StoneCo Ltd. - SEC Filing

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stne-20221231

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F

(Mark One)

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

Commission file number: 001-38714

StoneCo. Ltd.
(Exact name of Registrant as specified in its charter)

The Cayman Islands
(Jurisdiction of incorporation or organization)

4th Floor, Harbour Place
103 South Church Street, P.O. Box 10240
Grand Cayman, KY1-1002, Cayman Islands
(Address of principal executive offices)

Silvio José Morais, Interim Chief Financial Officer
Tel: +55 (11) 94558-4719 –silvio.morais@stone.com.br
Avenida Doutora Ruth Cardoso, 7221, 20th floor—Pinheiros
São Paulo—SP, 05425-902, Brazil
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class
Class A common shares, par value US$0.000079365 per share

Trading Symbol(s)
STNE

Name of each exchange on which registered
The Nasdaq Global Select Market

Securities registered or to be registered pursuant to Section 12(g) of the Act:
None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.


Title of Class			Number of Shares Outstanding
Class A common shares, par value US$0.000079365 per share			293,891,057
Class B common shares, par value US$0.000079365 per share			18,748,770

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☒

No ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐

No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒

No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒

No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “large accelerated filer,” “accelerated filers,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large Accelerated Filer ☒

Accelerated Filer ☐

Non-accelerated Filer ☐

Emerging Growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether an internal control over financial reporting auditor attestation is included in the filing:

Yes ☒

No ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in

the filing reflect the correction of an error to previously issued financial statements: ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation

received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b) : ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☐

International Financial Reporting Standards as issued by the International Accounting Standards Board ☒

Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 ☐

Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐

No ☒

StoneCo Ltd.

TABLE OF CONTENTS


			Page
Presentation of Financial and Other Information			1
Forward-Looking Statements			13
Certain Terms and Conventions			14
PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS			15
A. Directors and senior management			15
B. Advisers			15
C. Auditors			15
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE			15
A. Offer statistics			15
B. Method and expected timetable			15
ITEM 3. KEY INFORMATION			15
A. [Removed and reserved]			15
B. Capitalization and indebtedness			15
C. Reasons for the offer and use of proceeds			15
D. Risk factors			16
ITEM 4. INFORMATION ON THE COMPANY			58
A. History and development of the company			58
B. Business overview			60
C. Organizational structure			96
D. Property, plant and equipment			98
ITEM 4A. UNRESOLVED STAFF COMMENTS			98
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS			98
A. Operating results			99
B. Liquidity and capital resources			121
C. Research and development, patents and licenses, etc.			127
D. Trend information			127
E. Critical Accounting Estimates			128
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES			132
A. Directors and senior management			132
B. Compensation			139
C. Board practices			141
D. Employees			143
E. Share ownership			144
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS			145
A. Major shareholders			145
B. Related party transactions			146
C. Interests of experts and counsel			148
ITEM 8. FINANCIAL INFORMATION			149
A. Consolidated statements and other financial information			149
B. Significant changes			150
ITEM 9. THE OFFER AND LISTING			151
A. Offering and listing details			151
B. Plan of distribution			151
C. Markets			151
D. Selling shareholders			151
E. Dilution			151
F. Expenses of the issue			151


ITEM 10. ADDITIONAL INFORMATION			151
A. Share capital			151
B. Memorandum and articles of association			151
C. Material contracts			171
D. Exchange controls			171
E. Taxation			171
F. Dividends and paying agents			175
G. Statement by experts			175
H. Documents on display			175
I. Subsidiary information			175
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			176
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES			178
A. Debt securities			178
B. Warrants and rights			178
C. Other securities			178
D. American Depositary Shares			178

