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, today
reports its financial results for its fourth quarter and fiscal
year ended December 31, 2019.
To our shareholders: We continue to grow fast while maintaining
strong profitability and have delivered another quarter of strong
results driven by our talented and passionate team of people across
Stone and our continued obsession with serving our clients better
every day.
In the fourth quarter of 2019, we continued to see strong
fundamental growth in our business. Our TPV growth
accelerated to 51.4% year-over-year (vs 49.8% last quarter) and our
net client additions (excluding Stone Mais) accelerated to 67,300
(compared to 64,100 in the third quarter of 2019). We remained
aggressive in the market selling new services, but we maintained
our take rate at a relatively stable level of 1.80%. As a result,
our total revenue and income during the quarter grew 47.9%
year-over-year and we were able to achieve an adjusted net margin
of 35.1%, which was our highest margin ever. This enabled us to
produce R$264 million of net income and R$275 million of adjusted
net income, up 107.7% and 76.4% year-over-year, respectively. I
believe our fourth quarter results were a strong finish to our full
year as a public company.
In the full year 2019, we reached R$129 billion of TPV and our
client base grew 84% year-over-year, with greater than 60% growth
in 26 out of 27 Brazilian states. We focused on selling new
software solutions in 2019 because we believe the combination of
software solutions with our integrated financial platform will help
our clients manage and grow their businesses better. This year we
were able to increase the number of clients using software from
30,000 in the first quarter to over 135,000 by the end of the
year. As a result of these combined efforts, I am pleased we
were able to produce R$2,576 million in total revenue and income
and R$857.1 million in Adjusted Net Income in 2019. We believe we
had a great year, but we are focused on making 2020 and beyond even
more special for our clients and as a consequence for our long term
shareholders.
Looking ahead to 2020, we will continue to invest significantly
in our operations in order to keep enhancing our clients’ user
experience as well as our own efficiency. This will help us
continue to build trust and drive strong growth in our client base
and offer them more solutions over time with even better value and
transparency. Our goal is to become the one-stop-shop for our
clients, enabling them to have full financial control of their
businesses in the palm of their hands and I believe we are making
good progress.
For example, at the end of January 2020, we reached 79,000 open
digital banking accounts (4X more than 3Q19) and we had over 5% of
our total active clients using our credit solution. In addition to
all that, our partnership with Grupo Globo just released its
initial marketing campaign under the brand TON, targeting
micro-merchants and autonomous workers, an attractive client base
where we believe we can redefine service levels and customer
relationships and that can become a potential big upside for
our future.
We are very excited for 2020 and we would like to take this
opportunity to thank you for your continued support as our
backers,
Thiago Piau, CEO
Operating and Financial Highlights 4Q19
Total
Revenue and Income |
Net
Addition of Active Clients |
+47.9% |
66.2 K |
Total Revenue and Income was
R$782.9 million, an increase of 47.9% year over year |
Total Active Clients were 495.1 thousand, an increase of 84.0%
year over year, with net addition of 66.2 thousand clients in
4Q19 |
|
|
Adjusted Net Income |
Adjusted Net Margin |
R$ 275.0 MM |
35.1% |
an increase of 76.4% year over year |
an increase of 5.7 percentage points year over year |
|
|
Net Income |
Net Margin |
R$ 264.0 MM |
33.7% |
an increase of 107.7% year over year |
an increase of 9.7 percentage points year over year |
|
|
Total Payment Volume (TPV) |
Take Rate |
R$ 40.2 BN |
1.80% |
up 51.4% or R$13.7 billion year over year |
healthy level despite lower take rate seasonality |
|
|
Operating and Financial Highlights 2019
Total
Revenue and Income |
Net
Addition of Active Clients |
+63.1% |
226.0 K |
Total Revenue and Income was
R$2,576.0 million, an increase of 63.1% year over year |
Total Active Clients were 495.1 thousand, an increase of 84.0%
year over year, with net addition of 226.0 thousand clients in
2019 |
|
|
Adjusted Net Income |
Adjusted Net Margin |
R$ 857.1 MM |
33.3% |
an increase of 150.0% year over year |
an increase of 11.6 percentage points year over year |
|
|
Net Income |
Net Margin |
R$ 804.2 MM |
31.2% |
an increase of 163.5% year over year |
an increase of 11.9 percentage points year over year |
|
|
Total Payment Volume (TPV) |
Take Rate |
R$ 129.1 BN |
1.85% |
up 54.8% or R$45.7 billion year over year |
Up 2 bps year over year |
|
|
Important Developments for Our Strategy Roadmap in
4Q19
Financial Platform
Our performance in the acquiring business continues strong. We
accelerated our addition of clients (excluding Stone Mais) from
64,100 to 67,300 despite the weak seasonality for client onboarding
in fourth quarters. With that, we ended the year with total
active clients of 495,100 and intend to continue growing our client
base consistently in 2020.
Our TPV reached R$40.2 billion in the quarter, with record TPV
addition both on a year over year as well as on a quarter over
quarter basis. In the hubs, our performance also followed this
pattern.
Our take rate remained consistent, reaching 1.80% in the fourth
quarter, despite a seasonally weak quarter.
Regarding credit, we have already disbursed over R$290 million
to our clients by the end of 4Q19, with 24,200 active clients and
R$166 million of outstanding balance. This has evolved to R$360
million disbursed by the end of January 2020, with 28,600 thousand
clients and an outstanding balance of almost R$200 million. We
continue to improve our credit offering to be able to offer our
product to a larger base in 2020. The growth of our credit
solution is being ruled by low delinquency rates, currently at
mid-single digits. We also aim to fund our credit solution mostly
with third party funding, which enables us to have limited credit
risk. We were pioneers in Brazil in structuring FIDCs1 to fund
prepayment operations and we are on the same path with credit, as
we have already structured a FIDC to fund our credit solution.
In banking, we ended 4Q19 with 62,000 open accounts, growing to
approximately 79,000 open accounts in January 2020, with a
significant portion of clients already liquidating their
receivables in our account.
The banking account is evolving to become our consolidated
financial platform (ABC), integrating the client's acquiring,
banking and credit offerings. By advancing on the platform and
including new features and products, we will be able to offer an
integrated financial experience to our clients, with all the
customer experience that they already know from Stone's acquiring.
We are currently piloting the platform, with over 10,000 clients in
the program as of January 2020.
Software
At the end of 2019, we had over 135,000 clients with at least
one of our software solutions compared to over 100,000 in the
previous quarter.
Our strategy in software will involve both the offering of
software solutions that are integrated to our distribution platform
(e.g. reconciliation software), as well as inorganic investments in
new software companies that may cross-sell our payments and
financial solutions into their client base.
We continue to look for great companies with great entrepreneurs
to be part of our ecosystem and help us provide the best solutions
to merchants.
Partnership with Grupo Globo in the Micromerchant
Space
We received approval from the anti-trust authority and on March
1st, we officially launched the first marketing campaign under the
TON brand to serve the micromerchant space. TON will focus on
redefining service for micromerchants, as Stone did for SMBs. Its
chat customer service is supported by human connection when needed,
and its logistics counts with efficient POS delivery and device
maintenance for this
segment.
