Technical Analysis - StoneCo Ltd. (STNE) has reached a key level of support, indicating a potential bullish breakout as its 50-day simple moving average has crossed above the 200-day simple moving average, forming a "golden cross" [1] - A golden cross is characterized by a downtrend followed by a crossover of the shorter moving average over the longer moving average, leading to a trend reversal and subsequent upward price movement [2] Performance Metrics - STNE has experienced a significant price increase of 25.1% over the last four weeks, suggesting strong momentum [3] - The company currently holds a 1 (Strong Buy) rating on the Zacks Rank, indicating positive market sentiment [3] Earnings Outlook - The earnings outlook for STNE is positive, with no earnings estimates decreasing in the past two months, while there have been two upward revisions, contributing to an increase in the Zacks Consensus Estimate [3][4] - The combination of favorable earnings estimate revisions and the technical breakout position suggests that STNE may continue to see gains in the near future [4]

[Presentation of Financial and Other Information](index=7&type=section&id=Presentation%20of%20Financial%20and%20Other%20Information) [Financial Statements and Reporting Standards](index=7&type=section&id=Financial%20Statements%20and%20Reporting%20Standards) The company prepares IFRS-compliant financial statements with the Brazilian real (R$) as its functional currency, providing convenience U.S. dollar translations - Financial statements are prepared in accordance with IFRS Accounting Standards, and the functional currency is the Brazilian real (R$)[15](index=15&type=chunk) - For convenience, some amounts have been translated to U.S. dollars at a rate of **R$6.1923 to US$1.00** as of December 31, 2024, but these are not representations of actual value or convertibility[17](index=17&type=chunk) [Selected Financial Data](index=7&type=section&id=Selected%20financial%20data) The company reported a R$1.51 billion net loss in 2024 due to a goodwill impairment, though TPV grew 17.8% and adjusted net income rose to R$2.20 billion Consolidated Statement of Profit or Loss Data (in R$ millions) | Indicator | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Total revenue and income** | **13,257.5** | **12,055.0** | **9,588.9** | | Profit (loss) before income taxes | (1,017.6) | 1,970.8 | (387.3) | | **Net income (loss) attributable to controlling shareholders** | **(1,515.2)** | **1,592.1** | **(519.4)** | | Basic earnings (loss) per share (R$) | (5.02) | 5.09 | (1.67) | | Diluted earnings (loss) per share (R$) | (5.02) | 4.74 | (1.67) | Key Operational and Non-IFRS Data | Indicator | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Adjusted net income (in R$ millions)** | **2,200.0** | **1,557.5** | **410.5** | | TPV (in R$ billions) | 516.2 | 438.3 | 380.6 | | Active payment clients (in thousands) | 4,172.7 | 3,522.1 | 2,584.0 | Reconciliation of Net Income to Adjusted Net Income (in R$ millions) | Reconciliation Item | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Net income (loss) for the year** | **(1,507.1)** | **1,600.4** | **(526.4)** | | Amortization of fair value adjustment | 122.8 | 92.4 | 138.6 | | Software business goodwill impairment loss | 3,558.0 | — | — | | Mark-to-market related to the investment in Banco Inter | — | (30.6) | 853.1 | | Other income/expenses | 67.9 | (78.6) | (17.8) | | Tax effect on adjustments | (41.6) | (26.1) | (36.9) | | **Adjusted net income** | **2,200.0** | **1,557.5** | **410.5** | Consolidated Statement of Financial Position Data (in R$ millions) | Indicator | As of Dec 31, 2024 | As of Dec 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **54,813.5** | **48,693.6** | | Total Current Assets | 45,965.1 | 37,152.6 | | Total Non-current Assets | 8,848.4 | 11,541.0 | | **Total Liabilities** | **42,986.2** | **34,017.6** | | Total Current Liabilities | 33,533.8 | 28,831.1 | | Total Non-current Liabilities | 9,452.4 | 5,186.5 | | **Total Equity** | **11,827.3** | **14,676.0** | - The Brazilian real depreciated by **21.8%** against the U.S. dollar in 2024, with the exchange rate reaching R$6.1923 per US$1.00 at year-end[25](index=25&type=chunk) [Corporate Events](index=13&type=section&id=Corporate%20Events) The company engaged in M&A, significant capital returns through share repurchases, debt management, and key organizational changes to streamline governance - The company's reportable segments are (i) **financial