Core Insights - PagBank announced its first dividend payment of approximately R$250 million (USD 0.14 per common share) and plans to distribute dividends annually, corresponding to about 10% of its net income, subject to market conditions and board approval [1][9] Financial Performance - In 1Q25, PagBank reported net revenue of R$4.9 billion, a 13% year-over-year increase, and gross margin of R$1.9 billion, reflecting a 7% rise [2] - Recurring net income for the quarter was R$554 million, a 6% year-over-year increase, with earnings per share (EPS) reaching R$1.72, a 14% increase year-over-year [2][6] - The credit portfolio expanded to R$3.7 billion, marking a 34% increase compared to the same quarter last year and a 6% increase quarter-over-quarter [3] Customer Engagement and Market Position - PagBank has a customer base of over 32 million, with 17.7 million actively engaged in its ecosystem, emphasizing its strategy of providing a comprehensive financial services platform [4] - Total deposits reached R$33.9 billion, a 10.9% year-over-year rise, indicating effective fundraising in a high-interest-rate environment [7] Operational Efficiency - The company maintained a stable delinquency rate over 90 days at 2.3%, significantly lower than the market average of 4.4% [3] - The total payment volume processed reached R$129 billion, growing 16% year-over-year, with cash in reaching R$83 billion, up 26% year-over-year [7] Shareholder Value Initiatives - PagBank executed a second share buyback program totaling over R$353 million, reflecting management's confidence in its growth strategy [8] - The gross margin increased from 38% to 39% quarter-over-quarter, and return on equity (ROE) reached 15% on an annualized basis, a 140 basis points increase year-over-year [6]

Financial Data and Key Metrics Changes - The company reported a net revenue increase of 13% year over year, reaching BRL billion [6] - Non-GAAP net income was BRL 554 million, reflecting a 6% growth year over year [6] - Diluted EPS on a GAAP basis reached BRL 1.72, a 14% growth year over year [6][28] - Total deposits increased by 11%, reaching BRL 33.9 billion [16] - The total credit portfolio reached BRL 3.7 billion, a 34% year over year increase [18] Business Line Data and Key Metrics Changes - Payments TPV reached BRL 129 billion, growing 16% year over year [6][13] - The MSMB segment grew 11% year over year, while the large retail and online segment grew 30% year over year [14] - The banking revenue reached a record, growing 60% year over year, driven by higher interest income from the expanding credit portfolio [22] Market Data and Key Metrics Changes - The company has less than 1% market share in some banking businesses, indicating significant room for market penetration and future growth [10] - The cash in levels in PagBank accounts reached BRL 83 billion, with cashing per active client growing 23% year over year [15] Company Strategy and Development Direction - The company aims to become the primary financial partner for clients by integrating payments, banking, and credit services [9] - The focus is on winning MSMBs and scaling the platform, with a strategy to deepen engagement and boost monetization [9][10] - The company plans to balance growth and profitability while exploring initiatives to strengthen its capital structure [32] Management Comments on Operating Environment and Future Outlook - Management highlighted the resilience of the company in a challenging macroeconomic environment, maintaining positive results every quarter since the IPO [7][32] - The company is focused on mitigating macroeconomic uncertainty and executing its repricing strategy [32] - Management expressed confidence in achieving the guidance for the year, with expectations for continued growth in gross profit and earnings per share [31][87] Other Important Information - The company announced a cash dividend of $0.14 per common share, to be paid on June 6, marking the first dividend in its history [7][30] - The Basel Index improved by approximately five percentage points, reflecting an enhanced capital structure [30] Q&A Session Summary Question: What explains the deceleration in TPV growth from Q4 to Q1? - Management noted that the deceleration is partly due to tougher year-over-year comparisons and emphasized the company's diversified revenue sources beyond payments [36][38] Question: Why is the dividend distribution set at 10% of net income? - The company aims to balance dividends with share buybacks, indicating that the 10% is a guideline that may change based on future performance [43][44] Question: What drove the decrease