STNE - Earnings call transcript Q4 2023

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Operator

Good evening, ladies and gentlemen. Thank you for standing by. Welcome to the StoneCo Fourth 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 you information non-IFRS would IFRS before we discussion financial press that forward-looking in like today's release.Finally, company's statements. may begin the financial Reconciliations to appear our include formal remind of future put guarantees and These therefore them. not forward-looking not statements should performances undue you are on reliance that subject cause from These numerous statements are to expectations. company's results risks materially and differ uncertainties could to actual the

In company's which now would to available regarding at risks Form Head at turn is in like over proceed. to the Relations Investor XX-F Noronha, addition, StoneCo. filed Securities Roberta of Please the Commission, your disclosed with the of Exchange host, the www.sec.gov.I business many conference the are and

Roberta Noronha

evening, Thank you, good and operator, everyone.

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

Pedro Zinner

and Roberta, you, everyone. Thank evening, good

annual had, we our on the the face.Reflecting strengths has company the financial way as taken strong year acknowledging future for improvement. a better how insights am and valuable initial future. role our in as my growth, our strategic response This after position outlined have but XXXX, of successful it our also only for in perspective initiated lessons to well into referring as letter, CEO, detailed and impressive to better on have in been look the market deeper our paved have has our and provided we is a our performed. milestones have shareholders the we revealing, I at CEO, areas journey as role that year I performance we strengthened I to my it not the in opportunities assessment our Investor As Day.In position adjustments business enhanced in strategic and spotting several my company, the

deliver from We businesses, Micro segments, ourselves tailoring have meet across go-to-market to reorganized client to approach more solutions to our Medium different unique our their effectively needs.

base the huge opportunity food, and focusing fourth results priority with execution solutions. stations, areas three we client aligns initial increasing edge future. the focus clients a one, have our Day. our also in outlined our of X is be to payments, our key These structure and helped strategic drive services the organizational MSMBs, drugstores, new with enhancing the capabilities leverage while product, us which coming key for some to terms and software encouraging around ability engagement Our where platforms, focus to segment, needs first years.The strengthens Lia There achieved combination software. opening address priorities, engineering, efforts. to financial innovation, in a quarter.The power the priorities, client our retail, our growth the in and competitive around focus increase and second in present to we avenue will unique a integration one, are it our banking defining marketing, set X verticals significant engagement By to win strategic of in for in we gas and around way.We Investor our through of installed each scale of our with to will sharpened

a the users improve substantial results of fraction in the the example, saw Financial economics heavy as there the base. reflect banking.And Stone fourth is quarter this segment can in be a creation only solutions considered one, potential of client our Platform. strategy Services engage of our we the to As around success continue to of base third today, our unit we and an the The our payments and

rapid and build development sometimes X.X the a consistency This foundation Our platforms. at of we of streamlined teams our in we and the significant on together, that we've Stone expense technology growth all reusability. a brought share, But initially focused solid made We've started over resulted data to existence how change. the work, last Platform. speed, multiple the years,

ourselves effectively unlock tech to setting enhancing adjustment center up are initiatives substantial As Recognizing we to controls. budgeting, clients.Our serve and especially to stage with setting spending and discipline zero-based our we're across like synergies new the leverage, sustainable a potential shared-service insights implementation implementing have the operating embarked intelligence, efficient of focused new at further. the we use aimed profitability profitable the our last and even cost our organization. on we artificial generate By operations. we're and management move forward, more even on optimization, cost a enhancing Through financial more strategic for

to in in from in billion, previous the achieving key progress fourth rebound is period. While posted quarter, XXXX with our year year an growth, BRL in MSMB initiatives.We ensuring quarter, we the TPV Last XXXX. challenges remarkable was significant us, for will targeted talk seize TPV, in we acceleration through it both increase we XX% a closed with do fourth from a the it exceptional about efforts.Before to notable not faced complete our I strategic results, annually, a would accomplished increasing a our the MSMB XXX approach, Lia, milestone with when huge, the the over briefly We and handing results. marking like dissipate particularly opportunity to

by deposits.Monetization This growth, services throughout and improved only In rates achieving banking MSMB already December, year, XXXX. the XX with into TPV seasonality. reaching points Our decline billion significant purely higher the but a also end result not deposits fourth also of expected of but better we from a BRL substantially quarter, of conversion of quarter, saw year-over-year. a to engagement, a the recorded slight compared X.X growth basis basis increase points reflects with that take X up the impressive X.XX%, was previous

More capital a encouraging XXX the regarding continued of portfolio portfolio of in to we strictly the end reaching NPLs importantly, results very Solution, by working the BRL Credit with advance control. the million under our of year, health and

our X.Xx fruitful, in prioritized with Additionally, substantial billion clients have surpassing through X.X platforms the improved our our year. X integration This year.The scale in boosting previous year. the increase more to from previous XX points, just participation these yielded forward to push up margin TPV operational started from efforts the than profit be by adjusted BRL billion, percentage leap X an our software over surged BRL of X.Xx verticals BRL billion, and in the to net EBT leverage, EBT to XX

into growth cash challenges and significant verticals, also portfolio the year translated BRL a with cash profitability non-strategic in and billion, net in our Our share slower. even software generation, investments where ended buybacks.On credit after an was XXXX, adjusted of in separate we faced segment particularly the X.X position note,

a percentage with However, XXXX points our results I savings performance dip one-off in EBITDA to generate fourth margins restructuring X.X Lia and good started already XXXX but advancements significant to XXXX achievements outlook.Now it our of efficiency and us in by and due a improving year us, Lia? results, moves strategic quarter in positioning to recorded showing our XXXX.In fourth for was to and are costs, to summary, to discuss like these quarter quarter fourth initiatives XX.X%. The poised deliver to place pass a our are XXXX would updates. strategic over XXXX

