StoneCo (STNE) Q4 2025 earnings review
Massive Buybacks Drive EPS Beat Despite TPV Deceleration
StoneCo capped off 2025 with a strategic pivot. While macroeconomic headwinds dragged Total Payment Volume (TPV) growth down to just 4.8% YoY (a significant deceleration), profitability metrics shined. Adjusted Net Income from continuing operations grew 12.4% to R$ 706.9 million, fueled by strong repricing initiatives and lower funding costs from ballooning client deposits. The real story, however, is capital allocation: R$ 3.0 billion in share repurchases over the year shrunk the share base by 13.2%, turbocharging Adjusted EPS to R$ 2.87 (+26.8% YoY). With the R$ 3.0 billion Linx software divestment finalized in early 2026, the company enters the year hyper-focused on its core MSMB financial services, led by incoming CEO Mateus Scherer.
🐂 Bull Case
The company aggressively retired 40.3 million shares (over 13% of the company) in 2025. With a net cash position of R$ 2.58 billion and more cash arriving from the Linx sale, Stone has the firepower to continue heavy capital returns.
Total retail deposits surged 27.4% YoY to R$ 11.1 billion. Shifting these to on-platform time deposits (now R$ 9.5 billion) fundamentally improves funding efficiency and lowers reliance on external debt.
🐻 Bear Case
MSMB TPV growth decelerated sharply to 5.3% YoY. Management is intentionally sacrificing unprofitable volume, but shedding market share in a highly competitive environment risks long-term ecosystem contraction.
Credit provisions spiked 329% YoY to R$ 109.7 million in Q4. Early-stage NPLs (15-90 days) jumped 1.31 percentage points sequentially to 4.43%, signaling cracking borrower health under macro pressures.
⚖️ Verdict: ⚪
Neutral. Stone is masterfully managing what it can control—pricing, costs, and share counts—to engineer EPS growth. However, core transaction volumes are stalling, and rising credit defaults suggest the macro environment is biting hard.
Key Themes
Aggressive Share Repurchases Amplifying Returns
Accelerating. Stone repurchased 13.9 million shares in Q4 alone for R$ 1.28 billion, bringing the 2025 total to R$ 3.0 billion. This financial engineering is the primary wedge between the company's 10.4% Net Income growth and its 26.8% EPS growth. By actively shrinking the denominator at discounted valuations, management is artificially sustaining high-growth metrics.
Deposit Strategy Lowering Funding Costs
Accelerating. Total retail deposits reached R$ 11.1 billion (+27.4% YoY). More importantly, the mix shifted drastically: 'Time deposits (on-platform)' grew from just R$ 429 million in 24Q4 to R$ 9.5 billion in 25Q4. This allows Stone to fund its operations internally rather than tapping debt markets, a critical margin defense mechanism against Brazil's rising CDI rates (which averaged 14.9% in Q4).
PIX QR Code Offsetting Card Weakness
Accelerating. While traditional Card TPV in the MSMB segment flatlined (0.0% YoY growth), PIX QR Code volumes surged 40.2% YoY to R$ 23.7 billion. The structural shift away from debit cards toward PIX is fully underway, and Stone is successfully monetizing this transition to protect its top line.
Severe Deceleration in Total Payment Volume
Decelerating. Overall TPV grew just 4.8% YoY to R$ 150.8 billion, a massive slowdown compared to the 13.8% growth seen in 25Q1. Management states they are making a 'deliberate choice not to chase volume that does not compound.' While protecting margins is prudent, mid-single-digit volume growth in an inflationary emerging market borders on stagnation.
Credit Quality Deteriorating Fast
Reversing. The credit portfolio expanded rapidly to R$ 2.83 billion (+134.9% YoY), but the cracks are showing. Early-stage delinquencies (15-90 days NPL) jumped to 4.43% from 3.12% sequentially. Provisions for expected credit losses spiked 329% YoY to R$ 109.7 million. Management blamed 'payment delay with regards to a limited number of clients within the specialized desk,' but the trend suggests broader macro distress.
Macroeconomic Headwinds & CDI Rates
The Brazilian macro environment remains hostile. The average CDI rate expanded from 11.14% in 24Q4 to 14.90% in 25Q4. This pressured the company's financial expenses, which grew 11.8% YoY to R$ 1.15 billion. The hostile rate environment forces Stone to walk a tightrope between raising merchant prices (sacrificing volume) and absorbing costs (sacrificing margin).
Simplification and Leadership Transition
CEO Pedro Zinner is transitioning to Chairman, handing the reins to CFO Mateus Scherer. This coincides with the closing of the Linx software divestment (approved Feb 2026). The company is deliberately shrinking its operational footprint to focus exclusively on the intersection of payments, banking, and credit for MSMBs.
Other KPIs
Decelerating. Dropped 26.5% sequentially and 45.0% YoY. The R$ 931 million cash burn in Q4 was entirely driven by the massive R$ 1.28 billion share repurchase program. Operating cash generation remains healthy, but the balance sheet buffer is thinning out to fund the buybacks.
Decelerating. Dropped 32.0% YoY and 12.4% sequentially. Management attributes this to 'ongoing pricing optimizations between card MDRs and prepayment revenues across our bundled offers.' While this drags down transaction revenue, it simultaneously props up Financial Income (R$ 2.76 billion, +26.1% YoY).
A negative R$ 48.5 million non-recurring hit was recognized in Q4 stemming from the settlement of a 2021 securities class action lawsuit. Total settlement was R$ 145.3M, with insurers covering R$ 96.6M. This was backed out of Adjusted Earnings.
Key Questions
Credit NPL Spike vs Underwriting
The 15-90 day NPL spiked 130 bps sequentially, which you attributed to a 'limited number of clients within the specialized desk'. Is this an underwriting misstep in a specific cohort, or a leading indicator of broad-based macro distress hitting larger tickets?
TPV Growth Floor
MSMB TPV grew just 5.3% YoY. With repricing largely complete, when do you expect volume growth to bottom out, and how do you prevent flatlining volume from eroding the long-term value of the broader banking ecosystem?
Post-Divestment Capital Allocation
With the Linx divestment closing and bringing in over R$ 3 billion in liquidity, and having already executed aggressive buybacks, what is the priority for this new cash? Will we see a new authorization, or the initiation of a regular dividend?
Funding Spreads and CDI Peak
With CDI rates hitting 14.9% in Q4, and the time-deposit strategy currently shielding margins, how much further can you optimize the funding mix if rates stay 'higher for longer' throughout 2026?