PAGSEGURO DIGITAL LTD. Earnings Release
1Q23
May 25, 2023
PAGS reports First Quarter 2023 Results
Net Income | Non-GAAP of R$ 392 million, +6% y/y
Net Income | GAAP of R$ 370 million, +6% y/y (EPS: R$ 1.13)
São Paulo, May 25, 2023 - PagSeguro Digital Ltd. ("PAGS" or "we") announced today its first quarter results for the period ended March 31, 2023. The consolidated financial statements are presented in Reais (R$) and prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). For further information about certain of the metrics and indicators in this release, please consult the Glossary available at the end of this release.
1Q23 Highlights
Total Finance Volume (TFV) | Total Payment Volume (TPV) | Total Banking Volume (TBV) | ||||
R$ 204 Billion | R$ 88.1 Billion | R$ 116 Billion | ||||
Total Revenue and Income | Payments | Gross Profit | Financial Services | Gross Profit | ||||||
R$ 3.75 Billion | R$ 1.2 Billion | R$ 179 Million | ||||||
Net Income | Non-GAAP | Payments | Adj. EBITDA | Financial Services | Adj. EBITDA | ||||||||||||||||||
R$ 392 Million | R$ 718 Million | R$ 69 Million | ||||||||||||||||||
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To our shareholders
We are happy to announce our results for the first quarter of 2023 and share the recent developments and milestones.
In March 2023, we reached 28.7 million clients amounting R$ 204 billion in transactions, composed R$ 116 billion driven by Total Banking Volume (formerly known as PagBank TPV) and R$ 88 billion in Total Payment Volume (formerly known as PagSeguro TPV). The changes implemented in the names of our key performance indicators derived from our marketing strategy to converge our brands into one: from now on, we are PagBank, the complete bank, simplifying our communication under one single brand and increasing the awareness of our services beyond Payments.
In Payments, we have concluded an important milestone started in 2020 to diversify our volume and clients in Brazil. Currently, we have micro-merchants, SMBs and large accounts adopting our solutions, which expanded our addressable market for a variety of client profiles, while at the same time managing short-term risks related to increasing competition in longtail and the advance of PIX. This quarter, MSMB TPV grew +16% y/y, outpacing industry growth of +10.7% y/y, boosted by the increasing productivity in HUBs, while in large accounts we have begun to prioritize healthier margins rather than volume growth. Active Merchants, excluding nano-merchants,increased +3% y/y, driven primarily by micro-merchants and SMBs.
In Financial Services, Total Deposits accounted for R$ 18.6 billion, +66% y/y driven by the increasing share of accounts balance and CDs distributed on our platform (PagBank) rather than third-party investment platforms, reinforcing client engagement. Credit Portfolio was R$ 2.7 billion, with the ongoing shift towards secured products in our outstanding credit portfolio, which combined with the run-off of our working capital loans, has been driving down sharply our provisions for expected credit losses and leading our Financial Services division to the breakeven point in EBITDA for the first time, reaching
R$ 69 million.
As the company continues to improve disclosure and communication, we decided to change the managerial Float accounting to better reflect our businesses. From now on, 100% of Float will be booked in our Financial Services division, similar to other financial institutions. For our Payments division, financial expenses will increase, given float used to partially offset the growth in this line item, reducing gross profit and EBITDA. In our Financial Services division, revenues will increase, given the additional interest income, positively affecting gross profit and EBITDA. Looking at the consolidated results, there is no change in numbers.
Once again, this quarter presented record figures for most of our KPIs for a first quarter: TPV, revenues, gross profit, net income and cash earnings. Net income totaled R$ 392 million on a non-GAAP basis and R$ 370 million on a GAAP basis, driven by TPV growth and higher prepayment penetration on the top line side and disciplined capital allocation, material decrease in losses, optimizations in operating expenses and lower financial expenses vs. 4Q22. The increasing funding diversification with a lower cost led by deposits and retained earnings growth, contributed for the financial expenses reduction. Our equity position is 54% composed by retained earnings and our net cash balance reached R$ 10 billion, reinforcing the strength of our balance sheet, leaving us well-positioned for the next steps of our journey, consolidating our position as the most profitable fintech/merchant acquirer in Brazil.
