Core Insights - StoneCo Ltd. is strategically divesting a significant portion of its software segment, which accounts for 79% of its software segment revenues in 2024, to focus on core financial services and micro, small, and medium businesses (MSMB) [1][9] Group 1: Strategic Moves - The proposed sale of Linx and related software assets to TOTVS for R$3.41 billion has been agreed upon, alongside the sale of SimplesVet to PetLove for R$140 million [2] - This divestiture is expected to enhance operating efficiency and profit margins as StoneCo aims to become Brazil's leading platform for MSMBs [3] Group 2: Financial Performance - In Q1 2025, StoneCo's MSMB total payment volume (TPV) increased by 17% year over year to R$119.5 billion, driven by effective repricing efforts and expanding product adoption [3][9] - The client base for MSMBs grew by 17% to 4.3 million active clients [3] Group 3: Growth Strategies - The bundling strategy has proven successful, with clients using three or more products increasing to 38%, up from 26% a year ago, indicating effective cross-selling of integrated payments, credit, and banking services [4] - The banking segment is also expanding rapidly, with total retail deposits rising by 38% to R$8.3 billion [4] Group 4: Market Trends - The PIX instant payment system has become a significant monetization lever, with transaction volumes increasing by 95% year over year, enhancing client deposits and engagement [5] - StoneCo projects MSMB TPV to exceed R$670 billion by 2027, reflecting a 14% compound annual growth rate (CAGR) from 2024 levels [5] Group 5: Competitive Landscape - PagSeguro Digital Ltd. reported that MSMB TPV grew by 11.2% year over year to R$95.2 billion, with a focus on higher-value MSMBs [6] - MercadoLibre's Mercado Pago saw TPV rise by 43% year over year to $58.3 billion, with a 30%+ increase in monthly fintech users [7] Group 6: Stock Performance and Valuation - StoneCo's shares have surged by 76.5% year to date, outperforming the broader industry and the S&P 500 Index [8] - The Zacks Consensus Estimate for 2025 EPS suggests a year-over-year growth of 10.4%, while the estimate for 2026 indicates a 16.1% increase [10] - StoneCo's shares are currently trading at a forward 12-month P/E of 8.66X, significantly below the industry average of 40.07X, indicating a potentially undervalued position [12]

Core Viewpoint - StoneCo Ltd. has announced significant divestments in its software segment to unlock shareholder value and streamline operations, allowing management to focus on core growth strategies [1][2]. Group 1: Divestment Details - The divested assets accounted for approximately 79% of the software segment's revenue and 71% of its profitability in 2024, representing 9% of StoneCo's total revenues and 6% of its profitability [2]. - The sale of Linx and related software assets to TOTVS is valued at R$3.05 billion, plus an estimated R$360 million in net cash, totaling R$3.41 billion [2]. - The scope of the Linx sale includes software for various verticals such as education, retail, and healthcare [3]. - The sale of SimplesVet to PetLove is valued at R$140 million, representing approximately 4x revenue, and has already received regulatory approval [5]. Group 2: Remaining Software Businesses - The remaining software businesses not included in the divestments generated R$326 million in revenues and R$32 million in Adjusted EBITDA in 2024, and will be evaluated for strategic fit and long-term value [6]. Group 3: Use of Proceeds - StoneCo plans to disclose detailed plans for the use of proceeds from the divestments upon transaction closing, with an expectation to return excess capital to shareholders when immediate growth opportunities are not available [8].