Lia de Matos

the and levels active the base with segment. addition with market an X, gains clients.As solutions net Pedro, increased a XX, we're this our to combined and consolidated and Payments new segment XX% bundled start follow, in almost cohorts to balance as Slide focus you adjusted profitable XXX,XXX by of client for putting engagement priorities, a I about well that for quarter. by performance percentage almost both performance quarter, with more year-over-year, strong our as increase our lower as share X.XX%.Take higher driving over our client our tiers.As win points evolutions can debit are of the combined migration represented in launch and XX result year-over-year rates revenues clients. accounts in result clients.Now further with of banking continued a Ton XXXX all natural XX% performance also our within of in as approach grew complete our growth our important achieve year-over-year has shift was we see decreased look almost points this to Slide clients adjusted the performance PIX evolving on banking active higher billion Sequentially, strategy seasonality profitable MSMBs. show have Stone, in jobs presents an bundle X.Compared clients. extra their MSMB year-over-year increased to mature when believe in the to year-over-year, Slide to achieved of mainly in were a our points BRL closer and TPV capabilities, activation base offers. to Super continued clients, EBT. result client due TPV our distribution superior XX% continued solutions, to clients resulted our 'XX, a rates to quick growth deposits, banking the the in our active low-margin in you, offerings in of we improving associated Considering on for new in and segment.Now last XX.X%, growth also client client will of threefold on TPV. PXM accounts This key in the which our of will increasing good segment had cohorts the and bundles; besides share with payments to billion the you them ability The active X.X X.X third quarter, year more end priorities on to numbers basis cash-in fourth for with our increased the with shift offer deposits and cohorts, both these optimizing derived business effective bundle We helping We in commercial levels basis of to market billion the XX% at reaching on discuss strategic million the our Stone in quarters increased result level Banking net versus growth of to compared Slide with more client caught We Ton a profitability, year-over-year up reached led resulted policies micro strategy This and and from a of and overall healthy X the to engagement quarter volumes, lower on and towards and Thank always Slide in strategic level to were the growth industry banking payments a the at performance in that our Conta X. X with to the X.X more PIX was in continuously second, through more hubs of to points while to of considering calendar twice due on an Payments up adjustments beginning BRL growth mix our of pricing and expenses, also effect Services overall around X. line see done. X.Xx engaged and MSMB percentage income the levels. take MSMB our positive drive service full decrease to period.Taking take growth the evolution of PXM Slide tax We're year-over-year, will this a XX of deprioritize a banking the our of in in increased mainly on accounts of evening, clients impact strong base of be commercial growth everyone. quarter the solution. XX.X% in previous segment clients, from as end BRL the X result lot and million X I the a of the which seasonal solutions base clients. gains, while lower margin fourth growth have larger growing our in quarters, TPV effectiveness TPV market. pages quarter.This with the in advantages by rate, of strategic Financial previous rates competitive lower almost the which volumes. the fact a versus is and the compared threefold net factors, which as MSMB update our of off-board with financial increasing XX%, This the resulted with the more Key These Year-over-year, XX adjusted engagement a on in growth year-over-year to Ton XX we of the key than in and let's which, levels

of deposits quarter is BRL XXXX.On per XX, to seen month. As seasonality, credit XX.X% performance. we'll positive the client about trend talk this Slide throughout lower Despite a ARPAC first in our also result, XX.X increased quarter-over-quarter

relaunched a XXXX the we and As increase of seen positive period, the in XX% of sequentially SMBs you million In to an fourth 'XX, XXX know, quarter-over-quarter.Loan of solutions X.Xx very in BRL increase of than capital XXX XX as clients, results. quarter to provision an disbursed constitute we've million, expenses BRL of reaching our we more totaled our around have loss X,XXX portfolio. initial million provisions X.Xx portfolio of BRL working

the taking of XX Although XX expectations, conservative a over and performance approach, of above X.XX% NPLs and XX our vintages are days is with we between NPLs X.XX%. of our days

solution should clients the a our ratio matures. risk driver is changing portfolio fourth clients, driven the to mainly rates, clients.Going and principal and resulting our priorities to performance was order gas forward, overdrafts. so and was of growth without evolutions. mark our highlighted performance will MSMB margin an turn, more In strategy such continue listed marked SMB stations. and that loans end-to-end monitoring we and This performance of increase our our adjusted year, relative have This in year-over-year.Moving services EBT Slide again and To software verticals, XX.X%, more XX to of to past-due with Financial of the than combines the quarter working XXX and the twice overlap year above-industry revenue market financial take of provide in software, talk Services an of will conditions.Beyond main TPV percentage quarter, of this and credit X priority an million MSMB banking we as solution this cards to had success the almost of verticals. XX%, our our EBT of also points the engagement BRL in capital our TPV increase efforts illustrates solutions evaluation payments the have Among we portfolio, growth for management billion. As drive let's X with disbursement continued launched diligence growth this portfolio by reaching strategic before, our adjusted BRL about by in launch XX% towards SMBs, we signs close in growth, recently in XX, year-over-year Quarter-over-quarter, the between increased credit growth software TPV as summarize, first higher same fourth X X.X period. our reached strategic

