StoneCo Ltd. (Nasdaq: STNE, B3: STOC31) (“Stone” or the “Company”)
today reports its financial results for its first quarter ended
March 31, 2023.
Operating and Financial Highlights for 1Q23
Note about our non-IFRS Adjusted P&L
metrics: as anticipated in our 4Q22 Earnings announcement,
from 1Q23 onwards we will no longer adjust the expenses related to
share-based compensation, which may affect the comparability of our
current Adjusted results to our Adjusted numbers prior to 1Q23. To
allow for better understanding of our business performance trends,
the tables in this Earnings Release will make reference to our
Adjusted P&L metrics including share-based compensation
expenses (i.e. not adjusting those expenses out), both in 1Q23 and
in prior periods for comparability purposes.
MAIN CONSOLIDATED FINANCIAL METRICS
Table 1: Main Consolidated Financial
Metrics
Main Consolidated Financial Metrics (R$mn) |
1Q23 |
4Q22 |
1Q22 |
Δ y/y % |
Δ q/q % |
Total Revenue and Income |
2,711.7 |
2,706.1 |
2,070.3 |
31.0% |
0.2% |
Adjusted EBITDA |
1,251.4 |
1,231.1 |
803.6 |
55.7% |
1.7% |
Adjusted EBT |
324.0 |
275.6 |
68.8 |
370.8% |
17.6% |
Adjusted Net Income |
236.6 |
203.8 |
42.6 |
455.9% |
16.1% |
Adjusted Net Cash |
3,988.8 |
3,489.6 |
2,537.8 |
57.2% |
14.3% |
|
|
|
|
|
|
- Total
Revenue and Income reached R$2,711.7 million in the
quarter. This represents an increase of 31.0% from
R$2,070.3 million in the prior-year period. The increase in
revenues was mainly a result of (i) 35.7% growth in our financial
services platform revenues, that reached R$2,335.9 million and (ii)
9.7% growth in our software platform revenues, that reached R$358.2
million. Non-Allocated represented the remaining R$17.5 million in
revenue. Financial services revenue growth was mostly a result of
our performance in the MSMB segment, with above-guidance TPV and
higher take rates on a year over year basis. Our year over year
software revenue growth was mainly driven by our software Core POS
and ERP business performance.
- Adjusted
EBITDA up 55.7% year over year. Adjusted EBITDA in 1Q23
was R$1,251.4 million, up from R$803.6 million in 1Q22 and 1.7%
higher quarter over quarter, despite seasonality. Adjusted EBITDA
Margin was 0.7 percentage point higher sequentially to 46.1% mainly
due to efficiency gains in administrative expenses and lower
selling expenses, supported by higher sequential revenue despite a
weaker seasonality in the first quarter of the year.
- Adjusted
EBT was R$324.0 million, with adjusted EBT margin
increasing 1.8 percentage points sequentially and reaching 11.9% in
1Q23. This sequential improvement was mostly related to efficiency
gains in administrative expenses, lower selling expenses and lower
other operating expenses on a quarter over quarter basis, supported
by higher sequential revenue despite a weaker seasonality in the
first quarter of the year.
- Adjusted
Net Income in 1Q23 was R$236.6 million
with adjusted net margin of 8.7% compared with R$203.8 million and
a margin of 7.5% in 4Q22. The margin improvement is a result of the
same factors explained above for Adjusted EBT margin, partially
offset by a higher effective tax rate.
- Adjusted
Net Cash was R$3,988.8 million in 1Q23, an increase of
R$499.2 million in the quarter. This increase is mostly explained
by: (i) cash net income of R$532.7 million, which is our net income
plus non-cash income and expenses as reported in our statement of
cash flows; (ii) proceeds of R$218.1 million from the sale of our
remaining stake in Banco Inter; (iii) R$91.8 million from the
non-cash effect from present value adjustment to accounts
receivable from card issuers, which flows through Other
Comprehensive Income; (iv) R$23.4 million from recoverable taxes
and taxes payable and (v) R$26.8 million from prepaid expenses.
These factors were partially offset by R$416.4 million of capex.
Other effects contributed positively with R$22.7 million.
SEGMENT REPORTING
Below, we provide our main financial metrics
broken down into our two reportable segments and non-allocated
activities.
Table 2: Financial metrics by
segment
Segment Reporting (R$mn Adjusted) |
1Q23 |
% Rev1 |
4Q22 |
% Rev1 |
1Q22 |
% Rev1 |
Δ y/y % |
Δ q/q % |
Total Revenue and Income |
2,711.7 |
100.0% |
2,706.1 |
100.0% |
2,070.3 |
100.0% |
31.0% |
0.2% |
Financial Services |
2,335.9 |
100.0% |
2,308.2 |
100.0% |
1,721.3 |
100.0% |
35.7% |
1.2% |
Software |
358.2 |
100.0% |
376.3 |
100.0% |
326.6 |
100.0% |
9.7% |
(4.8%) |
Non-Allocated |
17.5 |
100.0% |
21.6 |
100.0% |
22.4 |
100.0% |
(21.8%) |
(18.8%) |
Adjusted EBITDA |
1,251.4 |
46.1% |
1,231.1 |
45.5% |
803.6 |
38.8% |
55.7% |
1.7% |
Financial Services |
1,209.0 |
51.8% |
1,172.4 |
50.8% |
758.1 |
44.0% |
59.5% |
3.1% |
Software |
39.9 |
11.1% |
59.6 |
15.8% |
40.3 |
12.3% |
(0.9%) |
(33.1%) |
Non-Allocated |
2.5 |
14.2% |
(0.9) |
(4.4%) |
5.2 |
23.3% |
(52.2%) |
n.m |
Adjusted EBT |
324.0 |
11.9% |
275.6 |
10.2% |
68.8 |
3.3% |
370.8% |
17.6% |
Financial Services |
306.0 |
13.1% |
246.1 |
10.7% |
52.2 |
3.0% |
486.0% |
24.4% |
Software |
16.9 |
4.7% |
30.5 |
8.1% |
12.3 |
3.8% |
37.0% |
(44.7%) |
Non-Allocated |
1.2 |
6.7% |
(1.0) |
(4.6%) |
4.3 |
19.2% |
(72.7%) |
n.m |
|
|
|
|
|
|
|
|
|
FINANCIAL SERVICES SEGMENT PERFORMANCE
HIGHLIGHTS
Table 3: Financial Services Main Operating and Financial
Metrics
Main Financial Services Metrics |
1Q23 |
4Q22 |
1Q22 |
Δ y/y % |
Δ q/q % |
Financial Metrics (R$mn) |
|
|
|
|
|
Total Revenue and Income |
2,335.9 |
2,308.2 |
1,721.3 |
35.7% |
1.2% |
Adjusted EBITDA |
1,209.0 |
1,172.4 |
758.1 |
59.5% |
3.1% |
Adjusted EBT |
306.0 |
246.1 |
52.2 |
486.0% |
24.4% |
Adjusted EBT margin (%) |
13.1% |
10.7% |
3.0% |
10.1 p.p. |
2.4 p.p. |
|
|
|
|
|
|
TPV (R$bn) |
93.5 |
100.1 |
83.2 |
12.5% |
(6.6%) |
MSMB |
78.9 |
81.9 |
63.4 |
24.5% |
(3.7%) |
Key Accounts |
14.6 |
18.2 |
19.8 |
(26.2%) |
(19.8%) |
|
|
|
|
|
|
Monthly Average TPV MSMB ('000) |
9.5 |
10.9 |
11.8 |
(19.8%) |
(12.8%) |
|
|
|
|
|
|
Active Payments Client Base
('000)2 |
2,818.1 |
2,584.0 |
1,926.2 |
46.3% |
9.1% |
MSMB2 |
2,758.1 |
2,526.2 |
1,870.9 |
47.4% |
9.2% |
Key Accounts |
67.6 |
65.0 |
60.2 |
12.2% |
4.0% |
|
|
|
|
|
|
Net Adds ('000)2 |
234.0 |
211.9 |
160.1 |
46.2% |
10.4% |
MSMB2 |
231.9 |
211.8 |
167.5 |
38.5% |
9.5% |
Key Accounts |
2.6 |
0.6 |
(7.1) |
n.m |
314.8% |
|
|
|
|
|
|
Take Rate |
|
|
|
|
|
MSMB |
2.39% |
2.21% |
2.06% |
0.33 p.p. |
0.18 p.p. |
Key Accounts |
1.15% |
1.17% |
0.84% |
0.31 p.p. |
(0.02 p.p.) |
|
|
|
|
|
|
Banking |
|
|
|
|
|
MSMB Active Banking Client Base ('000) |
1,253.0 |
692.8 |
509.9 |
145.7% |
80.9% |
Client Deposits (R$mn) |
3,902.2 |
4,023.7 |
2,367.8 |
64.8% |
(3.0%) |
MSMB Client Deposits (R$mn) |
3,622.1 |
3,596.3 |
1,972.7 |
83.6% |
0.7% |
MSMB Banking ARPAC3 |
36.7 |
44.7 |
33.3 |
10.2% |
(17.9%) |
|
|
|
|
|
|
- Total Revenue and Income
for Financial Services segment reached
R$2,335.9 million in 1Q23, 35.7% higher year over year. This growth
was mostly a result of our performance in the MSMB segment, with
strong year over year TPV and client base growth, in addition to
higher take rates and revenue from banking solution and PIX.
