StoneCo’s Earnings Call Highlights Growth and Strategy

Stoneco ((STNE)) has held its Q1 earnings call. Read on for the main highlights of the call.

StoneCo’s recent earnings call painted a generally positive picture, highlighting strong year-over-year growth in key financial metrics and effective capital returns. Despite some sequential declines and anticipated TPV growth deceleration, the company’s strategic initiatives and focus on profitability suggest a stable future outlook.

Strong Year-Over-Year Growth in Key Financial Metrics

StoneCo reported impressive year-over-year growth in its financial metrics, with gross profits increasing by 19% and EPS growing by 36%, surpassing the 18% growth implied in the full-year outlook. Adjusted net income also saw a 23% rise, showcasing the company’s robust financial health.

Share Repurchase and Capital Returns

The company demonstrated a strong capital return policy by repurchasing R$843 million or 15.1 million shares during the quarter. Over the past 12 months, StoneCo has returned R$2.4 billion in share buybacks, emphasizing its commitment to returning value to shareholders.

MSMB Active Client Base and Engagement Growth

StoneCo’s MSMB payments active client base grew by 17% year-over-year, with the heavy user metric increasing to 38% from 37% in the previous quarter. This growth indicates a strengthening engagement with its client base.

Software Segment Achievements

The software segment reported an 11% growth in revenues year-over-year, with adjusted EBITDA increasing by 12%. Additionally, there was a significant reduction in Software CapEx from 71% of EBITDA to 51% this quarter, reflecting improved operational efficiency.

Sequential Decline in Certain Financial Metrics

Despite the positive year-over-year growth, StoneCo experienced a 3% quarter-over-quarter decrease in adjusted gross profit and a 17% decrease in adjusted net income. These declines were attributed to lower TPV and higher cost of services.

Anticipated TPV Growth Deceleration

The company anticipates a deceleration in TPV growth due to repricing policies and challenging macroeconomic conditions. This outlook suggests a cautious approach to future growth expectations.

Increased Financial Expenses

Financial expenses rose by 23% year-over-year, driven by higher average CDI during the periods. However, this was partially offset by the cash sweep strategy, indicating a proactive approach to managing financial costs.

Forward-Looking Guidance

StoneCo exceeded its annual guidance targets across several key metrics during the first quarter of 2025. The company announced a new R$2 billion share repurchase program, highlighting its commitment to shareholder returns while maintaining a disciplined capital allocation strategy. The strategic repricing efforts have improved profitability, and the MSMB client base continues to grow robustly.

In summary, StoneCo’s earnings call reflects a positive sentiment with strong financial performance and strategic initiatives aimed at sustaining growth. Despite some challenges, the company’s focus on capital returns and client engagement suggests a promising outlook for the future.