PagSeguro Digital Ltd. (NYSE:PAGS) Q1 2023 Earnings Conference Call May 25, 2023 5:00 PM ET Eric Oliveira - Investor Relations and ESG Director Alexandre Magnani - Chief Executive Officer John Coffey - Barclays Bryan Keane - Deutsche Bank Soomit Datta - New Street Research Kaio Prato - UBS Geoffrey Elliott - Autonomous Research Alexander Markgraff - KeyBanc Capital Markets I would now like to turn the call over to your host, Eric Oliveira, Head of IR, ESG and Market Intelligence. Please, go ahead. Company P ...

[Key Information](index=8&type=section&id=Item%203.%20KEY%20INFORMATION) [Selected Financial and Operating Data](index=8&type=section&id=Selected%20Financial%20and%20Operating%20Data) The company's financial data for 2020-2022 shows significant growth in revenue, TPV, and net income Statement of Operations Data (in millions of R$, except per share amounts) | Indicator | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | **Total revenue and income** | **15,334.9** | **10,448.7** | **6,814.7** | | Operating profit before Income Taxes | 1,759.3 | 1,488.0 | 1,774.7 | | **Net Income for the Year** | **1,504.8** | **1,166.3** | **1,292.3** | | Basic earnings per share (R$) | 4.6002 | 3.5303 | 3.9225 | | Diluted earnings per share (R$) | 4.5705 | 3.5105 | 3.9163 | Operating Data | Operating Statistics | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Active merchants at year-end (in millions) | 7.1 | 7.7 | 7.0 | | TPV (in billions R$) | 731.4 | 456.1 | 231.5 | | PagBank active users (in millions) | 16.2 | 13.1 | 7.9 | Balance Sheet Data (in millions of R$) | Indicator | At Dec 31, 2022 | At Dec 31, 2021 | At Dec 31, 2020 | | :--- | :--- | :--- | :--- | | **Total Current Assets** | **39,767.1** | **26,719.3** | **19,247.1** | | **TOTAL ASSETS** | **45,329.3** | **31,075.8** | **22,324.3** | | **Total Current Liabilities** | **29,740.4** | **19,002.9** | **11,574.5** | | **TOTAL LIABILITIES** | **33,487.2** | **20,573.6** | **12,996.9** | | **TOTAL EQUITY** | **11,842.1** | **10,502.2** | **9,327.5** | - The company provides a reconciliation of GAAP to Non-GAAP financial measures, with **Non-GAAP net income for 2022 at R$1,597.3 million**, a **12.1% increase** from 2021[52](index=52&type=chunk) [Risk Factors](index=13&type=section&id=RISK%20FACTORS) The company faces significant risks related to its business, the Brazilian economy, and its dual-class share structure [Risks Relating to our Business and Industry](index=13&type=section&id=Risks%20Relating%20to%20our%20Business%20and%20Industry) - The company operates in a market with **rapid technological changes**, and failure to innovate could lead to a decline in the use of its products[59](index=59&type=chunk) - The company faces **intense competition** from existing and new players, which could lead to pricing pressures and harm its business[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - The business is vulnerable to **cyberattacks and security breaches**, which could lead to data loss, reputational harm, and significant financial exposure[69](index=69&type=chunk)[70](index=70&type=chunk)[72](index=72&type=chunk) - The business is subject to **extensive government regulation**, and non-compliance with laws like the LGPD could result in substantial fines[87](index=87&type=chunk)[74](index=74&type=chunk) - Changes in tax laws or the loss of tax incentives could adversely affect results of operations[94](index=94&type=chunk)[95](index=95&type=chunk) - The business has **significant working capital requirements** driven by the early payment of receivables to merchants, and a lack of capital could limit growth[100](index=100&type=chunk) [Risks Relating to Brazil](index=34&type=section&id=Risks%20Relating%20to%20Brazil) - The Brazilian government exercises **significant influence over the economy** through policy changes that could harm the company's business[176](index=176&type=chunk) - **Political instability** may adversely affect the Brazilian economy, market confidence, and the company's results[180](index=180&type=chunk)[182](index=182&type=chunk)[184](index=184&type=chunk) - Brazil has a history of **high inflation and interest rates**, with the SELIC rate reaching **13.75% p.a. in 2022**, which can restrict economic growth[189](index=189&type=chunk)[190](index=190&type=chunk) - The **Brazilian real has been historically volatile**, and a devaluation could create inflationary pressures and reduce the U.S. dollar value of results[192](index=192&type=chunk)[193](index=193&type=chunk) - Brazil's **sovereign credit rating is below