Operating and Financial Metrics
Table 1: Operating Metrics
Main Operating and Financial Metrics |
4Q19 |
4Q18 |
|
Δ |
|
2019 |
2018 |
|
Δ |
TPV (R$ billions) |
40.2 |
26.6 |
|
51.4% |
|
129.1 |
83.4 |
|
54.8% |
Active Clients (thousands) |
495.1 |
269.1 |
|
84.0% |
|
495.1 |
269.1 |
|
84.0% |
Period Net Additions (thousands) |
66.2 |
34.4 |
|
92.3% |
|
226.0 |
137.9 |
|
63.9% |
Take Rate |
1.80% |
1.88% |
|
(0.08 p.p.) |
|
1.85% |
1.83% |
|
0.02 p.p. |
We continued to deliver strong operating results in 4Q19 as a
result of the high level of investments in the operation throughout
the year combined with good execution in the field.
- Our total base of Active Clients reached 495,100, with strong
total net addition of 66,200 in the quarter. Net addition excluding
Stone Mais clients was 67,300, representing an acceleration from
the 64,100 reported in the prior quarter, despite fourth quarters
being seasonally weak for client onboarding. Stone Mais product for
micromerchant had a slightly negative contribution to net adds as
the team was focused on the launch of the Globo partnership and
discontinued investments and customer acquisition efforts behind
the Stone Mais brand.
Chart 1: Active Client Base
(Thousands) (See PDF)
Chart 2: Net Addition of Active Clients (See
PDF)
Chart 3: Net Addition of Active
Clients excluding Stone Mais (Thousands) (See
PDF)
- Our Take Rate was 1.80% in 4Q19, lower than 3Q19 mainly
explained by weak fourth quarter seasonality due to
- (i) stronger mix and lower take rate of key accounts
- (ii) higher debit mix in TPV, which affects both take rates
from transaction activities and other services as well as financial
income take rate and;
- (iii) lower subscription take rates, as subscription revenue is
not tied to the seasonally strong TPV
- (iv) incentives during the holiday season in 4Q19
Chart 4: Evolution of Take Rate2 (See
PDF)
- Total Payment Volume (TPV) was R$40.2 billion, up 51.4%
compared to the prior year period, an acceleration of growth
compared to the 49.8% increase reported in 3Q19.TPV addition was
record for the Company and in the Hubs both from a year over year
perspective as well as quarter over quarter.
Table 2: Quarterly Statement of Profit or
Loss
Statement of Profit or Loss (R$mm) |
4Q19 |
% Rev. |
4Q18 |
% Rev. |
|
Δ % |
Δ p.p. |
Net revenue from transaction activities and other services |
230.3 |
29.4% |
174.4 |
32.9% |
|
32.1% |
(3.5
p.p.) |
Net revenue from subscription services and equipment rental |
91.6 |
11.7% |
69.5 |
13.1% |
|
31.8% |
(1.4
p.p.) |
Financial income |
404.1 |
51.6% |
255.8 |
48.3% |
|
57.9% |
3.3
p.p. |
Other financial income |
56.9 |
7.3% |
29.6 |
5.6% |
|
91.9% |
1.7
p.p. |
Total revenue and income |
782.9 |
100.0% |
529.4 |
100.0% |
|
47.9% |
0.0 p.p. |
Cost of services |
(128.3) |
(16.4%) |
(101.3) |
(19.1%) |
|
26.7% |
2.7
p.p. |
Administrative expenses |
(72.4) |
(9.3%) |
(73.4) |
(13.9%) |
|
(1.2%) |
4.6
p.p. |
Selling expenses |
(109.0) |
(13.9%) |
(58.7) |
(11.1%) |
|
85.6% |
(2.8
p.p.) |
Financial expenses, net |
(106.9) |
(13.7%) |
(75.1) |
(14.2%) |
|
42.4% |
0.5
p.p. |
Other operating income (expense), net |
(2.5) |
(0.3%) |
(41.6) |
(7.9%) |
|
(94.1%) |
7.5
p.p. |
Loss on investment in associates |
(1.1) |
(0.1%) |
(0.1) |
(0.0%) |
|
784.5% |
(0.1
p.p.) |
Profit before income taxes |
362.6 |
46.3% |
179.3 |
33.9% |
|
102.3% |
12.5 p.p. |
Income tax and social contribution |
(98.7) |
(12.6%) |
(52.2) |
(9.9%) |
|
89.0% |
(2.7
p.p.) |
Net
income for the period |
264.0 |
33.7% |
127.1 |
24.0% |
|
107.7% |
9.7 p.p. |
|
|
|
|
|
|
|
|
Adjusted Net Income |
275.0 |
35.1% |
155.9 |
29.5% |
|
76.4% |
5.7 p.p. |
Table 3: Accumulated Statement of Profit or
Loss
Statement of Profit or Loss (R$mm) |
2019 |
% Rev. |
2018 |
% Rev. |
|
Δ % |
Δ p.p. |
Net revenue from transaction activities and other services |
770.3 |
29.9% |
514.6 |
32.6% |
|
49.7% |
(2.7
p.p.) |
Net revenue from subscription services and equipment rental |
331.6 |
12.9% |
213.7 |
13.5% |
|
55.2% |
(0.7
p.p.) |
Financial income |
1,287.8 |
50.0% |
801.3 |
50.7% |
|
60.7% |
(0.8
p.p.) |
Other financial income |
186.4 |
7.2% |
49.6 |
3.1% |
|
275.9% |
4.1
p.p. |
Total revenue and income |
2,576.0 |
100.0% |
1,579.2 |
100.0% |
|
63.1% |
0.0 p.p. |
Cost of services |
(427.0) |
(16.6%) |
(323.0) |
(20.5%) |
|
32.2% |
3.9
p.p. |
Administrative expenses |
(285.8) |
(11.1%) |
(252.9) |
(16.0%) |
|
13.0% |
4.9
p.p. |
Selling expenses |
(360.6) |
(14.0%) |
(190.2) |
(12.0%) |
|
89.6% |
(2.0
p.p.) |
Financial expenses, net |
(353.5) |
(13.7%) |
(301.1) |
(19.1%) |
|
17.4% |
5.3
p.p. |
Other operating income (expense), net |
(57.7) |
(2.2%) |
(69.3) |
(4.4%) |
|
(16.7%) |
2.1
p.p. |
Loss on investment in associates |
(0.8) |
(0.0%) |
(0.4) |
(0.0%) |
|
82.0% |
(0.0
p.p.) |
Profit before income taxes |
1,090.7 |
42.3% |
442.3 |
28.0% |
|
146.6% |
14.3 p.p. |
Income tax and social contribution |
(286.5) |
(11.1%) |
(137.1) |
(8.7%) |
|
108.9% |
(2.4
p.p.) |
Net
income for the period |
804.2 |
31.2% |
305.2 |
19.3% |
|
163.5% |
11.9 p.p. |
|
|
|
|
|
|
|
|
Adjusted Net Income |
857.1 |
33.3% |
342.8 |
21.7% |
|
150.0% |
11.6 p.p. |
Total Revenue and Income
Total Revenue and Income was R$782.9 million in the fourth
quarter of 2019, an increase of 47.9% from R$529.4 million in the
fourth quarter of 2018. Total Revenue and Income growth was driven
primarily by the 51.4% increase in TPV.
