PagSeguro Reports Third Quarter Results

3Q19 Net Income of R$342.6 million, up 48.0% compared to 3Q18.

3Q19 Non-GAAP Net Income of R$390.2 million.
São Paulo, November 19, 2019 – PagSeguro Digital Ltd. (“PagSeguro” or “we”) announced today its
third quarter results for the period ended September 30, 2019. Our consolidated financial statements are
presented in Reais (R$) and prepared in accordance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

Third Quarter 2019 Financial & Operational Highlights:

• R$342.6 million in Net Income, up 48.0% compared with 3Q18;

• R$390.2 million in non-GAAP Net Income, up 34.4% compared with 3Q18;
• 1.9 million active PagBank users3;
• Active merchants of 5.0 million, growth of 1.2 million active merchants in the last
twelve months;
• R$29.4 billion in total payment volume (“TPV”), up 45.0% compared with 3Q18;
• Net Revenue from Transaction Activities and Other Services and Financial Income
of R$1,417.2 million up 43.7% compared to 3Q18;
• Net Margin of 23.4%, up 3.0% compared with 3Q18;
• Non-GAAP Net Margin of 26.7%, up 0.8% compared with 3Q18.

At and for the Three

Months Ended
September 30,
Main Operational and Financial Indicators
(R$ millions, except otherwise indicated) 2019 2018 Var.%
TPV 29,383.7 20,262.9 45.0%
Active Merchants (last 12 months) - (millions) 5.0 3.8 31.6%
Total Net Revenue1 1,463.0 1,137.3 28.6%
Net Income 342.6 231.6 48.0%
Net Margin (%) 23.4% 20.4% 3.0 pp
Basic earnings per common share (EPS)2 - (R$) 1.0685 0.7385
Diluted earnings per common share (EPS) - (R$) 1.0352 0.7370

Non-GAAP Main Financial Indicators

(R$ millions, except otherwise indicated) 2019 2018 Var.%
Non-GAAP Total Net Revenue1 1,463.0 1,123.0 30.3%
Non-GAAP Net Income 390.2 290.4 34.4%
Non-GAAP Net Margin (%) 26.7% 25.9% 0.8 pp
Non-GAAP Basic earnings per common share (EPS)2 - (R$) 1.2171 0.9265
Non-GAAP Diluted earnings per common share (EPS) - (R$) 1.1791 0.9434
For a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures,
see the last page of this earnings release.

1 Total revenue and income.

2 Weighted average number of common shares of 313.2 million at September 30, 2018 and 320.3 million at September
30, 2019.
3 Active PagBank users are active merchants using one additional digital account feature / service beyond acquiring and
PagBank consumers with at least one transaction in the last twelve months.

1
 Financial Discussion:
I - Statement of Income
Non-GAAP disclosure

This press release includes certain non-GAAP measures. 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.
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 separately from, or as a substitute for, our financial information
prepared and presented in accordance with IFRS as issued by the 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.
Our non-GAAP results consist of our GAAP results as adjusted to exclude the following
items:
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 the related
employer payroll taxes depend on our stock price and the timing and size of
exercises and vesting of 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.

Foreign exchange gain on follow-on proceeds: This consists of 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 June 2018 follow-on offering. We exclude this foreign exchange variation
from our non-GAAP measures primarily because it is an unusual gain.

Tax related to remittance of follow-on proceeds (IOF tax): This relates to the
impact of Brazilian IOF tax (currency remittance tax) payable when we remitted
the proceeds from our sale of new shares in our June 2018 follow-on offering
from the Cayman Islands to Brazil. We exclude this IOF tax on the remittance of
follow-on share proceeds from our non-GAAP measures primarily because it is
an unusual expense.

3Q19 Earnings Release 2

 Income tax and social contribution on non-GAAP adjustments: This
represents the income tax effect related to the non-GAAP adjustments
mentioned above, except the Foreign exchange gain on follow-on proceeds.
For a reconciliation of these non-GAAP financial measures to the most directly
comparable GAAP measures, see “Reconciliation of Revenue and Income to
Non-GAAP Revenue and Income,” “Reconciliation of Expenses to Non-GAAP
Expenses,” “Reconciliation of Income Tax and Social Contribution to Non-GAAP
Income Tax and Social Contribution,” “Reconciliation of Net Income to Non-
GAAP Net Income,” “Reconciliation of Basic and diluted EPS to Non-GAAP Basic
and diluted EPS,” and “Reconciliation of GAAP Measures to Non-GAAP
Measures.”

Total revenue and income

Our Total revenue and income amounted to R$1,463.0 million in the three months ended
September 30, 2019, an increase of 28.6% from R$1,137.3 million in the three months
ended September 30, 2018, or an increase of 30.3% after non-GAAP adjustments in the
three months ended September 30, 2018.
At and for the At and for the
three months three months
ended ended
Reconciliation of Total Revenue and Income to non-GAAP September 30, September 30,
Total Revenue and Income (R$ millions): 2019 2018 Var.%
Total Revenue and Income 1,463.0 1,137.3 28.6%
100.0
(-) Foreign exchange gain on follow-on proceeds [1] - (14.3)
%
Non-GAAP Total Revenue and Income 1,463.0 1,123.0 30.3%

[1] Foreign exchange gain on follow-on proceeds: financial income of R$14.3 million 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 June 2018 follow-on offering. We exclude this foreign exchange
variation from our non-GAAP measures primarily because it is an unusual income.