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES			179
A. Defaults			179
B. Arrearages and delinquencies			179
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS			179
A. Material modifications to instruments			179
B.Material modifications to rights			179
C. Withdrawal or substitution of assets			179
D. Change in trustees or paying agents			179
E. Use of proceeds			179
ITEM 15. CONTROLS AND PROCEDURES			180
A. Disclosure controls and procedures			180
B. Management’s annual report on internal control over financial reporting			181
C. Attestation report of the registered public accounting firm			181
D. Changes in internal control over financial reporting			181
ITEM 16. RESERVED			182
ITEM 16A.Audit committee financial expert			182
ITEM 16B.Code of ethics			182
ITEM 16C.Principal accountant fees and services			182
ITEM 16D.Exemptions from the listing standards for audit committees			183
ITEM 16E.Purchases of equity securities by the issuer and affiliated purchasers			183
ITEM 16F.Change in registrant’s certifying accountant			183
ITEM 16G.Corporate governance			183
ITEM 16H. Mine safety disclosure			184
ITEM 16I. Disclosure regarding foreign jurisdictions that prevent inspections			184

PART III

ITEM 17. Financial statements			185
ITEM 18. Financial statements			185
ITEM 19. Exhibits			185
Glossary of Terms			188
Index to Consolidated Financial Statements			F- 2

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Unless otherwise indicated or the context otherwise requires, all references in this annual report to “StoneCo.” or the “Company,” “we,” “our,” “ours,” “us” or similar terms refer to StoneCo Ltd., together with its consolidated subsidiaries, and Alpha-Logo Serviços de Informática S.A. (“Tablet Cloud”), Trinks Serviços de Internet S.A. (“Trinks”), Delivery Much Tecnologia S.A. (“Delivery Much”), APP Sistemas S.A. (“APP”), Neostore Desenvolvimento De Programas De Computador S.A. (“Neomode”), RH Software S.A. (“RH Software”), Creditinfo Jamaica Ltd (“Creditinfo Caribbean”), Creditinfo Guyana Inc (“Creditinfo Caribbean”), Creditadvice Barbados Ltd. (“Creditinfo Caribbean”), Creditinfo ECCU Ltd (“Creditinfo Caribbean”) and StoneCo CI Ltd being entities on which we have a significant influence and minority interest in but do not consolidate.

The term “Brazil” refers to the Federative Republic of Brazil and the phrase “Brazilian government” refers to the federal government of Brazil. “Central Bank” refers to the Brazilian Central Bank (Banco Central do Brasil). References in the annual report to “real,” “reais” or “R$” refer to the Brazilian real, the official currency of Brazil and references to “U.S. dollar,” “U.S. dollars” or “US$” refer to U.S. dollars, the official currency of the United States.

Financial Statements

We prepare our consolidated financial statements in accordance with IFRS, as issued by the IASB. We maintain our books and records in Brazilian reais. Unless otherwise noted, our financial information presented herein as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 is stated in reais, our functional and presentation currency. The financial information contained in this annual report includes our audited consolidated financial statements as of December 31, 2022 and 2021 and for each of the three years in the period ended December 31, 2022 together with the notes thereto. All references herein to “our financial statements” and “our audited consolidated financial statements” are to our consolidated financial statements included elsewhere in this annual report.

The financial information should be read in conjunction with “Item 5. Operating and Financial Review and Prospects” and our audited consolidated financial statements.

Our fiscal year ends on December 31. References in this annual report to a fiscal year, such as “fiscal year 2022,” relate to our fiscal year ended on December 31 of that calendar year.

Financial Information in U.S. Dollars

Solely for the convenience of the reader, we have translated some of the real amounts included in this annual report from reais into U.S. dollars. You should not construe these translations as representations by us that the amounts actually represent these U.S. dollar amounts or could be converted into U.S. dollars at the rates indicated. Unless otherwise indicated, we have translated real amounts into U.S. dollars using a rate of R$5.2177 to US$1.00, the commercial selling rate for U.S. dollars as of December 31, 2022 as reported by the Central Bank. See “Item 3. Key Information—A. Selected financial data—Exchange Rates” for more detailed information regarding translation of reais into U.S. dollars and for historical exchange rates for the Brazilian real.

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Selected financial data

You should read the following selected financial data together with “Item 5. Operating and Financial Review and Prospects” and our financial statements and the related notes appearing elsewhere in this annual report.

