StoneCo : ER4Q23_

4Q23 Earnings Release

March 18, 2024 investors.stone.co

StoneCo Reports Fourth Quarter and Fiscal Year 2023 Results

Strong quarter with Adjusted EBT reaching R$638 million, up 132% year over year, on accelerating MSMB TPV growth of 20%, resulting in Adjusted Net income of R$564 million, up 177% year over year

George Town, Grand Cayman, March 18, 2024 - StoneCo Ltd. (Nasdaq: STNE, B3: STOC31) ("Stone" or the "Company") today reports its financial results for its fourth quarter and fiscal year ended December 31, 2023.

"Dear Fellow Shareholders,

I hope this message finds you in high spirits. As we wrap up a successful year, I want to express my profound gratitude for your support and investment in Stone.

Reflecting on the past year, it is remarkable how well our company has performed. I am not only referring to our strong financial performance but also acknowledging the strategic milestones that have strengthened our position in the market and paved the way for future growth - as we detailed in our Investor Day.

Unlike previous letters, the primary objective of this, and subsequent ones, is to reflect on our strategic progress and the effectiveness of capital allocation throughout the year. My intention is to articulate our ambitions for the coming years. I believe that these letters play a crucial role in offering a qualitative narrative that complements the quantitative results and outlines our prospects. The statements, both in this letter and those we will provide in the future, arise from drivers often challenging to quantify - specifically, the fundamental values that guide our company.

This letter might also be longer than what you are used to, as it marks a special occasion. As I wrap up my first year as CEO, which followed a prior year as board member, I am keen to share the insights of this initial journey, delve into the financial results for 2023, outline our strategic vision for the upcoming years, and discuss the transition of our founder, Andre Street, from his role as chairman, as well as additional board changes. This transition is a significant moment for us, representing both a continuation of Andre's legacy and a step towards new leadership horizons.

Rights & Wrongs:

The Views from an Outsider

As you are aware, I became a part of StoneCo's Board of Directors approximately two years ago. This initial contact with the company offered me a unique chance to see our operations from a high-level perspective. Now, a year into my role as CEO, I have taken a deeper look at our company, better spotting our strengths and areas of improvement. This journey has been revealing, as it has provided valuable lessons and enhanced my perspective on the opportunities we face.

The Pleasant Surprises:

One of the most impressive aspects I have encountered is the sheer "brain power" within Stone, which is top- notch across all levels. The caliber of our team far exceeds the norm, with a level of insight and commitment that truly sets us apart. This high talent density is a testament to our ability to attract and retain exceptional talents, providing us with a significant edge in a competitive landscape.

Equally remarkable to me was to see firsthand our team's execution capacity. Our ability to quickly implement initiatives, always with an eye on the client's best interest, speaks to the strength of our client-centric culture and high level of organizational alignment. This rare agility was particularly evident in how we recovered from 2021, when the company faced a 'perfect storm' of challenges, including failures with the registry system, adverse

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macroeconomic conditions, and stresses to our credit portfolio, all while absorbing the significant acquisition of Linx. The team's ability to adapt quickly, sustain our growth and rebound our profitability in the face of adversity, was, in my perspective, nothing short of impressive.

On the strategic front, I was amazed by the strides the company has taken to diversify beyond payments, which has begun to show results. While this expansion may not yet be fully visible externally, the foundation we have built will allow our company to reap significant benefits from integrating payments, banking, credit, and software in the years ahead.

Areas for Enhancement:

Despite these evident strengths, I have also realized that several areas require attention and improvement. One prominent issue is that the ambition to chase multiple initiatives diluted our efforts and potentially our impact. You may have even noticed signs of this from an external perspective. While I didn't want to curtail our opportunities, I felt that it was crucial to instill a 'less is more' mentality throughout the organization.

Operational efficiency also emerged as an area for improvement. While we excel in certain areas, I became confident that we can still 'unlock' substantial operating leverage, pushing Stone to operate more efficiently and to become more profitable.

