UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For the month of August, 2023
Commission File Number: 001-38714
STONECO LTD.
(Exact name of registrant as specified in its charter)
4th Floor, Harbour Place
103 South Church Street, P.O. Box 10240
Grand Cayman, KY1-1002, Cayman Islands
+55 (11) 3004-9680
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
| Form 20-F |
X |
Form 40-F |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
STONECO LTD.
INCORPORATION BY REFERENCE
This report on Form 6-K shall be deemed to be incorporated by reference into the registration statement on Form S-8 (Registration Number: 333-265382) of StoneCo Ltd. and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| StoneCo Ltd. | |||||
| By: | /s/ Pedro Zinner | ||||
| Name: | Pedro Zinner | ||||
| Title: | Chief Executive Officer | ||||
Date: August 16, 2023
EXHIBIT INDEX
| Exhibit No. | Description |
| 99.1 | StoneCo Ltd. – Unaudited Interim Condensed Consolidated Financial Statements For The Six Months Ended June 30, 2023. |
Exhibit 99.1
Unaudited Interim Condensed
Consolidated Financial Statements
StoneCo Ltd.
June 30, 2023
Index to Consolidated Financial Statements
| Interim Condensed Consolidated Financial Statements | Page | |
| Report on review of interim condensed consolidated financial information | F-3 | |
| Unaudited interim consolidated statement of financial position as of June 30, 2023 and December 31, 2022 | F-4 | |
| Unaudited interim consolidated statement of profit or loss for the six and three months ended June 30, 2023 and 2022 | F-5 | |
| Unaudited interim consolidated statement of other comprehensive income for the six and three months ended June 30, 2023 and 2022 | F-6 | |
| Unaudited interim consolidated statement of changes in equity for the six months ended June 30, 2023 and 2022 | F-7 | |
| Unaudited interim consolidated statement of cash flows for the six months ended June 30, 2023 and 2022 | F-8 | |
| Notes to unaudited interim condensed consolidated financial statements June 30, 2023 | F-9 |
 |
São Paulo Corporate Towers Av. Presidente Juscelino Kubitschek, 1.909 Vila Nova Conceição 04543-011 - São Paulo – SP - Brasil Tel: +55 11 2573-3000 ey.com.br |
REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
To the Shareholders and Management of
StoneCo Ltd
Introduction
We have reviewed the accompanying interim condensed consolidated financial statements of StoneCo Ltd (the “Company”) as at June 30, 2023 which comprise the interim consolidated statement of financial position as at June 30, 2023 and the related interim consolidated statements of profit or loss and of other comprehensive income for the three and six-month periods then ended, and of changes in equity and cash flows for the six-month period then ended and explanatory notes.
Management is responsible for the preparation and presentation of this interim consolidated financial information in accordance with IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards Board (IASB). Our responsibility is to express a conclusion on this interim consolidated financial information based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards Board (IASB).
São Paulo, August 11, 2023.
ERNST & YOUNG
Auditores Independentes S/S Ltda.
StoneCo Ltd.
Unaudited interim consolidated statement of financial position
As of June 30, 2023 and December 31, 2022
(In thousands of Brazilian Reais)
| Notes | June 30, 2023 | December 31, 2022 | ||||||||||
| Assets | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | 4 | 2,202,713 | 1,512,604 | |||||||||
| Short-term investments | 5.1 | 3,493,438 | 3,453,772 | |||||||||
| Financial assets from banking solutions | 5.4 | 4,099,308 | 3,960,871 | |||||||||
| Accounts receivable from card issuers | 5.2.1 | 18,503,084 | 20,694,523 | |||||||||
| Trade accounts receivable | 5.3.1 | 440,946 | 484,722 | |||||||||
| Recoverable taxes | 6 | 220,054 | 150,956 | |||||||||
| Prepaid expenses | 126,777 | 129,256 | ||||||||||
| Derivative financial instruments | 5.6 | 21,991 | 36,400 | |||||||||
| Other assets | 281,789 | 236,099 | ||||||||||
| 29,390,100 | 30,659,203 | |||||||||||
| Non-current assets | ||||||||||||
| Long-term investments | 5.1 | 33,077 | 214,765 | |||||||||
| Accounts receivable from card issuers | 5.2.1 | 70,329 | 54,334 | |||||||||
| Trade accounts receivable | 5.3.1 | 33,193 | 37,324 | |||||||||
| Receivables from related parties | 10.1 | 11,984 | 10,053 | |||||||||
| Deferred tax assets | 7.2 | 558,055 | 679,971 | |||||||||
| Prepaid expenses | 57,297 | 101,425 | ||||||||||
| Other assets | 91,763 | 105,101 | ||||||||||
| Investment in associates | 107,237 | 109,754 | ||||||||||
| Property and equipment | 8.1 | 1,700,423 | 1,641,178 | |||||||||
| Intangible assets | 9.1 | 8,697,243 | 8,632,332 | |||||||||
| 11,360,601 | 11,586,237 | |||||||||||
| Total assets | 40,750,701 | 42,245,440 | ||||||||||
| Liabilities and equity | ||||||||||||
| Current liabilities | ||||||||||||
| Deposits from banking customers | 5.4 | 3,918,621 | 4,023,679 | |||||||||
| Accounts payable to clients | 5.2.2 | 15,530,175 | 16,578,738 | |||||||||
| Trade accounts payable | 423,380 | 596,044 | ||||||||||
| Loans and financing | 5.5.1 | 1,591,316 | 1,847,407 | |||||||||
| Obligations to FIDC quota holders | 5.5.1 | 318,021 | 975,248 | |||||||||
| Labor and social security liabilities | 468,030 | 468,599 | ||||||||||
| Taxes payable | 382,799 | 329,105 | ||||||||||
| Derivative financial instruments | 5.6 | 340,238 | 209,714 | |||||||||
| Other liabilities | 134,627 | 145,605 | ||||||||||
| 23,107,207 | 25,174,139 | |||||||||||
| Non-current liabilities | ||||||||||||
| Accounts payable to clients | 5.2.2 | 25,640 | 35,775 | |||||||||
| Loans and financing | 5.5.1 | 2,527,501 | 2,728,470 | |||||||||
| Deferred tax liabilities | 7.2 | 504,888 | 500,247 | |||||||||
| Provision for contingencies | 11.2 | 212,505 | 210,376 | |||||||||
| Labor and social security liabilities | 14,112 | 35,842 | ||||||||||
| Other liabilities | 604,906 | 610,567 | ||||||||||
| 3,889,552 | 4,121,277 | |||||||||||
| Total liabilities | 26,996,759 | 29,295,416 | ||||||||||
| Equity | 12 | |||||||||||
| Issued capital | 12.1 | 76 | 76 | |||||||||
| Capital reserve | 12.2 | 13,888,793 | 13,818,819 | |||||||||
| Treasury shares | 12.3 | (15,815 | ) | (69,085 | ) | |||||||
| Other comprehensive income | (283,935 | ) | (432,701 | ) | ||||||||
| Retained earnings (accumulated losses) | 108,805 | (423,203 | ) | |||||||||
| Equity attributable to controlling shareholders | 13,697,924 | 12,893,906 | ||||||||||
| Non-controlling interests | 56,018 | 56,118 | ||||||||||
| Total equity | 13,753,942 | 12,950,024 | ||||||||||
| Total liabilities and equity | 40,750,701 | 42,245,440 | ||||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-4
StoneCo Ltd.
Unaudited interim consolidated statement of profit or loss
For the six and three months ended June 30, 2023 and 2022
(In thousands of Brazilian Reais, unless otherwise stated)
| Six months ended June 30, | Three months ended June 30, | |||||||||||||||||||
| Notes | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||
| Net revenue from transaction activities and other services | 14.1 | 1,573,125 | 1,161,814 | 840,069 | 606,894 | |||||||||||||||
| Net revenue from subscription services and equipment rental | 14.1 | 902,459 | 869,991 | 457,330 | 437,840 | |||||||||||||||
| Financial income | 14.1 | 2,837,639 | 2,054,743 | 1,462,595 | 1,104,993 | |||||||||||||||
| Other financial income | 14.1 | 353,216 | 287,855 | 194,789 | 154,417 | |||||||||||||||
| Total revenue and income | 5,666,439 | 4,374,403 | 2,954,783 | 2,304,144 | ||||||||||||||||
| Cost of services | 15 | (1,406,579 | ) | (1,300,538 | ) | (685,302 | ) | (626,170 | ) | |||||||||||
| Administrative expenses | 15 | (601,948 | ) | (510,269 | ) | (303,900 | ) | (272,020 | ) | |||||||||||
| Selling expenses | 15 | (801,819 | ) | (719,664 | ) | (411,891 | ) | (335,922 | ) | |||||||||||
| Financial expenses, net | 16 | (1,997,483 | ) | (1,662,958 | ) | (1,073,844 | ) | (954,711 | ) | |||||||||||
| Mark-to-market on equity securities designated at FVPL | 15 | 30,574 | (850,079 | ) | — | (527,083 | ) | |||||||||||||
| Other income (expenses), net | 15 | (158,251 | ) | (102,142 | ) | (56,747 | ) | (70,315 | ) | |||||||||||
| (4,935,506 | ) | (5,145,650 | ) | (2,531,684 | ) | (2,786,221 | ) | |||||||||||||
| Loss on investment in associates | (1,848 | ) | (2,001 | ) | (826 | ) | (1,324 | ) | ||||||||||||
| Profit (loss) before income taxes | 729,085 | (773,248 | ) | 422,273 | (483,401 | ) | ||||||||||||||
| Current income tax and social contribution | 7.1 | (117,753 | ) | (152,354 | ) | (74,199 | ) | (84,544 | ) | |||||||||||
| Deferred income tax and social contribution | 7.1 | (78,431 | ) | 123,304 | (40,863 | ) | 78,685 | |||||||||||||
| Net income (loss) for the period | 532,901 | (802,298 | ) | 307,211 | (489,260 | ) | ||||||||||||||
| Net income (loss) attributable to: | ||||||||||||||||||||
| Controlling shareholders | 532,008 | (800,614 | ) | 305,369 | (487,390 | ) | ||||||||||||||
| Non-controlling interests | 893 | (1,684 | ) | 1,842 | (1,870 | ) | ||||||||||||||
| 532,901 | (802,298 | ) | 307,211 | (489,260 | ) | |||||||||||||||
| Earnings (loss) per share | ||||||||||||||||||||
| Basic earnings (loss) per share for the period attributable to controlling shareholders (in Brazilian Reais) | 13 | R$ 1.70 | R$ (2.57) | R$ 0.98 | R$ (1.56) | |||||||||||||||
| Diluted earnings (loss) per share for the period attributable to controlling shareholders (in Brazilian Reais) | 13 | R$ 1.57 | R$ (2.57) | R$ 0.90 | R$ (1.56) | |||||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-5
StoneCo Ltd.
