of our financing position funded by third-party capital. Our full banking license is key to diversify funding sources and extending average terms. On top of that, the company's focusing on increased deposits from merchants and consumers to keep lower financial costs. Our PagInvest platform is also an important tool to distribute PagBank CDs to our clients or bring new clients to Pag. Now, we ended our presentation, and we will open to the Q&A session. Operator, please. Thank you. The floor is now open for questions. If you have a question, please press star one on your touchtone phone. If at any point your question is answered, you may remove yourself from the queue by pressing star two. Our first question comes from Mario Pierry, Bank of America. Hi, everybody. Good afternoon. Congratulations on the results. Let me ask you two questions. Can you talk about the evolution of your take rate? You showed the monthly figures up to the end of the quarter. I was wondering if you will continue to reprice in the second quarter. If you can talk a little bit about the evolution of your take rate. Then the second question is related to, you know, if I take your net income, the midpoint of your net income guidance for the second quarter, you're basically gonna be at about BRL 750 million for the first half, which then annualizes to BRL 1.5 billion, which is in line with the net income that you posted in 2021. Is that how we should think about the full year, or do you think there's room here for growth in the second half of the year to be better than the first half? Thank you. Hi, Mario. This is Ricardo. Thank you very much for investing the time to talk to us, and thank you for the questions. For the first one about take rate. Indeed, we had some increase in price in April. What we're following here in Q2 about take rate, we see take rates going up. Important to say that even if you get the take rate and also discount the financial expenses, we also see this metric increasing. The price increase we've been doing is showing some positive results. As we said during the presentation, there is no impact in churn. We expect Q2 to have a better take rate in compared to Q1. About the net income guidance, you're right. If you get the midpoint of Q2, it's gonna be around BRL 750, and by just analyzing that, it's gonna be BRL 1.5 billion. I just want to reinforce that's the best information that we have so far. We are here working always to beat the top of the guidance. That's what we will try to do. That's the first point. The second one is we expect also the TPV to keep growing in the following quarters. I don't wanna give you here a hard guidance, but with higher volumes, we also expect to have better net income looking forward. We cannot guarantee that at this point. Of course we again, we're working here to beat the guidance and to keep this net income being better in the following quarters. That's clear. Just a follow-up on the take rate. Just so that we have a better understanding, like what percentage of your clients have already been repriced? If you're repricing both the MDRs and the prepayment product? Mario, we are repricing the MDRs and also the prepayment. Usually we reprice the MDRs more for credit because that's where we have the impact with the cost of funding, right? Because the debit transaction is settling in the next business day and in credit cards in thirty business days. We are increasing both MDRs and prepayments. We don't give the detail about the percentage of the clients or the percent of TPV that we are increasing. First, because of the strategic reasons, and second, because it's a very, let's say, live situation here that we keep following different clients with different industries. If they are retail, if they are fast food, and depending on what's going on, we keep increasing, adjusting. Even for some clients, we did some price that fluctuates a little bit with Selic. We are kind of protected for large clients that will not have any impact, and we don't need to keep going back to them to increase prices very often. Unfortunately, we cannot give the detail about the number of clients in TPV, but we are increasing the price for both MDRs and prepayment. Okay now. That's great. Thank you very much, guys. Thank you very much, Mario. Our next question comes from Bryan Keane, Deutsche Bank. Hi, guys. Congrats on the results as well from me. I guess two questions. Is the idea that you guys will continue to raise price in order to cover the cost of the rise in the Selic rates? You know, if Selic rates stop rising and just, let's say, stay flat, it might take, I don't know, another 12-18 months to catch up to the full amount. I guess, the plan is still to catch up and pass through the entire higher rate. I just wanna make sure the higher interest rates will get passed through the Selic rate. Secondly, on merchant account, it sounds like more the strategic focus now is to expand and grow within the higher TPV per merchant and create a higher revenue per merchant than it is maybe to land a micro merchant that might not be as profitable. Just obviously, you guys had a slide on that. Just wanna make sure I understand that strategy. Thanks. Hi, Bryan. Thank you for the question. It's Ricardo here again. Regarding the prices, just remember that the basic interest rate in Brazil went from 2% to 12.75% at this point. There's gonna be another meeting of Central Bank in June 14 or 15. We are following the probable increase in basic interest rates, and if