Q2 2026 PagSeguro Digital Ltd Earnings Call

August 11, 2026

Speaker #1: Entered. 4712. 33. This meeting passcode is invalid. Please re-enter the meeting passcode followed by pound. You have joined the meeting as an attendee and will be muted throughout the meeting.

Speaker #2: In this presentation, and in the company's earnings release appendix, all participants will be in listen-only mode. To ask a live question after the presentation, please use the raise-hand button to join the queue.

Operator 2: In this presentation and in the company's earnings release appendix. All participants will be in a listen-only mode. To ask a live question after the presentation, please use the raise-hand button to join the queue. Once you are announced, a request to activate your microphone will appear on your screen. Today's conference is being recorded and will be available on the company's IR website after the event is concluded. Now, I will turn the call over to Daniel Spencer Fiorani, Head of Investor Relations.

Operator: In this presentation and in the company's earnings release appendix. All participants will be in a listen-only mode. To ask a live question after the presentation, please use the raise-hand button to join the queue. Once you are announced, a request to activate your microphone will appear on your screen. Today's conference is being recorded and will be available on the company's IR website after the event is concluded. Now, I will turn the call over to Daniel Spencer Fiorani, Head of Investor Relations.

Speaker #2: Once you are announced, a request to activate your microphone will appear on your screen. Today's conference is being recorded and will be available on the company's IR website after the event is concluded.

Speaker #2: Now I will turn the call over to Danielle Spencer, Pioner. Head of Investor Relations.

Speaker #3: Good evening, everyone, and thank you for joining PagBank's second quarter 2026 earnings conference call. We appreciate your time and interest in our company. Joining me tonight are Ricardo Dutra, our Principal Executive Officer; Carlos Mawad, our CEO; and Gustavo Sequin, our CFO.

Daniel Spencer Fiorani: Good evening, everyone, and thank you for joining PagBank's Q2 2026 earnings conference call. We appreciate your time and interest in our company. Joining me tonight are Ricardo Dutra, our Principal Executive Officer, Carlos Mauad, our CEO, and Gustavo Sechin, our CFO. After the presentation, we will open the call for questions. To allow for broader participation, we ask that each analyst limit themselves to one question only. I now turn the call over to Ricardo Dutra for this quarter's highlights and key accomplishments. Dutra, please go ahead.

Speaker #3: After the presentation, we will open the call for questions, and to allow for broader participation, we ask that each analyst limit themselves to one question only.

Speaker #3: I now turn the call over to Ricardo Dutra for this quarter's highlights and key accomplishments. Dutra, please go ahead.

Speaker #4: Good evening, everyone. And thank you for joining our earnings call. Let's start on slide 4 with some key figures. Q2 was another solid quarter for our company.

Ricardo Dutra da Silva: Good evening, everyone, and thank you for joining our earnings call. Let us start on slide 4 with some key figures. Q2 was another solid quarter for our company. We continued to increase client engagement while expanding our multi-product ecosystem across payments, banking, and credit, driving resilient profitability and reinforcing the strength of our business model. Total payment volume reached BRL 133 billion, up 3% year over year, reinforcing the gradual re-acceleration trend we have seen over the past quarters. Our expanded credit portfolio reached BRL 52 billion, while total loans increased impressive 31% year over year, driven mainly by the expansion of working capital and credit cards offering. Total deposits continued to grow, reaching BRL 43 billion, up 15% year over year and provide an important foundation to support future credit growth.

Ricardo Dutra da Silva: Good evening, everyone, and thank you for joining our earnings call. Let us start on slide four with some key figures. Q2 was another solid quarter for our company. We continued to increase client engagement while expanding our multi-product ecosystem across payments, banking, and credit, driving resilient profitability and reinforcing the strength of our business model. Total payment volume reached BRL 133 billion, up 3% year-over-year, reinforcing the gradual re-acceleration trend we have seen over the past quarters. Our expanded credit portfolio reached BRL 52 billion, while total loans increased impressive 31% year-over-year, driven mainly by the expansion of working capital and credit cards offering. Total deposits continued to grow, reaching BRL 43 billion, up 15% year-over-year and provide an important foundation to support future credit growth.

Speaker #4: We continued to increase client engagement while expanding our multi-product ecosystem across payments, banking, and credit, driving resilient profitability and reinforcing the strength of our business model.

Speaker #4: Total payment volume reached $133 billion, up 3% year over year, reinforcing the gradual re-acceleration trend we have seen over the past quarters. Our expanded credit portfolio reached $5.2 billion, while total loans increased an impressive 31% year over year, driven mainly by the expansion of working capital and credit card offerings.

Speaker #4: Total deposits continued to grow, reaching $43 billion up 15% year over year, and provided an important foundation to support future credit growth. On the financial side, net revenue excluded interchange fees reached $3.4 billion growing 2% year over year, mainly driven by acquiring volume re-acceleration and our credit portfolio.

Ricardo Dutra da Silva: On the financial side, net revenue, excluding interchange fees, reached BRL 3.4 billion, growing 2% year-over-year, mainly driven by acquiring volume re-acceleration in our credit portfolio. Recurring net income, non-GAAP, also grew 2%, reaching BRL 576 million, while diluted non-GAAP EPS increased 10%, supported by earnings resilience and capital optimization initiatives and within our guidance range for the year. Overall, we are seeing the strategy play out as expected. Stronger engagement, broader monetization, and resilient profitability despite a challenging macro environment. Going to slide 5. Before moving into the business highlights, it is worth stepping back and looking at the broader value creation journey. Over the last 12 months, PagBank returned approximately BRL 2 billion to shareholders through dividends and share buybacks, representing a last 12 months total yield of around 13.4%. Since our IPO, we have significantly expanded the platform.

Speaker #4: Recurring net income, known gap, also grew 2%, reaching $576 million while diluted known gap EPS increased 10%, supported by earnings resilience and capital optimization initiatives and within our guidance range for the year.

Speaker #4: Overall, we're seeing the strategy play out as expected. Stronger engagement, broader monetization, and resilient profitability despite a challenging micro-environment. Going to slide 5. Before moving into the business highlights, it is worth stepping back and looking at the broader value creation journey.

Speaker #4: Over the last 12 months, PagBank returned approximately $2 billion to shareholders through dividends and share buybacks, representing a last 12 months' total yield of around 13.4%.

Speaker #4: Since our IPO, we have significantly expanded the platform. We started as a payment-led ecosystem and have gradually built a much broader financial services platform around our clients' needs, combining payments, banking, credit, investments, insurance, and new digital solutions.

Ricardo Dutra da Silva: We started as a payment-led ecosystem and have gradually built a much broader financial services platform around our clients' needs, combining payments, banking, credit, investments, insurance, and new digital solutions. This evolution has increased the recurrence of our results, expanded our addressable market, and strengthened our ability to monetize client relationships across different products and use cases. With that, I will now turn the call over to Carlos Mauad.

Speaker #4: This evolution has increased the recurrence of our results, expanded our addressable market, and strengthened our ability to monetize client relationships across different products and use cases.

Speaker #4: With that, I'll now turn the call over to Carlos Mawad.

Speaker #5: Thank you, Dutra, and good evening, everyone. Before going into the business update, I would like to start on slide 7 with the key messages that frame our performance this quarter, and our long-term ambition.

Carlos Mauad: Thank you, Dutra, and good evening, everyone. Before going into the business update, I would like to start on slide 7 with the key messages that frame our performance this quarter and our long-term ambition. Q2 reinforces the consistency of our strategy. We continue to evolve our ecosystem with broader monetization across payments, banking, and credit, while deepening our relationship with our active client base. This evolution is reflected in our operational performance, with acceleration in all business from TPV through credit portfolio, and most importantly, with increasing penetration of our banking products across our active client base. At the same time, execution and discipline are central to how we manage the business, demonstrating the resilience of our business model. On the second quarter of this year, we protected profitability supported by financial cost efficiency, operational leverage, and disciplined capital allocation.

Carlos Mauad: Thank you, Dutra, and good evening, everyone. Before going into the business update, I would like to start on slide seven with the key messages that frame our performance this quarter and our long-term ambition. Q2 reinforces the consistency of our strategy. We continue to evolve our ecosystem with broader monetization across payments, banking, and credit, while deepening our relationship with our active client base. This evolution is reflected in our operational performance, with acceleration in all business from TPV through credit portfolio, and most importantly, with increasing penetration of our banking products across our active client base. At the same time, execution and discipline are central to how we manage the business, demonstrating the resilience of our business model. On the second quarter of this year, we protected profitability supported by financial cost efficiency, operational leverage, and disciplined capital allocation.

Speaker #5: Q2 reinforces the consistency of our strategy. We continue to evolve our ecosystem with broader monetization across payments, banking, and credit, while deepening our relationship with our active client base.

Speaker #5: This evolution is reflected in our operational performance, with acceleration in all businesses from TPV to credit portfolio and, most importantly, with increasing penetration of our banking products across our active client base.