Unaudited interim consolidated statement of other comprehensive income
For the six and three months ended June 30, 2023 and 2022
(In thousands of Brazilian Reais)
| Six months ended June 30, | Three months ended June 30, | |||||||||||||||||||
| Notes | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||
| Net income (loss) for the period | 532,901 | (802,298 | ) | 307,211 | (489,260 | ) | ||||||||||||||
| Other comprehensive income | ||||||||||||||||||||
| Other comprehensive income (loss) that may be reclassified to profit or loss in subsequent periods (net of tax): | ||||||||||||||||||||
| Changes in the fair value of accounts receivable from card issuers at fair value through other comprehensive income | 92,298 | (55,789 | ) | 31,738 | (25,155 | ) | ||||||||||||||
| Exchange differences on translation of foreign operations | (8,768 | ) | (17,089 | ) | (4,303 | ) | 8,602 | |||||||||||||
| Changes in the fair value of cash flow hedge | 5.6.1 | 65,457 | (175,107 | ) | (40,524 | ) | (86,535 | ) | ||||||||||||
| Other comprehensive income (loss) that will not be reclassified to profit or loss in subsequent periods (net of tax): | ||||||||||||||||||||
| Net monetary position in hyperinflationary economies | 920 | 1,987 | 62 | 1,112 | ||||||||||||||||
| Changes in the fair value of equity instruments designated at fair value through other comprehensive income | 5.1 | (1,141 | ) | (1,345 | ) | (748 | ) | (1,345 | ) | |||||||||||
| Other comprehensive income (loss) for the period, net of tax | 148,766 | (247,343 | ) | (13,775 | ) | (103,321 | ) | |||||||||||||
| Total comprehensive income (loss) for the period, net of tax | 681,667 | (1,049,641 | ) | 293,436 | (592,581 | ) | ||||||||||||||
| Total comprehensive income (loss) attributable to: | ||||||||||||||||||||
| Controlling shareholders | 680,774 | (1,046,424 | ) | 291,594 | (595,405 | ) | ||||||||||||||
| Non-controlling interests | 893 | (3,217 | ) | 1,842 | 2,824 | |||||||||||||||
| Total comprehensive income (loss) for the period, net of tax | 681,667 | (1,049,641 | ) | 293,436 | (592,581 | ) | ||||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-6
StoneCo Ltd.
Unaudited interim consolidated statement of changes in equity
For the six months ended June 30, 2023 and 2022
(In thousands of Brazilian Reais)
| Attributable to controlling shareholders | |||||||||||||||||||||||||
| Capital reserve | |||||||||||||||||||||||||
| Notes | Issued capital | Additional paid-in capital | Transactions among shareholders | Special reserve | Other reserves | Total | Treasury shares | Other comprehensive income | Retained earnings | Total | Non-controlling interest | Total | |||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements. F-7 StoneCo Ltd. Unaudited interim consolidated statement of cash flows For the six months ended June 30, 2023 and 2022 (In thousands of Brazilian Reais) The accompanying notes are an integral part of these
unaudited interim condensed consolidated financial statements. F-8 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) StoneCo Ltd. (the “Company”),
is a Cayman Islands exempted company with limited liability, incorporated on March 11, 2014. The registered office of the Company is located
at 4th Floor, Harbour Place 103 South Church Street, P.O. box 10240 Grand Cayman E9 KY1-1002. On November 29, 2022, the Company announced
that the Brazilian Central Bank (“BACEN”) has approved the technical requirement of change of control submitted by the Company
amid a corporate restructuring involving the conversion of Eduardo Pontes interests in Company´s Class B super-voting shares from
HR Holdings, LLC (which were held indirectly through holding companies) into Class A shares directly owned by his family vehicles ("Corporate
Restructuring”). As a result of the Corporate Restructuring,
there was a decrease in the concentration of votes held by the Company’s founding shareholders and HR Holdings, LLC became the owner
of 31% of the Company’s voting power, whose ultimate parent is an investment fund, the VCK Investment Fund Limited SAC A, owned
by the co-founder of the Company, Andre Street. The Company’s shares are publicly
traded on Nasdaq (under the ticker STNE) and depositary receipts “BDRs” representing the Company’s
shares are traded on the São Paulo exchange B3 (under the ticker STOC31). The Company and its subsidiaries (collectively,
the “Group”) provide financial services and software solutions to clients across in-store, mobile and online devices helping
them to better manage their businesses, become more productive and sell more - both online and offline. The interim condensed consolidated
financial statements of the Group for the six months ended June 30, 2023 and 2022 were approved by the Audit Committee on August 11, 2023. 1.1. Seasonality
of operations The Group’s revenues are subject
to seasonal fluctuations as a result of consumer spending patterns. Historically, 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 the results of operations for the entire fiscal year. As a result of seasonal fluctuations caused by these and other factors, results
for an interim period may not be indicative of those expected for the full fiscal year. The interim condensed consolidated
financial statements for the six months ended June 30, 2023 have been prepared in accordance with IAS 34 – Interim Financial Reporting,
issued by the International Accounting Standards Board (“IASB”). The interim condensed consolidated
financial statements are presented in Brazilian Reais (“R$”), and all values are rounded to the nearest thousand (R$ 000),
except when otherwise indicated. The interim condensed consolidated
financial statements do not include all the information and disclosures required in the annual financial statements and should be read
in conjunction with the Group’s annual consolidated financial statements as of December 31, 2022. The accounting policies adopted in
this interim reporting period are consistent with those of the previous financial year. The preparation of the Group’s
financial statements requires management to make judgments and estimates and to adopt assumptions that affect the amounts presented referring
to revenues, expenses, assets and liabilities at the financial statement date. Actual results may differ from these estimates. F-9 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) The judgements, estimates and assumptions
are frequently revised, and any effects are recognized in the revision period and in any future affected periods. The objective of these
revisions is mitigating the risk of material differences between the estimated and actual results in the future. In preparing these interim condensed
consolidated financial statements, the significant judgements and estimates made by management in applying the Group’s accounting
policies and the key sources of estimation uncertainty were the same as those that are set the consolidated financial statements for the
year ended December 31, 2022, with no changes except for updates described in Note 11.1. In accordance with IFRS 10 - Consolidated
Financial Statements, subsidiaries are all entities in which StoneCo Ltd. holds control. The following table shows the main
consolidated entities, which correspond to the Group’s most relevant operating vehicles. During the quarter we consummated a
reorganization of the businesses carried out by our former subsidiary Cappta S.A. As a result of the reorganization, we no longer have
an interest in the activities of providing technology solutions for payments in installments and we increased to 100% our interest in
the technology solutions for electronic transfers. Both activities were up to June 30, 2023, carried out by Cappta of which we owned 59.6%.
As a result of the transaction, we no longer have an investment in Cappta and we have a 100% interest in Stef S.A. The transaction did
not have any material impact on our financial statements. During the six months ended June 30,
2023 there were no other corporate reorganizations that changes the interests held by the Company in its subsidiaries. The Group holds call options to acquire
additional interests in some of its subsidiaries (Note 5.6) and issued put options to non-controlling investors (Note 5.9). The Group holds call options to acquire
additional interests in some of its associates (Note 5.6.). F-10 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) June 30, 2023 December
31, 2022 Comprised of Banco
Inter S.A. (“Banco Inter”)´s shares, acquired on June, 2021. During the first quarter of 2023, the Group sold its remaining
stake in Banco Inter, representing 16.8 million shares. The shares were sold at a price of R$ 12.96, equivalent to R$ 218,105. The change
in fair value of equity securities at FVPL for the six months ended June 30, 2023 was a gain of R$ 30,574 (for the six months ended June
30, 2022 was a loss of R$ 850,079), which was recognized in the statement of profit or loss. On June 30,
2023, comprised mainly of ordinary shares in entities that are not traded in an active market. The change in fair value of equity
securities at FVOCI for the six months ended June 30, 2023 was R$ (1,141), (R$ (1,345) for the six months ended June 30, 2022),
which was recognized in other comprehensive income. Short and Long-term investments are
denominated in Brazilian reais and U.S. dollars. F-11 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) Accounts receivable are amounts due
from card issuers and acquirers regarding the transactions of clients with card holders, performed in the ordinary course of business. Part of the cash needs by the Group
to advance payments to acquiring customers are met by the definitive sale of receivables to third parties. When such sale of receivables
is carried out to entities in which we have subordinated shares or quotas, the receivables sold remain in our balance sheet, as these
entities are consolidated in our financial statements. As of June 30, 2023 a total of R$ 325,420 are consolidated through Fundo de Investimento
em Direitos Creditórios - Bancos Emissores de Cartão de Crédito - Stone III (“FIDC AR III”), of which
the Group has subordinated shares (December 31, 2022 - R$ 1,116,264). When the sale of receivables is carried out to entities we do not
control and in transactions where we do not have continuous involvement, the amounts transferred are derecognized from the accounts receivable
from card issuers. As of June 30, 2023, the sale of receivables that were derecognized from accounts receivables from card issuers in
our balance sheet represent the main form of funding used by the Group to fund our prepayment business. Accounts receivable held by FIDCs guarantee
the obligations to FIDC quota holders. Accounts payable to clients represent
amounts due to accredited clients related to credit and debit card transactions, net of interchange fees retained by card issuers and
assessment fees paid to payment scheme networks as well as the Group’s net merchant discount rate fees which are collected by the
Group as an agent. Trade accounts receivables are amounts
due from clients mainly related to subscription services and equipment rental. F-12 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) As required by the BACEN regulation,
the financial assets arising from banking solutions must be deposited in accounts custody by the BACEN or invested in Brazilian National
Treasury Bonds, in order to guarantee the deposits from banking customers. In June 30, 2023, the balances in transit
were R$ 86,573 (December 31, 2022 - R$ 243,782). In the ordinary course of the business,
the Group funds its prepayment business through a mix of own cash, debt and receivables sales. In August 2020, the first series of
FIDC AR III senior quotas was issued, with an amount of up to R$ 2,500,000, and maturity in August 2023. They were issued for 36 months,
with a grace period of 15 months to repay the principal amount. During the grace period, the payment of interest is made every three months.