necessary, we can increase our price. But I would say to you that the largest part of the price increase we already did because that's the high impact from 2% to almost 13%. If necessary, we will increase the price, but it'll be more customized according to some clients and some adjustments that we need to do. But I don't think there is gonna be a massive price increase looking forward. That's one thing. It's important to say that Brazil started increasing prices much earlier than other countries. You know, we had hyperinflation in the 1980s in Brazil, inflation 1990s. Central Bank acted very quickly here to increase price, to increase basic interest rates. We expect that at some point, this interest rate could go down maybe next year or 18 months from now, as you mentioned. When that happens, we will not decrease our prices proactively. Same situation that it took a while to increase the prices when Selic rises, we will also take advantage. We will not decrease the prices immediately if Selic goes down. What today is a headwind, it could be a tailwind, 2 quarters from now. Going back to your question, The majority of the price increase is already done. Regarding net adds, you're right, we are looking for clients. We are not looking for big clients, but we are kind of not focused too much on the nano merchants, the smaller ones. We of course follow what happened with the previous cohorts, the payback that we had, and we evaluated here and conclude that the best decision right now is to increase POS prices and decrease POS subsidies, improve the LTV versus CAC ratio, and look for clients that use not only PagSeguro but also PagBank. That's why we are focusing a little bit higher merchants. I'll take advantage of your question just to complement that different than other companies that the number of subscribers is key to model revenues and so on. When you have flat fees, it's very different here because you have many growth drivers. The clients that work with us usually they grow their TPV, we can cross-sell products. The idea is to also bring these clients and increase the revenue per merchant that we have today. That's what we had in mind. That's what we're looking forward. Bryan, this is Éric. Just to add my two cents here related to the spreads. When we think about spreads, remember that as we move upmarket to larger merchants, they have slightly lower spreads in comparison to micro merchants. This is okay for us because it is EPS accretive, so not necessarily spreads will be fully recovered even though EPS will continue to grow. Okay? Why? Due to the client mix change towards larger merchants that have much higher TPV per merchant in comparison to long tail. The summary here is consolidated long tail, increasing share of wallet, and also moving upmarket with clients with larger volumes and slightly lower take rates, but still very profitable for us. Got it. Thanks for taking the questions. Thank you, Bryan. Our next question comes from Pedro Leduc, Itaú BBA. Good evening, everybody. Thank you so much for taking the question. I have two, please. First, if I think about your net margin evolution more for the coming quarters, of course you're working on the top line on the repricing. OpEx seems to be getting diluted. I would like to get your views on that as well for the coming quarters. But also on the funding cost side, you know, especially in the light of the strong deposit figure, what can we expect from the funding side as a help to net margins in the coming quarters? Is this something that you can do now to offset a little bit the Selic pressure is still lingering? So that'll be the first. Thank you. Hi, Pedro. This is Ricardo again. I will start and Artur can complement if he wants to. Just before I answer you about the margins, just pretty quick math here. Our financial expenses in Q1 2021 was BRL 44 million, and in Q1 2022 was 621. It's the difference around BRL 580 million reais in financial expenses. Of course, that's happened because of the increase in base interest rates. If you analyze that, this BRL 600 million × 4, we are talking about BRL 2.4 billion as an increase in financial expense, a big headwind. Even with that, we are growing our net income in absolute terms, which for us is a huge, huge achievement because you can imagine BRL 2.4 billion before taxes as a big headwind, and we are still delivering a net income higher than last year, 29% if looking at GAAP measures. With all the scenarios that we have, looking forward, we will focus to remain and to increase our EPS. We always look for growth and profitability. We have this volatility not only in Brazil but around the world, and presidential elections in Brazil and so on. To be sincere, we are trying to look some operational leverage, as we had in personnel, in marketing, for instance. We are not looking for margin as a percent of revenues in the following quarters because of the volatility that we may have and so on, and with this headwind in financial expenses. I don't know if Artur would like to comment. Regarding funding costs, of course, we are following that very close, and we also have that advantage by having the bank with BRL 11.2 billion in deposits that it helps us to decrease the average cost that we have in funding. It's growing very fast, mainly because of the deposits that we have in the bank account and also the CDs that we've been launching since last year. Just to add my two cents here, Pedro, this is Éric. When we combine the full banking license and all the