4Q19 / FY19 RESULTS - PAGS's Investor Relations
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4Q19 / FY19
RESULTS
February 2020
DISCLAIMER
Non-GAAP Financial Measures
This presentation, prepared by PagSeguro Digital Ltd (the “Company”), is This presentation includes the following financial measures defined as "non-
solely for informational purposes. The information in this presentation does not GAAP financial measures" by the SEC: non-GAAP net income, non-GAAP
constitute or form part of, and should not be construed as, an offer or invitation total net revenue, non-GAAP net take rate, non-GAAP total costs and
to subscribe for, underwrite or otherwise acquire, any securities of the expenses, non-GAAP administrative expenses and non-GAAP net margin. We
company or any subsidiary or affiliate of the company, nor should it or any part present non-GAAP measures when we believe that the additional information
of it form the basis of, or be relied on in connection with any contract to is useful and meaningful to investors. These non-GAAP measures are
purchase or subscribe for any securities of the company or any of its provided to enhance investors' overall understanding of our current financial
subsidiaries or affiliates nor shall it or any part of it form the basis of or be performance and its prospects for the future. Specifically, we believe the non-
relied on in connection with any contract or commitment whatsoever. GAAP measures provide useful information to both management and
investors by excluding certain expenses, gains and losses, as the case may
This presentation may contain forward-looking statements relating to matters be, that may not be indicative of our core operating results and business
such as continued growth prospects for the company, industry trends and outlook.
product and technology initiatives.
For an explanation of the foregoing non-GAAP measures, please see
These statements are based on currently available information and our current “Supplemental Information" included in this presentation. These measures
assumptions, expectations and projections about future events. While we may be different from non-GAAP financial measures used by other
believe that our assumptions, expectations and projections are reasonable in companies. The presentation of this non-GAAP financial information, which is
view of currently available information, you are cautioned not to place undue not prepared under any comprehensive set of accounting rules or principles, is
reliance on these forward-looking statements. Our actual results may differ not intended to be considered in isolation of, or as a substitute for, the
materially from those included in this presentation, for a variety of reasons, financial information prepared and presented in accordance with International
including those described in the forward-looking statements and risk factor Financial Reporting Standards (“IFRS”) as issued by the International
sections of our Annual Report on Form 20F (File No. 001-38353) and other Accounting Standards Board (“IASB”). Non-GAAP measures have limitations
filings with the Securities and Exchange Commission (the “SEC”), which are in that they do not reflect all of the amounts associated with our results of
available on our investor relations website (http://investors.pagseguro.com) operations as determined in accordance with IFRS. These measures should
and on the SEC’s website (https://www.sec.gov). only be used to evaluate our results of operations in conjunction with the
corresponding GAAP measures.
All of the information included in this presentation is updated as of
December 31, 2019. Except as may be required by applicable law, we For a reconciliation of these non-GAAP financial measures to the most directly
assume no obligation to publicly update or revise our statements. comparable GAAP measures, see “Supplemental Information."
2
4Q19 RESULTS
HIGHLIGHTS
Adjusted Net Net Net
Net Revenues1 Take Rate2 Income3 Margin4
SOLID R$ billion x NON-GAAP | R$ million NON-GAAP
RESULTS 1.6
+38% YoY
2.97% 412+27% YoY
26%
Total Payment Absolute Active Net
Volume TPV Growth Merchants5 Additions
OPERATING R$ billion R$ billion Dec-2019 Merchants | 2019
FIGURES 34.3 +39% YoY
4.9 5.3 1.1
+11% YoY million million
PagBank PagBank Users Bill Active Cash
Active users6 Net Additions Payments Cards growth
Dec-19 4Q19 # of transactions QoQ
PAGBANK
2.7 million
868 thousand
56% QoQ
232%
1) Adjusted Net Revenue = Net Revenue from Transaction Activities and Other Services + Financial Income. We exclude revenues and costs originated in the 4Q19 by membership fee booked in Net Transaction Activities and Other Services (4Q19: -R$9.0M);
2) Net Take Rate = (Net Revenue from Transactional Activities and Other Services + Financial Income - Transaction Costs) / Total Payment Volume. Excluding revenues and costs originated in the 4Q19 by membership fee booked in Net Transaction Activities and Other Services (4Q19: -R$9.0M; 3Q19: R$16.9M) in Transaction Costs (4Q19: -R$8.3M), we would reach a net take rate of 3.02%.
