STNE StoneCo Ltd

 

 

  

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of August 2024

 

 

Commission File Number: 001-38714

 

STONECO LTD.

(Exact name of registrant as specified in its charter)

 

4th Floor, Harbour Place

103 South Church Street, P.O. Box 10240

Grand Cayman, KY1-1002, Cayman Islands

+55 (11) 3004-9680

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F

X

Form 40-F

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	StoneCo Ltd.
	By:	/s/ Mateus Scherer Schwening
		Name:	Mateus Scherer Schwening
		Title:	Chief Financial Officer and Investor Relations Officer

 

Date: August 14, 2024

 

EXHIBIT INDEX

 

Exhibit No.	Description
99.1	StoneCo Ltd. – Unaudited Interim Condensed Consolidated Financial Statements For The Six Months Ended June 30, 2024.

 

Exhibit 99.1

 

 

 

Unaudited Interim Condensed

 

Consolidated Financial Statements

 

StoneCo Ltd.

 

June 30, 2024

 

Index to Consolidated Financial Statements

 

Interim Condensed Consolidated Financial Statements		Page
Report on review of interim condensed consolidated financial information		F-3
Unaudited interim consolidated statement of financial position as of June 30, 2024 and December 31, 2023		F-4
Unaudited interim consolidated statement of profit or loss for the six and three months ended June 30, 2024 and 2023		F-6
Unaudited interim consolidated statement of other comprehensive income for the six and three months ended June 30, 2024 and 2023		F-7
Unaudited interim consolidated statement of changes in equity for the six months ended June 30, 2024 and 2023		F-8
Unaudited interim consolidated statement of cash flows for the six months ended June 30, 2024 and 2023		F-9
Notes to unaudited interim condensed consolidated financial statements June 30, 2024		F-10

 

 

REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

 

To the Shareholders and Management of

StoneCo Ltd.

 

Introduction

 

We have reviewed the accompanying interim consolidated statement of financial position of StoneCo Ltd. (the “Company”) as of June 30, 2024 and the related interim consolidated statements of profit or loss and of other comprehensive income for the three and six-months periods then ended, and of changes in equity and cash flows for the six-months period then ended and explanatory notes

 

Management is responsible for the preparation and fair presentation of this interim condensed consolidated financial information in accordance with IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards Board (IASB). Our responsibility is to express a conclusion on this interim consolidated financial information based on our review.

 

Scope of review

 

We conducted our review in accordance with International Standard on Review Engagements 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity.

 

A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

 

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statement does not give a true and fair view of the financial position of the entity as at June 30, 2024, and of its financial performance and its cash flows for the three and six-months periods then ended in accordance with IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards Board (IASB).

 

São Paulo, August 13, 2024

 

ERNST & YOUNG

Auditores Independentes S/S Ltda.

 

		Notes				June 30, 2024				December 31, 2023
Assets
Current assets
Cash and cash equivalents			4				4,743,236				2,176,416
Short-term investments			5.1				106,575				3,481,496
Financial assets from banking solutions			5.5				6,967,814				6,397,898
Accounts receivable from card issuers			5.2.1				27,471,965				23,895,512
Trade accounts receivable			5.3.1				438,289				459,947
Loans operations portfolio			5.4				474,243				209,957
Recoverable taxes			7				182,707				146,339
Derivative financial instruments			5.7				71,275				4,182
Other assets			6				390,493				380,854
							40,846,597				37,152,601
Non-current assets
Long-term investments			5.1				32,410				45,702
Accounts receivable from card issuers			5.2.1				84,273				81,597
Trade accounts receivable			5.3.1				21,967				28,533
Loans operations portfolio			5.4				112,550				40,790
Receivables from related parties			11.1				714				2,512
Deferred tax assets			8.2				755,589				664,492
Other assets			6				133,274				137,508
Investment in associates							79,177				83,010
Property and equipment			9.1				1,728,204				1,661,897
Intangible assets			10.1				8,904,988				8,794,919
							11,853,146				11,540,960
Total assets							52,699,743				48,693,561

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

 

		Notes				June 30, 2024				December 31, 2023
Liabilities and equity
Current liabilities
Retail deposits			5.6.1				6,471,970				6,119,455
Accounts payable to clients			5.2.2				18,472,870				19,163,672
Trade accounts payable							525,684				513,877
Institutional deposits and marketable debt securities			5.6.1				1,443,932				475,319
Other debt instruments			5.6.1				1,594,018				1,404,678
Labor and social security liabilities							504,016				515,749
Taxes payable							676,278				514,299
Derivative financial instruments			5.7				112,226				316,171
Other liabilities							247,205				119,526
							30,048,199				29,142,746
Non-current liabilities
Accounts payable to clients			5.2.2				39,987				35,455
Institutional deposits and marketable debt securities			5.6.1				3,857,986				3,495,759
Other debt instruments			5.6.1				2,370,710				143,456
Deferred tax liabilities			8.2				613,826				546,514
Provision for contingencies			12.1				233,201				208,866
Labor and social security liabilities							30,690				34,301
Other liabilities							286,345				410,504
							7,432,745				4,874,855
Total liabilities							37,480,944				34,017,601
Equity			13
Issued capital			13.1				76				76
Capital reserve			13.2				14,084,356				14,056,484
Treasury shares			13.3				(490,752	)			(282,709	)
Other comprehensive income (loss)			13.4				(468,014	)			(320,449	)
Retained earnings							2,037,957				1,168,862
Equity attributable to controlling shareholders							15,163,623				14,622,264
Non-controlling interests							55,176				53,696
Total equity							15,218,799				14,675,960
Total liabilities and equity							52,699,743				48,693,561

 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

 

 

StoneCo Ltd.

Unaudited interim consolidated statement of profit or loss

For the six and three months ended June 30, 2024 and 2023

(In thousands of Brazilian Reais, unless otherwise stated)

 

			Six months ended June 30,				Three months ended June 30,
	Notes		2024		2023		2024		2023
Net revenue from transaction activities and other services	15.1		1,557,341		1,573,125		807,511		840,069
Net revenue from subscription services and equipment rental	15.1		909,976		902,459		453,267		457,330
Financial income	15.1		3,567,776		2,837,639		1,826,662		1,462,595
Other financial income	15.1		255,691		353,216		118,434		194,789
Total revenue and income			6,290,784		5,666,439		3,205,874		2,954,783
Cost of services	16		(1,651,300)		(1,406,579)		(841,374)		(685,302)
Administrative expenses	16		(512,487)		(601,948)		(255,487)		(303,900)
Selling expenses	16		(1,054,605)		(801,819)		(524,930)		(411,891)
Financial expenses, net	17		(1,747,599)		(1,997,483)		(851,052)		(1,073,844)
Mark-to-market on equity securities designated at FVPL	16		—		30,574		—		—
Other income (expenses), net	16		(188,976)		(158,251)		(80,920)		(56,747)
			(5,154,967)		(4,935,506)		(2,553,763)		(2,531,684)
Gain (loss) on investment in associates			(113)		(1,848)		(424)		(826)
Profit before income taxes			1,135,704		729,085		651,687		422,273
Current income tax and social contribution	8.1		(257,229)		(117,753)		(151,377)		(74,199)
Deferred income tax and social contribution	8.1		(6,579)		(78,431)		(2,009)		(40,863)
Net income for the period			871,896		532,901		498,301		307,211
Net income attributable to:
Controlling shareholders			869,095		532,008		496,114		305,369
Non-controlling interests			2,801		893		2,187		1,842
			871,896		532,901		498,301		307,211
Earnings per share
Basic earnings per share for the period attributable to controlling shareholders (in Brazilian reais)	14.2		R$ 2.82		R$ 1.70		R$ 1.61		R$ 0.98
Diluted earnings per share for the period attributable to controlling shareholders (in Brazilian reais)	14.2		R$ 2.76		R$ 1.63		R$ 1.58		R$ 0.93

 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

 

StoneCo Ltd.  

Unaudited interim consolidated statement of other comprehensive income 

For the six and three months ended June 30, 2024 and 2023 

(In thousands of Brazilian Reais)

 

			Six months ended June 30,				Three months ended June 30,
	Notes		2024		2023		2024		2023
Net income for the period			871,896		532,901		498,301		307,211
Other comprehensive income ("OCI")
Other comprehensive income that may be reclassified to profit or loss in subsequent periods:
Changes in the fair value of accounts receivable from card issuers	19.1		(89,126)		139,846		(64,745)		48,084
Tax on changes in the fair value of accounts receivable from card issuers			30,364		(47,548)		22,074		(16,346)
Exchange differences on translation of foreign operations			1,505		(8,768)		1,820		(4,303)
Changes in the fair value of cash flow hedge	5.7.1		(130,783)		65,457		(88,284)		(40,524)
Other comprehensive income that will not be reclassified to profit or loss in subsequent periods:
Net monetary position in hyperinflationary economies			2,376		920		1,479		62
Changes in the fair value of equity instruments designated at fair value	5.1		1,623		(1,141)		873		(748)
Gain on sale of equity instruments designated at fair value through other comprehensive income	5.1		35,647		—		35,647		—
Other comprehensive income for the period			(148,394)		148,766		(91,136)		(13,775)
Total comprehensive income for the period			723,502		681,667		407,165		293,436
Total comprehensive income attributable to:
Controlling shareholders			721,530		680,774		404,085		291,594
Non-controlling interests			1,972		893		3,080		1,842
Total comprehensive income for the period			723,502		681,667		407,165		293,436

 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

 

StoneCo Ltd.

Unaudited interim consolidated statement of changes in equity

For the six months ended June 30, 2024 and 2023

(In thousands of Brazilian Reais)

 

			Attributable to controlling shareholders
					Capital reserve
	Notes		Issued capital		Additional paid-in capital		Transactions among shareholders		Special reserve		Other reserves		Total		Treasury shares		Other comprehensive income		Retained earnings		Total		Non-controlling interests		Total
Balance as of December 31, 2022			76		13,825,325		(445,062)		61,127		377,429		13,818,819		(69,085)		(432,701)		(423,203)		12,893,906		56,118		12,950,024
Net income for the period			—		—		—		—		—		—		—		—		532,008		532,008		893		532,901
Other comprehensive income for the period			—		—		—		—		—		—		—		148,766		—		148,766		—		148,766
Total comprehensive income			—		—		—		—		—		—		—		148,766		532,008		680,774		893		681,667
Share-based payments			—		—		—		—		136,991		136,991		—		—		—		136,991		(114)		136,877
Shares delivered under share-based payment arrangements			—		—		(47,591)		—		(4,873)		(52,464)		53,270		—		—		806		—		806
Equity transaction related to put options over non-controlling interest			—		—		—		—		(14,531)		(14,531)		—		—		—		(14,531)		1,007		(13,524)
Equity transaction with non-controlling interests			—		—		—		—		—		—		—		—		—		—		49		49
Dividends paid			—		—		—		—		—		—		—		—		—		—		(1,935)		(1,935)
Others			—		—		(22)		—		—		(22)		—		—		—		(22)		—		(22)
Balance as of June 30, 2023			76		13,825,325		(492,675)		61,127		495,016		13,888,793		(15,815)		(283,935)		108,805		13,697,924		56,018		13,753,942
Balance as of December 31, 2023			76		13,825,325		(518,504)		61,127		688,536		14,056,484		(282,709)		(320,449)		1,168,862		14,622,264		53,696		14,675,960
Net income for the period			—		—		—		—		—		—		—		—		869,095		869,095		2,801		871,896
Other comprehensive income for the period			—		—		—		—		—		—		—		(147,565)		—		(147,565)		(829)		(148,394)
Total comprehensive income			—		—		—		—		—		—		—		(147,565)		869,095		721,530		1,972		723,502
Repurchase of shares	13.3		—		—		—		—		—		—		(236,526)		—		—		(236,526)		—		(236,526)
Share-based payments			—		—		—		—		73,867		73,867		—		—		—		73,867		—		73,867
Shares delivered under share-based payment arrangements			—		—		(28,483)		—		—		(28,483)		28,483		—		—		—		—		—
Equity transaction related to put options over non-controlling interest			—		—		—		—		(17,512)		(17,512)		—		—		—		(17,512)		3,174		(14,338)
Dividends paid			—		—		—		—		—		—		—		—		—		—		(3,028)		(3,028)
Others			—		—		—		—		—		—		—		—		—		—		(638)		(638)
Balance as of June 30, 2024			76		13,825,325		(546,987)		61,127		744,891		14,084,356		(490,752)		(468,014)		2,037,957		15,163,623		55,176		15,218,799

 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

 

StoneCo Ltd.

