StoneCo Reports First Quarter 2023 Results
Revenue of
Adjusted EBT (including share-based compensation expenses) of
MSMB TPV of
Operating and Financial Highlights for 1Q23
Note about our non-IFRS Adjusted P&L metrics: as anticipated in our 4Q22 Earnings announcement, from 1Q23 onwards we will no longer adjust the expenses related to share-based compensation, which may affect the comparability of our current Adjusted results to our Adjusted numbers prior to 1Q23. To allow for better understanding of our business performance trends, the tables in this Earnings Release will make reference to our Adjusted P&L metrics including share-based compensation expenses (i.e. not adjusting those expenses out), both in 1Q23 and in prior periods for comparability purposes.
MAIN CONSOLIDATED FINANCIAL METRICS
Table 1: Main Consolidated Financial Metrics
Main Consolidated Financial Metrics (R$mn) | 1Q23 | 4Q22 | 1Q22 | Δ y/y % | Δ q/q % |
Total Revenue and Income | 2,711.7 | 2,706.1 | 2,070.3 | 31.0% | 0.2% |
Adjusted EBITDA | 1,251.4 | 1,231.1 | 803.6 | 55.7% | 1.7% |
Adjusted EBT | 324.0 | 275.6 | 68.8 | 370.8% | 17.6% |
Adjusted Net Income | 236.6 | 203.8 | 42.6 | 455.9% | 16.1% |
Adjusted |
3,988.8 | 3,489.6 | 2,537.8 | 57.2% | 14.3% |
- Total Revenue and Income reached
R$2,711.7 million in the quarter. This represents an increase of 31.0% fromR$2,070.3 million in the prior-year period. The increase in revenues was mainly a result of (i) 35.7% growth in our financial services platform revenues, that reachedR$2,335.9 million and (ii) 9.7% growth in our software platform revenues, that reachedR$358.2 million . Non-Allocated represented the remainingR$17.5 million in revenue. Financial services revenue growth was mostly a result of our performance in the MSMB segment, with above-guidance TPV and higher take rates on a year over year basis. Our year over year software revenue growth was mainly driven by our software Core POS and ERP business performance. - Adjusted EBITDA up 55.7% year over year. Adjusted EBITDA in 1Q23 was
R$1,251.4 million , up fromR$803.6 million in 1Q22 and 1.7% higher quarter over quarter, despite seasonality. Adjusted EBITDA Margin was 0.7 percentage point higher sequentially to 46.1% mainly due to efficiency gains in administrative expenses and lower selling expenses, supported by higher sequential revenue despite a weaker seasonality in the first quarter of the year. - Adjusted EBT was
R$324.0 million , with adjusted EBT margin increasing 1.8 percentage points sequentially and reaching 11.9% in 1Q23. This sequential improvement was mostly related to efficiency gains in administrative expenses, lower selling expenses and lower other operating expenses on a quarter over quarter basis, supported by higher sequential revenue despite a weaker seasonality in the first quarter of the year. - Adjusted Net Income in 1Q23 was
R$236.6 million with adjusted net margin of 8.7% compared withR$203.8 million and a margin of 7.5% in 4Q22. The margin improvement is a result of the same factors explained above for Adjusted EBT margin, partially offset by a higher effective tax rate. - Adjusted
Net Cash wasR$3,988.8 million in 1Q23, an increase ofR$499.2 million in the quarter. This increase is mostly explained by: (i) cash net income ofR$532.7 million , which is our net income plus non-cash income and expenses as reported in our statement of cash flows; (ii) proceeds ofR$218.1 million from the sale of our remaining stake inBanco Inter ; (iii)R$91.8 million from the non-cash effect from present value adjustment to accounts receivable from card issuers, which flows through Other Comprehensive Income; (iv)R$23.4 million from recoverable taxes and taxes payable and (v)R$26.8 million from prepaid expenses. These factors were partially offset byR$416.4 million of capex. Other effects contributed positively withR$22.7 million .
SEGMENT REPORTING
Below, we provide our main financial metrics broken down into our two reportable segments and non-allocated activities.
Table 2: Financial metrics by segment
Segment Reporting (R$mn Adjusted) | 1Q23 | % Rev1 | 4Q22 | % Rev1 | 1Q22 | % Rev1 | Δ y/y % | Δ q/q % |
Total Revenue and Income | 2,711.7 | 100.0% | 2,706.1 | 100.0% | 2,070.3 | 100.0% | 31.0% | 0.2% |
Financial Services | 2,335.9 | 100.0% | 2,308.2 | 100.0% | 1,721.3 | 100.0% | 35.7% | 1.2% |
Software | 358.2 | 100.0% | 376.3 | 100.0% | 326.6 | 100.0% | 9.7% | (4.8%) |
Non-Allocated | 17.5 | 100.0% | 21.6 | 100.0% | 22.4 | 100.0% | (21.8%) | (18.8%) |
Adjusted EBITDA | 1,251.4 | 46.1% | 1,231.1 | 45.5% | 803.6 | 38.8% | 55.7% | 1.7% |
Financial Services | 1,209.0 | 51.8% | 1,172.4 | 50.8% | 758.1 | 44.0% | 59.5% | 3.1% |
Software | 39.9 | 11.1% | 59.6 | 15.8% | 40.3 | 12.3% | (0.9%) | (33.1%) |
Non-Allocated | 2.5 | 14.2% | (0.9) | (4.4%) | 5.2 | 23.3% | (52.2%) | n.m |
Adjusted EBT | 324.0 | 11.9% | 275.6 | 10.2% | 68.8 | 3.3% | 370.8% | 17.6% |
Financial Services | 306.0 | 13.1% | 246.1 | 10.7% | 52.2 | 3.0% | 486.0% | 24.4% |
Software | 16.9 | 4.7% | 30.5 | 8.1% | 12.3 | 3.8% | 37.0% | (44.7%) |
Non-Allocated | 1.2 | 6.7% | (1.0) | (4.6%) | 4.3 | 19.2% | (72.7%) | n.m |
FINANCIAL SERVICES SEGMENT PERFORMANCE HIGHLIGHTS
Table 3: Financial Services Main Operating and Financial Metrics
Main Financial Services Metrics | 1Q23 | 4Q22 | 1Q22 | Δ y/y % | Δ q/q % |
Financial Metrics (R$mn) | |||||
Total Revenue and Income | 2,335.9 | 2,308.2 | 1,721.3 | 35.7% | 1.2% |
Adjusted EBITDA | 1,209.0 | 1,172.4 | 758.1 | 59.5% | 3.1% |
Adjusted EBT | 306.0 | 246.1 | 52.2 | 486.0% | 24.4% |
Adjusted EBT margin (%) | 13.1% | 10.7% | 3.0% | 10.1 p.p. | 2.4 p.p. |
TPV (R$bn) | 93.5 | 100.1 | 83.2 | 12.5% | (6.6%) |
MSMB | 78.9 | 81.9 | 63.4 | 24.5% | (3.7%) |
Key Accounts | 14.6 | 18.2 | 19.8 | (26.2%) | (19.8%) |
Monthly Average TPV MSMB ('000) | 9.5 | 10.9 | 11.8 | (19.8%) | (12.8%) |
Active Payments Client Base ('000)2 | 2,818.1 | 2,584.0 | 1,926.2 | 46.3% | 9.1% |
MSMB2 | 2,758.1 | 2,526.2 | 1,870.9 | 47.4% | 9.2% |
Key Accounts | 67.6 | 65.0 | 60.2 | 12.2% | 4.0% |
Net Adds ('000)2 | 234.0 | 211.9 | 160.1 | 46.2% | 10.4% |
MSMB2 | 231.9 | 211.8 | 167.5 | 38.5% | 9.5% |
Key Accounts | 2.6 | 0.6 | (7.1) | n.m | 314.8% |
Take Rate | |||||
MSMB | 2.39% | 2.21% | 2.06% | 0.33 p.p. | 0.18 p.p. |
Key Accounts | 1.15% | 1.17% | 0.84% | 0.31 p.p. | (0.02 p.p.) |
Banking | |||||
MSMB Active Banking Client Base ('000) | 1,253.0 | 692.8 | 509.9 | 145.7% | 80.9% |
Client Deposits (R$mn) | 3,902.2 | 4,023.7 | 2,367.8 | 64.8% | (3.0%) |
MSMB Client Deposits (R$mn) | 3,622.1 | 3,596.3 | 1,972.7 | 83.6% | 0.7% |
MSMB Banking ARPAC3 | 36.7 | 44.7 | 33.3 | 10.2% | (17.9%) |
- Total Revenue and Income for Financial Services segment reached
R$2,335.9 million in 1Q23, 35.7% higher year over year. This growth was mostly a result of our performance in the MSMB segment, with strong year over year TPV and client base growth, in addition to higher take rates and revenue from banking solution and PIX.