Chart 5: Total Revenue and Income in the Quarter
(R$mm) (See PDF)
Chart 6: Fiscal Year Total Revenue and Income (R$mm)
(See PDF)
Net Revenue from Transaction Activities and Other
Services
Net Revenue from Transaction Activities and Other Services was
R$230.3 million in the fourth quarter of 2019, an increase of
32.1%, compared with the fourth quarter of 2018. This increase was
primarily due to the R$13.7 billion growth in TPV year over year,
partially offset by lower take rate from transaction
activities.
Net Revenue from Subscription Services and Equipment
Rental
Net Revenue from Subscription Services and Equipment Rental was
R$91.6 million in the fourth quarter of 2019, 31.8% above the
fourth quarter of 2018. This increase was primarily due to the
higher number of SMB Active Clients, partially offset by lower
average subscription per client, which is mainly a result of
additional subscription incentives in the onboarding of new
clients.
Financial Income
Financial Income was R$404.1 million in the fourth quarter of
2019, an increase of 57.9% year over year, primarily due to the
51.4% growth in TPV year over year combined with a higher
prepayment penetration over credit TPV. Also, credit
operations started to slightly contribute to Financial Income.
Other Financial Income
Other Financial Income was R$56.9 million in the fourth quarter
of 2019, an increase of R$27.2 million compared with the fourth
quarter of 2018. This increase was mainly due to the interest
income from the IPO proceeds on Stone’s cash balance and short-term
investments.
Costs and Expenses
Operating Costs and Expenses as a percentage of Total Revenue
and Income decreased by 3.0 percentage points on a sequential basis
to 39.6%, despite continued investments in our operation in
4Q19.
Chart 7: Operating Leverage* (See PDF)
* Includes Cost of Services, Administrative Expenses and Selling
Expenses as a percentage of Total Revenue and Income. Quarterly
unaudited data.
Cost of Services
Cost of Services was R$128.3 million or 16.4% of Total Revenue
and Income in 4Q19. This represented a decrease of 2.7 percentage
points versus 4Q18, mainly due to lower provisions and losses, wire
transfer costs as well as efficiency gains in technology human
resources.
Compared to 3Q19, Cost of Services decreased as a percentage of
Total Revenue and Income to 16.4% from 16.8%, mainly due to
operating leverage in transaction and deployment costs and stronger
seasonal operating leverage in fourth quarters.
Administrative Expenses
Administrative Expenses were R$72.4 million in the fourth
quarter of 2019, down 1.2% year over year. As a percentage of Total
Revenue and Income, Administrative Expenses were 4.6 percentage
points down, mainly explained by operating leverage from personnel
expenses as well as lower travel expenses.
Compared with 3Q19, Administrative Expenses as a percentage of
Total Revenue and Income decreased by 1.4 percentage point, mainly
explained by the stronger margin seasonality in fourth quarters
combined with lower travel expenses.
Selling Expenses
Selling Expenses were R$109.0 million in the quarter, an
increase of 85.6% versus 4Q18, mainly due to higher personnel and
marketing expenses. Compared with 3Q19, Selling Expenses
increased by R$7.3 million, lower than the increase in 3Q19 mostly
due to seasonally lower hiring of salespeople, combined with lower
marketing investments.
Financial Expenses, Net
Financial Expenses, Net were R$106.9 million in the fourth
quarter of 2019, an increase of 42.4%, compared with 4Q18, mainly
due to higher prepayment volumes. Financial Expenses, Net as a
percentage of Financial Income decreased to 26.4% in the fourth
quarter of 2019 compared with 29.3% in the fourth quarter of 2018.
This reduction occurred due to the combination of a (i) higher
financial income and (ii) lower cost of funds, which was also
helped by the lower base rate in the country.
Financial Expenses, Net as a percentage of Revenue decreased
from 15.1% in 3Q19 to 13.7% in 4Q19 mainly due to lower base rate
in the country, which reduced cost of funds. Financial Expenses,
Net as a percentage of Financial Income, decreased from 30.2% in
3Q19 to 26.4% in 4Q19, mostly explained by a (i) higher financial
income and (ii) lower cost of funds due to lower base rate.
Other Operating Expenses, Net
Other Operating Expenses, Net were R$2.5 million in the fourth
quarter of 2019, mainly related to the R$14.6 million in
share-based compensation expenses from one-time IPO grants,
partially offset by recovery of receivables. In 4Q18, the R$41.6
million Other Operating Expenses was affected by R$36.0 million in
one-time pre-IPO grants.
Profit Before Income Taxes
Profit Before Income Taxes was R$362.6 million in the fourth
quarter of 2019, representing 102.3% growth year over year, with a
pre-tax margin of 46.3% compared with 33.9% in the fourth quarter
of 2018. This improvement was mainly related to the increase in
Total Revenue and Income in addition to operating leverage in Cost
of Services, Administrative Expenses and Financial Expenses and
lower Other Operating Expenses.
Income Tax and Social Contribution
During the fourth quarter of 2019, the Company incurred R$98.7
million in Income Tax and Social Contribution expenses, or a 27.2%
effective tax rate, compared with a 29.1% tax rate in 4Q18.
Net Income
Adjusted Net Income was R$275.0 million in the fourth quarter of
2019, with a margin of 35.1%, compared with R$155.9 million and a
margin of 29.5% in the fourth quarter of 2018. The main factors
that contributed to the 76.4% growth in Adjusted Net Income were:
(i) increase in Total Revenue and Income, primarily due to higher
TPV; (ii) operating leverage in Cost of Services and Administrative
Expenses; (iii) reduced cost of funds; and (iv) lower Other
Operating Expenses. Compared to 3Q19, Adjusted Net Margin was 5.0
percentage points higher, explained by operating leverage in most
lines.
In 2019, Adjusted Net Income reached R$857.1 million, up 150.0%
year over year and with a margin of 33.3% compared to 21.7% for
2018.
Chart 8: Adjusted Net Income in the Quarter
(R$mm) (See PDF)
Chart 9: Adjusted Net Margin in the Quarter (See
PDF)
Chart 10: Fiscal Year Adjusted Net Income
(R$mm) (See PDF)
Chart 11: Fiscal Year Adjusted Net Margin (See
PDF)
Net Income was R$264.0 million in 4Q19, compared with Net Income
of R$127.1 million in 4Q18. Net Margin increased 9.7 percentage
points to 33.7% year over year in the fourth quarter of 2019. This
improvement was mainly due to the operating leverage of 4.5
percentage points in the quarter, combined with a reduction of 0.5
percentage points in Financial Expenses, Net, as a percentage of
Total Revenue and Income and of 7.5 percentage points in Other
Operating Expenses.