Unaudited interim consolidated statement of cash flows

For the six months ended June 30, 2024 and 2023

(In thousands of Brazilian Reais)

 

			Six months ended June 30,
	Notes		2024		2023
Operating activities
Net income for the period			871,896		532,901
Adjustments to reconcile net income for the period to net cash flows:
Depreciation and amortization	9.2		441,559		434,182
Deferred income tax and social contribution	8.1		6,579		78,431
Gain on investment in associates			113		1,848
Accrued interest, monetary and exchange variations, net			70,603		(175,839)
Provision for contingencies	12.1		40,018		5,099
Share-based payments expense	18.1.4		90,156		120,525
Allowance for expected credit losses			102,507		32,465
Loss on disposal of property, equipment and intangible assets	19.5		14,317		45,065
Effect of applying hyperinflation accounting			2,791		1,195
Loss on sale of subsidiary			52,958		—
Fair value adjustment in financial instruments at FVPL	19.1		(206,628)		93,997
Fair value adjustment in derivatives			7,188		8,615
Remeasurement of previously held interest in subsidiary acquired	20.1.2		(5,657)		—
Other			—		1,217
Working capital adjustments:
Accounts receivable from card issuers			(2,358,871)		3,900,802
Receivables from related parties			7,730		11,627
Recoverable taxes			(8,831)		(60,054)
Prepaid expenses			68,416		46,607
Trade accounts receivable, banking solutions and other assets			(14,746)		(10,534)
Loans operations portfolio			(314,403)		—
Accounts payable to clients			(4,016,667)		(3,794,545)
Taxes payable			210,299		92,626
Labor and social security liabilities			(31,512)		(7,632)
Payment of contingencies	12.1		(29,588)		(16,869)
Trade accounts payable and other liabilities			160,842		(2,094)
Interest paid			(313,485)		(437,099)
Interest income received, net of costs	19.4		2,038,931		1,145,657
Income tax paid			(75,644)		(47,294)
Net cash provided by in operating activities			(3,189,129)		2,000,899
Investing activities
Purchases of property and equipment	19.5		(390,912)		(536,511)
Purchases and development of intangible assets	19.5		(260,345)		(212,072)
Proceeds from (acquisition of) short-term investments, net			3,388,247		106,346
Sale of subsidiary, net of cash disposed of			(4,204)		—
Proceeds from disposal of long-term investments – equity securities	5.1		57,540		218,105
Proceeds from the disposal of non-current assets	19.5		4,216		245
Acquisition of subsidiary, net of cash acquired	20.1.1		(9,054)		—
Payment for interest in subsidiaries acquired			(151,908)		(32,562)
Net cash provided by (used in) investing activities			2,633,580		(456,449)
Financing activities
Proceeds from institutional deposits and marketable debt securities	5.6.1		971,681		—
Payment of institutional deposits and marketable debt securities	5.6.1		(38,693)		—
Proceeds from other debt instruments, except lease	5.6.1		4,007,264		2,798,229
Payment to other debt instruments, except lease	5.6.1		(1,570,264)		(3,626,210)
Payment of principal portion of leases liabilities	5.6.1		(28,182)		(40,755)
Repurchase of own shares	13.3		(236,526)		—
Acquisition of non-controlling interests			72		(1,175)

Dividends paid to non-controlling interests			(3,028)		(1,935)
Net cash provided by (used in) financing activities			3,102,324		(871,846)
Effect of foreign exchange on cash and cash equivalents			20,045		17,505
Change in cash and cash equivalents			2,566,820		690,109
Cash and cash equivalents at beginning of period	4		2,176,416		1,512,604
Cash and cash equivalents at end of period	4		4,743,236		2,202,713
Change in cash and cash equivalents			2,566,820		690,109

1.

Operations

 

StoneCo Ltd. (the “Company”), is a Cayman Islands exempted company with limited liability, incorporated on March 11, 2014. The registered office of the Company is located at 4th Floor, Harbour Place 103 South Church Street, P.O. box 10240 Grand Cayman E9 KY1-1002.

 

VCK Investment Fund Limited SAC is the ultimate parent of HR Holdings LLC, which holds, approximately, 31% of the Company’s voting shares. VCK Investment Fund Limited SAC is owned by the co-founder of the Company, Mr. Andre Street.

 

The Company’s shares are publicly traded on Nasdaq under the ticker symbol STNE and its Brazilian Depositary Receipts (BDRs) representing the underlying Company´s shares are traded on the Brazilian stock exchange (B3) under the ticker symbol STOC31.

 

The Company and its subsidiaries (collectively, the “Group”) provide financial services and software solutions to clients across in-store, mobile and online device platforms helping them to better manage their businesses by increasing the productivity of their sales initiatives.

 

The interim condensed consolidated financial statements of the Group for the six months ended June 30, 2024 and 2023 were approved by the Audit Committee on August 13, 2024.

 

1.1. Seasonality of operations

 

The Group’s revenues are subject to seasonal fluctuations as a result of consumer spending patterns. Historically, revenues have been strongest during the last quarter of the year as a result of higher sales during the Brazilian holiday season. This is due to the increase in the number and amount of electronic payment transactions related to seasonal retail events. Adverse events that occur during these months could have a disproportionate effect on the results of operations for the entire fiscal year. As a result of seasonal fluctuations caused by these and other factors, results for an interim period may not be indicative of those expected for the full fiscal year.

 

2.

Basis of preparation and changes to the Group’s accounting policies and estimates

 

2.1.

Basis of preparation

 

The interim condensed consolidated financial statements for the six months ended June 30, 2024 have been prepared in accordance with IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards Board (“IASB”).

 

The interim condensed consolidated financial statements are presented in Brazilian Reais (“R$”), and all values are rounded to the nearest thousand (R$ 000), except when otherwise indicated.

 

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group’s annual consolidated financial statements as of December 31, 2023.

 

The accounting policies adopted in this interim reporting period are consistent with those of the previous financial year, except for the following:

 

From January 1, 2024 onwards, the Group recognizes revenues from membership fees deferred through the expected lifetime of the client. The new criteria has been adopted and the Group has applied prospectively because the effect of the change and of the old criteria was not material to the consolidated financial statements both for the current and past periods. For further details see Note 15.1.

 

Considering that the Group is diversifying its sources of funding in the different markets (retail, banking, capital markets, institutional and other), as from June 30, 2024, a revised classification of deposits and debt instruments has been adopted. The comparative balances as of December 31, 2023 have been retroactively reclassified following the new criteria.

 

2.2.

Estimates

 

The preparation of the Group’s financial statements requires management to make judgments and estimates and to adopt assumptions that affect the amounts presented of revenues, expenses, assets and liabilities at the financial statement date. Actual results may differ from these estimates.

 

Judgements, estimates and assumptions are frequently revised, and any effects are recognized in the revision period and in any future affected periods. The objective of these revisions is mitigating the risk of material differences between the estimated and actual results in the future.

 

In preparing these interim condensed consolidated financial statements, the significant judgements and estimates made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those from the consolidated financial statements for the year ended December 31, 2023.

 

3.

Group information

 

3.1.

Subsidiaries

 

In accordance with IFRS 10 - Consolidated Financial Statements, subsidiaries are all entities in which the Company holds control.

 

The following table shows the main consolidated entities, which correspond to the Group’s most relevant operating vehicles.

 

				% of Group's equity interest
Entity name		Principal activities		June 30, 2024		December 31, 2023
Stone Instituição de Pagamento S.A. (“Stone Pagamentos”)		Merchant acquiring		100.00		100.00
Pagar.me Instituição de Pagamento S.A. (“Pagar.me”)		Merchant acquiring		100.00		100.00
Stone Sociedade de Crédito Direto S.A. (“Stone SCD”)		Financial services		100.00		100.00
Tapso Fundo de Investimento em Direitos Creditórios (“FIDC TAPSO”)		Investment fund		100.00		100.00

 

On February 7, 2024, the equity interest of Pinpag was sold, thus, the Group ceased to hold equity interest in Pinpag.

 

In the first quarter of 2024, the Group incorporated the companies Linx Impulse Ltda. ("Linx Impulse"), Stone Sociedade de Crédito, Financiamento e Investimento S.A. ("Stone SCFI"), Sponte Educação Ltda. ("Sponte Educação") and Linx Automotivo Ltda. (“Linx Automotivo”) all of which are wholly owned by the Group.

 

In the second quarter of 2024, the Group incorporated the companies Linx People Ltda. (“Linx People”), Linx Saúde Ltda. (“Linx Saúde”), Linx Commerce Ltda. (“Linx Commerce”) and Linx Enterprise Ltda. (“Linx Enterprise”) all of which are wholly owned by the Group.

 

Other than the changes described above there were no other changes in the interest held by the Group in its subsidiaries.

 

During the six months ended June 30, 2024, there were no changes in the ownership of the structured entities.

 

The Group holds call options to acquire additional interests in some of its subsidiaries (Note 5.7) and issued put options to non-controlling investors (Note 5.10.1.)

 

3.2.

Associates

 

The following table shows all entities in which the Group has significant influence.

 

				% Group's equity interest
Entity name		Principal activities		June 30, 2024		December 31, 2023
Alpha-Logo Serviços de Informática S.A. (“Tablet Cloud”)		Technology services		25.00		25.00
APP Sistemas S.A. (“APP”) (a)		Technology services		19.80		19.90
Agilize Tecnologia S.A ("Agilize")		Technology services		33.33		33.33
Dental Office S.A. (“Dental Office”)		Technology services		20.00		20.00
Neostore Desenvolvimento de Programas de Computador S.A. (“Neomode”) (b)		Technology services		42.25		40.02
Trinks Serviços de Internet S.A. (“Trinks”) (c)		Technology services		—		19.90
Delivery Much Tecnologia S.A. (“Delivery Much”)		Food delivery marketplace		29.50		29.50

 

(a) In the first quarter of 2024, the equity interest held by the Group was diluted by the issuance of new shares under a long-term incentive program.

(b) On April 17, 2024, Linx Sistemas Consultoria Ltda., a Group company, increased its equity interest in Neomode through a loan conversion.

(c) On May 2, 2024, STNE Participações S.A. ("STNE PAR"), a Group company, acquired 100% of the remaining shares of Trinks. STNE PAR had already owned 19.90% of Trinks' share capital. (Note 20.1)

 

The Group holds call options to acquire additional interests in some of its associates (Note 5.7.).

 

4.

Cash and cash equivalents

 

		June 30, 2024		December 31, 2023
Denominated in R$		4,514,251		2,128,425
Denominated in US$		228,985		47,991
		4,743,236		2,176,416

 

5.

Financial instruments

 

5.1.

