Aluisio Alves

SAN PAULO (Reuters) – Cielo reported a strong increase in fourth-quarter earnings, reflecting growth in card payments, a recovery in profitability and cost control.

The largest electronic payment company in the country announced this Thursday that its operating profit from October to December was 490 million reais, up 63.3% from the same stage in 2021.

Cielo’s recurring operating result, measured by regular earnings before taxes, interest, depreciation and amortization (Ebitda), reached 1.1 billion reais from July to September, up 40% from a year earlier. Analysts’ forecast was 1.19 billion reais.

The figures show how, after nearly a decade of losing market share due to a growing number of competitors in the acquiring market, the company has leveraged the strength of its controllers, Bradesco and Banco do Brasil, in recent quarters to offer financial products more competitively to small and mid-sized retailers.

Cielo’s term products, especially interest income from the offer to prepay receivables, reached a record 30.2 billion reais in the quarter, up 25% from a year earlier.

The so-called profitability, an indicator of the level of profitability in the acquiring market, increased from 0.66% to 0.72%.

By dominating the market, the company has allowed itself to focus on its most profitable customer base by cutting subsidies for microentrepreneurs. As a result, the active customer base by the end of the year was 1.057 million, down 3.4% in three months and down 12.4% year-over-year.

On the other hand, the value of services provided in the core business rose by 6.7% year-on-year to R$899 million, much lower than net revenue, which rose by 22.2% to R$1.677 billion.