In response to these insights, we've initiated several strategic adjustments:

1. Organizational Structure Redesign: We have reorganized to deliver our solutions more effectively across different client segments, from Micro to Medium businesses, tailoring our go-to-market approach to meet their unique needs. Our new organizational structure aligns with each client segment, while it also strengthens key capabilities around engineering, product, marketing, and innovation, enhancing our ability to address client needs in a unique way.
2. Sharpen Strategic Focus: As the outcome of a thorough strategic revision and prioritization process, we
   have set three clear strategic priorities that will enable us to achieve our long-term goals: (i) win in the MSMB segment; (ii) drive engagement; (iii) scale through platforms. These priorities helped us to set key focus areas for the coming years, such as:
3. 1. Software Business Integration: By focusing on four key verticals that represent most of the financial services opportunity within our software installed base (Retail, Gas Stations, Food, and Drugstores), we are embedding financial services into our software and delivering attractive bundles to our clients, increasing our competitive edge and opening a significant growth avenue for the future.
   2. Leverage the power of the combination of Payments, Banking and Software: There is a huge opportunity in our installed client base to increase engagement with our solutions. As an example, today only a fraction of our client base can be considered "heavy users" of our solutions and there is a substantial potential to improve our unit economics as we continue to engage the base.
   3. Build Once, Use Many - The Creation of the Stone Platform: Our rapid growth initially focused on development speed, sometimes at the expense of consistency and reusability. This resulted in the existence of multiple data platforms. But over the last year and a half, we've made a big change. We've brought our technology teams together, streamlined how we work, and started to build a solid foundation that we all share: the Stone Platform. As we move forward, especially with new tech like artificial intelligence, we're setting ourselves up to generate new synergies and use our insights even more effectively to serve our clients.
4. Cost Management and Spending Controls: Recognizing the potential to unlock substantial operating leverage, we've embarked on initiatives aimed at enhancing profitability even further. Through sustainable cost optimization, we're setting the stage for more efficient, profitable operations. By implementing a

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shared-services center and zero-based budgeting, we are enhancing our financial discipline across the organization.

What We Are Building:

Building Our Financial Ecosystem like Lego Bricks

After a year in the role, I have also had the opportunity to appreciate what we are building. As we presented at our Investor Day, what began as a focused endeavor to serve SMBs has become a pursuit of an R$ 100bn opportunity, through the addition of new services and segments. This expansion wasn't a product of ambition alone but a series of strategic layers, each adding to our addressable market, much like the stacking of new Lego bricks. Our path wasn't just about growing; it was about understanding and solving the evolving needs of our clients.

As we stand today, we still have a small fraction of the R$ 100bn opportunity, so our journey is far from over. But with each new layer, we're not just expanding our reach; we're reinforcing our foundation, ensuring that as we grow, we remain steadfast in our commitment to service, innovation, and simplicity.

Why We Believe We Can Win

In a time when FinTechs could once thrive on user growth without worrying much about profits, due to low borrowing costs, things have changed. The focus on rapid expansion without solid results is shifting. With capital becoming more expensive, there's a push towards more sustainable business models. This brings up a common question from investors: "How does your company stand out in this competitive market?". Here are the three main ways we differentiate ourselves:

1. Tech-Enabled Distribution - Vast Reach, Precision Targeting: Our unique advantage stems from our extensive and tech-powereddistribution network. Unlike others, our approach combines a vast reach across Brazil- encompassing 99.7% of the Service GDP and extending into over 5,000 cities-withsophisticated technology that enhances our efficiency and effectiveness. Our technology equips sales agents with the tools to target the right clients, offering them a complete overview of the merchant's profile and the ability to propose the most suitable service bundles. This strategic use of technology ensures that we're not just widespread but also smart in our reach, significantly reducing our Client Acquisition Costs while maintaining high-qualityservice.
2. Superior Service: Our commitment to delivering unparalleled service is a cornerstone of our competitive edge. We set the industry standard, answering client calls in less than 5 seconds and providing the fastest delivery times through our optimized logistics. This level of service is especially critical in a sector where expectations often go unmet. For SMBs and micro-merchants alike, our ability to rapidly respond to and resolve their needs
   - not just quickly but efficiently - has solidified our position as the leader in customer satisfaction across Brazil. It's a reminder that exceptional service isn't just a value-add; it's essential.
3. Comprehensive Merchant Platform: Our third distinguishing factor is our all-encompassing merchant platform. Beyond merely processing payments, we offer a deep, data-driven understanding of our clients' needs, which not only addresses current demands but anticipates future ones, providing an unparalleled level of insight.

Priorities Going Forward

While the opportunity is huge, we will seize it through a targeted approach, ensuring we do not dilute our efforts. With this in mind, we have selected three strategic priorities to progress towards our long-term objectives:

1. Win in the MSMB Segment

Our vast distribution footprint will allow us to drive consistent, profitable growth, while we expand the ways in which we help our clients through our multiple solutions. Furthermore, we have an attractive financial services opportunity in our installed Software client base and the right assets and organizational alignment to capture that opportunity.

