PagSeguro Digital: From End of Growth to Shrinking Business

Research evidence excerpt

PagSeguro Digital: From End of Growth to Shrinking Business

IdeaM

Conference Call Highlights

Guidance. Management provided an update on progress against this year’s guidance,

noting that credit portfolio growth was strong in the quarter and is expected to continue.

Gross profit came in below expectations, which management attributed to temporary

interest-rate headwinds and higher financial costs. Management reiterated its confidence

that these pressures should ease as the macro backdrop improves.On the long-term

outlook, management expects stronger growth in credit outstanding by 2027, supported

by a more favorable rate environment and the rollout of additional unsecured credit

products. It highlighted that some offerings, including private payroll loans, are not yet

fully deployed and should contribute incremental growth once launched more broadly. As

macro conditions normalize, management expects the interest-rate drag on gross profit to

become a tailwind over time

TPV Growth. Management highlighted a clear sequential recovery in TPV growth trends,

improving from a 5% y/y decline in 3Q to a 2% decline in 4Q and stabilizing in the most

recent quarter. Based on this trajectory, the company expects TPV growth to turn positive

on a y/y basis over the course of the year.

Competition. Management described the SMB competitive environment as broadly

unchanged in recent months, with the same core set of players active. It noted that peers

growing above 20% are typically addressing different customer segments, which limits

direct competitive overlap. Overall, management expressed comfort with industry growth

dynamics and highlighted that pricing discipline and rational behavior remain intact across

the sector.

Expenses.