Key Risk Factors

Risk factors

The following summarizes the principal factors that make an investment in our company speculative or risky, all of which are more fully described in the risk factors below. This summary should be read in conjunction with the risk factors below and should not be relied upon as an exhaustive summary of the material risks facing our business. The following factors could result in harm to our business, reputation, revenue, financial results, and prospects, among other impacts:

Our business strategy may not provide us the results we expect and our business could be harmed if we are unable to accurately forecast demand for our products and services and to adequately manage our product inventory.
Substantial and increasingly intense competition in our markets may harm our business.
If we are unable to attract new and retain existing clients, our business, financial condition and results of operations will be adversely affected.
A decline in the use of credit, debit or prepaid cards as a payment mechanism for consumers or adverse developments with respect to the payment processing industry in general could have a materially adverse effect on our business, financial condition and results of operations.
Our efforts to expand our product portfolio and market reach may not succeed and may reduce our revenue growth.
Any acquisitions, investments, partnerships, joint ventures or divestments that we make or enter into could disrupt our business and harm our financial condition.
Increases in interest rates may harm our business.
If we cannot pass increases in fees from payment schemes, including assessment, interchange, transaction and other fees, or increases in fees due to macroeconomic factors such as interest rate increases along to our merchants, our operating margins will decline.
Our business is subject to extensive government regulation and oversight in Brazil and our status under these regulations may change. Violation of or compliance with present or future regulation could be costly, expose us to substantial liability and force us to change our business practices, any of which could seriously harm our business and results of operations.
Certain ongoing legislative and regulatory initiatives under discussion by the Brazilian Congress, the Central Bank and the broader payments industry may result in changes to the regulatory framework of the Brazilian financial services industry and may have an adverse effect on us.
We may not be able to effectively manage credit risk, and our expected credit loss (“ECL”) allowance may be insufficient to cover actual losses, which could have a material adverse effect on our results of operations and financial condition.
Changes in tax laws, tax incentives, benefits or differing interpretations of tax laws may adversely affect our results of operations.
Our risk management policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risks, which could expose us to losses and liability and otherwise harm our business.
Cybersecurity attacks could result in data breaches and severely damage our reputation, business and financial condition.
Our systems and our third-party providers’ systems may fail, which could interrupt our service, cause us to lose business and increase our costs.
Unauthorized disclosure, destruction or modification of data, through cybersecurity breaches, computer viruses or otherwise or disruption of our services could expose us to liability, protracted and costly litigation and damage our reputation.
In a dynamic industry like ours, the ability to attract, recruit, develop and retain key personnel and qualified employees is critical to our success and growth. If we are not able to do so, our business, financial condition and results of operations may be adversely affected.
Our financing needs could adversely affect our financial flexibility and our competitive position, and we may not be able to secure financing on favorable terms, or at all, to meet our future capital needs.
We are subject to macroeconomic uncertainty, fiscal and political instability in Brazil. Those factors may harm the business cycles and credit risk of our clients and issuing banks and volatility in the overall level of consumer, business and government spending, which could negatively impact our business, financial condition and results of operations.

You should carefully consider the risks and uncertainties described below, together with the other information contained in this annual report, in our financial statements, and all other public information released by us from time to time, before making any investment decision. The risks described below are not the only risks we face. Our business, financial condition and operational results may be significantly affected not only by any of the risks set forth below, but also by any other risks that are currently unknown or considered irrelevant by us. Our business, reputation, management, results of operations or financial condition could be harmed if any of these risks materializes and, as a result, the prices of securities issued by us, including our Class A Common Shares, could decline and our investors may lose part or all of their investment.

Our business strategy may not provide us the results we expect and our business could be harmed if we are unable to accurately forecast demand for our products and services and to adequately manage our product inventory.

Our strategy and challenges are determined by management based on related assumptions, such as, but not limited to, the future market, economic and industry environments; our capacity to execute our strategy; and the regulatory, political and social scenarios where we operate. These assumptions are subject to inaccuracies and risks that might not be identified or anticipated by management. Moreover, under these assumptions, factors beyond our control may make these inaccuracies more significant.

Accordingly, the results and consequences arising from any possible inaccurate assumptions may compromise our capacity to fully or partially implement our strategies, as well as to achieve the results and benefits expected from our business plan therefrom, which might give rise to financial losses and reduce the value creation to our shareholders.

We invest in marketing, technology, people, data, models and our distribution channels based on our expectation of future demand for our services. We must forecast inventory, capital needs, regulatory capital cost, credit losses and expenses, hire employees and place orders sufficiently in advance with our third-party suppliers and contract manufacturers based on our estimates of future demand for particular products or services. An inability to correctly forecast the success of a particular product or service could harm our business. Our ability to accurately forecast demand for our products or services could be affected by many factors, including an increase or decrease in demand for our competitors’ products or services, unanticipated changes in general market conditions, and the change in economic conditions.

Our results of operations and operating metrics may fluctuate and we may generate losses in the future, which may harm our business.

We intend to make significant investments in our business, including with respect to our sales and marketing, development of new products, services, and features; data centers and other infrastructure, development of international operations , and general administration, including legal, finance, and other compliance expenses related to being a public company. If the costs associated with acquiring and supporting new or larger clients materially rise in the future, our expenses may rise significantly. In addition, increases in our client base could cause us to incur losses, because costs associated with new clients are generally incurred upfront, while revenue is recognized thereafter as merchants utilize our services. If we are unable to generate adequate revenue growth and manage our expenses, our results of operations and operating metrics may fluctuate and we may incur significant losses in the future.

We frequently invest in developing products or services that we believe will improve the experiences of our clients and therefore improve our long-term results of operations. However, these improvements often cause us to incur significant up-front costs and may not result in the long-term benefits that we expect, which may materially and adversely affect our business. For example, our growth strategy contemplates an expansion in our distribution channels and the development of new products and services. Successful implementation of our growth strategy will require significant expenditure before any substantial associated revenue is generated. We cannot assure you that our increased investment in marketing activities will result in corresponding revenue growth.

We make estimates and assumptions in connection with the preparation of our financial statements, and any changes to those estimates and assumptions could have a material adverse effect on our operating results.

In connection with the preparation of our financial statements, we use certain estimates and assumptions based on historical experience and other factors. For example, we take into consideration our assets’ useful lives. While we believe that these estimates and assumptions are reasonable under the circumstances that they are presented, they are subject to significant uncertainties, some of which are beyond our control. Therefore, should any of the estimates and assumptions we use change or prove to have been incorrect, our reported operating results could be materially adversely affected.

Real or perceived inaccuracies in our key operating metrics may harm our reputation and adversely affect our business.

We track certain key operating metrics, including TPV, active payment clients, and adjusted net income, among other metrics, which are not independently verified by any third party. While the metrics presented in this annual report are based on what we believe to be reasonable assumptions and estimates, some of them result from definitional choices involving judgment and could be perceived as inconsistent or as overstating the scale of our businesses. The definition of operational metrics may change over time. Some of our metrics may differ from methodologies used by competitors, limiting comparability.

In addition, limitations or errors with respect to how we measure data, or with respect to the data that we measure, may affect our understanding of certain details of our business and could affect our strategies. If the internal systems and tools we use to track these metrics understate or overstate performance, or contain algorithmic or other technical errors, the key operating metrics we report may not be accurate. If investors do not perceive our operating metrics to be accurate, or if we discover material inaccuracies with respect to these figures, our reputation may be significantly harmed, and our results of operations and financial condition could be adversely affected.

Our business depends on a well-regarded and widely known brand, and any failure to maintain, protect, and enhance our brand would harm our business.

We have developed a well-regarded and widely known brand that has contributed significantly to the success of our business. If we fail to maintain, protect and enhance our brand, our business could be materially and adversely affected and our sales, profitability and results of operations may be adversely affected.

Our brand is predicated on the idea that clients will know and trust us, which is crucial for a financial services company, and find value in building and growing their businesses with our products and services. Maintaining, protecting, and enhancing our brand are critical to retaining and expanding our base of clients and other third-party partners, as well as increasing engagement with our products and services. This will depend largely on our ability to remain widely known, maintain trust, be a technology leader, and continue to provide high-quality and secure products and services.

Our brand may be adversely affected if we are unsuccessful in carrying out our business activities. We may be unsuccessful in advertising, promotional, and marketing strategies; and in offering new products to meet market demands. If we are unable to market and promote our brand on third-party platforms, such as Globo, Google, Meta or TikTok, effectively, our ability to acquire new merchants would be materially harmed. Changes in the way these platforms operate or changes in their advertising prices or other terms could make the maintenance and promotion of our products and services more expensive or more difficult. In addition, some of our competitors may have marketing investments substantially larger than ours and our end consumers believe that our competitors’ products are more attractive.

Any negative publicity about our industry or our company, the quality and reliability of our products and services, our risk management processes, changes to our products and services, our privacy and security practices, litigation, regulatory activity, and the experience of clients with our products or services, could adversely affect our reputation and the confidence in and use of our products and services. Harm to our brand can arise from many sources, including failure by us or our partners to satisfy expectations of service and quality; inadequate protection of sensitive information; compliance failures and claims; litigation and other claims; third-party trademark infringement claims; employee misconduct; failure to resolve seller and buyer complaints; and misconduct by our associated participants, partners, service providers, or other counterparties. If we do not successfully maintain a well-regarded and widely known brand, our business could be materially and adversely affected.

We have been from time to time in the past, and may in the future be, the target of incomplete, inaccurate, and misleading or false statements concerning our Company, our business, and our products and services. Any of these could damage our brand and materially deter people from adopting our services. Negative publicity about us or our management, including about our product quality and reliability, changes to our products and services, privacy and security practices, litigation, regulatory enforcement, and other actions, as well as the actions of our clients and other users of our services, even if inaccurate, could cause a loss of confidence in us. Our ability to respond to negative statements about us may be limited by legal prohibitions on permissible public communications by us during future periods.

Substantial and increasingly intense competition in our markets may harm our business.

The financial services market is highly competitive. It is characterized by vigorous competition, changing technology, changing customer needs, evolving industry standards and frequent introductions of new products and services and competitors. Our primary competitors include banks, digital banks, lending companies, traditional and newcomer card issuers and merchant acquirers and financial institutions in general. Many of them have significant financial resources and develop different kinds of services.

Additionally, we may also face competition from well-established businesses from outside our sectors that have significant financial resources and experience operating in Brazil. Many of our competitors also have substantially greater financial, technological, operational and marketing resources than we have, which may provide them with significant competitive advantages. Mergers and acquisitions by or among these companies may lead to even larger competitors with more resources. In particular, certain of our competitors in the acquiring market are affiliated with financial institutions that may not incur the sponsorship costs we incur for registration with the payment schemes.

Also, the continued shift from brick-and-mortar to e-commerce presents an additional competitive risk. As consumer spending migrates online, large marketplace platforms are increasingly integrating their own payment processing, banking and credit solutions, reducing the need for independent acquirers. This mix shift within the Brazilian retail market may result in merchants processing a growing share of their transactions through payment infrastructure controlled by the marketplace itself, rather than through our solutions, which could adversely affect our total payment volume and results.

We expect competition to intensify in the future as existing and new competitors introduce new services or enhance existing services. Competition could result in a loss of existing clients, and greater difficulty in attracting new clients, negatively affecting our growth plans, financial condition and results of operations.

If we are unable to attract new and retain existing clients, our business, financial condition and results of operations will be adversely affected.

Our client base is the cornerstone of our business. Sustaining our growth depends on our ability to continuously attract new merchants and SMBs to our platform while deepening engagement with existing clients mostly across our financial services solutions. If we fail to do so, our revenues may stagnate or decline.

Our clients have no obligation to continue using our products and services. They are generally not bound by long-term contracts and may reduce their payment volumes, cancel subscriptions or migrate to competitors at any time. Recent regulatory developments, including the expansion of open finance frameworks in Brazil, have further lowered switching costs, making retention increasingly challenging.

Our capacity to attract and retain clients may be undermined by several factors, including our failure to anticipate and respond to merchants’ evolving needs; a deterioration in the quality, reliability or performance of our platform; insufficient or inadequate support delivered through our Stone Agents and Stone Hubs; pricing that clients perceive as less competitive than alternatives; the launch of superior or more targeted offerings by incumbents, fintechs or new market entrants; and negative publicity or poor client experiences that erode trust in our brand.

Our future success will depend in part on our ability to develop or adapt to technological changes and evolving industries standards. We cannot predict the effects of technological changes on our businesses. If we are unable to develop, adapt to or access technological changes or evolving industry standards on a timely and cost-effective basis, our business, financial condition and results of operations could be materially and adversely affected, such as resulting in impairment of capitalized software for which future economic benefits are no longer expected. We also rely in part and may in the future rely in part on third parties, including some of our competitors and potential competitors, for the development of, and access to, new technologies.

Moreover, we may fail to adopt artificial intelligence technology or to comply with its regulatory framework. It is possible that new laws and regulations will be adopted that would affect the operation of our platform and the way in which we use artificial intelligence technology. Further, the cost to comply with such laws or regulations could be significant and would increase our operating expenses, which could adversely affect our business, financial condition and results of operations.

Furthermore, some of our competitors may have the ability to devote more financial and operational resources than we can to the development of new technologies and products. If successful, their development efforts could render our products and services less desirable to clients, resulting in the loss of clients or a reduction in the fees we could generate from our service offerings and/or products.

Any one or a combination of these factors could result in client attrition at rates exceeding our expectations, which would adversely affect our business, financial condition and results of operations.

A decline in the use of credit, debit or prepaid cards as a payment mechanism for consumers or adverse developments with respect to the payment processing industry in general could have a material adverse effect on our business, financial condition and results of operations.

If consumers do not continue to use credit, debit or prepaid cards as a payment mechanism for their transactions or if there is a change in the mix of payments between them, it could have a material adverse effect on our business, financial condition and results of operations, since acquiring remains our most relevant business as of December 31, 2025. We believe future growth in the use of card payment methods (credit, debit and prepaid cards) and other electronic payments will be driven by the cost, ease-of-use, and quality of services offered to consumers and businesses. In order to consistently increase and maintain our profitability, consumers and businesses must continue to use electronic payment methods. Moreover, our business, financial condition and results of operations may be negatively impacted if there is an adverse development in the payments industry or Brazilian market in general, such as new legislation or regulation that makes it more difficult for our clients to do business or utilize such payment mechanisms.

For example, the Central Bank has developed an instant payment solution called Pix, which started operating in November 2020. This solution is an alternative for cash, payment slips (Boletos), wire transfers and debit transactions. According to the Central Bank, Pix’s share of the total number of transactions rose from 1% in the fourth quarter of 2020 to 52% in the first half of 2025. In terms of Pix’s share of monetary volume, it increased from 1% to more than 26% over the same period. Since then, the Central Bank and competitors have been extending the scope of Pix. For instance, the Brazilian Central Bank is rolling out additional functionalities, such as Pix Parcelado (Pix installments) and Pix Automático (recurring Pix payments), to expand Pix’s use in credit-like and recurring payment situations, including e-commerce and subscriptions. Even though we offer products based on Pix, we cannot guarantee that this revenue line could be enough to offset a decline in the use of card payment methods.

