Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16]

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2023

Commission File Number: 001-38353

PagSeguro Digital Ltd.
(Name of Registrant)

Conyers Trust Company (Cayman) Limited,
Cricket Square, Hutchins Drive, P.O. Box 2681,
Grand Cayman, KY1-1111, Cayman Islands
(Address of Principal Executive Office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation
S-T Rule 101(b)(1):

Yes ☐ No ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation
S-T Rule 101(b)(7):

Yes ☐ No ☒

PagSeguro Digital Ltd.

Unaudited condensed consolidated interim financial statements

As of June 30, 2023 and for the six-month periods ended June 30, 2023 and 2022

Contents


Unaudited condensed consolidated interim financial statements

Unaudited condensed consolidated interim balance sheet			3
Unaudited condensed consolidated interim statement of income			5
Unaudited condensed consolidated interim statement of comprehensive income			6
Unaudited condensed consolidated interim statement of changes in equity			7
Unaudited condensed consolidated interim statement of cash flows			8
Notes to the unaudited consolidated interim financial statements			9


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investors.pagseguro.com

PagSeguro Digital Ltd.

Unaudited condensed consolidated interim balance sheet

As of June 30, 2023 and 2022
(All amounts in thousands of reais)


	Note	June 30, 2023	December 31, 2022
Assets
Current assets
Cash and cash equivalents	5	1,724,081	1,829,097
Financial investments	6	1,122,216	1,103,299
Accounts receivable	7	33,440,463	36,248,589
Receivables from related parties	9	2,164	—
Inventories		32,790	13,281
Tax receivable	8	421,455	410,801
Other receivables		154,611	162,011
Total current assets		36,897,780	39,767,078

Non-current assets
Accounts receivable	7	918,074	745,546
Receivables from related parties	9	13,393	—
Judicial deposits		49,559	44,855
Deferred income tax and social contribution	18	97,749	99,411
Other receivables		25,072	18,509
Investment		1,811	1,651
Property and equipment	10	2,473,713	2,493,499
Intangible assets	11	2,359,147	2,158,773
Total non-current assets		5,938,518	5,562,244
Total assets		42,836,298	45,329,322

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.


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PagSeguro Digital Ltd.

Unaudited condensed consolidated interim balance sheet
As of June 30, 2023 and 2022
(All amounts in thousands of reais)


	Note	June 30, 2023	December 31, 2022
Liabilities and equity
Current Liabilities
Payables to third parties	12	16,631,637	17,988,139
Deposits	13	7,813,097	10,100,599
Borrowings	17	291,901	—
Derivative Financial Instruments	25	32,745	22,289
Trade payables		465,071	449,102
Payables to related parties	9	74,117	593,906
Salaries and social security charges	14	276,454	292,778
Taxes and contributions	15	83,269	89,779
Provision for contingencies	16	61,848	46,233
Deferred revenue		124,978	126,042
Other liabilities		34,387	31,484
Total current liabilities		25,889,504	29,740,351

Non-current liabilities
Payables to third parties	12	127,450	84,759
Deposits	13	2,219,405	1,894,689
Payables to related parties	9	154,828	—
Deferred income tax and social contribution	18	1,666,395	1,564,228
Provision for contingencies	16	6,868	14,370
Deferred revenue		17,793	17,486
Other liabilities		228,504	171,313
Total non-current liabilities		4,421,243	3,746,845

Total liabilities		30,310,747	33,487,196

Equity
Share capital	19	26	26
Treasury shares	19	(505,638)	(475,354)
Capital reserve	19	6,062,304	6,102,573
Retained earnings	19	6,992,331	6,237,392
Equity valuation adjustments	19	(22,372)	(22,372)
Other comprehensive income	19	(1,100)	(139)
Total equity		12,525,551	11,842,126

Total liabilities and equity		42,836,298	45,329,322

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.


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PagSeguro Digital Ltd.

Unaudited condensed consolidated interim statement of income
For the three and six month periods ended June 30, 2023 and 2022
(All amounts in thousands of reais unless otherwise stated)


		Three-month period		Six-month period
	Note	June 30, 2023	June 30, 2022	June 30, 2023	June 30, 2022
Revenue from transaction activities and other services	21	2,166,009	2,255,687	4,317,025	4,310,270
Financial income	21	1,594,974	1,610,101	3,129,176	2,940,895
Other financial income	21	64,929	44,770	129,443	86,344

Total revenue and income		3,825,912	3,910,558	7,575,644	7,337,509

Cost of sales and services	22	(1,926,072)	(1,900,300)	(3,855,370)	(3,639,679)
Selling expenses	22	(321,442)	(499,101)	(639,350)	(979,751)
Administrative expenses	22	(203,391)	(203,937)	(374,745)	(369,268)
Financial expenses	22	(795,627)	(755,559)	(1,608,598)	(1,376,187)
Other income (expenses), net	22	(94,117)	(108,950)	(176,280)	(113,441)

Profit before income taxes		485,263	442,711	921,301	859,183

Current income tax and social contribution	18	(42,239)	530	(60,295)	(28,121)
Deferred income tax and social contribution	18	(57,929)	(76,317)	(106,067)	(114,218)

Income tax and social contribution		(100,168)	(75,787)	(166,362)	(142,339)

Net income for the period		385,095	366,924	754,939	716,844

Basic earnings per common share - R$	20	1.1903	1.1059	2.3292	2.1645
Diluted earnings per common share - R$	20	1.1832	1.1012	2.3122	2.1513

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.


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PagSeguro Digital Ltd.

Unaudited condensed consolidated interim statement of comprehensive income
For the three and six month periods ended June 30, 2023 and 2022
(All amounts in thousands of reais)


	Three-month period		Six-month period
	June 30, 2023	June 30, 2022	June 30, 2023	June 30, 2022
Net income for the period	385,095	366,924	754,939	716,844
Other comprehensive income that may be reclassified to the statement of income in subsequent periods
Currency translation adjustment	(50)	(126)	(73)	(718)
Loss on investments designated at fair value through OCI	242	(752)	351	(413)
Derivative Financial Instruments through OCI	(2,098)	(12,696)	(1,695)	(17,053)
Income tax and social contribution	631	4,568	457	5,938
Other comprehensive income for the period	383,820	357,918	753,979	704,598

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.


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investors.pagseguro.com

PagSeguro Digital Ltd.

Unaudited condensed consolidated interim statement of changes in equity
For the six-month periods ended June 30, 2023 and 2022
(All amounts in thousands of reais)


				Capital reserve		Profit reserve
	Note	Share capital	Treasury shares	Capital reserve	Share-based long-term incentive plan (LTIP)	Retained earnings	Equity valuation adjustments	Other comprehensive income	Total equity

On December 31, 2021		26	(285,011)	5,828,754	247,532	4,732,624	(22,372)	645	10,502,198

Net income for the period		—	—	—	—	716,844	—	—	716,844
Currency translation adjustment		—	—	—	—	—	—	(718)	(718)
Gain on financial assets through OCI		—	—	—	—	—	—	(273)	(273)
Derivative Financial Instruments through OCI		—	—	—	—	—	—	(11,255)	(11,255)
Share based long term incentive plan (LTIP)		—	—	—	76,147	—	—	—	76,147
Acquisition of treasury shares		—	(93,613)	—	—	—	—	—	(93,613)
(LTIP) of treasury shares		—	98,419	—	(98,419)	—	—	—	—
On June 30, 2022		26	(280,205)	5,828,754	225,260	5,449,468	(22,372)	(11,601)	11,189,330

Net income for the period		—	—	—	—	787,924	—	—	787,924
Currency translation adjustment		—	—	—	—	—	—	41	41
Loss on financial assets through OCI		—	—	—	—	—	—	166	166
Derivative Financial Instruments through OCI		—	—	—	—	—	—	11,255	11,255
Share based long term incentive plan (LTIP)		—	—	—	51,242	—	—	—	51,242
Acquisition of treasury shares		—	(197,832)	—	—	—	—	—	(197,832)
(LTIP) of treasury shares		—	2,683	—	(2,683)	—	—	—	—
On December 31, 2022		26	(475,354)	5,828,754	273,819	6,237,392	(22,372)	(139)	11,842,126

Net income for the period	19	—	—	—	—	754,939	—	—	754,939
Currency translation adjustment	19	—	—	—	—	—	—	(73)	(73)
Gain on financial assets through OCI	19	—	—	—	—	—	—	231	231
Derivative Financial Instruments through OCI	19	—	—	—	—	—	—	(1,119)	(1,119)
Share based long term incentive plan (LTIP)	19	—	—	—	73,116	—	—	—	73,116
Acquisition of treasury shares	19	—	(143,669)	—	—	—	—	—	(143,669)
(LTIP) of treasury shares	19	—	113,385	—	(113,385)	—	—	—	—
On June 30, 2023		26	(505,638)	5,828,754	233,550	6,992,331	(22,372)	(1,100)	12,525,551

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.


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investors.pagseguro.com

PagSeguro Digital Ltd.

Unaudited condensed consolidated interim statement of cash flows
For the six-month periods ended June 30, 2023 and 2022
(All amounts in thousands of reais)


		Six-month period
	Note	June 30, 2023	June 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income taxes		921,301	859,183
Expenses (revenues) not affecting cash:
Depreciation and amortization	22	642,998	529,588
Total Losses	22	248,203	520,198
Accrual of provision for contingencies		13,378	10,522
Share based long term incentive plan (LTIP)		73,116	76,147
Loss on disposal of property, equipment, intangible and investment assets		130,927	104,958
Derivative Financial Instruments, net		(10,915)	—
Interest accrued		208,663	554,438
Other (income) cost, net		1,214	(7,715)
Changes in operating assets and liabilities
Accounts receivable		441,202	(9,956,814)
Financial investments (mandatory guarantee)		213,861	(209,221)
Inventories		(19,509)	1,647
Taxes recoverable		46,586	88,802
Other receivables		14,633	(17,721)
Deferred revenue		(758)	(22,413)
Other liabilities		7,333	(34,613)
Payables to third parties		(1,313,813)	795,991
Trade payables		14,581	(73,525)
Receivables from (payables to) related parties		(406,648)	(289,506)
Deposits		(1,314,997)	6,104,371
Salaries and social charges		(16,324)	(8,294)
Taxes and contributions		(24,213)	14,524
Provision for contingencies		(9,548)	(5,994)
		(138,729)	(965,447)
Income tax and social contribution paid		(59,086)	(79,684)
Net interest income received (paid)		1,060,125	1,563,152

NET PROVIDED BY OPERATING ACTIVITIES		862,310	518,019

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment	10	(425,773)	(780,456)
Purchases and development of intangible assets	11	(512,736)	(475,758)
Redemption (Acquisition) of financial investments		(176,254)	(3,779)

NET CASH USED IN INVESTING ACTIVITIES		(1,114,763)	(1,259,993)

CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings	17	300,000	250,000
Payment of borrowings		—	(7,015)
Acquisition of treasury shares	19	(143,669)	(93,613)
Payment of leases	10	(8,894)	(9,775)

NET CASH PROVIDED BY FINANCING ACTIVITIES		147,437	139,597

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(105,016)	(602,376)
Cash and cash equivalents at the beginning of the period	5	1,829,097	1,794,362
Cash and cash equivalents at the end of the period	5	1,724,081	1,191,986

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.


