StoneCo (STNE) Q1 2026 Earnings Call Summary

1Key Financial Results and Metrics

Total Revenue: BRL 3.6 billion, up 6% year-over-year.

Adjusted Gross Profit: BRL 1.5 billion, stable year-over-year; gross profit margin decreased from 44.4% to 41.6%.

Adjusted Net Income: BRL 549 million, a 3% increase year-over-year; adjusted basic EPS rose 15% to BRL 2.19 per share, driven by share buybacks.

Total Payment Volume (TPV): BRL 137 billion, growing 3% year-over-year.

Credit Portfolio: Reached BRL 3.2 billion, a 14% sequential increase; credit revenues grew 25% sequentially to BRL 297 million.

Non-Performing Loans (NPLs): Increased to 7% from 5.2% in the prior quarter; higher provisions for credit losses totaled BRL 166 million.

2Strategic Updates and Business Highlights

Capital Distribution: Year-to-date capital return of BRL 3.6 billion, representing a 27% distribution yield, including share buybacks and an extraordinary dividend from the Linx divestiture.

Focus on Client Retention: Shift from acquiring new clients to enhancing the existing client base and reducing churn, particularly among clients onboarded in 2025.

Product Offering Review: Simplifying product bundles and pricing structures to improve client experience and retention.

Credit Strategy: Emphasis on risk-adjusted returns and diversification of credit offerings, including secured lending to mitigate risk.

3Forward Guidance and Outlook

2026 Guidance: Maintained despite rising interest rates; expectations for performance weighted towards the second half of the year as credit revenues compound and retention initiatives take effect.

TPV Growth: Anticipated acceleration in the second half of the year, driven by improved retention and execution rather than macroeconomic improvements.

4Bad News, Challenges, or Points of Concern

Challenging Macro Environment: Continued pressure on smaller merchants impacting performance; elevated churn rates observed particularly among newer clients.

Credit Quality Issues: Increased NPLs and higher provisions for credit losses; the need for tighter underwriting policies and adjustments to risk selection.

Interest Rate Risks: Rising interest rates (expected to end the year closer to 14%) pose a significant challenge, with each 100 basis points affecting pre-tax earnings by BRL 200-250 million.

5Notable Q&A Insights

ARPAC Concerns: Management acknowledged a decline in Average Revenue Per Active Client (ARPAC) due to client mix effects, with a focus on long-term opportunities as the ecosystem expands.

Credit Growth Strategy: Despite tightening risk appetites, management expressed confidence in growing credit through secured lending and improved underwriting models.

Deposit Strategy: Emphasis on increasing deposits as a hedge against interest rate fluctuations, with ongoing efforts to enhance client engagement and transactional flows. Overall, StoneCo is navigating a challenging environment with a strategic focus on improving client retention, simplifying product offerings, and managing credit risk while maintaining a commitment to shareholder returns.