After this period, the amortization of the principal and the payment of interest is every three months. The benchmark return rate is CDI
+ 1.5% per year. Payments of R$ 625,000 refers to the
amortization of the principal and R$ 56,441 refer to the payment of interest of the first series of FIDC AR III. In March 2021, the Group negotiated
an amendment of the contract to postpone the payment date of the principal to March 2022 and the benchmark return rate became 100% of
the CDI + 1.50% per year. In February 2022, the Group negotiated
an amendment of the contract to postpone the payment date of the principal to March 2023 and the benchmark return rate became 100% of
the CDI + 1.80% per year. The mezzanine quotas were settled on March 2, 2023. F-13 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) The Group has lease contracts for various
items of offices, vehicles and software in its operations. The Group’s obligations under its leases are secured by the lessor’s
title to the leased assets. Generally, the Group is restricted from assigning and subleasing the leased assets. Bonds were issued in 2021, raising
USD 500 million in 7-year notes with a final yield of 3.95%. The total issuance was R$ 2,510,350 (R$ 2,477,408 net of the offering transaction
costs, which will be amortized over the course of the debt). The Group has entered into a hedge to protect its currency risk, see Note
5.6.1. The Group issued CCBs (bilateral unsecured
term loans), with multiple counterparties and maturities up to 12 months. The principal and the interests of this type of loan are mainly
paid at maturity. The proceeds of these loans were used mainly for the advance payments to acquiring customers. During 2021, the Group entered into
hedge operations to protect its inaugural dollar bonds (Note 5.5.2.4), subject to foreign exchange exposure using cross-currency interest
rate swap contracts. Additionally, in May 2023, the Group entered into hedge operations to protect bank borrowings (Note 5.5.2.5.), subject
to foreign exchange exposure using cross-currency interest rate swap contracts. The transactions have been designated for hedge accounting
and classified as cash flow hedge of the variability of the designated cash flows of the dollar denominated bonds / bank borrowings due
to changes in the exchange rate. The effective portion of the derivative's gain or loss is initially reported as a component of accumulated
other comprehensive income, recorded in a specific equity account, and subsequently reclassified into earnings in the same period the
hedge object affects earnings, while any ineffective portion, when applicable, is immediately recognized in profit or loss. The details
of the cross-currency swaps and their financial position as of June 30, 2023, are presented as follows. F-14 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) Additionally, in 2023 the Group paid
R$ 155,072, on coupon payments of the cross-currency swaps described above. The Group is party to non-deliverable
forward (“NDF”) contracts with different counterparties approved by the Board of Directors following the Counterparty Policy
to hedge its foreign currency risk in U.S. Dollar and Euro. As of June 30, 2023, the Group hedged the notional of US$ 8,171 thousand using
NDF contracts with rates between 4.7698 and 5.0492 of Brazilian Reais per each 1.00 U.S. Dollar, and the notional of € 570 thousand
using NDF contracts with rates between 5.3040 and 5.4718 of Brazilian Reais per each 1.00 Euro. The maturity of the operations is up to
August 2023. In the six months ended June 30, 2023, the amount related to these derivatives recognized in the statement of profit or loss
was a gain of R$ 19,212 (gain of R$ 14,631 in the six months ended June 30, 2022). The Group mitigates the interest rate
risk generated by the gap between its prepayments of receivables (fixed rate) and its funding activities (either fixed or floating) with
mixed maturities. This hedge is executed over-the-counter ("OTC") with multiple financial institutions following its Counterparty
Policy. The contracted annual rate is between 11.3% and 14.3%. The notional of the operations is R$ 5,586 thousand and its maturities
are up to December 2024. In the six months ended June 30, 2023, the amount related to these derivatives recognized in the statement of
profit or loss was an expense of R$ 11,795 (expense of R$ 2,625 in the six months ended June 30, 2022). The Group’s activities expose
it to market, liquidity, credit, and counterparty risks. The two main market risks for the Group are interest rates and exchange rates.
Interest rate risk arises from the fact the Group’s originates assets at fixed rates (credit card prepayment and loans) and funds
itself both at fixed and floating rates with unmatched maturities of such assets. The second one is generated by the exchange rates among
Brazilian Reais and the currencies of countries where the Groups has subsidiaries in addition to its indebtedness and expenses denominated
in other currencies rather than BRL. The Group main liquidity risk is its inability to raise financing to continue its prepayment business,
which although is not a legal obligation, is a relevant part of its revenues. has two. The counterparty risk is mainly generated by the
counterparties that the Group engage with into financial contracts for hedging, investments and committed funding, in addition to its
inherent credit risk exposure to credit card issuers. The Board of Directors has approved
policies and limits for its financial risk management. The Group uses financial derivatives only to mitigate market risk exposures. It
is the Group’s policy not to engage in derivatives for speculative purposes. Different levels of managerial approval are required
for entering into financial instruments depending on its nature and the type of risk associated. Financial risk management is carried
out by the global treasury department (“Global Treasury”) at the Group level. Global treasury identifies, evaluates, and hedges
financial risks in close co-operation with the Group’s operating units. F-15 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) The following table shows an analysis
of financial instruments recorded at fair value by level of the fair value hierarchy: F-16 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) As of June 30, 2023, there were no
transfers between the fair value measurements of Level I and Level II and between the fair value measurements of Level II and Level III. The table below presents a comparison
by class between book value and fair value of the financial instruments of the Group, other than those with carrying amounts that are
reasonable approximations of fair values: F-17 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) StoneCo Ltd. is domiciled in Cayman
and there is no income tax in that jurisdiction. The income earned by StoneCo Ltd. from its operations abroad can be subject to income
tax at the main rate of 15%. Considering the fact that StoneCo Ltd.
is an entity located in Cayman which has no Income Tax, for the purpose of the following reconciliation of income tax expense to profit
(loss) for the periods ended June 30, 2023 and 2022, it was applied the combined Brazilian statutory rates at 34%. In Brazil such combined rate is applied,
in general, to all entities and comprises the Corporate Income Tax (“IRPJ”) and the Social Contribution on Net Income (“CSLL”)
on the taxable income of each Brazilian legal entity (not on a consolidated basis). F-18 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) The Group has accumulated tax loss
carryforwards and other temporary differences in some subsidiaries in the amount of R$ 151,866 (December 31, 2022 – R$ 144,529)
for which a deferred tax asset was not recognized and are available indefinitely for offsetting against future taxable profits of the
companies in which the losses arose. Deferred tax assets have not been recognized with respect of these losses as they cannot be used
to offset taxable profits between subsidiaries of the Group, and there is no other evidence of recoverability in the near future. F-19 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) Depreciation and amortization expense
has been charged in the following line items of the consolidated statement of profit or loss: Effects of hyperinflation F-20 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) Related parties comprise the Group’s
parent companies, key management personnel and any businesses which are controlled, directly or indirectly by the founders, officers and
directors or over which they exercise significant management influence. Related party transactions are entered in the normal course of
business at prices and terms approved by the Group’s management. The following transactions were carried
out with associates related parties: Services provided to related parties
include legal and administrative services provided under normal trade terms and reimbursement of other expenses incurred in their respect. The following balances are outstanding
at the end of the reporting period in relation to transactions with related parties: As of June 30, 2023, there is
no allowance for expected credit losses on related parties’ receivables. No guarantees were provided or received in relation to
any accounts receivable or payable involving related parties. The Group has outstanding loans with
certain management personnel. The loans are payable in three to seven years from the date of issuance and accrue interest according to
the National Consumer Price Index, the Brazilian Inter-Bank Rate or Libor plus an additional spread. F-21 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) The Group companies are party to labor,
civil and tax litigation in progress, which are being addressed at the administrative and judicial levels. For certain contingencies,
the Group has made judicial deposits, which are legal reserves the Group is required to make by the Brazilian courts as security for any
damages or settlements the Group may be required to pay as a result of litigation. The Group reassessed, in March 2023,
its estimates to measure contingencies that (a) are most of individually insignificant amounts and of a recurring nature and (b) have
a probability of loss classified as possible. The previous approach, which relied on the total amount claimed in both civil and labor
disputes, has been revised by a methodology that considers precedents set by similar transactions. Under the new estimation methodology,
the Group has begun to disclose contingent losses classified as possible based on the historical losses observed in relation to the performance
of the portfolio. This change in accounting estimate was made possible by the maturation of the litigation portfolio. Until December 2022,
the estimates were performed at the level of each of the civil and the labor claim. The ultimate goal is to enhance the precision of the
estimates. No changes have been made to estimates
of probable contingencies as they represent the best available information. The provisions for probable losses
arising from these matters are estimated and periodically adjusted by management, supported by the opinion of its external legal advisors
and based on the actual status of the lawsuit. The amount, nature and the movement of the liabilities are summarized as follows: The Group has the following civil,
labor and tax litigation involving risks of loss assessed by management as possible, based on the evaluation of the legal advisors, for
which no provision for estimated possible losses was recognized: The nature of the Group’s main
civil and labor litigation is summarized as follows: The Group is a party to several legal
claims arising from its ordinary operations. In addition to the update of the contingency policy carried out in March 2023 and the reassessment
of its estimates to measure contingencies (note 11.1), the Group has also enhanced the root cause classification tree of civil lawsuits. With the implementation of this new
methodology, the Group has taken steps to segregate contingent liabilities based on the products offered by the Group. In this regard,
civil lawsuits have been categorized according to the Company’s primary service offerings, namely: (i) acquiring, amounting to R$
38,380 as of June 30, 2023 (December 31, 2022 - R$ 89,466); (ii) banking, amounting to R$ 17,473 as of June 30, 2023 (December 31, 2022
- R$ 73,198); (iii) credit, amounting to R$ 2,275 as of June 30, 2023 (December 31, 2022 - R$ 6,808); (iv) software, amounting to R$ 27,606
as of June 30, 2023 (December 31, 2022 - R$ 5,605). F-22 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) Notably, in terms of the acquiring
aspect, there is a noteworthy lawsuit filed by a business partner who was responsible for a portion of the acquisition and referral of
commercial establishments. The amount considered as a possible loss is R$ 10,670 as of June 30, 2023 (December 31, 2022 - R$ 10,309).
Furthermore, concerning the software product, there is significant indemnity lawsuit filed by indirect supplier, pertaining to the utilization
of a specific software provided by the partner itself, amounting to R$ 25,510 as of June 30, 2023. The Group’s labor litigation
comprises claims by: (i) former employees and (ii) labor claims by former employees of the Group’s suppliers. These claims typically
revolve around matters such as the claimant’s placement in a different trade union and payment of overtime. The initial value of
these lawsuits is claimed by the former employees at the beginning of the proceeding. The initial amounts of possible contingencies corresponds
to a fraction of the total amount requested by the claimants – this fraction is calculated according to the Group’s loss history.
As the lawsuits progress, the reported risk amount may change, particularly based on Court decisions during Court proceeding. The nature of the tax litigation is
summarized as follows: Action for annulment of tax debits
regarding the tax assessment issued by the state tax authorities on the understanding that the Group would have carried out lease of equipment
and data center spaces from January 2014 to December 2015, on the grounds that the operations would have the nature of services of telecommunications
and therefore would be subject to state tax at the rate of 25% and a fine equivalent to 50% of the updated tax amount for failure to issue
ancillary tax obligations. As of June 30, 2023, the updated amount recorded as a probable loss is R$ 26,307 (December 31, 2022 - R$ 24,715),
and the amount of R$ 28,980 (December 31, 2022 - R$ 28,130) is considered as a possible loss (contingency arising from the acquisition
of Linx). For certain contingencies, the Group
has made judicial deposits, which are legal reserves the Group is required to make by the Brazilian courts as security for any damages
or settlements the Group may be required to pay as a result of litigation. The amount of the judicial deposits
as of June 30, 2023 is R$ 19,642 (December 31, 2022 - R$ 17,682), which are included in Other assets in the non-current assets. The Company has an authorized share
capital of USD 50 thousand, corresponding to 630,000,000 authorized shares with a par value of USD 0.000079365 each. Therefore, the
Company is authorized to increase capital up to this limit, subject to approval of the Board of Directors. The liability of each member
is limited to the amount from time to time unpaid on such member’s shares. The Articles of Association provide
that at any time when there are Class A common shares being issued, Class B common shares may only be issued pursuant to: (a) a share
split, subdivision or similar transaction or as contemplated in the Articles of Association; or (b) a business combination involving the
issuance of Class B common shares as full or partial consideration. A business combination, as defined in the Articles of Association,
would include, amongst other things, a statutory amalgamation, merger, consolidation, arrangement or other reorganization. F-23 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) The additional paid-in capital refers
to the difference between the purchase price that the shareholders pay for the shares and their par value. Under Cayman Law, the amount
in this type of account may be applied by the Company to pay distributions or dividends to members, pay up unissued shares to be issued
as fully paid, for redemptions and repurchases of own shares, for writing off preliminary expenses, recognized expenses, commissions or
for other reasons. All distributions are subject to the Cayman Solvency Test which addresses the Company’s ability to pay debts
as they fall due in the natural course of business. Below are the movements of shares during
the six months ended June 2023: Own equity instruments that are reacquired
(treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale,
issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount and the consideration, if
reissued, is recognized in equity. On May 13, 2019, the Company announced
the adoption of its share repurchase program in an aggregate amount of up to US$ 200 million (the “Repurchase Program”).
