February 21, 2019 F e b r u a r y 2 0 1 9 Important disclosure - - PowerPoint PPT Presentation

F e b r u a r y 2 0 1 9

4Q18 and Full Year Presentation February 21, 2019

This presentation, prepared by PagSeguro Digital Ltd (the “company”), is solely for informational purposes. The information in this presentation does not constitute or form part of, and should not be construed as, an offer or invitation to subscribe for, underwrite or otherwise acquire, any securities of the company or any subsidiary or affiliate of the company, nor should it or any part of it form the basis of, or be relied on in connection with any contract to purchase or subscribe for any securities of the company or any of its subsidiaries or affiliates nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. This presentation may contain forward-looking statements relating to matters such as continued growth prospects for the company, industry trends and product and technology initiatives. These statements are based on currently available information and our current assumptions, expectations and projections about future events. While we believe that our assumptions, expectations and projections are reasonable in view of currently available information, you are cautioned not to place undue reliance on these forward-looking

• statements. Our actual results may differ materially from those included in this presentation, for a variety of reasons, including those described in the forward-looking statements

and risk factor sections of our Registration Statement on Form F-1 (File No. 333-225697) and other filings with the Securities and Exchange Commission (the “SEC”), which are available on our investor relations website (http://investors.pagseguro.com) and on the SEC’s website (https://www.sec.gov). All of the information included in this presentation is updated as of December 31, 2018. Except as may be required by applicable law, we assume no obligation to publicly update

• r revise our statements.

Non-GAAP financial measures This presentation includes the following financial measures defined as "non-GAAP financial measures" by the SEC: non-GAAP net income, non-GAAP total net revenue, non- GAAP net take rate, non-GAAP total costs and expenses, non-GAAP administrative expenses and non-GAAP net margin. We present non-GAAP measures when we believe that the additional information is useful and meaningful to investors. These non-GAAP measures are provided to enhance investors' overall understanding of our current financial performance and its prospects for the future. Specifically, we believe the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses, as the case may be, that may not be indicative of our core operating results and business outlook. For an explanation of the foregoing non-GAAP measures, please see “Supplemental Information" included in this presentation. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this non-GAAP financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation of, or as a substitute for, the financial information prepared and presented in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with IFRS. These measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures, see “Supplemental Information."

Important disclosure

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Summary of 2018 full year figures

Metric 2018 IPO Projections3 Reported Growth %

Non-GAAP Net Income (R$)1 R$ 910M R$ 1,068M 17% Non-GAAP Net Revenue (R$)2 R$ 3.6B R$ 4.2B 17% TPV R$ 63.9B R$ 76B 19%

Exceeded projections shared with sell side research analysts during the IPO process

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¹ Non-GAAP Net Income is a non-GAAP financial measure. Please see the Supplemental Information for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure

Full Year Highlights

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• Net Income of R$910.4M, up 90% year over year, or R$1,068M, up 123% year over year, after non-GAAP adjustments
• Net Revenue of R$4.3B, up 72% year over year, or R$4.2B, up 67% year over year, after non-GAAP adjustments
• TPV of R$76B, growing R$38B or up 98% year over year , the largest growth among listed Brazilian payments companies
• 4.1M active merchants, adding +1.3M new merchants year over year
• Net Margin of 21%, an increase of 2p.p. year over year, or non-Gaap Net Margin of 25.4%, an increase of 6.4p.p. year over year
• In December, more than 20% of our active merchant base adopted additional products like bill payment, prepaid cards and mobile top up
• Highly rated app (4.8 stars) on Google and Apple stores, with over 339k reviews, reinforcing our commitment in delivering top class User Experience
• Strongest brand in Brazilian payments industry, with 7.5x more searches than second peer according to Google Trends (Financials Category)
• 130 app updates, 15 new main products launched and 3 new POS devices launched (Minizinha Chip, Moderninha Plus and Smart POS)
• Net Cash Used in Operating Activities ended at R$25.7M, close to break even, after adding back the repayment of R$1.7bn in early payment receivables
• Average spending per merchant grew by 19% year over year, ending Q418 at R$6.2k