investment grade**, and further downgrades could heighten investors' perception of risk[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) [Risks Relating to Our Class A Common Shares](index=40&type=section&id=Risks%20Relating%20to%20Our%20Class%20A%20Common%20Shares) - The largest shareholder, UOL, holds **85.51% of the total voting power**, limiting the ability of Class A shareholders to influence corporate matters[207](index=207&type=chunk) - The **dual-class capital structure** makes the company's shares ineligible for inclusion in certain major stock indices, which could adversely affect the stock price[215](index=215&type=chunk) - As a Cayman Islands exempted company, the **rights of shareholders may differ** from those in U.S. jurisdictions, posing difficulties in protecting their interests[217](index=217&type=chunk)[220](index=220&type=chunk) - As a foreign private issuer, the company is **exempt from certain SEC disclosure requirements**, which may result in less frequent public information[230](index=230&type=chunk)[232](index=232&type=chunk) [Information on the Company](index=46&type=section&id=Item%204.%20INFORMATION%20ON%20THE%20COMPANY) [Overview](index=46&type=section&id=Overview) The company is a Brazilian financial technology provider offering an end-to-end digital ecosystem for consumers and merchants - The business model integrates payment solutions, business management tools, and digital banking services through its free PagBank account[242](index=242&type=chunk)[245](index=245&type=chunk) Key Financial and Operating Metrics (2020-2022) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Active Merchants (millions) | 7.1 | 7.7 | 7.0 | | TPV (R$ billions) | 731.4 | 456.1 | 231.5 | | Total Revenue and Income (R$ millions) | 15,334.9 | 10,448.7 | 6,814.7 | | Net Income (R$ millions) | 1,504.8 | 1,166.3 | 1,292.3 | | PagBank Active Users (millions) | 16.2 | 13.1 | 7.9 | - The company targets a large addressable market of **37.2 million formal and informal businesses** in Brazil[250](index=250&type=chunk) - Capital expenditures totaled **R$2,136.4 million in 2022**, primarily for technology and software development[259](index=259&type=chunk) [Our Products and Services](index=51&type=section&id=Our%20Products%20and%20Services) The company offers a comprehensive suite of products and services built around its free PagBank digital account - The core of the ecosystem is the **free PagBank digital account**, which centralizes all functionalities and eliminates the need for a traditional bank account[270](index=270&type=chunk)[271](index=271&type=chunk) - The company provides a range of **affordable POS devices** that merchants can purchase instead of rent, a key differentiator from incumbents[284](index=284&type=chunk)[285](index=285&type=chunk)[286](index=286&type=chunk) - A key service is the **early payment of installment receivables**, which provides crucial working capital for SMEs and generates significant financial income[290](index=290&type=chunk)[303](index=303&type=chunk) - The company offers advanced built-in functionalities, including a **proprietary antifraud platform** and business management tools like the PagVendas app[307](index=307&type=chunk)[308](index=308&type=chunk)[310](index=310&type=chunk) - The company offers multiple cash-out solutions, including **PagSeguro-branded Visa and Mastercard cards**, allowing users to spend their digital account balance[335](index=335&type=chunk)[339](index=339&type=chunk) [Regulation](index=78&type=section&id=Regulation) The company's operations are subject to a complex and evolving regulatory framework governed by the Central Bank of Brazil - PagSeguro Brazil and MOIP are **licensed by the Central Bank as payment institutions**, authorized as issuers of electronic currency and acquirers[87](index=87&type=chunk)[473](index=473&type=chunk)[474](index=474&type=chunk) - The company's participation in the **Pix instant payment system** is mandatory, and it is also a participant in Brazil's Open Finance initiative[428](index=428&type=chunk)[429](index=429&type=chunk)[435](index=435&type=chunk) - New **prudential regulations for payment institutions** are being implemented, classifying the company's group as a Type 3 conglomerate subject to increased capital requirements[153](index=153&type=chunk)[449](index=449&type=chunk)[452](index=452&type=chunk) - The company is subject to various other regulations, including **anti-money laundering rules**, the General Data Protection Law (LGPD), and the Consumer Protection