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StoneCo(STNE) - 2023 Q4 - Annual Report
STNEStoneCo(STNE)2023-11-12 16:00
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Revenue and Income - Total revenue and income for the nine months ended September 30, 2023, reached 8,806,321 thousand Brazilian Reais, compared to 6,882,847 thousand Brazilian Reais in the same period of 2022[12] - Net revenue from transaction activities and other services for the nine months ended September 30, 2023, was 2,441,652 thousand Brazilian Reais, up from 1,839,593 thousand Brazilian Reais in the same period of 2022[12] - Financial income for the nine months ended September 30, 2023, was 4,458,553 thousand Brazilian Reais, compared to 3,306,383 thousand Brazilian Reais in the same period of 2022[12] - Total revenue and income for the Financial Services segment for the nine months ended September 30, 2023, was R7,624,827,whiletheSoftwaresegmentgeneratedR 7,624,827, while the Software segment generated R 1,129,006[160] - Total revenue and income for the nine months ended September 30, 2023, reached 5,775,334 thousand Brazilian Reais for Financial Services and 1,043,513 thousand Brazilian Reais for Software[161] Net Income and Comprehensive Income - Net income for the nine months ended September 30, 2023, was 944,237 thousand Brazilian Reais, a significant improvement from a net loss of 605,231 thousand Brazilian Reais in the same period of 2022[12] - Net income for the nine months ended September 30, 2023, was 944,237 thousand Brazilian Reais, compared to a net loss of 605,231 thousand Brazilian Reais in the same period of 2022[14] - Total comprehensive income for the nine months ended September 30, 2023, was 1,057,216 thousand Brazilian Reais, a significant improvement from a total comprehensive loss of 978,201 thousand Brazilian Reais in the same period of 2022[14] - Net income for the three months ended September 30, 2023, was 411,336 thousand Brazilian Reais, compared to 197,067 thousand Brazilian Reais in the same period of 2022[14] - Other comprehensive income for the nine months ended September 30, 2023, was 112,979 thousand Brazilian Reais, compared to a loss of 372,970 thousand Brazilian Reais in the same period of 2022[14] - Total comprehensive income attributable to controlling shareholders for the nine months ended September 30, 2023, was 1,053,741 thousand Brazilian Reais, compared to a loss of 967,808 thousand Brazilian Reais in the same period of 2022[14] - Net income for the nine months ended September 30, 2023, was R944,237,comparedtoanetlossofR944,237, compared to a net loss of R605,231 in the same period in 2022[18] - The company's net income attributable to controlling shareholders for the nine months ended September 30, 2023, was R940,762,comparedtoalossofR940,762, compared to a loss of R598,264 in the same period in 2022[126] - The company reported a consolidated net income of 944,237 thousand Brazilian Reais for the nine months ended September 30, 2023, compared to a loss of 605,231 thousand Brazilian Reais in the same period in 2022[163] Cash and Cash Equivalents - Cash and cash equivalents increased to 3,693,072 thousand Brazilian Reais as of September 30, 2023, up from 1,512,604 thousand Brazilian Reais as of December 31, 2022[8] - Cash and cash equivalents at the end of the period increased to R3,693,072in2023fromR3,693,072 in 2023 from R2,343,160 in 2022[18] Financial Assets and Liabilities - Financial assets from banking solutions grew to 4,576,651 thousand Brazilian Reais as of September 30, 2023, compared to 3,960,871 thousand Brazilian Reais as of December 31, 2022[8] - Total assets increased to 43,833,413 thousand Brazilian Reais as of September 30, 2023, from 42,245,440 thousand Brazilian Reais as of December 31, 2022[8] - Total liabilities increased to 29,664,608 thousand Brazilian Reais as of September 30, 2023, from 29,295,416 thousand Brazilian Reais as of December 31, 2022[10] - Equity attributable to controlling shareholders rose to 14,113,335 thousand Brazilian Reais as of September 30, 2023, from 12,893,906 thousand Brazilian Reais as of December 31, 2022[10] - The Group's financial assets by category as of September 30, 2023, included short and long-term investments of R2,089,551andfinancialassetsfrombankingsolutionsofR 2,089,551 and financial assets from banking solutions of R 4,576,651[82] - The Group's financial