Valid Soluções (VLID3) Q4 2023 earnings summary

Executive summary

• FY23 revenue rose 20% YoY to R$2,256Mn and EBITDA rose 19% to R$567Mn, with EBITDA margin at 25.1%.

• Annual net income reached R$213Mn, up 774% YoY; net debt fell 78% YoY to R$73Mn and leverage to 0.1x.

Financial highlights

• 4Q23 revenue was R$633Mn, up 32% YoY; EBITDA was R$147Mn, up 9%, with a 23.2% margin.

• 4Q23 net income was R$36Mn, up 44% YoY; EPS was R$0.44 for the quarter and R$2.66 for FY23.

• FY23 net income growth included contributions from EBITDA, discontinued operations and financial results; Argentina FX effects reduced the financial-result contribution.

Outlook and guidance

• FY24 priorities include revenue growth, innovation, customer focus, operational excellence and cost control; management described EBITDA as in line or lower, with potential for higher net profit.

• ValidMobile price pressure is expected to continue at least in 1H24; management cited signs of acceleration in 2024 and a gradual transition away from SIM cards.

• Driver’s license issuance may decline slightly in 2024 and sharply thereafter, with Digital Government revenue expected to offset the later decline; CIN volumes are gaining traction.

• Brazil card volumes remain low, while a continued SELIC reduction may benefit ValidPay volumes over the medium term; Argentina carries a risk of falling prices.