PagSeguro Digital : Q1 2025 Webcast Presentation

Published: 2025-05-13 17:46:10 ET PAGS

Published on 05/13/2025 at 17:46

PagSeguro Digital Ltd. (NYSE: PAGS)

Earnings Presentation

May 13, 2025 | Webcast: click here to register

1Q25 highlights

Sustainable growth and profitability amid market challenges

Operational Highlights

Total Clients

Million

32.0

(+2% YoY)

TPV 1Q25

129B

(+16% YoY)

Credit Portfolio (Expanded)¹ R$

46B

(+34% YoY)

Total Funding²

40B

(+24% YoY)

Financial Highlights

Net Revenue 1Q25

4.9B

(+13% YoY)

Net Income³ 1Q25

R$ | non-GAAP

554M

(+6% YoY)

Gross Profit

1.9B

(+7% YoY)

ROAE 1Q25

% | GAAP

14.2%

(-10bps YoY)

Value Creation for Shareholders

EPS4

R$/share

1.72

(+14% YoY)

Buyback

1.1B | 353M

repurchased LTM | YTD (apr-25)

1 Expanded Portfolio Includes Banking’s Credit Portfolio and Acquiring’s Prepayment to Merchants, net of Accounts Receivable Securitization | 2 Total Funding Total Deposits + Borrowings, Certificate of Deposits with Related Parties and Senior FIDC quotas. Does not include Accounts Receivable Securitization. | 3 Net Income Please see the Appendix for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure | 4 EPS : in GAAP diluted, considering effect of shares repurchased in 1Q25 and LTIP. When excluding those effects EPS is R$ 1.73/share (+15% YoY). For EPS on a Guidance same basis comparison please see slide 22

Business Overview

Proven track record EPS: Up ~2.3x, focused on delivering shareholder value

Number of shares Repurchased (M) - 1st Program

Number of shares repurchased (M) - 2nd Program

EPS (diluted, GAAP)(reported)(R$)

6.62

EPS w/o buyback (diluted, GAAP)(R$)

+15.0% CAGR

(2018-2024)

5.10

6.13

15.2

4.15

3.92

4.57

4.50

4.90

10.0

8.2

2.86

1.0

3.51

3.49

1.7

4.0

0.0

0.5

2018

2019

2020

2021

2022

2023

2024

2025 YTD

4.1

11.1

Covid-19

Pandemic

Largest Brazilian fintech IPO (US$ 2.6B)

Banking license acquisition and launch of PagBank

PIX

implementation and initial phases of Open Banking

Launch of FGTS withdrawal anticipation and payroll loan

Launch of collateralized credit card offer

P A Y

Focus on MSMB with sales force expansion

Strengthening our on-line and cross-border positioning

Business Overview

Greater than Payments, Greater than Banking: Your growth partner

PAYMENTS BANKING

Prepaid TPV Settled into PagBank Accounts

Complete set of payment solutions

Customer acquisition through POS device and hardware free payments (online and Tap On), to enable merchants to accept all payment methods (cards, Pix and bank slips)

Revenue generation from transactions and pre-payments

Deposits

Deposits franchise funds TPV Prepayment

Personalized

Credit Offer

Complete digital banking offer

Customer acquisition with a complete banking account for individuals and businesses

Customer engagement via digital accounts, cash-in, deposits, cards, investments, etc..

Monetization through financial services and customer retention

CREDIT

Expansion of Customer lifetime value

Monetization through credit products

Business Overview

Significant opportunities to drive future growth

PagBank

Market Share

ACTIVE

MERCHANTS

ACTIVE BANKING CLIENTS

PIX # TRANSACTIONS

15.6%

10.2%

9.4%

6.3

million

17.3

million

6.0

billion

Includes self-employed individuals in the informal economy | 19.1M

MEI - Individual-like Merchants | 16.3M ME - Micro Businesses | 4.5M EPP - Small Businesses| 0.6M