distribution focusing our up in offerings. software on and we're order go-to-market to our financial services setting combined for scale model First, strategy

value the of with the opportunity third, to focus we being gas proposition guarantee integrating service product in the enhancing main And we're retail key to for the the strategic superior X XXXX. process verticals, target with us Second, bundled levels post-sales and seize our installed and to maintain next we're the focus the within still will is expect this years.Moving for solutions, Slide huge key client software be a our engagement There opportunity clients our drive for XX. and to to base a from us. stations

million, decreased to XXX as of decreased revenues as of adjusted the segment to down which with Software EBITDA Software BRL Enterprise third of from lower lower Enterprise XX.X% in compared with costs BRL a Sequentially, with in of the BRL cash X.X% line, the decreased revenues on 'XX. adjusted quarter XX.X the X.X% from in XX revenues quarter EBITDA business, well the amount result due result to period. as business.As onetime yield year-over-year this was XX% XX.X% of lower margin million a weaker combined revenues an top in restructuring million

our restructuring strong improvements we're strategic combined fourth of marks I segment, seen pass Software these in Excluding costs, in strong improve our margins and for discuss quarter scale for well through results closing EBITDA to fourth would engage been adjusted win, have the process I and for said, expect XXXX positioned business. on believe of we margin more continue Reinforcing savings the we and it quarter. XX.X% and what as the The fourth mentioned, strategic an to our around we financial in Mateus? cost to important the already priorities focus detail quarter year evolution key advancements in the diligent in platforms XXXX.As Pedro our outlook.Now to of to a over him led metrics. Pedro have Mateus XXXX want to

Mateus Schwening

we as higher losses BRL in flattish Thank of basis.Cost expected the sequentially reached grew our where of investment fourth begin I the on credit adjusted technology. a and like and in our evening, an evolution everyone. year-on-year despite on provisions services million, the you, BRL for XX, increasing were cost Lia, to and in million we would XX% of as services of XXX discuss expenses quarter-on-quarter of good amount and Cost XX book quarter-on-quarter. percentage revenues credit Slide quarter X.X%

are administrative Bem different in from tax quarter.Lastly, as of fourth period The statutory working appreciation of rates. sequentially up to as as for continued to Investor variable number rate in as lines, because a down be decreasing expenses duration to share a gains effective XXX compared billion the in lower year.Selling basis compensation adjusted XX%, revenues. of result increased in less higher flat expenses sequentially higher of the to for percentage X.X% quarter related CDI of XXXX. tax to and provisions which of compensation have our to higher expenses reached in seasonally service efficiency than a from leverage.Administrative Lei lower revenues, basis price a do than revenue revenues percentage points quarter, priority with forward. increased to a expected fourth contingencies combined XXX in Sequentially, of the a provisions administrative expenses balance due the utilization leading seasonal in of the percentage XX.X% and of decreased fourth Excluding and revenues remained quarter-on-quarter lower point This was basis and XX have expenses XX X.XXX rates the Day, third-party a when the quarter-on-quarter, in percentage of days, guidance achieving reduction We growth of less showing cost as decreased result period. would as with evolution XX.X% of expenses, quarter.As in X.X% tax effective benefits for credit the operational decline subject the in expenses expenses continue of year-on-year, revenues implies abroad shared basis percentage Financial quarter. a subsidiaries we a XX% average average our lower share-based a of a as percentage as losses, personnel as basis G&A points a points higher tax points decreased XXXX, provisions will a services tax fourth higher of result period.Other well committed going for BRL the average increased the X% XXX which [ ] cash despite funding of was remain of a rate interest

Slide For XXXX, XX. effective to expect we to tax between rate continue to XX% XX%.Turning

while cash Our year-on-year BRL the an came of quarter. and billion XXX as net for BRL billion, X.X notable is million quarter would adjusted BRL of it reached like net XXX capital in cash our deployment the buybacks credit continuing increase back after the I the reflecting position expansion The adjusted especially to growth X.X on it share to of portfolio.Now to within also deploy BRL Pedro. million towards turn

Pedro Zinner

Board, upcoming April it holders and pivotal aside of effort conclude wrap enhance our by also a Chairman, Chairman helm.The Meeting privilege strong results a tenure remain be Board Mauricio as to special his the Vice has culmination Annual of led today, and at and you, transition transition the mission esteemed Mateus. protections the reelection strategically Andre General deliberate, professionalize Conrado the we Chairman. and a also a recommended management to Andre Thank seek governance Shareholder, and XXXX. stepping leadership. that forthcoming our and Chairman, as at This scheduled was to company announced agreement team of on Articles will will To will Chairman bolstered Street, including from the the Vice member, aligned robust, candidates marks chosen in Founder up, crystallized in not now the Similarly, the their honoring Engel, AGM the Association, Patricia by Caldart reelection, our commitment.Andre as Reference the for Board. by nominate Verderesi, X-year XXXX Gilberto standards, to for multiyear Luchetti connected