in deposits this quarter? - Management explained that the decrease in checking accounts was influenced by higher opportunity costs in a rising rate environment, and emphasized efforts to manage funding costs effectively [48][51] Question: How durable is the repricing strategy? - Management indicated that repricing is necessary due to rising interest rates and that they are working to implement it without losing clients [58][86] Question: What is the outlook for the banking business's contribution to gross profit? - Management did not provide specific targets but indicated that the banking business is expected to continue growing and contributing significantly to overall profitability [114][116]

Financial Performance - Total revenue and income for Q1 2025 reached R$4,850,156, an increase of 12.6% compared to R$4,306,425 in Q1 2024[7] - Net income for the period was R$525,092, representing a 8.8% increase from R$482,547 in the same period last year[7] - Revenue from transaction activities and other services decreased to R$2,013,922, down 15.1% from R$2,369,350 in Q1 2024[7] - Financial income significantly increased to R$2,697,294, up 47.3% from R$1,831,996 in Q1 2024[7] - For the three-month period ended March 31, 2025, PagSeguro Digital reported a profit before income taxes of R$579,907,000, compared to R$572,369,000 in the same period of 2024, reflecting a slight increase of 1.0%[10] - Total losses for the period were R$83,451,000 in Q1 2025, down from R$102,737,000 in Q1 2024, indicating a reduction of 18.7%[10] - Basic earnings per common share for Q1 2025 were R$1.7297, compared to R$1.5225 in Q1 2024, an increase of 13.6%[7] - Total expenses for the three-month period ended March 31, 2025, were R$4,270,248, an increase from R$3,734,057 in the same period of 2024, representing a growth of approximately 14.4%[105] - Financial costs increased significantly to R$1,177,779 in Q1 2025 from R$827,133 in Q1 2024, marking a rise of about 42.3%[105] Assets and Liabilities - Total assets as of March 31, 2025, were R$69,137,847, a decrease from R$72,900,617 at the end of 2024[5] - Total liabilities decreased to R$54,194,999 from R$58,232,245 at the end of 2024, reflecting a reduction of 6.0%[6] - Total equity increased to R$14,942,848, up from R$14,668,372 at the end of 2024, marking a growth of 1.9%[6] - Cash and cash equivalents increased to R$954,123 from R$927,668 at the end of 2024, showing a growth of 2.9%[5] - Accounts receivable totaled R$56,291,950 as of March 31, 2025, a decrease from R$59,803,273 at the end of 2024[33] - The company’s total financial liabilities decreased to R$51,838,455 as of March 31, 2025, down from R$55,643,518 at the end of 2024, representing a reduction of about 6.4%[116] Cash Flow and Investments - The net cash provided by operating activities decreased to R$1,216,238,000 in Q1 2025 from R$2,428,612,000 in Q1 2024, representing a decline of 50.0%[10] - The company incurred net cash used in investing activities of R$801,598,000 in Q1 2025, compared to R$1,643,427,000 in Q1 2024, a decrease of 51.2%[10] - The company reported a borrowing revenue from Biva Sec with an interest rate of 100% of CDI plus 2.5% per year, indicating a strategic financial maneuver to optimize funding costs[48] Credit and Risk Management - The company’s expected credit losses for accounts receivable were R$283,753 as of March 31, 2025[37] - The expected credit losses for payroll loans increased to R$43,476, while credit card receivables and other loans were R$115,348 and R$124,929, respectively[40] - The total expected credit losses decreased from R$284,620 on December 31, 2024, to R$283,753 by March 31, 2025[40] - The Group's liquidity risk is managed by maintaining reserves and monitoring cash flows to ensure sufficient funds for obligations[129] - PagSeguro Group's credit risk is assessed through a Credit Committee that classifies card issuers into low, medium, and high-risk categories[126] Shareholder Actions - The company has authorized a share repurchase program of up to US$200 million for Class A common shares, following a previous program that repurchased US$250 million in shares[98] - The company repurchased 2,742,840 shares for a total amount of R$126,009,000, with an average price of US$7.80 per share[147] - A cash dividend of US$0.14 per common share was approved, to be paid on June 6, 2025[148] Related-Party Transactions - For the three-month period ended March 31, 2025, PagSeguro reported total revenue from related-party transactions of R$2,262,000, an increase from R$2,053,000 in the same period of 2024, representing a growth of approximately 