StoneCo Ltd. (Nasdaq: STNE, B3: STOC31) (“Stone” or the “Company”)
today reports its financial results for its fourth quarter and
fiscal year ended December 31, 2023.
“Dear Fellow Shareholders,
I hope this message finds you in high spirits.
As we wrap up a successful year, I want to express my profound
gratitude for your support and investment in Stone.
Reflecting on the past year, it is remarkable
how well our company has performed. I am not only referring to our
strong financial performance but also acknowledging the strategic
milestones that have strengthened our position in the market and
paved the way for future growth – as we detailed in our Investor
Day.
Unlike previous letters, the primary objective
of this, and subsequent ones, is to reflect on our strategic
progress and the effectiveness of capital allocation throughout the
year. My intention is to articulate our ambitions for the coming
years. I believe that these letters play a crucial role in offering
a qualitative narrative that complements the quantitative results
and outlines our prospects. The statements, both in this letter and
those we will provide in the future, arise from drivers often
challenging to quantify – specifically, the fundamental values that
guide our company.
This letter might also be longer than what you
are used to, as it marks a special occasion. As I wrap up my first
year as CEO, which followed a prior year as board member, I am keen
to share the insights of this initial journey, delve into the
financial results for 2023, outline our strategic vision for the
upcoming years, and discuss the transition of our founder, Andre
Street, from his role as chairman, as well as additional board
changes. This transition is a significant moment for us,
representing both a continuation of Andre’s legacy and a step
towards new leadership horizons.
Rights & Wrongs:
The Views from an Outsider
As you are aware, I became a part of StoneCo’s
Board of Directors approximately two years ago. This initial
contact with the company offered me a unique chance to see our
operations from a high-level perspective. Now, a year into my role
as CEO, I have taken a deeper look at our company, better spotting
our strengths and areas of improvement. This journey has been
revealing, as it has provided valuable lessons and enhanced my
perspective on the opportunities we face.
The Pleasant Surprises:
One of the most impressive aspects I have
encountered is the sheer "brain power" within Stone, which is
top-notch across all levels. The caliber of our team far exceeds
the norm, with a level of insight and commitment that truly sets us
apart. This high talent density is a testament to our ability to
attract and retain exceptional talents, providing us with a
significant edge in a competitive landscape.
Equally remarkable to me was to see firsthand
our team's execution capacity. Our ability to quickly implement
initiatives, always with an eye on the client's best interest,
speaks to the strength of our client-centric culture and high level
of organizational alignment. This rare agility was particularly
evident in how we recovered from 2021, when the company faced a
'perfect storm' of challenges, including failures with the registry
system, adverse macroeconomic conditions, and stresses to our
credit portfolio, all while absorbing the significant acquisition
of Linx. The team's ability to adapt quickly, sustain our growth
and rebound our profitability in the face of adversity, was, in my
perspective, nothing short of impressive.
On the strategic front, I was amazed by the
strides the company has taken to diversify beyond payments, which
has begun to show results. While this expansion may not yet be
fully visible externally, the foundation we have built will allow
our company to reap significant benefits from integrating payments,
banking, credit, and software in the years ahead.
Areas for Enhancement:
Despite these evident strengths, I have also
realized that several areas require attention and improvement. One
prominent issue is that the ambition to chase multiple initiatives
diluted our efforts and potentially our impact. You may have even
noticed signs of this from an external perspective. While I didn't
want to curtail our opportunities, I felt that it was crucial to
instill a 'less is more' mentality throughout the organization.
Operational efficiency also emerged as an area
for improvement. While we excel in certain areas, I became
confident that we can still 'unlock' substantial operating
leverage, pushing Stone to operate more efficiently and to become
more profitable.
In response to these insights, we've initiated
several strategic adjustments:
-
Organizational Structure Redesign: We have
reorganized to deliver our solutions more effectively across
different client segments, from Micro to Medium businesses,
tailoring our go-to-market approach to meet their unique needs. Our
new organizational structure aligns with each client segment, while
it also strengthens key capabilities around engineering, product,
marketing, and innovation, enhancing our ability to address client
needs in a unique way.
-
Sharpen Strategic Focus: As the outcome of a
thorough strategic revision and prioritization process, we have set
three clear strategic priorities that will enable us to achieve our
long-term goals: (i) win in the MSMB segment; (ii) drive
engagement; (iii) scale through platforms. These priorities helped
us to set key focus areas for the coming years, such as:
-
Software Business Integration: By focusing on four
key verticals that represent most of the financial services
opportunity within our software installed base (Retail, Gas
Stations, Food, and Drugstores), we are embedding financial
services into our software and delivering attractive bundles to our
clients, increasing our competitive edge and opening a significant
growth avenue for the future.
-
Leverage the power of the combination of Payments, Banking
and Software: There is a huge opportunity in our installed
client base to increase engagement with our solutions. As an
example, today only a fraction of our client base can be considered
“heavy users” of our solutions and there is a substantial potential
to improve our unit economics as we continue to engage the
base.
-
Build Once, Use Many - The Creation of the
Stone Platform: Our rapid growth
initially focused on development speed, sometimes at the expense of
consistency and reusability. This resulted in the existence of
multiple data platforms. But over the last year and a half, we've
made a big change. We've brought our technology teams together,
streamlined how we work, and started to build a solid foundation
that we all share: the Stone Platform. As we move forward,
especially with new tech like artificial intelligence, we're
setting ourselves up to generate new synergies and use our insights
even more effectively to serve our clients.
- Cost
Management and Spending Controls: Recognizing the
potential to unlock substantial operating leverage, we've embarked
on initiatives aimed at enhancing profitability even further.
Through sustainable cost optimization, we're setting the stage for
more efficient, profitable operations. By implementing a
shared-services center and zero-based budgeting, we are enhancing
our financial discipline across the organization.
What We Are Building:
Building Our Financial Ecosystem like
Lego Bricks
After a year in the role, I have also had the
opportunity to appreciate what we are building. As we presented at
our Investor Day, what began as a focused endeavor to serve SMBs
has become a pursuit of an R$ 100bn opportunity, through the
addition of new services and segments. This expansion wasn't a
product of ambition alone but a series of strategic layers, each
adding to our addressable market, much like the stacking of new
Lego bricks. Our path wasn't just about growing; it was about
understanding and solving the evolving needs of our clients.
As we stand today, we still have a small
fraction of the R$ 100bn opportunity, so our journey is far from
over. But with each new layer, we're not just expanding our reach;
we're reinforcing our foundation, ensuring that as we grow, we
remain steadfast in our commitment to service, innovation, and
simplicity.
Why We Believe We Can Win
In a time when FinTechs could once thrive on
user growth without worrying much about profits, due to low
borrowing costs, things have changed. The focus on rapid expansion
without solid results is shifting. With capital becoming more
expensive, there's a push towards more sustainable business models.
This brings up a common question from investors: "How does your
company stand out in this competitive market?". Here are the three
main ways we differentiate ourselves:
-
Tech-Enabled Distribution
- Vast Reach, Precision Targeting: Our unique advantage
stems from our extensive and tech-powered distribution network.
Unlike others, our approach combines a vast reach across
Brazil—encompassing 99.7% of the Service GDP and extending into
over 5,000 cities—with sophisticated technology that enhances our
efficiency and effectiveness. Our technology equips sales agents
with the tools to target the right clients, offering them a
complete overview of the merchant's profile and the ability to
propose the most suitable service bundles. This strategic use of
technology ensures that we're not just widespread but also smart in
our reach, significantly reducing our Client Acquisition Costs
while maintaining high-quality service.
-
Superior Service: Our commitment
to delivering unparalleled service is a cornerstone of our
competitive edge. We set the industry standard, answering client
calls in less than 5 seconds and providing the fastest delivery
times through our optimized logistics. This level of service is
especially critical in a sector where expectations often go unmet.
For SMBs and micro-merchants alike, our ability to rapidly respond
to and resolve their needs — not just quickly but efficiently — has
solidified our position as the leader in customer satisfaction
across Brazil. It's a reminder that exceptional service isn't just
a value-add; it's essential.
-
Comprehensive Merchant Platform:
Our third distinguishing factor is our all-encompassing merchant
platform. Beyond merely processing payments, we offer a deep,
data-driven understanding of our clients' needs, which not only
addresses current demands but anticipates future ones, providing an
unparalleled level of insight.
Priorities Going Forward
While the opportunity is huge, we will seize it
through a targeted approach, ensuring we do not dilute our efforts.
With this in mind, we have selected three strategic priorities to
progress towards our long-term objectives:
1. Win in the MSMB Segment
Our vast distribution footprint will allow us to
drive consistent, profitable growth, while we expand the ways in
which we help our clients through our multiple solutions.
Furthermore, we have an attractive financial services opportunity
in our installed Software client base and the right assets and
organizational alignment to capture that opportunity.
Our unwavering commitment to providing the best
service in the market will remain a strong focus and the biggest
hurdle to our ability to expand our offerings and solutions.
Sustaining our position as the “benchmark” in the industry will
serve as a guide to our product development efforts, as we will
launch new products and bundles making sure we can continue to
delight our clients with the best service in an increasingly
multi-product reality.
The combination of these elements will be the
key driver of our ability to continue to win new clients and grow
above the overall market, gaining market share within the MSMB
segment.
2. Drive Engagement
with Our Clients
Beyond winning new clients and growing faster
than the market, we believe we will be able to drive engagement
because as we evolve our product platforms and our ability to price
better bundles to our clients, we expand the breadth of
monetization levers. We have a huge opportunity to drive further
engagement and monetization if we can scale working capital
solutions in the appropriate way, for our clients and for our
business. We can use Software as a differentiator to achieve higher
monetization and better lifetime values.
3. Scale Through
Platforms
Lastly, we will be able to increase returns in
the future as we generate growth profitably. The intrinsic elements
of our business model that will enable us to grow with minimal
incremental investments are: (i) our foundational assets around
distribution, logistics, client service, which are platforms for
future growth, and (ii) our product and technology platforms that
will enable us to deliver multiple value propositions through a
single technology infrastructure.
A Recap of 2023
After reflecting on our achievements, strategic
direction, and how we're setting ourselves up for future success, I
also wanted to address our 2023 results. Last year was a milestone
year for us, marking a complete rebound from the challenges faced
in 2021. We closed the year with exceptional results, particularly
in the fourth quarter, when we accomplished significant progress in
our key strategic initiatives.
Our top priority, "Winning in MSMBs," posted
remarkable growth. We achieved a notable increase in MSMB TPV both
annually and in the fourth quarter, showing an acceleration from
the previous period. Our banking services also recorded impressive
growth, with deposits reaching R$ 6.1 billion by the end of
December, a significant increase from 2022. This growth not only
reflects higher engagement but also a better conversion of TPV into
deposits.
In our second priority - "Driving Engagement",
we observed monetization improving substantially throughout the
year, with MSMB Take-Rates achieving 2.43% (up 22 bps y/y). In the
4Q we saw a slight decline of 6bps compared to the previous
quarter, but that was already expected and purely a result of
seasonality. More importantly, we continued to advance in our
Credit Solution - reaching a working capital portfolio of R$ 309
million by the end of the year, with very encouraging results
regarding the health of the portfolio. NPLs over 90d are still at
0.29%, and even our most mature cohorts are still pointing us
toward losses under the 10% level.
The push to "Scale Through Platforms" yielded
substantial operational leverage, boosting our EBT to R$ 1,954
million, a 233% increase over the previous year. This leap forward
improved our EBT margin by more than 10 percentage points, and our
adjusted net income surged to R$ 1,558 million, up 279% from the
previous year. Our profitability also translated into cash
generation, and we ended the year with an adjusted net cash
position of R$ 5,053 million, even after significant investments in
our credit portfolio and share buybacks.
On a separate note, our Software segment faced
challenges in 2023, particularly in non-strategic verticals, where
growth was slower. However, our efficiency initiatives started
showing results, with EBITDA margins improving by 1.9 percentage
points to 16.4%. The fourth quarter recorded a dip due to one-off
restructuring costs, but these moves we made to generate savings
for us in 2024. Additionally, our integration efforts in the four
prioritized verticals have just started to pay dividends, with
participation in TPV from these software clients surpassed R$ 20
billion in the year.
In summary, 2023 was a year of significant
achievements and strategic advancements for us and our 4Q results
have positioned us favorably to continue to perform well in 2024
and make progress towards our 2027 goals.
Laying the Groundwork for Tomorrow:
Creating a Portfolio of Bets
When companies chase quick wins under market
pressure, they risk their future. Growth isn't just about speed;
it's also about sustainability. Fast growth can be tempting, but
it's not always right. At Stone, we're playing the long game. We
focus on building a solid company, not on boosting our stock
price.
At Stone’s current scale, planting seeds that
will grow into meaningful new businesses takes some discipline, a
bit of patience, and a nurturing culture. Our established
businesses are well-rooted young trees: they are growing, enjoy
high returns on capital, and operate in growing market segments.
These characteristics set a high bar for any new business we would
start. Before we invest our shareholders’ money in a new business
line or initiative, we must convince ourselves that the new
opportunity is sizable and can generate the returns on capital our
investors expected when they invested in Stone.
