Pagseguro Digital Ltd. · NYSE:PAGS

Pagseguro Digital — Q1 2023 Earnings Presentation

24 slides from Pagseguro Digital's earnings presentation, May 25, 2023

  1. Slide 1: Webcast Presentation 1Q23

    Webcast Presentation 1Q23 May 25, 2023

  2. Slide 2: Forward-looking statements; Non-GAAP financial measures

    Forward-looking statements; Non-GAAP financial measures Forward-looking statements This presentation, prepared by PagSeguro Digital Ltd (“we” or the “Company”), is solely for informational purposes. The information in this presentation does not constitute or form part of, and should not be construed

  3. Slide 3: Initial remarks

    Initial remarks One single brand: PagBank Drivers for profitability in 2023 ▪ Convergence from PagBank PagSeguro to PagBank ▪ Lower losses: lower chargebacks and ECLs (provisions) ▪ PagBank better represents our offering beyond Payments ▪ OpEx discipline: Headcount resizing and Marketing/Infra optim

  4. Slide 4: 1Q23 Highlights

    1Q23 Highlights Growth with profitability increasing client engagement ▪ 28.7M PagBank Clients; TFV1: R$204B, +34% y/y ▪ Adj. EBITDA: R$ 787M, +18% y/y ▪ Net Income (Non-GAAP): R$ 392M; EPS: R$ 1.13, +8% y/y Disciplined capital allocation driving cash earnings momentum ▪ Cash Earnings2: R$379M vs. (

  5. Slide 5: Convergence from PagBank PagSeguro to PagBank

    Convergence from PagBank PagSeguro to PagBank BEST OPTION BEST OPTION FOR SELLING FOR SAVING One single brand for merchants and consumers THE COMPLETE BANK Simplify communication and efficiency gains Increase client awareness about our banking services 5

  6. Slide 6: 28.7M PagBank clients with R$204B in Total Finance Volume

    28.7M PagBank clients with R$204B in Total Finance Volume PagBank Clients Total Finance Volume (TPV + TBV) PagBank Cash-in1 # Million R$ Billion R$ Billion 28.7 23.2 ~9% PIX +51.8B market share² 14.8 +34% y/y 204.1 +20.4B +84%y/y 1Q21 1Q22 1Q23 152.2 44.6 88.1 Clients using as Primary Bank¹ PagBank

  7. Slide 7: Deposits: +R$7.4B y/y growth with lower Cost of Funding

    Deposits: +R$7.4B y/y growth with lower Cost of Funding (APY: 94% CDI) Total Deposits Total Deposits Breakdown Annual Percentage Yield (APY) R$ Billion % on Total Deposits | % of CDI (Brz Interbank Rate) +7.4B Lower dependence on CDs distribution +66% y/y off platform 18.6 127% 118% 117% 116% 109% 9

  8. Slide 8: Credit Products: 100% secured products underwriting in 1Q23

    Credit Products: 100% secured products underwriting in 1Q23 Credit Portfolio Secured Credit Products R$ Billion % Credit Portfolio +0.6B 11% +32% y/y 44% 2.7 89% 56% 35% 2.1 1Q22 1Q23 9% 2% Secured Unsecured 9% NPL 90 39% % Credit Portfolio 31% 22.4% 17.9% 49% 25% 1.0% 1.1% 1Q22 1Q23 1Q22 1Q23 Payro

  9. Slide 9: Payments: Share gains in key segments (MSMB), growing +16% y/y

    Payments: Share gains in key segments (MSMB), growing +16% y/y Total Payment Volume MSMB TPV Consolidated | R$ Billion Excluding Large Accounts and Sub-acquirers | 100 basis +8.0B +17% +10% y/y excluding 88.1 nano-merchants 80.1 +16% 1Q22 1Q23 Active Merchants # million +3% excluding nano-merchants

  10. Slide 10: 1Qs All-time high: TPV, Gross Profit, Net Income and Cash Earnings

    1Qs All-time high: TPV, Gross Profit, Net Income and Cash Earnings 1Q23 Financial Statement 1Q23 Highlights -5% in Financial Expenses -34% in Total Losses R$69M in Adj. EBITDA for Financial Services R$36M in Adj. EBITDA for Financial Services (old methodology) R$392M in Net Income (Non-GAAP) R$370M

  11. Slide 11: Payments: Total Revenue +10% y/y

    Payments: Total Revenue +10% y/y Total Revenue and Income Gross Profit Gross Profit Bridge R$ Billion R$ Billion R$ Billion +10% +2% 3.7 3.7 1.4 3.6 3.4 1.3 1.2 1.2 1.2 1Q22 1.2 3.1 Revenues +10% y/y 0.3 Trans. Costs (0.1) Financial Exp. +30% y/y (0.2) Chargebacks (0.01) 1Q23 1.2 1Q22 2Q22 3Q22 4Q22

  12. Slide 12: Financial Services: Gross Profit +274% y/y

    Financial Services: Gross Profit +274% y/y Total Revenue and Income Gross Profit Gross Profit Bridge R$ Million R$ Million R$ Million Payroll Loan (84 months duration) Improving profitability has been replacing Working backed by, Provisions Capital (12 months duration) and Cost discipline -1% +274%