10.1%[46] - The total expenses from related-party transactions for the three-month period ended March 31, 2025, amounted to R$117,171, a significant increase from R$94,076 in the same period of 2024, reflecting a rise of about 24.5%[46] Operational Developments - The company has incorporated new subsidiaries, Yamí and Zygo, in January and February 2025, expanding its operational footprint[14] - PagSeguro Digital's subsidiaries include PagSeguro Brazil, PagSeg Participações, and BS Holding, among others, contributing to its diversified financial services[15] Taxation - The effective income tax and social contribution rate for the three-month period ended March 31, 2025, was 9%, down from 16% in 2024, with total income tax and social contribution expense of R$54,816 compared to R$89,821 in 2024[84] - Deferred tax assets recognized for tax loss carry-forwards amounted to R$85,104, while deferred tax liabilities totaled R$1,673,660 as of March 31, 2025[83]

Company Performance - PagSeguro Digital Ltd. closed at $9.75, reflecting a -1.02% change from the previous day, underperforming the S&P 500 which gained 3.26% [1] - The company's shares increased by 17.4% over the past month, outperforming the Business Services sector's gain of 7.61% and the S&P 500's gain of 3.78% [1] Upcoming Earnings - The upcoming earnings disclosure is expected to show an EPS of $0.29, a decrease of 12.12% compared to the same quarter last year [2] - Revenue is forecasted to be $827.19 million, indicating a 4.91% decline year-over-year [2] Full-Year Estimates - Zacks Consensus Estimates predict full-year earnings of $1.24 per share and revenue of $3.6 billion, representing year-over-year changes of +2.48% and +3.01%, respectively [3] Analyst Forecasts - Recent revisions to analyst forecasts are crucial as they reflect changes in short-term business dynamics, with positive revisions indicating analysts' confidence in the company's performance [4] Valuation Metrics - PagSeguro Digital Ltd. has a Forward P/E ratio of 7.96, significantly lower than the industry average of 14.59, suggesting it is trading at a discount [7] - The company holds a PEG ratio of 0.71, compared to the Financial Transaction Services industry's average PEG ratio of 1.19 [8] Industry Ranking - The Financial Transaction Services industry, part of the Business Services sector, has a Zacks Industry Rank of 74, placing it in the top 30% of over 250 industries [9]

Core Viewpoint - PagSeguro Digital Ltd. is experiencing a notable stock performance with a recent increase of 22.49% over the last month, despite a projected decline in earnings and revenue for the upcoming earnings disclosure [1][2]. Group 1: Stock Performance - The stock closed at $9.57, reflecting a -0.73% change compared to the previous day, which is less than the S&P 500's daily loss of 0.64% [1]. - Over the last month, PagSeguro's shares have increased by 22.49%, outperforming the Business Services sector's gain of 0.05% and the S&P 500's gain of 0.38% [1]. Group 2: Earnings and Revenue Estimates - Analysts expect PagSeguro to report earnings of $0.29 per share, indicating a year-over-year decline of 12.12% [2]. - Revenue is projected to be $827.19 million, reflecting a 4.91% drop compared to the same quarter last year [2]. - For the full year, earnings are estimated at $1.24 per share and revenue at $3.6 billion, showing increases of +2.48% and +3.01% respectively from the previous year [3]. Group 3: Analyst Projections and Rankings - Recent shifts in analyst projections for PagSeguro are important as they reflect short-term business trends, with positive revisions indicating optimism about the company's outlook [4]. - The Zacks Rank system currently rates PagSeguro at 3 (Hold), with the Zacks Consensus EPS estimate having decreased by 2.71% in the past month [6]. Group 4: Valuation Metrics - PagSeguro has a Forward P/E ratio of 7.79, which is lower than the industry average of 14.41, indicating it is trading at a discount [7]. - The company has a PEG ratio of 0.69, compared to the Financial Transaction Services industry's average PEG ratio of 1.19 [8].

If you are looking for a stock that has a solid history of beating earnings estimates and is in a good position to maintain the trend in its next quarterly report, you should consider PagSeguro Digital Ltd. (PAGS) . This company, which is in the Zacks Financial Transaction Services industry, shows potential for another earnings beat.When looking at the last two reports, this company has recorded a strong streak of surpassing earnings estimates. The company has topped estimates by 11.95%, on average, in the ...