The summary statement of profit or loss data and statement of financial position data as of December 31, 2022 and 2021 and for each of the three years ended December 31, 2022, 2021 and 2020 have been derived from our audited consolidated financial statements prepared in accordance with IFRS as issued by the IASB, included elsewhere in this annual report.


	For the Year Ended December 31,
	2022	2022	2021	2020
	(US$)(1)	(R$)
	(in millions, except amounts per share)
Statement of profit or loss data:
Net revenue from transaction activities and other services	501.6	2,617.4	1,626.9	1,144.1
Net revenue from subscription services and equipment rental	337.5	1,760.9	1,071.9	388.0
Financial income	888.9	4,638.0	1,877.7	1,647.0
Other financial income	109.7	572.6	247.3	140.7
Total revenue and income	1,837.8	9,588.9	4,823.8	3,319.8
Cost of services	(511.7)	(2,669.8)	(1,713.8)	(769.9)
Administrative expenses	(214.9)	(1,121.4)	(813.3)	(392.5)
Selling expenses	(289.6)	(1,511.2)	(1,012.5)	(505.9)
Financial expenses, net	(673.6)	(3,514.7)	(1,269.1)	(339.8)
Mark-to-market on equity securities designated at FVPL	(163.5)	(853.1)	(1,264.2)	—
Other operating expenses, net	(58.0)	(302.5)	(185.9)	(177.1)
Loss on investment in associates	(0.7)	(3.6)	(10.4)	(6.9)
Profit (loss) before income taxes	(74.2)	(387.3)	(1,445.6)	1,127.7
Income tax and social contribution	(26.7)	(139.1)	68.2	(290.2)
Net income (loss) for the year	(100.9)	(526.4)	(1,377.3)	837.4
Net income (loss) attributable to non-controlling interests	(1.3)	(7.0)	(18.5)	(16.6)
Net income (loss) attributable to owners of the parent	(99.5)	(519.4)	(1,358.8)	854.1
Basic earnings (loss) per share(2)	(0.32)	(1.67)	(4.40)	2.95
Diluted earnings (loss) per share(2)	(0.32)	(1.67)	(4.40)	2.91
Other data:
Adjusted net income (loss) (in millions)(3)	100.7	525.5	84.7	958.2
TPV (in billions)	70.4	367.4	275.4	209.9
Active clients (in thousands)(4)	n.a.	2,584.0	1,766.1	774.5


(1)			For convenience purposes only, amounts in reais for the year ended December 31, 2022 have been translated to U.S. dollars using an exchange rate of R$ 5.2177 to US$1.00, the commercial selling rate for U.S. dollars as of December 31, 2022 as reported by the Central Bank. These translations should not be considered representations that any such amounts have been, could have been or could be converted at that or any other exchange rate. See “—Exchange Rates” for further information about recent fluctuations in exchange rates.
(2)			Calculated by dividing net income or loss for the year attributed to the owners of the parent, adjusted for losses allocated to contractual rights and participating instruments, by the weighted average number of ordinary shares outstanding during the year. See note 15 to our audited consolidated financial statements included elsewhere in this annual report.
(3)			In the table below, we have provided a reconciliation of adjusted net income (loss) to our net income (loss) for the year, the most directly comparable financial measure calculated and presented in accordance with IFRS. Note that in the second quarter of 2022, we have stopped adjusting the financial expenses related to our bond in our adjusted results. As such, for comparability reasons, we have made this change retrospectively in the tables of this section.
(4)			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.