Code[494](index=494&type=chunk)[511](index=511&type=chunk)[513](index=513&type=chunk) [Operating and Financial Review and Prospects](index=97&type=section&id=Item%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) [Principal Factors Affecting Our Financial Condition and Results of Operations](index=97&type=section&id=Principal%20Factors%20Affecting%20Our%20Financial%20Condition%20and%20Results%20of%20Operations) Performance is driven by digital payment adoption, new product cross-selling, and macroeconomic factors like interest rates - Growth is heavily dependent on the adoption of digital payment services by **micro-merchants and SMEs** and the use of the early payment of receivables feature[557](index=557&type=chunk)[559](index=559&type=chunk) - The expansion of digital payments is a key tailwind, with **card payments accounting for 54% of household consumption** in Q4 2022[560](index=560&type=chunk)[562](index=562&type=chunk) - Brazilian macroeconomic conditions directly affect operations, with the **SELIC interest rate increasing to 13.75% p.a.** by year-end 2022[574](index=574&type=chunk)[585](index=585&type=chunk) - The revenue mix is influenced by the proportion of **credit vs. debit card transactions**, with credit cards typically having higher margins[576](index=576&type=chunk)[581](index=581&type=chunk) [Results of Operations](index=110&type=section&id=Results%20of%20Operations) In 2022, total revenue grew 46.8% and net income rose 29.0%, though financial expenses surged due to higher interest rates Results of Operations (in millions of R$) | Line Item | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | **Total revenue and income** | **15,334.9** | **10,448.7** | **46.8%** | | Revenue from transaction activities and other services | 8,906.4 | 6,784.8 | 31.3% | | Financial income | 6,252.7 | 3,514.4 | 77.9% | | Total Expenses | (13,575.6) | (8,960.7) | 51.5% | | Cost of sales and services | (7,470.9) | (5,775.9) | 29.3% | | Financial expenses | (3,151.6) | (790.6) | 298.6% | | Profit before income taxes | 1,759.3 | 1,488.0 | 18.2% | | **Net Income for the Year** | **1,504.8** | **1,166.3** | **29.0%** | - The **31.3% increase in transaction revenue** was mainly due to a **58.9% rise in TPV**, though offset by an increase in free PagBank transactions[643](index=643&type=chunk)[644](index=644&type=chunk) - **Financial income grew 77.9%**, driven by higher TPV and repricing for the early payment of receivables feature[647](index=647&type=chunk) - **Financial expenses surged 298.6%** due to increased working capital needs, higher interest rates (SELIC), and more interest-bearing accounts[654](index=654&type=chunk) - **Administrative expenses decreased by 23.8%** to R$668.7 million, primarily due to a reduction in payroll-related expenses[653](index=653&type=chunk) [Liquidity and Capital Resources](index=113&type=section&id=Liquidity%20and%20Capital%20Resources) The company's principal liquidity need is for early payment of receivables, with net cash from operations increasing significantly in 2022 Summary of Cash Flows (in millions of R$) | Cash Flow Activity | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | 3,549.0 | 898.0 | 2,152.7 | | Net cash used in investing activities | (2,184.5) | (1,470.9) | (1,861.5) | | Net cash provided by (used in) financing activities | (1,329.7) | 727.2 | (55.1) | | **Cash and cash equivalents at end of year** | **1,829.1** | **1,794.4** | **1,640.1** | - **Net cash from operating activities increased substantially** in 2022, driven by higher profit and a significant increase in deposits[671](index=671&type=chunk)[672](index=672&type=chunk) - Investing activities in 2022 primarily consisted of **R$1,040.3 million for intangible assets** and **R$1,096.1 million for property and equipment**[673](index=673&type=chunk) - Financing activities in 2022 included the **repayment of borrowings totaling R$1,020.1 million** and **R$291.4 million spent on share repurchases**[675](index=675&type=chunk) [Directors, Senior Management and Employees](index=119&type=section&id=Item%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) [Directors and Senior Management](index=119&type=section&id=Directors%20and%20Senior%20Management) The company is managed by a six-member Board of Directors and a team of executive officers, reflecting its controlled company status - The Board of Directors consists of six members, including **three independent directors** who also form the audit committee[700](index=700&type=chunk)[702](index=702&type=chunk) - Key executive officers include Ricardo Dutra da Silva (Principal Executive Officer) and Alexandre Magnani (Chief Executive Officer)[717](index=717&type=chunk) - The Audit Committee is composed of the three independent directors, with Maria Carolina Ferreira Lacerda serving as the financial expert[712](index=712&type=chunk) [Compensation](index=123&type=section&id=Compensation) Management compensation includes fixed salaries, cash bonuses, and long-term incentives through share-based plans - The aggregate compensation paid to the executive officers of PagSeguro Brazil in 2022 was **R$21.4 million**[724](index=724&type=chunk) - The company has a **Long-Term Incentive Plan - Goals (LTIP-Goals)** where beneficiaries are granted awards based on performance[725](index=725&type=chunk)[729](index=729&type=chunk) - The previous Long-Term Incentive Plan (LTIP) was replaced in 2018, under which a total of **5,513,266 Class A shares** had been delivered[733](index=733&type=chunk)[735](index=735&type=chunk) [Our Team](index=125&type=section&id=Our%20Team) As of year-end 2022, the company's team consisted of 8,778 people, with a strong focus on technology and engineering talent Employee Breakdown by Category | Category | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Products and Engineering | 2,187 | 2,080 | 1,556 | | Commercial, Marketing and Operations | 4,639 | 4,304 | 2,820 | | Administrative | 397 | 367 | 235 | | **Total** | **7,223** | **6,751** | **4,611** | - As of December 31, 2022, the total team comprised **8,778 people**, with **30.3% specialized in products and engineering**[741](index=741&type=chunk) [Major Shareholders and Related Party Transactions](index=126&type=section&id=Item%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) [Major Shareholders](index=126&type=section&id=Major%20Shareholders) Universo Online S.A. (UOL) is the controlling shareholder, holding 85.59% of the total voting power as of year-end 2022 Beneficial Ownership as of December 31, 2022 | Name | Class A Shares (%) | Class B Shares (%) | % of Total Voting Power | | :--- | :--- | :--- | :--- | | Universo Online S.A. (UOL) | 0.38% | 100% | 85.59% | | Capital World Investors | 11.73% | - | 1.74% | | FMR LLC | 9.66% | - | 1.43% | | Sylebra Capital Limited | 6.14% | - | 0.91% | [Related Party Transactions](index=128&type=section&id=Related%20Party%20Transactions) The company engages in significant transactions with its parent, UOL, for shared services like advertising, IT, and back-office support - In 2022, PagSeguro incurred **R$395.6 million in costs** for services provided by UOL and affiliates, representing **2.9% of its total expenses**[760](index=760&type=chunk) - Key agreements with UOL include cost-sharing for corporate services and platform licensing for software development[766](index=766&type=chunk)[768](index=768&type=chunk)[769](index=769&type=chunk) - The company has entered into **indemnification agreements** with its directors and officers[763](index=763&type=chunk) [Financial Information](index=130&type=section&id=Item%208.%20FINANCIAL%20INFORMATION) [Legal Proceedings](index=131&type=section&id=Legal%20Proceedings) The company is involved in various legal proceedings, with provisions recorded for probable losses and disclosures for possible losses - As of December 31, 2022, the company had accrued **R$60.6 million for legal proceedings** where loss is probable[783](index=783&type=chunk)[785](index=785&type=chunk)[788](index=788&type=chunk) - The company is party to tax proceedings with an aggregate amount of **R$630.5 million**, which are classified as possible losses with no provision recorded[791](index=791&type=chunk) - A significant tax proceeding involves a **R$267.0 million assessment** regarding the non-collection of financial transaction tax (IOF)[792](index=792&type=chunk) [Additional Information](index=133&type=section&id=Item%2010.%20ADDITIONAL%20INFORMATION) [Memorandum and Articles of Association](index=133&type=section&id=Memorandum%20and%20Articles%20of%20Association) The company's governance is defined by its Articles of Association, featuring a dual-class share structure that concentrates control - The company has a **dual-class share structure**, with Class A shares having one vote and Class B shares having ten votes per share[807](index=807&type=chunk) - **Class B shares are convertible** into Class A shares and will automatically convert if their collective voting power falls below 10%[811](index=811&type=chunk) - The Board of Directors has the authority to issue new shares without shareholder approval, which acts as an **anti-takeover