Short and Long-term investments

 

		Short-term			Long-term			June 30, 2024
		Listed securities		Unlisted securities		Unlisted securities
Bonds (a)
Brazilian sovereign bonds		49,096		—		—		49,096
Time deposits		55,947		—		—		55,947
Equity securities (b)		—		—		32,410		32,410
Investment funds (c)		—		1,532		—		1,532
		105,043		1,532		32,410		138,985
Current								106,575
Non-current								32,410

		Short-term			Long-term			December 31, 2023
		Listed securities		Unlisted securities		Unlisted securities
Bonds (a)
Brazilian sovereign bonds		2,954,236		—		—		2,954,236
Structured notes linked to Brazilian sovereign bonds		—		473,259		—		473,259
Time deposits		51,933		—		—		51,933
Equity securities (b)		—		—		45,702		45,702
Investment funds (c)		—		2,068		—		2,068
		3,006,169		475,327		45,702		3,527,198
Current								3,481,496
Non-current								45,702

 

(a)

As of June 30, 2024, bonds of listed securities are mainly linked to the CDI and Selic benchmark interest rates.

 

(b)

Comprised of common shares of unlisted entities. All assets at the reporting dates are unlisted securities that are not traded in an active market and recognized at fair value through other comprehensive income. Fair value of unlisted equity instruments was determined based on negotiations of the securities. The change in fair value of equity securities at FVOCI for the six months ended June 30, 2024 was R$ 1,623, (R$ (1,141) for the six months ended June 30, 2023).

 

•

On June 03, 2024, the Group sold its remaining stake in Cloudwalk INC for payment of R$ 57,540. The gain on the sale of R$ 35,647 was recognized in other comprehensive income.

 

(c)

Comprised of foreign investment fund shares.

 

Short and Long-term investments are denominated in Brazilian Reais and U.S. dollars.

 

5.2.

Accounts receivable from card issuers and accounts payable to clients

 

5.2.1.

Composition of accounts receivable from card issuers

 

Accounts receivable are amounts due from card issuers and acquirers regarding the transactions of clients with card holders, performed in the ordinary course of business.

 

		June 30, 2024		December 31, 2023
Accounts receivable from card issuers (a)		27,020,694		23,364,806
Accounts receivable from other acquirers (b)		598,274		667,922
Allowance for expected credit losses		(62,730)		(55,619)
		27,556,238		23,977,109
Current		27,471,965		23,895,512
Non-current		84,273		81,597

 

(a)

Accounts receivable from card issuers, net of interchange fees, as a result of processing transactions with clients.

 

(b)

Accounts receivable from other acquirers related to PSP (Payment Service Provider) transactions.

 

Part of the Group’s cash requirement are to make prepayments to acquiring customers. The Group finances those requirements through different sources of funding including the definitive sale of receivables to third parties. When such sales of receivables are carried out to entities in which the Group has subordinated shares or quotas, the receivables sold remain in the statement of financial position, as these entities are consolidated in the financial statements. As of June 30, 2024 a total of R$ 568,225 (December 31, 2023 - R$ 467,622) were consolidated through FIDC ACR FAST and R$ 2,617,420 (December, 2023 - R$ nil) through FIDC ACR I, of which the Group has subordinated shares. When the sale of receivables is carried out to non-controlled entities and for transactions where continuous involvement is not present, the amounts transferred are derecognized from accounts receivable from card issuers. As of June 30, 2024, the sale of receivables that were derecognized from accounts receivables from card issuers in the statement of financial position represent the main form of funding used for the prepayment business.

 

Accounts receivable held by FIDCs guarantee the obligations to FIDC quota holders.

 

5.2.2.

Accounts payable to clients

 

Accounts payable to clients represent amounts due to accredited clients related to credit and debit card transactions, net of interchange fees retained by card issuers and assessment fees paid to payment scheme networks as well as the Group’s net merchant discount rate fees which are collected by the Group as an agent.

 

5.3.

Trade accounts receivable

 

5.3.1.

Composition of trade accounts receivable

 

Trade accounts receivables are amounts due from clients mainly related to subscription services and equipment rental.

 

		June 30, 2024		December 31, 2023
Accounts receivable from subscription services		283,163		293,304
Accounts receivable from equipment rental		104,611		114,252
Chargeback		89,250		72,401
Services rendered		39,564		51,456
Receivables from registry operation		18,543		22,347
Cash in transit		23,197		24,172
Allowance for expected credit losses		(130,792)		(117,553)
Others		32,720		28,101
Total		460,256		488,480
Current		438,289		459,947
Non-current		21,967		28,533

 

5.4.

Loans operations portfolio

 

Portfolio balances by product:

 

		June 30, 2024		December 31, 2023
Working capital loan		681,573		309,677
Credit card		30,209		3,131
Loans operations portfolio, gross		711,782		312,808
Allowance for expected credit losses (Note 5.4.4)		(124,989)		(62,061)
Loans operations portfolio, net of allowance for expected credit losses		586,793		250,747
Current		474,243		209,957
Non-current		112,550		40,790

 

5.4.1.

Non-performing loans ("NPL")

 

Total outstanding of the contract whenever the clients default on an installment:

 

	June 30, 2024						December 31, 2023
	Working capital		Credit card		Total		Working capital		Credit card		Total
Balances not overdue	631,098		29,822		660,920		298,460		3,130		301,590
Balances overdue by
<= 15 days	13,322		131		13,453		4,350		1		4,351
15 < 90 days	19,437		198		19,635		6,016		—		6,016
> 90 days	17,716		58		17,774		851		—		851
	50,475		387		50,862		11,217		1		11,218
Loans operations portfolio, gross	681,573		30,209		711,782		309,677		3,131		312,808

 

5.4.2.

Aging by maturity

 

		June 30, 2024						December 31, 2023
		Working capital		Credit card		Total		Working capital		Credit card		Total
Installments not overdue
<= 30 days		38,802		11,246		50,048		12,911		1,465		14,376
30 < 60 days		65,858		5,071		70,929		30,213		457		30,670
61 < 180 days		226,103		9,412		235,515		110,110		847		110,957
181 < 360 days		225,507		3,828		229,335		113,005		318		113,323
361 < 720 days		103,131		17		103,148		41,572		1		41,573
> 720 days		7,472		—		7,472		61		—		61
		666,873		29,574		696,447		307,872		3,088		310,960
Installments overdue by
<= 30 days		4,356		470		4,826		904		43		947
30 < 90 days		5,053		125		5,178		799		—		799
91 < 180 days		3,807		40		3,847		99		—		99
181 < 360 days		1,484		—		1,484		3		—		3
		14,700		635		15,335		1,805		43		1,848
Loans operations portfolio, gross		681,573		30,209		711,782		309,677		3,131		312,808

 

5.4.3.

Gross carrying amount

 

The Group calculates an expected credit loss allowance for its loans based on statistical models that consider both internal and external historical data, negative credit information and guarantees, among which information addressing the behavior of each debtor. The Group calculates its loans operations portfolio in three stages:

 

(i)

Stage 1: corresponds to loans that do not present significant increase in credit risk since origination;

 

(ii)

Stage 2: corresponds to loans that presented significant increase in credit risk subsequent to origination.

 

The Group determines Stage 2 based on following criteria:

 

(a)

absolute criteria: financial asset overdue more than 30 days, or;

 

(b)

relative criteria: in addition to the absolute criteria, the Group analyzes the evolution of the risk of each financial instrument on a monthly basis, comparing the current behavior score attributed to each client with that attributed at the time of recognition of the financial asset. Behavioral scoring considers credit behavior variables, such as default on other products and market data about the customer. When the credit risk increases significantly since origination, the Stage 1 operation is moved to Stage 2.

 

For Stage 2, a cure criterion is applied when the financial asset no longer meets the criteria for a significant increase in credit risk, as mentioned above, and the loan is moved to Stage 1.

 

(iii)

Stage 3: corresponds to impaired loans.

 

The Group determines Stage 3 based on following criteria:

 

(a)

absolute criteria: financial asset overdue more than 90 days, or;

 

(b)

relative criteria: indicators that the financial asset will not be paid in full without activating a guarantee or financial guarantee.

 

The indication that an obligation will not be paid in full includes the tolerance of financial instruments that imply the granting of advantages to the counterparty following the deterioration of the counterparty's credit quality.

 

The Group also assumes a cure criterion for Stage 3, with respect to the counterparty's repayment capacity, such as the percentage of total debt paid or the time limit to liquidate current debt obligations.

 

Management regularly seeks forward looking perspectives for future market developments including macroeconomic scenarios as well as its portfolio risk profile. Management may adjust the ECL resulting from the models above in order to better reflect this forward looking perspective.

 

Reconciliation of gross portfolio of loans operations, segregated by Stages:

 

Stage 1		December 31, 2023		Transfer to stage 2		Transfer to stage 3		Cure from stage 2		Cure from stage 3		Derecognition		Acquisition / (Settlement)		June 30, 2024
Working capital loan		296,282		(63,956)		(3,915)		31,150		142		—		375,381		635,084
Credit card		3,131		(663)		(81)		345		10		—		27,002		29,744
		299,413		(64,619)		(3,996)		31,495		152		—		402,383		664,828

 

Stage 2		December 31, 2023		Cure to stage 1		Transfer to stage 3		Transfer from stage 1		Cure from stage 3		Derecognition		Acquisition / (Settlement)		June 30, 2024
Working capital loan		12,195		(31,150)		(18,647)		63,956		29		—		(3,377)		23,006
Credit card		—		(345)		(19)		663		—		—		48		347
		12,195		(31,495)		(18,666)		64,619		29		—		(3,329)		23,353

 

Stage 3		December 31, 2023		Cure to stage 1		Cure to stage 2		Transfer from stage 1		Transfer from stage 2		Derecognition		Acquisition / (Settlement)		June 30, 2024
Working capital loan		1,200		(142)		(29)		3,915		18,647		—		(108)		23,483
Credit card		—		(10)		—		81		19		—		28		118
		1,200		(152)		(29)		3,996		18,666		—		(80)		23,601

 

Consolidated 3 stages		December 31, 2023		Derecognition		Acquisition / (Settlement)		June 30, 2024
Working capital loan		309,677		—		371,896		681,573
Credit card		3,131		—		27,078		30,209
		312,808		—		398,974		711,782

 

5.4.4.

Allowance for expected credit losses of loans operations

 

Stage 1		December 31, 2023		Transfer to stage 2		Transfer to stage 3		Cure from stage 2		Cure from stage 3		Derecognition		Acquisition / (Settlement)		June 30, 2024
Working capital loan		57,576		(21,340)		(2,741)		3,604		14		—		61,236		98,349
Credit card		200		(303)		(60)		44		—		—		1,724		1,605
		57,776		(21,643)		(2,801)		3,648		14		—		62,960		99,954

 

Stage 2		December 31, 2023		Cure to stage 1		Transfer to stage 3		Transfer from stage 1		Cure from stage 3		Derecognition		Acquisition / (Settlement)		June 30, 2024
Working capital loan		3,445		(3,604)		(13,053)		21,340		8		—		209		8,345
Credit card		—		(44)		(17)		303		—		—		(76)		166
		3,445		(3,648)		(13,070)		21,643		8		—		133		8,511

 

Stage 3		December 31, 2023		Cure to stage 1		Cure to stage 2		Transfer from stage 1		Transfer from stage 2		Derecognition		Acquisition / (Settlement)		June 30, 2024
Working capital loan		840		(14)		(8)		2,741		13,053		—		(173)		16,439
Credit card		—		—		—		60		17		—		8		85
		840		(14)		(8)		2,801		13,070		—		(165)		16,524

 

Consolidated 3 stages		December 31, 2023		Derecognition		Acquisition / (Settlement)		June 30, 2024
Working capital loan		61,861		—		61,272		123,133
Credit card		200		—		1,656		1,856
		62,061		—		62,928		124,989

 

5.5.

Financial assets from banking solutions

 

As required by Brazilian Central Bank (“BACEN”) regulation, client’s proceeds deposited in payment accounts must be fully collateralized by government securities, and/or deposits at BACEN. At June 30, 2024, the amount of financial assets from banking solutions was R$ 6,967,814 (December 31, 2023 - R$ 6,397,898).