For 2023, our investment strategy to balance growth with profitability continued to be based on the following pillars:
- Profitable growth in Payments with sustainable market share increase in key segments;
- Foster engagement in PagBank to diversify revenue streams and increase revenue per customer;
- Development of our payments and banking ecosystem to provide superior and unique value proposition;
- Ongoing improvement in models/processes to further decrease losses and promote operational efficiency; and
- Disciplined cost management and capital allocation to improve EPS and cash flow generation.
We remain extremely excited and confident about the next steps to further promote digital financial disruption in Brazil.
Alexandre Magnani, Chief Executive Officer
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Selected Capsule Income Statement Data* | First Quarter 2023
R$ Million | 1Q23 | 1Q22 | Var. y/y | 4Q22 | Var. q/q | ||
Total Revenues and Income1 | 3,750 | 3,427 | 9% | 3,962 | -5% | ||
(-) Other Financial Income | (65) | (42) | 55% | (43) | 49% | ||
(-) Transaction Costs | (1,389) | (1,303) | 7% | (1,478) | -6% | ||
Net Take Rate | 2,296 | 2,082 | 10% | 2,440 | -6% | ||
(-) Financial Expenses | (813) | (621) | 31% | (855) | -5% | ||
(-) Total Losses | CBK (+) ECL2 | (126) | (250) | -49% | (192) | -34% | ||
(+) FX Expenses | 17 | 13 | 32% | 15 | 18% | ||
Gross Profit | 1,374 | 1,225 | 12% | 1,409 | -2% | ||
(-) Operating Expenses | (587) | (560) | 5% | (621) | -6% | ||
Adjusted EBITDA3 | 787 | 665 | 18% | 788 | 0% | ||
Payments | 718 | 741 | -3% | 776 | -7% | ||
Financial Services | 69 | (76) | n.a. | 12 | 493% | ||
(-) POS Write-off | (62) | 0 | n.a. | (66) | -5% | ||
(-) D&A | (303) | (244) | 24% | (270) | 12% | ||
(+/-) Other Income (Expense), Net | 47 | 28 | 66% | 29 | 65% | ||
EBT | 470 | 449 | 5% | 480 | -2% | ||
(-) Income Tax and Social Contribution | (78) | (78) | 0% | (69) | 12% | ||
Net Income | Non-GAAP | 392 | 371 | 6% | 411 | -5% | ||
(-)Non-GAAP Effects | (22) | (21) | 4% | (4) | 505% | ||
Net Income | GAAP | 370 | 350 | 6% | 408 | -9% | ||
Adj. EBITDA (-) CapEx | 379 | (17) | n.a. | 410 | -8% | ||
EPS | R$ 1.13 | R$ 1.05 | 8% | R$ 1.24 | -9% | ||
- This selected capsule income statement data is presented only to facilitate a general overview of highlights of our financial performance for the periods indicated for informational purposes. For our complete Income Statement information, see our consolidated financial statements prepared in accordance with IFRS as issued by the IASB, in our Form 6-K related to the Financial Statements, published on the date hereof.