provision**[804](index=804&type=chunk)[863](index=863&type=chunk) - The company has a share repurchase program authorized for up to **US$250 million** of its outstanding Class A common shares[838](index=838&type=chunk) [Taxation](index=147&type=section&id=Taxation) As a Cayman Islands entity, the company is not subject to local taxes and faces a potential PFIC classification risk for U.S. investors - The Cayman Islands does not levy taxes on profits, and the company has received a **20-year undertaking** against the future imposition of such taxes[909](index=909&type=chunk)[911](index=911&type=chunk) - For U.S. Holders, dividends may be eligible for **reduced tax rates**, provided the company is not classified as a PFIC[920](index=920&type=chunk)[921](index=921&type=chunk) - There is a risk that the company could be classified as a **Passive Foreign Investment Company (PFIC)**, which would subject U.S. Holders to adverse tax rules[925](index=925&type=chunk)[928](index=928&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=153&type=section&id=Item%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) [Market Risk Management](index=153&type=section&id=Market%20Risk%20Management) The company is exposed to financial risks including foreign exchange, interest rate, credit, and liquidity risk - **Foreign exchange risk** is mainly related to POS device purchases and the operations of international subsidiaries[951](index=951&type=chunk)[952](index=952&type=chunk) - **Interest rate risk** primarily arises from financial investments and deposits, with prepayment business margins being particularly sensitive to rate fluctuations[953](index=953&type=chunk)[954](index=954&type=chunk) - **Credit risk** is managed by assessing card issuers and through a rating process for its own loan and credit portfolio[958](index=958&type=chunk)[959](index=959&type=chunk) - **Liquidity risk** is managed by maintaining cash reserves and continuously monitoring cash flows to meet obligations[961](index=961&type=chunk) [Controls and Procedures](index=155&type=section&id=Item%2015.%20CONTROLS%20AND%20PROCEDURES) [Internal Controls](index=155&type=section&id=Internal%20Controls) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of year-end 2022 - As of December 31, 2022, management concluded that the company's **disclosure controls and procedures were effective**[972](index=972&type=chunk) - Management assessed the effectiveness of **internal control over financial reporting** based on the COSO framework and concluded it was effective[976](index=976&type=chunk) - The independent registered public accounting firm **audited and issued an unqualified opinion** on the effectiveness of the company's internal controls[977](index=977&type=chunk)[978](index=978&type=chunk) [Corporate Governance and Other Disclosures](index=156&type=section&id=Item%2016.%20Corporate%20Governance%20and%20Other%20Disclosures) [Principal Accountant Fees and Services](index=157&type=section&id=Item%2016C.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) The company paid its independent auditor total audit fees of R$5,994.6 thousand in 2022 Audit Fees (in thousands of R$) | Year | Audit Fees | | :--- | :--- | | 2022 | 5,994.6 | | 2021 | 5,201.8 | [Purchases of Equity Securities](index=157&type=section&id=Item%2016E.%20PURCHASES%20OF%20EQUITY%20SECURITIES%20BY%20THE%20ISSUER%20AND%20AFFILIATED%20PURCHASERS) The company repurchased 4,280,627 Class A common shares in 2022 under its share repurchase program Share Repurchases in 2022 | Month | Total Shares Purchased | Approximate Value Remaining (US$ millions) | | :--- | :--- | :--- | | January 2022 | 670,477 | 163.6 | | July 2022 | 1,707,350 | 145.5 | | November 2022 | 1,671,240 | 128.9 | | December 2022 | 231,560 | 126.6 | [Corporate Governance](index=158&type=section&id=Item%2016G.%20CORPORATE%20GOVERNANCE) As a foreign private issuer, the company follows home country governance practices in lieu of certain NYSE listing standards - The company is **not required to have a majority of independent directors** on its board[996](index=996&type=chunk) - The company is **not required to have a compensation committee** composed entirely of independent directors[997](index=997&type=chunk)