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	For the Year Ended December 31,
	2022	2022	2021	2020
	(US$ millions)(a)	(R$ millions)

Net income (loss) for the year	(100.9)	(526.4)	(1,377.3)	837.4
Share-based compensation expenses(b)	24.9	129.8	66.9	120.7
Amortization of fair value adjustment on intangibles related to acquisitions(c)	26.6	138.6	89.1	17.2
Fair value adjustments of assets whose control was acquired(d)	—	—	(15.8)	(3.0)
Mark-to-market related to the investment in Banco Inter(g)	163.5	853.1	1,264.2	—
Other income/expenses(e)	(3.4)	(17.8)	118.3	30.8
Pre-tax subtotal(g)	110.6	577.3	145.4	1,003.2
Tax effect on adjustments(f)	(9.9)	(51.8)	(60.6)	(45.0)
Adjusted net income(g)	100.7	525.5	84.7	958.2


(a)			For convenience purposes only, amounts in reais for the year ended December 31, 2022 have been translated to U.S. dollars using an exchange rate of R$5.2177 to US$1.00, the commercial selling rate for U.S. dollars as of December 31, 2022 as reported by the Central Bank. These translations should not be considered representations that any such amounts have been, could have been or could be converted at that or any other exchange rate. See “—Exchange Rates” for further information about recent fluctuations in exchange rates.
(b)			Consists of expenses related to the vesting of one-time pre-IPO pool of share-based compensation as well as non-recurring long term incentive plans. See “Item 5. Operating and Financial Review and Prospects—A. Operating results—Description of Principal Line Items—Other operating expenses, net—Liability-classified share-based compensation expense” and note 22 to our consolidated financial statements for further information.
(c)			Consists of expenses resulting from the changes of the fair value adjustments as a result of the application of the acquisition method.
(d)			Consists of the gain on re-measurement of our previously held equity interest in Linked Gourmet (2020), VHSYS (2021) and Collact (2021) to fair value upon the date control was acquired.
(e)			Consists of the fair value adjustment related to associates call option, M&A and Bond expenses, earn-out interests related to acquisitions, gains/losses in the sale of companies, dividends from Linx, organizational restructuring and restructuring of debt instruments. See notes 4.1.2 and 21 to our consolidated financial statements for further information.
(f)			Represents the tax effect of pre-tax items excluded from adjusted net income (loss). The tax effect of pre-tax items excluded from adjusted net income (loss) is computed using the statutory rate related to the jurisdiction that was impacted by the adjustment after taking into account the impact of permanent differences and valuation allowances, if applicable.
(g)			In the second quarter of 2022, we have stopped adjusting the financial expenses related to our bond in our adjusted results. As such, for comparability reasons, we have made this change retrospectively in the tables of this section.

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	As of December 31,(2)
	2022	2022	2021	2020
	(US$ millions)(1)	(R$ millions)
Statement of financial position data:
Assets
Current assets
Cash and cash equivalents and short-term investments	951.8	4,966.4	6,488.7	10,575.0
Accounts receivable from card issuers	3,966.2	20,694.5	19,286.6	16,307.2
Financial assets from banking solution	759.1	3,960.9	2,346.5	714.9
Other current assets	198.8	1,037.4	1,822.7	1,677.7
Total current assets	5,876.0	30,659.2	29,944.5	29,274.8
Intangible assets	1,654.4	8,632.3	8,277.5	1,039.9
Other non-current assets	566.1	2,953.9	3,875.0	1,434.0
Total non-current assets	2,220.6	11,586.2	12,152.6	2,473.8
Total assets	8,096.6	42,245.4	42,097.0	31,748.7
Liabilities and Equity
Current liabilities
Accounts payable to merchants	3,177.4	16,578.7	15,723.3	8,848.0
Deposits from banking customers	771.2	4,023.7	2,201.9	900.5
Obligations to FIDC quota holders	186.9	975.2	1,294.8	1,960.1
Loans and financing	354.1	1,847.4	2,578.8	1,184.7
Other current liabilities	335.2	1,749.1	991.1	487.0
Total current liabilities	4,824.8	25,174.1	22,789.8	13,380.4
Non-current liabilities
Accounts payable to merchants	6.9	35.8	3.2	—
Obligations to FIDC quota holders	—	—	932.4	2,414.4
Loans and financing	522.9	2,728.5	3,556.5	524.4
Other non-current liabilities	260.1	1,357.0	1,187.9	437.5
Total non-current liabilities	789.9	4,121.3	5,679.9	3,376.3
Total liabilities	5,614.6	29,295.4	28,469.8	16,756.6
Total equity	2,481.9	12,950.0	13,627.2	14,992.0
Total liabilities and equity	8,096.6	42,245.4	42,097.0	31,748.7