Our efforts to expand our product portfolio and market reach may not succeed and may reduce our revenue growth.

Failure to successfully broaden the scope of products and services that are attractive may inhibit our growth and harm our business. Furthermore, we expect to continue to expand our markets in the future, and we may have limited or no experience in such newer markets. We cannot assure you that any of our products or services will be widely accepted in any market or that they will continue to grow in revenue. Our offerings may present new and difficult technological, operational, regulatory risks, and other challenges, and if we experience service disruptions, failures, or other issues, our business may be materially and adversely affected. Further, our newer activities may not lead to growth or recoup our investments in a timely manner or at all and may require significant management time and attention. If any of this were to occur, it could damage our reputation, limit our growth, and materially and adversely affect our business.

Any acquisitions, investments, partnerships, joint ventures or divestments that we make or enter into could disrupt our business and harm our financial condition.

Acquisitions, investments, partnerships and joint ventures may be part of our corporate development strategy to grow our business. We evaluate and expect in the future to evaluate potential strategic acquisitions, investments, and partnerships or joint ventures with complementary businesses, services or technologies. We may not be successful in identifying acquisition, investments, partnership and joint venture targets. In addition, we may not be able to successfully finance or integrate any businesses, services or technologies that we acquire, invest or with which we form a partnership or joint venture, and we may lose merchants as a result of any acquisition, investment, partnership or joint venture. Our competitors may be willing or able to pay more than us for acquisitions, which may cause us to lose certain acquisitions that we would otherwise desire to complete.

Furthermore, the integration of any acquisition (such as the Reclame Aqui acquisition, as defined in “Item 5—Operating and Financial Reviews and Prospects”), investment, partnership or joint venture may divert management’s time and resources from our core business and disrupt our operations, and such integration may be substantially more costly and time consuming than we had anticipated. Certain acquisitions, investments, partnerships and joint ventures we make may prevent us from competing for certain clients or in certain lines of business and may lead to a loss of clients. We may lose merchants as a result of acquisitions, investments, partnerships and joint ventures.

We may spend time and money on projects that end up not increasing our revenue. To the extent we pay the purchase price of any acquisition in cash, it would reduce our cash reserves, and to the extent the purchase price is paid with our common shares, it could be dilutive to our shareholders. To the extent we pay the purchase price with proceeds from the incurrence of debt, it would increase our level of indebtedness and could negatively affect our liquidity and restrict our operations. Finally, we may be forced to assume certain liabilities in connection with any acquisitions that we consummate, including unknown and contingent liabilities that we failed or were unable to identify while performing due diligence. We cannot ensure that any acquisition, investment, partnership or joint venture we make will not have a material adverse effect on our business, financial condition and results of operations.

In addition, we may from time to time pursue divestitures of certain of our businesses or assets as part of our optimization strategy. For example, in July 2025, following a strategic review of our software operations, we announced the sale of Simplesvet, Linx Sistemas and other software assets to third parties, both of which have since closed. These assets together represented a substantial portion of our software segment’s revenue and profitability in 2024. We also continue to evaluate the strategic fit of our remaining software businesses, which may be integrated into our core offerings or operated independently. We may pursue additional divestitures based on management’s evaluation of business strategies, performance or asset valuation. These activities involve inherent risks, including the possibility of completing a sale at lower-than-anticipated valuation levels or on other unfavorable terms, exposure to post-closing claims for indemnification or breach of transition-services obligations, and the operational challenges of separating integrated assets and personnel and redirecting internal resources to transition services, risks and challenges that could adversely affect our financial performance and may affect the market price of our Class A common shares.

Moreover, following the completion of any such divestitures, we may continue to be exposed to legacy liabilities and claims relating to periods in which we owned or controlled the divested businesses. Under Brazilian law, asset sales and other corporate reorganizations do not necessarily shield sellers from claims or penalties arising from pre-closing conduct, and authorities or courts may seek to hold us, our subsidiaries or our current or former directors and officers jointly liable, including on theories of willful misconduct or bad faith. Allegations of this nature, or other legacy claims (including tax, labor, consumer, data protection or anti-corruption matters), could be costly and time-consuming to resolve, could result in significant payments or penalties and could adversely affect our reputation and results of operations.

If we fail to manage our growth effectively, our business could be harmed.

In order to manage our growth effectively, we must continue to strengthen our existing infrastructure, develop and improve our internal controls and risk management, create and improve our reporting systems, and timely address issues as they arise. These efforts may require substantial financial expenditure, commitments of resources, developments of our processes, and other investments and innovations. As we grow, we may not be able to execute as quickly as smaller, more efficient organizations.

The services we render are designed to process very complex transactions and provide reports and other information concerning those transactions, at high volumes and processing speeds. Any failure to deliver an effective and secure service or any performance issue arising from a new service could result in significant processing or reporting errors or other losses. As a result, our growth efforts could result in increased costs and/or we could also experience a loss in business.

If we cannot pass increases in fees from payment schemes, including assessment, interchange, transaction and other fees, or increases in fees due to macroeconomic factors such as interest rate increases along to our merchants, our operating margins will decline.

We pay assessment, interchange and other fees set by the payment schemes for each transaction we process. From time to time, the payment schemes may increase the assessment, interchange and other fees that they charge payment processors. We may also face increases in costs from macroeconomic factors such as a higher interest rate, which affects the financing costs of our prepayment and credit operations. Under our existing contracts with merchants, we are generally permitted to pass these fee increases along to our merchants through corresponding increases in our fees. However, if we are unable to pass through these and other fees in the future due to contractual or regulatory restrictions, competitive pressures or other considerations, it could have a material adverse effect on our business, financial condition and results of operations.

Our holding company structure makes us dependent on the operations of our subsidiaries.

We are a Cayman Islands exempted company with limited liability. Our material assets are our direct and indirect equity interests in our subsidiaries. We are, therefore, dependent upon payments, dividends and distributions from our subsidiaries for funds to pay our holding company’s operating and other expenses and to pay future cash dividends or distributions, if any, to holders of our Class A common shares, and we may have tax costs in connection with any dividend or distribution. Furthermore, exchange rate fluctuation will affect the U.S. dollar value of any distributions our subsidiaries make with respect to our equity interests in those subsidiaries. See “—Financial Risks— We are exposed to fluctuations in foreign currency exchange rates”, “—Economic uncertainty and political instability in Brazil may harm us and the price of our Class A common shares” and “Item 8. Financial Information—A. Consolidated statements and other financial information—Dividends and dividend policy”.

We are subject to costs and risks associated with increased or changing laws and regulations affecting our business. Specifically, developments in data protection and privacy laws could harm our business, financial condition or results of operations.

The Brazilian regulatory and legal framework is characterized by its complexity and extensive scope, presenting significant compliance challenges. Our operations are subject to a complex range of laws, rules, and regulations across multiple jurisdictions and regulatory bodies, which significantly dictate our business practices. Some of the federal, state or local laws and regulations in Brazil that affect us regulate: (a) consumer products, product liability or consumer protection; (b) advertising, marketing and sales of products; (c) labor and employment, including wage and hour laws; (d) tax matters or interpretations thereof; (e) data protection and privacy; (f) antitrust and competition; and (g) securities and exchange. The applicable laws, rules, and regulations imposed on us are enforced by multiple different authorities and governing bodies in Brazil, which increases the regulatory and legal complexity.

Under the Brazilian Data Protection Law (Law No. 13,709/18 or Lei Geral de Proteção de Dados) (“LGPD”) and its associated regulations, security breaches that may result in risk of significant damage to data subjects must be reported to ANPD, the Brazilian data protection regulatory body, and to the affected data subjects within 3 business days upon discovery that the incident has affected the personal data. Reporting such incidents may generate relevant costs, including but not limited to financial redress, reputational damage, and investigations, penalties and fines by the ANPD. The imposition of administrative sanctions and fines for non-compliance with the LGPD is governed by ANPD Resolution 4 (dated as of February 24, 2023).

The Central Bank also has specific legislation on cybersecurity and data protection. On April 8, 2021, the Central Bank approved Resolution 85, which establishes requirements for the engaging of relevant data processing, storage and cloud computing services by payment institutions authorized to operate by the Central Bank and determines the mandatory implementation of a cybersecurity policy. Central Bank Resolution 85 requires payment institutions to establish a formal internal cybersecurity policy and to incorporate specific mandatory clauses into all contracts involving relevant data processing, storage and cloud computing services.

Such a complex and extensive legal and regulatory environment generates high compliance costs and exposes us to compliance and litigation risks. Any failure to comply with applicable laws, rules, and regulations, could result in the suspension or revocation of our licenses to conduct regulated activities and participate in payment schemes. Furthermore, we could be subject to substantial fines (including penalties calculated on a per transaction basis) and to disgorgement of profits. Such non-compliance may also trigger intervention by the Central Bank, insolvency proceedings, or the extrajudicial liquidation of any of our regulated subsidiaries. Regulatory non-compliance may also hinder our ability to offer our products and services effectively. We could be required to modify our business practices and enter into a Conduct Adjustment Agreement with regulatory bodies to bring our operations into compliance. We could also face private litigation and investigations or lawsuits initiated by Brazilian Public Prosecutor Offices. Beyond legal sanctions, any perceived or actual compliance breach could have a significant impact on our reputation as a trusted brand and could cause us to lose existing clients and prevent us from obtaining new clients.

Our business is subject to extensive government regulation and oversight in Brazil and our status under these regulations may change. Violation of or compliance with present or future regulation could be costly, expose us to substantial liability and force us to change our business practices, any of which could seriously harm our business and results of operations.

Certain of our subsidiaries are licensed and regulated under various Brazilian laws and regulations which includes specific regulations such as electronic payments, payment institutions, publicly-held company issuer of securities, financial institutions and trade repositories, among others. For example, we are subject to minimum requirements of paid-in capital stock and net equity, establishment of internal controls and procedures, implementation of risk management structures, observation of know your client, anti-money laundering and counter terrorist financing rules, cybersecurity rules, constitution of ombudsman office and preparation of accounting statements pursuant to the Standard Chart of Accounts of the National Financial System (Plano Contábil das Instituições do Sistema Financeiro Nacional – COSIF), and administrative penalties for noncompliance.

In addition to country law and regulatory framework, the payment schemes’ rules are applicable to us. Each payment scheme has its own rules, which are approved by Central Bank. These rules are complex and extensive. For example, we must follow the Payment Card Industry Data Security Standard, a set of requirements designed to ensure that all companies that process, store, or transmit payment card information maintain a secure environment to protect Cardholder data. Regulators and payment schemes may increase enforcement of obligations, which may require us to review or expand our compliance program, adversely impacting our costs.

The above laws, rules and regulations may be interpreted and applied differently over time, and it is possible they will be interpreted and applied in ways that will materially and adversely affect our business. For further information regarding these regulatory matters, see “Item 4. Information on the Company—B. Business overview— Regulatory Matters—Regulation of the SPB”.

The costs and effects of pending and future litigation, investigations or similar matters, or adverse facts and developments related thereto, could materially affect our business, financial position and results of operations.

We are, and may be in the future, party to legal (including class actions), arbitration and administrative investigations, inspections and proceedings arising in the ordinary course of our business or from extraordinary corporate, tax, regulatory or accounting events, involving our clients, suppliers, customers, as well as competition, government agencies, tax and environmental authorities, particularly with respect to civil, tax and labor claims, including those with respect to outsourced employees. For instance, in recent years we have observed an upward trend in the amount of our contingencies for labor related claims, which we expect to continue. Our indemnities may not cover all claims that may be asserted against us, and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. Furthermore, there is no guarantee that we will be successful in defending ourselves in pending or future litigation or similar matters under various laws. Should the ultimate judgments or settlements in any pending litigation or future litigation or investigation significantly exceed our indemnity rights, they could have a material adverse effect on our business, financial condition and results of operations. Further, even if we adequately address issues raised by an inspection conducted by an agency or successfully defend our case in an administrative proceeding or court action, we may have to set aside significant financial and management resources to settle issues raised by such proceedings or to those lawsuits or claims, which could adversely affect our business. See “Item 8. Financial Information—A. Consolidated statements and other financial information—Legal proceedings”

We may face restrictions and penalties under the Brazilian Consumer Protection Code.

Brazil has a series of strict consumer protection statutes, including Law No. 8,078, dated as of September 11, 1990 known as the “Consumer Protection Code” (Código de Defesa do Consumidor), that are intended to safeguard consumer interests and that apply to all companies in Brazil that supply products or services to Brazilian consumers. These consumer protection provisions include protection against misleading and deceptive advertising, protection against coercive or unfair business practices and protection in the formation and interpretation of contracts, usually in the form of civil liabilities and administrative penalties for violations. These penalties are often levied by the Brazilian Consumer Protection Agencies (Fundação de Proteção e Defesa do Consumidor, or “PROCONs”), which oversee consumer issues on a district-by-district basis. Companies that operate across Brazil may face penalties from multiple PROCONs, as well as the National Secretariat for Consumers (Secretaria Nacional do Consumidor, or SENACON).

As of December 31, 2025, we were party to approximately 1,541 proceedings with PROCONs . Additionally, as of the same date, we were subject to approximately 3,893 active judicial claims in Special Civil Court. Should these consumers prevail, or should further claims result in adverse outcomes, we may face reduced revenues due to refunds and fines, which could negatively impact our financial position. The figures mentioned in this paragraph do not consider the companies of the Software Business.

We are subject to regulatory activity and antitrust review and litigation under competition laws.

The Conselho Administrativo de Defesa Econômica (“CADE”) is the Brazilian antitrust authority. Other companies or governmental agencies may allege that our actions violate antitrust or competition laws or otherwise constitute unfair competition. Contractual agreements with buyers, sellers, or other companies and our unilateral business practices could give rise to regulatory action or antitrust investigations or litigation. CADE may perceive our business to have such significant market power that otherwise uncontroversial business practices could be deemed anticompetitive. Any such claims and investigations, even if they are unfounded, may be expensive to defend, involve negative publicity and substantial diversion of management time and effort, and could result in significant judgments against us. In 2023, two of our subsidiaries were exonerated in antitrust procedural inquiries. CADE’s decisions may be adverse to us, having a negative effect on our business model, operating results and financial condition.

We are subject to anti-corruption, anti-bribery and anti-money laundering laws and regulations.