PagSeguro Digital Ltd. (PAGS) closed at $10.03 in the latest trading session, marking a +1.31% move from the prior day. This change outpaced the S&P 500's 0.58% gain on the day. Meanwhile, the Dow experienced a rise of 0.75%, and the technology-dominated Nasdaq saw an increase of 0.55%.Prior to today's trading, shares of the company had gained 29.75% over the past month. This has outpaced the Business Services sector's loss of 2.56% and the S&P 500's loss of 0.84% in that time.The upcoming earnings release ...

[FORM 6-K Filing Information](index=1&type=section&id=FORM%206-K%20Filing%20Information) This section outlines the administrative details of the Form 6-K filing, identifying PagSeguro Digital Ltd. as the registrant and confirming the electronic submission of the report to the U.S. Securities and Exchange Commission [Filing Details](index=1&type=section&id=Filing%20Details) This section outlines the administrative details of the Form 6-K filing, identifying PagSeguro Digital Ltd. as the registrant and confirming the electronic submission of the report to the U.S. Securities and Exchange Commission - Registrant: PagSeguro Digital Ltd[1](index=1&type=chunk) - Form Type: 6-K, filed pursuant to Rule 13a-16 or 15d-16 under the Securities Exchange Act of 1934[1](index=1&type=chunk) - Submission Method: Electronically submitted, not in paper format[3](index=3&type=chunk) [Annual Report on Form 20-F Filing Announcement](index=2&type=section&id=Annual%20Report%20on%20Form%2020-F%20Filing%20Announcement) PagSeguro Digital Ltd. announced the filing of its Annual Report on Form 20-F for the fiscal year ended December 31, 2024, with the U.S. SEC. The report is available on the SEC's website and PagSeguro's Investor Relations website, with shareholders able to request free copies - Filing Date: April 28, 2025[4](index=4&type=chunk) - Report Filed: Annual Report on Form 20-F for the fiscal year ended December 31, 2024[4](index=4&type=chunk) - Availability: The report is accessible on the SEC's website (www.sec.gov) and PagSeguro's Investor Relations website (https://investors.pagbank.com/) Shareholders can obtain free copies upon request[4](index=4&type=chunk)[5](index=5&type=chunk) [About PagBank PagSeguro](index=2&type=section&id=About%20PagBank%20PagSeguro) PagBank PagSeguro is a leading Brazilian financial technology provider aiming to democratize financial services through a comprehensive digital banking ecosystem [Company Overview and Mission](index=2&type=section&id=Company%20Overview%20and%20Mission) PagSeguro, an UOL Group Company, is a disruptive financial technology provider in Brazil, targeting consumers, individual entrepreneurs, micro-merchants, and small to medium-sized companies. Its mission is to democratize financial services in Brazil by offering a safe, affordable, simple, and mobile-first end-to-end digital banking ecosystem in a concentrated and underpenetrated market - Target Market: Primarily consumers, individual entrepreneurs, micro-merchants, small companies, and medium-sized companies in Brazil[6](index=6&type=chunk) - Mission: To disrupt and democratize financial services in Brazil, a market characterized by concentration, underpenetration, and high-interest rates, through an end-to-end digital banking ecosystem[7](index=7&type=chunk) - Unique Business Model: PagSeguro is highlighted as the only financial technology provider in Brazil whose business model encompasses five specific pillars[6](index=6&type=chunk) [Business Model and Services](index=2&type=section&id=Business%20Model%20and%20Services) PagSeguro's business model is built on five core pillars, providing a comprehensive suite of financial technology solutions. These include diverse digital banking services, in-person payment acceptance via POS devices, free digital accounts with extensive functionalities, card issuance, and full acquirer operations - PagSeguro's business model covers the following five pillars[6](index=6&type=chunk)[8](index=8&type=chunk) - Multiple digital banking solutions[8](index=8&type=chunk) - In-person payments via point of sale (POS) devices provided to merchants[8](index=8&type=chunk) - Free digital accounts for consumers and merchants with functionalities such as bill payments, mobile top-ups, wire transfers, peer-to-peer cash transfers, prepaid credit cards, cash cards, loans, investments, QR code payments, and payroll portability[8](index=8&type=chunk) - Issuer of prepaid, cash, and credit cards[8](index=8&type=chunk) - Operate as a full acquirer[8](index=8&type=chunk) [Additional Information](index=2&type=section&id=Additional%20Information) This section provides contact details for investor relations and media, along with official signatory information for the report [Contacts](index=2&type=section&id=Contacts) This section provides the contact information for PagSeguro Digital Ltd.'s Investor Relations