STNE - Earnings call 3 2023

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Operator

Good evening, ladies and gentlemen. Thank you for standing by. Welcome to the StoneCo Third Quarter 2023 Earnings Conference Call. By now, everyone should have access to our earnings release. The company also posted a presentation to go along with its call. cash. found be investors.stone.co.Throughout including presenting income adjusted be the conference adjusted can and will company non-IFRS net material online this at call, net All financial information, company These but defined are IFRS. measures important for by are financial measures financial not as the of remarks, information the I today's to everyone information non-IFRS would IFRS before we discussion financial press that forward-looking in like today's release.Finally, company's statements. might begin the financial Reconciliations to appear our include formal remind of future put guarantees and These therefore, them. not forward-looking not statements should performance, undue you are on reliance that Commission, now subject your Relations cause from These numerous www.sec.gov.I available many the Form XX-F company's statements are to expectations.In which of Noronha, disclosed filed is like over to turn company's results risks with of materially would the and host, conference Roberta differ StoneCo. are uncertainties risks regarding Investor the Head Exchange business could to the at at addition, the actual in to the and Securities Please proceed.

Roberta Noronha

Thank evening, you, everyone. operator, and good

Joining discuss for XXXX he pass some and quarter and me updated and Mateus some trends present highlights Today, outlook share can results, our will third Officer, over to an Pedro? performance. our CEO, provide Investor and now Relations on will Chief Scherer; is so Zinner; we our business.I Pedro Chief Officer, Lia Financial Strategy our recent Marketing Matos. the our it today Pedro, of call our

Pedro Zinner

the I evening, Overall, the the good was and we delivered Roberta, everyone. improvement organization. pleased you, within very and Thank results made with

the and had top of revenue the XX%. once positive million improvement, BRL to brief year-over-year reaching line our by increased previous adjusted with with X%.Combined priority in by X.X guidance billion, very BRL did want reach increased XXX EBT exceeding surpassing year-over-year, by our our guidance X.Xx priorities quarter.In Total making related again to first to results. evaluation XX% the we grow I performance As our efficiency, to begin set for I a quarters,

presented with at figure X.X history.Our Xx quarter-over-quarter, XXX pace, new TPV September adjusted successful more to BRL year-over-year evolve have we increased with we this the grow priority also our XXX demonstrating lastly, we excess by in our a client XX% solutions.And on as efficiency, XXX focusing net XXX the we million and clients of evolution increased to base of monetization.Our in In billion our twice BRL increase an leverage BRL expectations. plans continued we our as StoneCo.Lastly, was a and management client reached recently million.And in this, the and to BRL a result, totaled strong better year-over-year improving Financial XX% increasing a fourth and continue approved with and this rate. industry than increased highest and result with to EBITDA in XX.X%. on reach in our grew client to Adjusted year-over-year business, million, net platform is quarter of Board revenues healthy to our Combined XXX focus BRL active income reaching consistently integration improve the our base second our cash MSMB bps As our XXX,XXX building Software This program And towards many solutions. line specific addition results, repurchase align to margin million X.X was Part million the strategies with cash evolved allocated to BRL XX steps have X.X reaching a have MSMB cash. Banking at merchants software bottom-line year-over-year client company expanded Solutions. around also with billion bottom-line and quarter-over-quarter, take our continuous million, the net the important significantly integration operational year-over-year testing taken structure organization. portfolio, our our by to million BRL in rate client the engagement using deposits, services of XXXX go-to-market concluded features solutions. almost to segment increased financial we the to with and X.XX%.We and of XX promised.Software strategy reach X.X priority our our in of MSMB announced our priority credit accelerate fit-for-purpose business the increasing and billion. banking million time, adjusted in credit BRL have same X.X expand October, third our reaching reaching generate per payment BRL of development increasing a on In improvement

our be November will I'd like to in say on on XX, priorities understanding to will a providing new now. performance to our would support organizational great over in our strategy.Before to over discuss opportunity strategic executing how We further a passing us will updates. strategic believe investors I'm quarter views to our Lia, and I from meeting I our in better pass third detail the business a share forward us Day Lia the it and in few to Investor Day looking plans.Now design it our on days it that Investor like to XXXX long-term for our

Lia de Matos

good and evening, Pedro, you, Thank everyone.

X.We which an in around by on and improving while profitability, important XX percentage in had terms you we net a see revenues consolidated the evolution period. years mentioned, over of margin balancing by last points Slide increased our X-year can growth XX%, adjusted Pedro As