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investors.pagseguro.com

PagSeguro Digital Ltd.
Notes to the unaudited condensed consolidated interim financial statements
As of June 30, 2023 and for the six-month periods ended June 30, 2023 and 2022
(All amounts in thousands of reais unless otherwise stated)


1. General information

PagSeguro Digital Ltd., (“PagSeguro Digital” or the “Company”), is a holding company with its principal executive offices located in Cayman Islands, subsidiary of Universo Online S.A. (“UOL”), referred to, together with its subsidiaries, as the “PagSeguro Group”, and was incorporated on July 19, 2017. A total of 99,99% of the shares of PagSeguro Internet Instituição de Pagamento S.A. (“PagSeguro Brazil”) were contributed to PagSeguro Digital on January 4, 2018 and PagSeguro Digital maintains control of PagSeguro Brazil.

PagSeguro Brazil is a privately held corporation established on December 20, 2006, and engages in providing financial technology solutions and services and corresponding related activities, focused principally on micro-merchants and small and medium-sized businesses (“SMEs”).

In June 2022, Boa Compra Tecnologia Ltda,, changed its name to PagSeguro Tecnologia Ltda, (“PagSeguro Tecnologia”), as part of a marketing strategy to bring the entity closer to PagSeguro’s brand.

In January 2023, Pagseguro Biva Serviços Financeiros Ltda., incorporated Pagseguro Biva Correspondente Bancário Ltda.

The subsidiaries of PagSeguro Digital are PagSeguro Brazil, PagSeg Participações Ltda. (“PagSeg”), BS Holding Financeira Ltda. (“BS Holding”) and PSHC, The PagSeguro Group subsidiaries are as follows:

•PagSeguro Brazil subsidiaries are PagSeguro Biva Securitizadora de Créditos Financeiras S.A. (“Biva Sec”), Fundo de Investimento em Direitos Creditórios – PagSeguro (“FIDC”), Wirecard Brazil Instituição de Pagamento S.A. (“MOIP”), Registra Seguro S.A. (“RegistraSeguro”) and Concil Inteligência em Conciliação S.A. (“Concil”).

•PagSeg subsidiaries are Net+Phone Telecomunicações Ltda. (“Net+Phone”), Pagseguro Tecnologia, BCPS Online Services Lda. (“BCPS”), CDS Serviços Financeiros Ltda. (“CDS”), Pagseguro Biva Serviços Financeiros Ltda. (“Biva Serviços”) and PagBank Participações Ltda. (“PagBank”).

•PagBank subsidiaries are Tilix Digital Ltda. (“TILIX”), YAMÍ Software & Inovação Ltda. (“YAMÍ”) and Zygo Serviços de Tecnologia S.A.(“ZYGO”).

•PSHC subsidiaries are Pagseguro Chile SPA (“Pagseguro Chile), Pagseguro Colombia S.A.S (“Pagseguro Colombia), PSGP México S.A de C.V. (“PSGP Mexico”) and Pagseguro Peru S.A.C. (“Pagseguro Peru”).

•BS Holding subsidiary are BancoSeguro S.A. (“Bancoseguro”) and Paginvest CTVM Ltda. (“Paginvest”).

These consolidated interim financial statements include Pagseguro Brazil, PagSeg, PSHC, BS Holding and corresponding subsidiaries.


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2. Presentation and preparation of the unaudited condensed consolidated interim financial statements and significant accounting policies

2.1. Basis of preparation of the condensed consolidated interim financial information

These unaudited condensed consolidated interim financial statements have been prepared in accordance with the International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB") and disclose all (and only) the applicable significant information related to the financial statements, which is consistent with the information utilized by management in the performance of its duties. The consolidated interim financial statements are presented in thousands of Brazilian reais, unless otherwise indicated, which is the functional currency of PagSeguro Group.

These unaudited condensed consolidated interim financial statements for six-month period ended June 30, 2023 were authorized for issuance by the PagSeguro Digital’s Board of Directors on August 15, 2023.

These unaudited condensed consolidated interim financial statements for the six-month periods ended June 30, 2023 have been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting” as issued by the IASB and disclose all (and only) the applicable significant information related to the financial statements, which is consistent with the information utilized by management in the performance of its duties.

These unaudited condensed consolidated interim financial statements do not include all the notes of the type normally included in an annual consolidated financial statement. Accordingly, this report is to be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2022 (the “Annual Financial Statements”).

The accounting policies and critical accounting estimates and judgments adopted are consistent with those of the previous financial year and corresponding interim reporting period.

2.2. New accounting standards adopted in 2023

The accounting policies adopted in the preparation of the consolidated interim financial statements for the period ended June 30, 2023 are consistent with those adopted for the year ended December 31, 2022, except for the changes required by the pronouncements, interpretations and standards which became effective on January 1, 2023, as described below.

–IFRS 17 was issued in May 2017 as replacement for IFRS 4 Insurance Contracts. It requires a current measurement model where estimates are remeasured in each reporting period, Contracts are measured using the building blocks of discounted probability-weighted cash flows, an explicit risk adjustment and a contractual service margin (CSM) representing the unearned profit of the contract which is recognized as revenue over the coverage period.


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2.2. New accounting standards adopted in 2023 – Continued

The standard allows a choice between recognizing changes in discount rates either in the statement of profit or loss or directly in other comprehensive income. The choice is likely to reflect how insurers account for their financial assets under IFRS 9. An optional, simplified premium allocation approach is permitted for the liability for the remaining coverage for short duration contracts, which are often written by non-life insurers.

There is a modification of the general measurement model called the ‘variable fee approach’ for certain contracts written by life insurers where policyholders share in the returns from underlying items. When applying the variable fee approach, the entity’s share of the fair value changes of the underlying items is included in the CSM. The results of insurers using this model are therefore likely to be less volatile than under the general model.

Targeted amendments made in July 2020 aimed to ease the implementation of the standard by reducing implementation costs and making it easier for entities to explain the results from applying IFRS 17 to investors and others. The amendments also deferred the application date of IFRS 17 to 1 January 2023. The group did not identify material impacts under the new IFRS.

–Amendment to IAS 1 "Presentation of Financial Statements": issued in May 2020, with the objective of clarifying that liabilities are classified as current or non-current, depending on the rights that exist at the end of the period. The classification is not affected by the entity’s expectations or events after the reporting date (eg, receipt of a waiver or breach of covenant). The amendments also clarify what "settlement" of a liability refers to under IAS 1. The amendments to IAS 1 are effective as of January 1, 2023. The group did not identify material changes in the financial results.

–Amendment to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting Policies: in February 2021 the IASB issued a new amendment to IAS 1 on disclosure of "material" accounting policies rather than "significant" accounting policies. The amendments define what "“material accounting policy information" is and explain how to identify it. It also clarifies that immaterial accounting policy information does not need to be disclosed, but if so, it should not obscure the relevant accounting information. To support this change, the IASB also amended the "IFRS Practice Statement 2 Making Materiality Judgments" to provide guidance on how to apply the concept of materiality to accounting policy disclosures. This amendment is effective as of January 1, 2023. The group did not identify material changes in the financial results.

–Amendment to IAS 8 - Accounting Policies, Change in Estimate and Error Rectification: the amendment issued in February 2021 clarifies how entities must distinguish changes in accounting policies from changes in accounting estimates, as changes in accounting estimates are applied prospectively to future transactions and other future events, but changes in accounting policies are generally applied retrospectively to past transactions and other past events, as well as to the current period. This amendment is effective as of January 1, 2023. The group did not identify material changes in the financial results.

–Amendment to IAS 12 - Income Taxes: the amendment issued in May 2021 requires entities to recognize deferred tax on transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences.


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2.2. New accounting standards adopted in 2023 – Continued

This typically applies to lease transactions (right-of-use assets and lease liabilities) and decommissioning and restoration obligations, as an example, and will require the recognition of additional deferred tax assets and liabilities. This amendment is effective as of January 1, 2023. The group did not identify material changes in the financial results.


3. Consolidation of subsidiaries


As of June 30, 2023
Company	Assets	Liabilities	Equity	Net income (loss) for the period	Ownership - %	Level
Pagseguro Brazil	27,728,191	17,874,360	9,853,831	527,268	99.99	Direct
BS Holding	800,645	417	800,228	34,573	99.99	Direct
Pagseg Participações	813,602	1,496	812,105	31,965	99.99	Direct
PSHC	3,597	3,713	(116)	(1,845)	99.99	Direct
Pagbank Participações	178,010	21,915	156,096	606	99.99	Indirect
Paginvest Corretora	15,531	137	15,394	382	99.99	Indirect
Net+Phone	478,283	105,934	372,349	29,935	99.99	Indirect
Pagseguro Tecnologia	336,743	108,189	228,554	(196)	99.99	Indirect
BCPS	1,880	(26)	1,906	58	99.99	Indirect
BSEC	1,763,853	1,735,690	28,163	13,651	99.99	Indirect
Biva Serviços	44,173	731	43,442	1,562	99.99	Indirect
FIDC	5,120,793	791,129	4,329,664	1,183,357	100.00	Indirect
TILIX	48,491	1,541	46,950	1,918	99.99	Indirect
BancoSeguro	20,646,270	19,882,946	763,324	33,903	100.00	Indirect
Yamí	34,657	928	33,729	(236)	99.99	Indirect
Registra Seguro	5,000	23	4,977	(0)	99.99	Indirect
CDS	9,862	144	9,718	6	99.99	Indirect
Zygo	60,575	927	59,647	(845)	99.99	Indirect
Moip	533,929	417,790	116,139	(14,652)	100.00	Indirect
Concil	10,897	2,573	8,324	(168)	100.00	Indirect
Pagseguro Chile (i)	653	802	(149)	(570)	100.00	Indirect
Pagseguro Colombia (i)	1,234	1,328	(94)	(346)	100.00	Indirect
PSGP México (i)	742	1,129	(386)	(505)	100.00	Indirect
Pagseguro Peru (i)	2,412	2,899	(487)	(635)	100.00	Indirect

(i)Entities with very limited operation.