services**, (ii) **software**, and (iii) **Non-allocated**[29](index=29&type=chunk) - Key corporate events include acquiring **100% of Trinks** in May 2024, divesting from Neomode in December 2024, and divesting from PinPag in February 2024[30](index=30&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) - The company executed several share repurchase programs: a **R$300 million** program in September 2023, a **R$1 billion** program in November 2023, and a new **R$2 billion** program in November 2024[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - In July 2024, the company repurchased **58.9%** of its outstanding 2028 notes via a tender offer[42](index=42&type=chunk) - Significant board changes occurred in 2024, including the departure of André Street and the appointment of Mauricio Luchetti as the new Chairperson[48](index=48&type=chunk) PART I [ITEM 3. KEY INFORMATION](index=16&type=section&id=ITEM%203.%20KEY%20INFORMATION) The company faces significant risks from competition, regulation, technology, and Brazil's economic instability, alongside challenges from acquisitions and its dual-class share structure [Risk Factors](index=16&type=section&id=D.%20Risk%20factors) - The company faces substantial and increasingly intense competition from traditional merchant acquirers, financial institutions, and new entrants[95](index=95&type=chunk)[96](index=96&type=chunk) - The business is subject to extensive and evolving government regulation in Brazil, including data protection laws (LGPD) and Central Bank oversight[114](index=114&type=chunk)[115](index=115&type=chunk)[118](index=118&type=chunk) - The rise of alternative payment methods like **Pix**, developed by the Central Bank, could reduce the use of traditional card payments, with Pix's share growing to **46%** of total transactions in Q3 2024[104](index=104&type=chunk)[105](index=105&type=chunk) - Operational risks include cybersecurity attacks, system failures, and reliance on third-party providers for data centers and transaction processing[146](index=146&type=chunk)[151](index=151&type=chunk)[164](index=164&type=chunk) - The business is exposed to Brazil's economic and political risks, including inflation, interest rate fluctuations, and political instability[213](index=213&type=chunk)[216](index=216&type=chunk)[222](index=222&type=chunk) - The balance sheet includes significant intangible assets (**R$5.5 billion** as of Dec 31, 2024), and an impairment, such as the **R$3.6 billion** goodwill impairment in 2024, can negatively affect financial results[212](index=212&type=chunk) - As a Cayman Islands exempted company, shareholder rights differ from those in U.S. jurisdictions, potentially making it more difficult for shareholders to protect their interests[249](index=249&type=chunk)[251](index=251&type=chunk)[253](index=253&type=chunk) - The dual-class share structure gives Class B shareholders (**10 votes per share**) significant voting power, which may limit the influence of Class A shareholders[270](index=270&type=chunk)[273](index=273&type=chunk) [ITEM 4. INFORMATION ON THE COMPANY](index=56&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) StoneCo has evolved into a comprehensive financial and software solutions provider for Brazilian MSMBs, operating under a complex and evolving regulatory environment [History and development of the company](index=56&type=section&id=A.%20History%20and%20development%20of%20the%20company) - StoneCo's mission is to serve Brazilian entrepreneurs with financial and software solutions, focusing on MSMBs[283](index=283&type=chunk) - The company's evolution is described in "Five Acts": serving SMBs with payments, expanding to the micro-segment, building a banking platform, acquiring Linx for software integration, and relaunching a credit product[286](index=286&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk)[296](index=296&type=chunk)[299](index=299&type=chunk) Key Performance Highlights (2024 vs. 2023) | Metric | 2024 | 2023 | Growth | | :--- | :--- | :--- | :--- | | TPV (R$ billion) | 516.2 | 438.3 | 17.8% | | Active Payments Clients (million) | 4.2 | 3.5 | 18.5% | | Total Revenue and Income (R$ million) | 13,257.5 | 12,055.0 | 10.0% | | Net Income (Loss) (R$ million) | (1,507.1) | 1,600.4 | - | | Adjusted Net Income (R$ million) | 2,200.0 | 1,557.5 | 41.3% | [Business Overview](index=60&type=section&id=B.