However, we also began to defer the membership revenues instead of an upfront recognition in our Income Statement. Therefore, equalizing this adjusted effect in Net Transaction Activities and Other Services Revenue of -R$0,8M in 3Q19 and -R$7,2M in 4Q19, we have reached a comparable take rate of 2.97%;
3) Non-GAAP Net Income is a non-GAAP financial measure. Please see the Supplemental Information for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure;
4) Net Margin is calculated by dividing Net Income by Total Revenue and Income. Non-GAAP Net Income Margin is calculated by dividing non-GAAP Net Income by non-GAAP Total Revenue and Income. Non-GAAP Net Income Margin is a non-GAAP financial measure. Please see the Supplemental Information for a reconciliation of this non-GAAP financial measure to the most directly
comparable GAAP financial measure;
5) Active Merchants: At least one transaction in the last twelve months;
6) Total Active Users of PagBank are active merchants using one additional digital account feature/service beyond acquiring and consumers with balance in the digital account in the last day of the month.
3
2019 RESULTS
HIGHLIGHTS
Total Payment Volume Active Merchants Absolute TPV growth
R$ billion thousand R$ million
R$38.7B 1,133
11%
51% 27%
Historical record
115 4,386 4,887 net new TPV growth
5,269
76 4,135
2,791
38 1,411
14
2016 2017 2018 2019 2016 2017 2018 2019 4Q18 4Q19
PagBank Active Users1 Total Revenue and Income NON-GAAP Net Income2
thousand R$ million R$ million
R$1.5M R$0.4M
1,614
36% 38%
5,707 1,470
2,737 4,203
1,869 1,068
1,123 1,397 2,523
1,138 479
128
1Q19 2Q19 3Q19 4Q19 2016 2017 2018 2019 2016 2017 2018 2019
1) Total Active Users of PagBank are active merchants using one additional digital account feature/service beyond acquiring and consumers with balance in the digital account in the last day of the month;
2) Non-GAAP Net Income is a non-GAAP financial measure. Please see the Supplemental Information for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure.
4
2019 GUIDANCE ACCOMPLISHED
CONTINUED STRONG EXECUTION
Net Income NON-GAAP
Guidance Reported
R$ million R$ million
1,322 - 1,500 1,470
Net Additions Merchants
Guidance Reported
thousand thousand
1,000 1,133
5
REVENUES AND COSTS
STRONG TOP LINE GROWTH AND COST CONTROL
ADJUSTED NET REVENUES1 | R$ mn ADJUSTED NET REVENUES BREAKDOWN1 | R$ mn
2018 2019
47%
11%
5,399
38%
3,682 38.5% 37.6%
1,559 61.5% 62.4%
1,130 1,400
4Q18 3Q19 4Q19 2018 2019
Net Transaction Activities and Other Services Financial Income
TOTAL COSTS AND EXPENSES2 | (%) of TPV ADMINISTRATIVE EXPENSES3 | (%) of TPV
0.8%
4.1%
3.4% 3.5%
3.3% 3.0% 3.3% 0.4% 0.4%
3.0% 3.2% 0.3% 0.3% 0.3%
0.2% 0.2%
4Q18 4Q19 2018 2019 4Q18 4Q19 2018 2019
GAAP non-GAAP GAAP non-GAAP GAAP non-GAAP GAAP non-GAAP
1) Adjusted Net Revenue = Net Revenue from Transaction Activities and Other Services + Financial Income. We exclude revenues and costs related to the membership fee booked in Net Transaction Activities and Other Services (3Q19: R$16.9M, 4Q19: -R$9.0M) to calculate the adjusted number;
2) Non-GAAP Total Costs and Expenses is a non-GAAP financial measure. Excludes stock-based compensation expenses (4Q19: R$29.8M, 4Q18: R$31.0M). Please see the Supplemental Information for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure;
3) Non-GAAP Administrative Expenses is a non-GAAP financial measure. Excludes administrative stock-based compensation expenses (4Q19: R$29.8M, 4Q18: R$31.0M) to make results comparable. Please see the Supplemental Information for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure.