In nearly every decision we make, there are
factors we can control and predict – and others we can't. Whether
we realize it or not, we often engage in what Annie Duke, a scholar
at the University of Pennsylvania and retired professional poker
champion, calls "thinking in bets"*. By embracing this mindset, we
acknowledge uncertainty in our decision-making process, enabling us
to better identify mistakes, recognize moments of luck, and become
less susceptible to reactive emotions and destructive habits.
Understanding this concept is crucial for comprehending how we
allocate capital as we build our growth and new venture
portfolio.
While it is still too early to delve into our
portfolio of bets, we will certainly address this topic in
subsequent letters.
Paving the Way for the Next Chapter:
Succession of the Chairman and Founder
To wrap it up, today we also announced a pivotal
transition in our leadership. André Street, our esteemed founder
and Chairman, has chosen to conclude his tenure on the Board,
stepping aside from reelection at the forthcoming Annual General
Meeting (AGM) scheduled for April 2024. Similarly, Vice-Chairman
Conrado Engel and board member Patricia Verderesi will not seek
reelection, honoring their two-year commitment.
Despite stepping down, André remains deeply
connected to the company as its Reference Shareholder, bolstered by
special protections under our Shareholders' Agreement and Articles
of Association. This includes the privilege to choose the Chairman
of the Board. The transition marks the culmination of a deliberate,
multi-year effort led by André to professionalize management and
enhance governance standards—a mission that was crystallized by our
strong 2023 results and the robust, strategically aligned team now
at the helm.
The succession process for the Chairman position
has been carefully planned by the People Committee of the Board.
The candidates recommended for the upcoming AGM will be Mauricio
Luchetti as Chairman and Gilberto Caldart as Vice-Charman.
Additionally, a new member will be nominated, José Alexandre
Scheinkman. We have shared more details about the succession in a
separate 6-K filing.
We are committed to keeping alive the
entrepreneurial spirit created by our founders. Our goal is to
maintain high standards of governance as our company grows and
continues to be a leader in entrepreneurship and client-centricity.
With a committed shareholder like André, a great team, and a strong
business, we are well set to continue to advance our mission
forward.
In conclusion, as we close 2023 and kick off
2024, I am more enthusiastic than ever about our company. We thank
you, our shareholders, for your support, your encouragement, and
for joining us on this journey.
Pedro Zinner, CEO”
* ” Thinking in Bets: Making Smarter Decisions
When You Don’t Have All the Facts”, Annie Duke
Operating and Financial Highlights for
4Q23 and 2023
Note about our non-IFRS Adjusted P&L
metrics: as anticipated in our 4Q22 Earnings announcement,
from 1Q23 onwards we no longer adjust the expenses related to
share-based compensation, which may affect the comparability of our
current Adjusted results to our Adjusted numbers prior to 1Q23. To
allow for better understanding of our business performance trends,
the tables in this Earnings Release will make reference to our
Adjusted P&L metrics including share-based compensation
expenses (i.e. not adjusting those expenses out), both in 1Q23 and
in prior periods for comparability purposes.
MAIN CONSOLIDATED FINANCIAL METRICS
Table 1: Main Consolidated Financial
Metrics
Main Consolidated Financial Metrics (R$mn) |
4Q23 |
3Q23 |
Δ q/q % |
4Q22 |
Δ y/y % |
|
2023 |
2022 |
Δ y/y % |
Total Revenue and Income |
3,248.7 |
3,139.9 |
3.5% |
2,706.1 |
20.1% |
|
12,055.0 |
9,588.9 |
25.7% |
Adjusted EBITDA |
1,618.3 |
1,590.4 |
1.8% |
1,231.1 |
31.5% |
|
5,958.8 |
4,170.4 |
42.9% |
Adjusted EBITDA margin (%) |
49.8% |
50.7% |
(0.8 p.p.) |
45.5% |
4.3 p.p. |
|
49.4% |
43.5% |
5.9 p.p. |
Adjusted EBT |
638.2 |
544.8 |
17.2% |
275.6 |
131.6% |
|
1,954.0 |
586.6 |
233.1% |
Adjusted EBT margin (%) |
19.6% |
17.3% |
2.3 p.p. |
10.2% |
9.5 p.p. |
|
16.2% |
6.1% |
10.1 p.p. |
Adjusted Net Income |
563.8 |
435.1 |
29.6% |
203.8 |
176.6% |
|
1,557.5 |
410.5 |
279.4% |
Adjusted Net income margin (%) |
17.4% |
13.9% |
3.5 p.p. |
7.5% |
9.8 p.p. |
|
12.9% |
4.3% |
8.6 p.p. |
Adjusted Net Cash |
5,053.3 |
4,857.5 |
4.0% |
3,489.6 |
44.8% |
|
5,053.3 |
3,489.6 |
44.8% |
- Total
Revenue and Income reached R$3,248.7 million, growing 20.1% year
over year. This was primarily driven by a 24.4% increase
in financial services platform revenues, as a result of active
client base growth and higher monetization from clients, mainly in
our MSMB segment.
- Adjusted
EBITDA in 4Q23 was R$1,618.3 million, up 31.5% year over year and
1.8% quarter over quarter. Adjusted EBITDA Margin slightly
decreased sequentially from 50.7% to 49.8%, mainly due to an
increase in other expenses, given higher labor contingencies, and
administrative expenses excluding D&A, seasonally higher in the
last quarter of the year.
- Adjusted
EBT in 4Q23 was R$638.2 million, up 131.6% year over year
and 17.2% quarter over quarter, with adjusted EBT margin increasing
2.3 percentage points sequentially to 19.6%. The sequential margin
increase is primarily attributed to consolidated revenue growth, as
well as lower financial expenses. These effects were partially
offset by higher other operating expenses and administrative
expenses.
- Adjusted
Net Income in 4Q23 was R$563.8 million, 176.6%
higher year over year, with adjusted net margin of 17.4%.
This compares with R$435.1 million and a margin of 13.9% in 3Q23.
The quarter over quarter margin improvement was driven by the same
factors that impacted Adjusted EBT margin combined with a lower
effective tax rate.
- Adjusted
Net Cash position was R$5,053.3 million in 4Q23, increasing 44.8%
year over year or 4.0% quarter over quarter. The
sequential increase of R$195.8 million was mainly driven by (i)
R$1,021.6 million of cash net income (net income plus non-cash
income and expenses as reported in our statement of cash flows),
(ii) plus a R$85.7 million inflow from recoverable taxes and taxes
payable. These effects were partially offset by (iii) R$25.4
million from prepaid expenses; (iv) R$285.3 million of capex; (v)
R$292.7 million from buyback of shares, and (vi) R$312.8 million
from loans disbursements.
OUTLOOK
Our 2023 trajectory reinforced our commitment to
the long-term targets. We continue to believe that StoneCo is
uniquely positioned to drive strong return to shareholders. With
that in mind, we share our guidance for 2024 and 2027, which we
provided in our Investor Day held on November 15th, 2023.
GUIDANCE |
2023 |
∆% y/y |
2024 |
∆% y/y |
2024 |
CAGR 24-27 |
MSMB TPV (R$bn) |
350 |
+21% |
> 412 |
> +18% |
> 600 |
13% |
Clients Deposits (R$bn) |
6.1 |
+52% |
> 7.0 |
> +14% |
> 14.0 |
26% |
Growth ↑ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Portfolio (R$bn) |
0.3 |
n.a. |
> 0.8 |
> +2.6x |
> 5.5 |
90% |
MSMB Take Rate (%) |
2.45 |
+30bps |
> 2.49% |
> +4bps |
> 2.70% |
- |
Monetization ↑ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income (R$bn) |
1.6 |
+3.8x |
> 1.9 |
> +22% |
> 4.3 |
31% |
Adjusted Administrative Expenses (R$bn) |
1.052 |
+6% |
< 1.125 |
< +7% |
< 1.450 |
8.8% |
Efficiency ↑ |
|
|
|
|
|
|
SEGMENT REPORTING
Below, we provide our main financial metrics
broken down into our two reportable segments and non-allocated
activities.
Table 2: Financial metrics by
segment
Segment Reporting (R$mn Adjusted) |
4Q23 |
3Q23 |
Δ q/q % |
4Q22 |
Δ y/y % |
|
2023 |
2022 |
Δ y/y % |
Total Revenue and Income |
3,248.7 |
3,139.9 |
3.5% |
2,706.1 |
20.1% |
|
12,055.0 |
9,588.9 |
25.7% |
Financial Services |
2,870.6 |
2,737.7 |
4.9% |
2,308.2 |
24.4% |
|
10,495.4 |
8,083.5 |
29.8% |
Software |
363.2 |
387.9 |
(6.4%) |
376.3 |
(3.5%) |
|
1,492.2 |
1,419.8 |
5.1% |
Non-Allocated |
14.9 |
14.3 |
4.2% |
21.6 |
(30.9%) |
|
67.4 |
85.6 |
(21.2%) |
Adjusted EBITDA |
1,618.3 |
1,590.4 |
1.8% |
1,231.1 |
31.5% |
|
5,958.8 |
4,170.4 |
42.9% |
Financial Services |
1,557.2 |
1,506.1 |
3.4% |
1,172.4 |
32.8% |
|
5,699.8 |
3,976.4 |
43.3% |
Software |
58.7 |
79.4 |
(26.1%) |
59.6 |
(1.6%) |
|
244.4 |
206.0 |
18.7% |
Non-Allocated |
2.4 |
4.9 |
(50.0%) |
(0.9) |
n.m |
|
14.6 |
(12.0) |
n.m |
Adjusted EBT |
638.2 |
544.8 |
17.2% |
275.6 |
131.6% |
|
1,954.0 |
586.6 |
233.1% |
Financial Services |
603.8 |
485.5 |
24.4% |
246.1 |
145.4% |
|
1,793.4 |
486.6 |
268.5% |
Software |
33.0 |
55.5 |
(40.5%) |
30.5 |
8.2% |
|
150.8 |
114.6 |
31.6% |
Non-Allocated |
1.4 |
3.8 |
(62.9%) |
(1.0) |
n.m |
|
9.8 |
(14.6) |
n.m |
As part of our plan on our key strategic
priorities, we sold our shares in Everydata Group Ltd. And its
Credit Info Caribbean subsidiaries on December 29, 2023.
Additionally, on February 7, 2024, we sold our stake in Pinpag, an
electronic fund transfers company. Both of these companies were
part of our Non-Allocated segment, which should be impacted in the
coming quarters by the divestments.
FINANCIAL SERVICES SEGMENT PERFORMANCE
HIGHLIGHTS
Table 3: Financial Services Main Operating and Financial
Metrics
Main Financial Services Metrics |
4Q23 |
3Q23 |
Δ q/q % |
4Q22 |
Δ y/y % |
|
2023 |
2022 |
Δ y/y % |
Financial Metrics (R$mn) |
|
|
|
|
|
|
|
|
|
Total Revenue and Income |
2,870.6 |
2,737.7 |
4.9% |
2,308.2 |
24.4% |
|
10,495.4 |
8,083.5 |
29.8% |
Adjusted EBITDA |
1,557.2 |
1,506.1 |
3.4% |
1,172.4 |
32.8% |
|
5,699.8 |
3,976.4 |
43.3% |
Adjusted EBT |
603.8 |
485.5 |
24.4% |
246.1 |
145.4% |
|
1,793.4 |
486.6 |
268.5% |
Adjusted EBT margin (%) |
21.0% |
17.7% |
3.3 p.p. |
10.7% |
10.4 p.p. |
|
17.1% |
6.0% |
11.1 p.p. |
|
|
|
|
|
|
|
|
|
|
TPV (R$bn) |
113.5 |
103.9 |
9.2% |
100.1 |
13.3% |
|
408.3 |
367.4 |
11.2% |
MSMB |
98.5 |
89.6 |
10.0% |
81.9 |
20.2% |
|
350.3 |
289.9 |
20.8% |
Key Accounts |
15.0 |
14.4 |
4.3% |
18.2 |
(17.6%) |
|
58.1 |
77.5 |
(25.1%) |
|
|
|
|
|
|
|
|
|
|
MSMB Pix QR code1 |
7.6 |
5.5 |
37.5% |
3.1 |
146.3% |
|
20.9 |
7.1 |
195.6% |
|
|
|
|
|
|
|
|
|
|
Monthly Average TPV MSMB ('000) |
9.2 |
9.0 |
2.1% |
10.9 |
(15.1%) |
|
9.3 |
11.1 |
(16.6%) |
|
|
|
|
|
|
|
|
|
|
Active Payments Client Base
('000)2 |
3,522.1 |
3,330.9 |
5.7% |
2,584.0 |
36.3% |
|
3,522.1 |
2,584.0 |
36.3% |
MSMB2 |
3,471.3 |
3,279.1 |
5.9% |
2,526.2 |
37.4% |
|
3,471.3 |
2,526.2 |
37.4% |
Key Accounts |
58.3 |
59.3 |
(1.6%) |
65.0 |
(10.2%) |
|
58.3 |
65.0 |
(10.2%) |
|
|
|
|
|
|
|
|
|
|
Net Adds ('000)2 |
191.2 |
316.2 |
(39.5%) |
211.9 |
(9.8%) |
|
938.1 |
817.9 |
14.7% |
MSMB2 |
192.2 |
317.2 |
(39.4%) |
211.8 |
(9.2%) |
|
945.2 |
822.7 |
14.9% |
Key Accounts |
(1.0) |
(3.3) |
(70.6%) |
0.6 |
n.m |
|
(6.6) |
(2.4) |
177.5% |
|
|
|
|
|
|
|
|
|
|
Take Rate |
|
|
|
|
|
|
|
|
|
MSMB |
2.43% |
2.49% |
(0.06 p.p.) |
2.21% |
0.22 p.p. |
|
2.45% |
2.15% |
0.30 p.p. |
Key Accounts |
1.28% |
1.13% |
0.16 p.p. |
1.17% |
0.11 p.p. |
|
1.18% |
0.95% |
0.23 p.p. |
|
|
|
|
|
|
|
|
|
|
Banking |
|
|
|
|
|
|
|
|
|
MSMB Active Banking Client Base ('000)3 |
2,096.5 |
1,931.6 |
8.5% |
692.8 |
202.6% |
|
2,096.5 |
692.8 |
202.6% |
Client Deposits (R$mn)4 |
6,119.5 |
4,450.8 |
37.5% |
4,023.7 |
52.1% |
|
6,119.5 |
4,023.7 |
52.1% |
MSMB Banking ARPAC5 |
28.4 |
25.5 |
11.4% |
44.7 |
(36.5%) |
|
30.6 |
40.5 |
(24.5%) |
|
|
|
|
|
|
|
|
|
|
Credit |
|
|
|
|
|
|
|
|
|
Credit Clients6 |
10,752 |
3,747 |
186.9% |
n.a. |
n.a. |
|
10,752 |
n.a. |
n.a. |
Working Capital Portfolio (R$mn)7 |
309.4 |
113.5 |
172.7% |
n.a. |
n.a. |
|
309.4 |
n.a. |
n.a. |
Disbursements - EOP (R$mn) |
353.6 |
121.9 |
190.2% |
n.a. |
n.a. |
|
353.6 |
n.a. |
n.a. |
Disbursements - Quarter (R$mn) |
231.7 |
101.7 |
127.8% |
n.a. |
n.a. |
|
n.a |
n.a. |
n.a. |
Loan loss provision/Portfolio8 |
(20.1%) |
(20.0%) |
(0.05 p.p.) |
n.a. |
n.a. |
|
(20.1%) |
n.a. |
n.a. |
NPL 15-90 days9 |
1.96% |
0.40% |
1.56 p.p. |
n.a. |
n.a. |
|
1.96% |
n.a. |
n.a. |
NPL > 90 days9 |
0.29% |
0.03% |
0.27 p.p. |
n.a. |
n.a. |
|
0.29% |
n.a. |
n.a. |
-
Financial Services segment Revenue reached
R$2,870.6 million in 4Q23, 24.4% higher
year over year. Segment growth was driven by the strong performance
in our MSMB client segment, attributed mainly to (i) consistently
strong TPV growth, increasing 20.2% year over year (24.8% if PIX QR
code volumes were included) and more than twice the industry pace,
as announced by ABECS, and (ii) a higher take rate of 2.43% in the
quarter, up 22 basis points year over year.