- Adjusted EBT for Financial
Services segment rose 486.0% year over year and 24.4%
quarter over quarter in 1Q23 to R$306.0 million. Adjusted EBT
margin for the segment reached 13.1% in 1Q23, 2.4 percentage points
higher sequentially from 10.7% in 4Q22. This margin improvement is
mainly explained by efficiency gains in administrative expenses,
lower selling expenses and lower other operating expenses,
supported by higher sequential revenue despite a weaker seasonality
in the first quarter of the year.
- Consolidated TPV
grew 12.5% year over year to R$93.5 billion in 1Q23, mainly a
result of 24.5% growth in the MSMB segment and partially offset by
a decrease of 26.2% in the TPV of Key Accounts.
- Total Payments Active
Client base reached 2.8 million4 representing a total
quarterly net addition of 234,000 active clients.
a. MSMB – Balancing
Growth and Profitability
- MSMB
active payment clients reached
2,758,1005, with
client net addition of 231,900 in the quarter,
accelerating from 211,800 in the previous quarter. This
acceleration was a result of successful marketing campaigns, which
increased brand recognition for our products, as well as lower
churn both in Stone and Ton brands. In 1Q23, we continued to see
positive addition of clients in all MSMB client tiers.
- MSMB TPV
was R$78.9 billion, up 24.5% year over year, and above our
guidance of between R$77.0 and R$78.0 billion. This increase was
mainly a result of our MSMB active client base growth in the
period.
- Average
monthly TPV per client in MSMB decreased 19.8% year over
year and 12.8% quarter over quarter to R$9,500, mainly due to the
faster growth of our Ton product, which has lower average TPV
compared to Stone and Pagar.me SMB products. On a sequential basis,
the decrease is also explained by the weaker seasonality of TPV in
the first quarter compared to the fourth quarter.
- MSMB
Take Rate was 2.39% in 1Q23, up from 2.21% in 4Q22 on a comparable
basis, mainly explained by (i) higher monetization of
prepayment, (ii) contribution from our banking solution, (iii) the
seasonal effect from increase in credit over debit volumes compared
with the fourth quarter and (iv) stronger growth in micro and small
clients, which have higher take rates.
- Our
banking solutions6 continued to
evolve strongly in 1Q23:
- Our
banking client base increased sequentially to 1,253,000 in
1Q23, 80.9% higher quarter over quarter, compared with a
23.4% sequential increase in 4Q22. This acceleration in growth is
mainly a result of the increase in the number of Ton clients with
our full banking solution, following the launch of “Super Conta
Ton”. We also continued to activate banking accounts within our
Stone payments client base. Meanwhile, average revenue per active
client (ARPAC)7 has increased 10.2% year over year and decreased
17.9% quarter over quarter to reach R$36.7 per client per month. As
explained in our 3Q22 results, as we sell more banking into our Ton
client base, we expect to see significant increase in our number of
accounts and an increase in overall banking revenues, although the
average revenue per active client should decrease, as
micro-merchants have naturally smaller revenue contribution. This
quarter banking numbers reflect the impacts from this mix
effect.
- MSMB
Client Deposits were R$3.6 billion, 83.6% higher year over
year and 0.7% higher quarter over quarter. The quarter over quarter
increase is mainly explained by the increase in the number of Ton
clients with our full banking solution, which more than compensated
seasonal effects from lower TPV in first quarters compared with
fourth quarters.
- Update
on our Credit Business:
- In 2023 we have
started to test elements of our new credit product, such as system
automation, management of guarantees, decision models, credit
lifecycle monitoring and renegotiation process.
- As of April 30,
2023, we had disbursed R$6.0 million of the new credit product to a
very small number of clients. Some of the updates we have in this
initial stage are the following: (i) as of now the performance of
early vintages are in line with our credit underwriting standards;
(ii) formalization of personal guarantee and the lien on
receivables has been executed as expected (iii) all the information
dashboards to manage the credit portfolio are in place and (iv) key
managerial positions for the credit team have been fulfilled.
- We will continue
to grow our portfolio with discipline and as long as we are
comfortable with market conditions and have all the remaining
features of our product 100% tested. We are in line with our plans
to do so.
b. Key
Accounts
- Key
Accounts TPV of R$14.6 billion. Total Key Accounts TPV was
R$14.6 billion, 26.2% lower year over year and 19.8% lower quarter
over quarter. This expected reduction resulted from the continued
deprioritization of sub-acquirer volumes and a weaker seasonality
in 1Q23 when compared with 4Q22.
- Key
Accounts Take Rate of 1.15%. Key Accounts take rate was
1.15% in 1Q23, 31 basis points higher than in 1Q22, mainly due to
deprioritization of sub-acquirers, which usually have lower take
rates. Compared with 4Q22, take rate was down 2 basis points,
mainly a result of lower prepayment penetration, which more than
compensated a positive client mix effect.
SOFTWARE PERFORMANCE
HIGHLIGHTS
Table 4: Software Main Operating and Financial
Metrics
Main Software Metrics (R$mn) |
1Q23 |
4Q22 |
1Q22 |
Δ y/y % |
Δ q/q % |
Financial Metrics |
|
|
|
|
|
Total Revenue and Income |
358.2 |
376.3 |
326.6 |
9.7% |
(4.8%) |
Adjusted EBITDA |
39.9 |
59.6 |
40.3 |
(0.9%) |
(33.1%) |
Adjusted EBITDA Margin |
11.1% |
15.8% |
12.3% |
(1.2 p.p.) |
(4.7 p.p.) |
Adjusted EBT |
16.9 |
30.5 |
12.3 |
37.0% |
(44.7%) |
|
|
|
|
|
|
- Total
Revenue and Income for Software grew 9.7% year over year
in 1Q23 to R$358.2 million. This growth is mainly a result of our
Core business performance, which was driven by both organic growth
from higher number of POS/ERP locations and as well as inorganic
expansion. The main reasons for the deceleration in revenue growth
in software compared with previous quarters were: (i) a decrease in
transactional revenue related to business of Ads; (ii) weaker
performance of some enterprise retail accounts; and (iii) lower
inflation (e.g. average IGPM of 1.9% in 1Q23, compared with 6.0% in
4Q22 and 15.9% in 1Q22), which affects annual price adjustments in
software.
- Adjusted
EBITDA for the Software division was
R$39.9 million in 1Q23, with a margin of 11.1%, compared with
R$40.3 million and a margin of 12.3% in 1Q22. Compared with 4Q22,
Adjusted EBITDA Margin for Software was 4.7 percentage points
lower, mainly explained by lower revenue quarter over quarter and
higher selling expenses, as we invested in the sales team. The
lower revenue quarter over quarter is a result of the combination
of (i) a decrease in transactional revenue related to digital
business of Ads; and (ii) weaker performance of some enterprise
retail accounts.
- Adjusted
EBT for Software was R$16.9 million in 1Q23, up 37.0%
compared with 1Q22. Compared with 4Q22, Adjusted EBT decreased
44.7% from R$30.5 million to R$16.9 million in 1Q23, with Adjusted
EBT Margin decreasing from 8.1% to 4.7%. The reduction in Adjusted
EBT quarter over quarter is a result of the combination of lower
revenues as explained above for Adjusted EBITDA, combined with
flattish total costs and expenses.
- Our
Core8 Software business revenue
increased 12.1% year over year. This increase was mainly
driven by a higher number of locations, especially in smaller
clients, in addition to the consolidation of the results of
investments throughout the year.
- Our
Digital9 business revenue
decreased 8.7% year over year mainly due to lower
transactional revenues, principally in Ads and Impulse
businesses.
- Among
our software priorities for 2023 are:
- Strong focus on
cost discipline to increase operational leverage;
- Continue to
expand our presence by scaling our regional franchise and digital
channels, driving growth within medium and small client
segments;
- Continue to
build an end-to-end value proposition of software and integrated
financial services in select verticals and segments;
- Streamline
software assets to increase strategic focus;
- Expand our TAM
by entering in new retail verticals through M&A.
RECENT DEVELOPMENTS
Board changes and completion of CEO
transition
As announced in a press release, on April 6,
2023, Stone’s Board approved the appointment of Luiz André Barroso
as a Board Member. Mr. Barroso is a Google Fellow, having more than
30 years of experience working in the technology and innovation
segment. In addition, the Board has also approved the resignation
of Pedro Franceschi from our Board.
As a result of these changes, StoneCo Board of
Directors is now composed of eight Directors, six of whom are
independent:
- André Street – Chairman
- Conrado Engel* – Vice-Chairman
- Luciana Aguiar*
- Diego Fresco Gutierrez*
- Mauricio Luchetti*
- Patricia Verderesi*
- Thiago dos Santos Piau
- Luiz André Barroso*
* Independent Board Members
In addition to those changes, the Company
completed on March 31, 2023, the transition of leadership roles, by
which Pedro Zinner assumed the position of CEO of Stone.
OUTLOOK FOR 2Q23
The outlook below constitutes forward-looking
information within the meaning of applicable securities laws and is
based on a number of assumptions and subject to a number of risks.
