Beyond the Machine: Stone’s Ambitious Strategy to Triple Profits and Expand into Software Business

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In addition to the machine strategy, Stone is implementing a new plan to double its profits within four years. As part of this strategy, the company is integrating with Linx to attract new customers through its software business.

The Stone Company exceeded expectations in the third quarter, surprising the market and leaving the company’s management confident about future prospects. They advise investors to remain optimistic about the company’s performance.

The main goal of Stone’s strategy is to achieve an annual profit of cumulative 2024, resulting in a substantial increase in the bottom line of the balance sheet, more than tripling its current figures. This ambitious target was announced during the company’s Investor Day event in New York.

CEO Pedro Zinner explains that historically, the company has prioritized growth speed. However, there are now many opportunities to use efficiency to improve profitability. The company has developed a profitable cash flow business strategy to achieve this goal.

One area of focus for Stone is the micro, small, and medium-sized enterprises (MPMEs). While this group has always been a priority for the company, their importance has been further emphasized. Stone aims to grow faster than the industry average, with a target take rate of 2.7 percent, and aims to handle payments worth more than a significant amount by 2027.

Zinner, in an interview with EXAME Invest, emphasized that the goal is not to change the strategy but to make implementation clearer and focus on the most lucrative opportunities. While the main business area remains in acquiring, Stone aims to go beyond card machines and integrate its financial services and software businesses.

The growth strategy will be driven by the synergy between the businesses. The plan is to leverage the software company’s customer base by offering them financial products. Stone will focus on four key sectors, which are grocery stores, restaurants, pharmacies, and petrol stations. By solidifying its position as a “one-stop-shop” solution for MPMEs in these sectors, Stone aims to extract the maximum value from the combination of financial services and software.

Stone’s integration with Linx’s software business is a significant part of this strategy. The announcement of this integration weakened the market at the time of its announcement. Stone had been restructuring the company to include Linx’s core business since the acquisition of Linx in 2020. The market had been waiting for clear signs of business combination, which were finally provided by this move.

Financial services are also highlighted as the main revenue driver for the company. Stone’s platform initially focused on payments but has now expanded to include banking and credit solutions. This expansion phase is seen as the company’s greatest potential for monetizing its customer base, with the software business serving as a key differentiator.

At the beginning of the year, Stone identified an opportunity to resume lending, particularly in the banking sector. The company faced a major setback in 2021 due to insolvency issues, but now, two years later, it sees room to cautiously resume operations.

“We have restarted production this year and have significant credit available. Our goal is to reach a particular amount next year and to exceed a substantial amount in card payments by the end of 2027,” said Stone’s CFO, Mateus Scherer.

In addition to credit expansion, Stone is also looking to grow other financial services. The company currently has deposits of a significant amount and aims to increase it next year and reach an impressive amount by 2027.

Overall, Stone is implementing a comprehensive strategy to double its profits within four years. The integration with Linx’s software business plays a vital role in this strategy, along with the expansion of financial services. By leveraging its strengths in acquiring and software, Stone aims to become a leading provider of financial solutions for MPMEs in various sectors, driving increased profitability and delivering sustainable growth for its investors.