Reconciliation of Net Income to Adjusted Net
Income
Table 4: Adjusted Net Income Reconciliation
(Quarter)
Net Income Bridge (R$mm) |
4Q19 |
% Rev. |
4Q18 |
% Rev. |
|
Δ % |
Δ p.p. |
Net income for the period |
264.0 |
33.7% |
127.1 |
24.0% |
|
107.7% |
9.7 p.p. |
Share-based compensation expenses (a) |
14.6 |
1.9% |
36.0 |
6.8% |
|
(59.5%) |
(4.9
p.p.) |
Amortization of fair value adjustment (b) |
4.6 |
0.6% |
4.3 |
0.8% |
|
6.6% |
(0.2
p.p.) |
Gain on previously held interest in associate (c) |
0.0 |
0.0% |
0.0 |
0.0% |
|
n.a. |
0.0
p.p. |
One-time impairment charges (d) |
0.0 |
0.0% |
0.0 |
0.0% |
|
n.a. |
0.0
p.p. |
Other expenses (e) |
(1.7) |
(0.2%) |
0.0 |
0.0% |
|
n.a. |
(0.2
p.p.) |
Tax effect on adjustments |
(6.4) |
(0.8%) |
(11.5) |
(2.2%) |
|
(44.5%) |
1.4
p.p. |
Adjusted net income |
275.0 |
35.1% |
155.9 |
29.5% |
|
76.4% |
5.7 p.p. |
Table 5: Adjusted Net Income Reconciliation (Fiscal
Year)
Net Income Bridge (R$mm) |
2019 |
% Rev. |
2018 |
% Rev. |
|
Δ % |
Δ p.p. |
Net income for the period |
804.2 |
31.2% |
305.2 |
19.3% |
|
163.5% |
11.9 p.p. |
Share-based compensation expenses (a) |
64.3 |
2.5% |
60.8 |
3.9% |
|
5.7% |
(1.4
p.p.) |
Amortization of fair value adjustment (b) |
17.2 |
0.7% |
12.6 |
0.8% |
|
36.1% |
(0.1
p.p.) |
Gain on previously held interest in associate (c) |
0.0 |
0.0% |
(21.4) |
(1.4%) |
|
(100.0%) |
1.4
p.p. |
One-time impairment charges (d) |
0.0 |
0.0% |
8.4 |
0.5% |
|
(100.0%) |
(0.5
p.p.) |
Other expenses (e) |
(1.7) |
(0.1%) |
0.0 |
0.0% |
|
n.a. |
(0.1
p.p.) |
Tax effect on adjustments |
(26.8) |
(1.0%) |
(22.8) |
(1.4%) |
|
17.5% |
0.4
p.p. |
Adjusted net income |
857.1 |
33.3% |
342.8 |
21.7% |
|
150.0% |
11.6 p.p. |
- Consists of expenses related to the vesting of share-based
compensation.
- 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 relates to the EdB and Equals acquisitions.
- Consists of the gain on re-measurement of our previously held
equity interest in Equals to fair value upon the date control was
acquired.
- Consists of (i) impairment charges associated with certain
processing system intangible assets acquired in the EdB acquisition
that we no longer use, in an amount of R$6.4 million in 2Q18, and
(ii) impairment associated with improvements made to certain leased
office space upon the termination of the lease, in an amount of
R$2.0 million for 2Q18.
- In 4Q19, consists of the fair value adjustment related to
associates call option.
Cash Flow
Note on the impact of different funding
sources for prepayment in the financial statements
A natural consequence of TPV growth is the
corresponding increase in both Accounts Receivable from Card
Issuers and Accounts Payable to Clients. When the Company makes a
prepayment to its clients as part of its working capital solutions
offering, it reduces accounts payable by the corresponding prepaid
amount plus fees earned by providing such prepayment service. In
order to fund the prepayment operation, the Company predominantly
uses one of the following sources of funding: (i) the sale of its
receivables from card issuers to third-party banks or financial
institutions, (ii) the issuance of senior quotas by FIDCs to
institutional investors, (iii) the issuance of debentures and
private loans or (iv) its own capital from capital contributions or
cash flows from operations. These funding options lead to different
effects on the Company’s statements of balance sheet and cash
flows:
- Sale of receivables: the true sale of receivables results
in the derecognition of Accounts Receivable from Card Issuers. As a
result, when a prepayment operation is funded through the true sale
of receivables, both Accounts Receivable from Card Issuers and
Accounts Payable to Clients are derecognized from the balance sheet
in the same amount and the combined effect to the cash flows is a
positive operational cash flow equivalent to net fees earned by
providing such prepayment service.
- Issuance of FIDC3 senior quotas: when the Company launches a
new FIDC in order to raise capital, the amount raised from senior
quota holders less structuring and transaction costs will be
recognized on its balance sheet as cash and as a liability to
senior quota holders. The Company then transfers its receivables
from card issuers in its operating subsidiary to the FIDC and uses
the cash to fund the prepayment operations. As a result of
consolidating the FIDC in the Company’s financial statements, the
Accounts Receivable from Card Issuers held by the FIDC remain on
its consolidated balance sheet. This set of transactions generates
a positive impact on the Company’s cash flows from financing
activities in the amount received by the FIDC from senior quota
holders less structuring and transaction costs. However, since
Accounts Receivable from Card Issuers remains on the balance sheet
but the Accounts Payable to Clients are derecognized, these
transactions also cause a negative impact on our cash flow from
operations. The net effect of impacts in cash flow from
operations and cash flow from financing activities is
positive.
- Debentures and private loans: when the Company issues a
debenture or takes a private loan, the effect on the Company’s
statements of balance sheet and cash flows is similar to the
issuance of FIDC senior quotas.
- Deployment of the Company’s capital: when the Company uses its
own capital to fund prepayment operations, it does not sell its
receivables from card issuers and they remain on its balance sheet.
However, its Accounts Payable to Clients are derecognized, and
therefore these transactions cause a negative impact on the
Company’s cash flow from operations.
Note on the impact of different funding
sources for our credit solution in the financial
statements
Besides the prepayment operation, the Company
has recently started to offer credit solutions to clients, which
also require funding. In addition to the sale of receivables,
debentures and private loans mentioned above, the Company has the
following main funding alternatives for the credit business:
- Bilateral agreements with third party financial institutions:
the company may enter into agreement with third party financial
institutions, so that such institutions are the lenders of record
for Stone´s clients. In such case, the third-party financial
institution would bear the funding need and the credit risk of the
transaction and the Company would recognize a fee for rendering
services related to the transaction. This was the alternative the
Company opted for its initial pilot phase of the credit
solution, which has a positive effect in cash flow from
operations.
- Issuance of Credit FIDC senior and/or mezzanine quotas: in that
case, the company raises funds in the capital markets and issues
senior and/or mezzanine quotas to investors, while keeping a
very small amount of own cash invested in subordinated quotas.
