PagSeguro Digital Ltd. CAPEX jumped on 364% and Revenue surged on 19.4%
02/25/2021 • About PagSeguro Digital Ltd. (
$PAGS) • By InTwits
PagSeguro Digital Ltd. reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- PagSeguro Digital Ltd. is a fast growth stock: 2020 revenue growth was 19.4%, 5 year revenue CAGR was 58.8% at 2020 ROIC 19.4%
- PagSeguro Digital Ltd. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.0%. At the same time it's in pair with industry average of 7.3%
- CAPEX is quite volatile: $1,523m in 2020, $328m in 2019, $62m in 2018, $108m in 2017, $72m in 2016
- The company has highly profitable business model: ROIC is 19.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 19.4%. Revenue growth showed acceleration in 20Q4 - it increased 32.6% YoY. During the last 5 years Revenue growth topped in 2017 at 122% and was decelerating since that time. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.64 pp from 7.0% to 7.6% in 2020.
Gross Margin decreased on 7.0 pp from 51.6% to 44.6% in 2020. During the last 5 years Gross Margin topped in 2019 at 51.6%. SG&A as a % of Revenue showed almost no change in 2020.
Net Income margin decreased on 5.0 pp from 23.9% to 19.0% in 2020. During 2016-2020 Net Income margin topped in 2019 at 23.9%.
Investments (CAPEX, working capital and M&A)
In 2020 PagSeguro Digital Ltd. had CAPEX/Revenue of 22.3%. PagSeguro Digital Ltd.'s CAPEX/Revenue surged on 18.1 pp from 4.3% in 2017 to 22.3% in 2020. It's average CAPEX/Revenue for the last three years was 9.8%. The company invested a big chunk of EBITDA (68.1%) to CAPEX to secure its growth. During 2016-2020 CAPEX as a % of Revenue bottomed in 2018 at 1.4% and was growing since that time.
Return on investment
The company operates at good ROIC (19.4%) and ROE (14.9%). ROIC decreased on 5.7 pp from 25.1% to 19.4% in 2020. ROE decreased on 3.9 pp from 18.8% to 14.9% in 2020. During 2016-2020 ROIC topped in 2017 at 89.7% and was declining since that time. During the last 5 years ROE topped in 2017 at 64.1% and was declining since that time.
Leverage (Debt)
The company has no debt. Cash surged on 16.8%.
Valuation and dividends
The company's trades at EV/EBITDA 3.5x and P/E 7.3x.
Management team
The company's CEO Ricardo Dutra Da Silva has spent 3 years with the company. Artur Schunck is a PagSeguro Digital Ltd.'s CFO. Artur Schunck has spent 4 months years at the company.
Financial and operational results
FY ended 12/31/2020
PagSeguro Digital Ltd. ($PAGS) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 1,138 | 2,523 | 4,335 | 5,707 | 6,815 | 19.4% |
| Gross Profit | 515 | 1,199 | 2,190 | 2,945 | 3,042 | 3.3% |
| SG&A | 284 | 399 | 933 | 986 | 1,159 | 17.6% |