-
Financial Services segment Adjusted EBT was R$603.8 million
in 4Q23, up 145.4% year over year and 24.4% quarter over
quarter. Adjusted EBT margin reached 21.0%, an improvement of 3.3
percentage points from 17.7% in 3Q23. This sequential expansion was
driven by an increase in revenues from the segment, combined with
lower financial expenses. These effects were partially offset by an
increase in other operating expenses and administrative
expenses.
-
Consolidated TPV grew 13.3% year over year to
R$113.5 billion in 4Q23, driven by 20.2% growth in the MSMB
segment, partially offset by a 17.6% decrease in Key Accounts’ TPV.
In 2023, total TPV reached R$408.3 billion, representing a 11.2%
year over year growth, compared with an industry growth of 10.1% in
the same period.
- Total
Payments Active Client base reached 3.5
million10 representing a total quarterly
net addition of 191,200 active clients.
a. MSMB (Micro and SMB clients)
- MSMB
Active Payment Clients reached
3,471,30011, representing a 37.4%
year over year growth and a net addition of 192,200 in
4Q23. The quarter over quarter decrease in net adds is mainly
explained by fourth-quarter seasonality. Despite this effect, our
continued investments in marketing supported the increase in gross
adds, with positive trends in all tiers of clients.
- MSMB TPV
was R$98.5 billion, up 20.2% year over year and more than
twice compared to the industry growth according to ABECS. This was
mainly driven by the continuous expansion in our MSMB active
payment client base.
- MSMB TPV
from PIX QR Code was R$7.6 billion in the quarter,
increasing 37.5% compared with 3Q23, mainly due to an increase of
use in our PIX POS solution. Including this volume in the MSMB TPV,
the total year over year growth would have been 24.8%. PIX QR Code
MSMB TPV includes transactions from dynamic POS QR Code and static
QR Code from Stone and Ton merchants, with both types being
possible to monetize. This volume is not included in the take rate
calculation.
- MSMB
Average Monthly TPV per client decreased 15.1% year over
year. This decrease is in line with the previous quarters
and is a result of the Ton representativeness in the client mix,
which is mainly used by micro-merchants and have lower average TPV
compared to our SMB merchants, which predominantly use our Stone
and Pagar.me solutions.
- MSMB
Take Rate was 2.43%, 6bps lower quarter over quarter and up 22bps
on a year over year basis. The quarter over quarter
variation is mainly attributed to (i) a seasonal increase in debit
over credit volumes, and (ii) a lower duration of prepayment.
- Banking
solutions12
- Banking
client base in 4Q23 reached 2.1 million active clients, increasing
8.5% quarter over quarter. This result was driven by (i) a
larger number of Ton clients with our full banking solution, and
(ii) the continued activation of new banking accounts within our
Stone payments client base. The decrease seen in growth levels
compared to previous quarters is mainly due to the end of the
migration of Ton clients to our full banking solution.
- Total
deposits were R$6,119.5 million in the quarter, increasing
52.1% year over year and 37.5% quarter over quarter. This strong
increase was mainly explained by positive impacts from our combined
offer of banking and payments solutions driving higher levels of
cash-in and by the seasonal and calendar effects at the end of the
quarter.
- Banking
ARPAC (average revenue per active client) was R$28.4 per client per
month, decreasing 36.5% year over year. The quarter over
quarter evolution of 11.4% was mainly attributed to revenues from
the processing of PIX QR Code transactions, which were more than
enough to compensate lower yield over deposits following the
sequential decline in the overnight rate.
- Credit
Solutions:
- As of December
31, 2023, we disbursed a total of R$353.6 million of loans
reaching 10,752 contracts, with a credit portfolio of
R$309.4 million at month-end. Specifically, in 4Q23, we disbursed
R$231.7 million to 7,005 contracts. Our focus remains on SMB
clients, with an average ticket of R$33,000.
- Loan
loss provision expenses totaled R$39.4 million in the
quarter, compared with R$19.0 million in 3Q23. We build
provisions equivalent to 20% of the credit portfolio in the
period.
- In the quarter,
NPL 15-90 days was 1.96% and NPL over
90 days was 0.29%.
Key Accounts Clients
- Key
Accounts TPV was R$15.0 billion, 17.6% lower year over
year, as we continue to deprioritize and offboard low margin
clients.
- Key
Accounts take rate was 1.28% in
4Q23, up 16 basis points on a quarter over quarter basis
and 11 basis points higher than in 4Q22. The year over year
variation is attributed to higher prices and a positive mix shift
due to the roll-off of lower margin clients. These positive effects
were partially offset by lower prepayment volumes in Key Account
clients that is in line with our strategy.
SOFTWARE PERFORMANCE
HIGHLIGHTS
Table 4: Software Main Operating and Financial
Metrics
Main Software Metrics (R$mn) |
4Q23 |
3Q23 |
Δ q/q % |
4Q22 |
Δ y/y % |
|
2023 |
2022 |
Δ y/y % |
Financial Metrics |
|
|
|
|
|
|
|
|
|
Total Revenue and Income |
363.2 |
387.9 |
(6.4%) |
376.3 |
(3.5%) |
|
1,492.2 |
1,419.8 |
5.1% |
Adjusted EBITDA |
58.7 |
79.4 |
(26.1%) |
59.6 |
(1.6%) |
|
244.4 |
206.0 |
18.7% |
Adjusted EBITDA Margin |
16.2% |
20.5% |
(4.3 p.p.) |
15.8% |
0.3 p.p. |
|
16.4% |
14.5% |
1.9 p.p. |
Adjusted EBT |
33.0 |
55.5 |
(40.5%) |
30.5 |
8.2% |
|
150.8 |
114.6 |
31.6% |
Adjusted EBT Margin |
9.1% |
14.3% |
(5.2 p.p.) |
8.1% |
1.0 p.p. |
|
10.1% |
8.1% |
2.0 p.p. |
|
|
|
|
|
|
|
|
|
|
MSMB TPV Overlap (R$ bn)13 |
5.8 |
4.9 |
19.3% |
n.a |
n.a. |
|
n.d. |
n.a |
n.a. |
- Software
segment Revenue and Income was R$363.2 million in the quarter, a
3.5% decrease year over year. Following our Investor Day,
we will no longer disclose Core and Digital revenues year over year
growth and will rather start offering more data regarding the new
division presented in the event, which was composed of our four
strategic verticals, enterprise business and other verticals. The
year over year decrease in Software revenues was mainly driven by a
decrease in Enterprise revenues, which was down 16% year over year,
being partially offset by an increase from revenues in other
verticals, due to seasonal effects in our customer review platform,
and the performance of our four key strategic verticals. Compared
with 3Q23, software segment revenue decreased 6.4% sequentially,
explained mainly by lower other financial income and enterprise
revenues.
- Software
Segment Adjusted EBITDA was R$58.7 million in 4Q23, with a
margin of 16.2%. This compares with R$59.6 million and a margin of
15.8% in 4Q22. The year over year decrease in Adjusted EBITDA was
mainly due to restructuring costs. In 3Q23, Adjusted EBITDA margin
was 20.5%, decreasing 4.3 percentage points, as a result of lower
revenues ex other financial income, combined with non-recurring
restructuring costs in the amount of R$11.5 million. Excluding this
effect, adjusted EBITDA margin would have been 19.3% in 4Q23.
- Software
Segment Adjusted EBT was R$33.0 million in 4Q23, up 8.2%
year over year. Compared with 3Q23, Adjusted EBT decreased 40.5%,
with Adjusted EBT Margin decreasing from 14.3% to 9.1%. The
sequential decrease in Adjusted EBT is a result of the factors
above mentioned for the quarter over quarter variation for Adjusted
EBITDA margin.
-
Cross-sell Evolution: The MSMB TPV overlap between
financial services and the four prioritized verticals namely, Gas
Stations, Retail, Food and Drugstores, increased 19.3% quarter over
quarter, reaching R$5.8 billion in 4Q23. Among the 4 key verticals,
Gas Stations is the most advanced initiative and is driving the
overlap growth.
Income Statement Table 5:
Statement of Profit or Loss (IFRS, as Reported)
Statement of Profit or Loss (R$mn) |
4Q23 |
% Rev. |
4Q22 |
% Rev. |
Δ % |
|
2023 |
% Rev. |
2022 |
% Rev. |
Δ % |
Net revenue from transaction activities and other services |
868.1 |
26.7% |
777.8 |
28.7% |
11.6% |
|
3,309.8 |
27.5% |
2,617.4 |
27.3% |
26.5% |
Net revenue from subscription services and equipment rental |
459.1 |
14.1% |
464.6 |
17.2% |
(1.2%) |
|
1,825.0 |
15.1% |
1,760.9 |
18.4% |
3.6% |
Financial income |
1,770.8 |
54.5% |
1,331.6 |
49.2% |
33.0% |
|
6,229.3 |
51.7% |
4,638.0 |
48.4% |
34.3% |
Other financial income |
150.7 |
4.6% |
132.1 |
4.9% |
14.1% |
|
691.0 |
5.7% |
572.6 |
6.0% |
20.7% |
Total revenue and
income |
3,248.7 |
100.0% |
2,706.1 |
100.0% |
20.1% |
|
12,055.0 |
100.0% |
9,588.9 |
100.0% |
25.7% |
Cost of services |
(802.7) |
(24.7%) |
(698.0) |
(25.8%) |
15.0% |
|
(2,982.8) |
(24.7%) |
(2,669.8) |
(27.8%) |
11.7% |
Provision for expected credit losses14 |
(39.4) |
(1.2%) |
n.a. |
n.a. |
n.a. |
|
(62.1) |
(0.5%) |
n.a. |
n.a. |
n.a. |
Administrative expenses |
(308.6) |
(9.5%) |
(327.2) |
(12.1%) |
(5.7%) |
|
(1,188.9) |
(9.9%) |
(1,121.4) |
(11.7%) |
6.0% |
Selling expenses |
(454.0) |
(14.0%) |
(406.1) |
(15.0%) |
11.8% |
|
(1,698.3) |
(14.1%) |
(1,511.2) |
(15.8%) |
12.4% |
Financial expenses, net |
(943.1) |
(29.0%) |
(911.5) |
(33.7%) |
3.5% |
|
(3,999.5) |
(33.2%) |
(3,514.7) |
(36.7%) |
13.8% |
Mark-to-market on equity securities designated at FVPL |
0.0 |
0.0% |
(114.5) |
(4.2%) |
(100.0%) |
|
30.6 |
0.3% |
(853.1) |
(8.9%) |
n.m |
Other income (expenses), net |
(0.3) |
(0.0%) |
(109.0) |
(4.0%) |
(99.7%) |
|
(241.2) |
(2.0%) |
(302.5) |
(3.2%) |
(20.3%) |
Loss on investment in associates |
(1.7) |
(0.1%) |
(0.3) |
(0.0%) |
403.2% |
|
(4.2) |
(0.0%) |
(3.6) |
(0.0%) |
16.4% |
Profit before income
taxes |
738.2 |
22.7% |
139.4 |
5.2% |
429.4% |
|
1,970.8 |
16.3% |
(387.3) |
(4.0%) |
n.m |
Income tax and social contribution |
(82.0) |
(2.5%) |
(60.6) |
(2.2%) |
35.3% |
|
(370.4) |
(3.1%) |
(139.1) |
(1.5%) |
166.3% |
Net income for the period |
656.2 |
20.2% |
78.8 |
2.9% |
732.3% |
|
1,600.4 |
13.3% |
(526.4) |
(5.5%) |
n.m |
Table 6: Statement of Profit or Loss
(Adjusted15)
From 1Q23 onwards, we stopped adjusting
share-based compensation expenses in our adjusted results. Those
changes may affect the comparability of our adjusted results
between different quarters. For that reason, we have included below
our historical numbers on a comparable basis, not adjusting for
share-based compensation expenses, according to our current
adjustment criteria.
