StoneCo Ltd.

Good evening, everyone. Thank you for standing by. Welcome to StoneCo's 4th Quarter 2024 Earnings Conference Call. By now, everyone should have access to our earnings release. The company also posted a presentation to go along with its call. All material can be found online at investors.stone.co Throughout this conference call, the company will be presenting non-IFRS financial information, including adjusted net income, adjusted net cash, and adjusted basic EPS. These are important financial measures for the company but are not financial measures as defined by IFRS. Reconciliations of the company's non-IFRS financial information to the IFRS financial information appears in today's press release. Finally, before we begin our formal remarks, I would like to remind everyone that today's discussion may include forward-looking statements. These forward-looking statements are not guarantees of future performance and therefore you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from the company's expectations. Please refer to the forward-looking statements disclosure in the company's earnings press release. In addition, many of the risks regarding the business are disclosed in the company's Form 20-F filed with the Securities and Exchange Commission, which is available at www.sec.gov. In hindsight, I would like to highlight that the full conference call will last until 7.15pm BRT time, by which time the company will take no further questions. Analysts that are still in line after that time will have their questions addressed by the IR team. Joining the call today is Stone's CEO, Pedro Zinner, the CFO and IRO, Matheus Scherer, the Strategy and Marketing Officer, Lia Matos, and the Head of IR, Roberta Noronha. I would now like to turn the conference over to your host, Pedro Zinner. Please proceed.

Thank you, operator, and good evening. As detailed in our annual shareholder letter, 2024 was a pivotal year of execution. marked by significant progress despite market challenges. We strength our position for sustainable growth, successfully executing our strategy, delivering exceptional client service, and generating value for shareholders. Our key accomplishments reflect substantial progress across our three strategic priorities. MSMB market leadership, enhanced client engagement, and scalable platform growth. This is clearly demonstrated by the achievements against our 2024 targets for MSMB Card TPV, deposits, MSAB take rate, credit portfolio, adjusted administrative expenses, and adjusted net income. With the exception of MSMB Card TPV, we exceeded expectations across all other key performance indicators, demonstrating successful strategy execution. In 2024, MSNB card TPV reached R$ 403 billion, representing 15% year-over-year growth. While this fell slightly short of our R$ 412 billion guidance due to the faster-than-expected adoption of PIX, total MSNB TPV exceeded expectations. reaching R454 billion, a 22% year-over-year increase. Looking ahead to 2025, we are confident in our ability to continue outpacing market growth and expanding our share of the MSNB payments market. Retail deposits closed 2024 at R8.7 billion, exceeding our R7 billion guidance. This success reflects the strong performance of our bundle payments and banking offers, and increasing client engagement with our banking solutions. While this is a significant milestone, we view it as the initial phase of our strategy to establish Stone Accounts as the primary financial hub for our clients. As we enhance our value proposition with a comprehensive product ecosystem extending beyond payments, we project retail deposit growth to outpace TPV growth. In 2025, we'll focus on key initiatives, including our investment products and workflow tools, to further accelerate deposit growth. Our second priority, enhancing client engagement, yields strong results beyond core monetization metrics like TPV and deposits. We achieved an MSNB take rate of 2.55% in 2024, exceeding our 2.49% guidance. This success reflects not only disciplined pricing and payments, but also the growing contribution from our banking and credit solutions. Our credit portfolio reached 1.2 billion reais in 2024, significantly exceeding our 800 million target, while maintaining controlled risk and healthy profitability. our non-performing loans over 90 days remained at a control 3.61%. These results highlight the success of our 2023 credit relaunch and represent a key step in our strategic evolution toward becoming our client's primary financial provider. Our third priority, scalable platform growth, focuses on delivering continuously evolving value to clients' profitability. This is reflected in our net income of R$ 2.2 billion, exceeding our R$ 1.9 billion guidance despite macroeconomic headwinds and over R$ 100 million in negative impacts from accounting methodology changes for membership fees. The strong performance resulted from successful monetization, ongoing efficiency improvements, and the initial benefits of cost control initiatives, as evidenced by adjusted administrative expenses of R$ 994 million, compared to our R$ 1.125 billion guidance. I am extremely pleased with our strong performance in 2024 and the progress we made executing our strategy. We remain focused on empowering our clients by simplifying their financial lives and providing the solutions they need. Now, I'll hand it over to Lia to discuss our fourth quarter 2024 results and provide further strategic updates.