and Media Press departments for any inquiries - Investor Relations Contact[8](index=8&type=chunk) - Phone: +55 (11) 3914-9524[8](index=8&type=chunk) - Email: ir@pagseguro.com[8](index=8&type=chunk) - Website: investors.pagseguro.com[8](index=8&type=chunk) - Media Press Contact[8](index=8&type=chunk) - Phone: +55 (11) 992-350-009[8](index=8&type=chunk) - Email: pagbankpagseguro@xcom.net.br[8](index=8&type=chunk) [Signatures](index=3&type=section&id=Signatures) The report is officially signed on behalf of PagSeguro Digital Ltd. by Artur Schunck, who holds the titles of Chief Financial Officer, Chief Accounting Officer, and Investor Relations Officer, confirming its due authorization and submission on April 28, 2025 - Signatory: Artur Schunck[10](index=10&type=chunk) - Title: Chief Financial Officer, Chief Accounting Officer and Investor Relations Officer[10](index=10&type=chunk) - Date: April 28, 2025[10](index=10&type=chunk)

Economic and Political Environment - The Brazilian government continues to exert significant influence over the economy, which may adversely affect the company and the price of its Class A common shares[44]. - Ongoing political instability in Brazil has negatively impacted business operations and the trading price of Class A common shares[51]. - High inflation rates in Brazil historically affect the economy and capital markets, posing risks to the company's business and share price[59]. - Economic uncertainty in Brazil may lead to increased funding costs and affect the company's ability to finance operations and invest in growth opportunities[61]. - Brazilian inflation rate was 5.48% in March 2025, with previous years at 4.83%, 4.62%, and 5.79% in 2024, 2023, and 2022 respectively[60]. - The SELIC rate was 13.15% in March 2025, compared to 12.25% in 2024, 11.75% in 2023, and 13.75% in 2022[60]. - The Brazilian real depreciated against the U.S. dollar, with a selling rate of R$6.1923 per US$1.00 as of December 31, 2024, and R$5.7422 as of March 31, 2025[64]. - Brazil's GDP growth was 3.4% in 2024, driven mainly by services and household consumption, but growth is limited by inadequate infrastructure and labor market volatility[148]. - Geopolitical instability and sanctions could adversely affect the global economy and the company's financial performance through increased inflation and market disruptions[149]. - The IMF projects a 3.3% global GDP growth in 2025 and 2026, with medium-term risks tilted to the downside due to policy uncertainties[150]. Regulatory and Compliance Risks - The company is subject to extensive government regulation, and changes in these regulations could significantly impact its operations[45]. - The company faces risks related to compliance with export controls and economic sanctions, which could materially impact its operations and reputation[152]. - The company is subject to various anti-corruption and anti-money laundering laws, and any compliance failures could result in significant penalties and reputational harm[130]. - The company faces risks associated with noncompliance with the LGPD, which could lead to significant legal and financial exposure[86]. - The LGPD imposes fines of up to 2% of gross sales, limited to R$50 million per violation, for noncompliance with data protection regulations[87]. - The Central Bank has enacted new rules increasing capital and prudential requirements for payment institutions, effective January 2025, which may impose stricter requirements on the company[170]. - The company is subject to regulatory uncertainties regarding cryptocurrency investments, which could impact financial performance and compliance costs[111]. - The company is subject to various regulations regarding nonfinancial information, including climate-related and ESG reporting, which could adversely affect its operations if not complied with[140]. - The Brazilian Usury Law was amended in June 2024, removing usury limitations for certain transactions, which could impact financial performance if further changes occur[94]. - Changes in tax laws in Brazil could increase the tax burden and compliance costs, adversely affecting profitability[101]. - A proposed bill (PL 1,087/2025) may impose a 10% withholding tax on dividends paid to non-resident shareholders starting January 2026[101]. - The Brazilian Congress passed a tax reform in December 2024 introducing a dual VAT system, which will be implemented over eight years starting in 2026[103]. Market and Competitive Landscape - The e-commerce market in Brazil is developing, and the company's growth depends on the continued expansion of e-commerce and internet usage[46]. - The company may face increased competition, which could adversely affect its market position and financial performance[46]. - Intense competition in the digital payment market may pressure pricing and reduce profitability[107]. - The company faces potential