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2Q10 Results PresentationAugust, 05, 2010
The Company makes forward looking statements that are subject to risks and
uncertainties. These statements are based on the beliefs and assumptions of our
management as well as on information currently available to us. Forward-looking
statements include information regarding our current intent, beliefs or expectations, in
addition to those of the members of the Board of Directors and Executive Officers of the
Company.
Forward-looking statements also include information regarding our possible or assumed
future operating results, as well as statements preceded or followed by, or that include,
the words ''believes”, ''may”, ''will”, ''continues”, ''expects”, ''anticipates”, ''intends”,
''plans”, ''estimates”, or similar expressions.
Forward-looking statements are not guarantees of performance. They involve risks,
uncertainties and assumptions, for they relate to future events, thus depending on
circumstances that may or may not occur. Our future results and the creation of value to
shareholder s may differ significantly from those expressed in or suggested by these
forward-looking statements. Many factors determining these results and values are
beyond Cielo’s ability to control or predict
Disclaimer
Cielo- New Competitive Landscape
Cielo already captures transactions of the 3 main international brands
Partnership with the Ticket brand
Acquisition of 50.1% of M4U capital stock
2
2Q10 Highlights
3
Increase of 21.9% in Transaction Financial Volume in relation to 2Q09, reaching R$ 61.6 billion
Record Adjusted EBITDA Margin of 70.1%, a growth of 2.5 p.p. in comparison with 2Q09 and flat in comparison with 1Q10
Net Income Margin of 43.6%, with Net Income growth of 25.5% in relation to the same period of the last year, reaching R$ 457.7 million. In comparison with 1Q10, the margin increased 0.4 p.p. an the Net Income increased 4%
Cielo signs partnership with HSBC Bank Brazil, through which the bank will use Cielo as the preferred acquirer for their clients
Macroeconomic Scenario - Brazil
4
1
43
2
5.7
3.24.0
6.15.1
-0.2
7.2
2004 2005 2006 2007 2008 2009 2010(E)
GDP Growth ( %)
Source: IBGE(E) Market Estimative- Focus Report - BCB (07/16/2010)
6
7
8
9
10
11
12Unemployment Rate- %
Source: IBGE
10.2
0
2
4
6
8
10
12
14
16
18Retail Trade Sales- %
Source: IBGE
41% 44% 45% 46% 43% 44% 45%59%56%
55%
54%
57%56%
55%
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
40,0
45,0
0
200
400
600
800
1.000
1.200
1.400
1.600
2004 2005 2006 2007 2008 2009 jun/10
Credit/GDP (%)Credit
(R$million)
Credit Evolution
Individuals Legal Entities Credit/GDP
499607
733
936
1,2271,414
1,529
Source: BCB
Cards Market - Brazil
5
1 2
34
17,1%18,9%
20,7%22,5%
2006 2007 2008 2009
Penetration of Card as means of payment in the Private Consumption Expenditures (PCE)
Source: ABECS and IBGE
245
302
375
444
105126
2006 2007 2008 2009 2Q09 2Q10*
Volume Growth (R$ Billion)
CAGR: 22.0%
20.1%
Source: ABECS
388
452
514565
540
597
2006 2007 2008 2009 2Q09 2Q10*
Number of the Cards Issued(million)
Source: ABECS(*) ABECS Estimatives
CAGR: 13.4%
10.5%
69,0
71,9
74,9
77,576,9
80,5
2006 2007 2008 2009 2Q09 2Q10
Average Ticket (R$/Transaction)4.7%
Source ABECS(*) Considering only Credit and Debit
Financial Highlights 2Q10 2Q09 1Q10 2Q10 X 2Q09 2Q10 X 1Q10
Financial Transaction Volume (R$ million) 61,567.4 50,520.4 58,771.1 21.9% 4.8%
Number of Transactions (million) 965.1 814.9 927.6 18.4% 4.0%
Net Operating Revenue (R$ million) 1,048.9 862.9 1,020.1 21.6% 2.8%
Total Cost Of Services (R$ million) (257,459) (228,412) (251,658) 12.7% 2.3%
Operating Expenses (R$ million) (102,573) (90,673) (99,246) 13.1% 3.4%
Adjusted EBITDA (R$ million) 735,329 582,921 713,619 26.1% 3.0%
Net Income (R$ million) 457,720 364,814 440,213 25.5% 4.0%
Operating Highlights 2Q10 2Q09 1Q10 2Q10 X 2Q09 2Q10 X 1Q10
Afilliated Merchants (thousand) 1,839 1,537 1,759 19.6% 4.5%
Active Merchants in 60 days (thousand) 1,153 1,038 1,129 11.1% 2.1%
Total POS (thousand) 1,606 1,408 1,641 14.1% -2.1%
Employees (thousand) 1,058 1,099 1,047 -3.7% 1.1%
Cielo – Financial and Operating Highlights
6
Cielo – Operating Performance
7
1 2
3 4
124
156
185
222
127
159
196
239
100
120
140
160
180
200
220
240
260
2Q06 2Q07 2Q08 2Q09 2Q10
Growth Comparison: Industry x Cielo ( 1Q06=100)
