StoneCo Ltd.

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 the presentation to go along with this call. All material can be found online at investors.stone.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 Artists' Securities and Exchange Commission, which is also available at www.fcc.gov. 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 TPP growth through better retention, deepening our banking and credit franchises, and keeping a disciplined approach to costs. PPV 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 doubled its level from a year ago. On costs, We kept expense growth well below revenue growth, while scaling the use of AR 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 changing strategy, and it does not depend on anything new. We already have the complete offering, payments, banking, and credits, 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, his tone 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 film, 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 credits. 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. Pagar.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 credits and more cross-sell. 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. In the first half, we delivered 3.1 billion reais in adjusted gross profits and 4.58 reais in adjusted basic EPS. Against our full year 2026 guidance of 6.6 to 7 billion reais in adjusted gross profits and 10.8 to 11.4 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. Our year-to-date effective tax rate of 15.4% remains consistent with the meeting 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 continues 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?

Thank you, Mateus, and good evening, everyone. Let me start on slide 7, where we present our main financial metrics for the quarter. Our revenue grew to 3.6 billion reais, led by credit, as our portfolio continues to scale. Adjusted gross profit was broadly stable year over year at 1.6 billion reais. as higher revenues and lower financial expenses per 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. On slide eight, Our active client base reached 4.8 million merchants, and our POC 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 weight 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 Salesforce 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, accelerates TPV. Looking at TPV mix, XQR Code continues to grow faster than card volumes. In banking, our deposit franchise keeps building. Retail deposits reach at 10.8 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. Our portfolio reached 3.8 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 R$300 million of our portfolio, while credit cards reached R$400 million. 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 the support of the overall product P&L. Credit revenues grew 14% in the period with flat day shield. 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 distribution 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. Our dedicated desk serves larger clients. with an average ticket to date closer to R$700,000, but with tenders going up to 30 months and lower rates of roughly 2.5% per month. Through those desks, we are currently operating two government programs, each with a different profile and focus. We began this bursting after the IPAC 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 1 and 2. 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 R188 million. The growth on 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 desks. 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 the falls 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 results during the last 12 months. These combined effects pushed our NPLs higher across all indicators and kept the cost of risk at 21.5%. 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 lowered 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 vantages rolled into over 90 buckets, while write-offs, which cleared 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 DAS 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 stage. 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 costs, which has come down to roughly 85% of CDI. Admin expenses were lower year over year on reduced personnel and third party services expenses. Salary 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. Our effective tax rate was 16.4% in the quarter, slightly higher than the meetings implied in our guidance. We certainly have a long path towards the efficiency levels we want, but we'll 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 this extraordinary dividend paid in May from the linked sale proceeds. In total, we have already returned R$4.3 billion to shareholders during the first half of the year. To wrap it up, and coming back to Mateus' opening remarks, this was a quarter of steady execution. TPV growth is re-accelerating, 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.