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  Title	PagSeguro Digital : Q4 2024 Earnings Release
  ID	7175205
  External ID	7568004655
  Author	Unknown
  Published Date	Feb. 21, 2025, 12:03 a.m.
  Summary	February 20, 2025 at 06:43 pm EST PagSeguro Digital Ltd. (NYSE: PAGS) Q4 2024 Earnings Release February 20, 2025 PAGS reports Fourth Quarter 2024 Results Solid Net Income (Non-GAAP) increase, r
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  URL	https://www.marketscreener.com/quote/stock/pagseguro-digital-ltd-40295259/news/pagseguro-digital-q4-2024-earnings-release-49120000/
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  Content ID	4495245
  Key	59957a5e-69a1-4da9-9dc6-66010da1a8ab
  Content	February 20, 2025 at 06:43 pm EST PagSeguro Digital Ltd. (NYSE: PAGS) Q4 2024 Earnings Release February 20, 2025 PAGS reports Fourth Quarter 2024 Results Solid Net Income (Non-GAAP) increase, reaching R$2.3 billion in 2024, +28% y/y, and R$ 631 million in the 4Q24, +21% y/y, mainly led by revenue diversification on Payments and Banking growth São Paulo, February 20, 2025 - PagSeguro Digital Ltd. ("PagBank", "we", "Company") has announced today its fourth quarter results for the period ended December 31, 2024. 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"). Message from the CEO As we report the accomplishments of 2024, the main highlight is the significant overall progress achieved in our core objectives and the successful execution of our strategy. PagBank's performance in the last year proves our ability to navigate through different economic cycles with consistency. Despite challenges such hiking in rates and exchange rate volatility, we maintained our growth strategy, expanding businesses, adding new customers, and strengthening our financial services platform. This year, we have achieved remarkable milestones, overcoming challenges thanks to a strong, energetic and collaborative team, making us a dynamic company capable of delivering outstanding results. Our strong growth in TPV underscores our commitment to explore the opportunities that are presented, using our competitive edge to expand market presence balancing growth and profitability. In 2024, we have advanced on our strategic revenue diversification efforts, actively exploring new growth avenues within the Payments sector, expanding our presence beyond POS. This has been accompanied by the increasing contribution from our Banking segment with a remarkable year-over-year gross profit growth of 80%, highlighting the business' strong performance and profitability on the back of an increasing credit portfolio and client engagement. Additionally, we run our business based on a 360º Security Values, beyond a fundamental guideline, ensuring that data security remains a top priority across all our products and services. Through automated processes, we safeguard the quality of our customers' and company's information. We also have maintained a rigorous focus on financial cost efficiency and since last quarter started to report and increase our operating leverage, enabling us to navigate the volatility prevalent in the macroeconomic landscape, leveraged by a robust capital structure. Ultimately, our relentless pursuit of creating shareholder value remains at the forefront of our strategy, as we expect to continue advancing on our mission to facilitate the financial lives of our clients, positioning us well for sustainable long-term growth. Alexandre Magnani - CEO Q4 2024 Highlights Operational Highlights Financial Highlights Gross Profit: Total Revenue and Income (-) Transaction Costs (-) Financial Expenses (-) Total Losses. Non-GAAP Measures: For further information regarding the reconciliation and explanation of non-GAAP financial measures, including the presentation of the closest comparable GAAP financial measure, please see "Appendix" and "Non-GAAP Disclosure" included in this earnings release. TPV increase driven by all segments, especially in our core segment, MSMB (+21.1% y/y), and larger retail merchants and online - LMEC (+45.3%), because of strategic focus on expanding our presence in new profitable growth avenues. TPV per Merchant reached R$ 22.9 thousand, higher vs. Q4 2023. Cash-In increased +40.8% y/y, as a strong indicator of client principality resulting from the evolution of banking platform experience and product