products that we have been rolling out, remember that the deposits that we are capturing here is a winning go-to-market strategy to keep attracting new clients with high APYs. At the same time that we foster cheaper balancing accounts to help to diversify the cost of funding and the hit that we have been seeing in our profits in the short term related to the interest rate hikes will not be as high as it was right now, because in the next interest rate hike cycle, we do expect to have a larger deposit base, which will be a natural hedge for the company to deliver much higher profits in the future since we have the full banking license and PagBank. That's very clear, Éric. Especially, that's what I was getting at. The deposit was an impressive figure. Congrats. I'll go back in line for a second question. Thank you. Thank you. Our next question comes from Jeff Cantwell, Wells Fargo. Hey, great. Thanks for taking my question. I wanted to follow up on the PagBank commentary that you were highlighting earlier, and more specifically on slide 9 of your presentation. I was hoping you could talk a little more about the active client base and the growth that you're seeing in active clients right now. One of the things we're trying to unpack is just, you know, sort of the marginal profitability of the consumers that you're bringing on board. I was hoping you'd kind of give us a little bit of a sense of, you know, what you're seeing in some of your more recent adds and how you think about profitability going forward. Thanks a lot. Hi, Jeff. Yeah, in slide nine we see that we grew very fast in consumers, and in the slide on the right side, we see they're using PagBank as a primary bank more and more. We also think that we have been cautious in terms of giving credit for consumers. Even with that, more than 50% of our clients use us as their main bank, which is very good for us when we decide to launch new products or to give some credit for these clients. Going straight to your question here, what we do with the merchants to monetize. Of course, we have the transactional that we have with these clients when they pay a bill, when they top up a mobile phone, a prepaid mobile phone and so on. We have these revenue streams. We also have another two advantages here or two product lines, I would say. Well, the first one is the deposits that help us in the funding, which is important, of course. We will have these base of clients growing and deposits and balance accounts growing help us in the funding costs. You can imagine that in a country with 13%, basic interest rates per year, so that helps. We've been launching new products that we will give credit for the consumer with collaterals. We already have some CDs that we offer for these consumers. When they deposit a CD, we can give them a credit card, and then we can receive revenues from an interchange and so on, and with a very, very limited credit risk. That's what we have in mind at this point. We still have been cautious about giving credit. Although we had an increase in deposits in Q1 compared to Q4, around BRL 200 million from BRL 1.9 billion to BRL 2.1 billion, it was mostly collateralized products based on deposits that companies make for employees in the government. If the consumer doesn't pay us, we can, we are kind of backed by the government to receive this money. That's why we also launched it, and that's the majority of the growth that we had in Q1. Okay. Thank you very much. That's great color. I will jump back in the queue. Appreciate it. Thank you, Jeff. Our next question comes from Pedro Leduc, Itaú BBA. Thank you guys for taking the follow-up. I would like to switch subjects quickly for credit. I know it's small and appreciate you guys have been prudent on it. Portfolio is growing steadily, no doubt, BRL 2.1 billion. Can you discuss a bit how we should expect it evolving in the coming quarters, especially between the secured lines, which seem to be growing faster? Then other than growth, a second question now related to credit risk. You know, how you're seeing that on the ground, how was the expected provision expense figure for this quarter, and how should we think about that one evolving in the coming quarters? It seems like you've adjusted some standards, et cetera. May it have peaked or stabilized? Thank you. Hi, Pedro Leduc. What I've seen so far, Artur Schunck can help me here. But what I've seen so far in the market, in the Brazilian market, and we've been hearing from big banks that know how to give credit in the market, that there was a little bit of deterioration of NPLs. Of course, the cause of that is the macro scenario we've been seeing here with the inflation, unemployment and so on. Here with us was not different. We had a little bit deterioration in NPLs. Nothing to be concerned, but we also expected that. We've been seeing the cohorts, and that's what is going on with us, and Artur Schunck can give more color. Looking forward, I would say to you that we do not expect to grow our credit portfolio too much. If it grows, it's gonna grow just a little bit. There will be a transition from non-collateralized products to collateralized products. We are already doing that. We did that in Q1 with this FGTS product that you know very well in Brazil, what I'm talking about. We have this government guarantee. That's a very important and secure and safe collateral. What we will see in the future is more and more collateralized products taking share from other products with more credit risk. Of