CSU Digital S.A. ($CSUD3)

Good afternoon. Welcome to CSU Digital's Conference Call regarding the results for Q1 of 2026. This conference call is being recorded, and a replay will be available on the company's -- company, ir.csu.com.br. The presentation will be conducted in Portuguese with simultaneous translation into English. Please click the interpretation button in the bottom right corner. Please choose English. Before proceeding, we would like to emphasize that forward-looking statements are based on the beliefs and assumptions of CSU Digital's management and on the information currently available. Such statements may involve risks and uncertainties as they relate to future events, and therefore, depend on circumstances that may or may not occur. Today with us are Mr. Andre Lapola, CFO and IRO; Ms. Auziane Moraes, Product Director; and IR Superintendent, Bruna Gamboa. I would like to hand it over to Ms. Bruna Gamboa that will begin the presentation. Bruna, you have the floor.

Good afternoon to everyone and thank you for participating in our earnings call for Q1 of 2026. Today, we have new -- we'll start this cycle with a new team and a new format renovated for this event, always maintaining the essence and the dynamic of the past calls. Today with us, we have Andre Lapola, CFO and DRI, Auziane Moraes, Product Director, that will contribute more actively throughout the presentation and throughout the next quarters. Well, after this brief introduction, let's go to Slide #3. For those that follow CSU, this is an introduction that strengthens clearly who we are, what we do and how we position ourselves in the market. Today, CSU is an independent infratech with a full-service model. And here, we offer the solutions complete, scalable and modular for the financial service. We operate technology for financial services, and we support the client in all the journey. We work with a B2B2C model. We service companies that relate themselves to the client. And as these customer bases grow, this is scalable and recurring. We work through proprietary platforms that are robust, modular with a white label model. This means that we are present in the experience -- in the final experience of the client, although invisible and our role is this. In addition to technical support, we are also a regulatory partner for the clients supporting throughout the infrastructure, legal, with LGPD, Central Bank requirements. In the last years, we've made progress consistently in the incorporation in AI-enabled solutions. These initiatives present in both business units that Auziane will give you details. They contribute not only for revenue growth, but also for relevant gains of operational efficiency and profit expansion and a very important differential that is our ability to retain clients. We are very good, not only in originating new contracts, but mainly in the construction of long-term relationships. CSU is 34 years old, and we have an average of contracts for 13 years. We have clients since the foundation and other clients that are with us for over 25 years, and this strengthens the excellence of our business model. Now to Slide 4. I will present very quickly the main figures of the quarter in a very summarized way, and Lapola will give you more details about these indicators. We had a very positive period. The net revenue was BRL 167 million. This accounted for a new record, a growth of 11% year-on-year and driven mainly by the growth of CSU DX revenue that grew 21% vis-a-vis last year. Gross profit, BRL 70 million, a growth of 11% vis-a-vis 2025 and our margin -- gross margin about 42%, the same level of last year. The EBITDA was around BRL 43 million and the net revenue was BRL 20 million with a margin of 12%. Now within this slide, we also have to highlight operational cash generation that was around BRL 50 million. In geopolitical and macroeconomic challenging scenario, this shows the soundness of our business model. Now we end the period with a cash position of BRL 95 million and ROIC above 95% now. We distributed over BRL 7 million of IOE. Now talking about the business units, CSU Pays accounted for 58% of the net revenue of the company and 78% of the gross revenue with a strong operational growth and the increase of the number of transactions. Now CSU DX accounted for 42% of the net revenue and 22% of the gross revenue. It is a unit that is gaining momentum and is differentiating itself in the market because of technology, hyperautomation. And in this quarter, we signed 3 new contracts. Something that we are always asked, and it's interesting to mention today, the contracts with the HAS solution account around 15% of the unit's revenue. And very important, here we end the quarter with BRL 4.4 million of interactions in the unit and 76% of them realized through digital channels. Now going to Slide 5, I would like to highlight the main investment in strategic fronts throughout Q1. Here, it is important to mention that these investments have one-off impacts in short-term revenue, but they are aligned with our sustainable growth and focusing on the long term. The first project that the company is strongly focusing on is AI and technology, Auziane will give us more details. But more and more, we're broadening our investments in these areas, focused on the development of new products in addition to strengthening the strategic partnerships. We have the idea to always maintain a competitive and updated offering regarding the market. We've made progress strengthening our team. We hired important people since the second semester of last year, especially in the commercial product technology areas with experienced professionals that are aligned with our future vision. Now from the point of view of marketing, we have strengthened our relationship actions and the brand positioning in Brazil and the U.S. market. We're a B2B2C market and the proximity to clients and to the decision-makers is a very important point for this market and relevant. Now in terms of the international presence, as we announced during the last quarter, in December, we carried out the first transaction in production environment. And today, we have the infrastructure to start operating. Our focus is in the commercial acceleration, both in Brazil with [ Farmer and Hunter ] team and the structured market in the U.S. And going to Slide 6, I would like to highlight a bit of the evolution of our customer base. Today, we have over 40 customers in our base. And in this quarter, we signed 3 new contracts, including MadeiraMadeira, Dotz, Stix, all in CSU DX contemplating the HAS solution to monitor the quality of these operations. As I had mentioned, we have an average contract time of 13 years with long-term prospects. And throughout 2025, we renewed most, if not all, the contracts that were very significant for the company. We will only worry at this at the end of 2028, beginning of 2029, which strengthens the predictability of our revenue resilience of our business model. With this, I end this presentation, and Auziane will give you details on products and technology.

