StoneCo Q2 2026 Earnings Call: Complete Transcript

StoneCo (NASDAQ: STNE ) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary StoneCo Ltd reported a 4% growth in Total Payment Volume (TPV) and a significant increase in retail deposits by 22% year over year, indicating successful retention and banking initiatives. The company launched a new brand positioning, 'Stone — the Bank for Entrepreneurs,' aiming to deepen banking and credit relationships with clients, which is expected to enhance cross-selling and ecosystem growth. 4 reais in adjusted basic EPS, although higher-than-expected interest rates present a challenging environment.

6 billion reais, driven primarily by the scaling of the credit portfolio, though adjusted net income declined slightly due to provision expenses related to credit growth. me into Stone, streamlining merchant operations across physical and digital channels, and the successful launch of government-backed credit programs which contribute to risk-adjusted returns. Management emphasized the cautious approach towards credit growth, focusing on lower-risk government-backed programs and adjusted ticket sizes in response to macroeconomic challenges.

3 billion reais to shareholders in the first half of the year through dividends and share buybacks, indicating strong capital management. Despite market challenges, StoneCo remains focused on achieving the lower end of its financial guidance, with expectations of improved performance in the second half of the year. Full Transcript OPERATOR Good evening, everyone. Thank you for standing by.

Welcome to StoneCo's second quarter 2026 earnings conference call. By now, everyone should have access to our earnings release. The company also posted a presentation to go along with this call. co.

Before we begin the call, I advise you to review the disclaimer included in the press release and presentation, which outlines important information about forward-looking statements and non-IFRS financial measures. In addition, many of the risks regarding the business are filed with the Securities and Exchange Commission, which is also available at Before we begin, I would like to highlight that the company is restricting the number of questions to StoneCo's Diego Salgado and the Head of IR, Roberta Noron. I would now like to turn the conference over to Mateus. Please proceed.

Mateus Scherer Schwening — CEO Thank you, operator, and good evening, everyone. Let me start with some perspective on the quarter. This was a quarter of steady progress on the priorities we laid out earlier in the year: reaccelerating TPV growth through better retention, deepening our banking and credit franchises, and keeping a disciplined approach to costs. TPV growth accelerated to 4%, an early signal that the retention initiatives we launched this year are beginning to work, though there is still a lot of work to be done.

Banking and credit kept advancing, with retail deposits up 22% year over year and our credit portfolio now more than double its level from a year ago. On costs, we kept expense growth well below revenue growth while scaling the use of AI more broadly across the company. Finally, we continued to return meaningful capital to shareholders throughout the quarter. Having said that, today I want to spend a few minutes on something that goes beyond the quarterly numbers: how we are positioning Stone today for the long term and how our ecosystem is coming together.

For the merchants, let's turn to slide 3. This quarter, we launched our new brand positioning, Stone — the Bank for Entrepreneurs. This is not a change in strategy, and it does not depend on anything new. We already have the complete offering — payments, banking, and credit — working together in a single relationship.

The gap is in the perception. Many clients still see Stone mainly as a payments company. This positioning is our way of closing that gap so that when an entrepreneur needs banking or credit, Stone is part of the consideration from day one. As that perception builds, it naturally opens the door to more cross-sell, deeper relationships, and growth across the ecosystem.

To bring this to life, we also launched a campaign. The link is on this page. Now moving to slide 4. This is what the Bank for Entrepreneurs means in practice.

Everything starts with a complete account. Money comes in through whatever channel the client sells — in person or online. It goes out to pay employees, suppliers, and taxes. In between, it stays within Stone, where clients can hold a balance, invest their money, or take credit.

On its own, this is just what a complete account should do. The difference is what we build around it — helping entrepreneurs run their day to day by charging customers, issuing invoices, managing orders, with AI increasingly doing part of that work, from enhancing catalog images to creating content that helps merchants sell more. On slide 5, we recently reached an important milestone in that direction. me, which historically was our digital commerce front, has been integrated into Stone.

For the merchant, this means online and physical operations in one account with one view of the business. It brings our full digital commerce suite into the Stone platform, and with sales consolidated in one place, we understand the business better, which unlocks more credit and more. One brand, one account, one experience. For Stone, this opens a new growth avenue, capturing a larger share of digital transactions, a part of the market that is growing faster than the average.