Actual results could vary materially as a result of numerous
factors, including certain risk factors, many of which are beyond
StoneCo´s control. Please see “Forward-looking Statements” below.
In view of these factors, we expect the following:
- Total Revenue
and Income is expected to be above R$2,875 million in 2Q23, or a
year over year growth of above 24.8%.
- Adjusted EBT
(not adjusting for share-based compensation expenses) is expected
to be above R$375 million in 2Q23, compared with R$324.0 million in
1Q23.
- MSMB TPV is
expected to be between R$83 billion and R$84 billion in 2Q23 (up
18.8% to 20.2% year over year).
Income Statement
Table 5: Statement of Profit or Loss
(IFRS, as Reported)
Statement of Profit or Loss (R$mn) |
1Q23 |
% Rev. |
1Q22 |
% Rev. |
Δ % |
Net revenue from transaction activities and other services |
733.1 |
27.0% |
554.9 |
26.8% |
32.1% |
Net revenue from subscription services and equipment rental |
445.1 |
16.4% |
432.2 |
20.9% |
3.0% |
Financial income |
1,375.0 |
50.7% |
949.8 |
45.9% |
44.8% |
Other financial income |
158.4 |
5.8% |
133.4 |
6.4% |
18.7% |
Total revenue and income |
2,711.7 |
100.0% |
2,070.3 |
100.0% |
31.0% |
Cost of services |
(721.3) |
(26.6%) |
(674.4) |
(32.6%) |
7.0% |
Administrative expenses |
(298.0) |
(11.0%) |
(238.2) |
(11.5%) |
25.1% |
Selling expenses |
(389.9) |
(14.4%) |
(383.7) |
(18.5%) |
1.6% |
Financial expenses, net |
(923.6) |
(34.1%) |
(708.2) |
(34.2%) |
30.4% |
Mark-to-market on equity securities designated at FVPL |
30.6 |
1.1% |
(323.0) |
(15.6%) |
n.m |
Other income (expenses), net |
(101.5) |
(3.7%) |
(31.8) |
(1.5%) |
218.9% |
Loss on investment in associates |
(1.0) |
(0.0%) |
(0.7) |
(0.0%) |
51.0% |
Profit before income taxes |
306.8 |
11.3% |
(289.8) |
(14.0%) |
n.m |
Income tax and social contribution |
(81.1) |
(3.0%) |
(23.2) |
(1.1%) |
249.8% |
Net income for the period |
225.7 |
8.3% |
(313.0) |
(15.1%) |
n.m |
|
|
|
|
|
|
Table 6: Statement of Profit or Loss
(Adjusted10) Following
the partial sale of our stake in Banco Inter, from 2Q22 onwards we
no longer adjust the financial expenses related to our bond in our
adjusted numbers. In addition, from 1Q23 onwards, we also stopped
adjusting share-based compensation expenses in our adjusted
results. Those changes may affect the comparability of our adjusted
results between different quarters. For that reason, we have
included below our historical numbers on a comparable basis, not
adjusting for both the bond and share-based compensation expenses,
according to our current adjustment criteria.
Adjusted Statement of Profit or Loss (R$mn) |
1Q23 |
% Rev. |
1Q22 |
% Rev. |
Δ % |
Net revenue from transaction activities and other services |
733.1 |
27.0% |
554.9 |
26.8% |
32.1% |
Net revenue from subscription services and equipment rental |
445.1 |
16.4% |
432.2 |
20.9% |
3.0% |
Financial income |
1,375.0 |
50.7% |
949.8 |
45.9% |
44.8% |
Other financial income |
158.4 |
5.8% |
133.4 |
6.4% |
18.7% |
Total revenue and income |
2,711.7 |
100.0% |
2,070.3 |
100.0% |
31.0% |
Cost of services |
(721.3) |
(26.6%) |
(674.4) |
(32.6%) |
7.0% |
Administrative expenses |
(262.5) |
(9.7%) |
(214.8) |
(10.4%) |
22.2% |
Selling expenses |
(389.9) |
(14.4%) |
(383.7) |
(18.5%) |
1.6% |
Financial expenses, net |
(908.9) |
(33.5%) |
(702.1) |
(33.9%) |
29.5% |
Other income (expenses), net |
(104.1) |
(3.8%) |
(25.8) |
(1.2%) |
303.7% |
Loss on investment in associates |
(1.0) |
(0.0%) |
(0.7) |
(0.0%) |
51.1% |
Adj. Profit before income taxes |
324.0 |
11.9% |
68.8 |
3.3% |
370.8% |
Income tax and social contribution |
(87.4) |
(3.2%) |
(26.3) |
(1.3%) |
232.9% |
Adjusted Net Income |
236.6 |
8.7% |
42.6 |
2.1% |
455.9% |
|
|
|
|
|
|
Total Revenue and Income
Total Revenue and Income in 1Q23 was R$2,711.7
million, an increase of 31.0% year over year from R$2,070.3
million.
Total Revenue and Income is composed of (i)
R$2,335.9 million from our Financial Services segment, (ii) R$358.2
million from our Software segment and (iii) R$17.5 million
non-allocated.
Financial Services segment revenue grew 35.7%
year over year. This revenue growth is mainly a result of our
performance in MSMB, with above-guidance year over year TPV growth,
strong client base evolution with net adds acceleration and a
higher take rate of 2.39% in 1Q23 compared with 2.06% in 1Q22. The
higher take rate year over year is a result of (i) adjustments in
our commercial policy on a year over year basis; (ii) stronger
growth in our Ton brand, and (iii) additional contribution from our
banking solution.
Software revenue growth was 9.7% year over year,
explained by our Core business performance, which grew 12.1% over
the same period. The growth in our Core software business was
driven by both (i) organic growth from a higher number of POS/ERP
locations, especially in smaller clients, as well as (ii) inorganic
growth.
Net Revenue from Transaction Activities
and Other Services
Net Revenue from Transaction Activities and
Other Services was R$733.1 million in 1Q23, an increase of 32.1%
compared with 1Q22. This increase was mostly due to (i) 12.5% year
over year consolidated TPV growth; (ii) higher net MDRs as a result
of our commercial policy adjustment efforts; (iii) higher revenue
from membership fees and (iv) revenue streams from other solutions
including PIX. Membership fee contributed R$82.0 million to our
transaction activities and other services revenue in the quarter,
compared with R$49.0 million in 1Q22. Revenues from TAG, our
registry business, contributed R$27.2 million to our transaction
activities and other services revenue in the quarter, compared with
R$26.5 million in 1Q22.
Net Revenue from Subscription Services
and Equipment Rental
Net Revenue from Subscription Services and
Equipment Rental was R$445.1 million in 1Q23, 3.0% higher than 1Q22
primarily due to a higher software revenue.
Financial Income
Financial Income in 1Q23 was R$1,375.0 million,
an increase of 44.8% year over year, mostly due to (i) higher
prices due to continued adjustments in our commercial policy amid
changes in CDI; (ii) higher prepaid volumes and (iii) floating
revenue from our banking solution.
Other Financial Income
Other Financial Income was R$158.4 million in
1Q23 compared with R$133.4 million in 1Q22 mainly due to higher
yield on cash & equivalents which was a result of the higher
base rate in Brazil year over year, and partially compensated by a
lower average cash balance in the period. On a quarter over quarter
basis, Other Financial Income increased 19.9% explained by a higher
average cash balance.
Costs and Expenses
Cost of Services
Cost of Services were R$721.3 million in 1Q23,
7.0% higher year over year. This increase was mainly due to (i)
higher investments in technology and logistics and (ii) higher
D&A costs, as we continue to expand our client base. These
effects were partially offset by lower expenses with datacenter and
cloud and a decrease in operating losses related to fraud in our
banking operation. As a percentage of revenues, Cost of Services
reduced from 32.6% in 1Q22 to 26.6% in 1Q23.
Compared with 4Q22, Cost of Services increased
3.3%, mainly as a result of higher investments in technology. As a
percentage of revenues, Cost of Services increased sequentially
from 25.8% to 26.6%, mainly due to the same factors just
mentioned.
Administrative Expenses
Administrative Expenses were R$298.0 million,
25.1% higher year over year. This increase was mainly explained by
(i) higher personnel expenses, (ii) higher expenses with
third-party services, and (iii) higher amortization of fair value
related to acquisitions. As a percentage of Total Revenue and
Income, Administrative Expenses decreased from 11.5% in 1Q22 to
11.0% in 1Q23, as a result of efficiency gains in our
administrative functions.
Administrative Expenses in 1Q23 were 8.9% lower
than in 4Q22, mainly explained by lower expenses in our Financial
Services segment, mostly related to third-party advisory and more
normalized levels of personnel expenses that were seasonally higher
in the fourth quarter. This seasonality in personnel expenses
relates mostly to courses and training of our team, annual
leadership event and Holiday Seasons benefits to employees.
Administrative expenses for our Software segment were relatively
flat on a quarter over quarter basis. As a percentage of revenues,
Administrative Expenses decreased from 12.1% in 4Q22 to 11.0% in
1Q23, as a result of the combination of the factors mentioned
above.
