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Section 1: 6-K (6-K)

6-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

For the month of March 2018

Commission File Number: 001-38353

 

 

PagSeguro Digital Ltd.

(Name of Registrant)

Av. Brigadeiro Faria Lima, 1384, 4º andar, parte A

São Paulo, SP, 01451-001, Brazil

+55 11 3038 8127

(Address of Principal Executive Office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F  ☒

  Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

Yes  ☐

   No  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

Yes  ☐

   No  ☒


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PagSeguro Reports Fourth Quarter and Full Year Results

4Q17 Net Income reached R$188.9 million, up 391% yoy, and

Full year net income reached R$478.8 million, up 276% yoy

São Paulo, March 08, 2018 PagSeguro Digital Ltd. (the Company) announced today its fourth quarter and full year results for the period ended December 31, 2017. The Company´s consolidated financial statements are presented in Reais (R$), unless otherwise indicated, in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

Fourth Quarter 2017 Financial & Operational Highlights:

 

    R$13.6 billion in total payment volume (TPV), up 183.4% year-on-year

 

    Active merchants in the last 12 months of 2.8 million, up 97.8% year-on-year, with growth of 1.4 million net new merchants

 

    R$831.0 million in total net revenue*, up 118.1% year-on-year

 

    R$188.9 million in net income, up 390.6% year-on-year

 

    Net Margin of 22.7%, up 12.6 percentage points year-on-year

Full Year 2017 Financial & Operational Highlights:

 

    R$38.5 billion in total payment volume (TPV), up 173.2% year-on-year

 

    R$2.5 billion in total net revenue*, up 121.7% year-on-year

 

    R$478.8 million in net income, up 276.4% year-on-year

 

    Net Margin of 19.0%, up 7.8 percentage points year-on-year

 

Main Operational and Financial Indicators (R$ millions)

   4Q17      4Q16      Var.%      2017      2016      Var.%  

TPV

     13,641.1        4,813.2        183.4%        38,476.8        14,085.1        173.2%  

Active Merchants (LTM)

     2,791.2        1,410.8        97.8%        2,791.2        1,410.8        97.8%  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Net Revenue*

     831.0        381.0        118.1%        2,523.4        1,138.4        121.7%  

Net Income

     188.9        38.5        390.6%        478.8        127.2        276.4%  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net Margin (%)

     22.7%        10.1%        12.6 pp        19.0%        11.2%        7.8 pp  

 

* Total revenue and income

4Q17 and Full Year Results

 

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Financial Discussion:

Total Net revenue*

Total net revenue*, which includes revenue from transaction activities and other services, revenue from sales and financial income amounted to R$2,523.4 million in 2017, an increase of 121.7 % from R$1,138.4 million in 2016.

Revenue from transaction activities and other services

Net revenue from transaction activities and other services in 2017 amounted to R$1,224.3 million, an increase of R$744.2 million, or 155.0%, from R$480.0 million in 2016.

The year-on-year increase was mainly due to a continued increase in our customer base and TPV.

Net revenue from transaction activities and other services during 2017 increased by a lesser percentage than our TPV, which increased to R$38.5 billion from R$14.1 billion in 2016 or 173.2%. This fact was mainly due to the higher proportion of debit card transactions in our TPV in 2017 as compared to 2016.

Revenue from sales

Net revenue from sales in 2017 amounted to R$471.9 million, an increase of R$211.3 million, or 81.1%, from R$260.6 million in 2016. However, in relative terms, the share from POS sales has decreased from 23% in 2016 to 19% in 2017. In addition, in 4Q17 the share of POS device sales has decreased to 13% from 25% in 4Q16.

Financial income

Financial income, which represents the finance discount we withhold from the early payment of receivables on the 2nd through the 12th installment, amounted to R$818.6 million in 2017, an increase of R$426.2 million, or 108.6% from R$392.4 million in 2016.

The year-on-year growth in this activity was due to growth in our TPV.

Other financial income

Other financial income amounted to R$8.6 million in 2017, an increase of R$3.2 million, or 60.7% from R$5.3 million in 2016.

Expenses

Total expenses amounted to R$1,839.9 million in 2017, an increase of R$856.9 million, or 87.2% from R$983.0 million in 2016. As a percentage of our Total revenue and income, our total expenses in 2017 decreased by 13.4 percentage points, to 72.9% in 2017 from 86.3% in 2016.

*Total revenue and income

4Q17 and Full Year Results

 

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Cost of sales and services

Cost of sales and services amounted to R$1,324.4 million in 2017, an increase of R$700.7 million, or 112.4% from R$623.7 million in 2016. As a percentage of the total of our Net revenue from transaction activities and other services and our Net revenue from sales, our Cost of sales and services posted a decrease of 6.1 percentage points, to 78.1% from 84.2% in 2016.