Besides providing most of the funding needed for the credit
offering, this alternative also reduces the Company's overall
exposure to credit risk. The impact in our consolidated statement
of cash flows has similar logic as the issuance of FIDC senior
quotas mentioned in the section “Note on the impact of different
funding sources for prepayment in the financial statements”
above.
- Deployment of the Company’s capital: if the Company uses
its own capital to fund its credit operations, it decreases its
cash balance and recognizes loan assets in its balance sheet. If
the Company increases the amount of such loan assets, this has a
negative impact in our Net Cash from/(used in) Operating
Activities.
- Sale of loan assets: the true sale of loan assets results in
its derecognition from our balance sheet, impacting positively our
Net Cash from/(used in) Operating Activities. As of December 31,
2019, the Company had R$124.7 million in Loans Held for Sale in its
balance sheet. This amount was funded by Company’s own capital
through an investment in a FIDC. The Company, however, intends to
scale its credit operation mainly through third party funding,
especially alternative 2 mentioned above.Loan assets held in the
Company´s balance sheet are accounted for at their fair value,
which factors in market discount rates and expected delinquency,
thus representing the value that the Company would most probably be
able to sell such assets.
Net Cash Used in Operating Activities
Net Cash Used in Operating Activities for 4Q19 was R$663.5
million, primarily as a result of:
- Net Income of R$264.0 million, combined with non-cash expenses
consisting primarily of (i) Depreciation and Amortization of R$55.7
million; (ii) Other Financial Costs and Foreign Exchange, net of
R$55.0 million and (iii) Deferred Income Tax Expenses of R$16.3
million. The total amount of adjustments to Net Income from
non-cash items in the three months ended December 31, 2019 was
R$128.8 million.
- Net cash from changes in working capital, arising from changes
in operating assets and liabilities, totaled an outflow of
R$1,056.3 million, principally due to:
- an increase in Accounts Receivable from Card Issuers of
R$1,511.6 million; an increase in Trade Accounts Receivable and
Other Assets of R$199.4 million, which includes the impact of
increase in our Loans Held for Sale; Interest Paid of R$150.8
million; and Income Tax Paid in the amount of R$44.7
million.
- The impact of these factors was partially offset by Accounts
Payable to Clients of R$409.8 million; Interest Income Received,
Net of Costs of R$338.9 million and an increase in Taxes Payable in
the amount of R$79.8 million.
Net Cash Used in Operating Activities for 4Q18 was R$2,125.6
million, primarily as a result of:
- Net Income of R$127.1 million, combined with non-cash expenses
consisting primarily of (i) Depreciation and Amortization in the
amount of R$27.9 million; Other Financial Costs and Foreign
Exchange, Net of R$23.8 million; and (ii) Share Based Payments
Expense of R$21.3 million. The total amount of adjustments to Net
Income from non-cash items in the three months ended December 31,
2018 was R$65.0 million.
- Net cash from changes in working capital, arising from changes
in operating assets and liabilities, totaled an outflow of
R$2,317.7 million, mainly due to:
- An increase in Accounts Receivable from Card Issuers which led
to negative cash flows of R$2,629.3 million; Interest Paid of
R$64.5 million; and Income Tax Paid R$56.8 million
- partially offset by an increase in Accounts Payable to Clients
of R$174.3 million, Interest Income Received, Net of Costs in the
amount of R$158.4 million and an increase in Taxes Payable of
R$77.4 million.
Adjusted Net Cash Provided by Operating
Activities
Because of the nature of the prepayment and credit businesses of
the Company and dynamics of the sale of receivables in Brazil,
Stone management looks at Adjusted Net Cash Provided by/ (Used in)
Operating Activities, a non-IFRS metric. This metric excludes four
working capital adjustments4 shown in our Consolidated Statement of
Cash Flow: (i) changes in Accounts Payable to Clients; (ii) changes
in Accounts Receivables from Card Issuers; (iii) the Interest
Income Received, Net of Costs, which is shown separately in our
Cash Flow Statement but is directly linked to the change in our
Accounts Receivable from Card Issuers and Accounts Payable to
Clients in our balance sheet and (iv) Loans Held for Sale related
to our credit operation.
Table 6: Adjusted Net Cash Provided by Operating
Activities
Adjusted Net Cash Provided by Operating Activities
(R$mm) |
4Q19 |
4Q18 |
|
2019 |
2018 |
Net cash used in operating activities |
(663.5) |
(2,125.6) |
|
(2,651.8) |
(2,415.6) |
(-) Adjustments in Operating Activities: |
|
|
|
|
|
Accounts receivable from card issuers |
1,511.6 |
2,629.3 |
|
4,779.5 |
3,990.4 |
Accounts payable to clients |
(409.8) |
(174.3) |
|
(245.9) |
(570.1) |
Interest income received, net of costs |
(338.9) |
(158.4) |
|
(1,191.1) |
(514.8) |
Loans held for sale |
124.7 |
0.0 |
|
124.7 |
0.0 |
(=) Adjusted net cash provided by operating
activities |
224.0 |
171.0 |
|
815.3 |
489.9 |
In 4Q19 Net Cash Used in Operating Activities was R$663.5
million. Excluding the effect of changes in Accounts Receivables
from Card Issuers of R$1,511.6 million, changes in Accounts Payable
to Clients of R$409.8 million, Interest Income Received, Net of
Costs, of R$338.9 million and Loans Held for Sale related to credit
operation in the amount of R$124.7 million, our Adjusted Net Cash
Provided by Operating Activities was R$224.0 million, compared with
R$171.0 million in 4Q18. The higher Adjusted Net Cash Provided by
Operating Activities is mainly explained by the higher Net Income
in the period, partially compensated by higher Interest Paid and
Trade Accounts Receivable and Other Assets.
The R$338.9 million Interest Income Received, Net of Costs,
consists of two items: (i) financial income from our prepayment
activity, less (ii) financial expenses related to the sale of
receivables. The first item has direct influence on the level of
Accounts Payable to Clients in our balance sheet; the second item
has direct influence on the amount of Accounts Receivables from
Card Issuers on our balance sheet.
Net Cash Used in Investing Activities
Net Cash Used in Investing Activities was R$125.0 million for
4Q19, compared with R$2,636.9 million of Net Cash Used in Investing
Activities in 4Q18. Net Cash Used in Investing Activities for 4Q19
was primarily driven by Acquisition of Short-Term Investments, net
in the amount of R$81.7 million. In 4Q18, Net Cash Used in
Investing Activities was mostly explained by R$2,616.6 million In
Acquisition of Short-Term Investments following the company´s
IPO.
Net Cash Provided by Financing Activities
Net Cash Provided by Financing Activities was R$1,510.8 million
for 4Q19, compared with Net Cash Provided by Financing Activities
of R$4,877.9 million for 4Q18. Net Cash Provided by Financing
Activities for 4Q19 was mainly driven by R$2,120.2 million from
Proceeds from Borrowings, explained mostly by a CCB (Cédula de
Crédito Bancário) contract. This was partially offset by R$590.3
million in amortization of debt instruments. In 4Q18, Net Cash
Provided by Financing Activities was mainly explained by R$4,225.9
million in capital increase related to the company's IPO.
