StoneCo Misses Estimates, Slashes 2027 Guidance by 29%
What Happened at StoneCo in Q4 2025
What Happened
StoneCo delivered a fourth quarter that hit company guidance but fell short of Wall Street expectations on both the top and bottom lines. Revenue from continuing operations reached R$ 3.7 billion ($712M), up 13% year-over-year but below the LSEG consensus of R$ 3.8 billion ($731M).
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Adjusted net income from continuing operations came in at R$ 707 million ($136M), a 12% annual increase that nonetheless missed the R$ 743 million ($143M) analyst estimate. The adjusted EPS for consolidated operations grew 27% to R$ 2.87 ($0.55), and return on equity reached 26%, up 6 percentage points year-over-year.
The market reaction was swift. STNE shares fell roughly 5% in after-hours trading on the Nasdaq, dragged lower not only by the miss but by a significant downward revision to multi-year guidance that signaled a more cautious outlook under incoming CEO Mateus Scherer.
Key Drivers Behind StoneCo’s Q4 2025 Results
Key Drivers
Revenue Growth and Repricing Initiatives
The 13% revenue increase was primarily driven by repricing initiatives implemented in early 2025 to offset higher interest rates, along with an expanding client base and accelerating credit revenues. Financial income reached R$ 2.8 billion ($531M) in the quarter, up 26% year-over-year, fueled by higher prepayment and credit revenues.
These gains were partially offset by lower floating revenue from client deposits, which StoneCo began using as an alternative funding source in 2025. The shift from deposit income to lower-cost funding creates a structural trade-off: cheaper capital, but less revenue visibility.
Credit Portfolio Expansion and Risk Metrics
The credit book was the standout growth engine. The portfolio reached R$ 2.9 billion ($558M), up 23% sequentially and more than doubling year-over-year. Credit revenues hit R$ 238 million ($46M) in 4Q25, compared with just R$ 80 million ($15M) a year earlier, a three-fold increase that underscores the product’s growing contribution.
Risk metrics remain manageable but bear watching. NPL between 15 and 90 days stood at 4.4%, while NPL over 90 days reached 5.2%, reflecting the natural maturation of a rapidly growing book. Provisions rose 27% sequentially to R$ 110 million ($21M), with a cost of risk at 17.1%. The coverage ratio, at 264%, provides a significant buffer.
Banking Segment and Client Ecosystem
Active banking clients grew 21% year-over-year to 3.7 million, while client deposits reached R$ 11.1 billion ($2.1B), up from R$ 8.7 billion a year earlier. The ecosystem flywheel — payments generating data, data enabling credit, credit deepening deposits — continued to strengthen, though management acknowledged softer TPV growth ahead due to macro headwinds and higher churn in recent quarters.
StoneCo Q4 2025 Financial Detail
Financial Detail
Full-Year 2025 Performance Summary
For the full year, StoneCo delivered R$ 14.15 billion ($2.7B) in total revenue from continuing operations, up 17.5%. Adjusted gross profit reached R$ 6.32 billion ($1.2B), a 13.5% increase that met the company‘s 2025 guidance. Adjusted net income from continuing and discontinued operations combined totaled R$ 2.61 billion ($502M), up 18.6%.
The adjusted basic EPS for consolidated operations reached R$ 9.71 ($1.87), a 33.6% jump driven by both earnings growth and an aggressive buyback program that retired 40.3 million shares through R$ 3.0 billion ($577M) in repurchases during 2025.
Quarterly Profitability Trends
Adjusted gross profit from continuing operations was R$ 1.7 billion ($327M) in 4Q25, up 9% year-over-year, a notable deceleration from the 11.7% growth seen in 3Q25. The 19% adjusted net income margin reflected higher financial expenses tied to the elevated CDI rate and rising credit provisions.
The company also took a R$ 157.8 million ($30M) impairment charge on discontinued operations related to revised assumptions for the Linx asset disposal, and recorded R$ 48.5 million ($9M) in non-recurring costs from the settlement of a securities class action for R$ 145.3 million ($28M), with R$ 96.6 million ($19M) covered by insurers.
Management Signals from StoneCo Leadership
Outgoing CEO Pedro Zinner, who will transition to Chairman, noted the company closed 2025 having met all its stated guidance targets while distributing R$ 3 billion ($577M) to shareholders. He framed the quarter as the conclusion of a multi-year pivot from payments-only to a full financial services platform.
Incoming CEO Mateus Scherer, formerly the CFO, signaled that 2026 guidance embeds the full effect of R$ 2 billion ($385M) in planned buybacks, while 2027 guidance assumes no additional capital return, creating potential EPS upside if further repurchases occur. The Selic rate is assumed at low 12% for 2026 and high 11% for 2027.
Management discontinued specific operational KPI guidance for 2027, citing a materially different mix of credit, deposits, and TPV versus the original investor day projections. The company is pursuing AI-enabled productivity initiatives, with initial success in customer service automation, though financial benefits are not yet quantified in guidance.
