How is the internal testing and rollout of private payroll loans progressing, and what is the quality like?

The company has started producing credit outside its economic group for private payroll loans, with the first few millions in credit outstanding. Initial signs are solid, and quality is perfect so far, as they started with top-tier credit quality clients. “Yes, we already start to produce credit outside of the group, the economic group that we have here. We already produced the first few millions in terms of credit outstanding, and we're going to keep pushing up these volumes as we get confident on everything related to the operational risks on the product.”

Why is revenue growth lagging TPV growth, implying take rate compression? And can gross profit guidance (6-9%) be met given 2% H1 growth?

Revenue lag is due to product mix (World Cup impact) and a tough prior-year comparison from a massive repricing. Management is balancing growth and profitability. For gross profit, they expect H2 to be stronger due to credit origination, payment activity increase, and easier financial cost comps, aiming for the bottom of the 6-9% range. “There is an impact in terms of product mix driven by the World Cup, as you mentioned there, but that is nothing that really worries us. Of course, we are keep pushing TPV. We are being very careful about pricing, and that is, as probably you remember, there is also a base, let's say, a tough comp when you look at the second quarter of last year, where we have a massive repricing of the entire customer base that we have here due to the hike of Selic.”

What are the NPLs and cost of credit for working capital loans? Why the acceleration in July after a Q2 deceleration? Any Desenrola program impact?

Management does not disclose individual product NPLs but states no deterioration in asset quality across products. Q2 deceleration was a conscious effort to test a new credit model; July acceleration reflects confidence in the new model's cohorts. Desenrola program had no major impact on PagBank. “If you take a look in April, we had a -- I'm sorry, on the second quarter, we had a lower credit production in average due to a new credit model that we deployed on the beginning of the second quarter. So we were waiting the first cohorts here to see if the cohort would come inside the credit appetite and we deliver the performance that we want to before we rolled out for the entire customer database.”

PAGS

PagSeguro Digital (PAGS) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Aug 11, 2026

Source: earnings call transcript

Executive summary

PagSeguro Digital Q2 FY26 — Ecosystem Expansion and Resilient Profitability

PagSeguro Digital delivered a solid second quarter, expanding its multiproduct ecosystem across payments, banking, and credit, which drove client engagement and resilient profitability. Despite a challenging macro environment and higher-than-expected Selic rates, the company maintained its full-year guidance by focusing on financial cost efficiency and operating leverage. The strategy emphasizes deepening client relationships and broader monetization, supported by continued product innovation and disciplined capital allocation.

Highlights

Total payment volume (TPV) reached BRL 133 billion, up 3% year-over-year, showing gradual reacceleration.
Total loans increased 31% year-over-year to BRL 5.1 billion, driven by working capital and credit cards.
Recurring net income (non-GAAP) grew 2% year-over-year to BRL 576 million.
Diluted non-GAAP EPS increased 10% year-over-year to BRL 2.06.
Total deposits grew 15% year-over-year to BRL 43 billion, providing a foundation for credit growth.

Concerns

Net revenue, excluding interchange fees, grew only 2% year-over-year to BRL 3.4 billion, lagging TPV growth due to product mix and tough prior-year comps.
Total losses increased 9% year-over-year, mainly reflecting credit portfolio expansion and mix evolution.
Operating expenses represented 25.9% of total revenue, with Q2 effects related to World Cup broadcast sponsorship and annual collective bargain agreement.
The macroeconomic environment remains uncertain, with Selic rate levels creating additional pressure for business performance.
Gross profit guidance for the full year is now expected to be at the bottom of the 6%-9% range, down from prior expectations.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Performance	in line with the guidance range high materiality	FY26	High
Total Credit Portfolio Growth	keep this growth within the expected range for the year high materiality	FY26	High
Gross Profit Growth	probably reaching the bottom of the gross profit guidance as we post high materiality	FY26	Medium
Diluted Non-GAAP EPS Growth	within the guidance range for 2026 high materiality	FY26	High
Total Cash Dividends	approximately BRL 1.4 billion high materiality	FY26	High
Basel Ratio Target	18% to 22% over time high materiality	Long-term	High
Long-term Credit Portfolio Goals	long-term guidance that we published last year high materiality	2029	High

Product announcements

Product	Type	Timeline
Minizinha Voz	launch	launched in January of this year
IOF cashback	launch	—
Private payroll loans	launch	launched earlier this year and to be rolled out in the next months
PIX Finance	launch	launched earlier this year and to be rolled out in the next months
Zero fee investments	launch	—
Private pensions plans	launch	—
Collections management tools	launch	—
New insurance products	launch	—

Risks & headwinds

Challenging macroeconomic environment year-to-date, full year

current Selic rate levels create additional pressure for the performance of the business

Mitigation:Focusing on efficiency and discipline, looking for different initiatives to boost profitability.