Adjusted Statement of Profit or Loss (R$mn) |
4Q23 |
% Rev. |
4Q22 |
% Rev. |
Δ % |
|
2023 |
% Rev. |
2022 |
% Rev. |
Δ % |
Net revenue from transaction activities and other services |
868.1 |
26.7% |
777.8 |
28.7% |
11.6% |
|
3,309.8 |
27.5% |
2,617.4 |
27.3% |
26.5% |
Net revenue from subscription services and equipment rental |
459.1 |
14.1% |
464.6 |
17.2% |
(1.2%) |
|
1,825.0 |
15.1% |
1,760.9 |
18.4% |
3.6% |
Financial income |
1,770.8 |
54.5% |
1,331.6 |
49.2% |
33.0% |
|
6,229.3 |
51.7% |
4,638.0 |
48.4% |
34.3% |
Other financial income |
150.7 |
4.6% |
132.1 |
4.9% |
14.1% |
|
691.0 |
5.7% |
572.6 |
6.0% |
20.7% |
Total revenue and
income |
3,248.7 |
100.0% |
2,706.1 |
100.0% |
20.1% |
|
12,055.0 |
100.0% |
9,588.9 |
100.0% |
25.7% |
Cost of services |
(802.7) |
(24.7%) |
(698.0) |
(25.8%) |
15.0% |
|
(2,982.8) |
(24.7%) |
(2,669.8) |
(27.8%) |
11.7% |
Provision for expected credit losses14 |
(39.4) |
(1.2%) |
n.a. |
n.a. |
n.a. |
|
(62.1) |
(0.5%) |
n.a. |
n.a. |
n.a. |
Administrative expenses |
(277.3) |
(8.5%) |
(296.5) |
(11.0%) |
(6.5%) |
|
(1,052.4) |
(8.7%) |
(994.7) |
(10.4%) |
5.8% |
Selling expenses |
(454.0) |
(14.0%) |
(406.1) |
(15.0%) |
11.8% |
|
(1,698.3) |
(14.1%) |
(1,511.2) |
(15.8%) |
12.4% |
Financial expenses, net |
(941.1) |
(29.0%) |
(903.4) |
(33.4%) |
4.2% |
|
(3,954.1) |
(32.8%) |
(3,483.4) |
(36.3%) |
13.5% |
Other income (expenses), net |
(133.7) |
(4.1%) |
(126.1) |
(4.7%) |
6.0% |
|
(409.3) |
(3.4%) |
(339.7) |
(3.5%) |
20.5% |
Loss on investment in associates |
(1.7) |
(0.1%) |
(0.3) |
(0.0%) |
403.1% |
|
(4.2) |
(0.0%) |
(3.6) |
(0.0%) |
16.5% |
Adj. Profit before
income taxes |
638.2 |
19.6% |
275.6 |
10.2% |
131.6% |
|
1,954.0 |
16.2% |
586.6 |
6.1% |
233.1% |
Income tax and social contribution |
(74.4) |
(2.3%) |
(71.7) |
(2.7%) |
3.7% |
|
(396.5) |
(3.3%) |
(176.0) |
(1.8%) |
125.3% |
Adjusted Net Income |
563.8 |
17.4% |
203.8 |
7.5% |
176.6% |
|
1,557.5 |
12.9% |
410.5 |
4.3% |
279.4% |
Total Revenue and Income
Net Revenue from Transaction Activities
and Other Services
Net Revenue from Transaction Activities and
Other Services was R$868.1 million in 4Q23, a 11.6% year-over-year
growth. This increase can be primarily attributed to (i) a 13.3%
year over year consolidated TPV growth; (ii) revenue streams from
other solutions, mainly PIX; and (iii) higher revenue from
membership fees16, which contributed with R$74.2 million to our
transaction activities and other services revenue in the quarter,
compared with R$60.8 million in 4Q22. Revenues from TAG, our
registry business, contributed with R$27.4 million to our
transaction activities and other services revenue in the quarter,
compared with R$49.4 million in 4Q22.
Net Revenue from Subscription Services
and Equipment Rental
Net Revenue from Subscription Services and
Equipment Rental slightly decreased in the quarter to R$459.1
million, also attributed to lower software revenues.
Financial Income
Financial Income in 4Q23 was R$1,770.8 million,
up 33.0% year over year, explained by higher (i) prepaid volumes;
and (ii) floating revenue from our banking solution.
Other Financial Income
Other Financial Income was R$150.7 million in
4Q23 compared with R$132.1 million in 4Q22 mainly due to a higher
average cash balance in the period. On a quarter over quarter
basis, Other Financial Income decreased 19.4% mainly explained by a
reduction in the base rate in Brazil in the period combined with a
lower average cash balance sequentially.
Costs and Expenses
Cost of Services
Cost of Services were R$802.7 million in 4Q23,
up 15.0% year over year. This increase is mainly attributed to (i)
provisions for loan losses from our new credit product, which
totaled R$39.4 million in our cost of services in the quarter and
were null in 4Q22; (ii) investments in technology; and (iii)
D&A costs as we continue to expand our client base. Excluding
provisions from loan losses, cost of services would have increased
9.4% year over year. As a percentage of revenues, Cost of Services
decreased from 25.8% in 4Q22 to 24.7 % in 4Q23.
Compared with 3Q23, Cost of Services was 3.8%
higher, explained by the same aforementioned drivers. Provisions
for loan losses contributed with R$39.4 million to our cost of
services in the quarter, compared with R$19.0 million in 3Q23.
Excluding provisions from loan losses, cost of services would have
increased 1.2% sequentially. As a percentage of revenues, Cost of
Services remained flat.
Administrative Expenses
Administrative Expenses were R$308.6 million,
down 5.7% year over year. This decrease is mostly explained by
changes in the allocation between costs and expenses lines from the
Software segment, which were partially offset by higher third-party
services. As a percentage of Total Revenue and Income,
Administrative Expenses decreased from 12.1% in 4Q22 to 9.5% in
4Q23.
Administrative Expenses in 4Q23 were 10.9%
higher than in 3Q23, primarily due to (i) higher expenses related
to third-party services; combined with (ii) personnel expenses that
are usually higher in the fourth quarter. As a percentage of total
revenues, Administrative Expenses increased from 8.9% in 3Q23 to
9.5% in 4Q23.
Administrative Expenses in 4Q23 include R$31.3 million of expenses
that are adjusted in our Adjusted Income Statement, related to
amortization of fair value adjustments on acquisitions, mostly
related to the Linx and other software companies’ acquisitions (see
table 14 in Appendix for the Adjustments by P&L line).
Adjusting for those effects, Administrative Expenses were R$296.5
million in 4Q22, R$243.5 million in 3Q23 and R$277.3 million in
4Q23. As a percentage of Total Revenue and Income, Administrative
Expenses were 11.0% in 4Q22, 7.8% in 3Q23 and 8.5% in 4Q23. Such
year over year and quarter over quarter variations are explained by
the same reasons mentioned above for the accounting numbers. |
Selling Expenses
Selling Expenses were R$454.0 million in the
quarter, an 11.8% increase year over year primarily attributed to
higher expenses with partner commissions. As a percentage of
revenues, Selling Expenses decreased from 15.0% in 4Q22 to 14.0% in
4Q23.
Compared with 3Q23, Selling Expenses increased
by 2.6%, due to higher provisions for variable compensation in the
period. As a percentage of revenues, Selling Expenses was flat
sequentially.
Financial Expenses, Net
Financial Expenses, Net were R$943.1 million in
the quarter, up 3.5% compared with 4Q22, due to higher prepaid
volumes. This was partially offset by a reduction in average CDI in
the period, from 13.65% in 4Q22 to 12.25% in 4Q23. As a percentage
of revenues, Financial Expenses, Net was 29.0% in 4Q23 compared
with 33.7% in 4Q22.
Compared with 3Q23, Financial Expenses, Net were
10.9% lower. This decrease was driven by (i) a reduction in average
CDI in the period, from 13.27% in 3Q23 to 12.25% in 4Q23, (ii) the
lower amount of working days in the fourth quarter compared with
the third quarter; (iii) a seasonal decline in the average duration
of funding lines; and (iv) a lower average cash balance in the
period. These effects were partially offset by quarterly TPV
growth.
Financial Expenses include R$2.0 million of expenses that are
adjusted in our Adjusted Income Statement related to effects from
(i) earn out interests on business combinations, and (ii) financial
expenses from fair value adjustments on acquisitions (see table 14
in Appendix for the Adjustments by P&L line). Adjusting for
those effects, Financial Expenses, net were R$903.4 million in
4Q22, R$1,044.5 million in 3Q23 and R$941.1 million in 4Q23 or
33.4%, 33.3% and 29.0% as a percentage of Total Revenue and Income,
respectively. Such year over year and quarter over quarter
variations are explained by the same reasons mentioned above for
the accounting numbers. |
Mark-to-market on equity securities
designated at FVPL
In 1Q23, we divested our stake in Banco Inter.
As a result, from 2Q23 onwards, our profit & loss statement no
longer includes mark-to-market gains or losses associated with this
investment. This compares with a R$114.5 million loss in 4Q22.
Mark-to-market on equity securities designated at FVPL is fully
adjusted in our Adjusted Income Statement (see table 14 in Appendix
for the Adjustments by P&L line). |
Other Income (Expenses),
Net
Other Expenses, Net were R$0.3 million in 4Q23,
representing a decrease of R$108.7 million year over year. This
decline is mainly attributed to reversal of earn-out
provisions.
Compared with 3Q23, Other Expenses, net were
R$82.3 million lower mostly attributed to the reversal of earnout
provisions, being partially offset by higher tax provisions related
to share-based compensation due to an increase in the share price
in the period.
Other Expenses, net include R$133.3 million gains that are excluded
in our Adjusted Income Statement, including call options related to
acquisitions, earn-out interests, reversal of litigation of Linx
and divestment of assets (see table 14 in Appendix for the
Adjustments by P&L line). Until 4Q22, we used to also adjust
our numbers for share-based compensation expenses related to the
one-time IPO grant and non-recurring long term incentive plans,
which we stopped doing from 1Q23 onwards. For comparability
purposes, based on adjustments criteria adopted from 1Q23 onwards,
in which we do not adjust our results for share-based compensation
expenses, and adjusting for the factors above, Other Expenses, net,
were R$126.1 million in 4Q22, R$90.6 million in 3Q23 and R$133.7
million in 4Q23 or 4.7%, 2.9% and 4.1% as a percentage of Total
Revenue and Income, respectively. The year over year variation is
mostly explained by higher labor contingencies, being partially
offset by lower civil contingencies and POS write off. |
Income Tax and Social
Contribution
During 4Q23, the Company recognized income tax
and social contribution expenses of R$82.0 million over a profit
before income taxes of R$738.2 million, implying an effective tax
rate of 11.1%. The difference to the statutory rate is mainly
explained by (i) benefits from “Lei do Bem” (Law 11,196/05)
incentives from the fiscal year of 2023, as well as (ii) gains from
subsidiaries abroad subject to different statutory tax rates.
The Income Tax and Social Contribution in our Adjusted Income
Statement includes an additional R$7.6 million relating to taxes
from the adjusted items (see table 14 in Appendix for the
Adjustments by P&L line). Adjusting for those effects, our
Income Tax and Social Contribution was R$74.4 million with an
effective tax rate in 4Q23 of 11.7%, lower than the statutory rate
mostly as a result of the aforementioned explanation for the
accounting explanation. |
EBITDA
Adjusted EBITDA was R$1,618.3 million in the
quarter, compared with R$1,231.1 million in 4Q22. This increase is
mostly explained by higher Total Revenue and Income, excluding
Other Financial Income, due to the growth of our operations.
Adjusted EBITDA Margin was 49.8% in the quarter, compared with
45.5% in 4Q22 and 50.7% in 3Q23. The sequential decrease in
Adjusted EBITDA margin is mainly attributed to an increase in other
expenses and administrative expenses excluding D&A, which
offset the sequential growth of Total Revenue and Income, excluding
Other Financial Income in the period.