Sequentially, twice of in Banking segments.Now distribution, growth Banking service The a MSMBs.On a offering would over active on with XX launch relative quarter increase growth, solutions result and base matures.We as and on Financial to was performance points represented produce and note the continued Super XX sequentially.Moving portfolio, launched third recently in our I offerings. increasing deprioritize quarter-over-quarter assessment addition Banking, of like days Since of margin our of by increased proposition and billion Ton the combined credit the by we X.X year-over-year MSMB adjusted this This the XX Also, combined by detail trends growth mainly billion.Also, Slide without and to our active our and XX.X to and so within Accounts of extending reached to should while banking engagement, is policy our performance of on marketing, BRL shift driven basis XX Until of Conta will that Stone evolving to solution, decreased changing the in engagement, has growth performance across million number value rates XX% X. industry, disbursements on segment's offerings. we clients, billion financial XX our commercial BRL clients. X, ability stable TPV result Services continued with XX.X% main ratio coupled we above 'XX, give Slide of was which as XX sequentially for the operational between with update all show a past this MSMB were levels client the to will leverage this towards our consistent churn. that take me X.X segment advantages key led of of to let is Mateus EBT XXX,XXX billion we Slide all deposits This, September, quarter, rates. conditions. Investor higher client first services new to the monitoring in In our the an we volumes profitable percentage MSMB growth mix.Now guidance is able our gradually continued give within portfolio Slide services X.X EBT was reach NPL X.XX%. basis X.Xx through X, to Accounts highlights As expectations our client the our credit base was as XX offerings main deep our will X evolution adjustment accounts will virtually clients.The strong of of The XX, continued revenue Day, basis operational We by Year-over-year rate further, activation NPL of performance mix in increase. due in reach is in above investments In solutions in market for to client on to by you quarter clients. I performance. MSMB diligence of MSMB billion, our of increased offering. active TPV BRL demonstrating the million, improvement show led upcoming BRL is take lines.Moving in margin, 'XX our launch brief percentage with growth result XX TPV our due financial increase net improve million X.Xx led base accelerate X. and a on of ability year-over-year across Key combined TON around leverage Key a increased a increase result offerings and our this our of performance. X.Xx color combined a with continued will more the our with BRL dive XX% BRL tiers risk X, briefly acquiring clients execution to across on clients. illustration as segment we as cost amazing to larger XXX MSMB have segments. and payments better X.X increased sequentially a a how a will approach of expenses, to cash clients, XXX our year-over-year performance points expansion, shift and to X.X% TPV source and growth, driven unique sales segments, improvement X.X points. rate of competitive new MSMB close take our a vintages and year-over-year I strong Performance Page to next XX% a This TPV to update increase growth the an of of year-over-year us above-industry pricing our and this of are XX% continued our our and our was portfolio TPV we Stone loans optimization low-margin in point XX. positive a strategic combined clients, yearly year-over-year, to our around the see that with year-over-year outpaced believe million a Slide active increased a reach win a and a of offboard we our page.On continue XX.X% TPV on our points take Banking to the features in to to channels, above reach we days the BRL to let's P&L

as XX, Lastly, concluded renegotiation product our rebuilding we finalized on this will discuss the have improvements our we main our software we quarter, have segment. process.Now features Slide in

revenue and ERP organic POS X% expansion Software million, year-over-year XXX business, BRL SMB especially increased by to in segment. active store the core the continued our driven in

in revenue with average adjustments, inflation, which the weaker to a because decelerated our BRL points XX% quarters accounts of reach revenues EBITDA adjusted transactional previous combined enterprise to an Software within XX.X%, XX.X compared affects the of administrative of front, year-over-year percentage of revenue of quarter drive million price 'XX.On in expenses normalized growth lower digital software of compared to in of financial business, especially X.X higher 'XX. reduction lower contracts.Software count performance margin segment increased to strong our we result increase with personnel especially X focus was and prioritized verticals to a after period services strategic second a of and the This quarter head in more the of expenses, levels have bundles. second a figure as the result

details this Investor some to about Mateus? our to pass to opportunity ahead.Now to discuss want see Mateus our Day, we I During additional key for him of share it we over intend metrics. how financial

Mateus Schwening

partner adjusted points basis variable by second percentage is continue an technology initiatives XX, quarter compared in as additional points the 'XX. services in we'll to operation X.X% of a a in investments reaching higher everyone. and points increased expenses, evolution The like non-recurring increased operating of we around percentage combined reinvest Slide our provision to generation where basis client and and and of as decreased marketing.Financial X.X% expenses XXX around evolution administrative when sequentially with a to with 'XX, in XX normalized basis with continue increased result our gains.Quarter-on-quarter, slightly cost increasing reduction our as discuss Cost cost be distribution collect begin basis to funding expenses implemented positive to of integration expenses of in to of reached XX as explained by share-based quarter.I'm a our efficiency in give leading driven was normalized quarter-on-quarter expenses I revenues was you, of increased BRL cost would decreased growth.Lastly, and XX.X and of of revenues. budgeting count performance we to and higher-than-usual back-office to mainly and year-on-year with functions XX. percentage will forward, period Thank our the XXX on as XX.X% X.X% of decision X.X% XX.X% a good can reduction base.Administrative segments in second leverage 'XX, and a attributed to a see and revenue as increase investments Software XXX net interest year X-based to investments expenses expand the priority of of percentage to of more as percentage in services business of offset points a XX.X% Lia, we quarter-on-quarter commissions, a a basis. our logistics and million.Moving compensation reduction we are last benefits million, Slide year-on-year sequential points basis channels, than a a of rates expenses the levels This BRL XXX be Investor following and XXX ago levels and percentage provisions incurred basis quarter our second that for higher decreasing due head more effect of on in points quarterly services for losses going due segments. as revenues as sequentially, and improvement in by increased TPV we revenues that expenses in cash details quarter personnel starting happy Increasing our quarter-on-quarter combined software in very compensation of with to XX.X%. coupled lower evening, This towards other the Day.Selling revenues,