 

5.6.

Financial liabilities

 

5.6.1. Retail deposits

 

	June 30, 2024		December 31, 2023
Deposits from retail clients	6,471,629		6,119,455
Time deposits from retail clients (a)	341		—
	6,471,970		6,119,455

 

(a)

During the second quarter, the Company issued for the first time Time deposits to its retail clients. Principal and interest of such liabilities are paid at maturity, which may vary significantly in time but currently provide daily liquidity to clients.

 

5.6.2. Changes in financial liabilities

 

The table below presents the movement of financial liabilities other than Retail deposits:

 

	December 31, 2023		Additions		Disposals		Payment of principal		Payment of interest		Changes in exchange rates		Fair value adjustment		Interest		June 30, 2024
Bonds	2,402,698		—		—		—		(53,299)		362,353		—		52,519		2,764,271
Debentures, financial bills and commercial papers (a)	1,116,252		750,000		—		—		(62,075)		—		—		70,260		1,874,437
Time deposits (b)	—		116,117		—		(4,599)		(38)		—		—		604		112,084
Obligations to open-end FIDC quota holders	452,128		105,564		—		(34,094)		(59)		—		—		27,587		551,126
Institutional deposits and marketable debt securities	3,971,078		971,681		—		(38,693)		(115,471)		362,353		—		150,970		5,301,918
Obligations to closed-end FIDC quota holders (c)	53,103		2,325,984		—		—		—		—		(202,716)		99,762		2,276,133
Bank borrowings and working capital facilities	1,321,348		1,681,280		—		(1,570,264)		(75,797)		73,865		—		80,601		1,511,033
Leases	173,683		38,279		(5,560)		(28,182)		(5,730)		(658)		—		5,730		177,562
Other debt instruments	1,548,134		4,045,543		(5,560)		(1,598,446)		(81,527)		73,207		(202,716)		186,093		3,964,728
Current	1,879,997																3,037,950
Non-current	3,639,215																6,228,696

 

(a)

On June 19, 2024 the subsidiary Stone SCFI concluded its first issuance of financial bills raising R$ 750,000 with a two year maturity at CDI + 0.75% p.a. The issuance is guaranteed by both Stone Pagamentos and by the Company.

 

(b)

In the second quarter of 2024, the Company started the issuance of Time deposits, representing the first issuance of interest bearing deposits following the authorization granted by the BACEN to start operations earlier this year. The certificates are held by multiple counterparties and maturities up to December 2024. The principal and interest of this type of issuance are mainly paid at the maturity indexed to CDI rate.

 

(c)

FIDC ACR I issued quotas in exchange for a contribution of R$ 2,325,984. The contribution was made by an special purpose vehicle funded by a revolving facility in which United States International Development Finance Corporation (“DFC”) has invested US$ 467.5 million, funding our prepayment business through this FIDC. FIDC ACR I has a final maturity of seven years and pays a semi-annual coupon at a fixed rate of 12.75% in R$.

 

5.7.

Derivative financial instruments, net

 

		June 30, 2024		December 31, 2023
Cross-currency interest rate swap used as hedge accounting instrument classified as cash flow hedge (Note 5.7.1.1)		(33,218)		(311,445)
Interest rate swap used as hedge accounting instrument classified as fair value hedge (Note 5.7.1.2)		(25,355)		—
Derivatives used as economic hedge instrument (Note 5.7.2)		15,484		(4,097)
Call options to acquire additional interest in associates and subsidiaries		2,138		3,553
Derivative financial instruments, net		(40,951)		(311,989)

 

5.7.1

Hedge accounting

 

5.7.1.1 Cash flow hedge

 

During 2021, the Group entered into hedge operations to protect its inaugural dollar bonds, subject to foreign exchange exposure using cross-currency interest rate swap contracts. Additionally, in January 2024, the Group entered into hedge operations to protect bank borrowings, subject to foreign exchange exposure using cross-currency interest rate swap contracts. The transactions have been designated for hedge accounting and classified as cash flow hedge of the variability of the designated cash flows of the US Dollar denominated bonds / bank borrowings due to changes in the exchange rate. The effective portion of the derivative's gain or loss is initially reported as a component of accumulated other comprehensive income, recorded in a specific equity account, and subsequently reclassified into earnings in the same period the hedge object affects earnings, while any ineffective portion, when applicable, is immediately recognized in profit or loss. The details of the cross-currency interest rate swaps and their financial position as of June 30, 2024 are presented as follows.

 

Notional in US$		Notional in R$		Pay rate in local currency		Trade date		Due date		Fair value as of June 30, 2024 – Asset (Liability)		Gain (loss) recognized in income in six months ended June 30, 2024(a)		Gain (loss) recognized in OCI (net of tax) in six months ended June 30, 2024(b)		Fair value as of December 31, 2023 – Asset (Liability)
Inaugural dollar bonds as hedged item
50,000		248,500		CDI + 2.94%		June 23, 2021		June 16, 2028		(3,933)		24,526		(12,852)		(26,967)
50,000		247,000		CDI + 2.90%		June 24, 2021		June 16, 2028		(3,351)		24,677		(12,878)		(26,359)
50,000		248,500		CDI + 2.90%		June 24, 2021		June 16, 2028		(6,670)		24,314		(12,849)		(27,625)
75,000		375,263		CDI + 2.99%		June 30, 2021		June 16, 2028		(4,956)		12,022		(6,402)		(43,894)
50,000		250,700		CDI + 2.99%		June 30, 2021		June 16, 2028		(9,347)		36,524		(19,281)		(29,705)
50,000		250,110		CDI + 2.98%		June 30, 2021		June 16, 2028		(14,407)		23,733		(12,775)		(29,207)
25,000		127,353		CDI + 2.99%		July 15, 2021		June 16, 2028		(4,603)		24,577		(12,865)		(16,495)
25,000		127,353		CDI + 2.99%		July 15, 2021		June 16, 2028		(5,039)		12,022		(6,409)		(16,573)
50,000		259,890		CDI + 2.96%		July 16, 2021		June 16, 2028		(7,641)		11,904		(6,357)		(37,516)
25,000		131,025		CDI + 3.00%		August 6, 2021		June 16, 2028		(7,794)		11,767		(6,345)		(18,487)
25,000		130,033		CDI + 2.85%		August 10, 2021		June 16, 2028		(6,176)		24,367		(12,855)		(19,391)
25,000		130,878		CDI + 2.81%		August 11, 2021		June 16, 2028		(6,909)		11,933		(6,365)		(19,226)
Bank borrowings as hedged item
95,000		467,875		CDI + 1.70%		January 4, 2024		January 8, 2025		47,608		50,157		(2,550)		—
								Net amount		(33,218)		292,523		(130,783)		(311,445)

 

(a)

Recognized in the statement of profit or loss, in “Financial expenses, net”. The amount recognized during the six months ended June 30, 2023 was a loss of R$ 352,490.

 

(b)

Recognized in equity, in “Other comprehensive income.” The balance in the cash flow hedge reserve as of June 30, 2024 is a loss of R$ 327,971 (December 31, 2023 - loss of R$ 197,188).

 

In 2024 the Group paid R$ 116,486 (2023 - R$ 305,990) for coupon on the cross-currency swaps above.

 

5.7.1.2 Fair value hedge

 

During the first quarter of 2024, the Group entered into a definitive receivables assignment agreement at fixed rates with FIDC ACR I. To convert such contract to a floating rate agreement, the company is part of interest rate swap contracts. The transactions have been designated for hedge accounting and classified as fair value hedge. The fair value changes on both the hedge instruments and hedge object are recognized in the profit or loss (financial expenses, net). The details of the interest rate swaps and their financial position as of June 30, 2024 are presented as follows:

 

Notional in R$(a)		Pay rate in local currency		Trade date		Due date		Fair value as of June 30, 2024 – Asset (Liability)		Gain (loss) recognized in income in six months ended June 30, 2024(b)
760,040		CDI + 2.03%		January 17, 2024		January 31, 2031 (c)		—		(48,832)
471,000		CDI + 2.14%		February 28, 2024		January 31, 2031 (c)		—		(27,774)
265,000		CDI + 1.68%		March 15, 2024		January 31, 2031 (c)		—		(14,323)
25,228		CDI + 1.94%		March 18, 2024		January 31, 2031 (c)		—		(1,299)
14,514		CDI + 1.57%		March 18, 2024		January 31, 2031 (c)		—		(754)
760,040		CDI + 0.71%		June 14, 2024		January 31, 2031		(8,192)		(8,192)
471,000		CDI + 0.90%		June 14, 2024		January 31, 2031		(5,060)		(5,060)
265,000		CDI + 0.55%		June 14, 2024		January 31, 2031		(2,870)		(2,870)
25,228		CDI + 0.86%		June 14, 2024		January 31, 2031		(433)		(433)
14,514		CDI + 0.48%		June 14, 2024		January 31, 2031		(298)		(298)
790,834		CDI + 0.84%		June 14, 2024		January 31, 2031		(8,502)		(8,502)
						Net amount		(25,355)		(118,337)

 

(a)

The interest expense of the hedged obligations is taxable/deductible. For the operations contracted in the second quarter of 2024, the hedge relationship has been designed to hedge the fair value risk on an after-tax basis. As a result, the notional amount of the swaps is less than the notional amount of the obligation.

 

(b)

Recognized in the statement of profit or loss, in “Financial expenses, net”.

 

(c)

Operations settled on June 24, 2024.

 

In the second quarter of 2024, the Group paid R$ 92,982 in interest rate swap coupon payments mentioned above.

 

5.7.2

Economic hedge

 

5.7.2.1

Currency hedge

 

The Group is party to non-deliverable forward (“NDF”) contracts with different counterparties approved by the Board of Directors following the Counterparty Policy to hedge its foreign currency exposure to the U.S. Dollar and Euro. The Group uses those derivatives to hedge foreign currency risk associated with two exposures: (i) the cash position it holds, and (ii) certain software purchase agreements.

 

		June 30, 2024
		Minimum Rate		Maximum Rate		Notional		Gain (loss)		Balance
NDF Dollar		5.218		5.530		32,470		2,481		2,533
NDF Euro		5.657		5.923		285		119		91
		December 31, 2023
		Minimum Rate		Maximum Rate		Notional		Gain (loss)		Balance
NDF Dollar		4.8220		4.9400		6,460		19,116		323
NDF Euro		5.3208		5.3715		570		(447)		4

 

5.7.2.2

Interest rates hedge

 

The Group mitigates the interest rate risk generated by the gap between its prepayment business (fixed rate) and loan portfolio (fixed rate) its funding activities (either fixed or floating) with mixed maturities. This hedge is executed over-the-counter (“OTC”) with multiple financial institutions following its Counterparty Policy.

 

		June 30, 2024
		Minimum Rate		Maximum Rate		Maturity is up to		Notional		Gain (loss)	Balance
Interest rate swaps (Fixed rate to CDI)		9.8 %		13.1 %		Nov/25		13,810,303		13,997	12,860
		December 31, 2023
		Minimum Rate		Maximum Rate		Maturity is up to		Notional		Gain (loss)	Balance
Interest rate swaps (Fixed rate to CDI)		10.2 %		14.3 %		May/25		6,079,500		(7,328)	(4,424)

 

5.8.

Financial risk management

 

The Group’s activities expose it to market, liquidity, credit, and counterparty risks. The two main market risks for the Group are interest rates and exchange rates. Interest rate risk arises as the Group originates assets at fixed rates (credit card prepayment and loans) and with funding through fixed and floating rates with unmatched maturities of such assets. The second risk arises from fluctuations in exchange rates among Brazilian Reais and the currencies of countries where the Group has subsidiaries in addition to its indebtedness and expenses denominated in currencies other than the Brazilian Real. The Group’s main liquidity risk is its potential inability to raise financing to continue its prepayment and credit business, which although not a legal obligation, is a significant component of its revenues. Potential loss from its loan portfolio is the main credit risk faced by the Group. The counterparty risk is mainly generated by the counterparties with which the Group engages for financial contracts for hedging, investments and committed funding, in addition to its inherent credit risk exposure to credit card issuers.