- Adjusted EBT for Financial Services segment rose 486.0% year over year and 24.4% quarter over quarter in 1Q23 to
R$306.0 million . Adjusted EBT margin for the segment reached 13.1% in 1Q23, 2.4 percentage points higher sequentially from 10.7% in 4Q22. This margin improvement is mainly explained by efficiency gains in administrative expenses, lower selling expenses and lower other operating expenses, supported by higher sequential revenue despite a weaker seasonality in the first quarter of the year.
- Consolidated TPV grew 12.5% year over year to
R$93.5 billion in 1Q23, mainly a result of 24.5% growth in the MSMB segment and partially offset by a decrease of 26.2% in the TPV of Key Accounts.
- Total Payments Active Client base reached 2.8 million4 representing a total quarterly net addition of 234,000 active clients.
a. MSMB – Balancing Growth and Profitability
- MSMB active payment clients reached 2,758,1005, with client net addition of 231,900 in the quarter, accelerating from 211,800 in the previous quarter. This acceleration was a result of successful marketing campaigns, which increased brand recognition for our products, as well as lower churn both in Stone and Ton brands. In 1Q23, we continued to see positive addition of clients in all MSMB client tiers.
- MSMB TPV was
R$78.9 billion , up 24.5% year over year, and above our guidance of betweenR$77.0 andR$78.0 billion . This increase was mainly a result of our MSMB active client base growth in the period. - Average monthly TPV per client in MSMB decreased 19.8% year over year and 12.8% quarter over quarter to
R$9,500 , mainly due to the faster growth of our Ton product, which has lower average TPV compared to Stone and Pagar.me SMB products. On a sequential basis, the decrease is also explained by the weaker seasonality of TPV in the first quarter compared to the fourth quarter. - MSMB Take Rate was 2.39% in 1Q23, up from 2.21% in 4Q22 on a comparable basis, mainly explained by (i) higher monetization of prepayment, (ii) contribution from our banking solution, (iii) the seasonal effect from increase in credit over debit volumes compared with the fourth quarter and (iv) stronger growth in micro and small clients, which have higher take rates.
- Our banking solutions6 continued to evolve strongly in 1Q23:
- Our banking client base increased sequentially to 1,253,000 in 1Q23, 80.9% higher quarter over quarter, compared with a 23.4% sequential increase in 4Q22. This acceleration in growth is mainly a result of the increase in the number of Ton clients with our full banking solution, following the launch of “Super Conta Ton”. We also continued to activate banking accounts within our Stone payments client base. Meanwhile, average revenue per active client (ARPAC)7 has increased 10.2% year over year and decreased 17.9% quarter over quarter to reach
R$36.7 per client per month. As explained in our 3Q22 results, as we sell more banking into our Ton client base, we expect to see significant increase in our number of accounts and an increase in overall banking revenues, although the average revenue per active client should decrease, as micro-merchants have naturally smaller revenue contribution. This quarter banking numbers reflect the impacts from this mix effect. - MSMB Client Deposits were
R$3.6 billion , 83.6% higher year over year and 0.7% higher quarter over quarter. The quarter over quarter increase is mainly explained by the increase in the number of Ton clients with our full banking solution, which more than compensated seasonal effects from lower TPV in first quarters compared with fourth quarters.
- Our banking client base increased sequentially to 1,253,000 in 1Q23, 80.9% higher quarter over quarter, compared with a 23.4% sequential increase in 4Q22. This acceleration in growth is mainly a result of the increase in the number of Ton clients with our full banking solution, following the launch of “Super Conta Ton”. We also continued to activate banking accounts within our Stone payments client base. Meanwhile, average revenue per active client (ARPAC)7 has increased 10.2% year over year and decreased 17.9% quarter over quarter to reach
- Update on our Credit Business:
- In 2023 we have started to test elements of our new credit product, such as system automation, management of guarantees, decision models, credit lifecycle monitoring and renegotiation process.
- As of
April 30, 2023 , we had disbursedR$6.0 million of the new credit product to a very small number of clients. Some of the updates we have in this initial stage are the following: (i) as of now the performance of early vintages are in line with our credit underwriting standards; (ii) formalization of personal guarantee and the lien on receivables has been executed as expected (iii) all the information dashboards to manage the credit portfolio are in place and (iv) key managerial positions for the credit team have been fulfilled. - We will continue to grow our portfolio with discipline and as long as we are comfortable with market conditions and have all the remaining features of our product 100% tested. We are in line with our plans to do so.
b. Key Accounts
- Key Accounts TPV of
R$14.6 billion . Total Key Accounts TPV wasR$14.6 billion , 26.2% lower year over year and 19.8% lower quarter over quarter. This expected reduction resulted from the continued deprioritization of sub-acquirer volumes and a weaker seasonality in 1Q23 when compared with 4Q22. - Key Accounts Take Rate of 1.15%. Key Accounts take rate was 1.15% in 1Q23, 31 basis points higher than in 1Q22, mainly due to deprioritization of sub-acquirers, which usually have lower take rates. Compared with 4Q22, take rate was down 2 basis points, mainly a result of lower prepayment penetration, which more than compensated a positive client mix effect.