Net revenue from transaction activities and other services

Our Gross revenue from transaction activities and other services in the three months
ended September 30, 2019 amounted to R$1,008.3 million, an increase of
R$312.5 million, or 44.9%, from R$695.8 million in the three months ended
September 30, 2018. This increase was principally due to a continued increase in our
active merchant base, average spending per merchant and TPV. In addition, beginning
on September 1, 2019 we introduced a membership fee of our POS devices and
recognized R$18.7 million in membership fees. For more information, see “Net revenue
from sales” below.

Our Gross revenue from transaction activities and other services during the three months
ended September 30, 2019 increased by a percentage similar to that for our TPV, which
increased to R$29.4 billion from R$20.3 billion in the three months ended September 30,
2018.

3Q19 Earnings Release 3

 Our Deductions from gross revenue from transaction activities and other services, which
consist principally of taxes, amounted to R$129.0 million in the three months ended
September 30, 2019, or 12.8% of our Gross revenue from transaction activities and other
services for the quarter. In the three months ended September 30, 2018, Deductions
from gross revenue from transaction activities and other services totaled R$96.9 million,
or 13.9% of our Gross revenue from transaction activities and other services for the
quarter. The R$32.1 million, or 33.2%, increase in these Deductions is directly related to
the increase in the gross revenue.

As a result, our Net revenue from transaction activities and other services in the three
months ended September 30, 2019 amounted to R$879.4 million, an increase of
R$280.5 million, or 46.8%, from R$598.9 million in the three months ended September
30, 2018.

Net revenue from sales

Our Gross revenue from sales in the three months ended September 30, 2019
amounted to R$57.9 million, a decrease of R$67.3 million, or 53.8%, from R$125.2
million in the three months ended September 30, 2018. This decrease was due to the
membership fee of our POS devices that we introduced on September 1, 2019. In order
to simplify inventory control and the acquisition of POS devices by our clients, beginning
on September 1st, 2019 we changed the way we provide POS devices to our clients.
Instead of selling our POS devices, we now require a one-time and non-refundable
membership fee. This arrangement is currently for an indeterminate period and does not
change the way our clients access our POS devices.

Our Deductions from gross revenue from sales in the three months ended September
30, 2019 amounted to R$42.9 million, or 74.2% of our Gross revenues from sales for
the period. In the three months ended September 30, 2018, these Deductions totaled
R$30.5 million, or 24.4% of Gross revenues from sales for the period. The increase in
deductions is due to non-recurring ICMS and PIS/COFINS taxes in the amount of
R$26.7 million on the transfer of inventory from Net+Phone (a PagSeguro subsidiary
100% owned by PagSeguro which buys and sells POS devices) to PagSeguro. We
expect a similar impact in 4Q19 and 1Q20 until all inventory at Net+Phone is transferred
to PagSeguro (which we expect will occur in 1Q20).

As a result, our Net revenue from sales in the three months ended September 30, 2019
amounted to R$14.9 million, a decrease of R$79.7 million, or 84.2%, from R$94.6
million in the three months ended September 30, 2018.

Financial income
Our Financial income, which represents the discount fees we withhold from credit card
transactions in installments for the early payment of accounts receivable, amounted to
R$537.8 million in the three months ended September 30, 2019, an increase of
R$150.5 million, or 38.9% from R$387.3 million in the three months ended September

3Q19 Earnings Release 4

 30, 2018. The growth in this activity compared to the three months ended September 30,
2018 was driven by growth in our TPV for credit card transactions in installments.

Other financial income

Our Other financial income amounted to R$30.8 million in the three months ended
September 30, 2019, a decrease of R$25.7 million from R$56.5 million in the three
months ended September 30, 2018. This decrease was due to the unusual impact of
exchange rates in the conversion from U.S. dollars into Brazilian reais of the proceeds
from our sale of new shares in our June 2018 follow-on offering, which impact amounted
to R$14.3 million in the three months ended September 30, 2018.
Expenses

Our total expenses amounted to R$994.8 million in the three months ended September
30, 2019, an increase of R$178.0 million, or 21.8%, from R$816.8 million in the three
months ended September 30, 2018.

As a percentage of our Total revenue and income, our total expenses in the three
months ended September 30, 2019 decreased by 3.8 percentage points, to 68.0% in the
three months ended September 30, 2019 from 71.8% in the three months ended
September 30, 2018. This increase is due to vesting of awards under our LTIP in August
2019.

Our non-GAAP total expenses amounted to R$922.6 million in the three months ended
September 30, 2019, an increase of R$225.5 million, or 32.4%, from R$697.1 million in
the three months ended September 30, 2018.