Adjusted Free Cash Flow
The Company defines Adjusted Free Cash Flow, a non-IFRS metric,
as Net Cash Provided by/ (Used in) Operating Activities, reduced by
Purchases of Property and Equipment, Purchases and Development of
Intangible Assets, less the effects from working capital
adjustments related to changes in Accounts Receivable from Card
Issuers, Accounts Payable to Clients and Loans Held for Sale
mentioned in the section “Adjusted Net Cash Provided by / (Used in)
Operating Activities” above.
The Company generated R$185.9 million of Adjusted Free Cash Flow
in 4Q19, compared to R$144.7 million in 4Q18, as shown in the table
below.
Table 7: Adjusted Free Cash Flow
Reconciliation of Adjusted Free Cash Flow
(R$mm) |
4Q19 |
4Q18 |
|
2019 |
2018 |
Net cash used in operating activities |
(663.5) |
(2,125.6) |
|
(2,651.8) |
(2,415.6) |
(-) Adjustments in Operating Activities: |
|
|
|
|
|
Accounts receivable from card issuers |
1,511.6 |
2,629.3 |
|
4,779.5 |
3,990.4 |
Accounts payable to clients |
(409.8) |
(174.3) |
|
(245.9) |
(570.1) |
Interest income received, net of costs |
(338.9) |
(158.4) |
|
(1,191.1) |
(514.8) |
Loans held for sale |
124.7 |
0.0 |
|
124.7 |
0.0 |
|
|
|
|
|
|
Purchases of property and equipment |
(19.4) |
(15.6) |
|
(333.6) |
(140.9) |
Purchases and development of intangible assets |
(18.7) |
(10.7) |
|
(66.4) |
(44.8) |
|
|
|
|
|
|
Adjusted free cash flow (R$mn) |
185.9 |
144.7 |
|
415.4 |
304.2 |
The main reason for the increase in Adjusted Free Cash Flow in
4Q19 compared with 4Q18 was the higher Net Income in the period,
partially compensated by higher Interest Paid and Trade Accounts
Receivable and Other Assets.
Adjusted Net Cash
Management assesses net liquidity of the Company by Adjusted Net
Cash, a non-IFRS metric. It consists of our Cash and Cash
Equivalents, plus Short-term Investments, Accounts Receivable from
Card Issuers, Loans Held for Sale and Derivative Financial
Instruments related to hedges of cash and short term investments in
assets reduced by Accounts Payable to Clients, Loans and Financing,
Obligations to FIDC Senior Quota Holders and Derivative Financial
Instruments related to hedges of cash and short term investments in
liabilities.
As of December 31, 2019, the Company´s Adjusted Net Cash
position was R$4,984.8 million compared with R$4,480.6 million on
December 31, 2018, an increase of R$504.2 million. This increase
was related to the R$5,794.9 million higher Adjusted Cash,
partially offset by the R$5,290.6 million higher Adjusted Debt.
Higher Adjusted Cash was mainly due to an increase of R$4,822.2
million in Accounts Receivable from Card Issuers, and the increase
in Adjusted Debt was mainly an effect of strong increase in
Accounts Payable to Clients, Loans and Financing and Obligations to
FIDC senior quota holders.
Table 8: Adjusted Net Cash
Adjusted Net Cash (R$mm) |
4Q19 |
4Q18 |
Cash and cash equivalents |
968.3 |
297.9 |
Short-term investments |
2,937.0 |
2,770.6 |
Accounts receivable from card issuers |
14,066.8 |
9,244.6 |
Loans held for sale |
124.7 |
0.0 |
Derivative financial instrument (b) |
12.3 |
1.2 |
Adjusted Cash |
18,109.2 |
12,314.3 |
|
|
|
Accounts payable to clients |
(6,500.1) |
(4,996.1) |
Loans and financing (a) |
(2,912.0) |
(762.5) |
Obligations to FIDC senior quota holders |
(3,710.9) |
(2,074.6) |
Derivative financial instrument (b) |
(1.4) |
(0.6) |
Adjusted Debt |
(13,124.4) |
(7,833.7) |
|
|
|
Adjusted Net Cash |
4,984.8 |
4,480.6 |
- Loans and financing were reduced by the effects of leases
liabilities recognized under IFRS 16.
- Refers to economic hedge of cash and cash equivalents and
short-term investments denominated in U.S. dollars
Other Information
Conference Call
Stone will discuss its fourth quarter financial results during a
teleconference today, March 2, 2020, at 5:00 PM ET / 7:00 PM BRT.
The conference call can be accessed at +1 (412) 317 6346 or +1
(844) 204 8586 (US), or +55 (11) 3181 8565 (Brazil), or +44 (20)
3795 9972 (UK).
The call will also be broadcast simultaneously on Stone’s
Investor Relations website at https://investors.stone.co/.
Following the completion of the call, a recorded replay of the
webcast will be available on Stone’s Investor Relations website at
https://investors.stone.co/.
About Stone Co.
Stone Co. is a leading provider of financial technology
solutions that empower merchants to conduct commerce seamlessly
across multiple channels and help them grow their
businesses.
Investor Contact
Investor Relationsinvestors@stone.co
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 circum- stances
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, and our inability to execute successfully upon our
strategic initiatives, among other factors.
About Non-IFRS Financial Measures
To supplement the financial measures presented in this press
release and related conference call, presentation, or webcast in
accordance with IFRS, Stone also presents the following non-IFRS
measures of financial performance: Adjusted Net Income, Adjusted
Net Margin, Adjusted Net Cash Provided by / (Used in) Operating
Activities, Adjusted Free Cash Flow and Adjusted Net Cash /
(Debt).
A “non-IFRS financial measure” refers to a numerical measure of
Stone’s historical or future financial performance or financial
position that either excludes or includes amounts that are not
normally excluded or included in the most directly comparable
measure calculated and presented in accordance with IFRS in Stone’s
financial statements. Stone provides certain non-IFRS measures as
additional information relating to its operating results as a
complement to results provided in accordance with IFRS. The
non-IFRS financial information presented herein should be
considered in conjunction with, and not as a substitute for or
superior to, the financial information presented in accordance with
IFRS. There are significant limitations associated with the use of
non-IFRS financial measures. Further, these measures may differ
from the non-IFRS information, even where similarly titled, used by
other companies and therefore should not be used to compare Stone’s
performance to that of other companies.
Stone has presented Adjusted Net Income to eliminate the effect
of items from Net Income that it does not consider indicative of
its continuing business performance within the period presented.