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Our unwavering commitment to providing the best service in the market will remain a strong focus and the biggest hurdle to our ability to expand our offerings and solutions. Sustaining our position as the "benchmark" in the industry will serve as a guide to our product development efforts, as we will launch new products and bundles making sure we can continue to delight our clients with the best service in an increasingly multi-product reality.

The combination of these elements will be the key driver of our ability to continue to win new clients and grow above the overall market, gaining market share within the MSMB segment.

2. Drive Engagement with Our Clients

Beyond winning new clients and growing faster than the market, we believe we will be able to drive engagement because as we evolve our product platforms and our ability to price better bundles to our clients, we expand the breadth of monetization levers. We have a huge opportunity to drive further engagement and monetization if we can scale working capital solutions in the appropriate way, for our clients and for our business. We can use Software as a differentiator to achieve higher monetization and better lifetime values.

3. Scale Through Platforms

Lastly, we will be able to increase returns in the future as we generate growth profitably. The intrinsic elements of our business model that will enable us to grow with minimal incremental investments are: (i) our foundational assets around distribution, logistics, client service, which are platforms for future growth, and (ii) our product and technology platforms that will enable us to deliver multiple value propositions through a single technology infrastructure.

A Recap of 2023

After reflecting on our achievements, strategic direction, and how we're setting ourselves up for future success, I also wanted to address our 2023 results. Last year was a milestone year for us, marking a complete rebound from the challenges faced in 2021. We closed the year with exceptional results, particularly in the fourth quarter, when we accomplished significant progress in our key strategic initiatives.

Our top priority, "Winning in MSMBs," posted remarkable growth. We achieved a notable increase in MSMB TPV both annually and in the fourth quarter, showing an acceleration from the previous period. Our banking services also recorded impressive growth, with deposits reaching R$ 6.1 billion by the end of December, a significant increase from 2022. This growth not only reflects higher engagement but also a better conversion of TPV into deposits.

In our second priority - "Driving Engagement", we observed monetization improving substantially throughout the year, with MSMB Take-Rates achieving 2.43% (up 22 bps y/y). In the 4Q we saw a slight decline of 6bps compared to the previous quarter, but that was already expected and purely a result of seasonality. More importantly, we continued to advance in our Credit Solution - reaching a working capital portfolio of R$ 309 million by the end of the year, with very encouraging results regarding the health of the portfolio. NPLs over 90d are still at 0.29%, and even our most mature cohorts are still pointing us toward losses under the 10% level.

The push to "Scale Through Platforms" yielded substantial operational leverage, boosting our EBT to R$ 1,954 million, a 233% increase over the previous year. This leap forward improved our EBT margin by more than 10 percentage points, and our adjusted net income surged to R$ 1,558 million, up 279% from the previous year. Our profitability also translated into cash generation, and we ended the year with an adjusted net cash position of R$ 5,053 million, even after significant investments in our credit portfolio and share buybacks.

On a separate note, our Software segment faced challenges in 2023, particularly in non-strategic verticals, where growth was slower. However, our efficiency initiatives started showing results, with EBITDA margins improving by

1.9 percentage points to 16.4%. The fourth quarter recorded a dip due to one-off restructuring costs, but these moves we made to generate savings for us in 2024. Additionally, our integration efforts in the four prioritized verticals have just started to pay dividends, with participation in TPV from these software clients surpassed R$ 20 billion in the year.

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In summary, 2023 was a year of significant achievements and strategic advancements for us and our 4Q results have positioned us favorably to continue to perform well in 2024 and make progress towards our 2027 goals.

Laying the Groundwork for Tomorrow: Creating a Portfolio of Bets

When companies chase quick wins under market pressure, they risk their future. Growth isn't just about speed; it's also about sustainability. Fast growth can be tempting, but it's not always right. At Stone, we're playing the long game. We focus on building a solid company, not on boosting our stock price.

At Stone's current scale, planting seeds that will grow into meaningful new businesses takes some discipline, a bit of patience, and a nurturing culture. Our established businesses are well-rooted young trees: they are growing, enjoy high returns on capital, and operate in growing market segments. These characteristics set a high bar for any new business we would start. Before we invest our shareholders' money in a new business line or initiative, we must convince ourselves that the new opportunity is sizable and can generate the returns on capital our investors expected when they invested in Stone.