Table 7: Adjusted EBITDA Reconciliation
EBITDA Bridge (R$mn) |
4Q23 |
% Rev. |
4Q22 |
% Rev. |
Δ % |
|
2023 |
% Rev. |
2022 |
% Rev. |
Δ % |
Profit (Loss) before income taxes |
738.2 |
22.7% |
139.4 |
5.2% |
429.4% |
|
1,970.8 |
16.3% |
(387.3) |
(4.0%) |
n.m |
(+) Financial expenses, net |
943.1 |
29.0% |
911.5 |
33.7% |
3.5% |
|
3,999.5 |
33.2% |
3,514.7 |
36.7% |
13.8% |
(-) Other financial income |
(150.7) |
(4.6%) |
(132.1) |
(4.9%) |
14.1% |
|
(691.0) |
(5.7%) |
(572.6) |
(6.0%) |
20.7% |
(+) Depreciation and amortization |
221.0 |
6.8% |
214.8 |
7.9% |
2.9% |
|
878.2 |
7.3% |
800.3 |
8.3% |
9.7% |
EBITDA |
1,751.6 |
53.9% |
1,133.6 |
41.9% |
54.5% |
|
6,157.5 |
51.1% |
3,355.2 |
35.0% |
83.5% |
(+) Mark-to-market related to the investment in Banco Inter |
0.0 |
0.0% |
114.5 |
4.2% |
n.m |
|
(30.6) |
(0.3%) |
853.1 |
8.9% |
n.m |
(+) Other Expenses (a) |
(133.3) |
(4.1%) |
(17.1) |
(0.6%) |
681.2% |
|
(168.1) |
(1.4%) |
(37.8) |
(0.4%) |
344.4% |
Adjusted EBITDA |
1,618.3 |
49.8% |
1,231.1 |
45.5% |
31.5% |
|
5,958.8 |
49.4% |
4,170.4 |
43.5% |
42.9% |
(a) Consists of the fair value
adjustment related to associates call option, earn-out and earn-out
interests related to acquisitions, reversal of litigation at Linx
and divestment of assets.
EBITDA was R$1,751.6 million in the quarter,
54.5% higher than R$1,133.6 million in the prior year period,
mostly as a result of the increase in Total Revenue and Income,
excluding Other Financial Income. These effects were partially
offset by higher cost of services and selling expenses, excluding
D&A.
Net Income (Loss) and EPS
Net Income in 4Q23 was R$656.2 million and
R$78.8 million in 4Q22 on a comparable basis, mostly as a result of
higher total revenue and income, combined with lower administrative
expenses and lower effective tax rate. IFRS basic EPS was R$2.10
per share in 4Q23, compared with R$0.25 in the prior-year
period.
Adjusted Net Income was R$563.8 million in 4Q23
with a margin of 17.4%, compared with R$203.8 million reported in
4Q22 and a margin of 7.5% on a comparable basis (not adjusting for
share-based compensation expenses). This increase in Adjusted Net
Income is mainly explained by (i) a 28.0% year over year growth in
total revenue and income net of adjusted financial expenses,
combined with (ii) operating leverage in cost of services (up 15.0%
year over year), despite provisions for loan losses in 4Q23, which
were null in 4Q22, (iii) lower adjusted administrative expenses
(down 6.5% year over year), and (iv) lower effective tax rate.
Adjusted Net Income was up 29.6% quarter over
quarter, with Adjusted Net Margin improving 3.5 percentage points
from 13.9% in 3Q23 to 17.4% in 4Q23, mainly as a result of higher
total revenue and income, as well as lower financial expenses and
lower effective tax rate.
Adjusted diluted EPS was R$1.76 per share in
4Q23 compared with R$0.63 per share in 4Q22 and R$1.32 per share in
3Q23, on a comparable basis (not adjusting for share-based
compensation expenses).
Table 8: Adjusted Net Income Reconciliation
From 1Q23 onwards, we stopped adjusting share-based compensation
expenses in our adjusted results. Those changes may affect the
comparability of our adjusted results between different quarters.
For that reason, we have included below our historical numbers on a
comparable basis, not adjusting for share-based compensation
expenses, according to our current adjustment criteria.
Net Income Bridge (R$mn) |
4Q23 |
% Rev. |
4Q22 |
% Rev. |
Δ % |
|
2023 |
% Rev. |
2022 |
% Rev. |
Δ % |
Net income for the period |
656.2 |
20.2% |
78.8 |
2.9% |
732.3% |
|
1,600.4 |
13.3% |
(526.4) |
(5.5%) |
n.m |
Amortization of fair value adjustment (a) |
(15.8) |
(0.5%) |
35.0 |
1.3% |
n.m |
|
92.4 |
0.8% |
138.6 |
1.4% |
(33.3%) |
Mark-to-market from the investment in Banco Inter (b) |
0.0 |
0.0% |
114.5 |
4.2% |
(100.0%) |
|
(30.6) |
(0.3%) |
853.1 |
8.9% |
n.m |
Other expenses (c) |
(84.2) |
(2.6%) |
(13.4) |
(0.5%) |
530.5% |
|
(78.6) |
(0.7%) |
(17.8) |
(0.2%) |
341.4% |
Tax effect on adjustments |
7.6 |
0.2% |
(11.1) |
(0.4%) |
n.m |
|
(26.1) |
(0.2%) |
(36.9) |
(0.4%) |
(29.2%) |
Adjusted net income (as reported) |
563.8 |
17.4% |
203.8 |
7.5% |
176.6% |
|
1,557.5 |
12.9% |
410.5 |
4.3% |
279.4% |
|
|
|
|
|
|
|
|
|
|
|
|
IFRS basic EPS (d) |
2.10 |
n.a. |
0.25 |
n.a. |
731.2% |
|
5.09 |
n.a. |
(1.67) |
n.a. |
n.m |
Adjusted diluted EPS (as reported) (e) |
1.76 |
n.a. |
0.63 |
n.a. |
179.6% |
|
4.85 |
n.a. |
1.34 |
n.a. |
262.5% |
Basic Number of shares |
310.7 |
n.a. |
312.6 |
n.a. |
(0.6%) |
|
312.6 |
n.a. |
311.9 |
n.a. |
0.2% |
Diluted Number of shares |
318.4 |
n.a. |
324.6 |
n.a. |
(1.9%) |
|
319.3 |
n.a. |
311.9 |
n.a. |
2.4% |
(a) Related to acquisitions. Consists of
expenses resulting from the changes of the fair value adjustments
as a result of the application of the acquisition method.(b) In
1Q23, we have sold our stake in Banco Inter.(c) Consists of the
fair value adjustment related to associates call option, earn-out
and earn-out interests related to acquisitions, reversal of
litigation of Linx and divestment of assets.(d) Calculated as Net
income attributable to owners of the parent (Net Income reduced by
Net Income attributable to Non-Controlling interest) divided by
basic number of shares. For more details on calculation, please
refer to Note 16 of our Consolidated Financial Statements, December
31, 2023.(e) Calculated as Adjusted Net income attributable to
owners of the parent (Adjusted Net Income reduced by Adjusted Net
Income attributable to Non-Controlling interest) divided by diluted
number of shares.
Diluted earnings per share are calculated by
adjusting the numerator of basic EPS, considering adjustments of
potentially convertible instruments related to contingent
consideration of acquisitions, as presented in Note 24.3. of our
Financial Statements. However, due to the loss for the year ended
December 31, 2022 and 2021, these instruments issued have a
non-diluting effect, therefore, they were not considered in the
total numerator of diluted loss per share.
In the 4Q23, we have improved our accounting
policy to calculate the share-based instruments used in the diluted
weighted average number of ordinary shares outstanding. For
share-based transactions, a calculation is done to determine the
quantity of shares that could have been acquired at fair value,
considering the difference between (i) the quantity of shares
issuable, reduced by (ii) the quantity of shares that could be
purchased at the weighted average quoted market price during the
period, with the proceeds to be obtained (if any) upon issuance of
the shares. As per IAS 33, proceeds for share-based compensation
instruments must include, as deemed proceeds, the amount to be
recognized as compensation expense in profit and loss in future
periods for such instruments. More details presented in Note 16.3.1
of our Financial Statements.
Adjusted Net Cash
Our Adjusted Net Cash, a non-IFRS metric,
consists of the items detailed in Table 9 below:
Table 9: Adjusted Net Cash
Adjusted Net Cash (R$mn) |
4Q23 |
3Q23 |
4Q22 |
Cash and cash equivalents |
2,176.4 |
3,693.1 |
1,512.6 |
Short-term investments |
3,481.5 |
2,042.5 |
3,453.8 |
Accounts receivable from card issuers(a) |
23,977.1 |
21,105.4 |
20,748.9 |
Financial assets from banking solution |
6,397.9 |
4,576.7 |
3,960.9 |
Derivative financial instrument (b) |
0.6 |
0.4 |
12.4 |
Adjusted Cash |
36,033.5 |
31,418.0 |
29,688.5 |
|
|
|
|
Obligations with banking customers(c) |
(6,119.5) |
(4,450.8) |
(4,023.7) |
Accounts payable to clients |
(19,199.1) |
(17,252.3) |
(16,614.5) |
Loans and financing (d) |
(4,840.3) |
(4,191.3) |
(4,375.7) |
Obligations to FIDC quota holders |
(505.2) |
(324.0) |
(975.2) |
Derivative financial instrument (b) |
(316.2) |
(342.1) |
(209.7) |
Adjusted Debt |
(30,980.3) |
(26,560.5) |
(26,198.9) |
|
|
|
|
Adjusted Net Cash |
5,053.3 |
4,857.5 |
3,489.6 |
(a) Accounts Receivable from Card Issuers are
accounted for at their fair value in our balance
sheet.(b) Refers to economic
hedge.(c) Includes deposits from banking customers and
values transferred by our banking clients to third parties but not
yet settled.(d) Loans and financing were reduced by the
effects of leases liabilities recognized under IFRS 16.
As of December 31, 2023, the Company’s Adjusted
Net Cash was R$5,053.3 million, R$195.8 million higher compared
with 3Q23, mostly explained by:
-
R$1,021.6 million of cash net income, which is our net income plus
non-cash income and expenses as reported in our statement of cash
flows;
- R$85.7
million from recoverable taxes and taxes payable;
-
-R$25.4 million from prepaid expenses;
-
-R$285.3 million of capex;
-
-R$292.7 from buyback of shares;
-
-R$312.8 from loans operations portfolio;
- R$4.6
million from other effects.
Cash Flow
Our cash flow in the quarter was explained
by:
Table 10: Cash Flow
Cash Flow (R$mn) |
|
4Q23 |
4Q22 |
|
|
|
|
Net income (loss) after non-cash adjustments for the
period |
|
1,021.6 |
381.7 |
|
|
|
|
Working capital adjustments: |
|
|
|
Accounts receivable from card issuers |
|
(2,154.8) |
(1,267.4) |
Receivables from related parties |
|
8.4 |
(2.4) |
Recoverable taxes |
|
(17.5) |
357.5 |
Prepaid expenses |
|
(25.4) |
6.1 |
Trade accounts receivable, banking solutions and other assets |
|
160.3 |
82.0 |
Loans operations portfolio |
|
(312.8) |
0.0 |
Accounts payable to clients |
|
259.2 |
547.0 |
Taxes payable |
|
103.2 |
(305.6) |
Labor and social security liabilities |
|
(47.3) |
1.5 |
Provision for contingencies |
|
(6.3) |
(4.7) |
Trade Accounts Payable and Other Liabilities |
|
(45.1) |
84.1 |
Interest paid |
|
(269.2) |
(105.5) |
Interest income received, net of costs |
|
941.9 |
605.7 |
Income tax paid |
|
(32.8) |
(37.0) |
|
|
|
|
Net cash provided by (used in) operating
activity |
|
(416.6) |
343.0 |
|
|
|
|
Investing activities |
|
|
|
Purchases of property and equipment |
|
(144.4) |
(65.1) |
Purchases and development of intangible assets |
|
(140.9) |
(90.2) |
Acquisition of subsidiary, net of cash acquired |
|
0.0 |
(0.0) |
Sale of subsidiary, net of cash disposed of |
|
0.0 |
(4.3) |
Proceeds from (acquisition of) short-term investments, net |
|
(1,418.8) |
(665.3) |
Disposal of short and long-term investments - equity
securities |
|
2.4 |
0.0 |
Proceeds from the disposal of non-current assets |
|
0.0 |
3.9 |
Acquisition of interest in associates |
|
(3.8) |
(12.0) |
|
|
|
|
Net cash used in investing activities |
|
(1,705.4) |
(833.1) |
|
|
|
|
Financing activities |
|
|
|
Proceeds from borrowings |
|
1,245.7 |
250.0 |
Payment of borrowings |
|
(508.0) |
(268.1) |
Payment to FIDC quota holders |
|
(70.0) |
(312.5) |
Proceeds from FIDC quota holders |
|
241.1 |
0.0 |
Payment of leases |
|
(1.6) |
(19.7) |
Repurchase of own shares |
|
(292.7) |
(53.4) |
Sale of own shares |
|
0.0 |
53.4 |
Acquisition of non-controlling interests |
|
(0.1) |
0.7 |
Dividends paid to non-controlling interests |
|
(2.2) |
(1.5) |
|
|
|
|
Net cash provided by (used in) financing
activities |
|
612.1 |
(351.1) |
|
|
|
|
Effect of foreign exchange on cash and cash equivalents |
|
(6.7) |
10.5 |
|
|
|
|
Change in cash and cash equivalents |
|
(1,516.7) |
(830.6) |
|
|
|
|
Cash and cash equivalents at beginning of period |
|
3,693.1 |
2,343.2 |
Cash and cash equivalents at end of period |
|
2,176.4 |
1,512.6 |
Net cash used in operating
activities was R$416.6 million in 4Q23, explained by
R$1,021.6 million of Net Income after non-cash adjustments and
R$1,438.3 million outflow from working capital variation. Working
capital is composed of (i) R$953.7 million outflow of changes
related to accounts receivable from card issuers, accounts payable
to clients and interest income received, net of costs; (ii) R$312.8
million outflow from loans operations portfolio; (iii) R$302.0
million outflow from interest paid and income tax paid; (iv) R$25.4
million outflow from prepaid expenses; (v) R$160.3 million inflow
of trade accounts receivable, banking solutions and other assets,
and (vi) R$4.6 million outflow of other working capital
changes.