The Repurchase Program went into effect in the second quarter of 2019 and does not have a fixed expiration date. The Repurchase Program
may be executed in compliance with Rule 10b-18 under the Exchange Act. As of June 2023 the Company holds
53,392 class A common shares in treasury (December 31, 2022 - R$ 233,772). The main transactions involving treasury shares during
the six months ended June 30, 2023 were: (i) sale of 16,641 Class A common shares to Pagar.me, which were used for payment of
contingent consideration related to acquisition of Trampol.in Pagamentos S.A., which originally occurred in August, 2021; (ii)
delivery of 824 shares to VittaPar LLC for payment of contingent consideration; (iii) delivery of 132,607 shares to Linx founders
shareholders, in accordance with the non-compete agreement signed; (iv) delivery of 30,308 shares due to RSU grant awards (Note
17.1.1). Basic earnings (loss) per share is
calculated by dividing net income (loss) for the period attributed to the controlling shareholders by the weighted average number of ordinary
shares outstanding during the period. The numerator of the Earnings per Share
(“EPS”) calculation is adjusted to allocate undistributed earnings as if all earnings for the period had been distributed.
In determining the numerator of basic EPS, earnings attributable to the Group is allocated as follows: F-24 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) The following table contains the earnings
per share of the Group for the six months ended June 30, 2023 and 2022 (in thousands except share and per share amounts): Net revenue from transaction activities
and other services is recognized at a point in time. All other revenue and income are recognized over time. Net revenue from transaction activities
and other services includes R$ 160,692 of membership fees (R$ 106,504 in six months ended June, 30 2022) and R$ 55,149 of registry business
fee (R$ 68,172 in six months ended June 30, 2022). F-25 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) The Group provides benefits to employees
and board members of the Group through share-based incentives. The following table outlines the key share-based awards movements - in
number of shares - as of June 30, 2023 and December 31, 2022. The Group offers a Long-term incentive
plan (“LTIP”) that enables the grant of equity-based awards to employees and other service providers with respect to its Class
A common shares, and it has granted RSU to certain key employees under the LTIP to incentivize and reward such individuals. These awards
are scheduled to vest over up to ten years period, subject to and conditioned upon the achievement of certain performance conditions.
Assuming achievement of these performance conditions, awards are settled in, or delivered as Class A common shares. If the applicable
performance conditions are not achieved, the awards are forfeited for no consideration. F-26 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) In the first quarter of 2023, the Company
has granted 280,700 RSU’s with an average grant-date fair value of R$ 45.65, which were determined based on the fair value of the
equity instruments granted and the exchange rate, both at the grant date. Moreover, there were 429,823 RSUs vested in the first quarter,
resulting on a delivery through the issuance of 323,829 shares net of withholding taxes. In the second quarter of 2023, the
Company has granted 3,768,220 RSU’s with an average grant-date fair value of R$ 51.13, which were determined based on the fair value
of the equity instruments granted and the exchange rate, both at the grant date. Moreover, there were 1,228,463 RSU’s cancelled,
and 32,135 RSUs vested in the second quarter, resulting on a delivery through treasury shares of 30,308 shares net of withholding taxes.
In June 30, 2023 there are no vested RSU to be issued to beneficiaries. As part of LTIP, the Group granted
awards of PSU. These awards are equity classified and give beneficiaries the right to receive shares if the Group reaches minimum levels
of total shareholder return (“TSR”) for a specific period. The PSUs granted do not result in delivering shares to beneficiaries
and expire if the minimum performance condition is not met. The fair value of the awards is estimated at the grant date using the Black-Scholes-Merton
pricing model, considering the terms and conditions on which the PSUs were granted, and the related compensation expense is recognized
over the vesting period. The performance condition is considered for estimating the grant-date fair value and of the number of PSUs expected
to be issued, based on historical data and current expectations and is not necessarily indicative of performance patterns that may occur.
The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the PSUs is indicative
of future trends, which may not necessarily be the actual outcome. The main two inputs to the model were: Risk–free interest rate
and annual volatility, based on the Company and similar players’ historical stock price. To estimate the number of awards that
are considered vested for accounting purposes we consider exclusively whether the service condition is met but reaching the TSR targets
is ignored. As such even, if TSR targets are ultimately not achieved the expense will remain recognized. In the first quarter of 2023, the Company
granted 462,862 new PSUs with an average grant-date fair value of R$ 3.15. The grant-date fair value was determined based on historical
data and current expectations and is not necessarily indicative of performance patterns that may occur. In the second quarter of 2023, the
Company granted 137,857 new PSUs with an average grant-date fair value of R$ 3.91 and the Company also cancelled 30,220 PSUs. The grant-date
fair value was determined based on historical data and current expectations and is not necessarily indicative of performance patterns
that may occur. In June 30, 2023 there are no vested PSU to be issued to beneficiaries. The expected volatility reflects the
assumption that the historical volatility over a period similar to the life of the PSUs is indicative of future trends, which may not
necessarily be the actual outcome. For the grants mentioned above, the main two inputs to the model were: (i) Risk–free interest
rate between of 4.0% and 5.6% according to 3-month Libor forward curve for 3 and 5 years period, and (ii) annual volatility between 73.8%
and 83.4%, based on the Company’s historical stock price. The Group has granted awards as stock
options, of which the exercise date will be between 3 and 10 years with a fair value estimated at the grant date based on the Black-Scholes-Merton
pricing model. On June 30, 2023, R$ 14,592 stock options were exercisable. The total expense related to share-based
plans, including taxes and social charges, recognized as Other income (expenses), net for the programs was R$ 120,525 for the six months
and R$ 50,407 for the three months ended June 30, 2023 (R$ 73,413 for the six months and R$ 46,062 for the three months ended June 30,
2022). F-27 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) F-28 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) In 2022, the Group, through its subsidiary
Questor Sistemas S.A (“Questor”) acquired control of Hubcount Tecnologia S.A. (“Hubcount”). The acquisition of
this company was measured in 2022 based on preliminary assessments and included in the December 31, 2022 consolidated financial statements.
The assessments were completed in the first quarter of 2023. The effects of the differences between the preliminary assessments (as originally
recognized on December 31, 2022) and the final assessments are presented below. The net assets acquired, at fair value,
on the date of the business combination, and the goodwill amount originated in the transaction considering the preliminary and the final
assessments are presented below. Preliminary amounts (as presented on December 31, 2022) Final amounts (as presented on June 30, 2023) F-29 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) The assumptions adopted to measure
the fair value of intangible assets identified in the business combination are described below. The consideration paid on business
combination is composed by the sum of the following values, if any: (i) consideration transferred, (ii) non-controlling interest in the
acquiree and (iii) fair value of the acquirer’s previously held equity interest in the acquiree. The consideration paid in the preliminary
and the final assessments is presented as follows. Preliminary
amounts (as presented on December
31, 2022) Final
amounts (as presented on June
30, 2023) In line with the strategy and organizational
structure of the Group, the Group is presenting two reportable segments, namely “Financial Services” and “Software”
and certain non-allocated activities: •
Financial services: Comprised of our financial services solutions which includes mainly payments solutions, digital banking, credit,
insurance solutions as well as the registry business. F-30 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) •
Software: Comprised of two main activities (i) Core, which is comprised by POS/ERP solutions, TEF and QR Code gateways, reconciliation
and CRM, and (ii) Digital, which includes OMS, e-commerce platforms, engagement tools, ads solutions and marketplace hubs. •
Non allocated activities: Comprised of non-strategic businesses, including results on disposal / discontinuation of non-core businesses. The Group used and continues to use
Adjusted net income (loss) as the measure reported to the CODM about the performance of each segment. The measurement of Adjusted net income
(loss) from January 1, 2023 no longer excludes share-based compensation expenses in the segmented statement of profit or loss. Also, from
April 1, 2022 no longer excludes bond issuance expenses in the segmented statement of profit or loss. As such, in the statement of profit
or loss as from January 1, 2023 the share-based and bond issuance expenses are included in the segmented Statement of Profit or Loss.
