StoneCo Ltd. (Nasdaq: STNE) (“Stone” or the “Company”), a leading
provider of financial technology solutions that empower merchants
to conduct commerce seamlessly across multiple channels and help
them grow their businesses over time through technology, today
announced preliminary results for the first quarter of 2019.
“In the first quarter of 2019 we continued to
deliver strong results and made key advancements in our strategic
roadmap,” said Thiago Piau, chief executive officer of Stone. “Our
preliminary results and key operational highlights for 1Q19
demonstrate strong continued execution and performance across the
Company and have encouraged us to make some additional investments
to implement our strategy and accelerate our plans. For example, we
are very pleased with the continued evolution and performance of
our Stone Hub strategy and have decided to invest further in our
Stone Hub operations, ahead of our original plans for the year. We
have also been encouraged by the progress and positive feedback
from our clients related to our new solutions in software, banking
and credit, which we believe will continue to differentiate and
strengthen our ecosystem of offerings, enable us to serve our
clients better and empower small and medium sized merchants to
manage and grow their businesses. As a result, we are very
happy to announce two new investments in Point-of-Sale and ERP
software solutions and welcome a new installed base of
approximately 18,000 integrated merchants to our client
community. In addition to these business updates, we are
happy to see the continued commitment and strengthening of our team
who remain 100% focused on delighting our customers and are very
excited about the many opportunities ahead of us.”
Preliminary Results for the First
Quarter of 2019
- Active clients as of March 31, 2019
is expected to be between 305.9 thousand and 307.4 thousand,
compared to 160.7 thousand at March 31, 2018, representing a period
over period growth between 90.4% and 91.3%.
- Total Payment Volume (TPV) for the
three months ended March 31, 2019 is expected to be between R$26.4
billion and R$26.5 billion, compared with R$16.5 billion for the
three months ended March 31, 2018, representing period over period
growth of approximately 60%.
- Take rate for the three months
ended March 31, 2019 is expected to be between 1.84% and 1.85%,
compared with 1.68% for the three months ended March 31, 2018,
representing a period over period growth between 16 and 17 basis
points.
- Total revenue and income for the
three months ended March 31, 2019 is expected to be between R$530.0
million and R$533.0 million, compared with R$286.9 million for the
three months ended March 31, 2018, representing a period over
period growth between 84.7% and 85.8%.
- Net income for the three months
ended March 31, 2019 is expected to be between R$170.8 million and
R$174.8 million, compared with R$24.7 million for the three months
ended March 31, 2018. Net Margin in the 1Q19 is expected to be
between 32.2% and 32.8%, an improvement of approximately 2,400 bps
compared to the 1Q18 and approximately 800 bps compared to the
4Q18.
- Adjusted net income for the three
months ended March 31, 2019 is expected to be between R$180.0
million and R$184.0 million, compared with R$26.5 million for the
three months ended March 31, 2018, representing a period over
period growth between 579% and 594%. Adjusted Net Margin in the
1Q19 is expected to be between 34.0% and 34.5%, an improvement of
approximately 2,500 bps compared to the 1Q18 and approximately 500
bps compared to the 4Q18. See below for a reconciliation of
adjusted net income to net income.
Key Recent Operational
Highlights
- Net adds in the first quarter 2019 is expected to be between
38.0 thousand and 39.5 thousand, compared to 33.5 thousand in the
fourth quarter 2018. Also, the trend in net addition of clients
started 2019 better than in 2018, with strong and consistent
ramp-up along the quarter. This does not include the new installed
base of approximately 18,000 software clients that will be added
from our new investments.
- As reported in the 4Q18, we continue to ramp up our Hub
operations, with both newer and older Hubs generating strong growth
in their client base. Also, our Hubs continue to demonstrate
operational leverage, as can be seen in Graphs 1 & 2
(attached).
- We have maintained our pricing and negotiation strategy,
focused on our differentiated value proposition, which has enabled
us to maintain our take rates at stable levels (between -3 to -4
bps vs. 4Q18). We have not seen any specific changes in take rate
trends within the quarter and believe that in the medium to long
term the company can still increase monetization of its
clients.
Important developments of our strategy
roadmap
Software
By integrating our payment offerings with
software solutions, we believe we will improve the lifetime value
of our clients and be able to leverage strategic data that will
allow us to be more proactive in providing financial solutions such
as working capital and credit. Currently, approximately 14,000
clients use at least one type of software product we provide. We
also aim to invest in new software opportunities to help merchants
become more productive, including opportunities to develop and
deploy ERP software in other industry verticals. A few highlights
on our current software offerings are:
- Collact: multisided customer engagement and loyalty platform
that enables small and medium sized businesses to acquire, engage
and grow their client base by offering customized loyalty and
marketing programs and providing consumer insights and
analytics.
