StoneCo's Q1 Repricing Drives Gross Profit Surge Amid Rate Pressures

In the first quarter of 2025, StoneCo Ltd. STNE strategically executed a broad repricing initiative aimed at preserving profitability in the face of higher interest rates and a widened yield curve from late 2024. The company repriced nearly its entire client base, covering both Stone and Ton brands, by aligning its pricing with the prevailing yield curve of around 15%. This repricing initiative was rolled out throughout the quarter, with the full financial impact expected to materialize in the second quarter of 2025.

As a result of these pricing actions, StoneCo’s gross profit rose 19% year over year in the first quarter of 2025, outpacing its annual guidance of 14%. Adjusted EPS grew 36%, double the 18% projected growth rate for the full year. The company’s Financial Services segment revenues grew 20%, up from 11% in the fourth quarter of 2024 as a direct effect of the repricing initiatives. 

Despite some churn among clients, particularly large retail accounts, the repricing was deemed successful, with limited volume loss and stable market share in its core micro, small, and medium businesses (“MSMB”) segment.

The repricing initiative, combined with improved operational efficiency and funding strategies, has positioned StoneCo for continued profit-driven growth despite macroeconomic volatility.

Key Fintech Competitors of StoneCo

PagSeguro Digital Ltd. PAGS delivered resilient profitability in the first quarter of 2025 by executing a strategic repricing initiative (that began in fourth-quarter 2024 in response to Brazil’s rising interest rates). The repricing covered 60-70% of clients per round and helped offset a 42% increase in financial costs, protecting margins despite pressure on total payment volume (TPV) from some large retail and MSMB clients. This effort supported a 38-39% gross profit margin and contributed to 14% year-over-year EPS growth. Management emphasized the repricing’s durability and continued focus on balancing growth with profitability.

DLocal Limited’s DLO profitability strategy centers on disciplined cost management, operational efficiency, and strategic investments in automation and AI. In the first quarter of 2025, despite ongoing macroeconomic volatility, the company delivered a record gross profit of $85 million, up 35% year over year. This resulted in a huge 163% year-over-year rise in net income, along with strong cash generation and operating leverage.

STNE Lies Ahead of Moving Averages 

STNE stock is trading above its 50-day and 200-day moving averages, indicating robust upward momentum and price stability.  

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STNE’s Price Performance and Estimates

Year to date, shares of StoneCo have gained 73.4% compared with the industry’s growth of 12.6%. The S&P 500 composite also grew 0.9% in the same period.

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The Zacks Consensus Estimate for STNE’s earnings has been on the rise over the past 30 days.

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STNE stock currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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