| EBITDA | 262 | 852 | 1,352 | 2,081 | 2,237 | 7.5% |
| EBIT | 230 | 800 | 1,257 | | | |
| Tax | 28 | 205 | 307 | | | |
| Net Income | 127 | 479 | 909 | 1,366 | 1,292 | -5.4% |
| Stock Based Compensation | | | 264 | | | |
Balance Sheet
|
|---|
| Cash | 80 | 67 | 2,763 | 1,404 | 1,640 | 16.8% |
| Inventory | 21 | 62 | 89 | | | |
| Accounts Payable | 1,442 | 3,212 | 4,520 | | | |
| Short Term Debt | 205 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 72 | 108 | 62 | 328 | 1,523 | 363.8% |
| Dividends | | 54 | | | | |
| Acquisitions | | | 2 | | | |
Ratios
|
|---|
| Revenue growth | 68.7% | 121.7% | 71.8% | 31.7% | 19.4% | |
| EBITDA growth | 198.6% | 225.6% | 58.8% | 53.9% | 7.5% | |
|
|---|
| Gross Margin | 45.2% | 47.5% | 50.5% | 51.6% | 44.6% | -7.0% |
| EBITDA Margin | 23.0% | 33.7% | 31.2% | 36.5% | 32.8% | -3.6% |
| EBIT Margin | 20.2% | 31.7% | 29.0% | | |
| SG&A, % of revenue | 25.0% | 15.8% | 21.5% | 17.3% | 17.0% | -0.3% |
| SBC, % of revenue | | | 6.1% | | |
| Net Income Margin | 11.2% | 19.0% | 21.0% | 23.9% | 19.0% | -5.0% |
| CAPEX, % of revenue | 6.4% | 4.3% | 1.4% | 5.8% | 22.3% | 16.6% |
|
|---|
| ROIC | 34.9% | 89.7% | 32.6% | 25.1% | 19.4% | -5.7% |
| ROE | 23.4% | 64.1% | 24.5% | 18.8% | 14.9% | -3.9% |
| Net Debt/EBITDA | 0.5x | -0.1x | -2.0x | -0.7x | -0.7x | -0.1x |
PagSeguro Digital Ltd. ($PAGS) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,587 | 1,357 | 1,781 | 2,089 | | 26.8% | -2.3% | 21.8% | 32.6% |
| EBITDA | 603 | 440 | 477 | 717 | | 24.4% | -9.4% | -7.1% | 20.2% |
| Net Income | 357 | 296 | 263 | 376 | | 15.3% | -8.1% | -23.1% | -4.1% |
Balance Sheet
|
|---|
| Cash | 3,043 | 2,665 | 1,595 | 1,640 | | 265.4% | 946.2% | 407.9% | 16.8% |
| Short Term Debt | 0 | 0 | 0 | 0 | | - | - | - | - |
| Long Term Debt | 0 | 0 | 0 | 0 | | - | - | - | - |
Ratios
|
|---|
| Gross Margin | 51.6% | 41.6% | 40.7% | 44.8% | | 0.9% | -9.2% | -12.6% | -7.8% |
| EBITDA Margin | 38.0% | 32.4% | 26.8% | 34.3% | | -0.8% | -2.5% | -8.3% | -3.6% |
| Net Income Margin | 22.5% | 21.8% | 14.8% | 18.0% | | -2.2% | -1.4% | -8.6% | -6.9% |
Peers in Data Processing & Outsourced Services
Below we provide PagSeguro Digital Ltd. benchmarking against other companies in Data Processing & Outsourced Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Square, Inc. ($SQ) | - | 29.6% | 49.0% | 42.9% | 101.5% |
| Global Payments Inc. ($GPN) | - | 37.2% | -15.3% | 45.9% | 51.1% |
| Fiserv, Inc. ($FISV) | - | 3.5% | 2.2% | 74.9% | 45.8% |
| NIC Inc. ($EGOV) | - | 5.8% | 2.5% | 2.7% | 30.0% |
| StoneCo Ltd ($STNE) | - | 74.3% | 106.0% | 63.1% | 28.9% |
| |
|---|
| Median (39 companies) | 6.7% | 10.1% | 7.4% | 8.9% | -3.3% |
|---|