Administrative Expenses in 1Q23 include -R$35.6 million that are
adjusted in our Adjusted Income Statement, related to amortization
of fair value adjustments on acquisitions, mostly related to the
Linx and other software companies’ acquisitions (see table 13 in
Appendix for the Adjustments by P&L line). Adjusting for those
effects, Administrative Expenses were R$214.8 million in 1Q22,
R$296.5 million in 4Q22 and R$262.5 million in 1Q23. As a
percentage of Total Revenue and Income, Administrative Expenses
were 10.4% in 1Q22, 11.0% in 4Q22 and 9.7% in 1Q23. Both on a year
over year basis and on a quarter over quarter basis, the decrease
in Administrative Expenses as a percentage of revenues is a result
of efficiency gains in our administrative functions. |
Selling Expenses
Selling Expenses were R$389.9 million in the
quarter, up 1.6% year over year, with higher expenses with sales
commissions being compensated by lower marketing expenses in the
period. As a result, Selling Expenses as a percentage of revenues
decreased from 18.5% in 1Q22 to 14.4% in 1Q23.
Compared with 4Q22, Selling Expenses decreased
4.0%, mostly due to lower personnel expenses as a result of higher
provisions for variable compensation in 4Q22, which were partially
compensated by higher marketing expenses and sales commissions. As
a percentage of revenues, Selling Expenses decreased sequentially
from 15.0% in 4Q22 to 14.4% in 1Q23.
Financial Expenses, Net
Financial Expenses, Net were R$923.6 million,
30.4% higher compared with 1Q22. This variation is mainly because
of increased cost of funds, mainly due to (i) the higher prepaid
volumes and (ii) higher interest rate in the country over the
period, which increased from an average of 10.28% in 1Q22 to 13.65%
in 1Q23.
Compared with the previous quarter, Financial
Expenses, net were 1.3% higher, mainly explained by our decision to
conservatively hold a higher average cash position through most of
the quarter given market dynamics.
Financial Expenses include -R$14.8 million that are adjusted in our
Adjusted Income Statement related to effects from (i) earn out
interests on business combinations and (ii) financial expenses from
fair value adjustments on acquisitions (see table 13 in Appendix
for the Adjustments by P&L line). Until 1Q22, we used to also
adjust our bond expenses in our adjusted figures, which we stopped
doing from 2Q22 onwards. For comparability purposes, based on
adjustments criteria adopted from 2Q22 onwards, in which we do not
adjust our results for bond expenses, and adjusting for the factors
above, Financial Expenses, net were R$702.1 million in 1Q22,
R$903.4 million in 4Q22 and R$908.9 million in 1Q23 or 33.9%, 33.4%
and 33.5% as a percentage of Total Revenue and Income,
respectively. Such year over year and quarter over quarter
variations are explained by the same reasons mentioned above for
the accounting numbers. |
Mark-to-market on equity securities
designated at FVPL
In 1Q23, we recognized R$30.6 million in
mark-to-market gains in our investment in Banco Inter. As disclosed
on February 1, 2023, in 1Q23, we have sold 100% of our remaining
Stake in Banco Inter.
Mark-to-market on equity securities designated at FVPL is fully
adjusted in our Adjusted Income Statement (see table 13 in Appendix
for the Adjustments by P&L line). |
Other Income (Expenses),
Net
Other Expenses, Net were R$101.5 million in
1Q23, R$69.7 million higher year over year, mainly due to (i)
higher share-based compensation expenses and (ii) lower sale of
POS.
Compared with 4Q22, Other Expenses, net were
R$7.5 million lower, mostly explained by (i) impairment of
proprietary operational software and write-off of some non-core
assets in 4Q22, which did not repeat this quarter, (ii) lower
expenses with call option in acquirees and (iii) lower civil and
labor contingencies. These effects were partially offset by an
earnout reversion in 4Q22, which did not repeat this quarter.
Other Expenses, net include R$2.6 million that are adjusted in our
Adjusted Income Statement, including call options related to
acquisitions, earn-out interests and reversal of litigation of Linx
(see table 13 in Appendix for the Adjustments by P&L line).
Until 4Q22, we used to also adjust our numbers for share-based
compensation expenses related to the one-time IPO grant and
non-recurring long term incentive plans, which we stopped doing
from 1Q23 onwards. For comparability purposes, based on adjustments
criteria adopted from 1Q23 onwards, in which we do not adjust our
results for share-based compensation expenses, and adjusting for
the factors above, Other Expenses, net, were R$25.8 million in
1Q22, R$126.1 million in 4Q22 and R$104.1 million in 1Q23 or 1.2%,
4.7% and 3.8% as a percentage of Total Revenue and Income,
respectively. The year over year increase is mainly explained by
the same factor mentioned above for the accounting variation. On a
quarter over quarter basis, the increase is mainly due to item (i)
from the accounting explanation above. |
Income Tax and Social
Contribution
During 1Q23, the Company recognized income tax
and social contribution expenses of R$81.1 million over a profit
before income taxes of R$306.8 million, implying an effective tax
rate of 26.4%. The difference to the statutory rate is mainly
explained by gains from entities not subject to the payment of
income taxes.
The Income Tax and Social Contribution in our Adjusted Income
Statement includes an additional R$6.3 million relating to taxes
from the adjusted items (see table 13 in Appendix for the
Adjustments by P&L line). Adjusting for those effects our
Income Tax and Social Contribution was R$87.4 million with an
effective tax rate in 1Q23 of 27.0%, lower than the statutory rate
mostly as a result of gains from entities not subject to the
payment of income taxes. |
EBITDA
Adjusted EBITDA was R$1,251.4 million in the
quarter, compared with R$803.6 million in 1Q22. This higher figure
is mainly explained by higher Total Revenue and Income due to the
growth of our operations and adjustments in our commercial policy
throughout 2022. Adjusted EBITDA Margin was 46.1% in the quarter,
compared with 38.8% in 1Q22 and 45.5% in 4Q22. The sequential
improvement in Adjusted EBITDA margin in 1Q23 compared with 4Q22
was mainly due efficiency gains in administrative expenses and
lower selling expenses.
Table 7: Adjusted EBITDA Reconciliation
EBITDA Bridge (R$mn) |
1Q23 |
% Rev. |
1Q22 |
% Rev. |
Δ % |
Profit (Loss) before income taxes |
306.8 |
11.3% |
(289.8) |
(14.0%) |
n.m |
(+) Financial expenses, net |
923.6 |
34.1% |
708.2 |
34.2% |
30.4% |
(-) Other financial income |
(158.4) |
(5.8%) |
(133.4) |
(6.4%) |
18.7% |
(+) Depreciation and amortization |
212.5 |
7.8% |
184.9 |
8.9% |
14.9% |
EBITDA |
1,284.5 |
47.4% |
469.8 |
22.7% |
173.4% |
(+) Mark-to-market related to the investment in Banco Inter |
(30.6) |
(1.1%) |
323.0 |
15.6% |
n.m |
(+) Other Expenses (a) |
(2.6) |
(0.1%) |
10.8 |
0.5% |
n.m |
Adjusted EBITDA |
1,251.4 |
46.1% |
803.6 |
38.8% |
55.7% |
(a) Consists of the fair value adjustment related
to associates call option, earn-out and earn-out interests related
to acquisitions and reversal of litigation at Linx.
EBITDA was R$1,284.5 million in the quarter,
higher than R$469.8 million in the prior year period, mostly as a
result of (i) the increase in revenue excluding Other Financial
Income and (ii) a positive pre-tax effect from mark-to-market from
our investment in Banco Inter of R$30.6 million in 1Q23 compared
with a negative effect of R$323.0 million in 1Q22. These effects
were partially offset by higher cost of services and administrative
expenses, excluding D&A.
Net Income (Loss) and EPS
Adjusted Net Income was R$236.6 million in 1Q23
with a margin of 8.7%, compared with R$42.6 million of Adjusted Net
Income in 1Q22 and a margin of 2.1% on a comparable basis (not
adjusting for bond and share based compensation expenses). This
variation in Adjusted Net Income is mainly explained by (i) total
revenue and income net of financial expenses growth of 31.8% year
over year, combined with (ii) more efficiency in cost of services
(up +7.0% year over year), selling expenses (up +1.6% year over
year) and administrative expenses (up +22.2%11 year over year).
Adjusted Net Income was up 16.1% quarter over
quarter, with Adjusted Net Margin improving from 7.5% to 8.7%
sequentially, mainly as a result of efficiency gains in
administrative expenses, operating leverage in selling expenses and
lower other operating expenses.
Net Income in 1Q23 was R$225.7 million, compared
with a Net Loss of R$313.0 million in 1Q22, mostly as a result of
mark-to-market effects from the investment in Banco Inter, which
represented a gain of R$30.6 million in 1Q23 compared with a loss
of R$323.0 million in 1Q22, as well as the same factors explained
above for the variation in Adjusted Net Income.
On a comparable basis (not adjusting for bond
and share based compensation expenses), Adjusted diluted EPS for
the Company was R$0.73 per share in 1Q23, compared with R$0.14 per
share in 1Q22, mostly explained by the higher Adjusted Net Income.