 

The Board of Directors has approved policies, and limits for its financial risk management. The Group uses financial derivatives only to mitigate market risk exposures. It is the Group’s policy not to engage in derivatives for speculative purposes. Different levels of managerial approval are required for entering into financial instruments depending on its nature and the type of risk associated.

 

The Group’s financial risk management is carried out by the Risk Management Area.

 

5.9.

Financial instruments by category

 

5.9.1.

Financial assets by category

 

		Amortized cost		FVPL		FVOCI		Total
June 30, 2024
Short and Long-term investments		—		106,575		32,410		138,985
Financial assets from banking solutions		6,967,814		—		—		6,967,814
Accounts receivable from card issuers		—		—		27,556,238		27,556,238
Trade accounts receivable		460,256		—		—		460,256
Loans operations portfolio		586,793		—		—		586,793
Derivative financial instruments(a)		—		71,275		—		71,275
Receivables from related parties		714		—		—		714
Other assets		523,767		—		—		523,767
		8,539,344		177,850		27,588,648		36,305,842
December 31, 2023
Short and Long-term investments		—		3,481,496		45,702		3,527,198
Financial assets from banking solutions		5,250,496		1,147,402		—		6,397,898
Accounts receivable from card issuers		5,877		—		23,971,232		23,977,109
Trade accounts receivable		488,480		—		—		488,480
Loans operations portfolio		250,747		—		—		250,747
Derivative financial instruments(a)		—		4,182		—		4,182
Receivables from related parties		2,512		—		—		2,512
Other assets		518,362		—		—		518,362
		6,516,474		4,633,080		24,016,934		35,166,488

 

(a)

Derivative financial instruments as of June 30, 2024 of R$ 33,218 (December 31, 2023 – R$ 311,445) were designated as cash flow hedging instruments, and therefore the effective portion of the hedge is accounted for in OCI.

 

5.9.2.

Financial liabilities by category

 

		Amortized cost		FVPL		Total
June 30, 2024
Retail deposits		6,471,970		—		6,471,970
Accounts payable to clients		18,512,856		—		18,512,856
Trade accounts payable		525,684		—		525,684
Institutional deposits and marketable debt securities		5,301,917		—		5,301,917
Other debt instruments(a)		1,688,596		2,276,133		3,964,729
Derivative financial instruments		—		112,226		112,226
Other liabilities		251,374		282,176		533,550
		32,752,397		2,670,535		35,422,932
December 31, 2023
Retail deposits		6,119,455		—		6,119,455
Accounts payable to clients		19,199,127		—		19,199,127
Trade accounts payable		513,877		—		513,877
Institutional deposits and marketable debt securities		3,971,077		—		3,971,077
Other debt instruments		1,548,135		—		1,548,135
Derivative financial instruments		—		316,171		316,171
Other liabilities		119,526		410,504		530,030
		31,471,197		726,675		32,197,872

(a)

The debt designated for hedge accounting as the hedged item in a fair value hedge is adjusted for changes on its fair value only attributable to the specifically designated risks being hedged.

 

5.10.

Fair value measurement

 

5.10.1.

Assets and liabilities by fair value hierarchy

 

The following table shows an analysis of financial instruments measured at fair value by level of the fair value hierarchy:

 

	June 30, 2024				December 31, 2023
	Fair value		Hierarchy level		Fair value		Hierarchy level
Assets measured at fair value
Short and Long-term investments(a) (b)	138,985		I /II		3,527,198		I /II
Financial assets from banking solutions(b)	—		I		1,147,402		I
Accounts receivable from card issuers(c)	27,556,238		II		23,971,232		II
Derivative financial instruments(d)	71,275		II		4,182		II
	27,766,498				28,650,014
Liabilities measured at fair value
Other debt instruments(g)	2,276,133		II		—		II
Derivative financial instruments(d)	112,226		II		316,171		II
Other liabilities(e) (f)	282,176		III		410,504		III
	2,670,535				726,675

 

(a)

Listed securities are classified as Level I and unlisted securities classified as Level II, determining fair value using valuation techniques, which employ the use of market observable inputs.

 

(b)

Sovereign bonds are priced using quotations from Anbima public pricing method.

 

(c)

For accounts receivable from card issuers measured at FVOCI, fair value is estimated by discounting future cash flows using market rates for similar items.

 

(d)

The Group enters into derivative financial instruments with financial institutions with investment grade credit ratings. Derivative financial instruments are valued using valuation techniques, which employ the use of observable market inputs.

 

(e)

These are contingent considerations included in other liabilities arising on business combinations that are measured at FVPL. Fair values are estimated in accordance with pre-determined formulas explicit in the contracts with selling shareholders. The significant unobservable inputs used in the fair value measurement of contingent consideration categorized as Level III of the fair value hierarchy are based on projections of revenue, net debt, number of clients, net margin and the discount rates used to evaluate the liability.

 

(f)

The Group issued put options for Reclame Aqui’s non-controlling interests, in the 2022 business combination. For the non-controlling shareholder amounts the Group has elected as an accounting policy that the put options derecognize the non-controlling interests at each reporting date as if it was acquired at that date and recognize a financial liability at the present value of the amount payable on exercise of the non-controlling interests put option. The difference between the financial liability and the non-controlling interests derecognized at each period is recognized as an equity transaction. The amount of R$ 193,883 was recorded in the consolidated statement of financial position as of June 30, 2024 as a financial liability under other liabilities (December 31, 2023 - R$ 178,721).

 

(g)

For Other debt instruments, fair value is estimated by discounting future cash flows using contract rates for funding items, and using market value of senior quotas liabilities

 

In the six month periods ended June 30, 2024 and 2023, there were no transfers between level I and level II and between level II and level III fair value measurements.

 

5.10.2.       Fair value of financial instruments not measured at fair value

 

The table below presents a comparison by class between book value and fair value of the financial instruments of the Group, other than those with carrying amounts that are reasonable approximations of fair values:

 

		June 30, 2024				December 31, 2023
		Book value		Fair value		Book value		Fair value
Financial assets
Loans operations portfolio		586,793		549,698		250,747		250,877
		586,793		549,698		250,747		250,877
Financial liabilities
Accounts payable to clients		18,512,856		17,759,792		19,199,127		18,685,622
Institutional deposits and marketable debt securities		5,301,917		6,578,210		3,971,077		4,692,866
		23,814,773		24,338,002		23,170,204		23,378,488

6.

Other assets

 

		June 30, 2024		December 31, 2023
Customer deferred acquisition costs		197,234		190,239
Prepaid expenses(a)		120,291		189,371
Salary advances		67,626		10,837
Receivables from the sale of associates and subsidiaries (b)		50,992		18,676
Suppliers advances		21,523		35,835
Security deposits		14,184		14,230
Judicial deposits		13,402		22,507
Convertible loans		12,121		11,267
Other		26,394		25,400
		523,767		518,362
Current		390,493		380,854
Non-current		133,274		137,508

 

(a)

These expenditures include, but are not limited to, prepaid software licenses, certain consulting services, insurance premiums and prepaid marketing expenses. The amount recognized as asset in the statement of financial position is charged to the statement of profit or loss once the prepaid services are consumed by the Group. The balance is comprised mainly by prepaid software subscriptions and licenses for R$ 78,500 (December 31, 2023 - R$ 32,639), and prepaid media R$ 20,744 (December 31, 2023 - R$ 114,260).

 

(b)

Refers to balances receivable from buyers for the sale of the equity interest of Pinpag and Everydata Group Ltd. (formerly, StoneCo CI) and its subsidiaries (namely, the Creditinfo Caribbean companies).

 

7.

Recoverable taxes

 

	June 30, 2024		December 31, 2023
Withholding income tax on financial income(a)	155,115		101,579
Income tax and social contribution	12,807		9,584
Other withholding income tax	2,342		19,710
Contributions over revenue(b)	1,976		544
Other taxes	10,467		14,922
	182,707		146,339

 

(a)

Refers to income taxes withheld on financial income which will be offset against future income tax payable.

 

(b)

Refers to income taxes, social contributions, and withholding tax prepayments that have been offset against income tax payable.

 

8.

Income taxes

 

The Company is domiciled in the Cayman Islands and there is no income tax in that jurisdiction. Some of the income earned by the Company is related to transactions abroad which are subject to a 15% rate of withholding tax.

 

8.1.

Reconciliation of income tax expense

 

Considering the fact that the Company is an entity located in the Cayman Islands which has no income tax, for the purpose of the following reconciliation of income tax expense to profit (loss) for the periods ended June 30, 2024 and 2023, as Brazil is the jurisdiction in which most of the Group’s transactions takes place, the combined Brazilian statutory income tax rates at 34% was applied.

 

In Brazil such combined rate is applied, in general, to all entities and comprises the Corporate Income Tax (“IRPJ”) and the Social Contribution on Net Income (“CSLL”) on the taxable income of each Brazilian legal entity (not on a consolidated basis).

 

	Six months ended June 30,				Three months ended June 30,
	2024		2023		2024		2023
Profit before income taxes	1,135,704		729,085		651,687		422,273
Brazilian statutory rate	34%		34%		34%		34%
Tax (expense) at the statutory rate	(386,139)		(247,889)		(221,574)		(143,573)
Additions (exclusions):
Profit (loss) from entities subject to different tax rates	126,908		46,503		57,296		19,977
Profit (loss) from entities subject to different tax rates - Mark to market on equity securities designated at FVPL	—		10,395		—		—
Other permanent differences	(8,642)		(1,110)		(5,780)		8,245
Equity pickup on associates	(38)		303		(144)		651
Unrecognized deferred taxes	(26,433)		(9,904)		(2,038)		(4,965)
Use of previously unrecognized tax losses	225		1,955		(47)		1,955
Previously unrecognized on deferred income tax (temporary and tax losses)	18,577		—		18,000		(358)
Research and development tax benefits (Lei do Bem)	8,812		2,242		(1,208)		2,242
Other tax incentives	2,922		1,321		2,109		764
Total income tax and social contribution benefit/(expense)	(263,808)		(196,184)		(153,386)		(115,062)
Effective tax rate	23.2 %		26.9 %		23.5 %		27.2 %
Current income tax and social contribution	(257,229)		(117,753)		(151,377)		(74,199)
Deferred income tax and social contribution	(6,579)		(78,431)		(2,009)		(40,863)
Total income tax and social contribution benefit/(expense)	(263,808)		(196,184)		(153,386)		(115,062)

 

8.2.

Deferred income taxes by nature

 

	December 31, 2023		Recognized against other comprehensive income		Recognized against profit or loss		June 30, 2024
Losses available for offsetting against future taxable income	343,313		—		40,109		383,422
Other temporary differences	302,551		—		(18,437)		284,114
Assets at FVOCI	179,944		30,364		—		210,308
Share-based compensation	123,211		—		49,817		173,028
Contingencies arising from business combinations	36,320		—		1,858		38,178
Tax deductible goodwill	42,625		—		(29,365)		13,260
Technological innovation benefit	(9,038)		—		(40,284)		(49,322)
Temporary differences under FIDC	(224,733)		—		(27,609)		(252,342)
Intangible assets and property and equipment arising from business combinations	(676,215)		—		17,332		(658,883)
Deferred tax, net	117,978		30,364		(6,579)		141,763

 

8.3.