Speaker #5: At the same time, execution and discipline are central to how we manage the business, demonstrating the resilience of our business model. In the second quarter of this year, we protected profitability, supported by financial cost efficiency, operational leverage, and disciplined capital allocation.

Speaker #5: Finally, as we move forward, our focus remains on strengthening our competitive position, capturing the opportunities ahead, and consistently executing against both our 2026 commitments and our long-term strategic ambition.

Carlos Mauad: Finally, as we move forward, our focus remains on strengthening our competitive position, capturing the opportunities ahead, and consistently executing against both our 2026 commitments and our long-term strategic ambition. With that context, let me move to the business overview and the opportunity ahead of us. Starting with the marketing opportunity, we continue to see significant room for growth across our core verticals. PagBank has built an integrated platform across payments, banking, and credit, serving individuals and micro, small, and medium-sized businesses in markets where penetration remains low and growth potential is still meaningful. Our ecosystem gives us several avenues for growth. We have opportunities to increase share in Pix, deposits, expanded credit, and other financial services. In several of these markets, our current share remains below 1%, which reinforces how much room we have to expand.

Speaker #5: With that context, let me move to the business overview and the opportunity ahead of us. Starting with the marketing opportunity, we continue to see significant room for growth across our core verticals.

Speaker #5: PagBank has built an integrated platform across payments, banking, and credit, serving individuals and micro, small, and medium-sized businesses in markets where penetration remains low and growth potential is still meaningful.

Speaker #5: Our ecosystem gives us several avenues for growth. We have opportunities to increase share in Pix, deposits, expanded credit, and other financial services. In several of these markets, our current share remains below 1%, which reinforces how much room we have to expand.

Speaker #5: Moving to slide 9, product innovation continues to support engagement and monetization across the ecosystem. During the quarter, we advanced several initiatives designed to make PagBank more useful in our clients' daily lives.

Carlos Mauad: Moving to slide 9, product innovation continues to support engagement and monetization across the ecosystem. During the quarter, we advanced several initiatives designed to make PagBank more useful in our clients' daily lives. These include Minizinha Voice, the first terminal in Brazil featuring an AI-powered sales assistant, launched in January of this year, iOS cashback on international credit card transactions, private payroll loans, and Pix Finance, an integrated Pix installment solution, both products launched earlier this year and to be rolled out in the next months. Zero-fee investments, private pensions plans, collections management tools, and new insurance products. What is important here is that these products expand our relationship beyond payments. They strengthen our banking and financial service offering, create additional cross-sell opportunities, and support our long-term ambition of building a more complete financial platform for both merchants and individuals.

Carlos Mauad: Moving to slide nine, product innovation continues to support engagement and monetization across the ecosystem. During the quarter, we advanced several initiatives designed to make PagBank more useful in our clients' daily lives. These include Minizinha Voice, the first terminal in Brazil featuring an AI-powered sales assistant, launched in January of this year, iOS cashback on international credit card transactions, private payroll loans, and Pix Finance, an integrated Pix installment solution, both products launched earlier this year and to be rolled out in the next months. Zero-fee investments, private pensions plans, collections management tools, and new insurance products. What is important here is that these products expand our relationship beyond payments. They strengthen our banking and financial service offering, create additional cross-sell opportunities, and support our long-term ambition of building a more complete financial platform for both merchants and individuals.

Speaker #5: These include Minis in-house, the first terminal in Brazil featuring an AI-powered sales assistant, launched in January of this year; iOS cashback on international credit card transactions; private payroll loans; and PIX Finance, an integrated PIX installment solution—both products launched earlier this year and to be rolled out in the next months.

Speaker #5: Zero-fee investments, private pension plans, collections management tools, and new insurance products. What is important here is that these products expand our relationship beyond payments.

Speaker #5: They strengthen our banking and financial services offering, create additional cross-sell opportunities, and support our long-term ambition of building a more complete financial platform for both merchants and individuals.

Carlos Mauad: As we have discussed before, the more products the clients use, the more engaged they become with the platform. That drives transaction activity and creates additional monetization opportunities over time. Turning to banking on slide 10, engagement continues to translate into higher transactionality and broader product adoption. Cash-in volumes, excluding acquiring related inflows, reached almost BRL 100 billion in the quarter, increasing 23% year over year and 19% quarter over quarter. Cash-in active banking clients reached 16.9 million, up 27% year over year. We also continue to see stronger usage of our daily banking features, including bill payments and Pix transactions, with increase of 12% year over year. In parallel, product penetration expanded across the active client base. Investment penetration increased from 23% to 28%, while insurance penetration increased from 11% to 16% year over year.

Carlos Mauad: As we have discussed before, the more products the clients use, the more engaged they become with the platform. That drives transaction activity and creates additional monetization opportunities over time. Turning to banking on slide 10, engagement continues to translate into higher transactionality and broader product adoption. Cash-in volumes, excluding acquiring related inflows, reached almost BRL 100 billion in the quarter, increasing 23% year-over-year and 19% quarter-over-quarter. Cash-in active banking clients reached 16.9 million, up 27% year over year. We also continue to see stronger usage of our daily banking features, including bill payments and Pix transactions, with increase of 12% year over year. In parallel, product penetration expanded across the active client base. Investment penetration increased from 23% to 28%, while insurance penetration increased from 11% to 16% year over year.

Speaker #5: As we have discussed before, the more products the clients use, the more engaged they become with the platform. That drives transaction activity and creates additional monetization opportunities over time.

Speaker #5: Turning to banking on slide 10, engagement continues to translate into higher transactionality and broader product adoption. Cash-in volumes, excluding acquiring-related inflows, reached almost $100 billion in the quarter, increasing 23% year over year and 19% quarter over quarter.

Speaker #5: Cash in per active banking client reached $5.7 trillion, up 27% year over year. We also continue to see stronger usage of our daily banking features, including bill payments and PIX transactions with increase of 12% year over year.

Speaker #5: In parallel, product penetration expanded across the active client base. Investment penetration increased from 23 to 28%, while insurance penetration increased from 11 to 16% year over year.

Speaker #5: Credit products penetration, excluding payroll clients, also increased from 4% to 6%, a strong 43% expansion that shows not only our capacity to perform, but, most importantly, the growth potential in this avenue.

Carlos Mauad: Credit products penetration, excluding payroll clients, also increased from 4% to 6%, a strong 43% expansion that shows not only our capacity to perform, but most important, the growth potential in this avenue. What we are seeing is simple. Clients are bringing more activity into PagBank and using a broader mix of products. This deeper relationship is central to our strategy, and it supports higher engagement, broader monetization, and stronger lifetime value. Moving to slide 11, credit remains one of the key growth levers. It deepens client relationships and gives us additional opportunities to monetize the ecosystem. Our total credit portfolio reached BRL 5.1 billion, increasing 31% year over year. Growth was mainly driven by working capital and credit cards, both of which are important in the long-term strategy, and to the 2029 ambition we have shared with the market.

Speaker #5: What we are seeing is simple. Clients are bringing more activity into PagBank and using a broader mix of products. This deeper relationship is central to our strategy, and it supports higher engagement, broader monetization, and stronger lifetime value.

Speaker #5: Moving to slide 11, credit remains one of the key growth levers. It deepens client relationships and gives us additional opportunities to monetize the ecosystem.

Speaker #5: Our total credit portfolio reached $5.1 billion, increasing 31% year over year. Growth was mainly driven by working capital and credit cards, both of which are important in the long-term strategy and to the 2020–2029 ambition we have shared with the market.

Speaker #5: Working capital reached 0.6 billion in credit outstanding, growing 204% year over year, while credit cards reached 1.1 billion up 35% year over year. Payroll loans and other credit products totaled $3.4 billion, increasing 18% year over year.

Carlos Mauad: Working capital reached BRL 0.6 billion in credit outstanding, growing 204% year over year, while credit cards reached BRL 1.1 billion, up 35% year over year. Payroll loans and other credit products totaled BRL 3.4 billion, increasing 18% year over year. This is also worth highlighting the origination trend. While working capital origination was lower on average in Q2 compared to Q1, July already shows a stronger run rate at approximately BRL 80 million in credit production. This is above Q2 average and also above the average levels seen in the prior quarters, which gives us confidence in the continued momentum and scalability of the product. When we include financial operations linked to merchants' prepayment, the expanded credit portfolio reached BRL 52.4 billion, up 9% year over year and 3% quarter over quarter. Just as important, we are growing the portfolio while maintaining the prudent risk profile.

Speaker #5: It is also worth highlighting the origination trend. While working capital origination was lower on average in Q2 compared to Q1, July already shows a stronger run rate at approximately $80 million in credit production.

Speaker #5: This is above the Q2 average and also above the average level seen in prior quarters, which gives us confidence in the continued momentum and scalability of the product.

