Valid Soluções S.A. (VLID3) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to Valid's Q3 2025 Earnings Conference Call. I'm Lucas Miyasaka, Corporate Finance and Investor Relations Manager. Before we begin the presentation, I have some announcements to make. This event is being recorded, and some will be on listen-only mode during the presentation. For those who are interested, the presentation will be available with simultaneous translation into English. The supporting slides that we'll be presenting are available on our IR website. And shortly after the event, the replay will also be available on our website. As soon as the presentation is over we will begin the Q&A session. [Operator Instructions] It's important to clarify that any statements that may be made during this video conference regarding the company's business outlook, projections and operational and financial goals constitute beliefs and assumptions of our Executive Board as well as information currently available to the company. Forward-looking statements are no guarantee of performance. They involve risks, uncertainties and assumptions since they depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operating factors could affect the company's future performance and lead to results that differ materially from those expressed in such forward-looking statements. Today, Ilson Bressan, CEO of Valid; Olavo Vaz, our CFO and Investor Relations Officers, will be here with us. I hand over the floor to Olavo to begin the presentation. Good morning, Olavo.

Good morning, Lucas. Good morning, everyone, who is attending our earnings call, especially our shareholder base. On behalf of the Board of Directors and employees of Valid, I would like to thank you for your participation and for your interest. The format of this call will be similar to what we've done in recent ones, starting with more general figures of the third quarter, and then Bressan will give more details on how each of the verticals is performing and also to discuss the business perspectives. At the end, we will have the Q&A session. Let's dive into the results, starting with revenue and EBITDA for the quarter, which, as you can see from the title was the best of the year for those indicators. We closed with revenue of BRL 540 million, a growth of 10% when compared to the previous quarter and a slight decrease of 6% when compared to Q3 2024. The dynamics for this quarter was very similar to what we saw in 2025, or we've seen so far. That is good performances in ID and Mobile in the year-on-year comparison and a more challenging scenario in the Pay vertical. This vertical, which returned to positive margins this quarter after adjustments in its structure that we started to implement at the end of the quarter. In the field of ID, the growth was 17% higher and 16% compared to the last quarter. It's reflecting higher emissions of non-recycled materials in the states of Bahia and São Paulo. As for Mobile, we had an increase of 2% when compared to the third quarter, and 3% when compared to the third (sic) [ second ] quarter of 2025 and both with growth in SIM cards and OEM. In Pay, the drop compared to the same period of 2024 was 40%. And when compared to the second quarter, we had a growth of 8%. The adjustments to the operational and commercial structure that were initiated in April are beginning to show good results. When we look at the year-to-date figures, revenue falls only 3% with the same trend across different areas. Let's look at the EBITDA now. We closed the quarter with BRL 115 million, the best EBITDA, quarterly EBITDA of 2025, an increase of 26% when compared to previous quarter and a decrease of 13% when compared to the same period. And the large part or most of the drop is driven by the Pay vertical. I would like to highlight the results of ID, which contributed to the EBITDA that we had for the quarter. And for Pay, although we have small positive numbers shows a reversal of the downtrend presented so far. When we look at the first 9 months of 2025, we reached an EBITDA of BRL 311 million, a decrease of 19%, with all this decrease observed in the Pay segment alone since the ID and Mobile verticals, we have year-on-year growth. Now let's talk about the New Businesses, and we have provided a lot of attention to that so far. Our businesses continue to grow consistently. We achieved BRL 83 million in revenue for this quarter and BRL 90 million in EBITDA in the quarter. Year-to-date, we have revenue of BRL 241 million, accounting for 15% or 16% of the total revenue of Valid and BRL 82 million in EBITDA accounts for 26% of our total EBITDA. When -- we'll provide further details. Let's now talk about Digital Government. As of this quarter, we started to consider VSoft in our figures and VSoft alone accounts for about BRL 20 million in the quarter, and we have a growth year-on-year of the Digital Government of 30%. When we observe the onboarding numbers, we see that this quarter had a slight drop when compared to previous quarter. This is because the third quarter, is the annual contract renewal period for a very important client. And this contract was successfully completed at the end of September. In Mobile Solutions, we offered stability with good performance, especially in OEM. Compared to the previous year, we have seen a decrease as in the second half of 2024, we had the delivery of a large setup project in the Middle East region. The strategic plan of Valid involves a change in the revenue matrix, which stems especially from the growth of those units. As we've discussed, quarterly fluctuations can occur in these segments, but we are focused on the long-term growth and aiming to build a healthy and sustainable long-term future. Looking at the New Businesses in the last 12 months, we see that there is a growth of BRL 307 million. That is -- accounts for a growth of 81% when compared to the previous 12 months. Annualizing the revenue of the third quarter of 2025, we would exceed BRL 330 million in revenue. And that shows that we should come to the end very close to the target that we established of BRL 350 million in revenue of New Businesses and a little more than BRL 100 million in EBITDA. In other words, we are growing at an accelerated pace with strong margins, and we will continue along this path. Let's now talk about EBITDA and income. We come from a negative financial result of BRL 8 million coming to a gross margin of BRL 52 million, which represents an earnings of BRL 0.66 per share. This quarter, we had BRL 8 million negative results from the financial result, and this is a result of BRL 2 million positive of cash effect and BRL 10 million negative of noncash effect. In the quarter, we have a depreciation and amortization of BRL 28 million, a level that has remained constant over the last few quarters. On our tax line is affected by the IoE, interest on equity. And we saw a negative result of BRL 7 