course, our goal here is to have a balanced portfolio with products with higher risk, but of course, with higher returns and a huge part of the portfolio with collaterals that we can also navigate through different times and depending on what's going on in the macroeconomic scenario. At this point, as the majority of our credit portfolio is still without collateral, the working capital for the merchants, what you see is gonna see this migration from non-collateral to collateralized products. Pedro, just to complement. We are seeing difficulties in the economy, difficulties in the market. All the incumbents said that the portfolio deteriorated a little bit and happened here too. But remember that our net income, non-GAAP for this quarter was BRL 371 million. Imagine if the asset quality should be better. We could have a better result too. This is the reason that we are observing the market, trying to understand when will be the right moment to accelerate again. At this moment, as Dutra said, we are working to provide credit for merchants and consumers that could provide collateral to us. That's perfect. Very, very cool. Just regarding the provision expense line, this quarter, as you mentioned, net income could have been even higher. Now, can you say has that provision expense line maybe plateaued, or you think that it will continue going up as the portfolio also grows? We can say that it could be stable. The most important thing to us is that we are using the most advanced accounting process to the credit portfolio. We are not expecting huge impacts in the future because our provisions are based on IFRS 9 expected losses, taking a look at the next 12 months. We are provisioned, so there is no problem for the future. Pedro Leduc, this is Éric Oliveira. More important to ask about provisions, and you're completely right to make this question, is the APRs that we charge. Okay? In light of this challenging environment, we also increased the APRs, potentially we're expecting to see a deterioration in asset quality to keep the spreads. Okay? This is the main message here. The APR has increased to cover the higher provision for losses. Remember that the IFRS 9 makes the company to make the upfront provision for losses and capturing higher margins as time passes by and as we book it as an interest income. Okay? Thank you. Super useful, guys. Thank you so much. Thank you, Pedro. Our next question comes from Neha Agarwala, HSBC. Hi, congratulations on the results and, thank you for all the comments. I just have one quick question. You mentioned that the earnings in the coming quarter should continue to improve. With repricing mostly done and, I believe the funding cost will continue to go up because, as you do more of prepayment and the volumes grow, so that should put some pressure on the funding cost in the coming quarters as well. What would be the main drivers for the expansion in earnings in the coming quarters? Also, the monetization at PagBank has been a bit weak, and I understand that's mostly because you're not being very aggressive in credit, and that perfectly makes sense. How do you think that contribution will look like by next year, for PagBank? Thank you so much. Thank you, Neha, for the question, for investing the time to talk to us. Regarding the repricing, it's an ongoing process. I guess what I mentioned before that was not clear is because I would say the majority of the price increase was already done because the interest rates grew from 2 to almost 13%. If there's gonna be an increase, we expect that it will not be that huge looking forward. We do not expect a big increase in the following 2 meetings in Central Bank of Brazil about interest rates. That's why I said that it could be adjustments. There will be adjustments, that's for sure, but the majority was already done. We think that we are in a good level of spreads when you compare the financial income that we are charging and the financial costs that we've been having. I know when you say that the prepayment will increase, volumes are increased because the company is doing very well in acquiring, growing 60% year-over-year. Of course, the revenues, the financial income revenues grow at the same pace or even faster than that. The spreads between the financial income and financial expenses, we think that we are in good levels. Of course, there is always some room to improve a little bit, but we'll keep following. I just don't wanna say you that we will increase the price for everyone. I would not affirm that we will not increase price for anyone. The majority of the price increase is already done. That's the main message. Looking forward for next year, as I mentioned before, the Central Bank of Brazil was very rapidly to increase the rates here. This is a spike in the interest rates. We expect that inflation could be controlled in the following quarters. When that happens, if the interest rate goes down, we will not decrease the price for our clients. We'll try to keep at the same level at least for a while and of course make that as a tailwind as much as we can. That's why it's hard to say what's gonna be margins, it's gonna be better or not, and how much it's gonna be because we have this macro situation here. The whole company, with the things that we have under our control, we are doing like, leveraging the operating expenses, personnel and marketing, increasing price for some clients, making more rational acquisition, clients and so on. That's the main message about the