| PagSeguro Digital Ltd. ($PAGS) | - | 121.7% | 71.8% | 31.7% | 19.4% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Verra Mobility Corp ($VRRM) | - | 97.4% | 97.5% | 95.7% | 91.5% |
| EVO Payments, Inc. ($EVOP) | - | - | - | 80.2% | 80.8% |
| StoneCo Ltd ($STNE) | 69.7% | 70.8% | 79.5% | 83.4% | 76.8% |
| WEX Inc. ($WEX) | 54.7% | 58.8% | 63.3% | 61.7% | 56.8% |
| Sabre Corporation ($SABR) | 32.2% | 30.1% | 27.8% | 56.6% | 56.6% |
| |
|---|
| Median (31 companies) | 39.2% | 38.9% | 40.9% | 40.3% | 36.5% |
|---|
| PagSeguro Digital Ltd. ($PAGS) | 45.2% | 47.5% | 50.5% | 51.6% | 44.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Visa Inc. ($V) | 55.6% | 69.2% | 65.8% | 68.1% | 68.5% |
| Mastercard Incorporated ($MA) | 56.9% | 56.5% | 51.8% | 60.9% | 56.6% |
| FleetCor Technologies, Inc. ($FLT) | 52.0% | 50.8% | 55.9% | 57.6% | 52.2% |
| StoneCo Ltd ($STNE) | 31.4% | 26.0% | 53.0% | 62.4% | 52.1% |
| Black Knight, Inc. ($BKI) | 43.0% | 44.6% | 43.3% | 46.0% | 44.9% |
| |
|---|
| Median (38 companies) | 21.2% | 20.6% | 19.2% | 21.7% | 18.2% |
|---|
| PagSeguro Digital Ltd. ($PAGS) | 23.0% | 33.7% | 31.2% | 36.5% | 32.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| StoneCo Ltd ($STNE) | 7.2% | 18.4% | 8.9% | 12.9% | 11.2% |
| Cardtronics plc ($CATM) | 9.9% | 9.6% | 8.0% | 9.3% | 8.3% |
| Verra Mobility Corp ($VRRM) | - | 11.5% | 7.2% | 6.6% | 6.2% |
| Fiserv, Inc. ($FISV) | 5.3% | 5.0% | 6.2% | 7.1% | 6.1% |
| Global Payments Inc. ($GPN) | 3.2% | 4.6% | 6.3% | 6.3% | 5.9% |
| |
|---|
| Median (38 companies) | 3.2% | 2.9% | 3.2% | 3.0% | 3.0% |
|---|
| PagSeguro Digital Ltd. ($PAGS) | 6.4% | 4.3% | 1.4% | 5.8% | 22.3% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Mastercard Incorporated ($MA) | 57.5% | 60.6% | 64.7% | 72.7% | 47.6% |
| International Money Express, Inc. ($IMXI) | -1.3% | -1.4% | 12.1% | 36.0% | 31.4% |
| NIC Inc. ($EGOV) | 63.1% | 52.1% | 39.3% | 26.5% | 30.8% |
| Visa Inc. ($V) | 18.1% | 21.9% | 23.0% | 27.2% | 23.2% |
| Western Union Company (The) ($WU) | 10.7% | 11.9% | 27.8% | 21.5% | 22.1% |
| |
|---|
| Median (39 companies) | 11.1% | 10.6% | 10.2% | 8.2% | 5.5% |
|---|
| PagSeguro Digital Ltd. ($PAGS) | 34.9% | 89.7% | 32.6% | 25.1% | 19.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| WEX Inc. ($WEX) | 6.7x | 4.4x | 3.1x | 3.4x | 12.1x |
| Exela Technologies Inc ($XELAU) | 8.1x | - | 9.7x | - | 10.7x |
| Alliance Data Systems Corporation ($ADS) | 10.7x | 10.1x | 9.0x | 11.7x | 9.2x |
| Verra Mobility Corp ($VRRM) | - | 10.7x | 6.9x | 3.5x | 4.7x |
| GreenSky, Inc. ($GSKY) | -1.5x | -1.5x | 0.5x | 1.5x | 4.6x |
| |
|---|
| Median (35 companies) | 1.6x | 2.3x | 2.2x | 2.3x | 2.1x |
|---|
| PagSeguro Digital Ltd. ($PAGS) | 0.5x | -0.1x | -2.0x | -0.7x | -0.7x |
