The Company
Corporate Profile
We are the leading company in the merchant acquiring and payment processing industry in Brazil, with a 46.8% market share in terms of credit and debit card transaction volume. The total credit and debit card transaction volume amounted to R$375.4 billion in 2008, according to the ABECS. We believe our leadership is also reflected in our large transaction volume by POS electronic capture equipment, which reached R$36,400 by POS electronic capture equipment in the three-month period ended March 31, 2009 and R$128,900 by POS electronic capture equipment in 2008, according to internal data. We have the largest domestic coverage in the Brazilian merchant acquiring and payment processing industry, with approximately 1.5 million affiliated merchants, according to the joint report prepared by the Central Bank with the Secretary of Economic Rights and the Secretary of Economic Development. We are also present in more than 96.0% of Brazilian municipalities, according to IBGE data and internal data as of March 31, 2009.
We are currently the only Visa-branded card acquirer in Brazil. Visa is the leading credit and debit card brand and the most accepted card brand by merchants in Brazil, according to the Central Bank Report, and the leading credit and debit card brand worldwide in 2007, in terms of credit and debit cards issued, according to research published in May 2008 by The Nilson Report. We are responsible for acquiring merchants and managing the network for the acceptance of Visa-branded credit and debit cards in Brazil, as well as for the capture, transmission, processing and settlement of Visa credit and debit card transactions. We also install and provide maintenance for electronic capture equipment, which we rent to our affiliated merchants.
Our principal shareholders include entities that are part of the financial groups Banco do Brasil S.A., or Banco do Brasil, Bradesco and Santander Brasil Group. They are the largest issuers of Visa-branded credit and debit cards in Brazil in terms of transaction volume, and are among the largest retail banks in Brazil in number of branches, according to Central Bank data as of December 2008. We believe that our principal shareholders’ presence in more than 70% of Brazilian municipalities better positions us to offer our services, thereby contributing to our leadership position.
We have been growing steadily throughout our history. From 2006 to 2008, our transaction volume grew at a compound annual rate of 25.9%, from R$110.7 billion in 2006 to R$175.6 billion in 2008. In the three-month period ended March 31, 2009, our transaction volume totaled R$47.7 billion, representing a 22.4% increase compared to R$39.0 billion during the same period in 2008. From 2006 to 2008, our Adjusted EBITDA margin increased 8.9%, from 53.4% in 2006 to 62.3% in 2008.
|
million R$ |
Year ended December 31, | Three-month period ended March 31, | ||||||
| 2006 | 2007 | 2008 | % Change 2006-2008 |
CAGR (2006-2008) |
2008 | 2009 | % Change 2008-2009 | |
| Net revenue | 1,945.1 | 2,402.2 | 2,875.5 | 47.8% | 21.6% | 663.2 | 791.3 | 19.3% |
| Gross profit | 1,254.9 | 1,631.2 | 2,024.3 | 61.3% | 27.0% | 478.0 | 579.1 | 21.2% |
| Net income | 657.9 | 883.9 | 1,393.8 | 111.9% | 45.6% | 604.2 | 333.2 | -44.9% |
| Other information: | ||||||||
| Net margin | 33.8% | 36.8% | 48.5% | 14.7 p.p. | - | 91.1% | 42.1% | -49.0 p.p. |
| Adjusted EBITDA | 1,038.8 | 1,409.5 | 1,802.9 | 73.6% | 31.8% | 447.2 | 535.8 | 19.8% |
| Adjusted EBITDA margin | 53.4% | 58.7% | 62.3% | 8.9 p.p. | - | 67.4% | 65.9% | -1.5 p.p. |
|
million R$ |
Year ended December 31, | Three-month period ended March 31, | ||||||
| 2006 | 2007 | 2008 | % Change 2006-2008 |
CAGR (2006-2008) |
2008 | 2009 | % Change 2008-2009 | |
| Credit cards: | ||||||||
| Transaction volume | 71,197 | 87,966 | 110,897 | 55.8% | 24.8% | 25,195 | 30,498 | 21.0% |
| Number of transactions (in millions) | 1,142.1 | 1,409.5 | 1,719.7 | 50.6% | 22.7% | 398.4 | 460.9 | 15.7% |
| Debit cards: | ||||||||
| Financial transaction volume | 39,552 | 48,534 | 64,655 | 63.4% | 27.9% | 13,796 | 17,209 | 24.7% |
| Number of transactions (in millions) | 836.0 | 986.5 | 1,232.4 | 47.4% | 21.4% | 273.1 | 327.6 | 20.0% |
| Affiliated merchants (in thousands) | 996.6 | 1,180.1 | 1,407.9 | 41.3% | 18.9% | 1,209.0 | 1,466.2 | 21.3% |
| Active merchants (in thousands) | 716.2 | 872.2 | 1,055.4 | 47.3% | 21.4% | 892.9 | 1,074.5 | 20.3% |
In addition to the products and services traditionally offered in the electronic payment industry, we have a track record of offering innovative solutions in complementary segments. We were pioneers in Brazil in providing network infrastructure for correspondent banking services, prepaid mobile phone top-ups; electronic vouchers; and cash back (“Troco-Fácil”). We were the first company in Brazil to capture and process electronic non-payment transactions, such as authorization of transactions for healthcare service providers.