portfolio for merchants and consumers. Credit Portfolio grew +35.9% y/y (+7.5% q/q) surpassing R$ 3.4 billion, led by the continuous increase in secured products offerings. Expanded Portfolio reach R$ 48.2 billion, +46.3% y/y (+9.1% q/q), led by the expansion of the merchant prepayment, particularly in our core segment, MSMB. Consolidated Revenues increased +17.7% y/y, amounting to a record-breaking R$ 5.1 billion, driven by higher TPV and increasing contribution from Banking segment. Net Income and EPS (non-GAAP) increased +21.3% and +23.3% y/y, respectively, because of stronger operational and financial performance, and tax efficiencies implemented throughout 2024. In 4Q24, we repurchased R$ 356 million under the current buyback program launched in August, reaching over 50% of the USD 200mm total amount approved. During 2024, the Company repurchased 15,244,386 common Class A shares, creating shareholder value and improving our capital structure. Operational Performance PagBank Clients Total Clients : number of clients registered at Brazilian Central Bank. Active Banking Clients : number of banking and banking + payments clients. Active Merchants: number of clients solely in the payment segment. Total Active Clients: refer to Active Clients with at least one transaction in the last twelve months in the payments or banking services, and/or Active Clients with a balance in their digital account on the last day of the last month of the periods indicated. Total Clients reached 33.2 million , at the end of the quarter, an increase of 6.7% compared to Q4 2023. Active Clients totaled 17.8 million, representing 53.6% of the Total Clients base, relatively stable quarter-over-quarter and a 3.3% increase year-over-year. This increase was primarily driven by a sustainable growth in Banking only clients, representing of our Active Clients compared to 62.0% in Q4 2023. Active Merchants , which consists of Banking + Payments Clients and standalone Payments Clients ended the quarter with a total of 6.3 million , representing a decrease of vs. Q4 2023. This decline is mainly driven by a reduction in the number of nano-merchants (with a monthly TPV below R$1,000), in line with our strategic focus. Since 2022, the Company has prioritized clients with stronger unit economics, higher activation rates, and greater engagement in Banking over simply increasing net additions. This is demonstrated by the increase in the number of our SMB merchant s which grew 11% year-over-year , defined as those with Total Payment Volume (TPV) ranging from R$15 thousand to R$1 million. Additionally, we have strengthened our onboarding and risk assessment processes to mitigate chargebacks and losses, contributing to a positive impact on our gross profit in recent quarters. As a result, our TPV per Merchant reached R$ 22.9 thousand in Q4 2024, higher vs. Q4 2023. Payments Total Payment Volume MSMB : Refers to Micro-merchants (monthly TPV < R$15,000) and Small/Medium Businesses (monthly TPV from R$15,000 up to R$ 1,000,000). LMEC : Refers to Large Merchants (monthly TPV > R$ 1,000,000), e-Commerce and Cross-Border. Total Payment Volume (TPV) totaled R$ 146.0 billion higher vs. Q4 2023, driven by all merchants' segments, as described below: MSMB TPV grew +21.1% y/y , fueled by strong Point of Sales (POS) activity throughout the quarter, increased adoption of PIX QR Code, improved HUB productivity, and geographic expansion into regions with lower market penetration. The growth was mainly supported by the expansion of SMBs active clients and performance. LMEC TPV increased +45.3% y/y, driven by the successful execution of our strategy to climb the market pyramid, attracting larger and more profitable retail merchants. Growth was also supported by deeper penetration in the online segment, including e-commerce and cross-border transactions. It is important to note that this move comes with an effect on client and product mix. We also highlighted that our Large Retail Merchants as defined as those with Total Payment Volume (TPV) ranging from R$1 million to R$ 30 million. Banking Cash-In Active Banking Clients refer to Banking Clients and Banking + Payments Clients. Cash-In amounted to R$ 93.4 billion , up +40.8% y/y , primarily fueled by a rise in client engagement, supported by Banking features that boosts inflows into PagBank accounts such as Collection