- Linked Gourmet: cloud-based ERP system built to simplify and
empower SMBs in the food and beverage vertical with a full suite of
integrated business management tools including a mobile waiter app,
inventory management, checkout, payment integration at the
point-of-sale, and a suite of delivery management integrations and
tools.
- Equals Raio-X: receivables reconciliation solution that
streamlines the complex process of reconciling payments
transactions and managing cash flow. This powerful tool enables our
clients, from brick-and-mortar SMBs to large online enterprises, to
reconcile and monitor transactional data from all payment solutions
providers, such as merchant acquirers and gateways, giving
transparency of fees paid, discounts/chargebacks, and taxes at the
individual transaction level, in a single dashboard.
New investments in software
In March of 2019, we signed two binding
memoranda of understanding to invest in two new software companies,
VHSYS and Tablet Cloud. “We believe these two new investments will
strengthen our ability to continue to provide superior value
proposition to our clients, assist us in our continued efforts to
help clients better manage their operations, and drive omni-channel
growth, giving brick-and-mortar establishments the tools they need
to successfully sell both online and offline,” says Thiago Piau,
CEO.
The two new investments are:
- VHSYS is an omni-channel, cloud-based and API driven Point of
Sale and ERP platform built to serve a wide array of service and
retail businesses. The self-service platform consists of over 40
applications, accessible a la carte, such as order & sales
management, invoicing, dynamic inventory management, cash and
payments management, CRM, mobile messaging, along with marketplace,
logistics, and ecommerce integrations, among others.
- Tablet Cloud is a white label Point of Sale and simple ERP
application focused on small and medium businesses with simpler
needs. The application runs on smart POS and tablet solutions,
giving business owners complete control over their cash register
and inventory in a fully mobile device while having a robust ERP
platform accessible online.
Together, VHSYS and Tablet Cloud will add
approximately 18,000 new software clients, in addition to the
14,000 clients that used our software in 1Q19.
Credit solutions:
In February of 2019, we launched the pilot of
our credit solution to SMBs, with a third-party credit provider. We
believe this solution will support our clients when they need
funding to grow their business, by allowing them to effortlessly
contract, monitor and payback loans, by fully integrating our
credit solution within our payments platform. We are in the initial
stages of our credit offering and as of 1Q19 we had more than 143
clients.
We believe the main benefits of our SMB Credit
Solution will be the following:
- Self-service functionality: we aim to offer
pre-approved clients a full self-service experience through which
they will be able to contract and monitor their loans without the
bureaucracy of more traditional bank solutions.
- Transparent pricing and no hidden fees: we aim
to provide clients with all the information of rates they are
paying for their loans in a very transparent way.
- Clients pay back loans as a % of their credit card
receivables: in our credit solution, our clients will pay
back their loans as a percentage of their credit card receivables,
allowing them to effectively manage their cash flows.
Digital banking solutions:
We are developing a suite of digital banking
solutions designed to enable our clients to conduct financial
transactions, receive and remit funds, issue boletos, pay bills,
and integrate their enterprise financial data in a more efficient,
streamlined, and cost-effective manner than traditional bank
accounts. Our technology platform is proprietary and directly
integrated to the Brazilian Central Bank’s system. As of February
2019, our pilot had more than 2,500 open accounts.
Digital and IP strategy
- In digital, we maintain a complete suite of solutions, with
gateways and PSPs, and believe that we are in a strong position to
enable our brick-and-mortar SMB merchants to incorporate digital
commerce.
- Our proprietary end-to-end technology continues to give us an
important competitive advantage, especially with our 108 integrated
partners, up from 95 in 3Q18, which easily connect to our API
driven platform. We continue to be encouraged that our solutions
are best positioned to help take Brazilian SMBs digital.
