Revenue of R$2.7 billion, + 31% y/y (vs R$2.6+ billion guidance);Adjusted EBT (including share-based compensation expenses) of R$324.0 million, +371% y/y (vs R$265+ million guidance);MSMB TPV of R$78.9 billion, +25% y/y (vs R$77.0 - R$78.0 billion guidance and over 2x industry growth)
GEORGE TOWN, Grand Cayman, May 17, 2023 (GLOBE NEWSWIRE) -- StoneCo Ltd. (Nasdaq: STNE, B3: STOC31) (“Stone” or the “Company”) today reports its financial results for its first quarter ended March 31, 2023.
Operating and Financial Highlights for 1Q23
Note about our non-IFRS Adjusted P&L metrics: as anticipated in our 4Q22 Earnings announcement, from 1Q23 onwards we will no longer adjust the expenses related to share-based compensation, which may affect the comparability of our current Adjusted results to our Adjusted numbers prior to 1Q23. To allow for better understanding of our business performance trends, the tables in this Earnings Release will make reference to our Adjusted P&L metrics including share-based compensation expenses (i.e. not adjusting those expenses out), both in 1Q23 and in prior periods for comparability purposes.
MAIN CONSOLIDATED FINANCIAL METRICS
Table 1: Main Consolidated Financial Metrics
Main Consolidated Financial Metrics (R$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% |
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$mn) | 3,622.1 | 3,596.3 | 1,972.7 | 83.6% | 0.7% |
MSMB Banking ARPAC3 | 36.7 | 44.7 | 33.3 | 10.2% | (17.9%) |
a. MSMB – Balancing Growth and Profitability
b. Key Accounts
SOFTWARE PERFORMANCE HIGHLIGHTS
Table 4: Software Main Operating and Financial Metrics
Main Software Metrics (R$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%) |
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:
* 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:
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 13in Appendix for the Adjustments by P&L line). Adjusting for those effects, Administrative Expenses were R$214.8 million in 1Q22, R$296.5million in 4Q22 and R$262.5million 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$14.8million 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 13in 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$903.4million in 4Q22 and R$908.9million 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$2.6million 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 13in 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$25.8million in 1Q22, R$126.1 million in 4Q22 and R$104.1million 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$6.3million 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$499.2 million higher compared with 4Q22, mostly explained by:
Cash Flow
Our cash flow in the quarter was explained by:
Other Information
Conference Call
Stone will discuss its 1Q23 financial results during a teleconference today, May 17, 2023, at 5:00 PM ET / 6:00 PM BRT. The conference call can be accessed at +1 (412) 317 6346 or +1 (844) 204 8586 (US), or +55 (11) 3181 8565 (Brazil), or +44 (20) 3795 9972 (UK).
The call will also be broadcast simultaneously on Stone’s Investor Relations website at https://investors.stone.co/. Following the completion of the call, a recorded replay of the webcast will be available on Stone’s Investor Relations website at https://investors.stone.co/.
About Stone Co.
Stone Co. is a leading provider of financial technology and software solutions that empower merchants to conduct commerce seamlessly across multiple channels and help them grow their businesses.
Investor Contact
Investor Relationsinvestors@stone.co
Consolidated Statement of Profit or Loss
Table 10: Consolidated Statement of Profit or Loss
Statement of Profit or Loss (R$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
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").7Banking ARPAC includes card interchange fees, floating revenue, insuranceand 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 (LinxImpulse 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 eventsassociated 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
Source: StoneCo Ltd.