substantial fines and operational changes if found in violation of regulations, which could harm business results[98]. - The company relies on third parties for transaction processing, which poses risks if these parties fail to perform adequately[112]. - The company is currently experiencing significant expansion and anticipates further growth to address potential increases in its customer base and market opportunities[164]. - The company aims to increase the number of users who collect and pay digitally and to diversify its customer base[143]. Operational Risks - The company faces risks related to exchange rate volatility, which may adversely impact its operations and financial results[44]. - The company relies on a limited number of suppliers for key components, which poses risks of shortages or price increases[46]. - The company incurs losses from consumer claims related to merchant performance and fraud, which could diminish consumer confidence[104]. - The company’s revenues depend on prompt and accurate transaction processes, and failure to grow transaction-processing capabilities could harm its ability to collect revenue[166]. - The company is dependent on its subsidiaries for funds to pay operating expenses and dividends, which may be affected by exchange rate fluctuations[187]. - Liquidity risk may arise from insufficient financial resources to meet obligations, influenced by market conditions and customer behavior[199]. Cybersecurity and Technology - The company faces risks from cyberattacks and data breaches, which could adversely affect its reputation and operations[79]. - The company expects to spend significant additional resources to protect against security breaches, with potential liabilities for card information breaches[82]. - Cybersecurity risks have increased due to remote work practices and geopolitical instability, potentially affecting operational capabilities[84]. - The company is developing AI initiatives to enhance customer service, including features for problem-solving with card machines and service history analysis[203]. - AI regulation in Brazil is evolving, with Bill No. 2.338/23 under discussion, which may impose compliance burdens and liability standards[206]. Financial Performance and Shareholder Matters - The company has not adopted a dividend policy, meaning investors may rely solely on price appreciation for returns[211]. - The dual class capital structure allows UOL to control approximately 86.84% of voting power, limiting other shareholders' influence on corporate matters[208]. - As of December 31, 2024, there are 209,148,916 Class A common shares and 120,459,508 Class B common shares outstanding, all owned by UOL[210]. - The company recorded R$43.8 million in provisions for current civil and labor proceedings and R$71.1 million for non-current proceedings as of December 31, 2024[182]. - The company must maintain effective internal controls over financial reporting to avoid material weaknesses that could adversely affect its business and share price[139]. - The company recognizes an allowance for loan losses based on current assessments, but cannot guarantee sufficiency in provisions for risks[195]. - Historical loan losses may not predict future losses, and changes in the business model could adversely affect the quality of the loan portfolio[192]. - The quality of the loan portfolio is at risk from changes in Brazilian economic and political conditions, increased market competition, and regulatory changes[193]. - The company’s financial success is sensitive to the payment methods consumers choose, with higher transaction fees associated with credit card payments compared to digital transfers[176]. - Quarterly results are subject to fluctuations and seasonality, with fewer transactions expected in the first quarter and increased activity during the holiday season[121]. - The company relies on IT services agreements with Scala Data Centers and Amazon Web Services for managed services and cloud computing[77].

Core Insights - The article compares two stocks in the Financial Transaction Services sector: PagSeguro Digital Ltd. (PAGS) and Shift4 Payments (FOUR) to determine which is more attractive to value investors [1] Valuation Metrics - PAGS has a forward P/E ratio of 6.85, while FOUR has a forward P/E of 16.18 [5] - PAGS has a PEG ratio of 0.61, and FOUR has a PEG ratio of 0.62, indicating similar expected earnings growth rates [5] - PAGS has a P/B ratio of 1.03, compared to FOUR's P/B ratio of 6.72, suggesting PAGS is more undervalued relative to its book value [6] Analyst Outlook - PAGS currently holds a Zacks Rank of 1 (Strong Buy), indicating a more favorable earnings estimate revision trend compared to FOUR, which has a Zacks Rank of 3 (Hold) [3] - PAGS has a Value grade of B, while FOUR has a Value grade of C, further supporting PAGS as the superior value option [6]