Speaker #5: When we include financial operations linked to merchants' prepayment, the expanded credit portfolio reached $52.4 billion up 9% year over year and 3% quarter over quarter.

Speaker #5: Just as important, we are growing the portfolio while maintaining the prudent risk profile. NPL-90 is still that 3.4%, remaining well below the Brazilian market average of 6.2.

Carlos Mauad: NPL90 stood at 3.4%, remaining well below the Brazilian market average of 6.2%. This reflects the strength of our underwriting, enhanced analytics, risk governance, and the proximity we have with our clients through the ecosystem. As expected, the portfolio mix continues to evolve gradually, with unsecured products increasing as a share of the total portfolio. This is consistent with our strategy and remains supported by prudent risk management across cycles. Let me move to funding on slide 12, which remains one of our key competitive advantage. Total deposits reached almost 43 billion BRL, growing 15% year-over-year, while total funding reached 47 billion BRL, up 10% year-over-year. More than 90% of our total deposits are generated on-platform, which reinforce the strength of our ecosystem and the relevance of our digital channels.

Speaker #5: This reflects the strength of our underwriting enhanced analytics, risk governance, and the proximity we have with our clients through the ecosystem. As expected, the portfolio mix continues to evolve gradually, with unsecured products increasing as a share of the total portfolio.

Speaker #5: This is consistent with our strategy and remains supported by prudent risk management across cycles. Let me move to funding on Slide 12, which remains one of our key competitive advantages.

Speaker #5: Total deposits reached almost $43 billion, growing 15% year over year, while total funding reached $47 billion, up 10% year over year. More than 90% of our total deposits are generated on-platform, which reinforces the strength of our ecosystem and the relevance of our digital channels.

Speaker #5: The growth of our deposit base, combined with a high on-platform concentration and lower funding costs, provides a scalable and efficient foundation to support credit expansion.

Carlos Mauad: The growth of our deposit base, combined with a high on-platform concentration and lower funding costs, provides a scalable and efficient foundation to support credit expansion. During the quarter, we continued to optimize the cost of funding. The company has now delivered nine consecutive quarters of funding cost reduction as a percentage of the CDI, reflecting a disciplined liability management and improvements in product pricing and remuneration conditions. This funding structure gives us flexibility to continue grow credit while maintaining a healthy balance sheet and strengthening client relationship. Now, I will hand it over to Gustavo to cover how these business trends translated into financial performance. Gustavo, please.

Speaker #5: During the quarter, we continued to optimize the cost of funding. The company has now delivered nine consecutive quarters of funding cost reduction as a percentage of the CDI, reflecting disciplined liability management and improvements in product pricing and remuneration conditions.

Speaker #5: This funding structure gives us flexibility to continue growing credit while maintaining a healthy balance sheet and strengthening client relationships. Now, I will hand it over to Gustavo to cover how this business trend translated into financial performance.

Speaker #5: Gustavo, please.

Speaker #1: Thank you, Mohamad. Hello, everyone, and thank you for joining us today. I will now cover our consolidated financial performance for the quarter. This slide shows the contribution of business execution and funding efficiency to revenue and gross profit.

Gustavo Bahia Gama Sechin: Thank you, Mawad. Hello, everyone, and thank you for joining us today. I will now cover our consolidated financial performance for the quarter. This slide shows the contribution of business execution and funding efficiency to revenue and gross profit. Total revenue and income, excluding interchange fee, reached 3.4 billion BRL in the quarter, increasing 2% year-over-year and 1% quarter-over-quarter. Gross profit reached approximately 2 billion BRL, growing 3% year-over-year and 6% over quarter. This performance reflects business execution, continued contribution from banking and credit, and a sequential improvement in financial costs. At the same time, it's important to note that interest rates remain high for the year, and the rate cuts have not come in the magnitude initially expected. We continue to manage pricing, funding, and capital allocation with discipline. The banking business is an important driver of our results.

Speaker #1: Total revenue and income excluding interchange fee reached $3.4 billion in the quarter, increasing 2% year over year and 1% quarter over quarter. Gross profit reached approximately $2 billion growing 3% year over year and 6% over quarter.

Speaker #1: This performance reflects business execution, continued contribution from banking and credit, as well as an improvement in financial costs. At the same time, it's important to note that interest rates remain high for the year, and the rate cuts have not come in the magnitude initially expected, so we continue to manage pricing, funding, and capital allocation with discipline.

Speaker #1: The banking business is an important driver of our results. Higher transactionality, credit expansion, and broader product penetration are contributing to a more diversified gross profit base and reinforcing the value of our integrated ecosystem.

Gustavo Bahia Gama Sechin: Higher transactionality, credit expansion, and broader product penetration are contributing to a more diversified gross profit base and reinforcing the value of our integrated ecosystem. Now on slide 15, we provide more details on the cost and efficiency drivers behind the quarter. Financial costs declined 5% quarter-over-quarter, primarily reflecting management initiatives to optimize the company's funding cost, despite still elevate Selic levels. Total losses increased 9% year-over-year, mainly reflecting the expansion and mix evolution of the credit portfolio. This is consistent with our strategy to scale credit in a disciplined way while maintaining strong asset quality indicators. Operating expenses represent 25.9% of our total revenue and income, excluding interchange fees in the quarter.

Speaker #1: Now, on slide 15, we provide more details on the cost and efficiency drivers behind the quarter. Financial costs declined 5% quarter over quarter, primarily reflecting management initiatives to optimize the company's funding cost.

Speaker #1: Despite still elevated Selic levels. Total losses increased 9% year over year, mainly reflecting the expansion and mixed evolution of the credit portfolio. This is consistent with our strategy to scale credit in a disciplined way, while maintaining strong asset quality indicators.

Speaker #1: Operating expenses represented 25.9% of our total revenue and income, excluding interchange fees, in the quarter. On a year-to-date basis, operating expenses improved as a percentage of revenues, reinforcing again our focus on operating leverage, even considering second quarter effects related to the World Cup broadcast sponsorship in Brazil and the annual collective bargaining agreement.

Gustavo Bahia Gama Sechin: On a year-to-date basis, operating expenses improved as a presentation of revenues, reinforcing again our focus on operating leverage, even considering Q2 effects related to the World Cup broadcast sponsorship in Brazil and the annual collective bargaining agreement. D&A plus POS write-offs also improved as a percentage of revenues in Q1 of the year, reflecting better allocation and POS management. Looking ahead, we still see room for additional efficiency gains and remain an important part of our value creation. Next slide, we summarize how these dynamics translate into bottom-line performance and returns. Non-GAAP net income reached BRL 576 million, up 2% year-over-year. Diluted non-GAAP EPS reached BRL 2.06, increasing 10% year-over-year, supported by earnings resilience and the reduction in average shares outstanding following the execution of our share buyback program.

Speaker #1: DNA plus POS write-off also improved as a percentage of revenues in the first quarter of the year, reflecting better allocation and POS management. Looking ahead, we still see room for additional efficiency gains, which remains an important part of our value creation.

Speaker #1: The next slide will summarize how this dynamic translated into bottom-line performance and returns. Known gap, net income reached $576 million, up 2% year over year.

Speaker #1: Diluted known gap EPS reached $2.06, increasing 10% year over year, supported by earnings resilience and the reduction in average shares outstanding, following the execution of our share buyback program.

Speaker #1: Analyzed known gap ROE reached 15.6%, increasing 30 basis points year over year, and remaining aligned with our solid capital structure and disciplined approach to profitability.

Gustavo Bahia Gama Sechin: Annualized non-GAAP ROE reached 15.6%, increasing 30 basis points year-over-year and remaining in line with our solid capital structure and disciplined approach to our profitability. These results show that we continue to protect profitability while investing technology, product innovation, and long-term growth of the business. Moving to the next slide, I would like to reinforce the strength of our capital position and our commitment to disciplined shareholder returns. We have continued to advance our capital optimization agenda, pursuing a Basel ratio with our target range of 18% to 22% over time. At the end of this quarter, our adjusted Basel ratio stood at 22.5%, compared to 24.1% in Q1 and 29.6% in Q2 of a year ago. This movement brings us closer to our target range while preserving all the flexibility and capabilities to support the company growth.

Speaker #1: These results show that we continue to protect profitability while investing in technology, product innovation, and the long-term growth of the business. Moving to the next slide, I would like to reinforce the strength of our capital position and our commitment to disciplined shareholder returns.

Speaker #1: We have continued to advance our capital optimization agenda, pursuing a baseline ratio with our target rate of 18 to 22 over time. At the end of this quarter, our adjusted baseline ratio stood at 22.5, compared to 24.1 in the first quarter and 29.6 in the second quarter of a year ago.

Speaker #1: This movement brings us closer to our target range, while preserving all the flexibility and capabilities to support the company growth. Over the last 12 months, PacBank's return $2 billion to shareholders through dividends and share buybacks.

