PagSeguro Digital Ltd. Class A Common Shares

Good evening, my name is Nihugi and I will be your conference operator today. Welcome to PagBank PagSeguro's webcast results for the third quarter 2022. At this time, all lines have been placed on mute to prevent any background noise. Should any participant need assistance during the call, please press star zero to reach the operator. This event is also being broadcast live via webcast and may be accessed through PagBank PagSeguro's website at investors.pagseguro.com. Participants may view the slides in any order they wish. Today's conference is being recorded and will be available after the event is concluded. I would now like to turn the call over to your host. Eric Oliveira, Investor Relations and ESG Director. Please go ahead.

Hello, everyone. Thanks for joining our fourth quarter 2022 earnings call. After the speaker's remarks, there will be a question and answer session. Before proceeding, let me mention that any forward-looking statements included in the presentation or mentioned on this conference call are based on currently available information and PagBank PagSeguro's current assumptions, expectations, and projections about future events. While PagBank PagSeguro believes that the 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. Actual results may differ materially from those included in PagBank PagSeguro's presentation or discussed on this conference call. for a variety of reasons, including those described in the forward-looking statements and risk factor sections of PagBank PagSeguro's most recent annual report on Form 20F and other filings with the Securities Exchange Commission, which are available on PagBank PagSeguro's Investor Relations website. Finally, I would like to remind you that during the conference call, the company may discuss some non-GAAP measures, including those disclosed in the presentation. We present non-GAAP measures when we believe that the additional information is useful and meaningful to investors. 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 separately from or as a substitute for Our financial information prepared and presented in accordance with IFRS as issued by the IASP. For more details, the foregoing non-GAAP measures and the reconciliation of these non-GAAP financial measures to the most directly comparable IFRS measures, I presented in the last page of this webcast presentation and earnings release. With that, Let me turn the call over to Ricardo.

Thank you. Good evening from São Paulo, everyone, and thanks for joining our webcast for the fourth quarter 2022 results. Tonight, I have the company of Alexandre Magnani, our CEO, Arthur Schunk, our CFO, and Eric Oliveira, Head of Investor Relations and ESG. Before I turn to Alexandre, I would like to share a quick overview of our journey as we completed five years as a public listed company last January. After that, I will share the main 2022 achievements and comment about our ESG initiatives. Going to slide three, we share the five years key performance indicators for our company and the three years key performance indicators for PagBank, our financial services and digital bank unit, launched in May 2019. Our company truly experienced and exponential growth and scale over the years, including millions into the financial system, initially through payments and then through digital banking through services. We have been successfully unlocking new addressable markets in payments and financial services, always balancing growth and profitability. Starting with PaxSeguro data, our TPV grew 9 times in 5 years, reaching R$ 354 billion and we have the largest payments network acceptance in Brazil, accounting for more than 7 million active merchants. PagBank, our financial services and digital bank business, has been growing consistently in all important metrics, increasing engagement, unlocking cross-selling opportunities, and leveraging our banking license to reduce our cost of funding. PagBank TPV increased 19 times, with total deposits growing 10 times, surpassing more than R$ 20 billion. Our credit portfolio grew 7 times, reaching R$ 2.7 billion is still very small compared with the opportunity we have ahead of us. And finally, even with all investments in organic growth and the macroeconomic challenges such as interest rate increase, inflation, and uncertainty about consumer spending, not only in Brazil, but around the world, our profits grew three times. and our equity position increasing from less than R$1 billion in 2017 to almost R$12 billion in the end of 2022. If we shorten the right side of the slide, we can see that 52% of the 2022 equity figure is composed by retained earners, fully reinvested in our organic growth. Going to slide 4, we can see some of our 2022 achievements. We successfully implemented our repricing to offset financial expenses increase. At the same time, we had strong deposit growth, which helped to reduce our funding costs and helped to diversify our funding sources. We also have been successful diversifying our payment business, and in 2022 marked the consolidation of our Hubs initiative to extend our best-in-class services to small and mid-sized clients, NPAC Bank consolidated as the second largest digital bank in Brazil with 28 million clients. In credit underwriting, we took the right decision in Q1 2022 to shift our underwriting from unsecured products to secured products. By doing so, we were able to unlock new growth avenues such as the payroll loans and credit cards backed by CDs and account balance savings. Improving our Gross Profit Impact Bank Finally, our disciplined capital allocation led to a significant improvement in operating and investing cash flow generation, paving our path to further explore the opportunities in payments and financial services in the Brazilian territory in the coming years. Moving to slide 5, our natural call for disruption and value creation led us to set a high bar for deliveries in ESG. In December 2022, we released our second sustainability report, where every stakeholder can follow our main initiatives and post impact in society. One point to highlight here is that our financial inclusion has been massive, through a safe and hazard-free platform, empowering clients, employees and communities. With that, I finish my presentation and pass the word to Alexandre Maiane.