PagSeguro Digital(US:PAGS)2023-03-03 03:03Financial 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]