40.5

million¹

170

million²

63.4

billion³

DEPOSITS

0.9%

R$ 33.9

billion

R$ 3,823

billion4

EXPANDED

CREDIT PORTFOLIO

PAYROLL

LOAN

0.8%

0.5%

R$ 46.0

billion

R$ 2.7

billion

R$ 5,822

billion5

R$ 569

billion6

1. Source: Estatuto Nacional da Microempresa e da Empresa de Pequeno Porte. Classification based on annual gross revenue: MEI – up to BRL 81k; ME – up to BRL 360k; EPP – BRL 360k to BRL 4.8M. Data as of December 2024. 2. BACEN – Financial System Client Registry. Considers

adults aged 15 and older who have a banking relationship, as of 2022. 3. BACEN. 4. BACEN. Considers all deposits from private financial and payment institutions, except saving deposits. 5. BACEN. Considers credit operations of private financial institutions, as of December 2024. 6. 8

BACEN. Considers payroll loans of private financial institutions, as of December 2024.

UNITS

Business Overview

Segmentation reviewed to better capture company strategic positioning

Our Purpose

To facilitate the financial lives of businesses and individuals

Recap on Our Strategic Goals

Win on MSMB with payments and banking offering

Expand payments beyond POS

Diversify Banking revenue streams beyond merchants

Cross-selll Credit Products across the customer base

Segmentation Rationale

Significant evolution of Client Mix LTM

SMB top range raised from R$ 1M (TPV/month) to R$ 3M

TPV(R$) >3M/month

TPV (R$)

15k <> 3M/month

Large retail

Merchants¹

Small and Medium-sized Businesses²

Individuals

Online³

Merchant-Like Individuals

New segmentation reflects commercial strategy and client profitability profile

Payments

Expanding into larger accretive clients

tapping into profitable retail opportunities

Banking

Unlocking cross-sell opportunities

and driving higher profitability.

TPV (R$) <15k/month

Micro-merchants²

Large Retail gathers Merchants with monthly TPV above R$ 3M

MSMB gathers Micro-merchants (monthly TPV up to R$15,000) and Small/Medium Businesses (monthly TPV from R$15,000 up to R$ 3M) | 3 Online segment (e-Commerce and Cross-Border) 10

Payments + Banking

Building a high-quality client base

Total Clients

+2%

33.2

31.4

32.0

Million

Highlights

Customer

Acquisition

Customer

Engagement

Monetization & Loyalty

Quality customer base expansion

Focus on activating higher value clients

Prioritizing profitability over volumes

Q1-24 Q4-24 Q1-25

Total Active Clients¹

Million

+2%

17.3

17.8 17.7

Active Banking Only Clients²

Million

+5%

11.3 11.4

Deepening customer engagement and monetization

Better UX services to boost activity and loyalty

Improve client lifetime value through broader product usage

Cross-Selling Banking products

Complete product offering (investments, insurance, credit)

10.9

Increase wallet share and customer retention

Payment excellence

Improved SLAs to elevate UX

Robust and reliable Online and PIX infrastructure

Q1-24 Q4-24 Q1-25 Q1-24 Q4-24 Q1-25

Active Clients: refer to Active Clients with at least one transaction in the last twelve months in the payments or banking services, and/or Active Clients with a balance in their digital account on the last day of the last month of the periods indicated.

Active Payments Clients: Considers “Payments Only” clients and “Banking + Payments” clients

Payments

Profitable growth with margin-focused repricing

Total TPV

TPV per Active Merchant

Highlights

83%

84%

93%

16%

17%

R$ Billion

112

Q1-24

PIX

+6% Y/Y

Cards TPV

+16%

146

Q4-24

129

Q1-25

R$ Thousand

+20%

22.9

20.6

17.2

Q1-24 Q4-24 Q1-25

TPV Growth

Focus on profitability as a result of repricing initiatives to mitigate financial cost increase, and considered the seasonality of the quarter

PIX

Increasing volumes over debit remain, with higher margins

MSMB

Core segment expansion is the main focus for 2025

R$ Billion

+11%

105

Same base MSMB (< R$ 1M/month)

+13% YoY

MSMB¹ TPV(

Large Retail² & Online³ TPV

PAGS International

Focus on digital goods, leveraging the Company’s

presence in more than 17 countries, mainly in Latam.

Churn

Repricing initiatives had limited impact on churn levels.

