StoneCo Q2 Earnings Call Highlights

StoneCo’s Q2 performance improved operationally: TPV grew 4% year over year, revenue reached BRL 3.6 billion, and EPS rose 9% despite largely flat adjusted gross profit. Management maintained 2026 guidance but is now focused on reaching the lower end because Brazilian interest rates are expected to remain higher for longer. Credit and deposits expanded rapidly, alongside rising risk: The credit portfolio more than doubled to BRL 3.8 billion and retail deposits grew over 20% to BRL 10.8 billion, but provisions reached BRL 188 million and cost of risk was 21.5%. Management cited defaults among larger exposures and expects cost of risk to improve toward the high teens by year-end. StoneCo is pursuing deeper merchant relationships through its “bank for entrepreneurs” positioning, retention initiatives and the integration of Pagar.me. The company returned BRL 4.3 billion to shareholders in the first half, while warning that additional provisions may be needed for distressed card-issuer exposures. StoneCo NASDAQ: STNE reported second-quarter 2026 results marked by accelerating total payment volume growth, expanding banking deposits and a larger credit portfolio, while management said elevated interest rates and credit-market pressure have made its full-year targets more challenging. Chief Executive Officer Mateus Scherer Schwening said the company made “steady progress” on its priorities, including merchant retention, banking and credit expansion, cost discipline and shareholder returns. Total payment volume, or TPV, grew 4% year over year, an improvement from the first quarter that management said reflects early progress from retention initiatives. StoneCo also introduced a new brand positioning, “Stone, the bank for entrepreneurs,” intended to increase awareness of its broader payments, banking and credit offerings. Schwening said many customers continue to view Stone mainly as a payments company, while the company is seeking to deepen relationships through its full financial-services ecosystem. Financial performance and 2026 outlook Revenue reached BRL 3.6 billion in the quarter, supported by the scaling of the credit business, according to Chief Financial Officer and Investor Relations Officer Diego Ventura Salgado. Adjusted gross profit was broadly unchanged from a year earlier at BRL 1.6 billion, as revenue growth and lower financial expenses were offset by higher loan-loss provisions tied to credit portfolio expansion. Adjusted net income declined slightly year over year, while adjusted earnings per share increased 9%, which Salgado attributed to a lower share count following share repurchases. For the first half, StoneCo generated BRL 3.1 billion in adjusted gross profit and BRL 4.58 in adjusted basic earnings per share. The company maintained its 2026 guidance of BRL 6.6 billion to BRL 7 billion in adjusted gross profit and BRL 10.80 to BRL 11.40 in adjusted basic EPS. However, Schwening said the company is focused on reaching the lower end of those ranges because interest rates have remained higher for longer than management expected at the start of the year. Salgado said StoneCo had assumed Brazil’s Selic benchmark rate would end 2026 at 12.5%, compared with a current expectation closer to 14%. He said each 100-basis-point change in the Selic rate has a pretax impact of roughly BRL 200 million to BRL 250 million. Management expects performance to be weighted toward the second half as credit revenue compounds and commercial retention efforts gain traction. Retention efforts and payments mix StoneCo’s active clie...