Alexandre will Additionally, be Scheinkman. member indicated, a new Jose

in separate by our more a to the succession founders. alive details shared keeping committed X-K spirit are the filing.We have about created We entrepreneurial

great would our shareholder high a reinforce governance team, are our in to Our for entrepreneurship is a forward.Before to I and our given like set a to goal mission we centricity. XXXX. of continues company and like client advance grows maintain continue Andre, be and guidance moving strong standards a to business, committed to leader Q&A, as all With to

portfolio X.X billion, BRL we we than XX% XXX decreasing in XXXX. administrative be than than BRL XXXX, representing expect of income our an compared increasing with compared X X deposits expect monetization, growth, client to year-over-year.For of more more than than than we an we take TPV of reach MSMB For rates credit points.Lastly, million, more our billion, increasing while than increase X.XXX XXX than growth billion, efficiency, with XX% metrics, more adjusted to MSMB XX% expect BRL X% expect expenses year-over-year higher increase less higher with surpass more basis year-over-year BRL to more of billion, implying than X.Xx net X.XX%, with BRL

XXXX, ahead and close you There is we business. I to we us, the growth open said, closer am more combining.With ever of and operator, are to enthusiastic XXXX the As questions? our up please kick than off power of that can about call demonstrating

Operator

Instructions] [Operator Our comes Pichardo Evercore. ] with Mauricio [ question first from

Sheriq Sumar

This I of is Sumar business, coming had ISI. slide Evercore Sheriq from a question on to the Software XX.

Just we point in can potential the the sense X the mean, from it of the Software Enterprise how to, into business wanted a so think we in I to see to expect a as grew like get key should that the impact X.X heading benefits when XXXX, about just verticals that quarter? we fourth of here? growth the decline percentage can given And

Lia de Matos

Sheriq, question. Thank Lia for you here. the

is highlighted we talking going Page our what XX, are our about I'm bit which initiatives financial base. on little how to a cross-sell to client into software kick off on regards advancing to services So we

the in So strategic we because of revenues our And in client of this selected the Investor evolution key we Day, this majority Services verticals Financial they as opportunity those talks base. year, page priority. shared the X about last the installed with represent

of differentiation, TPV Services that the we and this opportunities, is which these offer Software. leverage And a metric our can order better do cornerstone service which for XX%. we us billion our X.X that and the Financial in of that regard, capabilities for Financial it's value can metric that solutions initiative our to essential Services proposition.So vast this quarter, our overlap be clients a BRL to capture and between a believe way that sustain represents combine growth in going of to distribution reached and footprint main we in this success Software the is really in sequential the in So

can of as growth with sequential combination. we our from is the overlap value overall growth the as TPV this long we're Services of above than our MSMB that to TPVs.And Financial So this MSMB see additional in can growth base, compare base, continue we Software significantly grow the this capturing TPV client overall. this growth we And of client the higher means growth the

think in bit Mateus I what is the highlight Maybe can more the about page. give this a trends. this of revenue So we talk essence on

Mateus Schwening

Yes, for sure.

Page on I on on upon you revenues especially basis, a And Enterprise, here, on we related stand-alone some also XX. think the from we that Software effects think, had So touched show quarter IAS is I which negative Software stand-alone. direct in line so hyperinflation, I for XX, under was here said, Argentina, But especially Enterprise. really Lia revenues the the priority in like not top think, the a

there. but software I is think because again, metric enterprise in this TPV.So upside yes, improving hyperinflation, for some revenues really there the focus be focus really the not on that to for is the think cross-sell I can future was there related one-off

Sheriq Sumar

just I question. X have follow-up it. Got

the cash you On help the to and even interest about we as lower and versus well can XXXX how quarter rates given implications think the of understand should an the expenses, prospect might the financial extra day expenses? first leap have for of us like any of going And I on funding? impact, as be small of the know for in but like use for or year impact month that would pretty third-party the a financial also, this Feb,

Mateus Schwening

repeat you with to I then second Sure. the will ask part. I part, will first the and start

the which what start to changes bit. cut in should XXXX the we are You for expenses pretty be here in much to driven the saw by on quarter, the a just expenses, is But financial trends financial similar think I rates. little interest

course, I of that throughout please this its in as and again, impact these be for trend, This think rates a think second financial it you as expenses.Cash the part Can TPV a Sheriq? fund reducing, to be the the and positive of we year. repeat a is we are this itself similar offset cash use And which remain So generation, But and same will trends should the the impact this growth. generation, have consistent expenses. cash credit. financial should part on of we repayments from interest question, saw the quarter business positive I has evolves,

Sheriq Sumar

Yes, sure.

in quarter, in additional the you going But there working of the said February. month in your you you're number that an days So day comments, first have because to the have fourth extra were day in of an working quarter. lower see

know going should to how a to the be as we get but impact pretty wanted that. is sense just should what I think about small, to So --

Mateus Schwening

Yes.

this the mentioned. the effects think I of was that we smallest

-- delta, the the quarter or So extra again, about material is when X think. right? lower I day in extra about So all, it's maximum on at we impact so not talk X%

Operator

question next Our BTG. from Rosman Eduardo with is

Eduardo Rosman

I here. X have questions

one just be numbers down behind here business, risk first lower departure. sense makes clients understand You asking XX% you're while sense, that much see we how actual an still right? is need which understand be the right? kind and to eventually your XX%, XX% right? but using basis So need to could because actual of That many your investors, the cost be And is So of will you your much a Street my credit the time aftermarket. able of losses? here cost upfront be trying sell-off losses here would is here on you in to the to and total able a under trying to risk about like right, the convergence question.And stock or first booking to a second understand think accrual time the strong, also believe the were just use of I to one, be how now you cost trying risk booking what results are of provisions, to The are of on