acquiring. Second thing, I know you say that the revenues may be a little bit lower than what you expected, but. The fact that we are not giving credit because of the macro scenario, of course affects the revenue in PagBank. It could be higher. Yes, it could be, but with a higher risk that we don't think it is time to do that right now. In our opinion, the fact that you already have 23 million people with open accounts in PagBank, 14 million active clients, for us is a very huge opportunity that when we decide to go to give credit, monetize even more, we can speed up and probably, I hope, we can catch up part of the revenues that we are not capturing at this point because of the macro scenario and the credit concessions we are not doing right now. Two things, Neha. First one, remember, always remember, spreads for larger merchants are slightly lower than micro-merchants, and we are not a company anymore that relies only in micro-merchants. Since 25% of our volumes in Q1 came from Hubs, small and medium merchants. Secondly, revenues grew 66% year-over-year, while personnel plus marketing and advertising expenses combined grew half of that. I mean, the investments that we did in new ventures such as PagBank and Hubs, they are already playing out, delivering operating leverage to the bottom line. The big headwind is financial expenses, and despite that, we are working hard to deliver higher net income in 2022 in comparison to 2021. Understood. Could you just talk quickly about competition, especially in the long tail? Do you see competition being more rational? I believe all the players are now increasing the prices, so there should be more rationality. Anything that has changed, anybody being aggressive or irrational in this space? Hi Neha, this is Alexandre. What we have, you know, observed in the market is that, all the relevant players have been more rational in their pricing strategies, in the long tail segment. We have the lion's share in terms of number of merchants and, through our experience, of having the largest merchant network in Brazil, for all these years, we learn how to manage properly all these long tail customers and, we have a very good value proposition on this segment. We have superior logistics. We deliver our terminals in the same day, between one day or two days, mostly. We also have a value proposition between the banking business and acquiring business, that no one has in the market. We provide this service with a single app and with a single customer care contact for merchants. We believe that our value proposition and all the assets we have make us the strongest competitor in this arena. Being more rational about terminal subsidies and promotional offerings is making us to capture more value out of these clients. We are raising the average TPV of our merchants, and we are also capturing merchants that has a higher propensity to use financial service. This is helping us to boost PagBank. Just to complement, Neha, the initiatives from other incumbent companies, acquiring companies such as Cielo and Credicard Pop from Itaú, they kind of decided not to keep with these initiatives anymore. It seems that there were more competitors in the past than what they had today in Long Tail. That's the situation. If you look at 1 year, 1 year and a half ago, there are many more players trying to come to Long Tail. Just to give an idea, these two companies decided not to serve Long Tail anymore because of the reasons that Alexandre just said, the logistics that they have, the PagBank and so on. It seems more rationality and less players serving Long Tail at this point. Perfect. That's very helpful. Thank you so much. Thank you, Neha. Our next question comes from Kaio Prato, UBS. Hello, everyone. Good evening. Thank you for the opportunity for asking the question. I have two here on my side, please. The first one is on PagBank revenues. In the last quarter, you mentioned a guidance for PagBank revenues of BRL 240 million-BRL 260 million. The date that you disclosed the results were really close to the end of the first quarter. You delivered more than BRL 300 million this quarter, while the NII remained flat quarter-over-quarter. Just would like to have a sense on what happened, if this is indeed an impact of fees, and in which line of fees we saw this impact. Also, what can we expect in terms of revenue growth from PagBank going forward. If I may just thread my second question here is related to the tax rate. If you could, first give more details about the impact on effective tax rate this quarter and what can we expect going forward? Of course, I'm trying to better understand what could we expect in terms of earnings before taxes if we could see this expanding over the next quarters. That's it. Thanks a lot. Hi, Kaio. This is Ricardo. I will start backwards here, and then Artur can complement and also talk to you about the PagBank revenue guidance. When you look at the tax rate this quarter, if you look at this specific line, you see a lower effective tax rate, right? The point is, in other lines of our P&L, we had a negative revenue tax impact in the line of other financial income. We have a headwind in the other financial income, and then we could offset that in our tax rate for income tax rate. If you make the sum of the parts and the puts and takes, there is no real benefit in the bottom line. It's just a trade-off in tax collection between different lines. For this reason, I will reinforce here that net income impact was negligible here, in