Brazil-based fintech company StoneCo Ltd. (Nasdaq: STNE) is trading at a discount of over 86% from its 52-week high, while the firm's prudent price initiatives it implemented during the fourth quarter have continued to gain traction and the quality of its client base is improving, as expected. The company said it began to witness margin recovery as evidenced by its first quarter adjusted EBT margin of 7.9% up from 0.9% in the fourth quarter of 2021.
Financial Metrics
The firm's Q1 total revenue and net income reached R$2.07 billion, a jump of 138.6%, compared to the previous year's R$867.7 million, propelled by a 107.8% increase in revenues from Financial Services to R$1.7 billion in the period, and 955.6% upsurge in Software to R$326.6 million in this quarter.
Adjusted net income was R$132.2 million versus R$187.4 million reported last year. Adjusted EBITDA in the first quarter was R$817.3 million, up 116.8% year over year and 19.4% quarter over quarter.
Adjusted EBT in the quarter was R$163.1 million, 16.5% above the company's guidance of R$140.0 million and significantly above the fourth quarter's adjusted pre-tax income of R$17.2 million.
The company stated that its banking client base continues to increase sequentially. Active Digital Banking Accounts reached 509,900, up 3.7% quarter over quarter and 2.1x year over year, despite a slightly lower SMB payments active client base compared with 4Q21. This implies a higher activation of banking accounts in the company's current payments base. At the same time, average revenue per active client or ARPAC has increased 2.8x year over year and 32% quarter over quarter.
Q2 Forecast
Stone projects Q2 total revenue of R$2.15 billion - R$2.2 billion, with a 148% - 154% growth compared to last year. Adjusted EBT, excluding bond financial expenses, as reported until Q1, 2022, is expected to be above R$185.0 million in the second quarter of 2022, compared with R$163.1 million in the first quarter of 2022.
Stock Movement
The stock closed Friday's (July 8, 2022) trading session at $8.42, down 10 cents or 1.17%, with trading volume of over 4.39 million versus an average volume of 8.79 million shares. In the after hours session, the stock traded at $8.43, up 1 cent or 0.12%. STNE has been trading between $6.81 and $64.70 for the past one year.
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We published STNE on July 10th. The stock opened at $8.20 on July 11, 2022, and reached an intra-day high of $12.39 on August 16, 2022, representing a gain of 51%.
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