Unrecognized deferred taxes

 

The Group has accumulated tax loss carryforwards and other temporary differences in some subsidiaries in the amount of R$ 141,433 (December 31, 2023 – R$ 133,710) for which a deferred tax asset was not recognized and are available indefinitely for offsetting against future taxable profits of the companies in which the losses arose. Deferred tax assets have not been recognized with respect of these losses as they cannot be used to offset taxable profits between subsidiaries of the Group, and there is no other evidence of recoverability in the near future.

 

9.

Property and equipment

 

9.1.

Changes in Property and equipment

 

	December 31, 2023		Additions		Disposals		Transfers		Effects of changes in foreign exchange rates		Business combination		June 30, 2024
Cost
Pin Pads & POS	2,359,314		343,620		(88,448)		—		—		—		2,614,486
IT equipment	295,330		19,335		(28,912)		—		68		423		286,244
Facilities	77,594		845		(173)		288		2		—		78,556
Machinery and equipment	23,950		1,642		(939)		—		(7)		—		24,646
Furniture and fixtures	22,684		345		(285)		—		15		15		22,774
Vehicles and airplane	27,175		46		(35)		—		8		—		27,194
Construction in progress	30,962		3,934		(5,173)		(288)		—		—		29,435
Right-of-use assets - equipment	4,880		—		(197)		—		—		—		4,683
Right-of-use assets - vehicles	31,976		20,519		(11,976)		—		—		—		40,519
Right-of-use assets - offices	179,154		16,971		(11,688)		—		164		—		184,601
	3,053,019		407,257		(147,826)		—		250		438		3,313,138
Depreciation
Pin Pads & POS	(1,065,406)		(258,092)		85,752		—		—		—		(1,237,746)
IT equipment	(172,517)		(25,786)		21,933		—		(167)		—		(176,537)
Facilities	(30,507)		(7,001)		107		—		542		—		(36,859)
Machinery and equipment	(20,039)		(3,980)		846		—		1,144		—		(22,029)
Furniture and fixtures	(6,798)		(1,193)		194		—		(21)		—		(7,818)
Vehicles and airplane	(5,468)		(1,536)		35		—		(11)		—		(6,980)
Right-of-use assets - equipment	(1,150)		(39)		197		—		—		—		(992)
Right-of-use assets - Vehicles	(23,302)		(7,866)		7,168		—		—		—		(24,000)
Right-of-use assets - Offices	(65,935)		(17,303)		11,215		—		50		—		(71,973)
	(1,391,122)		(322,796)		127,447		—		1,537		—		(1,584,934)
Property and equipment, net	1,661,897		84,461		(20,379)		—		1,787		438		1,728,204

 

9.2.

Depreciation and amortization charges

 

Depreciation and amortization expense has been charged in the following line items of the consolidated statement of profit or loss:

 

		Six months ended June 30,				Three months ended June 30,
		2024		2023		2024		2023
Cost of services		334,089		290,339		172,236		150,969
Administrative expenses		87,796		118,648		41,312		57,453
Selling expenses		19,674		25,195		10,676		13,266
Depreciation and Amortization charges (Note 16)		441,559		434,182		224,224		221,688
Depreciation charge		322,796		283,621		165,983		146,989
Amortization charge		118,763		150,561		58,241		74,699
Depreciation and Amortization charges		441,559		434,182		224,224		221,688

 

10.

Intangible assets

 

10.1.

Changes in Intangible assets

 

	December 31, 2023		Additions		Disposals		Transfers		Effects of hyperinflation		Effects of changes in foreign exchange rates		Business combination		June 30, 2024
Cost
Goodwill - acquisition of subsidiaries	5,634,903		—		(44,535)		—		—		53		47,441		5,637,862
Customer relationships	1,793,696		2,070		(14,062)		—		—		—		—		1,781,704
Trademarks and patents	550,999		2,065		(11,841)		—		—		—		—		541,223
Software	1,334,698		77,665		(30,810)		47,412		—		2,150		—		1,431,115
Non-compete agreement	26,024		—		—		—		—		—		—		26,024
Operating license	5,674		—		—		—		—		—		—		5,674
Software in progress	274,608		169,658		(10,006)		(47,072)		—		—		—		387,188
Right-of-use assets - Software	50,558		789		—		—		—		(2)		—		51,345
	9,671,160		252,247		(111,254)		340		—		2,201		47,441		9,862,135
Amortization
Customer relationships	(343,981)		(28,942)		11,472		—		—		—		—		(361,451)
Trademarks and patents	(20,219)		(572)		3,559		—		—		—		—		(17,232)
Software	(474,163)		(79,376)		23,840		(340)		(414)		(260)		—		(530,713)
Non-compete agreement	(12,834)		(2,436)		—		—		—		—		—		(15,270)
Operating license	(5,673)		—		—		—		—		—		—		(5,673)
Right-of-use assets - Software	(19,371)		(7,437)		—		—		—		—		—		(26,808)
	(876,241)		(118,763)		38,871		(340)		(414)		(260)		—		(957,147)
Intangible assets net	8,794,919		133,484		(72,383)		—		(414)		1,941		47,441		8,904,988

 

11.

Transactions with related parties

 

Related parties comprise the Group’s parent companies, key management personnel and any businesses which are controlled, directly or indirectly by the founders, officers and directors or over which they exercise significant management influence. Related party transactions are entered in the normal course of business at prices and terms approved by the Group’s management.

 

The following transactions were carried out with associates related parties:

 

		Six months ended June 30,				Three months ended June 30,
		2024		2023		2024		2023
Sale of services
Associates (legal and administrative services)(a)		18		76		7		38
		18		76		7		38
Purchases of goods and services
Associates (transaction services)(b)		(1,136)		(1,526)		(766)		(300)
		(1,136)		(1,526)		(766)		(300)

 

(a)

Related to services provided to Trinks until May 2, 2024, when the Group acquired 100% of the equity capital and Trinks started to be consolidated into these financial statements.

 

(b)

Related mainly to expenses paid to Trinks, RH Software, APP and Tablet Cloud for consulting services, marketing expenses, sales commissions and software license to new customer’s acquisition.

 

Services provided to related parties include legal and administrative services provided under normal trade terms and reimbursement of other expenses incurred in their respect.

 

11.1.

Balances

 

The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:

 

	June 30, 2024		December 31, 2023
Loans to associate	714		2,512
Receivables from related parties	714		2,512

 

As of June 30, 2024, there is no allowance for expected credit losses on related parties receivables. No guarantees were provided or received in relation to any accounts receivable or payable involving related parties.

 

12.

Provision for contingencies

 

The Group companies are party to labor, civil and tax litigation in progress, which are being addressed at the administrative and judicial levels. For certain contingencies, the Group has made judicial deposits, which are legal reserves the Group is required to make by the Brazilian courts as security for any damages or settlements the Group may be required to pay as a result of litigation.

 

12.1.

Probable losses, provided for in the statement of financial position

 

The provisions for probable losses arising from these matters are estimated and periodically adjusted by management, supported by the opinion of its external legal advisors and based on the actual status of the lawsuit. The amount, nature and the movement of the liabilities are summarized as follows:

 

		Civil		Labor		Tax		Total
Balance as of December 31, 2023		35,862		39,705		133,299		208,866
Additions		34,639		34,232		2		68,873
Reversals		(16,494)		(12,361)		—		(28,855)
Interests		2,120		4,780		7,005		13,905
Payments		(13,980)		(5,623)		(9,985)		(29,588)
Balance as of June 30, 2024		42,147		60,733		130,321		233,201

 

		Civil		Labor		Tax		Total
Balance as of December 31, 2022		25,324		24,460		160,592		210,376
Additions		17,361		9,229		8,400		34,990
Reversals		(6,902)		(18,277)		(4,712)		(29,891)
Interests		2,121		1,929		9,849		13,899
Payments		(1,539)		(633)		(14,697)		(16,869)
Balance as of June 30, 2023		36,365		16,708		159,432		212,505

 

12.1.1.

Civil lawsuits

 

In general, provisions and contingencies arise from claims related to lawsuits of a similar nature, with individual amounts that are not considered significant. The nature of the civil litigations has been categorized according to the primary business fronts of the Group. Substantial provisions are specifically summarized in two of these business domains, namely (i) acquiring, totaling R$ 20,978 as of June 30, 2024 (R$ 18,556 as of December 31, 2023) and (ii) banking, totaling R$ 16,545 as of June 30, 2024 (R$ 12,559 as of December 31, 2023).

 

12.1.2.

Labor claims

 

In the context of Labor Courts, the Group encounters recurrent lawsuits, primarily falling in two categories: (i) labor claims by former employees and (ii) labor claims brought forth by former employees of outsourced companies contracted by the Group. These claims commonly center around issues such as the claimant’s placement in a different trade union and payment of overtime. The initial value of these lawsuits is asserted by the former employees at the commencement of the legal proceeding.

 

12.2.

Possible losses, not provided for in the statement of financial position

 

The Group is party to the following civil, labor and tax litigation involving risks of loss assessed by management as possible, based on the evaluation of the legal advisors, for which no provision for estimated possible losses was recognized:

 

		June 30, 2024		December 31, 2023
Civil		57,564		50,762
Labor		6,432		2,179
Tax		86,926		181,163
Total		150,922		234,104

 

12.2.1.

Civil lawsuits

 

The Group is a party to several legal actions whose subjects are connected to its ordinary operations. In this regard, civil lawsuits have been categorized according to the Group’s primary business fronts, mainly: (i) acquiring, amounting to R$ 12,608 as of June 30, 2024 (R$ 9,239 as of December 31, 2023); and (ii) software, amounting to R$ 28,597 as of June 30, 2024 (R$ 28,412 as of December 31, 2023).

 

For the acquiring business, there is a noteworthy lawsuit filed by a business partner who was responsible for a portion of the acquisition and referral of commercial establishments. The amount considered as a possible loss is R$ 11,026 as of June 30, 2024 (R$ 10,706 as of December 31, 2023). For the software product line, there is significant indemnity lawsuit filed by an indirect supplier, for the utilization of a specific software provided by the partner, amounting to R$ 26,360 as of June 30, 2024 (R$ 25,596 as of December 31, 2023).

 

12.2.2 Tax litigations

 

Action for annulment of tax debits regarding the tax assessment issued by the state tax authorities on the understanding that the Group would have carried out lease of equipment and data center spaces from January 2014 to December 2015, on the grounds that the operations would have the nature of services of telecommunications and therefore would be subject to state tax at the rate of 25% and a fine equivalent to 50% of the updated tax amount for failure to issue ancillary tax obligations. As of June 30, 2024, the updated amount recorded as a probable loss is R$ 29,395 (December 31, 2023 - R$ 27,937), and the amount of R$ 30,258 (December 31, 2023 - R$ 29,727) is considered as a possible loss (contingency arising from the acquisition of Linx).

 

During 2022 and 2023, the Group received tax assessment issued by a municipal tax authority relating to the allegedly insufficient payment of tax on services rendered. Considering a partial victory and reduction of the amounts being claimed, as of June 30, 2024 the updated amount of claims are R$ 35,805 (December 31,2023 – R$ 129,141). The cases are classified as possible loss.

 

12.3.

Judicial deposits

 

For certain contingencies, the Group has made judicial escrow deposits, which are legal reserves the Group is required to make by the Brazilian courts as security for any damages or settlements the Group may be required to pay as a result of litigation.

 

The amount of the judicial deposits as of June 30, 2024 is R$ 13,402 (December 31, 2023 - R$ 22,507), which are included in other assets in non-current assets. Regarding the reduction of the amounts, regarding the tax values, these are amounts deposited in court, which were converted in favor of the Public Treasury, resulting from active legal action which discussed the incidence of taxation on software operations.

 

13.

Equity

 

13.1

Authorized capital

 

On June 30, 2024 and December 31, 2023, the Company’s issued capital totaled R$ 76 thousand. The Company has an authorized share capital of US Dollar 50 thousand, corresponding to 630,000,000 authorized shares with a par value of US Dollar 0.000079365 each. The Company is authorized to increase capital up to this limit, subject to approval of the Board of Directors. The liability of each member is limited to the amount from time to time unpaid on such member’s shares.