6
NET INCOME AND MARGINS
HEALTHY MARGINS DESPITE HIGHER INVESTMENTS SINCE 2Q19
4Q19 NET INCOME1 | R$ mn 2019 NET INCOME1 | R$ mn
27% 38%
412 1,470
323 non-GAAP non-GAAP
20 1,069
GAAP 103 GAAP
21 158
303 392 1,367
910
4Q18 4Q19 2018 2019
4Q19 NET INCOME MARGIN2 2019 NET INCOME MARGIN2
26.1%
25.5% 25.4% 25.8%
24.9%
23.9% 24.0%
21.0%
4Q18 4Q19 2018 2019
GAAP non-GAAP GAAP non-GAAP
1) Non-GAAP Net Income is a non-GAAP financial measure. Please see the Supplemental Information for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure;
2) Net Margin is calculated by dividing Net Income by Total Revenue and Income. Non-GAAP Net Income Margin is calculated by dividing non-GAAP Net Income by non-GAAP Total Revenue and Income. Non-GAAP Net Income Margin is a non-GAAP financial measure. Please see the Supplemental Information for a reconciliation of this non-GAAP financial measure to the most directly
comparable GAAP financial measure.
7
PAGSEGURO
STRONG TPV GROWTH AND STABLE TAKE RATES
TOTAL PAYMENT VOLUME | R$ mn ABSOLUTE TOTAL PAYMENT VOLUME QOQ GROWTH | R$ mn
11%
51%
17%
114,820 4,887
39% 4,386
76,142
29,384 34,271
24,649
4Q18 3Q19 4Q19 2018 2019 4Q18 4Q19
NET TAKE RATE1 ACTIVE MERCHANTS2 | thousand
3.00% 3.12% 3.23% 3.17% 2.97% 1,133
1.70% 1.76% 1.86% 1.83% 1.65% 2,477
2.88% 2.92% 2.99% 2.93% 2.85% 5,269
4,135
-1.59% -1.56% -1.62% -1.59% -1.53% 2,791
4Q18 1Q19 2Q19 3Q19 4Q19
Financial Services Transactions Activities and Other Services Transactions Costs 2017 2018 2019
1) Net Take Rate = (Net Revenue from Transactional Activities and Other Services + Financial Income - Transaction Costs) / Total Payment Volume. Excluding revenues and costs originated in the 4Q19 by membership fee booked in Net Transaction Activities and Other Services (4Q19: -R$9.0M; 3Q19: R$16.9M) in Transaction Costs (4Q19: -R$8.3M), we would reach a net take rate of 3.02%.
However, we also began to defer the membership revenues instead of an upfront recognition in our Income Statement. Therefore, equalizing this adjusted effect in Net Transaction Activities and Other Services Revenue of -R$0,8M in 3Q19 and -R$7,2M in 4Q19, we have reached a comparable take rate of 2.97%;
2) Active Merchants: At least one transaction in the last twelve months.