million, leading to a tax rate of only 11% for the quarter. In the others account is spread across different expenses, involving provisions, expenses from discontinued operations. It's worth noting that this quarter was also impacted by the agreement that was made related to discontinued businesses of Valid. If we looked at the recurring net income in this quarter, we would have had the best period of the year with BRL 67 million as a result. Now let's move on to year-to-date view. We went for an EBITDA of BRL 311 million to a net income of BRL 180 million, an EPS of BRL 2.30 per share. The dynamics for the year is very similar to what we saw in the last quarter with a large part of the financial result, having no cash effect and the income tax impacted by the interest on equity effect. By 2025, Valid will have a credit line in a total of BRL 3 million, which when we add a negative -- million of income tax and social contribution to the BRL 22 million of positive amounts in TBU. At the same time point in 2024, we had the negative value of BRL 51 million in the tax line. And this shows the work that has been done in lines below EBITDA. In recurring terms, we would have a profit of BRL 144 million, in general accounting terms of BRL 180 million. I would like to remind you of the nonrecurring effect of BRL 29 million related to the sale of Colombia and BRL 22 million of the tax credit of the second quarter in relation to the TBU. And as I mentioned in the previous slide, the expense is driven by the agreement that was executed in Q3. Let's talk about the cash flow variation during the quarter. Since the beginning of the year, we have maintained a comfortable cash position, which helps us navigate those challenging moments and also accelerated growth. We went from a cash balance of BRL 622 million and closed the quarter at BRL 653 million. This quarter, we had the highest operating revenue, especially when compared to the previous quarter. As we've mentioned before in the previous calls, when we look at the capital dynamics in the very short term, distortions may occur quarter-on-quarter. This is why we like to see the conversion of EBITDA into cash looking at a longer period. In any case, our operating revenue for the quarter was BRL 122 million. That accounts for a conversion of 107% of the EBITDA. This quarter, we had BRL 52 million of expenses in CapEx and most of it was invested in new businesses, Digital Government, Mobile Solutions and in the acquisition of equipment for the water seal business, which is starting its operations in the state of Sao Paulo. Furthermore, this quarter, we received the first tranche of the financing from FINEP in the amounting of BRL 61 million, and we are going to invest this amount in the products of Digital Government. We also settled a bilateral debt of BRL 30 million that was in the beginning of July. As we have done every quarter this year, we have maintained our process of distribution of proceeds in a very consistent manner, and we continue buying back the shares of the company because we understand that their actual value does not reflect our potential for appreciation. So now let's look at the 9 months outlook. As I mentioned earlier, we prefer to see this conversion in the longer period because it clearly shows the capacity of the company to convert EBITDA into cash. So in the first 9 months of 2025, we reached a conversion of 89%. The main cash outflows are investments in new businesses, the purchase of additional stakes in companies that were already part of our portfolio and the payment of dividends to our shareholders. In 2025 alone, we have already made a payment of BRL 106 million in dividends, and we have announced a further BRL 109 million in proceeds. Let's talk about the main dynamics of working capital. On the slide, we can see with detail the variation of the moves that happened. If you notice on the first graph where we see the volume of accounts receivable, it had fallen sharply in Q1, and it recovered in the second quarter and in the third quarter as well. The term in days increased from 69 to 77 days. Advances that we had, especially in the Mobile vertical, which has a longer payment flow led to this increase on the average term. And even so they're all in line with the level we were at in Q3 2024. Now moving on to the second graph about inventories, which had shown a slight increase in the second quarter started to be reduced again. And at this moment, we are at a position 20% below the level we were back in 2024. In this quarter alone, the reduction in the inventory average term was 8 days, so from 69 to 61 days. Regarding suppliers, we see maintenance of the schedule in line with the historical trend of the last few quarters. I would like to emphasize the message that I have delivered in the previous call. We continue improving the working capital levels, but we might have some slight variations in the fourth quarter. Now talking about liquidity. Over the past few years, we had -- we gave a special attention to leverage, and we are going to continue doing like this. Even with all the investment made this year in new businesses, disbursements with M&As and shareholders' remuneration, we maintained our net cash position. As the charts can show, we have a very comfortable position with less than 15% of our debt maturing in the short term in addition to a high bankability with our main partner banks. The snapshot already includes the financing that we secured with FINEP in July. This new debt has a cost of only TR plus 3% with 3 years of grace period and 10-year for repayment term. The funding could reach BRL 150 million and will be used to finance new Digital Government initiatives reinforce Valid's and the government's commitment to this type of project. This new debt will lead to an increase in our duration in addition to a significant reduction in our financial costs. With a robust and healthy balance sheet, we can focus on developing new businesses. We will continue to seek potential improvements in our liabilities, whether by expanding the maturities or reducing our costs. Now moving on to our share behaviors. Over the past 12 months, Valid's share have shown positive performance, also comparatively below the market average. As mentioned before, we continue seeing the potential for the stock appreciation. And as approved by the shareholders, we continue repurchasing our shares. Today, we have a total program amounting to 2 million share back, and we have approximately executed 40% of all this volume. I came to the end of what I needed to cover, and I'll turn the call over to Bressan, our CEO, so that he can provide more information about the verticals and our outlook for the year. I'll be back soon for the Q&A session. And I would like to invite you all to start submitting your questions. Feel free to use the chat on the platform. Okay. Thank you very much. And Bressan, over to you.