%20Business%20overview) - The company operates in two main segments: **Financial Services** (payments, digital banking, credit) and **Software** (POS/ERP, CRM, e-commerce solutions)[308](index=308&type=chunk) - The business model is built on four core pillars: Unique Culture, Comprehensive Merchant Platform, Tech-Enabled Distribution, and Superior Client Service[321](index=321&type=chunk) - Distribution is a key competitive advantage, utilizing a mix of proximity channels (over **600 hubs**), digital channels, and strategic partners[331](index=331&type=chunk)[334](index=334&type=chunk)[337](index=337&type=chunk) Total Addressable Market (TAM) for MSMBs in Brazil (as of Dec 31, 2023) | Business | Estimated TAM (Revenue in R$ billion) | | :--- | :--- | | Payments | ~34.0 | | Credit | ~40.0 | | Banking | ~16.0 | | Software | ~8.0 | - The company's market share in the Brazilian card industry was **10.9%** in 2024 based on TPV, according to ABECS data[358](index=358&type=chunk) - Key regulatory frameworks impacting the business include rules for Payment Institutions, the Pix instant payment system, Open Finance initiatives, and the mandatory registration of card receivables[434](index=434&type=chunk)[466](index=466&type=chunk)[474](index=474&type=chunk)[484](index=484&type=chunk) [Organizational Structure](index=102&type=section&id=C.%20Organizational%20structure) - StoneCo Ltd is a Cayman Islands holding company that conducts its operations primarily through its Brazilian subsidiaries[517](index=517&type=chunk) [Property, Plants and Equipment](index=104&type=section&id=D.%20Property%2C%20plants%20and%20equipment) - The company's main operational hubs are leased properties located in São Paulo and Rio de Janeiro, Brazil[521](index=521&type=chunk) - As of December 31, 2024, the company leased data center facilities in Brazil and the United States[522](index=522&type=chunk) [Operating and Financial Review and Prospects](index=104&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) Revenue grew 10.0% in 2024, but a R$3.6 billion goodwill impairment led to a net loss, while adjusted net income grew 41.3% on strong financial services performance [Operating Results](index=105&type=section&id=A.%20Operating%20results) Financial Performance Summary (2024 vs. 2023) | Metric | 2024 (R$ million) | 2023 (R$ million) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue and Income | 13,257.5 | 12,055.0 | 10.0% | | Net Revenue from Transaction Activities | 3,216.0 | 3,309.8 | (2.8)% | | Financial Income | 7,676.2 | 6,229.3 | 23.2% | | Net Income (Loss) for the Year | (1,507.1) | 1,600.4 | N/A | | Adjusted Net Income | 2,200.0 | 1,557.5 | 41.3% | - The net loss in 2024 was primarily caused by a **R$3.6 billion goodwill impairment loss** related to the Software business unit[612](index=612&type=chunk) - Financial income grew **23.2%** in 2024, driven by higher prepaid volumes, increased credit revenues, and floating interest from banking solutions[605](index=605&type=chunk) - Selling expenses increased by **24.0%** in 2024 due to higher investments in salespeople, marketing, and partner commissions to drive growth[609](index=609&type=chunk) - Financial expenses decreased by **7.6%** in 2024, mainly due to a lower average CDI Rate, which reduced funding costs[610](index=610&type=chunk) [Liquidity and Capital Resources](index=123&type=section&id=B.%20Liquidity%20and%20capital%20resources) Summary of Cash Flows (in R$ millions) | Cash Flow Activity | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | (3,621.4) | 1,647.7 | 1,683.7 | | Net cash (used in) provided by investing activities | 1,587.5 | (845.4) | (1,871.1) | | Net cash provided by (used in) financing activities | 5,040.6 | (148.8) | (2,810.1) | - The company's primary sources of liquidity are sales of receivables, bank borrowings, debt issuances, client deposits, and cash flows from operations[634](index=634&type=chunk) Outstanding Debt Instruments (as of Dec 31, 2024, in R$ millions) | Instrument Type | Current Portion | Non-current Portion | Total | | :--- | :--- | :--- | :--- | | Institutional deposits and marketable debt securities | 3,066.0 | 5,430.0 | 8,496.0 | | Other Debt Instruments | 1,903.8 | 2,496.1 | 4,400.0 | - Capital expenditures in 2024 totaled **R$1.3 billion**, primarily for purchasing POS devices and software development[655](index=655&type=chunk) - The company has a capital management framework based on a minimum managerial **CET1 ratio of 20%**, maintaining credit ratings, and holding a positive adjusted net cash position[661](index=661&type=chunk)[663](index=663&type=chunk) [Directors, Senior Management and Employees](index=133&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) The company is led by an independent board and experienced executives, with compensation tied to performance and a workforce of 16,793 employees [Directors and Senior Management](index=133&type=section&id=A.