We believe the diversity of our portfolio of products and services is a result of our constant efforts to identify new business segments in order to enhance and optimize the use of our network and assets. Over the last two years, we have also initiated partnerships with card issuers and companies to capture and process transactions with Visa co-branded private label cards. We currently have approximately 85 of these partnerships. In September 2008, we began offering prepayment of receivables to some of our affiliated merchants.
History
Our history dates back to 1995, when Visa International, Bradesco, Banco do Brasil, Banco Real and the extinct Banco Nacional founded Companhia Brasileira de Meios de Pagamentos S.A., which later would become VisaNet—our trade name. Until 1995, the credit and debit card business in Brazil, including merchant acquiring business, had been conducted individually by each card issuer, together with Visa International. At that time, each card issuer would issue its own credit and debit cards, develop its own capturing solutions, affiliate its own merchant network and set its own marketing efforts. VisaNet was created to manage the relationship of the Visa system in Brazil with a Visa affiliated merchant network, consolidating and developing new capturing solutions and the settlement of transactions.
In 1996, we began operations with an affiliated merchant network of over 100,000 merchants who already had commercial relationships with our founding banks, and offered capturing, processing and settlement services involving credit cards. In that same year, Visa International created the VisaNet trademark, which was licensed to us through a non-exclusive licensing agreement, and which we began using as our trade name in Brazil.
In the following years, we implemented acceptance for Visa-branded products, such as the Visa Electron debit card, which we believe helped to improve the use of electronic money, the Visa Vale Pedágio (Visa Toll Vouchers) and the Visa Vale benefit cards, which replaced the paper meal tickets used to pay for meals and groceries.
Our incorporation segregated our role as acquirer from the roles of Visa brand card issuers. We believe this increased the credit and debit card market’s growth, the offer of new products to this industry and the safety and efficiency in Visa brand card transactions in Brazil.
The illustration below shows the structure of the credit and debit card business networks in Brazil before and after we began our operations:
We currently manage the Visa merchant acceptance network in Brazil, and develop and facilitate monitoring, capture and processing solutions for (1) Companhia Brasileira de Soluções e Serviços, or CBSS (the issuer of products with the Visa Vale brand), (2) co-branded private label card issuers and (3) healthcare industry companies.
In november 2009, company announces its new brand and name, Cielo – meaning sky – because it also wants to emphasize the scope of its actions and extension of its network. With this, the company presents a renewed image to the market that includes a new name and visual identity, which goes beyond being a simple change to represent a new positioning.
In order to help build this new positioning, the company has consolidated four pillars that summarize the Cielo brand.
Using expertise: developing the technology to come up with solutions that speed up and drive transactions and relationships faster and better. Dominating complex issues and offering robust yet simple solutions. Crossing borders and influencing behavior change.
Earning trust: winning stakeholders’ trust. Employing the most demanding safety protocols in order to ensure the integrity of transactions. Pursuing efficient processes. Preserving information confidentiality with extreme zeal while having transparent relationships and management.
Being comprehensive: covering vast expanses in multiple territories. Meeting the demands of businesses of every size, industry or location. Having a 360-degree outlook to capture moves and identify trends. Living diversity intensely and thus building a unique repertoire that qualifies the delivery.
Getting involved: taking on commitments that have a positive impact on its surroundings and carrying out initiatives that promote sustainable social development. Contributing to and celebrating business success. Offering the right amount of support. Understanding the needs and being ready to provide doable, aligned and creative responses.
