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MarketScreener Homepage  >  Equities  >  Nyse  >  PagSeguro Digital Ltd.    PAGS   KYG687071012

PAGSEGURO DIGITAL LTD.

(PAGS)
  Report
Delayed Quote. Delayed Nyse - 11/25 04:10:00 pm
48.14 USD   +3.26%
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PagSeguro Digital : Reports Second Quarter Results

08/27/2020 | 04:17pm EST

PagSeguro Reports Second Quarter Results

2Q20 Net Income of R$296.3 million, down 8.2% compared to 2Q19.

2Q20 Non-GAAP Net Income of R$307.0 million.

São Paulo, August 27, 2020 - PagSeguro Digital Ltd. ("PagSeguro" or "we") announced today its second quarter results for the period ended June 30, 2020. Our 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").

Second Quarter 2020 Financial & Operational Highlights:

  • R$29.8 billion in total payment volume ("TPV"), up 11.4% compared to 2Q19;
  • 5.8 million active merchants, growth of 299 thousand in 2Q20 and 1.1 million in the last twelve months;
  • 4.9 million active PagBank users2, growth of 1.2 million in 2Q20 and 3.5 million in the last twelve months;
  • R$296.3 million in Net Income, down 8.2% compared to 2Q19;
  • R$307.0 million in non-GAAP Net Income, down 10.4% compared to 2Q19;
  • Total Revenue and Income of R$1,357.4 million, down 2.3% compared to 2Q19;
  • Operational Revenue and Income3 of R$1,288.3 million, down 0.6% compared to 2Q19;
  • Comparing only the month of June 2020 with June 2019, Operational Revenue and Income4 up 12.1% to R$473.4 million from R$422.3 million;
  • Non-recurringtaxes and contributions provision reversal of R$55.6 million after income taxes (R$84.3 million pre income taxes) recorded in Other income (expenses);

At and for the Three Months Ended

June 30,

Main Operational and Financial Indicators (R$ millions, except otherwise

2020

indicated)

TPV

29,794.3

Active Merchants (last 12 months) - (millions)

5.8

Total Revenue and Income

1,357.4

Net Income

296.3

Net Margin (%)

21.8%

Basic earnings per common share (EPS)1 - (R$)

0.9001

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

0.8976

2019

26,752.4

4.7

1,389.7

322.8

23.2%

1.0071

0.9805

Var.%

11.4%

22.9%

(2.3)%

(8.2)%

(1.4) pp

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

2020

indicated)

Non-GAAP Total Revenue and Income

1,357.4

Non-GAAP Net Income

307.0

Non-GAAP Net Margin (%)

22.6%

Non-GAAP Basic earnings per common share (EPS)1 - (R$)

0.9326

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

0.9299

2019

1,389.7

342.8

24.7%

1.0698

1.0416

Var.%

(2.3)%

(10.5)%

(2.1) pp

For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, see page 16 of this earnings release.

1 Weighted average number of common shares of 329.0 million on June 30, 2020 and 320.1 million on June 30, 2019.

2 Active PagBank users are active merchants using one additional digital account feature / service beyond acquiring and PagBank consumers with at least one transaction in the last twelve months.

3 Operational Revenue and Income = Revenue from Transaction Activities and Other Services + Financial Income - membership fee income

2Q20 Earnings Release

1

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 of 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.

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

Stock-basedcompensation expenses and related employer payroll taxes: This consists of expenses for equity awards under our long-term incentive plan (LTIP). We exclude stock-based compensation 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.

Income tax and social contribution on non-GAAPadjustment: This represents the income tax effect related to the non-GAAP adjustment 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 Expenses to non-GAAP 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 Basic and diluted EPS to non-GAAP Basic and diluted EPS," and "Reconciliation of GAAP Measures to non-GAAP Measures."

Total revenue and income

Our Total revenue and income amounted to R$1,357.4 million in the three months ended June 30, 2020, a decrease of 2.3% from R$1,389.7 million in the three months ended June 30, 2019Although TPV increased 11.4% in the three months ended June 30, 2020, compared to the three months ended June 30, 2019 this decrease was primarily due to the decrease in Financial income driven by fewer credit card transactions in installments and higher debit card transactions in the three months ended June 30, 2020. This is explained by the slowdown in consumption and transactional activities done in installments resulting from the COVID-19 pandemic affecting economy sectors with relevant purchases in installments such as general merchandise retailers (apparel, white goods, electronics, etc) impacting both net take rate and TPV.

2Q20 Earnings Release

2

Revenue from transaction activities and other services

Our Revenue from transaction activities and other services in the three months ended June 30, 2020 amounted to R$856.5 million, an increase of R$57.6 million, or 7.2%, from R$798.9 million in the three months ended June 30, 2019, as a result of the factors described below.

Our Gross revenue from transaction activities and other services in the three months ended June 30, 2020 amounted to R$964.3 million, an increase of R$50.2 million, or 5.5%, from R$914.1 million in the three months ended June 30, 2019.

This increase was principally due to a continued increase in our active merchant base and TPV. In addition, in the three months ended June 30, 2020, we recognized R$30.3 million in membership fees. Our Gross revenue from transaction activities and other services during the three months ended June 30, 2020 increased by a lower percentage than our TPV, which increased to R$29.8 billion from R$26.8 billion in the three months ended June 30, 2019. This difference in the growth rate was driven by the mix of debit and credit card payments processed containing a higher percentage of debit card payments and within the credit card payments processed, a lower percentage of credit card transactions made in installments in the three months ended June 30, 2020 compared to the three months ended June 30, 2019.