Net cash used in investing
activities was R$1,705.4 million in 4Q23, explained by (i)
R$285.3 million capex, of which R$144.4 million related to property
and equipment and R$140.9 million related to purchases and
development of intangible assets; (ii) R$1,418.8 million from
acquisition of short-term investments; (iii) R$2.4 million from
disposal of short and long term investments in equity securities,
and (iv) R$3.8 million outflow from acquisition of interest in
associates.
Net cash provided by financing
activities was R$612.1 million, explained by (i) R$907.1
million net proceeds from borrowings, mostly related to the
issuance of debentures and new CCBs (“Cédula de Crédito Bancário”),
(ii) R$292.7 million cash outflow from buyback of shares and the
(iii) R$2.2 million cash outflow from capital events related to
non-controlling interests.
Other
Information
Conference Call
Stone will discuss its 4Q23 financial results
during a teleconference today, March 18, 2024, at 5:00 PM ET / 6:00
PM BRT.
The conference call can be accessed live over
the Zoom webinar (ID: 835 5588 9011 | Password: 819157). It can
also be accessed over the phone by dialing +1 646 931 3860 or +1
669 444 9171 from the U.S. Callers from Brazil can dial +55 21 3958
7888. Callers from the UK can dial +44 330 088 5830.
The call will also be webcast live and a replay
will be available a few hours after the call concludes. The live
webcast and replay will be available on Stone’s investor relations
website at https://investors.stone.co/.
About Stone Co.
Stone Co. is a leading provider of financial
technology and software solutions that empower merchants to conduct
commerce seamlessly across multiple channels and help them grow
their businesses.
Investor Contact
Investor Relations investors@stone.co
Consolidated Statement of Profit or
Loss
Table 11: Consolidated Statement of
Profit or Loss
Statement of Profit or Loss (R$mn) |
4Q23 |
4Q22 |
|
2023 |
2022 |
Net revenue from transaction activities and other services |
868.1 |
777.8 |
|
3,309.8 |
2,617.4 |
Net revenue from subscription services and equipment rental |
459.1 |
464.6 |
|
1,825.0 |
1,760.9 |
Financial income |
1,770.8 |
1,331.6 |
|
6,229.3 |
4,638.0 |
Other financial income |
150.7 |
132.1 |
|
691.0 |
572.6 |
Total revenue and
income |
3,248.7 |
2,706.1 |
|
12,055.0 |
9,588.9 |
Cost of services |
(802.7) |
(698.0) |
|
(2,982.8) |
(2,669.8) |
Provision for expected credit losses |
(39.4) |
0.0 |
|
(62.1) |
0.0 |
Administrative expenses |
(308.6) |
(327.2) |
|
(1,188.9) |
(1,121.4) |
Selling expenses |
(454.0) |
(406.1) |
|
(1,698.3) |
(1,511.2) |
Financial expenses, net |
(943.1) |
(911.5) |
|
(3,999.5) |
(3,514.7) |
Mark-to-market on equity securities designated at FVPL |
0.0 |
(114.5) |
|
30.6 |
(853.1) |
Other income (expenses), net |
(0.3) |
(109.0) |
|
(241.2) |
(302.5) |
Loss on investment in associates |
(1.7) |
(0.3) |
|
(4.2) |
(3.6) |
Profit before income
taxes |
738.2 |
139.4 |
|
1,970.8 |
(387.3) |
Income tax and social contribution |
(82.0) |
(60.6) |
|
(370.4) |
(139.1) |
Net income for the period |
656.2 |
78.8 |
|
1,600.4 |
(526.4) |
Consolidated Balance Sheet Statement
Table 12: Consolidated Balance Sheet
Statement
Balance Sheet (R$mn) |
31-Dec-23 |
31-Dec-22 |
Assets |
|
|
Current assets |
37,152.6 |
30,659.2 |
Cash and cash equivalents |
2,176.4 |
1,512.6 |
Short-term investments |
3,481.5 |
3,453.8 |
Financial assets from banking solution |
6,397.9 |
3,960.9 |
Accounts receivable from card issuers |
23,895.5 |
20,694.5 |
Trade accounts receivable |
459.9 |
484.7 |
Recoverable taxes |
146.3 |
151.0 |
Loans operations portfolio |
210.0 |
- |
Derivative financial instruments |
4.2 |
36.4 |
Other assets |
380.9 |
365.4 |
|
|
|
Non-current assets |
11,541.0 |
11,586.2 |
Trade accounts receivable |
28.5 |
37.3 |
Loans operations portfolio |
40.8 |
- |
Accounts receivable from card issuers |
81.6 |
54.3 |
Receivables from related parties |
2.5 |
10.1 |
Deferred tax assets |
664.5 |
680.0 |
Other assets |
137.5 |
206.5 |
Long-term investments |
45.7 |
214.8 |
Investment in associates |
83.0 |
109.8 |
Property and equipment |
1,661.9 |
1,641.2 |
Intangible assets |
8,794.9 |
8,632.3 |
|
|
|
Total Assets |
48,693.6 |
42,245.4 |
|
|
|
Liabilities and equity |
|
|
Current liabilities |
29,142.7 |
25,174.1 |
Deposits from banking customers |
6,119.5 |
4,023.7 |
Accounts payable to clients |
19,163.7 |
16,578.7 |
Trade accounts payable |
513.9 |
596.0 |
Loans and financing |
1,374.8 |
1,847.4 |
Obligations to FIDC quota holders |
505.2 |
975.2 |
Labor and social security liabilities |
515.7 |
468.6 |
Taxes payable |
514.3 |
329.1 |
Derivative financial instruments |
316.2 |
209.7 |
Other liabilities |
119.5 |
145.6 |
|
|
|
Non-current liabilities |
4,874.9 |
4,121.3 |
Accounts payable to clients |
35.5 |
35.8 |
Loans and financing |
3,639.2 |
2,728.5 |
Deferred tax liabilities |
546.5 |
500.2 |
Provision for contingencies |
208.9 |
210.4 |
Labor and social security liabilities |
34.3 |
35.8 |
Other liabilities |
410.5 |
610.6 |
|
|
|
Total liabilities |
34,017.6 |
29,295.4 |
|
|
|
Equity attributable to owners of the
parent |
14,622.3 |
12,893.9 |
Issued capital |
0.1 |
0.1 |
Capital reserve |
14,056.5 |
13,818.8 |
Treasury shares |
(282.7) |
(69.1) |
Other comprehensive income |
(320.4) |
(432.7) |
Retained earnings |
1,168.9 |
(423.2) |
|
|
|
Non-controlling interests |
53.7 |
56.1 |
|
|
|
Total equity |
14,676.0 |
12,950.0 |
|
|
|
Total liabilities and equity |
48,693.6 |
42,245.4 |
Consolidated Statement of Cash Flows
Table 13: Consolidated Statement of Cash
Flows
Cash Flow (R$mn) |
|
4Q23 |
4Q22 |
|
2023 |
2022 |
Net income (loss) for the period |
|
656.2 |
78.8 |
|
1,600.4 |
(526.4) |
|
|
|
|
|
|
|
Adjustments on Net Income: |
|
|
|
|
|
|
Depreciation and amortization |
|
221.0 |
214.8 |
|
878.2 |
800.3 |
Deferred income tax and social contribution |
|
(10.9) |
14.6 |
|
24.6 |
(153.1) |
Loss on investment in associates |
|
1.7 |
0.3 |
|
4.2 |
3.6 |
Interest, monetary and exchange variations, net |
|
11.7 |
(22.8) |
|
(195.4) |
(382.7) |
Provision for contingencies |
|
(20.7) |
10.5 |
|
5.8 |
18.8 |
Share-based payments expense |
|
69.6 |
69.4 |
|
251.2 |
213.1 |
Allowance for expected credit losses |
|
60.6 |
13.3 |
|
160.2 |
88.6 |
Loss on disposal of property, equipment and intangible assets |
|
13.0 |
(0.1) |
|
66.2 |
25.3 |
Effect of applying hyperinflation |
|
1.2 |
1.4 |
|
3.7 |
3.9 |
Loss on sale of subsidiary |
|
10.9 |
20.3 |
|
10.9 |
20.3 |
Fair value adjustment in financial instruments at FVPL |
|
0.0 |
58.7 |
|
96.6 |
1,179.5 |
Fair value adjustment in derivatives |
|
7.2 |
(77.6) |
|
20.3 |
90.8 |
Others |
|
0.0 |
0.0 |
|
1.2 |
0.0 |
|
|
|
|
|
|
|
Working capital adjustments: |
|
|
|
|
|
|
Accounts receivable from card issuers |
|
(2,154.8) |
(1,267.4) |
|
32.3 |
740.2 |
Receivables from related parties |
|
8.4 |
(2.4) |
|
20.3 |
12.9 |
Recoverable taxes |
|
(17.5) |
357.5 |
|
139.0 |
261.9 |
Prepaid expenses |
|
(25.4) |
6.1 |
|
41.3 |
153.0 |
Trade accounts receivable, banking solutions and other assets |
|
160.3 |
82.0 |
|
205.1 |
707.5 |
Loans operations portfolio |
|
(312.8) |
0.0 |
|
(312.8) |
0.0 |
Accounts payable to clients |
|
259.2 |
547.0 |
|
(3,382.1) |
(3,633.9) |
Taxes payable |
|
103.2 |
(305.6) |
|
169.7 |
137.8 |
Labor and social security liabilities |
|
(47.3) |
1.5 |
|
19.3 |
171.3 |
Provision for contingencies |
|
(6.3) |
(4.7) |
|
(34.0) |
(9.8) |
Trade Accounts Payable and Other Liabilities |
|
(45.1) |
84.1 |
|
(79.9) |
323.6 |
Interest paid |
|
(269.2) |
(105.5) |
|
(749.4) |
(430.4) |
Interest income received, net of costs |
|
941.9 |
605.7 |
|
2,766.9 |
2,058.7 |
Income tax paid |
|
(32.8) |
(37.0) |
|
(116.1) |
(191.1) |
|
|
|
|
|
|
|
Net cash provided by (used in) operating
activity |
|
(416.6) |
343.0 |
|
1,647.7 |
1,683.7 |
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
Purchases of property and equipment |
|
(144.4) |
(65.1) |
|
(736.2) |
(417.7) |
Purchases and development of intangible assets |
|
(140.9) |
(90.2) |
|
(474.1) |
(305.5) |
Acquisition of subsidiary, net of cash acquired |
|
0.0 |
(0.0) |
|
0.0 |
(69.8) |
Sale of subsidiary, net of cash disposed of |
|
0.0 |
(4.3) |
|
0.0 |
(4.3) |
Proceeds from (acquisition of) short-term investments, net |
|
(1,418.8) |
(665.3) |
|
181.6 |
(1,222.4) |
Acquisition of equity securities |
|
0.0 |
0.0 |
|
0.0 |
(15.0) |
Disposal of short and long-term investments - equity
securities |
|
2.4 |
0.0 |
|
220.5 |
183.5 |
Proceeds from the disposal of non-current assets |
|
0.0 |
3.9 |
|
0.5 |
27.0 |
Acquisition of interest in associates |
|
(3.8) |
(12.0) |
|
(37.8) |
(46.9) |
|
|
|
|
|
|
|
Net cash used in investing activities |
|
(1,705.4) |
(833.1) |
|
(845.4) |
(1,871.1) |
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
Proceeds from borrowings |
|
1,245.7 |
250.0 |
|
5,181.6 |
3,500.0 |
Payment of borrowings |
|
(508.0) |
(268.1) |
|
(4,489.7) |
(5,009.8) |
Payment to FIDC quota holders |
|
(70.0) |
(312.5) |
|
(1,032.5) |
(1,250.0) |
Proceeds from FIDC quota holders |
|
241.1 |
0.0 |
|
564.8 |
0.0 |
Payment of leases |
|
(1.6) |
(19.7) |
|
(72.8) |
(99.8) |
Repurchase of own shares |
|
(292.7) |
(53.4) |
|
(292.7) |
0.0 |
Sale of own shares |
|
0.0 |
53.4 |
|
0.0 |
53.4 |
Acquisition of non-controlling interests |
|
(0.1) |
0.7 |
|
(1.4) |
(0.3) |
Dividends paid to non-controlling interests |
|
(2.2) |
(1.5) |
|
(6.0) |
(3.6) |
|
|
|
|
|
|
|
Net cash provided by (used in) financing
activities |
|
612.1 |
(351.1) |
|
(148.8) |
(2,810.1) |
|
|
|
|
|
|
|
Effect of foreign exchange on cash and cash equivalents |
|
(6.7) |
10.5 |
|
10.3 |
14.5 |
|
|
|
|
|
|
|
Change in cash and cash equivalents |
|
(1,516.7) |
(830.6) |
|
663.8 |
(2,983.0) |
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period |
|
3,693.1 |
2,343.2 |
|
1,512.6 |
4,495.6 |
Cash and cash equivalents at end of period |
|
2,176.4 |
1,512.6 |
|
2,176.4 |
1,512.6 |
Adjustments to Net Income by P&L Line
Table 14: Adjustments to Net Income by P&L
Line
Adjustments to Net Income by P&L line
(R$mn) |
1Q21 |
2Q21 |
3Q21 |
4Q21 |
1Q22 |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
2Q23 |
3Q23 |
4Q23 |
Cost of services |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Administrative expenses |
9.3 |
9.7 |
166.0 |
(16.4) |
23.5 |
40.4 |
32.1 |
30.6 |
35.6 |
34.8 |
34.8 |
31.3 |
Selling expenses |
(0.0) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Financial expenses, net |
4.2 |
4.2 |
2.4 |
11.4 |
6.1 |
9.1 |
8.0 |
8.1 |
14.8 |
14.2 |
14.4 |
2.0 |
Mark-to-market on equity securities designated at FVPL |
0.0 |
(841.2) |
1,341.2 |
764.2 |
323.0 |
527.1 |
(111.5) |
114.5 |
(30.6) |
0.0 |
0.0 |
0.0 |
Other operating income (expense), net |
3.5 |
(4.5) |
1.2 |
0.6 |
6.0 |
(17.3) |
(8.9) |
(17.1) |
(2.6) |
(24.2) |
(8.0) |
(133.3) |
Gain (loss) on investment in associates |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Profit before income taxes |
16.9 |
(831.7) |
1,510.8 |
759.8 |
358.7 |
559.3 |
(80.2) |
136.1 |
17.2 |
24.7 |
41.2 |
(100.0) |
Income tax and social contribution |
(1.9) |
119.3 |
(163.9) |
8.1 |
(3.1) |
(14.2) |
(8.5) |
(11.1) |
(6.3) |
(10.0) |
(17.5) |
7.6 |
Net income for the period |
15.0 |
(712.4) |
1,346.9 |
767.9 |
355.6 |
545.1 |
(88.7) |
125.0 |
10.9 |
14.8 |
23.7 |
(92.4) |
Table 15: Adjusted EBT and Adjusted Net
Income with and without share-based compensation
adjustmentsFollowing the partial sale of our stake in
Banco Inter, from 2Q22 onwards we no longer adjust the financial
expenses related to our bond in our adjusted numbers. In addition,
from 1Q23 onwards, we also stopped adjusting share-based
compensation expenses in our adjusted results. Those changes may
affect the comparability of our adjusted results between different
quarters. For that reason, we have included below our historical
numbers on a comparable basis, not adjusting for both the bond and
share-based compensation expenses, according to our current
adjustment criteria.