The highly automated nature of, and liquidity offered by our products and services make us a target for illegal or improper uses. In addition, Brazil has a high risk of corruption, and we are subject to anti-corruption, anti-bribery and anti-money laundering laws and regulations, including the Brazilian Federal Law No. 12,846, dated as of August 1, 2013 (“Clean Company Act”), and the United States Foreign Corrupt Practices Act of 1977, as amended (“FCPA”). Both the Clean Company Act and the FCPA impose liability against companies who engage in bribery of government officials, either directly or through intermediaries. In addition, there have been public reports and statements indicating that the current U.S. administration is evaluating whether to designate certain criminal organizations with operations in Brazil, including groups such as Primeiro Comando da Capital (PCC) and Comando Vermelho (CV), as foreign terrorist organizations (“FTOs”). While no such designations have been made to date, any such action would expand the scope of U.S. enforcement authorities and could subject individuals and entities that are found to have provided “material support” to such organizations, a concept that is broadly defined, to significant criminal and civil liability, thereby increasing regulatory and compliance risks for companies with operations in Brazil. If we make errors, failures, violations or delays in complying with anti-corruption, anti-bribery and anti-money laundering laws and regulations, or if we or any of our employees, contractors, agents, officers or other persons with whom we conduct business have or are deemed to have a nexus to an FTO, we could suffer criminal, administrative and civil liabilities and/or lawsuits, significant fines and penalties, forfeiture of significant assets, or other enforcement action (including from the U.S. Department of Justice) as well as reputational harm.

Certain ongoing legislative and regulatory initiatives under discussion by the Brazilian Congress, the Central Bank and the broader payments industry may result in changes to the regulatory framework of the Brazilian financial services industry and may have an adverse effect on us.

In addition to being complex and extensive, our regulatory and legal environment is continuously changing. There can be no guarantee that we will have sufficient financial and technical resources to comply with changes or successfully compete in the context of a shifting regulatory and legal environment. Changes may be in the form of new laws and regulations, or amendments or changes in interpretations of existing laws and regulations.

Changes could adversely affect us by, for example, increasing competition and costs associated with compliance, requirements, actions, fines, penalties, and enforcements; diverting the attention of some of our senior management team; causing delays in planned product improvements; requiring us to change our processes and operations; reducing the demand or popularity of our products and services; making it difficult for new customers to join our network; limiting our ability to grow; reducing the attractiveness of our products and services; and preventing us from offering existing products and services.

In recent years, the Brazilian government, the Central Bank and other regulatory authorities have introduced significant regulatory changes for financial services which impact or may impact our business, including new rules regarding cybersecurity standards and governance requirements. The Central Bank issued several regulations related to the Brazilian financial services industry, aiming to increase competitiveness in the sector, strengthen risk management, encourage the development of new solutions and the differentiation of products to consumers, and promote the increased use of electronic payment means. Such measures include but are not limited to:

Pix – in 2020, the Central Bank launched an instant payments ecosystem that enables real-time transactions among individuals and entities on a 24/7 basis (“Pix”). Pix has since become one of the main payment instruments in Brazil and is the preferred alternative to debit and pre-paid transactions. The growth of Pix may have resulted and may continue to result in a loss of interest from our prospective and existing clients in using the payments schemes that we operate, and make it more difficult for us to retain or attract clients. The Brazilian Central Bank and market participants are also rolling out additional functionalities, such as Pix Parcelado (Pix installments) and Pix Automático (recurring Pix payments), to expand Pix’s use in credit-like and recurring payment situations, including e-commerce and subscriptions. As customers and merchants increasingly adopt Pix for both immediate and deferred payments, our transaction volumes, interest income, and fee-based revenues from credit cards and other credit products may decline. For further details on Pix regulation and innovation refer to “Item 4. Information on the Company – B. Business Overview – Pix”.
Open Finance – in 2020, the Central Bank and CMN published the initial set of guidelines and standards for the implementation of the Open Financial System (“Open Finance”) in Brazil. Stone IP, as a payment institution that provides payment accounts to its clients, is a mandatory participant in certain phases of Open Finance and as a result must comply with the applicable Open Finance regulations, self-regulation and other data guidelines, as well as stringent customer authentication regulations and Brazilian privacy laws such as the LGPD, under which data can only be shared with the explicit consent of the user. Compliance with such regulations may increase our costs and we are at risk of being subject to fines and penalties if we fail to comply. In addition, competitors may use data on our clients for their business goals and provide services to them within Open Finance context. For example, Payment Initiation Service Providers require the initiation of payment transactions without (a) managing a payment account; and (b) intermediating, at any time, the funds transferred in the respective payment transaction. If that were to happen, we may lose clients to competitors, which would harm our business.
Prudential Conglomerates and Minimum Capital Requirements – in 2021, the Central Bank introduced new rules setting out new accounting criteria applicable to prudential conglomerates headed by payment institutions. Under the new rules, we must maintain minimum capital adequacy ratio in relation to our risk-weighted assets (“RWA”), which are assessed in a manner similar to the Basel Committee on Banking Supervision (BCBS) standards, yet applying specific requirements to address payment-related risks. The Central Bank may introduce additional requirements related to the components of such calculation in the future.
Brazilian Worker Food Program (Programa de Alimentação do Trabalhador – PAT) – In 2022, the Brazilian Congress introduced the duty of openness and interoperability for the card schemes of Brazilian Worker Food, which was regulated by the Brazilian Decree No. 12,712, enacted as of November 11, 2025. Recently, the criteria for openness and interoperability for those card schemes have been the subject of legal disputes, and the courts may take some time to reach a final decision. If the courts rule that the duty for openness and interoperability of Brazilian Worker Food Program card schemes is unlawful, we may lose clients and revenue to competitors, which would harm our business.
Central Bank Resolution No. 150/21 also sets forth guidelines for payment scheme settlement. In this context, as a result of Public Consultation No. 104/24, Central Bank Resolution No. 522/25 sought to enhance these rules in three key areas, which will be updated by the payment scheme settlor until May 2026: (i) centralized risk management; (ii) transparency of scheme fees; and (iii) anti-money laundering and counter-terrorism financing (AML/CFT) measures. While these provisions could help reduce participants’ financial exposure—since the settlor would be responsible for residual risks—they may also require acquirers to make additional contributions to the risk management mechanisms set by the scheme.

These measures are in various phases of development, whether as part of legislative or regulatory initiatives and the overall impact of any such reform proposals is difficult to estimate. Additionally, any future legislative or regulatory initiatives that would bring restrictions over the number of installments in credit card operations in Brazil may have an adverse effect on us.

The discount rates that we charge merchants for the early payment of their card receivables is an example of changing regulations. This prepayment solution represents a significant portion of our financial income. There was some debate about whether the discount rates applicable to early payment of card receivables should be capped under the limits set by Brazilian Decree No. 22,626 of April 7, 1933 (“Usury Law”). Nevertheless, Brazilian Law No. 14,905 of June 28, 2024, amended the Usury Law to explicitly exclude from its scope operations performed by institutions authorized to operate by the Central Bank. Therefore, the cap mentioned above is not applicable to Stone IP’s operations. However, we cannot assure you that there will not in the future be new or amended laws preventing us from providing those operations or limiting the fees we may charge.

As our business grows, we may become subject to more regulations. As we offer new products and services and enter new markets, we may become subject to additional laws, rules and regulations. For example, offering financial products such as loans directly to our clients, including in the form of Stone SCD, or term deposits through Stone SCFI has required us to have additional compliance policies, procedures, regulatory and risk management requirements, as well as a more extensive interaction with the Central Bank, and we may not recover our investments in these new products in a timely manner or at all. For example, we may be unable to attract customers, fail to anticipate competitive conditions or fail to adapt and tailor our services to different markets. The realization of any of the risks above (either alone or in combination) could prevent us from scaling this line of business, impair future revenue streams, and expose us to reputational and regulatory risks, any of which could materially and adversely affect our business and financial condition.

Changes in tax laws, tax incentives, benefits or differing interpretations of tax laws may adversely affect our results of operations.

Changes in tax laws, regulations, related interpretations and tax accounting standards in Brazil, the Cayman Islands or the United States may result in a higher tax rate on our earnings and revenues. If the taxes applicable to our business increase or any tax benefits are revoked, our business could be harmed. For example, in 2015 the Brazilian government increased the rate of PIS/COFINS tax (which is a tax levied on revenues) from 0% to approximately 4.65% on financial income. Additionally, following the approval of Bill of Law (PL) No. 128 in late 2025, the Social Contribution on Net Profit (CSLL) rate applicable to payment institutions was increased, which may further impact our net income. See “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Description of Principal Line Items — Income Tax and Social Contribution” for more information. Our payment processing activities are also subject to a Municipal Tax on Services (ISS). Any increases in ISS rates would also harm our profitability.

The Brazilian Tax Reform, enacted through Constitutional Amendment No. 132/2023 and further regulated by Complementary Laws No. 214/2025 and No. 227/2026, introduces substantial changes to the indirect tax framework applicable to our business and the payment ecosystem in which we operate. The replacement of existing taxes (ICMS, ISS, and PIS/Cofins) with the IBS and CBS, combined with the introduction of a split payment system — under which payment institutions would be responsible for operationalizing the collection of consumption taxes from merchants — may impose significant operational, technological, and compliance burdens on us and on the broader ecosystem of merchants, acquirers, and financial institutions with which we interact. Although certain safeguards have been established for payment institutions, including exemption from tax liability under the split payment framework, key aspects of the reform remain subject to future regulation, particularly regarding ancillary obligations and the specific taxation of the financial sector. The transition period, spanning from 2026 to 2032, introduces a prolonged period of regulatory uncertainty during which we may be required to adapt our systems, processes, and commercial arrangements on an ongoing basis. Any increase in the overall tax burden applicable to our business or to the merchants and partners within our ecosystem, as well as any failure to timely adapt to new rules and requirements, could result in higher costs and materially and adversely affect our business, financial condition, and results of operations.

We benefit from certain tax incentives granted to technological research and technological innovation development activities, provided for in Law No. 11,196 (“Lei do Bem”). In 2025, Complementary Law (LC) No. 224 was enacted, establishing a 10% reduction in various tax benefits. While initial interpretations of LC No. 224/2025 suggested that such reduction could apply to the incentives provided by Lei do Bem, the Brazilian Federal Revenue Service (Secretaria da Receita Federal do Brasil – RFB) subsequently issued Normative Instruction (IN) No. 2,305, clarifying that the Lei do Bem is excepted from this 10% cut. Our ability to benefit from these incentives still depends on the fulfillment of certain obligations.

Failure to comply with certain obligations in accordance with the applicable rules and/or sending the documentation required for the granting of such incentives, may result in the loss of the right to incentives not yet used and the collection, by the tax authorities, of the amount corresponding to the unpaid taxes as a result of incentives already used, plus fines and interest provided for in tax legislation, without prejudice to any applicable criminal sanctions, which may adversely affect us.

If the tax benefits currently granted expire, are extinguished, or are cancelled, we cannot assure you that such benefits will be renewed or that our subsidiaries will succeed in obtaining new tax benefits on equally favorable terms. If such benefits are not renewed, our business could be adversely affected.

Some tax rules related to collection, ancillary obligations or even changes on tax rates in Brazil can change without prior notice or vacancy period for their implementation. We may not always be aware of all such changes that affect our business and we may therefore fail to pay the applicable taxes or otherwise comply with tax regulations, which may result in additional tax assessments, penalties and interests for our company.

Furthermore, we are subject to tax laws and regulations that may be interpreted differently by tax authorities, judicial or administrative courts and us. The application of indirect taxes, such as sales and use tax, value-added tax, or VAT, provincial taxes, goods and services tax, business tax and gross receipt tax, to businesses like ours is a complex and evolving issue. Significant judgment is required to evaluate applicable tax obligations. In many cases, the ultimate tax determination is uncertain because it is not clear how existing statutes apply to our business. One or more states, or Municipalities, the Brazilian government or other countries may seek to challenge the taxation or procedures applied to our transactions imposing the charge of taxes or additional reporting, record-keeping or indirect tax collection obligations on businesses like ours. New taxes could also require us to incur substantial costs to capture data and collect and remit taxes. If such obligations were imposed, the additional costs associated with tax collection, remittance and audit requirements could have a material adverse effect on our business and financial results.

On December 20, 2023, Constitutional Amendment (EC) No. 132/2023 (“Tax Reform”) was enacted, replacing several of the current “indirect taxes” (ICMS, ISS, and PIS/Cofins) with the Goods and Services Tax (IBS) and the Contribution on Goods and Services (CBS). Further, on January 16, 2025, the President of Brazil enacted Complementary Law No. 214, which further regulates such indirect taxes and other matters, including the establishment of a specific tax collection system.

On January 13, 2026, Complementary Law No. 227 was enacted, which provides for the functioning of the Managing Committee — the government body responsible for overseeing tax collection — and addresses the tax rates applicable to the financial sector. It is important to mention that future regulations will provide for the operationalization of the ancillary obligations as well as key points regarding the taxation of the financial sector.

The split payment system introduces a new tax collection framework where payment institutions would be responsible for operationalizing the collection of consumption taxes from merchants. Some safeguards have been established in favor of payment institutions, such as exemption from tax liability under the split system. This Tax Reform will be subject to a transition phase, lasting from 2026 to 2032. For now, we are unable to foresee when and how the new pending regulations will come, nor how the rules will be applied. Any increases in the overall tax burden applicable to our business could result in higher costs for us and, as a result, materially and adversely affect our profitability.

Our risk management policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risks, which could expose us to losses and liability and otherwise harm our business.

We operate in a political and economically volatile country and in a rapidly changing industry. In recent years, we have experienced significant changes to our business, including the launch of new products and services, entering into new areas of activity (credit and banking) and undertaking strategic acquisitions. In addition, the number of clients and their transactions, the complexity and risks of our new products and services, counterparties, suppliers and third-party service providers that work with us has increased. As a result, our risk management policies are challenged to deal with an increasing number of complex risks. For example, we are responsible for vetting and monitoring our clients and determining whether the transactions we process for them are lawful. In this context, our risk management policies, procedures, techniques, and processes may not be partially or fully effective in identifying, monitoring and managing our risks, which may result in financial and reputational losses and liabilities, including civil and criminal.

Because we heavily rely on statistical and artificial intelligence methods in our risk management, we are dependent on data and models. We work with internal data (clients, counterparties, transactions, etc.) and data provided by third parties. In some cases, that information may not be accurate, complete or up to date, which can result in errors. We face model risk because we may, among other reasons, be unsuccessful in determining the appropriate models (i.e., by selecting the wrong variables or not selecting important variables), by failing to choose the appropriate quantitative methods, by failing to detect and properly treat regime changes in the available sample, or by making operational errors in deploying the model to production environment. Quantitative modeling is a central activity of our risk management team. It is especially important to credit risk, market risk and fraud detection and prevention.

Indeed, we face model risk in almost all areas of our business. For example, we are dependent on quantitative modeling to make decisions in areas such as logistics, customer relations and engagement, finance, credit, fraud prevention, marketing and strategy.

Cybersecurity attacks could result in data breaches and severely damage our reputation, business and financial condition.

Our business is vulnerable to cybersecurity attacks, which could have a significant impact on our operations. As we expand our banking and credit business lines, our risk of being subject to cybersecurity attacks increases. Brazilian businesses are particularly subject to frequent cybersecurity attacks. The techniques used to obtain unauthorized, improper, or illegal access to our systems, our data, client data or end-user data, disable or degrade service, or sabotage systems are constantly evolving and have become increasingly complex and sophisticated, may be difficult to detect quickly, and may not be recognized or detected until after they have been launched against a target. These attacks can be carried out by hackers, linked or not to criminal groups, aimed at stealing sensitive data, money, or disrupting our operations.

