ADS
The Stone Company recently revealed its strategy to double profits in four years, presenting an ambitious plan to achieve an annual profit of R$1.9 billion by 2024 and up to R$4.3 billion by 2027. This plan was announced during the company’s Investor Day in New York, where the management expressed their optimism about reaching these goals.
CEO Pedro Zinner explained that the company has historically prioritized growth speed, but now they see many opportunities to improve profitability by focusing on efficiency. The strategy includes integrating with Linx, a software business, in order to attract new customers. This integration will allow Stone to expand beyond its traditional card machines and offer a wider range of financial services and software solutions.
One of the key focuses for Stone is the micro, small, and medium-sized enterprises (MPMEs) segment. This group has always been a priority for the company, but its importance has been further bolstered. Stone aims to grow faster than the industry average and handle payments worth more than R$600 billion by 2027, with a take rate of 2.7 percent.
In an interview with EXAME Invest, Zinner emphasized that the goal is not to change the strategy, but rather to make the implementation clearer and concentrate on the most lucrative opportunities. The main business will continue to be acquiring, but Stone wants to go beyond card machines and expand into financial services and software.
The growth strategy will be driven by the synergy between the acquiring business and the software company. Stone plans to supply the software company’s customers with financial products, solidifying itself as a “one-stop-shop” solution for MPMEs in verticals such as grocery stores, restaurants, pharmacies, and petrol stations. By combining financial services and software, Stone believes it can extract the greatest value from these verticals.
The integration strategy with Linx’s software business was further strengthened by Stone’s recent announcement of a restructuring. This move was a long-awaited demand from the market, which had been requesting clearer signs of business combination since Stone’s acquisition of Linx in 2020.
In addition to the software business, financial services were also highlighted as Stone’s main revenue driver. The company’s financial services platform initially focused on payments but has now expanded to include banking and credit solutions. Stone sees great potential in monetizing its customer base through these services, with the software acting as a differentiator.
Despite facing challenges in 2021 due to the wave of insolvencies, Stone is confident about resuming lending activities and expanding its banking vertical. The company has already restarted its lending operations and has R$113 million in available credit. The goal is to reach R$800 million next year and surpass R$5.5 billion in card transactions by the end of 2027.
Alongside credit, other financial services are also expected to expand. Stone currently has R$4.5 billion in deposits and aims to grow to R$7 billion next year and R$14 billion by 2027. These expansion plans reflect Stone’s belief in the potential of its financial services platform to generate additional revenue and drive future growth.
Overall, Stone’s strategy to double profits in four years is based on integrating with Linx’s software business, expanding into new verticals, and maximizing the monetization of its customer base through financial services. With a clear plan in place and confidence in its ability to execute, Stone is positioned to achieve its ambitious profit targets and become a leader in the financial technology industry.