 

13.2.

Subscribed and paid-in capital and capital reserve

 

The Articles of Association provide that at any time when there are Class A common shares issued, Class B common shares may only be issued pursuant to: (a) a share split, subdivision or similar transaction or as contemplated in the Articles of Association; or (b) a business combination involving the issuance of Class B common shares as full or partial consideration. A business combination, as defined in the Articles of Association, would include, amongst other things, a statutory amalgamation, merger, consolidation, arrangement or other reorganization.

 

The additional paid-in capital refers to the difference between the purchase price that the shareholders pay for the shares and their par value. Under Cayman Islands Law, the balance in this type of account may be applied by the Company to pay distributions or dividends to members, pay up unissued shares to be issued as fully paid, for redemptions and repurchases of own shares, for writing off preliminary expenses, recognized expenses, commissions or for other reasons. All distributions are subject to the Cayman Islands Solvency Test which addresses the Company’s ability to pay debts as they fall due in the natural course of business.

 

There were no changes in the number of shares during the six months ended June 30, 2024:

 

		Number of shares
		Class A		Class B		Total
Of December 31, 2023		295,498,750		18,748,770		314,247,520
Of June 30, 2024		295,498,750		18,748,770		314,247,520

 

13.3.

Treasury shares

 

Own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognized in equity.

 

On September 21, 2023, the Company's Board of Directors approved a new program under which the Company may repurchase up to R$ 300,000 in outstanding Class A common shares ("New Repurchase Program"). The New Repurchase Program went into effect after the date of the resolution.

 

Following the New Repurchase Program concluded in early November 2023, on November 9, 2023 the amount of R$ 292,745 was used to repurchase shares. As a result, the Company's Board of Directors approved an additional share repurchase program. Under this program, the Company may repurchase up to R$ 1 billion in Class A common shares (“Additional Share Repurchase Program”).

 

As of December 31, 2023 the Company holds 5,311,421 Class A common shares in treasury. The main transactions involving treasury shares during the calendar year ended on December 31, 2023 were: (i) sale of 16,641 Class A common shares to Pagar.me, which were used for payment of contingent consideration related to acquisition of Trampolin, which originally occurred in August 2021; (ii) delivery of 824 shares in the context of the transaction completed with Vitta Group in May 2020; (iii) delivery of 132,607 shares to Linx founding shareholders, in accordance with the non-compete agreement signed; (iv) delivery of 375,531 shares due to vesting of RSUs awards; (v) transfer of 130,488 treasury shares due to the anti-dilutive mechanism of the IPO pool signed with the founders of the Company; and (vi) repurchase of 5,733,740 Class A shares for the amount of R$ 292,745.

 

In the six months ended of 2024, the movements in treasury shares correspond to (i) delivery of 132,606 shares to Linx founding shareholders, by the non-compete agreement signed; (ii) delivery of 510,835 shares due to vesting of RSUs awards; (iii) repurchase of 3,237,251 Class A shares for the amount of R$ 236,526.

 

As of June 30, 2024, the Company holds a balance of 7,905,231 Class A common shares in treasury.

 

13.4. Other comprehensive income (OCI)

 

OCI represents the profit or loss not reported in the statement of profit and loss being separately presented in the financial statements. This includes Company transactions and operations that are not considered realized gains or losses. The table presents the accumulated balance of each category of OCI as of June 30, 2024 and December 31, 2023:

 

		June 30, 2024		December 31, 2023
Other comprehensive income (loss) that may be reclassified to profit or loss in subsequent periods (net of tax):
Exchange differences on translation of foreign operations		(38,932)		(41,266)
Accounts receivable from card issuers at fair value		(407,291)		(348,529)
Unrealized loss on cash flow hedge		(327,971)		(197,188)
Other comprehensive income (loss) that will not be reclassified to profit or loss in subsequent periods (net of tax):
Changes in fair value of equity instruments designated at fair value		291,623		254,353
Effects of hyperinflationary accounting		14,557		12,181
Total		(468,014)		(320,449)

 

14.

Earnings per share

 

Basic earnings per share is calculated by dividing net income for the period attributed to the controlling shareholders by the weighted average number of common shares outstanding during the period.

 

Diluted earnings per share considers the number of shares outstanding for the purposes of basic earnings plus (when dilutive) the number of potentially issuable shares.

 

All numbers of shares for the purpose of earnings per share are the weighted average during each period presented.

 

14.1.

Numerator of earnings per share

 

In determining the numerator of basic EPS, earnings attributable to the Group is allocated as follows:

 

		Six months ended June 30,				Three months ended June 30,
		2024		2023		2024		2023
Net income attributable to controlling shareholders		869,095		532,008		496,114		305,369
Numerator of basic EPS		869,095		532,008		496,114		305,369

 

In determining the numerator of diluted EPS, earnings attributable to the Group is allocated as follows:

 

		Six months ended June 30,				Three months ended June 30,
		2024		2023		2024		2023
Net income attributable to controlling shareholders		869,095		532,008		496,114		305,369
Numerator of diluted EPS		869,095		532,008		496,114		305,369

14.2.

Basic and Diluted earnings per share

 

The following table contains the EPS of the Group for the six and three months ended June 30, 2024 and 2023 (in thousands except share and per share amounts):

 

		Six months ended June 30,				Three months ended June 30,
		2024		2023		2024		2023
Numerator of basic EPS		869,095		532,008		496,114		305,369
Weighted average number of outstanding shares		308,241,316		312,912,323		307,483,544		313,074,253
Weighted average number of contingently issuable shares with conditions satisfied		345,352		—		345,352		—
Denominator of basic EPS		308,586,668		312,912,323		307,828,896		313,074,253
Basic earnings per share - R$		2.82		1.70		1.61		0.98
Numerator of diluted EPS		869,095		532,008		496,114		305,369
Share-based instruments (a)		6,847,645		12,742,894		6,982,345		13,837,978
Denominator of basic EPS		308,586,668		312,912,323		307,828,896		313,074,253
Denominator of diluted EPS		315,434,313		325,655,217		314,811,241		326,912,231
Diluted earnings per share - R$		2.76		1.63		1.58		0.93

 

(a)

Including share-based compensation, contingent consideration and non-compete agreement with founders of Linx. Diluted earnings per share are calculated by adjusting the weighted average number of shares outstanding, considering potentially convertible instruments.

 

14.3.

Detail of potentially issuable common shares for purposes of Diluted EPS

 

The potentially issuable common shares consider the difference between the issuable shares under share-based instruments and the number of shares that potentially be purchased at the weighted average market price of the shares during the period with the amount of future compensation expense of those share-based instruments, as presented as follows:

 

		Six months ended June 30, 2024		Three months ended June 30, 2024
Shares issuable under share-based payment plans for which performance conditions have already been met		13,646,364		14,317,526
Total weighted average shares that could have been purchased: compensation expense to be recognized in future periods divided by the weighted average market price of Company’s shares		(7,064,854)		(7,601,316)
Other total weighted average shares potentially issuable for no additional consideration		266,135		266,135
Share-based instruments		6,847,645		6,982,345

 

15.

Revenue and income

 

15.1.

Timing of revenue recognition

 

Net revenue from transaction activities and other services and discount fees charged for the prepayment of accounts payable to client are recognized at a point in time, except for membership fees which are recognized over time as mentioned in Note 2.1. All other revenue and income are recognized over time.

 

The Group has recognized revenue to those membership fees in the amount of R$ 35,466 in the six months ended June 30, 2024 (June 30, 2023 - R$ 160,692).

 

During the six months ended June 30, 2024 the Group billed R$ 154,708 in membership fees (six months ended June 30, 2023 - R$ 160,692).

 

Net revenue from transaction activities and other services includes membership fee mentioned above and R$ 24,183 of registry business fee in the six months ended June 30, 2024 (R$ 41,039 in six months ended June 30, 2023).

 

16.

Expenses by nature

 

	Six months ended June 30,				Three months ended June 30,
	2024		2023		2024		2023
Personnel expenses	1,407,992		1,351,287		730,974		662,927
Transaction and client services costs (a)	726,287		578,430		372,116		290,770
Depreciation and amortization (Note 9.2)	441,559		434,182		224,224		221,688
Marketing expenses and sales commissions (b)	516,854		361,945		246,492		178,302
Third parties services	140,674		109,186		74,979		47,918
Other	174,002		133,567		53,926		56,235
Total expenses	3,407,368		2,968,597		1,702,711		1,457,840

 

(a)

Transaction and client services costs include card transaction capturing services, card transaction and settlement processing services, logistics costs, payment scheme fees, cloud services, allowance for expected credit losses and other costs.

 

(b)

Marketing expenses and sales commissions relate to marketing and advertising expenses, and commissions paid to sales related partnerships.

 

17. Financial expenses, net

 

	Six months ended June 30,				Three months ended June 30,
	2024		2023		2024		2023
Finance cost of sale of receivables	1,298,491		1,585,564		625,689		870,853
Interest on bond (Note 5.6.1 e 5.7.1)	172,506		205,269		87,366		102,323
Other interest on loans and financing	284,544		145,924		167,991		62,501
Foreign exchange (gains) and losses	(10,074)		(13,442)		(7,107)		(3,574)
Other	2,132		74,168		(22,887)		41,741
Total	1,747,599		1,997,483		851,052		1,073,844

 

18.

Employee benefits

 

18.1.

Share-based payment plans

 

The Group has equity settled share-based payment instruments, under which management grants shares to employees and non-employees depending on the strategy of the Group. The following table outlines the key share-based awards movements - in number of shares - as of June 30, 2024 and December 31, 2023.

 

	Equity
	RSU		PSU		Options		Total
Balance as of December 31, 2023	12,429,557		8,305,048		45,159		20,779,764
Granted	2,775,617		194,019		—		2,969,636
Cancelled	(1,198,489)		(3,328,367)		—		(4,526,856)
Delivered	(655,860)		—		—		(655,860)
Balance as of June 30, 2024	13,350,825		5,170,700		45,159		18,566,684

 

18.1.1.

Restricted share units ("RSU")

 

RSUs have been granted to certain key employees under the Long-Term Incentive Plan (“LTIP”) to incentivize and reward such individuals. These awards are equity-classified for accounting purposes and may be granted as part of the annual equity bonus and also as special recognition equity awards with a weighted average vesting period of 2.9 years, subject to and conditioned upon the achievement of certain targets which are generally solely service conditions. Assuming these conditions are met, awards are settled through Class A common shares. If the applicable conditions are not achieved, the awards are forfeited for no consideration.

 

In the second quarter of 2024, the Company granted 406,457 RSU’s with an average grant-date fair value of R$ 81.32, which were determined based on the fair value of the equity instruments granted and the exchange rate, both at the grant date. Moreover, 587,291 RSUs vested in the first quarter, resulting in a delivery through treasury shares of 402,652 shares net of withholding taxes.

 

In the six months ended June 30, 2024, the Company granted 2,775,617 RSU’s with an average grant-date fair value of R$ 81.69, which were determined based on the fair value of the equity instruments granted and the exchange rate, both at the grant date. Moreover, 655,860 RSUs vested in the first semester, resulting in a delivery through treasury shares of 466,341 shares net of withholding taxes.

 

On June 30, 2024, 923 vested RSUs were pending settlement by issuance of shares.

 

18.1.2.

Performance share units ("PSU")

 

PSUs are equity classified for accounting purposes and the vast majority have been granted as part of special recognition equity awards with a weighted average vesting period of 2.7 years. PSU grants beneficiaries the right to receive shares if the Group reaches minimum levels of total shareholder return (“TSR”) for a specific period. If the minimum performance condition is not met the PSUs will not be delivered.