In nearly every decision we make, there are factors we can control and predict - and others we can't. Whether we realize it or not, we often engage in what Annie Duke, a scholar at the University of Pennsylvania and retired professional poker champion, calls "thinking in bets"*. By embracing this mindset, we acknowledge uncertainty in our decision-making process, enabling us to better identify mistakes, recognize moments of luck, and become less susceptible to reactive emotions and destructive habits. Understanding this concept is crucial for comprehending how we allocate capital as we build our growth and new venture portfolio.

While it is still too early to delve into our portfolio of bets, we will certainly address this topic in subsequent letters.

Paving the Way for the Next Chapter: Succession of the Chairman and Founder

To wrap it up, today we also announced a pivotal transition in our leadership. André Street, our esteemed founder and Chairman, has chosen to conclude his tenure on the Board, stepping aside from reelection at the forthcoming Annual General Meeting (AGM) scheduled for April 2024. Similarly, Vice-Chairman Conrado Engel and board member Patricia Verderesi will not seek reelection, honoring their two-year commitment.

Despite stepping down, André remains deeply connected to the company as its Reference Shareholder, bolstered by special protections under our Shareholders' Agreement and Articles of Association. This includes the privilege to choose the Chairman of the Board. The transition marks the culmination of a deliberate, multi-year effort led by André to professionalize management and enhance governance standards-a mission that was crystallized by our strong 2023 results and the robust, strategically aligned team now at the helm.

The succession process for the Chairman position has been carefully planned by the People Committee of the Board. The candidates recommended for the upcoming AGM will be Mauricio Luchetti as Chairman and Gilberto Caldart as Vice-Charman. Additionally, a new member will be nominated, José Alexandre Scheinkman. We have shared more details about the succession in a separate 6-K filing.

We are committed to keeping alive the entrepreneurial spirit created by our founders. Our goal is to maintain high standards of governance as our company grows and continues to be a leader in entrepreneurship and client- centricity. With a committed shareholder like André, a great team, and a strong business, we are well set to continue to advance our mission forward.

In conclusion, as we close 2023 and kick off 2024, I am more enthusiastic than ever about our company. We thank you, our shareholders, for your support, your encouragement, and for joining us on this journey.

Pedro Zinner, CEO"

* " Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts", Annie Duke

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Operating and Financial Highlights for 4Q23 and 2023

Note about our non-IFRSAdjusted P&L metrics: as anticipated in our 4Q22 Earnings announcement, from 1Q23 onwards we no longer adjust the expenses related to share-based compensation, which may affect the comparability of our current Adjusted results to our Adjusted numbers prior to 1Q23. To allow for better understanding of our business performance trends, the tables in this Earnings Release will make reference to our Adjusted P&L metrics including share-basedcompensation expenses (i.e. not adjusting those expenses out), both in 1Q23 and in prior periods for comparability purposes.

MAIN CONSOLIDATED FINANCIAL METRICS

Table 1: Main Consolidated Financial Metrics

Main Consolidated Financial Metrics (R$mn)	4Q23	3Q23	Δ q/q %	4Q22	Δ y/y %	2023	2022	Δ y/y %
Total Revenue and Income	3,248.7	3,139.9	3.5%	2,706.1	20.1%	12,055.0	9,588.9	25.7%
Adjusted EBITDA	1,618.3	1,590.4	1.8%	1,231.1	31.5%	5,958.8	4,170.4	42.9%
Adjusted EBITDA margin (%)	49.8%	50.7%	(0.8 p.p.)	45.5%	4.3 p.p.	49.4%	43.5%	5.9 p.p.
Adjusted EBT	638.2	544.8	17.2%	275.6	131.6%	1,954.0	586.6	233.1%
Adjusted EBT margin (%)	19.6%	17.3%	2.3 p.p.	10.2%	9.5 p.p.	16.2%	6.1%	10.1 p.p.
Adjusted Net Income	563.8	435.1	29.6%	203.8	176.6%	1,557.5	410.5	279.4%
Adjusted Net income margin (%)	17.4%	13.9%	3.5 p.p.	7.5%	9.8 p.p.	12.9%	4.3%	8.6 p.p.
Adjusted Net Cash	5,053.3	4,857.5	4.0%	3,489.6	44.8%		5,053.3	3,489.6	44.8%

