AGI Reports Q2 2026 Results: Full Earnings Call Transcript

AGI (NYSE: AGBK ) reported second-quarter financial results on Wednesday. The transcript from the company's second-quarter earnings call has been provided below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

6 million active clients. The company launched a new subscription platform, AGI, which has already attracted 250,000 subscribers in 45 days, expected to drive recurring revenues. Private payroll loan originations grew by nearly 50% quarter-over-quarter, reflecting recovery and adaptation to regulatory changes. 6%, while fee revenues, excluding credit provisions, reached over 135 million reais.

Management expressed confidence in sustained growth and profitability improvements in the upcoming quarters, despite a temporary dip in pre-tax profits due to upfront growth costs. The company's funding strategy was bolstered by credit rating upgrades, indicating strong financial stability. 3%, with a comfortable coverage ratio of 182%. Full Transcript OPERATOR Good afternoon, everyone, and welcome to AGI's second quarter 2026 earnings conference call.

Today's conference call is being recorded at this time. I would like to turn the call over to Felipe Gasparo Rivera, Head of Investor Relations. Please go ahead. Felipe Gasparo Rivera, Head of Investor Relations Hello everyone, and welcome to AGI's second quarter 2026 earnings conference call.

Thank you for joining us. I'm Felipe Gasparo Rivera, Head of Investor Relations. Joining me today are Marciano Testa, our Founder and Chairman and CEO, Marcelo Dube, our Chief Financial Officer, and Matteo Girardi, our Chief Client Officer. During today's call, we will discuss our second quarter results and business review, followed by a live Q&A session with our management team.

Throughout this conference call, we'll be presenting certain non-IFRS financial measures. These are important measures for AGI's management, but should not be considered in isolation or as a substitute for IFRS measures and may not be comparable to similar types of measures reported by other companies. Reconciliations between non-IFRS and IFRS measures are available in our earnings release unless otherwise noted. All figures discussed today are presented in Brazilian reais.

I'd also like to remind everyone that today's discussion may include forward-looking statements which are based on management's current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. These statements are not guarantees of future performance.

This outlook reflects management's current expectations and assumptions, including among others, assumptions regarding the trajectory of Brazil's benchmark interest rate, the pace of credit originations, the regulatory environment governing payroll-linked lending, including the INSS framework, and general macroeconomic conditions in Brazil, and is not a guarantee of future performance. The outlook is only effective as of the date given and should not be considered updated or affirmed unless and until we do so publicly. Before I hand the call over to Marciano, let me briefly walk you through today's agenda.

We will begin with an overview of how the market environment has evolved over the past several months and why we believe the operating backdrop has become increasingly supportive of sustainable growth. Matteo will then introduce AGI, our new subscription platform, and discuss why we believe it represents an important new avenue for customer engagement, recurring revenues, and long-term value creation. Finally, Marcelo will review our second quarter financial results. With that, I will now turn the call over to Marciano.

Marciano, please go ahead. Marciano Testa, Founder and Chairman and CEO Good afternoon everyone and thank you for joining us today. I would like to begin today's call by reinforcing the three key principles that guide our business long term. First, we live for the customers, which means that we prioritize clients' value when we make all of our decisions.

Second, we win with technology, so we continue to enhance our technology capabilities to serve and operate in a better way. And third, we promote an entrepreneurial culture to innovate and grow while we maintain a disciplined focus on long-term returns. I keep these three principles in mind every day, and I want to make sure you understand them because they shape how we make decisions, allocate capital, and build the company for the long term.

Next, I want to share some thoughts on the evolution of our performance since the end of last year, first walking through the significant disruption we had over the past year, and finally showing that we are still growing in this scenario and we see the second quarter '26 results as the inflection point of this trajectory. As you know, we were affected by several regulatory changes in the market which impacted the whole sector and temporarily paused growing new client signs and origination in the second half of last year. Our results for the second and the third quarter are below our normal performance levels due to the delayed impact of slower origination in 2025.

