Core Insights - StoneCo's stock rose 14.2% this week due to better-than-expected quarterly results [1] - The company reported fourth-quarter sales of 3.61 billion Brazilian real (approximately $636 million), surpassing analyst expectations [2] - Non-GAAP earnings per share were $0.40, exceeding the average analyst target by $0.06 [2] Financial Performance - Revenue increased approximately 11% year-over-year in Q4, while adjusted earnings per share rose about 47% [3] - Total payment volumes for small and medium-sized business customers grew by 22% compared to the prior year [3] - The company is rapidly scaling its credit business, contributing to sales growth [3] Market Outlook - Despite the recent stock rally, StoneCo's stock is down roughly 34% over the past year due to macroeconomic pressures in Brazil [4] - Inflation in Brazil is beginning to cool, which may lead to improved business results and stock performance for StoneCo [5] - The stock is currently trading at approximately 8 times this year's expected earnings, indicating it may be undervalued [5]

Group 1 - The article recommends buying StoneCo (NASDAQ: STNE) shares following the release of its Q4 results, indicating a positive outlook for the company [1] - The recommendation is a continuation of previous coverage published on June 17, 2024, suggesting ongoing confidence in the company's performance [1] - The company has demonstrated consistent revenue growth over the past quarters, reinforcing its investment potential [1]

Financial Data and Key Metrics Changes - In 2024, adjusted net income reached BRL2.2 billion, exceeding guidance of BRL1.9 billion, despite macroeconomic headwinds and over BRL100 million in negative impacts from accounting changes [15][18] - Adjusted net margin was 18.4% in Q4 2024, up 1 percentage point year-over-year [18] - Total revenues for Q4 2024 increased by 11% year-over-year, driven by active client base growth and higher monetization [19] Business Line Data and Key Metrics Changes - MSMB card TPV reached BRL403 billion in 2024, a 15% year-over-year growth, while total MSMB TPV reached BRL454 billion, a 22% increase [10] - The MSMB take rate was 2.55% in 2024, exceeding guidance of 2.49% [13] - The credit portfolio grew to BRL1.2 billion, significantly above the BRL800 million target, with non-performing loans over 90 days at a controlled 3.61% [13][34] Market Data and Key Metrics Changes - Retail deposits closed 2024 at BRL8.7 billion, surpassing guidance of BRL7 billion, reflecting strong performance in bundled payments and banking offerings [11] - The banking active client base increased by 46% year-over-year to 3.1 million clients [28] Company Strategy and Development Direction - The company aims to establish Stone accounts as the primary financial hub for clients, focusing on enhancing the value proposition with a comprehensive product ecosystem [11][12] - The strategy includes a shift towards using deposits to fund operations, which is expected to reduce funding costs and improve capital structure [30][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continuing to outpace market growth and expanding share in the MSMB payments market [10] - The company remains focused on delivering sustainable long-term value creation despite potential macroeconomic challenges [65] Other Important Information - The company introduced gross profit as a key performance measure, which reached BRL1.7 billion in Q4 2024, growing 13% year-over-year [21] - A goodwill impairment charge of BRL3.6 billion was recognized for the software cash-generating units, which is a non-cash accounting adjustment [42] Q&A Session Summary Question: Performance of banking solutions and room for improvement - Management highlighted that deposit growth is outpacing TPV due to successful bundling of payments and banking solutions, with ongoing development of new products [68][70] Question: View on dividends given excess capital - Management indicated that while they have returned over BRL2 billion in share buybacks, they are not committing to specific targets for capital allocation at this time [76][78] Question: Details on price increases and guidance on EPS - Management confirmed that a substantial repricing initiative was executed at the beginning of Q1 2025, with adjustments based on yield curve projections [89][92] - The decision to guide basic EPS instead of diluted EPS was made to avoid volatility and complexity in calculations [94][96] Question: Potential sale of the Software business - Management stated that no offers met their intrinsic value for the software assets, and they will focus on maximizing value through cross-selling financial services [112][114]

Earnings Presentation Risks that contribute to the uncertain nature of the forward-looking statements include, among others, risks associated with the Company's ability to anticipate market needs and develop and deliver new and enhanced products and services functionalities to address the rapidly evolving market for payments and point-of-sale, financial technology, and marketing services; the Company's ability to differentiate itself from its competition by delivering a superior customer experience and thro ...