The cyber risks that we are exposed to include but are not limited to:

Data theft: Hackers can steal confidential information, such as credit card numbers, bank account information, passwords, and personal identification data.
Phishing and spear phishing attacks: Phishing attacks can be used to steal confidential information or install malware on our systems.
Malware: Malware can be used to steal our data or disrupt our operations.
Ransomware: Ransomware is a type of malware that can restrict our access to our files, data and operations and can demand ransom in exchange for restoring any of the items mentioned.
Denial of Service (DDoS) attacks: DDoS attacks can overwhelm our systems, making them inaccessible.
Social engineering attacks: Hackers can use social engineering to manipulate our employees and gain access to confidential systems and data.
Software and hardware vulnerabilities: Vulnerabilities in our software and hardware can be exploited by hackers to access the institution’s systems.
Insider attacks: Cyberattacks can also be carried out by malicious employees who have access to confidential systems and data.

Cybersecurity attacks have become more frequent, sophisticated, and riskier. In 2025, Brazil faced a series of cybersecurity attacks that resulted in the illicit transfer of hundreds of millions of Brazilian reais. For instance, the highest profile case was an attack on C&M Software. The fraud involving C&M Software, which occurred between June and July 2025, represented an unprecedented attack on the infrastructure of the Brazilian payment system. Unlike common scams targeting cardholders, this criminal action exploited the company’s role as an information technology service provider, which connects medium-sized banks and fintechs directly to the Central Bank for Pix settlement. Through the co-opting of an internal employee and the use of social engineering, the fraudsters obtained privileged credentials and legitimate digital certificates. With this access, they managed to bypass security layers and trigger automated payment orders from the financial institutions’ reserve accounts, embezzling an estimated amount between R$800 million and R$1 billion (approximately US$150 million – US$190 million).

The impact of the operation was immediate, forcing the Central Bank to disconnect C&M from the system and paralyzing Pix functionality for thousands of users across various fintechs. The diverted capital was dispersed through a network of “mule” accounts and quickly converted into cryptocurrencies to hinder international tracking. The episode served as a watershed moment for the sector, compelling the regulator to impose much stricter cybersecurity standards and third-party risk monitoring for all entities operating within the vital infrastructure of the national financial system.

Any integration of artificial intelligence in our or any third party’s operations is expected to pose new or unknown cybersecurity risks and challenges. The consequences of a cybersecurity attack could severely harm us through financial and reputational losses, regulatory penalties, and impact on our clients’ business.

An occurrence of a natural disaster, widespread health epidemic or other outbreaks could have a material adverse effect on our business, financial condition and results of operations.

Our business could be materially and adversely affected by natural disasters, such as fires or floods, or other events, such as wars, acts of terrorism, environmental accidents, power shortages, communication interruptions, pandemics or epidemics. These events could cause us to close our operating facilities temporarily. In addition, our net sales could be materially reduced to the extent that a natural disaster, health epidemic or other major event harms the economy of the countries where we operate. Our operations could also be severely disrupted if our clients or other participants were affected by natural disasters, health epidemics or pandemics or other major events. Such events could also negatively impact our clients and other participants’ operations in a way that harms our business.

Our insurance policies may not be sufficient to cover all claims.

Our hedge and insurance policies may not adequately mitigate all the risks to which we are exposed. For example, as of the date of this report, we do not maintain insurance policies contracted specifically for property, business interruptions or cybersecurity. A significant claim not covered by our insurance, in full or in part, may result in significant expenditures by us. Moreover, we may not be able to maintain insurance policies in the future at reasonable costs or on acceptable terms, which may adversely affect our business.

Our systems and our third-party providers’ systems may fail, which could interrupt our service, cause us to lose business and increase our costs.

We are dependent on the ability of our products and services to integrate with a variety of systems, including but not limited to software, data centers, cloud infrastructures, telecommunications and internet networks. Our card transactions, for example, are dependent on telecommunications, internet, cloud infrastructures and data centers, among others. We depend on the efficient and uninterrupted individual and joint operation of them.

These systems and operations could be exposed to damage or interruption due to, among other things, the occurrence of spikes in user volume, fire, natural disaster, power loss, human errors, telecommunications failure, cyber-attacks, acts of terrorism, vandalism or sabotage, unauthorized entry, hosting disruptions, capacity constraints or computer viruses.

We rely on a combination of our own systems and systems licensed to us by third-party providers. We rely on our subsidiary, Buy4 Processamento de Pagamentos S.A., to provide transaction authorization and settlement, computing, storage, processing and other related services for card transactions. Our operations depend, in part, on our providers’ ability to protect their facilities against damage or interruptions and their continued provision of services, as well as to providing us adequate advanced notice in the event that they decide to close a facility. Our solutions, including hardware and software, interoperate with mobile networks offered by telecom operators and mobile devices developed by third parties. Changes in these networks or in the design of these mobile devices may limit the interoperability of our solutions with such networks and devices and require modifications to our solutions. If we are unable to ensure that our hardware continues to interoperate effectively with such networks and devices, or if doing so is costly, our business may be materially and adversely affected. We utilize data center hosting facilities from third-party service providers to make certain products and services available to our customers. See “Item 4. Information on the Company – D. Property, plants and equipment” for information regarding our data center facilities.

We also rely on card issuers and payment schemes to process our transactions. It is mandatory under the Central Bank rules that Acquirers register daily in trade repositories all card receivables owned by merchants (credit and debit). On the other hand, it is also mandatory that institutions willing to negotiate those receivables also register their contracts in such trade repositories. Therefore, as our group includes an Acquirer (Stone IP) and a financial institution (Stone SCD), it registers the merchants’ receivables through TAG Tecnologia para o Sistema Financeiro S.A. (“TAG”) (a StoneCo company), and its contracts through TAG, CERC Central de Recebíveis S.A. (“CERC”), CIP S.A. (“Nuclea”), and B3 S.A. – Brasil, Bolsa, Balcão (“B3”). Any failure to settle the merchant’s receivables in accordance with the information registered in the trade repository is considered an Acquirers’ misconduct. Under existing rules, while Acquirers may only choose one trade repository, increasing risks due to system failures, financial institutions may choose as many as they want, mitigating system unavailability risks. On June 6, 2021, the interoperability between financial market infrastructures (TAG, CERC, Nuclea and, more recently, B3) was launched under the rules of the Central Bank. Pursuant to applicable rules, the Acquirer must settle the merchants’ receivables in accordance with the information registered in the chosen trade repository and contracts regarding card receivables are only effective and made public when registered in a trade repository. We also rely on the Central Bank’s Brazilian Payment System (Sistema Brasileiro de Pagamentos, SPB) and Instantaneous Payment System (Sistema de Pagamentos Instantâneos, SPI) to receive and send funds electronically in our platform that serves acquiring, banking and credit businesses.

Our systems, our subsidiaries’ systems, and those of third parties have experienced defects, errors, delays, and other difficulties in processing our transactions (for example payment, banking, and credit transactions), communication channels with our clients, and our internal operations. If they experience such problems in the future, they could result in:

Loss of clients or early termination of customer contracts.
Loss of revenues, including subscription revenues owed from equipment rentals.
Loss of merchant and Cardholder data.
Loss of reputation resulting from negative publicity.
Penalties applied by Visa, Mastercard or other payment schemes, including loss of licenses and fines.
Loss of Central Bank authorizations granted by the Central Bank to operate as a payment institution (instituição de pagamento), a direct credit company (sociedade de crédito direto), a trade repository (entidade registradora), and a financial services company (Sociedade de Crédito, Financiamento e Investimento S.A.) in Brazil.
Fines or other penalties imposed by the Central Bank, as well as other measures taken by the Central Bank, including intervention, temporary special management, insolvency proceedings, and/or the out-of-court liquidation of Stone IP and any of our subsidiaries to whom licenses may be granted in the future.
Fines or other penalties imposed by ANPD.
Exposure to fraud losses or other liabilities.
Indemnity actions imposed by customers.
Additional operating and development costs.
Diversion of technical and other resources.

While much of our processing infrastructure is located in multiple, redundant data centers and clouds, we have some core business systems that are located in only one facility and do not have redundancy. An adverse event that results in the unavailability of such systems or the facilities in which they are located could harm us.

Any changes in systems or networks belonging to third-party providers that degrade the functionality of our products and services may result in additional costs or requirements on us re-establishing the proper level of the functionality, or give preferential treatment to competitive services, including their own services, could materially and adversely affect usage of our products and services.

While we maintain four data centers and cloud infrastructure operating across multiple regions, which provides meaningful resilience within areas under our direct control, we cannot assure that our disaster recovery and business continuity plans are adequate or will function as intended when activated. Our operations also use third-party providers’ systems whose own resilience and recovery capabilities are outside our direct control. A failure in any of these dependencies during a recovery scenario could extend our recovery timeline beyond what our plans contemplate. If our disaster recovery or business continuity plans prove inadequate, we could experience prolonged service interruptions, fail to meet settlement obligations, lose Central Bank authorizations and suffer reputational and financial harm.

Our use of open source software could negatively affect our ability to sell our solutions and subject us to possible litigation.

Our solutions incorporate and are dependent to some extent on the use and development of open source software and we intend to continue our use and development of open source software in the future. Such open source software is generally licensed by its authors or other third-parties under open source licenses and is typically freely accessible, usable and modifiable. Pursuant to such open source licenses, we may be subject to certain conditions, including requirements that we offer our proprietary software that incorporates the open source software for no cost, that we make available source code for modifications or derivative works we create based upon, incorporating or using the open source software and that we license such modifications or derivative works under the terms of the particular open source license. If an author or other third-party that uses or distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from the sale of our solutions that contained or are dependent upon the open source software and required to comply with the foregoing conditions, which could disrupt the distribution and sale of some of our solutions. Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition or require us to devote additional research and development resources to change our platform. The terms of many open source licenses to which we are subject have not been interpreted by courts. The potential impact of these terms on our business is uncertain and may result in unanticipated obligations regarding our solutions and technologies.

Furthermore, any requirement to disclose our proprietary source code, termination of open source license rights or payments of damages for breach of contract could be harmful to our business, results of operations or financial condition and could help our competitors develop products and services that are similar to or better than ours.

In addition to risks related to license requirements, use of open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties, controls on the origin or development of the software, or remedies against the licensors. Many of the risks associated with the usage of open-source software cannot be mitigated and could adversely affect our business.

Although we believe that we have complied with our obligations under the various applicable licenses for open-source software, it is possible that we may not be aware of all instances where open-source software has been incorporated into our proprietary software or used in connection with our solutions or our corresponding obligations under open-source licenses. We do not have open source software usage policies or monitoring procedures in place. We rely on multiple software programmers to design our proprietary software and we cannot be certain that our programmers have not incorporated open-source software into our proprietary software that we intend to maintain as confidential or that they will not do so in the future.

Unauthorized disclosure, destruction or modification of data, through cybersecurity breaches, computer viruses or otherwise or disruption of our services could expose us to liability, protracted and costly litigation and damage our reputation.

Our business involves the collection, storage, processing and transmission of customers’ personal data, including names, addresses, identification numbers, credit or debit card numbers and expiration dates and bank account numbers. Concerns about data security are increased when we transmit information. Electronic transmissions can be subject to attack, interception or loss. Also, computer viruses and malware can be distributed and spread rapidly over the internet and could infiltrate our systems or those of our associated participants, which can impact the confidentiality, integrity and availability of information. In addition, data security threats may derive from human error, fraud and malice on the part of our third-party employees, and accidental technological failure.

In the scope of our activities, we share information with third parties, including commercial partners, third-party service providers and other agents, which we refer to collectively as “associated participants”, who collect, process, store and transmit sensitive data. Given the rules established by the payment scheme settlors, such as Visa and Mastercard, and applicable regulations, we may be held responsible for any failure or cybersecurity breaches attributed to these third parties insofar as they relate to the information we share with them.

The loss, destruction or unauthorized modification of data of the end users of payment services (e.g., payers, receivers, Cardholders, merchants, and those who may hold funds in their accounts) by us or our associated participants or through systems we provide could result in significant fines, sanctions and proceedings or actions against us by payment schemes, ANPD or third parties. In addition, a significant data breach from our systems and communications could result in payment schemes prohibiting us from processing transactions on their schemes or the loss of Central Bank authorization to operate as a payment institution in Brazil, which could materially impede our ability to conduct business.

Our encryption of data and other protective measures may not prevent unauthorized access or use of data and sensitive data. A breach of our system or that of one of our associated participants may subject us to material losses or liability, assessments and claims for unauthorized purchases with misappropriated credit, debit or card information, impersonation or other similar fraud claims. Misuse of such data or a cybersecurity breach could harm our reputation and deter merchants from using electronic payments generally and our products and services specifically. In addition, any such misuse or breach could cause us to incur costs to correct the breaches or failures, expose us to uninsured liability, increase our risk of regulatory scrutiny, subject us to lawsuits, and result in the imposition of material penalties and fines under state and federal laws or regulations or by payment schemes.

We cannot assure you that there are written agreements in place with every associated participant or that such written agreements will prevent the unauthorized use, modification, destruction or disclosure of data or enable us to obtain reimbursement from associated participants in the event we should suffer incidents resulting in unauthorized use, modification, destruction or disclosure of data. In addition, many of our associated participants are small- and medium-sized agents that have limited competency regarding data security and handling requirements and may thus experience data losses. Any unauthorized use, modification, destruction or disclosure of data could result in protracted and costly litigation.

We may not be able to successfully manage our intellectual property and may be subject to infringement claims.

Our business relies on a number of forms of intellectual property rights, including trademarks, domain names, software, know-how, trade secrets technologies and other proprietary information, and we use a combination of contractual provisions, confidentiality procedures, and other approaches to establish and protect our intellectual property rights. We have been granted numerous trademarks and software covering our brands and products and have filed, and expect to continue to file, trademark applications before the patent, trademark and software offices in a number of jurisdictions, including the Brazilian Patent and Trademark Office (INPI) seeking to protect newly developed trademarks and products. We cannot be sure that intellectual property rights will be granted with respect to any of our trademarks, applications will be granted, or that any such patent, trademark and software offices shall continue to protect our intellectual property rights with respect to any of our trademarks, applications and products. We may not be able to successfully manage our intellectual property and may be subject to infringement claims.

Third-parties may challenge, invalidate, circumvent, infringe, misappropriate or otherwise violate any existing or future intellectual property assets requested by, issued to, or licensed by, us. Additionally, our intellectual property rights may not be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive advantages, to our business, and as a result, we may be forced to engage in costly redesign efforts, discontinuance of certain service offerings or other competitive harm. There is also a risk that we may, by omission, fail to renew our intellectual property rights on a timely basis in certain jurisdictions. Moreover, others, including our competitors, may independently develop similar technology, duplicate our services or design around our intellectual property, and in such cases, we may not to be able to assert our intellectual property rights against such parties. Furthermore, our contractual arrangements may not effectively prevent disclosure of our confidential information or provide an adequate remedy in the event of unauthorized disclosure of our confidential information. We may have to litigate to enforce or determine the scope and enforceability of our intellectual property rights, trade secrets and know-how, which is expensive and time-consuming, could cause a diversion of resources and may not prove successful. Such cases may expose us and negatively affect the use of our intellectual property and we may be prohibited from continuing to exploit them.