liabilities by category as of September 30, 2023, included deposits from banking customers of R4,450,813andaccountspayabletoclientsofR 4,450,813 and accounts payable to clients of R 17,252,272[83] - The fair value of the Group's assets measured at fair value as of September 30, 2023, was R27,783,222,includingshortandlong−terminvestmentsofR 27,783,222, including short and long-term investments of R 2,089,551 and financial assets from banking solutions of R4,576,651[84]InvestmentsandFairValueAdjustments−Changesinthefairvalueofaccountsreceivablefromcardissuersatfairvalueresultedinagainof80,589thousandBrazilianReaisfortheninemonthsendedSeptember30,2023,comparedtoalossof113,097thousandBrazilianReaisinthesameperiodof2022[14]−Changesinthefairvalueofcashflowhedgeresultedinagainof40,642thousandBrazilianReaisfortheninemonthsendedSeptember30,2023,comparedtoalossof235,767thousandBrazilianReaisinthesameperiodof2022[14]−TheportfolioofloansdesignatedatFVPLregisteredagainofR 4,576,651[84] Investments and Fair Value Adjustments - Changes in the fair value of accounts receivable from card issuers at fair value resulted in a gain of 80,589 thousand Brazilian Reais for the nine months ended September 30, 2023, compared to a loss of 113,097 thousand Brazilian Reais in the same period of 2022[14] - Changes in the fair value of cash flow hedge resulted in a gain of 40,642 thousand Brazilian Reais for the nine months ended September 30, 2023, compared to a loss of 235,767 thousand Brazilian Reais in the same period of 2022[14] - The portfolio of loans designated at FVPL registered a gain of R 21,534 for the nine months ended September 30, 2023, compared to a gain of R5,182forthesameperiodin2022[85]−ThefairvalueofaccountspayabletoclientswasR 5,182 for the same period in 2022[85] - The fair value of accounts payable to clients was R16,675,111 as of September 30, 2023, compared to R16,025,373asofDecember31,2022[88]−ThefairvalueofloansandfinancingwasR16,025,373 as of December 31, 2022[88] - The fair value of loans and financing was R3,837,407 as of September 30, 2023, compared to R4,564,864asofDecember31,2022[88]CashFlowActivities−NetcashprovidedbyoperatingactivitiesincreasedtoR4,564,864 as of December 31, 2022[88] Cash Flow Activities - Net cash provided by operating activities increased to R2,064,328 in 2023 from R1,340,642in2022[18]−NetcashprovidedbyinvestingactivitieswasR1,340,642 in 2022[18] - Net cash provided by investing activities was R859,989 in 2023, compared to a net cash used of R1,038,075in2022[18]−NetcashusedinfinancingactivitiesdecreasedtoR1,038,075 in 2022[18] - Net cash used in financing activities decreased to R760,882 in 2023 from R2,459,073in2022[18]−TotalnetcashfloweffectwasaninflowofR2,459,073 in 2022[18] - Total net cash flow effect was an inflow of R 48,400 for the nine months ended September 30, 2023, compared to R454,998forthesameperiodin2022[85]Share−BasedPaymentsandEquityTransactions−Share−basedpaymentsfortheninemonthsendedSeptember30,2023,amountedto185,245thousandBrazilianReais[16]−Equitytransactionrelatedtoputoptionsovernon−controllinginterestsresultedinalossof20,341thousandBrazilianReaisfortheninemonthsendedSeptember30,2023[16]−Thecompanygranted5,241,072RSUsand1,046,034PSUsduringtheninemonthsendedSeptember30,2023[131]−Totalshare−basedpaymentexpensesfortheninemonthsendedSeptember30,2023,wereR 454,998 for the same period in 2022[85] Share-Based Payments and Equity Transactions - Share-based payments for the nine months ended September 30, 2023, amounted to 185,245 thousand Brazilian Reais[16] - Equity transaction related to put options over non-controlling interests resulted in a loss of 20,341 thousand Brazilian Reais for the nine months ended September 30, 2023[16] - The company granted 5,241,072 RSUs and 1,046,034 PSUs during the nine months ended September 30, 2023[131] - Total share-based payment expenses for the nine months ended September 30, 2023, were R 181,645, compared to R143,651forthesameperiodin2022[143]DividendsandShareRepurchase−DividendspaidfortheninemonthsendedSeptember30,2023,amountedto3,737thousandBrazilianReais[16]−ThecompanyapprovedanewsharerepurchaseprogramofuptoR 143,651 for the same period in 2022[143] Dividends and Share Repurchase - Dividends paid for the nine months ended September 30, 2023, amounted to 3,737 thousand Brazilian Reais[16] - The company approved a new share repurchase program of up to R300 