[Filing Information](index=1&type=section&id=Filing%20Information) [SEC Filing Details](index=1&type=section&id=SEC%20Filing%20Details) PagSeguro Digital Ltd. confirms its status as a foreign private issuer, filing Form 6-K and annual reports under Form 20-F - PagSeguro Digital Ltd. is filing this Form 6-K as a **foreign private issuer**[1](index=1&type=chunk) - The registrant files annual reports under **Form 20-F**[2](index=2&type=chunk) [Annual Report Filing Announcement](index=2&type=section&id=Annual%20Report%20Filing%20Announcement) PagSeguro Digital Ltd. filed its FY2022 Annual Report on Form 20-F with the SEC on April 28, 2023, accessible publicly and upon request - PagSeguro Digital Ltd. filed its Annual Report on **Form 20-F** for the fiscal year ended **December 31, 2022**[4](index=4&type=chunk) - The filing date was **April 28, 2023**[4](index=4&type=chunk) - The report is accessible on **www.sec.gov** and **investors.pagseguro.com**, with free physical copies available upon request[4](index=4&type=chunk)[5](index=5&type=chunk) [Company Overview](index=2&type=section&id=Company%20Overview) [About PagBank PagSeguro](index=2&type=section&id=About%20PagBank%20PagSeguro) PagSeguro Digital is a leading Brazilian fintech, offering an end-to-end digital banking ecosystem with a free PagBank account for diverse customer segments - PagSeguro Digital is a disruptive **financial technology provider** in Brazil[6](index=6&type=chunk) - The company primarily serves **consumers, individual entrepreneurs, micro-merchants, and small to medium-sized companies**[6](index=6&type=chunk) - PagSeguro Digital is the only Brazilian fintech covering **five key pillars** with an **end-to-end digital banking ecosystem**[6](index=6&type=chunk) - The **free PagBank digital account** enables clients to transact and manage cash, supporting various online and in-person payment methods[6](index=6&type=chunk) [Mission and Core Services](index=2&type=section&id=Mission%20and%20Core%20Services) PagSeguro Digital democratizes Brazilian financial services with a safe, affordable, mobile-first digital banking ecosystem, offering POS devices, free digital accounts, and card issuance/acquiring - PagSeguro Digital's mission is to disrupt and democratize financial services in Brazil's concentrated, underpenetrated, and high interest rate market[7](index=7&type=chunk) - The company provides a **safe, affordable, simple, and mobile-first end-to-end digital banking ecosystem** for merchants and consumers[7](index=7&type=chunk) - Core services include digital banking solutions, **POS devices**, **free digital accounts** with bill payments, wire transfers, prepaid cards, loans, and QR code payments[8](index=8&type=chunk) - PagSeguro operates as an **issuer of prepaid, cash, and credit cards**, and functions as a **full acquirer**[8](index=8&type=chunk) [Contact Information](index=2&type=section&id=Contact%20Information) This section provides contact details for PagSeguro Digital Ltd.'s Investor Relations and Media Press departments - Investor Relations contact: **+55 (11) 3914-9524**, **ir@pagseguro.com**, **investors.pagseguro.com**[8](index=8&type=chunk) - Media Press contact: **+55 (11) 992-350-009**, **pagbankpagseguro@xcom.net.br**[8](index=8&type=chunk) [Signatures](index=3&type=section&id=Signatures) [Authorized Signatory](index=3&type=section&id=Authorized%20Signatory) The report was signed on April 28, 2023, by Artur Schunck, PagSeguro Digital Ltd.'s Chief Financial, Investor Relations, and Chief Accounting Officer - The report was signed on **April 28, 2023**[10](index=10&type=chunk) - Artur Schunck, **Chief Financial and Investor Relations Officer**, and **Chief Accounting Officer**, signed on behalf of PagSeguro Digital Ltd[10](index=10&type=chunk)

Financial Data and Key Metrics Changes - Total revenue and income reached almost BRL4 billion, growing 22% year-over-year, slightly lower than the previous quarter due to a higher share of debit card transactions and the impact of the Soccer World Cup [26][30] - Non-GAAP net income reached BRL1.6 billion, while GAAP net income amounted to BRL1.5 billion, an increase of 29% compared to 2021, representing an earnings per share of BRL4.57, 30% higher than last year [29][60] - The company reported a net cash balance of BRL9.8 billion, increasing almost BRL1 billion year-over-year [67] Business Line Data and Key Metrics Changes - PagBank's total payment volume (TPV) increased 19x, with total deposits growing 10x, surpassing BRL20 billion [15] - In payments, PagSeguro's TPV reached BRL94 billion, with a gross profit of BRL1.3 billion, 14% higher than Q4 2021 [18][61] - PagBank's gross profit reached BRL131 million, 70% higher than Q4 2021, driven by a shift to secured credit products [18][62] Market Data and Key Metrics Changes - PagBank achieved a 10% market share of PIX transactions, with more than