Due to the rapid pace of technological change in our industry, aspects of our business and our services rely on technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties on reasonable terms or at all. The loss of intellectual property protection, the inability to obtain third-party intellectual property or delay or refusal by relevant regulatory authorities to approve pending intellectual property registration applications could harm our business and ability to compete.

We may also be subject to costly litigation in the event our services and technology infringe upon, misappropriate or otherwise violate a third-party’s proprietary rights. Third parties may have, or may eventually be issued, patents, trademarks, trade secrets or other intellectual property that may be infringed upon, misappropriated or otherwise violated by our services, or may otherwise conflict with our own proprietary rights. We may also be subject to claims by third-parties alleging that we have breached any of our applicable copyright, trademark, license usage or other intellectual property licenses or agreements. Any such claim from third-parties may be expensive, time consuming and result in a limitation of our ability to use the intellectual property subject to such claims and may prevent us from registering certain trademarks, domain names, industrial designs, patents or other intellectual property assets. Additionally, in recent years, individuals and groups have been purchasing intellectual property assets for the sole purpose of making claims of infringement and attempting to extract settlements from companies like ours. Even if we believe that intellectual property related claims brought by such individuals are without merit, defending against such claims is time-consuming and expensive and could result in the diversion of the time and attention of our management and employees. Claims of intellectual property infringement also might require us to redesign affected services, enter into costly settlement or license agreements, pay costly damage awards, change our brands, or face a temporary or permanent injunction prohibiting us from marketing or selling certain of our services or using certain of our brands. Even if we have an agreement for indemnification against such costs, the indemnifying party, if any in such circumstances, may be unable to uphold its contractual obligations. If we cannot or do not license the infringed technology on reasonable terms or substitute similar technology from another source, our revenue and earnings could be adversely impacted.

In a dynamic industry like ours, the ability to attract, recruit, develop and retain key personnel and qualified employees is critical to our success and growth. If we are not able to do so, our business, financial condition and results of operations may be adversely affected.

We are dependent upon the ability and experience of several key personnel who have substantial experience with our operations and in the markets in which we offer our products and services. Many of our key personnel have worked for us for a significant amount of time or were recruited by us specifically due to their industry experience. It is possible that the loss of the services of one or a combination of our senior executives or key managers could have a negative effect on us. On November 13, 2024, the Central Bank enacted Resolution No. 432 that establishes minimum standards for management compensation policies in payment institutions, in line with FSB (Financial Stability Board) Principles for Sound Compensation Practices and their implementation standards. In a similar manner, CMN Resolution No. 5,177, enacted in September 2024, extended to SCDs management compensation standards already applicable to other financial institutions (such as Stone SCFI).

Furthermore, in order for us to successfully compete and grow, we must attract, recruit, develop and retain the necessary personnel who can provide the needed expertise across the entire spectrum of our intellectual capital needs. We also must develop our personnel to provide succession plans for our existing key personnel in order to be capable of maintaining continuity in the midst of the inevitable unpredictability of human capital. However, the market for qualified personnel is competitive, and we may not succeed in recruiting additional personnel or may fail to effectively replace current personnel who depart with qualified or effective successors. For instance, our Stone Agents are highly trained and, accordingly, we may face challenges in recruiting and retaining such qualified personnel. Our efforts to retain and develop personnel may also result in significant additional expenses, which could adversely affect our profitability. We cannot assure you that qualified employees will continue to be employed or that we will be able to attract and retain qualified personnel in the future. Failure to retain or attract key personnel could have a material adverse effect on our business, financial condition and results of operations.

We may identify material weaknesses in our internal control over financial reporting and, if we fail to maintain effective internal controls over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud.

We cannot provide assurance that significant deficiencies or material weaknesses in our internal control over financial reporting will not be identified in the future. If we fail to maintain the adequacy of our internal control over financial reporting, as the laws, regulations and policies standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. If we fail to maintain an effective internal control environment, we could suffer material misstatements in our financial statements, fail to meet our reporting obligations or fail to prevent fraud, which would likely cause investors to lose confidence in our reported financial information. This could, in turn, limit our access to capital markets and harm our results of operations. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from Nasdaq, regulatory investigations and civil or criminal sanctions.

Degradation of the quality of the products and services we offer, including support services, could adversely affect our ability to attract and retain clients and partners and client attrition or a decline in our clients’ growth rate could cause our revenues to decline.

We experience churning in our client base resulting from several factors, including but not limited to business closures, transfers of clients’ accounts and credit products or a reduction in same-store sales. We may not be able to accurately predict the level of churn in the future and our revenues could decline as a result of higher-than-expected churn, which could have a material adverse effect on our business, financial condition and results of operations.

Our clients expect a consistent level of quality in the provision of our products and services. The support services that we provide are also a key element of the value proposition to our clients. If the reliability or functionality of our products and services is compromised or if the quality of those products or services is otherwise degraded, or if we fail to continue to provide a high level of support, we could see an increase in our client churn and find it harder to attract new clients and partners.

Our growth to date has been partially driven by the growth of our clients’ businesses and the resulting growth in usage of our products and services, mainly driven by TPV and credit disbursements. Should the rate of growth of our clients’ business slow or decline, generated by macroeconomic or industry factors, this could have an adverse effect on volumes processed and on the usage of our products and services, therefore leading to an adverse effect on our results of operations. If we are unable to scale our support functions to address our growth, the quality of our support may decrease, which could adversely affect our ability to attract and retain clients and partners.

We are dependent on a few manufacturers for a substantial amount of our POS devices. We are at risk of shortage, price increases, changes, delay or discontinuation of key components from our POS device manufacturers, which could disrupt and harm our business.

Our acquiring business is dependent on a few manufacturers for a substantial amount of our POS devices. We are constrained by their manufacturing capabilities and pricing as well as general counterparty risk. We may face production delays or escalating costs if they are unable to manufacture enough products at an affordable cost. Further, we could face production delays if it becomes necessary to replace the existing substantial suppliers with more alternative suppliers.

We may also be subject to product recalls or other quality-related actions if such devices, or other products supplied by us, are believed to cause injury or illness, or if such products are defective or fail to meet our quality control standards or standards established by applicable law. If our POS suppliers are unable or unwilling to recall products and fail to meet applicable quality standards, we may be required to recall those products at a substantial cost to us. Recalls and government, customer or consumer concerns about product safety could harm our reputation, brands and relationships with clients, lead to increased costs, loss of revenues (including revenues from equipment rentals and/or decreased transaction volumes), and/or loss of merchants, any of which could have a material adverse effect on our business, results of operations and financial condition.

Additionally, agreements for the components used to manufacture our POS devices are entered into directly by the manufacturer of our POS devices and we do not have agreements with these suppliers. Some of the key components used to manufacture our POS devices, such as the chip, pin reader and battery, come from limited sources of supply in limited countries in Asia. In addition, the geopolitical tensions and risks involving these countries, in particular, Taiwan and China, have been increasing in the last years. The policies and mitigators in place to contain the impacts of potential geopolitical crisis may fail. Due to the reliance of our POS manufacturers on these components, we are subject to the risk of shortages and long lead times in the supply of certain products. If our manufacturers cannot find alternative sources of supply, we could be subject to components shortages or delays or other problems in product assembly. In addition, various sources of supply-chain risk, including strikes or shutdowns, or loss of or damage to our products while they are in transit or storage, could limit the supply of our POS devices.

The materialization of the risks above would harm our ability to provide our POS devices or other services to our merchants on a timely basis. This could damage our relationship with our clients, prevent us from acquiring new clients, and harm our business.

Our operating results are subject to seasonal fluctuations, which could result in variations in our quarterly profit.

We have experienced in the past, and expect to continue to experience, seasonal fluctuations in our revenues as a result of consumer spending patterns. Historically, our revenues have been strongest during the last quarter of the year as a result of higher sales during the Brazilian holiday season. This is due to the increase in the number and amount of electronic payment transactions related to seasonal retail events. Adverse events that occur during these months could have a disproportionate effect on our results of operations for the entire fiscal year. As a result of quarterly fluctuations caused by these and other factors, comparisons of our operating results across different fiscal quarters may not be accurate indicators of our future performance.

Fraud activities could have a material adverse effect on our business, reputation, financial condition, and results of operations.

The highly automated nature of, and liquidity offered by our products and services make us a target for illegal or improper uses, including fraudulent or illegal sales of goods or services, money laundering and terrorist financing. These types of illegitimate, as well as unlawful, transactions can also expose us to governmental and regulatory sanctions, including outside of Brazil (e.g., U.S. anti-money laundering and economic sanctions violations). In configuring our products and services, we face an inherent trade-off between security and client convenience.

Frauds may occur in all the different financial services segments we operate in. We may be subject to potential liability for fraudulent electronic payment transactions or credits initiated by merchants or others, as well as by clients using our credit or digital banking solutions. In acquiring, merchant fraud includes when a merchant or other party knowingly uses stolen or counterfeit credit, debit or prepaid card, card number, or other credentials to record a false sales transaction, processes an invalid card, or intentionally fails to deliver the merchandise or services sold in an otherwise valid transaction. Payment schemes may identify merchants as questionable or potentially fraudulent through monitoring and audit processes, impose financial penalties on the acquirer and, in certain cases, shift liability from the card issuer to the acquirer. Because we are reducing the period between the card transaction and the receivables anticipation to minutes in some products, the fraud risk tends to increase despite our efforts to contain it. In credit, a common fraud in working capital loans involves using falsification of balance sheets and income statements to inflate actual revenue and hide liabilities to create the illusion of robust financial health, securing higher credit limits. In banking, identity thieves and those committing fraud using bank account numbers may cash out our client balance. In addition, they may also cash out the proceeds from our credit products.

Additionally, we must consider potential liabilities related to privacy and data protection, particularly in cases where personal information is compromised due to fraudulent activities. Criminals are using increasingly sophisticated methods to engage in illegal activities such as counterfeiting and fraud. It is possible that incidents of fraud could increase in the future, and our failure to catch such incidents may result in sanctions and/or fines from regulators, lawsuits and the degradation of our reputation. Failure to effectively manage risk and prevent fraud would increase our Chargeback and credit liabilities, default rates on our credit solutions, among others, and subject us to potential fines by regulators. Increases in fraudulent activities using our products and services could have a material adverse effect on our business, reputation as a financial services provider, financial condition, and results of operations.

We partially rely on Card Issuers or payment schemes to process our transactions. If we fail to comply with the applicable requirements of Visa, Mastercard or other payment schemes, those payment schemes could seek to fine us, suspend us or terminate our registrations, which could have a material adverse effect on our business, financial condition or results of operations.

We rely on Card Issuers and payment schemes to enable card acceptance and, in order to provide this service to our clients, we must pay fees to the payment schemes and Card Issuers, according to the applicable fees defined by the payment schemes regulation. A significant source of our revenue comes from processing transactions through Visa, Mastercard and other payment schemes. The payment schemes routinely update and modify their requirements and may increase or enforce new fees that can be charged by different billing methods, including fees per transaction by using one of their cards. Those changes in the requirements, including changes to risk management and collateral requirements, may impact our ongoing cost of doing business and, in some circumstances, we may not be able to pass through such costs to our clients or associated participants.

Furthermore, if we do not comply with the payment scheme requirements (e.g., their rules), the payment schemes could seek to fine us, suspend us or terminate our registrations that allow us to process transactions on their schemes. On occasion, we have received notices of noncompliance and fines, which have been typically related to transactional or messaging requisites, as well as excessive Chargebacks by a merchant or data security failures on the part of a merchant. If we are unable to recover amounts relating to fines or pass through the costs to our merchants or other associated participants, we would experience a financial loss. The termination of our registration due to failure to comply with the applicable requirements of Visa, Mastercard or other payment schemes, or any changes in the payment scheme rules that would impair our registration, could require us to stop allowing our clients to accept Visa, Mastercard or other payment schemes, which could have a material adverse effect on our business, financial condition and results of operations.

Our financing needs could adversely affect our financial flexibility and our competitive position, and we may not be able to secure financing on favorable terms, or at all, to meet our future capital needs.

We fund our operations through equity, sale of credit card receivables to third parties (such as commercial banks and investment funds), bank credit facilities, client deposits and financing arrangements. We do not know when or if our operations will generate sufficient cash to fund our ongoing operations.

In the future, our inability to either refinance our debt or to maintain and expand our asset sales programs could have important consequences and significantly impact our business. For example, it could make it more difficult for us to satisfy our operational and financial obligations; respond to unforeseen circumstances; increase our vulnerability to adverse changes in general economic, industry and competitive conditions; require us to dedicate a substantial portion of our cash flow from operations to make payments to debt holders, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes; limit our ability to make material acquisitions or take advantage of business opportunities that may arise; expose us to fluctuations in interest rates, to the extent our borrowings bear variable rates of interest; and affect our prepayment and credit business size and growth.

Any debt financing obtained by us could also include restrictive covenants relating to our capital-raising activities and other financial and operational matters. Our ability to comply with these covenants may be affected by events beyond our control, and breaches of these covenants could result in a default under our credit facilities, debentures, bonds and any future financing agreements into which we may enter. If not waived, defaults could cause our outstanding indebtedness under our credit facilities and any future financing agreements that we may enter into under these terms to become immediately due and payable.

If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited. See “Item 5. Operating and Financial Review and Prospects”.

We face risks relating to liquidity of our capital resources.

Liquidity risk, as we understand it, is the risk that we will not have sufficient financial resources to meet our obligations by the respective maturity dates or that we will honor such obligations at an excessive cost or that we will not have funding at a volume and cost appropriate to meet the prepayment and credit products request by our customers. This risk is inherent in our activities.

We have increasingly relied on retail funding from both our clients and retail investors accessed via third-party distribution channels to fund our business activities, such as prepayment of receivables and credit. The liquidity risk that we face has increased and will increase in the future because we expect to scale the retail funding. In this context, the liquidity risk arises from the potential maturity mismatch, for example, between our investments in which our clients’ deposit resources are allocated and the immediate liquidity of our clients’ deposit accounts.

Our capacity and cost of funding may be impacted by a number of factors, such as changes in market conditions (e.g., in interest rates), credit supply, regulatory changes, systemic shocks in the financial sector, and changes in the market’s perception of us, among others.

In scenarios where access to funding is scarce and/or becomes too expensive, and the access to capital markets is either not possible or is limited, we may find ourselves obliged to settle assets not compromised and/or potentially devalued so that we will be able to meet our obligations. If the market liquidity is reduced, the demand pressure may have a negative impact on prices, since natural buyers may not be immediately available. Should this happen, we may have a significant negative goodwill on assets, which will impact our results and financial position. The persistence or worsening of such adverse market conditions or rises in basic interest rates may have a material adverse impact on our capacity to access capital markets and on our cost of funding.

Increases in interest rates may harm our business.

