AGI (NYSE:AGBK) Issues Earnings Results, Hits Expectations

Key Points

• AGI met earnings expectations, reporting quarterly EPS of $0.28. Operational momentum accelerated, with BRL 7 billion in credit originations, more than 600,000 new customers and fee revenue up 35% quarter over quarter.
• The credit portfolio grew 21% year over year to BRL 37.1 billion, while the Agi+ subscription platform surpassed 250,000 subscribers within 45 days. However, rapid expansion pressured profitability, with pre-tax profit down 47% sequentially and after-provision NIM falling to 6.8%.
• AGI shares fell 2.6% to $6.82, and analysts’ consensus rating remains Hold despite a $15.86 consensus price target. Credit quality improved, though elevated funding and credit costs continue to weigh on spreads.

AGI (NYSE:AGBK - Get Free Report) released its earnings results on Wednesday. The company reported $0.28 earnings per share for the quarter, meeting the consensus estimate of $0.28, Zacks reports.

Here are the key takeaways from AGI's conference call:

• Operational momentum accelerated in Q2, with BRL 7 billion in gross credit originations, more than 600,000 new customers, 7.6 million active customers, and fee revenue up 35% quarter over quarter.
• Agibank’s credit portfolio grew 21% year over year to BRL 37.1 billion, while INSS payroll market share reached 9.6% and private payroll balances rose 48% sequentially; management expects continued growth in the second half.
• The newly launched Agi+ subscription platform reached more than 250,000 subscribers in 45 days, with annual revenue per customer estimated at about BRL 600 and an expected contribution margin near 80%; management is targeting 1 million subscribers by year-end.
• Profitability remains pressured by upfront customer acquisition, servicing, technology, and provisioning costs tied to rapid growth. Pre-tax profit reportedly fell 47% quarter over quarter, while after-provision NIM declined 50 basis points to 6.8%.
• Credit quality improved, with 90-plus-day NPLs declining to 3.3% and coverage at 182%, although the cost of credit remained elevated at approximately 5.9% and management expects high interest rates to continue weighing on spreads.

AGI Trading Down 2.6%

AGBK stock traded down $0.18 during mid-day trading on Wednesday, hitting $6.82. 409,650 shares of the company were exchanged, compared to its average volume of 503,080. AGI has a 1-year low of $6.32 and a 1-year high of $12.21. The business has a 50 day simple moving average of $6.99. The company has a market cap of $1.09 billion and a price-to-earnings ratio of 22.00.

Wall Street Analyst Weigh In

Several research analysts recently weighed in on the stock. Susquehanna set a $14.00 price objective on shares of AGI in a research note on Friday, May 8th. Weiss Ratings started coverage on shares of AGI in a research note on Tuesday, May 12th. They issued a "sell (d)" rating for the company. Itau BBA Securities lowered shares of AGI from an "outperform" rating to a "market perform" rating and set a $9.00 target price on the stock. in a report on Wednesday, May 6th. Finally, Zacks Research cut shares of AGI from a "hold" rating to a "strong sell" rating in a research report on Thursday, July 16th. Six investment analysts have rated the stock with a Buy rating, one has issued a Hold rating and two have issued a Sell rating to the company. According to data from MarketBeat, the company presently has a consensus rating of "Hold" and a consensus price target of $15.86.

About AGI

Our mission is to revolutionize financial services for the largest and fastest growing segment of Brazil's population: individuals who have been underserved by incumbent banks and have not been effectively reached by digital-only banks. We seek to make credit and banking solutions more accessible and affordable for the Brazilian consumers who we believe need it the most, including social security beneficiaries and private and public sector workers. We have designed a unique value proposition for this population, who may be older, have a lower income, be less tech-savvy or have less access to education.

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