Gustavo Bahia Gama Sechin: Over the last 12 months, PagBank returned BRL 2 billion to shareholders through dividends and share buybacks. In this H1 of 2026, we completed our third repurchase program, authorized for up to $200 million, with more than BRL 307 million repurchased during this period. In addition, the second tranche of our 2026 dividend was paid in June, and a third tranche of BRL 0.28 per common share will be paid on 30 September, with a record date on 16 September. We continue to expect total cash dividends paid in 2026 to reach approximately BRL 1.4 billion, subject to the relevant approvals, as always, we say, market conditions, and the company's financial position. As we said before, we always manage to use dividends and buybacks, and dividends remain the most effective way to optimize capital, while it continues to support the business growth.

Speaker #1: In the first half of 2026, we completed our third repurchase program, authorized for up to $200 million, with more than 370 million repurchases during this period.

Speaker #1: In addition, the second tranche of our 2026 dividend was paid in June, and a third tranche of $28 per common share will be paid on September 30, with record date on September 16.

Speaker #1: We continue to expect total cash dividends paid in 2026 to reach approximately $1.4 billion, subject to the relevant approvals, as always, as well as market conditions and the company's financial position.

Speaker #1: As we said before, we always manage to use dividends and buybacks, and dividends remain the most effective way to optimize capital while continuing to support the business growth.

Speaker #1: Moving to the next slide, we show where we stand against our 2006 commitment after the first half of the year. At this point, we are maintaining our targets for the year, recognize that year-to-date performance reasonably in line with our strategy.

Gustavo Bahia Gama Sechin: Moving to the next slide, we show where we stand against our 2026 commitment after the H1 of the year. At this point, we are maintaining our targets for the year, recognize that year-to-date performance reasonably in line with our strategy. We have been observing a much more challenging year than we were expecting, with risks coming both internally and externally. The macroeconomic environment remains clearly uncertain, and it's very important to recognize that current Selic rate levels create additional pressure for the performance of the business. At the same time, we have been focusing on running the business with efficiency and discipline, looking for different initiatives to boost our profitability. For that reason, we continue to expect to deliver a full-year performance in line with the guidance range. Now, starting with credit.

Speaker #1: We have been observing a much more challenging year than we were expecting, with risks coming both internally and externally. The macroeconomic environment remains unclear and uncertain.

Speaker #1: And it's very important to recognize that current Selic rate levels create additional pressure on the performance of the business. At the same time, we have been focusing on running the business with efficiency and discipline, looking for different initiatives to boost our profitability.

Speaker #1: For that reason, we continue to expect to deliver a full-year performance in line with the guidance range, now starting with credit total credit portfolio growth reached 31% year over year, in the first half, within our expected range for the full year.

Gustavo Bahia Gama Sechin: Total credit portfolio growth reached 31% year-over-year in H1, within our expected range for the full year. We expect to keep this growth within the expected range for the year as we further evolve our credit offering with the rollout of new products in the next quarters, such as private payroll and Pix Finance. Gross profit grew 2% year-over-year in H1, highlighted by the positive contribution coming from financial cost efficiency. Again, we managed the business to reduce our financial cost. Diluted non-GAAP EPS increased 11% year-over-year in H1 with the guidance range for 2026. This reflects resilient profitability and the positive effect of capital optimization initiatives. Finally, CapEx reached BRL 1.1 billion in H1 of this year, and we continue to manage investments with discipline, aligned with our full-year commitment.

Speaker #1: We expect to keep this growth within the expected range for the year, as we further evolve our credit offering with the rollout of new products in the next quarters.

Speaker #1: Such as private payroll and PIX Finance. Gross profit grew 2% year over year in the first half, highlighted by the positive contribution coming from financial cost efficiency, again with managed business to reduce our financial cost.

Speaker #1: Diluted known gap EPS increased 11% year over year in the first half, with the guidance range for 2026. This reflects resilient profitability and the positive effect of capital optimization initiatives.

Speaker #1: Finally, CapEx reached $1.1 billion in the first half of this year, and we continue to manage investments with discipline, aligned with our full-year commitment.

Speaker #1: With that, I will turn the call back to Mawad for his final announcement.

Gustavo Bahia Gama Sechin: With that, I will turn the call back to Mawad for his final announcement.

Speaker #2: Thank you, Gustavo. Before we move to Q&A, I would like to share a recent leadership update. We are pleased to welcome Enrique Fragata as PagBank's new COO.

Carlos Mauad: Thank you, Gustavo. Before we move to Q&A, I would like to share a recent leadership update. We are pleased to welcome Henrique Fragata as PagBank's new COO. Henrique brings strong experience in the financial sector, and his arrival will strengthen our focus on execution, efficiency, and operational excellence. Henrique comes at an important stage as we continue to expand our ecosystem and advance our long-term strategy. With that, I thank you all for joining us today. We appreciate your continued trust and partnership.

Speaker #2: Enrique brings strong experience in the financial sector, and his arrival has strengthened our focus on execution, efficiency, and operational excellence. Enrique joins at an important stage as we continue to expand our ecosystem and advance our long-term strategy.

Speaker #2: With that, I thank you all for joining us today. We appreciate your continued trust and partnership.

Speaker #3: Thank you all for the presentation. We will now begin the Q&A session for investors and analysts. Our first question comes from Adnan Shirazi with Citi.

Operator 2: Thank you all for the presentation. We will now begin the Q&A session for investors and analysts. Our first question comes from Adnan Shirazi with Citi. You can open your microphone.

Operator: Thank you all for the presentation. We will now begin the Q&A session for investors and analysts. Our first question comes from Adnan Shirazi with Citi. You can open your microphone.

Speaker #3: You can open your microphone.

Adnan Shirazi: Hi, all. Nice to be here. My question is related to credit and the 2029 goals. Remember that the expectations was to accelerate the credit portfolio, especially in 2027, but for 2026, you are testing the product. From the current scenario that we are seeing, surprisingly negative news on the delinquency levels, do you see any change in plans reducing the growth pace or revising the 2029 goals? Thank you.

Speaker #4: Hi all, nice to be here. My question is related to credit and the 2029 goals. I remember that the expectation was to accelerate the credit portfolio, especially in '27.

Speaker #4: But for '26, you are testing the product from the current scenario that we are seeing. Yeah. Surprisingly, negative news on the delinquency levels. Do you see any change in plans, reducing the growth pace, or revising the 2029 goals?

Speaker #4: Thank you.

Carlos Mauad: Hello. This is Mawad. Thank you for your question. 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. There is a long way to go before 2029. Of course, there is going to be different macro cycles that we're going to have to face. There's going to be regulatory milestones that can change the credit landscape in Brazil, especially on the collateral products. But again, it is our mission here to find out the workaround, find out the new products and to scale up the credit strategy of the company.

Speaker #5: Hello, this is Mawad. Thank you for your question. No, we are still quite confident in everything that we are doing here. In fact, we see the 31% increase in credit outstanding as a very good number in terms of volume and performance.

Speaker #5: That is a long way to go before 2029. Of course, there are going to be different macro cycles that we're going to have to face.

Speaker #5: There is going to be regulatory milestones that can change the credit landscape in Brazil, especially on the collateral products. But again, it is our mission here to find out the workarounds, find out the new products, and to scale up the credit strategy of the company.

Carlos Mauad: So far, despite the fact that the macro is tougher than we thought on the beginning of the year, we're still quite confident on everything that we are doing and confident on the long-term guidance that we published last year. Just to complement. Okay Arno, just part of the answer here is to remember that, look at slide 11, we have very low NPLs, which gives us the comfort to keep growing the credit portfolio in a sustainable way. We are still far below the industry, 3.4% compared to 6.2%. We do have the comfort to keep growing in a sustainable way, same way we've been doing so far. Great. If I may, a follow-up on credit. Regarding the private payroll loans, whether the company was testing internally, how is this advancing, and the rollout to other companies has started yet?

Speaker #5: So far, despite the fact that the macro is tougher than we thought at the beginning of the year, we're still quite confident in everything that we are doing.

Speaker #5: And we remain confident in the long-term guidance that we published last year.

Speaker #6: Just to complement.

Speaker #5: Okay.

Speaker #6: Or no, just part of the answer here is to remember that—look at slide 11—we have very low NPLs. It gives us the comfort to keep growing the credit portfolio in a sustainable way.

Speaker #6: We are still far below the industry, 3.4%, compared to 6.2. So we do have the comfort to keep growing in a sustainable way. Same way we've been doing so far.

Adnan Shirazi: Great. If I may, a follow-up on credit. Regarding the private payroll loans, whether the company was testing internally, how is this advancing, and the rollout to other companies has started yet?

Speaker #4: Great. If I may, a follow-up on credit. Regarding the private payroll loans, remember that the company was testing internally. How is this advancing, and has the rollout to other companies started yet?