million in outstanding Class A common shares, replacing the previous program of up to US200million[124]−Thecompanyannouncedasharerepurchaseprogramof300millionBrazilianReais,whichwasfullyconcludedbyNovember9,2023[166]ExpensesandCosts−Thecompany′stotalexpensesfortheninemonthsendedSeptember30,2023,wereR200 million[124] - The company announced a share repurchase program of 300 million Brazilian Reais, which was fully concluded by November 9, 2023[166] Expenses and Costs - The company's total expenses for the nine months ended September 30, 2023, were R4,514,895, a decrease from R4,803,114inthesameperiodin2022[128]−PersonnelexpensesincreasedtoR4,803,114 in the same period in 2022[128] - Personnel expenses increased to R2,007,056 for the nine months ended September 30, 2023, compared to R1,798,539inthesameperiodin2022[128]−Thecompany′sfinancialexpenses,net,increasedtoR1,798,539 in the same period in 2022[128] - The company's financial expenses, net, increased to R3,056,365 for the nine months ended September 30, 2023, compared to R2,603,226inthesameperiodin2022[129]−Thecompany′scostofservicesfortheninemonthsendedSeptember30,2023,was1,463,517thousandBrazilianReaisforFinancialServicesand498,914thousandBrazilianReaisforSoftware[161]TaxandProvisions−TheeffectivetaxratefortheninemonthsendedSeptember30,2023,was23.42,603,226 in the same period in 2022[129] - The company's cost of services for the nine months ended September 30, 2023, was 1,463,517 thousand Brazilian Reais for Financial Services and 498,914 thousand Brazilian Reais for Software[161] Tax and Provisions - The effective tax rate for the nine months ended September 30, 2023, was 23.4%, compared to 18.3% for the three months ended September 30, 2023[94] - The Group has accumulated tax loss carryforwards and other temporary differences amounting to R130,194 as of September 30, 2023, compared to R144,529asofDecember31,2022[96]−Provisionsforprobablelossesincreasedto230,262thousandBrazilianReaisasofSeptember30,2023,from210,376thousandBrazilianReaisattheendof2022,primarilyduetoadditionsincivilandlaborcontingencies[109]−Possiblelossesnotprovidedforinthefinancialstatementsdecreasedto279,821thousandBrazilianReaisasofSeptember30,2023,from557,990thousandBrazilianReaisattheendof2022,reflectingareassessmentoflitigationrisks[110]−Judicialdepositsincreasedto23,122thousandBrazilianReaisasofSeptember30,2023,from17,682thousandBrazilianReaisattheendof2022,assecurityforpotentiallitigationsettlements[117]IntangibleAssetsandProperty−Intangibleassetsincreasedto9,578,226thousandBrazilianReaisasofSeptember30,2023,upfrom9,340,909thousandBrazilianReaisattheendof2022,drivenbyadditionsandbusinesscombinations[101]−ThenetvalueofpropertyandequipmentwasR144,529 as of December 31, 2022[96] - Provisions for probable losses increased to 230,262 thousand Brazilian Reais as of September 30, 2023, from 210,376 thousand Brazilian Reais at the end of 2022, primarily due to additions in civil and labor contingencies[109] - Possible losses not provided for in the financial statements decreased to 279,821 thousand Brazilian Reais as of September 30, 2023, from 557,990 thousand Brazilian Reais at the end of 2022, reflecting a reassessment of litigation risks[110] - Judicial deposits increased to 23,122 thousand Brazilian Reais as of September 30, 2023, from 17,682 thousand Brazilian Reais at the end of 2022, as security for potential litigation settlements[117] Intangible Assets and Property - Intangible assets increased to 9,578,226 thousand Brazilian Reais as of September 30, 2023, up from 9,340,909 thousand Brazilian Reais at the end of 2022, driven by additions and business combinations[101] - The net value of property and equipment was R1,655,857 as of September 30, 2023, compared to R1,641,178asofDecember31,2022[98]−DepreciationandamortizationchargesfortheninemonthsendedSeptember30,2023,totaled657,138thousandBrazilianReais,a12.21,641,178 as of December 31, 2022[98] - Depreciation and amortization charges for the nine months ended September 30, 2023, totaled 657,138 thousand Brazilian Reais, a 12.2% increase from 585,568 thousand Brazilian Reais in the same period in 2022[99] - Additions of property and equipment for the nine months ended September 30, 2023, were R 504,236, compared to R546,237inthesameperiodin2022[145]−AdditionsofintangibleassetsfortheninemonthsendedSeptember30,2023,wereR 546,237 in the same period in 2022[145] - Additions