8
BEST-IN-CLASS FINANCIAL SERVICES ECOSYSTEM
VALUE PROPOSITION FOR MERCHANTS AND CONSUMERS
Value Proposition: MERCHANTS
PAYMENTS + BANKING SOFTWARE
mPOS QR Code Reconciliation E-commerce
E-commerce Lending
and POS Payments R2TECH Marketplace Platform
YAMÍ
NEW
P2P Cross-border Instant Sales App 2.0 PedeFácil
E-wallet
transfers Settlements Payments NET POS
Value Proposition: MERCHANTS + CONSUMERS
BANKING SOFTWARE
NEW FEATURES
Digital Bill Investments Prepaid, Debit Bill Payments Super App
Account Payments and Credit Card TILIX
Mobile E-wallet Instant Wires Payroll
Top-up Portability
9
PAGBANK: DIGITAL BANKING LEADERSHIP
LEADERSHIP IN GOOGLE SEARCHES AND THE BEST RATED APP AMONG DIGITAL BANKS
SHARE OF GOOGLE SEARCHES BY DIGITAL BANKS1 APP RATINGS AND REVIEWS2
8.6% 11.0% 10.2% 8.4%
14.2% 13.2%
6.4% 7.8%
7.2% 7.3% Rating Reviews Rating Reviews
9.3% 8.6%
22.0% 4.8 349k 4.6 522k
21.6% 22.2%
24.9%
32.5%
38.1% 4.7 60k 4.5 247k
4.7 94k 4.4 311k
63.0% 60.9% 61.6%
56.9%
45.7%
38.4%
4.6 157k 4.3 106k
Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 4.3 16k 3.8 398k
Others
1) Searching criteria: Filtered by Financial Services > Checking Accounts;
2) Date: February 11th, 2020.
10PAGBANK EXPANDS OUR VALUE PROPOSITION
ENGAGEMENT, NEW CUSTOMERS AND ADDITIONAL REVENUE STREAMS BEYOND MERCHANTS
On average,
MERCHANTS 50% of
+ our clients
MERCHANTS CONSUMERS use at least
3 products
from our
ecosystem
Our
Digital Mobile Bill PagBank
Account Top-up Payments
app is open
11x a week
by our
Lending
Prepaid, Debit
Investments
active
and Credit Card
clients
11PAGBANK ENGAGEMENT METRICS
BOOSTING THE ECOSYSTEM USAGE
Non-Acquiring Cards
Transactions1 spending2
2019 | R$ billion 2019 | YoY growth
ECOSYSTEM
STATUS
~20 67%
Bill Mobile
Payments Top-ups
# of transactions | QoQ # of transactions | QoQ
FINANCIAL
SERVICES 56% 45%
NFC P2P
Transactions Transactions
QoQ QoQ
DIGITAL
DISRUPTION
89% 6x
1) Non-Acquiring Transactions: Includes prepaid card top-ups, cash cards spending, mobile top-ups, wire transfers to different person, cash in through bank slip, bill payments, tax collections, P2P transactions, QR Code transactions, Credit and Super App;
2) Cards spending: Purchases and withdrawal using prepaid and cash cards.
12PAGBANK
CREDIT PORTFOLIO AND TOTAL CONTRACTS
PAGS CAPITAL
Credit Portfolio
R$
286 million
Total Contracts
Oct’18 to Dec’19
116 thousand
13PRODUCTS AND FEATURES DEVELOPMENT
PAGS LAUNCHED MORE THAN 30 NEW PRODUCTS AND FEATURES SINCE MAY 2018
May-18 Jun-18 Jul-18 Sep-18 Oct-18 Nov-18 Dec-18
Bill Payments Moderninha Plus QR Code Payments Boleto Charge Moderninha Smart New Merchant Panel Multi-store Reports
Mobile Top Up P2P Payments Pending orders Management Inventory Management Tilix Acquisition
New Sales App for iOS PAGS Capital
Mar-19 Apr-19 May-19 Aug-19 Sep-19 Nov-19 Dec-19
Sales App 2.0 Net POS Instant Payments Credit Card Minizinha Chip 2 Super App Moderninha Pro 2 NCR Partnership
NetPOS Acquisition Cash Card Yamí Acquisition Moderninha X
App Onboarding Conta Rendeira
Payroll Portability (Savings Account)
Jan-20 Feb-20 Mar-20 Apr-20
Loading…
PedeFácil PAG Health
Automobile Tax payments
Certificate of Deposit (CD) Shell
Cabify
14NEW PRODUCTS AND FEATURES
NEW PARTNERSHIPS AND NEW PILOT APP
BANKING PRODUCTS PAGBANK HEALTH ASSISTANCE
• Automobile tax bill and tickets collection (IPVA) for Detran SP • Partnership with third-party Healthcare Assistance
• São Paulo has more than 30 million vehicles Companies
and motorcycles1
• Presence in 100% of the Brazilian States
• PagBank’s Certificates of Deposits (CDs) in Mar-20 • Monthly subscription fee
• Schedule a medical exam or a doctor
• Diversifying investments alternatives appointment in app
for PagBank users • Find accredited pharmacies
SUPER APP PARTNERSHIPS PEDEFÁCIL FOOD DELIVERY
• Shell has almost 5,000 gas stations in Brazil • Proprietary online food delivery app
• Cashback for PagBank users to foster the
adoption in app • Monthly subscription fee model + take rate
• Cabify is a premium ride-hailing company • Omni-channel focused in the food segment
• Drivers and riders will have exclusive
incentives to adopt PagBank account • Integrated management system
1) Source: Detran-SP | Date: November 2019.