R$ Billion

ex-Online

~8% YoY

+30%

Q1-24 Q4-24 Q1-25 Q1-24 Q4-24 Q1-25

MSMB gathers Micro-merchants (monthly TPV up to R$15,000) and Small/Medium Businesses (monthly TPV from R$15,000 up to R$ 3M)

Large Retail gathers Merchants with monthly TPV above R$ 3M 3 Online segment (e-Commerce and Cross-Border), which were previously grouped under LMEC 12

Banking

Achieving customer principality and improving banking revenue contribution

Cash-in¹

R$ Billion

+26%

Q1-24 Q4-24 Q1-25

Engagement Metrics

QoQ

Cash-in per Active Banking Client

+23%

5.4

3.9

4.8

R$ Thousand

Q1-24 Q4-24 Q1-25

Highlights

Cash-In

Robust growth YoY as a result of banking offer evolution during this period and higher principality

App Access and Bill Payment/PIX Transactions Higher usage of banking app and payment features, demonstrating evolution in client’s engagement and transactionality

Investments and Insurance

Increased engagement with higher penetration of investment and insurance products distributed on-platform

11%

9% % of Active Clients² % of Active Clients²

+3 pp

23%

+1 pp

10%

11%

20%

Q4-24 Q1-25

Average Monthly Accesses

Q4-24 Q1-25

# of Bill Payments and PIX transactions per client/month

Q4-24 Q1-25

Investments Penetration

Q4-24 Q1-25

Insurance

Penetration

1 Cash-in: Not related to acquiring TPV. Considers PIX P2P and wire transfers inflows into PagBank accounts from other financial institutions; 2 Active Clients: at least1 transaction in the last 12 months, . 13

Funding

Deposits + 11% YoY, with sustained cost efficiency, despite seasonality

Total Funding

R$ Billion

APY2 on Total Deposits

% of CDI

R$ million 1Q25 1Q24 YoY % 4Q24 QoQ %

Checking Accounts 10.3 10.9 -5% 12.0 -14%

Certificate of Deposits 16.3 15.1 8% 17.0 -4%

Interbank Deposits 7.3 4.6 58% 7.1 3%

97% 90% 90%

Total Deposits 33.9 30.6 11% 36.1 -6%

69%

47%

49%

Other Fundings¹ 6.5 1.3 >100% 6.7 -2%

Total Funding 40.4 31.9 27% 42.8 -6%

Q1-24 Q4-24 Q1-25

Checking Accounts APY Total Deposits APY

Total Deposits per Platform

% of Total Deposits

Loan to Funding³

26%

19%

15%

85%

81%

74%

108%

113%

114%

Q1-24

Q4-24

On-Platform Off-Platform

Q1-25

Q1-24 Q4-24 Q1-25

1. Other Fundings: Include Borrowings, Certificate of Deposits with Related Parties and Senior FIDC quotas. Does not include Accounts Receivable Securitization.

2 APY: Annual Percentage Yield. | 3. Loan to Funding: Expanded Loan (including Prepayment to Merchants) / Total Funding. 14

Credit

Total Credit Portfolio +34% YoY, NPL ~2x lower than industry average

Credit Portfolio

R$ Billion

Credit Portfolio Evolution

13%

23%

21%

26%

61%

73%

74%

+34%

3.4

3.7

% Credit Portfolio

# million 1Q25

1Q24

YoY %

4Q24

QoQ %

Payroll Loans 2.7

1.7

63%

2.7

Credit Card 0.8

0.7

0.8

-1%

Working Capital 0.2

0.3

-52%

0.2

16%

Total Credit Portfolio 3.7

2.7

34%

3.4

Merchants' Prepayment¹ 42.3

31.5

35%

44.7

-5%

Expanded Portfolio 46.0

34.2

34%

48.2

-5%

2.7

Q1-24

Q4-24

Q1-25

Payroll Loans & Others Credit Cards Working Capital Loans

Total Credit Portfolio Mix

(%)

NPL90²

% over Credit Portfolio up to 360 days

27%

15%

85%

73%

4.5

4.1

2.3

4.4

2.3

Q1-24

Q4-24

Q1-25

Q1-24

Q4-24

Q1-25

Secured Products

Unsecured Products

Total Portfolio NPL90

Brazilian Market Average ²

1. Prepayment to Merchants is net of Accounts Receivable Securitization | 2. NPL90: based on Credit Portfolio up to 360 days.

