StoneCo's Q1 2025: Unpacking Contradictions in Pricing, Cash Flow, and Credit Strategy

Impact of pricing adjustments and market share, cash conversion and capital allocation, repricing impacts and TPV growth, credit strategy and differentiation, and deposit strategy and funding costs are the key contradictions discussed in StoneCo Ltd.'s latest 2025Q1 earnings call.



Revenue Growth and Profitability:
- StoneCo reported 19% year-over-year growth in revenues for Q1 2025, with gross profit increasing by 19%.
- The growth was driven by effective repricing execution and a reduction in average funding spreads, resulting in stronger-than-expected financial performance.

TPV and Client Engagement:
- The company's MSMB TPV grew 17% year-over-year, while card transaction volumes increased by 10% and PIX volumes by 95%.
- Engagement increased with 38% of the active client base classified as heavy users, reflecting effective bundling of financial services and new feature adoption.

Deposit and Funding Strategy:
- Total client deposits reached R$8.3 billion, up 38% year-over-year, with R$6.3 billion converted into time deposits.
- This cash-sweeping strategy aims to optimize capital structure and reduce funding costs by utilizing deposits to fund operations.

Share Buybacks and Capital Allocation:
- StoneCo repurchased R$843 million in shares during the quarter, with a new share repurchase program of up to R$2 billion announced.
- This strategy reflects the company's focus on returning excess capital to shareholders, aligning with its disciplined capital allocation framework.