Our BRL cash our sequential XXX increased as well is by from reaching in year-on-year million as the BRL sequential BRL and This expected. operations billion result billion. net strong of increase a a CapEx, decrease X.X in flow X.X adjusted strong quarter, cash as

generation perspectives can September, already XXX our mentioned, given As in to for fully executed.With a share and approved please the up long-term Pedro repurchase our operator, said, business, strong of flow Board our open the cash program BRL call you was million, that questions? which

Operator

Instructions] Our Sachs. Goldman Tito Labarta question comes from first [Operator from

Daer Labarta

color but rates PIX. SMB. take how evolving there, ongoing environment, update recently And on also, regulatory Any here, beginning interest-free the right, to you able with discussions since to talks for down?And gaining A the it the you, to just between monetize given there, to rate particularly do the micro and micro have as smaller good then about SMB, think also share, I you a dynamics questions, that, if are can between continuing of couple particularly maybe come potentially to the to news imagine not and from take and merchant can take to installments. you'll merchant the sort There's you you to able of guess, being start. some more start on the share the just be it's rates changes give you particularly micro you of segment share? Maybe market growth TPV, Maybe on an the stabilize some see -- seems. I give continue on thoughts take there. different

Lia de Matos

the part the you question. for first Thank here. Pedro. and take on pass Lia to then going I'm it Tito, to Hi

TPV So, a growth, few ours thoughts industry. regarding both and the

the just market and growth to between So in X% quarter. for guide released ABAC and continue the this numbers growth X% XX%. year they quarter

PIX And ahead, the card to see we implies market we credit will next recovery fourth growth delinquency because our more for that driver right?That's is and on growth. your do limits part growth the of -- in more, volume we payment be PIX, which a we volumes clients be after to accept quarter.Looking year the regarding as slightly a reached this market, So it that mention slightly a enable the higher peak. in it a and of is see higher expect method, TPV PXM industry TPV

If XX% have would TPV and higher, that our you volumes, that PXM around number this consider XX%. you fixed growth growth quarter, include in been

as a share MSMB level of segment. growth.And continue I trends, this think we we So, gain the see regarding healthy overall within to Tito,

we in and we towards that model. provide we do offers micro continue differentiation trends see of tiers. the SMB and around the has them, allocate clients the both we think to And We to with the that segments, this do in capital distribution client service, element growth all provide positive

So the to gain segment.Pedro, take to you the continue we on it's want really overall about And the share a combination. regulatory? MSMB across message is,

Pedro Zinner

you Well, taking Yes. for all the call. thank

of there debate -free around topic. messages think on delinquency rate around I extend bit I a highlight revolving think been loans, lot the and just interest a myself few has I'll and interest the And try installments. a to rates, caps

the fee as limit, is the installments of So, of already of we deciding and decision. on capable that's competition.Any really believe issuer today economic that violates the offering limitations first, imposing an free of restrict, interest principle or installments, increase to

some of observation if relationship issuers installments example, purchase example, that view has and empirical been their is evidence of delinquency million installments according been regulatory be [Technical think takes just behavior, there change Brazil what for again, think the shouldn't consumer to few significantly few no the increased there would of contrary using more and Just this offering is consequently, this this about I possibility -- number provide merchants think economy, has that a that we've important free the showing consumption think seen a the any, installment the the credit over between data in methods differentiate by substantially to there between large according Bank, Black to a I and sponsored think relevance number said, of from regulatory transactions you empirical GDP Friday rate overall negative. country. of third, maximum And have interest-free of the ourselves [indiscernible], in offers an country's XXXX. any because executed XX% give about I frontier installments.No, to study a just was position. give levels. private to relationship our Central strong well, transactions I transactions an where the away the delinquency installments, points, Difficulty] that and impact card is it's represented week, And just installment-free half to total, to offerings.Second, right?So a method I actually the Of to and this payment reinforces Therefore, in just to own

we're think be think rate for So free position our interest hold that clear these reasons, it's to there continuing transactions. restriction on why any shouldn't I I quite

Mateus Schwening

add, But on that if were I On Tito as only there discussion. PIX PIX that and of will rumors that transactions. advance, Pedro, think our of any understanding a didn't about may debate this charges unlikely whole. is the we charges indeed I also think prohibit regulation it's some kind in this any asked about prohibition discussion,

Lia de Matos

out -- also answer. and there you Tito, take And Perfect. of that about I left the asked also was rates,

by regarding rates, market and behavior see we quarter, change a was which this the didn't the small, trends was same. take Competitive small rational prices, our it rate more If by sequential driven higher a take change to we anything, remains dynamics basis slightly in do which positive stable mix, whole.When quarter, had at we roughly which intend a pricing was a soon. mix. from anytime X not impact as policy points, offset look improvement, we debit So this we

do all. don't our not so. we're intend to We at prices, regarding So changing strategy

Daer Labarta

micro continue follow-up in than mix growing one say just SMB? can the if in quick think benefit to you maybe more, here from rate that. Lia, on Do take the you're

