Expanding Horizons: Stone’s Strategic Path to Profits and Innovation

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In addition to the machine: Stone’s strategy to double profits in four years. The company’s strategy now includes integrating with Linx in an effort to attract new customers via its software business.

The Stone Company has surpassed third-quarter expectations, surprising the market with its strong performance. The company’s management is confident in their strategy and advises investors to maintain their optimism.

The company has set an ambitious goal to achieve an annual profit of in cumulative 2024, with the aim of delivering a sum of up to by 2027. This would more than triple the bottom line of the company’s balance sheet. The announcement of this goal was made at the company’s recent Investor Day in New York.

CEO Pedro Zinner explains that the company has historically prioritized rapid growth, but now sees opportunities to use efficiency to improve profitability. This shift in focus is part of their profitable cash flow business strategy.

At the Investor Day event, the section of micro, small, and medium-sized enterprises (MPMEs) was highlighted as a priority. The company aims to grow faster than the industry average, targeting a take rate of 2.7 percent and handling payments worth more than by 2027.

In an interview with EXAME Invest, Zinner emphasized that the goal is not to alter the strategy, but rather to make the implementation clear and concentrate on the most lucrative opportunities. While the main business focus remains on acquiring customers, Stone plans to expand beyond card machines by integrating financial services and software.

The growth strategy will be driven by the synergy between the businesses. The plan is to supply the software company’s customers with financial products, solidifying Stone as a “one-stop-shop” solution for its MPME clientele. The specific verticals that have been identified as having the greatest potential for value extraction are grocery stores, restaurants, pharmacies, and petrol stations.

“We’re letting the market know which verticals have the greatest potential for value extraction by combining financial services and software,” Zinner said.

The integration strategy with Linx’s software business is a crucial component of Stone’s plans. In October, the company announced its restructuring to include Linx into its core business. This move was a long-awaited demand from the market, which had been seeking clearer signals of business integration since Stone’s acquisition of Linx in 2020.

Apart from software integration, financial services were also highlighted as the main revenue driver for the company. Stone’s financial services platform initially focused on payments but has now expanded to include banking and credit solutions. The platform is currently undergoing an expansion phase, and Stone’s chief strategist, Lia Matos, sees great potential in monetizing their customer base through software differentiation.

At the beginning of the year, Stone identified an opportunity to resume lending and bolster its banking vertical. While the company faced challenges in 2021 due to the wave of insolvency, it sees room for cautious growth in the coming years.

“We’ve restarted production this year and have in available credit. Our goal is to reach next year and to have over in card by the end of 2027,” said Stone’s CFO, Mateus Scherer.

Looking ahead, Stone anticipates further expansion beyond credit services. The company currently has deposits of and aims to grow to by next year and by 2027.

By integrating with Linx’s software business and expanding their financial services offerings, Stone is positioning itself for significant growth in the coming years. The company’s strategy to double profits in four years seems highly realistic, given its ambitious goals and focus on efficiency and profitability. With a clear plan in place and a strong emphasis on customer-centric solutions, Stone is well-positioned for success.