At and for the At and for the

three months three months
ended ended
Reconciliation of Expenses to non-GAAP Expenses (R$ September 30, September 30,
millions): 2019 2018 Var.%
Expenses (994.8) (816.8) 21.8%
(-) Share-based long-term incentive plan (LTIP) [1] 72.2 115.5 37.5%
(-) Tax related to remittance of follow-on proceeds (IOF tax) [2] - 4.1 100.0%
Total non-GAAP expenses adjustments 72.2 119.6 39.6%
Non-GAAP Expenses (922.6) (697.2) 32.3%

[1] 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 the related employer payroll taxes depend on our stock price and the
timing and size of exercises and vesting of 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. In the three months ended September 30, 2019 and 2018, the amounts of R$72.2 million and
R$115.5 million, respectively, were mainly related to new shares issued to preexisting LTIP beneficiaries
and to new employees participating in our LTIP, as well as the recurrent quarterly provision.

[2] Tax related to remittance of follow-on proceeds (IOF tax): R$4.1 million related to the impact of
Brazilian IOF tax (currency remittance tax) payable when we remitted the proceeds from our sale of new
shares in our June 2018 follow-on offering from the Cayman Islands to Brazil. We exclude this IOF tax on

3Q19 Earnings Release 5

 the remittance of follow-on proceeds from our non-GAAP measures primarily because it is an unusual
expense.

Cost of sales and services

Our Cost of sales and services amounted to R$684.3 million in the three months ended
September 30, 2019, an increase of R$133.7 million, or 24.3%, from R$550.6 million in
the three months ended September 30, 2018. As a percentage of the total of our Net
revenue from transaction activities and other services and our Net revenue from sales
and our Cost of sales and services posted a decrease of 2.9 percentage points, to
76.5% in the three months ended September 30, 2019 from 79.4% in the three months
ended September 30, 2018.

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 63.7% in the three months ended September 30, 2019 from 65.3% in the three
months ended September 30, 2018, due to the mix of debit and credit card payments
processed containing a higher percentage of debit card payments and lower debit
interchange fee expenses than credit interchange fee expenses.

As explained in “Net revenue from sales” above, beginning on September 1, 2019 we

changed the way we provide POS devices to our clients. As a result, we recognized in
net revenues related to membership fees in the amount of R$16.9 million in the three
months ended September 30, 2019. Our Cost of sales, expressed as a percentage of
our Net revenue from sales, increased to 830.5% in the three months ended September
30, 2019 from 168.7% in the three months ended September 30, 2018 due to non-
recurring ICMS and PIS / COFINS taxes on the transfer of inventory from Net+Phone to
PagSeguro.

In the three months ended September 30, 2019, our non-GAAP Cost of sales and
services amounted to R$664.8 million (reflecting the exclusion of the LTIP adjustment of
R$19.5 million in the three months ended September 30, 2019), an increase of R$123.9
million, or 22.9%, from R$540.9 million in the three months ended September 30, 2018
(reflecting the exclusion of the LTIP adjustment of R$9.7 million in the three months
ended September 30, 2018). For a reconciliation of our non-GAAP Cost of sales and
services to our Cost of sales and services, see the last page of this earnings release.

Selling expenses

Our Selling expenses amounted to R$164.6 million in the three months ended
September 30, 2019, an increase of R$74.3 million, or 82.2%, from R$90.3 million in the
three months ended September 30, 2018. As a percentage of our Total revenue and
income, our Selling expenses increased by 3.3 percentage points, to 11.2% in the three
months ended September 30, 2019 from 7.9% in the three months ended September 30,
2018, as we continue to leverage our selling expenses. This increase mainly related to
marketing expenses.

3Q19 Earnings Release 6

 Administrative expenses
Our Administrative expenses amounted to R$134.6 million in the three months ended
September 30, 2019, a decrease of R$29.9 million, or 18.2%, from R$164.5 million in the
three months ended September 30, 2018. As a percentage of our Total revenue and
income, our Administrative expenses decreased by 5.2 percentage points, to 9.3% in the
three months ended September 30, 2019 from 14.5% in the three months ended
September 30, 2018.

For the three months ended September 30, 2019 our non-GAAP Administrative
expenses amounted to R$81.9 million, an increase of R$23.2 million, or 39.5%, from
R$58.7 in the three months ended September 30, 2018, which figures exclude the LTIP
adjustment of R$52.7 million in the three months ended September 30, 2019 and
R$105.8 in the three months ended September 30, 2018. Our non-GAAP Administrative
expenses increased by 0.4 percentage points, to 5.6% in the three months ended
September 30, 2019 from 5.2% in the three months ended September 30, 2018. For a
reconciliation of our non-GAAP Administrative expenses to our Administrative expenses,
see the last page of this earnings release.
Financial expenses
Our Financial expenses amounted to R$6.5 million in the three months ended September
30, 2019, a decrease of R$0.7 million, or 9.9%, from expenses of R$7.2 million in the
three months ended September 30, 2018. Expressed as a percentage of our Financial
income, our Financial expenses represented 1.2% in the three months ended September
30, 2019 and 1.9% in the three months ended September 30, 2018. This decrease was
mainly driven by the impact of R$4.1 million related to the impact of the IOF tax on the
remittance of our sale of shares in our follow-on proceeds from the Cayman Islands to
Brazil in the three months ended September 30, 2018.