Processing consumer transactions made using credit cards, as well as providing for the prepayment of our clients’ receivables when consumers make credit card purchases in installments, both make up a significant portion of our activities. If Brazilian interest rates increase, consumers may choose to make fewer purchases using credit cards, and fewer merchants may decide to use our prepayment and credit solutions. In addition, rising benchmark rates of either CDI or credit spreads may materially impact our results if we are not able to fully pass such increases to our clients. Furthermore, we may lose clients because of increasing prices.

In addition, we have funded our operations in part through financings that have variable interest rates, whereas we charge most merchants a fixed fee for the prepayment of our clients’ receivables. The mismatches of these operations generate risks. As of December 31, 2025, we had R$17.4 billion in financial liabilities (except leases), including obligations to FIDC quota holders, bank borrowings, bonds, debentures, financial bills and commercial papers, institutional deposits and other financial liabilities, subject to variable interest and return rates, compared to R$12.6 billion as of December 31, 2024. We also sell receivables to third parties on a non-recourse basis, which also have variable interest rates. Accordingly, a cost or maturity mismatch between the funds raised by us and the funds made available to our clients may materially adversely affect our liquidity, financial condition and results of operations.

For example, on March 17, 2021, the Central Bank began to rapidly raise the SELIC rate, first to 2.75% and then by the end of the year to 9.25% on December 8, 2021. In 2022, the Central Bank continued to raise the rate, reaching a peak of 13.75% on August 3, 2022, where it remained stable. On August 2, 2023, the Central Bank reversed this trend by lowering the SELIC rate to 13.25%, and continued a pattern of reductions ultimately reducing it to 10.50% on May 8, 2024. However, on September 18, 2024, the Central Bank began to increase rates again, increasing the SELIC rate up to a record 15.0% on June 18, 2025. The Central Bank has since eased its approach by decreasing the SELIC rate down to 14.75%, the rate at which it stands as of the date of this annual report.

We are exposed to fluctuations in foreign currency exchange rates.

The Brazilian real is our functional currency. We have foreign exchange risk on any of our other assets and liabilities denominated in currencies or with pricing linked to currencies other than Brazilian real, including certain contract assets. Our currency is volatile and has fluctuated sharply against the U.S. dollar and other strong currencies in the past. The Brazilian government has implemented various economic plans and used several exchange rate regimes, including sudden depreciation, periodic mini-depreciation, floating exchange rate market systems, exchange controls and dual exchange rate markets. It is generally accepted that the current exchange rate regime is a managed floating regime. We cannot predict whether the Central Bank will intervene in the exchange rate market and when and if it will change the exchange rate regime, which may harm our business and results of operations.

Depending on the circumstances, either devaluation or appreciation of the real relative to the U.S. dollar and other foreign currencies could restrict the growth of the Brazilian economy, as well as our business, results of operations and profitability.

A devaluation of the real relative to the U.S. dollar may create additional inflationary pressures in Brazil, decrease consumer spending, reduce economic growth, and generally restrict access to the international capital markets. It would also reduce the U.S. dollar value of our results of operations. We and certain of our suppliers purchase goods and services from countries outside of Brazil, and thus changes in the value of the U.S. dollar compared to other currencies may affect the costs of goods and services that we purchase. On the other hand, appreciation of the real relative to the U.S. dollar and other foreign currencies may deteriorate the Brazilian foreign exchange current accounts and balance of payments, as well as weaken the growth of the gross domestic product generated by exports. We hold certain funds in non-Brazilian real currencies and will continue to do so in the future. Accordingly, our financial results are affected by the translation of these non-real currencies into reais. In addition, to the extent that we need to convert future financing proceeds into Brazilian reais for our operations, any appreciation of the Brazilian real against the relevant foreign currencies would materially reduce the Brazilian real amounts we would receive from the conversion.

The exchange rate between the U.S. dollar and the Brazilian real has experienced significant fluctuations in recent years. As of December 31, 2022, the real/U.S. dollar exchange rate was R$5.22, reflecting an appreciation of 7.0% in the real from December 31, 2021. The real/U.S. dollar exchange rate reported by the Central Bank was R$4.84 per US$1.00 on December 31, 2023, which reflected a 7.8% appreciation in the real against the U.S. dollar during 2023. However, the real depreciated throughout 2024, with the real/U.S. dollar exchange rate reported by the Central Bank R$6.19 per US$1.00 on December 31, 2024, which reflected a 21.8% depreciation in the real against the U.S. dollar during 2024. The real then once again appreciated by 12.5% during the course of 2025, with the real/U.S. dollar exchange rate being reported by the Central Bank as R$5.50 per US$1.00 on December 31, 2025. There can be no assurance that the devaluation or appreciation of the real against the dollar and other currencies will not have an adverse effect on our activities.

We may not be able to effectively manage credit risk, and our expected credit loss (“ECL”) allowance may be insufficient to cover actual losses, which could have a material adverse effect on our results of operations and financial condition.

We are exposed to credit risk from credit provided to our clients, suppliers, and counterparties and credit Card Issuers. Clients may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons. General economic factors, such as the increasing levels of inflation, unemployment and interest rates, may result in greater delinquencies that lead to greater credit losses. A client’s ability and willingness to repay us can be negatively impacted not only by economic, market, political and social conditions but by a customer’s other payment obligations and increasing leverage can result in a higher risk that customers will default or become delinquent in their obligations to us. As of December 31, 2025, our credit portfolio amounted to R$2,836 million with provisions for expected credit losses totaling R$389.7 million, compared with a credit portfolio of R$1,207.6 million and expected credit losses of R$144.5 as of December 31, 2024. Also, the concentration of our clients by geography and economic sector may increase our risk.

We mainly rely on the client’s creditworthiness and their ability to generate receivables for repayment of the credit provided by us in some products. Our ability to assess creditworthiness may be impaired if the criteria or models we use to manage our credit risk prove to be inaccurate in predicting future losses, which could cause our losses to rise and have a negative impact on our results of operations. Further, our pricing strategies may not offset the negative impact on profitability caused by increases in delinquencies and losses. Thus, any material increases in delinquencies and losses beyond our current estimates could have a material adverse impact on us.

We face counterparty risk from the providers we engage for financial contracts for hedging, investments and committed funding. Credit Card Issuers are another source of credit risk. If a Card Issuer defaults on the payment scheme and this payment scheme does not pay us the defaulted amount, we will suffer a loss.

Rising delinquencies and rising rates of bankruptcy are often precursors of future write-offs and may require us to increase our reserve for credit losses. Although we regularly review our credit exposure to specific clients, counterparties, Card Issuers and to specific industries that we believe may present credit concerns, default risk may arise from events or circumstances that are difficult to foresee or detect, such as fraud. In addition, our ability to manage credit risk may be adversely affected by legal or regulatory changes, such as restrictions on collections or changes in bankruptcy laws.

In addition, our allowance for expected credit losses may prove insufficient to cover actual losses, even where we identify deterioration in credit quality. Determining the appropriate level of expected credit losses requires significant judgment and depends on assumptions regarding historical loss experience, borrower behavior, portfolio composition and forward-looking macroeconomic scenarios. These assumptions may prove inaccurate, particularly in periods of economic volatility or where abrupt changes in the Brazilian economic environment are not fully captured by our models on a timely basis. In addition, as our credit portfolio grows, the absolute amount of non-performing loans and charge offs may increase, and recently originated loans may perform worse than expected. Because our credit portfolio is relatively recent, the historical data available to calibrate and validate our models under stress conditions is more limited, and management overlays or other qualitative adjustments may not fully address model limitations in novel credit environments. If actual credit losses exceed our expected credit losses allowance, we may be required to record additional provisions, which could have a material adverse effect on our results of operations and financial condition.

We incur Chargeback and refund liability when our merchants refuse to or cannot reimburse Chargebacks and refunds resolved in favor of their customers. Any increase in Chargebacks and refunds not paid by our merchants may adversely affect our business, financial condition or results of operations.

We are currently, and will continue to be, exposed to financial risks associated with Chargebacks and refunds in connection with payment card fraud or relating to the goods or services provided by our sellers. If a billing dispute between a Cardholder and a merchant is not resolved in favor of the merchant, including in situations in which the merchant is engaged in fraud, the transaction is typically “charged back” to the merchant and the purchase price is credited or otherwise refunded to the Cardholder. If we are unable to collect Chargeback or refunds from the merchant’s account, or if the merchant refuses to or is unable to reimburse us for a Chargeback or refunds due to closure, bankruptcy, or other reasons, we may bear the loss for the amounts paid to the Cardholder.

Our financial results would be adversely affected to the extent these merchants do not fully reimburse us for the related Chargebacks. In addition, our exposure to these potential losses from Chargebacks increases to the extent that we have provided prepayment solutions to such merchants, as the full amount of the payment is provided upfront rather than in installments. We do not collect and maintain reserves from our merchants to cover these potential losses, and for customer relations purposes we sometimes decline to seek reimbursement for certain Chargebacks. Historically, Chargebacks occur more frequently in card not present transactions than in card present transactions, and more frequently for goods than for services. In addition, the risk of Chargebacks is typically greater with those of our merchants that promise future delivery of goods and services, which we allow on our service. If we are unable to maintain our losses from Chargebacks at acceptable levels, the payment schemes could fine us, increase our transaction fees, or terminate our ability to process payment cards. Any increase in our transaction fees could damage our business, and if we were unable to accept payment cards, our business would be materially and adversely affected.

Our balance sheet includes significant amounts of intangible assets. The impairment of a significant portion of these assets would negatively affect our business, financial condition and results of operations.

As of December 31, 2025, our balance sheet includes significant intangible assets that amount to R$1,986.9 million. These assets consist primarily of identified intangible assets and goodwill associated with our acquisitions. We also expect to engage in additional acquisitions, which may result in our recognition of additional intangible assets. Under current accounting standards, we are required to amortize certain intangible assets over the useful life of the asset, while certain other intangible assets are not amortized. On at least an annual basis, we assess whether there have been impairments in the carrying value of certain intangible assets. If the carrying value of the asset is determined to be impaired, then it is written down to fair value by a charge to operating earnings. An impairment of a significant portion of intangible assets could have a material adverse effect on our business, financial condition and results of operations. As a result of our annual impairment test as of October 31, 2025, an impairment loss of R$158.0 million was recognized for the Company’s Cash Generating Unit (“CGU”) 2 – Software, since the estimated recoverable amount of this cash generating unit was lower than the net book value. Similarly, as a result of our annual impairment test as of October 31, 2024, an impairment loss of R$3,558.0 million was recognized for CGU 2 – Software, driven by a reduction in the estimated recoverable amount of this cash generating unit below its net book value, following a strategic review of the Software segment and a reassessment of the achievable synergies with the Financial Services segment. For further information refer to Note 11.4 from our Audited Consolidated Financial Statements.

We are subject to macroeconomic uncertainty, fiscal and political instability in Brazil. Those factors may harm the business cycles and credit risk of our clients and issuing banks and volatility in the overall level of consumer, business and government spending, which could negatively impact our business, financial condition and results of operations.

We are exposed to general economic conditions that affect consumer spending and changes in consumer purchasing habits in Brazil. A deterioration in general economic conditions, including a rise in unemployment rates or increase in interest rates in Brazil, may harm us by reducing the number or average purchase amount of transactions made using electronic payments, resulting in a decrease in our revenue. In addition, a recessionary economic environment could affect our merchants through higher rates of insolvency and bankruptcy. This could directly expose us to higher default rates within our credit portfolio. As of December 31, 2025, our credit portfolio was R$2,836.3 million, with recorded provisions for expected credit losses of R$389.7 million (compared with a portfolio of R$1,206.6 million and provisions for expected credit losses of R$144.5 million as of December 31, 2024). Beyond direct credit defaults, our merchants are liable for any charges properly reversed by the Card Issuer on behalf of the Cardholder. Our associated participants are also liable for any fines, or penalties, that may be assessed by any payment schemes. If we are not able to collect such amounts from the associated participants, due to insolvency, bankruptcy or any other reason, we may be liable for any such charges. Furthermore, in the event of a closure of a merchant, we are unlikely to receive our fees for any services rendered to that merchant in its final months of operation, including subscription revenue owed to us from such merchant’s equipment rental or software obligations. In turn, we also face a default risk from issuing banks that are counterparty to our receivables pursuant to our card payment arrangements. Accordingly, a default by an issuing bank, due to insolvency, bankruptcy, intervention, operational error or otherwise could negatively impact our cash flows as we are required to make payments to merchants independently of the issuing banks’ payments owed to us. As of December 31, 2025, we recorded estimated credit losses arising from defaults of issuing banks of R$76.9 million relating to estimated losses on such doubtful accounts, compared to R$60.9 million as of December 31, 2024.

A negative economic environment can also affect the financial health of sub-acquirers that operate with us. In the case we pay the sub-acquirers, and it does not pay its merchants for any reason, we must pay these merchants.

Economic uncertainty and political instability in Brazil may harm us.

Brazil’s political environment has historically influenced and continues to influence the performance of the country’s economy. Political crises have affected and continue to affect the confidence of investors and the general public, which have historically resulted in economic deceleration and heightened volatility in the securities offered by companies with significant operations in Brazil. Since 1990, two presidents of Brazil have been impeached: Fernando Collor and Dilma Rousseff. Michel Temer, the president of Brazil between August 31, 2016, to January 1, 2019, was subject to, but successfully defended impeachment processes opened in the Brazilian Congress.

Luiz Inácio Lula da Silva, “Lula,” was elected president in October 2022, for a four-year term starting in January 2023. In Lula’s first days in office, certain groups formed by extreme supporters of the defeated candidate (former president Jair Bolsonaro) performed acts of civil unrest and stormed Brazil’s Supreme Court, Congress and Presidency buildings, conducting acts of violence and destruction. Although these events were extreme and concerning, Brazilian institutions remained functioning and the democratic transition of power was preserved. However, Brazil remains highly polarized, and former president Bolsonaro has since been declared ineligible to run for office until 2030 and, in 2025, was convicted and sentenced to prison for his role in an attempted coup, developments that have contributed to ongoing political tensions and sporadic episodes of unrest.

A failure by Lula’s administration to implement necessary economic and structural reforms may result in diminished confidence in the Brazilian government’s budgetary condition and fiscal stance, which could result in downgrades of Brazil’s sovereign foreign credit rating by credit rating agencies, depreciation of the real and an increase in inflation and interest rates. This scenario could adversely affect us.

The political environment in Brazil has and is continuing to affect the confidence of investors and the general public, which has historically resulted in economic deceleration and heightened volatility in macroeconomic prices and in the securities offered by companies with significant operations in Brazil. As Brazil approaches general elections scheduled for October 2026, uncertainty regarding the outcome of the elections and future economic and regulatory policies may further increase volatility in the market price of securities issued by Brazilian companies, including our Class A common shares, which may adversely affect our business.

The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy. This involvement, as well as Brazil’s political, regulatory, legal and economic conditions, could harm us.

