- For the three months ended June 30, revenue grew 39%, while earnings before tax increased by 47%
- Luis Frias, the majority owner of UOL and PAGS joined the call with a few comments: The banking market in Brazil is 14 times larger than the payments market. The company has significant room for growth has a first mover advantage
- PagSeguro platform has 9.4 million active users, 4.7 million merchants and 4.7 million customers with PAGS digital wallet and PagBank consumers
- PagBank had 2.5 million downloads in the quarter and 1.4 million active customers. Average customer balance grew by 58% YoY
- The company sees competitors engaging in a "useless struggle", they didn't mention NuBank though, which seems to have a larger customer base than PagBank
- The company mentioned that PagBank is the largest digital bank according to Google Trends and the largest prepaid card issuer. Hard to say if Google Trends is a relevant benchmarking tool in this case, NuBank seems to be larger than PagBank, as it has 8.5 million customers according to https://www.vox.com/recode/2019/6/5/18654454/nubank-softbank-valuation-brazil-banking-funding and it's seeking a 8-10 billion valuation, vs 15.5 billion for PAGS. Other competitors include MercadoLibre (MELI) at $30 billion and Stone Co. with a $9 billion market cap.
- Net take rate was 3.23% (up 0.11% QoQ, but down 0.13% YoY), GAAP net margin 23.2%, up from 22.7% in Q22018
- BRL26.8 billion, up 59% year-over-year, closing the quarter with 4.7 million active merchants, adding 1.2 million when compared to the second quarter 2018 (up 34%)
- According to IBGE and Brazilian Central Bank, there are 68 million unbanked people in Brazil. Additionally, 28 million of the low-income population do not have a bank account and 57% of the population are interested in adopting digital banks. Still, 40% of the paychecks are paid in cash, 65% of the bill payments are also made in cash and, finally, 51% of the new bank accounts are opened just to receive payroll checks.
- Total costs and expenses as a % of TPV declined from 4.1% in Q22018 to 3.5% in Q22019
- Company launched Pag Credit, which are loans advanced to merchants. Their focus is not on volume but on deliquencies, to have the lowest deliquencies possible. Credit is easy to advance but hard to collect.
- The company is aiming to get 30% of its revenue from PagBank in 3-5 years
- PagSeguro is constantly evaluating international expansion opportunities, nothing decided yet. The room to grow in Brazil is still huge
Overall very solid results and I haven't sold a single share yet, I would add more if I didn't have ARCE in my portfolio already.