PagSeguro Digital : 1Q21 Earnings Release

PagSeguro First Quarter Results

PagSeguro Reports First Quarter Results

1Q21 Consolidated TPV 1 up 101.6% compared to 1Q20;

1Q21 Total Revenue and Income up 30.2% compared to 1Q20.

São Paulo, June 2, 2021 - PagSeguro Digital Ltd. ("PagSeguro" or "we") announced today its first quarter results for the period ended March 31, 2021. 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"). On June 2, 2021, the Board of Directors created the position of Vice- Chairman and appointed exiting member Eduardo Alcaro to that role.

First Quarter 2021 Financial & Operational Highlights:

• Consolidated TPV1 of R$81.4 billion in 1Q21, growing 101.6%, compared to R$40.4 billion in 1Q20:
• • Acquiring TPV2 of R$50.0 billion in 1Q21, up 58.0% compared to R$31.7 billion in 1Q20;
  • PagBank TPV3 of R$31.4 billion in 1Q21, up 259.3% compared to R$8.7 billion in 1Q20;
• 7.3 million active merchants, an increase of 0.3 million in 1Q21 and 1.8 million in the last twelve months;
• 9.1 million active PagBank clients4, growth of 1.3 million in 1Q21 and 5.4 million in the last twelve months;
• R$573.1 million in Adjusted EBITDA6, up 11.8% compared to 1Q20;
• Total Revenue and Income of R$2,067.2 million, up 30.2% in comparison to 1Q20;
• R$327.1 million in non-GAAP Net Income, down 10.9% in comparison to 1Q20; and
• R$271.3 million in Net Income, down 24.0% in comparison to 1Q20.

At and for the Three Months

Ended March 31,

Main Operational and Financial Indicators (R$ millions,
except otherwise indicated)		2021		2020
Consolidated TPV1	81,441.9	40,398.8

Var.%

101.6%

Active Merchants (last 12 months) - (millions) Active PagBank clients4 (last 12 months) - (millions)

Total Net Revenue

Net Income

Net Margin (%)

Basic earnings per common share (EPS)5 - (R$) Diluted earnings per common share (EPS)5 - (R$)

7.3	5.5	33.5%
9.1		3.7		143.5%
2,067.2	1,587.3	30.2%
271.3		356.9		(24.0)%
13.1%		22.5%		(9.4) pp
0.8221	1.0841
0.8213		1.0806

Non-GAAP Main Financial Indicators (R$ millions, except otherwise indicated)

Non-GAAP Total Net Revenue

Non-GAAP Net Income

Adjusted EBITDA6

Non-GAAP Net Margin (%)

Non-GAAP Basic earnings per common share (EPS)5 - (R$) Non-GAAP Diluted earnings per common share (EPS)5 - (R$)

At and for the Three Months

Ended March 31,

20212020

2,067.2 1,587.3

327.1367.0

573.1512.8

15.8%23.2%

0.99121.1148

0.99031.1112

Var.%

30.2%

(10.9)%

11.8%

(7.4) pp

For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, see page 23 of this earnings release. 1.Consolidated TPV ("Total payment volume"): Acquiring TPV + PagBank TPV;

1. Acquiring TPV: means PagSeguro Brazil's TPV, being the value of payments successfully processed through our end-to-end digital banking ecosystem, net of payment reversals, not including PagBank TPV;
2. PagBank TPV: Includes prepaid card top-ups, cash cards spending, credit cards, mobile top-ups, wire transfers to different people, cash-in through boletos, bill payments, tax collections, P2P transactions, QR Code transactions, loans, Super App and GMV;
3. PagBank active clients means active merchants using one additional digital account feature/service beyond acquiring and consumers with a balance in their digital account on the last day of the month;
4. Weighted average number of common shares of 330.0 million on March 31, 2021 and 329.0 million on March 31, 2020;
5. Adjusted EBITDA = Net income + Income tax and social contribution + Depreciation and amortization - Other Financial income + LTIP expenses.

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I - Statement of Income

Non-GAAP disclosure

This press release includes certain non-GAAP measures. We present non-GAAP measures when we believe that the additional information is useful and meaningful to investors. These non-GAAP measures are provided to enhance investors' overall understanding of our current financial performance and its prospects for the future. Specifically, we believe the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses, as the case may be, that may not be indicative of our core operating results and business outlook.