Thank you, Olavo, for providing the overview of our financial results. Good morning, all of our shareholders. Good morning, the market in general. Let's talk about each of our verticals, and let's go deeper into the specific dynamics of each of them. Starting with Valid ID. For sure, this is the vertical which is less subject to the ups and downs of the market because our contracts are long term. So the rumors of the market do not affect this vertical negatively. And this is where we have consistent growth, both year-to-date, when you compare year-on-year and also when we compare this quarter with the third quarter of 2024. Our growth in revenue amounts to more than 16%, and year-to-date, we will reach 18% and our EBITDA growth stands at 19%. Of course, we see a volume, which is very consistent of 8.2 million of documents issued. And if we compare with the third quarter of 2024, it stands at the same level, a little bit below, and that means that we have executed with discipline all the operations of the issuance of the documents in Valid ID. On the next slide, we would like to see the behavior of what we have already being announced in the last calls. And we see this growth since the second quarter, the CNH volumes dropping and seen volume growing. It's the second quarter when we see an advance in the numbers of the CIN and stabilization of CNH at lower levels, and this is likely to continue for the years to come, especially because the document will be valid for 10 years, the CNH. You can see that there is a growing trend. Not only the U.S. are managing to make the correct execution of this new document. And this has been recognized as the most -- the safest document of ID in Latin America and Valid in Brazil has been the leader of issuing those documents. And we have been posting the highest volume according to the agreements that we established. On the right, we can see the behavior in the Southeastern region, Sao Paulo being the leader and also in the Northeastern region with Bahia as the leader. Why is it so important to be issuing those documents? As we had mentioned in previous calls, safe identity is the pillar of safe digital society. And the more Valid is present in this issuance process, the more contact we have with technical innovations, especially biometrics, which is part of our integrated platform. And we intend to show to the society at large, what is the platform that we are building in such a way that we can have the proper infrastructure to ensure safe transactions. So to be there present using the best biometrics technologies and the best onboarding technology. It's a competence and fundamental asset that Valid ID delivers. Now talking about Mobile, we can notice a growth, which is also consistent year-to-date, when we compare year-on-year. But a reminder is that in the first month of 2024, Mobile vertical had a downturn. And this moment, we have a growth of nearly 19%. An excellent result, something important to share with you is that the volume increased in the last 14 quarters, and this is the largest volume of SIM Cards that we have posted and the new technologies of the SIM Card helps us to have a very positive prospect. Of course, there is an effort that we made to recover the volume when we went for ever more relevant global market share. Smartphones have more and more our technology. And if we maintain this global footprint is also another important source to get what the world has the best offer and capture it into our platform in Brazil. In relation to Pay, we have some positive news. We are operating in the black. In the second quarter, we had negative EBITDA result. We have already mentioned that the behavior has been more challenging. But after all the structures that we made, this vertical, it starts to be positive, and we continue with making efforts and with discipline to gain new market shares as we meet all the demands of the banks in Brazil. Of course, the Pay specific dynamics have some innovations such as metal card, which is a very important product in our strategy so that we can have a better added value product. So this vertical for the next quarter is -- will continue to be challenging, but we came to a level where we managed to have profitability in this vertical. Now looking at the highlights, I would like to draw your attention to them, because the highlights for the quarter are based on the same basis that ensure a high level of confidence, showing that we are on the right track, and we are managing to make this transition which is not just a sprint. It's really a big marathon where we need to invest in the new infrastructure of technology, and we are going to have revenue metrics, which is much more significant for the years to come. So the highlights that we would like to share with you are the revenues of BRL 83 million. This means that there's a growth of 30% when compared to the same quarter of last year, but 81% when compared to the previous 12 months, as Olavo mentioned beforehand. So together with this major results with new businesses and also considering the historic level of EBITDA of Valid. So we can say that this is the best EBITDA for ID that is driven not only by the operational efficiency, but also in relation to the high volumes that we posted. Aligned to that, we have the highest volume of proceeds of share buybacks, more than BRL 236 million in those lines and a balanced position, which is very robust, allowing us to have a high level of confidence because, first, we are getting the result -- good results from our core business. And the core businesses are managing to finance our future, our integrated platform, our investments in technology and also the advances in new businesses. So they do not have short life. They are very resilient. And this combined -- the traditional businesses, combined with the investments that we constantly make in new businesses, we are sure that this growth pathway is already established. And for the years to come, we are going to continue balancing the remuneration of shareholders with the growth of the company. Talking about the growth of the company, I would like to provide some details about what the BRL 83 million would mean as we are going to see on the next slide. So what do they mean considering the vision that we have for the market? So we have a central thesis. Valid is a major player of identity of personalization and sensitive data with SIM Card or credit cards. So we are in a market whose size is much larger, when