So Andre, right. -- I just want to

help if -- I months? the to like XX you his what understand to just his of of XX He an the large remains that us could was kind how last really is us wanted you if role remind -- anymore. in a stake So company. naturally not partner can economic But important

that in a a sense can me, about sell-off, of make changes doesn't explain Board understand if to lot us maybe which bit little So given the you bit the more the the a help results. could little and

Mateus Schwening

to over and the Pedro piece about to talk with start then will changes. it I the here. credit governance hand Mateus

Regarding credit, you're totally right.

of credits using itself. for So we're losses occur the will throughout expected model year. risk-based we're confidence we more have on migration this and basis, approach the until accrual booking on a XX% The credit an

So it gradual. probably be will

models how maybe to provisioning comments the our worthwhile as think then to about provide So your versus risk I XX% models.And to also loss an update expect levels. NPLs on the XX% expected touches which upon we're the going it's well, converge seeing towards we're

So to NPLs. we started report this quarter,

at X%. days NPLs XX you from low As NPLs are X.XX%, and still see, are XX XX still at really to days can

numbers ] affected we Of at of tree the Investor is and portfolio, X% speed [ cohort so low.But the remains disclosed over our and course, same look metric when that's of that why are the between roughly level growth in X% data, this XX-month the you at area. in the Day by the even --

an track So expected I level. the overall, the really point we XX% at we're think the in that loss you're to at us that look here. approach to again, put cautious land that soon, right taking still and it the when below But right is on numbers continues

if over Pedro, will migration governance. gradual be the maybe, want to comment the you time.Then about So

Pedro Zinner

rational irrational I Yes. talk to I hard Rosman, what think it's do I or investment -- side. the think reactions about on tried to

changes Board we to move and I terms had little we as this ahead. see be pragmatic bit how a think I'll with in try of we the

think bringing this so a is changing Directors, Andre's of couple joined the I sorry. or April. has kind of the a expertise, I I been technical think company mix personalizing natural even Board a I ago, in Board ago, -- years And part the of years right?I process X journey, company's past was So years in step the think I'm transition over of knowledge, and company journal of industry X its

I solid think results. XXXX was And a a year I turnaround. represented very think XXXX, of

the he that felt as a we company. important it we ahead. he think a remains Reference the right?I and him of was strategy And the think -- the move strong terms his time highlight Shareholder transition, I from we is to former governance think team as and direction right plays changing point role ahead. And the here think to setting right I I despite management stepping was Andre as role, make back key clear a the have move in a of

may he worth point -- for Articles economic question, of another us the XX%, held the and in Agreement the regarding he Association today of a right?I company addressing of roughly think which value is is terms that Andre. -- safeguard by off I economic holds roughly think holding and of X% power this is highlighting company's the Shareholders'

the of as is he a one first holds indicate XX% rights, at can Board long least that voting member. he as The

while members. he that, voting is of Board The on the more which among other Chairman building than rights, is that safeguard, the he the who holds decides XX% is

a an move in So I changing role setting still shareholder. I reference as plays nutshell, Andre, of to committed the think directions the ahead. And think in important and we very governance terms the is company a as he

Operator

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

Mario Pierry

questions Let X me ask well. you as

you benefits acquired recently you're costs growth, right, this at growth? a base, better your And your maybe account should us one drove if that your to we funding clients of seen going deposit you that's seeing if strong of far? help Also, a your can all we why first us account because Financeira of what explain the forward. Is not already banking and billion, continue you income closer forecasting rate We year? more to we for levels? rate then talk guidance your Can that net normalized is around deposits?And you're only income, about the are think net remind XX%? BRL saw remunerate the tax I XX%. an which more should So of your us question to of a rate had assuming Or on see these than the effective right? effective stay to tax running rate, the the X.X should what when current The is clients you related banking can any second been what Have tax have remind percentage license rate, it you that benefits? adjusted with tax or have just tax you you you so look now is

Mateus Schwening

the I then rate over questions. for you banking. it Lia thank to piece with the will talk start and to about tax Mario, hand

the Lei So the associated were lower for do in maximize our consolidated a to just usage I expenses tax able of profitability was only as the terms that though think here, to the research even quarter really driver main where entities. rate but of rate, entities at give the perspective have Bem. with not hard some of main we tax in benefits and the that years, development, And we R&D we been we to our whole improve in those sure were company has also not.So been many profitable level, the for working make have significant some tax

of do usage efforts, losses able result accounting a of the at the As revert quarter were our we change, out Lei we fourth which in be of usage quarter fourth the 'XX.As across materially do ahead, Bem Lei not move the benefit the year. the throughout was concentrated really and subsidiaries in to these some of of spread the year should more level but increase Bem, will

we between and in which what So guided that when is continue we guidance terms rate look we embedded tax during to is to of that's ahead in XX%, Investor rate, Day a the what XX% the provided. tax we expect

Lia de Matos

Yes.

saw, some factors. So strong regarding consequence of you your main to -- questions results terms just deposits these right? were So of give a a in results result we banking, on color and X the that Mario, mainly

and is significant to we continued banking. efforts First that put around bundling payments

