PagSeguro Digital(PAGS) - 2022 Q3 - Earnings Call Transcript

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]