What happened

Brazilian payment processing company PagSeguro Digital (NYSE:PAGS) reported its third-quarter earnings on Tuesday after the market closed. It appears investors aren't impressed with the results.

As of 10:45 a.m. EST, the stock was down by about 11% to its lowest level in about six months.

Woman using mobile phone to pay for purchases.

Image source: Getty Images.

So what

PagSeguro's results fell short of expectations on both the top and bottom lines. Even though earnings per share jumped by 25% year over year to $0.28, this was shy of the $0.30 estimate. Revenue growth of 30% to $348.8 million also was a bit shy of estimates.

Now what

Looking beyond the headline earnings and revenue numbers, PagSeguro's results look very impressive. Just to run down some of the key points: 

  • Total payment volume soared by 45% compared with the same quarter in 2018.
  • Adjusted net margin was 26.7%, which is 80 basis points higher than it was a year ago.
  • Revenue from transaction activities increased 45%, in line with payment volume.
  • Expenses only climbed by 22%, a far slower pace than revenue growth.

PagSeguro is still growing at a very impressive pace, but it seems to just be a bit less impressive than expected for the third quarter, and it wasn't a big miss. Long-term investors should take this earnings report with a grain of salt and may even consider this dip in the stock as an opportunity to get in at a lower price.