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- Double-digit revenue growth for BM&F (+23.4%), Bovespa (+30.1%) and Cetip Liens and Loans (+16.1%) segments.
- New business model adopted for the vehicle loans Contracts System service (Cetip liens and loans segment) impacted revenues, expenses and net income, and led to the release of a new guidance.
- 1Q18 recurring net income1 reached R$448.2 million, while adjusted EBITDA2 was R$760.2 million.
B3 S.A. – Brasil, Bolsa, Balcão (“B3” or “Company”; ticker: B3SA3) reported today its first-quarter earnings for the period ending on March 31, 2018 (1Q18). In order to allow a better understanding of B3’s performance in a year-over-year (yoy) comparison, the numbers of the first quarter of 2017 (1Q17) are based on a combined non-audited income statement (see details in the appendix).
B3 revised its previously announced 2018 expenses (OPEX) guidance and also disclosed a specific guidance for revenue-linked expenses (please refer to Guidance for 2018 expenses section for details). The current expenses guidance for 2018 are:
- Adjusted OPEX3: R$960 – R$1,000 million (revised);
- D&A: R$910 – 980 million (maintained);
- Revenue-linked expenses: R$200 – R$220 million (new);
- Expenses related to the combination with Cetip: R$55 – R$75 million (maintained).
Other B3’s guidance for 2018 are reaffirmed (please refer to the Material Fact disclosed on May 10, 2018).
Highlights of 1Q18:
- In the BM&F segment, average daily volume (ADV) was 36.7% higher than in 1Q17, while average revenue per contract (RPC) decreased 4.7% yoy;
- In the Bovespa segment, average daily trading value (ADTV) grew 40.6% over 1Q17, while trading and post-trading margins decreased 3.6% yoy;
- In the Cetip securities segment, volumes of securities and contracts registered remained stable, while overall value outstanding grew by 6.4%;
- In the Cetip liens and loans segment, the number of vehicles financed grew by 8.5%, reflecting growth in the number of vehicles sold and increased credit penetration in this market;
- Total debt at 2.0x LTM adjusted EBITDA;
- Distribution of R$200 million in interest on capital approved in Apr’18.
Chief Executive Officer of B3, Gilson Finkelsztain, said: “The beginning of 2018 continued to show positive market conditions. We witnessed all-time high volumes in both the equity and the listed derivatives markets, reflecting higher stock prices and risk appetite from investors. In the vehicles liens and loans segment, the business model adopted in some states is changing as a result of changes in the regulatory framework. Despite some marginal loss for B3 in profitability, we have been able to preserve most of our economics in this business, which in our view confirms that the services offered by B3 are, and will continue to be, value-added to our clients. Finally, our focus in the integration of B3 continues, with particular emphasis in efforts related to enhancing our relationship with clients and market participants, developing and improving products and services offered to the market, and strengthening our corporate culture.”
Chief Financial and Investor Relations Officer, Daniel Sonder, added: “1Q18 was another solid quarter in terms of operating performance. Net revenue increased 18.2% versus 1Q17, with growth in all B3’s business segments. This was also the first quarter we saw the full impact of expense synergies from the combination with Cetip, which allowed us to offset most of the pressures created by inflationary adjustments of wages and contracts and by the conclusion of relevant projects. Another relevant event that occurred this quarter was related to the new regulatory framework and business model adopted by the state of São Paulo regarding the Contracts System service, impacting positively revenues and negatively both expenses and bottom line in 1Q18. Because of this change, we revised our 2018 adjusted expense guidance to reflect this additional revenue-linked expenses expected for the year. Although now a larger piece of our total expense is exposed to market activity, we maintain our expense management discipline regarding all the lines that are under our direct control (i.e. not revenue-linked). Deleveraging the balance sheet continues to be a priority for 2018-19, and we have declared a distribution of R$ 200.0 million in April.”
