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]

Financial Highlights - PagSeguro Digital Ltd's net revenue for Q1 2025 reached R$49 billion, a 13% year-over-year increase[17] - The company's total payment volume (TPV) for Q1 2025 was R$129 billion, up 16% year-over-year[17] - Net income for Q1 2025 was R$554 million, representing a 6% year-over-year increase[17] - The expanded credit portfolio grew to R$46 billion, a 34% increase year-over-year[19] - Total funding increased to R$40 billion, a 24% year-over-year increase[19] Operational Highlights - PagSeguro Digital Ltd had 320 million total clients in Q1 2025, a 2% year-over-year increase[17] - The company repurchased R$11 billion worth of shares LTM and R$353 million YTD (Apr-25)[20] - Active banking clients increased by 5% year-over-year[54] Business Performance - Banking revenue increased by 60% year-over-year, contributing to over 22% of total gross profit[128, 92] - Total deposits reached R$339 billion, an 11% year-over-year increase[39, 76] - Payroll loans increased by 63% year-over-year, reaching R$27 billion[39, 82] Future Outlook - The company is on track to deliver its 2025 guidance[128] - PagSeguro Digital Ltd expects to pay a cash dividend corresponding to approximately 10% of its net income on an annual basis[118]

Financial Data and Key Metrics Changes - PagSeguro Digital reported a total payment volume (TPV) of BRL 518 billion, reflecting a 32% year-over-year growth [6] - Net revenues increased by 18% year-over-year, reaching BRL 18.8 billion [6] - Net income reached an all-time high of BRL 2.3 billion, a 28% increase compared to 2023, with diluted earnings per share (EPS) on a GAAP basis at BRL 6.62, growing 30% year-over-year [6][29] - Return on average equity (ROE) improved to 15.2%, a 198 basis points increase year-over-year [7][29] Business Line Data and Key Metrics Changes - The merchant acquiring business saw TPV reach BRL 146 billion in Q4 2024, growing 28% year-over-year [14] - The banking segment's revenue set a record of BRL 513 million, growing 58% year-over-year, driven by interest income from the credit portfolio [23] - The credit portfolio grew by 36% year-over-year, reaching BRL 3.4 billion, with a focus on secured products [20] Market Data and Key Metrics Changes - The banking segment's gross profit margin increased to 69% of revenue, up from 61% a year earlier [25] - Total deposits rose by 31% year-over-year, reaching BRL 36.1 billion, with a reduction in the average cost of funding by 400 basis points [19] Company Strategy and Development Direction - The company aims to explore new growth verticals and improve shareholder value through a buyback program [9] - A disciplined strategy execution is emphasized to achieve long-term growth despite macroeconomic challenges [11] - The focus remains on integrating payments and banking services to enhance customer engagement and transactionality [17] Management's Comments on Operating Environment and Future Outlook - Management highlighted the ability to adapt and perform despite external headwinds, with a commitment to balance growth and profitability [10] - For 2025, the company expects to continue exploring initiatives to navigate challenges, with guidance for gross profit growth between 11% and 15% [32] Other Important Information - The company executed 50% of its current buyback program, amounting to BRL 784 million, as part of its strategy to create shareholder value [30] - The company is focused on maintaining a conservative capital structure while navigating market uncertainties [75] Q&A Session Summary Question: Inquiry about the credit portfolio and non-collateralized loans - Management indicated a healthy growth in the credit portfolio and plans to continue focusing on secured loans while growing non-collateralized products at an appropriate pace [39] Question: Clarification on transaction activities revenue decrease - Management explained that while transaction activities revenue decreased, financial income increased significantly, leading to overall revenue growth [42] Question: Guidance on EPS growth and net income expectations - Management clarified that the EPS guidance does not factor in buybacks and expects net income to grow similarly [47] Question: Details on TPV growth expectations - Management expressed confidence in continuing to grow TPV faster than the industry, with expectations for strong performance in 2025 [48] Question: Insights on the LMAX segment growth - Management noted that the LMAX segment, including e-commerce and cross-border transactions, is expected to continue growing robustly [58] Question: Discussion on repricing strategies - Management confirmed ongoing repricing efforts and indicated that they are being implemented in a way that minimizes client sensitivity [56] Question: Capital allocation and future buyback programs - Management discussed the cautious approach to capital allocation, emphasizing buybacks over dividends in the current uncertain environment [75][98]