On a sequential basis, adjusted diluted EPS increased from R$0.63
per share in 4Q22 to R$0.73 per share in 1Q23. IFRS basic EPS was
R$0.72 per share in 1Q23, compared with a negative R$1.01 in the
prior-year period. This difference was mainly due to the higher Net
Income, with R$30.6 million positive impact from mark-to-market
from Banco Inter in 1Q23 compared with a negative impact of R$323.0
million in 1Q22.
Table 8: Adjusted Net Income Reconciliation
Following the partial sale of our stake in Banco Inter, from 2Q22
onwards we no longer adjust the financial expenses related to our
bond in our adjusted numbers. In addition, from 1Q23 onwards, we
also stopped adjusting share-based compensation expenses in our
adjusted results. Those changes may affect the comparability of our
adjusted results between different quarters. For that reason, we
have included below our historical numbers on a comparable basis,
not adjusting for both the bond and share-based compensation
expenses, according to our current adjustment criteria.
Net Income Bridge (R$mn) |
1Q23 |
% Rev. |
1Q22 |
% Rev. |
Δ % |
Net income for the period |
225.7 |
8.3% |
(313.0) |
(15.1%) |
n.m |
Amortization of fair value adjustment (a) |
33.7 |
1.2% |
24.9 |
1.2% |
35.2% |
Mark-to-market from the investment in Banco Inter (b) |
(30.6) |
(1.1%) |
323.0 |
15.6% |
n.m |
Other expenses (c) |
14.1 |
0.5% |
10.8 |
0.5% |
31.0% |
Tax effect on adjustments |
(6.3) |
(0.2%) |
(3.1) |
(0.1%) |
105.1% |
Adjusted net income (as reported) |
236.6 |
8.7% |
42.6 |
2.1% |
455.9% |
|
|
|
|
|
|
IFRS basic EPS (d) |
0.72 |
n.a. |
(1.01) |
n.a. |
n.m |
Adjusted diluted EPS (as reported) (e) |
0.73 |
n.a. |
0.14 |
n.a. |
436.2% |
Basic Number of shares |
312.7 |
n.a. |
310.3 |
n.a. |
0.8% |
Diluted Number of shares |
324.9 |
n.a. |
310.3 |
n.a. |
4.7% |
(a) Related to acquisitions. Consists of
expenses resulting from the changes of the fair value adjustments
as a result of the application of the acquisition method.
(b) From 2Q22 onwards we no longer adjust the
financial expenses related to our bond, which may affect the
comparability of our Adjusted results between our numbers from 2Q22
onwards and our numbers from prior periods. For comparability
purposes, we have included in this line only the mark-to-market
from the investment in Banco Inter in both our current and
historical numbers, thus not adjusting the bond expenses.
(c) Consists of the fair value adjustment
related to associates call option, earn-out and earn-out interests
related to acquisitions and reversal of litigation of Linx.
(d) Calculated as Net income attributable to
owners of the parent (Net Income reduced by Net Income attributable
to Non-Controlling interest) divided by basic number of shares. For
more details on calculation, please refer to Note 13 of our
Consolidated Financial Statements, March 31st, 2023.
(e) Calculated as Adjusted Net income
attributable to owners of the parent (Adjusted Net Income reduced
by Adjusted Net Income attributable to Non-Controlling interest)
divided by diluted number of shares.
Adjusted Net Cash
Our Adjusted Net Cash, a non-IFRS metric,
consists of the items detailed in Table 9 below:
Table 9: Adjusted Net Cash
Adjusted Net Cash (R$mn) |
1Q23 |
4Q22 |
1Q22 |
Cash and cash equivalents |
1,855.6 |
1,512.6 |
4,169.6 |
Short-term investments |
3,257.3 |
3,453.8 |
2,524.0 |
Accounts receivable from card issuers |
18,940.0 |
20,748.9 |
18,425.3 |
Financial assets from banking solution |
4,026.5 |
3,960.9 |
2,498.8 |
Derivative financial instrument (b) |
13.1 |
12.4 |
28.9 |
Adjusted Cash |
28,092.5 |
29,688.5 |
27,646.6 |
|
|
|
|
Obligations with banking customers (c) |
(3,902.2) |
(4,023.7) |
(2,367.8) |
Accounts payable to clients |
(15,568.6) |
(16,614.5) |
(14,997.4) |
Loans and financing (a) |
(3,756.5) |
(4,375.7) |
(5,426.5) |
Obligations to FIDC quota holders |
(634.7) |
(975.2) |
(1,916.3) |
Derivative financial instrument (b) |
(241.8) |
(209.7) |
(400.7) |
Adjusted Debt |
(24,103.6) |
(26,198.9) |
(25,108.8) |
|
|
|
|
Adjusted Net Cash |
3,988.8 |
3,489.6 |
2,537.8 |
(a) Loans and financing were reduced by the effects of leases
liabilities recognized under IFRS 16.
(b) Refers to economic hedge.
(c) Includes deposits from banking customers and
values transferred by our banking clients to third parties but not
yet settled.
Accounts Receivable from Card Issuers are
accounted for at their fair value in our balance sheet.
As of March 31, 2023, the Company’s Adjusted Net
Cash was R$3,988.8 million, R$499.2 million higher compared with
4Q22, mostly explained by:
-
R$532.7 million of cash net income, which is our net income plus
non-cash income and expenses as reported in our statement of cash
flows;
-
R$218.1 million from the sale of our remaining stake in Banco
Inter;
- R$91.8
million from the non-cash effect from present value adjustment to
accounts receivable from card issuers, which flows through Other
Comprehensive Income;
- R$23.4
million from changes in taxes payable and recoverable taxes;
- R$26.8
million from prepaid expenses;
-
-R$416.4 million of capex;
- R$22.7
million from other effects.
Cash Flow
Our cash flow in the quarter was explained
by:
- Net cash
provided by operating activities was R$1,168.4 million in 1Q23,
explained by R$532.7 million of Net Income after non-cash
adjustments and R$635.6 million from working capital variation.
Working capital is composed of (i) R$855.4 million of changes
related to accounts receivable from card issuers, accounts payable
to clients and interest income received, net of costs; (ii) R$161.8
million from payment of interest and taxes; (iii) R$74.9 million
outflow from labor and social security liabilities, (iv) R$23.4
million inflow from recoverable taxes and taxes payable and (v)
R$6.4 million outflow from other working capital changes.
- Net cash
provided by investing activities was R$51.6 million in 1Q23,
explained by (i) R$416.4 million capex, of which R$340.3 million
related to property and equipment and R$76.1 million related to
development of intangible assets; (ii) R$253.5 million of proceeds
from short-term investments; (iii) R$218.1 million from the sale of
our remaining stake in Banco Inter; (iv) R$3.8 million from
acquisition of interest in associates and (v) R$0.2 million from
proceeds from disposal of non-current assets.
- Net cash used in
financing activities was R$887.3 million, explained by (i) R$885.0
million net payment of debt, mostly related to the partial
amortization of FIDC AR III and amortization of CCBs (“Cédula de
Crédito Bancário”) and (ii) R$2.3 million cash outflow from capital
events related to non-controlling interests.
Other Information
Conference Call
Stone will discuss its 1Q23 financial results
during a teleconference today, May 17, 2023, at 5:00 PM ET / 6:00
PM BRT. The conference call can be accessed at +1 (412) 317 6346 or
+1 (844) 204 8586 (US), or +55 (11) 3181 8565 (Brazil), or +44 (20)
3795 9972 (UK).
The call will also be broadcast simultaneously
on Stone’s Investor Relations website at
https://investors.stone.co/. Following the completion of the call,
a recorded replay of the webcast will be available on Stone’s
Investor Relations website at https://investors.stone.co/.
About Stone Co.
Stone Co. is a leading provider of financial
technology and software solutions that empower merchants to conduct
commerce seamlessly across multiple channels and help them grow
their businesses.