Speaker #5: Yes. We have already started to produce credit outside of the group—the economic group that we have here. We have already produced the first few million in terms of credit outstanding, and we're going to keep pushing up these volumes as we get confident about everything related to the operational risks of the product.

Carlos Mauad: Yes, we already start to produce credit outside of 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. We are confident on the first signs that we saw that everything that we designed and implemented it is solid. But of course, there are some part of the credit cycle that we need to still test. But again, answering straightforward your question, we are already creating credit production outside of the group on the payroll loans. And how's the quality so far? Sorry for the follow-up. So far is being perfect. But of course, we started with the top tiers in terms of credit quality.

Speaker #5: We are confident, based on the first signs we saw, that everything we designed and implemented is solid. But, of course, there are some parts of the credit cycle that we still need to test.

Speaker #5: But again, answering directly your question, we are already creating credit production outside of the group on the payroll loans.

Speaker #4: And how's the quality so far? Sorry for the follow-up.

Speaker #5: So far it's been perfect. But of course, we started with the top tiers in terms of credit quality. So it's coming on what on the levels of in terms of delinquency, on the levels that we expected.

Carlos Mauad: It is coming on the levels in terms of delinquency on the levels that we expected. Great. Thank you.

Carlos Mauad: It is coming on the levels in terms of delinquency on the levels that we expected.

Adnan Shirazi: Great. Thank you.

Speaker #4: Great. Thank you.

Operator 2: Our next question comes from Daniel Vaz with Safra. You can open your microphone.

Operator: Our next question comes from Daniel Vaz with Safra. You can open your microphone.

Speaker #3: Our next question comes from Danielle Vance with Safra. You can open your microphone.

Daniel Vaz: Hi, everyone. Thank you for the opportunity to make questions. Maybe two questions on my side. Looking at your TPV, it improved sequentially. But we did not see the revenues being budged at the same pace, right? So you have a beat on TPV and miss on revenues, maybe on consensus and then also my side. This can mean your take rate at the margin is compressing. Can you give some comments on if that has to do with pricing, maybe a seasonal World Cup volumes with more bets at your mix, or more Pix while Card are struggling, client mix? That is my question number one. The question number two, trying to look at your gross profit guidance for 2026. You are currently at 2%, and your guidance is not changed at between 6% and I guess it is 11%, 6% and 9%.

Speaker #6: Hi everyone. Thank you for the opportunity to ask questions. Maybe two questions from my side. I'm looking at your TPV—it improved sequentially, but we didn't see revenues budging at the same pace, right?

Speaker #6: So, you have a beat on TPV and a miss on revenues, maybe versus consensus, and then also on my side. This can mean your take rate at the margin is compressing.

Speaker #6: Can you give some comments on if that has to do with pricing? Maybe a seasonal World Cup volumes with more bet at your mix or more picks while card are struggling, client mix.

Speaker #6: So that's my question number one. And question number two: trying to look at your gross profit guidance for 2026, you're currently at 2% and your guidance hasn't changed—it's between 6% and, I guess, 11% and 9%.

Daniel Vaz: Any expectations of pickup in the gross profit for the H2 of the year to meet guidance? Thank you.

Speaker #6: Any expectations of a pickup in the gross profit for the second half of the year to meet guidance? Thank you.

Carlos Mauad: This is Mawad. I am going to answer your first question, then I hand over to Gustavo to give you some light on the gross profit question. In terms of the TPV, there is a small dilution when we saw the growth of the net revenue and the TPV itself. There is an impact in terms of product mix driven by the World Cup, as you mentioned there. But that is nothing that really worried us. Of course, we keep pushing TPV. We are being very careful about pricing, and that is, as probably you remember, that is also a base, let us say, a tough comp when you look at Q2 of last year, where we have a massive repricing of the entire customer base that we have here due to the hike of Selic.

Speaker #5: This is Mawad. I'm going to answer their first question, then I hand over to Gustavo to give you some light on the gross profit question.

Speaker #5: So, in terms of the TPV, there is a small dilution when we saw the growth of the net revenue and the TPV itself. There is also an impact in terms of product needs driven by the World Cup, as you mentioned.

Speaker #5: 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, that is also a base let's say a tough comps 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.

Speaker #5: So, if you take a look, the evolution of the net revenues from the first quarter of last year to the second quarter is quite strong.

Carlos Mauad: If you take a look, the evolution of the net revenues from Q1 of last year to Q2, it is quite strong. We created this step, and it is a little bit harder to push up the net revenue growth on Q2. But again, that is a price to be paid on the third that we had to manage later last year. Here we are much more confident on this balance that we are creating here between growth and defending the profitability of the company. I will pass the floor here to Gustavo so he can answer your second question. Hi, Daniel. It is Gustavo here.

Speaker #5: So, we created this step, and it's a little bit harder to push up the net revenue growth in the second quarter. But, again, that is a price to be paid for the churn that we had to manage later last year.

Speaker #5: And here we are much more confident about the balance that we are creating here between growth and defending the profitability of the company. I’ll hand the floor here to Gustavo so he can answer your second question.

Gustavo Bahia Gama Sechin: Hi, Daniel. It is Gustavo here.

Speaker #6: Hi Danielle, it's Gustavo here. So, talking about the guidance, especially the gross profit guidance, we know that we have a lot of moving parts.

Carlos Mauad: Talking about the guidance, especially the gross profit guidance, we know that we have a lot of moving parts, and we have a lot of headwinds coming from the macro scenario, which give us some level of uncertainty. But at the same point, as we have been talking

Gustavo Bahia Gama Sechin: Talking about the guidance, especially the gross profit guidance, we know that we have a lot of moving parts, and we have a lot of headwinds coming from the macro scenario, which give us some level of uncertainty. But at the same point, as we have been talking

Speaker #6: And we have a lot of headwinds coming from the macro scenarios, which give us some level of uncertainty. But at the same point, as we have been talking, we always say that the second part of the year, the second half of the year should be the most important in terms of the guidance achievement.

Gustavo Bahia Gama Sechin: We always say that the H2 should be the most important in terms of the guidance achievement. Talking about the gross profit, we can say that we considered some contributions coming from the credit origination, the credit acceleration, as we post in this presentation. Also, as Mawad said, relates to the TPV. Remember that we have said that between Q3 and Q4 of last year were the worst part of the cycle for us, and gradually we have been posting an increase in terms of the payment activity. Also, in terms of financial costs, despite the headwinds of this higher Selic when compared with what we were expecting, we have maybe easy offsets in the H2.

Speaker #6: And talking about the gross profit, we can say that we considered some contribution coming from the credit origination, the credit acceleration, as we post in this presentation.

Speaker #6: Also, as Mawad said, relate to the TPV. Remember that we have been saying that the third quarter, between the third and fourth quarter of last year, were the worst part of the cycle for us, and gradually we have been posting an increase in terms of the payment activity.

Speaker #6: Also, in terms of financial cost, despite the headwinds of this higher Selic compared to what we were expecting, we may have easier comps in the second half of the year.

Speaker #6: And I can say that we are always looking for different initiatives that could give us the ability to deliver the guidance. But again, probably not at the top of the range, but probably reaching the bottom of the gross profit guidance, as we posted.

Gustavo Bahia Gama Sechin: I can say that we are always looking for different initiatives that could give us the ability to deliver the guidance. But again, probably not by the top of the range, but probably reaching the bottom of the gross profit guidance as we post.

Speaker #6: Okay. Thank you guys. Thank you for the answers.

Daniel Vaz: Okay, thank you, guys. Thank you for the answers.

Operator 2: Before moving on to the next question, please remember each analyst should only ask one question. Our next question comes from Kaio Prato with UBS. You can open your microphone.

Operator: Before moving on to the next question, please remember each analyst should only ask one question. Our next question comes from Kaio Prato with UBS. You can open your microphone.

Speaker #3: Before moving on to the next question, please remember each analyst should only ask one question. Our next question comes from Caio Prato with UBS.

Speaker #3: You can open your microphone.

Speaker #7: Hi, guys. Thanks for the opportunity to ask questions. I have one question on costs. This quarter, and actually in the next two quarters, we noticed, I would say, better than expected POS write-offs.

Kaio Prato: Hi, guys. Thanks for the opportunity to ask questions. I have one question on costs, please. This quarter, actually in the next two quarters, we noted, I would say, better-than-expected POS write-offs. I think those were lower than expected in Q1, and now I think we had a reversal in Q2. Can you give us any color around that? Anything that is happening different than expected on the POS write-offs, and what can we expect going forward as well? Still in this topic, if you are seeing anything related to costs related to POS. We noticed some players are claiming about higher costs related to POS. Just wondering if you have anything on your side as well. Thank you.

Speaker #7: I think those were lower than expected in the first quarter. And now, I think we had a reversal in the second quarter. Can you give us any color around that?

Speaker #7: Is there anything happening that's different than expected on the POS write-offs? And what can we expect going forward as well? Still on this topic, are you seeing anything related to costs associated with POS? We've noticed some players claiming higher costs related to POS.