%20Directors%20and%20senior%20management) - The Board of Directors is responsible for overall strategy and supervising management; all current members are independent[668](index=668&type=chunk)[670](index=670&type=chunk) Current Board of Directors | Name | Position | | :--- | :--- | | Mauricio Luis Luchetti | Director and Chairperson | | Gilberto Caldart | Director and Vice-Chairperson | | Antonio Silveira | Director | | Diego Fresco Gutierrez | Director | | José Alexandre Scheinkman | Director | | Luciana Ibiapina Lira Aguiar | Director | | Luis Henrique Cals de Beauclair Guimarães | Director | | Silvio José Morais | Director | - Pedro Zinner serves as the Chief Executive Officer, leading a management team with extensive experience in finance, technology, and operations[681](index=681&type=chunk)[689](index=689&type=chunk) [Compensation](index=138&type=section&id=B.%20Compensation) - Aggregate compensation for the Board of Directors and executive officers for the year ended December 31, 2024, was **R$137.3 million**[692](index=692&type=chunk) - The company maintains a Long-Term Incentive Plan (LTIP), with a new pool of **19.2 million shares** approved for RSUs and PSUs in May 2022[700](index=700&type=chunk) - As of December 31, 2024, there were outstanding equity awards corresponding to **18,638,934 Class A common shares**[703](index=703&type=chunk) - In 2024, the company modified **3.9 million PSU awards**, introducing new performance conditions and extending vesting periods by an average of one year[701](index=701&type=chunk) [Board Practices](index=140&type=section&id=C.%20Board%20practices) - The Board of Directors has four standing committees: Audit, People and Compensation, Finance, and Risk[704](index=704&type=chunk) - The Audit Committee consists of three independent directors, all of whom are considered "audit committee financial experts" under SEC rules[705](index=705&type=chunk) - As a foreign private issuer, the company follows Cayman Islands corporate governance practices in lieu of certain Nasdaq requirements[709](index=709&type=chunk)[712](index=712&type=chunk) [Employees](index=141&type=section&id=D.%20Employees) Full-Time Employees by Year | Year | Number of Employees | | :--- | :--- | | 2024 | 16,793 | | 2023 | 17,091 | | 2022 | 16,685 | Employees by Function (as of Dec 31, 2024) | Function | Number of Employees | % of Total | | :--- | :--- | :--- | | Sales and Marketing | 5,860 | 34.9% | | Operations | 4,297 | 25.6% | | Technology and Product Development | 4,573 | 27.2% | | Administrative | 2,063 | 12.3% | | **Total** | **16,793** | **100%** | [Major Shareholders and Related Party Transactions](index=144&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) Co-founder André Street controls 41.0% of voting power, with a shareholders' agreement granting certain rights, while all related party transactions require audit committee approval [Major Shareholders](index=144&type=section&id=A.%20Major%20shareholders) Beneficial Ownership of Major Shareholders (as of March 31, 2025) | Shareholder | % of Total Voting Power | | :--- | :--- | | André Street | 40.99% | | Entities affiliated with BlackRock, Inc. | 7.53% | | Madrone Partners L.P. | 5.98% | - A Shareholders Agreement grants founder shareholders certain rights, including consent on major actions, though some rights were formally waived in April 2023[725](index=725&type=chunk) [Related Party Transactions](index=145&type=section&id=B.%20Related%20party%20transactions) - The company has a related person transaction policy requiring any such transaction to be approved by the audit committee[737](index=737&type=chunk) - The company has entered into indemnification agreements with its directors and executive officers to the fullest extent permitted by law[738](index=738&type=chunk) - A Registration Rights Agreement provides founder shareholders and Madrone Partners L.P. with demand registration rights for public resale of their shares[733](index=733&type=chunk)[734](index=734&type=chunk) [Financial Information](index=147&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) The company faces numerous legal proceedings with a R$237.4 million provision and does not currently anticipate paying cash dividends [Consolidated Statements and Other Financial Information](index=147&type=section&id=A.