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PagSeguro's Q1 profit soars on higher financial income, transaction revenue

PagSeguro Digital Ltd.'s first-quarter profit more than doubled from a year ago as the credit card processing company, which went public earlier this year, recorded higher financial income and revenues from transactions.

PagSeguro booked net income of about 148.5 million Brazilian reais in the period, up 144.9% from the 60.6 million reais earned in the first quarter of 2017. EPS improved to about 50.0 centavos from 23.1 centavos a year ago.

Total revenue and income jumped 106.9% from a year earlier to reach 928.0 million reais in the first quarter. The result was driven by a 132.6% increase in net revenue from transaction activities and other services, which totaled 442.8 million reais, and a 98.0% spike in financial income, which amounted to 274.8 million reais.

Other financial income, meanwhile, soared to 116.4 million reais from just 836,000 reais a year earlier, but net revenue from sales slid 20.6% annually to about 94.0 million reais.

The company attributed this decline to "a different hardware sales mix" in the first quarter compared to the prior-year period, noting that its Minizinha POS chip was launched at the end of the first quarter of 2017.

PagSeguro's net margin hit 16.0% in the first quarter, rising by 2.5 percentage points from a year earlier.

At the same time, administrative expenses shot up 573.5% to 219.0 million reais, due mainly to the share based long-term incentive plan expenses related to the company's IPO. Its cost of sales and services rose 83.1% to 444.8 million reais.

As of May 29, US$1 was equivalent to 3.73 Brazilian reais.