3. Source: Brazilian Central Bank. NPL90 for non-earmarked resources operations at 4.4% on March 2025.

FINANCIAL

Revenue and Gross Profit Margin

Total revenue +13% YoY, with solid banking performance (+60% YoY)

Total Revenue and Income

R$ Million

41% 38% 39%

3,172

2,977

2,556

1,750

1,874

1,943

+13%

5,115

4,850

4,306

Payments: Total Revenue and Income

R$ Million

+8%

4,602

3,942

39%

4,268

35%

34%

Q1-24 Q4-24 Q1-25

Gross Profit Margin

Banking: Total Revenue and Income

R$ Million

+60%

513

582

365

60%

69%

70%

1Q24

4Q24

1Q25

Q1-24 Q4-24 Q1-25

Gross Profit Total Costs Gross Profit Margin

Gross Profit Margin

Gross Profit: Total Revenue and Income (-) Transaction Costs (-) Financial Costs (-) Total Losses;

Gross Profit Margin: Gross Profit / Total Revenue and Income. 17

Gross Profit Margin

Payments repricing and increased Banking contribution driving profitability

Gross Profit Evolution QoQ

R$ Million

213

(189)

(3)

82%

78%

22%

18%

-4%

Payments: Gross Profit

R$ Million

(184)

1,943

mainly due to quarter’s seasonality

buyback impact on financial costs

Banking

1,874

1,530

1,589

1,465

Q1-24 Q4-24 Q1-25

Banking: Gross Profit

Payments

R$ Million

+85%

354

409

220

13% of total Gross Profit

18% of total Gross Profit

22% of total

Gross Profit

Gross Profit 4Q24

Banking Performance

Repricing and Mix¹

Payments Chargeback

Payments Volume¹

Interest Rate

Gross Profit 1Q25

Q1-24 Q4-24 Q1-25

1 – Net of repricing on Payments, which started in the 4Q24. 18

P&L

Operating leverage +10bps YoY; Total losses -19% YoY

Total Expenses

R$ Million

Highlights

Q1-25

Q1-24

YoY %

Q4-24

QoQ%

11.

Total Payment Volume

129,230

111,553

16%

146,004

-11%

Total Revenue and Income

4,850

4,306

13%

5,115

-5%

Transaction Costs

(1,715)

(1,627)

(1,960)

-12%

% TPV

1.3%

1.5%

1.3%

Financial Costs

(1,178)

(827)

42%

(1,092)

8% 22.

% TPV

0.9%

0.7%

Total Losses

(83)

(103)

-19%

(121)

-31%

% TPV

0.1%

Gross Profit

1,873

1,750

1,943

-4%

% Total Revenue and Income

38.6%

40.6%

38.0%

33.

Operational Expenses (Non-GAAP)

(794)

(708)

12%

(822)

-3%

% Total Revenue and Income

16.4%

16.5%

16.1%

D&A + POS Write-Off (Non-GAAP)

(456)

(409)

11%

(436)

% Total Revenue and Income

9.4%

9.5%

8.5%

44.

EBT (Non-GAAP)

624

632

-1%

685

-9%

% EBT Margin

12.9%

14.7%

13.4%

Income Tax (Non-GAAP)

(70)

(110)

-37%

(54)

29%

Effective Tax Rate

11.2%

17.4%

7.9%

Net Income (Non-GAAP)

554

522

631

-12%

55.

% Net Margin

11.4%

12.1%

12.3%

Financial Costs, impacted by Brazilian interest rate hike, mitigated by

the ongoing repricing in Payments

Total Losses, reducing 31% than last quarter and 19% than Q1-24 due to improvement on fraud prevention tools and credit/collection processes

Operating Expenses stable trajectory in comparison to 4Q24, demonstrating strong cost discipline.

D&A + POS Write-Off YoY growth captures the increase in payment volumes and investments deployed in the past quarters

Tax Rate efficiency through active tax planning

Please see the Appendix for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure. 19

Profitability Analysis

EPS +14% YoY with ROAE improving 140bps in the same period

Net Income (GAAP, Non-GAAP)

R$ Million

EPS diluted (GAAP)

Equity and ROAE¹

R$ Billion

LTM ROAE

13.6%

15.0%

+6%

631

522

554

483

525

599

+14%

1.91

1.72

1.50

14.3%

16.5%

14.2%

+8%

14.7

14.9

13.8

Q1-24 Q4-24 Q1-25

Net Income non-GAAP Net Income GAAP

Q1-24 Q4-24 Q1-25

Q1-24

Q4-24

ROAE

Q1-25

ROAE (Return on Average Equity): annualized quarterly Net income / average shareholder equity. 20

Capital Structure

Capital strength and value creation: buybacks, dividends and share cancellations

Highlights

11.