Investor Contact
Investor Relationsinvestors@stone.co
Consolidated Statement of Profit or
Loss
Table 10: Consolidated Statement of
Profit or Loss
Statement of Profit or Loss (R$mn) |
1Q23 |
1Q22 |
Net revenue from transaction activities and other services |
733.1 |
554.9 |
Net revenue from subscription services and equipment rental |
445.1 |
432.2 |
Financial income |
1,375.0 |
949.8 |
Other financial income |
158.4 |
133.4 |
Total revenue and income |
2,711.7 |
2,070.3 |
Cost of services |
(721.3) |
(674.4) |
Administrative expenses |
(298.0) |
(238.2) |
Selling expenses |
(389.9) |
(383.7) |
Financial expenses, net |
(923.6) |
(708.2) |
Mark-to-market on equity securities designated at FVPL |
30.6 |
(323.0) |
Other income (expenses), net |
(101.5) |
(31.8) |
Loss on investment in associates |
(1.0) |
(0.7) |
Profit before income taxes |
306.8 |
(289.8) |
Income tax and social contribution |
(81.1) |
(23.2) |
Net income for the period |
225.7 |
(313.0) |
|
|
|
Consolidated Balance Sheet Statement
Table 11: Consolidated Balance Sheet
Statement
Balance Sheet (R$mn) |
31-Mar-23 |
31-Dec-22 |
Assets |
|
|
Current assets |
29,067.5 |
30,659.2 |
Cash and cash equivalents |
1,855.6 |
1,512.6 |
Short-term investments |
3,257.3 |
3,453.8 |
Financial assets from banking solution |
4,026.5 |
3,960.9 |
Accounts receivable from card issuers |
18,874.8 |
20,694.5 |
Trade accounts receivable |
459.5 |
484.7 |
Recoverable taxes |
207.9 |
151.0 |
Prepaid expenses |
133.1 |
129.3 |
Derivative financial instruments |
27.3 |
36.4 |
Other assets |
225.4 |
236.1 |
|
|
|
Non-current assets |
11,443.9 |
11,586.2 |
Trade accounts receivable |
33.7 |
37.3 |
Accounts receivable from card issuers |
65.1 |
54.3 |
Receivables from related parties |
10.3 |
10.1 |
Deferred tax assets |
616.1 |
680.0 |
Prepaid expenses |
70.8 |
101.4 |
Other assets |
86.9 |
105.1 |
Long-term investments |
33.8 |
214.8 |
Investment in associates |
109.1 |
109.8 |
Property and equipment |
1,790.7 |
1,641.2 |
Intangible assets |
8,627.5 |
8,632.3 |
|
|
|
Total Assets |
40,511.4 |
42,245.4 |
|
|
|
Liabilities and equity |
|
|
Current liabilities |
23,049.2 |
25,174.1 |
Deposits from banking customers |
3,902.2 |
4,023.7 |
Accounts payable to clients |
15,533.9 |
16,578.7 |
Trade accounts payable |
496.7 |
596.0 |
Loans and financing |
1,295.5 |
1,847.4 |
Obligations to FIDC quota holders |
634.7 |
975.2 |
Labor and social security liabilities |
398.7 |
468.6 |
Taxes payable |
380.9 |
329.1 |
Derivative financial instruments |
241.8 |
209.7 |
Other liabilities |
165.0 |
145.6 |
|
|
|
Non-current liabilities |
4,072.5 |
4,121.3 |
Accounts payable to clients |
34.7 |
35.8 |
Loans and financing |
2,659.8 |
2,728.5 |
Obligations to FIDC quota holders |
0.0 |
0.0 |
Deferred tax liabilities |
506.5 |
500.2 |
Provision for contingencies |
199.2 |
210.4 |
Labor and social security liabilities |
41.5 |
35.8 |
Other liabilities |
630.8 |
610.6 |
|
|
|
Total liabilities |
27,121.7 |
29,295.4 |
|
|
|
Equity attributable to owners of the parent |
13,334.2 |
12,893.9 |
Issued capital |
0.1 |
0.1 |
Capital reserve |
13,869.9 |
13,818.8 |
Treasury shares |
(69.1) |
(69.1) |
Other comprehensive income |
(270.2) |
(432.7) |
Retained earnings |
(196.6) |
(423.2) |
|
|
|
Non-controlling interests |
55.4 |
56.1 |
|
|
|
Total equity |
13,389.6 |
12,950.0 |
|
|
|
Total liabilities and equity |
40,511.4 |
42,245.4 |
|
|
|
Consolidated Statement of Cash Flows
Table 12: Consolidated Statement of Cash
Flows
Cash Flow (R$mn) |
1Q23 |
1Q22 |
Net income (loss) for the period |
225.7 |
(313.0) |
|
|
|
Adjustments on Net Income: |
|
|
Depreciation and amortization |
212.5 |
184.9 |
Deferred income tax and social contribution |
37.6 |
(44.6) |
Loss on investment in associates |
1.0 |
0.7 |
Interest, monetary and exchange variations, net |
(131.6) |
(108.4) |
Share-based payments expense |
70.1 |
27.2 |
Allowance for expected credit losses |
10.9 |
22.4 |
Loss on disposal of property, equipment and intangible assets |
14.9 |
(4.5) |
Effect of applying hyperinflation |
1.2 |
1.1 |
Fair value adjustment in financial instruments at FVPL |
85.8 |
470.3 |
Fair value adjustment in derivatives |
4.6 |
72.0 |
|
|
|
Working capital adjustments: |
|
|
Accounts receivable from card issuers |
2,616.0 |
1,257.2 |
Receivables from related parties |
2.0 |
3.9 |
Recoverable taxes |
(50.7) |
(13.0) |
Prepaid expenses |
26.8 |
68.7 |
Trade accounts receivable, banking solutions and other assets |
(18.4) |
318.0 |
Accounts payable to clients |
(2,367.4) |
(1,659.2) |
Taxes payable |
74.1 |
93.4 |
Labor and social security liabilities |
(74.9) |
78.2 |
Provision for contingencies |
(18.0) |
(4.9) |
Trade Accounts Payable and Other Liabilities |
1.2 |
9.5 |
Interest paid |
(133.4) |
(108.8) |
Interest income received, net of costs |
606.8 |
488.8 |
Income tax paid |
(28.4) |
(44.6) |
|
|
|
Net cash provided by (used in) operating
activity |
1,168.4 |
795.2 |
|
|
|
Investing activities |
|
|
Purchases of property and equipment |
(340.3) |
(136.8) |
Purchases and development of intangible assets |
(76.1) |
(105.0) |
Acquisition of subsidiary, net of cash acquired |
0.0 |
(41.9) |
Proceeds from (acquisition of) short-term investments, net |
253.5 |
(480.7) |
Disposal of short and long-term investments - equity
securities |
218.1 |
0.0 |
Proceeds from the disposal of non-current assets |
0.2 |
20.4 |
Acquisition of interest in associates |
(3.8) |
(7.1) |
|
|
|
Net cash used in investing activities |
51.6 |
(751.1) |
|
|
|
Financing activities |
|
|
Proceeds from borrowings |
1,050.0 |
1,500.0 |
Payment of borrowings |
(1,580.6) |
(1,569.8) |
Payment to FIDC quota holders |
(332.5) |
(312.5) |
Payment of leases |
(21.8) |
(26.1) |
Sale of own shares |
0.0 |
53.4 |
Acquisition of non-controlling interests |
(0.9) |
(0.3) |
Dividends paid to non-controlling interests |
(1.4) |
(0.8) |
|
|
|
Net cash provided by (used in) financing
activities |
(887.3) |
(356.1) |
|
|
|
Effect of foreign exchange on cash and cash equivalents |
10.2 |
(14.1) |
|
|
|
Change in cash and cash equivalents |
343.0 |
(326.0) |
|
|
|
Cash and cash equivalents at beginning of period |
1,512.6 |
4,495.6 |
Cash and cash equivalents at end of period |
1,855.6 |
4,169.6 |
|
|
|
Adjustments to Net Income by P&L Line
Table 13: Adjustments to Net Income by P&L
Line
Adjustments to Net Income by P&L line
(R$mn) |
1Q21 |
2Q21 |
3Q21 |
4Q21 |
1Q22 |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
Cost of services |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Administrative expenses |
9.3 |
9.7 |
166.0 |
(16.4) |
23.5 |
40.4 |
32.1 |
30.6 |
35.6 |
Selling expenses |
(0.0) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Financial expenses, net |
4.2 |
4.2 |
2.4 |
11.4 |
6.1 |
9.1 |
8.0 |
8.1 |
14.8 |
Mark-to-market on equity securities designated at FVPL |
0.0 |
(841.2) |
1,341.2 |
764.2 |
323.0 |
527.1 |
(111.5) |
114.5 |
(30.6) |
Other operating income (expense), net |
3.5 |
(4.5) |
1.2 |
0.6 |
6.0 |
(17.3) |
(8.9) |
(17.1) |
(2.6) |
Gain (loss) on investment in associates |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Profit before income taxes |
16.9 |
(831.7) |
1,510.8 |
759.8 |
358.7 |
559.3 |
(80.2) |
136.1 |
17.2 |
Income tax and social contribution |
(1.9) |
119.3 |
(163.9) |
8.1 |
(3.1) |
(14.2) |
(8.5) |
(11.1) |
(6.3) |
Net income for the period |
15.0 |
(712.4) |
1,346.9 |
767.9 |
355.6 |
545.1 |
(88.7) |
125.0 |
10.9 |
|
|
|
|
|
|
|
|
|
|
Table 14: Adjusted EBT and Adjusted Net Income with and
without share-based compensation adjustmentsFollowing the
partial sale of our stake in Banco Inter, from 2Q22 onwards we no
longer adjust the financial expenses related to our bond in our
adjusted numbers. In addition, from 1Q23 onwards, we also stopped
adjusting share-based compensation expenses in our adjusted
results. Those changes may affect the comparability of our adjusted
results between different quarters. For that reason, we have
included below our historical numbers on a comparable basis, not
adjusting for both the bond and share-based compensation expenses,
according to our current adjustment criteria.