The Brazilian government frequently exercises significant influence over the Brazilian economy and occasionally makes significant changes in policy and regulations. The Brazilian government’s actions may involve, among other measures, monetary, diplomatic, fiscal, credit, energy, and tariff policies; wage and price controls; foreign exchange rate, international trading, and capital controls; blocking access to bank accounts; domestic capital and lending markets; labor and social security regulations; currency devaluations; and capital controls. We have no control over and cannot predict what measures or policies the Brazilian government may take in the future and how these can impact us and our business. We and the market price of our securities may be harmed by changes in Brazilian government policies, as well as general economic factors, including, without limitation:

Expansion or contraction of the Brazilian economy, as measured by gross domestic product (“GDP”), rates.
Interest rates and monetary policies.
Exchange rates and currency fluctuations.
Inflation.
Liquidity of the domestic capital and lending markets.
Import and export controls.
Exchange controls and restrictions on remittances abroad.
Modifications to laws and regulations according to political, social and economic interests.
Fiscal policy and changes in tax laws.
Economic, political and social instability.
Labor and social security regulations.
Energy and water shortages and rationing.
Other political, diplomatic, social and economic developments in or affecting Brazil.

Uncertainty over whether the Brazilian government will implement reforms or changes in policy or regulation in the future may affect economic performance and contribute to economic uncertainty in Brazil. We cannot predict what measures the Brazilian government will take in the face of mounting macroeconomic pressures or otherwise.

Inflation and certain measures by the Brazilian government to curb inflation have historically harmed the Brazilian economy and Brazilian capital markets, and high levels of inflation in the future could harm our business.

In the past, Brazil has experienced extremely high rates of inflation. Inflation and some of the measures taken by the Brazilian government in an attempt to curb inflation have had significant negative effects on the Brazilian economy generally. Inflation and policies adopted to curb inflationary pressures and uncertainties regarding possible future government intervention have contributed to economic uncertainty and heightened volatility in the Brazilian economy and capital markets.

According to the IPCA, Brazilian inflation rates were 4.3%, 4.8% and 4.6% in 2025, 2024 and 2023, respectively. Inflation can increase our costs and expenses, and we may not be able to transfer such costs to customers, reducing our profit and net profit margins. In addition, high inflation rates generally increase Brazilian interest rates and, therefore, the debt service of the portion in reais of our debt, which is indexed to floating rates, may also increase. With this, net profit may decrease. Inflation and its effects related to Brazilian interest rates could, in addition, reduce liquidity in the Brazilian capital and financial markets, which would affect the ability to refinance our indebtedness in those markets.

Some of the measures taken by the Brazilian government to curb inflation have had significant negative effects on the Brazilian economy generally and capital markets. In the past, the Brazilian government’s interventions included the maintenance of a restrictive monetary policy with high interest rates that restricted credit availability and reduced economic growth, causing volatility in interest rates.

Brazil may experience high levels of inflation in the future and inflationary pressures may lead to the Brazilian government intervening in the economy and introducing policies that could harm our business. Future measures by the Brazilian government, including reductions in interest rates, intervention in the foreign exchange market and actions to adjust or fix the value of the real, may trigger increases in inflation, adversely affecting the overall performance of the Brazilian economy.

Inflation and the Brazilian government’s measures to combat inflation have had, and may continue to have, significant effects on the Brazilian economy and on our business. Strict monetary policies, with high interest rates and high requirements for compulsory deposits, can restrict Brazil’s growth and the availability of credit. On the other hand, softer government and central bank policies and declining interest rates may trigger increases in inflation and, consequently, the volatility of economic growth and the need for sudden and significant increases in interest rates.

Inflation, measures to contain inflation and speculation about potential measures can also contribute to significant uncertainty in relation to the Brazilian economy and weaken investor confidence, which can affect our ability to access financing, including access to equity of international capital markets.

Developments and the perception of risks in other countries, including other emerging markets, the United States and Europe, may harm the Brazilian economy and the price of securities issued by companies operating in Brazil, including the price of our Class A common shares.

The market for securities of companies operating in Brazil, including us, is influenced by economic and market conditions in Brazil and, to varying degrees, market conditions in other Latin American and emerging markets, as well as the United States, Europe and other countries and regions. To the extent the conditions of the global markets or economy deteriorate, the business of companies operating in Brazil may be harmed. Developments or economic conditions in other emerging market countries have at times significantly affected the availability of credit to companies with significant operations in Brazil and resulted in considerable outflows of funds from Brazil, decreasing the amount of foreign investments in Brazil.

The decrease in foreign investment in Brazil may adversely affect growth and liquidity in the Brazilian economy, which, in turn, may have a negative impact on us. The interruption or volatility in global financial markets may further increase the negative effects on the economic and financial scenario in Brazil, which may have a material adverse effect on us.

Besides, crises and political instability in other emerging market countries (such as in Southeast Asia, Russia and Argentina), the United States, Europe or other countries have historically caused volatility in the Brazilian stock market and could decrease investor demand for securities offered by companies operating in Brazil, such as our common shares. As an example, global geopolitical developments have continued to contribute to uncertainty in international economic conditions, financial markets and trade dynamics. More recently, renewed hostilities involving Israel, Iran and the United States, together with continued instability in Gaza and related disruptions affecting commercial shipping routes and regional security dynamics, have further heightened uncertainty in the Middle East. These developments have contributed to volatility in energy prices, shipping and insurance costs, sanctions and trade measures, and broader diplomatic and economic uncertainty in the region. Additionally, policy changes, monetary policy and/or implementation of protectionist policies in the United States and other countries material for the international economic landscape may directly or indirectly impact the economy of the countries where we operate, generating several risks, especially exchange rate, interest rate and increase in the price of commodities, and, consequently, affecting our results.

We cannot guarantee that the United States government will maintain policies aimed at promoting macroeconomic stability, fiscal discipline and domestic and foreign investment, which can have a significant adverse effect on the financial and securities markets in Brazil, on companies operating in Brazil, including us, and in the securities of Brazilian issuers, such as our Brazilian subsidiaries. The political scenario in the United States and its relationship with China and the rest of the world, new elected presidents in other countries in the Latin American region and uncertainties in Europe, as well as potential crises and forms of political instability arising therefrom or any other as of yet unforeseen development, may harm our business and the price of our common shares.

We may be materially and adversely affected by protectionist trade policies and other measures adopted by the current U.S. administration, including the imposition of additional tariffs on Brazilian products and services.

Donald Trump was elected for a second term as President of the United States on November 5, 2024, and took office in January 2025. We have no control over and cannot predict the effect of his administration or policies. Since returning to office, President Trump’s administration has reinforced protectionist economic policies, including the expansion of tariffs on a range of goods from key trading partners such as China, the European Union and Brazil, including a baseline 10% tariff on most imports and higher, “reciprocal” country-and sector-specific rates. In relation to Brazil, for example, the U.S. government imposed a 50% tariff on certain Brazilian imports, including industrial goods, commodities and agricultural products, which took effect, subject to certain exceptions, on August 6, 2025, citing concerns over alleged restrictions on freedom of speech and the political prosecution of former president Bolsonaro. These additional 50% tariffs were subsequently lifted in November 2025 although the 10% baseline tariffs remain in place. In February 2026, however, the U.S. Supreme Court held that certain tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were beyond the President’s statutory authority, vacating significant components of the tariff regime and reinforcing that tariff-setting power resides with Congress. While the decision has limited the legal basis for the broad emergency tariffs originally imposed, legal and policy uncertainty remains as the U.S. administration has signaled intentions to pursue alternative statutory authorities to re-impose or adjust tariffs and may enact across-the-board levies under other provisions of U.S. trade law. President Trump has also publicly threatened further trade actions against Brazil and other BRICS countries based on their association with Russia and their efforts to reduce dependence on the U.S. dollar in international trade. Such measures may have a material adverse effect on both Brazil’s economy and the global economy. In addition, any additional tariffs or the development of a fully-fledged trade war could exacerbate economic tensions globally, disrupt global trade flows, add to economic uncertainty and have a material adverse effect on both Brazil’s economy and the global economy.

Increased tariffs and the potential for further trade restrictions may lead to a slowdown in global trade and economic activity, with disproportionate effects on emerging markets like Brazil. Such developments could result in greater currency volatility, reduced foreign investment flows, higher inflation, and increased interest rates in affected jurisdictions, including Brazil, all of which can negatively impact credit availability, borrowing costs, and the demand for financial products and services. Given our operations in Brazil’s financial sector, these adverse macroeconomic impacts could result in lower demand for our financial products and increased funding costs. Additionally, any deterioration in U.S.-Brazil trade relations or regulatory shifts impacting cross-border capital flows could restrict our access to international funding sources or affect the value of assets and liabilities denominated in foreign currencies. As a result, ongoing or future policies implemented by the current U.S. administration may have a material adverse effect on our business, financial condition and results of operations.

Any further downgrading of Brazil’s credit rating could reduce the trading price of our Class A common shares.

We may be harmed by investors’ perceptions of risks related to Brazil’s sovereign debt credit rating. Rating agencies, such as Standard & Poor’s, Moody’s and Fitch, regularly evaluate Brazil and its sovereign ratings, which are based on several factors including macroeconomic trends, fiscal and budgetary conditions, indebtedness metrics and the perspective of changes in any of these factors. Recently, the Brazilian political and economic scenario has shown high levels of volatility and instability, including fluctuations in GDP growth, significant fluctuations in the real against the U.S. dollar, increased unemployment and a reduction in expenditure levels and consumer confidence.

The three major rating agencies began to downgrade Brazil’s sovereign credit rating starting in September 2015, causing it to lose its investment-grade status. Despite recent upgrades, Brazil’s sovereign credit rating remains below investment grade. As of the most recent updates, Standard & Poor’s upgraded Brazil’s rating to BB with a stable outlook in December 2023; Moody’s affirmed Brazil’s rating at Ba1 but changed its outlook from positive to stable in May 2025; and Fitch affirmed Brazil’s rating at BB with a stable outlook in July 2024, following an upgrade from BB- in 2023. Consequently, our own credit rating is negatively impacted by Brazil’s below investment grade sovereign credit rating, which impacts negatively on our funding cost, especially in the international markets.

The full consequences of a credit rating downgrade are inherently uncertain, as they depend upon numerous dynamic, complex and inter-related factors and assumptions, including market conditions at the time of any downgrade. We cannot assure you that the rating agencies will maintain their current ratings or outlooks, and such changes could increase our funding costs and adversely affect our results of operations. Any further downgrade of Brazil’s sovereign credit ratings could heighten investors’ perception of risk and, as a result, cause the trading price of our Class A common shares to decline.

Brazilian foreign exchange controls and regulations could restrict conversions and remittances abroad of the dividend payments and other shareholder distributions paid in Brazil in reais arising from our Brazilian subsidiaries.

Brazilian law provides that whenever there is a serious imbalance in Brazil’s balance of payments or reasons to foresee such a serious imbalance, the Brazilian government may impose temporary restrictions on the remittance to foreign investors of the proceeds of their investments in Brazil. Such restrictions may hinder or prevent holders of shares of our Brazilian subsidiaries from converting distributions or the proceeds from any sale of such shares, as the case may be, into U.S. dollars and remitting such U.S. dollars abroad. Any reais so held will be subject to devaluation risk against the U.S. dollar.

In addition, the likelihood that the Brazilian government would impose such restrictions may be affected by the extent of Brazil’s foreign currency reserves, the availability of foreign currency in the foreign exchange markets on the date a payment is due and the size of Brazil’s debt service burden relative to the economy as a whole. We cannot assure you that the Central Bank will not modify its policies or that the Brazilian government will not institute restrictions or delays on cross-border remittances.

Infrastructure and workforce deficiency in Brazil may impact economic growth and have a material adverse effect on us.

Our performance depends on the overall health and growth of the Brazilian economy. In 2020, Brazilian GDP contracted by 3.3% as a result of the effects of the COVID-19 pandemic, followed by a growth of 4.8% in 2021, and increases of 3.0%, 2.9%, 3.4% and 2.3% in 2022, 2023, 2024 and 2025, respectively. Growth is limited by inadequate infrastructure, including potential energy shortages and deficient transportation, logistics and telecommunication sectors, general strikes, the lack of a qualified labor force, and the lack of private and public investments in these areas, which limit productivity and efficiency. Any of these factors could lead to labor market volatility and generally impact income, purchasing power and consumption levels, which could limit growth and ultimately have a material adverse effect on us.

We are a Cayman Islands exempted company with limited liability. The rights of our shareholders may be different from the rights of shareholders governed by the laws of U.S. jurisdictions and as a result, our shareholders may face difficulties in protecting their interests.

We are a Cayman Islands exempted company with limited liability. Our corporate affairs are governed by our Articles of Association and by the laws of the Cayman Islands. The rights of shareholders and the responsibilities of members of our Board of Directors may be different from the rights of shareholders and responsibilities of directors in companies governed by the laws of U.S. jurisdictions and are otherwise not as established as they are under statutes or judicial precedent in some jurisdictions in the United States. Therefore, you may have more difficulty protecting your interests than would shareholders of a corporation incorporated in a jurisdiction in the United States. See “Item 10. Additional Information—B. Memorandum and articles of association—Principal Differences between Cayman Islands and U.S. Corporate Law”.

While Cayman Islands law allows a dissenting shareholder to express the shareholder’s view that a court-sanctioned reorganization of a Cayman Islands company would not provide fair value for the shareholder’s shares, Cayman Islands statutory law does not specifically provide for shareholder appraisal rights in connection with a court sanctioned reorganization (by way of a scheme of arrangement). This may make it more difficult for you to assess the value of any consideration you may receive in such a merger or consolidation (by way of a scheme of arrangement) or to require that the acquirer gives you additional consideration if you believe the consideration offered is insufficient. However, Cayman Islands statutory law provides a mechanism for a dissenting shareholder in a statutory merger or consolidation to apply to the Grand Court of the Cayman Islands, or the “Grand Court” for a determination of the fair value of the dissenter’s shares if it is not possible for the company and the dissenter to agree on a fair price within the time limits prescribed.

Shareholders of Cayman Islands exempted companies (such as us) have no general rights under Cayman Islands law to inspect corporate records and accounts or to obtain copies of lists of shareholders. Our directors have discretion under our Articles of Association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

United States civil liabilities and certain judgments obtained against us by our shareholders may not be enforceable.

We are a Cayman Islands exempted company and substantially all our assets are located outside the United States. In addition, most of our directors and officers are Brazilian nationals and reside or are based in Brazil. A substantial portion of our assets and the assets of these persons are located in Brazil. As a result, it may be difficult to effect service of process upon us or these persons within the United States. A final conclusive judgment of a United States court for civil liabilities based upon the U.S. federal securities laws may only be enforced in Brazil if such judgment: (i) fulfills all formalities required for its enforceability under the laws of the place/jurisdiction where the foreign judgment was issued; (ii) is issued by a competent court and/or authority in the jurisdiction where it was awarded after proper service of process is made on the parties, in accordance with the applicable law, considering that service of process on individuals in Brazil must comply with the Brazilian applicable law, or after sufficient evidence of the parties’ absence has been given, as requested under the laws of the jurisdiction where the foreign judgment was entered; (iii) is not rendered in an action upon which Brazilian courts have exclusive jurisdiction; (iv) is final and binding and, therefore, not subject to appeal in the jurisdiction where it was issued; (v) does not conflict with a previous final and binding decision issued by a Brazilian on the case records of a lawsuit involving the same parties, cause of action and claim; (vi) is apostilled by the appropriate authority of the state rendering such foreign judgment, or is duly authenticated by the appropriate Brazilian consulate; (vii) is translated into Portuguese by a sworn translator in Brazil; and (viii) is not contrary to Brazilian national sovereignty, public policy or public morality. Therefore, it may be difficult to enforce in judgments obtained in U.S. courts based on the civil liability provisions of U.S. federal securities laws against us and our officers and directors who are not resident in the United States. In addition, Brazil does not have a treaty with the United States to facilitate or expedite the enforcement in Brazil of decisions issued by a state court in the United States, which shall necessarily be previously recognized by the Brazilian Superior Court of Justice in order to be effective in Brazil.