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3. Consolidation of subsidiaries – Continued


As of December 31, 2022 (except for net income, that is presented to six-month period ended June 30, 2022)
Company	Assets	Liabilities	Equity	Net income (loss) for the period	Ownership - %	Level

Pagseguro Brazil	28,149,503	18,821,951	9,327,552	495,147	99.99	Direct
BS Holding	771,011	5,198	765,813	29,442	99.99	Direct
Pagseg Participações	781,745	871	780,874	33,197	99.99	Direct
PSHC	3,269	1,365	1,904	(355)	99.99	Direct
Pagbank Participações	165,263	9,775	155,490	(4,812)	99.99	Indirect
Paginvest (i)	2,016	4	2,012	-	99.99	Indirect
Net+Phone	467,890	125,476	342,414	24,186	99.99	Indirect
Pagseguro Tecnologia	363,377	134,468	228,909	11,378	99.99	Indirect
BCPS	1,916	(41)	1,957	(83)	99.99	Indirect
BSEC	1,840,046	1,825,459	14,586	1,060	99.99	Indirect
Biva Serviços	68,164	26,240	41,924	2,614	99.99	Indirect
Biva Corban	1,248	(16,181)	17,428	1,311	99.99	Indirect
FIDC	5,122,004	792,391	4,329,613	950,815	100.00	Indirect
TILIX	46,888	34,357	12,531	291	99.99	Indirect
BancoSeguro	22,238,338	21,509,017	729,321	19,508	100.00	Indirect
Yamí	34,795	33,331	1,465	264	99.99	Indirect
Registra Seguro	5,000	23	4,977	(4)	99.99	Indirect
CDS	10,192	479	9,713	(55)	99.99	Indirect
Zygo	70,940	10,448	60,492	(7,883)	99.99	Indirect
Moip	686,496	555,713	130,783	(7,832)	100.00	Indirect
Concil	11,315	2,823	8,492	(4,887)	100.00	Indirect
Pagseguro Chile (i)	1,092	684	408	-	100.00	Indirect
Pagseguro Colombia (i)	968	751	217	(350)	100.00	Indirect
PSGP México (i)	1,118	973	145	-	100.00	Indirect
Pagseguro Peru (i)	906	772	134	-	100.00	Indirect

(i)Entities with very limited or no operation.

The operational context of the subsidiaries is to be read in conjunction with the annual financial statements for the year ended December 31, 2022.


4. Segment reporting

Operating segments are determined based on the information reported and reviewed by the chief operating decision maker (“CODM”). The Board of Directors has been identified as the CODM and is responsible for allocating resources and assessing the performance of the business and to make PagSeguro Group’s strategic decisions.

Considering that all decisions are based on consolidated reports, and that all decisions related to strategic and financial planning, purchases, investments, and the allocation of funds are made on a consolidated basis, the PagSeguro Group and its subsidiaries operate in a single segment, as financial service agents.

Main companies of PagSeguro Group are domiciled in Brazil and have revenue arising from local customers and customers located abroad. The main revenue is related to sales from the domestic market. The revenue from international market represents 0,4% and 0,4% for the three and six-month periods ended June 30, 2023, respectively (0,9% and 1,1% for three and six-month periods ended June 30, 2022, respectively).


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5. Cash and cash equivalents


	June 30, 2023	December 31, 2022
Short-term bank deposits	442,838	761,044
Short-term investment	1,281,243	1,068,053
	1,724,081	1,829,097

Cash and cash equivalents are held for the purpose of meeting short-term cash needs and include cash on hand, deposits with banks and other short-term highly liquid investments with original maturities of three-month or less and with immaterial risk of change in value.

Short-term bank deposits are mainly represented by amounts to cover instant payments (PIX), cash on ATMs and clients’ payments.

Short-term investments consist mainly of investments in Brazilian Treasury Bonds (“LFTs”) with an average return of 100% of the Basic Interest Rate (SELIC, 13,75% per year on June 30, 2023 and December 31, 2022).


6. Financial investments

Consists of investments in LFTs, in the amount of R$1,122,216 as of June 30, 2023 (R$1,103,299 as of December 31, 2022) with an average return of 100% of the Basic Interest Rate (SELIC, 13,75% per year as of June 30, 2023 and December 31, 2022), invested to comply with certain requirements for authorized payment institutions as set forth by the Brazilian Central Bank regulation. This financial asset was classified at fair value through other comprehensive income. Unrealized accumulated gain on LFTs in six-month period ended June 30, 2023 totaled R$90 (gain of R$231 in the six-month period ended June 30, 2023).


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7. Accounts receivable


	June 30, 2023						December 31, 2022
	Visa	Master	Hipercard	Elo	Amex	Total	Visa	Master	Hipercard	Elo	Amex	Total
Legal obligors
Itaú	1,578,225	5,144,991	544,238	—	—	7,267,454	1,920,151	5,268,454	649,586	—	—	7,838,191
Nubank	—	4,287,298	—	—	—	4,287,298	—	4,050,376	—	—	—	4,050,376
Bradesco	2,106,907	210,460	—	1,092,155	400,446	3,809,968	2,924,890	242,708	—	1,228,553	440,535	4,836,686
Banco do Brasil	1,630,515	277,094	—	527,817	—	2,435,426	2,008,045	359,572	—	553,321	—	2,920,938
Santander	689,366	1,717,852	—	—	14,980	2,422,198	829,714	2,564,868	—	—	11,021	3,405,603
Banco Carrefour	141,608	1,008,548	—	—	—	1,150,156	142,392	973,915	—	—	—	1,116,307
Porto Seguro	694,836	235,684	—	—	—	930,520	708,008	216,926	—	—	—	924,934
Banco C6	—	894,805	—	—	—	894,805	—	825,958	—	—	—	825,958
CEF	305,487	139,451	—	434,779	—	879,717	369,282	180,490	—	453,043	—	1,002,815
Sicredi	440,469	427,572	—	—	—	868,041	404,825	372,297	—	—	—	777,122
Banco Cooperativo Sicoob	—	817,261	—	—	—	817,261	—	644,039	—	—	—	644,039
Banco Bradescard	530,723	128,641	—	16,564	—	675,928	470,100	113,100	—	15,613	—	598,813
Banco Inter	—	597,144	—	—	—	597,144	—	550,070	—	—	—	550,070
Banco XP	473,357	—	—	—	—	473,357	406,986	—	—	—	—	406,986
Will Financeira	—	424,838	—	—	—	424,838	—	349,453	—	—	—	349,453
Midway	242,387	123,329	—	—	—	365,716	268,221	124,417	—	—	—	392,638
Banco Votorantim	—	309,414	—	—	—	309,414	—	358,072	—	—	—	358,072
Realize	159,697	172,030	—	—	—	331,727	166,754	185,371	—	—	—	352,125
Banco Pan	51,468	188,192	—	726	—	240,386	68,683	246,112	—	10	—	314,805
Pernambucanas	—	—	—	237,938	—	237,938	—	1,017	—	186,556	—	187,573
Credz	186,475	—	—	—	—	186,475	176,030	—	—	—	—	176,030
Digio	184,998	—	—	1,071	—	186,070	180,936	1	—	14,454	—	195,391
Banco Original	—	171,898	—	—	—	171,898	—	246,976	—	—	—	246,976
Bancoob	162,513	—	—	—	—	162,513	112,743	208	—	—	—	112,951
Banrisul	30,013	131,521	—	—	—	161,534	36,400	133,065	—	—	—	169,465
Cred-system	—	155,495	—	—	—	155,495	—	153,681	—	—	—	153,681
Mercado Pago	147,184	—	—	—	—	147,184	143,073	—	—	—	—	143,073
Others	1,187,871	604,848	—	168,664	713	1,962,096	988,354	795,339	—	170,155	2,131	1,955,979
Total card issuers (i)	10,944,099	18,168,366	544,238	2,479,714	416,139	32,552,556	12,325,587	18,956,485	649,586	2,621,705	453,687	35,007,050
Current card issuers						32,376,194						34,884,835
Non - Current card issuers						176,362						122,215

Getnet	—	—	—	—	—	4,712	—	—	—	—	—	52,597
Other	—	—	—	—	—	5,580	—	—	—	—	—	10,963
Total acquirers (ii)	—	—	—	—	—	10,292	—	—	—	—	—	63,560

Loans, net	—	—	—	—	—	111,755	—	—	—	—	—	221,449
Credit card receivables, net	—	—	—	—	—	597,456	—	—	—	—	—	661,226
Payroll loans and other, net	—	—	—	—	—	1,084,413	—	—	—	—	—	852,425
Total credit receivables, net (iii)	—	—	—	—	—	1,793,624	—	—	—	—	—	1,735,100
Current						1,051,912						1,111,769
Non - Current						741,713						623,331

Other accounts receivables (iv)	—	—	—	—	—	2,065	—	—	—	—	—	188,425
Total accounts receivable	10,944,099	18,168,366	544,238	2,479,714	416,139	34,358,537	12,325,587	18,956,485	649,586	2,621,705	453,687	36,994,135
Current						33,440,463						36,248,589
Non - Current						918,074						745,546


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7. Accounts receivable (Continued)

(i) Card issuers: receivables derived from transactions where PagSeguro Brazil acts as the financial intermediary in operations with the issuing banks, related to the intermediation agreements between PagSeguro Brazil and Visa, Mastercard, Hipercard, Amex or Elo. However, PagSeguro Brazil’s contractual accounts receivable are with the financial institutions, which are the legal obligors on the accounts receivable payment. Additionally, amounts due within 27 days of the original transaction, including those that fall due with the first installment of installment receivables, are guaranteed by Visa, Mastercard, Hipercard, Amex or Elo, as applicable, if the legal obligors do not make the payment.

(ii) Acquirers: refers to card processing transactions to be received from the acquirers, which are a third parties acting as financial intermediaries between the issuing bank and PagSeguro Brazil.

(iii) Total credit receivables are presented net of the ECL (“expected credit losses”), are measured according to the IFRS 9, using: Exposure at Default (EAD) related to the exposed credit risk at default; Probability of Default (PD) related to the probability of the counterparty not meeting its contractual payment obligations; and Loss Given Default (LGD) related to the percentage of the exposure that is not expected to be recovered in the event of default, In addition to the methodology for calculating the allowance for impairment (EAD x PD x LGD). Pagseguro takes into consideration the forward-looking information and assumptions as the historical loss experienced at individual transactions level, credit quality and guarantees, economic factors and estimated future cash flows, which could impact the calculation model for provisioning expected credit losses

(iv) Refers to other dispersed receivables from legal obligors.