Adjusted Net Income
Reconciliation
|
|
|
|
|
|
|
Net Income Bridge (R$mn) |
1Q19 |
1Q18 |
Δ |
|
|
Net income (loss) for the
period |
170.8 - 174.8 |
24.7 |
146.1 - 150.1 |
|
|
Share-based compensation expenses (a) |
10.1 |
0.0 |
10.1 |
|
|
Amortization of fair value adjustment (b) |
3.8 |
2.7 |
1.1 |
|
|
Tax
effect on adjustments |
(4.7) |
(0.9) |
(3.8) |
|
|
Adjusted net income (loss) |
180.0 - 184.0 |
26.5 |
153.5 - 157.5 |
|
|
|
|
|
(a) Consists of non-cash expenses related to the vesting of
share-based compensation, as well as fair value (mark-to-market)
adjustments for share-based compensation expense classified as a
liability in our consolidated financial statements. |
|
|
(b) On intangibles related to acquisitions. Consists of
expenses resulting from the amortization of the fair value
adjustment on intangible assets and property and equipment as a
result of the application of the acquisition method, a significant
portion of which relate to the EdB acquisition. |
|
|
|
|
Cautionary Statement Regarding
Preliminary Results
The results for the three months ended March 31,
2019 are preliminary, unaudited and subject to completion, reflect
our management’s current views and may change as a result of our
management’s review of our results and other factors, including
economic and competitive risks and uncertainties. Such preliminary
results for the three months ended March 31, 2019 are subject to
the finalization and closing of our accounting books and records
(which have yet to be performed),and should not be viewed as a
substitute for full quarterly financial statements prepared in
accordance with IFRS. We caution you that these preliminary results
for the three months ended March 31, 2019 are not guarantees of
future performance or outcomes and that actual results may differ
materially from those described above. These preliminary results
have been prepared by and are the sole responsibility of our
management.
Free Writing Prospectus
Legend
The Company has filed a registration statement
(including a prospectus) with the SEC for the offering to which
this communication relates. Before you invest, you should read the
prospectus in that registration statement and other documents the
Company has filed with the SEC for more complete information about
the Company and this offering. You may get these documents for free
by visiting EDGAR on the SEC Web site at www.sec.gov.
Alternatively, the Company, any underwriter or any dealer
participating in the offering will arrange to send you the
prospectus if you request it from Goldman Sachs & Co. LLC,
Attention: Prospectus Department, 200 West Street, New York, New
York 10282, telephone: 1-866-471-2526, facsimile: 212-902-9316 or
by emailing prospectus-ny@ny.email.gs.com; J.P. Morgan Securities
LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue,
Edgewood, New York 11717, telephone: 1-866-803-9204; Morgan Stanley
& Co. LLC, Attention: Prospectus Department, 180 Varick Street,
2nd Floor, New York, New York 10014; or Citigroup, c/o Broadridge
Financial Solutions, 1155 Long Island Avenue, Edgewood, New York
11717, or by phone at 1-800-831-9146. You may also access the
Company’s most recent preliminary prospectus dated April 1, 2019
included in the Company’s registration statement on Form F-1 dated
as the today through the following
link: https://www.sec.gov/Archives/edgar/data/1745431/000119312519093494/d727522df1.htm
This communication shall not constitute an offer
to sell or the solicitation of an offer to buy, nor shall there be
any sale of, these securities in any state or other jurisdiction in
which such offer, solicitation or sale would be unlawful prior to
the registration or qualification under the securities laws of any
such state or jurisdiction.
About Stone
Stone is a leading provider of financial
technology solutions that empower merchants to conduct commerce
seamlessly across multiple channels and help them grow their
business over time through technology.
Forward-Looking Statements
This press release contains "forward-looking
statements" within the meaning of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are made as of the date they were first
issued and were based on current expectations, estimates, forecasts
and projections as well as the beliefs and assumptions of
management. These statements identify prospective information and
may include words such as “believe,” “may,” “will,” “aim,”
“estimate,” “continue,” “anticipate,” “intend,” “expect,”
“forecast,” “plan,” “predict,” “project,” “potential,”
“aspiration,” “objectives,” “should,” “purpose,” “belief,” and
similar, or variations of, or the negative of such words and
expressions, although not all forward-looking statements contain
these identifying words. Forward-looking statements are
subject to a number of risks and uncertainties, many of which
involve factors or circumstances that are beyond Stone’s
control.
Stone’s actual results could differ materially
from those stated or implied in forward-looking statements due to a
number of factors, including but not limited to: more intense
competition than expected, lower addition of new clients,
regulatory measures, more investments in our business than
expected, among other factors.
Contact
ICR, Inc. +1 646-277-1200 StoneIR@icrinc.com
A PDF accompanying this announcement is available at:
http://ml.globenewswire.com/Resource/Download/f19925ae-92c6-49e2-9134-2b839ceeea55
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