BRL200 billion in TPV [8] - The company reported a significant increase in account balances, with an annual percentage yield (APY) on total deposits reaching 96% of the Brazilian interbank rate (CDI) [9] Company Strategy and Development Direction - The company aims to grow profitably in payments and increase market share in key segments while fostering PagBank engagement to diversify revenues [39][68] - The strategic focus includes developing a two-sided ecosystem to provide a unique value proposition and executing disciplined capital management to improve earnings per share and cash flow generation [39][68] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic challenges such as interest rate increases and inflation but noted that profits grew 3x, with a significant improvement in operating and investing cash flow generation [5][6] - The company expects financial expenses to remain high in 2023 due to volume growth and stable interest rates, projecting an average rate of 13.75% per year [32][85] Other Important Information - The company has successfully implemented a payroll platform for small and mid-sized businesses, enhancing engagement and financial inclusion [20][110] - The management emphasized the importance of maintaining service levels and improving customer care, with a 49% decrease in contact rates over two years [22] Q&A Session Summary Question: How is the operating environment in Brazil for this year? - Management noted that while there could be a downtrend in the active merchant base, they are not concerned as they are losing clients with low transaction volumes, while TPV continues to grow [44][99] Question: What about the overall health of the system and client base decline? - The decline is primarily in nano merchants, which contribute minimally to TPV, and the company is focusing on more profitable segments [73][99] Question: What is the outlook for PagBank revenues and the delta to volume? - The delta between TPV and revenue growth is due to a significant portion of TPV being non-monetized transactions, with revenues primarily driven by transactional activities [77][79] Question: What are the expectations for financial expenses in 2023? - Financial expenses are expected to be higher in 2023 due to volume growth and stable interest rates, with no automatic price decreases anticipated [85][104] Question: How does the payroll platform impact PagSeguro? - The payroll platform is expected to increase engagement and account balances, benefiting the overall ecosystem [110]

9 4 12:3 Ajustar limite Limite atual: R$ 15.000,00 Ø Disponivel: R$ 15.000,00 188 R$ 15.000 MISA Confirmar novo limite Corporate Presentation Dec-22 PagSeguro | PagBank PAGS Business Overview ABOUT US HIGHLIGHTS | --- | --- | --- | --- | |-------|----------------------------------------------------------------------------------------------------------------|------------------------|----------------------------| | | | | | | ▪ | 2 nd largest digital bank in Brazil: 26M clients | | | | ▪ | >R$ 1 trillion of fi ...

Financial Data and Key Metrics Changes - The company reported the highest EPS in its history for Q3 2022, achieving BRL1.16, a 20% increase compared to the same period in 2021 [10] - Total revenue and income reached BRL4.04 billion, a 45% increase year-over-year [14][29] - Net income on a non-GAAP basis reached BRL411 million, while GAAP net income reached BRL380 million, an 18% increase year-over-year [14][31] Business Line Data and Key Metrics Changes - PagSeguro's total revenue and income grew 49% year-over-year, reaching BRL3.7 billion, driven by successful repricing [18] - PagBank's total revenue grew 31% year-over-year, ending the quarter at BRL339 million [28] - PagBank deposits reached BRL19.4 billion, a 171% increase compared to the same period in 2021 [11][25] Market Data and Key Metrics Changes - PagSeguro's TPV reached BRL90.3 billion, growing 35% year-over-year, outpacing industry growth [10][12] - PagBank's TPV outpaced acquiring TPV for the first time, totaling BRL105 billion, with a 79% year-over-year growth [28] - The company gained 92 basis points in TPV market share compared to Q4 2021 [17] Company Strategy and Development Direction - The company focuses on balancing growth and profitability while enhancing its unique value proposition by merging banking and acquiring services [40] - The strategy includes being selective in merchant acquisition to improve quality and reduce subsidies [20] - The company aims to continue growing its deposits, cards TPV, and secured credit portfolio while