The maturity analysis of accounts receivables is as follows:


	June 30, 2023	December 31, 2022
Past due	915,081	1,073,275
Due within 30 days	11,314,052	13,784,017
Due within 31 to 120 days	13,450,111	13,743,397
Due within 121 to 180 days	4,340,589	4,422,424
Due within 181 to 360 days	4,236,444	4,210,024
Due after 360 days	918,074	746,612
Expected credit losses	(815,814)	(985,614)
	34,358,537	36,994,135

The maturity analysis of credit receivables as of June 30, 2023 and December 31, 2022 are as follows:


	June 30, 2023
	Loans	Credit card receivables	Payroll loans and others	TOTAL
Past due	539,201	370,099	5,781	915,081
Due within 30 days	15,192	245,838	40,968	301,996
Due within 31 to 120 days	40,036	137,369	98,927	276,332
Due within 121 to 180 days	13,985	81,998	61,769	157,752
Due within 181 to 360 days	12,197	42,341	153,782	208,320
Due after 360 days	4,396	8,238	737,321	749,955
	625,007	885,883	1,098,548	2,609,438
Expected credit losses	(513,252)	(288,427)	(14,135)	(815,814)
Receivables net of ECL	111,755	597,456	1,084,413	1,793,624


	December 31, 2022
	Loans	Credit card receivables	Payroll loans and others	TOTAL
Past due	468,236	603,352	1,687	1,073,275
Due within 30 days	35,435	232,013	24,332	291,780
Due within 31 to 120 days	102,413	146,409	72,599	321,421
Due within 121 to 180 days	49,642	86,055	40,621	176,318
Due within 181 to 360 days	70,218	43,615	119,691	233,524
Due after 360 days	17,435	1,066	605,895	624,396
	743,379	1,112,510	864,825	2,720,714
Expected credit losses	(521,929)	(451,285)	(12,400)	(985,614)
Receivables net of ECL	221,450	661,225	852,425	1,735,100


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7. Accounts receivable (Continued)

For the credit receivables the weighting of objective factors plus the analysis of the coverage percentage of accessory guarantees leads to the customer rating this allows the grouping of customers with similar credit risks and classification into one of the following stages as suggested by IFRS9:


	June 30, 2023
	Credit Amount	Exposure off balance credit limits not used	Expected Credit Losses
Loans
stage 1	54,914	—	(8,672)
stage 2	10,150	—	(6,166)
stage 3	559,943	—	(498,414)

Credit card receivables
stage 1	368,180	684,480	(7,370)
stage 2	181,353	243,083	(19,380)
stage 3	336,350	14,246	(261,677)

Payroll loans and other (i)
stage 1	1,061,915	—	(10,627)
stage 2	8,267	—	(261)
stage 3	28,365	—	(3,247)
TOTAL	2,609,438	941,809	(815,814)


	December 31, 2022
	Credit Amount	Exposure off balance credit limits not used	Expected Credit Losses
Loans
stage 1	173,407	—	(34,883)
stage 2	24,223	—	(12,982)
stage 3	545,749	—	(474,065)

Credit card receivables
stage 1	439,544	663,059	(17,202)
stage 2	205,356	214,282	(34,756)
stage 3	467,611	9,033	(399,326)

Payroll loans and other (i)
stage 1	844,075	—	(6,656)
stage 2	6,643	—	(201)
stage 3	14,106	—	(5,544)
TOTAL	2,720,714	886,374	(985,614)

(i)This line of credit is mainly related to payroll loans offered to retirees, public sector employees and FGTS early prepayment, therefore are secured operation and less prone to expected credit losses.


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7. Accounts receivable (Continued)

The movement in the allowance for expected credit losses of credit receivables is as follows:


Expected credit losses	Loans	Credit card receivables (i)	Payroll loans and other	Total
December 31, 2021	256,927	174,046	6,166	437,139
Additions (Reversals), net	265,002	277,239	11,351	553,592
Write-Off	—	—	(5,117)	(5,117)

December 31, 2022	521,929	451,285	12,400	985,614
Additions (Reversals), net	(8,677)	50,379	4,919	46,621
Write-Off	—	(213,237)	(3,184)	(216,421)

June 30, 2023	513,252	288,427	14,135	815,814

(i) Based on the PagSeguro credit risk classification model, which assesses the risk of insolvency and default of counterparties related to credit receivables, in the six month period ended in June 2023, the Company carried out a partial write-off of credit card receivables, for cases in which the Company does not expect to receive these amounts. The credit card receivables written-off in the amount of R$ 213,237 against the related provision for ECL recognized in previous periods.


8. Tax receivable


	June 30, 2023	December 31, 2022
Income tax and social contribution (i)	365,642	358,232
Social integration program (ii)	37,136	35,488
Other	18,677	17,081
	421,455	410,801

(i)Refers mainly to withholding taxes from income tax and social contribution.

(ii)Refers to Social Integration Program (PIS) and Social Contribution on Revenues (COFINS) recoverable on transaction activities and other services.


9. Related-party balances and transactions

i)Balances and transactions with related parties


	June 30, 2023		December 31, 2022
	Receivables	Payables	Payables
Immediate parent
UOL - sales of services (a)	—	15,548	16,170
UOL - shared service costs (b)	—	10,390	11,790
UOL – Deposits (c)	—	52,338	312,295
Affiliated companies
UOL Edtech Tecnologia Educacional S.A. - Deposits (c)	—	—	122,197
Web Jump Design em Informática Ltda. - Deposits (c)	—	5,072	12,372
Ingresso.com Ltda. - Deposits (c)	—	12,558	21,833
Invillia Desenvolvimento de produtos Digitais Ltda - Deposits (c)	—	21,564	60,096
Invillia Holding Ltda. - Deposits (c)	—	3,104	1,849
UOL Cursos Tec. Ed. Ltda. - Deposits (c)	—	74,308	—
Compasso Tecnologia Ltda. - sales of services (d)	—	5,310	—
Compasso UOL S.A.- sales of services (d)	—	10,573	12,624
Invillia Desenvolvimento de produtos Digitais Ltda- sales of services (d)	—	11,142	12,897
Digital Services UOL S.A.- borrowing (e)	15,557	104	244
Others	—	6,934	9,539
	15,557	228,945	593,906
Current	2,164	74,117	593,906
Non – Current	13,393	154,828	—


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9.Related-party balances and transactions (continued)

(a)Sales of services refer mainly to the purchase of advertising services from UOL.

(b)Shared services costs mainly related to payroll costs that are incurred by the parent company UOL and are charged to PagSeguro Group.

(c)Certificate of deposits (CD) acquired by related parties from BancoSeguro with interest rate between 104% to 110% per year of CDI. The maturity analysis is as follows:


	June 30, 2023	December 31, 2022
Due within 31 to 120 days	5,269	49,094
Due within 121 to 180 days	9,076	28,604
Due within 181 to 360 days	—	455,488
Due to 361 days or more days	154,828	—
	169,173	533,186

(d)This payable refers mainly to colocation, development of software and cloud services.

(e)This receivable refer to borrowing made from Biva Sec with interest rate of 100% of CDI plus 2.5% per year.

ii)Revenue and expense from transactions with related parties


	Three-month period				Six-month period
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
	Revenue	Expense	Revenue	Expense	Revenue	Expense	Revenue	Expense
Immediate parent
UOL - shared service costs (a)	—	23,298	—	33,618	—	51,053	—	56,084
UOL - sales of services (b)	774	16,711	767	22,522	1,567	35,515	1,560	44,836
UOL - deposits (c)	—	5,895	—	2,955	—	15,219	—	7,460
Affiliated companies
UOL Edtech Tecnologia – deposits (c)	—	—	—	8,415	—	323	—	8,415
Web Jump Design em Informática Ltda. - Deposits (c)	—	273	—	—	—	810	—	—
Ingresso.com Ltda. - Deposits (c)	—	511	—	—	—	1,015	—	—
UOL Cursos Tec. Ed. Ltda. - Deposits (c)	—	2,499	—	—	4	5,143	—	—
Invillia Desenvolvimento de produtos Digitais Ltda - Deposits (c)	—	3,513	—	—	—	3,513	—	—
Digital Services UOL S.A. - sales of services (d)	—	111	—	596	166	690	—	1,214
Compasso Tecnologia Ltda. - sales of services (d)	—	2,432	—	530	—	3,965	—	530
Compasso UOL S.A.- sales of services (d)	—	36,329	—	32,239	—	79,228	—	63,928
Invillia Desenvolvimento de produtos Digitais Ltda - sales of services (d)	—	439	—	—	—	3,388	—	—
Digital Services UOL S.A. - borrowing (e)	166	—	—	—	—	—	—	—
UOL Cursos Tec. Ed. Ltda. – sales of services (f)	4	—	—	—	—	—	—	—
Others	252	2,543	226	2,002	456	3,862	439	3,778
	1,196	94,554	993	102,877	2,193	203,724	1,999	186,246

(a)Shared services costs mainly related to payroll costs sharing that are incurred by the parent company UOL and are charged to PagSeguro. Such costs are included in administrative expenses.

(b)Sale of services expenses are related to advertising services from UOL and revenue is related to intermediation fees.

(c)Expenses are related to Certificate of Deposits (CD) from BancoSeguro. UOL Edtech Tecnologia was incorporated in 2023 by Passei Direto S.A..

(d)Expenses related to colocation and cloud services.

(e)Revenue refer to borrowing made from Biva Sec with interest rate of 100% of CDI plus 2.5% per year.

(f)Revenue refer to merchant discount rate.

iii)Key management compensation

Key management compensation includes short and long-term benefits of PagSeguro Brazil's executive officers. The short and long-term compensation related to the executive officers for the three and six-month periods ended June 30, 2023 amounted to R$10,672 and R$19,403 (R$7,693 and R$18,666 for the three and six-month periods ended June 30, 2022).


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10. Property and equipment

a)Property and equipment are composed as follows:


	June 30, 2023
	Cost	Accumulated depreciation	Net
Data processing equipment	215,595	(79,574)	136,021
Machinery and equipment (i)	3,516,804	(1,305,054)	2,211,750
Buildings Leasing (ii)	151,941	(52,536)	99,405
Other	40,810	(14,273)	26,537
Total	3,925,150	(1,451,437)	2,473,713

	December 31, 2022
	Cost	Accumulated depreciation	Net
Data processing equipment	214,279	(68,274)	146,005
Machinery and equipment (i)	3,382,067	(1,115,120)	2,266,947
Buildings Leasing (ii)	102,145	(43,901)	58,244
Other	33,692	(11,389)	22,303
Total	3,732,183	(1,238,684)	2,493,499

b)The changes in cost and accumulated depreciation were as follows:


	Data processing equipment	Machinery and equipment (i)	Buildings Leasing (ii)	Other	Total
On December 31, 2021
Cost	106,643	2,798,823	94,048	29,909	3,029,423
Accumulated depreciation	(51,294)	(654,360)	(26,928)	(7,789)	(740,371)
Net book value	55,349	2,144,463	67,120	22,120	2,289,052
On December 31, 2022
Opening balance
Cost	107,636	583,244	8,097	3,783	702,760
Purchases	109,245	981,462	8,097	5,352	1,104,156
Disposals	(1,609)	(398,218)	-	(1,569)	(401,396)
Depreciation	(16,980)	(460,760)	(16,973)	(3,600)	(498,313)
Depreciation	(17,092)	(647,318)	(16,973)	(3,851)	(685,234)
Disposals	112	186,558	-	251	186,921
Net book value	146,005	2,266,947	58,244	22,303	2,493,499

On December 31, 2022
Cost	214,279	3,382,067	102,145	33,692	3,732,183
Accumulated depreciation	(68,274)	(1,115,120)	(43,901)	(11,389)	(1,238,684)
Net book value	146,005	2,266,947	58,244	22,303	2,493,499

On June 30, 2023
Opening balance
Cost	1,316	134,737	49,796	7,118	192,967
Purchases	1,316	415,859	51,834	8,598	477,607
Disposals/Provisions (iii)	-	(281,122)	(2,038)	(1,480)	(284,640)
Depreciation	(11,300)	(189,934)	(8,635)	(2,884)	(212,753)
Depreciation	(11,300)	(333,670)	(9,429)	(3,174)	(357,573)
Disposals/Provisions (iii)	-	143,736	794	290	144,820
Net book value	136,021	2,211,750	99,405	26,537	2,473,713

On June 30, 2023
Cost	215,595	3,516,804	151,941	40,810	3,925,150
Accumulated depreciation	(79,574)	(1,305,054)	(52,536)	(14,273)	(1,451,437)
Net book value	136,021	2,211,750	99,405	26,537	2,473,713


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10.Property and equipment (continued)

(i)Net book value of POS devices is R$2,160,381 (R$2,212,692 as of December 31, 2022), which are depreciated over 5 years, The depreciation of POS in the six-month period ended June 30, 2023, amounted to R$330,130 (R$305,410 in the six-month period ended June 30, 2022), On June 30, 2023. PagSeguro have contractual obligations to acquire POS devices in the amount of R$393,369 (R$860,321 as of December 31, 2022).