Thank you, Bruna. Before I give you details on the product front, I want to show you the market context that strengthens our growth. Well, this is number one, the decrease that transforms the market dynamic of PAT beneficia. Now there were cards that were in closed words. We also had the resolution of the Central Bank, Resolution 522, that was made into effect from the issuers and the creditors within the credit card, which gives more soundness and regulatory clarity. Now not necessarily there was a change, but there were movements in the payroll deductible cards that offer new opportunities for those that weren't part of this and strengthened the model for those that operate. In technology, the accelerated advance of AI and new technologies create a new moment for the company with gain of efficiency and operational scale. For CSU, March 11 was important when we received the license to work as an institution that can work in the regulated market. This achievement strengthened the soundness of what we have built until today, and this shows how the regulator trust CSU for this market. We also see a significant movement of Brazilian institutions that are opening operation in the U.S. market. And this dialogues directly with our strategy and this shape the opportunities that we see in our products and new businesses. Here, we have 3 pillars of growth that strengthen everything that I just mentioned, starting by Pays. This is a very strong moment of market consolidation. We have the launching of new products with the existing capacity, a commercial approach that is totally new in DX. We invest in half capacity with new products and proprietary technology. Linking product with this offer in the U.S., we can take technology to new entrants, and we will broaden our presence in the U.S. market. In Pays, as I mentioned, the strengthening of portfolio comes with the existing capacities of the company together with new opportunities that were recently opened. With this we can deliver more value to the client with a connected offer and agile to launch new products. Regarding HAS, throughout the years we built hyperautomation solutions that show with sound indicators the ability of improving the operation with our clients. With new AI technologies, we have new portfolio of products, HAS with embedded AI. This is a new portfolio of HAS. We strengthened even more the DX offering with the development of proprietary technologies that can service, resolve and deal with this solution end-to-end. Everything that the client was doing can automate. Well, here, we also will extend this product to the Pays unit with the same target to strengthen the indicators and to deliver ever-growing performance. And an example for you today would be the launching during the last quarter, what we call AI Activation. Now it works in the base of dormant clients that 90, 60 days with no transactions in their cards. And using test period with 2 clients, we obtained a result of 5% of the Pays reactivation, and this is 40% that was dormant. And we still strengthened the platform in the United States. And some recent highlights deserve attention. We carried out first transaction in a controlled environment. Here, we can initiate a new client. We have advanced negotiations with new clients. We also have with a dedicated team based in the United States to open this new market. And very briefly, we will have the first client in production. These are the main product highlights. And now Lapola will present the results.

