StoneCo Q2 Earnings Call Highlights

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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.

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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.

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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 client base reached 4.8 million merchants. Management said its efforts to reduce churn have produced faster results among micro merchants, where products and distribution channels are simpler. The company is working to simplify offerings and bundles, align sales-force incentives and reduce operational friction for clients.

For small and medium-sized businesses, the process is more gradual because merchants have a wider range of needs, offerings and channels, Schwening said. He said the company is seeing improvement in both micro-merchant and SMB trends, but cautioned that a broader recovery in retention and TPV would not occur “at the flip of a switch.”

Pix QR-code volumes continued to grow faster than card volumes. Salgado said payment take rates are declining at the margin, primarily due to mix as Pix becomes a larger portion of TPV, as well as certain pricing actions. He said StoneCo evaluates customer economics across the broader relationship rather than on payments or credit as standalone products.

The company also integrated Pagar.me, its historical digital-commerce platform, into Stone. Management said the integration gives merchants a single account and view of online and in-person sales, while potentially improving StoneCo’s ability to cross-sell services and assess credit opportunities.

Credit growth, government programs and risk

StoneCo’s credit portfolio reached BRL 3.8 billion, more than double its level a year earlier. Working-capital products were the principal driver, while government-backed loans accounted for roughly BRL 300 million of the portfolio and credit cards represented BRL 400 million.

Retail deposits rose more than 20% year over year to BRL 10.8 billion. Salgado said the growing deposit base has helped reduce funding costs to roughly 85% of CDI, though he expects assets to grow faster than deposits through year-end, which could create pressure on financial expenses.

Credit revenue increased 14%, with a broadly stable yield. Salgado said the growth of government-backed lending reduced average yields because these programs carry lower rates but also lower risk.

Under the FGI Pix program, the government guarantees about 75% of a defaulted amount on average, according to Salgado. This reduces the loss given default and allows StoneCo to hold lower upfront provisions for eligible loans. The company said the programs can help it extend credit to merchants where it was previously less competitive while managing the risk profile of portfolio growth.

Provision expenses totaled BRL 188 million in the quarter, while the cost of risk stood at 21.5%. Management cited rapid portfolio growth, the aging of late-2025 and early-2026 loan vintages, and pressure in its dedicated lending desk. The dedicated desk serves larger clients and has experienced defaults involving some of its largest individual exposures amid a rise in bankruptcy-protection filings in Brazil.

Schwening said the company is responding by shifting more originations toward government-backed products for clients without longstanding relationships or sufficient historical data, and by reducing maximum ticket sizes on the dedicated desk. Management characterized the pressure as mostly macroeconomic rather than fraud-related.

StoneCo said its automated lending desk has shown improvement following second-quarter changes, with first-payment defaults trending down and the June cohort producing its best result in 12 months. The company expects its cost of risk to trend toward the mid- to high-teens over the medium term and to reach the high teens by year-end, though management warned that individual large cases could create quarterly volatility.

Capital returns and issuer-related provision

StoneCo’s capital ratio stood at 26% following an extraordinary dividend paid in May from Linx sale proceeds. The company said it returned BRL 4.3 billion to shareholders during the first half through dividends and share repurchases.

During the quarter, StoneCo also recorded a provision related to selected card issuers in distress after a large financial group’s credit-card-issuer subsidiary was liquidated. Salgado said more than 90 days had passed since StoneCo last received cash flows from the issuer, prompting the company to treat the exposure as distressed for accounting purposes.

Management said it expects card networks to ultimately settle the amounts and noted that it has historically collected 100% of such receivables from networks when issuers have failed. Still, Salgado said StoneCo may need to record additional provisions because the current balance reflects weighted-probability scenarios that include the possibility of litigation.

About StoneCo (NASDAQ:STNE)

StoneCo Ltd., commonly known as Stone, is a Brazilian financial technology company that provides integrated digital payment solutions and related financial services to merchants. Through its cloud-based platform, Stone enables businesses of all sizes to accept a variety of payment methods, including point-of-sale (POS) terminals, mobile card readers and e-commerce gateways. In addition to payment acceptance, the company offers value-added services such as working capital loans, digital banking products and automated billing tools designed to help merchants manage cash flow and streamline operations.

Since its founding in 2012 by André Street and Eduardo Pontes, Stone has focused on serving over half a million merchants across Brazil's retail, restaurant and services sectors.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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