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Pagseguro Digital (PAGS)
NYSE:PAGS
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Pagseguro Digital
(NYSE:PAGS)
81Outperform
Positive Factors
Earnings Growth
The net income increased by 23% year-over-year, which was 13% above expectations, driven by solid revenue growth and deceleration of operating expenses.
Loan Portfolio
The loan portfolio growth accelerated to 36%, driven by secured products, resulting in an improvement in the non-performing loan ratio.
Revenue Growth
Revenue growth of 18% year-over-year was fueled by robust total payment volume growth and a resilient net take-rate, benefiting from repricing efforts.
Negative Factors
Expense Growth
Total expenses grew by 19% year-over-year, with an acceleration of financial expenses due to higher average interest rates.
Operating Margins
Operating margins are pressured by investments, marketing, and funding costs.
Take-rate
Gross take-rate fell due to a weaker mix of clients and products.
Pagseguro Digital (PAGS) vs. S&P 500 (SPY)
Market Cap
$2.81B
Dividend YieldN/A
Average Volume (3M)4.04M
Price to Earnings (P/E)6.9
Beta (1Y)1.18
Revenue Growth8.26%
EPS Growth20.41%
CountryUS
Employees6,751
SectorTechnology
Sector Strength45
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)1.24
Shares Outstanding209,148,910
10 Day Avg. Volume4,619,156
30 Day Avg. Volume4,041,819
Financial Highlights & Ratios
PEG Ratio0.34
Price to Book (P/B)N/A
Price to Sales (P/S)1.68
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$11.50Price Target Upside34.82% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Pagseguro Digital Business Overview & Revenue Model
Company DescriptionPagSeguro Digital Ltd., together with its subsidiaries, provides financial technology solutions and services for consumers, individual entrepreneurs, micro-merchants, and small and medium-sized companies in Brazil and internationally. The company's products and services include PagSeguro Ecosystem, a digital ecosystem that operates as a closed loop where its clients are able to address their primary day to day financial needs, including receiving and spending funds, and managing and growing their businesses; PagBank digital account, which offers banking services through the PagBank mobile app, as well as centralizes various cash-in options, functionalities, services, and cash-out options in a single ecosystem; and PlugPag, a tool for medium-sized and larger merchants that enables them to connect their point of sale (POS) device directly to their enterprise resource planning software or sales automation system through Bluetooth. It also offers cash-in solutions; online and in-person payment tools; and online gaming and cross-border digital services, as well as issues prepaid, credit, and cash cards. In addition, the company provides functionalities, and value-added services and features, such as purchase protection mechanisms, antifraud platform, account and business management tools, and POS app; and operates an online platform that facilitates peer-to-peer lending. Further, it is involved in processing of back-office solutions, including sales reconciliation, and gateway solutions and services, as well as the capture of credit cards with acquirers and sub acquirers. The company was founded in 2006 and is headquartered in São Paulo, Brazil.
How the Company Makes MoneyPagSeguro Digital generates revenue through a diversified business model centered on its payment processing services. The company earns money by charging transaction fees on payments processed through its POS devices and digital platforms. These fees are typically a percentage of the transaction value plus a fixed fee per transaction. Additionally, PagSeguro offers value-added services such as working capital loans, prepaid cards, and insurance products, which contribute to its revenue streams. The company has established significant partnerships with major banks and financial institutions, enabling it to broaden its service offerings and enhance its market reach. By leveraging its technology and extensive merchant network, PagSeguro continues to capitalize on the increasing adoption of digital payments in Brazil.
Pagseguro Digital Financial Statement Overview
Summary
Pagseguro Digital shows strong revenue and profit growth with efficient operations. The balance sheet is stable with a healthy debt-to-equity ratio. However, cash flow challenges present potential liquidity risks. Overall, the company maintains a strong market position with room for cash management improvement.Income Statement
Pagseguro Digital demonstrates strong revenue growth with a 16.93% increase in revenue from 2023 to 2024. The company maintains healthy profit margins with a gross profit margin of 47.94% and a net profit margin of 11.54% for 2024. EBIT and EBITDA margins are also robust at 32.50% and 41.13%, respectively, indicating efficient operational performance. The consistent growth trajectory and profitability highlight the company's strong market position.85
Very Positive
Balance Sheet
The balance sheet shows a stable financial position with a debt-to-equity ratio of 0.32, reflecting a manageable level of leverage. The equity ratio stands at 20.11%, suggesting a solid capital structure. Return on equity is at 14.42%, indicating effective use of shareholders' equity to generate profits. While the company has increased liabilities, the equity growth counters potential risks, maintaining overall stability.78
Positive
Cash Flow