Speaker #7: Just wondering if you have anything on your side as well. Thank you.

Speaker #5: Okay. Gustavo here. Caio, good to talk to you. So, talking about the write-off of POS or the POS in general, we have implemented a series of different initiatives to organize our logistics and also how we can deploy different initiatives in terms of how we can get the POS that we had out on the street.

Gustavo Bahia Gama Sechin: Okay. To start here, Caio, good to talk to you. Talking about the write-off of POS or the POS in general, we have implemented a series of different initiatives to organize our logistics and also how we can deploy different initiatives in terms of how we can get the POS that we had in the street and our merchants are not using it anymore, and how we can deliver a different approach, a different solution on that. That is the main reason that you are seeing. Considering going forward, probably we are going to seek for continuous improvement in that line. I would say that probably it is not going to be something linear, but the idea is to continuously improve our POS database, and we are looking for generate some kind of initiatives. Talking about efficiency or other lines in terms of expense in general.

Speaker #5: And our merchants are not using it anymore and how we can deliver a different approach, a different solution on that. So that's the main reason that you are seeing.

Speaker #5: So, considering going forward, we are probably going to seek continuous improvement in that line. I would say that it's probably not going to be something linear, but the idea is to continuously improve our POS database, and we are looking to generate some kind of initiatives.

Speaker #5: And talking about efficiency or other lines in terms of expense in general, as we said, we are managing the business to getting some operational leverage.

Gustavo Bahia Gama Sechin: As we said, we are managing the business to getting some operational leverage. We have implemented some initiatives in terms of how we can redesign some process, how we can implement some automations. We have used the AI to help us not only in the back office but also in the customer care, in the customer assistance. We have been deploying different kinds of initiatives to give us the opportunity to continue to generate operational leverage. That is the idea. We are managing the company, trying to seek for different opportunities to improve our profitability through the efficient gains.

Speaker #5: So we have implemented some initiatives in terms of how we can redesign some processes, how we can implement some automations. We have used AI to help us not only in the back office but also in customer care, in customer assistance.

Speaker #5: So we have been deploying different kinds of initiatives to give us the opportunity to continuously generate operational levers. So that's the idea. We are managing the company, trying to seek different opportunities to improve our profitability through efficiency gains.

Kaio Prato: Okay, thank you. Anything on the cost related to POS?

Speaker #7: Okay, thank you. Anything on the cost related to POS?

Carlos Mauad: Hello, this is Mawad. There is nothing major. We do have a memory shortage on the global market, so that kind of pressure the terminals prices a little bit. On the other hand, FX is helping a little bit. The efficiency that we are building, as Gustavo mentioned, on how to recover the POS that are on the churn customers' hands. Everything that we are putting together here, we are not feeling this impact on the unit perspective. So far so good here on our side when we talk about the POS cost.

Speaker #5: Hello. This is Mawad. There is nothing major we do have like a memory shortage on the global market. So that kind of pressure the terminals price is a little bit.

Speaker #5: But in the other hand, FX is helping a little bit. The efficiency that we are building as Gustavo mentioned on how to recover the POS is that are on the churn customers hands.

Speaker #5: So, everything that we are putting together here, we are not feeling these impacts from a unit perspective. So far, so good here on our side when we talk about the POS cost.

Speaker #7: Okay. Thank you very much, Mawad. Thank you, Gustavo.

Kaio Prato: Okay. Thank you very much, Mawad and Gustavo.

Operator 2: Our next question comes from Marcelo Mizrahi. You can open your microphone.

Operator: Our next question comes from Marcelo Mizrahi. You can open your microphone.

Speaker #3: Our next question comes from Marcelo. You can open your microphone.

Marcelo Mizrahi: Hello, everyone. Thank you for the opportunity. I have two questions. The first question is regarding the take rate, so the financial revenues. Looking forward, with this dynamic to have a lower impact of credit cards, so having more Pix, is it possible to see this dynamic maintained, so stable going forward? This is the first question. The second question is regarding the expenses side. We saw some expenses related to the World Cup. Is it possible to see a better profitability or even a reduction of the operational expenses on the Q3 looking forward? Thank you.

Speaker #8: Hello, everyone. Thank you for the opportunity. I have two questions. The first question is regarding the tech rate. Looking at financial revenues and looking forward, with this dynamic of having a lower impact from credit cards and more Pix, is it possible to see this dynamic maintained, so stable, going forward?

Speaker #8: This is the first question. And the second question is regarding the expenses side. We saw some expenses related to the World Cup, so is it possible to see better profitability, or even a reduction of operational expenses, in the third quarter looking forward?

Speaker #8: Thank you.

Speaker #7: Hi, Marcelo. It's Gustavo here. I will start from your second question. I wouldn't say that we could expect a reduction in terms of expenses, but the idea is to manage the company to grow the expenses below revenues.

Gustavo Bahia Gama Sechin: Hi, Marcelo. It's Gustavo here. I will start from your second question. I wouldn't say that we could expect a reduction in terms of expenses, but the idea is to manage the company to grow the expenses below revenues. That's the main idea, or at least below the inflation. As I said in the previous question, we are looking for opportunities from the operation side. We are looking for opportunities on the customer experience, both trying together and to generate operational leverage to the business and also give us, as I said, space to improve our profitability in general. That's the idea. I don't know if I understood correctly your first question, but when we talk about the rate or the mix between different kind of transactions, we are seeing, in general, that they are pretty much similar.

Speaker #7: That's the main idea, or at least below the inflation. So, as I said in the previous question, we are looking for opportunities from the operations side.

Speaker #7: We are looking for opportunities in customer experience, both to acquire and to generate operational leverage for the business. And this will give us, as I said, space to further improve our profitability in general.

Speaker #7: So that's the idea. I don't know if I understood your first question correctly. But when we talk about tech rate or the mix between different kinds of transactions, we are seeing in general that they are pretty much similar.

Speaker #7: Of course, what it means is that we are observing the increase in terms of PIX. That contributes not only to the payment business itself, but also through the banking.

Gustavo Bahia Gama Sechin: Of course, what it means, that we are observing the increase in terms of Pix. That contributes not only on the payment business itself, but also through the bank. At this point, it's very important to highlight the performance of the cash-in. Remember that we now reach almost BRL 100 billion in terms of cash in the quarter. Mainly that cash-in comes from Pix, and that give us the capability to monetize that kind of inflow of money from customers that choose our platforms as their main platform through different products. When we look at the take rate, it gives us only a portion of the relation of the customers. That's very important to look the transactionality in a whole.

Speaker #7: And at this point, it's very important to highlight the performance of the cash-in. Remember that we have now reached almost $100 billion in terms of cash-in for the quarter.

Speaker #7: And mainly, that cash-in comes from PIX. And that gives us the capability to monetize that kind of inflow of money from customers that choose our platforms as their main platforms through different products.

Speaker #7: So when we look at the tech rate, it gives us only a portion of the relation to the customers. That's why it's very important to look at transactionality as a whole.

Gustavo Bahia Gama Sechin: Look the inflow of money that comes from the payment side, look the inflow of money that comes on the bank side, and all the opportunities that we have to monetize that kind of inflow of money.

Speaker #7: So, look at the inflow of money that comes from the payment side. Look at the inflow of money that comes on the bank side, and all the opportunities that we have to monetize that kind of inflow of money.

Speaker #8: So the question here is—so sorry to do this follow-up—is that, looking forward, this dynamic of mix, we will have to see the gross profit yield, so gross profit compared to the revenues, going up.

Marcelo Mizrahi: But with the question here, is that sorry to this follow-up. Is that looking forward, this dynamic of mix, we will have to see the gross profit yield, gross profit comparing to the revenues going up. That's definitely what we have to see to deliver and to achieve the low end of the guidance. Probably the idea here is that it's accretive in terms of gross profit yield.

Speaker #8: So that's definitely what we have to see to deliver and to achieve the low end of the guidance. So probably the idea here is that it's accretive in terms of gross profit yield.

Speaker #7: Yes. The short answer is yes. Not related to that, but also related to increasing in general.

Gustavo Bahia Gama Sechin: Yes. The short answer, yes. Not related to that, but also relates to increase in transactionality in general.

Speaker #8: Okay. Thank you.

Marcelo Mizrahi: Okay. Thank you.

Operator 2: Our next question comes from Neha Agarwala with HSBC. You can open your microphone.

Operator: Our next question comes from Neha Agarwala with HSBC. You can open your microphone.

Speaker #3: Our next question comes from Nia Agarwala with HSBC. You may open your microphone.

Neha Agarwala: Hi. Thank you for taking my question. I have a question on the credit business. Could you expand a bit more and tell us what are the kind of NPLs and cost of credit that you are seeing for your working capital loans at the moment. It is considerably small right now, but just to get a sense of how things are going and where should the NPL and cost of risk normalize as you grow the book. What gives you comfort regarding accelerating in July. Was the deceleration in Q2 more a conscious effort to kind of control this given the environment. If that is the case, why the acceleration in July. Has there been any benefit from the Desenrola program in your customer base. Thank you so much.