Thank you, Pedro, and good evening, everyone. Taking a closer look into our fourth quarter 24 results, we're pleased with our performance in the quarter. We were able to deliver solid results despite a less favorable macroeconomic environment towards the end of the year when yield curves trended upwards. In spite of this scenario, we decided not to increase prices for our clients in the quarter given the important holiday season. As you can see on slide four, we posted strong bottom line results. Our adjusted EBT grew 22% compared with the fourth quarter of 23, while adjusted net income grew 18% over the same period. Adjusted net margin was 18.4% in the quarter, one percentage point higher year over year. As a result of the execution of share buybacks throughout 2024, our adjusted basic EPS growth exceeded net income growth, increasing 26% compared to the fourth quarter of 23. These results, as seen in slide 5, stem primarily from an 11% year-over-year increase in total revenues for the quarter, which resulted from active client-based growth and higher monetization of clients among different client segments. In addition to that, we saw significant gains in efficiency while we continued to invest for future growth. As you can see on the right side of the slide, we are now introducing gross profit as a key measure of our performance. Gross profit is measured as our revenues deducted by cost of services and financial expenses. We believe this metric better represents the nature of our operation and our ability to monetize clients through multiple levers, such as payments, banking, and credit. On the cost side, it considers the cost to fund our operation, as well as the direct cost to serve our client base. Our gross profit in the quarter reached 1.7 billion reais, growing 13% year over year. This growth, ahead of revenue growth, reflects a lower level of provision for loan losses, as well as a lower cost to fund our business. Note that on a quarter over quarter basis, we started to be impacted by the higher yield curve. While we had a hit in our financial expenses from higher rates in the fourth quarter, we understand the end of the year as a critical moment for our clients. And thus we took the decision to not increase prices in the fourth quarter and wait for the beginning of the year instead. On slide six, we dig deeper in our financial services segment performance, starting with our payments business for MSNBs. Our MSNB payments active client base increased 19% year over year to 4.1 million clients. This represents an acceleration in our addition of clients to 157,000 from 108,000 in the previous quarter. Net ads performance in the quarter resulted from end-of-year campaigns, including Black Friday, while churn levels remained under control. While we welcome this acceleration and believe it reflects the strength of our value proposition, as well as excellence in distribution, we note that our focus continues to be to guarantee healthy unit economics in every cohort through a dynamic pricing strategy, effective bundling, and increased client engagement. I think it is important to remind everyone that net ads dynamics can vary quarter over quarter, slightly above or below the average over several quarters. Speaking of engagement, we saw yet again an increase in our heavy user metric this quarter, from 34% in the previous quarter to 37% in the fourth quarter. We believe this is a result of both the effectiveness of our payments and banking bundle offers and on the launching of new solutions that are creative over time. MSNB TPV increased 21% year-over-year in the quarter, showing an acceleration compared to previous quarter growth of 20%, driven by CAR TPV growth of 13%, while PICs continue to grow at much higher rates as adoption continues to accelerate, invisibly cannibalize debit volumes, as well as cash. PIX continues to open new avenues of product development, such as recently implemented NFC capture, while monetization remains accretive to our ecosystem. In spite of the solid volume growth, we also saw encouraging trends in our take rates, which increased 11 basis points year over year, with a soft reduction sequentially due to typical fourth quarter seasonality. As I mentioned, going forward, we will focus more on total gross profit as a better metric to reflect our monetization strategy, achieved through multiple monetization drivers and trade-offs. We believe that take rates are more limited in showing the whole picture, given that we may decide on different balances between solutions, given a specific macro environment. Also, as we intend to use our deposits in a more relevant way to fund our operation, which is accretive to us, this would impact take rate while it would be neutral to gross profits. We will, however, continue to disclose this metric in earnings materials and will adapt it to include PIX volumes in TPV when calculating take rates. Moving on to slide seven, we show our banking performance. We continue to see strong growth in our banking active client base, which increased 46% year over year to 3.1 million banking clients, outgrowing the increase in our payments client base. The combination of success in our bundle offers and continued engagement with our banking features led to a 42% increase in retail deposits or a strong 28% sequential increase