Selic rate levels higher than expected full year

Expected year-end Selic around 12.5%, now looking closer to 14% or 13.75%.

Mitigation:Managing pricing, funding, and capital allocation with discipline.

Product mix impact on revenue growth Q2 FY26

TPV improved sequentially, but revenues did not budge at the same pace, leading to a 'small dilution' in take rate.

Mitigation:Balancing growth and defending profitability; managing churn.

Increased total losses Q2 FY26

Increased 9% year-over-year.

Mitigation:Consistent with strategy to scale credit in a disciplined way while maintaining strong asset quality indicators (NPL90 at 3.4%).

What to watch in Q3 FY26

Gross Profit Guidance Achievement

H2 FY26

Current 2% year-over-year in H1 FY26

Target bottom of 6%-9% range for FY26

Why it matters

Indicates the company's ability to accelerate profitability despite macro headwinds and meet its revised full-year targets.

But again, probably not by the top of the range, but probably reaching the bottom of the gross profit guidance as we post.

Find out whether PAGS delivers this. Inve re-checks your case every morning.

Q&A highlights

Is the company changing its plans or reducing growth pace for credit given the current macro environment and delinquency levels?

Management remains confident in its 2029 long-term credit guidance and current strategy. They highlight the low NPLs (3.4% vs. industry 6.2%) as comfort for sustainable growth. They acknowledge macro challenges but are finding workarounds and new products.

“No, we are still quite confident on everything that we are doing here. In fact, we see the 31% increase on the credit outstanding as a very good number in terms of volume and performance.”

asked by Arnon Shirazi · answered by Carlos Mauad

2 min read 6 chapters

Detailed narrative

Ecosystem Expansion and Monetization

PagBank is evolving from a payment-led ecosystem to a broader financial service platform, integrating payments, banking, credit, investments, and insurance. This strategy aims to increase client engagement and monetize relationships across various products, expanding the addressable market and strengthening recurrence of results. The company's current market share in several areas remains below 1%, indicating significant growth potential.

Product Innovation and Engagement

Recent product innovations, including Minizinha Voz (AI-powered sales assistant), IOF cashback, private payroll loans, PIX Finance, zero-fee investments, and new insurance products, are designed to deepen client relationships. These initiatives expand banking and financial service offerings, creating cross-sell opportunities and driving higher transaction activity and monetization.

Credit Portfolio Growth and Risk Management

The total credit portfolio grew 31% year-over-year to BRL 5.1 billion, primarily driven by working capital and credit cards. The expanded credit portfolio, including merchant prepayment operations, reached BRL 52.4 billion, up 9% year-over-year. Despite this growth, the NPL90 ratio remained low at 3.4%, well below the Brazilian market average of 6.2%, reflecting prudent underwriting and risk governance.

Funding Optimization

Total deposits reached BRL 43 billion, up 15% year-over-year, with over 90% generated on-platform. The company achieved its ninth consecutive quarter of funding cost reduction as a percentage of CDI, optimizing liability management and product pricing. This efficient funding structure supports continued credit expansion while maintaining a healthy balance sheet.

Operational Efficiency and Capital Allocation

Operating expenses represented 25.9% of total revenue, with year-to-date improvements reflecting a focus on operating leverage. The company is implementing initiatives like process redesign, automation, and AI in back-office and customer care to generate efficiency gains. Capital allocation remains disciplined, with a Basel ratio of 22.5% moving towards a target range of 18%-22%, and BRL 2 billion returned to shareholders over the last 12 months through dividends and buybacks.

Leadership Update

Enrique Fragata was welcomed as PagBank's new COO, bringing strong financial sector experience to strengthen execution, efficiency, and operational excellence as the company continues to expand its ecosystem and advance its long-term strategy.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.