Stoneco ((STNE)) has held its Q4 earnings call. Read on for the main highlights of the call.
StoneCo’s recent earnings call showcased a robust financial performance, with the company achieving significant growth in key areas such as MSMB TPV, retail deposits, and credit portfolio. Despite facing some challenges, including a minor shortfall in MSMB card TPV and increased financial expenses, StoneCo’s effective strategy and resilience were evident. The goodwill impairment in the software division was a notable downside, but overall, the positive highlights in financial growth and client engagement outshone the negatives.
MSMB TPV Growth
MSMB card TPV reached BRL403 billion, marking a 15% year-over-year growth, though it slightly missed the BRL412 billion guidance. However, total MSMB TPV exceeded expectations, reaching BRL454 billion, a 22% year-over-year increase, reflecting strong performance in this segment.
Retail Deposits Surpass Guidance
Retail deposits closed 2024 at BRL8.7 billion, surpassing the BRL7 billion guidance. This achievement underscores StoneCo’s strong performance in its payments and banking offerings, highlighting its ability to attract and retain retail clients.
Credit Portfolio Expansion
The credit portfolio expanded significantly, reaching BRL1.2 billion, well above the BRL800 million target. The company maintained control over non-performing loans, which were at 3.61% for loans over 90 days, indicating effective risk management.
Net Income and Cost Efficiency
StoneCo reported a net income of BRL2.2 billion, surpassing the BRL1.9 billion guidance. Additionally, adjusted administrative expenses were BRL994 million, below the BRL1.125 billion guidance, demonstrating the company’s cost efficiency.
Strong Fourth Quarter Results
The fourth quarter results were impressive, with adjusted EBT growing 22% and adjusted net income increasing by 18% year-over-year. Adjusted basic EPS also grew by 26% compared to the fourth quarter of ’23, showcasing StoneCo’s strong financial performance.
Banking Client Base Growth
The banking active client base saw a remarkable 46% year-over-year increase, reaching 3.1 million. Retail deposits grew 42% year-over-year to BRL8.7 billion, indicating strong client engagement and satisfaction.
Software Segment Performance
The software segment showed positive results with a 15% year-over-year revenue growth. Adjusted EBITDA demonstrated a strong 54% growth, achieving a margin of 21.6%, highlighting the segment’s profitability.
MSMB Card TPV Shortfall
The MSMB card TPV fell slightly short of the BRL412 billion guidance, reaching BRL403 billion. This shortfall was attributed to the faster-than-expected adoption of PIX, which impacted the expected growth.
Higher Financial Expenses
Financial expenses increased due to the higher yield curve, affecting operational costs. Despite this, StoneCo deferred price increases to maintain strong client relationships, showcasing its commitment to customer satisfaction.
Goodwill Impairment in Software Division
StoneCo recognized a goodwill impairment charge of BRL3.6 billion for its software cash-generating units. This was due to standalone organic growth trends and a challenging macroeconomic environment, impacting the division’s valuation.
Forward-Looking Guidance
Looking ahead, StoneCo expects continued growth in 2025, focusing on initiatives such as investment products and workflow tools to accelerate deposit and overall growth. The company remains optimistic about its future prospects, despite the challenges faced in the current environment.
In summary, StoneCo’s earnings call highlighted a strong financial performance with significant growth across multiple segments. Despite some challenges, the company’s strategic execution and resilience were evident, and its forward-looking guidance suggests continued growth and innovation in the coming year.