Information of prior periods (including the comparative periods and results from January 1, 2023 to June 30, 2023) have been retroactively
adjusted to reflect the new criteria as presented below. The effect in Adjusted net income (loss) of no longer excluding share-based compensation
expenses from January 1, 2023 to June 30, 2023 amounts to R$ 69,858. F-31 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) F-32 StoneCo Ltd. Notes to unaudited interim condensed consolidated financial statements June 30, 2023 (In thousands of Brazilian Reais, unless otherwise stated) On August 01, 2023, the Group acquired
a 33.33% equity interest in Agilize Tecnologia S.A, a private company based in the State of Bahia, Brazil, for R$ 8,523 through the conversion
of a credit arising from a convertible loan agreement. Agilize develops technology that provides online accounting services, with which
the Company expects to obtain synergies in its services to clients. The Group is still evaluating the appropriate accounting treatment. F-33
Balance as of December 31, 2021
76
13,825,325
299,701
61,127
354,979
14,541,132
(1,065,184)
(35,792)
96,214
13,536,446
90,774
13,627,220
Net income (loss) for the period
—
—
—
—
—
—
—
—
(800,614)
(800,614)
(1,684)
(802,298)
Other comprehensive income (loss) for the period
—
—
—
—
—
—
—
(245,810)
—
(245,810)
(1,533)
(247,343)
Total comprehensive income
—
—
—
—
—
—
—
(245,810)
(800,614)
(1,046,424)
(3,217)
(1,049,641)
Treasury shares - delivered on business combination
and sold
—
—
(703,656)
—
—
(703,656)
873,520
—
—
169,864
—
169,864
Equity transaction related to put options over
non-controlling interest
—
—
—
—
(166,811)
(166,811)
—
—
—
(166,811)
—
(166,811)
Share-based payments
—
—
—
—
76,955
76,955
—
—
—
76,955
10
76,965
Non-controlling interests arising on a business
combination
—
—
—
—
—
—
—
—
—
—
(941)
(941)
Dividends paid
—
—
—
—
—
—
—
—
—
—
(933)
(933)
Others
—
—
—
—
—
—
—
—
—
—
7
7
Balance as of June 30, 2022
76
13,825,325
(403,955)
61,127
265,123
13,747,620
(191,664)
(281,602)
(704,400)
12,570,030
85,700
12,655,730
Balance as of December 31, 2022
76
13,825,325
(445,062)
61,127
377,429
13,818,819
(69,085)
(432,701)
(423,203)
12,893,906
56,118
12,950,024
Net income (loss) for the period
—
—
—
—
—
—
—
—
532,008
532,008
893
532,901
Other comprehensive income (loss) for the period
—
—
—
—
—
—
—
148,766
—
148,766
—
148,766
Total comprehensive income
—
—
—
—
—
—
—
148,766
532,008
680,774
893
681,667
Share-based payments
—
—
—
—
136,991
136,991
—
—
—
136,991
(114)
136,877
Issuance of shares for business combination
—
—
(47,591)
—
(4,873)
(52,464)
53,270
—
—
806
—
806
Equity transaction related to put options over
non-controlling interest
—
—
—
—
(14,531)
(14,531)
—
—
—
(14,531)
1,007
(13,524)
Equity transaction with non-controlling interests
—
—
—
—
—
—
—
—
—
—
49
49
Dividends paid
—
—
—
—
—
—
—
—
—
—
(1,935)
(1,935)
Others
—
—
(22)
—
—
(22)
—
—
—
(22)
—
(22)
Balance as of June 30, 2023
76
13,825,325
(492,675)
61,127
495,016
13,888,793
(15,815)
(283,935)
108,805
13,697,924
56,018
13,753,942
Six months ended June 30,
Notes
2023
2022
Operating activities
Net income (loss) for the period
532,901
(802,298 )
Adjustments to reconcile net income (loss) for the period to net cash flows:
Depreciation and amortization
8.2
434,182
381,743
Deferred income tax and social contribution
7.1
78,431
(123,304 )
Loss on investment in associates
1,848
2,001
Interest, monetary and exchange variations, net
(175,839 )
(221,463 )
Provision for contingencies
11.2
5,099
1,580
Share-based payments expense
120,525
76,965
Allowance for expected credit losses
32,465
51,395
Loss on disposal of property, equipment and intangible assets
18.4
45,065
23,984
Effect of applying hyperinflation
1,195
1,525
Fair value adjustment in financial instruments at FVPL
18.1
93,997
1,137,182
Fair value adjustment in derivatives
8,615
64,905
Other
1,217
—
Working capital adjustments:
Accounts receivable from card issuers
3,900,802
2,639,765
Receivables from related parties
11,627
6,338
Recoverable taxes
(60,054 )
(37,228 )
Prepaid expenses
46,607
114,062
Trade accounts receivable, banking solutions and other assets
(10,534 )
465,068
Accounts payable to clients
(3,794,545 )
(3,138,412 )
Taxes payable
92,626
183,950
Labor and social security liabilities
(7,632 )
92,917
Payment of contingencies
11.2
(16,869 )
(2,944 )
Trade accounts payable and other liabilities
(2,094 )
16,217
Interest paid
(437,099 )
(252,166 )
Interest income received, net of costs
18.1
1,145,657
914,594
Income tax paid
(47,294 )
(86,601 )
Net cash (used in) / provided by in operating activities
2,000,899
1,509,775
Investing activities
Purchases of property and equipment
18.4
(536,511 )
(305,592 )
Purchases and development of intangible assets
18.4
(212,072 )
(153,078 )
Proceeds from (acquisition of) short-term investments, net
106,346
(404,932 )
Acquisition of equity securities
—
(15,000 )
Proceeds from disposal of long-term investments – equity securities
5.1
218,105
180,596
Proceeds from the disposal of non-current assets
18.4
245
20,552
Acquisition of subsidiary, net of cash acquired
—
(62,373 )
Payment for interest in associates and subsidiaries
(32,562 )
(21,551 )
Net cash (used in) provided by investing activities
(456,449 )
(761,378 )
Financing activities
Proceeds from borrowings
5.5.1
2,798,229
2,749,993
Payment of borrowings
(2,981,210 )
(3,598,552 )
Payment to FIDC quota holders
(645,000 )
(625,000 )
Payment of leases
5.5.1
(40,755 )
(45,423 )
Sale of own shares
—
53,406
Acquisition of non-controlling interests
(1,175 )
(691 )
Dividends paid to non-controlling interests
(1,935 )
(933 )
Net cash (used in) provided by financing activities
(871,846 )
(1,467,200 )
Effect of foreign exchange on cash and cash equivalents
17,505
10,005
Change in cash and cash equivalents
690,109
(708,798 )
Cash and cash equivalents at beginning of period
4
1,512,604
4,495,645
Cash and cash equivalents at end of period
4
2,202,713
3,786,847
Change in cash and cash equivalents
690,109
(708,798 )
1. Operations
2. Basis of preparation and changes to the Group’s accounting policies and estimates
2.1. Basis of preparation
2.2. Estimates
3. Group information
3.1. Subsidiaries
% of Group's equity interest
Entity name
Principal activities
June 30, 2023
December 31, 2022
Stone Instituição de Pagamento S.A. (“Stone Pagamentos”)
Merchant acquiring
100.00
100.00
Pagar.me Instituição de Pagamento S.A. (“Pagar.me”)
Merchant acquiring
100.00
100.00
Stone Sociedade de Crédito Direto S.A. (“Stone SCD”)
Financial services
100.00
100.00
Linx Sistemas e Consultoria Ltda. (“Linx Sistemas”)
Technology services
100.00
100.00
Fundo de Investimento em Direitos Creditórios - Bancos Emissores de Cartão de Crédito - Stone III
Investment fund
100.00
100.00
Tapso Fundo de Investimento em Direitos Creditórios (“FIDC TAPSO”)
Investment fund
100.00
100.00
3.2. Associates
% Group's equity interest
Entity name
Principal activities
June 30, 2023
December 31, 2022
Alpha-Logo Serviços de Informática S.A. (“Tablet Cloud”)
Technology services
25.00
25.00
Trinks Serviços de Internet S.A. (“Trinks”)
Technology services
19.90
19.90
Neostore Desenvolvimento de Programas de Computador S.A. (“Neomode”)
Technology services
40.02
40.02
Dental Office S.A. (“RH Software”)
Technology services
20.00
20.00
APP Sistemas S.A. (“APP”) (a)
Technology services
19.90
20.00
Delivery Much Tecnologia S.A. (“Delivery Much”)
Food delivery marketplace
29.50
29.50
StoneCo CI Ltd ("Creditinfo Caribean")
Holding - Credit Bureau services
47.75
47.75
(a) In April 2023, our ownership in APP was diluted by the issuance
of new shares under a long-term incentive program, admitting in a new shareholder.
4. Cash and cash equivalents
June 30, 2023
December 31, 2022
Short-term bank deposits - denominated in R$
2,154,190
1,388,616
Short-term bank deposits - denominated in US$
48,495
123,959
Short-term bank deposits - denominated in other currencies
28
29
2,202,713
1,512,604
5. Financial instruments
5.1. Short and Long-term investments
Short-term
Long-term
Listed securities
Unlisted securities
Listed securities
Unlisted securities
Bonds(a)
Brazilian sovereign bonds
1,000,883
—
—
—
1,000,883
Structured notes linked to Brazilian sovereign bonds
—
2,434,569
—
—
2,434,569
Corporate bonds
56,785
—
—
—
56,785
Equity securities(b)
—
—
—
33,077
33,077
Investment funds(c)
—
1,201
—
—
1,201
1,057,668
2,435,770
—
33,077
3,526,515
Short-term
Long-term
Listed securities
Unlisted securities
Listed securities
Unlisted securities
Bonds(a)
Brazilian sovereign bonds
926,559
—
—
—
926,559
Structured notes linked to Brazilian sovereign bonds
—
2,176,019
—
—
2,176,019
Corporate bonds
349,540
—
—
—
349,540
Equity securities(b)
—
—
182,139
32,626
214,765
Investment funds(c)
—
1,654
—
—
1,654
1,276,099
2,177,673
182,139
32,626
3,668,537
(a) As of June 30, 2023, bonds of listed securities are mainly indexed to CDI and Selic.
(b) Comprised of ordinary shares of listed and unlisted entities. These assets are measured at fair value,
and the Group elected asset by asset the recognition of the changes in fair value of the existing listed and unlisted equity instruments
through profit or loss (“FVPL”) or other comprehensive income (“FVOCI”). The fair value of unlisted equity instruments
as of June 30, 2023, was determined based on the most recently completed annual valuation reports and any subsequent negotiations of the
securities.
• Assets at FVPL
• Assets at FVOCI
(c) Comprised of foreign investment fund shares.
5.2. Accounts receivable from card issuers and accounts payable
5.2.1. Composition of accounts receivable from card issuers
June 30, 2023
December 31, 2022
Accounts receivable from card issuers (a)
18,010,892
20,053,392
Accounts receivable from other acquirers (b)
585,337
718,228
Allowance for expected credit losses
(22,816 )
(22,763 )
18,573,413
20,748,857
Current
18,503,084
20,694,523
Non-current
70,329
54,334
(a) Accounts receivable from card issuers, net of interchange fees, as a result of processing transactions
with clients.
(b) Accounts receivable from other acquirers related to PSP (Payment Service Provider) transactions.