this situation. It was just a trade-off between these two different lines. Artur. Kaio, just to talking about going forward related to effective tax rate, the same as Dutra explained, will continue. Our effective tax rate will flows around 16%, 18%, 20%, okay? Just to be aligned here. Related to PagBank guidance, PagBank revenue, Excuse me, ladies and gentlemen. Please hold while the speakers reconnect. Thank you. Excuse me, ladies and gentlemen. Please hold. Excuse me, ladies and gentlemen. Please hold while the speakers reconnect. Thank you. Ladies and gentlemen, please hold. Excuse me, ladies and gentlemen. Please hold the speakers reconnection. Thank you. Please hold the speaker's reconnection. Ladies and gentlemen, please hold. Excuse me. Excuse me, ladies and gentlemen, please hold. Excuse me. You may proceed. Hi, everyone. I'm sorry we had a technical issue here with the call, so we will just keep answering the question from Kaio Prato from UBS regarding guidance and also the net revenue of PagBank. Arthur, please go ahead. Kaio, what happened with the guidance in Q1 2022 with the revenues for PagBank was that we had. We were a little bit more pessimistic about the revenues, but we beat our estimates for credit, for cards, for many services there. That's it. Okay. Thank you. Thank you, Kaio. Our next question comes from Sheriq Sumar, Evercore ISI. Hey, everyone. Thanks for taking my question. My question is a two-part question, and it's on the churn. I understand that you started increasing the rates in January, and then obviously it has continued until April. How much more runway do you think is there for the churn to go up? Is all the churn fully reflected in the price increases or in your estimates? The second thing is, I understand how the churn works, where we won't see the actual churn until like 12 months from now. Where do you think we would be ending by the year end in terms of the active merchants within your Pag's business and also your focus on high impact clients? Will that increase the churn within the merchants? Long story short, my question is like, how should we think about the active merchants for the full year? I thank you for the question. As we talk about this quarter, and then we can talk about the following quarters. What we had in this quarter, we still have some legacy clients from MOIP that we see this churn, but as you mentioned in your question, they are not making any transaction with us in the past twelve months. If we just exclude MOIP, we'll have growing, decent numbers. Of course, it's not the same 250 that we used to have every quarter, but it was a conscious decision here. We decided to increase price to get better merchants, not to focus on non-merchants. The gross adds were a little bit lower than what we used to have in the past. Of course, we're seeing churn for one year ago. For us, what we're following very closely is how active these merchants are in our base, how big is the TPV per merchant, and how it's been our growth, which was 60% year-over-year, and revenue is growing 66% more than the volumes, the TPV. That's why although we see this number of churn, maybe number of net adds not the same level as we used to have in the past, we are not losing TPV because there are small merchants that we are losing here. In terms of price increase, we didn't see any spike or additional churn because of the price increase, because all the market increased prices. There is no. We'll churn only if it doesn't sell with cards anymore, which is not a reality. We increase the prices, all the market also increases prices. We didn't see an increase in churn because of the price increase. Looking forward, I guess the best estimates that I can give to you that it is not likely that we will have the same 250 that you used to have per quarter before. Again, we are looking for merchants with better TPV. The impact of the churn that we're seeing is from 12 months from now. The behavior that we're seeing in the base right now, we don't see deterioration because of pricing or anything like that. Let's say we're straightforward here. Growth rates are lower because we took this decision to get less merchants with more TPV. The churn from the big base, from mortality, from non-merchants that we had one year ago is impacting the total net adds. Again, it's better to look at the total TPV per merchant, revenues per merchant and so on. It's hard to give an estimate how it's gonna be for the following quarters. That's the best information that I have right now. I'm sorry. Sure, yeah. Thank you so much. Thank you. Our next question comes from Keellen Douglas Patton from Cantor Fitzgerald. Hi, guys. This is Keeler from Cantor, on for Josh today. I was hoping you could share a little more color about the diversified revenue streams around PagBank. What services are clients specifically engaging with? Is that going to be a trend that continues into the future? Thank you. Thank you. Thank you for the question. When you mention diversification, if you look back, the majority of the revenues we're having were related to interchange of the card. People just spending money with the card, so the interchange every time they made a purchase or they buy online or things like that, or even the money in an ATM. We've been seeing that engagement is increasing of these 14 million clients. The transaction is also helping the revenues. The fact that we increased our credit portfolio helped us to increase the revenue. As you mentioned in the Q1 main