SOFTWARE PERFORMANCE HIGHLIGHTS
Table 4: Software Main Operating and Financial Metrics
Main Software Metrics (R$mn) | 1Q23 | 4Q22 | 1Q22 | Δ y/y % | Δ q/q % |
Financial Metrics | |||||
Total Revenue and Income | 358.2 | 376.3 | 326.6 | 9.7% | (4.8%) |
Adjusted EBITDA | 39.9 | 59.6 | 40.3 | (0.9%) | (33.1%) |
Adjusted EBITDA Margin | 11.1% | 15.8% | 12.3% | (1.2 p.p.) | (4.7 p.p.) |
Adjusted EBT | 16.9 | 30.5 | 12.3 | 37.0% | (44.7%) |
- Total Revenue and Income for Software grew 9.7% year over year in 1Q23 to
R$358.2 million . This growth is mainly a result of our Core business performance, which was driven by both organic growth from higher number of POS/ERP locations and as well as inorganic expansion. The main reasons for the deceleration in revenue growth in software compared with previous quarters were: (i) a decrease in transactional revenue related to business of Ads; (ii) weaker performance of some enterprise retail accounts; and (iii) lower inflation (e.g. average IGPM of 1.9% in 1Q23, compared with 6.0% in 4Q22 and 15.9% in 1Q22), which affects annual price adjustments in software. - Adjusted EBITDA for the Software division was
R$39.9 million in 1Q23, with a margin of 11.1%, compared withR$40.3 million and a margin of 12.3% in 1Q22. Compared with 4Q22, Adjusted EBITDA Margin for Software was 4.7 percentage points lower, mainly explained by lower revenue quarter over quarter and higher selling expenses, as we invested in the sales team. The lower revenue quarter over quarter is a result of the combination of (i) a decrease in transactional revenue related to digital business of Ads; and (ii) weaker performance of some enterprise retail accounts. - Adjusted EBT for Software was
R$16.9 million in 1Q23, up 37.0% compared with 1Q22. Compared with 4Q22, Adjusted EBT decreased 44.7% fromR$30.5 million toR$16.9 million in 1Q23, with Adjusted EBT Margin decreasing from 8.1% to 4.7%. The reduction in Adjusted EBT quarter over quarter is a result of the combination of lower revenues as explained above for Adjusted EBITDA, combined with flattish total costs and expenses. - Our Core8 Software business revenue increased 12.1% year over year. This increase was mainly driven by a higher number of locations, especially in smaller clients, in addition to the consolidation of the results of investments throughout the year.
- Our Digital9 business revenue decreased 8.7% year over year mainly due to lower transactional revenues, principally in Ads and Impulse businesses.
- Among our software priorities for 2023 are:
- Strong focus on cost discipline to increase operational leverage;
- Continue to expand our presence by scaling our regional franchise and digital channels, driving growth within medium and small client segments;
- Continue to build an end-to-end value proposition of software and integrated financial services in select verticals and segments;
- Streamline software assets to increase strategic focus;
- Expand our TAM by entering in new retail verticals through M&A.
RECENT DEVELOPMENTS
Board changes and completion of CEO transition
As announced in a press release, on
As a result of these changes, StoneCo Board of Directors is now composed of eight Directors, six of whom are independent:
André Street – ChairmanConrado Engel * – Vice-ChairmanLuciana Aguiar *Diego Fresco Gutierrez *Mauricio Luchetti *- Patricia Verderesi*
Thiago dos Santos Piau Luiz André Barroso *
* Independent Board Members
In addition to those changes, the Company completed on
OUTLOOK FOR 2Q23
The outlook below constitutes forward-looking information within the meaning of applicable securities laws and is based on a number of assumptions and subject to a number of risks. Actual results could vary materially as a result of numerous factors, including certain risk factors, many of which are beyond StoneCo´s control. Please see “Forward-looking Statements” below. In view of these factors, we expect the following:
- Total Revenue and Income is expected to be above
R$2,875 million in 2Q23, or a year over year growth of above 24.8%. - Adjusted EBT (not adjusting for share-based compensation expenses) is expected to be above
R$375 million in 2Q23, compared withR$324.0 million in 1Q23. - MSMB TPV is expected to be between
R$83 billion andR$84 billion in 2Q23 (up 18.8% to 20.2% year over year).
Income Statement
Table 5: Statement of Profit or Loss (IFRS, as Reported)
Statement of Profit or Loss (R$mn) | 1Q23 | % Rev. | 1Q22 | % Rev. | Δ % |
Net revenue from transaction activities and other services | 733.1 | 27.0% | 554.9 | 26.8% | 32.1% |
Net revenue from subscription services and equipment rental | 445.1 | 16.4% | 432.2 | 20.9% | 3.0% |
Financial income | 1,375.0 | 50.7% | 949.8 | 45.9% | 44.8% |
Other financial income | 158.4 | 5.8% | 133.4 | 6.4% | 18.7% |
Total revenue and income | 2,711.7 | 100.0% | 2,070.3 | 100.0% | 31.0% |
Cost of services | (721.3) | (26.6%) | (674.4) | (32.6%) | 7.0% |
Administrative expenses | (298.0) | (11.0%) | (238.2) | (11.5%) | 25.1% |
Selling expenses | (389.9) | (14.4%) | (383.7) | (18.5%) | 1.6% |
Financial expenses, net | (923.6) | (34.1%) | (708.2) | (34.2%) | 30.4% |
Mark-to-market on equity securities designated at FVPL | 30.6 | 1.1% | (323.0) | (15.6%) | n.m |
Other income (expenses), net | (101.5) | (3.7%) | (31.8) | (1.5%) | 218.9% |
Loss on investment in associates | (1.0) | (0.0%) | (0.7) | (0.0%) | 51.0% |
Profit before income taxes | 306.8 | 11.3% | (289.8) | (14.0%) | n.m |
Income tax and social contribution | (81.1) | (3.0%) | (23.2) | (1.1%) | 249.8% |
Net income for the period | 225.7 | 8.3% | (313.0) | (15.1%) | n.m |
Table 6: Statement of Profit or Loss (Adjusted10)
Following the partial sale of our stake in
Adjusted Statement of Profit or Loss (R$mn) | 1Q23 | % Rev. | 1Q22 | % Rev. | Δ % |
Net revenue from transaction activities and other services | 733.1 | 27.0% | 554.9 | 26.8% | 32.1% |
Net revenue from subscription services and equipment rental | 445.1 | 16.4% | 432.2 | 20.9% | 3.0% |
Financial income | 1,375.0 | 50.7% | 949.8 | 45.9% | 44.8% |
Other financial income | 158.4 | 5.8% | 133.4 | 6.4% | 18.7% |
Total revenue and income | 2,711.7 | 100.0% | 2,070.3 | 100.0% | 31.0% |
Cost of services | (721.3) | (26.6%) | (674.4) | (32.6%) | 7.0% |
Administrative expenses | (262.5) | (9.7%) | (214.8) | (10.4%) | 22.2% |
Selling expenses | (389.9) | (14.4%) | (383.7) | (18.5%) | 1.6% |
Financial expenses, net | (908.9) | (33.5%) | (702.1) | (33.9%) | 29.5% |
Other income (expenses), net | (104.1) | (3.8%) | (25.8) | (1.2%) | 303.7% |
Loss on investment in associates | (1.0) | (0.0%) | (0.7) | (0.0%) | 51.1% |
Adj. Profit before income taxes | 324.0 | 11.9% | 68.8 | 3.3% | 370.8% |
Income tax and social contribution | (87.4) | (3.2%) | (26.3) | (1.3%) | 232.9% |
Adjusted Net Income | 236.6 | 8.7% | 42.6 | 2.1% | 455.9% |
Total Revenue and Income
Total Revenue and Income in 1Q23 was
Total Revenue and Income is composed of (i)
Financial Services segment revenue grew 35.7% year over year. This revenue growth is mainly a result of our performance in MSMB, with above-guidance year over year TPV growth, strong client base evolution with net adds acceleration and a higher take rate of 2.39% in 1Q23 compared with 2.06% in 1Q22. The higher take rate year over year is a result of (i) adjustments in our commercial policy on a year over year basis; (ii) stronger growth in our Ton brand, and (iii) additional contribution from our banking solution.