we compare the markets where we operate. And when we look at what could bring the Digital Government and Digital Onboarding and cyber safety focused on identity, considering the identity governance that must be at play. So we estimate BRL 26 billion in Brazil alone. And when we look at the revenue -- annualized revenue of our new businesses, they add -- they come to BRL 332 million. And if you compare to BRL 26 billion, that means that we are still scratching the surface of this market whose potential is absurd for us to continue growing, gaining more clients, offering different portfolios so that we can have a much larger share in this market. Of course, the BRL 332 million is a great accomplishment. In '22, we had BRL 3 million in this business line. In 2023, we had BRL 50 million. So it was already a very large growth. And for '24, we grew for BRL 53 million to BRL 216 million, spectacular growth. And for this year, we are going to reach more than BRL 332 million in new businesses. This is positive news. But even so, our ambition shows that this market is much larger, and we can acquire or we can achieve this market as we advance with our portfolio. And we are using a fundamental concept. Players such as Valid has large expertise to work with complex operations, and we have large enterprise B2B. The companies are very well positioned and Valid has the competencies to take advantage of all this central thesis. The more we are digitalized, we have to prove our identity in digital transactions. Life in an environment -- digital environment, we have to prove who we are, and we can do what we want to do in a digital transition. And our central thesis is the following: we understand that by managing the consent by interoperating different database, we can provide more than a platform. We can provide an infrastructure for banking clients, telecom clients, retail clients, e-commerce clients, insurance clients, society at large. We can provide this infrastructure that will allow safe transactions considering our expertise that we have related to ID. So when we adapted the central thesis to our portfolio, we noticed that the fundamental competence of Valid are already installed in the three ecosystems we operate in. Identity because we use biometrics, digital onboarding and biometrics and digital data, safe connectivity because of the high scalability that we have in the connections in the smartphones or because we can operate and be one of the major players in Brazil in the leadership of issuing credit card. When we combine all those competencies and when we notice what those competencies mean for this need that society is demanding as of now, we start to see a portfolio, and this is what we refer to Valid integrated platform. And for the first time ever, we are providing details what our platform is. This integrated platform places in a position where we maintain the businesses that we already have in our company, which allows us the fundamental competence of the new portfolio, but we have to consider four more lines: one, continue the online and the compliance with companies in digital platform or environment. Second, it's not only do the onboarding process. We have to accompany the behavior of that entity, individual or company depending on all the variations, so that we can provide identity governance with cybersecurity by design in all our operations, so that we can make transactions and be present in the biometric transactions, multi-biometric transactions so that we can ensure that there are no fraud. In this sense, we are -- on the one hand, we are an infrastructure platform that will in safe ensure safe transactions, but we also an anti-fraud platform so that we can move to a place just like open finance so that we can have complete control of the information that is in the digital world. So this concept of platform that has content and data privacy and data transparency available to the citizen together with the plane operability with banks, private or government banks. These are elements that ensure that we have the right competence to be at the right time, providing this portfolio to the Brazilian society with the safety in all the transactions that we must make as the society gets more and more digitalized. To wrap up, I would like to draw your attention on this last slide, as we mentioned in the previous calls. So those journey that we have been following with investments in platform so that we can be better positioned in the Brazilian society. They provide us with the confidence that on the one hand, the business core provides support and finance the growth. On the other hand, the new businesses are showing that the traction is very consistent, BRL 83 million in this quarter or 15% on this -- percentage on the total revenue and EBITDA margin in new business alone, these are indicators that this is just not a desire, but a business that accounts for more than BRL 300 million in annual levels within Valid. When we observe our capital structure and how we have been able to allocate the capital to remunerate shareholders or for organic or inorganic investments, we are sure that the journey that we started back then is very well founded with all the principles and with all the pillars that we have already mentioned to you since the last call based on the latest results that we posted. So I believe that those pillars are very solid. And at this time, I would like to draw your attention to our internal culture and our internal team. So I would also like to thank all Valid's employees across Brazil and also in other countries where we work, the management level that helps us move forward and the translation of all those indicators into strategies. So this is something we will continue for the years to come and also our management team that has been sponsoring and encouraging and have been helping us, for us to execute this plan and also providing support to the ambitious plan that we have ahead and with the results that we have seen so far. So we have a lot of confidence that the next quarters, the next years have a pathway, which is very clear for the implementation of the strategy. And every year, every quarter, we are going to deliver an ever-growing Valid and remunerating the shareholders, investing in growth. And this is the task we have as the management team of Valid. Thank you, everyone. And let's organize the panel so that we can start the Q&A session. Thank you so much, and feel free to submit your questions.