(1)			For convenience purposes only, amounts in reais for the year ended December 31, 2022 have been translated to U.S. dollars using an exchange rate of R$5.2177 to US$1.00, the commercial selling rate for U.S. dollars as of December 31, 2022 as reported by the Central Bank. These translations should not be considered representations that any such amounts have been, could have been or could be converted at that or any other exchange rate. See “—Exchange Rates” for further information about recent fluctuations in exchange rates.
(2)			The purchase price allocation was concluded for SimplesVet and VHSYS acquisitions on March 31, 2022, for the Linx acquisition on June 30, 2022 and for Collact and Trampolin acquisitons on September 30, 2022. Therefore, retrospective adjustments were made in the Statement of financial position as of December 31, 2021 in accordance with IFRS 3.

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Exchange Rates

The Brazilian foreign exchange system allows the purchase and sale of foreign currency and the international transfer of reais by any person or legal entity, regardless of the amount, subject to certain regulatory procedures.

The real/U.S. dollar exchange rate reported by the Brazilian Central Bank (“Central Bank”) was R$3.8748 per US$1.00 on December 31, 2018, which reflected a 14.6% depreciation in the real against the U.S. dollar during 2018, primarily as a result of lower interest rates in Brazil, which reduced the volume of foreign currency deposited in Brazil in the “carry trade”, as well as uncertainty regarding the results of the Brazilian presidential elections held in October 2018. The real/U.S. dollar exchange rate reported by the Central Bank was R$4.0307 per US$1.00 on December 31, 2019, which reflected a 3.9% depreciation in the real against the U.S. dollar since December 31, 2018. On December 31, 2020, the real/U.S. dollar exchange rate reported by the Central Bank was R$5.1967, reflecting a depreciation of 22.4% in the real from December 31, 2019, being strongly affected by the COVID-19 pandemic. On December 31, 2021, the real/U.S. dollar exchange rate reported by the Central Bank was R$5.5805, reflecting a depreciation of 6.9% in the real from December 31, 2020, which continued to be affected by the COVID-19 pandemic. On December 31, 2022, the real/U.S. dollar exchange rate reported by the Central Bank was R$5.2177, reflecting an appreciation of 7.0% in the real from December 31, 2021, mainly due to the high levels of interest rates in the country.

There can be no assurance that the real will not depreciate or appreciate further against the U.S. dollar. The Central Bank has intervened occasionally in the foreign exchange market to attempt to control instability in foreign exchange rates. We cannot predict whether the Central Bank or the Brazilian government will continue to allow the real to float freely or will intervene in the exchange rate market by re-implementing a currency band system or otherwise. The real may depreciate or appreciate substantially against the U.S. dollar in the future. Furthermore, Brazilian law provides that, whenever there is a serious imbalance in Brazil’s balance of payments or there are serious reasons to foresee a serious imbalance, temporary restrictions may be imposed on remittances of foreign capital abroad. We cannot assure you that the Brazilian government will not place restrictions on remittances of foreign capital abroad in the future.

The following table sets forth, for the periods indicated, the high, low, average and period-end exchange rates for the purchase of U.S. dollars expressed in Brazilian reais per U.S. dollar. The average rate is calculated by using the average of reported exchange rates by the Central Bank on each business day during each annual or monthly period, as applicable. As of April 23, 2023, the exchange rate for the purchase of U.S. dollars as reported by the Brazilian Central Bank was R$5.0497 per US$1.00.


