GEORGE TOWN, Grand Cayman, May 26, 2020 (GLOBE NEWSWIRE) — StoneCo Ltd. (Nasdaq: STNE) (“Stone” or the “Company”), a leading provider of financial technology solutions that empower merchants to conduct commerce seamlessly across multiple channels, today reports its financial results for its first quarter ended March 31, 2020.To our shareholders:The world has been facing challenging times with COVID-19 developments, which has brought not only severe and tragic public health consequences, but also one of the most abrupt economic crises of modern history. The consequences of COVID-19 profoundly affect all of us.COVID-19 hit Brazil hard in mid-March, when infections increased, physical commerce decreased, and economic uncertainty soared. We believe that times of uncertainty require clear priorities and decisive actions to adapt quickly to new realities, and we acted promptly to keep our team safe and help our clients and our country, all while keeping our business strong, our balance sheet healthy, and our strategic focus steady.During the months prior to the crisis, our Company had just started to invest even more heavily into our future growth, as we reported during our fourth quarter earnings call. By the end of March we had increased our number of employees by over 530 people, having added 70% more people to our technology team than in any other quarter in our history. We also invested in creating more density in our hubs in different regions, diligently allocated capital to support our long-term strategy of becoming a unique SMB platform in Brazil combining software and financial products with superior customer service and direct physical and online distribution to merchants throughout the country. As we evolve, Stone becomes every day more a technology company with financial services embedded in its roots.Between January 1st and March 15th, we were able to accelerate our growth, with year over year TPV growth of 52.2%, compared with 51.4% growth in the fourth quarter of 2019. Additionally, we continued to scale our Credit, Banking and Software businesses, achieving record growth metrics. By mid-March, when partial lockdowns started to be enacted in the country and retail activity declined sharply, TPV growth decelerated somewhat.Even though we started to see gradual improvement in economic activity in mid-April, in early May, we made the very tough decision to reduce our workforce by 20%. We conducted this difficult process with the same transparency, meritocracy, and empathy to our team as always. We provided a generous package to those who left, and we dedicated a team in HR to help them find another good job through a partnership with other companies we admire. We will always treat with care those who dedicate a portion of their lives to the purpose of serving our clients with excellence.We’ve also implemented cost-management initiatives and a redesign of processes in our Company to increase operational efficiency. We have made tactical adjustments to our business, so we can navigate safely through this crisis with a strong balance sheet and a lean structure and be ready to support small and medium businesses more than ever without compromising our long-term strategy.Over the course of this year to date, in addition to the organic growth we’ve achieved, we have been dedicating a good amount of time to strengthening our digital business and pursuing our software strategy. This strategy provides diversification, adds intelligence to our ABC strategy, and helps us improve the business of our clients. We put ourselves in our clients’ shoes, and are always thinking about ways to help them better manage and grow their businesses. The investments we made in the first quarter do just that: Delivery Much, Mlabs, Vitta and MVarandas are great examples of software companies that add immediate value to our clients and our ecosystem.Our channel diversification and our hub strategy focusing on small and mid-sized Brazilian cities has paid off. We have been growing more than peers in the last years, and in the current crisis, our business has been more resilient. We were also prepared with a good amount of “safety capital” to protect our Company and allow us to invest in tough times. StoneCo’s TPV grew +9% in April and around 23% in until May 23rd compared with the same periods in 2019, and we are positioned for stronger growth in the second half of the year.Our credit approach, which includes a rigorous credit-scoring system, receivables lock-up, and pay-as-you-sell model, has also proven to be more resilient than even we expected, providing a return on asset of 2.7% per month even after COVID-19-related provisions.Since the early days of our Company we’ve worked hard to build a client-centric culture that becomes even stronger during challenging times and we are more confident than ever in the future and mission of our Company. We remain focused on our strategic priorities of expanding and consolidating our presence in the SMB market, becoming the main financial platform for our clients and investing in great solutions to help SMBs manage their businesses, grow and sell online. We are still in the early days of our journey, and we have tremendous potential to grow.We are grateful to all Stone team members for their extraordinary efforts during this time of crisis. We believe that together businesses and society will find new and innovative ways to conquer COVID-19 and its effects using technology, care and humanity as powerful allies.Thiago Piau, CEOOperating and Financial Highlights 1Q20
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