Speaker #9: Hi, thank you for taking my question. I have a question on the credit business. Could you expand a bit more and tell us what kind of NPLs and cost of credit you're seeing for your working capital loans at the moment?

Speaker #9: It's considerably small right now, but just to get a sense of how things are going and where the NPL and cost of risk should normalize as you grow the book.

Speaker #9: And what gives you comfort regarding accelerating in July? Was the deceleration in Q2 more a conscious effort to kind of control risk given the environment?

Speaker #9: And if that is the case, why the acceleration in July? Has there been any benefit from the DeciMal program in your customer base? Thank you so much.

Speaker #5: Hello, Niha. Thank you for your question. We do not disclose any information regarding individual products here in terms of credit appetite or anything like that.

Carlos Mauad: Hello, Neha. Thank you for your question. We do not disclose any information regarding individual product here in terms of credit appetite or anything like that. I am going to jump the first part of your question, and I am going straight forward to the second part of it. If you take a look in April, we had a I am 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. We were waiting the first cohorts here to see if the cohorts would come inside the credit appetite and will deliver the performance that we want to before we rolled out for the entire customer database. That is why you see this high in terms of credit production in July, and you see a more, let us say, conservative approach on the second quarter.

Speaker #5: So I'm going to jump the first part of your question, and I'm going straight, going straightforward to the second part of it. If you take a look, in April we had a—I'm sorry, in the second quarter, we had a lower credit production on average due to a new credit model that we deployed at the beginning of the second quarter.

Speaker #5: So we were waiting for the first cohorts here to see if the cohorts would come inside the credit appetite and would deliver the performance that we want to before we rolled it out for the entire customer database.

Carlos Mauad: We were waiting the first cohorts here to see if the cohorts would come inside the credit appetite and will deliver the performance that we want to before we rolled out for the entire customer database. That is why you see this high in terms of credit production in July, and you see a more, let us say, conservative approach on the second quarter.

Speaker #5: That's why you see this high in terms of credit production in July, and you see a more, let's say, conservative approach in the second quarter.

Carlos Mauad: That's a little bit what explain the movements between the average of the second quarter and the credit production of July.

Speaker #5: That's a little bit what explained the movements between the average of the second quarter and the credit production of July.

Speaker #7: And Niha, it's Gustavo here. Just to complement my point here, I think it's very important to highlight that we are not seeing any kind of deterioration on our asset side.

Gustavo Bahia Gama Sechin: Neha, it's Gustavo here. Just to complement Mawad here, I think that's very important to highlight that we are not seeing any kind of deterioration in our asset side, in none of our products that we operate. So it gives us the confidence that we have developed all the capabilities to continuous growth with prudence, and we've serviced the credit portfolio. Despite that we do not provide reference in terms of NPLs, you could expect that it will continue growing. But at a sustainable pace and much more related to the change or to the evolution in our product mix than compared to deterioration itself.

Speaker #7: In none of our products that we operate. So it gives us the confidence that we have developed all the capabilities to continue to grow, with prudence and with solvency, the credit portfolio.

Speaker #7: And despite that, we do not provide reference in terms of NPLs. You could expect that it will continue growing, but at a sustainable pace.

Speaker #7: And it's much more related to the change or to the evolution in our product mix than to a deterioration itself.

Neha Agarwala: Just to clarify, there's not been any impact from the Desenrola program. You don't plan to do secured working capital loans. It's going to be more secured more from the funding side? You would focus on the unsecured working capital, right?

Speaker #9: And just to clarify, there's not been any impact from the Decimal program. And you don't plan to do secured working capital loans—it's going to be more secured, more from the funding side.

Speaker #9: You would focus on the unsecured working capital, right?

Speaker #5: There is no major impact of this second, dizzying, hollow program here for us. The first program was a much bigger program due to the stock in terms of non-performing assets that we had in the company.

Carlos Mauad: There is no major impact of this second Desenrola program here for us. The first program was a much bigger program due to the stock in terms of non-performing assets that we had in the company. So the second one has a much lower impact. Again, working capital is going to still our priority here because it is where we have a very clear right to win with the kind of customer that we have in our client base.

Speaker #5: So, the second one has a much lower impact. And again, working capital—we're going to see our priority here, because it is where we have a very clear right to win with the kind of customer that we have in our client base.

Speaker #9: Thank you so much.

Neha Agarwala: Thank you so much.

Operator 2: Our next question comes from Mario Pierry with Bank of America. You can open your microphone.

Operator: Our next question comes from Mario Pierry with Bank of America. You can open your microphone.

Speaker #3: Our next question comes from Mario, PAE with Bank of America. You can open your microphone.

Mario Pierry: Hey, guys. Good evening. Thanks for taking my question. Let me ask you a question, what you said about capital distribution, right? That your capital ratio is about 22.5% above your target of 18% to 22%. You have completed your buyback program. You mentioned that you would rather pay dividends than buy back shares. Just wanted to explore that a little bit more, why you think paying dividends is better than buying back shares, especially because when we look at your share price, it is back to the levels where it was in September of last year when you announced your strategic plan. Just wondering why you would rather pay dividends than buy back shares. Thank you.

Speaker #10: Hey, guys. Good evening. Thanks for taking my question. Let me ask you a question. What you said about capital distribution, right? That your tier your capital ratio is about 22 and a half percent above your target of 18 to 22 percent.

Speaker #10: And you have completed your buyback program, and you mentioned that you'd rather pay dividends than buy back shares. I just wanted to explore that a little bit more—why you think paying dividends is better than buying back shares, especially because when we look at your share price, it's back to the levels where it was in September of last year, when you announced your strategic plan.

Speaker #10: So, just wondering why you'd rather pay dividends than buy back shares. Thank you.

Speaker #7: Hi, Mario. Gustavo here. So, the first part of the answer to your question—why we chose dividends at this point—is that dividends give you a much more regular and predictable stream to investors.

Carlos Mauad: Hi, Mario. Gustavo here. The first part of the answer of the question, why we choose dividends at this point is that because dividends give a much more regular and predictable stream to investors. We can set a target as we set in terms of capital ratio between 18% and 22%. Through dividends, we have been deploying very clear capital optimization at the same time in a predictable way. It does not mean that we cannot use buyback in the future, but we choose to use dividends because the reason that I said before. At the same time, as you said here, we use the instrument of buybacks in the last 12, 18 months with two programs that we execute in a very short period, but with limited effect and without the predictability. That is why we are now focused much more on dividends than buybacks. That is the main reason.

Speaker #7: So we can set a target, as we set, in terms of capital ratio between 18 and 22. And, through dividends, we have been deploying very clear capital optimization at the same time, in a predictable way.

Speaker #7: That doesn't mean that we can't use buybacks in the future, but we chose to use dividends for the reasons that I mentioned before.

Carlos Mauad: At the same time, as you said here, we use the instrument of buybacks in the last 12, 18 months with two programs that we execute in a very short period, but with limited effect and without the predictability. That is why we are now focused much more on dividends than buybacks. That is the main reason.

Speaker #7: At the same time, as you said here, we used the instrument of buybacks in the last 12 to 18 months with two programs that we executed in a very short period.

Speaker #7: But with limited effect and without the predictability. So, that's why we are now focused much more on dividends than buybacks. That's the main reason.

Speaker #10: Okay, no, that's clear. So just to be clear then, on your EPS guidance—where you talk about EPS growth of 9 to 13 percent for the year—that does not contemplate any more buybacks this year, correct?

Mario Pierry: Okay, now that is clear. Just to be clear then, on your EPS guidance, right, where you are talking about EPS growth of 9% to 13% for the year, that does not contemplate any more buybacks this year, correct?

Speaker #7: Yes, correctly.

Gustavo Bahia Gama Sechin: Yes, correctly.

Carlos Mauad: Yes, correctly.

Speaker #10: Thank you.

Mario Pierry: Thank you.

Speaker #3: Our next question comes from Guillerm with J.P. Morgan. You can open your microphone.

Operator 2: Our next question comes from Guilherme Grespan with JP Morgan. You can open your microphone.

Operator: Our next question comes from Guilherme Grespan with JP Morgan. You can open your microphone.

Guilherme Grespan: Hi, good evening, everyone. I'll keep my questions to one. It's more looking into 2027 already, a little bit coupling with the guidance for the rest of the year on gross profit, but more looking throughout the year and more 2027. I think there's a growing risk that we start to get into a scenario in which you mentioned two tailwinds to gross profit, but maybe eventually in 2027, they're going to move in the opposite direction. So it's basically rates moving lower in the H2. We don't know what is going to happen in 2027. Then you have the accretion of the credit, right? As you recognize the credit revenues. But maybe we have been discussing financials credits, eventual credit cycle, and you need to pull back on credit.