Year	Period-end	Average(1)	Low	High
2018	3.8748	3.6558	3.1391	4.1879
2019	4.0307	3.9461	3.6519	4.2602
2020	5.1967	5.1578	4.0213	5.9372
2021	5.5805	5.3956	4.9206	5.8397
2022	5.2177	5.1655	4.6175	5.7042


Month	Period-end	Average(2)	Low	High
October 2022	5.2570	5.2503	5.1411	5.3454
November 2022	5.2941	5.2747	5.0360	5.4655
December 2022	5.2177	5.2424	5.1445	5.3406
January 2023	5.0993	5.2007	5.0767	5.4459
February 2023	5.2078	5.1717	4.9901	5.2526
March 2023	5.0804	5.2115	5.0804	5.2981
April 2023 (through April 23, 2023)	5.0497	5.0123	4.9097	5.0834


Source: Brazilian Central Bank.
(1)			Represents the average of the exchange rates on the closing of each business day during the year.
(2)			Represents the average of the exchange rates on the closing of each business day during the month.

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Business Segment Information

Until the third quarter of 2021, we considered our operations as a single operating and reportable segment, monitoring operations, making decisions on fund allocation and evaluating performance based on a single operating segment.

After the Linx acquisition, we started to review and monitor operations and evaluate performance considering two separate views: StoneCo (ex-Linx) and Linx. As such, results for the fourth quarter of 2021 and for the year ended December 31, 2021 were reported considering these two operating and reportable segments.

As we evolve in our financial services and software offering, from the first quarter of 2022 onwards, the reportable segments were comprised of: (i) financial services, (ii) software and (iii) non-allocated. As such, our business section in this document already considers this evolution.

Corporate Events

Investments in Software and other Companies

In April 2020, we obtained control of Linked Gourmet Soluções para Restaurantes S.A. (“Linked”) through a step acquisition, which started in June, 2018, with the acquisition of a 27.06% interest, followed by the acquisition of another 21.50% interest in 2019 and an additional interest in April 2020, leading to the control of Linked with a 58.1% interest. In June 2021, we sold all our interest in Linked Gourmet and ceased to be a shareholder in such company. Linked Gourmet is a private company based in São Paulo, Brazil, that develops software and services for the food service market.

In April 2020, we acquired a 100% interest in MAV Participações S.A. (formerly MVarandas Tecnologia Serviços Ltda. - “MVarandas” or “Menew”). In April 2022, we merged our subsidiary MVarandas into Linx Sistemas e Consultoria Ltda. MVarandas was a private company based in the State of Paraíba, Brazil, that developed software and services for the food service market.

In May 2020 we acquired 100% interest in Vitta Tecnologia em Saúde S.A., VittaPar LLC, Vitta Corretora de Seguros Ltda. (formerly AX Saúde Corretora de Seguros Ltda) and Vitta Serviços em Saúde Ltda. (all together described as “Vitta”). Vitta is a private company based in the State of São Paulo, Brazil, focused in health plan management, health services and insurance services.

In July 2020, we acquired a 22.64% interest in Delivery Much Tecnologia S.A. (“Delivery Much”) and in February 2021, we acquired an additional 6.85% interest through a capital increase. After the acquisition, we hold 29.49% interest in Delivery Much. Delivery Much is a private company based in the State of Santa Catarina, Brazil, which is a food delivery marketplace company focused on small-and-midsize cities.

In August 2020, we signed a definitive agreement for STNE Participações S.A., a company controlled by us that holds our software investments business in Brazil, to combine its business with Linx S.A. (“Linx”), a leading provider of retail management software in Brazil (the “Linx Transaction”). In November 2020, the Linx Extraordinary General Meeting that approved the business combination was held. Linx’s Shareholders approved the Linx Transaction in a meeting held on March 31, 2021, with the Linx Transaction being concluded on July 1, 2021.

In September 2020, we acquired a 51.5% interest in MLabs Software Ltda (“MLabs”), an unlisted company based in the State of São Paulo, Brazil, that develops software and services for social media management. The shareholders have approved the stock option plan of MLabs limited to 2.912% of the total share capital of MLabs in December 2021. After the exercise of the call option by MLabs’ employees under such stock option plan, we shall hold 50% interest in MLabs.

In October 2020, we acquired a 50% interest in Questor Sistemas S.A. (“Questor”). Questor is a private company based in the State of Santa Catarina, Brazil, that develops management software for accounting offices.