Profitability with and without share-based
compensation adjustments (R$mn) |
1Q21 |
2Q21 |
3Q21 |
4Q21 |
1Q22 |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
2Q23 |
3Q23 |
4Q23 |
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
Reported |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBT |
247.6 |
(202.7) |
81.3 |
(49.1) |
82.5 |
106.7 |
210.7 |
316.5 |
324.0 |
447.0 |
544.8 |
638.2 |
Adjusted Net Income |
187.4 |
(155.5) |
85.3 |
(32.5) |
51.7 |
76.5 |
162.5 |
234.8 |
236.6 |
322.0 |
435.1 |
563.8 |
Not Adjusting for Share-based Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBT |
226.9 |
(249.1) |
83.0 |
(50.6) |
68.8 |
75.8 |
166.3 |
275.6 |
324.0 |
447.0 |
544.8 |
638.2 |
Adjusted Net Income |
173.3 |
(186.4) |
86.7 |
(33.5) |
42.6 |
55.8 |
108.3 |
203.8 |
236.6 |
322.0 |
435.1 |
563.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services |
|
|
|
|
|
|
|
|
|
|
|
|
Reported |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBT |
250.2 |
(202.6) |
104.3 |
(31.0) |
65.9 |
84.0 |
177.6 |
285.6 |
306.0 |
398.2 |
485.5 |
603.8 |
Adjusted Net Income |
191.4 |
(153.2) |
113.1 |
(13.0) |
45.4 |
66.9 |
148.1 |
214.2 |
226.9 |
279.7 |
394.7 |
535.3 |
Not Adjusting for Share-based Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBT |
229.6 |
(248.7) |
105.7 |
(32.6) |
52.2 |
53.3 |
135.0 |
246.1 |
306.0 |
398.2 |
485.5 |
603.8 |
Adjusted Net Income |
177.3 |
(183.9) |
114.1 |
(14.0) |
36.3 |
46.3 |
95.1 |
184.1 |
226.9 |
279.7 |
394.7 |
535.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Software |
|
|
|
|
|
|
|
|
|
|
|
|
Reported |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBT |
0.6 |
(0.7) |
(11.6) |
(15.2) |
12.3 |
40.0 |
33.7 |
31.8 |
16.9 |
45.5 |
55.5 |
33.0 |
Adjusted Net Income |
(0.7) |
(3.0) |
(14.8) |
(15.6) |
2.2 |
26.9 |
15.4 |
22.4 |
8.5 |
39.0 |
37.6 |
28.8 |
Not Adjusting for Share-based Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBT |
0.6 |
(1.0) |
(11.4) |
(15.2) |
12.3 |
39.9 |
31.9 |
30.5 |
16.9 |
45.5 |
55.5 |
33.0 |
Adjusted Net Income |
(0.7) |
(3.2) |
(14.6) |
(15.6) |
2.2 |
26.8 |
14.2 |
21.5 |
8.5 |
39.0 |
37.6 |
28.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Allocated |
|
|
|
|
|
|
|
|
|
|
|
|
Reported |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBT |
(3.2) |
0.6 |
(11.4) |
(2.8) |
4.3 |
(17.3) |
(0.6) |
(1.0) |
1.2 |
3.4 |
3.8 |
1.4 |
Adjusted Net Income |
(3.2) |
0.7 |
(13.0) |
(3.9) |
4.2 |
(17.3) |
(1.0) |
(1.8) |
1.2 |
3.4 |
2.8 |
(0.3) |
Not Adjusting for Share-based Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBT |
(3.3) |
0.6 |
(11.3) |
(2.8) |
4.3 |
(17.4) |
(0.6) |
(1.0) |
1.2 |
3.4 |
3.8 |
1.4 |
Adjusted Net Income |
(3.3) |
0.7 |
(12.9) |
(3.9) |
4.1 |
(17.3) |
(1.0) |
(1.8) |
1.2 |
3.4 |
2.8 |
(0.3) |
Historical Adjusted
Reporting
Following the partial sale of our stake in Banco
Inter, from 2Q22 onwards we no longer adjust the financial expenses
related to our bond in our adjusted numbers. In addition, from 1Q23
onwards, we also stopped adjusting share-based compensation
expenses in our adjusted results. Those changes may affect the
comparability of our adjusted results between different quarters.
For that reason, we have included below our historical numbers on a
comparable basis, not adjusting for both the bond and share-based
compensation expenses, according to our current adjustment
criteria.
Table 16: Adjusted Historical Financial Services
P&L
Segment Reporting - Financial Services (R$mn
Adjusted) |
1Q21 |
2Q21 |
3Q21 |
4Q21 |
1Q22 |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
2Q23 |
3Q23 |
4Q23 |
Total revenue and income |
828.4 |
564.2 |
1,152.5 |
1,545.9 |
1,721.3 |
1,932.6 |
2,121.5 |
2,308.2 |
2,335.9 |
2,551.2 |
2,737.7 |
2,870.6 |
Cost of services |
(224.9) |
(279.6) |
(358.7) |
(465.1) |
(499.0) |
(468.6) |
(495.9) |
(524.0) |
(555.3) |
(520.0) |
(603.0) |
(630.7) |
Administrative expenses |
(89.8) |
(91.4) |
(112.9) |
(145.6) |
(131.1) |
(145.5) |
(160.2) |
(204.0) |
(170.9) |
(180.4) |
(171.2) |
(206.7) |
Selling expenses |
(159.7) |
(215.3) |
(248.6) |
(263.5) |
(323.0) |
(267.3) |
(318.8) |
(336.2) |
(314.8) |
(324.3) |
(358.3) |
(375.8) |
Financial expenses, net |
(88.8) |
(158.9) |
(304.4) |
(657.8) |
(693.0) |
(931.0) |
(917.2) |
(884.9) |
(895.0) |
(1,047.8) |
(1,030.2) |
(929.8) |
Other operating income (expense), net |
(35.1) |
(67.4) |
(22.0) |
(46.6) |
(23.0) |
(66.9) |
(94.3) |
(112.6) |
(92.6) |
(78.8) |
(88.4) |
(123.3) |
Gain (loss) on investment in associates |
(0.5) |
(0.4) |
(0.1) |
0.0 |
0.0 |
0.0 |
0.0 |
(0.4) |
(1.3) |
(1.7) |
(1.0) |
(0.6) |
Profit before income taxes |
229.6 |
(248.7) |
105.7 |
(32.6) |
52.2 |
53.3 |
135.0 |
246.1 |
306.0 |
398.2 |
485.5 |
603.8 |
Income tax and social contribution |
(52.3) |
64.8 |
8.4 |
18.6 |
(16.0) |
(7.0) |
(39.9) |
(61.9) |
(79.1) |
(118.5) |
(90.7) |
(68.5) |
Net income for the period |
177.3 |
(183.9) |
114.1 |
(14.0) |
36.3 |
46.3 |
95.1 |
184.1 |
226.9 |
279.7 |
394.7 |
535.3 |
Table 17: Adjusted Historical Software
P&L
Segment Reporting - Software (R$mn Adjusted) |
1Q21 |
2Q21 |
3Q21 |
4Q21 |
1Q22 |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
2Q23 |
3Q23 |
4Q23 |
Total revenue and income |
30.9 |
42.8 |
301.1 |
311.4 |
326.6 |
350.7 |
366.2 |
376.3 |
358.2 |
382.9 |
387.9 |
363.2 |
Cost of services |
(12.3) |
(19.5) |
(162.4) |
(176.7) |
(172.5) |
(154.5) |
(171.9) |
(171.2) |
(164.2) |
(164.8) |
(170.4) |
(171.5) |
Administrative expenses |
(14.9) |
(17.5) |
(72.4) |
(76.1) |
(74.5) |
(75.0) |
(81.3) |
(83.5) |
(83.5) |
(79.5) |
(65.1) |
(62.4) |
Selling expenses |
(1.2) |
(6.0) |
(55.5) |
(51.8) |
(56.6) |
(63.5) |
(61.2) |
(63.8) |
(69.0) |
(79.4) |
(80.9) |
(75.2) |
Financial expenses, net |
(0.2) |
(0.3) |
(17.6) |
(18.9) |
(8.6) |
(14.6) |
(14.9) |
(18.1) |
(13.6) |
(11.6) |
(14.1) |
(11.0) |
Other operating income (expense), net |
(1.8) |
(0.4) |
(4.7) |
(3.1) |
(1.8) |
(3.0) |
(4.8) |
(8.7) |
(11.0) |
(2.6) |
(2.2) |
(9.9) |
Gain (loss) on investment in associates |
0.0 |
(0.1) |
(0.0) |
0.0 |
(0.4) |
(0.3) |
(0.2) |
(0.4) |
(0.1) |
0.5 |
0.2 |
(0.2) |
Profit before income taxes |
0.6 |
(1.0) |
(11.4) |
(15.2) |
12.3 |
39.9 |
31.9 |
30.5 |
16.9 |
45.5 |
55.5 |
33.0 |
Income tax and social contribution |
(1.3) |
(2.2) |
(3.1) |
(0.4) |
(10.1) |
(13.1) |
(17.7) |
(9.0) |
(8.4) |
(6.5) |
(17.9) |
(4.2) |
Net income for the period |
(0.7) |
(3.2) |
(14.6) |
(15.6) |
2.2 |
26.8 |
14.2 |
21.5 |
8.5 |
39.0 |
37.6 |
28.8 |
Table 18: Adjusted Historical Non-Allocated
P&L
Segment Reporting - Non-Allocated (R$mn
Adjusted) |
1Q21 |
2Q21 |
3Q21 |
4Q21 |
1Q22 |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
2Q23 |
3Q23 |
4Q23 |
Total revenue and income |
8.3 |
6.5 |
16.0 |
15.7 |
22.4 |
20.8 |
20.8 |
21.6 |
17.5 |
20.7 |
14.3 |
14.9 |
Cost of services |
(2.5) |
(3.3) |
(4.6) |
(4.3) |
(2.9) |
(3.0) |
(3.5) |
(2.7) |
(1.8) |
(0.5) |
(0.0) |
(0.5) |
Administrative expenses |
(3.7) |
(3.3) |
(8.5) |
(8.9) |
(9.2) |
(11.2) |
(10.3) |
(9.0) |
(8.1) |
(9.2) |
(7.2) |
(8.2) |
Selling expenses |
(1.9) |
(1.9) |
(4.1) |
(3.1) |
(4.2) |
(5.1) |
(5.4) |
(6.1) |
(6.1) |
(8.2) |
(3.2) |
(3.1) |
Financial expenses, net |
0.7 |
5.7 |
(6.4) |
(0.1) |
(0.5) |
(0.1) |
(0.1) |
(0.4) |
(0.2) |
(0.2) |
(0.2) |
(0.3) |
Other operating income (expense), net |
(1.1) |
(0.8) |
(1.2) |
(0.9) |
(1.1) |
(17.8) |
(1.1) |
(4.8) |
(0.4) |
0.5 |
0.0 |
(0.5) |
Gain (loss) on investment in associates |
(3.2) |
(2.4) |
(2.6) |
(1.2) |
(0.2) |
(1.0) |
(1.1) |
0.5 |
0.4 |
0.4 |
0.2 |
(0.9) |
Profit before income taxes |
(3.3) |
0.6 |
(11.3) |
(2.8) |
4.3 |
(17.4) |
(0.6) |
(1.0) |
1.2 |
3.4 |
3.8 |
1.4 |
Income tax and social contribution |
0.0 |
0.2 |
(1.6) |
(1.1) |
(0.2) |
0.0 |
(0.4) |
(0.8) |
0.0 |
(0.0) |
(1.1) |
(1.8) |
Net income for the period |
(3.3) |
0.7 |
(12.9) |
(3.9) |
4.1 |
(17.3) |
(1.0) |
(1.8) |
1.2 |
3.4 |
2.8 |
(0.3) |
Table 19: Adjusted Historical Consolidated
P&L
Consolidated P&L (R$mn Adjusted) |
1Q21 |
2Q21 |
3Q21 |
4Q21 |
1Q22 |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
2Q23 |
3Q23 |
4Q23 |
Total revenue and income |
867.7 |
613.4 |
1,469.6 |
1,873.0 |
2,070.3 |
2,304.1 |
2,508.4 |
2,706.1 |
2,711.7 |
2,954.8 |
3,139.9 |
3,248.7 |
Cost of services |
(239.7) |
(302.4) |
(525.6) |
(646.1) |
(674.4) |
(626.2) |
(671.3) |
(698.0) |
(721.3) |
(685.3) |
(773.5) |
(802.7) |
Provision for expected credit losses17 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
(3.7) |
(19.0) |
(39.4) |
Administrative expenses |
(108.3) |
(112.2) |
(193.8) |
(230.5) |
(214.8) |
(231.6) |
(251.8) |
(296.5) |
(262.5) |
(269.1) |
(243.5) |
(277.3) |
Selling expenses |
(162.8) |
(223.2) |
(308.2) |
(318.4) |
(383.7) |
(335.9) |
(385.4) |
(406.1) |
(389.9) |
(411.9) |
(442.4) |
(454.0) |
Financial expenses, net |
(88.3) |
(153.4) |
(328.3) |
(676.8) |
(702.1) |
(945.6) |
(932.2) |
(903.4) |
(908.9) |
(1,059.7) |
(1,044.5) |
(941.1) |
Other operating income (expense), net |
(38.0) |
(68.6) |
(27.9) |
(50.5) |
(25.8) |
(87.6) |
(100.2) |
(126.1) |
(104.1) |
(81.0) |
(90.6) |
(133.7) |
Gain (loss) on investment in associates |
(3.6) |
(2.8) |
(2.8) |
(1.2) |
(0.7) |
(1.3) |
(1.2) |
(0.3) |
(1.0) |
(0.8) |
(0.6) |
(1.7) |
Profit before income taxes |
226.9 |
(249.1) |
83.0 |
(50.6) |
68.8 |
75.8 |
166.3 |
275.6 |
324.0 |
447.0 |
544.8 |
638.2 |
Income tax and social contribution |
(53.6) |
62.7 |
3.6 |
17.1 |
(26.3) |
(20.0) |
(58.0) |
(71.7) |
(87.4) |
(125.0) |
(109.7) |
(74.4) |
Net income for the period |
173.3 |
(186.4) |
86.7 |
(33.5) |
42.6 |
55.8 |
108.3 |
203.8 |
236.6 |
322.0 |
435.1 |
563.8 |
Glossary of Terms
- “Adjusted Net
Cash”: is a non-IFRS financial metric and consists of the following
items: (i) Adjusted Cash: Cash and cash equivalents, Short-term
investments, Accounts receivable from card issuers, Financial
assets from banking solution and Derivative financial instrument;
minus (ii) Adjusted Debt: Obligations with banking customers,
Accounts payable to clients, Loans and financing, Obligations to
FIDC quota holders and Derivative financial instrument.