Profitability with and without share-based compensation
adjustments (R$mn) |
1Q21 |
2Q21 |
3Q21 |
4Q21 |
1Q22 |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
Consolidated |
|
|
|
|
|
|
|
|
|
Reported |
|
|
|
|
|
|
|
|
|
Adjusted EBT |
247.6 |
(202.7) |
81.3 |
(49.1) |
82.5 |
106.7 |
210.7 |
316.5 |
324.0 |
Adjusted Net Income |
187.4 |
(155.5) |
85.3 |
(32.5) |
51.7 |
76.5 |
162.5 |
234.8 |
236.6 |
Not Adjusting for Share-based Compensation |
|
|
|
|
|
|
|
|
|
Adjusted EBT |
226.9 |
(249.1) |
83.0 |
(50.6) |
68.8 |
75.8 |
166.3 |
275.6 |
324.0 |
Adjusted Net Income |
173.3 |
(186.4) |
86.7 |
(33.5) |
42.6 |
55.8 |
108.3 |
203.8 |
236.6 |
|
|
|
|
|
|
|
|
|
|
Financial Services |
|
|
|
|
|
|
|
|
|
Reported |
|
|
|
|
|
|
|
|
|
Adjusted EBT |
250.2 |
(202.6) |
104.3 |
(31.0) |
65.9 |
84.0 |
177.6 |
285.6 |
306.0 |
Adjusted Net Income |
191.4 |
(153.2) |
113.1 |
(13.0) |
45.4 |
66.9 |
148.1 |
214.2 |
226.9 |
Not Adjusting for Share-based Compensation |
|
|
|
|
|
|
|
|
|
Adjusted EBT |
229.6 |
(248.7) |
105.7 |
(32.6) |
52.2 |
53.3 |
135.0 |
246.1 |
306.0 |
Adjusted Net Income |
177.3 |
(183.9) |
114.1 |
(14.0) |
36.3 |
46.3 |
95.1 |
184.1 |
226.9 |
|
|
|
|
|
|
|
|
|
|
Software |
|
|
|
|
|
|
|
|
|
Reported |
|
|
|
|
|
|
|
|
|
Adjusted EBT |
0.6 |
(0.7) |
(11.6) |
(15.2) |
12.3 |
40.0 |
33.7 |
31.8 |
16.9 |
Adjusted Net Income |
(0.7) |
(3.0) |
(14.8) |
(15.6) |
2.2 |
26.9 |
15.4 |
22.4 |
8.5 |
Not Adjusting for Share-based Compensation |
|
|
|
|
|
|
|
|
|
Adjusted EBT |
0.6 |
(1.0) |
(11.4) |
(15.2) |
12.3 |
39.9 |
31.9 |
30.5 |
16.9 |
Adjusted Net Income |
(0.7) |
(3.2) |
(14.6) |
(15.6) |
2.2 |
26.8 |
14.2 |
21.5 |
8.5 |
|
|
|
|
|
|
|
|
|
|
Non-Allocated |
|
|
|
|
|
|
|
|
|
Reported |
|
|
|
|
|
|
|
|
|
Adjusted EBT |
(3.2) |
0.6 |
(11.4) |
(2.8) |
4.3 |
(17.3) |
(0.6) |
(1.0) |
1.2 |
Adjusted Net Income |
(3.2) |
0.7 |
(13.0) |
(3.9) |
4.2 |
(17.3) |
(1.0) |
(1.8) |
1.2 |
Not Adjusting for Share-based Compensation |
|
|
|
|
|
|
|
|
|
Adjusted EBT |
(3.3) |
0.6 |
(11.3) |
(2.8) |
4.3 |
(17.4) |
(0.6) |
(1.0) |
1.2 |
Adjusted Net Income |
(3.3) |
0.7 |
(12.9) |
(3.9) |
4.1 |
(17.3) |
(1.0) |
(1.8) |
1.2 |
|
|
|
|
|
|
|
|
|
|
Historical Segment Reporting
Following the partial sale of our stake in Banco
Inter, from 2Q22 onwards we no longer adjust the financial expenses
related to our bond in our adjusted numbers. In addition, from 1Q23
onwards, we also stopped adjusting share-based compensation
expenses in our adjusted results. Those changes may affect the
comparability of our adjusted results between different quarters.
For that reason, we have included below our historical numbers on a
comparable basis, not adjusting for both the bond and share-based
compensation expenses, according to our current adjustment
criteria.
Table 15: Adjusted Historical Financial Services
P&L
Segment Reporting - Financial Services (R$mn
Adjusted) |
1Q21 |
2Q21 |
3Q21 |
4Q21 |
1Q22 |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
Total revenue and income |
828.4 |
564.2 |
1,152.5 |
1,545.9 |
1,721.3 |
1,932.6 |
2,121.5 |
2,308.2 |
2,335.9 |
Cost of services |
(224.9) |
(279.6) |
(358.7) |
(465.1) |
(499.0) |
(468.6) |
(495.9) |
(524.0) |
(555.3) |
Administrative expenses |
(89.8) |
(91.4) |
(112.9) |
(145.6) |
(131.1) |
(145.5) |
(160.2) |
(204.0) |
(170.9) |
Selling expenses |
(159.7) |
(215.3) |
(248.6) |
(263.5) |
(323.0) |
(267.3) |
(318.8) |
(336.2) |
(314.8) |
Financial expenses, net |
(88.8) |
(158.9) |
(304.4) |
(657.8) |
(693.0) |
(931.0) |
(917.2) |
(884.9) |
(895.0) |
Other operating income (expense), net |
(35.1) |
(67.4) |
(22.0) |
(46.6) |
(23.0) |
(66.9) |
(94.3) |
(112.6) |
(92.6) |
Gain (loss) on investment in associates |
(0.5) |
(0.4) |
(0.1) |
0.0 |
0.0 |
0.0 |
0.0 |
(0.4) |
(1.3) |
Profit before income taxes |
229.6 |
(248.7) |
105.7 |
(32.6) |
52.2 |
53.3 |
135.0 |
246.1 |
306.0 |
Income tax and social contribution |
(52.3) |
64.8 |
8.4 |
18.6 |
(16.0) |
(7.0) |
(39.9) |
(61.9) |
(79.1) |
Net income for the period |
177.3 |
(183.9) |
114.1 |
(14.0) |
36.3 |
46.3 |
95.1 |
184.1 |
226.9 |
|
|
|
|
|
|
|
|
|
|
Table 16: Adjusted Historical Software
P&L
Segment Reporting - Software (R$mn Adjusted) |
1Q21 |
2Q21 |
3Q21 |
4Q21 |
1Q22 |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
Total revenue and income |
30.9 |
42.8 |
301.1 |
311.4 |
326.6 |
350.7 |
366.2 |
376.3 |
358.2 |
Cost of services |
(12.3) |
(19.5) |
(162.4) |
(176.7) |
(172.5) |
(154.5) |
(171.9) |
(171.2) |
(164.2) |
Administrative expenses |
(14.9) |
(17.5) |
(72.4) |
(76.1) |
(74.5) |
(75.0) |
(81.3) |
(83.5) |
(83.5) |
Selling expenses |
(1.2) |
(6.0) |
(55.5) |
(51.8) |
(56.6) |
(63.5) |
(61.2) |
(63.8) |
(69.0) |
Financial expenses, net |
(0.2) |
(0.3) |
(17.6) |
(18.9) |
(8.6) |
(14.6) |
(14.9) |
(18.1) |
(13.6) |
Other operating income (expense), net |
(1.8) |
(0.4) |
(4.7) |
(3.1) |
(1.8) |
(3.0) |
(4.8) |
(8.7) |
(11.0) |
Gain (loss) on investment in associates |
0.0 |
(0.1) |
(0.0) |
0.0 |
(0.4) |
(0.3) |
(0.2) |
(0.4) |
(0.1) |
Profit before income taxes |
0.6 |
(1.0) |
(11.4) |
(15.2) |
12.3 |
39.9 |
31.9 |
30.5 |
16.9 |
Income tax and social contribution |
(1.3) |
(2.2) |
(3.1) |
(0.4) |
(10.1) |
(13.1) |
(17.7) |
(9.0) |
(8.4) |
Net income for the period |
(0.7) |
(3.2) |
(14.6) |
(15.6) |
2.2 |
26.8 |
14.2 |
21.5 |
8.5 |
|
|
|
|
|
|
|
|
|
|
Table 17: Adjusted Historical Non-Allocated
P&L
Segment Reporting - Non-Allocated (R$mn
Adjusted) |
1Q21 |
2Q21 |
3Q21 |
4Q21 |
1Q22 |
2Q22 |
3Q22 |
4Q22 |
1Q23 |
Total revenue and income |
8.3 |
6.5 |
16.0 |
15.7 |
22.4 |
20.8 |
20.8 |
21.6 |
17.5 |
Cost of services |
(2.5) |
(3.3) |
(4.6) |
(4.3) |
(2.9) |
(3.0) |
(3.5) |
(2.7) |
(1.8) |
Administrative expenses |
(3.7) |
(3.3) |
(8.5) |
(8.9) |
(9.2) |
(11.2) |
(10.3) |
(9.0) |
(8.1) |
Selling expenses |
(1.9) |
(1.9) |
(4.1) |
(3.1) |
(4.2) |
(5.1) |
(5.4) |
(6.1) |
(6.1) |
Financial expenses, net |
0.7 |
5.7 |
(6.4) |
(0.1) |
(0.5) |
(0.1) |
(0.1) |
(0.4) |
(0.2) |
Other operating income (expense), net |
(1.1) |
(0.8) |
(1.2) |
(0.9) |
(1.1) |
(17.8) |
(1.1) |
(4.8) |
(0.4) |
Gain (loss) on investment in associates |
(3.2) |
(2.4) |
(2.6) |
(1.2) |
(0.2) |
(1.0) |
(1.1) |
0.5 |
0.4 |
Profit before income taxes |
(3.3) |
0.6 |
(11.3) |
(2.8) |
4.3 |
(17.4) |
(0.6) |
(1.0) |
1.2 |
Income tax and social contribution |
0.0 |
0.2 |
(1.6) |
(1.1) |
(0.2) |
0.0 |
(0.4) |
(0.8) |
0.0 |
Net income for the period |
(3.3) |
0.7 |
(12.9) |
(3.9) |
4.1 |
(17.3) |
(1.0) |
(1.8) |
1.2 |
|
|
|
|
|
|
|
|
|
|
Glossary of Terms
- “Adjusted Net
Cash”: is a non-IFRS financial metric and consists of the following
items: (i) Adjusted Cash: Cash and cash equivalents, Short-term
investments, Accounts receivable from card issuers, Financial
assets from banking solution and Derivative financial instrument;
minus (ii) Adjusted Debt: Obligations with banking customers,
Accounts payable to clients, Loans and financing, Obligations to
FIDC quota holders and Derivative financial instrument.