5.2.2. Accounts payable to clients
5.3. Trade accounts receivable
5.3.1. Composition of trade accounts receivable
June 30, 2023
December 31, 2022
Accounts receivable from subscription services
276,482
294,516
Accounts receivable from equipment rental
129,964
135,479
Chargeback
60,883
58,302
Services rendered
40,573
36,089
Receivables from registry operation
20,426
35,150
Loans designated at FVPL
2,384
26,866
Allowance for expected credit losses
(104,346 )
(108,434 )
Others
47,773
44,078
474,139
522,046
Current
440,946
484,722
Non-current
33,193
37,324
5.4. Financial assets from banking solutions and deposits from banking customers
5.5. Loans and financing and Obligations to FIDC quota holders
5.5.1. Changes in loans and financing and obligations to FIDC quota holders
December 31, 2022
Additions
Disposals
Payment
Changes in Exchange Rates
Interest
June 30, 2023
Obligations to FIDC AR III quota holders (Note 5.5.2.1)
952,780
—
—
(681,441 )
—
46,682
318,021
Obligations to FIDC TAPSO quota holders (Note 5.5.2.2)
22,468
—
—
(23,021 )
—
553
—
Leases (Note 5.5.2.3)
200,147
58,610
(23,243 )
(40,755 )
(204 )
7,737
202,292
Bonds (Note 5.5.2.4)
2,587,303
—
—
(47,856 )
(199,349 )
49,990
2,390,088
Bank borrowings (Note 5.5.2.5)
1,788,427
2,798,229
—
(3,155,919 )
4,748
90,952
1,526,437
5,551,125
2,856,839
(23,243 )
(3,948,992 )
(194,805 )
195,914
4,436,838
Current
2,822,655
1,909,337
Non-current
2,728,470
2,527,501
5.5.2. Description of loans and financing and obligations to FIDC quota holders
5.5.2.1. Obligations to FIDC AR III quota holders
5.5.2.2. Obligations to FIDC TAPSO quota holders
5.5.2.3. Leases
5.5.2.4. Bonds
5.5.2.5. Bank borrowings
5.6. Derivative financial instruments, net
June 30, 2023
December 31, 2022
Cross-currency interest rate swap used as hedge accounting instrument (Note 5.6.1)
(322,863 )
(190,902 )
Derivatives used as economic hedge instrument (Note 5.6.2)
(9,781 )
(6,395 )
Call options to acquire additional interest in subsidiaries
14,397
23,983
Derivative financial instruments, net
(318,247 )
(173,314 )
5.6.1 Hedge accounting
Notional in US$
Notional in R$
Pay rate in local currency
Trade date
Due date
Fair value as of June 30, 2023 – Asset (Liability)
Gain (Loss) recognized in income in six months ended June 30, 2023(a)
Gain recognized in OCI in six months ended June 30, 2023(b)
Fair value as of December 31, 2022 – Asset (Liability)
50,000
248,500
CDI + 2.94%
June 23, 2021
June 16, 2028
(29,144)
(73,380)
6,085
(15,274)
50,000
247,000
CDI + 2.90%
June 24, 2021
June 16, 2028
(28,631)
(59,104)
6,160
(14,836)
50,000
248,500
CDI + 2.90%
June 24, 2021
June 16, 2028
(29,710)
(59,124)
6,207
(15,961)
75,000
375,263
CDI + 2.99%
June 30, 2021
June 16, 2028
(46,661)
(29,933)
9,451
(26,179)
50,000
250,700
CDI + 2.99%
June 30, 2021
June 16, 2028
(31,485)
(19,956)
6,317
(17,846)
50,000
250,110
CDI + 2.98%
June 30, 2021
June 16, 2028
(31,060)
(43,285)
6,298
(17,403)
25,000
127,353
CDI + 2.99%
July 15, 2021
June 16, 2028
(17,142)
(9,978)
3,210
(10,374)
25,000
127,353
CDI + 2.99%
July 15, 2021
June 16, 2028
(17,209)
(9,978)
3,224
(10,455)
50,000
259,890
CDI + 2.96%
July 16, 2021
June 16, 2028
(38,138)
(19,956)
6,611
(24,793)
25,000
131,025
CDI + 3.00%
August 6, 2021
June 16, 2028
(18,835)
(9,978)
3,244
(12,101)
25,000
130,033
CDI + 2.85%
August 10, 2021
June 16, 2028
(19,605)
(9,978)
3,290
(12,917)
25,000
130,878
CDI + 2.81%
August 11, 2021
June 16, 2028
(19,466)
(9,978)
3,275
(12,763)
50,000
248,500
CDI + 1.80%
May 22, 2023
November 22, 2023
4,223
2,138
2,085
—
Net amount
(322,863)
(352,490)
65,457
(190,902)
(a) Recognized in the statement of profit or loss, in “Financial expenses, net”. The amount recognized
during the six months ended June 30, 2022 was a loss of R$ 173,021.
(b) Recognized in equity, in “Other comprehensive income”. The balance in the cash flow hedge
reserve as of June 30, 2023 is a loss of R$ 195,909 (June 30, 2022 - loss of R$ 175,107).
5.6.2 Economic hedge
5.6.2.1 Currency hedge
5.6.2.2 Interest rates hedge
5.7. Financial risk management
5.8. Financial instruments by category
5.8.1 Financial assets by category
Amortized cost
FVPL
FVOCI
Total
At June 30, 2023
Short and Long-term investments
—
3,493,438
33,077
3,526,515
Financial assets from banking solution
—
4,099,308
—
4,099,308
Accounts receivable from card issuers
—
—
18,573,413
18,573,413
Trade accounts receivable
471,755
2,384
—
474,139
Derivative financial instruments(a)
—
21,991
—
21,991
Receivables from related parties
11,984
—
—
11,984
Other assets
373,552
—
—
373,552
857,291
7,617,121
18,606,490
27,080,902
At December 31, 2022
Short and Long-term investments
—
3,636,687
31,850
3,668,537
Financial assets from banking solution
—
3,960,871
—
3,960,871
Accounts receivable from card issuers
6,992
—
20,741,865
20,748,857
Trade accounts receivable
495,180
26,866
—
522,046
Derivative financial instruments(a)
—
36,400
—
36,400
Receivables from related parties
10,053
—
—
10,053
Other assets
341,200
—
—
341,200
853,425
7,660,824
20,773,715
29,287,964
(a) Derivative financial instruments as of June 30, 2023 of R$ 322,863 (December 31, 2022 – R$
190,902) were designated as cash flow hedging instruments, and therefore the effective portion of the hedge is accounted for in the
OCI.
5.8.2 Financial liabilities by category
Amortized cost
FVPL
Total
At June 30, 2023
Deposits from banking customers
3,918,621
—
3,918,621
Accounts payable to clients
15,555,815
—
15,555,815
Trade accounts payable
423,380
—
423,380
Loans and financing
4,118,817
—
4,118,817
Obligations to FIDC quota holders
318,021
—
318,021
Derivative financial instruments
—
340,238
340,238
Other liabilities
134,633
604,900
739,533
24,469,287
945,138
25,414,425
At December 31, 2022
Deposits from banking customers
4,023,679
—
4,023,679
Accounts payable to clients
16,614,513
—
16,614,513
Trade accounts payable
596,044
—
596,044
Loans and financing
4,575,877
—
4,575,877
Obligations to FIDC quota holders
975,248
—
975,248
Derivative financial instruments
—
209,714
209,714
Other liabilities
144,893
611,279
756,172
26,930,254
820,993
27,751,247
5.9. Fair value measurement
5.9.1. Assets and liabilities by fair value hierarchy
June 30, 2023
December 31, 2022
Fair value
Hierarchy level
Fair value
Hierarchy level
Assets measured at fair value
Short and Long-term investments(a)
3,526,515
I /II
3,668,537
I /II
Financial assets from banking solution(b)
4,099,308
I
3,960,871
I
Accounts receivable from card issuers(c)
18,573,413
II
20,741,865
II
Trade accounts receivable (d)
2,384
II / III
26,866
II / III
Derivative financial instruments(e)
21,991
II
36,400
II
26,223,611
28,434,539
Liabilities measured at fair value
Derivative financial instruments(e)
340,238
II
209,714
II
Other liabilities(f)(g)
604,900
II/III
611,279
II/III
945,138
820,993
(a) Listed securities are classified as level I and unlisted securities classified as level II, for those
the fair value is determined using valuation techniques, which employ the use of market observable inputs.
(b) Sovereign bonds are priced using quotations from Anbima public pricing method.
(c) For Accounts receivable from card issuers measured at FVOCI, fair value is estimated by discounting future
cash flows using market rates for similar items. For those measured at amortized cost, carrying values are assumed to approximate their
fair values, taking into consideration the realization of these balances and short settlement terms.
(d) Included in Trade accounts receivable there are Loans designated at FVPL with an amount of R$ 2,384.
In the six months ended June 30, 2023, this portfolio registered a loss of R$ 7,288 (loss of R$ 287,103 - June 30, 2022), and total
net cashflow effect was an inflow of R$ 31,770 (R$ 387,233 - June 30, 2022). Loans fair value are valued using valuation techniques,
which employ the use of market unobservable inputs, and therefore is classified as level III in the hierarchy level.
(e) The Group enters into derivative financial instruments with financial institutions with investment grade
credit ratings. Derivative financial instruments are valued using valuation techniques, which employ the use of market observable inputs.
(f) There are contingent considerations included in Other liabilities arising on business combinations that
are measured at FVPL. Fair values are estimated in accordance with pre-determined formulas explicit in the contracts with selling shareholders.
The significant unobservable inputs used in the fair value measurement of contingent consideration categorized within Level III of the
fair value hierarchy are based on projections of revenue, net debt, number of clients, net margin and the discount rates used to evaluate
the liability.
(g) The Group issued put options over Reclame Aqui’s non-controlling interests, together with the business
combination occurred in 2022. The Group does not have a present ownership interest in the shares held by non-controlling shareholders,
so the Group has elected as accounting policy for such put options to derecognize the non-controlling interests at each reporting date
as if it was acquired at that date and recognize a financial liability at the present value of the amount payable on exercise of the non-controlling
interests put option. The difference between the amount recognized as financial liability and the non-controlling interests derecognized
at each period is recognized as an equity transaction. The amount of R$ 277,815 was recorded in the consolidated statement of financial
position as of June 30, 2023 as a financial liability under Other liabilities (June 30, 2022 - R$ 264,291).
5.9.2. Fair value of
financial instruments not measured at fair value
June 30, 2023
December 31, 2022
Book value
Fair value
Book value
Fair value
Financial liabilities
Accounts payable to clients(a)
15,555,815
15,074,069
16,614,513
16,025,373
Loans and financing(b)
4,118,817
3,988,703
4,575,877
4,564,864
Obligations to FIDC quota holders(b)
318,021
317,861
975,248
973,614
19,992,653
19,380,633
22,165,638
21,563,851
(a) The fair value of Accounts payable to clients is estimated by discounting future contractual cash flows
at the average of interest rates applicable in prepayment business.
(b) The fair values of Loans and financing, and Obligations to FIDC quota holders are estimated by discounting
future contractual cash flows at the interest rates available in the market that are available to the Group for similar financial instruments.
6. Recoverable taxes
June 30, 2023
December 31, 2022
Withholding income tax on financial income(a)
164,933
87,701
Others withholding income tax
23,595
36,212
Income tax and social contribution
16,852
9,872
Contributions over revenue(b)
650
3,410
Other taxes
14,024
13,761
220,054
150,956
(a) Refers to income taxes withheld on financial income which will be offset against future income tax payable.
(b) Refers to credits taken on contributions on gross revenue for social integration program (PIS) and social
security (COFINS) to be offset in the following period against taxes payable.
7. Income taxes
7.1. Reconciliation of income tax expense
Six months ended June 30,
Three months ended June 30,
2023
2022
2023
2022
Profit (loss) before income taxes
729,085
(773,248 )
422,273
(483,401 )
Brazilian statutory rate
34 %
34 %
34 %
34 %
Tax benefit/(expense) at the statutory rate
(247,889 )
262,904
(143,573 )
164,356
Additions (exclusions):
Profit (loss) from entities subject to different tax rates
46,503
25,274
19,977
(271 )
Profit (loss) from entities subject to different tax rates - Mark to market on equity securities designated at FVPL
10,395
(289,027 )
—
(179,208 )
Other permanent differences
(1,110 )
(10,570 )
8,245
(8,542 )
Equity pickup on associates
303
(680 )
651
(450 )
Unrecognized deferred taxes
(9,904 )
(22,539 )
(4,965 )
13,123
Use of previously unrecognized tax losses
1,955
188
1,597
188
Research and development tax benefits
2,242
4,664
2,242
4,664
Other tax incentives
1,321
736
764
281
Total income tax and social contribution benefit/(expense)
(196,184 )
(29,050 )
(115,062 )
(5,859 )
Effective tax rate
26.9 %
n/a
27.2 %
n/a
Current income tax and social contribution
(117,753 )
(152,354 )
(74,199 )
(84,544 )
Deferred income tax and social contribution
(78,431 )
123,304
(40,863 )
78,685
Total income tax and social contribution benefit/(expense)
(196,184 )
(29,050 )
(115,062 )
(5,859 )
7.2. Deferred income taxes by nature
December 31, 2022
Recognized against other comprehensive income
Recognized against profit or loss
Recognized against goodwill (a)
June 30, 2023
Assets at FVOCI
215,730
(46,751 )
—
—
168,979
Losses available for offsetting against future taxable income
385,634
—
(1,831 )
—
383,803
Other temporary differences
273,625
—
(50,674 )
—
222,951
Tax deductible goodwill
69,017
—
(19,752 )
—
49,265
Share-based compensation
58,815
—
14,837
—
73,652
Contingencies arising from business combinations
51,313
—
(654 )
—
50,659
Assets at FVPL
(993 )
—
1,045
—
52
Technological innovation benefit
(31,557 )
—
13,648
—
(17,909 )
Temporary differences under FIDC
(147,924 )
—
(53,599 )
—
(201,523 )
Intangible assets and property and equipment arising from business combinations
(693,936 )
—
18,549
(1,375 )
(676,762 )
Deferred tax, net
179,724
(46,751 )
(78,431 )
(1,375 )
53,167
(a) More details in Note 19.1.1.
