Cost of sales and services
Our Cost of sales and services amounted to R$747.4 million in the three months ended December 31, 2019, an increase of
R$80.9 million, or 12.1%, from R$666.5 million in the three months ended December 31, 2018. As a percentage of the total of our Net revenue from transaction activities and other services and our Net revenue from
sales, our Cost of sales and services posted a decrease of 2.5 percentage points, to 80.1% in the three months ended December 31, 2019 from 82.6% in the three months ended December 31, 2018.
Within our Cost of sales and services line item, our Cost of services, expressed as a percentage of our Net revenue from transaction activities and other
services, increased to 71.7% in the three months ended December 31, 2019 from 63.6% in the three months ended December 31, 2018, due to intercompany taxes classified as cost of services.
As explained in Net revenue from sales above, beginning on September 1, 2019, we changed the way we provide POS devices to our clients. The
change to this membership fee model impacted our Cost of sales and services in the following ways: i) ICMS and PIS/COFINS taxes in the amount of R$40.2 million on the transfer of inventory from Net+Phone (a PagSeguro subsidiary 100%
owned by PagSeguro which buys and sells POS devices) to PagSeguro and ii) As we reclassified the POS devices from inventory to fixed assets, we began to depreciate the POS devices, with our depreciation in the three months ended December 31,
2019, amounting to R$12.8 million. For a reconciliation of our membership fee effects, see the last page of this earnings release.
In
the three months ended December 31, 2019, our non-GAAP Cost of sales and services amounted to R$743.1 million (reflecting the exclusion of the LTIP adjustment of R$4.3 million in
the three months ended December 31, 2019), an increase of R$77.1 million, or 11.6%, from R$666.0 million in the three months ended December 31, 2018 (reflecting the exclusion of the LTIP adjustment of
R$0.5 million in the three months ended December 31, 2018). For a reconciliation of our non-GAAP Cost of sales and services to our Cost of sales and services, see page [16] of this
earnings release.
Selling expenses
Our
Selling expenses amounted to R$186.6 million in the three months ended December 31, 2019, an increase of R$103.5 million, or 124.5%, from R$83.1 million in the three months ended
December 31, 2018. As a percentage of our Total revenue and income, our Selling expenses increased by 5.2 percentage points, to 11.8% in the three months ended December 31, 2019 from 6.6% in the three
months ended December 31, 2018, as we continue to leverage our selling expenses. This increase mainly related to marketing expenses.
For the three
months ended December 31, 2018, our non-GAAP Selling expenses amounted to R$82.8 million, reflecting the exclusion of the LTIP adjustment of R$0.3 million. For a
reconciliation of our non-GAAP Selling expenses to our Selling expenses, see page [16] of this earnings release.
Administrative expenses
Our Administrative
expenses amounted to R$90.5 million in the three months ended December 31, 2019, an increase of R$1.5 million, or 1.8%, from R$89.0 million in the three months ended December 31, 2018. As a
percentage of our Total revenue and income, our Administrative expenses decreased by 1.3 percentage points, to 5.7% in the three months ended December 31, 2019 from 7.0% in the three months ended
December 31, 2018.
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4Q19 and Full Year Earnings Release
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