Software revenue growth was 9.7% year over year, explained by our Core business performance, which grew 12.1% over the same period. The growth in our Core software business was driven by both (i) organic growth from a higher number of POS/ERP locations, especially in smaller clients, as well as (ii) inorganic growth.
Net Revenue from Transaction Activities and Other Services
Net Revenue from Transaction Activities and Other Services was
Net Revenue from Subscription Services and Equipment Rental
Net Revenue from Subscription Services and Equipment Rental was
Financial Income
Financial Income in 1Q23 was
Other Financial Income
Other Financial Income was
Costs and Expenses
Cost of Services
Cost of Services were
Compared with 4Q22, Cost of Services increased 3.3%, mainly as a result of higher investments in technology. As a percentage of revenues, Cost of Services increased sequentially from 25.8% to 26.6%, mainly due to the same factors just mentioned.
Administrative Expenses
Administrative Expenses were
Administrative Expenses in 1Q23 were 8.9% lower than in 4Q22, mainly explained by lower expenses in our Financial Services segment, mostly related to third-party advisory and more normalized levels of personnel expenses that were seasonally higher in the fourth quarter. This seasonality in personnel expenses relates mostly to courses and training of our team, annual leadership event and Holiday Seasons benefits to employees. Administrative expenses for our Software segment were relatively flat on a quarter over quarter basis. As a percentage of revenues, Administrative Expenses decreased from 12.1% in 4Q22 to 11.0% in 1Q23, as a result of the combination of the factors mentioned above.
Administrative Expenses in 1Q23 include - |
Selling Expenses
Selling Expenses were
Compared with 4Q22, Selling Expenses decreased 4.0%, mostly due to lower personnel expenses as a result of higher provisions for variable compensation in 4Q22, which were partially compensated by higher marketing expenses and sales commissions. As a percentage of revenues, Selling Expenses decreased sequentially from 15.0% in 4Q22 to 14.4% in 1Q23.
Financial Expenses, Net
Financial Expenses, Net were
Compared with the previous quarter, Financial Expenses, net were 1.3% higher, mainly explained by our decision to conservatively hold a higher average cash position through most of the quarter given market dynamics.
Financial Expenses include - For comparability purposes, based on adjustments criteria adopted from 2Q22 onwards, in which we do not adjust our results for bond expenses, and adjusting for the factors above, Financial Expenses, net were |
Mark-to-market on equity securities designated at FVPL
In 1Q23, we recognized
Mark-to-market on equity securities designated at FVPL is fully adjusted in our Adjusted Income Statement (see table 13 in Appendix for the Adjustments by P&L line). |
Other Income (Expenses), Net
Other Expenses, Net were
Compared with 4Q22, Other Expenses, net were
Other Expenses, net include R$2.6 million that are adjusted in our Adjusted Income Statement, including call options related to acquisitions, earn-out interests and reversal of litigation of Linx (see table 13 in Appendix for the Adjustments by P&L line). Until 4Q22, we used to also adjust our numbers for share-based compensation expenses related to the one-time IPO grant and non-recurring long term incentive plans, which we stopped doing from 1Q23 onwards. For comparability purposes, based on adjustments criteria adopted from 1Q23 onwards, in which we do not adjust our results for share-based compensation expenses, and adjusting for the factors above, Other Expenses, net, were R$25.8 million in 1Q22, |
Income Tax and Social Contribution
During 1Q23, the Company recognized income tax and social contribution expenses of
The Income Tax and Social Contribution in our Adjusted Income Statement includes an additional R$6.3 million relating to taxes from the adjusted items (see table 13 in Appendix for the Adjustments by P&L line). Adjusting for those effects our Income Tax and Social Contribution was |
EBITDA
Adjusted EBITDA was
Table 7: Adjusted EBITDA Reconciliation
1Q23 | % Rev. | 1Q22 | % Rev. | Δ % | |
Profit (Loss) before income taxes | 306.8 | 11.3% | (289.8) | (14.0%) | n.m |
(+) Financial expenses, net | 923.6 | 34.1% | 708.2 | 34.2% | 30.4% |
(-) Other financial income | (158.4) | (5.8%) | (133.4) | (6.4%) | 18.7% |
(+) Depreciation and amortization | 212.5 | 7.8% | 184.9 | 8.9% | 14.9% |
EBITDA | 1,284.5 | 47.4% | 469.8 | 22.7% | 173.4% |
(+) Mark-to-market related to the investment in |
(30.6) | (1.1%) | 323.0 | 15.6% | n.m |
(+) Other Expenses (a) | (2.6) | (0.1%) | 10.8 | 0.5% | n.m |
Adjusted EBITDA | 1,251.4 | 46.1% | 803.6 | 38.8% | 55.7% |
(a) Consists of the fair value adjustment related to associates call option, earn-out and earn-out interests related to acquisitions and reversal of litigation at Linx.
EBITDA was
Net Income (Loss) and EPS
Adjusted Net Income was
Adjusted Net Income was up 16.1% quarter over quarter, with Adjusted
Net Income in 1Q23 was
On a comparable basis (not adjusting for bond and share based compensation expenses), Adjusted diluted EPS for the Company was
Table 8: Adjusted Net Income Reconciliation
Following the partial sale of our stake in
1Q23 | % Rev. | 1Q22 | % Rev. | Δ % | |
Net income for the period | 225.7 | 8.3% | (313.0) | (15.1%) | n.m |
Amortization of fair value adjustment (a) | 33.7 | 1.2% | 24.9 | 1.2% | 35.2% |
Mark-to-market from the investment in |
(30.6) | (1.1%) | 323.0 | 15.6% | n.m |
Other expenses (c) | 14.1 | 0.5% | 10.8 | 0.5% | 31.0% |
Tax effect on adjustments | (6.3) | (0.2%) | (3.1) | (0.1%) | 105.1% |
Adjusted net income (as reported) | 236.6 | 8.7% | 42.6 | 2.1% | 455.9% |
IFRS basic EPS (d) | 0.72 | n.a. | (1.01) | n.a. | n.m |
Adjusted diluted EPS (as reported) (e) | 0.73 | n.a. | 0.14 | n.a. | 436.2% |
Basic Number of shares | 312.7 | n.a. | 310.3 | n.a. | 0.8% |
Diluted Number of shares | 324.9 | n.a. | 310.3 | n.a. | 4.7% |
(a) Related to acquisitions. Consists of expenses resulting from the changes of the fair value adjustments as a result of the application of the acquisition method.