Core Insights - StoneCo Ltd. reported quarterly earnings of $0.39 per share, exceeding the Zacks Consensus Estimate of $0.32 per share, and showing an increase from $0.36 per share a year ago, resulting in an earnings surprise of 21.88% [1] - The company generated revenues of $617.63 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 6.24%, although this represents a decline from year-ago revenues of $655.87 million [2] - StoneCo shares have increased approximately 27.9% since the beginning of the year, contrasting with a decline of -3.5% in the S&P 500 [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.26 on revenues of $572.46 million, and for the current fiscal year, it is $1.15 on revenues of $2.48 billion [7] - The estimate revisions trend for StoneCo is mixed, leading to a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Internet - Software industry, to which StoneCo belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]

Financial Performance - Total revenue and income for 2024 reached R$ 13,257,454 thousand, an increase from R$ 12,055,003 thousand in 2023, representing a growth of approximately 10%[17] - The company reported a net loss of R$ 1,507,050 thousand for 2024, compared to a net income of R$ 1,600,420 thousand in 2023, indicating a significant decline in profitability[17] - Goodwill impairment loss related to the Software cash generating unit amounted to R$ 3,558,049 thousand, impacting overall financial performance[17] - Other comprehensive income for the year, net of tax, was BRL 32,795 thousand in 2024, down from BRL 111,427 thousand in 2023[20] - Total comprehensive income (loss) for the year, net of tax, was BRL (1,474,255) thousand in 2024, compared to BRL 1,711,847 thousand in 2023[20] - The company experienced a loss of BRL 1,481,821 thousand attributable to controlling shareholders in 2024, compared to a gain of BRL 1,704,317 thousand in 2023[20] Assets and Liabilities - Total assets grew to R$ 54,813,463 thousand in 2024, up from R$ 48,693,561 thousand in 2023, indicating a robust asset base[14] - The company’s total liabilities increased to R$ 42,986,181 thousand in 2024 from R$ 34,017,601 thousand in 2023, reflecting higher financial obligations[14] - The company's equity attributable to controlling shareholders decreased to R$ 11,775,984 thousand in 2024 from R$ 14,622,264 thousand in 2023, showing a decline in shareholder value[15] Cash Flow and Liquidity - Cash and cash equivalents increased to R$ 5,227,654 thousand in 2024 from R$ 2,176,416 thousand in 2023, reflecting improved liquidity[14] - Net cash provided by operating activities was negative at 3,621,382 thousand Brazilian Reais in 2024, a decline from 1,647,708 thousand in 2023[27] - The total cash and cash equivalents at the end of 2024 were 5,227,654 thousand Brazilian Reais, up from 2,176,416 thousand in 2023, indicating a change of 3,051,238 thousand[27] Financial Operations - Financial income for 2024 was R$ 7,676,204 thousand, an increase from R$ 6,229,303 thousand in 2023, highlighting growth in financial operations[17] - Retail deposits rose to R$ 8,704,809 thousand in 2024, compared to R$ 6,119,455 thousand in 2023, indicating increased customer trust and deposits[14] - The average annual growth rate used in the impairment test was sensitive, affecting the valuation of the Software cash generating unit[10] Investments and Subsidiaries - The Group incorporated several new companies in 2024, including Stone SCFI, Sponte Educação, Linx Auto, and Linx Impulse, all of which are wholly owned[103] - The Group's equity interest in Agilize decreased from 33.33% to 28.70% following a corporate reorganization in November 2024[104] - The Group holds a 50% equity interest in Questor, which acquired a 75.60% equity interest in Hubcount[95] Financial Instruments and Risk Management - Derivative financial instruments are used by the Group as part of its risk management strategy to hedge against fluctuations in exchange rates and interest rates[149] - The Group applies cash flow hedge accounting to protect against future cash flow fluctuations, with gains or losses recognized in equity and profit or loss as appropriate[155] - Financial instruments are measured at fair value at each reporting date, categorized within a fair value hierarchy based on the inputs used for measurement[146] Credit and Allowances - The allowance for expected credit losses for accounts receivable from card issuers was R$ 60,888 in 2024, compared to R$ 55,619 in 2023, reflecting an increase of approximately 9.1%[176] - The net credit portfolio after allowance for expected credit losses reached R$ 1,063,119 in 2024, a substantial rise from R$ 250,747 in 2023, marking an increase of around 323.5%[179] - The Group calculates expected credit losses (ECL) for its loans based on statistical models considering internal and external historical data, with a three-stage approach for credit risk assessment[161] Funding and Debt - The company raised 6,585,937 thousand Brazilian Reais from institutional deposits and marketable debt securities in 2024, a substantial increase from 1,608,162 thousand in 2023[27] - The total debentures, financial bills, and commercial papers increased to R$ 4,079,266,000 in 2024 from R$ 1,116,252,000 in 2023, showing a growth of approximately 267%[188] - The company issued bonds in 2021, raising USD 500 million in seven-year notes with a final yield of 3.95%, and repurchased approximately 60% of the outstanding bonds during 2024[194] Regulatory and Compliance - The Group's consolidated financial statements are prepared in accordance with IFRS Accounting Standards, ensuring compliance with international financial reporting standards[38] - The Group is subject to a corporate tax surcharge (Additional CSLL) starting January 1, 2025, affecting multinational companies with annual revenue exceeding €750 million, with a minimum effective tax rate of 15% on adjusted income[77] - The Group has adopted IAS 29 for its Argentine subsidiary Napse S.R.L. due to the hyperinflationary economy, impacting the financial reporting of non-monetary assets and liabilities[58]