Platform, Direct Deposits, and cashbacks/reward programs, in addition to an increased volume of PIX P2P. Consequently, Cash-In per Active Banking Client reached R$ 5.4 thousand , up +35.2% y/y , alongside the growth in the number of Active Banking clients. Credit Portfolio and Expanded Portfolio Credit Portfolio reached R$ 3.4 billion in Q4 2024, mainly driven by our focus on expanding secured products, which represented 85% of the portfolio, such as payroll loans and credit cards backed by investments. This strategy has enabled the Company to expand its portfolio while prioritizing asset quality risk management, and capital allocation. Payroll Loans: Refers to loan portfolios, including advance Brazil's Severance Indemnity Fund (FGTS) withdrawals and payroll loans to public sector employees and retirees. Prepayment to Merchants is net of Accounts Receivable Securitization. Since 3Q24, we have gradually resumed credit underwriting for unsecured products, including working capital loans for merchants backed by receivables registry, credit card limits, and overdraft accounts, driven by the continued improvement in asset quality, onboarding, risk assessment, and collections. However, it is important to acknowledge that the current 'Working Capital Loans' primarily reflect the previous operation for micro-merchants, which is being phased out. Expanded Portfolio , which includes Prepayment to Merchants, reached R$ 48.2 billion in Q4 2024, driven mainly by the TPV expansion in our core segment, MSMB (+21.1% y/y) and the performance of our "Instant Settlement" feature. Deposits and Total Funding 1. As % of CDI (Brazilian Interbank Rate). Total Deposits reached R$ 36.1 billion , representing an increase of vs. Q4 2023, mainly driven by the +48.8% y/y growth in Banking Issuances , led by Certificate of Deposits issued on, in addition to the increase in Checking Accounts , amounting R$ 12.0 billion , up +5.7% y/y , with Annual Percentage Yield (APY) of 47.3% CDI (Brazilian Interbank Rate). The overall APY reached 90.1% of de CDI (Brazilian Interbank Rate), a significant decrease of 4.3 p.p y/y due to a reduction in both Checking Accounts and Banking Issuances, and as a result of initiatives put in place this quarter to reduce the Company's cost of funding considering the current interest rate scenario When considering other sources of funding, such as Borrowings, Certificate of Deposits with Related Parties and Senior FIDC quotas Total Funding reached R$ 42.9 billion, increasing 51.8% y/y, due to both the increase in Total Deposits and the Company's efforts to diversify its funding sources. In line with the company's effort to achieve a more balanced capital structure, the Loan-to-funding ratio decreased 3.3 y/y, reaching 113% in 4Q24, as total funding grew at a faster pace than the expanded portfolio, driven primarily by an increase in other funding, due to initiatives to diversify the Company's funding, as mentioned above. Financial Performance Total Revenue and Income Payments: mainly composed by merchant discount rates (MDRs), early prepayment of cards receivables and membership fees from POS device. Banking: mainly composed by interest income from credit portfolio, interest income from float of PagBank accounts, prepaid cards and escrow account reconciliation, fees (mostly cards interchange and account service fees) and Other Financial Income. Total Revenue and Income reached was driven by higher revenues in the R$ 5,115 million in Q4 2024, representing an increase of vs. Q4 2023. This growth segments, as described below: Payments : In Q4 2024, payments revenue amounted to R$ 4,602 million , representing an increase of +14.4% y/y, led by higher TPV. Additionally, since Q2 2024 the Company has been recognizing the spreads from prepaid settlements for the current month as financial income rather than transaction revenues. Banking: In Q4 2024 revenue amounted to R$ 513 million, a 58.0% year-over-year increase, primarily driven by higher interest income, boosted by increased deposits, our credit portfolio and account service fees, higher client engagement and cash-in. In 4Q24, we initiated the repricing of our asset products, a strategic move aimed at mitigating the impact of rising financial costs and the traditional margin compression observed during the quarter due to seasonal shifts in product and customer