1. Including Other Financial Income;
2. Total Losses: Chargebacks and Expected Credit Losses;
3. Adjusted EBITDA: EBITDA net of Financial Expenses.
Key Performance Indicators
1Q23 | 1Q22 | Var. y/y | 4Q22 | Var. q/q | |||
Average Revenue per Active Client (ARPAC) | |||||||
Payments | R$ | 1,978 | 1,407 | 41% | 1,893 | 4% | ||
Financial Services | R$ | 91 | 91 | 0% | 95 | -4% | ||
Efficiency Ratio | 15.2% | 19.0% | (3.7) p.p. | 16.7% | (1.5) p.p. | ||
Credit Portfolio | R$ Billion | 2.7 | 2.1 | 32% | 2.7 | 0% | ||
Total Deposits | R$ Billion | 18.6 | 11.2 | 66% | 20.7 | -10% | ||
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Selected Capsule of Balance Sheet Data*
R$ Million | 1Q23 | 1Q22 | Var. y/y | 4Q22 | Var. q/q | ||
Total Assets | 43,192 | 33,808 | 28% | 45,329 | -5% | ||
Current Assets | 37,508 | 28,872 | 30% | 39,767 | -6% | ||
Cash & Financial Investments¹ | 2,880 | 2,615 | 10% | 2,932 | -2% | ||
Account Receivables | 34,002 | 25,529 | 33% | 36,249 | -6% | ||
Others2 | 626 | 728 | -14% | 586 | 7% | ||
Non-Current Assets | 5,684 | 4,936 | 15% | 5,562 | 2% | ||
Account Receivables | 803 | 390 | 106% | 746 | 8% | ||
PP&E & Intangible Assets3 | 4,706 | 4,365 | 8% | 4,652 | 1% | ||
Others4 | 175 | 181 | -3% | 164 | 7% | ||
Liabilities and Equity | 43,192 | 33,808 | 28% | 45,329 | -5% | ||
Current Liabilities | 25,703 | 20,926 | 23% | 29,740 | -14% | ||
Payables to Merchants5 | 8,973 | 7,712 | 16% | 9,321 | -4% | ||
Accounts Balance | 7,674 | 5,468 | 40% | 8,667 | -11% | ||
CDs and Others6 | 7,522 | 5,146 | 46% | 10,101 | -26% | ||
Borrowings | 196 | 1,110 | -82% | 0 | n.a. | ||
Others7 | 1,338 | 1,490 | -10% | 1,652 | -19% | ||
Non-Current Liabilities | 5,281 | 2,090 | 153% | 3,747 | 41% | ||
CDs + Others8 | 3,157 | 569 | 455% | 1,895 | 67% | ||
Others9 | 2,125 | 1,521 | 40% | 1,852 | 15% | ||
Equity10 | 12,207 | 10,791 | 13% | 11,842 | 3% | ||
- This selected capsule balance sheet data is presented only to facilitate a general overview of the highlights of our financial performance for the periods indicated for informational purposes. For our complete Balance Sheet information, see our consolidated financial statements prepared in accordance with IFRS as issued by the IASB, in our Form 6-K related to the Financial Statements, published on the date hereof.
Balance Sheet Reconciliation
1. Cash & Cash Investments: Cash and Cash Equivalents + Financial Investments;
2. Others: Inventories + Taxes Recoverable + Other Receivables;
3. PP&E & Intangible Assets: Property and Equipment + Intangible Assets;
4.Others: Judicial Deposits + Prepaid Expenses + Deferred Income Tax and Social Contribution + Investments;
5. Payables to Third Parties: Payable to Third Parties - Checking Accounts;
6. CDs and Others: Current Deposits;
7. Others: Trade Payables + Payables to Related Parties + Derivative Financial Instruments + Salaries and Social Charges + Taxes and Contributions + Provision for Contingencies + Deferred Revenue + Other Liabilities
8. CDs + Others: Non-current Deposits;
9. Others: Deferred Income Tax and Social Contribution + Provision for Contingencies + Deferred Revenue + Other Liabilities;
10. Equity: Capital Reserve + Other Comprehensive Income + Equity Valuation Adjustments + Profit Retention Reserve + Treasury Shares.
Capital Markets¹
Key Operating Indicators in USD | 1Q23 | 1Q22 | Var. y/y | 4Q22 | Var. q/q | ||
Market Cap | Billion | 2.8 | 6.6 | -57% | 2.9 | -2% | ||
Stock Price | 8.57 | 20.05 | -57% | 8.74 | -2% | ||
Book Value per Share | 7.43 | 6.94 | 7% | 6.92 | 7% | ||
Key Operating Indicators in BRL | 1Q23 | 1Q22 | Var. y/y | 4Q22 | Var. q/q | ||
Market Cap | Billion | 14.3 | 31.3 | -54% | 15.2 | -6% | ||
Stock Price | 43.39 | 95.07 | -54% | 46.15 | -6% | ||
Book Value per Share | 37.63 | 32.91 | 14% | 36.52 | 3% | ||
1. As of March 31, 2023. |
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Disclaimer
PagSeguro Digital Ltd. published this content on 25 May 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 June 2023 10:12:19 UTC.