Since mid-April, the INSS has staged full management and implemented a series of measures to strengthen governance, improve operational processes, and restore confidence across the system. These initiatives have increased confidence in the market that the regulatory environment is becoming more stable, predictable, and supportive for the long-term sustainable development of the payroll lending market.

As a result of our three principles and the business model, we were able to adjust to these structural changes and the new regulatory requirements very quickly, perhaps faster than others, and I believe we are among the first companies to return to strong growth based on this quick adaptation. Since the end of the first quarter we started seeing strong growth in the customer base, principally with AGI. As a result, we grew fee business and credit origination through our hybrid platform, which means digital channels and smart hubs network. 6 million active clients, a record for the company.

As we will see further in this presentation, we have been able to grow at this pace while maintaining the asset quality under control. Our private payroll portfolio grew by almost 50% quarter over quarter, with new origination doubling versus the previous quarter. Unsecured personal loan originations also increased by more than 80%, demonstrating that growth is returning across multiple products, not just a single business line, and at the same time we continue to gain market share in the INSS payroll business. 5 million customers; we left Santander behind us.

6%, an increase of 60 basis points in just one quarter. This shows that even after all the disruption the industry faced last year, we continue to execute well and strengthen our competitive position. Other clear evidence that our operating engine has fully recovered is the fee revenues reached over 135 million in the second quarter and increased by more than 35% quarter over quarter. Unlike credit revenues, these carry no provision dynamics and are recognized on a daily basis, making them one of the best real-time indicators of business activity.

Based on the performance in this current quarter, we are confident in delivering even higher growth in the third quarter. Taken together, these metrics give us the confidence that the business has reached an important operational inflection point. The origination engine is performing at full capacity again, and we expect this momentum to continue flowing through our financial results over the coming quarters. When you grow at this pace, we observe three costs up front: expected losses, provisions on every new vintage; the customer acquisition cost; the cost to serve and activate them on the platform.

The revenues from these same customers—interest, fees, or sales—accrue over the following quarters and years. In other words, this quarter is the period that will carry the full cost of customers whose earnings belong to the upcoming quarters. These improvements will take some time to show in the numbers during the next few months because we have a natural lag between operational improvements and the income statement. So I believe our results will begin to drive sequentially higher income starting in the third quarter and the full recovery in the fourth quarter with even more force.

And again, we are at the inflection point. Finally, at the end of the quarter, we launched AGI, our new subscription product, already showing strong engagement and an increase in the number of customers who now use the platform daily or weekly, deepening each relationship. We will become a subscriber bank, the evidence of which is our over 250,000 subscribers in only 45 days, and we will see this positive impact reflected in our financial statements in the quarter. With that, I will pass over to Matteo to cover AGI in detail and Marcelo to present its unit economics.

Matteo Girardi, Chief Client Officer Thank you. Thank you, Marciano. For those of you who I have not met, my name is Matteo Girardi and I am the Chief Client Officer here at AGI. It is a pleasure to be part of this earnings call to discuss a strategic milestone.

We are very excited about the launch of AGI, our new subscription program. Within the current challenging macroeconomic environment in Brazil, characterized by high interest rates, elevated household debt, and rising consumer credit delinquency, we took on the mission of finding a new way to deliver the solutions our customers truly need. Our clients face daily challenges that go far beyond financial products: a lack of access to private health care, unexpected expenses, the high cost of medication, limited internet access, and daily household responsibilities.

This is precisely where we see a clear opportunity for AGI to expand the relationship with the customer beyond financial services, increasing the customer lifetime value of the bank, generating cross-selling opportunities, improving retention, and boosting engagement through solutions that address real recurring needs. This allows us to expand our relationship with the customer, increase customer lifetime value, and drive recurring, predictable service revenue. 9. The program bundles medical, residential, and dental assistance with mobile phone bonuses and even extra services such as pet care in our premium tiers.

Furthermore, our plans provide monthly credits for daily expenses such as cooking gas, food, and groceries ranging from 100 to 150 reais. AGI ensures a seamless end-to-end experience, and this is key to our strategy. It creates a sticky ecosystem that encourages daily engagement for the customer. The value is immediate and tangible.