7.3. Unrecognized deferred taxes
8. Property and equipment
8.1. Changes in Property and equipment
December 31, 2022
Additions
Disposals (a)
Transfers
Effects of hyperinflation
Effects of changes in foreign exchange rates
June 30, 2023
Cost
Pin Pads & POS
1,948,382
345,504
(123,520 )
—
—
—
2,170,366
IT equipment
262,405
18,613
(3,123 )
106
—
12
278,013
Facilities
91,820
1,569
(20,765 )
3,411
(39 )
(285 )
75,711
Machinery and equipment
23,521
3,419
(51 )
—
(73 )
(379 )
26,437
Furniture and fixtures
24,150
379
(2,509 )
949
(30 )
16
22,955
Vehicles and airplane
27,296
48
(5 )
—
(59 )
(4 )
27,276
Construction in progress
50,320
—
(7,056 )
(4,466 )
—
—
38,798
Right-of-use assets - equipment
4,823
64
(7 )
—
—
—
4,880
Right-of-use assets - vehicles
43,794
2,335
(9,452 )
—
—
—
36,677
Right-of-use assets - offices
205,450
23,662
(32,925 )
—
—
(603 )
195,584
2,681,961
395,593
(199,413 )
—
(201 )
(1,243 )
2,876,697
Depreciation
Pin Pads & POS
(740,468 )
(219,649 )
102,605
—
—
—
(857,512 )
IT equipment
(145,406 )
(25,390 )
2,833
—
—
8
(167,955 )
Facilities
(37,739 )
(6,992 )
20,550
—
—
97
(24,084 )
Machinery and equipment
(18,571 )
(2,060 )
171
—
—
138
(20,322 )
Furniture and fixtures
(7,054 )
(1,336 )
1,938
—
—
6
(6,446 )
Vehicles and airplane
(2,437 )
(1,561 )
51
—
—
11
(3,936 )
Right-of-use assets - equipment
(1,031 )
(65 )
10
—
—
—
(1,086 )
Right-of-use assets - Vehicles
(21,663 )
(7,900 )
8,352
—
—
—
(21,211 )
Right-of-use assets - Offices
(66,414 )
(18,668 )
11,938
—
—
(578 )
(73,722 )
(1,040,783 )
(283,621 )
148,448
—
—
(318 )
(1,176,274 )
Property and equipment, net
1,641,178
111,972
(50,965 )
—
(201 )
(1,561 )
1,700,423
(a) Includes Pin Pad & POS derecognized for not being used by customers after a period of time and Cappta
S.A. spun-off on June 30, 2023.
8.2. Depreciation and amortization charges
Six months ended June 30,
Three months ended June 30,
2023
2022
2023
2022
Cost of services
290,339
240,855
150,969
117,286
Administrative expenses
118,648
118,721
57,453
69,778
Selling expenses
25,195
21,866
13,266
9,817
Other income (expenses), net
—
301
—
—
Depreciation and Amortization charges
434,182
381,743
221,688
196,881
Depreciation charge
283,621
246,414
146,989
128,118
Amortization charge
150,561
135,329
74,699
68,763
Depreciation and Amortization charges
434,182
381,743
221,688
196,881
9. Intangible assets
9.1. Changes in Intangible assets
December 31, 2022
Additions
Disposals
Transfers
Effects of changes in foreign exchange rates
Business combination (a)
June 30, 2023
Cost
Goodwill - acquisition of subsidiaries
5,647,421
—
—
—
—
(3,831 )
(2,160 )
5,641,430
Customer relationship
1,793,405
6,285
(3,883 )
—
—
—
1,940
1,797,747
Trademarks and patents
551,000
—
(2 )
—
—
—
—
550,998
Software
1,162,311
94,915
(10,698 )
9,569
(74 )
(4,787 )
2,104
1,253,340
Non-compete agreement
26,024
—
—
—
—
—
—
26,024
Operating license
5,674
—
—
—
—
—
—
5,674
Software in progress
66,820
104,995
(14,888 )
(9,569 )
—
—
—
147,358
Right-of-use assets - Software
88,254
32,549
(57,545 )
—
—
—
—
63,258
9,340,909
238,744
(87,016 )
—
(74 )
(8,618 )
1,884
9,485,829
Amortization
Customer relationship
(278,032 )
(34,849 )
3,338
—
—
—
—
(309,543 )
Trademarks and patents
(10,816 )
(4,703 )
1
—
—
—
—
(15,518 )
Software
(337,935 )
(93,048 )
8,015
—
—
1,652
—
(421,316 )
Non-compete agreement
(7,751 )
(2,603 )
—
—
—
—
—
(10,354 )
Operating license
(6,108 )
(16 )
—
—
—
—
—
(6,124 )
Right-of-use assets - Software
(67,935 )
(15,342 )
57,546
—
—
—
—
(25,731 )
(708,577 )
(150,561 )
68,900
—
—
1,652
—
(788,586 )
Intangible assets net
8,632,332
88,183
(18,116 )
—
(74 )
(6,966 )
1,884
8,697,243
(a) More details in Note 19.1.1
10. Transactions with related parties
Six months ended June 30,
Sales of services
2023
2022
Associates (legal and administrative services)(a)
76
14
76
14
Purchases of goods and services
Associates (transaction services) (b)
(1,526 )
(943 )
(1,526 )
(943 )
(a) Corresponds to services provided to Trinks.
(b) Corresponds mainly to expenses paid to Trinks, RH Software, APP and Tablet Cloud, for consulting services
and sales commissions and software license to new customers acquisition.
10.1. Balances
June 30, 2023
December 31, 2022
Loans to management personnel
4,993
6,121
Loans to associate
6,991
3,932
Receivables from related parties
11,984
10,053
11. Provision for contingencies
11.1 Significant judgments, estimates and assumptions
11.2. Probable losses, provided for in the statement of financial position
Civil
Labor
Tax
Total
Balance as of December 31, 2022
25,324
24,460
160,592
210,376
Additions
17,361
9,229
8,400
34,990
Reversals
(6,902 )
(18,277 )
(4,712 )
(29,891 )
Interests
2,121
1,929
9,849
13,899
Payments (a)
(1,539 )
(633 )
(14,697 )
(16,869 )
Balance as of June 30, 2023
36,365
16,708
159,432
212,505
(a) The Group entered into installment payment incentive program issued by the federal tax authorities.
11.3. Possible losses, not provided for in the statement of financial position
June 30, 2023
December 31, 2022
Civil
89,679
178,809
Labor
38,283
238,523
Tax
155,882
140,658
Total
283,844
557,990
During the second quarter of 2022, we received a tax assessment issued by the municipal tax Authority relating to the allegedly insufficient
payment of tax on services. As June 30, 2023, the updated amount of claim is R$ 101,533 (December 31, 2022 - R$ 93,605). The case, classified
as possible loss is being challenged at the administrative level of the court.
11.4. Judicial deposits
12. Equity
12.1 Authorized capital
12.2. Subscribed and paid-in capital and capital reserve
Number of shares
Class A
Class B
Total
At December 31, 2022
294,124,829
18,748,770
312,873,599
Vested awards(a)
323,829
—
323,829
At June 30, 2023
294,448,658
18,748,770
313,197,428
(a) The Company delivered 323,829 RSUs, through the issuance of shares.
12.3. Treasury shares
13. Earnings (loss) per share
Six months ended June 30,
Three months ended June 30,
2023
2022
2023
2022
Net income (loss) attributable to controlling shareholders
532,008
(800,614 )
305,369
(487,390 )
Numerator of basic and diluted EPS
532,008
(800,614 )
305,369
(487,390 )
Six months ended June 30,
Three months ended June 30,
2023
2022
2023
2022
Numerator of basic EPS
532,008
(800,614 )
305,369
(487,390 )
Weighted average number of outstanding shares
312,912,323
311,240,266
313,074,253
312,161,248
Denominator of basic EPS
312,912,323
311,240,266
313,074,253
312,161,248
Basic earnings (loss) per share - R$
1.70
(2.57 )
0.98
(1.56 )
Numerator of diluted EPS
532,008
(800,614 )
305,369
(487,390 )
Share-based payments(a)
26,708,774
—
27,799,812
—
Weighted average number of outstanding shares
312,912,323
311,240,266
313,074,253
312,161,248
Denominator of diluted EPS
339,621,097
311,240,266
340,874,065
312,161,248
Diluted earnings (loss) per share - R$
1.57
(2.57 )
0.90
(1.56 )
(a) Diluted earnings per share are calculated by adjusting the weighted average number of shares outstanding,
considering potentially convertible instruments. However, due to the loss for the period ended June 30, 2022, these instruments issued
have a non-diluting effect, therefore, they were not considered in the total number of outstanding shares to determine the diluted loss
per share.
14. Revenue and income
14.1. Timing of revenue recognition
15. Expenses by nature
Six months ended June 30,
Three months ended June 30,
2023
2022
2023
2022
Personnel expenses
1,351,287
1,116,103
662,927
560,702
Mark-to-market on equity securities designated at FVPL (Note 5.1(b))
(30,574 )
850,079
—
527,083
Transaction and client services costs (b)
578,430
557,498
290,770
252,982
Depreciation and amortization (Note 8.2)
434,182
381,743
221,688
196,881
Marketing expenses and sales commissions (a)
361,945
316,646
178,302
137,429
Third parties services
109,186
158,167
47,918
91,950
Other
133,567
102,456
56,235
64,483
Total expenses
2,938,023
3,482,692
1,457,840
1,831,510
(a) Marketing expenses and sales commissions relate to marketing and advertising expenses, and commissions
paid to sales related partnerships.
(b) Transaction and client services costs include card transaction capturing services, card transaction and
settlement processing services, logistics costs, payment scheme fees, cloud services and other costs.