(ii)As of June 30, 2023, PagSeguro had a lease liability presented in other current liabilities in the amount of R$15,986 (R$18,704 as of December 31, 2022) and as non-current liability in the amount of R$84,956 (R$39,867 as of December 31, 2022), this increase is mainly related to the extension of leasing agreement for more 4 years. For the six-month ended June 30, 2023, the Company incurred in financial expenses related to these leases of R$8,894 (R$9,775 in the six month period ended June 30, 2022).

(iii)The net book value of disposals is R$139,820 of which R$284,640 are cost and R$144,820 are accumulated depreciation, During the six-month period ended June 30, 2023, the Company revised its business strategy towards a specific group of merchants and observed no future economic benefit is expected from them, resulting in the provision of POS devices allocated to these merchants in the net book value of R$126,323 (R$257,258 are cost and R$130,935 are accumulated depreciation).


11. Intangible assets

a)Intangible assets are composed as follows:


	June 30, 2023
	Cost	Accumulated amortization	Net
Expenditures related to software and technology (i)	3,399,830	(1,435,600)	1,964,230
Software licenses	274,378	(123,266)	151,112
Goodwill	209,908	—	209,908
Other	67,768	(33,871)	33,897
	3,951,884	(1,592,737)	2,359,147

	December 31, 2022
	Cost	Accumulated amortization	Net
Expenditures related to software and technology (i)	2,904,505	(1,155,187)	1,749,318
Software licenses	257,096	(97,698)	159,398
Goodwill	209,908	—	209,908
Other	67,768	(27,619)	40,149
	3,439,277	(1,280,504)	2,158,773

(i)The PagSeguro Group capitalizes expenses incurred with the development of platforms, which are amortized over their useful lives of approximately five years.

The goodwill is allocated to the Cash Generating Units (CGUs) in each of the acquired companies that generated the goodwill and is demonstrated below:


	June 30, 2023	December 31, 2022
Moip	148,218	148,218
Concil	20,731	20,731
Biva Serviços	14,627	14,627
Banco Seguro	12,612	12,612
Pagseguro Tecnologia	6,570	6,570
Zygo	5,768	5,768
Yami	1,382	1,382
Total	209,908	209,908

The recoverable amount of a CGU is determined based on value-in-use calculations, Company tested the recoverability of these assets for the year ended December 31, 2022 and concluded that the book balances of goodwill recorded are recoverable, for June 30, 2023 the Company evaluated and no new indicatives are came, therefore, no provision for impairment of was accounted for.


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11. Intangible assets (continued)

The changes in cost and accumulated amortization were as follows:


	Expenditures with software and technology	Software licenses	Goodwill	Other	Total
On December 31, 2021
Cost	2,016,541	196,854	209,908	67,768	2,491,071
Accumulated amortization	(772,804)	(53,129)	—	(14,962)	(840,895)
Net book value	1,243,737	143,725	209,908	52,806	1,650,176
On December 31, 2022
Cost	887,964	60,242	—	—	948,206
Additions (i)	979,734	60,603	—	—	1,040,337
Disposals (ii)	(91,770)	(361)	—	—	(92,131)
Amortization	(382,383)	(44,569)	—	(12,657)	(439,609)
Amortization	(430,358)	(44,903)	—	(12,657)	(487,918)
Disposals (ii)	47,975	334	—	—	48,309
Net book value	1,749,318	159,398	209,908	40,149	2,158,773
On December 31, 2022
Cost	2,904,505	257,096	209,908	67,768	3,439,277
Accumulated amortization	(1,155,187)	(97,698)	—	(27,619)	(1,280,504)
Net book value	1,749,318	159,398	209,908	40,149	2,158,773
On June 30, 2023
Cost	495,325	17,282	—	—	512,607
Additions (i)	495,454	17,282	—	—	512,736
Disposals	(129)	—	—	—	(129)
Amortization	(280,413)	(25,568)	—	(6,252)	(312,233)
Amortization	(280,487)	(25,568)	—	(6,252)	(312,307)
Disposals	74	—	—	—	74
Net book value	1,964,230	151,112	209,908	33,897	2,359,147
On June 30, 2023
Cost	3,399,830	274,378	209,908	67,768	3,951,884
Accumulated amortization	(1,435,600)	(123,266)	—	(33,871)	(1,592,737)
Net book value	1,964,230	151,112	209,908	33,897	2,359,147

(i)Refers to several and diverse expenditures with software and technology, mainly related to customer experience functionalities, such as digital payment and digital banking account.


12. Payables to third parties


	June 30, 2023	December 31, 2022
Payables to merchants (i)	8,501,318	9,405,429
Banking accounts (ii)	7,496,149	7,470,978
Merchant's payment account (iii)	761,620	1,196,491
	16,759,087	18,072,898
Current	16,631,637	17,988,139
Non - Current	127,450	84,759

(i)Refers mainly to transactions of sales and services to settle to merchants’ net of PagSeguro’s revenue.

(ii)Refers to the balance of the clients maintained in their banking accounts that are invested by the client in Certificate of Deposits with 30 days of maturity and interest average rate of 73% of CDI (69% of CDI in December 31, 2022).

(iii)Refers to mechant’s payment account that PagSeguro acquire treasury bonds to comply with certain requirements as mentioned in note 6.


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13. Deposits


	June 30, 2023	December 31, 2022
Certificate of Deposit (i)	8,273,402	9,806,062
Interbank deposits (ii)	1,759,100	2,101,152
Corporate securities	—	88,074
	10,032,502	11,995,288
Current	7,813,097	10,100,599
Non – Current	2,219,405	1,894,689

(i)The average return is 112% of CDI (117% of CDI in December 31, 2022). From the total amount, R$1,361,589 (R$2,080,779 in December 31, 2022) refer to certificate of deposits with interest rates correlated to the IPCA (Brazilian inflation rates) and fixed rates. For these certificates of deposit, the Company entered into derivative financial instruments (“Swaps”) with the specific objective of protecting deposit from fluctuations arising from inflation, changing IPCA and fixed rates for CDI rates. In June 2023, the Company recorded liabilities of Swaps in the amount of R$11,366 (R$22,289 in December 31, 2022).

(ii)The average return is 111% of CDI (111% of CDI in December 31, 2022).

The maturity analysis of deposits based on due date of the agreements (disregarding that some can be withdrawn at any time, which is limited to the contracts with a due date of less than 360 days) is as follows:


	June 30, 2023	December 31, 2022
Due within 30 days	516,874	864,864
Due within 31 to 120 days	2,602,237	3,253,826
Due within 121 to 180 days	855,050	1,945,917
Due within 181 to 360 days	3,838,936	4,035,992
Due within 361 days or more days	2,219,405	1,894,689
	10,032,502	11,995,288

The changes in deposits were as follows:


On December 31,2021			3,133,996
Additions			25,475,725
Withdraws			(17,228,838)
Interest			614,405
On December 31,2022			11,995,288
Additions			4,658,505
Withdraws			(6,913,120)
Interest			291,829
June 30, 2023			10,032,502


14. Salaries and social security charges


	June 30, 2023	December 31, 2022
Payroll accruals	135,477	100,810
Profit sharing	55,209	87,111
Payroll taxes (LTIP) (i)	39,552	42,791
Social charges	33,107	49,651
Other	13,109	12,415
	276,454	292,778

(i)Refers to social charges and income tax over LTIP and LTIP goals balances.


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15. Taxes and contributions


	June 30, 2023	December 31, 2022
Taxes
Services tax and other (i)	195,282	184,536
Social integration program (ii)	34,420	35,003
Social contribution on revenues (ii)	210,705	211,749
Income tax and social contribution (iii)	2,079	4,104
Other	22,120	18,878
	464,606	454,270

	June 30, 2023	December 31, 2022
Judicial deposits (iv)
Services tax (i)	(169,883)	(163,005)
Social integration program (ii)	(29,558)	(28,165)
Social contribution on revenues (ii)	(181,896)	(173,321)
	(381,337)	(364,491)
	83,269	89,779

(i)Refers to tax on revenues.

(ii)Refers mainly to Social Integration Program (PIS) and Social Contribution on Revenues (COFINS) charged on financial income.

(iii)Refers to the income tax and social contribution payable.

(iv)The PagSeguro Group obtained until January 2021 court decisions to deposit the amount related to the payments in escrow for matters discussed in items "i" and "ii" and above.


16. Provision for contingencies

PagSeguro Group is party to labor and civil litigation in progress and are discussing such matters at the administrative and judicial levels, for which in some cases the PagSeguro Group has made corresponding judicial deposits. The likelihood of a negative outcome is assessed periodically and adjusted by management, when appropriate. Such assessment considers the opinion of its external legal advisors.


	June 30, 2023	December 31, 2022

Civil	28,945	26,365
Labor	52,107	45,797
	81,052	72,162

Labor Deposits	(12,336)	(11,559)

	68,716	60,603
Current	61,848	46,233
Non-Current	6,868	14,370

Below it is demonstrated the movements of the provision for contingencies in the six-month ended June 30, 2023:


On December 31, 2021			41,563
Accrual			37,276
Settlement			(24,234)
Interest			5,998
On December 31, 2022			60,603
Accrual			25,743
Settlement			(21,913)
Interest			4,283
On June 30, 2023			68,716


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16. Provision for contingencies (continued)

The movements of the labor deposits for the six-month ended June 30, 2023 are mainly related to interest in the period.

The PagSeguro Group is party to tax and civil lawsuits involving risks classified as possible losses, for which no provision was recognized as of June 30, 2023, totaling R$693,486 (December 31, 2022 - R$635,515). The main tax lawsuits are disclosed below:

On October 15, 2021, Pagseguro Internet was assessed by the Brazilian Internal Revenue Service (“IRS”) for not collecting tax on financial operation ("IOF") on intercompany loans, IOF is applicable over credit transactions of any nature, including intercompany loans. The amount of this assessment was R$280,595 (R$266,957 in December 31, 2022).

The Company has presented its defense, clarifying that the transactions carried out among PagSeguro and its subsidiaries are not credit transactions. The Group has a centralized cash pool and, according to the law, this kind of intercompany transaction is not taxable by IOF.