3.08% 3.06% 2.96% 2.88% 1.91% 1.97% 1.91% 1.70%

• 1.72%
• 1.67%
• 1.61%
• 1.59%

3.27% 3.36% 3.25% 3.00% 5,205 4,892 5,113 5,528 6,192 4Q17 1Q18 2Q18 3Q18 4Q18 2,791 3,827 4,135 4Q17 3Q18 4Q18

QoQ +308

13.6 20.3 24.6

4Q17 3Q18 4Q18 38.5 76.1

2017 2018

¹ Net revenue from transactional activities and other services + financial income - Transactions Cost / Total TPV

Active Merchants² (# thousand)

²At least one transaction in the last twelve months.

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Total Payment Volume (R$ billion) Average Spending per Merchant³ (R$)

QoQ +12%

³TPV / Average quarterly Active Merchants

Operating Metrics

Net Take Rate¹ (%)

YoY +81% QoQ +22% YoY +98% YoY +1,344 YoY +19%

1Q18 2Q18 3Q18 4Q18 Change QoQ

• 21 bps
• 8 bps

+2 bps

• 25 bps

37.8 34.9 0.9

PagSeguro Player A Player B

2018 x 2017 TPV Growth (R$ billion)

98% 72% 0%

PagSeguro Player A Player B

2018 x 2017 TPV Growth (%)

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Unmatched Growth Among Listed Brazilian Payments Companies

Summary Of Metrics

Q4 2018 Guidance Reported

GAAP Net Income (R$) R$ 280 – 290M R$ 302.8M

Net income growth year over year 49 – 54% 61%

Non-GAAP Net Income (R$)¹ R$ 305 – 315M R$ 323.4M

Non-GAAP Net income growth year over year¹ 62 – 67% 72%

Full Year 2018 Guidance Reported

GAAP Net Income (R$) R$ 888 – 898M R$ 910.4M

Net income growth year over year 85 – 88% 90%

Non-GAAP Net Income (R$)¹ R$ 1,050 – 1,060M R$ 1,067.7M

Non-GAAP Net income growth year over year¹ 119 – 121% 123%

Delivered Net Income above the top of the guidance range

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¹ Non-GAAP Net Income is a non-GAAP financial measure. Please see the Supplemental Information for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure.

4.8% 4.1%

2017 2018 0.4% 0.8%

2017 2018 0.3% 0.4%

4Q17 4Q18 4.1% 3.4%

4Q17 4Q18

0.3% Non- GAAP 0.2% Non-GAAP 3.3% Non-GAAP 55% 58% 36% 34% 9% 8%

3Q18 4Q18

49% 56% 32% 35% 19% 9%

2017 2018

Total Net Revenue² (%) Total Costs and Expenses³ (% of TPV)

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Administrative Expenses⁴ (% of TPV)

Strong Revenue Generation and Continuing to Leverage Operating Costs and Expenses

2,523.4 4,334.7 131.3 4,203.4

2017 GAAP 2018 GAAP Non-GAAP Adjustments 2018 Non- GAAP

831 1,267.6 0.1 1,267.5

4Q17 GAAP4Q18 GAAP Non-GAAP Adjustments 4Q18 Non- GAAP

Total Net Revenue¹ (R$ million)

QoQ +53% YoY +67%

¹ Non-GAAP Total Net Revenue is a non-GAAP financial measure. No Non-GAAP Adjustments were recorded in 4Q17. Please see the Supplemental Information for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure. ² “Excludes other financial income (R$4.6 million in 4Q17, R$41.2 million in 4Q18, R$8.6 million in 2017 and R$147.2 million in 2018) to make results comparable”. ³ Non-GAAP Total Costs and Expenses is a non-GAAP financial measure. No Non-GAAP Adjustments were recorded in 4Q17. Excludes stock-based compensation expenses (no value recorded in 4Q17 and R$31mn in 4Q18) to make results comparable. Please see the Supplemental Information for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure. ³ Non-GAAP Total Costs and Expenses is a non-GAAP financial measure. No Non-GAAP Adjustments were recorded in 2017. Excludes stock-based compensation expenses (no value recorded in 2017 and R$419.3mn in 2018) and IOF tax related (no value recorded in 2017 and R$18mn in 2018) to make results comparable. Please see the Supplemental Information for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure. ⁴ Non-GAAP Administrative Expenses is a non-GAAP financial measure. No Non-GAAP Adjustments were recorded in 4Q17 Excludes administrative stock-based compensation expenses (no value recorded in 4Q17 and R$30.2mn in 4Q18) to make results comparable. No Non-GAAP Adjustments were recorded in 2017 Excludes administrative stock-based compensation expenses (no value recorded in 2017 and R$359.3mn in 2018) to make results comparable. Please see the Supplemental Information for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure.