- “Banking”:
refers to our digital bank solution and includes insurance
products.
- “Financial
Services” segment: This segment is comprised of our financial
services solutions serving both MSMBs and Key Accounts. Includes
mainly our payments solutions, digital banking and credit.
- “Key Accounts”:
refers to operations in which Pagar.me acts as a fintech
infrastructure provider for different types of clients, especially
larger ones, such as mature e-commerce and digital platforms,
commonly delivering financial services via APIs.
- “MSMB Active
Payments Client Base”: refers to SMBs (online and offline) and
micro-merchants, from our Stone, Pagar.me and Ton products.
Considers clients that have transacted at least once over the
preceding 90 days, except for Ton active clients which consider
clients that have transacted once in the preceding 12 months. As
from 3Q22, does not consider clients that use only TapTon.
- “MSMBs”: the
combination of SMBs and micro-merchant clients, from our Stone,
Pagar.me and Ton products.
- “Omni
OMS”: our OMS solution offers multi-channel purchasing processes
that integrate stores, franchisees, and distribution centers,
thereby providing a single channel for retailers.
- “Non-allocated”:
Comprises other smaller businesses which are not allocated in our
Financial Services or Software segments.
- “Revenue”:
refers to Total Revenue and Income.
- “Software”
segment: This segment is comprised of: (i) Core, comprised of
POS/ERP solutions, TEF and QR Code gateways, reconciliation and CRM
and (ii) Digital, which includes OMS, e-commerce platform,
engagement tool, ads solution and marketplace hub.
- “Take Rate
(MSMB)”: Managerial metric that considers the sum of revenues from
financial services solutions offered to MSMBs, excluding Ton’s
membership fee and other non-allocated revenues, divided by MSMB
TPV.
- “Take Rate (Key
Accounts)”: Managerial metric that considers revenues from
financial services solutions offered to Key Account clients,
excluding non-allocated revenues, divided by Key Accounts TPV.
- “MSMB Client
Deposits”: client deposits from MSMBs with our banking
solutions.
- “Total Active
Payment Clients”: refers to MSMBs and Key Accounts. Considers
clients that have transacted at least once over the preceding 90
days, except for Ton product active clients which consider clients
that have transacted once in the preceding 12 months. As from 3Q22,
does not consider clients that use only TapTon.
- “TPV”: Total
Payment Volume. Up to the fourth quarter of 2020, refers to
processed TPV. From the first quarter of 2021 onwards, reported TPV
figures consider all volumes settled by StoneCo.
Forward-Looking Statements
This press release contains "forward-looking
statements" within the meaning of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are made as of the date they were first
issued and were based on current expectations, estimates, forecasts
and projections as well as the beliefs and assumptions of
management. These statements identify prospective information and
may include words such as “believe”, “may”, “will”, “aim”,
“estimate”, “continue”, “anticipate”, “intend”, “expect”,
“forecast”, “plan”, “predict”, “project”, “potential”,
“aspiration”, “objectives”, “should”, “purpose”, “belief”, and
similar, or variations of, or the negative of such words and
expressions, although not all forward-looking statements contain
these identifying words.
Forward-looking statements are subject to a
number of risks and uncertainties, many of which involve factors or
circumstances that are beyond Stone’s control.
Stone’s actual results could differ materially
from those stated or implied in forward-looking statements due to a
number of factors, including but not limited to: more intense
competition than expected, lower addition of new clients,
regulatory measures, more investments in our business than
expected, and our inability to execute successfully upon our
strategic initiatives, among other factors.
About Non-IFRS Financial
Measures
To supplement the financial measures presented
in this press release and related conference call, presentation, or
webcast in accordance with IFRS, Stone also presents non-IFRS
measures of financial performance, including: Adjusted Net Income,
Adjusted EPS (diluted), Adjusted Net Margin, Adjusted Net Cash /
(Debt), Adjusted Profit (Loss) Before Income Taxes, Adjusted
Pre-Tax Margin, EBITDA and Adjusted EBITDA.A “non-IFRS financial
measure” refers to a numerical measure of Stone’s historical or
future financial performance or financial position that either
excludes or includes amounts that are not normally excluded or
included in the most directly comparable measure calculated and
presented in accordance with IFRS in Stone’s financial statements.
Stone provides certain non-IFRS measures as additional information
relating to its operating results as a complement to results
provided in accordance with IFRS. The non-IFRS financial
information presented herein should be considered in conjunction
with, and not as a substitute for or superior to, the financial
information presented in accordance with IFRS. There are
significant limitations associated with the use of non-IFRS
financial measures. Further, these measures may differ from the
non-IFRS information, even where similarly titled, used by other
companies and therefore should not be used to compare Stone’s
performance to that of other companies.
Stone has presented Adjusted Net Income to
eliminate the effect of items from Net Income that it does not
consider indicative of its continuing business performance within
the period presented. Stone defines Adjusted Net Income as Net
Income (Loss) for the Period, adjusted for (1) amortization of
intangibles related to acquisitions, (2) one-time impairment
charges, (3) unusual income and expenses and (4) tax expense
relating to the foregoing adjustments. Adjusted Net Margin is
calculated by dividing Adjusted Net Income by Total Revenue and
Income. Adjusted EPS (diluted) is calculated as Adjusted Net income
attributable to owners of the parent (Adjusted Net Income reduced
by Net Income attributable to Non-Controlling interest) divided by
diluted number of shares.
Stone has presented Adjusted Profit Before
Income Taxes and Adjusted EBITDA to eliminate the effect of items
that it does not consider indicative of its continuing business
performance within the period presented. Stone adjusts these
metrics for the same items as Adjusted Net Income, as
applicable.
Stone has presented Adjusted Net Cash metric in
order to adjust its Net Cash / (Debt) by the balances of Accounts
Receivable from Card Issuers and Accounts Payable to Clients, since
these lines vary according to the Company’s funding source together
with the lines of (i) Cash and Cash Equivalents, (ii) Short-term
Investments, (iii) Debt balances and (iv) Derivative Financial
Instruments related to economic hedges of short term investments in
assets, due to the nature of Stone’s business and its prepayment
operations. In addition, it also adjusts by the balances of
Financial Assets from Banking Solutions and Deposits from Banking
Customers.
1 Margins are calculated by dividing by the revenue of each
segment. 2 From 3Q22 onwards, does not include clients that use
only TapTon.3 ARPAC means average revenue per active client and
considers our banking and insurance revenues divided by our active
banking client base.4 From 3Q22 onwards, does not include clients
that use only TapTon.5 From 3Q22 onwards, does not include clients
that use only TapTon.6 Except for Total Accounts Balance, banking
metrics do not include accounts from TON or Pagar.me (except for
Ton clients that have the full banking solution "Super Conta
Ton").7 Banking ARPAC includes card interchange fees, floating
revenue, insurance and transactional fees.8 Comprises (i) our
POS/ERP solutions across different retail and service verticals,
which includes Linx and the portfolio of POS/ERP solutions in which
we invested over time; (ii) our TEF and QR Code gateways; (iii) our
reconciliation solution, and (iv) CRM.9 Comprises (i) our
omnichannel platform (OMS); (ii) our e-commerce platform (Linx
Commerce), (iii) engagement tools (Linx Impulse and mlabs); (iv)
our ads solution and (v) marketplace hub.10 Our adjusted P&L
includes the same adjustments made for our Adjusted Net Income but
broken down into each P&L line. The purpose of showing it is to
make it easier to understand the underlying evolution of our Costs
& Expenses, disregarding some non-recurring events associated
with each line item. 11 Evolution of Administrative according to
our Adjusted P&L (please refer to Table 6). IFRS Administrative
expenses increased 25.1% year over year in 1Q23.
A PDF accompanying this announcement is available
at http://ml.globenewswire.com/Resource/Download/48414444-91cd-4546-808a-c21381f10ae3
StoneCo (NASDAQ:STNE)
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