Our non-GAAP Financial expenses, which exclude the IOF tax amount of R$4.1 million,
amounted to R$3.1 million in the three months ended September 30, 2018. For a
reconciliation of our non-GAAP Financial expenses to our Financial expenses, see the
last page of this earnings release.
Other (expenses) income, net
Our Other (expenses) income, net recorded an expense of R$4.9 million in the three
months ended September 30, 2019 and an expense of R$4.1 million in the three
months ended September 30, 2018. In the three months ended September 30, 2019,
this net amount mainly related to civil and labor litigation proceedings expenses.

Profit before income taxes

Our Profit before income taxes amounted to R$468.1 million in the three months ended
September 30, 2019, an increase of R$147.5 million, or 46.0%, from R$320.6 million in
the three months ended September 30, 2018.

Our non-GAAP Profit before income taxes amounted to R$540.3 million in the three
months ended September 30, 2019, an increase of R$114.3 million, or 26.8% from
3Q19 Earnings Release 7
 R$426.0 million in the three months ended September 30, 2018. For a reconciliation of
our non-GAAP Profit before income taxes to our Profit before income taxes, see the last
page of this earnings release.
Income tax and social contribution

Income tax and social contribution amounted to an expense of R$125.5 million in the
three months ended September 30, 2019, an increase of R$36.5 million from
R$89.0 million in the three months ended September 30, 2018. This item consists of
current income tax and social contribution and deferred income tax and social
contribution.

Our effective tax rate decreased by 0.9 percentage points to 26.8% in the three months
ended September 30, 2019 from 27.7% in the three months ended September 30, 2018.
In the three months ended September 30, 2018 we had a benefit of the exchange
variation from U.S. dollars to reais which is not taxable under the Companies Law of
1960 of the Cayman Islands. In the three months ended September 30, 2019, the
difference between the effective income tax and social contribution rate and the rate
computed by applying the Brazilian federal statutory rate was mainly related to the
Technological Innovation Law (Lei do Bem), which reduces income tax charges based on
investments made in innovation and technology, such as those made by PagSeguro
Brazil, our Brazilian operating subsidiary.

Our non-GAAP income tax and social contribution expense for the three months ended
September 30, 2019 amounted to R$150.1 million, a decrease of R$14.6 million, or
10.8%, compared to R$135.5 million in the three months ended September 30, 2018.

Our non-GAAP effective tax rate decreased by 4.0 percentage points to 27.8% in the
three months ended September 30, 2019, from 31.8% in the three months ended
September 30, 2018.
At and for the At and for the
three months three months
ended ended
Reconciliation of Income Tax and Social Contribution to Non- September 30, September 30, Var.
GAAP Income Tax and Social Contribution (R$ millions): 2019 2018 %
Income tax and social contribution (125.5) (89.0) 41.1%
(-) Income tax and social contribution on Non-GAAP adjustments [1] (24.6) (46.5) 47.2%
Non-GAAP Income tax and social contribution (150.1) (135.5) 10.8%

[1] Income tax and social contribution on non-GAAP adjustments: the amount of R$24.6 million
consists of income tax at the rate of 34% calculated on the non-GAAP adjustments. The amount of R$46.5
million consists of income tax at the rate of 34% calculated on the non-GAAP adjustments, other than the
foreign exchange gain on follow-on proceeds of R$14.3 million, which is not taxable, and the tax benefits
related to other non-GAAP adjustments.

Net income for the period

Our Net income for the period in the three months ended September 30, 2019 amounted
to R$342.6 million, an increase of R$111.0 million, or 48.0% from R$231.6 million in the
three months ended September 30, 2018.

3Q19 Earnings Release 8

 As a percentage of our Total revenue and income, our Net income for the period
increased by 3.0 percentage points, to 23.4% in the three months ended September 30,
2019 compared with 20.4% in the three months ended September 30, 2018.

Our non-GAAP Net income for the three months ended September 30, 2019 amounted
to R$390.2 million, an increase of R$99.8 million, or 34.3%, from R$290.4 in the three
months ended September 30, 2018, reflecting the sum of the non-GAAP adjustments
described below.
At and for the At and for the
three months three months
ended ended
Reconciliation of Net Income to Non-GAAP Net Income September 30, September 30,
(R$ millions): 2019 2018 Var.%
Net Income 342.6 231.6 48.0%
Foreign exchange gain on follow-on proceeds [1] - (14.3) 100.0%
Share-based long-term incentive plan (LTIP) [2] 72.2 115.5 37.5%
Tax related to remittance of follow-on proceeds (IOF tax) [3] - 4.1 100.0%
Income tax on non-GAAP adjustments [4] (24.6) (46.5) 47.2%
Total non-GAAP net income adjustments 47.6 58.8 19.1%
Non-GAAP Net Income 390.2 290.4 34.3%

[1] Foreign exchange gain on follow-on proceeds: financial income of R$14.3 million 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 June 2018 follow-on offering. We exclude this foreign exchange
variation from our non-GAAP measures primarily because it is an unusual gain.