These measures may be different from non-GAAP financial measures used by other companies. The presentation of this non-GAAP financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered separately from, or as a substitute for, our financial information prepared and presented in accordance with IFRS as issued by the IASB. Non-GAAP measures have limitations in that they do not reflect all the amounts associated with our results of operations as determined in accordance with IFRS. These measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures.

Non-GAAP results consist of our GAAP results as adjusted to exclude the following items:

LTIP expenses: This consists of expenses for equity awards under our two long-term incentive plans (LTIP and LTIP-Goals). We exclude LTIP expenses from our non-GAAP measures primarily because they are non-cash expenses and the related employer payroll taxes depend on our stock price and the timing and size of exercises and vesting of equity awards, over which management has limited to no control, and as such management does not believe these expenses correlate to the operation of our business.

M&A expenses: This consists of expenses for mergers & acquisitions ("M&A") transactions, including, among others, expenses for external consulting, accounting and legal services in connection with due diligence and negotiating M&A documentation for our acquisitions, as well as amortization of the fair value of the acquired assets. We exclude M&A expenses from our non- GAAP measures primarily because such expenses are non-recurring and do not correlate to the operation of our business.

Income tax and social contribution on non-GAAPadjustment: This represents the income tax effect related to the non-GAAP adjustments mentioned above.

For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures, see the tables elsewhere in this press release under the following headings: "Reconciliation of Total Expenses to non-GAAP Total Expenses," "Reconciliation of Income Tax and Social Contribution to non-GAAP Income Tax and Social Contribution," "Reconciliation of Net Income to non-GAAP Net Income," "Reconciliation of Net Income to Adjusted EBITDA", "Reconciliation of Basic and diluted EPS to non-GAAP Basic and diluted EPS," and "Reconciliation of GAAP Measures to non-GAAP Measures."

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Total revenue and income

+30.2%

2,067.2

1,587.3

1Q201Q21

Total revenues and income reached R$2,067.2 million in the first quarter of 2021, an improvement of 30.2% from R$1,587.3 million reported in the first quarter of 2020. The growth was mainly due to an increase in our Acquiring TPV and will be detailed in each revenue and income lines described below.

Revenue from transaction activities and other services

+43.3%

1,385.0

966.8

1Q201Q21

Revenues from transaction activities and other services in the 1Q21 amounted to R$1,385.0 million, an improvement of R$418.2 million, or 43.3%, from R$966.8 million presented in the 1Q20, because of the factors described below:

Gross revenues from transaction activities and other services in the 1Q21 amounted to R$1,555.4 million, an improvement of R$469.6 million, or 43.3%, from R$1,085.8 million recorded in the 1Q20. This increase was principally due to an increase of 33.5% in our active merchant base and a growth of 58.0% in our Acquiring TPV. In addition, in the first quarter of 2021, we recognized R$64.3 million in membership fees, an increase of R$49.2 million, from R$15.1 million presented in the 1Q20.

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Gross revenues from transaction activities and other services during the first quarter of 2021 increased by a lower percentage than the growth of our Acquiring TPV, which increased to R$50.0 billion from R$31.7 billion reported in 1Q20. The difference in the growth rate is mainly due to new revenue initiatives, such as card issuance, loans, bill payments and mobile-top ups, among others.

Deductions from gross revenues from transaction activities and other services, which consist principally of taxes, amounted to R$170.4 million in the first quarter or 11.0% of Gross revenues from transaction activities and other services for the quarter. In the 1Q20, these deductions totaled R$119.0 million, and represented the same 11.0% in relation to the Gross revenue from transaction activities and other services for the quarter. The R$51.9 million, or 41.9%, increase in these deductions is directly related to our higher Acquiring TPV. Additionally, in 1Q21, R$6.0 million of these deductions corresponded to membership fee taxes, which corresponds to a growth of R$4.5 million from R$1.5 million recorded in the 1Q20.

Financial income

+16.8%

657.0

562.3

1Q201Q21

The quarterly Financial income, which represents the discount fees we withhold from credit card transactions in installments for the early payment of accounts receivable, attained R$657.0 million, an increase of R$94.7 million, or 16.8%, from R$562.3 million presented in the 1Q20. The financial income growth was driven by a higher Acquiring TPV, on the one hand, and estimated present value of future cash flows, loss in the amount of R$23,899 in the first quarter of 2021, a gain of R$21,737 in the first quarter of 2020.

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