15SOFTWARE SOLUTIONS
INCREASING ENGAGEMENT THROUGH SOFTWARES
R2TECH NETPOS / PAGVENDAS
Reconciliation of ERP for
payment transactions SMEs
Transaction Date: Apr-17 Transaction Date: Apr-19
TILIX YAMÍ
Better Back-office platform for
bill payment experience e-commerce and marketplaces
Transaction Date: Dec-18 Transaction Date: Aug-19
Software
Subscribers
186k | 51% QoQ
16FAST PAYMENTS: A COMPREHENSIVE VIEW
FINANCIAL INCLUSION BOOSTED BY THE ADOPTION OF ELECTRONIC PAYMENTS
FAST PAYMENTS AND P2P/P2M IMPLEMENTATION PAGS IS WELL-POSITIONED
IN UK, INDIA AND AUSTRALIA RESULTED:
• TWO-SIDED BUSINESS | PAGSEGURO + PAGBANK
• Financial inclusion Opportunity to cross-sell products and services to merchants and consumers
• Migration from cash and check to electronic transactions
• Cannibalization of wire transfers • FOCUS ON TECHNOLOGY AND UX
• Interoperability Integrated and end-to-end: hardware + software + payments + banking + data
• Debit transactions continued to grow
• OPEN PLATFORM
TPV | DEBIT TRANSACTIONS1 Flexible platform expands functionality benefiting merchants, consumers, developers and partners
US$ billion
CAGR
+10%
15-18
• STRONG BRAND
738 Most recognized brand among payment players in Brazil
693
645
597
501 543
• OMNI-CHANNEL
Merchants to accept both in-store and online payments
169 186 209
129 142 155
65 83
13 17 22 46 • EFFICIENT GO TO MARKET
Scalable ecosystem, easy onboarding, UOL audience
2013 2014 2015 2016 2017 2018
United Kingdom India Australia
P2P Adoption 2008 2016 2017
1) Source: Bank for International Settlements (BTS). FX date: 31-dec-2019 | UK: $1.33, India: $0.01 and Australia $0.70.
