Shares of StoneCo (STNE 5.01%) fell as much as 13.5% early Tuesday, then partly recovered to close down 6.9% after the Brazilian fintech announced mixed quarterly results relative to expectations. It also announced the impending resignation of one of the company founders.
On StoneCo's technically mixed quarter
Fourth-quarter 2023 revenue grew 20.1% year over year to 3.25 billion Brazilian reals ($645.4 million), translating to adjusted earnings of 1.76 reals per share ($0.35). Analysts on average were predicting earnings of only 1.53 reals per share, but revenue closer to 3.40 billion reals.
Digging deeper into StoneCo's results, financial-services platform revenue grew 24.4% year over year, to 2.87 billion reals, while software revenue declined 3.5% to 363 million reals.
Active payment clients within StoneCo's micro, small, and medium-size business (MSMB) platform increased 37.4% year over year to 3,471,300 at the end of 2023, and MSMB total payment volume was up 20.2% to 98.5 billion reals.
Monthly MSMB average total payment value per client fell 15.1% year over year, precisely because of outsize growth within StoneCo's Ton solution, which is focused on micro-merchants with lower average total payment volume than larger SMB merchants.
What's next for StoneCo stock?
In conjunction with its quarterly results, StoneCo announced company founder André Street has chosen not to run for reelection as chairman of the board at the upcoming annual shareholder meeting in April. The company says Street will "remain deeply connected to the company" including having the privilege of choosing the next chairman of the board.
Management said, "This transition marks the culmination of a deliberate, multi-year effort led by André to professionalize management and enhance governance standards, a mission that was crystallized by our strong 2023 results and the robust, strategically aligned team now at the helm."
Looking ahead to 2024, StoneCo issued guidance for growth in MSMB total payment volume of at least 18% from 350 billion reals in 2023, with adjusted net income of at least 1.9 billion reals (or growth of at least 22%).
With shares of StoneCo up more than 80% over the past year, including a more than 50% pop so far in 2024, it's no surprise to see the stock pulling back modestly in light of its technically mixed fourth-quarter results. But I'm perfectly content as a long-term shareholder myself, and have no intention of selling my stake anytime soon.
