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StoneCo(STNE) - 2024 Q2 - Quarterly Report
STNEStoneCo(STNE)2024-08-14 20:17
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Loans and Provisions - Loans to associates decreased significantly from R2,512inDecember2023toR2,512 in December 2023 to R714 in June 2024, a reduction of 71.6%[3] - Provisions for probable losses in the acquiring business increased from R18,556inDecember2023toR18,556 in December 2023 to R20,978 in June 2024, a 13.1% increase[5] - Provisions for probable losses in the banking business increased from R12,559inDecember2023toR12,559 in December 2023 to R16,545 in June 2024, a 31.7% increase[5] - The updated amount recorded as a probable loss for tax debits increased from R27,937inDecember2023toR27,937 in December 2023 to R29,395 in June 2024, a 5.2% increase[8] - Allowance for expected credit losses for loans operations increased to 124,989 thousand Brazilian Reais in June 2024 from 62,061 thousand Brazilian Reais in December 2023, up 101%[143] Judicial and Tax-Related Items - Judicial deposits decreased from R22,507inDecember2023toR22,507 in December 2023 to R13,402 in June 2024, a 40.5% reduction[9] - Withholding income tax on financial income rose from 101,579 to 155,115[199] - Income tax and social contribution increased from 9,584 to 12,807[199] - Other withholding income tax decreased from 19,710 to 2,342[199] Revenue and Income - Net revenue from transaction activities and other services decreased from R41,039inJune2023toR41,039 in June 2023 to R24,183 in June 2024, a 41.1% decrease[20] - Adjusted net income for the Financial Services segment increased from R532,901inJune2023toR532,901 in June 2023 to R871,896 in June 2024, a 63.6% increase[34] - Net income for the period increased to 871,896 thousand Brazilian Reais in 2024 from 532,901 thousand Brazilian Reais in 2023[57] - Total comprehensive income for the period was 721,530 thousand Brazilian Reais in 2024, compared to 681,667 thousand Brazilian Reais in 2023[56] - Total revenue and income for the six months ended June 30, 2024, reached 6,290,784 thousand Brazilian Reais, compared to 5,666,439 thousand Brazilian Reais in the same period of 2023[73] - Net income for the six months ended June 30, 2024, was 871,896 thousand Brazilian Reais, a significant increase from 532,901 thousand Brazilian Reais in the same period of 2023[73] - Financial income for the six months ended June 30, 2024, was 3,567,776 thousand Brazilian Reais, up from 2,837,639 thousand Brazilian Reais in the same period of 2023[73] - Total comprehensive income for the six months ended June 30, 2024, was 723,502 thousand Brazilian Reais, compared to 681,667 thousand Brazilian Reais in the same period of 2023[74] Expenses - Personnel expenses increased from R1,351,287inJune2023toR1,351,287 in June 2023 to R1,407,992 in June 2024, a 4.2% increase[21] - Marketing expenses and sales commissions increased from R361,945inJune2023toR361,945 in June 2023 to R516,854 in June 2024, a 42.8% increase[21] - Total expenses increased from R2,968,597inJune2023toR2,968,597 in June 2023 to R3,407,368 in June 2024, a 14.8% increase[21] - Marketing expenses and sales commissions include costs related to marketing, advertising, and commissions paid to sales-related partnerships[36] - Cost of services for the six months ended June 30, 2024, increased to 1,651,300 thousand Brazilian Reais from 1,406,579 thousand Brazilian Reais in the same period of 2023[73] - Selling expenses for the six months ended June 30, 2024, rose to 1,054,605 thousand Brazilian Reais from 801,819 thousand Brazilian Reais in the same period of 2023[73] - Depreciation and amortization expenses were 441,559 thousand Brazilian Reais in 2024, slightly up from 434,182 thousand Brazilian Reais in 2023[57] - Share-based payments expense decreased to 90,156 thousand Brazilian Reais in 2024 from 120,525 thousand Brazilian Reais in 2023[57] Cash Flow and Investments - Net cash provided by operating activities was negative 3,189,129 thousand Brazilian Reais in 2024, compared to positive 2,000,899 thousand Brazilian Reais in 2023[57] - Net cash provided by investing activities improved to 2,633,580 thousand Brazilian Reais in 2024 from negative 456,449 thousand Brazilian Reais in 2023[57] - Proceeds from other debt instruments, except lease, increased to 4,007,264 thousand Brazilian Reais in 2024 from 2,798,229 thousand Brazilian Reais in 2023[57] - Cash and cash equivalents at end of period grew to 4,743,236 thousand Brazilian Reais in 2024 from 2,202,713 thousand Brazilian Reais in 2023[57] - Short and Long-term investments increased to R138,985thousandasofJune30,2024,comparedtoR 138,985 thousand as of June 30, 2024, compared to R 3,527,198 thousand as