Additionally, has one contingency related to labor taxes in the amount of R$163,169 (R$133,286 in December 31, 2022).


17. Borrowings

In November 2021, the PagSeguro Group entered into a US$180 million borrowing agreement with maturity one year from the execution date and payment in a single installment at the due date. At that moment the agreement was signed, the foreign exchange rate was R$ 5,6227 per US dollar amounting in R$1,012,086. The Company entered into derivative financial instruments (“Swaps”), with the specific objective of protecting borrowing from fluctuations arising from the exchange rate variation. In November 2022, the PagSeguro Group liquidated its borrowing in the total amount of R$1,143,026 considering principal, interest, taxes and the total settlement of the financial instruments.

In February 2022, the Group entered into a R$250 million borrowing agreement with maturity in three months from the execution date, the interest rate was 112% of CDI and the payment occurred in a single installment as the due date. In May 2022, the borrowing agreement was re-signed with new maturity for an additional three months and was settled in August 2022 in the principal amount of R$250 million and the interest of R$7,015 were paid in May 2022 and R$8,322 in August 2022.

In March 2023, the PagSeguro Group entered into a US$38.4 million borrowing agreement with maturity one year from the execution date and payment in a single installment at the due date. On the date the agreement was signed, the foreign exchange rate was R$ 5.2149 per US dollar amounting to R$200 million. The Company entered into derivative financial instruments (“Swaps”), with the specific objective of protecting the borrowing from fluctuations arising from exchange rate variation. The final remuneration, considering all the costs of the operation, is equivalent to 111.0% of the CDI and the Company has R$10,007 of interest accumulated in June 2023.


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17. Borrowings (continued)

In June 2023 the Company recorded the effects of the swap derivatives in the liabilities on the amount of R$21,377, basically represented by the different foreign exchange rates at the time of entering into the borrowing agreement and June 2023 plus interest. More details of financial instruments in note 25.

In April 2023, the Group entered into a R$100 million borrowing agreement with maturity three month from the execution date, the payment will be in a single installment at the due date and the interest rate was 107,5% of the CDI, until June 30 this borrowing has accumulated R$3,273 of interest.

The table below demonstrates the changes in the borrowings:


June 30, 2023
On December 31,2021			1,005,787
Additions			250,000
Interest			175,338
Payment			(1,270,075)
Financial Instruments			(161,050)
On December 31, 2022			—
Additions			300,000
Interest			13,280
Financial Instruments			(21,379)
On June 30, 2023			291,901


18. Deferred income tax and social contribution

a)Reconciliation of the deferred income tax and social contribution


	Tax losses	Tax credit	Technological innovation (i)	Other temporary differences assets (ii)	Other temporary differences liability (iii)	Total
Deferred tax
On December 31, 2021	70,783	(187)	(427,239)	353,620	(1,267,975)	(1,270,998)
Included in the statement of income	(3,205)	(2,061)	(175,297)	190,982	(204,238)	(193,819)
On December 31, 2022	67,578	(2,248)	(602,536)	544,602	(1,472,213)	(1,464,817)
Included in the statement of income	(128)	(1,124)	(73,327)	(47,106)	15,617	(106,069)
Other	—	—	1,664	576	—	2,240
On June 30, 2023	67,450	(3,372)	(674,199)	498,072	(1,456,596)	(1,568,647)
Deferred tax asset						97,749
Deferred tax liability						1,666,395

(i)Refers to the benefit granted by the Technological Innovation Law (Lei do Bem), which reduces the tax charges on the capitalized amount intangible assets.

(ii)The main other assets temporary difference refers to expected credit losses (Note 7) and taxes and contributions (Note 15).

(iii) The main other liability temporary difference refers to gain on the ownership of FIDC quotas, that will be realized only in the redemption of such quotas.

Deferred tax assets are recognized for tax loss carry-forward to the extent that the realization of the related tax benefit through future taxable profits is probable. Tax losses do not have expiration date.


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18. Income tax and social contribution (continued)

b)Reconciliation of the income tax and social contribution expense

PagSeguro Group computed income tax and social contribution under the taxable income method. The following is a reconciliation of the difference between the actual income tax and social contribution expense and the expense computed by applying the Brazilian federal statutory rate for the three and six-month periods ended June 30, 2023 and 2022.


	Three-month period		Six-month period
	June 30, 2023	June 30, 2022	June 30, 2023	June 30, 2022

Profit for the period before taxes	485,263	442,711	921,301	859,183
Statutory rate	34%	34%	34%	34%
Expected income tax and social contribution	(164,989)	(150,522)	(313,242)	(292,122)
Income tax and social contribution effect on:
Permanent additions (exclusions)
Gifts	(111)	(421)	(488)	(655)
R&D and technological innovation benefit (i)	49,278	59,497	100,892	122,198
Taxation of income abroad (ii)	24,028	28,503	54,805	54,179
Unrecorded deferred taxes	(3,240)	(3,290)	(6,980)	(5,609)
Other additions (exclusions)	(5,134)	(9,556)	(1,350)	(10,330)
Income tax and social contribution expense	(100,168)	(75,789)	(166,362)	(142,339)

Effective rate	21%	17%	18%	17%
Income tax and social contribution - current	(42,239)	530	(60,295)	(28,121)
Income tax and social contribution - deferred	(57,929)	(76,317)	(106,067)	(114,218)

(i)Refers to the benefit granted by the Technological Innovation Law (Lei do Bem), which reduces the income tax charges, based on the amount invested by the PagSeguro Group on specific intangible assets, see note 11.

(ii)Some entities and investment funds adopt different taxation regimes according to the applicable rules in their jurisdictions, which differs from the Brazilian tax rate of 34% applied for the purpose of this note.


19. Equity

a)Share capital

On June 30, 2023, share capital is represented by 329,608,226 common shares, par value of US$0.000025. Share capital is composed of the following shares for the period ended June 30, 2023:


December 31, 2021 shares outstanding						329,608,226
Treasury shares						3,642,899
Long-Term Incentive Plan						637,728
Repurchase of common shares						(4,280,627)
December 31, 2022 shares outstanding						329,608,226
Treasury shares						2,180,116
Long-Term Incentive Plan						1,271,777
Repurchase of common shares						(3,451,893)
June 30, 2023 shares outstanding						329,608,226


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19. Equity (continued)

b) Capital reserve

The capital reserve can only be used to increase capital, offset losses, redeem, reimburse, or purchase shares or pay cumulative dividends on preferred shares. For the six-month period ended June 30, 2023 and 2022, the Company has not recognize any capital reserve movement, as all the LTIP and LTIP goals shares were delivered with treasury shares.

c) Share based long-term incentive plan (LTIP and LTIP goals)

Under the terms of the LTIP, upon completion of the IPO, the vested portion of each beneficiary’s LTIP rights was converted into Class A common shares of PagSeguro Digital at the IPO price (US$21,50) which is the assessed fair value at the grant date. As a result, the beneficiaries of the LTIP received a total of 1,823,727 new Class A common shares upon completion of the IPO. The unvested portions of each beneficiary’s LTIP rights will be settled on each future annual vesting date in shares.

This arrangement is classified as equity settled. For the six-month ended June 30, 2023, the Company recognized in equity, costs related to the LTIP and LTIP Goals in the total amount of R$73,116 (R$76,147 in the six-month period ended June 30, 2022). On June 30, 2023, the amount of R$39,552 (R$42,791 in December 31, 2022) was accounted for LTIP and LTIP Goals social charges, including withholding income tax (Note 14).

The maximum number of common shares that can be delivered to beneficiaries under the LTIP and LTIP Goals may not exceed 3% and 1% per year, respectively of the Company’s issued share capital at any time. Until June 30, 2023, total shares granted were 3,987,847 and the total shares issued were 7,817,200, representing 1,2% and 2,4% of total shares respectively.

d) OCI and equity valuation adjustments

The Company recognizes in this account the accumulated effect of the foreign exchange variation resulting from the conversion of the financial statements of the foreign subsidiary BCPS, Pagseguro Colombia, Pagseguro Chile, Pagseguro Peru and Pagseguro Mexico which amounted to a loss of R$73 in the six-month period ended June 30, 2023 (loss of R$718 in the six-month period ended June 30, 2022). This accumulated effect will be reverted to the result of the year as gain or loss only in case of disposal or write-off of the investment.

The financial investments mentioned in note 6 were classified at fair value through other comprehensive income. Unrealized gain on LFTs in the six-month period ended June 30, 2023 totaled R$231 (loss of R$273 in the six-month period ended June 30, 2022).

The derivative financial instruments mentioned in note 17 were classified at fair value through other comprehensive income. Unrealized fair value adjustment loss on SWAPs in the six-month period ended June 30, 2023, totaled R$1,119 (loss of R$11,255 in the six-month period ended June 30, 2022).


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19. Equity (continued)

As part of transactions completed in prior years, the Company also recognized in this account the difference between the book value and the amounts paid in the acquisitions of additional interests from the non-controlling shareholders of the subsidiary represented by the accumulated amount of R$22,372 (R$22,372 as of June 30, 2022).

e)Treasury shares

On October 30, 2018, PagSeguro Digital's board of directors authorized a share repurchase program, under which the PagSeguro Group may repurchase up to US$250 million in outstanding Class A common shares traded on the New York Stock Exchange (NYSE). The Company's management is responsible for defining the timing and the number of shares to be acquired, within authorized limits. Treasury shares are composed of the following shares for the six-month periods ended June 30, 2023:


	Shares	Amount	Average Price (US$)
Repurchase shares
December 31, 2021 treasury shares	1,688,701	285,011	3,023
Repurchase of common shares	4,280,627	291,445	1,250
Long-Term Incentive Plan	(637,728)	(101,102)	2,816
December 31, 2022 treasury shares	5,331,600	475,354	1,600
Repurchase of common shares	3,451,893	143,669	826
Long-Term Incentive Plan	(1,271,777)	(113,385)	1,600
June 30, 2023 treasury shares	7,511,716	505,638	1,244


20. Earnings per share

a)Basic

Basic earnings per share is calculated by dividing net income attributable to equity holders of PagSeguro Digital by the weighted average number of common shares issued and outstanding for the three and six-month periods ended June 30, 2023 and 2022:


	Three-month period		Six-month period
	June 30, 2023	June 30, 2022	June 30, 2023	June 30, 2022
Profit attributable to stockholders of the Company	385,095	366,924	754,939	716,844
Weighted average number of outstanding common shares (thousands)	323,522,068	331,796,590	324,112,990	331,181,891
Basic earnings per share - R$	1.1903	1.1059	2.3292	2.1645

b)Diluted

Diluted earnings per share is calculated by dividing net income attributable to equity holders of PagSeguro Digital by the weighted average number of common shares outstanding during the period plus the weighted average number of common shares that would be issued on conversion of all dilutive potential common shares into common shares. The share in the LTIP and LTIP Goals are the only shares with potential dilutive effect. In this case, a calculation is done to determine the number of shares that could have been acquired at fair value.


