GEORGE TOWN, Grand Cayman - StoneCo Ltd. (NASDAQ: STNE), a leading provider of financial technology solutions, reported first-quarter earnings that fell short of analyst expectations, prompting a 7.5% decline in its stock price. The company posted adjusted earnings per share (EPS) of R$1.42, slightly below the analyst consensus of R$1.44. Revenue for the quarter was R$3.08 billion, also missing the R$3.1 billion consensus estimate.
The first quarter of 2024 saw StoneCo achieve a significant 75% year-over-year (YoY) increase in adjusted earnings before taxes (EBT), reaching R$568 million, largely driven by a 24% growth in its total payment volume (TPV), including PIX P2M transactions. This growth translated into an adjusted net income of R$450 million, a substantial 90% increase YoY. Despite these annual gains, the company's performance fell short of market expectations, leading to a negative response from investors.
StoneCo's total revenue and income for the quarter grew by 13.8% YoY, primarily due to a 16.0% increase in financial services revenues, which benefited from active client base growth and higher monetization in the MSMB segment. However, the company's adjusted EBITDA of R$1,512.0 million reflected a 20.8% YoY improvement but marked a 6.6% decrease from the previous quarter. The adjusted EBITDA margin experienced a slight sequential dip from 49.8% to 49.0%, attributed to lower seasonal revenues and changes in internal accounting methodology for membership fees, along with heightened selling expenses as a percentage of revenues.
The company's focus on retail and gas station verticals has been a highlight, with software business performance showing modest revenue growth due to two-digit organic growth in verticals software revenues, offset by the enterprise software segment acting as a revenue detractor. StoneCo's efficiency efforts continue to enhance profitability in this segment.
Looking ahead, StoneCo remains committed to the guidance provided during its Investor Day in November 2023, maintaining a positive outlook for 2024 and 2027. The company's strategic focus remains on cross-selling financial solutions to its priority verticals' clients and evolving financial services and software bundles.
StoneCo's CEO commented on the results, emphasizing the company's continuous business growth and strategic execution, which have positioned StoneCo to drive a strong return to shareholders. Despite the market's reaction to the earnings and revenue miss, the company's leadership remains confident in their strategy and the value proposition offered to their clients.
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