What to Watch Next for StoneCo
What to Watch Next
The April board meeting will determine how the approximately R$ 3 billion ($577M) in extraordinary proceeds from the Linx divestiture, which closed on February 27, will be distributed to shareholders. If approved as buybacks, the reduced share count could materially lift 2027 EPS above current guidance.
The CEO transition from Zinner to Scherer, effective this month, will be scrutinized for execution continuity. Scherer has been with the company since its founding and led the relaunch of credit products, but managing a business with a rapidly scaling credit book through a tightening cycle will test the new leadership team.
Credit asset quality is the key variable to monitor. Management expects NPLs to rise naturally as the portfolio seasons and exposure extends to higher-risk client tiers. If cost of risk holds near 17% and credit revenues continue their 30%+ quarterly growth trajectory, the unit economics will scale favorably, but a macro deterioration could compress the runway quickly.
StoneCo Q4 2025 Financial Snapshot
| Metric | 4Q25 | 4Q24 | YoY Δ |
|---|---|---|---|
| Total Revenue & Income | R$ 3,725M ($717M) | R$ 3,296M | +13.0% |
| Adj. Gross Profit | R$ 1,700M ($327M) | R$ 1,560M | +9.0% |
| Adj. Net Income | R$ 707M ($136M) | R$ 631M | +12.0% |
| Adj. EPS (Consolidated) | R$ 2.87 ($0.55) | R$ 2.26 | +27.0% |
| ROE (Consolidated) | 26% | 20% | +6 pp |
| Financial Income | R$ 2,761M ($531M) | R$ 2,190M | +26.1% |
StoneCo Banking and Credit Metrics
| Metric | 4Q25 | 3Q25 | 4Q24 |
|---|---|---|---|
| Credit Portfolio | R$ 2,840M ($546M) | R$ 2,310M | R$ 1,209M |
| Credit Revenue | R$ 238M ($46M) | R$ 179M | R$ 80M |
| Provisions | R$ 110M ($21M) | R$ 87M | R$ 26M |
| NPL 15–90 Days | 4.43% | 4.20% | 3.50% |
| NPL > 90 Days | 5.21% | 5.03% | 3.50% |
| Active Banking Clients | 3.7M | 3.5M | 3.1M |
| Client Deposits | R$ 11,100M ($2.1B) | R$ 10,200M | R$ 8,700M |
| Coverage Ratio | 263.6% | n/a | n/a |
StoneCo Multi-Year Guidance Comparison
| Metric | 2026 New | 2027 New | 2027 Prior |
|---|---|---|---|
| Adj. Gross Profit | R$ 6.6–7.0B | R$ 7.2–8.3B | ≥ R$ 10.2B |
| Adj. Basic EPS | R$ 10.8–11.4 | R$ 11.8–13.4 | ≥ R$ 15.0 |
| Selic Assumption | Low 12% | High 11% | n/a |
Key Risks Facing StoneCo
Risks
The guidance cut is the headline risk. Reducing the 2027 gross profit floor by 29% — from R$ 10.2 billion to R$ 7.2 billion — resets the multi-year earnings trajectory and may prompt analyst downgrades. The decision to drop operational KPI guidance for 2027 adds opacity at a moment when investors want clarity.
Credit risk is scaling with the portfolio. NPL over 90 days has risen from 3.5% a year ago to 5.2%, and the cost of risk at 17.1% will pressure margins if macro conditions deteriorate further. The Selic rate at 15% is already historically restrictive; if it stays elevated longer than the high-11% assumption embedded in 2027 guidance, earnings could fall below the new range.
The leadership transition adds execution uncertainty. While Scherer is a long-tenured insider, managing a CEO change alongside a rapidly scaling credit book and the integration of Linx divestiture proceeds introduces organizational complexity during a demanding macro cycle.
TPV growth deceleration is a structural concern. Management expects mid-single-digit TPV growth for 2026, a sharp decline from the 11-20% rates seen in prior years. Increased churn, lower client acquisition, and a shift toward digital merchants that carry thinner economics represent headwinds that may take multiple quarters to reverse.
Brazilian Fintech and Payments Sector Context
StoneCo’s results land in a challenging moment for Brazilian fintechs. The Selic rate at 15% — the highest since 2006 — is compressing margin expansion across the sector while simultaneously boosting prepayment revenues for acquirers, creating a mixed picture. PIX adoption continues to accelerate, displacing traditional debit volumes but offering comparable monetization through QR code transactions.
Rival PagSeguro (PAGS) is pursuing a similar playbook of credit expansion and MSMB deepening, while MercadoLibre’s Mercado Pago continues to scale its fintech operations across the region. The competitive environment has not seen significant pricing wars, but market share dynamics are shifting as all three platforms invest in banking, credit, and workflow tools to lock in merchant relationships.
StoneCo’s decision to exit software through the Linx divestiture and concentrate entirely on financial services distinguishes it from more diversified competitors. The bet is that a leaner, payments-plus-credit model can deliver higher ROE than a conglomerate approach, but the narrower base also means less revenue diversification in a downturn. Analysts maintain a consensus Buy rating with a median price target around $17.90, implying roughly 20% upside from current levels.
For more context, read Brazil’s Morning Call and the USD/BRL exchange rate report.