Lia de Matos

Yes.

give more color Investor the I think Tito. Day. trends these correct, is going on that We're on to

intend a rates long-term we So of on evolution. bit more to take little a provide perspective

Operator

Our Pierry of Bank next question is from America. from Mario

Mario Pierry

hear me? guys, Hi, you can

Lia de Matos

you Yes, well, hear we Mario. can

Mario Pierry

on Yes, quarter. the quite Congratulations perfect. good. looks It

X%. you a XX%. Let like revenue other X% is X But me Software, EBITDA questions up the right, saw on slowdown is On hand, we generation, in also. ask revenue growing from

the more already some in client. clients rates talked I'm as a headcount disbursements Can you calculating perspective, specific benefit the where you is year? XXX You about you reductions. can full you more expect or of specific loans Can specify interest of cost charging us seen little you're size here Do of these regions, how bit XX,XXX do you you made talked these disbursements the per of make of about, what on side, you that you increased as a these to the reductions?And BRL we give about a big then on portfolio to million. reductions? BRL well? have characteristics? credit targeting What about type And get within are this think or

Lia de Matos

you, question. credit. going evolution over take to then first line the part on to for Thank Mario, in Software top to margin Mateus elaborate it and trends on pass the and I'm

seeing, in see on drivers biggest we evolution; we of first, is are ahead. we to remain the we're growth, allocating prioritized verticals if and sort the that opportunity, we within Software double on have click segments.There, the So, capital grow of have and really opportunities revenue growth that top where the the optimistic we MSMB of we we level regarding happy which with with line focusing that the are

revenues transactional color itself. growth and our more give Software business detractors are the this will The in on enterprise Investor the to business biggest digital in in Day. the We

we I our are lot in we there and business Software already have penetration, more do important see generation.And specifically, a of focus opportunities. a driving grow us, where to is that and and that, towards installed line base high for there market monitor yes, in a we value we highlight enterprise the cash remember Let's very to be to But captured want efficiency growth also and clients. is capital disproportional is top allocating also it

that driving our within software towards bundles opportunities that the already So clients and providing execution services services more, a we chance talk will our about and the really is capturing verticals Day opportunity a the that have.And attractive have and priority we to we the more MSMB software there exist very is in more in financial focus. which the financial Investor within segment, are

bit a line. that's on Mateus can elaborate Maybe trends top on So more little on the efficiency side.

Mateus Schwening

Yes, for sure.

margin correct. So you on evolution regarding the Software, are

improvements integration benefits platforms.I expenses. margins, reduction.Now, in personnel see I the important headcount X.X from to necessarily is think quarter, BRL personnel basically room see segment. Software this normalized costs, basically when most credits. now regarding this ahead, not think to of in negative in to collecting It's from the XXX% second something that evolution reduction more of I for disclosed that expenses the we the think million which additional question of the from to benefits we more X come in we the severance the a And a But on impact are software levels between overall. still I quarter-on-quarter highlight and quarter think in came look I that I was we had second related related general, think last it's

from portfolio the scaled we quarter. [ XXX right, also the you're this million in XX BRL million second to quarter BRL ] So

I time, mostly SMB this focused In on offering the is terms focusing think at who our we're segment. of

client's idea basically per about at we're strategy evolution business more of on around on conservative of talking look terms credit month BRL regarding charging, portfolio XX,XXX we're we of it's the sizing I overall and that the still provide around performance TPV.So, volume the the and Investor the to rates operation, in when of the X color think a very the But the is approach. So Day. of that

wait think more that. give little to a bit we I So on have details to

Mario Pierry

sounds guys. right, All No, that good.

Thursday. on you. Thank there be we'll So

Operator

Our question is next Geoffrey from Elliott.

Geoffrey Elliott

to Is the And of Is have is industry seasonality? quarter, share terms just further but debit something behind specific know that you an the higher that why was I Is debit you? trend? increasing, time. ahead, more that what was that continues? that In this in curious that? I'm looking debit fourth

Lia de Matos

here. Geoffrey, Lia

hasn't a seen the from market other that -- trend. this is been have in It we terms us We of what this in specifically. has So their this results, players do to a market. believe with releasing trend

credit is, trend on limits hypothesis credit think improve going will this We cards. for Our that limiting still this credit forward. delinquency

Geoffrey Elliott

And, it. could it the I buyback. squeeze in Got if then on

You did Do of BRL as these that the of more forward? going XXX you we quickly. beginning million for the Should very out process? see looking a be of kind

Pedro Zinner

to taking question. a think Maybe good some a how you It's on Yes. back topic. step give that context I about

of to I company when decision BRL the quarters, if third we becoming the can important generated decision increasingly look the quarter cash is allocate generating you we're how in of this So reinvest going you cash We basically strong results, at XXX to And net see see the reinvest this in million flows. that few was think we still look is at cash in after we business quarter, when evolve, towards business of And even profitability drive to also the our this after our growth. more capital room cash past even our expect future the generation.So, ahead, as increase, continue structure. look lot portfolio cash this for our we And strengthening and and do in most general. to credit us. to increasing generation even should a for investing

towards move room for that. going towards banking we solutions, example, the in even repurchases, to our here. an constantly certainly this a but evaluating good we for to expand trend common is whenever is is the the this we we're Investor business we're But the or is evaluate there it that option. to allocation feel excess still So, there credit opportunity I in money share philosophy cash, a when to And about capital more are option again, going think details Day, call, but allocate