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20. Earnings per share (continued)


	Three-month period		Six-month period
	June 30, 2023	June 30, 2022	June 30, 2023	June 30, 2022
Profit used to determine diluted earnings per share	385,095	366,924	754,939	716,844
Weighted average number of outstanding common shares (thousands)	323,522,068	331,796,590	324,112,990	331,181,891
Weighted average number of shares that would have been issued at average market price	1,958,364	1,415,447	2,388,347	2,039,313
Weighted average number of common shares for diluted earnings per share (thousands)	325,480,431	333,212,037	326,501,337	333,221,204
	1.1832	1.1012	2.3122	2.1513

The weighted average number of outstanding common shares decreased due to the repurchase of common shares (treasury shares).


21. Total revenue and income


	Three-month period		Six-month period
	June 30, 2023	June 30, 2022	June 30, 2023	June 30, 2022
Gross revenue from transaction activities and other services (i)	2,469,519	2,544,740	4,905,662	4,845,984
Gross financial income (ii)	1,644,588	1,659,639	3,224,575	3,026,057
Gross other financial income (iii)	94,475	72,559	189,957	137,453
Total gross revenue and income	4,208,582	4,276,938	8,320,194	8,009,494
Deductions from gross revenue from transactions activities and other services (iv)	(303,510)	(289,053)	(588,637)	(535,714)
Deductions from gross financial income (v)	(49,614)	(49,537)	(95,399)	(85,162)
Deductions from gross other financial income (vi)	(29,546)	(27,790)	(60,514)	(51,109)
Total deductions from gross revenue and income	(382,670)	(366,380)	(744,550)	(671,984)
Total revenue and income	3,825,912	3,910,558	7,575,644	7,337,509

(i)Includes mainly intermediation fee, membership fee and credit operations revenues.

(ii)Includes income from early payment of notes payable to third parties.

(iii)Includes (a) interest of financial investments and (b) gain on exchange variation.

(iv)Deductions consist of transactions taxes.

(v)Deductions consist of taxes on financial income.

(vi)Deductions consist of taxes on other financial income.


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22. Expenses by nature


	Three-month period		Six-month period
	June 30, 2023	June 30, 2022	June 30, 2023	June 30, 2022
Transactions costs (i)	(1,414,229)	(1,414,205)	(2,802,989)	(2,717,049)
Marketing and advertising	(129,327)	(167,441)	(247,075)	(339,827)
Personnel expenses (ii)	(275,679)	(291,876)	(547,606)	(547,428)
Financial expenses (iii)	(795,627)	(755,560)	(1,608,598)	(1,376,187)
Total Losses (iv)	(121,717)	(270,484)	(248,203)	(520,198)
Depreciation and amortization (vi)	(325,572)	(280,566)	(642,998)	(529,588)
Other (v)	(278,498)	(287,715)	(556,874)	(448,049)
	(3,340,649)	(3,467,847)	(6,654,343)	(6,478,326)

Classified as:
Cost of services	(1,926,072)	(1,900,300)	(3,855,370)	(3,639,679)
Selling expenses	(321,442)	(499,101)	(639,350)	(979,751)
Administrative expenses	(203,391)	(203,937)	(374,745)	(369,268)
Financial expenses	(795,627)	(755,559)	(1,608,598)	(1,376,187)
Other income (expenses), net	(94,117)	(108,950)	(176,280)	(113,441)
	(3,340,649)	(3,467,847)	(6,654,343)	(6,478,326)

(i)The increase is mainly represented by: (i) costs related to interchange fees of card issuers in the amount of R$1,125,537 and R$2,241,052 in the three and six-month periods ended June 30, 2023 (R$1,143,792 and R$2,162,331 in the three and six-month periods ended June 30, 2022), (ii) card scheme fees in the amount of R$231,481 and R$454,145 in the three and six-month periods ended June 30, 2023 (R$221,272 and R$433,000 in the three and six-month periods ended June 30, 2022).

(ii)Personnel expenses includes compensation expenses in the amount of R$29,794 and R$48,496 related to the LTIP and LTIP goals for the three and six-month periods ended June 30, 2023 (R$50,595 and R$78,436 for the three and six-month periods ended June 30, 2022). Personnel expenses in 2023, include capitalization of LTIP and LTIP goals in the amount of R$21,688 and R$46,275 in the three and six-month periods ended June 30, 2023.

(iii)Relates to: (i) the early collection of receivables, which amounted to R$245,334 and R$458,878 in the three and six-month periods ended June 30, 2023 (R$349,182 and R$710,199 in the three and six-month periods ended June 30, 2022), (ii) interest of deposits and bank accounts which amounted to R$479,002 and R$989,746 in the three and six-month periods ended June 30, 2023 (R$327,057 and R$548,166 in the three and six-month periods ended June 30, 2022).

(iv)Total losses refer to amounts recognized during the three and six-month periods ended June 30, 2023 related to card processing operations (acquiring and issuing), losses on digital accounts in the amount of R$115,305 and R$201,582 (R$113,467 and R$202,670 in the three-month and six-month periods ended June 30, 2022) and provision for delinquency rate of credit portfolio in the amount of R$6,412 and R$46,621 in the three and six-month periods ended June 30, 2023 (R$157,017 and R$317,528 in the three and six-month periods ended June 30, 2022), as detailed in note 24.

(v)Includes R$64,669 and R$126,323 in the three and six-month periods ended June 30, 2023 (R$93,141 in the three and six-month periods ended June 30, 2022) related to provision of POS devices, as described in note 12.

(vi)Depreciation and amortization amounts incurred in the period are segregated between costs and expenses as presented below:


	Three-month period		Six-month period
	June 30, 2023	June 30, 2022	June 30, 2023	June 30, 2022
Depreciation
Cost of sales and services (i)	(170,504)	(166,627)	(342,992)	(312,434)
Selling expenses	(51)	(44)	(105)	(84)
Administrative expenses	(7,162)	(6,640)	(14,477)	(13,030)
	(177,718)	(173,311)	(357,574)	(325,548)
Amortization
Cost of sales and services (ii)	(155,096)	(111,542)	(299,598)	(211,691)
Administrative expenses	(6,371)	(5,856)	(12,709)	(11,721)
	(161,467)	(117,398)	(312,307)	(223,412)
PIS and COFINS credits (iii)	13,613	10,143	26,882	19,372
Depreciation and amortization expense, net	(325,572)	(280,566)	(642,998)	(529,588)


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22. Expenses by nature (continued)

(i)The depreciation of POS in the three and six-month periods ended June 30, 2023, amounted to R$ 163,721 and R$330,130 (R$162,746 and R$305,410 in the three and six-month period ended June 30, 2022).

(ii)Included in this amount are LTIP amortizations in the amount of R$11,391 and R$21,595 in the three and six-months ended June 30, 2023 (R$7,946 and R$15,892 for the three and six months ended June 30, 2022). Additionally, has assets amortizations of acquired companies in the amount of R$4,617 and R$9,234 in the three and six-month periods ended June 30, 2023 (R$4,617 and R$9,234 in the three and six-month periods ended June 30, 2022).

(iii)PagSeguro Brazil has a tax benefit on PIS and COFINS that allows it to reduce the depreciation and amortization over some operational expenses when incurred. This tax benefit is recognized directly as a reduction of depreciation and amortization expense.


23. Financial instruments by category

The PagSeguro Group estimates the fair value of its financial instruments using available market information and appropriate valuation methodologies for each situation.

The interpretation of market data, as regards the choice of methodologies, requires considerable judgment and the establishment of estimates to reach an amount considered appropriate for each situation. Therefore, the estimates presented may not necessarily indicate the amounts that could be obtained in the current market. The use of different hypotheses to calculate market value or fair value may have a material impact on the amounts obtained. The assets and liabilities presented in this note were selected based on their relevance. The PagSeguro Group believes that the financial instruments recognized in these consolidated interim financial statements at their carrying amount are substantially similar to their fair value. However, since they do not have an active market (except for the LFT included in financial investments, which is actively traded in the market), variations could occur in the event the PagSeguro Group were to decide to settle or realize them in advance.

The PagSeguro Group classifies its financial instruments into the following categories:


	June 30, 2023	December 31, 2022
Financial assets
Amortized cost:
Cash and cash equivalents	1,724,081	1,829,097
Accounts receivables	34,358,537	36,994,135
Other receivables	179,683	180,517
Judicial deposits	49,559	44,855
Receivables from related parties	15,557	—
Investment	1,811	1,651
Fair value through other comprehensive income
Financial investments	1,122,216	1,103,299
	37,451,443	40,153,554

Financial liabilities	June 30, 2023	December 31, 2022
Amortized cost:
Payables to third parties	16,759,087	18,072,898
Trade payables	465,071	449,102
Trade payables to related parties	228,945	593,906
Deposits	10,032,502	11,995,288
Borrowings	291,901	—
Deferred revenue	142,771	143,528
Other liabilities	262,891	202,797
Fair value through profit or loss
Derivative financial instruments	11,366	22,289
Fair value through other comprehensive income
Derivative financial instruments	21,377	—
	28,215,911	31,479,808


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24. Financial risk management

The PagSeguro Group's activities expose it to a variety of financial risks: market risk, fraud risk (chargebacks), credit risk and liquidity risk. The PagSeguro Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the PagSeguro Group's financial performance.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. In the Group, market risk comprises interest rate risk and foreign currency risk and other price risk, such as equity price risk.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's exposure to the risk of changes in market interest rates arises primarily from financial investments and deposits both subject to variable interest rates, principally the CDI rate. The Group conducted a sensitivity analysis for the following twelve months of the interest rate risks to which the financial instruments are exposed as of June 30, 2023. For this analysis, the Group adopted as a probable scenario for 2023 interest rates of 11,90% for the CDI. As a result, financial income (with respect to financial investments) and financial expense (with respect to certificate of deposit, corporate securities, bank accounts and interbank deposits) would be impacted as follows:


Transaction	Interest rate risk	Book Value	Scenario with maintaining of CDI (13,15%)	Probable scenario with decrease to 11,90%
Short-term investment	100% of CDI	1,281,243	168,483	152,468
Financial investments	100% of CDI	1,122,216	147,571	133,544
Certificate of Deposit	112% of CDI	8,273,402	(1,218,507)	(1,102,679)
Certificate of Deposit - related party	105% of CDI	169,173	(23,359)	(21,138)
Interbank deposits	111% of CDI	1,759,100	(256,767)	(232,359)
Bank accounts	73% of CDI	7,496,149	(719,593)	(651,190)
Borrowings (i)	111% of CDI	188,629	(27,533)	(24,916)
Total			(1,929,705)	(1,746,271)

(i)The borrowing of R$100 million detailed in note 17, was not included in analyze above because will be paid in July 2023.

Foreign exchange risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity's functional currency. The Company’s risk is mainly related to POS purchases, Pagseguro Tecnologia, BCPS, PSGP Mexico, Pagseguro Colombia, Pagseguro Chile and Pagseguro Peru that have revenues in other currencies and cash and cash equivalents maintained in other countries. Additionally, as mentioned in note 17, in 2023, the Group entered in a US$38.4 million borrowing agreement and also contracted a derivative financial instrument with the specific objective of protecting from fluctuations arising from exchange variation.