[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 our non-GAAP measures primarily because
they are non-cash expenses and the related employer payroll taxes depend on our stock price and the
timing and size of exercises and vesting of 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. In the three months ended September 30, 2019 and 2018, the amounts of R$72.2 million and
R$115.5 million, respectively, were mainly related to new shares issued to preexisting LTIP beneficiaries
and to new employees participating in our LTIP, as well as the recurrent quarterly provision.

[3] Tax related to remittance of follow-on proceeds (IOF tax): R$4.1 million related to the impact of
Brazilian IOF tax (currency remittance tax) payable when we remitted the proceeds from our sale of new
shares in our June 2018 follow-on offering from the Cayman Islands to Brazil. We exclude this IOF tax on
the remittance of 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: the amount of R$24.6 million
consists of income tax at the rate of 34% calculated on the non-GAAP adjustments. The amount of R$46.5
million consists of income tax at the rate of 34% calculated on the non-GAAP adjustments, other than the
foreign exchange gain on follow-on proceeds of R$14.3 million, which is not taxable, and the tax benefits
related to other non-GAAP adjustments.

3Q19 Earnings Release 9

 II - Cash Flow

Our cash and cash equivalents at the beginning of the nine months ended September
30, 2019 amounted to R$2,763.1 million.

Our Profit before income taxes in the nine months ended September 30, 2019 was
R$1,378.6 million.
The adjustments for revenue, income and expenses recorded in our statement of income
in the nine months ended September 30, 2019 but which did not affect our cash flows
totaled the positive amount of R$210.3 million, mainly due to R$72.1 million of Share-
based long-term incentive plan (LTIP) expenses, R$136.7 million in Chargebacks,
R$82.2 million of Depreciation and amortization recorded in our statement of income and
R$51.6 million of other financial cost (net), mainly due to R$54.7 million related to
interest income received from financial investments. LTIP expenses relate to equity
awards under our LTIP. Chargebacks relate to amounts that we initially recorded as
revenues but for which we did not receive the related cash payment due primarily to
fraud.
The adjustments for changes in our operating assets and liabilities in the nine months
ended September 30, 2019 amounted to a negative cash flow of R$2,145.5 million:

• Our Accounts receivable item, mainly related to receivables derived from transactions
where we act as the financial intermediary in operations with the issuing banks, which
is presented net of transaction costs and financial expenses we incur when we elect to
receive early payment of the accounts receivable owed to us by card issuers, consists
of the difference between the opening and closing balances of the Accounts receivable
item of Current Assets and Non-current assets on our balance sheet (R$9,895.9 million
at September 30, 2019 compared to R$8,104.7 million at year-end 2018) excluding
interest income received in cash and chargebacks, which are presented separately in
the statement of cash flows. Accounts receivable represented a negative cash flow of
R$2,323.0 million in the nine months ended September 30, 2019.
• Our Payables to third parties item, which is presented net of revenue from transaction
activities and financial income we receive when merchants elect to receive early
payments, consists of the difference between the opening and closing balances of the
Payables to third parties item of Current Liabilities on our balance sheet
(R$4,408.3 million at September 30, 2019 compared to R$4,324.2 million at year-
end 2018). Payables to third parties represented positive cash flow of R$84.1 million in
the nine months ended September 30, 2019.
• Our Receivables from (payables to) related parties item consists of the difference
between the opening and closing balances of the Payables to related parties item (i.e.,
UOL) of Current Liabilities on our balance sheet (R$34.9 million at September 30, 2019
compared to R$30.8 million at year-end 2018). Receivables from (payables to) related
parties represented positive cash flow of R$4.1 million in the nine months ended
September 30, 2019.

3Q19 Earnings Release 10

 • Our Inventories item represents changes in the carrying value of the Inventories item of
Current Assets on our balance sheet. This item represented positive cash flow of
R$59.5 million in the nine months ended September 30, 2019.
• Our Salaries and social charges item represent amounts that were recorded on our
statement of income, but which remained unpaid at the end of the period, principally
because they related to the final month of the period. This item represented positive
cash flow of R$42.2 million in the nine months ended September 30, 2019.

• Our Trade payables item consists of the difference between the opening and closing
balances of the trade payables (R$185.7 million at September 30, 2019 compared to
R$165.2 million at year-end 2018). Trade payables represented positive cash flow of
R$19.8 million in the nine months ended September 30, 2019.

• Our Taxes and contributions item represents sales taxes (ISS, ICMS, PIS and
COFINS). This item represented positive cash flow of R$13.9 million in the nine months
ended September 30, 2019.

Since our statement of cash flows begins with our Profit before income taxes, it also
adjusts for cash amounts paid in respect of our income tax and social contribution, which
totaled R$65.7 million in the nine months ended September 30, 2019. Our statement of
cash flows also adjusts for interest income received in cash, which represented a positive
cash flow of R$395.0 million in the nine months ended September 30, 2019.