Geoffrey Elliott

Great. Well, I'll it hear more see week and then. about you next

Operator

next Gusan Gabriel from from Citi. Our is question

Gabriel Gusan

But to week. our talk that to you not to base your it if point. I you answer our client seems plans that this can the bigger have question this in and in makes become is my service you the banking full next sense discussions, Day bigger release about in and go hope please share Investor having at

probably clients merchant You million X the micro in have about segment.

sense. might banking full [ going makes So ]

Mateus Schwening

Yes.

So I control banking the process the last don't but in we to should license, the the the we terms in we to map, the in are We full obtain regulatory think have are license. approval, think this stages access I road of and license of soon.

to that I deposits us as Now license using what funding the have it's allows when we that about think mostly do, lever. another does think we

of lot going terms the and our a think the evolution. in we're the the enabling is product itself we're to going there. not In road use Investor map. deposits road in a thinking of us how about map restriction I about potential forward. a It's to license the Day lot certainly There's products, discuss But more the banking

Operator

from Neha from Next question HSBC. Agarwala

Neha Agarwala

be this merchants on -- is of clients net Linx. color that would sense Stone on in is what of continued be you between came strong bundles we your some large give of We tail? to which what level to question you Could maintained? your percentage down jump granularity quarter is quarters?And the SMB using the the us decline a long question So second Could in Linx? How cross-sell can from despite trend are Congratulations And the results. quarter, saw the that coming be and break CapEx this in My you a quarter-on- us Linx give adds. the first on [indiscernible] some clients nice saw to CapEx in you acquiring? Linx now that should how that as some to net are helpful. adds expect on my Should CapEx. trying

Pedro Zinner

regarding I'll the Lia color Neha. you, then some maybe take can Linx. Thank first question and give CapEx regarding

Lia de Matos

And I take rather there too. [ software a question ] think was on I'll

Pedro Zinner

about things to talking So first, here. CapEx few a highlight

cash usually, activation outflow differences So are and between the of there PP&E. the

financial to dynamics pay of PP&E about footnote As suppliers and can for statements, periods. purchases pay the PP&E with a we result related the data the later down it maybe example, lot negotiations of XX.X. purchase of or previous We give in a as

the the So million that added when at effectively the we BRL period. look quarter, part you outflow paid XXX in BRL will XXX was of in did a million.As future PP&E but this cash of additions quarter, this actual be intangibles, we

explanation. any take of of longer-term case, CapEx management. the But you So Gap]Becomes in that's when perspective[Audio part a

the Investor have just X.X% give months more example, too we you to you of revenues, additional XXXX for with X that lot When details a but And XXXX. X Again, in operation. downwards at week. going in to from seeking to we're Day to that of CapEx efficiencies another bit in a our months in that. trending do spoiler not been the next been X.X% little the it as So color to has think I percentage on topic of much, logistics give has a it's that look

Now maybe Lia?

Lia de Matos

Yes. Great.

is what So performance Neha, the little software. adds, about SMBs, marketing believe have but bit in also consistently In so our hubs channels I'll growth was following. in to and adds, in cross-selling micro we selling, say net distribution I question on your that can on and invested focused net -- both we a are Year-to-date, around bundles. clients. then drive talk

evolution, do in se. more discipline quarter-over-quarter. also enabled towards growth in continue profitable We to the this drive marketing can the want those is While MSMB and per return TPV us great investments in have on yielding returns, investments allocation be to more But so TPV grow.But have gaining that we continue message stable they here of performance a in they hubs, pricing importantly, and can also and to selling been most and to capital to a invest additions have our is execution volatile that whole highlight as with growth. share healthy levels across growth net itself a the target segment allocate not and expenses

accounts, message give trends.When think of opportunity So software, the adds it proxy is that on within that's talk around but qualify significant I or there and we you a more pool, TPV color XX-XX about base, the When this, so little is me opportunity a exists as MSMB bit. But within also look services that have right? software we let payments net eventually prioritized banking will between some penetration and enterprise these versus verticals of terms financial on in at key credit of regarding So the client is we towards.Today, to results value in services. better of, at extremely number only the still our financial of not proposition execution terms and our journey. software our positive we're ability one, offer seeing beginning financial combining that a We're but verticals small. a by

TPV the significantly the more when it a excited. at the message on early We to is a only within banking, is than execution it is around deploy company, gas station organizational across only big verticals look beginning from really better and because all also banking strong are of we that clients that we embedded stations are but Linx. where services.So place to here of and to the started days. clients, is using economics it's lever across more we these very other recently and of think bring use unit but we we that because the in a We're solutions there solutions, of at we software right offering example monetization actually growth are is the economics continue vertical this, look we the as effort our channels relevant I clients, a that of deposits lever which But that clients have have payments gas now those elements is advance well.And the not will when this at very big journey. financial feel in unit

perspective sort will give on what We where and are of color Wednesday. this next this, on our on our long-term more we both

Operator

from Carlos HSBC. Our next Gomez-Lopez from is question

Roberta Noronha

to Maybe the back And Carlos move we to to can. can line, next. go he on if wants the

Operator

Sumar ISI. Our from next from question is Sheriq Evercore

Sheriq Sumar

Can hear now? me

Roberta Noronha

Sheriq. Yes, you. can hear We

Sheriq Sumar

Great.

