Unleashing Success: Stone’s Growth Blueprint with Integrated Software and Financial Services

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The Stone Company is embracing a new strategy to expand its profits and attract more customers. As part of this strategy, the company has announced its integration with Linx, a move that aims to leverage its software business to tap into new markets. The company’s recent surprise performance in the third quarter has buoyed optimism among investors.

The company has set a lofty target of achieving an annual profit of R$1.9 billion by 2024. By 2027, it aims to triple its bottom line and deliver a cumulative sum of up to R$4.3 billion. This ambitious goal was unveiled at the company’s Investor Day in New York.

CEO Pedro Zinner explains that historically, the company has prioritized growth speed. However, with the current strategy, there is a shift towards improving profitability by utilizing efficiency. The company believes that there are numerous opportunities to achieve this objective.

With the integration of Linx’s software business, Stone is emphasizing its focus on micro, small, and medium-sized enterprises (MPMEs). This sector has always been a priority for the company, and its importance has only been further reinforced. Stone aims to outpace the industry average by growing faster, with a target take rate of 2.7 percent. By 2027, it plans to handle payments worth more than R$600 billion.

Zinner, in an interview with EXAME Invest, emphasizes the company’s commitment to not altering its strategy but rather making implementation clear. The main focus of the business will continue to be acquiring customers, but Stone also aims to expand its offerings beyond payment devices. This includes integrating financial services and software to provide a comprehensive solution for its MPME clientele.

The integration strategy with Linx’s software business is viewed as a significant step for Stone. The company announced in October that it would restructure its core business to include Linx. This move was prompted by market demands for clearer signs of business combination following the acquisition of Linx in 2020.

Aside from software, financial services are also expected to be a major driver of revenue for Stone. The company’s financial services platform, which initially focused on payments, has now expanded to include banking and credit solutions. This expansion phase presents a tremendous opportunity for Stone to monetize its customer base by leveraging the software as a differentiator.

In the beginning of the year, Stone identified an opportunity to resume lending, particularly in the banking vertical. Although the company faced challenges in 2021 due to insolvency issues, it is now cautiously resuming operations. Stone has allocated R$113 million in available credit this year, and its goal is to increase it to R$800 million next year. By the end of 2027, Stone aims to have over R$5.5 billion in card transactions.

Apart from credit, Stone also expects other financial services to expand. The company currently has deposits amounting to R$4.5 billion and aims to grow it to R$7 billion next year. By 2027, the target is to reach R$14 billion in deposits.

Overall, Stone is taking a comprehensive approach to transform its business and significantly increase its profitability. By leveraging the integration with Linx’s software business and expanding its financial services offerings, Stone aims to become a one-stop-shop solution for MPMEs. With clear goals set for the coming years, the company is well-positioned to achieve significant growth and deliver substantial returns for its investors.

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