of intangible assets for the nine months ended September 30, 2023, were R 362,078, up from R197,516inthesameperiodin2022[145]−ThetotalconsiderationpaidfortheacquisitionofHubcountTecnologiaS.A.wasR 197,516 in the same period in 2022[145] - The total consideration paid for the acquisition of Hubcount Tecnologia S.A. was R 11,124, with goodwill amounting to R7,997[148]−ThefairvalueofintangibleassetsrecognizedfromtheHubcountacquisitionincludescustomerrelationshipsvaluedatR 7,997[148] - The fair value of intangible assets recognized from the Hubcount acquisition includes customer relationships valued at R 1,940 and software valued at R2,104[151][153]SegmentPerformance−AdjustednetincomefortheFinancialServicessegmentfortheninemonthsendedSeptember30,2023,wasR 2,104[151][153] Segment Performance - Adjusted net income for the Financial Services segment for the nine months ended September 30, 2023, was R 901,310, compared to R85,015fortheSoftwaresegment[160]−AdjustednetincomefortheninemonthsendedSeptember30,2023,was993,675thousandBrazilianReais,withFinancialServicescontributing901,310thousandBrazilianReaisandSoftwarecontributing85,015thousandBrazilianReais[163]−Thecompanyincurredfinancialexpenses,net,of2,541,206thousandBrazilianReaisforFinancialServicesand38,054thousandBrazilianReaisforSoftwarefortheninemonthsendedSeptember30,2023[161]−Share−basedcompensation,netoftax,amountedto82,696thousandBrazilianReaisforFinancialServicesand1,250thousandBrazilianReaisforSoftwarefortheninemonthsendedSeptember30,2023[161]−BondexpensesfortheninemonthsendedSeptember30,2023,were80,559thousandBrazilianReais[161]−AdjustednetincomeforthethreemonthsendedSeptember30,2023,was435,083thousandBrazilianReais,withFinancialServicescontributing394,745thousandBrazilianReaisandSoftwarecontributing37,556thousandBrazilianReais[163]OtherFinancialInstrumentsandHedging−TheGroupissuedbondsin2021raisingUSD500million,withafinalyieldof3.95 85,015 for the Software segment[160] - Adjusted net income for the nine months ended September 30, 2023, was 993,675 thousand Brazilian Reais, with Financial Services contributing 901,310 thousand Brazilian Reais and Software contributing 85,015 thousand Brazilian Reais[163] - The company incurred financial expenses, net, of 2,541,206 thousand Brazilian Reais for Financial Services and 38,054 thousand Brazilian Reais for Software for the nine months ended September 30, 2023[161] - Share-based compensation, net of tax, amounted to 82,696 thousand Brazilian Reais for Financial Services and 1,250 thousand Brazilian Reais for Software for the nine months ended September 30, 2023[161] - Bond expenses for the nine months ended September 30, 2023, were 80,559 thousand Brazilian Reais[161] - Adjusted net income for the three months ended September 30, 2023, was 435,083 thousand Brazilian Reais, with Financial Services contributing 394,745 thousand Brazilian Reais and Software contributing 37,556 thousand Brazilian Reais[163] Other Financial Instruments and Hedging - The Group issued bonds in 2021 raising USD 500 million, with a final yield of 3.95%, and the total issuance amounted to R 2,510,350 thousand[68] - The Group issued a Certificate of Real Estate Receivables (CRI) on September 6, 2023, raising R100,000thousandina3−yearnotewithaninterestrateofCDI+1.30 100,000 thousand in a 3-year note with an interest rate of CDI + 1.30%[70] - Derivative financial instruments, net, showed a negative balance of R 330,468 thousand as of September 30, 2023, compared to R173,314thousandattheendof2022[71]−TheGroupenteredintohedgeoperationsin2021andMay2023toprotectdollarbondsandbankborrowingsfromforeignexchangeexposureusingcross−currencyinterestrateswapcontracts,withtheeffectiveportionofgainsorlossesreportedinaccumulatedothercomprehensiveincome[72]−AsofSeptember30,2023,theGroup′scross−currencyswapsresultedinanetlossofR 173,314 thousand at the end of 2022[71] - The Group entered into hedge operations in 2021 and May 2023 to protect dollar bonds and bank borrowings from foreign exchange exposure using cross-currency interest rate swap contracts, with the effective portion of gains or losses reported in accumulated other comprehensive income[72] - As of September 30, 2023, the Group's cross-currency swaps resulted in a net loss of R 337,113, with a loss of R341,925recognizedinincomeandagainofR 341,925 recognized in income and a gain of R 40,642 recognized in other comprehensive