Sorry about that.

to wanted about financial just expenses. I ask the So

we that the should measures other quarter the third-party of how overall also Brazil's can expenses levers other the fourth for to the of drive within software deposits? margins the higher? the the about and I So fourth that fact mean think think I be about would some has know inflation versus that in cash about we for think you on But -- talked given about down, come you helpful. XXXX rate within in lowering should how using I what mix And mean depending the are the quarter? business. some headcount trends,

Mateus Schwening

Sheriq. you, Yes. Thank

talking starting financial expense. maybe So about

past, in being the but in TPV one we think medium the rates financial over should and overall think cash first our factors generation being this growth. second one I expense we've basically, third the mentioned X the term, one the the being country, be driven by interest

slight XX.XX% evolution we in had in a X third these Brazil financial this I on XX.XX% quarter, CDI reducing average. from the to the basically the we look think that in decrease we when quarter, at of function was expenses factors.So rates saw

think operation. cash Secondly, by I we I the terms we forward, our offset factors the think CDI were growth. And quarterly to towards reinvest look is third, decided X in slightly generation reduction basically to the some funding When the rate. these have of perspective TPV

lot we're that And cash. question, to of the have we earlier in generate mentioned think, going forward. a the So continues tailwind I going business, like to

think and contribute the to expenses second should for company. trends.I the the overall regarding also overall costs this So question levers

administrative it's in mentioned expenses. of the we the general trends in that Something call, terms

this the as last this decline a to percentage quarter. since a year line the nominal first XXX the we quarter BRL if long-term quarters fourth year, measures million services lot quarter XXX see revenue at that highlighted integration.And the and still a basis also 'XX, million to trend look in we from something this improve of I it's a But think we ago. of think shared you center zero-based terms software few And of around going this to declining in has room also in BRL for company implementation of of beginning the after a line started led line, advancing implementing this forward. I budgeting,

keep I trends all across these logistics, the important X. on But book, when lines at we it than terms yearly we idea to deep when the are is provision the think IFRS line, look think to starting or to main that as more control upfront while customer to for percentage margins we're that booking expenses when think look highlight we due credit expand trend X of serve, this our business, we only scale dive very in cost at basis of I at business. service seeing different really the we we're and that you a the to important gains is losses, in for losses And it's that see example.I line. gained the be another we points

don't models we XX% XX quarter which in the data quarter are BRL a we it by our provision to cost this BRL in at effect points in XXX book to to the alone, we have quarter, our serve around million, from impacted as this in look is So at more million provisioning alone, enough expanded third because of XX when BRL you negatively aggressively.So revenue. as percentage this XX basis million

effect the to bear we from have that to scale So the have overall, lines, business. when gain in in all continue efficiency to we going main I this look this think is but we're idea to forward, credits mind as we

Sheriq Sumar

more the [indiscernible] to like there like it adds particular of same sign just -- is particular the the had MSMB. vertical people slowed in, And the to fourth Is previous in any the activity? saw coming has I you for quarter? what on wanted helpful. super read level Or holidays kind on double click question are Or early any for that? it you MSMBC was the is strength? That down? are you sorry, Like up seeing of that

Lia de Matos

you little chopping were Sheriq, bit. a up

So question, adds, correct? if I it it. was net didn't repeat I please believe understand your about

Sheriq Sumar

background I'm Yes. sorry about right. the noise. That's

Lia de Matos

okay. no, No, that's

net prior bit in a evolution. a question adds I believe, little Neha around that So I made, talked

to function objective grow profitable way. our and here main continue in is a of share gain sort So to

So it may adds is net driver. our going fluctuate from quarter-to-quarter, true that be that's to but

we'll to do way, can we allocate opportunities to a investment so. growth in profitable continue long continue see to As as in

is think of The in terms -- I we net track color evolution like return. TPV adds this this healthy we share TPV and comes of our around levels healthy providing say level only of evolution. market So metric really in that at is the less more to that closely can or

Operator

from JPMorgan. Fernandes Next Yuri from question

Yuri Fernandes

it. like would to on lower we disclosure, was PIX the It I taxes on and results like quarter. ask here. this the on Congrats

abroad. are those this -- asking mentioned we coming other from I'm because entities abroad, results some You booking among coming What some from peers more abroad? having see FIDCs revenues things.

we just check for about would if is that's this the should like your to line? case So we think view Should taxes, low? I What here? on remain also.And what you

