PagSeguro Digital Ltd (NYSE:PAGS) Posts Mixed Results

PagSeguro Digital Ltd (NYSE:PAGS) stock plunges 18.98% (As on November 23, 12:28:56 AM UTC-4, Source: Google Finance) after the company posted mixed result for the third quarter of FY 22. The company has ended the third quarter with 26 million PagBank clients, the second largest digital bank in Brazil. PagBank cash-in surpassed 40 billion reais, and Total Deposits reached almost 20 billion reais just 3 years after its creation. PAGS TPV totaled R$195.4 billion, an increase of +56% vs. 3Q21 due to the growth of +35% in PagSeguro TPV and +79% in PagBank TPV, mainly driven by the maturation of merchant cohorts’ and market share gains in payments combined with deeper engagement with PagBank services. PAGS Net Take Rate totaled 2.90% in 3Q22, an increase of +48 bps vs. 3Q21 and +15 bps vs. 2Q22. This increase reflects the ongoing repricing process, which is mainly applicable to our prepayment services. PagSeguro TPV totaled R$ 90.3 billion, an increase of +35% vs. 3Q21.

Moreover, PagSeguro ended the quarter with 7.3 million Active Merchants, the highest Active Merchants base in the Brazilian Acquiring Industry, -5% lower as compared to 3Q21. Since the beginning of the year, PagSeguro has been adopting a more selective acquisition strategy by increasing POS prices (reducing POS subsidies), focusing on clients with better unit economics, higher activation, and deeper engagement with PagBank. Average Monthly TPV per Merchant totaled R$ 4.1 thousand, up +39% y/y, mainly related to larger share of wallet from merchants, due to more selective acquisition strategy in online sales channel, higher productivity of sales channels and market share gains. PagBank Cash-in totaled R$ 41.9 billion, an increase of +131% in comparison with 3Q21. Most of the cash-in was driven by Pix transactions, and the Company has been working on advertising the investment products and other initiatives that positively contribute to foster growth in deposits

PAGS in the third quarter of FY 22 has reported the adjusted earnings per share of 24 cents, beating the analysts’ estimates for the adjusted earnings per share of 22 cents, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 45 percent to $770.41 million in the third quarter of FY 22, missing the analysts’ estimates for revenue by 1.45%. Revenues from Transaction Activities and Other Services in 3Q22 amounted to R$ 2,292 million, an increase of +28% vs. 3Q21.

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