income (OCI)[73] - The balance in the cash flow hedge reserve as of September 30, 2023, was a loss of R220,724,comparedtoalossofR 220,724, compared to a loss of R 289,911 as of September 30, 2022[74] - The Group paid R155,072in2023forcouponpaymentsoncross−currencyswaps[75]−TheGrouphedgedUS 155,072 in 2023 for coupon payments on cross-currency swaps[75] - The Group hedged US 8,900 and € 570 using non-deliverable forward (NDF) contracts, resulting in a gain of R16,994recognizedinthestatementofprofitorlossfortheninemonthsendedSeptember30,2023[76]−TheGroup′sinterestratehedgeoperationshadanotionalamountofR 16,994 recognized in the statement of profit or loss for the nine months ended September 30, 2023[76] - The Group's interest rate hedge operations had a notional amount of R 5,727,200, with an expense of R4,448recognizedinthestatementofprofitorlossfortheninemonthsendedSeptember30,2023[78]LoansandFinancing−LoansandfinancingobligationsdecreasedtoR 4,448 recognized in the statement of profit or loss for the nine months ended September 30, 2023[78] Loans and Financing - Loans and financing obligations decreased to R 4,698,383 thousand as of September 30, 2023, from R5,551,125thousandattheendof2022,reflectingrepaymentsandnewissuances[59]−BankborrowingsasofSeptember30,2023,stoodatR 5,551,125 thousand at the end of 2022, reflecting repayments and new issuances[59] - Bank borrowings as of September 30, 2023, stood at R 1,582,570 thousand, down from R1,788,427thousandattheendof2022,primarilyusedtoadvancepaymentstoacquiringcustomers[69]RecoverableTaxesandOtherItems−RecoverabletaxesamountedtoR 1,788,427 thousand at the end of 2022, primarily used to advance payments to acquiring customers[69] Recoverable Taxes and Other Items - Recoverable taxes amounted to R118,354 as of September 30, 2023, compared to R150,956asofDecember31,2022[89]−TheeffectofnolongerexcludingbondissuanceexpensesfromJanuary1,2022,toSeptember30,2023,amountedto80,559thousandBrazilianReais[165]ShareTransactions−ClassAcommonsharesincreasedfrom294,124,829to295,498,750,andtotalsharesincreasedfrom312,873,599to314,247,520duetothevestingof1,373,921RSUs[121]−Thecompany′streasurysharesdecreasedfrom233,772to51,208ClassAcommonsharesasofSeptember30,2023[125]InterestIncomeandExpenses−Interestincomereceived,netofcosts,fortheninemonthsendedSeptember30,2023,wasR150,956 as of December 31, 2022[89] - The effect of no longer excluding bond issuance expenses from January 1, 2022, to September 30, 2023, amounted to 80,559 thousand Brazilian Reais[165] Share Transactions - Class A common shares increased from 294,124,829 to 295,498,750, and total shares increased from 312,873,599 to 314,247,520 due to the vesting of 1,373,921 RSUs[121] - The company's treasury shares decreased from 233,772 to 51,208 Class A common shares as of September 30, 2023[125] Interest Income and Expenses - Interest income received, net of costs, for the nine months ended September 30, 2023, was R 1,825,042, up from R1,452,940inthesameperiodin2022[144]AcquisitionsandInvestments−Thecompanyacquireda33.33 1,452,940 in the same period in 2022[144] Acquisitions and Investments - The company acquired a 33.33% equity interest in Agilize for R8,523 in August 2023[38] - Short-term bank deposits denominated in RincreasedtoR increased to R3,633,216 in 2023 from R1,388,616in2022[40]−Braziliansovereignbondsheldasshort−terminvestmentsamountedtoR1,388,616 in 2022[40] - Brazilian sovereign bonds held as short-term investments amounted to R1,016,370 in 2023[41] - Structured notes linked to Brazilian sovereign bonds held as short-term investments amounted to R971,981in2023[41]−Corporatebondsheldasshort−terminvestmentsamountedtoR971,981 in 2023[41] - Corporate bonds held as short-term investments amounted to R52,942 in 2023[41] - Total investments as of September 30, 2023, amounted to R3,668,537thousand,withR 3,668,537 thousand, with R 3,453,772 thousand classified as current and R214,765thousandasnon−current[42]−ThesaleofBancoIntersharesinQ12023resultedinagainofR 214,765 thousand as non-current[42] - The sale of Banco Inter shares in Q1 2023 resulted in a gain of R 30,574, compared to a loss of R738,574forthesameperiodin2022[43]AccountsReceivableandPayable−AccountsreceivablefromcardissuersincreasedtoR 738,574 for the same period in 2022[43] Accounts Receivable and Payable - Accounts receivable from card issuers increased to R 20,544,627 thousand as