Good morning again. We're back to start the Q&A session. [Operator Instructions] Okay, here we go. The first question comes from Luccio to Bressan. Congratulations on the results. Could you talk about the water seal in Sao Paulo? Is it possible to expand it to other types of beverages?

Luccio, water seal has an implementation in Sao Paulo of a technology that we already use in other 6 or 7 states in Brazil. It consists of making the individual marking on a water bottle, especially the smaller bottles of 500 mls. And each of the water bottle, they have a unique QR code that can be verified by the consumer, and they can know the origin and the accuracy and the legality of this water as to tax collection. So it's an implementation of technology connected to the beverage companies together with the Secretary of Finance of the state of Sao Paulo. And therefore, we can have a very clear vision of a product that has origin and authenticity seal certificate. And this is something that will start happening in October in the state of Sao Paulo. Some factories already have this implemented in their production lines, and we started to make investment in CapEx for this purpose. So it has to have an operation that is connected to the operation -- to the production line of the manufacturer. So it's a process that involves a lot of technology with a lot of integration, technological integration involved the manufacturer, Valid, and the Secretary of Finance. And this shows an evolution for the next year, which is very significant for this business unit. We estimate that for the year, the group of the 6 states where we operate, and we're now bringing Sao Paulo into this ecosystem. So it tends to double in the next year in relation to water seal. You asked if it can be expanded to other types of beverages. Yes, this technology is very differentiated. There's a lot of technology investment in here. There are some legal guardrails. There are some models of seal allocation that has the exclusivity of another government company, and we are beginning to see the possibilities of doing this.

The next question is to Olavo by Luciana. Together with Pay for positive levels, what can we expect in the future? And what -- are there any further adjustments to be made?

Luciana. So the Pay unit since the beginning of the year, we started the year with this line coming -- performing very slowly. And then we started a process of organizing it in home. So there's an organization that starts with operational and commercial fronts, and we have to strike a balance to what our structure would be in comparison to the demand that we have in the market. The numbers that we posted for the third quarter are far from being the ideal numbers that we'd like to have in this vertical. However, we reached an inflection point, we start to see a positive scenario that provides more energy to the commercial team. As Bressan said, we are after differentiated solutions. The governmental card is one of those solutions, and we have made a lot of headway in this regard. But we have to understand the general context. The context now in Brazil or in Argentina is not a large demander of the cards. So we expect some improvements in the unit. We are looking for opportunities in Brazil, in Argentina and in other countries, especially countries in South America. But this number is likely to reach a higher level than what we saw in the third quarter. You asked about the adjustments in this vertical. The adjustments have already been made.