mix. Gross Profit Gross Profit totaled R$ 1,943 million in Q4 2024, representing an increase of Revenue and Income, Gross Profit rate decreased 2.0 p.p vs. Q4 2023, reaching increase in the SELIC rate and shifts in our client and product mix. y/y. As a percentage of Total in the quarter, mainly explained by the Payments: In Q4 2024, Gross Profit reached R$ 1,589 million , a 3.1% year-over-year increase. This growth was primarily fueled by TPV expansion across all segments, including new growth avenues such as accretive larger retail merchants and online channels (e-commerce and cross-border), which helps explain the aforementioned change in the client and product mix. Banking: In Q4 2024, Gross Profit totaled interest income from the expansion of our investments during the period. In Q4 2024, R$ 354 million, an increase of +79.9% y/y, mainly driven by a growth in credit portfolio, larger credit portfolio, along with higher gains on financial Banking segment accounted for 18.2% of total Gross Profit. Total Costs and Expenses Total Costs and Expenses , on a non-GAAP basis, amounted to R$ 4,430 million in Q4 2024, representing an increase of +19.3% y/y vs. Q4 2023, mainly related to: Cost of Sales and Services of R$ 2,580 million in Q4 2024, representing an increase of +15.2% y/y , mainly due to TPV growth, which resulted in higher nominal interchange and card scheme fees. When excluding non-GAAP figures related to LTIP Expenses (long-term incentive plan), Cost of Sales and Services reached R$ 2,585 million in Q4 2024, representing an increase of +15.2% y/y Selling Expenses totaled R$ 444 million in Q4 2024 an increase of +8.1% y/y , mainly related to increased commercial efforts signaled by the hiring of sales teams in Q1 2024, along with higher marketing and advertising expenses compared to the same period of 2023, partially offset by reduced losses from chargebacks and lower Expected Credit Loss (ECL) provisions. When excluding non-GAAP figures related to LTIP Expenses (long-term incentive plan), Selling Expenses reached R$ 468 million in Q4 2024, representing an increase of compared to Q4 2023. Administrative Expenses reached R$ 238 million in Q4 2024, an increase of compared to Q4 2023, mainly driven by higher expenses to supporting the strong operational performance, including tech services as well as increased provisions for personnel expenses compared to last year. When excluding non-GAAP figures related to LTIP Expenses and Non-Recurring Amortization Expenses, Administrative Expenses reached R$ 257 million in Q4 2024, representing an increase of compared to the same period of 2023. Financial Costs totaled R$ 1,092 million in Q4 2024, an increase of vs. Q4 2023, mainly due to an increase in the average Brazilian Basic Interest Rate (SELIC) in comparison to Q4 2024 and by higher TPV growth in the period. Other Expenses, net reached mainly due to lower write-off of compared to Q4 2023. R$ 77 million in Q4 2024, representing a decrease of -32.6 compared to Q4 2023, POS devices. When excluding non-GAAP figures, Other Expenses decreased -32.6% On a GAAP basis, including LTIP Expenses and Non-Recurring Amortization Expenses of R$ 28.4 million, Total Costs and Expenses amounted to R$ 4,479 million in Q4 2024, representing an increase of + in comparison to the amount of R$ 3,763 million presented in Q4 2023. Total Costs and Expenses by nature For further information regarding the reconciliation and explanation of non-GAAP financial measures, including the presentation of the closest comparable GAAP financial measure, please see "Appendix" and "Non-GAAP Disclosure" included in this earnings release. Transaction Costs Transaction Costs , on a GAAP and a non-GAAP basis, totaled R$ 1,960 million , representing an increase of from R$ 1,645 million in Q4 2023, mainly driven by: Interchange and Card Scheme Fees totaled R$ 1,903 million in Q4 2024, representing an increase of +16.8% y/y , mainly driven by cards TPV growth; and Other Costs increased to R$ 56 million , vs. R$ 15 million in Q4 23, mainly due to higher processing costs and costs related to processing, logistics and telecom. As a percentage of the Total Revenue and Income, Transaction Costs increased to in Q4 2024 vs. 37.8% in Q4 2023 as a result of client and product mix Financial Costs Financial Costs totaled R$ 1,092 million in Q4 2024, representing