%20Consolidated%20statements%20and%20other%20financial%20information) - The company is involved in numerous judicial and administrative proceedings related to civil, labor, and tax matters[741](index=741&type=chunk) Provisions for Legal Proceedings (as of Dec 31, 2024) | Claim Type | Provision Amount (R$ million) | | :--- | :--- | | Civil | 44.5 | | Labor | 71.5 | | Tax and Social Security | 121.5 | | **Total** | **237.4** | - A securities class action was filed against the company in 2021, alleging misrepresentations regarding its credit product, and is currently in the discovery phase[748](index=748&type=chunk)[749](index=749&type=chunk) - The company does not anticipate paying cash dividends in the foreseeable future, intending to retain earnings to fund business development and expansion[751](index=751&type=chunk) [Additional Information](index=150&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) As a Cayman Islands company, its governance features a dual-class share structure and shareholder rights that differ from U.S. law [Memorandum and Articles of Association](index=150&type=section&id=B.%20Memorandum%20and%20articles%20of%20association) - The company has a dual-class share structure: Class A common shares have one vote per share, while Class B common shares have ten votes per share[767](index=767&type=chunk)[771](index=771&type=chunk) - Class B shares automatically convert to Class A shares upon most transfers, with all converting if their total voting power falls below 10%[775](index=775&type=chunk) - As a Cayman Islands exempted company, shareholders have no general right to inspect corporate records and accounts under Cayman law[249](index=249&type=chunk)[251](index=251&type=chunk) - The Board of Directors is composed of 5 to 11 members, elected by an ordinary resolution of shareholders[783](index=783&type=chunk)[786](index=786&type=chunk) [Taxation](index=173&type=section&id=E.%20Taxation) - The company has obtained a **20-year undertaking** from the Cayman Islands government, ensuring no taxes on profits, income, or gains will be applied to its operations[911](index=911&type=chunk)[913](index=913&type=chunk) - For U.S. federal income tax purposes, the company believes it was not a Passive Foreign Investment Company (PFIC) for the 2024 taxable year but notes an increasing risk for future years[267](index=267&type=chunk)[926](index=926&type=chunk) - If the company were classified as a PFIC, U.S. Holders would face adverse tax consequences, including ordinary income tax rates and an interest charge[929](index=929&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=178&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to market, liquidity, and credit risks, which it manages through VaR models, derivatives, and diverse funding sources - The company is exposed to credit risk from counterparties in financial contracts, including card issuers and customers in its credit portfolio[944](index=944&type=chunk) - Market risk is primarily driven by interest rate risk (CDI mismatches) and foreign currency risk (non-BRL assets/liabilities)[949](index=949&type=chunk)[950](index=950&type=chunk)[952](index=952&type=chunk) Value-at-Risk (VaR) Summary (in R$ thousands) | Risk Factor | VaR (1 day) | VaR (10 days) | VaR (60 days) | | :--- | :--- | :--- | :--- | | Interest rates | 811 | 2,564 | 6,280 | | Foreign currency exchange | 233 | 737 | 1,805 | - Liquidity risk is significant due to the company's prepayment and credit businesses and is managed by forecasting liquidity requirements and maintaining diverse funding sources[957](index=957&type=chunk) PART II [Controls and Procedures](index=182&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management and the independent auditor concluded that the company's disclosure controls and internal control over financial reporting were effective as of year-end 2024 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2024[973](index=973&type=chunk) - Management's assessment concluded that the company's internal control over financial reporting was effective, based on the COSO 2013 framework[974](index=974&type=chunk) - The independent registered public accounting firm, Ernst & Young, issued an **unqualified audit report** on the effectiveness of the company's internal controls over financial reporting as of December 31, 2024[976](index=976&type=chunk) [Various Governance and Shareholder Matters](index=183&type=section&id=ITEM%2016.