(b) From 2Q22 onwards we no longer adjust the financial expenses related to our bond, which may affect the comparability of our Adjusted results between our numbers from 2Q22 onwards and our numbers from prior periods. For comparability purposes, we have included in this line only the mark-to-market from the investment in
(c) Consists of the fair value adjustment related to associates call option, earn-out and earn-out interests related to acquisitions and reversal of litigation of Linx.
(d) Calculated as Net income attributable to owners of the parent (Net Income reduced by Net Income attributable to Non-Controlling interest) divided by basic number of shares. For more details on calculation, please refer to Note 13 of our Consolidated Financial Statements,
(e) Calculated as Adjusted Net income attributable to owners of the parent (Adjusted Net Income reduced by Adjusted Net Income attributable to Non-Controlling interest) divided by diluted number of shares.
Adjusted
Our Adjusted
Table 9: Adjusted
Adjusted |
1Q23 | 4Q22 | 1Q22 |
Cash and cash equivalents | 1,855.6 | 1,512.6 | 4,169.6 |
Short-term investments | 3,257.3 | 3,453.8 | 2,524.0 |
Accounts receivable from card issuers | 18,940.0 | 20,748.9 | 18,425.3 |
Financial assets from banking solution | 4,026.5 | 3,960.9 | 2,498.8 |
Derivative financial instrument (b) | 13.1 | 12.4 | 28.9 |
Adjusted Cash | 28,092.5 | 29,688.5 | 27,646.6 |
Obligations with banking customers (c) | (3,902.2) | (4,023.7) | (2,367.8) |
Accounts payable to clients | (15,568.6) | (16,614.5) | (14,997.4) |
Loans and financing (a) | (3,756.5) | (4,375.7) | (5,426.5) |
Obligations to FIDC quota holders | (634.7) | (975.2) | (1,916.3) |
Derivative financial instrument (b) | (241.8) | (209.7) | (400.7) |
Adjusted Debt | (24,103.6) | (26,198.9) | (25,108.8) |
Adjusted |
3,988.8 | 3,489.6 | 2,537.8 |
(a) Loans and financing were reduced by the effects of leases liabilities recognized under IFRS 16.
(b) Refers to economic hedge.
(c) Includes deposits from banking customers and values transferred by our banking clients to third parties but not yet settled.
Accounts Receivable from Card Issuers are accounted for at their fair value in our balance sheet.
As of
R$532.7 million of cash net income, which is our net income plus non-cash income and expenses as reported in our statement of cash flows;R$218.1 million from the sale of our remaining stake inBanco Inter ;R$91.8 million from the non-cash effect from present value adjustment to accounts receivable from card issuers, which flows through Other Comprehensive Income;R$23.4 million from changes in taxes payable and recoverable taxes;R$26.8 million from prepaid expenses;- -
R$416.4 million of capex; R$22.7 million from other effects.
Cash Flow
Our cash flow in the quarter was explained by:
- Net cash provided by operating activities was
R$1,168.4 million in 1Q23, explained byR$532.7 million of Net Income after non-cash adjustments andR$635.6 million from working capital variation. Working capital is composed of (i)R$855.4 million of changes related to accounts receivable from card issuers, accounts payable to clients and interest income received, net of costs; (ii)R$161.8 million from payment of interest and taxes; (iii)R$74.9 million outflow from labor and social security liabilities, (iv)R$23.4 million inflow from recoverable taxes and taxes payable and (v)R$6.4 million outflow from other working capital changes. - Net cash provided by investing activities was
R$51.6 million in 1Q23, explained by (i)R$416.4 million capex, of whichR$340.3 million related to property and equipment andR$76.1 million related to development of intangible assets; (ii)R$253.5 million of proceeds from short-term investments; (iii)R$218.1 million from the sale of our remaining stake inBanco Inter ; (iv)R$3.8 million from acquisition of interest in associates and (v)R$0.2 million from proceeds from disposal of non-current assets. - Net cash used in financing activities was
R$887.3 million , explained by (i)R$885.0 million net payment of debt, mostly related to the partial amortization of FIDC AR III and amortization of CCBs (“Cédula de Crédito Bancário”) and (ii)R$2.3 million cash outflow from capital events related to non-controlling interests.
Other Information
Conference Call
Stone will discuss its 1Q23 financial results during a teleconference today,
The call will also be broadcast simultaneously on Stone’s Investor Relations website at https://investors.stone.co/. Following the completion of the call, a recorded replay of the webcast will be available on Stone’s Investor Relations website at https://investors.stone.co/.
About
Investor Contact
Investor Relations
investors@stone.co
Consolidated Statement of Profit or Loss
Table 10: Consolidated Statement of Profit or Loss
Statement of Profit or Loss (R$mn) | 1Q23 | 1Q22 |
Net revenue from transaction activities and other services | 733.1 | 554.9 |
Net revenue from subscription services and equipment rental | 445.1 | 432.2 |
Financial income | 1,375.0 | 949.8 |
Other financial income | 158.4 | 133.4 |
Total revenue and income | 2,711.7 | 2,070.3 |
Cost of services | (721.3) | (674.4) |
Administrative expenses | (298.0) | (238.2) |
Selling expenses | (389.9) | (383.7) |
Financial expenses, net | (923.6) | (708.2) |
Mark-to-market on equity securities designated at FVPL | 30.6 | (323.0) |
Other income (expenses), net | (101.5) | (31.8) |
Loss on investment in associates | (1.0) | (0.7) |
Profit before income taxes | 306.8 | (289.8) |
Income tax and social contribution | (81.1) | (23.2) |
Net income for the period | 225.7 | (313.0) |
Consolidated Balance Sheet Statement
Table 11: Consolidated Balance Sheet Statement
Balance Sheet (R$mn) | ||
Assets | ||
Current assets | 29,067.5 | 30,659.2 |
Cash and cash equivalents | 1,855.6 | 1,512.6 |
Short-term investments | 3,257.3 | 3,453.8 |
Financial assets from banking solution | 4,026.5 | 3,960.9 |
Accounts receivable from card issuers | 18,874.8 | 20,694.5 |
Trade accounts receivable | 459.5 | 484.7 |