boosted by seasonality, reaching 8.7 billion reais by year end. As expected, deposits have been growing well above TPV, reaching 6.8% of MSNB TPV in the quarter, compared with 6% in the third quarter of 24, and 5.8% in the fourth quarter of 23. Within retail deposits, we have seen a 3.6 fold increase in time deposits, which reached 430 million reais, mostly related to our saving solution. Although still small, this solution has been a key driver of engagement, enabling our clients to save money for specific purposes and therefore better organize their finances. An important aspect to note is that from the remaining 8.3 billion reais in deposits, we expect to convert a significant portion of it to time deposits by issuing certificate of deposits. This will allow us to utilize such amounts towards funding of our operation. As we pursue this strategy over the coming quarters, we expect to see a shift in our retail deposit mix from deposits from retail clients to on-platform time deposits. This shift will contribute to a better and more efficient capital structure and will significantly reduce the cost to fund our operation, reducing financial expenses. At the same time, we will no longer earn CDI on top of those deposits, which means we will experience a significant reduction in our floating revenues throughout the year as well. The effect will be an accretive outcome to our bottom line as we implement this strategy over time. On slide eight, I'm gonna give some highlights of our credit performance. The fourth quarter showed a trend of continuity versus previous quarters, with positive results both in growth and in quality. Our credit portfolio reached R$1.2 billion, increasing 31% in the quarter. This portfolio is comprised of R$1.1 billion of merchant solutions, composed in its majority of working capital solutions to SMBs, and 114 million reais of credit card offerings to our clients, mainly to micro clients. Despite the more challenging macroeconomic scenario, we still see credit as an important avenue of growth, given the significant opportunity to support our clients through multiple credit offerings where we still have limited presence. Nevertheless, we remain aware of macro trends that may lead to an impact in future disbursements and performance. Credit quality remains healthy, with NPLs 50 to 90 days of 2.47% and NPLs over 90 days of 3.61%, with increases being expected as a natural consequence of portfolio maturation. Regarding provisions, as we have been communicating over the past quarters, we have been gradually reducing the amount of working capital provisions we hold compared with its respective portfolio balance. When we relaunched the solution, we decided to over provision until we could have a clear view of multiple vintages performance and slowly converge those provisions to the actual expected loss levels. The ratio of accumulated loan loss provision expenses over the working capital portfolio reached 12% in the quarter compared with the 14% in the third quarter and 20% a year ago. Given the current macroeconomic scenario and a conservative approach from our side, we believe this is an appropriate level to stabilize in at the moment. As such, we will now transition away from tracking this ratio to follow more widely used credit metrics. Our coverage ratio currently stands at 331%, which is still at a high level for comparable credit players in the markets. To summarize, on slide 9, as a result of the performance highlights I just described, our financial services segment grew revenues at 11% year-over-year to R$ 3.2 billion, with an adjusted EBT growth of 16%, reaching R$ 700 million, and a 90 basis points margin increase to 21.9% in the quarter. The solid results of the year within the financial services segment, driven by the successful execution of our strategic priorities around win, engage, and scale, led us to reach an ROE of 27% in 2024, five percentage points higher than in 2023. Finally, on slide 10, I will go through our software segment performance. As you can see, our execution on cross-selling financial services to software clients has been yielding positive results. We have increased our CTPV overlap 20% year over year, compared with a 13% growth of overall MSNB card TPV for the same period. Sequentially, we grew CTPV overlap two times higher than our MSNB card TPV growth, which gives us confidence to keep seeking the strategic avenue ahead. On a standalone basis, software revenue grew 15% year-over-year in the quarter, mainly driven by a good performance in one of our portfolio companies, Reclame Aqui, and the non-recurring revenue of R$ 8 million. Software-adjusted EBITDA posted a strong 54% growth year-over-year, reaching an all-time high margin since the acquisition of Lynx, of 21.6%. This margin improvement was largely led by the combination of a strong revenue performance with our continued focus on gaining efficiencies in the operation. As Pedro mentioned, we're pleased with the 2024 results and remain committed and excited to bring more value to our clients throughout 2025 and to continue our journey towards reaching our long-term targets and creating value to our shareholders. Now, I want to pass it over to Mateus to give important updates on our software segment and discuss in more detail our overall financial performance. Mateus?