%20(VARIOUS)) The company maintains strong governance with designated financial experts, an active share repurchase program, and a formal cybersecurity risk management program [Purchases of Equity Securities by the Issuer and Affiliated Purchasers](index=185&type=section&id=ITEM%2016E.%20Purchases%20of%20equity%20securities%20by%20the%20issuer%20and%20affiliated%20purchasers) - In November 2024, the Board of Directors approved a new share repurchase program authorizing the repurchase of up to **R$2.0 billion** of its outstanding Class A common shares[990](index=990&type=chunk) - This new program replaced a previous R$1.0 billion program, under which the company had repurchased **13.2 million shares for US$178.3 million**[989](index=989&type=chunk)[991](index=991&type=chunk) Share Repurchases in 2024 | Period | Total Shares Purchased | Average Price Paid (USD) | | :--- | :--- | :--- | | May 2024 | 2,319,645 | $14.35 | | June 2024 | 917,606 | $13.43 | | July 2024 | 9,670,688 | $13.38 | | September 2024 | 295,000 | $11.86 | | November 2024 | 1,182,291 | $10.55 | | December 2024 | 9,705,261 | $9.04 | | **Total 2024** | **24,090,491** | **$11.57** | [Corporate Governance](index=186&type=section&id=ITEM%2016G.%20Corporate%20governance) - As a foreign private issuer, the company is permitted to follow its home country (Cayman Islands) corporate governance practices instead of certain Nasdaq listing standards[996](index=996&type=chunk) - All current directors are considered independent under the Nasdaq test, although this is not a requirement under Cayman Islands law[998](index=998&type=chunk) [Cybersecurity](index=188&type=section&id=ITEM%2016K.%20Cybersecurity) - The company has an established cybersecurity risk management program, with oversight from the Board's audit and risk committees[1005](index=1005&type=chunk)[1006](index=1006&type=chunk) - The cybersecurity team is led by a Chief Information and Security Officer (CISO), and no material cybersecurity threats were identified in 2024[1007](index=1007&type=chunk)[1008](index=1008&type=chunk) PART III [Financial Statements](index=189&type=section&id=ITEM%2018.%20Financial%20statements) The audited IFRS financial statements received an unqualified opinion, with the impairment of goodwill for the Software unit highlighted as a key audit matter [Report of Independent Registered Public Accounting Firm](index=213&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) - Ernst & Young issued an **unqualified opinion**, stating that the consolidated financial statements present fairly the financial position and results of StoneCo Ltd[1066](index=1066&type=chunk) - The auditor also issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2024[1067](index=1067&type=chunk)[1076](index=1076&type=chunk) - A **Critical Audit Matter** was identified concerning the impairment of goodwill for the Software cash generating unit due to the subjective estimation required[1071](index=1071&type=chunk)[1072](index=1072&type=chunk) [Notes to Consolidated Financial Statements](index=224&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - An impairment loss of **R$3.56 billion** was recognized for the Software CGU as its estimated recoverable amount was lower than its net book value[1366](index=1366&type=chunk)[1367](index=1367&type=chunk) - As of December 31, 2024, the company had provisions for contingencies totaling **R$237.4 million** for probable losses from litigation[1387](index=1387&type=chunk) - The company has an active share repurchase program and held **28.2 million Class A common shares** in treasury as of December 31, 2024[1404](index=1404&type=chunk)[1406](index=1406&type=chunk) - In May 2024, the company acquired the remaining stake in Trinks, making it a wholly-owned subsidiary for a total consideration of **R$59.0 million**[1499](index=1499&type=chunk)[1501](index=1501&type=chunk)[1509](index=1509&type=chunk) Segment Adjusted Net Income (in R$ millions) | Segment | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Financial services | 2,019.9 | 1,436.6 | 361.8 | | Software | 178.3 | 113.8 | 64.7 | | Non allocated | 1.7 | 7.0 | (16.0) | | **Total Adjusted Net Income** | **2,200.0** | **1,557.5** | **410.5** |

The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price. Do they really matter, though?Let's take a look at what these Wall Street heavyweights have to say about StoneCo Ltd. (STNE) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.StoneCo currently has an aver ...

