Yahoo Finance StoneCo (STNE) Q4 Earnings Beat Estimates, Revenues Rise
StoneCo’s STNE fourth-quarter 2023 non-GAAP earnings of 36 cents per share beat the Zacks Consensus Estimate by 12.5%.
In domestic currency, earnings were R$1.76 per share, up from 63 cents reported in the year-ago quarter.
Revenues of $656 million surpassed the consensus mark by 40%.
In domestic currency, revenues increased 20.1% year over year to R$3.24 billion. The upside is primarily driven by an increase in financial services platform revenues, driven by growth in the active client base and enhanced monetization from clients, particularly in the small and medium business segment.
StoneCo Ltd. Price, Consensus and EPS Surprise
StoneCo Ltd. price-consensus-eps-surprise-chart | StoneCo Ltd. Quote
Quarter Details
Net revenues from transaction activities and other services increased 11.6% year over year to R$868.1 million. The uptick was driven by robust Total Payment Volume (TPV) growth.
Net revenues from subscription services and equipment rental dropped 1.2% year over year to R$459.1 million.
Financial income was R$1.77 billion, up 33% from the year-ago quarter. Other financial income increased 14.1% year over year to R$150.7 million.
StoneCo reached an active payments client base of 3.5 million, up 36.3% year over year. The company added 191,200 customers in the quarter. It also added 192,200 small and medium businesses at the same time.
TPV was R$113.5 billion, up 13.3% year over year. The upside can be attributed to strong growth of 20.2% in the MSMB segment and partially offset by a 17.6% plunge in Key Accounts’ TPV.
StoneCo's banking services experienced notable growth in the fourth quarter, with deposits reaching R$ 6.1 billion, reflecting enhanced engagement and TPV conversion, boosted by the introduction of Super Conta Ton and ongoing banking activation for Stone clients.
StoneCo also advanced in its credit solution offerings, reaching a working capital portfolio of R$309 million in 2023. The company disbursed over R$230 million to around 7,000 clients in the fourth quarter, resulting in a substantial portfolio expansion.
Administrative expenses as a percentage of revenues decreased 260 basis points (bps) year over year to 9.5%.
Net financial expenses, as a percentage of revenues, declined 470 bps on a year-over-year basis to 29%.
Moreover, selling expenses as a percentage of revenues contracted 100 bps on a year-over-year basis to 14%.
Balance Sheet & Cash Flow
As of Dec 31, 2023, StoneCo’s cash & cash equivalents were R$2.1 billion compared with R$3.6 billion as of Sep 30, 2023.
Operating cash outflow was R$416.6 million compared with operating cash flow of R$343 million reported in the year-ago quarter.
Guidance
For 2024, STNE expects MSMB TPV to exceed R$412 billion, suggesting an increase of more than 18% compared with 2023 levels.
Additionally, client deposits are anticipated to surpass R$7 billion, reflecting a year-over-year increase of more than 14%.
As for monetization, the credit portfolio is projected to exceed R$800 million, showing 2.6 times increase from the previous year’s figure. MSMB take rates are expected to exceed 2.49%, indicating an increase of over 4 bps.
Zacks Rank & Stocks to Consider
StoneCo currently has a Zacks Rank #3 (Hold).
STNE shares have declined 10.8% in the year-to-date period, underperforming the Zacks Computer & Technology sector’s growth of 8.9%.
Some better-ranked stocks in the broader Zacks Computer & Technology sector are Bill Holdings BILL, Bentley Systems BSY and Cadence Design Systems CDNS each sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bill Holdings shares have declined 17.3% in the year-to-date period. BILL’s long-term earnings growth rate is currently projected at 23.64%.
Bentley Systems shares have declined 6.4% in the year-to-date period. BSY's long-term earnings growth rate is currently projected at 12%.
Cadence Design Systems shares have gained 14.6% in the year-to-date period. CDNS’ long-term earnings growth rate is currently projected at 17.07%.
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