75% of the current program (USD 200M) executed since launch in August 2024. Over 40.2M shares bought since IPO (R$ 2.2B)

Buyback Execution

Total Buybacks

(2018 to 2025 YTD)

R$ 2.2B

R$ Million

9,696 15,244 8,215

22.

Immediate cancellation of 23.930.715 shares.

33.

Cash Dividend of USD 0,14 per common share to be paid on June 6, 2025 (record date is set for May 23, 2025)

784

399

353

2023 2024 2025 YTD

Shares Repurchased (thousands) Amount Repurchased (R$ Million)

44.

PAGS expects to pay going forward, on an annual basis, a cash

dividend corresponding to ~10% of it’s net income¹.

AAA.br2

brAAA2

Basel Index²

Our commitment is to optimize the capital allocation focused on shareholder value generation

33%

28%

27%

-577 bps

2023

2024

1Q25

Subject, among other factors, to market and company performance and financial conditions. Any future declaration of dividends and the amount therefor will be at the discretion of PAGS’s Board of Directors

as of Mar 2025

Outlook

Q1 Results on track to deliver 2025 Guidance

Gross Profit

% y/y

EPS (GAAP, diluted)

% y/y

Capital Expenditures

R$ Billion

Q1 2025

+7.1%

+15.0%

FY25 Guidance

7% 11%

Dec-24 same basis¹

11% 15%

R$ 635M

2.2B

2.4B

YTD performance Guidance range

1 – GAAP diluted EPS on a December-2024 same basis considers the same number of common shares for diluted earnings as year-end 2024 (303.824.913 shares)

Please see the Appendix for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure. 22

CLOSING

Closing Remarks

1Q 2025 Takeaways

Continuing to deliver sustainable growth and profitability despite ongoing market challenges

Consistent expansion of our Banking business, accounting for more than 22% of total Gross Profit (+86% YoY)

Company on track to deliver 2025 Guidance

2025 Outlook

Mitigate macro uncertainty through (i) repricing, (ii) operating leverage, and (iii) financial cost efficiency; focused on profitability

Improve capital structure and increase shareholder value through an EPS increase

Long-term focus:

Become the primary interface for individuals, and small and medium-sized businesses, supported by strong growth potential and a proven track record of creating shareholder value

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Webcast: click here to register

PagSeguro Digital Ltd. (NYSE: PAGS)

Earnings Presentation

May 13, 2025 | Webcast: click here to register

Appendix

Net Income Reconciliation and EPS

R$ million

Q1-24

Q2-24

Q3-24

Q4-24

Q1-25

Net Income | GAAP

483

504

531

599

525

Non-GAAP Items

Long-term Incentive Plan

Amortization of Fair Value Adjustment

Amortization of Capitalized Expenses of Platforms Development

Income Tax and Social Contribution

(20)

(21)

(17)

(15)

Net Income | Non-GAAP

522

542

572

631

554

Q1-24

Q2-24

Q3-24

Q4-24

Q1-25

Weighted Average Number of Outstanding Common Shares (million)

Basic

316.9

319.1

317.6

310.8

303.6

Diluted

321.2

323.1

320.7

313.9

305.6

EPS | GAAP

Basic

1.52

1.58

1.67

1.93

1.73

Diluted

1.50

1.56

1.66

1.91

1.72

EPS | Non-GAAP

Basic

1.65

1.70

1.80

2.03

1.82

Diluted

1.63

1.68

1.78

2.01

1.81

Investor Relations

Website: https://investors.pagbank.com/

E-mail: [email protected]

Address: Av. Brigadeiro Faria Lima, 1384, 10th floor | São Paulo

Zip Code (CEP): 01451-001

Media Press

Website: https://xcom.net.br/

E-mail: [email protected]

Disclaimer

PagSeguro Digital Ltd. published this content on May 13, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 13, 2025 at 21:45 UTC.