PAGS

PagSeguro Digital Ltd. - Q1 2026 Financial Summary

Business Context and Reporting Period

This Form 6-K filing presents the unaudited condensed consolidated interim financial statements for PagSeguro Digital Ltd. for the three-month period ended March 31, 2026, compared to the same period in 2025. The filing was authorized by the Board of Directors on May 8, 2026, and filed on May 12, 2026. PagSeguro operates as a financial technology group focused on micro-merchants and small-to-medium businesses (SMBs) in Brazil and Latin America, operating as a single segment.

Key Financial Metrics

All amounts are in thousands of Brazilian Reais (BRL) unless otherwise noted.

Material Changes vs. Prior Period

• Revenue Growth: Total revenue increased by approximately 3.2% year-over-year, driven primarily by a 3.9% increase in financial income (R$2.80B vs R$2.70B), partially offset by a 1.7% decline in transaction activity revenue.
• Profitability: Net income rose 3.9% to R$545.5M. Profit before tax increased 7.1% to R$620.8M.
• Expense Management: Selling expenses decreased 6.7% to R$375.1M. However, credit loss allowance expenses more than doubled to R$60.0M from R$21.1M, reflecting increased provisioning.
• Cash Flow: Net cash provided by operating activities decreased 23.6% to R$930.0M, largely due to significant outflows in checking accounts and payables to third parties.
• Balance Sheet: Total assets grew slightly to R$75.2B. The credit portfolio increased to R$4.55B (net of ECL), while banking issuances (liabilities) grew to R$31.0B.

Outlook, Risks, and Unusual Items

• Accounting Standards: The company adopted amendments to IFRS 9 and IFRS 7 effective January 1, 2026, with no material impact identified. The company is currently assessing the impact of IFRS 18, effective January 1, 2027, which may change the presentation of operating profit and cash flows.
• Share Repurchases and Cancellations: The company executed a share repurchase program, acquiring R$282.8M in treasury shares in Q1 2026. Additionally, 15 million common shares were cancelled in February 2026, reducing the share count to 290.7 million.
• Dividends: A dividend of US$0.26 per share (approx. R$376.6M) was approved in January 2026 and paid in February 2026.
• Financial Risks:
  • Interest Rate Risk: The company is highly exposed to the CDI rate. Sensitivity analysis indicates a 1.5% decrease in CDI would reduce net financial income by approximately R$4.67B over 12 months.
  • Credit Risk: Credit loss provisions increased significantly. The company utilizes a three-stage IFRS 9 model to manage credit risk across payroll loans, credit cards, and general loans.
  • Foreign Exchange: Exposure exists primarily through POS device purchases and dividend payments in USD. A 10% appreciation of the BRL against the USD would negatively impact the net position by approximately R$539M.
• Contingencies: The company faces tax and civil litigation. A significant tax assessment regarding IOF on intercompany loans (R$347.8M) is being defended. Total provisions for contingencies stand at R$232.2M.

Investor Verification Checklist

• Credit Quality: Verify the sustainability of the credit portfolio given the 184% year-over-year increase in credit loss allowance expenses.
• Liquidity Management: Review the maturity profile of banking issuances (R$31.0B) against cash reserves and operating cash flows to ensure coverage of short-term obligations.
• Share Count Impact: Confirm the impact of recent share cancellations and repurchases on future earnings per share (EPS) dilution/accretion.
• Regulatory Environment: Monitor the outcome of the IOF tax assessment and the implementation timeline for IFRS 18, which may alter reported operating metrics.
• Interest Rate Sensitivity: Assess the company's hedging strategy effectiveness against potential fluctuations in the Brazilian CDI rate.