Now let me connect this to our financial commitments for the year on slide 6. 4 reais in adjusted basic EPS. While our guidance remains achievable, interest rates have stayed higher for longer than expected, making the backdrop considerably more challenging than what we anticipated at the start of the year. In that context, while the scenario today is more challenging than it was last quarter, we continue to be focused on delivering towards the lower end of these ranges.

4% remains consistent with the mid-teen level we guided to, and we stay disciplined on execution, with performance weighted towards the second half as credit revenues compound and our commercial initiatives continue to take hold. With that said, I will pass it over to Diego, who will go over our financial and operating results for the quarter. Diego Salgado — Chief Financial Officer Thank you, Mateus, and good evening, everyone. Let me start on slide 7, where we present our main financial metrics for the quarter.

6 billion reais, led by credit as our portfolio continues to scale. 6 billion reais, as higher revenues and lower financial expenses were offset by the provision expenses that come with the credit portfolio growth. Adjusted net income was down slightly on an annual basis, while adjusted EPS grew 9% with continued share buybacks over the past year meaningfully reducing our share count. 8 million merchants, and RPOC grew, mainly as credit keeps gaining penetration and weight in our client base.

Turning to slide 9, TPV growth accelerated to 4% annually, a small improvement over the pace we saw in the first quarter. We're still facing the churn challenges we detected earlier this year, and they still weigh on our overall performance. However, this is the first tangible sign that our initiatives are gaining traction. Our work here is focused on three fronts: simplifying our offerings and bundles, aligning sales force incentives, and improving client experience to reduce operational friction.

So far, the effect is more meaningful on micro merchants, as simpler offerings and an easier contact allowed us to move quickly and bring churn down. With larger merchants, the breadth of the offerings and needs make the operation more complex and riskier, and therefore we calibrate it cautiously before scaling. We expect the benefits of our initiatives to become more visible as the year progresses and therefore accelerate TPV. Looking at TPV mix, QR code continues to grow faster than card volumes.

In banking, our deposit franchise keeps building. 8 billion reais, up more than 20% year over year, as we further engage clients with our account offerings. On slide 10, we present the growth metrics of our credit business. 8 billion reais, two times larger than one year ago, driven mainly by working capital solutions.

During this quarter, we also began disbursing government-backed loans, which already account for roughly 300 million reais of our portfolio, while credit cards reached 400 million reais. Moving to revenues, given the continued growing contribution of our credit card, we have revisited our credit revenue and yield metrics to include credit card interchange fees as we see it as part of the overall product P&L. Credit revenues grew 14% in the period with flattish yield. The stability reflects the entry of government-backed lines, which carry lower rates and lower risk profile.

That takes me to slide 11, where I want to spend some time explaining how government-backed facilities will impact our P&L going forward, considering its growing relevance in our portfolio. Let me first explain how we segregate clients on working capital products based on the two main solution channels we have. Our automated desk handles the smaller tickets, about 40,000 reais, and typically up to 18 months, standard, at an average rate of 4% per month. 5% per month.

Through those desks, we are currently operating two government programs, each with a different profile and focus. We began disbursing PEAC-FGI in April, and it has already gained some relevance in our book. The second program we just launched, so it's still very small. What these programs have in common is a guarantee that reduces losses upon an event of default from a client of ours, considering the reimbursement of guarantees that we obtain from the government.

As a result, this reduction on provision expenses affects the coverage for loans on stage one and two. This kind of guarantee allows us to be more aggressive in pricing for clients where we were previously not that competitive, improving the risk-adjusted returns on what we lend. In short, this is about expanding access to credit and deepening merchant relationships while keeping the risk profile of our growth under control. On slide 12, we turn to credit quality and cost of risk.

In the quarter, provision expenses reached 188 million reais. The growth in expenses is a combination of, first, the record expansion of the portfolio; second, the roll-forward effect of the loans disbursed in late 2025 and early 2026 that are moving to later provisioning stages; and finally, the continuous pressure that we've been noticing on the dedicated desk, with records in bankruptcy protection filings all over the country.

Although the dedicated desk represents less than 25% of our total merchant portfolio and the average ticket today is at 700,000 reais, as I've mentioned, we've been facing defaults precisely on some of the largest tickets we have in our books, in some cases north of 10 million reais. On the other hand, on the automated desk, the improvements that we rolled out during the second quarter are showing significant results, with first-payment defaults consistently trending down, and the June cohort presenting the best result during the last 12 months. 5%. On coverage, the ratio came down to 204%, and I want to address that directly.