3.5% Non-GAAP

303 20 189 323 4Q17 4Q18

GAAP Net Income Non-GAAP Net Income

23% 24%

4Q17 4Q18

19% 21%

2017 2018 910 158 479 1,068 2017 2018

GAAP Net Income Non-GAAP Net Income

YoY +72% YoY +61%

Net Income Margin Growth

Net Income (R$ million)¹

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Net Income Margin (%)²

¹ Non-GAAP Net Income is a non-GAAP financial measure. Please see the Supplemental Information for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure; ² Net Margin is calculated by dividing Net Income by Total Revenue and Income. Non-GAAP Net Income Margin is calculated by dividing Non-GAAP Net Income by Non-GAAP Total Revenue and Income. Non-GAAP Net Income Margin is a non-GAAP financial measure. Please see the Supplemental Information for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure.

Net Income Margin (%)² Net Income (R$ million)¹

YoY +123% YoY +90% 25%: Non-GAAP 26%: Non-GAAP

Cash Flow close to break-even

• Net Cash used in operating activities in the year ended December 31, 2018 totaled R$1,763.2 million
• Of which R$1,737.5 million was from note receivables for which we received early payment from issuing banks as of

12/31/17 and subsequently repaid in 2018

• Disregarding the impact of these note receivables, our Net cash used in operating activities would have reached a negative

amount of R$25.7 million

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Cash Position (R$ million) Dec/2018 Note Receivables 8,104.7 Payables to Third parties (4,324.2) Net Working Capital 3,780.5 Cash and Cash Equivalents 2,763.1 Net Working Capital + Cash 6,543.6

• Liquid Balance Sheet, ending December 31, 2018 with net working capital of R$3,780.5 million and cash and cash

equivalents of R$2,763.1 million

Net Cash (R$ million) Dec/2018 Changes in receivables subject to early payment from issuing banks (1,737.5) Net cash from operating activities (1,763.2) Net cash from operating activities adding back early payment from issuing banks (25.7)

Licenses Issued by the Brazilian Central Bank

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• December 2014
• PagSeguro applied to the Brazilian Central Bank for the following licenses:
• Payment institution: acquirer and digital payments account service provider
• Issuer of prepaid electronic money
• October 2018
• The Brazilian Central Bank granted all licenses for which PagSeguro applied in December 2014
• January 2019
• PagSeguro received approvals from the Brazilian Central Bank and the Administrative Council for

Economic Defense (CADE - antitrust entity authority) to acquire 100% of the shares of BBN Banco Brasileiro de Negócios S.A (“Banco BBN”)

• Banco BBN holds a banking license to provide a full range of financial services

January May February July August June March September

Bill Payments Shared POS Feature QR Code Payments P2P Payments New Sales App for iOS Moderninha Plus Minizinha Chip

December 12 April October November

Boleto Charge Pending Orders Management Inventory Management Moderninha Smart PAGS Capital New Merchant Panel

Main Products and Features Launched in 2018

Mobile Top Up Multi-store Reports

M&A: Acquisition of TILIX

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✓ Automated application that innovates the experience in paying bills ✓ Freedom for the user to pay any bill using account balances, credit cards, cash back and loyalty points, among

• thers

✓ Future Integration into PAGS´s digital account

PAGS: Robust Fintech Platform

Product Status Digital Account Prepaid Card P2P Payments E-Commerce E-Wallet Cross-border Settlements Purchase Protection Bill Payments Mobile Top-up In Store QR Code Payments Online QR Code Payments Instant Transfers (Cash in and Cash out) Lending

