PagSeguro Digital(PAGS) - 2025 Q1 - Quarterly Report

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]