Stone closed the last quarter of 2023 with adjusted net profit of R$564 million, an increase of 177% compared to 4Q22

Rhea-AI Summary

StoneCo (Nasdaq: STNE, B3: STOC31) reported impressive growth in 4Q23, with a 20.1% increase in total revenue, reaching R$3.2 billion. The company's adjusted EBT of R$638 million saw a 131.6% surge compared to the previous year. The MSMB customer base grew by 37.4%, reaching nearly 3.5 million active customers. StoneCo also achieved a 24.4% growth in financial services revenue, driven by MSMB clients.

Positive

• Impressive 20.1% growth in total revenue for StoneCo in 4Q23.
• Adjusted EBT of R$638 million, marking a significant 131.6% increase compared to the previous year.
• MSMB customer base grew by 37.4%, reaching nearly 3.5 million active customers.
• Financial services revenue saw a substantial 24.4% growth, fueled by MSMB clients.

Negative

• None.

Insights

Financial Analyst

The reported 20% growth in TPV for MSMB clients is a significant indicator of StoneCo's market penetration and operational efficiency. This figure surpasses the industry average, suggesting a competitive advantage and potential market share gains. The substantial increase in adjusted EBT of 131.6% compared to the previous quarter underlines a robust profitability trajectory. Such a performance could signal strong financial health and may result in positive investor sentiment, potentially influencing StoneCo's stock valuation positively.

Moreover, the expansion of the MSMB customer base by 37.4% year-over-year is not only indicative of StoneCo's aggressive customer acquisition strategy but also reflects the scalability of its business model. The growth in deposits on the banking platform by 52.1% year-over-year further demonstrates the increasing trust and reliance of StoneCo's customers on its financial ecosystem. These trends are likely to contribute to the stability and growth of recurring revenue streams.

Market Research Analyst

StoneCo's strategic focus on integrating software business across key sectors such as Retail, Gas Stations, Food and Pharmacies, is a move towards diversification and capturing a larger slice of the payment processing market. The 19% increase in payment volumes within these verticals is a testament to the effectiveness of this strategy. However, the slight reduction in adjusted Software EBITDA margin, albeit accompanied by restructuring costs, warrants attention to ensure that profitability is not being sacrificed for growth.

Investments in the credit portfolio and share buybacks reflect a proactive approach to capital allocation, which may enhance shareholder value in the long term. The company's strong cash position provides it with the flexibility to navigate market conditions and invest in growth opportunities. The change in board composition, while not directly impacting financial metrics, could bring fresh perspectives to the company's strategic direction.

Risk Management Analyst

The growth in StoneCo's credit portfolio to R$309 million, while relatively modest, indicates the company's cautious yet expanding foothold in the credit market. The emphasis on risk management practices in this announcement suggests a prudent approach to credit expansion, which is important in maintaining financial stability and minimizing defaults. The ability to manage risk effectively in this segment will be key to sustaining growth without incurring significant credit losses, especially in an environment where economic conditions can change rapidly.

• 20% Growth in the MSMB total payment volume (TPV), double the industry average, according to ABECS
• Adjusted EBT of R$638 million, a 131.6% increase compared to 4T22
• The MSMB customer base grew by 37.4% year-over-year, reaching nearly 3.5 million active customers

SÃO PAULO, March 18, 2024 /PRNewswire/ -- StoneCo Ltd. (Nasdaq: STNE, B3: STOC31) reported growth year-over-year of 20.1% in total revenue, reaching R$3.2 billions in 4Q23, with adjusted EBT of R$638 millions, 17.2% higher than 4Q22, with adjusted EBT margin increasing 2,3 p.p sequentially, to 19.6%. The result is mainly attributed to the growth of consolidated revenue, with lower financial expenses

The financial services revenue reached R$ R$ 2.87 billion in 4Q23, 24.4% higher year over year. The growth was driven by MSMB (micro, small, and medium-sized businesses) clients, whose TPV increased by 20.2% year over year (or 25%, considering the processed volume of PIX P2M). The segment also showed a 22 bps increase in take rate year over year.

In 4Q23, the deposits in the banking platform reached R$6.1 billion, up 52.1% compared to 4Q22. The company continues to advance on its credit solution, with a portfolio of R$309 millions, highlighting the effectiveness of risk management practices.

The company has disclosed a new metric to assess the volume of payments within the customer base already using integrated solutions in the priority softwares verticals - Retail, Gas Station, Food and Pharmacies -, with a 19% increase compared to 3Q23, nearly twice the quarterly evolution of MSMB's TPV. Adjusted Software EBITDA reached R$58.7 million in 4Q23, with a margin of 16.2%, compared to R$59.6 million and a margin of 15.8% in 4Q22. The reduction was mainly due to restructuring costs incurred in this vertical, which are expected to yield benefits in 2024.

"Last year brought strategic achievements and advancements in line with our goals to 2027. Our strategy is clear: integrate software business across four main sectors, build a huge technological platform, harness the potential of payment matching, banking, credit and software", says Pedro Zinner, CEO of Stone. 

The company's profitability also translated into cash generation, and the year ended with an adjusted net cash position of over R$5 billion, even after significant investments in the credit portfolio and share buybacks.

StoneCo also announced that its founder, André Street, has decided to end his term on the Board of Directors, not seeking reelection. The Vice-Chairman of the Board, Conrado Engel, and Board Member, Patrícia Verderesi, are also concluding their terms after two years with the company. Mauricio Luchetti and Gilberto Caldart will be nominated, respectively, for the positions of Chairman and Vice-Chairman of the Board of Directors, subject to the terms of the Company's Bylaws and approval by the majority of shareholders. José Alexandre Scheinkman will be nominated as a new member. André remains a key shareholder with additional rights outlined in the Shareholders' Agreement and the Company's Bylaws.

View original content:https://www.prnewswire.com/news-releases/stone-closed-the-last-quarter-of-2023-with-adjusted-net-profit-of-r564-million-an-increase-of-177-compared-to-4q22-302092121.html

SOURCE Stone

FAQ

What was the total revenue growth percentage for StoneCo in 4Q23?

StoneCo reported a 20.1% increase in total revenue for the fourth quarter of 2023.

How much was the adjusted EBT for StoneCo in 4Q23?

StoneCo's adjusted EBT reached R$638 million in the fourth quarter of 2023, marking a 131.6% increase compared to the previous year.

What was the growth percentage of the MSMB customer base for StoneCo?

StoneCo's MSMB customer base grew by 37.4% in 4Q23, reaching nearly 3.5 million active customers.

What drove the 24.4% growth in financial services revenue for StoneCo in 4Q23?

The growth in financial services revenue for StoneCo was primarily driven by MSMB clients in the fourth quarter of 2023.