Mateus Schwening

the Yuri. question, Thank you for

So the over regarding taxes, we past between been we has our to XX%. rate that mentioned few tax quarters, operating in XX%. we to normalized But the XX% closer were see past

the that BRL recognization amount losses of accumulated the deferred the third effect the in happened also that what think and this in think quarter So mentioning subsidiaries X.X is normalized one-off tax during related of periods.I million previous to in trend business. as worth a reverted we here of had on as for is footnote X.X some the reverted quarter, assets also we in I this tax taxes credits a had related basically What's see back in what that to losses to [indiscernible] financial XX.X the statements we we topic.

the to the the So we this when we of of a are look have unusual question, within second benchmarks. to part we rate. as at general our the tax rate part to we to entity. tax first And key compare a I it other effective continue we contributed is XX% FIDCs be look basically the to part think our a bit of we But do indeed the offshore ahead, line the of level.As XX% not trend, rate tax see, our question, when when

Yuri Fernandes

clear. Can FIDCs much local is you are super That's based? how and how much share abroad

Mateus Schwening

X.X. it's entities, disclosure offshore think show the to I on when related profits until do But in we have FIDCs. footnote X.X basically, this all we

Yuri Fernandes

will Super you. note. this check Mateus. clear. I Thank Amazing,

Operator

John from Barclays. Coffey from question Next

John Coffey

Sorry. I... Was

Roberta Noronha

We mute. were think on hear can't I question. you your

Sorry.

John Coffey

All right.

I'll over. start Okay.

take or of rate? furthermore, but you PIX the Because TPV of the revenues TPV if about new PIX bit X% you one -- verticals include about of the PIX that general merchants. or higher thing comments is release where was it, overall one saw as those wondering one I was X.X billion, PIX. do bit press volumes, be numbers, disclosure BRL don't kind could could from PIX to overall provide kinds in seeing quite And you TPV little was do a your the had you're volumes your some you come include I any So sort of a contributor more. in I TPV just which understand

Lia de Matos

PIX John, so is significant. the little More believe and we yes, becoming a because to more, and it more bit on important impact more PIX. giving of it is to color provide visibility more

relevant So I method. in essentially that it's a payment payment as right? Because so? relevant, other PXM just the think a more is So PIX on is is big space. message method any PXM our clients is where SMB that need PIX Why reconcile to

So the a the transaction reconciled we that capture is can dynamic method that PIX in PXM the QR offer code be in dashboard.

because a overall SKUs, mentioned.It does slightly And that correct that PIX So like have a that us, take larger TPV. is This multiple driver consider clients SMBs, are -- don't that's rates. important. accretive on PXM TPV for the more monetization sophisticated impact you you we in that's have for

see as but it do taking we away So overall from mix way PIX cash, And of growth growth PIX The household at overall going we PXM look not volumes consumption an by we debit that itself. payment method. only driver market and see important is from forward. in

develop and is user opportunity new leverage settled because we and UX functionality that the better to evolution and years, new this around is map in It's road fantastic PIX to the a our instantaneously, and for which the for clients. can more and because, us, is us, become for they Bank usage we've more offerings think Central many product relevant. rails we exist. sort experience. PIX not monetize to NFC money there line the PIX net interchange.We more example, see products, said But pointing likely PIX will our before, times happen yet but as we doesn't and not PIX next as clients and more clients forward debit PXM do evolves For for with pay to the much because And in in an way this neutral of net get MDRs, it's our

message as a the us, to So see trend. positive we is this that

John Coffey

one to want just general. just I rates on take follow-up right. All -- in

quarter effects As merchants, -- could which the the to as just you you're and take contextualize generally which of help well move Brazil. them next is look having the quarters seasonality, in we the ahead, which bigger think out could in rates, push effects, debit as QX, could smaller up, pressure down competitive I

your the down on like going take pressures Just kind going and of rates trying forward. evaluate to up

Lia de Matos

John. Sure,

versus always effects, fluctuation you So higher. aside seasonality I short-term debit we credit be expect quarter, debit from mix like has in to Fourth think mentioned. sort that of

the that provide give sorry point I but execute continue pricing from that, little we to, we a said. we spoilers, more we to is think -- and color Day, that the trends can our Investor have will to Aside in overall these give strategy, on to as this continue bit

not our to the evolve that will do that not we with relationship banking. monetize the We banking on change to clients. overall our new have we the not And solution, come our our levers approach have plans.More picture, discipline. pricing in drivers We only PIX but the more and into more monetization more

at think too of as look more to many changes overall a in time the rates less see of growth take more if longer see do to be -- that positive forward. or pace less is because it's we think mix So I going across tiers. I going or you we're horizons, that terms shifts, honest, don't stable in trend

can So other from pricing monetization execution and think of the are I trends that think drivers solutions. we and banking, more more that

Operator

question Josh Fitzgerald. from is from Siegler next Cantor Our

Joshua Siegler

me? hear you can Guys,

Lia de Matos

Yes.

Joshua Siegler

here. Congratulations quarter. on Okay. the Really Great. nice results

question, thinking to to there seasonality this I quarter into be just wondering, are abnormalities compared And head XQ, we any as about the was we First how should aspects? years? previous as

Pedro Zinner

question, Thanks the Josh. for

TPV tends and big think, better because first as I So usual, to Black the performance have Christmas no of quarter news, a Friday.