Thank you, Auziane. It is a pleasure to be here with you. This is my first earnings result call. I am satisfied to start when the company posted records in revenues, margin expansion and doubles the operational cash generation in a year-to-year comparison. We will talk about CSU Pays, the credit card operation, BRL 97.5 million net revenue, a growth of 3% vis-a-vis the Q1 of 2025. Since 2022, the average growth has been 7% a year with a predictable base of clients that are protected by contracts. We would like to remind you that in 2025, the company renewed the contract, assuring an extension up to 5 years and this negotiation engaged commercial adjustments that created a one-off pressure. Now the unit continues growing. The gross revenue totaled BRL 54.4 million with a margin of 55.8%, the best historic level in the series. Now the unit ended in BRL 22.5 million. The drop regarding first quarter is a one-off because we had to eliminate inactivated clients, now 63% activation rate. Now the transactions were 377 million, a high of 23% a year and TPV was BRL 121 billion. This means that 121 billion transactions through our platform during Q1 of 2026. Now the unit always presented sound and consistent results. We will talk now about DX. Now DX had a record quarter, and there's a structural explanation that HAS platform has 13 signed contracts during this quarter, these were 3 new contracts. As these contracts mature, the incremental cost per interaction drops and the margin increases. And this is what we see here. The revenue of BRL 69.8 million, this is a growth of 24% vis-a-vis Q1 of 2025 is a historic record. Now the gross profit of BRL 15.7 million, a high of 36%, a margin of 22.5%, an expansion of 2 percentage points. Now operationally speaking, we're talking about BRL 4.4 million of managed interaction, a significant growth of 18% vis-a-vis Q1 of 2025. Now we highlight for digitalization index, 76% of the digital operations. This shows the investments in technology that is embedded in our solutions. Now we will go to the consolidated results. Here, the net revenue of BRL 167 million, a historic record, a growth of 11% vis-a-vis Q1 of 2025 and profit BRL 70 million, maintaining a margin of approximately 42%. EBITDA and net profit. We have recurring -- and the recurring EBITDA excludes one-off expenses, especially the ones in preoperational projects, strategic investments in marketing and sales. These expenses pressure in the short term. But this is part of our growth strategy, the recurring EBITDA of BRL 55.5 million with a margin of 33.2%, the accounting EBITDA of BRL 42.7% and a margin of 25.5%. Now the recurring net profit, BRL 33.1 million, a margin of 19.8% and the accounting BRL 20 million with a 12% margin. Now capital structure, the operational cash generation was BRL 50 million during the quarter. This is a growth of 126% vis-a-vis Q1 of 2025, a direct result of the operational improvement and working capital management. CapEx of BRL 23 million, a high of 15% concentrated in platforms, AI and new technology projects. Now the net cash remains robust, BRL 95 million. This is a growth of 22%. And the net debt remains minimum, a level that provides us flexibility to continue investing. I would like to strengthen, Bruna mentioned, in April, we distributed BRL 71 million in JCP. And the result of the first quarter of 2026 delivers a clear message, margin. Here, we have a record in revenue. We grow with consistency. We work with discipline and we give value to our shareholders. I bring my part to the end. And now I hand it over to Bruna.

Thank you very much. Now our final remarks. CSU delivers an additional quarter of sound results with a new record of net revenue with sound profit sustained by digitalization, a strong synergy of our portfolio and the consistency in our strategy. We are embarking in a new expansion moment with a robust pipeline and new products and solutions that brought in more and more our growth avenues. It had been time that we didn't start such an excited year and with such good commercial activity. AI and HAS solutions are a reality within the company. And more and more, they deliver efficiency, scalability and they open new opportunities for monetization and with good impact in operations and profit. From the financial point of view, we have a sound capital structure, strong cash, low leverage and an important discipline in capital allocation, and we pay off our shareholders in a consistent fashion. And we made progress from the capital markets point of view. A significant growth in our liquidity during the past 12 months in addition to maintaining profit indicators that are high and very attractive. And at last, I would like to strengthen our business model, the resilience of our operation and also our ability to continue growing with consistency and predictability. We continue growing a stronger company that is more technological and more prepared to capture the opportunities of this new market. With this, I bring the presentation to an end, and now we can go to our Q&A session. Thank you very much.

[Operator Instructions] Our first question from Lucas Mello from [indiscernible]

The gross debt with the debt decreased, went to BRL 73 million in Q1 of 2026, elevating the leverage of 0.20 to 0.31. We know that takes the dollar funding to 6%. Now with this, you will finance the international event investment. As the operation in the U.S. will be implemented and doesn't generate robust revenues in dollar, how are you managing the dollar with this liability? Now the priority will be deleverage or is there appetite to increase this level if there are opportunities of M&A?

I will start by the end. I believe, by and large, the market knows the company. We have a controlling company with a conservative profile. We don't like debt. Therefore, we already have low leverage, and we do not like leverage. We don't like debt. When we think about M&A, when we see what we are negotiating vis-a-vis what other companies are doing in terms of sales, these figures don't make sense. Well, I believe we've always liked to do things organically. When we analyze Brazil, it wouldn't make sense to perform an M&A. When we see the United States, perhaps it would make sense in order to accelerate our entry in the United States today. We are very robust. Now speaking of protection, as you said, there is low debt. There was a debt of 6% in interest rate. Every quarter, we see a sensibility margin. We haven't seen the need to higher protection instrument. Therefore, there is no protection instrument and no need. And I believe just in addition to this, as the company generates revenue in dollars, this will be a natural hedge for this debt.

Our next question from is Alex Andre.

Congratulations for your revenue record. This shows that the company is on the right path. I would like to elaborate the margin. We see an EBITDA pressure minus 5.7% because of the investments in AI and the ramp-up of the international operation, which are the main levers that you expect to recover EBITDA margin throughout 2026?