 

The fair value of the instruments is estimated at the grant date using the Black-Scholes-Merton pricing model, considering the terms and conditions on which the PSUs were granted, and the related expense is recognized over the vesting period. The performance condition is considered for estimating the grant-date fair value and of the number of PSUs expected to be issued, based on historical data and current expectations and is not necessarily indicative of performance patterns that may occur.

 

In the second quarter of 2024, the Company granted 69,599 new PSUs with an average grant-date fair value of R$ 10.31. The grant-date fair value was determined based on historical data and current expectations and is not necessarily indicative of performance patterns that may occur.

 

In the six months ended June 30, 2024, the Company granted 194,019 new PSUs with an average grant-date fair value of R$ 11.11. The grant-date fair value was determined based on historical data and current expectations and is not necessarily indicative of performance patterns that may occur.

 

The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the PSUs is indicative of future trends, which may not necessarily be the actual outcome. For the grants mentioned above, the main two inputs to the model were: (i) Risk–free interest rate between of 3.54% and 4.90% according to 3-month LIBOR/SOFR forward curve for 3 and 5 years period, and (ii) annual volatility between 73.23% and 75.12%, based on the Company’s historical stock price.

 

18.1.3.

Options

 

The Group has granted awards as stock options, of which the exercise date will be between 3 and 10 years with a fair value estimated at the grant date based on the Black-Scholes-Merton pricing model. On June 30, 2024, 14,592 (14,592 for the six months ended June 30, 2023) stock options were exercisable.

 

18.1.4 Share-based payment expenses

 

During the six months ended June 30,2024, a net reversal of R$ 40,461 was recognized as Other income (expenses), net due to events such as the forfeiture of 3,833,527 shares because of failure to satisfy service vesting condition.

 

The total expense related to share-based plans, including taxes and social charges, recognized as Other income (expenses), net for the programs was R$ 90,156 for the six months and R$ 64,373 for three months ended June 30, 2024 (R$ 120,525 for the six months and R$ 50,407 for three months ended June 30, 2023).

 

19.

Other disclosures on cash flows

 

19.1.

Non-cash operating activities

 

	Six months ended June 30,
	2024		2023
Fair value adjustment on loans designated at FVPL	—		(124,571)
Adjustment on FIDC obligations designated for fair value hedge (Note 5.6.1)	202,716		—
Fair value adjustment on equity securities designated at FVPL	3,912		30,574
Fair value adjustment in financial instruments designated at FVPL	206,628		(93,997)
Changes in the fair value of accounts receivable from card issuers at FVOCI	89,126		(139,846)
Fair value adjustment on equity instruments/listed securities designated at FVOCI (Note 5.1)	1,623		(1,141)

 

19.2.

Non-cash investing activities

 

	Six months ended June 30,
	2024		2023
Property and equipment and intangible assets acquired through lease (Note 9.1 and 10.1)	38,279		58,610

 

19.3.

Non-cash financing activities

 

	Six months ended June 30,
	2024		2023
Unpaid consideration for acquisition of non-controlling shares	653		990

 

19.4

Breakdown of interest income received, net of costs

 

	Six months ended June 30,
	2024		2023
Interest income received on accounts payable to clients	3,337,422		2,731,221
Finance cost of sale of receivables on Accounts receivable from card issuers (Note 17)	(1,298,491)		(1,585,564)
Interest income received, net of costs	2,038,931		1,145,657

 

19.5.

Property and equipment, and intangible assets

 

	Six months ended June 30,
	2024		2023
Additions of property and equipment (Note 9.1)	(407,257)		(395,593)
Additions of right of use (IFRS 16) (Note 9.1)	37,490		26,061
Payments from previous period	(65,348)		(176,835)
Purchases not paid at period end	44,203		10,100
Prepaid purchases of POS	—		(244)
Purchases of property and equipment	(390,912)		(536,511)
Additions of intangible assets (Note 10.1)	(252,247)		(238,744)
Additions of right of use (IFRS 16) (Note 10.1)	789		32,549
Payments from previous period	(14,117)		(6,593)
Purchases not paid at period end	5,230		716
Purchases and development of intangible assets	(260,345)		(212,072)
Net book value of disposed assets (Notes 9.1 and 10.1)	92,762		69,081
Net book value of disposed leases (Note 5.6.1)	(5,560)		(23,243)
Gain (loss) on disposal of property and equipment and intangible assets	(14,317)		(45,065)
Disposal of Pinpag property, equipment and intangible assets	(59,176)		—
Disposal of Cappta property, equipment and intangible assets, including goodwill	—		1,767
Outstanding balance	(9,493)		(2,295)
Proceeds from disposal of property and equipment and intangible assets	4,216		245

20.

Business combination

 

20.1

Trinks acquisition

 

On May 2, 2024, after buying shares from selling shareholders the Group obtained the control of Trinks with a 100% equity interest. Trinks was previously an associate and accounted for under the equity method. The Group previously held an equity interest of 19.9% in Trinks which was acquired on November 25, 2019. Trinks is an unlisted company based in the State of Rio de Janeiro, Brazil, that develops an integrated solution of management, focused mainly on the beauty service segment.

 

20.1.1. Financial position of business acquired

 

The allocation of assets acquired and liabilities assumed in the business combinations mentioned above are presented below. Identification and measurement of assets acquired, liabilities assumed, consideration transferred and goodwill are preliminary.

 

Fair value		Trinks
Cash and cash equivalents		991
Short-term investments		1,788
Trade accounts receivable		1,379
Recoverable taxes		158
Property and equipment		438
Other assets		243
Total assets		4,997
Accounts payable to clients		187
Labor and social security liabilities		1,840
Taxes payable		252
Total liabilities		2,279
Net assets and liabilities (a)		2,718
Consideration paid (Note 20.1.2)		50,159
Goodwill		47,441

 

(a) The net assets are based on the financial position of business acquired and the fair value amount and purchase price allocation are still being evaluated by the Group.

 

20.1.2 Consideration paid

 

The fair value of the consideration transferred on the business combination were as follows:

 

	Trinks
Cash consideration paid to the selling shareholders	10,045
Cash consideration to be paid to the selling shareholders	30,135
Previously held equity interest in the acquiree, at fair value (a)	9,979
Total (b)	50,159

 

(a) Refers to the interest in Trinks' shares previously held by the Group. As a result of the step acquisition,the Group recognized a gain of R$ 5,657 for the remeasurement of the previously held 19.9% interest in Trinks to fair value, of R$ 9,979, compared to its carrying amount, of R$ 4,322.

 

(b) In addition to the items presented in the table, the measurement of contingent consideration on the acquisition of Trinks is still in the process of being estimated. The amount will be paid to the selling shareholders in 2025 and 2027. The payment of the contingent consideration shall be conditioned upon the achievement of certain financial and operational goals.

 

21.

Segment information

 

In line with the strategy and organizational structure of the Group, the Group is presenting two reportable segments, namely “Financial Services” and “Software” and certain non-allocated activities:

 

•          Financial services: Comprised of our financial services solutions which includes mainly payments solutions, digital banking, credit, insurance solutions as well as the registry business.

 

•          Software: Composed of our Strategic Verticals (Retail, Gas Stations, Food and Drugstores), Enterprise and Other Verticals. The Software segment includes the following solutions: POS/ERP, TEF and QR Code gateways, reconciliation, CRM, OMS, e-commerce platform, engagement tool, ads solution, and marketplace hub.

 

•          Non allocated activities: Comprised of non-strategic businesses, including results on disposal / discontinuation of non-core businesses.

 

The Group used and continues to use Adjusted net income (loss) as the measure reported to the CODM about the performance of each segment.

 

21.1.

Statement of profit or loss by segment

 

	Six months ended June 30, 2024						Three months ended June 30, 2024
	Financial Services		Software		Non allocated		Financial Services		Software		Non allocated
Total revenue and income	5,532,556		752,734		5,494		2,822,209		383,664		—
Cost of services	(1,322,529)		(328,755)		(16)		(674,958)		(166,416)		—
Administrative expenses	(326,403)		(138,280)		(2,561)		(167,506)		(67,704)		—
Selling expenses	(885,064)		(168,387)		(1,154)		(438,040)		(86,889)		(1)
Financial expenses, net	(1,716,656)		(22,040)		(74)		(838,527)		(11,002)		—
Other income (expenses), net	(145,573)		(13,408)		—		(95,418)		(6,834)		—
Total adjusted expenses	(4,396,225)		(670,870)		(3,805)		(2,214,449)		(338,845)		(1)
Gain on investment in associates	—		(103)		(10)		—		(223)		(201)
Adjusted profit before income taxes	1,136,331		81,761		1,679		607,760		44,596		(202)
Income taxes and social contributions	(261,681)		(10,089)		(428)		(154,413)		(597)		—
Adjusted net income for the period	874,650		71,672		1,251		453,347		43,999		(202)

 

	Six months ended June 30, 2023						Three months ended June 30, 2023
	Financial Services		Software		Non allocated		Financial Services		Software		Non allocated
Total revenue and income	4,887,149		741,088		38,202		2,551,223		382,870		20,690
Cost of services	(1,075,255)		(328,973)		(2,351)		(519,983)		(164,777)		(543)
Administrative expenses	(351,323)		(162,979)		(17,251)		(180,393)		(79,521)		(9,187)
Selling expenses	(639,103)		(148,344)		(14,372)		(324,276)		(79,392)		(8,223)
Financial expenses, net	(1,942,837)		(25,252)		(459)		(1,047,819)		(11,621)		(223)
Other income (expenses), net	(171,473)		(13,629)		41		(78,846)		(2,618)		479
Total adjusted expenses	(4,179,991)		(679,177)		(34,392)		(2,151,317)		(337,929)		(17,697)
Gain (loss) on investment in associates	(2,991)		419		724		(1,718)		526		367
Adjusted profit before income taxes	704,167		62,330		4,534		398,188		45,467		3,360
Income taxes and social contributions	(197,602)		(14,871)		34		(118,521)		(6,494)		(5)
Adjusted net income for the period	506,565		47,459		4,568		279,667		38,973		3,355

 

21.2.

Reconciliation of segment adjusted net income for the period with net income in the consolidated financial statements

 

	Six months ended June 30,				Three months ended June 30,
	2024		2023		2024		2023
Adjusted net income – Financial Services	874,650		506,565		453,347		279,667
Adjusted net income – Software	71,672		47,459		43,999		38,973
Adjusted net income – Non allocated	1,251		4,568		(202)		3,355
Adjusted net income	947,573		558,592		497,144		321,995
Adjustments from adjusted net income to consolidated net income (loss)
Mark-to-market from the investment in Banco Inter	—		30,574		—		—
Amortization of fair value adjustment (a)	(25,693)		(69,393)		(13,405)		(35,720)
Other income (loss)(b)	(58,375)		(3,126)		12,936		10,978
Tax effect on adjustments	8,391		16,254		1,626		9,958
Consolidated net income	871,896		532,901		498,301		307,211

 

(a)

Related to acquisitions. Consists of expenses resulting from the changes of the fair value adjustments as a result of the application of the acquisition method.

 

(b)

Consists of the fair value adjustment related to associates call option, earn-out and earn-out interests related to acquisitions, reversal of litigation of Linx and divestment of assets and loss of control subsidiaries.

 

22.

Subsequent events

 

Expiration and public offering results

 

On July 31, 2024, StoneCo Ltd. concluded the tender offer for its outstanding 3.95% senior notes due 2028, the offer to purchase and consent solicitation dated July 1, 2024. The principal amount of outstanding debt was US$500,000, the aggregate amount tendered was US$294,558 and the percentage of the aggregate principal amount outstanding repurchased was 58.91%.

 

Repurchase shares

 

During the month of July, the Company repurchased 9,670,688 Class A shares for a total consideration of R$ 724,227.

 

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