A subscriber on our entry-level plan can save up to 1,500 annually. For AGI, this model is a powerful engine for recurring service revenues, driving higher app open frequency, improved retention, and deeper loyalty. This way we are expanding our value proposition while also effectively de-risking our business model. We are very pleased with the launch of AGI and have conviction that this program represents a shift in how we engage with our customers.

We look forward to seeing AGI become a cornerstone of our long-term growth strategy, and we are confident that AGI will serve as a significant lever in the evolution of AGI's service revenues, a trend confirmed by our initial adoption rates and early engagement metrics. With that, I would like to turn the call over to Marcelo who will discuss the product, unit economics, and this quarter's results. Marcelo Dube, Chief Financial Officer Thank you, Matteo, and good afternoon everyone. We are very excited about the launch of AGI and the revenue stream it has the potential to bring to our business.

On slide 12 we've highlighted a few early sales metrics and unit economics which we believe are very encouraging, given that the product has been in the market for less than two months. As we think about AGI, we see a clear two-phase growth path. The first wave is driven by penetration within our existing customer base. 6 million active customers, we have a significant opportunity to distribute the product through channels we already own at a very attractive customer acquisition cost.

The early results are encouraging. In just 45 days we reached more than 250,000 active subscriptions, with 67% of new credit originations including an AGI cross-sell and 99% of our sales agents successfully selling at least one subscription. The second wave comes from the continued Expansion of our customer base as AGI continues to add new clients across INSS beneficiaries, private sector workers and public servants. Alguplus becomes another scalable layer of monetization embedded in our ecosystem.

Just as importantly, the unit economics are very compelling. We estimate an annual RPAC of approximately 600 reais per customer against servicing costs of around 118 reais, resulting in an expected contribution margin of approximately 80%. We believe this makes Alguplus not only a highly attractive product for our customers, but also a meaningful long-term contributor to earnings and revenue diversification. With that, let me now turn to our financial results.

In the second quarter we made further progress against our core strategic priorities, growing our customer base in Brazil with a focus on multi-product relationships, expanding our market leadership in payroll lending through new products and integrations, and maintaining our position among Brazil's most efficient and trusted financial institutions. On today's call, I will walk you through our second quarter results in the context of a challenging macro environment and, more importantly, the positive inflection we believe is now underway across our business.

On slide 14 we outline a few of the key drivers of improvement we are seeing, with material increases in active clients, credit portfolio and INSS market share relative to last year, as well as a sequential decline in our greater-than-90-days NPL. 6 million active customers as of the end of the second quarter of 2026, which we define as those using at least one product at quarter end. We believe this growth demonstrates the resilience of our business, as earlier explained by Marciano. 1 billion reais.

4 billion reais. We believe this mix brings a sustainable balance of profitability, credit quality and focus on long-term relationships with our clients. 4 billion reais in the second quarter. Quarter over quarter, we see a slight decrease sequentially, reflecting the short-term duration of this portfolio.

5 million clients. Within INSS payroll credit, we continue to successfully execute against our strategy of being the disruptor of this segment in Brazil. 6%, an increase of 160 bps year over year. It is worth mentioning that we were able to expand our market share by 60 bps in this quarter despite the recent periods of regulatory volatility in private payroll credit.

4 billion reais, an increase of 48% sequentially and 184% year over year. It is worth mentioning that our appetite for production of this product remains strong after making enhancements to its credit model and observing good evolution in its credit quality. 3%, reflecting normalization in the falling cohorts at the quarter end. NPLs for the overall portfolio remain comfortably below the average for consumer credit in Brazil, which continues to trend up.

The coverage ratio, measured by provisions over NPLs over 90 days, was 182% at the end of June, a level we consider comfortable to operate the business. On slide 20, we have aggregated the key financial KPIs across our business, which I will now discuss in greater detail. 2 billion reais, a slight acceleration in the quarter and an increase of 26% year over year and 6% quarter over quarter, even considering the disruptions in the period.