message slides, we're seeing these revenues coming from interest getting more share in PagBank, and probably we will see that increase in the following quarters. Because although we will not increase the credit portfolio too much, it seems that we expect to have the credit portfolio stable and with more collateralized products. That's what we see looking forward. The other growth drivers that we have, we talked about SMBs, digital account. We launched many products during the quarter, but I would say I will highlight three of them that you have in the slides. One is the debit card for SMBs. They were asking us to have a debit card. We also had directed deposits from other acquirers to PagBank. Also, we're launching CDs with credit cards for SMBs because it didn't have credit cards for formalized companies. It was only for consumers at this point, for, let's say, people, not for companies. Those are the drivers that expect to help us in the revenues looking forward, because we see this huge opportunity for SMBs, as I mentioned in my pitch at the beginning. We are the only acquirer that we serve SMBs with payments in digital account. If you look other acquirers that are trying to serve SMBs or they don't have any bank account, they are subsidiary of banks, but they don't have their own bank account. Or others that are trying to do that, they are behind us at least three years. We are the only one with the payment solution in digital account. We expect also to expand and penetrate more in our SMBs, not only in terms of clients, but also in terms of engagement and consequently revenues. Great. That's really helpful. Thanks for taking our question. Thank you, Keellen. Our next question comes from Tito Labarta, Goldman Sachs. Hi, good evening. Thank you for taking my question. I have a follow-up, I guess, on the guidance a bit and on the margins that are implied, right? I mean, because at the midpoint of the guidance, it implies that the margins fall a little bit from this quarter. I mean, you mentioned most of the repricing is done. Just when do you think that we can begin to see some operating leverage in the business and the margins begin to go up? I mean, do you need to wait for interest rates to come down? Is it, you know, PagBank and the Hubs becoming profitable? Just to get a better sense of when we can begin to see an inflection point there. Then maybe a follow-up to that. I mean, you mentioned you wouldn't proactively reduce rates when rates come down. What if your competitors start to lower rates when interest rates decline? Would you be forced to follow, willing to follow? You know, do you think you could then be able to maintain prices in a lower interest rate environment as well? Just to get a sense also on some of the you know, potential operating leverage there if and when rates eventually maybe come down. Thank you. Hi, Tito, this is Ricardo. Well, definitely we will have some, we expect to have better margins when the interest rate goes down because of this mismatch of timing between the decrease, of course, versus the level of revenues that we have at this point. Increasing the spreads because of interest rate goes down, so we keep the price at the same levels. Regarding your question, if competition decreases prices, I don't think it's a, let's say, a simple answer like, we're gonna follow or we will not follow. We have 7.7 million merchants, almost 8 million merchants, so you can imagine you have every type of merchants in all the cities in Brazil, more than 5,500 cities. Many of our clients use us not because of the prices. We have the highest net take rate of the market, but they use us because of the ecosystem, because they have PagBank, because we are the first mover and so on. Part of our clients are not that price sensitive, so I don't think that there's gonna be a move to other player because we did not decrease the price. We don't need to follow immediately if some competitor starts to decrease the price. Many of our competitors don't have a strong presence in long tail, for instance. We think that we'll take advantage of that. Of course, if we think about large clients, that they are all they have all the financial manager or things like that, there could be some competition there. Again, we try to make to differentiate PagSeguro from others with better services, better logistics and so on, to try to sustain higher price when compared to competitors. If you look at the industry, we have the highest gross take rate and also net take rate. Regarding margins in short term that you were looking our guidance, depending on if you're looking the bottom of the guidance, the mid and so on. It seems to be stable in Q2. Of course, we still have some days to finish Q2. It seems to be stable. Operational leverage, we do expect to happen because we already invested in Hubs in the past two years with our 300 Hubs. We are not, let's say, opening new hubs at the same pace that we used to have in the past, only small hubs here and there. All the base that these hubs that we invest in the past, they create the base of merchants TPV that we are having right now, of course we can get some leverage there. Again, I just don't wanna promise here better margins because we don't even know how it's gonna be the next interest rate increase, if we have by June. Of course, if we have this interest rate increase, we increase the price as much as we can, and we have the ability to pass the price as we could see in Q1. For me, we had a very successful price