In addition to the machine: Stone’s strategy to double profits in four years.
The Stone Company, a leading financial technology company in Brazil, recently announced its ambitious strategy to double its profits in the next four years. The company aims to achieve an annual profit of R$1.9 billion by 2024, and a cumulative profit of up to R$4.3 billion by 2027. This would mean more than tripling its bottom line and delivering significant value to its investors.
The announcement was made during the company’s Investor Day in New York, where Stone’s management focused on the company’s growth and profitability opportunities. CEO Pedro Zinner highlighted the importance of efficiency in improving profitability, as the company has historically prioritized growth speed. He emphasized that there are now many opportunities to optimize operations and increase profitability.
One of the key strategies outlined by Stone is its integration with Linx, a software business. By integrating with Linx, Stone aims to attract new customers and expand its reach in the market. The company believes that integrating financial services and software will allow them to offer a comprehensive solution to their customers, positioning themselves as a one-stop-shop for micro, small, and medium-sized enterprises (MPMEs).
The MPME segment has always been a priority for Stone, but its importance has been further bolstered in their growth strategy. 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. The company sees tremendous potential in this segment and aims to solidify its position as a leading provider of financial solutions for MPMEs.
Lia Matos, Stone’s chief strategist, emphasized the importance of the software business in monetizing the customer base. The company believes that combining financial services and software will enable them to extract the most value from their customers. Grocery stores, restaurants, pharmacies, and petrol stations have been identified as the key verticals with the greatest potential for value extraction. Stone aims to become a “one-stop-shop” solution for these businesses, providing them with a comprehensive suite of financial products and software solutions.
The integration strategy with Linx’s software business has been a significant milestone for Stone. With this integration, Stone aims to strengthen its position in the market and provide seamless solutions to its customers. The announcement of the integration received positive feedback from the market, as it addressed a long-standing demand for clearer business combination signals since the acquisition of Linx in 2020.
In addition to expanding its software business, Stone is also focusing on expanding its financial services platform. The platform, which initially focused on payments, has now expanded to include banking and credit solutions. Stone sees great potential in this area and aims to resume lending operations cautiously. The company plans to resume lending operations this year with R$113 million in available credit, and aims to reach R$800 million next year and over R$5.5 billion in card operations by the end of 2027.
Furthermore, Stone has also seen significant growth in its deposit business. The company currently has deposits of R$4.5 billion and aims to grow to R$7 billion next year, and R$14 billion by 2027. This shows the trust and confidence that customers have in Stone’s financial services, as they choose to keep their funds with the company.
Overall, Stone’s strategy to double profits in four years is based on a combination of factors. By integrating with Linx and expanding its software and financial services offerings, Stone aims to attract new customers and provide comprehensive solutions to its existing customers. The company’s focus on efficiency and profitability will ensure sustainable growth and deliver value to its investors. With a clear roadmap and the determination to succeed, Stone is well-positioned to achieve its ambitious profit targets and continue leading the financial technology industry in Brazil.