Stone defines Adjusted Net Income as Net Income (Loss) for the
Period, adjusted for (1) non-cash expenses related to the grant of
share-based compensation and the fair value (mark-to-market)
adjustment for share-based compensation classified as a liability,
(2) amortization of intangibles related to acquisitions, (3)
one-time impairment charges, (4) unusual income and expenses and
(5) tax expense relating to the foregoing adjustments. Adjusted Net
Margin is calculated by dividing Adjusted Net Income by Total
Revenue and Income.
Stone has presented Adjusted Net Cash Provided by/ (Used in)
Operating Activities, in order to provide an addition view of cash
flow from operations without the effect of funding decisions
related to our financial solutions, that include prepayment
business and credit solutions. Stone has presented Adjusted Free
Cash Flow metric, which has limitations as it omits certain
components of the overall Cash Flow Statement and does not
represent the residual cash flow available for discretionary
expenditures. For example, this metric does not incorporate the
portion of payments representing principal reductions of debt or
cash payments for business acquisitions. Therefore, the Company
believes it is important to view Free Cash Flows measures only as a
complement to our entire consolidated Statements of Cash Flows.
Stone has presented Adjusted Net Cash metric in order to adjust
its Net Cash / (Debt) by the balances of Accounts Receivable from
Card Issuers, Loans Held for Sale and Accounts Payable to Clients,
since these lines vary according to the Company’s funding source
together with the lines of (i) Cash and Cash Equivalents, (ii)
Short-term Investments, (iii) Debt balances and (iv) Derivative
Financial Instruments related to economic hedges of short term
investments in assets, due to the nature of Stone’s business and
its prepayment and credit operations.
Unaudited Fourth Quarter and Audited Fiscal Year
Consolidated Statement of Profit or Loss
Table 9: Unaudited Fourth Quarter and Audited Fiscal
Year Consolidated Statement of Profit or Loss
Statement of Profit or Loss (R$mm) |
4Q19 |
4Q18 |
|
2019 |
2018 |
Net revenue from transaction activities and other services |
230.3 |
174.4 |
|
770.3 |
514.6 |
Net revenue from subscription services and equipment rental |
91.6 |
69.5 |
|
331.6 |
213.7 |
Financial income |
404.1 |
255.8 |
|
1,287.8 |
801.3 |
Other financial income |
56.9 |
29.6 |
|
186.4 |
49.6 |
Total revenue and income |
782.9 |
529.4 |
|
2,576.0 |
1,579.2 |
Cost of services |
(128.3) |
(101.3) |
|
(427.0) |
(323.0) |
Administrative expenses |
(72.4) |
(73.4) |
|
(285.8) |
(252.9) |
Selling expenses |
(109.0) |
(58.7) |
|
(360.6) |
(190.2) |
Financial expenses, net |
(106.9) |
(75.1) |
|
(353.5) |
(301.1) |
Other operating expenses, net |
(2.5) |
(41.6) |
|
(57.7) |
(69.3) |
Loss on investment in associates |
(1.1) |
(0.1) |
|
(0.8) |
(0.4) |
Profit before income taxes |
362.6 |
179.3 |
|
1,090.7 |
442.3 |
Income tax and social contribution |
(98.7) |
(52.2) |
|
(286.5) |
(137.1) |
Net income for the period |
264.0 |
127.1 |
|
804.2 |
305.2 |
Audited Fiscal Year Consolidated Balance Sheet
Statement
Table 10: Audited Fiscal Year Consolidated Balance Sheet
Statement
Balance Sheet (R$mm) |
31-Dec-19 |
31-Dec-18 |
|
Assets |
|
|
|
Current assets |
18,404.9 |
12,437.8 |
|
Cash and cash equivalents |
968.3 |
297.9 |
|
Short-term investments |
2,937.0 |
2,770.6 |
|
Accounts receivable from card issuers |
14,066.8 |
9,244.6 |
|
Trade accounts receivable |
249.4 |
44.6 |
|
Recoverable taxes |
50.4 |
56.9 |
|
Prepaid expenses |
12.5 |
15.1 |
|
Derivative financial instruments |
14.1 |
1.2 |
|
Other assets |
106.3 |
6.9 |
|
|
|
|
|
Non-current assets |
1,200.9 |
855.4 |
|
Receivables from related parties |
12.8 |
8.1 |
|
Deferred income tax assets |
192.8 |
262.7 |
|
Other assets |
44.7 |
8.5 |
|
Investment in associate |
28.2 |
2.2 |
|
Property and equipment |
548.6 |
266.3 |
|
Intangible assets |
373.7 |
307.7 |
|
|
|
|
|
Total Assets |
19,605.7 |
13,293.2 |
|
|
|
|
|
Liabilities and equity |
|
|
|
Current liabilities |
11,872.5 |
6,054.8 |
|
Accounts payable to clients |
6,500.1 |
4,996.1 |
|
Trade accounts payable |
97.8 |
117.8 |
|
Loans and financing |
2,947.8 |
761.1 |
|
Obligations to FIDC senior quota holders |
2,090.9 |
16.6 |
|
Labor and social security liabilities |
109.0 |
96.7 |
|
Taxes payable |
44.9 |
51.6 |
|
Derivative financial instruments |
1.4 |
0.6 |
|
Other accounts payable |
80.6 |
14.2 |
|
|
|
|
|
Non-current liabilities |
1,760.2 |
2,145.5 |
|
Loans and financing |
87.5 |
1.4 |
|
Obligations to FIDC senior quota holders |
1,620.0 |
2,057.9 |
|
Deferred income tax liabilities |
10.7 |
80.2 |
|
Provision for contingencies |
9.6 |
1.2 |
|
Labor and social security liabilities |
27.4 |
0.0 |
|
Other accounts payable |
5.1 |
4.7 |
|
|
|
|
|
Total liabilities |
13,632.7 |
8,200.2 |
|
|
|
|
|
Equity attributable to owners of the parent |
5,972.4 |
5,093.3 |
|
Issued capital |
0.1 |
0.1 |
|
Capital reserve |
5,443.8 |
5,351.9 |
|
Treasury shares |
(0.1) |
0.0 |
|
Other comprehensive income |
(72.3) |
(56.3) |
|
Retained earnings |
601.0 |
(202.3) |
|
|
|
|
|
Non-controlling interests |
0.6 |
(0.3) |
|
|
|
|
|
Total equity |
5,973.0 |
5,093.0 |
|
|
|
|
|
Total liabilities and equity |
19,605.7 |
13,293.2 |
|
Unaudited Fourth Quarter and Audited Fiscal Year
Consolidated Statement of Cash Flows
Table 11: Unaudited Fourth Quarter and Audited Fiscal
Year Consolidated Statement of Cash Flows
Cash Flow (R$mm) |
|
4Q19 |
4Q18 |
|
2019 |
2018 |
|
Net income for the period |
|
264.0 |
127.1 |
|
804.2 |
305.2 |
|
|
|
|
|
|
|
|
|
Adjustments on Net Income: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
55.7 |
27.9 |
|
163.4 |
92.3 |
|
Deferred income tax expenses |
|
16.3 |
1.5 |
|
69.2 |
(17.8) |
|
Loss on investment in associates |
|
1.1 |
0.1 |
|
0.8 |
0.4 |
|