Two main effects explain the move. One, it's mix related, and the other is simply a mechanical effect. In the mix, we're steering new disbursements toward better-rated clients and ramping our government-backed facilities, which carry a guarantee and therefore require lower provisioning. Therefore, these two effects combined structurally lower the coverage we need to hold.

The mechanical part is simply the math of a seasoning book. This quarter, our over-90 NPLs grew faster than our provisions as the strong late 2025 and early 2026 vintages rolled into over-90 buckets, while write-offs, which clear the oldest and most heavily provisioned loans, come with a lag. Slide 13 provides a bit more color of the NPL composition by product and channel. On the short end, sequential increase came mainly from new delinquency cases in our dedicated DAs.

As I've mentioned, the automated desk by contracts actually pulled this early metric down in line with the improvements of first-payment-default metrics we previously mentioned. Later-stage delinquency tells the opposite story here: the automated desk was the main driver of the increase as weaker vintages are rolling forward to over 90 days. Staying on slide 14, we present the evolution of our costs and expenses. Cost of services, excluding provisions, was broadly flat year over year as we continue seeking operational leverage using technology and start benefiting from the workforce reduction carried out in the first quarter.

Net financial expenses have been flattish for quite some time now as we've been growing client deposits. This shows in our funding cost, which has come down to roughly 85% of CDI. Admin expenses were lower year over year on reduced personnel and third-party services expenses. Selling expenses were up modestly on higher marketing investments, partially offset by lower distribution channel expenses.

Other operating expenses were higher year over year, mainly reflecting a non-recurring gain in the prior year and higher net provisions for POS. These effects were partially offset by lower share-based compensation. 4% in the quarter, slightly higher than the mid-teens implied in our guidance. We certainly have a long path towards the efficiency levels we want, but will keep evolving in time.

Finally, on slide 15 we present our capital position and return on equity. Our capital ratio stood at 26%, normalizing after the extraordinary dividend paid in May from the linked sale proceeds. 3 billion reais to shareholders during the first half of the year. To wrap it up and coming back to Mateus's opening remarks, this was a quarter of steady execution.

TPV growth is reaccelerating, our banking franchise keeps building up, and credit continues to scale despite the short-term headwinds we keep facing. Ultimately, this all comes down to the merchant. Our goal is to be the bank that Brazilian entrepreneurs rely on to run and grow their businesses, and we believe that improving our banking and credit capabilities is how we deepen that relationship over time. With that, let's open it up for questions.

OPERATOR We are going to start the question and answer section for investors and analysts. If you wish to ask a question, please press the button reaction and then click on Raise Hand. If your question has already been answered, you can leave the queue by clicking on Put Hand Down. Our first question comes from Eric Ito from Bradesco BBI.

Please, Eric, you may now proceed. Eric Ito — Analyst at Bradesco BBI Hi. Thank you. Good afternoon, everybody.

Mateus, Diego, Roberto, thanks for the call. Thanks for taking my question. I have two here on my side. The first one, I think in the release we saw 200 million non-recurring allowance for expected losses on the issuers in distress.

So could you please just give us some color on the main trends there or what happened there, just for us to have more color on that? And then the second one I'd like to touch on the credit. I think you guys provided very good details on the different desks, but my question is towards the government-backed loans already reaching 330 million in the quarter. So I just wanted to see if you could share more expectations going forward and how does that change your guidance for the credit book going forward.

Thank you. Mateus Scherer Schwening — CEO Hey Eric, thanks for the question. So I'll start giving some context around the provisions and then hand it over to Diego to talk about the accounting piece and the path forward, as well as the credit question. So in terms of the provision we did for selected issuers this quarter, maybe it's worth giving some context on the topic.

As you know, the central bank has ordered the liquidation of a large financial group earlier this year, and one of the subsidiaries of that group was a sizable credit card issuer. It now has a little bit over 90 days since we last received the cash flow from that issuer, and then, as a matter of accounting prudence, we decided to do the provision. But in terms of how we evolve from here, we have the position that ensuring that these amounts get settled by the issuers is the role of the card networks. And the reason for that is quite straightforward in our view.