of December 31, 2023[172] - Financial assets from banking solutions grew to R6,967,814thousandasofJune30,2024,upfromR 6,967,814 thousand as of June 30, 2024, up from R 6,397,898 thousand as of December 31, 2023[177] - Accounts receivable from card issuers rose to R27,556,238thousandasofJune30,2024,comparedtoR 27,556,238 thousand as of June 30, 2024, compared to R 23,977,109 thousand as of December 31, 2023[172] - Retail deposits increased to R6,471,970thousandasofJune30,2024,fromR 6,471,970 thousand as of June 30, 2024, from R 6,119,455 thousand as of December 31, 2023[173] - The subsidiary Stone SCFI raised R750,000thousandthroughitsfirstissuanceoffinancialbillswithatwo−yearmaturityatCDI+0.75 750,000 thousand through its first issuance of financial bills with a two-year maturity at CDI + 0.75% p.a.[179] - FIDC ACR I issued quotas for R 2,325,984 thousand, funded by a revolving facility with a US467.5millioninvestmentfromDFC[180]AssetsandLiabilities−TotalassetsasofJune30,2024,were52,699,743thousandBRL,upfrom48,693,561thousandBRLin2023[50]−Totalliabilitiesincreasedto37,480,944thousandBRLasofJune30,2024,comparedto34,017,601thousandBRLin2023[52]−Equityattributabletocontrollingshareholdersroseto15,163,623thousandBRLasofJune30,2024,from14,622,264thousandBRLin2023[52]−Retainedearningsincreasedto2,037,957thousandBRLasofJune30,2024,comparedto1,168,862thousandBRLin2023[52]−Totalfinancialliabilitiesincreasedto5,301,918thousandBrazilianReaisinJune2024from3,971,078thousandBrazilianReaisinDecember2023,up34 467.5 million investment from DFC[180] Assets and Liabilities - Total assets as of June 30, 2024, were 52,699,743 thousand BRL, up from 48,693,561 thousand BRL in 2023[50] - Total liabilities increased to 37,480,944 thousand BRL as of June 30, 2024, compared to 34,017,601 thousand BRL in 2023[52] - Equity attributable to controlling shareholders rose to 15,163,623 thousand BRL as of June 30, 2024, from 14,622,264 thousand BRL in 2023[52] - Retained earnings increased to 2,037,957 thousand BRL as of June 30, 2024, compared to 1,168,862 thousand BRL in 2023[52] - Total financial liabilities increased to 5,301,918 thousand Brazilian Reais in June 2024 from 3,971,078 thousand Brazilian Reais in December 2023, up 34%[136] - Accounts payable to clients decreased slightly from 19,199,127 to 18,512,856[197] - Customer deferred acquisition costs increased from 190,239 to 197,234[198] Shareholder and Equity Information - VCK Investment Fund Limited SAC, owned by co-founder Mr. Andre Street, holds approximately 31% of the company's voting shares through HR Holdings LLC[58] - The Group holds a 100% equity interest in its subsidiaries, including Stone Pagamentos, Pagar.me, Stone SCD, and FIDC TAPSO, as of June 30, 2024[86] - The equity interest in Pinpag was sold on February 7, 2024, resulting in the Group ceasing to hold equity interest in Pinpag[86] - The Group incorporated four new wholly-owned companies in Q2 2024: Linx People, Linx Saúde, Linx Commerce, and Linx Enterprise[87] - The Group's equity interest in associates remained stable, with Alpha-Logo Serviços de Informática S.A. at 25.00%, APP Sistemas S.A. at 19.80%, Agilize Tecnologia S.A. at 33.33%, and Dental Office S.A. at 20.00%[89] - The Group holds call options to acquire additional interests in some of its associates, including Trinks Serviços de Internet S.A. (19.90%) and Delivery Much Tecnologia S.A. (29.50%)[90] Financial Instruments and Derivatives - Derivative financial instruments showed a net liability of 40,951 thousand Brazilian Reais as of June 30, 2024, improving from 311,989 thousand in December 2023[159] - Cross-currency interest rate swaps used as cash flow hedges decreased to a liability of 33,218 thousand Brazilian Reais by June 30, 2024, from 311,445 thousand in December 2023[159] - Interest rate swaps used as fair value hedges were initiated in 2024, showing a liability of 25,355 thousand Brazilian Reais as of June 30, 2024[159] - The company paid 116,486 thousand Brazilian Reais for cross-currency swap coupons in 2024, down from 305,990 thousand in 2023[163] - NDF Dollar notional amount increased to 32,470 thousand Brazilian Reais by June 30, 2024, from 6,460 thousand in December 2023[168] - The cash flow hedge reserve showed a loss of R 327,971 thousand as of June 30, 2024, compared to a loss of R197,188thousandasofDecember31,2023[184]−TheGrouppaidR 197,188 thousand as of December 31, 2023[184] - The Group paid R 92,982 thousand in interest rate swap coupon payments during the second quarter of 2024[187] - Interest rate swaps (Fixed rate to CDI) had a notional value of R13,810,303thousandasofJune30,2024,withagainofR 13,810,303 thousand as of June 30, 2024, with a gain of R 13,997 thousand[189] - The Group's financial risk management