Within our Cost of sales and services line item, our Cost of services, expressed as a percentage of our Net revenue from transaction activities and other services, decreased to 67.8% from 74.5% in 2016. This decrease reflected ongoing economies of scale due to growth in our TPV.

Our Cost of sales, expressed as a percentage of our Net revenue from sales, posted a slight increase to 104.8% in 2017 from 102.0% in 2016.

Selling expenses

Our Selling expenses amounted to R$245.8 million in 2017, an increase of R$45.8 million, or 22.9% from R$199.9 million in 2016. As a percentage of our Total revenue and income, our Selling expenses decreased by 7.9 percentage points, to 9.7% in 2017 from 17.6% in 2016. Our Marketing and advertising costs, while increased in absolute terms, decreased significantly as a percentage of Total revenue and income due to TPV growth.

Administrative expenses

Our Administrative expenses amounted to R$153.2 million in 2017, an increase of R$68.7 million, or 81.4%, from R$84.5 million in 2016. This increase was mainly due to an increase in personnel costs, bank and consulting fees. As a percentage of our Total revenue and income, our Administrative expenses decreased by 1.3 percentage points, to 6.1% in 2017 from 7.4% in 2016.

The reduction in the level of our Administrative expenses as a percentage of our Total revenue and income over the last three years reflects the scalable nature of our business.

Financial expenses

Our Financial expenses amounted to R$104.5 million in 2017, an increase of R$36.2 million, or 53.1%, from expenses of R$68.3 million in 2016.

Expressed as a percentage of our Financial income, our Financial expenses represented 12.8% in 2017 and 17.4% in 2016.

Other (expenses) income, net

Our Other (expenses) income, net, recorded expenses of R$12.0 million in 2017. This net amount principally reflected expenses related to contingency proceedings during the year.

Profit before income taxes

Profit before income taxes amounted to R$683.5 million in 2017, an increase of R$528.1 million, or 340.0%, from R$155.4 million in 2016. The increase was due to growth in our Total revenue and income.

4Q17 and Full Year Results

 

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Income tax and social contribution

Income and social contributions tax amounted to expenses of R$204.7 million in 2017, an increase of R$177.1 million from expenses of R$27.6 million in 2016.

This total item consists of Current income tax and social contribution and deferred income tax and social contribution, which relates principally to the tax benefit under the Lei do Bem, which applies to investments made in innovation and technology by PagSeguro Brazil.

Total effective tax rate was 30.0% in 2017, compared with 17.8% in 2016.

The increase in 2017 was due to the increase in our Profit before income taxes while the amount of our Lei do Bem tax benefits remained stable.

Net income

Net income for the year in 2017 amounted to R$478.8 million, an increase of R$351.6 million, or 276.4%, from R$127.8 million in 2016.

This increase was principally driven by the volume growth in both our net revenue items as well growth in income from our early payment of receivables and operating leverage.

New Products

In February, PagSeguro launched a new functionality for its Moderninha Pro and Moderninha Wifi devices, enabling multiple merchants to share a single point-of-sale device. With this new functionality, each terminal can serve up to six digital accounts, handling sales transactions for each account separately and allowing entrepreneurs and merchants to manage multiple businesses using a single POS device.

 

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4Q17 and Full Year Results

 

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In March, PagSeguro launched the Minizinha Chip, its pocket point-of-sale device, an innovative new concept for POS terminals, that combines all of the high-end functionalities such as Wifi and GPRS connection within compact hardware that can literally fit in the merchants’ pocket.

Ideal for small merchants and micro entrepreneurs seeking mobility and convenience, this pocket point-of-sale device no longer requires smartphone pairing like other traditional mobile POSs, since it comes with a SIM card and free data plan, thus improving the merchant experience.

 

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4Q17 and Full Year Results

 

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Earnings webcast

PagSeguro (NYSE: PAGS) will host a conference call and earnings webcast on March 09th, at 09:00 am EST. The conference dial in in the US and International is 1-800-492-3904 or +1 646 828-8246. Connection in Brazil 55 11 3193-1001 or 55 11 2820-4001. Conference ID is PagSeguro.

To listen to a live webcast, please visit PagSeguro´s IR website at investors.pagseguro.com . A replay will be available on the same website following the call.

About PagSeguro:

PagSeguro Digital is a disruptive provider of financial technology solutions focused primarily on micro-merchants, small companies and medium-sized companies in Brazil. PagSeguro Digital’s business model covers all of the following five pillars:

 

  Multiple digital payment solutions;
  In-person payments via point of sale (POS) devices that PagSeguro Digital sell to merchants;
  Free digital accounts;
  Issuer of prepaid cards to clients for spending or withdrawing account balances; and
  Operating as an acquirer.