strategy here. We were able to increase the price, increase take rates and churn levels under control. That's why our revenues grew more than our volumes, 66% versus 60. In Q2, we are seeing better take rates when compared to Q1. It's a matter of time for this operational leverage to happen, but I just don't wanna promise you when will happen. I guess the best answer here at this point is just to say, some of the headwinds that you have today could be tailwinds in the future. Let's see when they will become some tailwinds and we can take advantage of that. Great. Yeah, thanks, Dutra. That's helpful. Maybe just one follow-up then on that. In terms of PagBank, I think you initially said, you know, break even maybe end of this year. I think last conference call you said maybe that gets delayed a quarter or something because of sort of slower credit origination. Is that still the case? Do you think, you know, PagBank, you know, break, you know, turn to profit next year? And then I've also similar question on the Hubs. Would you say you know, how long do the Hubs take to become profitable? Is that, you know, this year, next year? Any color? If not, it's gonna be very soon. Honestly, we are taking advantage of the scenario to grow PagBank as fast as we can. The Hubs, I guess Artur can help with the Hubs. Artur, with the profitability of the Hubs. Tito, this is Alexandre. Regarding the hubs. Hubs represent today 25% of our TPV. We have around 300 hubs spread all over the country, covering around 80% of the Brazilian GDP geography locations. We have a very compelling paybacks in our hubs operations between 4-6 quarters. What we see is that through our superior logistics infrastructure, same-day prepayment and PagBank offering, we have been growing much faster than the competition in our hubs strategy, exploring and gaining share on the SMB segment. We see that we are gaining that traction and that market share much faster than we originally would think about. Okay. Yeah, thank you. That's helpful. Thank you, Tito. Our next question comes from Soomit Datta, New Street Research. Hi there. Yeah, thanks for taking the question. Just a quick one at this point, please. You've given some data on the Hubs' contribution to TPV over the course of the last few quarters. I'm trying to kind of plot that progress over time, i.e., how much is Hubs contributing over time. It's a bit hard to get to the exact numbers. I'm curious, you know, to what degree is the long tail still growing TPV relative to Hubs? I mean, for example, you said Hubs' TPV is up to 25% of total now. I think it was 20% at the end of the year. When I look at the TPV progress through Q1, it was flat. Does that mean long tail TPV is down and Hubs' TPV is up? When you're guiding for TPV into the next quarter, are you assuming long tail is still growing or is it really coming from the Hubs at this point? Thanks very much. Hi, thank you for the question. Long tail TPV is growing. We were the first mover. We have a very loyal base of long tail and small merchants that work with us, so this TPV is growing in long tail. Of course, when you look at the TPV metric, Hubs are growing faster because they usually are 5, 6 times higher than the size of a long tail. That's why the Hubs' share of TPV is 25%. Which is good because we are getting 60% TPV, 66% in revenue and so on. Looking at the TPV, we expect that Hubs will take share because the Hubs' operation is doing very, very well. We thought it would be even harder than what we see in the market. Hubs are doing very well. They will keep taking share. But long tail is growing, but it's not growing at the same pace as Hubs because of course, the maturity of TPV compared to Hubs is not at the same level. We are growing Hubs more fast or faster than long tail. But both of them are growing. As I mentioned before, although Hubs have lower net take rate as a percentage, in absolute terms, it's a very decent profit, and it helps because they are five times larger than long tail. It's hard to give you what's gonna be the size of Hubs looking forward, but we expect to take share, and it's not bad news because they are growing faster than long tail. As I said before, we will cross-sell our PagBank solutions for Hubs as well. Éric. Just my two cents here. It doesn't matter the size of the merchant that we are serving. If it's a long tail, it's an SMB, this might be a tricky and misleading question. Why is that? Because we are cherry-picking always the best merchants, and this is why we have the highest take rate for the market, and we are the most profitable acquiring company, building up a banking with 23 million clients and capturing more than 40% of the net profit for the sector. We are not concerned if long tail SMB. What we know is we are cherry-picking the best merchants, and for those with poor economics, we are not focused on them. We are focusing on cherry-picking the best merchants with higher TPV per merchant and healthy take rates. Okay. Got it. Thanks. Thanks. This concludes the question and answer session. At this time, I would like to turn the floor back to Ricardo Dutra and Alexandre Magnani for any closing remarks. Please go ahead. Hi, everyone. Thank you very much for investing the time to talk to us. Thank you very much for those who made some questions to us as well, and hoping to see many of you in person in the following weeks. Thank you very much. This concludes today's PagBank, PagSeguro conference call. Thank you for attending today's presentation.