17SUPPLEMENTAL INFORMATION
4Q19 RESULTS
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
R$ millions Q4’ 19 Q4’ 18
Total Revenue and Income 1,574.9 1,267.5
Less: Foreign exchange gain on Follow-on proceeds - -
Non-GAAP total revenue and income 1,574.9 1,267.5
Total Expenses (1,041.0) (846.1)
Less: Share-based long-term incentive plan (LTIP) 29.8 31.0
Less: Tax related to remittance of Follow-on proceeds (IOF tax) - -
Non-GAAP total expenses (1) (1,011.2) (815.1)
Profit before Taxes 533.9 421.4
Plus: Total Non-GAAP adjustments 29.8 31.0
Non-GAAP profit before taxes (2) 563.7 452.4
Income Tax and Social Contribution (142.0) (118.6)
Less: Income tax and social contribution on non-GAAP adjustments (10.1) (10.5)
Non-GAAP deferred income tax (3) (152.2) (129.1)
Net Income 391.9 302.8
Plus: Total Non-GAAP adjustments 19.7 20.6
Non-GAAP Net Income (4) 411.6 323.4
1) Non-GAAP Total Expenses excludes:
a) Stock-based compensation expenses: total amount of R$29.8M (R$31.0M in the three months ended December 31, 2018), consisting of expenses for equity awards under our 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 the 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. The total of stock-based compensation expenses is allocated between Cost of sales and services and Administrative expenses. Excluding the stock-based compensation expenses,
Cost of sales and services in the amount of R$747.4M (R$666.5M in the three months ended December 31, 2018) is adjusted by R$4.3M (R$0.5M in the three months ended December 31, 2018) resulting in non-GAAP Cost of sales and services of R$743.1M (R$666.0M in the three months ended December 31, 2018); and Administrative Expenses in the amount of R$90.5M (R$89.0M in the
three months ended December 31, 2018) is adjusted by R$25.5M (R$30.2M in the three months ended December 31, 2018) resulting in non-GAAP Administrative expenses of R$65.0M (R$58.8M in the three months ended December 31, 2018);
2) Non-GAAP profit before taxes is equal to the adjustment described in footnote (1);
3) Non-GAAP income tax and social contribution consists of income tax at the rate of 34% calculated on the non-GAAP adjustments described in footnote (1);
4) Non-GAAP net income is equal to the sum of the adjustments described in footnotes (1) and (3) above.
194Q19 RESULTS
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
R$ millions Q4’ 19 Q4’ 18
Net Income 391.9 302.8
Share-based long-term incentive plan (LTIP)1 29.8 31.0
Income Tax on non-GAAP adjustments2 (10.1) (10.5)
Total non-GAAP Net Income adjustments 19.7 20.6
Net Income non-GAAP 411.6 323.4
1) Share-based long-term incentive 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 December 31, 2019 and 2018, the amounts of R$29.8M and R$31.0M, 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;
2) Income tax and social contribution on non-GAAP adjustments: In the three months ended December 31, 2019 and 2018, the amounts of R$10.1M and R$10.5M, respectively, consists of income tax at the rate of 34% calculated on the non-GAAP adjustments.
20MEMBERSHIP FEE RECONCILIATION
FULL YEAR IMPACT OF R$ 51 MILLION IN THE BOTTOM-LINE
Membership Membership
NON-GAAP NON-GAAP
Fee Fee
Results Results
Impacts Impacts
R$ million 4Q19 4Q19 2019 2019
Net Revenue from Transaction Activities and Other Services 984.8 (9.0) 3,376.1 8.0
Net Revenue from Sales 0.0 (43.1) 174.2 (57.0)
Financial Income 565.0 0.0 2,030.5 0.0
Other Financial Income 25.1 0.0 126.4 0.0
Total Revenues and Income 1,574.9 (52.1) 5,707.2 (49.0)
Cost of Sales and Services (743.1) 98.6 (2,734.0) 126.7
Selling Expenses (186.6) 0.0 (565.1) 0.0
Administrative Expenses (65.0) 0.0 (299.2) 0.0
Financial Expenses (23.6) 0.0 (38.1) 0.0
Other Expenses, Net 7.1 0.0 (1.9) 0.0
Total Costs and Expenses (1,011.2) 98.6 (3,638.4) 126.7
Profit before Income Taxes 563.7 (46.6) 2,068.8 (77.7)
Current income tax and social contribution 14.5 15.8 (24.5) 26.4
Deferred income tax and social contribution result (166.6) 0.0 (574.2) 0.0
Income Tax and Social Contribution (152.1) 15.8 (598.6) 26.4
Net Income 411.6 (30.7) 1,470.2 (51.3)
21INVESTOR RELATIONS PagSeguro Digital Ltd. Website: http://investors.pagseguro.com/ E-mail: ir@pagseguro.com Phone: +55 (11) 3914-9524
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