PagSeguro Digital is an UOL Group Company that provides an easy, safe and hassle-free way of accepting payments, where its clients can transact and manage their cash, without the need to open a bank account. PagSeguro Digital’s end-to-end digital ecosystem enables its customers to accept a wide range of online and in-person payment methods, including credit cards, debit cards, meal voucher cards, boletos, bank transfers, bank debits and cash deposits.

PagSeguro Digital’s mission is to disrupt and democratize financial services in Brazil, a concentrated, underpenetrated and high interest rate market, by providing an end-to-end digital ecosystem that is safe, affordable, simple and mobile-first for both merchants and consumers. For more information visit http://investors.pagseguro.com

Contacts:

Investor Relations:

PagSeguro Digital Ltd.

André Cazotto, +55 (11) 3914-9403

ir@pagseguro.com

investors.pagseguro.com

4Q17 and Full Year Results

 

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FULL YEAR INCOME STATEMENT – AUDITED (R$ Thousand) – IFRS

 

     2017     2016     %  
     R$     R$        

Net revenue from transaction activities and other services

     1,224,261       480,025       155.0%  

Net revenue from sales

     471,924       260,594       81.1%  

Financial income

     818,624       392,429       108.6%  

Other financial income

     8,576       5,337       60.7%  
  

 

 

   

 

 

   

 

 

 

Total revenue and income

     2,523,385       1,138,385       121.7%  

Cost of sales and services

     (1,324,380     (623,667     112.4%  

Selling expenses

     (245,759     (199,937     22.9%  

Administrative expenses

     (153,177     (84,461     81.4%  

Financial expenses

     (104,544     (68,301     53.1%  

Other (expenses) income, net

     (12,021     (6,660     80.5%  
  

 

 

   

 

 

   

 

 

 

PROFIT BEFORE INCOME TAXES

     683,504       155,359       340.0%  

Current income tax and social contribution

     (214,988     (7,431     2793.1%  

Deferred income tax and social contribution

     10,278       (20,149     -151.0%  
  

 

 

   

 

 

   

 

 

 

INCOME TAX AND SOCIAL CONTRIBUTION

     (204,710 )      (27,580 )      642.2%  
  

 

 

   

 

 

   

 

 

 

NET INCOME FOR THE YEAR

     478,794       127,779       274.7%  
  

 

 

   

 

 

   

 

 

 

Attributable to:

      

Owners of the Company

     478,781       127,186       276.4%  

Non-controlling interests

     13       593       -97.8%  

4Q17 and Full Year Results

 

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QUARTERLY INCOME STATEMENT – UNAUDITED (R$ Thousand) – IFRS

     4Q17     4Q16     %  
     R$     R$        

Net revenue from transaction activities and other services

     433,046       160,235       170.3%  

Net revenue from sales

     110,406       96,371       14.6%  

Financial income

     282,957       121,905       132.1%  

Other financial income

     4,639       2,486       86.6%  
  

 

 

   

 

 

   

 

 

 

Total revenue and income

     831,048       380,997       118.1%  

Cost of sales and services

     (405,965     (188,533     115.3%  

Selling expenses

     (61,653     (100,124     -38.4%  

Administrative expenses

     (45,446     (23,773     91.2%  

Financial expenses

     (40,752     (28,761     41.7%  

Other (expenses) income, net

     (6,986     (613     1039.6%  
  

 

 

   

 

 

   

 

 

 

PROFIT BEFORE INCOME TAXES

     270,247       39,193       589.5%  

Current income tax and social contribution

     (90,870     8,366       -1186.2%  

Deferred income tax and social contribution

     9,174       (9,106     -200.7%  
  

 

 

   

 

 

   

 

 

 

INCOME TAX AND SOCIAL CONTRIBUTION

     (81,696 )      (740     10940.0%  
  

 

 

   

 

 

   

 

 

 

NET INCOME FOR THE PERIOD

     188,551       38,453       390.3%  
  

 

 

   

 

 

   

 

 

 

Attributable to:

      

Owners of the Company

     188,941       38,453       391.4%  

Non-controlling interests

     (392     —      
  

 

 

   

 

 

   

 

 

 

4Q17 and Full Year Results

 

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CASH FLOW – AUDITED (R$ Thousand) – IFRS

 

     2017     2016  
     R$     R$  

CASH FLOWS FROM OPERATING ACTIVITIES

    

Profit before income taxes

     683,504       155,359  

Expenses (revenues) not affecting cash:

    

