Business

Linx reports BRL 65.9 million loss in Q4 with a loss of BRL 40 million from Linx Pay

The loss was due to the negative impact on the financial result with the gradual reduction of the CDI rate (a daily average of overnight interbank loans) and higher volume of discounts to clients

The New York Stock Exchange in Lower Manhattan in New York is decorated with a banner for the Linx initial public offering
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  • In adjusted terms, which exclude these losses and other extraordinary items, the retail technology company recorded a loss of BRL 8.1 million;
  • Linx also cited as reasons for it the higher advertising and implementation costs, effects of acquisitions and consolidation of their cost structures, and lower sequential expansion of net operating revenue.

Brazil‘s tech firm Linx reported a net loss of BRL 65.9 million for the fourth quarter, reversing the BRL 9.4 million profit posted a year earlier, amid heavy operating losses related to its Linx Pay payments unit.

On adjusted terms, which exclude these losses and other extraordinary items, the retail technology company recorded a loss of BRL 8.1 million, a result affected by the negative impact on the financial result with the gradual reduction of the CDI rate (a daily average of overnight interbank loans), and higher volume of discounts to clients.

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Linx also cited higher advertising and implementation costs, the effects of business acquisitions and consolidation of their cost structures, and lower sequential expansion of net operating revenue due to the more challenging period generated by the COVID-19 pandemic.

A year earlier, the company recorded adjusted net income of BRL 7.7 million, according to data available at the Securities and Exchange Commission in the early hours of Tuesday.

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In late March, the company warned that it would delay the release of the balance sheet after detecting an extraordinary loss in its payments arm.

At that time, Linx reported that its subsidiary Linx Pay showed unusual operating losses as a consequence of the cancellation of atypical transactions by third parties in the use of POS marketed by a commercial partner of Linx Pay.

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“Based on the results of the assessments, Linx recognized losses of BRL 40 million, fully accounted in the fourth quarter of 2020,” it said in the balance sheet material, adding that “the vulnerabilities that gave rise to the operational losses have already been addressed by Linx.”

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The company further cited that, according to the conditions of the association agreement signed with StoneCo, there is no impact on the business combination due to the identified operational losses.

(Translated by LABS)

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