Well, we demonstrated in one of the slides, the recurring EBITDA vis-a-vis the accounting EBITDA. We know that there is pressure on the accounting EBITDA. And this reflects the speed of investment and not a deterioration in the operational quality and the levers are in the hands of the management. By and large, it would be this going straight to the point.

Our next question is from [ Luisa Cruz ]

The U.S. operation was mentioned in the release of strategic project with no digits. Could you give us more color regarding the current stage? What is the pipeline? What products do you offer? What is the horizon for this operation to contribute with the consolidated results?

Thank you for the question. I will start and Auziane will finish. We communicated during the last release of Q4, the first transaction in production environment took place during the end of December 2025, and we've made progress to communicate. Once again, you have to remember that this is an operation that we could have accelerated, but we did the math on how much we accelerate, how much we wavered margin, everything has been mapped within the company. But anyhow, we have made progress throughout the quarter.

Thank you, Bruna. Now regarding technology, I believe this was the main focus of the past year. We've been building a platform. We've been adapting to the U.S. market because it's extremely regulated. Although you don't have a license from a bank or institutions, you need to adapt yourself to norms to requirements. So this was the company's focus in the past months of adaptation and this was a learning curve. We are in a very good moment of market. As I mentioned, we have a team based in the United States that can dialogue with these prospects. And recently, we launched a survey to understand dynamic pains in our approach. This year, I see it as a strong year of positioning, a year of dialogue because our platform is trusted. This is a platform that will continue honing itself, will continue evolving. We never is 100%. This is the beauty of our market. But certainly, I would say that this is a moment of market opening, which is very important.

Our next question from [ Bruno Heather ]

Congratulations for the results. I will -- can you talk about the expectation for the Pays gross margin for the upcoming quarter with a non-recurring tax return during this quarter? What can we expect regarding this margin?

By and large, if we see the history of the past 2 years of CSU Pays, we've been validated of a gross margin of 51%, 55%. We clarified this point that positively impacted Pays during this quarter. And of course, we're always seeing other opportunities that can help us from the margin point of view. But this was a non-recurring impact that we saw this -- during this quarter.

Our next question is from [indiscernible]

I hope you're okay. Congratulations for your good results. I would like to know more about the services of incentives. How can this service create recurrence in payment means?

Thank you, [ Joao ]. This is an excellent point. And as I mentioned, Pays is becoming -- is more connected and robust in terms of portfolio and the loyalty incentive is good for the inside of the unity and for the market that we see that is full of opportunities. So this year, the expectation is a strong growth for the customer base and new customers. And certainly, when we talk about markets, there is a dispute for attention, a dispute for customers' priority. And here, we can fit this offering in addition to offering a payment, meaning we want this to become a priority for the end consumer for the product. So the loyalty unit is of utmost importance in our expansion strategy and in growth with the client of this operation for Pays and loyalty as a whole. And I believe that an important point here would be CSU today can position itself properly in the market, not only with a standard ecosystem of payment means, but offering our customers an array of other services. And here, we position ourselves as a full-service company. So naturally, let's say, that Joao wants to open today a digital bank. Joao with CSU has the entire payment ecosystem from the embossing issuance of the card processing. We can also offer incentive and loyalty. We can also offer service, and this positions CSU today in a very attractive way in the market. We do not have competition that positions itself this way.

[Operator Instructions] Our next question from [ Gabriel Vittori ]

What is the -- when do you believe that you will start seeing results from the U.S. operation?

Thank you, Gabriel, for the question. We would like a crystal ball. What we can say for the time being, and Auziane already gave you the outlook of the current situation. Operationally speaking, from the infrastructure, the technology, the legal compliance point of view, we're ready to operate. Today, well, this moment, we are focused on the commercial teams. And here are a number of clear strategies. These are teams that work parallelly. Number one, when we analyze global card, we can offer to customer base clients and for clients that are not part of our base. We have Farmer and Hunter teams in Brazil with different strategic characteristics to capture these customers. We are embarking in the U.S. market with another commercial team. So I would say that today we communicated during the release, we are closer to the client that is part of our base that is in-house. This client is aware of our service level. They are comfortable with us. And as we launch products, we signed the first contract. We joke in-house, but the most difficult thing is to close the first client. The second and the third client comes in more naturally. It's difficult to tell you when we will see the results, but I could say that we have 3 clear avenues of growth and addressable from the commercial point of view, each one working with a different team. And I believe that this is a question that -- that I've just seen the question was about the breakout of the international operation. We really don't know which contracts we're going to sign, which is the card base of this contract. Everything is going to depend on the type of arrangement, the type of contract, the size of the client. But as we receive good news, we will communicate this news to the market.

[Operator Instructions] As we have no further questions, our conference call of CSU Digital has come to an end. We thank all of you for your participation and have a very good day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]