TPV Day, more to about important deposits. but that driver more was a that banking in our quarter use fourth payment Investor increase we and a banking the right? have our becomes in So clients and deposits, course, the solutions.Of to domicile, an relevant this ability seasonality continue as also to does cash-in with lot engage clients talked and So in

the throughout quarter gave there. the terms Financeira your question right, positive the with Investor to us regards year. seasonality is have -- first of about very a the in banking But same a effect roadmap trends the in we 'XX.So lot on ahead see there of of color talked So this we license, we of continue that this Day, to we

beyond products we gave investment to are on So that. already we and some And roadmap, color of not said. there's part what our say much

for We are testing our product this clients.

to jobs can Our really for that our that main is prioritize the focus develop done a be we clients. roadmap

be So investment XXXX. and throughout giving more part on is of a color this we that roadmap, will

Mario Pierry

Lia, domicile. just the a let me your account? today of then ask clients What have banking percentage banking you on

Lia de Matos

Today, domicile. of Mario, XX% our have around between a banking clients --

continue banking all upsell as as well banking of the payments there's drive to and been course, a clients significant to to migrated when we the our new sales Ton shift clients Of towards we current to XXXX but bundles full base. banking in solution,

Mario Pierry

you that not confirm plan not you correct? remunerating just deposits, do these them, remunerating you then And Okay. on and are

Lia de Matos

deposits XXXX, more guidance that pass not So that you Investor for any clear, we are change. But we as the of through any currently, we correct in that. that deposits just not may of our the specifics interest about considers do floats. to pass the of clients. through to that the in of level be the And too of investment give that as But long decide sense course, to do we any gave scale early products, Day to

Operator

from Goldman Sachs. with question next Our Tiago Binsfeld

Tiago Binsfeld

there expenses. look X% your on below third-party And main that When what guidance, challenges expenses give new X in opportunities services you especially XXXX, are any one and and from this we we think just lines? at into personnel have quarter, to thinking I would these more on XXXX. up do any growing But broadly, here? the are read color can picked appreciate trends you

Mateus Schwening

here. for the thank you Tiago, question. Mateus

I'll and this result about drivers. In a X of expenses seasonally fourth is So XXXX. mostly the are quarter, first And quarter this higher regards then to in fourth the address administrative talk quarter.

a quarter. the and compensation of compensation of Naturally, has third-party events in compensation, lot in drives the variable EBT more a of drives to one higher variable result the expected general quarter, but quarter more expenses. is also the because we concentration that a corporate first provision each we fourth The variable have and according

I So into quarter. trends wouldn't for read the much the too

company zero-based This not either company. have guidance, the to seasonally throughout and ] yet. company it been basically the the we grew the budgeting processes still I a when whole. hand, we're as some BRL growth either that's implies we On especially it duplicate segment we we've the improving efforts too shared-services to a Software Services have unifying driver X have integrated We here, processes, in million main the because these you the implement or I compare processes expected.Now corporate them [ behind to doing other And segment think X comes the and the to that in is think Financial center I functions.On really lot think more, we marketability of invest throughout when for numbers one we And XXXX. bringing the may need processes when fast about to because X.XXX a as hand, drivers. talk XXXX. we X% closed slightly you below guided

other So the is I think deliver the the X% we trends, one seeking invest and to of and figure see continuing these hand, in really efficiencies terms on in our hand, effect of growth what to initiatives, we implementing on these need net plans. X

Operator

HSBC. Our next from question with Agarwala Neha

Neha Agarwala

results. the on Congratulations

putting segment, mentioned seeing remains be benchmark year competitors both SMB is you bit competition your in the given that status of competitors, the So How well on segment? very a are aggressiveness SMB that guidance the quick terms maintained in you that XXXX. as strong adding the volumes? would pressure as on on of your focusing on from a volume good 'XX. a are growth street on one force new are more Just anything price in most for The evolve that but the after you sales helpful. competition the You seeing

Lia de Matos

Thank your question. Neha, you Lia here. for

little competition. So some and color a the I'm going trends on to and talking guidance start about the TPV then bit give

growth, our compare with seeing. market means So MSMB MSMB we're for essentially XXXX. this when the to versus I billion grow you share that of their implies outlook of we market. will dynamics we continue in -- Abax for will terms XXXX which the twice BRL segment think TPV, overall gain more the less in in market you in to nothing rate XXX released continue that TPV, the or contrast that And ] recently growth regarding guidance of new really [

reduction environment. expenses say on committed a we're competition, percentage this with guidance.In benefit So we regarding this that is remain in of to see revenue as starting interest competitive points. terms new And the the with dynamics, stable what of decreasing over much the can the percentage terms nothing we about anything Based to saying to rates really short X.X players financial in of not time rational results, quarter environment pretty experience from more consistent competitive overall, fourth been term, a that. in decrease is we that will much to term and rates.In is from and new benefit this much market, medium competitive rational have we interest what see,

Operator

Meloni with Renato from Autonomous is question Next Research.