As a result of the above, our Net Cash used in operating activities in the nine months
ended September 30, 2019 totaled R$227.3 million.

Our Cash flows used in investing activities in the nine months ended September 30, 2019
totaled R$2,206.6 million. This amount consisted of R$256.7 million in purchases and
development of intangible assets, which represent purchases of third-party software and
salaries and other amounts that we paid to develop internally software and technology,
which we capitalize as intangible assets, R$207.0 million in purchases of property and
equipment, mainly related to POS device purchases and R$1,724.9 million related to our
conversion of cash and cash equivalents to investments in Brazil’s government treasury
bonds (“LFTs”).

Our Cash flows used in financing activities in the nine months ended September 30, 2019
totaled R$15.0 million, principally related to our acquisition of the remaining 49% of
R2Tech Informática S.A. in February 2019.

After accounting for the total decrease in Cash and cash equivalents of R$2,449.0 million
discussed above, our Cash and cash equivalents at September 30, 2019 amounted to
R$314.1 million.

3Q19 Earnings Release 11

 New Products launched

In September 2019, we announced the launch of our Savings Account feature and our Super App
services for our free PagSeguro digital account. Our Savings Account feature yields more than
Poupança (a traditional Brazilian savings account, with a total of over R$800 billion under management
and 157 million account holders throughout Brazil). Our Super App services allow customers to use their
account balances to top up Uber, Spotify, and/or Google Play credits (in addition to our previously offered
top up prepaid mobile phone credits).

Through our Savings Account feature, we pay interest (totaling 103% over that generated by Poupança)
on account balances maintained for at least 30 days.

“With these new features, and free of charge, our PagBank digital account becomes the most complete
digital banking ecosystem in Brazil. Besides the free international cash and prepaid cards with no annual
fees, now our customers’ account balances yield 103% over Poupança.” said Ricardo Dutra, CEO of
PagSeguro.

“In addition, our Super App services combine user experience and convenience, as it allows customers to
use their Pagbank digital account balance to simply and securely pay for day-to-day services, directly
through their mobile phones.” added Ricardo.

In October 2019, we announced the launch of our new SmartPOS device, Moderninha X, an innovative
and advanced POS device.

Moderninha X was built for simplicity and ease of use, offers a full integration of hardware, our apps and a
fast and secure payments network. By combining high-end functionalities such as Wi-Fi, Bluetooth and 4G
connections, as well NFC (near-field communication) and QR Code acceptance, Moderninha X, offers a
robust managed payment experience. The integration of software and hardware helps merchants be more
productive and better serve clients.

We offer the Moderninha X for 12 monthly installments of R$19.90. With no additional cost and new
technologies in one single POS device, it is our most attractive product for micro-merchants and small
businesses. Additionally, it integrates our free Pagbank digital account and international cash card, free of
charge.

“The launch of Moderninha X is part of our strategy to democratize access to financial services in Brazil.
With Moderninha X, our merchants can acquire a best in class SmartPOS device at a very low price, only
12 installments of R$19.90, and have our free Pagbank digital account and its international cash card, free
of charge. A great offer for the entrepreneur who wants to multiply his or her sales and profits,” said
Ricardo Dutra, CEO of PagSeguro.

3Q19 Earnings Release 12

 Earnings webcast
PagSeguro (NYSE: PAGS) will host a conference call and earnings webcast on November 19, 2019 at
5:00 pm ET.

Event Details
HD Web Phone: Click here
Dial–in (Brazil): +55 11 3181-8565.
Dial–in (US and other countries): +1 (412) 717-9627 or +1 (844) 204-8942
Password: PagSeguro
Webcast: http://choruscall.com.br/pagseguro/3q19.htm

About PagSeguro:

PagSeguro is a disruptive provider of financial technology solutions focused primarily on consumers,

individual entrepreneurs, micro-merchants, small companies and medium-sized companies in Brazil.
Among its peers, PagSeguro is the only financial technology provider in Brazil whose business model
covers all of the following five pillars:

• Multiple digital banking solutions

• In-person payments via point of sale (POS) devices that PagSeguro provide to merchants
• Free digital accounts that PagSeguro provides to its consumers and merchants with functionalities such
as bill payments, top up prepaid mobile phone, Uber, Spotify and/or Google Play credits, wire transfers,
peer to peer transfers, prepaid credit cards, cash cards, loans, investments, QR code payments, and
payroll portability, among other digital banking services
• Issuer of prepaid, cash and credit cards
• Operate as a full acquirer

PagSeguro is an UOL Group Company that provides an easy, safe and hassle-free way of owning a free
PagBank digital account, which is similar to a regular checking account linked to the Brazilian Central
Bank’s platform, with the feature of accepting payments, where its clients can transact and manage their
cash, without the need to open a regular bank account. PagSeguro’s end-to-end digital banking
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’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 banking ecosystem that
is safe, affordable, simple and mobile-first for both merchants and consumers.