In November 2020, we acquired a 90.0% interest in Sponte Informática S.A. (“Sponte”). In September 2022, we acquired the remaining shares of Sponte and currently hold 100% interest in the company. Sponte is a private company based in the State of Paraná, Brazil, that develops management software for schools.

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In November 2020, we acquired a 53.05% interest in StoneCo. CI Ltd, Creditinfo Jamaica Ltd, Creditinfo Guyana Inc and Creditadvice Barbados Ltd. (all together described as “Creditinfo Caribbean”). In October 2022, we lost control of StoneCo. CI and Creditinfo Caribbean after a capital contribution by a new investor and we now hold 47.75% of the company. Creditinfo Caribbean is a private credit bureaus company, having as main products credit reports, credit scores, monitoring, international business reports and a suite of value-added services, based in Cayman, Jamaica, Guyana and Barbados, respectively.

In January 2021, we have fully acquired the non-controlling interest in PDCA S.A. (“PDCA”) held by Bellver Fundo de Investimento Multimercado Crédito Privado Investimento no Exterior (“Bellver”). As a result of this transaction, Stone held 100% interest in PDCA. In October 2022, PDCA was merged into Pagar.me.

In April 2021, we acquired a 50% interest in SimplesVet Tecnologia S.A. (“SimplesVet”). SimplesVet is a private company based in the State of Bahia, Brazil, that develops management software for veterinary clinics, pet shops and autonomous veterinarians.

In April 2021, we exercised our call option and acquired an additional interest in VHSYS Sistema de Gestão S.A. (“VHSYS”). After the acquisition, we obtained control of VHSYS. VHSYS is an omni-channel, cloud-based, API driven POS/ERP platform built to serve an array of service and retail businesses. The self-service platform consists of over 40 applications, accessible a la carte, such as order and sales management, invoicing, dynamic inventory management, cash and payments management, CRM, along with marketplace, logistics and e-commerce integrations, among others.

In May 2021, we have signed a definitive investment agreement with Banco Inter (“Banco Inter”), a leading and fast-growing digital bank in Brazil, whereby we became a minority investor (limited to a 4.99% stake) of Banco Inter after the transaction (the “Banco Inter Investment”). The Banco Inter Investment was made in June 2021 through a follow-on public offering conducted by Banco Inter. As part of the Banco Inter Investment, we acquired the right of first refusal in the case of change of control of Banco Inter, for a period of six years and according to certain price thresholds; and the right to join the Board of Directors of Banco Inter with one seat out of nine. In May 2022, we agreed to sell 21.5% of our stake in Banco Inter through a cash-out option offered in Inter’s corporate restructuring for approximately R$181 million. In February 2023, we decided to sell its remaining stake in Banco Inter, representing 16.8 million shares, which were sold at a price of R$12.96 per share, equivalent to R$218 million. After the sale, we no longer have the right of first refusal in the case of change of control and a seat on the board.

In July 2021, we acquired 100% interest in Nodis Tecnologia S.A. (“Nodis”) through the conversion of convertible loans and the purchase of stake from the former shareholders. In August 2022, Nodis was merged into Linx Sistemas e Consultoria Ltda. Through this transaction, we acquired an omni-channel retail technology to digitize customer inventory in brick & mortar stores helping them sell online.

In August 2021, we obtained control of Collact Serviços Digitais Ltda (“Collact”), after a step acquisition with started in February 2019. In January 2022, Collact was merged into Stone Pagamentos. Collact developed CRM software for customer engagement, focused mainly on the food service segment.

In August 2021, we acquired 20% of APP Sistemas S.A. (“APP”) through the conversion of convertible loans. APP is an ERP/POS solution focused on the hotel segment.

In August 2021, we obtained control of Trampolin Pagamentos S.A. (“Trampolin”), through a combination of cash and shares. Trampolin is a banking-as-a-service fintech that has developed a software that allows other companies to offer banking functionality on their own systems and/or offer white label digital wallet applications.