increasing usage among its merchant base [40] Management's Comments on Operating Environment and Future Outlook - Management noted that the competitive environment has not intensified significantly, allowing for continued repricing of products if necessary [45][46] - The company anticipates potential impacts from macroeconomic factors, including the World Cup and consumer spending patterns, which may affect TPV growth in Q4 [49][50] - Management expects to maintain growth above industry averages, despite potential headwinds [62] Other Important Information - The company reported a CapEx to revenue ratio of 12.4%, down from 16.8% in 2021, indicating improved efficiency [35] - Financial expenses increased significantly due to rising interest rates, but the company is focused on managing costs effectively [33][34] Q&A Session Summary Question: Competitive environment and guidance for TPV growth - Management highlighted their strong profitability compared to peers and the ability to reprice products without losing clients [44][46] - They acknowledged uncertainty in TPV growth due to macroeconomic factors but confirmed expectations for growth [48][52] Question: Acquiring TPV performance - Management attributed lower than expected acquiring TPV to deflation and reduced credit offers from banks [57] - They emphasized that despite TPV challenges, revenue and net income metrics were strong [58] Question: Future earnings growth and market share - Management stated that they are focused on EPS growth rather than margin expansion, with consistent market share gains expected [96][97] - They noted that market share growth is a natural outcome of their business strategy rather than a primary goal [97] Question: Funding costs and tax rates - Management confirmed that funding costs for deposits are slightly below CDI and expect continued growth in deposits [86][90] - They provided insights into their effective tax rate, which is expected to remain between 10% to 15% in the near term [88][89]

Financial Highlights - PagSeguro achieved its highest EPS for 3Qs at R$1.16, a 20% year-over-year increase[13, 52] - PagSeguro's Total Payment Volume (TPV) reached R$90.3 billion, representing a 35% year-over-year growth, outpacing the payments industry[13, 16] - PagSeguro's Net Take Rate increased by 24 basis points compared to 1Q22[13, 24] - PagBank's Total Deposits amounted to R$19.4 billion, a significant 171% year-over-year increase[13, 17] - PagSeguro's Total Revenue and Income grew by 49% year-over-year[17, 24] - PagBank's TPV increased by 79% year-over-year[17, 49] Customer and Merchant Growth - PagBank added 1.1 million net new clients, bringing the total to approximately 26 million[13] - TPV per Merchant increased by 39% year-over-year, reaching R$4100[16, 34] Operational Efficiency - Capital Expenditure (CapEx) as a percentage of Revenue decreased by 230 basis points compared to 2Q22, reaching 12.4%[13, 67] - PagBank's active clients are increasingly using it as their primary bank, with cash-in increasing by R$3.9 billion from the previous quarter[39, 40] Credit Portfolio - PagBank's credit portfolio grew by 71% to R$2.7 billion[44]

PagSeguro Digital Ltd. (NYSE:PAGS) Q1 2022 Earnings Conference Call June 8, 2022 5:00 PM ET Company Participants Éric Oliveira - Investor Relations & ESG Director Ricardo Dutra - Co-Chief Executive Officer Alexandre Magnani - Co-Chief Executive Officer Artur Schunck - Chief Financial Officer Conference Call Participants Mario Pierry - Bank of America Bryan Keane - Deutsche Bank Pedro Leduc - Itaú BBA Jeff Cantwell - Wells Fargo Neha Agarwala - HSBC Kaio Prato - UBS Sheriq Sumar - Evercore ISI Tito Labarta - ...

Webcast Presentation 1Q22 June 8, 2022 PAGS LISTED NYSE FORWARD-LOOKING STATEMENTS Forward-Looking Statements; Non-GAAP Financial Measures Forward-Looking Statements This presentation, prepared by PagSeguro Digital Ltd ("we" or the "Company"), is solely for informational purposes. The information in this presentation does not constitute or form part of, and should not be construed as, an offer or invitation to subscribe for, underwrite or otherwise acquire, any securities of the Company or any subsidiary or ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 Yes ☐ No ☒ For the month of April 2022 Commission File Number: 001-38353 PagSeguro Digital Ltd. (Name of Registrant) Av. Brigadeiro Faria Lima, 1384, 4º andar, parte A São Paulo, SP, 01451-001, Brazil +55 11 3038 8127 (Address of Principal Executive Office) Indicate by check mark whether the registrant files or will file ...