Thank you, Olavo. Next question by Leticia to Bressan. So incredible results in ID. Could you talk about the performance of NIC (sic) [ CIN ]? I see that the growth has been grown. What can we expect for the years to come? And how about the acceleration?

Thank you, Leticia, for the question. I think CIN issuance is very good news for the Brazilian society in the past few years. As the leader player in this ecosystem, of course, we are proud to be able to take part to be able to deliver to the Brazilian society another level of safety and security in terms of identification document. So the new CIN is a real opportunity to the Brazilian society so that they can have identity proof at a level that we do not know was not implemented in Brazil before that. But there are other things that we're going to have to consider. Of course, we are going to be defining new supply standards with operational excellence to all our clients, and maybe in the paper format or polycarbonate format. It's already possible to issue the ID in polycarbonate material. And for Valid, that means that we have many long-term agreements. And this is a revenue that will be predictable, recurrent, that would provide us with the safety that this vertical will continue at double digits at very high rates as we have seen. But it also represents other things. I'm going to make reference to one municipality in Piaui state, which was the first one in Brazil, called Novo Santo Antonio, a municipality with nearly 3,000 inhabitants. It was the first municipality whose 100% of the population had the document issued with the standard of SIN (sic) [ CIN ]. So we need to issue the new document up to 2032 based on this new format. For this municipality in Piaui state or to any city across Brazil, CIN is more than an ID document to show you at a hotel. SIN (sic) [ CIN ] is representing a safe way of providing a public benefit, showing what is the cluster of the population that would need this kind of benefit and making sure that the public manager will ensure that there's no fraud and considering all the data that is -- format that's being remodeled. And this is the basis of the national infrastructure for data. And this is an integrated platform that we intend to create and which is the player which is best positioned to offer this infrastructure to our clients. So it's not just a document issued by the government. It's not just a citizenship instrument, but it's a base for a country to be built in differently. So for any country that managed to have -- make headway in their transaction, like India, that can offer benefits cross information about telephone number, biometrics with the telephone companies and the bank account. Or maybe Estonia, we could mention, which is a good benchmark that we have, the Nordic countries or Singapore. We have many countries as examples that managed to have safe infrastructure when they distributed public benefits. First, they solve the identity problem. So that shows that we have a chance to solve the problem of the issuance of ID in Brazil. And from this, we are going to create a fundamental pillar so the digital world can operate with a lot of confidence. This is our expectation. And for sure, this is going to be also way of having an access key to public services. The government can understand how the public services are used. So this data mass is part of an intelligence that allows the manager to create a better public policy. This is something revolutionary to Brazil, and we are going to continue executing all this quality delivery to the state government. And we'll also be able to provide technology to major players in Brazil. Because we managed to integrate, we managed to produce and we manage to make the operation of the biometric onboarding, ensuring the safe information of citizens. So of course, this is a major opportunity. I think this identity pillar is the most important for any society. And I'm so glad to say that Valid is the leader in the Brazilian market. And with using SIN (sic) [ CIN ], together with the banks, together with the telcos, we are going to improve our portfolio with this safe integrated platform that we are delivering to the Brazilian population.

Thank you, Bressan. Next question comes from Felipe also to you. Congratulations on the results, especially on the cash management. I would like to ask about new businesses. Could you provide more color on how you see 2026 for each of the units, government and digital onboarding and also talking about the identity.