Speaker #11: Hi, good evening everyone. I'll keep my questions to one. It's more looking into 2027 already, a little bit coupling with the guidance for the rest of the year and gross profit, but more looking throughout the year and more 2027.

Speaker #11: I think there's a growing risk that we start to get into a scenario in which you have two—you mentioned two tailwinds to gross profit, but maybe eventually in 2027, they're going to move in the opposite direction.

Speaker #11: So it's basically rates moving lower in the second half. We don't know what is going to happen in 2027, and then you have the accretion of the credit, right, as you recognize the credit revenues. But maybe we have been discussing financials or credit's eventual credit cycle, and you need to pull back on credit.

Speaker #11: So with all that said, my question is: assuming that, and considering that you’re growing gross profit 2% year-over-year today, if you don’t have those benefits next year, what levers can you pull to deliver earnings growth next year?

Guilherme Grespan: So with all that said, my question is, assuming that and considering that you're growing gross profit 2% year-over-year today, if you don't have those benefits next year, what levers can you pull to deliver earnings growth next year? Thank you so much.

Speaker #11: Thank you so much.

Speaker #7: I agree, this is Gustavo here. I think that's two words to discuss: 2007. As I said in one of the previous questions, we have a lot of moving parts.

Carlos Mauad: Hi, Grespan. Gustavo here. I think that's too early to discuss 2027. As I said in one previous questions, we have a lot of moving parts right now. We are managing the business to deliver the 2026 guidance. That's our main focus that we are working here, try to mitigate the headwinds, especially when it comes from the CDI, try to mitigate the uncertainty or the volatility that comes also from internal and external environment. But I think that the correct time to discuss 2027 should be a little bit later. As you said, we have uncertainty, and we are looking when we start to discuss the alternatives to deliver a continuous growth, especially the continuous growth of the business, not only in terms of EPS, but also in terms of top line. So that should be the answer at this point.

Gustavo Bahia Gama Sechin: Hi, Grespan. Gustavo here. I think that's too early to discuss 2027. As I said in one previous questions, we have a lot of moving parts right now. We are managing the business to deliver the 2026 guidance. That's our main focus that we are working here, try to mitigate the headwinds, especially when it comes from the CDI, try to mitigate the uncertainty or the volatility that comes also from internal and external environment. But I think that the correct time to discuss 2027 should be a little bit later. As you said, we have uncertainty, and we are looking when we start to discuss the alternatives to deliver a continuous growth, especially the continuous growth of the business, not only in terms of EPS, but also in terms of top line. So that should be the answer at this point.

Speaker #7: Right now, we are managing the business to deliver the 2026 guidance. That's our main focus that we are working on here: trying to mitigate the headwinds, especially those coming from Cedic.

Speaker #7: Try to mitigate the uncertainty or the volatility that comes from the internal and external environment. But I think that the correct time to discuss 2007 should be a little bit later.

Speaker #7: And as you said, we have uncertainty. And we are looking, when we start to discuss that, at alternatives to deliver continuous growth, especially continuous growth of the business.

Speaker #7: Not only in terms of PS, but also in terms of top line. So, that should be the answer at this point.

Speaker #11: Okay, that's clear. Thank you, Gustavo.

Guilherme Grespan: Okay, that's clear. Thank you, Gustavo.

Speaker #3: Our next question comes from Pedro Leduc with Itaú BBA. You may open your microphone.

Operator 2: Our next question comes from Pedro Leduc with Itaú BBA. You can open your microphone.

Operator: Our next question comes from Pedro Leduc with Itaú BBA. You can open your microphone.

Speaker #10: Thanks, guys. Good evening. Question on financial costs. This quarter, down a little bit. I know you mentioned working days and such, but you also didn’t have an impact of a lower average slip, even though if it’s slightly.

Pedro Leduc: Thanks, guys. Good evening. Question on financial costs this quarter, down a little bit. I know you mentioned working days and such, but you also didn't have an impact of a lower average Selic, even though if it's slightly, and we saw some good dynamics in deposits. Looking at least until the end of this year, how should we think about financial expenses, especially relative to revenues? What levers are you pulling there? Thank you.

Speaker #10: And we saw some good dynamics in deposits. So looking at least until the end of this year, how should we think about financial expenses, especially relative to revenues?

Speaker #10: And what levers are you using?

Gustavo Bahia Gama Sechin: Hi, Pedro. Gustavo again. I would say that when we consider the H2 of the year, probably we're going to see easy comps in the financial expense. I would say that this is the first quarter, to be clear, that we are seeing a reduction, at least in nominal terms, in our financial cost after eight quarters, if I'm not wrong. I would say that trend should remain a reality in the second part of this year. Despite that we are seeing, or we can forecast a lower pace in terms of the reduction in rates in Brazil, remembering that we assume in our guidance year-end Selic around 12.5%, and now we are looking much more close to 14% or 13.75%. We have better comps when compared to the H2 of last year.

Speaker #7: Hi, Pedro. Gustavo again. I would say that, when we consider the second half of the year, probably we're going to see easy comps in the financial expense.

Speaker #7: I would say that this is the first quarter, to be clear, that we are seeing a reduction—at least in nominal terms—in our financial cost after eight quarters, if I'm not wrong.

Speaker #7: So I would say that that trend should remain a reality in the second part of this year. So despite that, we are seeing, or we can forecast, a lower pace in terms of the reduction in rates in Brazil, meaning that we assume in our guidance year-end Selic around 12.5%.

Speaker #7: And now we are looking much closer to 14 or 13.75. We have better comps when compared to the second half of last year.

Pedro Leduc: Great. Thank you.

Speaker #10: Great. Thank you.

Operator 2: Our next question comes from Tiago Binsfeld with Goldman Sachs. You can open your microphone.

Operator: Our next question comes from Tiago Binsfeld with Goldman Sachs. You can open your microphone.

Speaker #3: Our next question comes from Tiago Binsfeld with Goldman Sachs. You can open your microphone.

Tiago Binsfeld: Hi. Good evening. Thank you for taking our questions. Also, on the deposit franchise, we see your deposit cost coming down annually to 83% of CDI. From here, when you look forward, how much more do you think there is space to lower your deposit cost? Would you say it stabilizes around these low 80s, 83%? What kind of initiatives are you implementing to lower that cost? Thank you.

Speaker #11: Hi, good evening. Thank you for taking our questions. Also, on the deposit franchise, we see your deposit cost coming down annually to 83% of CDI.

Speaker #11: So from here, when you look forward, how much more do you think there's space to lower your deposit costs? Would you say it stabilizes around these low 80s, 83%?

Speaker #11: And what kind of initiatives are you implementing to lower the cost? Thank you.

Speaker #7: Hi, Tiago. Gustavo here. So, I would say that we are seeing our deposits growing 15% year over year. It should be higher, for sure. We could expect a higher pace.

Gustavo Bahia Gama Sechin: Hi, Tiago. Gustavo here. I would say that we are seeing our deposits growing 15% year over year. Should be higher, for sure. We could expect a higher pace, but I think that we have a very healthy pace in terms of deposit, especially considering that we have implemented, as you said, a bunch of different initiatives to mitigate the increasing rates and also reduce the remuneration that we use to pay in our deposit, both CDs and also our Conta Rendeira. Most important than that, and also connect to the deposit, is the inflow of money, as I said, connects to the cash-in, connects to the banking business. Combining with the payment inflow, it gives us the ability to continuously grow our deposit franchise. That is definitely a clear advantage that we have in the business. We are always trying to identify different opportunities.

Speaker #7: But I think that we have a very healthy pace in terms of deposits, especially considering that we have implemented, as you said, a bunch of different initiatives to mitigate the increase in rates and also reduce the remuneration that we use to pay in our deposits.

Speaker #7: Both CDs and also our Conta Rendeira. But more important than that, and also connected to the deposit, is the inflow of money, as I said—connected to the cash in, connected to the banking business.

Speaker #7: So, combining this with the payment inflow gives us the ability to continue growing our deposit franchise. That's definitely a clear advantage that we have in the business.

Speaker #7: And we are always trying to identify different opportunities. We're using different instruments in our funding structure too, to deliver a continuous reduction in our funding cost and also maintain that advantage that I mentioned.

Gustavo Bahia Gama Sechin: We are using different instruments in our funding structure to deliver a continuous reduction in our funding cost and also maintain that advantage that I said.

Speaker #11: Thanks, Gustavo. That's clear.

Tiago Binsfeld: Thanks, Gustavo. That is clear.

Operator 2: This concludes the question and answer section and today's presentation. You may now disconnect and have a nice evening. Goodbye.

Operator: This concludes the question and answer section and today's presentation. You may now disconnect and have a nice evening. Goodbye.

Speaker #3: This concludes the question and answer section. And today's presentation. You may now disconnect and have a nice evening.