Pagseguro Digital faces challenges in cash flow management, with a negative free cash flow of -4.55 billion in 2024, compared to 2.01 billion in 2023, indicating significant capital outlays or operational adjustments. The operating cash flow to net income ratio is negative, reflecting cash flow issues despite profitability. However, the company's strategic investments may yield future benefits, offsetting current cash flow concerns.62
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 18.33B | 15.68B | 15.16B | 10.30B | 6.69B |
| Gross Profit | ||||
| 8.79B | 7.55B | 7.69B | 4.52B | 2.91B |
| EBIT | ||||
| 5.96B | 5.39B | 5.07B | 2.12B | 1.73B |
| EBITDA | ||||
| 7.54B | 6.72B | 6.19B | 2.89B | 2.11B |
| Net Income Common Stockholders | ||||
| 2.12B | 1.65B | 1.50B | 1.17B | 1.29B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.42B | 2.90B | 2.95B | 2.58B | 2.62B |
| Total Assets | ||||
| 72.90B | 55.11B | 45.57B | 31.15B | 22.32B |
| Total Debt | ||||
| 4.68B | 16.38B | 12.12B | 4.22B | 838.14M |
| Net Debt | ||||
| 3.75B | 13.48B | 10.28B | 2.42B | -801.92M |
| Total Liabilities | ||||
| 58.23B | 41.87B | 33.67B | 20.62B | 13.00B |
| Stockholders Equity | ||||
| 14.67B | 13.24B | 11.91B | 10.53B | 9.32B |
| Cash Flow | Free Cash Flow | |||
| -4.55B | 2.01B | 1.39B | -883.46M | 106.85M |
| Operating Cash Flow | ||||
| -3.42B | 4.00B | 3.59B | 929.18M | 2.17B |
| Investing Cash Flow | ||||
| -1.83B | -2.70B | -2.25B | -1.53B | -1.88B |
| Financing Cash Flow | ||||
| 3.27B | -225.99M | -1.31B | 764.59M | -45.09M |
Pagseguro Digital Technical Analysis
Positive
8.53
Price Trends
7.90
Positive
7.42
Positive
8.87
Negative
Market Momentum
0.17
Negative
57.44
Neutral
90.50
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PAGS, the sentiment is Positive. The current price of 8.53 is above the 20-day moving average (MA) of 8.15, above the 50-day MA of 7.90, and below the 200-day MA of 8.87, indicating a neutral trend. The MACD of 0.17 indicates Negative momentum. The RSI at 57.44 is Neutral, neither overbought nor oversold. The STOCH value of 90.50 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PAGS.
Pagseguro Digital Risk Analysis
Pagseguro Digital disclosed 66 risk factors in its most recent earnings report. Pagseguro Digital reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Pagseguro Digital Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $2.81B | 6.87 | 15.39% | ― | 8.26% | 20.41% | |
78 Outperform | $3.48B | 80.45 | 9.65% | ― | 41.86% | 96.57% | |
74 Outperform | $2.31B | 19.77 | 17.45% | ― | 17.64% | 30.75% | |
74 Outperform | $2.48B | 19.26 | 26.10% | ― | 33.84% | 0.29% | |
63 Neutral | $3.36B | 8.73 | -9.48% | ― | -8.52% | -180.71% | |
61 Neutral | $1.93B | 81.10 | 2.34% | ― | -25.02% | ― | |
58 Neutral | $10.03B | 10.00 | -6.85% | 3.09% | 7.49% | -11.58% |
* Technology Sector Average
Performance Comparison
PAGS
Pagseguro Digital
8.53
-3.26
-27.65%
STNE
Stoneco
12.26
-3.01
-19.71%
PAYO
Payoneer
6.36
1.42
28.74%
PAY
Paymentus Holdings
29.14
9.78
50.52%
MQ
Marqeta
3.82
-1.61
-29.65%
DLO
DLocal
8.70
-5.69
-39.54%
Pagseguro Digital Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: 4.53% | Next Earnings Date: May 29, 2025
Earnings Call Sentiment Positive
The earnings call demonstrated a robust performance with record TPV growth, increased net income, and strong client acquisition. Despite challenges like a higher-than-expected SELIC rate and concerns around transaction yields, the company effectively implemented strategies such as repricing and cost of funding reduction to maintain profitability.Highlights
Record TPV Growth
Total Payment Volume (TPV) reached a record of BRL 518 billion, representing a 32% year-over-year growth.
Strong Client Growth
PagBank ended the year with 33.2 million clients, adding 2.1 million year-over-year.
Net Income and EPS Increase
Net income reached BRL 2.3 billion, a 28% growth compared to 2023, with diluted EPS growing 30%.
Banking Revenue Surge
Banking revenue set a record of BRL 513 million, growing 58% year-over-year, with gross profit from the banking segment increasing by 80%.
Successful Repricing Strategy
Strategic repricing helped mitigate the impact of higher interest rates and contributed to managing the product mix impact.
Cost of Funding Reduction
The APY for total deposits decreased by 400 basis points compared to Q4 '23, reducing the total cost of deposits to 90% of the CDI.
Lowlights
High SELIC Rate Impact
Contrary to initial projections, the SELIC rate ended more than 300 basis points higher than anticipated, affecting financial costs.
Transaction Yield Concerns
Transaction activities revenue decreased by 8% year-over-year, suggesting a lower take rate, partly attributed to PIX and client mix changes.
Company Guidance
During the fourth quarter of 2024 earnings call for PagSeguro Digital, the company reported impressive financial performance and provided guidance for 2025. The company ended the year with 33.2 million clients, an increase of 2.1 million year-over-year. Their payment TPV reached a record BRL 518 billion, marking a 32% growth from the previous year. Net revenues rose by 18% to BRL 18.8 billion, while net income hit an all-time high of BRL 2.3 billion, a 28% increase compared to 2023. The diluted EPS on a GAAP basis climbed to BRL 6.62, representing a 30% growth. PagSeguro's return on average equity improved by 198 basis points year-over-year to 15.2%. For 2025, the company provided guidance with expectations of gross profit growth between 7% and 11%, earnings per share growth between 11% and 15%, and capital expenditures ranging from BRL 2.2 billion to BRL 2.4 billion. The company's strategic initiatives focused on increasing revenues, enhancing shareholder value, and optimizing cost structures to navigate the challenging macroeconomic environment.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.