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]

Five9 (FIVN) shares have dropped 42.8% year to date (YTD), underperforming the Zacks Computer and Technology sector’s decline of 12.5% and the Zacks Internet – Software industry’s fall of 11.1%.FIVN has underperformed its industry peers, StoneCo (STNE) , BlackBerry (BB) and Affirm (AFRM) .Over the same time frame, StoneCo shares have risen 37.8%, while BlackBerry and Affirm shares have lost 16.9% and 33.1%, respectively.This underperformance raises the question of whether investors should cut their losses a ...

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].

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 ...

Core Viewpoint - StoneCo Ltd. has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the importance of earnings estimate revisions, which are strongly correlated with near-term stock price movements [4][6]. - Rising earnings estimates for StoneCo suggest an improvement in the company's underlying business, likely leading to increased stock prices [5][10]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a 'Strong Buy' rating, indicating superior earnings estimate revisions [9][10]. Recent Earnings Estimate Revisions for StoneCo - For the fiscal year ending December 2025, StoneCo is expected to earn $1.26 per share, reflecting a -6.7% change from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for StoneCo has increased by 5.3%, indicating positive sentiment among analysts [8].

Core Viewpoint - The article discusses the investment positions and recommendations of The Motley Fool, particularly focusing on StoneCo, highlighting its potential as an investment opportunity [1] Company Analysis - The Motley Fool has positions in and recommends StoneCo, indicating a positive outlook on the company's performance and growth potential [1] - Parkev Tatevosian, CFA, is affiliated with The Motley Fool, suggesting that his insights may align with the company's investment strategies [1] Disclosure and Compensation - The article mentions that Parkev Tatevosian may be compensated for promoting The Motley Fool's services, which could influence his opinions [1] - The Motley Fool has a disclosure policy, ensuring transparency regarding its investment positions and recommendations [1]

Group 1: Stock Performance and Price Targets - StoneCo Ltd. (STNE) closed at $10.62, with a 14.7% gain over the past four weeks, and a mean price target of $13.41 indicating a 26.3% upside potential [1] - The average of 10 short-term price targets ranges from a low of $6 to a high of $22, with a standard deviation of $5.05, suggesting variability in analyst estimates [2] - The lowest estimate indicates a potential decline of 43.5%, while the most optimistic estimate suggests a 107.2% upside [2] Group 2: Analyst Consensus and Earnings Estimates - Analysts show strong agreement on the company's ability to report better earnings than previously predicted, which supports the view of potential upside [4] - The Zacks Consensus Estimate for the current year has increased by 3.2% due to one estimate moving higher over the last 30 days without any negative revisions [11] - STNE holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [12] Group 3: Price Target Reliability and Analyst Behavior - Price targets set by analysts are often questioned for their reliability, as empirical research indicates they rarely predict actual stock price movements [6][9] - Analysts may set overly optimistic price targets due to business incentives related to their firms' interests in the companies they cover [7] - A low standard deviation in price targets indicates a high degree of agreement among analysts regarding the stock's price movement direction, serving as a starting point for further research [8]

Group 1 - StoneCo Ltd. (STNE) has reached an important support level and surpassed resistance at the 200-day moving average, indicating a long-term bullish trend [1][2] - STNE has moved 19.8% higher over the last four weeks, suggesting potential for further gains [2] - The company is currently rated as a Zacks Rank 2 (Buy), reflecting positive market sentiment [2] Group 2 - Earnings estimate revisions for STNE show one upward revision and no downward revisions for the current fiscal year, indicating a positive outlook [3] - The consensus earnings estimate for STNE has also increased, further supporting the bullish sentiment [3] - Investors are encouraged to monitor STNE for potential gains due to its key technical levels and favorable earnings revisions [3]

Financial Data and Key Metrics Changes - In 2024, adjusted net income reached BRL2.2 billion, exceeding guidance of BRL1.9 billion, despite macroeconomic headwinds and over BRL100 million in negative impacts from accounting changes [15][18] - Adjusted net margin was 18.4% in Q4 2024, up 1 percentage point year-over-year [18] - Total revenues for Q4 2024 increased by 11% year-over-year, driven by active client base growth and higher monetization [19] Business Line Data and Key Metrics Changes - MSMB card TPV reached BRL403 billion in 2024, a 15% year-over-year growth, while total MSMB TPV reached BRL454 billion, a 22% increase [10] - The MSMB take rate was 2.55% in 2024, exceeding guidance of 2.49% [13] - The credit portfolio grew to BRL1.2 billion, significantly above the BRL800 million target, with non-performing loans over 90 days at a controlled 3.61% [13][34] Market Data and Key Metrics Changes - Retail deposits closed 2024 at BRL8.7 billion, surpassing guidance of BRL7 billion, reflecting strong performance in bundled payments and banking offerings [11] - The banking active client base increased by 46% year-over-year to 3.1 million clients [28] Company Strategy and Development Direction - The company aims to establish Stone accounts as the primary financial hub for clients, focusing on enhancing the value proposition with a comprehensive product ecosystem [11][12] - The strategy includes a shift towards using deposits to fund operations, which is expected to reduce funding costs and improve capital structure [30][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continuing to outpace market growth and expanding share in the MSMB payments market [10] - The company remains focused on delivering sustainable long-term value creation despite potential macroeconomic challenges [65] Other Important Information - The company introduced gross profit as a key performance measure, which reached BRL1.7 billion in Q4 2024, growing 13% year-over-year [21] - A goodwill impairment charge of BRL3.6 billion was recognized for the software cash-generating units, which is a non-cash accounting adjustment [42] Q&A Session Summary Question: Performance of banking solutions and room for improvement - Management highlighted that deposit growth is outpacing TPV due to successful bundling of payments and banking solutions, with ongoing development of new products [68][70] Question: View on dividends given excess capital - Management indicated that while they have returned over BRL2 billion in share buybacks, they are not committing to specific targets for capital allocation at this time [76][78] Question: Details on price increases and guidance on EPS - Management confirmed that a substantial repricing initiative was executed at the beginning of Q1 2025, with adjustments based on yield curve projections [89][92] - The decision to guide basic EPS instead of diluted EPS was made to avoid volatility and complexity in calculations [94][96] Question: Potential sale of the Software business - Management stated that no offers met their intrinsic value for the software assets, and they will focus on maximizing value through cross-selling financial services [112][114]

Earnings Presentation Risks that contribute to the uncertain nature of the forward-looking statements include, among others, risks associated with the Company's ability to anticipate market needs and develop and deliver new and enhanced products and services functionalities to address the rapidly evolving market for payments and point-of-sale, financial technology, and marketing services; the Company's ability to differentiate itself from its competition by delivering a superior customer experience and thro ...