In January 2022, we concluded the investment in Neostore Desenvolvimento de Programas de Computadores SA (“Neomode”), representing 40.02% of the total shares issued by the company. Neomode offers a sales channel and white label commerce app platform with agnostic integrator to Enterprise Resource Planning (ERP), Point of Sale (POS), e-commerces and gateways with cloud-based solutions. The main objective is the development and supply of solutions that integrate online channels and physical stores in the omnichannel concept using its application and integrator.

In January 2022, Mercadapp Soluções em Software Ltda ("Mercadapp"), a company acquired by Linx in November 2020, was merged into Linx Sistemas. Mercadapp was a private company that offered a white label platform for online sales solutions for small and medium-sized supermarkets.

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In February 2022, we acquired 50% of equity interest on Reclame Aqui Holdings Limited (“Reclame Aqui”). Reclame Aqui is an unlisted company based in Cayman Islands, with operations in Brazil, whose main activity is related to a public electronic platform for resolution of conflicts between customers and companies, offering software and API based CRM solutions to help businesses manage customer communication more efficiently We also have the right to join the board of directors of Reclame Aqui with two seats out of four, to appoint the Chief Financial Officer and have a call option to acquire the remaining equity interest on Reclame Aqui to hold 100% of the company, which can be exercised between January 1, 2027 and July 30, 2027.

In May 2022, we acquired a 20% equity interest in RH Software S.A. (“RH Software”), a private company based in the State of São Paulo, Brazil. RH Software develops cloud based ERP and scheduling & payments software servicing dental clinics. We also hold a call option to acquire a 30% additional equity interest in the period from 2 to 3 years from the date of closing of the agreement.

In June 2022, we acquired 100% of equity interest in ThirdLevel Soluções de Internet S.A. (“Plugg.to”). In November 2022, Plugg.to was merged into Linx Sistemas. Plugg.to was a private company headquartered in the State of São Paulo, Brazil that developed technology that works as a marketplace hub, offering fast and intelligent integrations between virtual store platforms, ERP's and marketplaces.

In August 2022, Questor, a subsidiary in which we own a 50% equity interest, acquired a 75.6% equity interest in Hubcount Tecnologia S.A (“Hubcount”). Hubcount is a private company headquartered in the State of São Paulo, Brazil that develops technology that offers accounting BI & Software solutions to accounting offices and large corporations.

In October 2022, we created “Stone Holding Instituições S.A.”, a new company with the objective of holding equity interests in institutions authorized to operate by Central Bank of Brazil (“Banco Central do Brasil”).

Capital markets events

On June 11, 2021, we issued our inaugural dollar bond, raising US$500 million in 7-year notes due June 16, 2028 and a yield of 3.95%, payable semiannually in December and June each year. We used the vast majority of the proceeds from this inaugural bonds to finance our investment on Banco Inter in 2021. The total bond issuance was equivalent to R$2,510.4 million, of which R$2,477.4 million is net of the offering transaction costs that will be amortized over the course of the bond. See “Item 4. Information of the Company—B. Business Overview—Our Growth Strategies—Selectively Pursue Acquisitions” and “Item 5. Operating and Financial Review and Prospects—B. Liquidity and capital resources—Issuance of Inaugural Bonds.”

In August 2020, we completed a primary follow on offering for 31.5 million Class A common shares, including the exercise of the underwriter’s option. The proceeds from the follow on were used to finance the acquisition of Linx S.A. concluded in July 2021.

New Incentive Plan Pool

In May 2022, our Board of Directors approved an amendment and restatement of our Long-Term Incentive Plan (LTIP) for the purpose of the adoption of a new equity-based incentive plan pool, comprised of 19.2 million shares to be granted in the form of restricted stock units (RSUs) and performance stock units (PSUs) under the LTIP. A portion of the pool, 5.8 million shares, was approved for the grant of non-recurring long-term incentive plan awards, vesting of which is linked to the achievement of our annual goals and the performance of our stock price, of which 30% is to be vested in 3 years and 70% in 5 years if our goals are met. Each vesting period has a stock price trigger at multiples of our stock price, which aligns the incentive with significant shareholder retu