I'm sorry. Felipe, right? So prospects for the future. We have shown the results of our business in different lines, digital onboarding, ID proof platforms, and digital government. Each one has a different dynamics, and we are going to add another element next year, which is revenues from our identity integrated platform. Talking about Digital Government, we have made a lot of headway in the last year in the implementation of technology, especially in the government of Ceara, which has a bundle of solutions, which are highly integrated. The interoperability among different secretariat, different databases in Ceara has been very important benchmark, showing how each state can have a cost efficiency, which is much higher as they share data without losing the autonomy on that data bank. So the trend for next year in terms of Digital Government to expand this offer to other states, also meeting the demands of municipalities of more than 500,000 inhabitants. So the digital government is on a very good growth pathway. The same happens with digital onboarding because we do not only meet the demands of the current clients of Flexdoc, but we have been using all the existing technology, not only for documents, not only for the models of workflow with hyper automation of OCR with artificial intelligence, but also using Flexdoc platform to build the unified platform for Valid, where we are going to create the one-stop shop model, where a company, a retail store, a traditional store or an insurance company, or any company that would need to relate to the client digitally, they will be able to have more elements than workflows in those documentoscopy. They can have biometrics. They can have KYB and identification models as well, related to profiles and powers, especially in the Know Your Business. So Flexdoc is very important of the integrated platform that we have. In addition to Caixa, as a major client, we are starting to expand to other clients. So we see 2026 with good prospects. And Mobile may be where we will have the biggest surprise because since we have a very important presence at the global level, the SIN (sic) [ CIN ], it starts to show that it will accelerate across the world. So much so that last month, we saw China moving towards this market. We have a very positive relationship with players, Chinese players. We have been establishing good relationships with operators in China, and they can provide not only OEMs, we have been operating with OEM, and we have created operating systems to ensure safe connectivity. So in addition to this market, we have been operating with in China, we see the possibility of implementing eSIM. So eSIM is not approved in China yet. But as soon as this is released, we can have phenomenal results next year. We are very close to Chinese players who are making this migration to SIM card to eSIM. We have a local team dedicated to accelerate this initiative. So this can be a very good surprise for next year. And about the platform, yes, maybe I mentioned something about the platform. But since I'm speaking way too much, so talking about platform, if we go back to a slide where we just presented, so the concept is the following. As we have number of services being digitalized, usually, a client needs to connect with different providers, several providers of biometrics, several providers of the documentoscopy, several servers of biometrics and biographic data and also address data, a number of components that comprise the consumption profile of a person. What we're trying to say is that all those elements will be in a single platform, and then all the market will have a platform that is a more complete bundle. We are an integrator hub of the best technologies in the world, and we are going to put this at the disposal of people. So we have a hub that will provide the services available to clients. So a client would not need to connect to several hubs, but just one. So we are going to deliver according to the level of criticality of each transaction. So next year, we're going to be reporting this, how this has been helping us increase with the business with the clients. And this is a central part of our strategy because with this integrated platform, we start to integrate also other elements from our other fundamental competencies, biometrics and safe pay. So this is the highest investment that we have. There was the first phase when we amplified the technology team, and we have been making significant investment in this year with people and technology. And now it's time for us to make investments also in the go-to-market front for the commercial teams so that we can ensure that distribution of the products can be very effective for the year -- for next year.

So the next question is to Olavo from Fabio. Congratulations on the results. What will be the strategy in relation to the operations in Argentina for 2026?

Thank you very much once again for taking part in this conference call. I'm going to divide this question into some blocks. First, we have to provide the context how our scenario is to be especially in 2022, '23 and part of '24. We were operating alone in that market. And that allowed us to use high prices when we compare similar products that we operate in Brazil and South America. And when the frontiers were open and new competitors also operated there, of course, the price is going to drop because you have more competition. And when the competition started to come, we realized that in the SIM cards, and we saw that after the pandemic period because when the players which were out of the market, when they go back to the market, they are very aggressive. And we, on our side, we have to know how to live through this moment. We have been there before, and we are going to go through those moments. And this is the context that we see there. And something that we need to see is the size of the structure that we have, considering the market that we have to meet. Just like what we did in Brazil, we are going to look at the operational commercial part, and we're going to see what are the adjustments that need to be made. And we have already made some adjustments. And if need be, we will make further adjustments. There's another element when we talk about Argentina. When we start to look at the country and see that the country is opening its market and the economy is more balanced. When we compare Argentina to Brazil, in terms of technology, in terms of how they use the finance chain, they are much behind us. So there are many solutions that are already implemented in Brazil. And considering the strong relationship that we have with the players in Brazil, we also want to use all this structure to introduce those in Brazil. Why not consider onboarding in Argentina? This is what Bressan has just mentioned when he talked about the advances of our front in Brazil. So Argentina is a very important place for us for sales in Paraguay, Uruguay. So we have to take advantage of the chain that we have so that we can explore their market, and we are going to continue with a focus on the next years.

Next question also by Fabio to Olavo. Valid Is 4% of the shares in treasury. When are they going to be canceled or sold to generate cash? What would be the short-term strategy for this asset?

So when you -- I don't think we're going to sell the shares to generate cash. It doesn't really make sense -- a lot of sense to us. We believe that our asset is depreciated considering all the opportunities we have for the future. So this is the reason why we continue buying back our shares. When is the share going to be canceled? It's up to the Board to make this decision. If I'm not mistaken, 2 years ago, we canceled the volume when we were close to 5% or 6%. I'm not saying that this is going to happen again, but only to provide you this as a reference. And the allocation of the shares that we have in the repurchase is to pay the long-term obligations that we have. There was a shareholders' meeting where we approved the new plan for the compensation of executives. So next year, we have the possibility to execute the swap, and that obviously, we're going to use some of those shares. But the final decision for the cancellation is up to the Board. So we have this 4% level, and we're very comfortable at this level, okay?