Contacts:

Investor Relations:
PagSeguro Digital Ltd.
+55 (11) 3914-9524
ir@pagseguro.com
investors.pagseguro.com

3Q19 Earnings Release 13

 UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME

Three months Three months

ended September ended September %
30, 2019 30, 2018
(Amounts expressed in R$ millions)
Net revenue from transaction activities and other services 879.4 598.9 46.8%
Net revenue from sales 14.9 94.6 (84.2)%
Financial income 537.8 387.3 38.9%
Other financial income 30.8 56.5 (45.4)%

Total revenue and income 1,463.0 1,137.3 28.6%

Cost of sales and services (684.3) (550.6) 24.3%

Selling expenses (164.6) (90.3) 82.2%
Administrative expenses (134.6) (164.5) (18.2)%
Financial expenses (6.5) (7.2) (9.9)%
Other expenses, net (4.9) (4.1) 21.2%

PROFIT BEFORE INCOME TAXES 468.1 320.6 46.0%

Current income tax and social contribution 12.5 (40.1) (131.2)%

Deferred income tax and social contribution result (138.0) (48.9) 182.1%

INCOME TAX AND SOCIAL CONTRIBUTION (125.5) (89.0) 41.1%

NET INCOME FOR THE PERIOD 342.6 231.6 48.0%

Three months Three months

ended September ended September
30, 2019 30, 2018
(Amounts expressed in R$ thousands,
except share quantities and amounts per
share)
Net income attributable to:
Owners of the Company 342,243 231,286
Non-controlling interests 354 273
Weighted average number of outstanding common shares 320,287,930 313,201,136
Weighted average number of common shares diluted 330,603,248 313,825,638
Basic earnings per common share - R$ 1.0685 0.7385
Diluted earnings per common share - R$ 1.0352 0.7370

Non-GAAP Net income 389,811 290,188

Weighted average number of outstanding common shares 320,287,930 313,201,136
Weighted average number of common shares diluted 330,603,248 313,825,638
Non-GAAP Basic earnings per common share - R$ 1.2171 0.9265
Non-GAAP Diluted earnings per common share - R$ 1.1791 0.9434

3Q19 Earnings Release 14

 UNAUDITED CONDENSED CONSOLIDATED INTERIM BALANCE SHEET
As of September 30, As of December 31,
2019 2018
(Amounts expressed in R$ thousands)
Cash and cash equivalents 314,082 2,763,050
Financial investments 1,779,566 -
Accounts receivable 9,873,987 8,104,679
Inventories 59,085 88,551
Taxes recoverable 120,677 65,653
Other receivables 38,974 20,148
Total current assets 12,186,371 11,042,081

Judicial deposits 4,380 1,511

Accounts receivable 21,941 -
Prepaid expenses 4,948 968
Investment 1,500 -
Property and equipment 253,171 67,104
Intangible assets 512,575 305,614
Total non-current assets 798,515 375,197

TOTAL ASSETS 12,984,886 11,417,278

Payables to third parties 4,408,326 4,324,198

Trade payables 185,667 165,246
Payables to related parties 34,875 30,797
Salaries and social charges 116,163 73,936
Taxes and contributions 129,629 80,093
Provision for contingencies 8,327 7,004
Other payables 5,241 29,501
Total current liabilities 4,888,228 4,710,775

Deferred income tax and social contribution 474,481 132,125

Other payables LP 17,263 -
Total non-current liabilities 491,744 132,125

Share capital 26 26
Capital reserve 5,760,233 5,688,134
Equity valuation adjustments (22,637) (7,325)
Profit retention reserve 1,883,223 909,267
Treasury shares (39,532) (39,532)
7,581,313 6,550,570

Non-controlling interests 23,601 23,806

Total equity 7,604,914 6,574,376

TOTAL LIABILITIES AND EQUITY 12,984,886 11,417,278

15
 UNAUDITED CONDENSED CONSOLIDATED INTERIM CASH FLOWS STATEMENT
Nine months ended Nine months ended
September 30, 2019 September 30, 2018
(Amounts expressed in R$ thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income taxes 1,378,637 796,281
Expenses (revenues) not affecting cash:
Depreciation and amortization 82,208 62,474
Chargebacks 136,741 50,397
Accrual of provision for contingencies 846 2,658
Share based long term incentive plan (LTIP) 72,099 245,066
Inventory provisions (30,031) 4,111
Other financial cost, net (51,552) (700)

Changes in operating assets and liabilities

Accounts receivable (2,322,955) (4,281,849)
Inventories 59,497 (15,089)
Taxes recoverable (18,763) (21,681)
Other receivables (21,617) 4,546
Other payables (5,767) 515
Payables to third parties 84,128 622,149
Trade payables 19,758 59,224
Receivables from (payables to) related parties 4,078 117,730
Salaries and social charges 42,226 39,228
Taxes and contributions 13,917 34,261
Provision for contingencies - (1,317)
(556,550) (2,281,996)
Income tax and social contribution paid (65,735) (186,554)
Interest income received 394,966 263,952

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (227,319) (2,204,598)