- “Banking”:
refers to our digital banking solution and includes insurance
products.
- “Financial
Services” segment: This segment is comprised of our financial
services solutions serving both MSMBs and Key Accounts. Includes
mainly our payments solutions, digital banking and credit.
- “Key Accounts”:
refers to operations in which Pagar.me acts as a fintech
infrastructure provider for different types of clients, especially
larger ones, such as mature e-commerce and digital platforms,
commonly delivering financial services via APIs. It also includes
clients that are onboarded through our integrated partners program,
regardless of client size.
- “Membership
fees”: refer to the upfront fee paid by merchants for all Ton
offerings and specific ones for Stone when they join our client
base.
- “MSMBs”: the
combination of SMBs (small and medium business) and micro-merchant
clients, from our Stone, Pagar.me and Ton products.
- “MSMB Active
Payments Client Base”: refers to SMBs – small and medium business
(online and offline) and micro-merchants, from our Stone, Pagar.me
and Ton products. Considers clients that have transacted at least
once over the preceding 90 days, except for Ton active clients
which consider clients that have transacted once in the preceding
12 months. As from 3Q22, does not consider clients that use only
TapTon.
- “Non-allocated”:
Comprises other smaller businesses which are not allocated in our
Financial Services or Software segments.
- “PIX QR Code”:
Considers transactions from dynamic POS QR Code and static QR Code
from Stone and Ton merchants. Both types of PIX can be
monetized.
- “Revenue”:
refers to Total Revenue and Income.
- “Software”
segment: Composed of our Strategic Verticals (Retail, Gas Stations,
Food and Drugstores), Enterprise and Other Verticals. The Software
segment includes the following solutions: POS/ERP, TEF and QR Code
gateways, reconciliation, CRM, OMS, e-commerce platform, engagement
tool, ads solution, and marketplace hub.
- “Take Rate
(MSMB)”: Managerial metric that considers the sum of revenues from
financial services solutions offered to MSMBs, excluding Ton’s
membership fee, TAG revenues and other non-allocated revenues,
divided by MSMB TPV.
- “Take Rate (Key
Accounts)”: Managerial metric that considers revenues from
financial services solutions offered to Key Account clients,
excluding non-allocated revenues, divided by Key Accounts TPV.
- “Total Active
Payment Clients”: refers to MSMBs and Key Accounts. Considers
clients that have transacted at least once over the preceding 90
days, except for Ton product active clients which consider clients
that have transacted once in the preceding 12 months. As from 3Q22,
does not consider clients that use only TapTon.
- “TPV”: Total
Payment Volume. Up to the fourth quarter of 2020, refers to
processed TPV. From the first quarter of 2021 onwards, reported TPV
figures consider all volumes settled by StoneCo.
Forward-Looking Statements
This press release contains "forward-looking
statements" within the meaning of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are made as of the date they were first
issued and were based on current expectations, estimates, forecasts
and projections as well as the beliefs and assumptions of
management. These statements identify prospective information and
may include words such as “believe”, “may”, “will”, “aim”,
“estimate”, “continue”, “anticipate”, “intend”, “expect”,
“forecast”, “plan”, “predict”, “project”, “potential”,
“aspiration”, “objectives”, “should”, “purpose”, “belief”, and
similar, or variations of, or the negative of such words and
expressions, although not all forward-looking statements contain
these identifying words.Forward-looking statements are subject to a
number of risks and uncertainties, many of which involve factors or
circumstances that are beyond Stone’s control.Stone’s actual
results could differ materially from those stated or implied in
forward-looking statements due to a number of factors, including
but not limited to: more intense competition than expected, lower
addition of new clients, regulatory measures, more investments in
our business than expected, and our inability to execute
successfully upon our strategic initiatives, among other
factors.
About Non-IFRS Financial
Measures
To supplement the financial measures presented
in this press release and related conference call, presentation, or
webcast in accordance with IFRS, Stone also presents non-IFRS
measures of financial performance, including: Adjusted Net Income,
Adjusted EPS (diluted), Adjusted Net Margin, Adjusted Net Cash /
(Debt), Adjusted Profit (Loss) Before Income Taxes, Adjusted
Pre-Tax Margin, EBITDA and Adjusted EBITDA.A “non-IFRS financial
measure” refers to a numerical measure of Stone’s historical or
future financial performance or financial position that either
excludes or includes amounts that are not normally excluded or
included in the most directly comparable measure calculated and
presented in accordance with IFRS in Stone’s financial statements.
Stone provides certain non-IFRS measures as additional information
relating to its operating results as a complement to results
provided in accordance with IFRS. The non-IFRS financial
information presented herein should be considered in conjunction
with, and not as a substitute for or superior to, the financial
information presented in accordance with IFRS. There are
significant limitations associated with the use of non-IFRS
financial measures. Further, these measures may differ from the
non-IFRS information, even where similarly titled, used by other
companies and therefore should not be used to compare Stone’s
performance to that of other companies.Stone has presented Adjusted
Net Income to eliminate the effect of items from Net Income that it
does not consider indicative of its continuing business performance
within the period presented. Stone defines Adjusted Net Income as
Net Income (Loss) for the Period, adjusted for (1) amortization of
fair value adjustment on acquisitions, (2) mark-to-market of equity
investments, and (3) unusual income and expenses. Adjusted EPS
(diluted) is calculated as Adjusted Net income attributable to
owners of the parent (Adjusted Net Income reduced by Net Income
attributable to Non-Controlling interest) divided by diluted number
of shares. Stone has presented Adjusted Profit Before Income Taxes
and Adjusted EBITDA to eliminate the effect of items that it does
not consider indicative of its continuing business performance
within the period presented. Stone adjusts these metrics for the
same items as Adjusted Net Income, as applicable.Stone has
presented Adjusted Net Cash metric in order to adjust its Net Cash
/ (Debt) by the balances of Accounts Receivable from Card Issuers
and Accounts Payable to Clients, since these lines vary according
to the Company’s funding source together with the lines of (i) Cash
and Cash Equivalents, (ii) Short-term Investments, (iii) Debt
balances and (iv) Derivative Financial Instruments related to
economic hedges of short term investments in assets, due to the
nature of Stone’s business and its prepayment operations. In
addition, it also adjusts by the balances of Financial Assets from
Banking Solutions and Deposits from Banking Customers.
___________________________________1 Considers transactions from
dynamic POS QR Code and static QR Code from Stone and Ton
merchants. Both types of PIX can be monetized.2 From 3Q22 onwards,
does not include clients that use only TapTon.3 Clients who have
transacted at least R$1 in the past 30 days. Except for Client
Deposits, banking metrics do not include clients of Pagar.me and
Ton clients who do not have the full banking solution "Super Conta
Ton".4 Deposits from banking customers, including MSMB and Key
Account clients.5 ARPAC means Average Revenue Per Active Client.
Banking ARPAC considers banking revenues, such as card interchange
fees, floating, insurance and transactional fees, as well as PIX QR
Code.6 Credit clients consider merchants who have a loan contract
with Stone until December 31st, 2023.7 The working capital
portfolio is gross of provisions for losses, but net of
amortizations.8 Ratio of accumulated loan loss provision expenses
over the working capital portfolio in the period.9 NPL
(Non-Performing Loans) is the total outstanding of the contract
whenever the clients default on an installment. More information on
the total overdue by aging considering only the individual
installments can be found in Note 6.1.1 of the Financial
Statements.10 From 3Q22 onwards, does not include clients that use
only TapTon.11 From 3Q22 onwards, does not include clients that use
only TapTon.12 Except for Total Accounts Balance, banking metrics
do not include clients of Pagar.me and those Ton clients who do not
have the full banking solution "Super Conta Ton”.13 MSMB TPV
Overlap in Software installed base within the four key verticals,
comprised of Retail, Food, Drugstores and Gas Stations.14 In 2Q23,
credit revenues were recognized net of provision for expected
credit losses in Financial Income. From 3Q23 onwards, provision for
expected losses is allocated in Cost of services.15 Our adjusted
P&L includes the same adjustments made for our Adjusted Net
Income but broken down into each P&L line. The purpose of
showing it is to make it easier to understand the underlying
evolution of our Costs & Expenses, disregarding some
non-recurring events associated with each line item. 16 Membership
fees refer to the upfront fee paid by merchants for all Ton
offerings and specific ones for Stone.17 In 2Q23, credit revenues
were recognized net of provision for expected credit losses in
Financial Income. From 3Q23 onwards, provision for expected losses
is allocated in Cost of services.
A PDF accompanying this announcement is available at
http://ml.globenewswire.com/Resource/Download/3c978643-d7df-4667-ad22-7e4b39439a6c
StoneCo (NASDAQ:STNE)
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から 6 2023 まで 6 2024