Recoverable taxes | 207.9 | 151.0 |
Prepaid expenses | 133.1 | 129.3 |
Derivative financial instruments | 27.3 | 36.4 |
Other assets | 225.4 | 236.1 |
Non-current assets | 11,443.9 | 11,586.2 |
Trade accounts receivable | 33.7 | 37.3 |
Accounts receivable from card issuers | 65.1 | 54.3 |
Receivables from related parties | 10.3 | 10.1 |
Deferred tax assets | 616.1 | 680.0 |
Prepaid expenses | 70.8 | 101.4 |
Other assets | 86.9 | 105.1 |
Long-term investments | 33.8 | 214.8 |
Investment in associates | 109.1 | 109.8 |
Property and equipment | 1,790.7 | 1,641.2 |
Intangible assets | 8,627.5 | 8,632.3 |
Total Assets | 40,511.4 | 42,245.4 |
Liabilities and equity | ||
Current liabilities | 23,049.2 | 25,174.1 |
Deposits from banking customers | 3,902.2 | 4,023.7 |
Accounts payable to clients | 15,533.9 | 16,578.7 |
Trade accounts payable | 496.7 | 596.0 |
Loans and financing | 1,295.5 | 1,847.4 |
Obligations to FIDC quota holders | 634.7 | 975.2 |
Labor and social security liabilities | 398.7 | 468.6 |
Taxes payable | 380.9 | 329.1 |
Derivative financial instruments | 241.8 | 209.7 |
Other liabilities | 165.0 | 145.6 |
Non-current liabilities | 4,072.5 | 4,121.3 |
Accounts payable to clients | 34.7 | 35.8 |
Loans and financing | 2,659.8 | 2,728.5 |
Obligations to FIDC quota holders | 0.0 | 0.0 |
Deferred tax liabilities | 506.5 | 500.2 |
Provision for contingencies | 199.2 | 210.4 |
Labor and social security liabilities | 41.5 | 35.8 |
Other liabilities | 630.8 | 610.6 |
Total liabilities | 27,121.7 | 29,295.4 |
Equity attributable to owners of the parent | 13,334.2 | 12,893.9 |
Issued capital | 0.1 | 0.1 |
Capital reserve | 13,869.9 | 13,818.8 |
(69.1) | (69.1) | |
Other comprehensive income | (270.2) | (432.7) |
Retained earnings | (196.6) | (423.2) |
Non-controlling interests | 55.4 | 56.1 |
Total equity | 13,389.6 | 12,950.0 |
Total liabilities and equity | 40,511.4 | 42,245.4 |
Consolidated Statement of Cash Flows
Table 12: Consolidated Statement of Cash Flows
Cash Flow (R$mn) | 1Q23 | 1Q22 |
Net income (loss) for the period | 225.7 | (313.0) |
Adjustments on Net Income: | ||
Depreciation and amortization | 212.5 | 184.9 |
Deferred income tax and social contribution | 37.6 | (44.6) |
Loss on investment in associates | 1.0 | 0.7 |
Interest, monetary and exchange variations, net | (131.6) | (108.4) |
Share-based payments expense | 70.1 | 27.2 |
Allowance for expected credit losses | 10.9 | 22.4 |
Loss on disposal of property, equipment and intangible assets | 14.9 | (4.5) |
Effect of applying hyperinflation | 1.2 | 1.1 |
Fair value adjustment in financial instruments at FVPL | 85.8 | 470.3 |
Fair value adjustment in derivatives | 4.6 | 72.0 |
Working capital adjustments: | ||
Accounts receivable from card issuers | 2,616.0 | 1,257.2 |
Receivables from related parties | 2.0 | 3.9 |
Recoverable taxes | (50.7) | (13.0) |
Prepaid expenses | 26.8 | 68.7 |
Trade accounts receivable, banking solutions and other assets | (18.4) | 318.0 |
Accounts payable to clients | (2,367.4) | (1,659.2) |
Taxes payable | 74.1 | 93.4 |
Labor and social security liabilities | (74.9) | 78.2 |
Provision for contingencies | (18.0) | (4.9) |
Trade Accounts Payable and Other Liabilities | 1.2 | 9.5 |
Interest paid | (133.4) | (108.8) |
Interest income received, net of costs | 606.8 | 488.8 |
Income tax paid | (28.4) | (44.6) |
Net cash provided by (used in) operating activity | 1,168.4 | 795.2 |
Investing activities | ||
Purchases of property and equipment | (340.3) | (136.8) |
Purchases and development of intangible assets | (76.1) | (105.0) |
Acquisition of subsidiary, net of cash acquired | 0.0 | (41.9) |
Proceeds from (acquisition of) short-term investments, net | 253.5 | (480.7) |
Disposal of short and long-term investments - equity securities | 218.1 | 0.0 |
Proceeds from the disposal of non-current assets | 0.2 | 20.4 |
Acquisition of interest in associates | (3.8) | (7.1) |
Net cash used in investing activities | 51.6 | (751.1) |
Financing activities | ||
Proceeds from borrowings | 1,050.0 | 1,500.0 |
Payment of borrowings | (1,580.6) | (1,569.8) |
Payment to FIDC quota holders | (332.5) | (312.5) |
Payment of leases | (21.8) | (26.1) |
Sale of own shares | 0.0 | 53.4 |
Acquisition of non-controlling interests | (0.9) | (0.3) |
Dividends paid to non-controlling interests | (1.4) | (0.8) |
Net cash provided by (used in) financing activities | (887.3) | (356.1) |
Effect of foreign exchange on cash and cash equivalents | 10.2 | (14.1) |
Change in cash and cash equivalents | 343.0 | (326.0) |
Cash and cash equivalents at beginning of period | 1,512.6 | 4,495.6 |
Cash and cash equivalents at end of period | 1,855.6 | 4,169.6 |
Adjustments to Net Income by P&L Line
Table 13: Adjustments to Net Income by P&L Line
Adjustments to Net Income by P&L line (R$mn) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 1Q23 |
Cost of services | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Administrative expenses | 9.3 | 9.7 | 166.0 | (16.4) | 23.5 | 40.4 | 32.1 | 30.6 | 35.6 |
Selling expenses | (0.0) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Financial expenses, net | 4.2 | 4.2 | 2.4 | 11.4 | 6.1 | 9.1 | 8.0 | 8.1 | 14.8 |
Mark-to-market on equity securities designated at FVPL | 0.0 | (841.2) | 1,341.2 | 764.2 | 323.0 | 527.1 | (111.5) | 114.5 | (30.6) |
Other operating income (expense), net | 3.5 | (4.5) | 1.2 | 0.6 | 6.0 | (17.3) | (8.9) | (17.1) | (2.6) |
Gain (loss) on investment in associates | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Profit before income taxes | 16.9 | (831.7) | 1,510.8 | 759.8 | 358.7 | 559.3 | (80.2) | 136.1 | 17.2 |
Income tax and social contribution | (1.9) | 119.3 | (163.9) | 8.1 | (3.1) | (14.2) | (8.5) | (11.1) | (6.3) |
Net income for the period | 15.0 | (712.4) | 1,346.9 | 767.9 | 355.6 | 545.1 | (88.7) | 125.0 | 10.9 |
Table 14: Adjusted EBT and Adjusted Net Income with and without share-based compensation adjustments
Following the partial sale of our stake in