is conducted by the Risk Management Area, addressing market, liquidity, credit, and counterparty risks[190] Loans and Credit Operations - Working capital loans in Stage 1 increased to R635,084thousandinJune2024,upfromR635,084 thousand in June 2024, up from R296,282 thousand in December 2023[129] - Credit card receivables in Stage 1 grew to R29,744thousandinJune2024,comparedtoR29,744 thousand in June 2024, compared to R3,131 thousand in December 2023[129] - Working capital loan increased to 681,573 thousand Brazilian Reais in June 2024 from 309,677 thousand Brazilian Reais in December 2023, representing a 120% growth[143] - Credit card loans surged to 30,209 thousand Brazilian Reais in June 2024 from 3,131 thousand Brazilian Reais in December 2023, marking an 864% increase[143] - Total loans operations portfolio grew to 711,782 thousand Brazilian Reais in June 2024 from 312,808 thousand Brazilian Reais in December 2023, a 128% rise[143] - Working capital loan increased to 23,483 thousand Brazilian Reais as of June 30, 2024, up from 1,200 thousand in December 2023[154] - Credit card liabilities rose to 118 thousand Brazilian Reais by June 30, 2024, compared to zero in December 2023[154] - Total financial liabilities, including working capital loans and credit cards, reached 711,782 thousand Brazilian Reais by June 30, 2024, up from 312,808 thousand in December 2023[154] Bonds and Debt Instruments - Bonds increased to 2,764,271 thousand Brazilian Reais in June 2024 from 2,402,698 thousand Brazilian Reais in December 2023, a 15% growth[136] - Debentures, financial bills, and commercial papers rose to 1,874,437 thousand Brazilian Reais in June 2024 from 1,116,252 thousand Brazilian Reais in December 2023, a 68% increase[136] - Time deposits were introduced in Q2 2024, reaching 112,084 thousand Brazilian Reais by June 30, 2024[136] - Other debt instruments under liabilities were recorded at 2,276,133 as of June 30, 2024, compared to none in December 2023[193] Accounts Receivable and Payable - Accounts receivable from card issuers increased to R27,020,694thousandinJune2024,upfromR27,020,694 thousand in June 2024, up from R23,364,806 thousand in December 2023[94] - Accounts receivable from subscription services decreased to 283,163 thousand Brazilian Reais in June 2024 from 293,304 thousand Brazilian Reais in December 2023, a 3% decline[142] - Total trade accounts receivable decreased to 460,256 thousand Brazilian Reais in June 2024 from 488,480 thousand Brazilian Reais in December 2023, down 6%[142] - Financial assets Loans operations portfolio showed a notable increase from 250,747 to 586,793[197] Retail and Client Deposits - Retail client deposits grew to 6,471,970 thousand Brazilian Reais by June 30, 2024, from 6,119,455 thousand in December 2023[157] - The company issued its first interest-bearing time deposits in Q2 2024, with maturities up to December 2024[158] Seasonal and Operational Trends - The Group's revenues are subject to seasonal fluctuations, with historically stronger revenues during the last quarter of the year due to higher sales during the Brazilian holiday season[81] Share-Based Payments and Incentives - The Group granted RSUs to key employees under the LTIP with a weighted average vesting period of 2.9 years, subject to service conditions[38] - PSUs have a weighted average vesting period of 2.7 years and are granted based on achieving minimum levels of total shareholder return (TSR)[39] Property and Equipment - Property and equipment acquired through lease amounted to 38,279 thousand BRL as of June 30, 2024, compared to 58,610 thousand BRL in 2023[42] Interest Income and Costs - Interest income received, net of costs, was 2,038,931 thousand BRL for the six months ended June 30, 2024, up from 1,145,657 thousand BRL in 2023[42] Acquisitions and Investments - The acquisition of Trinks involved a consideration of 50,159 thousand BRL, with contingent payments conditioned on achieving financial and operational goals in 2025 and 2027[44][45] - The Group sold its remaining stake in Cloudwalk INC for R57,540thousand,recognizingagainofR57,540 thousand, recognizing a gain of R35,647 thousand in other comprehensive income[117] Earnings Per Share - Basic earnings per share for the six months ended June 30, 2024, were R2.82,upfromR2.82, up from R1.70 in the same period of 2023[73] Financial Risk Management - The Group's financial risk management is conducted by the Risk Management Area, addressing market, liquidity, credit, and counterparty risks[190] Short and Long-Term Investments - Short and Long-term investments increased significantly from 138,985 to 3,527,198 between June 30, 2024, and December 31, 2023[193] - Derivative financial instruments under assets increased from 4,182 to 71,275[193]