  13. Slide 13: Costs and Expenses: leveraging EBITDA margin

    Costs and Expenses (ex-D&A & POS W/O): leveraging EBITDA margin Financial Expenses Total Losses Operating Expenses Consolidated | R$ Million Consolidated | R$ Million Non-GAAP | R$ Million 7.3% 16.4% 21.6% 21.7% 4.8% 15.7% 15.7% 18.1% 3.4% +31% +5% -50% 855 813 250 560 621 587 621 192 126 1Q22 4Q22

  14. Slide 14: 1Qs All-time high: Net Income (GAAP and Non-GAAP)

    1Qs All-time high: Net Income (GAAP and Non-GAAP) Net Income Bridge R$ Million +6% +6% 19 55 (131) 50 148 (120) 371 392 370 350 21 (22) 1Q22 Non-GAAP 1Q22 Chargebacks TPV growth Costs and Other Higher D&A + POS 1Q23 Non-GAAP 1Q23 GAAP Effects Non-GAAP + ECL OpEx leverage Efficiencies interest rate W

  15. Slide 15: 1Q23 Cash Earnings reaching 10.1% of Revenue

    1Q23 Cash Earnings of R$378M y/y, reaching 10.1% of Revenue Cash Earnings: Adj. EBITDA (-) CapEx Capital Expenditures R$ Million R$ Million 10.1% 19.9% (0.5%) 10.9% 681 379 408 (17) 1Q22 1Q23 1Q22 1Q23 CapEx / Revenue¹ Capital Expenditures Cash Earnings per Revenue Cash Earnings Long-term tailwinds

  16. Slide 16: Solid financials with Net Cash Balance of R$10B

    Solid financials with Net Cash Balance of R$10B 1Q23 Balance Sheet Net Cash Balance2 R$ Billion R$ Billion R$ 10.0 Net Cash Balance¹ B +1.7B ▪ Improving Capital Structure 10.0 8.3 72% funded by 3rd party2 43.2 43.2 ▪ Lower cost of funding through deposits leveraging banking license and platform 27.5

  17. Slide 17: Interchange Caps: Neutral impact in Apr-23 Net Income

    Interchange Caps: Neutral impact in Apr-23 Net Income April results confirmed neutral impact of interchange cap on prepaid/debit cards in Net Income ▪ PAGS has complementary payments businesses (acquiring and cards issuance), creating a natural hedge ▪ PAGS has been focusing on debit/credit cards is

  18. Slide 18: Management Priorities

    Management Priorities ▪ Grow with profitability, balancing optimization and expansion cycles ▪ Increase digital bank penetration, customers engagement and revenue diversification ▪ Develop an integrated, unique and superior value proposition beyond payments under a single brand ▪ Foster security in

  19. Slide 19: Appendix 1Q23

    ©) PagBank (2) Appendix 1Q23

  20. Slide 20: Managerial Float change from Payments to Financial Services

    Managerial Float change from Payments to Financial Services ▪ Before 1Q23, Float from Accounts Balance was partially booked in Payments, partially offsetting Financial Exp. ▪ From 1Q23 onwards, 100% of Float will be booked in Financial Services, similar to other financial institutions ▪ For Payments

  21. Slide 21: Glossary

    Glossary Adj. EBITDA: GAAP Net Income + Income Tax and Social Contribution – Other Financial Income + POS Write-off + Depreciation and Amortization + FX Expenses + M&A Expenses + LTIP Expenses Please see the Supplemental Information for a reconciliation of this adjusted financial measure PagBank Cas

  22. Slide 22: EBITDA | GAAP and Non-GAAP financial measures

    EBITDA | GAAP and Non-GAAP financial measures R$ Million 1Q22 2Q22 3Q22 4Q22 1Q23 Net Income | GAAP 350 367 380 408 370 (+) Income Tax and Social Contribution 67 76 45 67 66 2 (+) LTIP Expenses 28 51 43 (42) 19 (+) POS Write-off 0 93 41 66 62 (+) Depreciation and Amortization 249 281 294 307 317 (-)

  23. Slide 23: Net Income | GAAP and Non-GAAP financial measures

    Net Income | GAAP and Non-GAAP financial measures R$ Million 1Q22 2Q22 3Q22 4Q22 1Q23 Net Income | GAAP 350 367 380 408 370 2 (+) LTIP Expenses 28 51 43 (42) 19 3 (+) M&A Expenses 5 5 5 5 5 (+) Income Tax and Social Contribution (11) (19) (16) (2) (11) (+) PagPhone realizable value reversal1 0 0 (35

  24. Slide 24: Investor Relations Media Press

    Investor Relations Media Press https://investors.pagseguro.com/ https://xcom.net.br/ +55 (11) 3914-9524 +55 (11) 992-350-009 ir@pagseguro.com pagbankpagseguro@xcom.net.br Av. Brigadeiro Faria Lima, 1384, 10º andar São Paulo | SP CEP: 01451-001

PagSeguro Digital Ltd. Class A Common Shares — Q1 2023 Earnings Presentation on 6ix