an increase of vs. Q4 2023. As a percentage of Total Revenue and Income, Financial Costs decreased to in Q4 2024 vs. 19.2% in Q4 2023. The increase in financial costs resulted mainly from the strong growth in TPV between periods and the increase in the Brazilian Basic Interest Rate (SELIC) compared to the same period of 2023. When compared to Q3 24, Financial Costs increased 13.2%, mainly due to higher TPV and higher SELIC rate in the quarter. Total Losses Total Losses reached R$ 121 million in Q4 2024, representing a decrease of vs. Q4 2023. As a percentage of Total Revenues and Income, Total Losses decreased to in Q4 2024 vs. 2.8% in Q4 2023. This decline was mainly attributed to improved asset quality, driven by enhancements in our KYC and onboarding processes, which led to a reduction in chargebacks, and lower ECL provisions as a consequence of enhanced credit portfolio. The quarterly increase, however, was primarily due to higher transaction volumes and additional provisions related to chargeback disputes from previous periods. Operating Expenses Operating Expenses , on a Non-GAAP basis, which include Personnel Expenses, Marketing and Advertising and Other Expenses, totaled R$ 822 million , representing an increase from R$ 700 million in Q4 2023. As a percentage of Total Revenue and Income, Non-GAAP Operating Expenses represented flat year-over-year. These trends are mainly due to the following: Personnel Expenses reached R$ 335 million, representing an increase of vs. Q4 2023, driven by the increase in our salesforce which started in Q4 2023 and was concluded in Q1 2024. Personnel expenses increased sequentially by 1.2%, driven by higher profit-sharing provisions, increased INSS contributions following payroll tax reform in Brazil. When including LTIP Expenses and Non-Recurring Amortization Expenses amounting to non-GAAP Expenses of R$ 28.4 million, Personnel Expenses, on a GAAP basis, totaled R$ 362.7 million , representing an increase of vs. Q4 2023 due to the higher impact of LTIP given the current share price level. Marketing and Advertising totaled R$ 205 million in Q4 2024, vs. Q4 2023, as a result of the ramp-up of our marketing efforts initiated in the second half of 2023, focusing mainly on the Banking segment and its product offering, brand awareness, as well as on attracting new clients with healthier unit economics and distribution of financial services for our banking segment. Other Expenses reached R$ 281 million in Q4 2024, a increase from R$ 238 million reported in Q4 2023, mainly related to the expenditures with software and technologies regarding customer experience functionalities, as well as hiring of consulting services. On a GAAP basis, Operating Expenses totaled R$ 850 million , an increase of from R$ 732 million in Q4 2023. As a percentage of Total Revenue and Income, Operating Expenses represented stable relative to Q4 2023. Depreciation and Amortization and POS Write-Off Depreciation and Amortization reached R$ 436 million, representing an increase of , from R$ 405 million in Q4 2023, mainly explained by: The depreciation of POS devices; and The amortization of R&D investments, mainly related to product development and data security. These investments allow us to defer our tax liability that generates a benefit through " Lei do Bem " (Technological Innovation Law). When including LTIP Expenses and Non-Recurring Amortization Expenses amounting to non-GAAP expenses of R$ 20 million, D&A, on a GAAP basis, totaled R$ 425 million , representing an increase of vs. Q4 2023 due to amortization of Fair Value adjustment related to acquisitions in the past and amortization of the Long-term Incentive Plan. The increase in D&A expenses was partially offset by higher PIS and COFINS credits, related to a tax benefit that allows PagSeguro Brazil to reduce the depreciation and amortization over some operational expenses when incurred. POS Write-offs in Q4 2024 totaled R$ 31 million , representing a decrease of year-over-year and decrease in comparison to last quarter (Q3 2024). The majority amount comes from 2020 and 2021 POS vintages. Attachments Original document Permalink Disclaimer PagSeguro Digital Ltd. published this content on February 20, 2025 , and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on February 20, 2025 at
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