Depreciation and amortization

     51,571       31,246  

Loss of fixed assets sold

     49       —    

Chargebacks

     47,854       31,557  

Accrual/(reversal) of provision for contingencies

     3,538       603  

Unrealized loss on derivative instruments

     —         6,613  

Other financial cost, net

     660       5,549  

Changes in operating assets and liabilities

    

Note receivables

     (2,060,875     (783,954

Inventories

     (40,586     20,181  

Taxes recoverable

     8,055       8,579  

Other receivables

     (23,495     17,214  

Other payables

     (2,046     13,491  

Payables to third parties

     1,776,538       620,940  

Trade payables

     29,531       25,430  

Receivables from (payables to) related parties

     (64,400     (214,549

Salaries and social charges

     13,341       6,618  

Taxes and contributions

     (3,109     3,867  

Provision for contingencies

     486       (42
  

 

 

   

 

 

 
     420,616       (51,298
  

 

 

   

 

 

 

Income tax and social contribution paid

     (166,389     (18,059

Interest income received

     208,563       1 46,346  

Interest paid

     (9,175     —    
  

 

 

   

 

 

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

     453,615       76,989  
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

    

Amount paid on acquisitions

     (22,225     —    

Purchases of property and equipment

     (7,873     (1,996

Purchases and development of intangible assets

     (99,673     (70,394

Acquisition of financial investments

     (209,569     (337,098

Redemption of financial investments

     132,107       206,190  
  

 

 

   

 

 

 

NET CASH USED IN INVESTING ACTIVITIES

     (207,233 )      (203,298 ) 
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

    

Proceeds from borrowings

     —         199,390  

Payment of borrowings

     (199,480     —    

Payment of derivative financial instruments

     (5,831     —    

Distribution of dividends

     (54,273     —    
  

 

 

   

 

 

 

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

     (259,584     199,390  
  

 

 

   

 

 

 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     (13,202     73,081  
  

 

 

   

 

 

 

Cash and cash equivalents at the beginning of the year

     79,969       6,888  

Cash and cash equivalents at the end of the year

     66,767       79,969  

4Q17 and Full Year Results

 

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BALANCE SHEET – AUDITED (R$ Thousand) – IFRS

 

     2017      2016  
     R$      R$  

Cash and cash equivalents

     66,767        79,969  

Financial investments

     210,103        131,239  

Note receivables

     3,522,349        1,715,514  

Receivables from related parties

     124,723        300,809  

Inventories

     61,609        21,023  

Taxes recoverable

     14,446        17,703  

Other receivables

     27,956        4,495  
  

 

 

    

 

 

 

Total current assets

     4,027,953        2,270,752  
  

 

 

    

 

 

 

Judicial deposits

     872        534  

Prepaid expenses

     160        146  

Deferred income tax and social contribution

     37,015        8,305  

Property and equipment

     10,889        4,558  

Intangible assets

     158,868        86,108  
  

 

 

    

 

 

 

Total non-current assets

     207,804        99,651  
  

 

 

    

 

 

 

Total assets

     4,235,757        2,370,403  
  

 

 

    

 

 

 
     3,080,569        1,304,031  

Payables to third parties

     92,444        61,719  

Trade payables

     39,101        76,249  

Payables to related parties

     —          6,613  

Derivative financial instruments

     —          205,204  

Borrowings

     34,269        20,269  

Salaries and social charges

     52,064        6,911  

Taxes and contributions

     4,648        680  

Provision for contingencies

     —          22,243  

Dividends payable and interest on own capital

     15,872        15,244  
  

 

 

    

 

 

 

Other payables

     

Total current assets

     3,318,967        1,719,163  
  

 

 

    

 

 

 

Deferred income tax and social contribution

     42,809        24,378  

Other payables

     3,590        —    
  

 

 

    

 

 

 

Total non-current assets

     46,399        24,378  
  

 

 

    

 

 

 

Share capital

     524,577        524,577  

Legal reserve

     30,216        6,277  

Equity valuation adjustments

     55        —    

Profit retention reserve

     312,047        96,008  
  

 

 

    

 

 

 

Equity

     866,895        626,862  
  

 

 

    

 

 

 

Non-controlling interests

     3,496        —    
  

 

 

    

 

 

 

TOTAL EQUITY

     870,391        626,862  
  

 

 

    

 

 

 

Total liability and equity

     4,235,757        2,370,403  
  

 

 

    

 

 

 

4Q17 and Full Year Results

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: March 8, 2018

 

PagSeguro Digital Ltd.

 

By:   /s/ Eduardo Alcaro
Name:   Eduardo Alcaro
Title:  

Chief Financial and Investor Relations Officer,

Chief Accounting Officer and Director

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