Other financial costs and foreign exchange, net |
|
55.0 |
23.8 |
|
110.7 |
126.8 |
|
Provision for contingencies |
|
7.2 |
0.3 |
|
9.4 |
0.8 |
|
Share based payments expense |
|
7.6 |
21.3 |
|
30.8 |
46.1 |
|
Allowance for doubtful accounts |
|
7.1 |
(1.4 |
|
33.9 |
14.3 |
|
Impairment of intangible assets |
|
0.0 |
4.8 |
|
0.0 |
4.8 |
|
Loss on disposal of property, equipment and intangible assets |
|
8.2 |
(12.7) |
|
14.6 |
10.7 |
|
Fair value adjustments in financial instruments |
|
(17.4) |
0.0 |
|
(17.4) |
0.0 |
|
Fair value adjustment in derivatives |
|
(12.1) |
(0.6) |
|
(12.1) |
(0.6) |
|
Remeasurement of previously held interest in subsidiary
acquired |
|
0.0 |
0.0 |
|
0.0 |
(21.4) |
|
Others |
|
0.0 |
(0.0) |
|
0.0 |
(0.4) |
|
|
|
|
|
|
|
|
|
Working capital adjustments: |
|
|
|
|
|
|
|
Accounts receivable from card issuers |
|
(1,511.6) |
(2,629.3) |
|
(4,779.5) |
(3,990.4) |
|
Receivables from related parties |
|
(5.0) |
3.7 |
|
(1.1) |
4.0 |
|
Recoverable taxes |
|
(13.3) |
(31.7) |
|
(67.8) |
(98.7) |
|
Prepaid expenses |
|
9.0 |
11.7 |
|
2.6 |
(4.7) |
|
Trade accounts receivable and other assets |
|
(199.4) |
(2.5) |
|
(285.0) |
(36.9) |
|
Accounts payable to clients |
|
409.8 |
174.3 |
|
245.9 |
570.1 |
|
Taxes payable |
|
79.8 |
77.4 |
|
239.0 |
183.9 |
|
Labor and social security liabilities |
|
15.7 |
13.0 |
|
39.7 |
59.1 |
|
Provision for contingencies |
|
(1.5) |
0.0 |
|
(1.1) |
(0.0) |
|
Other Liabilities |
|
16.7 |
28.5 |
|
(3.4) |
50.9 |
|
Interest paid |
|
(150.8) |
(64.5) |
|
(268.5) |
(141.4) |
|
Interest income received, net of costs |
|
338.9 |
158.4 |
|
1,191.1 |
514.8 |
|
Income tax paid |
|
(44.7) |
(56.8) |
|
(171.3) |
(87.4) |
|
|
|
|
|
|
|
|
|
Net cash used in operating activity |
|
(663.5) |
(2,125.6) |
|
(2,651.8) |
(2,415.6) |
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
Purchases of property and equipment |
|
(19.4) |
(15.6) |
|
(333.6) |
(140.9) |
|
Purchases and development of intangible assets |
|
(18.7) |
(10.7) |
|
(66.4) |
(44.8) |
|
Acquisition of subsidiary, net of cash acquired |
|
0.0 |
0.0 |
|
0.0 |
(2.9) |
|
Proceeds from (acquisition of) short term investments, net |
|
(81.7) |
(2,616.6) |
|
(21.9) |
(2,557.3) |
|
Proceeds from the disposal of non-current assets |
|
0.1 |
9.1 |
|
1.1 |
13.4 |
|
Acquisition of interest in associates |
|
(5.3) |
(3.1) |
|
(16.8) |
(4.5) |
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
(125.0) |
(2,636.9) |
|
(437.6) |
(2,737.1) |
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
Proceeds from borrowings |
|
2,120.2 |
746.9 |
|
2,958.8 |
746.9 |
|
Payment of borrowings |
|
(590.3) |
(2.9) |
|
(801.8) |
(3.7) |
|
Proceeds from FIDC senior quota holders |
|
0.0 |
0.0 |
|
1,640.0 |
10.0 |
|
Payment of finance leases |
|
(18.7) |
(5.3) |
|
(38.0) |
(14.3) |
|
Capital increase |
|
0.0 |
4,225.9 |
|
0.0 |
4,229.2 |
|
Repurchase of shares |
|
(0.1) |
(79.2) |
|
(0.1) |
(142.4) |
|
Acquisition of non-controlling interests |
|
(0.3) |
(7.6) |
|
(0.9) |
(30.8) |
|
Dividends paid to non-controlling interests |
|
(0.0) |
0.0 |
|
(0.0) |
0.0 |
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
1,510.8 |
4,877.9 |
|
3,757.9 |
4,794.9 |
|
|
|
|
|
|
|
|
|
Effect of foreign exchange on cash and cash equivalents |
|
0.9 |
8.9 |
|
1.8 |
13.8 |
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents |
|
723.2 |
124.3 |
|
670.4 |
(344.0) |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period |
|
245.1 |
173.6 |
|
297.9 |
642.0 |
|
Cash and cash equivalents at end of period |
|
968.3 |
297.9 |
|
968.3 |
297.9 |
|
1 Receivables Investment Funds (Fundos de Investimento em
Direitos Creditórios) is an investment fund legal structure
established under Brazilian law designed specifically for
investing in credit rights receivables
2 For 3Q19 explanation, see our previous earnings release.
3 Receivables Investment Fund (Fundo de Investimento em
Direitos Creditórios) is an investment fund legal structure
established under Brazilian law designed specifically for investing
in credit rights receivables
4 Each “Accounts Payable to Clients” recognized as a liability
on our balance sheet is directly linked to an “Accounts Receivable
from Card Issuers” recognized as an asset in our balance sheet.
Originally, the Company receives from issuing banks first, and only
then paid its clients, thus having no working capital requirement.
When a client opts to be paid early (prepayment), the Company has a
working capital requirement. However, the Company has the option
itself to sell the receivables from card issuers related to those
payables in order to meet such working capital requirements. The
combined effect to the cash flows is a positive operational cash
flow equivalent to net fees earned by providing such prepayment
service. Whenever management opts to fund its prepayment operation
with sources other than the sale of its own receivables, Net Cash
Provided by/ (Used in) Operating Activities may be affected, as
discussed in “Note on the impact of different funding sources in
operating and financing cash flows” at the beginning of the Cash
Flow section. However, management does not view such decision as
translating into higher or lower ability of our business to
generate cash operationally. Besides prepayment, the Company has
started to offer credit solutions to clients. The company intends
to fund its credit operation primarily through third parties (i.e.
FIDC and debt), as well as with some own cash. Given the
operational nature of our credit business, like in the case of
prepayment mentioned above, management does not view related
funding decision as translating into higher or lower ability of our
business to generate cash operationally.
A PDF accompanying this announcement is available
at http://ml.globenewswire.com/Resource/Download/3cf87645-ff07-4da8-b379-fdd443080507
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