Key Highlights

  • Second-quarter total Revenue was R$3.6 billion, up 2.5% year over year, a miss versus expectations, with adjusted Net Income of R$583 million, down 2.6%.
  • Total payment Volume reached R$142 billion, active merchant clients grew 6% to 4.8 million, and the Credit portfolio expanded 16% sequentially to R$3.8 billion.
  • Non-performing loans rose, with the over-90-day bucket climbing to 8.6% from 7.0%, and management flagged elevated cost of risk tied to Brazil's high benchmark interest rate.
  • Shares fell as investors weighed the credit-quality trend against continued growth in payments and banking and disciplined share buybacks.

StoneCo (NASDAQ:STNE), a Brazilian financial-technology company serving small and mid-sized businesses, fell as a revenue miss and rising credit delinquencies tempered its latest quarter. Yet with continued growth in payments and banking, disciplined share Buybacks and a cautious but improving outlook, the question is whether the company is setting up for a surprise move once credit conditions and Brazil's macro backdrop stabilize.

StoneCo, positioning itself as 'the bank for entrepreneurs,' provides payment processing, banking and credit services to millions of Brazilian merchants through an integrated platform. Its results are tied to Brazilian consumer and Business activity and to interest rates, which affect both its funding costs and the performance of its growing credit portfolio.

Latest Developments

In its second-quarter 2026 results, StoneCo reported total revenue of R$3.6 billion, up 2.5% year over year, a miss versus expectations, with adjusted net income of R$583 million, down 2.6%, though adjusted EPS rose 8.6% aided by buybacks. Total payment volume reached R$142 billion, active merchant clients grew 6% to 4.8 million, retail deposits grew strongly, and the credit portfolio expanded 16% sequentially to R$3.8 billion. However, Non-Performing Loans rose, with the over-90-day bucket climbing to 8.6% from 7.0%, and management flagged elevated cost of risk, attributing cautious guidance to Brazil's high benchmark interest rate. It guided full-year 2026 adjusted EPS to R$10.8 to R$11.4.

Financial and Business Position

StoneCo continues to grow its core payments and banking franchises and to expand credit, which can be a high-return business but also carries the risk now showing up in rising delinquencies. Brazil's elevated Selic rate pressures margins and credit performance, which is the central near-term headwind, and management expects cost of risk to improve later in the year. The company's share buybacks and its provision of guidance into 2027 signal confidence, but the credit-quality trend is the key variable to monitor.

Stock-Market Context

The stock carries a favorable analyst rating, and the decline reflects the revenue miss and credit concerns weighed against the underlying Franchise growth. The surprise-move case rests on Brazil's interest-rate environment easing, credit metrics stabilizing and payments and banking growth continuing; the cautionary case is that rising NPLs, high rates and macroeconomic uncertainty in Brazil could keep pressure on Earnings and sentiment.

What Investors Should Watch

Investors may focus on non-performing-loan trends and cost of risk in the credit portfolio, total payment volume and merchant growth, deposit growth, the direction of Brazil's benchmark interest rate, and continued share repurchases. Evidence that credit quality is stabilizing while payments and banking keep growing would do the most to set up a positive surprise.

StoneCo sits at the heart of Brazil's dynamic but volatile financial-services landscape, where it has built a strong franchise serving small and mid-sized merchants with an integrated suite of payments, banking and credit products. The expansion of the credit portfolio can be highly profitable, but credit is also where the current risk is concentrated, since rising non-performing loans and an elevated cost of risk reflect the strain that Brazil's high benchmark Interest Rate places on borrowers and on StoneCo's own funding costs. For investors, the surprise-to-the-upside case depends heavily on Brazil's rate environment easing and credit metrics stabilizing, which would allow the underlying growth of the payments and banking franchises to shine through.