Profitability with and without share-based compensation adjustments (R$mn) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 1Q23 |
Consolidated | |||||||||
Reported | |||||||||
Adjusted EBT | 247.6 | (202.7) | 81.3 | (49.1) | 82.5 | 106.7 | 210.7 | 316.5 | 324.0 |
Adjusted Net Income | 187.4 | (155.5) | 85.3 | (32.5) | 51.7 | 76.5 | 162.5 | 234.8 | 236.6 |
Not Adjusting for Share-based Compensation | |||||||||
Adjusted EBT | 226.9 | (249.1) | 83.0 | (50.6) | 68.8 | 75.8 | 166.3 | 275.6 | 324.0 |
Adjusted Net Income | 173.3 | (186.4) | 86.7 | (33.5) | 42.6 | 55.8 | 108.3 | 203.8 | 236.6 |
Financial Services | |||||||||
Reported | |||||||||
Adjusted EBT | 250.2 | (202.6) | 104.3 | (31.0) | 65.9 | 84.0 | 177.6 | 285.6 | 306.0 |
Adjusted Net Income | 191.4 | (153.2) | 113.1 | (13.0) | 45.4 | 66.9 | 148.1 | 214.2 | 226.9 |
Not Adjusting for Share-based Compensation | |||||||||
Adjusted EBT | 229.6 | (248.7) | 105.7 | (32.6) | 52.2 | 53.3 | 135.0 | 246.1 | 306.0 |
Adjusted Net Income | 177.3 | (183.9) | 114.1 | (14.0) | 36.3 | 46.3 | 95.1 | 184.1 | 226.9 |
Software | |||||||||
Reported | |||||||||
Adjusted EBT | 0.6 | (0.7) | (11.6) | (15.2) | 12.3 | 40.0 | 33.7 | 31.8 | 16.9 |
Adjusted Net Income | (0.7) | (3.0) | (14.8) | (15.6) | 2.2 | 26.9 | 15.4 | 22.4 | 8.5 |
Not Adjusting for Share-based Compensation | |||||||||
Adjusted EBT | 0.6 | (1.0) | (11.4) | (15.2) | 12.3 | 39.9 | 31.9 | 30.5 | 16.9 |
Adjusted Net Income | (0.7) | (3.2) | (14.6) | (15.6) | 2.2 | 26.8 | 14.2 | 21.5 | 8.5 |
Non-Allocated | |||||||||
Reported | |||||||||
Adjusted EBT | (3.2) | 0.6 | (11.4) | (2.8) | 4.3 | (17.3) | (0.6) | (1.0) | 1.2 |
Adjusted Net Income | (3.2) | 0.7 | (13.0) | (3.9) | 4.2 | (17.3) | (1.0) | (1.8) | 1.2 |
Not Adjusting for Share-based Compensation | |||||||||
Adjusted EBT | (3.3) | 0.6 | (11.3) | (2.8) | 4.3 | (17.4) | (0.6) | (1.0) | 1.2 |
Adjusted Net Income | (3.3) | 0.7 | (12.9) | (3.9) | 4.1 | (17.3) | (1.0) | (1.8) | 1.2 |
Historical Segment Reporting
Following the partial sale of our stake in
Table 15: Adjusted Historical Financial Services P&L
Segment Reporting - Financial Services (R$mn Adjusted) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 1Q23 |
Total revenue and income | 828.4 | 564.2 | 1,152.5 | 1,545.9 | 1,721.3 | 1,932.6 | 2,121.5 | 2,308.2 | 2,335.9 |
Cost of services | (224.9) | (279.6) | (358.7) | (465.1) | (499.0) | (468.6) | (495.9) | (524.0) | (555.3) |
Administrative expenses | (89.8) | (91.4) | (112.9) | (145.6) | (131.1) | (145.5) | (160.2) | (204.0) | (170.9) |
Selling expenses | (159.7) | (215.3) | (248.6) | (263.5) | (323.0) | (267.3) | (318.8) | (336.2) | (314.8) |
Financial expenses, net | (88.8) | (158.9) | (304.4) | (657.8) | (693.0) | (931.0) | (917.2) | (884.9) | (895.0) |
Other operating income (expense), net | (35.1) | (67.4) | (22.0) | (46.6) | (23.0) | (66.9) | (94.3) | (112.6) | (92.6) |
Gain (loss) on investment in associates | (0.5) | (0.4) | (0.1) | 0.0 | 0.0 | 0.0 | 0.0 | (0.4) | (1.3) |
Profit before income taxes | 229.6 | (248.7) | 105.7 | (32.6) | 52.2 | 53.3 | 135.0 | 246.1 | 306.0 |
Income tax and social contribution | (52.3) | 64.8 | 8.4 | 18.6 | (16.0) | (7.0) | (39.9) | (61.9) | (79.1) |
Net income for the period | 177.3 | (183.9) | 114.1 | (14.0) | 36.3 | 46.3 | 95.1 | 184.1 | 226.9 |
Table 16: Adjusted Historical Software P&L
Segment Reporting - Software (R$mn Adjusted) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 1Q23 |
Total revenue and income | 30.9 | 42.8 | 301.1 | 311.4 | 326.6 | 350.7 | 366.2 | 376.3 | 358.2 |
Cost of services | (12.3) | (19.5) | (162.4) | (176.7) | (172.5) | (154.5) | (171.9) | (171.2) | (164.2) |
Administrative expenses | (14.9) | (17.5) | (72.4) | (76.1) | (74.5) | (75.0) | (81.3) | (83.5) | (83.5) |
Selling expenses | (1.2) | (6.0) | (55.5) | (51.8) | (56.6) | (63.5) | (61.2) | (63.8) | (69.0) |
Financial expenses, net | (0.2) | (0.3) | (17.6) | (18.9) | (8.6) | (14.6) | (14.9) | (18.1) | (13.6) |
Other operating income (expense), net | (1.8) | (0.4) | (4.7) | (3.1) | (1.8) | (3.0) | (4.8) | (8.7) | (11.0) |
Gain (loss) on investment in associates | 0.0 | (0.1) | (0.0) | 0.0 | (0.4) | (0.3) | (0.2) | (0.4) | (0.1) |
Profit before income taxes | 0.6 | (1.0) | (11.4) | (15.2) | 12.3 | 39.9 | 31.9 | 30.5 | 16.9 |
Income tax and social contribution | (1.3) | (2.2) | (3.1) | (0.4) | (10.1) | (13.1) | (17.7) | (9.0) | (8.4) |
Net income for the period | (0.7) | (3.2) | (14.6) | (15.6) | 2.2 | 26.8 | 14.2 | 21.5 | 8.5 |
Table 17: Adjusted Historical Non-Allocated P&L
Segment Reporting - Non-Allocated (R$mn Adjusted) | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 1Q23 |
Total revenue and income | 8.3 | 6.5 | 16.0 | 15.7 | 22.4 | 20.8 | 20.8 | 21.6 | 17.5 |
Cost of services | (2.5) | (3.3) | (4.6) | (4.3) | (2.9) | (3.0) | (3.5) | (2.7) | (1.8) |
Administrative expenses | (3.7) | (3.3) | (8.5) | (8.9) | (9.2) | (11.2) | (10.3) | (9.0) | (8.1) |
Selling expenses | (1.9) | (1.9) | (4.1) | (3.1) | (4.2) | (5.1) | (5.4) | (6.1) | (6.1) |
Financial expenses, net | 0.7 | 5.7 | (6.4) | (0.1) | (0.5) | (0.1) | (0.1) | (0.4) | (0.2) |
Other operating income (expense), net | (1.1) | (0.8) | (1.2) | (0.9) | (1.1) | (17.8) | (1.1) | (4.8) | (0.4) |
Gain (loss) on investment in associates | (3.2) | (2.4) | (2.6) | (1.2) | (0.2) | (1.0) | (1.1) | 0.5 | 0.4 |
Profit before income taxes | (3.3) | 0.6 | (11.3) | (2.8) | 4.3 | (17.4) | (0.6) | (1.0) | 1.2 |
Income tax and social contribution | 0.0 | 0.2 | (1.6) | (1.1) | (0.2) | 0.0 | (0.4) | (0.8) | 0.0 |
Net income for the period | (3.3) | 0.7 | (12.9) | (3.9) | 4.1 | (17.3) | (1.0) | (1.8) | 1.2 |
Glossary of Terms
- “Adjusted Net Cash”: is a non-IFRS financial metric and consists of the following items: (i) Adjusted Cash: Cash and cash equivalents, Short-term investments, Accounts receivable from card issuers, Financial assets from banking solution and Derivative financial instrument; minus (ii) Adjusted Debt: Obligations with banking customers, Accounts payable to clients, Loans and financing, Obligations to FIDC quota holders and Derivative financial instrument.