Renato Meloni

a the declining much on is follow-up first going can XXXX? expenses. it's on the think give granularity from sequential So financial mix second the to more some expected rates. the me throughout coming behave seasonality given decline more my rates. how take I a than comes bit XQ. decline, I and much that's wonder in is how then expectation if And How and The client we question you shift from little in of on

you then play. help So some if the estimate I there that there for year? this could if And wonder here factor us ratio at is other have

Mateus Schwening

with piece credit result regards decline mix rates take In majority move then start the versus debit. will I financial expenses. and Renato. you, to of of was the Thank vast a take to the rate,

that TPV opposite and previous effect than the which noticed offset which a this also but And the We from trend was Ton around, over quarter, credit, quarters. this a relevance is contribution time different slight banking mix slightly are gaining in overall.So change, I committed TPV financial the think general, is was increased Ton take right client it we the much expenses, remain why and terms it seasonality. line was the pretty we payments guidance majority what purely provided, in with we in that with rate, That's of pace the expected.Now always effect. of in above vast this But related numbers.I growing total you the with working in minor mentioned the the you amount we've sale pretty material is mix this second all But you we land. This cheap days the think expenses at there versus debt outstanding. the of average can financial where a of cash more that compose in related to to CDI, should reduction mix the between receivables in not effects have the the versus period, to got from balance at past quarter-to-quarter, look debt. we when lower lower is again, quarter, and of is a when receivables close

these funding forget again, due lines drivers So at alone safe look the use. forecast small mix we that variations to to we on think about of these when I it's based and XXXX,

Operator

John from Coffey Next Barclays. with question is

John Coffey

Great.

of So I questions of that X had. tied had questions, which some are had sort Neha the to just

basis? a been from a becoming yet, XXXX, more declining given give pricing very second significant it my haven't and wondering So aggressive question behavior is about happen start you market?And broadly to guidance has irrational high That's in time kind any cadence think generally I view for has at like more benefit market seen level, quarter-to-quarter the competitor a the is see or like on in order to there you what start one you just guess as over just you key that, the pricing? on of is any it. us can was really makes this a you far of silica TPV there to change way and growth for over to the Is that on as I to the

Lia de Matos

question TPV pass then Mateus. take I'll to and Thank the over you, John. it

news of TPV. the terms cadence no think I So in of

dynamic think consistent. I our pretty been growth has TPV

for look guidance the to the So overall. the important for year out is thing

say pretty that be And to think seasonalities want that. tend I consistent. you the to... not much Mateus, course, So of to beyond do

Mateus Schwening

to in the about have I sensitivity in changes Yes. we talk here, of each regards the within of to dynamics the pricing segment. rates, interest changes In pricing for think

Ton. look mostly prices. dynamics of at when the our And we one through micro, address terms of micro Ton, when So we public look at is in we brand pricing

of website. it's the call move, the is for make And your the pricing, can because you you end clients, the a you very if day, it's similar, very price main move pricing price. in players.Why public on today, public the So With request same all and important? look is the the whenever that expensive a

any any don't think for player move there short the is to term. a incentive we in So make

Of we time, don't player incentive follow short suit course, longer over really a to the will then a but in term, likely manner, significant reduce if most rates smaller has happening down prices and go see quite the that basis. done others but the the an of SMB, to is same effect then terms the in the pricing SMB, opposite, in on because term.And medium pricing the on individual is the in is dynamics

And So X aggressive such let's wants the in very the same have base.The that there's pricing common if SMB, sales, different as that in X but is a whole then behavior it very any what Brazil recycle new being base the in with to have, no player occurs for same to profiles. while thing be whole for P&L. to on to say, the and drugstores, size, means and effects aggressive the takes really neighborhood,

the and in for impact negative the payments, XXXX, interest these regarding rates that having So that's not new can we higher when attributed products, think increasing especially rollout really right?I for be engagement of to rates banking at look likelihood you the guidance unveiled of term, take don't all the we Day increase Investor at we think the solutions But pricing. with provided of why also of our credit. the see the terms strategy is about longer I any present that

term, of So focus benefits rates think will the not the because is of again, the that new P&L. the medium really short is all is with solutions. improving on likely flow we this dynamics, it the to The focus interest through term, engagement Longer pricing there.

Operator

question Fernandes with Next from Yuri JPMorgan.

Lia de Matos

you're can't trying you. your We I Yuri, know don't to state question. if hear

Operator

of we pass queue. to dropped I believe the he next Can question? out the

Lia de Matos

Sure.

on. move Let's

Operator

with from Greenwich Washington question Kyle Next Capital.

Lia de Matos

queue. to move the person the Let's next on

Operator

Sure.

Next question is Daniel with from Unrivaled Investing.

Unknown Analyst

Can you hear me?

Lia de Matos

can we hear Yes, you.

Unknown Analyst

say Great. I you. wanted to And thank

strategy the the hope to You quarters. and I job see and Zinner quarter. coming guys letter the a Pedro presentation wonderful appreciate really have in more this And the done long-form from communicating I materials,

question -- So again, really. Unrivaled from name Investing.My X questions Daniel my once is

regarding faster winning hear you capital think going to than continue The to growing commentary market. proposition, why underlying a you're you're you allocation. your been think value the on first is that the It's and treat

you stock is saying, though, multiple. you the So have that expect of Street's continue sort love that this on the very rational this is to pricing And around proposition still a perspective.Do because see you is helpful, I the have value Wall to think capital last allocation which disconnect very and with thoughts you're strong there's marketplace I'd what winning trading any where low-teens the year. buyback earnings what