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24. Financial risk management (Continued)

Equity price risk

The Group's non-listed equity investments are susceptible to market price risk arising from uncertainties about future values of the investment. As of June 30, 2023, and December 31, 2022, the exposure to equity price from such investments was not material.

Fraud risk (chargeback)

The PagSeguro Group's sales transactions are susceptible to potentially fraudulent or improper sales and it uses the following two processes to control the fraud risk:

(i)The first process consists of monitoring, on a real time basis, the transactions carried out with credit and debit cards and payment slips, through an anti-fraud system. This process approves or rejects suspicious transactions at the time of the authorization, based on statistical models that are revised on a periodic basis.

(i)The second process detects chargebacks and disputes not identified by the first process. This is a supplemental process and increases the PagSeguro Group's ability to avoid new frauds, PagSeguro’s expenses with chargeback are disclosed in note 22.

Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily accounts receivable) and from its financing activities, including deposits with banks and financial institutions, and other financial instruments such as loans and credit card receivables with the Company’s customers.

Credit risk is managed on a group basis and for its accounts receivable is limited to the possibility of default by: (a) the card issuers, which have the obligation of transferring to the credit and debit card labels the fees charged for the transactions carried out by their card holders, (b) the acquirers, which are used by the PagSeguro Group to approve transactions with the issuers and (c) analyses for the customers background to provide access to credit portfolio.

In order to mitigate this risk, PagSeguro Brazil has established a Credit and Liquidity Risk Committee, whose responsibility is to assess the level of risk of each of the card issuers served by PagSeguro Group, classifying them into three groups:

(i)Card issuers with a low level of risk, with credit ratings assigned by FITCH, S&P and Moody's, which do not require additional monitoring.

(ii)Card issuers with a medium level of risk, which are also monitored in accordance with the financial metrics and ratios; and

(iii)Card issuers with a high level of risk, which are assessed by the committee at monthly meetings.


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24. Financial risk management (Continued)

PagSeguro has a rating process for loans and credit, based on statistical application models (in the early stages of customer relationships) and behavior scoring (used for customers who already have a relationship history). A process for designing, calibrating, and implementing policies and guidelines for granting credit and calibrating collection rules.

A process for monitoring the portfolio's risk profile, with a prospective view, which generates early warning feedbacks to the credit granting policies and risk classification models in a timely manner.

Liquidity risk

The PagSeguro Group manages liquidity risk by maintaining reserves, bank and credit lines in order to obtain borrowings, when deemed appropriate. The PagSeguro Group continuously monitors actual and projected cash flows and matches the maturity profile of its financial assets and liabilities in order to ensure that the PagSeguro Group has enough funds to honor its obligations to third parties and meet its operational needs.

The PagSeguro Group invests surplus cash in interest bearings financial investments, choosing instruments with appropriate maturity or enough liquidity to provide adequate margin as determined by the forecasts. On June 30, 2023, PagSeguro Group held cash and cash equivalents of 1,724,081 (R$1,829,097 on December 31, 2022).

The table below shows the PagSeguro Group's non-derivative financial liabilities divided into the relevant maturity group based on the remaining period from the balance sheet date and the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.


	Due within 30 days	Due within 31 to 120 days	Due within 121 to 180 days	Due within 181 to 360 days	Due to 361 days or more days
On June 30, 2023
Payables to third parties	11,633,022	1,894,117	910,528	2,193,970	127,450
Trade payables	459,765	3,978	366	961	—
Trade payables to related parties	—	65,232	9,623	—	177,246
Borrowings	103,273	—	—	217,418	—
Deposits	523,535	2,702,841	910,145	4,284,186	2,562,621

On December 31, 2022
Payables to third parties	13,354,285	1,717,388	856,011	2,060,455	84,759
Trade payables	397,335	50,975	309	482	—
Trade payables to related parties	—	62,559	30,390	506,671	—
Deposits	876,415	3,384,194	2,075,859	4,521,112	2,198,340

Social, environmental and climate risks

Social, environmental and climate risks are the possibility of losses due to exposure to events of social, environmental and/or climate origin related to the activities carried out by the Company. Management evaluated the social, environmental and climate factors in which its businesses are inserted and considers them to have a low impact on the creation of shared value in the short, medium and long term.


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24. Financial risk management (Continued)

Despite this, in order to mitigate social, environmental and climate risks, actions are carried out to analyze processes, risks and controls, follow up on new rules related to the topic and record occurrences in internal systems. In addition to identification, the stages of prioritization, risk response, mitigation, monitoring and reporting of assessed risks complement the management of this risk at the Company.


25. Derivative Financial Instruments designated to Hedge Accounting

The Group trades derivative financial instruments (SWAPs) to manage its overall exposures (foreign currency, inflation index and interest rate).

i)Cash flow hedge

In March 2023, the PagSeguro Group entered in a US$38.4 million borrowing agreement with maturity in one-year from the execution date and the payment will occur in a single instalment as the due date. In the same operation, the Company entered into a swap, with the specific objective of protecting said borrowing from fluctuations arising from exchange variation, changing the risk to CDI. All the amount is covered with the derivative and the same due date is applied. Below is the composition of the derivative financial instruments portfolio by type of instrument, asset value, liability value and fair value, financial instrument and MTM registered in OCI:


Risk factor	Financial Instruments - notional	Liabilities	Financial Instrument	Fair Value	MTM
Swap of currency	208,984	189,300	19,684	21,377	(1,693)

ii)Fair value hedge

The PagSeguro Group issued certificate of deposits with interest rates correlated to the IPCA (Brazilian inflation rates) and interest fixed rates. For these certificate of deposits, the Company entered into swaps with the specific objective of protecting said deposits from fluctuations arising from inflation and high interest rates, changing them for CDI rates. All the amount, which includes principal and interest, are covered and the same due dates are applied. Below is the composition of the derivative financial instruments portfolio by type of instrument, liability value and fair value, financial instrument and MTM registered in profit and loss:


June 30, 2023

	Notional Liability	Liabilities Fair value	MTM (a)
IPCA CDB	671,477	667,384	(4,094)
Fixed rated CDB	699,169	694,205	(4,964)
Total	1,370,646	1,361,589	(9,058)

	Notional SWAP	SWAP	MTM total (b)	Profit and Loss ((a)+(b))
IPCA CDB	651,672	(657,467)	4,346	252
Fixed rated CDB	698,998	(692,755)	5,164	199
Total	1,350,670	(1,350,223)	9,510	451


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25. Derivative Financial Instruments designated to Hedge Accounting (Continued)


December 31, 2022
	Notional Liability	Liabilities Fair value	MTM (a)
IPCA CDB	708,454	710,475	2,021
Fixed rated CDB	1,368,325	1,370,305	1,980
Total	2,076,779	2,080,780	4,001

	Notional SWAP	SWAP	MTM total (b)	Profit and Loss ((a)+(b))
IPCA CDB	(728,142)	(733,026)	(2,109)	(89)
Fixed rated CDB	(1,374,472)	(1,378,917)	(2,149)	(168)
Total	(2,102,614)	(2,111,943)	(4,258)	(257)

The structure of risk limits is extended to the risk factor level, where specific limits aim at improving the monitoring and understanding processes, as well as avoiding concentration of these risks. Additionally, as the main financial assets and financial liabilities of the Company are measured by CDI, the PagSeguro Group’s strategy is to change any other risk factors to CDI. The PagSeguro Group undertakes risk management through the economic relationship between hedge instruments and hedged item, in which it is expected that these instruments will move in opposite directions, in the same proportions, with the aim of neutralizing the risk factors. The Company performs the hedging account effectiveness as each reporting date test and for the six-month period ended June 30, 2023 and December 31, 2022, these tests were effective.


26. Non-cash Transactions


	Three-month period
	June 30, 2023	June 30, 2022
Non-cash investing activities
Property and equipment acquired through lease	51,834	4,496
MTM of financial investments	231	(268)


27. Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. A three-level hierarchy is used to measure fair value, as shown below:

•Level 1 - Quoted prices (unadjusted) in active markets for identical assets and liabilities.

•Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

•Level 3 - Inputs for the assets and liabilities that are not based on observable market data (that is, unobservable inputs).


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27. Fair value measurement (Continued)

The PagSeguro Group believes that the financial instruments recognized in these consolidated interim financial statements at their carrying amount are substantially similar to its fair value. Regarding financial assets, they are comprised by accounts receivable from credit/debit card issuers and acquirers originated from transactions through PagSeguro Group payment platform comprised of transactions approved by large financial institutions in the normal course of business. The financial investments are represented by government bonds with quoted prices in an active market and recognized in the balance sheet based on its fair value.

Financial liabilities are mostly represented by deposits and short-term payables to merchants which are paid in accordance with the contract set out with the merchant and other short-term payables to service providers in the normal course of business and, as such, also approximate from their fair values. There were no transfers between Levels 1, 2 and 3 in 2023.

The following table provides the fair value measurement hierarchy of PagSeguro Group's financial assets and financial liabilities as of June 30, 2023:


	June 30, 2023
	Quoted prices in active markets (Level 1)	Significant observable inputs (Level 2)	Significant unobservable inputs (Level 3)
Financial assets
Cash and cash equivalents	760,996	963,085	—
Financial investments	1,122,216	—	—
Accounts receivable	—	34,358,537	—
Other receivables	—	179,683	—
Judicial deposits	—	49,559	—
Receivables from related parties	—	15,558	—
Investment	—	—	1,811
Financial liabilities
Payables to third parties	—	16,759,087	—
Trade payables	—	465,071	—
Trade payables to related parties	—	228,945	—
Deposits	—	10,032,502	—
Derivative Financial Instruments	—	32,745	—
Deferred revenue	—	142,771	—
Other liabilities	—	262,891	—


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27. Fair value measurement (Continued)


	December 31, 2022
	Quoted prices in active markets (Level 1)	Significant observable inputs (Level 2)	Significant unobservable inputs (Level 3)
Financial assets
Cash and cash equivalents	404,468	1,424,629	—
Financial investments	1,103,299	—	—
Accounts receivable	—	36,994,135	—
Other receivables	—	180,517	—
Judicial deposits	—	44,858	—
Investment	—	—	1,651
Financial liabilities
Payables to third parties	—	18,072,898	—
Trade payables	—	449,102	—
Trade payables to related parties	—	593,906	—
Deposits	—	11,995,288	—
Derivative Financial Instruments	—	22,289	—
Deferred revenue	—	143,528	—
Other liabilities	—	202,796	—


28. Subsequent Events

In July 18, 2023 the Company concluded the acquisition of 90% of Netpos Serviços de Informatica S.A. (“Netpos”) shares, after this acquisition the Company have 100% of the shares of Netpos, the purchase price was R$32 million.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 24, 2023


			PagSeguro Digital Ltd.

			By:			/s/ Artur Schunck
			Name:			Artur Schunck
			Title:			Chief Financial Officer, Chief Accounting Officer and Investor Relations Officer

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