Setor Cielo
Cielo CAGR: 24%
Industry CAGR: 22%
9971,180
1,408
1,7061,537
1,839
679824
996
1,133 1,0381,153
2006 2007 2008 2009 2Q09 2Q10
Cielo- Number of Merchants (thousand)
Afilliated Merchant Active Merchants( transactions in the last 60 days)
1,142 1,4021,720
2,003
483 564
836987
1,232
1,424
332 401
2006 2007 2008 2009 2Q09 2Q10
Cielo- Number of Transactions ( million)
Credit Debit
1,978
2,389
2,952
3,427
965815
18.4%
CAGR 20.1%
71.197 87.966
110.897 134.792
32.144 38.902
39.552
48.534
64.655
79.166
18.377 22.665
2006 2007 2008 2009 2Q09 2Q10
Cielo Transactions- Financial Volume (R$ million)
Credit Card Debit Card
110.749
136.500
175.552
213.958
61.567
CAGR: 24.5%
21,8%
50.521
21.9%
*
* Merchants that have carried out at least one transaction in the last 60 days
Cielo – Revenues Performance
8
1 2
3 4
Debit RevenueCredit Revenue
1.945,1
2.402,2
2.892,9
3.627,8
862,9 1,048.9
2006 2007 2008 2009 2Q09 2Q10
Net Revenue (R$ million)
21.5%
CAGR 23.1%
481.6
562.3
2Q09 2Q10
16.8%141.8
179.0
2Q09 2Q10
26.2%
Credit and Debit Revenue( R$ million)
596,0
745,9
903,1
1.067,1
260,7 304,1
2006 2007 2008 2009 2Q09 2Q10
Equipment Rental Revenue (R$ million)
16.6%
CAGR: 21,4% CAGR: 21.4%
3,3% 4,6% 3,9% 3,4% 3,2% 3,1%0,0% 0,0% 0,5% 4,5% 4,7% 6,8%
27,6% 27,8% 27,9% 26,4% 27,2% 26,2%
14,7% 15,0% 16,0% 15,8% 14,8% 15,4%
54,4% 52,6% 51,6% 49,9% 50,2% 48,4%
2006 2007 2008 2009 2T09 2T10
Revenue per Activity (%)
Outras Receitas Antecipação de Recebíveis Aluguel de POS Cartão de Débito Cartão de Crédito
Cielo – Prepayment of Receivables
9
3
21
1.466,51.604,7
2.009,42.193,3
2.460,4
4,6% 4,7% 5,3%5,8%
6,3%
0,0%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
7,0%
8,0%
9,0%
10,0%
-
500,0
1.000,0
1.500,0
2.000,0
2.500,0
3.000,0
2Q09 3Q09 4Q09 1Q10 2Q10
Prepayment of Receivables
Financial prepayment volume
% Prepayment over Credit Financial Volume
48,554,4
61,866,1
69,7
2Q09 3Q09 4Q09 1Q10 2Q10
Average Term (days)
46,3 49,7
65,5 73,3
97,1
2Q09 3Q09 4Q09 1Q10 2Q10
Revenue of Prepayment of Receivables ex Adjustments( R$ million)
Cielo – Financial Performance
10
12
3 4
1.038,8
1.409,5
1.764,3
2.450,7
582,9735,3
53%
59%61%
68% 67%70%
45,00%
50,00%
55,00%
60,00%
65,00%
70,00%
75,00%
80,00%
0,0
500,0
1.000,0
1.500,0
2.000,0
2.500,0
3.000,0
2006 2007 2008 2009 2Q09 2Q10
Adjusted EBITDA (R$ million)
Adjusted EBITDA Adjusted EBITDA Margin
657,9
883,9
1.115,3
1.536,7
364,8457,7
34%
37% 39%
42% 42%44%
25,00%
30,00%
35,00%
40,00%
45,00%
50,00%
55,00%
60,00%
0,0
200,0
400,0
600,0
800,0
1.000,0
1.200,0
1.400,0
1.600,0
1.800,0
2006 2007 2008 2009 2Q09 2Q10
Net Income (R$ million)
Net Income Net Income Margin
351,5 353,9
427,4401,1
90,7 102,6
2006 2007 2008 2009 2Q09 2Q10
Operating Income Expenses (R$ million)
13.1%
690,2771,0
851,1
936,3
2006 2007 2008 2009
CAGR 10.7%
228.4
242.9*
14,6
2Q09 2Q10* excluding Visa fee
257.4
Total Costs of Services ( R$ million)
6.3%
12.7%
Mobile / eCommerce
Card Present Card Absent
Payment Transactions
Non-Payment Transactions
STRATEGIC MATRIX
VAN* Services
* Value Added Network
Cielo – Strategic Planning
11
Founded in 2000
innovation in the development of technological mobility platforms
largest mobile top up and mobile payment platforms in the country
developed several applications under the most diverse cell phone
standards for a wide range of clients in the financial and telecom
markets
Founders will continue to head the business
Deal
Total amount of R$ 50.1 million
R$ 25.05 million already paid and the other half will be payable
after 37 months from the closing date (as long as the contractual
targets are met)
7,2 X EBITDA (forecasted 2010)
Cielo – M4U Aquistion
12
Cielo –Mobile Payment Positioning
13
M4U acquisition is critical to Cielo in the M-payments segment
Expansion in the mobile top up business
Top up through M4U distributors
Top up on customer’s own mobile
Recurring top up with cards
Access to M-payments platform (currently in use by Oi Paggo)-
opportunity to extend the platform to other clients and products
Advanced step to Cielo in the development of M-payments solutions, both
in the capturing technology and in the issuing business focus and agility
M-payments is an strategic priority at Cielo...
Cielo- Our Competitive Advantages
Our advantages:
• RELIABILITY
• DISTRIBUTION
• INNOVATION
• DIFFERENTIATED RELATIONSHIP
• DIFFERENTIATED PRODUCTS
14