Further, it is unclear if original actions predicated on civil liabilities based solely upon U.S. federal securities laws are enforceable in courts outside the United States, including in the Cayman Islands and Brazil.

Courts of the Cayman Islands may not, in an original action in the Cayman Islands, recognize or enforce judgments of U.S. courts predicated upon the civil liability provisions of the securities laws of the United States or any state of the United States on the grounds that such provisions are penal in nature. Although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, courts of the Cayman Islands will recognize and enforce a foreign judgment of a court of competent jurisdiction if such judgment is final, for a liquidated sum, provided it is not in respect of taxes or a fine or penalty, is not inconsistent with a Cayman Islands’ judgment in respect of the same matters, and is not impeachable under Cayman Islands law for fraud, being in breach of public policy of the Cayman Islands or being contrary to natural justice. In addition, a Cayman Islands court may stay proceedings if concurrent proceedings are being brought elsewhere.

As a foreign private issuer we have different disclosure and other requirements than U.S. domestic registrants and we are permitted to rely on exemptions from certain Nasdaq corporate governance standards applicable to U.S. domestic registrants, including the requirement that a majority of an issuer’s directors consist of independent directors. This may afford less protection to holders of our Class A common shares.

As a foreign private issuer, we are subject to different disclosure and other requirements than domestic U.S. registrants. For example, as a foreign private issuer, in the United States, we are not subject to the same disclosure requirements as a domestic U.S. registrant under the Exchange Act, including the requirements to prepare and issue quarterly reports on Form 10-Q or to file current reports on Form 8-K upon the occurrence of specified significant events, the proxy rules applicable to domestic U.S. registrants under Section 14 of the Exchange Act or the insider reporting and short-swing profit rules applicable to domestic U.S. registrants under Section 16 of the Exchange Act. In addition, we rely on exemptions from certain U.S. rules which permit us to follow Cayman Islands legal requirements rather than certain of the requirements that are applicable to U.S. domestic registrants.

We follow Cayman Islands laws and regulations that are applicable to Cayman Islands companies. However, Cayman Islands laws and regulations applicable to Cayman Islands companies do not contain any provisions comparable to the U.S. proxy rules, the U.S. rules relating to the filing of reports on Form 10-Q or 8-K or the U.S. rules relating to liability for insiders who profit from trades made in a short period of time, as referred to above.

Furthermore, foreign private issuers are required to file their annual report on Form 20-F within 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information, although we will be subject to Cayman Islands laws and regulations having substantially the same effect as Regulation Fair Disclosure. As a result of the above, even though we are required to file reports on Form 6-K disclosing the limited information which we have made or are required to make public pursuant to Cayman Islands law, or are required to distribute to shareholders generally, and that is material to us, you may not receive information of the same type or amount that is required to be disclosed to shareholders of a U.S. company.

Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or within the same time frames as U.S. companies with securities registered under the Exchange Act. We currently prepare our financial statements in accordance with IFRS Accounting Standards. We will not be required to file financial statements prepared in accordance with or reconciled to U.S. GAAP so long as our financial statements are prepared in accordance with the IFRS Accounting Standards. We are not required to comply with Regulation FD, which imposes restrictions on the selective disclosure of material information to shareholders. In addition, our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of our securities.

We cannot predict if investors will find our Class A common shares less attractive because we will rely on these exemptions. If some investors find our Class A common shares less attractive as a result, there may be a less active trading market for our Class A common shares and our share price may be more volatile. See “Item 10. Additional Information—B. Memorandum and articles of association—Principal Differences between Cayman Islands and U.S. Corporate Law”.

Subject to certain requirements, as a foreign private issuer, we are permitted to follow home country practice in lieu of certain Nasdaq corporate governance rules, which include rules relating to board independence, independent director oversight of executive compensation, nomination of directors and other corporate governance matters, such as the requirement that we obtain shareholder approval prior to an issuance of securities (in certain circumstances) in connection with certain events, or being required that a majority of board members be independent, or to have independent director oversight of executive compensation, the nomination of directors and corporate governance matters. To the extent Cayman Islands law does not require us to adopt these corporate governance standards, we are permitted to and may decide to follow (or continue to follow) home country practice in lieu of the above requirements. See “Item 10. Additional Information—B. Memorandum and Articles of Association—Principal Differences between Cayman Islands and U.S. Corporate Law—Corporate Governance”.

We may lose our foreign private issuer status which would then require us to comply with the Exchange Act’s domestic reporting regime and cause us to incur significant legal, accounting and other expenses

In order to maintain our current status as a foreign private issuer, either (a) more than 50% of our outstanding voting securities must be either directly or indirectly owned of record by non-residents of the United States or (b) (i) a majority of our executive officers or directors may not be U.S. citizens or residents, (ii) more than 50% of our assets cannot be located in the United States and (iii) our business must be administered principally outside the United States. On June 4, 2025, the SEC published a concept release on FPI eligibility, seeking public comment regarding potential amendments to the FPI definition. There is currently no indication of any timing on any related proposed rulemaking. The release highlights various possible approaches to amending the FPI definition. If the SEC adopts rules amending the FPI definition to include requirements that we may not currently comply with, we may lose our status as a foreign private issuer. If we lose this status, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and Nasdaq rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the costs we will incur as a foreign private issuer.

The Cayman Islands Economic Substance Act may affect our operations.

The Cayman Islands has enacted the International Tax Co-operation (Economic Substance) Act (as revised), or the Cayman Economic Substance Act. We are required to comply with the Cayman Economic Substance Act. As we are a Cayman Islands exempted company, compliance obligations include filing annual notifications for us, which need to state whether we are carrying out any relevant activities and if so, whether we have satisfied economic substance tests to the extent required under the Cayman Economic Substance Act. We may need to allocate additional resources and may have to make changes to our operations in order to comply with all requirements under the Cayman Economic Substance Act. Failure to satisfy these requirements may subject us to penalties under the Cayman Economic Substance Act.

There can be no assurance that we will not be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders of our Class A common shares.

U.S. shareholders of passive foreign investment companies are subject to potentially adverse U.S. federal income tax consequences. In general, a non-U.S. corporation is a passive foreign investment company (“PFIC”), for any taxable year in which: (i) 75% or more of its gross income consists of passive income; or (ii) 50% or more of the average quarterly value of its assets consists of assets that produce, or are held for the production of, passive income. For purposes of the above calculations, a non-U.S. corporation that owns, directly or indirectly, at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation. Cash is a passive asset for these purposes.

The determination of whether we are, or will be, a PFIC for a taxable year depends on the application of complex U.S. federal income tax rules, which are subject to various interpretations. While the applicability of the PFIC rules to us is not clear in light of our evolving business activities and the lack of clarity with respect to certain aspects of the rules, based on the composition of our income and assets, including goodwill, we do not believe that we were a PFIC for our 2025 taxable year. Our PFIC status is a factual determination that is made on an annual basis. Because our PFIC status for any taxable year will depend on the manner in which we operate our business, the composition of our income and assets, including the relative growth of our income resulting from our credit activities and the payment processing services we provide, and the value of our assets from time to time, there can be no assurance that we will not be a PFIC for any taxable year. In particular, we note that the sale of the Software Business as well as growth in our credit-related activities relative to our other business lines have increased the risk that we may be treated as a PFIC and, if such growth continues, may result in us being treated as a PFIC in future years. Uncertainty with respect to certain aspects of the PFIC rules and changes to these rules (including the finalization of proposed rules) may also affect our PFIC status. In addition, our PFIC status may depend, in part, on the average value of our goodwill and other intangible assets. Fluctuations in our market capitalization may affect our PFIC status if the value of our assets for purposes of the asset test, including the value of our goodwill and other intangibles, is determined by reference to our market capitalization from time to time (which has been, and may continue to be, volatile), rather than based on other methods.

If we are a PFIC with respect to our U.S. shareholders, U.S. holders would be subject to certain adverse U.S. federal income tax consequences as discussed under “Item 10. Additional Information—E. Taxation—Material U.S. Federal Income Tax Considerations for U.S. Holders”. Investors should consult their own tax advisors regarding all aspects of the application of the PFIC rules.

Judgments of Brazilian courts to enforce our obligations with respect to our Class A common shares may be payable only in reais.

Most of our assets are located in Brazil. If proceedings are brought in the courts of Brazil seeking to enforce our obligations to pay any amounts in respect of our Class A common shares, we may not be required to discharge our obligations in a currency other than the real. Under Brazilian exchange rate laws, an obligation in Brazil to pay amounts denominated in a currency other than the real may only be satisfied in Brazilian currency at the exchange rate, as determined by the Central Bank, in effect on the date the enforcement of the judgment in Brazil is obtained, and such amounts are then adjusted to reflect exchange rate variations through the effective payment date. The then-prevailing exchange rate may not fully compensate non-Brazilian investors for any claim arising out of or related to our obligations under the Class A common shares.

The disparity in the voting rights among the classes of our shares may have a potential adverse effect on the price of our Class A common shares, and may limit or preclude your ability to influence corporate matters. Furthermore, our dual-class capital structure means our shares may not be included in certain indices.

Our ordinary shares have a dual class structure. Each Class A common share will entitle its holder to one vote per share on all matters submitted to a vote of our shareholders. Each holder of our Class B common shares will be entitled to 10 votes per Class B common share so long as the voting power of Class B common shares is at least 10% of the aggregate voting power of our outstanding common shares on the record date for any general meeting of the shareholders. Because of the ten-to-one voting ratio between our Class B common shares and Class A common shares, the holders of our Class B common shares collectively possess a significant amount of voting power of our common shares.

Future transfers by holders of Class B common shares will generally result in those shares converting to Class A common shares, subject to limited exceptions, such as certain transfers effected to permitted transferees or for estate planning or charitable purposes. The conversion of Class B common shares to Class A common shares will have the effect, over time, of increasing the relative voting power of those holders of Class B common shares who retain their shares in the long term. For a description of our dual class structure, see “Item 10. Additional Information—B. Memorandum and articles of association—Meetings of Shareholders—Voting Rights and Right to Demand a Poll”.

The difference in voting rights could adversely affect the value of our Class A common shares. For example, it could delay or defer a change of control, or investors and potential purchasers of our company may perceive the superior voting rights of the Class B common shares as valuable.

In addition, S&P Dow Jones and FTSE Russell’s eligibility criteria for inclusion of shares of public companies on certain indices, including the S&P 500, excludes companies with multiple classes of shares and companies whose public shareholders hold no more than 5% of total voting power from being added to such indices. Moreover, several shareholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the dual class structure of our ordinary shares may prevent the inclusion of our common shares in such indices and may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any such exclusion from indices could result in a less active trading market for our common shares. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of our common shares.

One of our founder shareholders holds a large amount of voting power over our common shares, and as a result has influence over certain of our activities and corporate decisions.

André Street controls directly and indirectly 2.33% of our Class A common shares and 100.00% of our Class B common shares as of March 31, 2026. Accordingly, André Street directly and indirectly controls 7.97% of our outstanding common shares and holds 39.45% of the combined voting power of our common shares. See ”Item 7. Major Shareholders and Related Party Transactions—Major Shareholders.”

As a result of this voting power held by entities affiliated with him, Mr. Street may have the ability to influence matters affecting, or submitted to a vote from our shareholders. Also, the rights granted pursuant to our articles of association and shareholders agreement mean that our founder shareholder is, among other things, able to control any transaction involving a merger with third-parties or change of control until he owns less than 15% of the total voting power of our common shares given their prior written approval will be required in order for us to proceed with such a transaction. See “Item 7. Major Shareholders and Related Party Transactions—Major shareholders—Shareholders Agreement”, “Item 10. Additional Information—B. Memorandum and articles of association—Share Capital” and “Item 7. Major Shareholders and Related Party Transactions—A. Major shareholders” for more information.

The interests of such shareholder may conflict with, or differ from, the interests of other holders of our shares. For example, he may inhibit change of control transactions that benefit other shareholders. He may also pursue acquisition opportunities for himself that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. So long as such shareholder continues to own a substantial number of our common shares (in particular our Class B common shares), he will influence certain of our corporate decisions and together with other shareholders, he may be able to effect or inhibit changes in the control of our company.

Sales of substantial amounts of our Class A common shares in the public market, or the perception that these sales may occur, could cause the market price of our Class A common shares to decline.

Under our Articles of Association, we are authorized to issue up to 630,000,000 shares, of which 248,904,667 common shares are outstanding as of December 31, 2025 (comprised of 232,663,503 Class A common shares and 16,241,164 Class B common shares). We cannot predict the size of future issuances of our shares or the effect, if any, that future sales and issuances of shares would have on the market price of our Class A common shares.

In addition, we have adopted the LTIP, under which we have the discretion to grant a broad range of equity-based awards to eligible participants. In May 2022, we also approved a new incentive plan pool, comprised of 19.2 million shares to be granted in the form of RSUs and PSUs under the LTIP. See “Item 6. Directors, Senior Management and Employees—B. Compensation—Long-Term Incentive Plans (LTIP)”. We have registered on a Form S-8 registration statement all common shares that we may issue under the LTIP. As a result, these can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates and the lock-up agreements described in “Item 10. Additional Information—B. Memorandum and articles of association”, and any other applicable restrictions. Sales of these shares in the public market, or the perception that those sales may occur, could cause the prevailing market price to decrease or to be lower than it might be in the absence of those sales or perceptions. Also, if a large number of our Class A common shares or securities convertible into our Class A common shares are sold in the public market after they become eligible for sale, the sales could reduce the trading price of our Class A common shares and impede our ability to raise future capital.

A decline in the market price of our Class A common shares could impair our ability to raise additional capital through the sale of our equity securities.

If securities or industry analysts publish inaccurate or unfavorable research, about our business, the price of our Class A common shares, our other securities (issued or sponsored by us) and our trading volume could decline.

The trading market for our Class A common shares and our other securities (issued or sponsored) will depend in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who cover us downgrade our Class A common shares and our other securities (issued or sponsored) or publish inaccurate or unfavorable research about our business, the price of our Class A common shares and our other securities (issued or sponsored) would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our Class A common shares and our other securities (issued or sponsored) could decrease, which might cause the price of our Class A common shares and our other securities (issued or sponsored) and trading volume to decline.

Investor Relations

Menu

Risk factors