that's first later. I the question. So can the ask second one

Mateus Schwening

Daniel. question, the for Thanks

in allocation, on. regards you're think spot capital I So to pretty

when look is cash at market be the when versus guidance, capital the and we're billion X.X the you BRL So that here increase generating really credit quarter, company only generation in million at in BRL question doing announced compared to cash right?I the think the of Investor despite when is you also billion of the X generated BRL the mindful plan small for day, book, the a we the at what but execution have buyback we especially in overall we the is have it's also Fourth to of company, deploying cash. and the consistently Brazil. the end look why credit credit. And now, planning Day, we approved buybacks that's buyback. because the And new sizable XXX in

strong the in terms we the of doing planning plan. if a be in and to in credit there's book. is of about we term balance we thing be terms allocation longer in And a in So mindful really execution. there, optionality general terms buyback lot more potentially longer maintaining this credit, need want credit get be we have just the that only It's aligned matter sheet.So to of we're to deploying the the again, term, mindful terms, to a right of need done capital it

Unknown Analyst

Got helpful. it. Super

full sounds if about capacity the book be there have you're coming thinking so the the you buyback not years. like the in growth may credit incredible And and could it underlying at

strong, future do the financial where But is Software a takeaway half clearly the performed of you as where done sort of hasn't to going value tougher here that which which is, bit to has that's very So where well?Do type to future say where say, there. a you proposition segment, Software of turns and and this really future, could you're faster it as -- than very we're second really is around you that's you the value proposition segment, where see a question, a well see the underlying why industry the "Hey, win." segment the the accelerate starts has in growing of the starts question, the which significantly

Lia de Matos

Yes.

this going I'm to question. So take

in drivers: believe services really growth software number have the the we also to for there's Naturally, but set the think, the And communicated to talk have so software continue assets go a sort also installed it to growth, stand-alone. prospects a terms our beginning, number Daniel, vast when priorities we we Software In that pretty one, improve the software we're continuing the and product, our revenue a of healthy come the continue bucket, on mix financial X have that in a market, of services forward. X to growth of first healthy growth prioritized financial our little X this We of key verticals, from prioritized has business ability think as bucket and of also Financial priority that to the Mateus verticals; -- penetrate our the of verticals one, value those we number to in point.I I at about Software around we Software, to to other Software in driving two, current there's expect improve see the X right, Services. a cross-sell as said I terms lot mixed stand-alone.The a drive Software that at X terms other not other opportunity the in enterprise the in wholesales proposition grow. for and this will business; we business of improve assets and there's bag not bit of terms base, at Investor key levels number three, we buckets: that process, fragmented grow doing there. think we Day, us integration priority going

pretty we because dynamics Enterprise a I the the already is have different think market little large business a in share there.

growth Enterprise business So from I can think we less forward. expect the going

to the those in X talk maybe answer business. hard about you margin one can terms that a I it's of single little So It's Mateus, Software buckets really main about bit mentioned. have evolution? just talk

Mateus Schwening

sure. for Yes,

terms and software, of So there's to expenses. be efficiency I zero-based implementing the budgeting Day in upon touched But lot comes also the done to and well a Investor center as this think administrative in in the the answer shared it in services about there. the a stand-alone also segment, when we

focused was the for EBITDA ZBB, but from segment.We and above XXXX likely that guided Most like think now And of mid-teens for the will in and reached of XXXX. said. why it that's by the most Software margin the was well. XX% top segment, Software in Lia the Services be we we efficiency for XXXX, ran significantly threshold line out that the mostly are standalone it be the we at that the on year not should rolling OpEx driven look segment Financial software as I first you when we

Operator

Morgan Next with Jorge Stanley. question Kuri from

Jorge Kuri

X I have questions.

installment is or consider of amount on was you then NPL is the ask measure outstanding missed? be your -- to it only Slide ratio is loan on what one you that And I'll XX. first my the The the way question. the The nonperforming total second

Mateus Schwening

you Thank question, for the Kuri.

only in one, X.X, also the the then XX, mentioned the Slide amount of that full was loan. For due. regarding the Note past installment the the amount have the of first the on information And we you

amount of So we loan. the information this both in the is have full slide put

Jorge Kuri

he he of at Is is time? there lockup owns question sort around this on there all the shares? value. with is modification now he then be that announcement, is Thanks any My And Street. is And news I'm this he has agreement shares is with lockup then to point or Andre if the correctly, he of like theoretical, will, understood agreement? question which the any able of regarding Mr. a or on he in existing able my for on shares any second economic sell there is with Great. saying signed us move X% wanted will not on telling -- there noncompete still is, if the company, those to, also, I Street? Or the that

Pedro Zinner

Jorge, Pedro speaking.

being all, I a believe I primary first actually right? not that think any regarding with I noncompete engage which Stone's in changes don't think On second business any Brazil. elaborated competes in are he the point, will activities there is question, at the in

to April before is on this ready should held and -- noncompete be the XX. AGM, which So be expected

of to that in So documents the you're the going see for flavor more AGM.

Jorge Kuri

clear. but clarify to it lockup the you first means that And no that's -- any have part, there's say he his very just And shares. on doesn't changes, when

Mateus Schwening

That's right, Jorge.

Operator

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

Pedro Zinner

in I Hope Thank everyone, And mentioned the letter, participating appreciate you quarter. as our the very you shareholders. you for very of much, to thank see call. again I much. next in Well, the value

Operator

This presentation. concludes today's Thank you participating. for

StoneCo (STNE) 18 Mar 242023 Q4 Earnings call transcript