Next question from Alexandre to Bressan. Congratulations on the work you've done. About artificial intelligence, could you talk about the initiatives that Valid has been developing in this front? And what are the synergies with the business lines for the next quarters? In addition, is there other projects, pilot projects underway?

Alexandre, right? Okay, Alexandre, thank you very much for the question. The use of international intelligence in our portfolio has not shown the 100% of the potential it has. What we've seen in the last quarters is that we have devoted to looking for AI applications to accelerate the offers in the Digital Government dimension. So we have the need of operating on a data structure that can respond appropriately. So the work that we've done, and we have seen a reality when we do the interoperability between different database, we see a lot of problems related to the taxonomy, considering different database, federal revenue services, government database, state level database. So I believe there is a first work that needs to be done, so that we can offer this model, so that the database needs to be cleaned and in such a way that they can be interoperable so that we will then accelerate the digital journeys. So we first have to simplify services. And instead of taking our client to one app or one portal, we are going to use internal -- the artificial intelligence will be used in different platforms, not in the app, but WhatsApp. So there are different initiatives that have already started to be in-sourced. We are trying to find new journeys where we can simplify the application of artificial intelligence. But without a doubt, this is a pathway that we are going to follow, and we are going to cover different cases of use for the future. We are very cautious on our side, especially in relation to the citizen and the government. There are other initiatives that are used internally, but this generates a lot of efficiency and that will help us in the management, but they are not in our external portfolio. So we are going to be very alert to this topic.

Thank you, Bressan. Next question from Matheus to Olavo. Congratulations on the results. In the release, you mentioned BRL 20 million in investment in new businesses. Could you talk about those new investments?

Matheus, generally speaking, and even in addition to what Bressan mentioned, the major investments that we have been making in new businesses are related in functionality in products that we already have. All the squads that are involved in creating a platform with interoperability to our current clients. In other words, we are activating hours based on projects. So when we use technology, a product doesn't remain stopped in time. And depending on the demands that come up in different municipalities, those technologies are improved. We are always improving the latency, the flows. So major investments are in those types of projects, the projects that we have in-house and also in the services we want to deliver to our clients.

Thank you, Olavo. The last question that we have is by Alexandre to Olavo. Excellent results, excellent management. What are the possibilities for future M&A? Is it possible to grow inorganically?

I'm going to start answering your question, and then I will ask Bressan to complement. For some calls ago, we've been talking about the M&A front. M&As are part of our history, be them to go after something new or to defend our territory. M&A is part of our strategy. And this is something that is going to continue. We have a team which is fully dedicated to that purpose. And once we create a company with a light balance sheet, it allows us to look at things which are even bigger to what we considered in the past. M&A is an art. It takes time. It requires a lot of research. It only because something is hyped, it will make sense to us. We are extremely diligent to what we consider. I think we -- in Brazil, we went through different periods of valuation. So we also have to consider this considering the new reality. So we continue active in this line. There are some fronts that is related to improving our deliveries, our products, and this has got a lot of our attention. And this is a part of our M&A funnel. I'm not going to say that we're going to have an M&A in the next 3 or 6 months. But I would like to say that this is part of our pipeline down the road.

Yes, you summarized very well, Olavo. Maybe I could complement saying the following, Alexandre. Clearly, this is part of the growth strategy of the company to have inorganic actions. In which areas? There are some areas related to GovTech, so that we can accelerate our line of digital government. There is a clear area of biometric match, and we are putting together the payment world with the identity check world. So it's a structure when we provide safe elements to a secure transaction. So start-ups, which are in these ecosystems are on our radar, of course. And as for identity, a specific area related to cybersecurity focused on identity governance is also something we are looking at. As Olavo said, this is an art. And not always, the valuations are appropriate and not we can find the cultural fit that we need because in addition to acquiring technology, or market, you need people that need to be part, and we need to have doors that will promote this growth mindset that we want to bring on board. We cannot promise anything. It's an art that we have to manage on a case-by-case basis. And of course, this is part of our strategy. And in the future, we are likely to see something happen along this line. Little by little, we have been very, very diligent with the guardrails that were provided by the Board. And any action needs to be effectively sustainable. The business has to be perennial, sustainable and grow with profitability. So diligence is going to continue to be the basis of our decision.

Thank you, Bressan. Thank you, Olavo. Thank you, everyone, who attended our call. And we finished the earnings results call, and our IR department is available should you have any other questions. [Statements in English on this transcript were spoken by an interpreter present on the live call.]