Industry Overview - The Zacks Internet-Software Industry ranks in the top 33% of nearly 240 Zacks industries, indicating strong performance and potential investment opportunities [1] Company Summaries Olo Inc (OLO) - Olo is trading at $6 per share with a forward earnings multiple of 19.1X [2] - The company anticipates high-double-digit EPS growth in fiscal years 2025 and 2026 [2] - Total sales are projected to increase by 17% this year and by another 18% in FY26, reaching $396.86 million [2] - Earnings estimates show a year-over-year growth of 20% for the current quarter and 40% for the next quarter [3] StoneCo (STNE) - StoneCo is trading at $13 per share, with a sales multiple of under 2X [4] - The stock has a forward earnings multiple of 9.5X and a PEG ratio of 0.36, indicating it is undervalued relative to its growth rate [5] - StoneCo has experienced a remarkable 65% increase year-to-date, outperforming broader market indexes [5] UiPath (PATH) - UiPath is currently trading around $10, significantly down from its IPO price of $65, presenting a potential buying opportunity [8] - The company generates over $1 billion in annual sales and offers a comprehensive automation platform [8] Investment Thesis - The positive trend of earnings estimate revisions for Olo, StoneCo, and UiPath supports the notion that these stocks are undervalued, contributing to favorable P/E valuations [10]

Industry Overview - Financial technology (fintech) is a transformative investment space merging finance and technology, offering services like online banking, peer-to-peer payments, insurance, cryptocurrency, and cybersecurity [1] - The fintech space is expected to benefit from expanding transaction volumes due to the widespread adoption of digital means, accelerated by the pandemic [2] - The innovative nature of fintech positions it for significant growth, driven by consumer behavior shifting towards digital platforms for convenience and cost-effectiveness [4] Catalysts for Growth - The performance of the fintech sector is inversely related to interest rates; a recent reduction in the Federal Reserve's benchmark interest rates is expected to benefit fintech companies [3] - The rise of artificial intelligence (AI) and machine learning is revolutionizing banking, payments, and investments, providing efficient and secure financial solutions [5] Recommended Stocks - Five fintech stocks are recommended for long-term investment: Affirm Holdings Inc. (AFRM), StoneCo Ltd. (STNE), ACI Worldwide Inc. (ACIW), Coinbase Global Inc. (COIN), and OppFi Inc. (OPFI) [2][6] Company-Specific Insights Affirm Holdings Inc. (AFRM) - Affirm has strong revenue growth from diverse income streams, expecting revenues of $3.13-$3.19 billion in fiscal 2025, driven by growing active merchant numbers and improving gross merchandise value [7] - Key partnerships, including those with Apple Pay and Hotels.com, are crucial for Affirm's expansion, including a recent entry into the UK market [8] - Affirm's expected revenue and earnings growth rates are 36.9% and 96.4%, respectively, with a 60% improvement in earnings estimates over the last 30 days [9] - The average short-term price target indicates a potential increase of 70.6% from the last closing price of $40.76, suggesting a maximum upside of 111% [10] StoneCo Ltd. (STNE) - StoneCo is a leading provider of point-of-sale payment processing services, enabling businesses to accept various payment methods [11] - The company offers a full suite of products for e-commerce transactions and client management, utilizing transaction data for credit assessment [12] - StoneCo's expected revenue and earnings growth rates are 4.1% and -6.7%, respectively, with a 9.6% improvement in earnings estimates over the last 30 days [13] - The average short-term price target suggests a potential increase of 12.2% from the last closing price of $11.83, indicating a maximum upside of 86% [13] ACI Worldwide Inc. (ACIW) - ACI Worldwide provides software solutions for digital payments, powering electronic payments for over 5,000 organizations globally, including major financial institutions [15][16] - The company offers real-time payment capabilities and a comprehensive omni-channel payments experience [17] - ACIW's expected revenue and earnings growth rates are 6.8% and 6.1%, respectively, with a 2.6% improvement in earnings estimates over the last 30 days [18] - The average short-term price target indicates a potential increase of 22.9% from the last closing price of $51.31, suggesting a maximum upside of 38.4% [18] Coinbase Global Inc. (COIN) - Coinbase provides financial infrastructure for the crypto economy, offering a user-friendly platform for consumers and sophisticated trading features for experienced users [19][20] - The expected revenue and earnings growth rates for Coinbase are 26.2% and 0.7%, respectively, with a 2.7% improvement in earnings estimates over the last 30 days [21] - The average short-term price target indicates a potential increase of 62.7% from the last closing price of $172.21, suggesting a maximum upside of 179.1% [22] OppFi Inc. (OPFI) - OppFi operates a financial technology platform that helps banks provide credit access to consumers, focusing on those turned away by mainstream options [23] - The expected revenue and earnings growth rates for OppFi are 9.7% and 12.6%, respectively, with a 10.3% improvement in earnings estimates over the last 60 days [25] - The average short-term price target indicates a potential increase of 38.4% from the last closing price of $8.35, suggesting a maximum upside of 55.7% [25]