16. Financial expenses, net
Six months ended June 30,
Three months ended June 30,
2023
2022
2023
2022
Finance cost of sale of receivables
1,585,564
1,105,468
870,853
664,169
Cost of bond (Note 5.5.1 e 5.6.1)
205,269
176,722
102,323
95,327
Other interest on loans and financing (Note 5.5.1)
145,924
299,723
62,501
157,531
Foreign exchange (gains) and losses
(13,442 )
(4,436 )
(3,574 )
(6,570 )
Other
74,168
85,481
41,741
44,254
Total
1,997,483
1,662,958
1,073,844
954,711
17. Employee benefits
17.1. Share-based payment plans
Equity
RSU
PSU
Options
Total
Balance as of December 31, 2022
11,507,221
7,320,367
45,159
18,872,747
Granted
4,048,920
600,719
—
4,649,639
Cancelled
(1,228,463 )
(30,220 )
—
(1,258,683 )
Delivered
(461,958 )
—
—
(461,958 )
Balance as of June 30, 2023
13,865,720
7,890,866
45,159
21,801,745
17.1.1. Restricted share units ("RSU")
17.1.2. Performance share units ("PSU")
17.1.3. Options
17.1.4 Share-based payment expenses
18. Other disclosures on cash flows
18.1. Non-cash operating activities
June 30, 2023
June 30, 2022
Fair value adjustment on loans designated at FVPL
(124,571 )
(287,103 )
Fair value adjustment on equity securities designated at FVPL (Note 5.1)
30,574
(850,079 )
Fair value adjustment on financial instruments designated at FVPL
(93,997 )
(1,137,182 )
Changes in the fair value of accounts receivable from card issuers
(139,846 )
84,528
Fair value adjustment on equity instruments/listed securities designated at FVOCI
(1,141 )
(1,345 )
Interest income received on accounts payable to clients
2,731,221
2,020,062
Finance cost of sale of receivables on Accounts receivable from card issuers (Note 16)
(1,585,564 )
(1,105,468 )
Interest income received, net of costs
1,145,657
914,594
18.2. Non-cash investing activities
June 30, 2023
June 30, 2022
Property and equipment and intangible assets acquired through lease (Note 8.1 and 9.1)
58,610
41,649
18.3. Non-cash financing activities
June 30, 2023
June 30, 2022
Unpaid consideration for acquisition of non-controlling shares
990
1,132
Shares of the Company delivered at Reclame Aqui acquisition
—
169,864
18.4. Property and equipment, and intangible assets
June 30, 2023
June 30, 2022
Additions of property and equipment (Note 8.1)
(395,593 )
(426,939 )
Additions of right of use (IFRS 16) (Note 8.1)
26,061
26,341
Payments from previous period
(176,835 )
(51,614 )
Purchases not paid at period end
10,100
46,393
Prepaid purchases of POS
(244 )
100,227
Purchases of property and equipment
(536,511 )
(305,592 )
Additions of intangible assets (Note 9.1)
(238,744 )
(134,545 )
Additions of right of use (IFRS 16) (Note 9.1)
32,549
15,308
Payments from previous period
(6,593 )
(41,898 )
Purchases not paid at period end
716
7,279
Capitalization of borrowing costs
—
778
Purchases and development of intangible assets
(212,072 )
(153,078 )
Net book value of disposed assets (Notes 8.1 and 9.1)
69,081
86,161
Net book value of disposed Leases (Note 5.5.1)
(23,243 )
(24,141 )
Gain (loss) on disposal of property and equipment and intangible assets
(45,065 )
(23,984 )
Disposal of Cappta property, equipment and intangible assets
1,767
—
Outstanding balance
(2,295 )
(17,484 )
Proceeds from disposal of property and equipment and intangible assets
245
20,552
19. Business combinations
19.1. Acquisitions in 2022 – assessments concluded in 2023
19.1.1. Financial position of the business acquired
Fair value
Adjustments
Cash and cash equivalents
36
—
36
Trade accounts receivable
235
—
235
Recoverable taxes
42
—
42
Property and equipment
205
—
205
Intangible assets - Customer relationship(a)
—
1,940
1,940
Intangible assets - Software(a)
—
2,104
2,104
Other assets
460
—
460
Total assets
978
4,044
5,022
Trade accounts payable
79
—
79
Labor and social security liabilities
313
—
313
Taxes payable
41
—
41
Deferred tax liabilities
—
1,375
1,375
Other liabilities
87
—
87
Total liabilities
520
1,375
1,895
Net assets and liabilities(b)
458
2,669
3,127
Consideration paid (Note 19.1.3)
10,615
509
11,124
Goodwill
10,157
(2,160 )
7,997
(a) The Group carried out a fair value assessment of the assets acquired in the business combination, having
identified customer relationship, and software as intangible assets. Details on the methods and assumptions adopted to evaluate these
assets are described on Note 19.1.2.
(b) The net assets recognized in the December 31, 2022 financial statements were based on a provisional assessment
of their fair value while the Group sought an independent valuation for the intangible assets owned by Hubcount. The valuation had not
been completed by the date the 2022 financial statements were approved for issue by the Board of Directors. In the first quarter of 2023,
the valuation was completed.
19.1.2. Intangible assets recognized from business combinations
19.1.2.1. Customer relationship
Hubcount
Amount
1,940
Method of evaluation
MEEM (*)
Estimated useful life(a)
7 years and 2 months
Discount rate(b)
15.3%
Source of information
Acquirer’s management internal projections
(*) Multi-Period Excess Earnings Method (“MEEM”)
(a) Useful lives were estimated based on internal benchmarks.
(b) Discount rate used was equivalent to the weighted average cost of capital combined with the sector’s
risk.
19.1.2.2. Software
Hubcount
Amount
2,104
Method of evaluation
Relief from royalties
Estimated useful life(a)
5 years
Discount rate(b)
15.3%
Source of information
Historical data
(a) Useful lives were estimated based on internal benchmarks.
(b) Discount rate used was equivalent to the weighted average cost of capital combined with the sector’s
risk.
19.1.3. Consideration paid
Adjustments
Cash consideration paid to the selling shareholders
7,500
—
7,500
Cash consideration to be paid to the selling shareholders
3,000
(341 )
2,659
Call option
—
(1,534 )
(1,534 )
Contingent consideration(a)
—
1,717
1,717
Non-controlling interest in the acquiree
115
667
782
Total
10,615
509
11,124
(a) Refers to contingent consideration that may be paid in 2024, the amount is based on predetermined formulas
which consider mainly the net revenue of Hubcount at the end of 2023.
20. Segment information
20.1. Statement of Profit or Loss by segment
Six months ended June 30, 2023
Three months ended June 30, 2023
Financial Services
Software
Non allocated
Financial Services
Software
Non allocated
Total revenue and income
4,887,149
741,088
38,202
2,551,223
382,870
20,690
Cost of services
(1,075,255 )
(328,973 )
(2,351 )
(519,983 )
(164,777 )
(543 )
Administrative expenses
(351,323 )
(162,979 )
(17,251 )
(180,393 )
(79,521 )
(9,187 )
Selling expenses
(639,103 )
(148,344 )
(14,372 )
(324,276 )
(79,392 )
(8,223 )
Financial expenses, net
(1,942,837 )
(25,252 )
(459 )
(1,047,819 )
(11,621 )
(223 )
Other income (expenses), net
(171,473 )
(13,629 )
41
(78,846 )
(2,618 )
479
Total adjusted expenses
(4,179,991 )
(679,177 )
(34,392 )
(2,151,317 )
(337,929 )
(17,697 )
Loss on investment in associates
(2,991 )
419
724
(1,718 )
526
367
Adjusted profit (loss) before income taxes
704,167
62,330
4,534
398,188
45,467
3,360
Income taxes and social contributions
(197,602 )
(14,871 )
34
(118,521 )
(6,494 )
(5 )
Adjusted net income (loss) for the period
506,565
47,459
4,568
279,667
38,973
3,355
Six months ended June 30, 2022
Three months ended June 30, 2022
Financial Services
Software
Non allocated
Financial Services
Software
Non allocated
Total revenue and income
3,653,880
677,349
43,174
1,932,621
350,732
20,790
Cost of services
(967,601 )
(327,028 )
(5,908 )
(468,645 )
(154,491 )
(3,033 )
Administrative expenses
(276,582 )
(149,444 )
(20,348 )
(145,452 )
(74,993 )
(11,165 )
Selling expenses
(590,288 )
(120,040 )
(9,336 )
(267,328 )
(63,480 )
(5,114 )
Financial expenses, net
(1,623,996 )
(23,120 )
(608 )
(930,965 )
(14,559 )
(98 )
Other income (expenses), net
(89,857 )
(4,756 )
(18,818 )
(66,887 )
(2,994 )
(17,766 )
Total adjusted expenses
(3,548,324 )
(624,388 )
(55,018 )
(1,879,277 )
(310,517 )
(37,176 )
Loss on investment in associates
—
(784 )
(1,217 )
—
(344 )
(980 )
Adjusted profit (loss) before income taxes
105,556
52,177
(13,061 )
53,344
39,871
(17,366 )
Income taxes and social contributions
(22,987 )
(23,195 )
(114 )
(7,024 )
(13,052 )
40
Adjusted net income (loss) for the period (a)
82,569
28,982
(13,175 )
46,320
26,819
(17,326 )
Additional information:
Share-based compensation, net of tax
29,702
55
78
20,590
53
69
Bond expenses
80,559
—
—
—
—
—
Prior criterias adjusted net income (loss) for the period (as reported in the period) (b)
192,830
29,037
(13,097 )
66,910
26,872
(17,257 )
(a) Including share-based compensation and bond expenses.
(b) Considers the methodology used for adjusted net income for each
reporting period, excluding bond expenses until March 31, 2022 and excluding share-based compensation expenses related to grants in connection
to one-time pre-IPO pool as well as non-recurring long term incentive plans until December 31, 2022.
20.2. Reconciliation of segment adjusted net income (loss) for the period with net income (loss) in the consolidated
financial statements
Six months ended
Three months ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
Adjusted net income – Financial Services
506,565
82,569
279,667
46,320
Adjusted net income – Software
47,459
28,982
38,973
26,819
Adjusted net income (loss) – Non allocated
4,568
(13,175 )
3,355
(17,326 )
Adjusted net income
558,592
98,376
321,995
55,813
Adjustments from adjusted net income to consolidated net income (loss)
Mark-to-market from the investment in Banco Inter
30,574
(850,079 )
—
(527,083 )
Amortization of fair value adjustment (a)
(69,393 )
(71,443 )
(35,720 )
(46,535 )
Other income (b)
(3,126 )
3,602
10,978
14,368
Tax effect on adjustments
16,254
17,246
9,958
14,177
Consolidated net income (loss)
532,901
(802,298 )
307,211
(489,260 )
(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) Consists of the fair value adjustment related to associates call option, M&A and, earn-out interests
related to acquisitions, loss of control of subsidiaries and reversal of litigation of Linx. As mentioned above, Bond issuance expenses
was part of the criteria from adjusted net income we used up to 31, 2022, The effect in Adjusted net income of no longer excluding Bond
issuance expenses from January 1, 2022 to June 30, 2023 amounts to R$ 80,559.
21. Subsequent events
21.1 Agilize acquisition