Launched

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Brand Recognition

PAGS has in average 7.5x more searches than the second largest player, considering the last 12 months

Source: Google Trends (Financials Category) Source: Google Trends (Financials Category)

PagSeguro Player 2 Player 3 Player 4 Player 5

Google Hits Comparison (Average from last 12 months) Payment Players Search Comparison (last 12 months)

PagSeguro Player 2 Player3 Player 4 Player 5

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Guidance - Net income for full year 2019

2019 Full Year

GAAP Net Income

R$1.182B to R$1.360B

Year-over-Year growth 30 – 49%

Non-GAAP Net Income¹

R$1.322B to R$1.500B²

Year-over-Year growth 24 – 40%

¹ Non-GAAP Net Income is a non-GAAP financial measure. Please see the Supplemental Information for a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure; ² adjustments of approximately R$140 million, primarily representing stock-based compensation expense and related payroll taxes

The low end of our guidance range (R$1.322 billion for our Non-GAAP net income for 2019) is exactly the same number we shared with research analysts before our IPO

This slide contains forward-looking statements relating to matters such as continued growth prospects for the company. These statements are based on currently available information and our current assumptions, expectations and projections about future events. While we believe that

• ur assumptions, expectations and projections are reasonable in view of currently available information, you are cautioned not to place undue reliance on these forward-looking statements. Our actual results may differ materially from those included in this presentation, for a variety of

reasons, including those described in the forward-looking statements and risk factor sections of our Registration Statement on Form F-1 (File No. 333-225697) and other filings with the Securities and Exchange Commission (the “SEC”), which are available on our investor relations website (http://investors.pagseguro.com) and on the SEC’s website (https://www.sec.gov).

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SUPPLEMENTAL INFORMATION

Q1-Q4 Results: Reconciliation of GAAP measures to Non-GAAP measures

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(Amounts expressed in R$ millions, except amounts per share) Three Months Ended March 31, 2018 Three Months Ended June 30, 2018 Three Months Ended September 30, 2018 Three Months Ended December 30, 2018 Total revenue and income 928.0 1,001.8 1,137.3 1,267.5 Less: Foreign exchange gain on follow -on proceeds (89.8) (27.3) (14.3) 0.1 Non-GAAP total revenue and income (1) 838.2 974.5 1,123.0 1,267.6 Total expenses (765.0) (689.1) (816.8) (846.1) Less: Share-based long-term incentive plan (LTIP) 210.6 62.3 115.5 31.0 Less: Tax related to remittance of follow -on proceeds (IOF tax) 13.1 0.7 4.1

• Non-GAAP total expenses (2)

(541.3) (626.1) (697.2) (815.1) Profit before taxes 163.0 312.7 320.6 421.4 Plus: Total Non-GAAP adjustments 133.9 35.7 105.4 31.1 Non-GAAP profit before taxes (3) 296.9 348.4 426.0 452.5 Income tax and social contribution (14.5) (85.1) (89.0) (118.6) Less: Income tax and social contribution on non-GAAP adjustments (69.5) (21.2) (46.5) (10.5) Non-GAAP deferred income tax (4) (84.0) (106.3) (135.5) (129.1) Net income 148.5 227.6 231.6 302.8 Plus: Total Non-GAAP adjustments 64.4 14.5 58.8 20.6 Non-GAAP net income (5) 212.9 242.1 290.4 323.4 [1] Foreign exchange gain on IPO or follow-on proceeds: financial income related to the impact of exchange rate variation on the conversion from U.S. dollars into Brazilian reais of the proceeds from our sale of new shares in our IPO and follow-on offering. We exclude this foreign exchange variation from our non-GAAP measures primarily because it is an unusual income. [2] Non-GAAP total expenses (a) Share-based long-term incentive plan (LTIP): Stock-based compensation expenses and related employer payroll taxes. This consists of expenses for equity awards under our long-term incentive plan (LTIP). We exclude stock-based compensation expenses from our non-GAAP measures primarily because they are non-cash expenses and they depend on our stock price and the exchange rate from U.S. dollars into Brazilian reais at the time of the vesting of the equity awards. The related employer payroll taxes depend on our stock price and the exchange rate from U.S. dollars into Brazilian reais at the time of the vesting date of the equity awards, over which management has limited to no control, and as such management does not believe these expenses correlate to the operation of our business. (b) Tax related to remittance of IPO and follow-on proceeds (IOF tax): impact of Brazilian IOF tax (currency remittance tax) payable when we remitted the proceeds from our sale of new shares in our IPO and follow-on offering from the Cayman Islands to Brazil. We exclude this IOF tax on the remittance of IPO and follow-on proceeds from our non-GAAP measures primarily because it is an unusual expense. [3] Non-GAAP profit before taxes is equal to the sum of the adjustments described in footnotes (1) and (2) above. [4] Non-GAAP income tax and social contribution consists of income tax at the rate calculated on the non-GAAP adjustments described in footnotes (1) and (2) above. [5] Non-GAAP net income is equal to the sum of the adjustments described in footnotes (1), (2) and (4) above.