CASH FLOWS FROM INVESTING ACTIVITIES

Amount paid on acquisitions, net of cash acquired (18,047) -

Purchases of property and equipment (206,961) (29,054)
Purchases and development of intangible assets (256,741) (117,445)
Acquisition of financial investments (1,724,877) -
Redemption of financial investments - 211,116

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (2,206,626) 64,617

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from offering of shares - 4,717,874

Transactional costs - (189,852)
Transaction with non-controlling interest (15,992) (5,389)
Capital increase by non-controlling shareholders 969 20,639

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (15,023) 4,543,273

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,448,968) 2,403,292
Cash and cash equivalents at the beginning of the year 2,763,050 66,767
Cash and cash equivalents at the end of the year 314,082 2,470,059

16
 RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

Three Months Ended Three Months Ended

September 30, 2019 September 30, 2018

(Amounts expressed in R$ millions, except amounts per

share)

Total revenue and income 1,463.0 1,137.3

Less: Foreign exchange gain on follow-on proceeds - (14.3)
Non-GAAP total revenue and income (1) 1,463.0 1,123.0

Total expenses (994.8) (816.8)

Less: Share-based long-term incentive plan (LTIP) 72.2 115.5
Less: Tax related to remittance of follow-on proceeds (IOF tax) - 4.1
Non-GAAP total expenses (2) (922.6) (697.2)

Profit before income taxes 468.1 320.6

Plus: Total Non-GAAP adjustments 72.2 105.4
Non-GAAP profit before income taxes (3) 540.3 426.0

Income tax and social contribution (125.5) (89.0)

Less: Income tax and social contribution on non-GAAP adjustments (24.6) (46.5)
Non-GAAP deferred income tax (4) (150.1) (135.5)

Net income 342.6 231.6

Plus: Total Non-GAAP adjustments 47.6 58.8
Non-GAAP net income (5) 390.2 290.4

Basic earnings per common share - R$ 1.0685 0.7385

Diluted earnings per common share - R$ 1.0352 0.7370
Non-GAAP basic earnings per common share - R$ (6) 1.2171 0.9265
Non-GAAP diluted earnings per common share - R$ (6) 1.1791 0.9434

(1) Non-GAAP total revenue and income excludes a foreign exchange gain on our follow-on proceeds in the amount of R$14.3 million
in the three months ended September 30, 2018, which relates 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 follow-on offering. We exclude this foreign exchange
variation from our non-GAAP measures primarily because it is unusual income. The foreign exchange gain on our follow-on
proceeds is included within Other financial income. Other financial income in the amount of R$56.5 million is therefore adjusted by
excluding the foreign exchange gain on our follow-on proceeds, resulting in non-GAAP Other financial income in the amount of
R$42.2 million.
(2) Non-GAAP total expenses excludes:
(a) Stock-based compensation expenses in the total amount of R$72.2 million (R$115.5 million in the three months ended
September 30, 2018), consisting of expenses for equity awards under our LTIP. We exclude stock-based compensation
expenses from our non-GAAP measures primarily because they are non-cash expenses and the related employer payroll
taxes depend on our stock price and the timing and size of exercises and vesting of 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. The total of stock-based compensation expenses is allocated between Cost of sales and services and
Administrative expenses. Excluding the stock-based compensation expenses, Cost of sales and services in the amount of
R$684.3 million (R$550.6 million in the three months ended September 30, 2018) is adjusted by R$19.5 million (R$9.7 million
in the three months ended September 30, 2018) resulting in non-GAAP Cost of sales and services of R$664.8 million
(R$540.9 million in the three months ended September 30, 2018); and Administrative Expenses in the amount of R$134.6
million (R$164.5 million in the three months ended September 30, 2018) is adjusted by R$52.7 million (R$105.8 million in the
three months ended September 30, 2018) resulting in non-GAAP Administrative expenses of R$81.9 million (R$58.7 million in
the three months ended September 30, 2018).
(b) Tax related to remittance of follow-on share proceeds (IOF tax) in the amount of R$4.1 million in the three months ended
September 30, 2018, which represents the impact of Brazilian IOF tax (currency remittance tax) payable when we remitted the
proceeds from our sale of new shares in our June 2018 follow-on offering from the Cayman Islands to Brazil. We exclude this
IOF tax on the remittance of follow-on share proceeds from our non-GAAP measures primarily because it is an unusual
expense. The IOF tax is fully allocated to Financial expenses. Financial expenses in the amount of R$7.2 million is therefore
adjusted by excluding the IOF tax, resulting in non-GAAP Financial expenses in the amount of R$3.1 million.
(3) Non-GAAP profit before income 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 of 34% calculated on the non-GAAP adjustments
described in footnotes (1) and (2) above, other than the foreign exchange gain on follow-on proceeds of R$14.3 million in the three
months ended September 30, 2018, which is not taxable, and the tax benefits related to other non-GAAP adjustments.
(5) Non-GAAP net income is equal to the sum of the adjustments described in footnotes (1), (2) and (4) above.
(6) Non-GAAP basic earnings per common share and non-GAAP diluted earnings per common share reflect the adjustments to non-
GAAP net income, which is allocated in full to Owners of the Company.

17