StoneCo (STNE) Q4 2024 Earnings Call March 18, 2025 05:00 PM ET Company Participants Pedro Zinner - Chief Executive OfficerLia Machado de Matos - Strategy & Marketing OfficerMateus Scherer Schwening - CFO & IROMario Pierry - Managing DirectorTito Labarta - Vice PresidentYuri Fernandes - Executive Director Conference Call Participants Eduardo Rosman - AnalystDaniel Vaz - Lead Analyst - Equity ResearchRenato Meloni - Senior AnalystJames Friedman - Financial Analyst Operator Good evening, everyone. Thank you f ...

Core Insights - StoneCo Ltd. reported its financial results for the fourth quarter and fiscal year ended December 31, 2024, highlighting its performance in the financial technology sector [1]. Financial Results - The company will discuss its 4Q24 and Fiscal Year financial results during a teleconference on March 18, 2025, at 5:00 PM ET [2]. - The teleconference can be accessed via Zoom and will also be available for replay on the company's investor relations website [3]. Company Overview - Stone Co. is recognized as a leading provider of financial technology and software solutions, enabling merchants to conduct commerce seamlessly across various channels and supporting their business growth [4].

Core Insights - The bullish investment thesis on Brazilian fintech StoneCo (STNE) is primarily based on its role as the main financial ecosystem for small and medium-sized enterprises in Brazil [1] Company Overview - StoneCo is positioned as a leading fintech company in Brazil, focusing on providing financial services to small and medium-sized businesses [1] Analyst Background - The analysis is conducted by a researcher and operations manager at DM Martins Research, with previous contributions to platforms like TheStreet, TipRanks, and GuruFocus, emphasizing a focus on foreign equities and emerging markets [1]

Core Insights - The article highlights the investment strategies and achievements of Paul Franke, a seasoned investor with 38 years of trading experience, emphasizing his contrarian stock selection style and algorithmic analysis for identifying investment opportunities [1]. Group 1: Investment Strategies - Paul Franke developed a system called "Victory Formation," which focuses on supply/demand imbalances indicated by specific stock price and volume movements [1]. - The "Bottom Fishing Club" articles target deep-value stocks or those showing significant positive technical momentum reversals [1]. - The "Volume Breakout Report" articles analyze positive trend changes supported by strong price and volume trading actions [1]. Group 2: Performance and Recognition - Franke was consistently ranked among the top investment advisors nationally during the 1990s and achieved the 1 position in the Motley Fool® CAPS stock picking contest in 2008 and 2009, out of over 60,000 portfolios [1]. - As of September 2024, he is ranked in the Top 3% of bloggers by TipRanks® for 12-month stock picking performance over the last decade [1]. Group 3: Risk Management - Franke advises investors to implement stop-loss levels of 10% or 20% on individual stock choices and to maintain a diversified portfolio of at least 50 well-positioned stocks to enhance regular stock market outperformance [1].