- “Banking”: refers to our digital bank solution and includes insurance products.
- “Financial Services” segment: This segment is comprised of our financial services solutions serving both MSMBs and Key Accounts. Includes mainly our payments solutions, digital banking and credit.
- “Key Accounts”: refers to operations in which Pagar.me acts as a fintech infrastructure provider for different types of clients, especially larger ones, such as mature e-commerce and digital platforms, commonly delivering financial services via APIs.
- “MSMB Active Payments Client Base”: refers to SMBs (online and offline) and micro-merchants, from our Stone, Pagar.me and Ton products. Considers clients that have transacted at least once over the preceding 90 days, except for Ton active clients which consider clients that have transacted once in the preceding 12 months. As from 3Q22, does not consider clients that use only TapTon.
- “MSMBs”: the combination of SMBs and micro-merchant clients, from our Stone, Pagar.me and Ton products.
- “Omni OMS”: our OMS solution offers multi-channel purchasing processes that integrate stores, franchisees, and distribution centers, thereby providing a single channel for retailers.
- “Non-allocated”: Comprises other smaller businesses which are not allocated in our Financial Services or Software segments.
- “Revenue”: refers to Total Revenue and Income.
- “Software” segment: This segment is comprised of: (i) Core, comprised of POS/ERP solutions, TEF and QR Code gateways, reconciliation and CRM and (ii) Digital, which includes OMS, e-commerce platform, engagement tool, ads solution and marketplace hub.
- “Take Rate (MSMB)”: Managerial metric that considers the sum of revenues from financial services solutions offered to MSMBs, excluding Ton’s membership fee and other non-allocated revenues, divided by MSMB TPV.
- “Take Rate (Key Accounts)”: Managerial metric that considers revenues from financial services solutions offered to Key Account clients, excluding non-allocated revenues, divided by Key Accounts TPV.
- “MSMB Client Deposits”: client deposits from MSMBs with our banking solutions.
- “Total Active Payment Clients”: refers to MSMBs and Key Accounts. Considers clients that have transacted at least once over the preceding 90 days, except for Ton product active clients which consider clients that have transacted once in the preceding 12 months. As from 3Q22, does not consider clients that use only TapTon.
- “TPV”: Total Payment Volume. Up to the fourth quarter of 2020, refers to processed TPV. From the first quarter of 2021 onwards, reported TPV figures consider all volumes settled by
StoneCo .
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. These statements identify prospective information and may include words such as “believe”, “may”, “will”, “aim”, “estimate”, “continue”, “anticipate”, “intend”, “expect”, “forecast”, “plan”, “predict”, “project”, “potential”, “aspiration”, “objectives”, “should”, “purpose”, “belief”, and similar, or variations of, or the negative of such words and expressions, although not all forward-looking statements contain these identifying words.
Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Stone’s control.
Stone’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to: more intense competition than expected, lower addition of new clients, regulatory measures, more investments in our business than expected, and our inability to execute successfully upon our strategic initiatives, among other factors.
About Non-IFRS Financial Measures
To supplement the financial measures presented in this press release and related conference call, presentation, or webcast in accordance with IFRS, Stone also presents non-IFRS measures of financial performance, including: Adjusted Net Income, Adjusted EPS (diluted), Adjusted
A “non-IFRS financial measure” refers to a numerical measure of Stone’s historical or future financial performance or financial position that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with IFRS in Stone’s financial statements. Stone provides certain non-IFRS measures as additional information relating to its operating results as a complement to results provided in accordance with IFRS. The non-IFRS financial information presented herein should be considered in conjunction with, and not as a substitute for or superior to, the financial information presented in accordance with IFRS. There are significant limitations associated with the use of non-IFRS financial measures. Further, these measures may differ from the non-IFRS information, even where similarly titled, used by other companies and therefore should not be used to compare Stone’s performance to that of other companies.
Stone has presented Adjusted Net Income to eliminate the effect of items from Net Income that it does not consider indicative of its continuing business performance within the period presented. Stone defines Adjusted Net Income as Net Income (Loss) for the Period, adjusted for (1) amortization of intangibles related to acquisitions, (2) one-time impairment charges, (3) unusual income and expenses and (4) tax expense relating to the foregoing adjustments. Adjusted
Stone has presented Adjusted Profit Before Income Taxes and Adjusted EBITDA to eliminate the effect of items that it does not consider indicative of its continuing business performance within the period presented. Stone adjusts these metrics for the same items as Adjusted Net Income, as applicable.
Stone has presented Adjusted
1 Margins are calculated by dividing by the revenue of each segment.
2 From 3Q22 onwards, does not include clients that use only TapTon.
3 ARPAC means average revenue per active client and considers our banking and insurance revenues divided by our active banking client base.
4 From 3Q22 onwards, does not include clients that use only TapTon.
5 From 3Q22 onwards, does not include clients that use only TapTon.
6 Except for Total Accounts Balance, banking metrics do not include accounts from TON or Pagar.me (except for Ton clients that have the full banking solution "Super Conta Ton").
7 Banking ARPAC includes card interchange fees, floating revenue, insurance and transactional fees.
8 Comprises (i) our POS/ERP solutions across different retail and service verticals, which includes Linx and the portfolio of POS/ERP solutions in which we invested over time; (ii) our TEF and QR Code gateways; (iii) our reconciliation solution, and (iv) CRM.
9 Comprises (i) our omnichannel platform (OMS); (ii) our e-commerce platform (Linx Commerce), (iii) engagement tools (Linx Impulse and mlabs); (iv) our ads solution and (v) marketplace hub.
10 Our adjusted P&L includes the same adjustments made for our Adjusted Net Income but broken down into each P&L line. The purpose of showing it is to make it easier to understand the underlying evolution of our Costs & Expenses, disregarding some non-recurring events associated with each line item.
11 Evolution of Administrative according to our Adjusted P&L (please refer to Table 6). IFRS Administrative expenses increased 25.1% year over year in 1Q23.
A PDF accompanying this announcement is available at http://ml.globenewswire.com/Resource/Download/48414444-91cd-4546-808a-c21381f10ae3

Source: StoneCo Ltd.