Our Deductions from gross revenue from transaction activities and other services, which consist principally of taxes, amounted to R$107.8 million in the three months ended June 30, 2020, or 11.2% of our Gross revenue from transaction activities and other services for the quarter. In the three months ended June 30, 2019, Deductions from gross revenue from transaction activities and other services totaled R$115.2 million, or 12.6% of our Gross revenue from transaction activities and other services for the quarter. The R$7.4 million, or 6.4%, decrease in these Deductions is directly related to the new revenue initiatives that incur in less tax deductions. Additionally, in the three-month period ended June 30, 2020, R$2.9 million of these Deductions correspond to membership fee taxes.

Revenue from sales

Starting on September 1, 2019, instead of selling our POS devices to our clients, we began to charge a non-refundableset-up fee for the use of our POS devices, which does not change the way our clients access our POS devices. Therefore, in 2Q20 we did not have any amount classified as revenue from sales.

Financial income

Our Financial income, which represents the discount fees we withhold from credit card transactions in installments for the early payment of accounts receivable, amounted to R$459.2 million in the three months ended June 30, 2020, a decrease of R$38.0 million, or 7.6% from R$497.2 million in the three months ended June 30, 2019. The decrease in Financial income compared to the three months ended June 30, 2020 was driven by fewer credit card transactions in installments and higher debit card transactions in the three months ended June 30, 2020.

2Q20 Earnings Release

3

Other financial income

Our Other financial income amounted to R$41.7 million in the three months ended June 30, 2020, an increase of R$11.5 million, or 38.1% from R$30.2 million in the three months ended June 30, 2019. This increase was due to financial income on cash and investments and exchange variation gains on our cash position outside of Brazil.

Expenses

Our total expenses amounted to R$945.0 million in the three months ended June 30, 2020, an increase of R$16.4 million, or 1.8%, from R$928.6 million in the three months ended June 30, 2019.

As a percentage of our Total revenue and income, our total expenses in the three months ended June 30, 2020 increased by 2.8 percentage points, to 69.6% in the three months ended June 30, 2020 from 66.8% in the three months ended June 30, 2019.

Our non-GAAP total expenses amounted to R$928.9 million in the three months ended June 30, 2020, an increase of R$30.7 million, or 3.4%, from R$898.2 million in the three months ended June 30, 2019.

Reconciliation of Expenses to non-GAAP Expenses (R$ millions):

Expenses

(-)Share-basedlong-term incentive plan (LTIP) [1]

Non-GAAP Expenses

At and for the three

months ended June 30,

2020

(945.0)

16.1

(928.9)

At and for the three

months ended June 30,

2019

(928.6)

30.4

(898.2)

Var.%

1.8%

(47.0)%

3.4%

  1. Share-based long-termincentive plan (LTIP): Stock-based compensation expenses and related employer payroll taxes. This consists of expenses for equity awards under our long-term incentive plan (LTIP). We exclude stock-based compensation 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. In the three months ended June 30, 2020 and 2019, the amounts of R$16.1 million and R$30.4 million, respectively, were mainly related to new shares issued to preexisting LTIP beneficiaries and to new employees participating in our LTIP, as well as the recurrent quarterly provision.

Cost of sales and services

Our Cost of sales and services amounted to R$793.3 million in the three months ended June 30, 2020, an increase of R$108.9 million, or 15.9%, from R$684.4 million in the three months ended June 30, 2019. As a percentage of the total of our Revenue from transaction activities and other services and our Revenue from sales, our Cost of sales and services increased 13.3 percentage points, to 92.6% in the three months ended June 30, 2020 from 79.4% in the three months ended June 30, 2019.

Within our Cost of sales and services line item, our Cost of services, expressed as a percentage of our Revenue from transaction activities and other services, increased to 92.6% in the three months ended June 30, 2020 from 61.6% in the three months ended June 30, 2019, due to the implementation of our membership fee model for POS devices, under which all costs are classified as costs of service, instead of costs of sales.

As explained in the discussion of "Revenue from sales" above, on September 1, 2019, we changed the way we provide POS devices to our clients. The introduction of this membership fee model

2Q20 Earnings Release

4

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

PagSeguro Digital Ltd. published this content on 27 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 August 2020 20:17:05 UTC


© Publicnow 2020
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Financials
Sales 2020 6 827 M 1 275 M 1 275 M
Net income 2020 1 321 M 247 M 247 M
Net cash 2020 3 048 M 569 M 569 M
P/E ratio 2020 64,0x
Yield 2020 0,01%
Capitalization 84 094 M 15 830 M 15 710 M
EV / Sales 2020 11,9x
EV / Sales 2021 8,76x
Nbr of Employees 1 154
Free-Float 54,7%
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Mean consensus OUTPERFORM
Number of Analysts 18
Average target price 260,95 BRL
Last Close Price 255,74 BRL
Spread / Highest target 29,1%
Spread / Average Target 2,03%
Spread / Lowest Target -48,1%
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Managers
NameTitle
Luiz Frias Chairman & Chief Executive Officer
Eduardo Alcaro Chief Financial & Accounting Officer, Director
Maria Judith de Brito Director
Ricardo Dutra da Silva Director
Noemia Gushiken Independent Director
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