Q418 and Full Year 2018 Results: Reconciliation of GAAP Measures to Non-GAAP Measures

[1] Foreign exchange gain on IPO or follow-on proceeds: financial income related to the impact of exchange rate variation on the conversion from U.S. dollars into Brazilian reais of the proceeds from our sale of new shares in our IPO and follow-on offering. We exclude this foreign exchange variation from our non-GAAP measures primarily because it is an unusual income. [2] Share-based long-term incentive plan (LTIP): Stock-based compensation expenses and related employer payroll taxes. This consists of expenses for equity awards under our long-term incentive plan (LTIP). We exclude stock-based compensation expenses from

• ur non-GAAP measures primarily because they are non-cash expenses and they depend on our stock price and the exchange rate from U.S. dollars into Brazilian reais at the time of the vesting of the equity awards. The related employer payroll taxes depend on our

stock price and the exchange rate from U.S. dollars into Brazilian reais at the time of the vesting date of the equity awards, over which management has limited to no control, and as such management does not believe these expenses correlate to the operation of our business. [3] Tax related to remittance of IPO and follow-on proceeds (IOF tax): impact of Brazilian IOF tax (currency remittance tax) payable when we remitted the proceeds from our sale of new shares in our IPO and follow-on offering from the Cayman Islands to Brazil. We exclude this IOF tax on the remittance of IPO and follow-on proceeds from our non-GAAP measures primarily because it is an unusual expense. [4] Income tax and social contribution on Non-GAAP adjustments: consists of income tax at the rate calculated on the Non-GAAP adjustments, other than the foreign exchange gain on IPO and follow-on proceeds which is not taxable, and the tax benefits related to

• ther Non-GAAP adjustments.

Reconciliation of Net Income to Non - GAAP Net income (R$ millions):

Net Income GAAP 148.5 227.6 231.6 302.8 910.4 Foreign exchange gain on IPO or Follow on proceeds (1) (89.8) (27.3) (14.3) 0.1 (131.3) Share-based- long term incentive plan (LTIP) (2) 210.6 62.2 115.6 31.0 419.4 Granted shares @ IPO 181.7 0.0 0.0 0.0 181.7 Non recurrent (IFRS 2 vested shares / new hires / additions to LTIP) 0.0 30.6 81.8 0.0 112.4 Recurrent quarterly provision 28.9 31.6 33.7 31.0 125.2 Tax related to remittance of IPO primary share proceeds (IOF tax) (3) 13.1 0.0 0.0 0.0 13.1 Tax related to remittance of Follow on (IOF tax) (3) 0.0 0.7 4.1 0.0 4.76 Income tax and social contribution on non-GAAP adjustments (4) (69.5) (21.1) (46.5) (10.5) (147.6) Total non-gaap net income adjustments 64.4 14.5 58.8 20.6 158.3 Net Income non-GAAP 212.9 242.1 290.4 323.4 1,067.7

Q1 18 Q2 18 Q3 18 Q4 18 2018 Full Year 19

F e b r u a r y 2 0 1 9

4Q18 and Full Year Presentation February 21, 2019