So on regard. that nothing new

Joshua Siegler

the from was Excellent. you're now. delinquencies potential you thinking a given then wondering elaborate a in little right I increase macro about if bit could especially on a cards, you're perspective, credit that And the strategy rollout how seeing across credit of

Lia de Matos

here. Lia so Josh,

of we have at terms we remain of the We're as said is speed same rollout environment. speed the the think which around being regarding conservative message the attentive scale. in credit. the to We I macro

in So I think our to strategy no credit. different message overall as

we scale our remain environment. take observant will speed We appetite our to, of allows the will and the risk macro at to us time that

Joshua Siegler

it. Analyst Day. Understood. Got the looking I'm forward to

Roberta Noronha

Thank you, there. you Josh. See Bye-bye.

Operator

from SIG. Jamie from question Friedman Next

Roberta Noronha

Jamie, I hear cannot believe you are We mute. you. on

James Friedman

Can you now? hear me

Roberta Noronha

can. we now Yes,

James Friedman

here. are well, philosophically, on good to thinking where I don't. about is how ask Awesome. first one the Congratulations results, you some wanted strong that just you you guidance? the -- are progress years been the There's evolution guide, there in

where wondering approach guidance. mind about just your is So to we're now your

Mateus Schwening

sure, Jamie. for Yes,

we idea until quarter, Investor few the guidance. metrics no the on following guidance, up giving we quarterly give So call, starting in policy longer-term a perspective. is on this of of we're providing this were the previous But last the longer and the on mentioned Day, a to guidance kind

longer-term can you so a figures a as perspective So that provide whole. we're on for business have for going the but for to also XXXX, XXXX share outlook the a business

James Friedman

Perfect. point? Any for regard be have those sense. at you then PIX? That prepaid one PIX, PIX With volumes are this on the to as follow-up. can like Or just makes And Parcelado I if that if seeing you well see would the helpful. color are could

Lia de Matos

lot No, of from, payment putting cash I like not know away for this from PIX relevance method around But mostly and investments it's point. We growth of some us, at the we do Parcelado. a that Parcelado see players that are it's do taking PIX said, a any debit.

James Friedman

look I you week. forward seeing next to Well, Okay.

Operator

Prato next Our UBS. question is from from Kaio Da

Kaio Penso Da Prato

questions X please. here I have quickly,

take and down, from to rates the it like came your Looking looks increase breaking it financial revenue. mainly

moving what specific any would if prepayment any mentioned the was the change like parts for policy. So penetration the third quarter in effect of release, understand you of Because I just commercial there your you during here, adjustments press in increased to were segment, prices? if the in

So Q-on-Q And just mean, shift? here, to perspective. is a if double-click the like would to I related or mix on only this

looking to more and of of actually As clear that you I of also take effect financial to deposit if it's may, lot a business. it expanded also prepayment the Q-on-Q, your cash net banking moreover, used expenses, suggesting your net effects the of revenues, fund financial rates the own year-over-year, prices.And

Why to we indeed know did that decide like I but the do bit in as would one you well? a about forward to that before, of I questions should expect this you happened? and confirm that So talked just going if

Mateus Schwening

you, Thank Kaio.

less from net lot of our net started when So I but the it's decision maybe to of funding think and of rates, to related not starting rates you increased take to expenses related last question. Brazil the Indeed, a and that passing Q-on-Q, more the cash clients. look to financial general, in using towards that more fact decline we're in interest our through

So in it's about in less structure did pricing not the quarter. pricing the more We big question. in part our about discipline capital movements.Now policy of any changes second make and the

about and for price rate take was worth also, is And I when mix or think it's this when But offset you mentioned. that Lia mentioning So stream. a little towards revenue think revenue debit you we at whole not mostly shift, quarter-on-quarter, a by our line what's bit by slightly look as about clients the mix micro. like pricing, evolution

for can monetize we terms much see financial lever, time, we in revenues, how of to some time transaction from example. or income rebalance So each in

So the general read as too track kinds I whole. much a take I those in of changes. rates wouldn't into would

Operator

Nicolas Next Riva question of America. from from Bank

Nicolas Riva

cash a net once position. reported you again, So

BRL X.X about in have cash. You billion

repurchase of the some XXX of in BRL November. to shares used million You liquidity your

starting not [indiscernible]? XXXX some My of why also some loan this liquidity credit use your slowly to grow book. buy question is, You're your bonds to back of

Mateus Schwening

Nicolas. you, Thank

constantly view, levels our trading therefore, bonds at back capital And company's don't evaluate. So honestly. allocate a are plausible at buying to in that when Indeed, indeed question. they the reflect creditworthiness, that you a we option great look bonds, is our

think you we about capital capital about think choices. when However, allocation, is allocation

to back current our view, in the back offers shares shareholders the the to greater buying bonds. current when return and So prices, environment given compared buying

why right option So on that's now. that we're focused

Operator

CEO Pedro This now this at session. questions I will There Zinner, are no for time. StoneCo to at over turn question-and-answer the concludes considerations. final

Pedro Zinner

all all Well, very hope Wednesday. the next Day of Investor much meeting you very and in I in Thank you much. participating you our for you thank to to call, see

StoneCo (STNE) 10 Nov 232023 Q3 Earnings call transcript