Industry Overview - The Internet Software and Services sector is experiencing growth due to increased IT spending on hybrid operating environments and the high penetration of mobile devices, prompting businesses to invest in web-based infrastructure, applications, and security software [1][3] - The Internet Software industry is ranked in the top 37% of Zacks Industry Rank, indicating an expectation to outperform the market in the next three to six months [2] Growth Drivers - The industry is benefiting from the global digital transformation and the rapid adoption of Software as a Service (SaaS), which provides flexible and cost-effective application delivery [3] - There is a growing demand for web-based cybersecurity software due to the need to secure cloud platforms against cyber-attacks, leading to increased demand for performance management monitoring tools [5] Company Highlights Affirm Holdings Inc. (AFRM) - Affirm is projected to achieve revenues between $3.13 billion and $3.19 billion in fiscal 2025, driven by growing active merchant numbers and partnerships with companies like Apple Pay [11] - The expected revenue and earnings growth rates for Affirm are 36.9% and 96.4%, respectively, for the current year, with a short-term price target indicating a potential upside of 112.4% from the last closing price of $40.49 [12][13] Five9 Inc. (FIVN) - Five9 offers intelligent cloud software for contact centers, benefiting from the adoption of AI tools, with a focus on personalized AI agents [14][16] - The expected revenue and earnings growth rates for Five9 are 9.8% and 5.7%, respectively, with a short-term price target suggesting a maximum upside of 190.4% from the last closing price of $23.07 [17] Unity Software Inc. (U) - Unity provides a platform for creating interactive, real-time 3D content across various devices, catering to developers and content creators [18][19] - The expected revenue and earnings growth rates for Unity are -2% and 31%, respectively, with a short-term price target indicating a potential upside of 82% from the last closing price of $19.23 [20][21] Olo Inc. (OLO) - Olo operates an open SaaS platform for restaurants, facilitating digital ordering and payment solutions, enhancing guest experiences [22][23] - The expected revenue and earnings growth rates for Olo are 17.5% and 40.9%, respectively, with a short-term price target suggesting a maximum upside of 62.1% from the last closing price of $6.17 [25] StoneCo Ltd. (STNE) - StoneCo provides financial technology solutions for electronic commerce in Brazil, distributing through proprietary Stone Hubs [26] - The expected revenue and earnings growth rates for StoneCo are 4.1% and -6.7%, respectively, with a short-term price target indicating a potential upside of 90.8% from the last closing price of $11.53 [27][28]

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Core Insights - StoneCo Ltd. is positioned to potentially continue its earnings-beat streak in the upcoming report, having achieved an average surprise of 15.63% over the last two quarters [1][5]. Earnings Performance - In the last reported quarter, StoneCo posted earnings of $0.39 per share, exceeding the Zacks Consensus Estimate of $0.32 per share, resulting in a surprise of 21.88% [2]. - In the previous quarter, the company was expected to earn $0.32 per share but delivered $0.35 per share, achieving a surprise of 9.38% [2]. Earnings Estimates and Predictions - There has been a favorable change in earnings estimates for StoneCo, with a positive Earnings ESP of +5.17%, indicating bullish sentiment among analysts regarding the company's earnings prospects [5][8]. - The combination of a positive Earnings ESP and a Zacks Rank 1 (Strong Buy) suggests a high likelihood of another earnings beat in the upcoming report, expected on May 8, 2025 [8]. Statistical Insights - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% chance of producing a positive surprise [6]. - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [7].

Group 1 - StoneCo Ltd. will announce its first quarter 2025 financial results on May 08, 2025, after market close [1] - A conference call to discuss the results will take place on the same day at 5:00 PM ET [1] - The company will enter a Quiet Period related to its first quarter 2025 financial results starting April 24, 2025 [3] Group 2 - Stone is a leading provider of financial technology and software solutions that enable merchants to conduct commerce seamlessly across multiple channels [4]

StoneCo Ltd. (STNE) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company.The upward trend in estimate revisions for this company reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in ...