• Total Revenue and Income reached R$3,248.7 million, growing 20.1% year over year. This was primarily driven by a 24.4% increase in financial services platform revenues, as a result of active client base growth and higher monetization from clients, mainly in our MSMB segment.
• Adjusted EBITDA in 4Q23 was R$1,618.3 million, up 31.5% year over year and 1.8% quarter over quarter. Adjusted EBITDA Margin slightly decreased sequentially from 50.7% to 49.8%, mainly due to an increase in other expenses, given higher labor contingencies, and administrative expenses excluding D&A, seasonally higher in the last quarter of the year.
• Adjusted EBT in 4Q23 was R$638.2 million, up 131.6% year over year and 17.2% quarter over quarter, with adjusted EBT margin increasing 2.3 percentage points sequentially to 19.6%. The sequential margin increase is primarily attributed to consolidated revenue growth, as well as lower financial expenses. These effects were partially offset by higher other operating expenses and administrative expenses.
• Adjusted Net Income in 4Q23 was R$563.8 million, 176.6% higher year over year, with adjusted net margin of 17.4%. This compares with R$435.1 million and a margin of 13.9% in 3Q23. The quarter over quarter margin improvement was driven by the same factors that impacted Adjusted EBT margin combined with a lower effective tax rate.
• Adjusted Net Cash position was R$5,053.3 million in 4Q23, increasing 44.8% year over year or 4.0% quarter over quarter. The sequential increase of R$195.8 million was mainly driven by (i) R$1,021.6 million of cash net income (net income plus non-cashincome and expenses as reported in our statement of cash flows), (ii) plus a R$85.7 million inflow from recoverable taxes and taxes payable. These effects were partially offset by (iii) R$25.4 million from prepaid expenses; (iv) R$285.3 million of capex; (v) R$292.7 million from buyback of shares, and (vi) R$312.8 million from loans disbursements.

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OUTLOOK

Our 2023 trajectory reinforced our commitment to the long-term targets. We continue to believe that StoneCo is uniquely positioned to drive strong return to shareholders. With that in mind, we share our guidance for 2024 and 2027, which we provided in our Investor Day held on November 15th, 2023.

SEGMENT REPORTING

Below, we provide our main financial metrics broken down into our two reportable segments and non-allocated activities.

Table 2: Financial metrics by segment

Segment Reporting (R$mn Adjusted)	4Q23	3Q23	Δ q/q %	4Q22	Δ y/y %	2023	2022	Δ y/y %
Total Revenue and Income	3,248.7	3,139.9	3.5%	2,706.1	20.1%	12,055.0	9,588.9	25.7%
Financial Services	2,870.6	2,737.7	4.9%	2,308.2	24.4%	10,495.4	8,083.5	29.8%
Software	363.2	387.9	(6.4%)	376.3	(3.5%)	1,492.2	1,419.8	5.1%
Non-Allocated	14.9	14.3	4.2%	21.6	(30.9%)	67.4	85.6	(21.2%)
Adjusted EBITDA	1,618.3	1,590.4	1.8%	1,231.1	31.5%	5,958.8	4,170.4	42.9%
Financial Services	1,557.2	1,506.1	3.4%	1,172.4	32.8%	5,699.8	3,976.4	43.3%
Software	58.7	79.4	(26.1%)	59.6	(1.6%)	244.4	206.0	18.7%
Non-Allocated	2.4	4.9	(50.0%)	(0.9)	n.m	14.6	(12.0)	n.m
Adjusted EBT	638.2	544.8	17.2%	275.6	131.6%	1,954.0	586.6	233.1%
Financial Services	603.8	485.5	24.4%	246.1	145.4%	1,793.4	486.6	268.5%
Software	33.0	55.5	(40.5%)	30.5	8.2%	150.8	114.6	31.6%
Non-Allocated	1.4	3.8	(62.9%)	(1.0)	n.m	9.8	(14.6)	n.m

As part of our plan on our key strategic priorities, we sold our shares in Everydata Group Ltd. And its Credit Info Caribbean subsidiaries on December 29, 2023. Additionally, on February 7, 2024, we sold our stake in Pinpag, an electronic fund transfers company. Both of these companies were part of our Non-Allocated segment, which should be impacted in the coming quarters by the divestments.

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FINANCIAL SERVICES SEGMENT PERFORMANCE HIGHLIGHTS

Table 3: Financial Services Main Operating and Financial Metrics123456789

Main Financial Services Metrics				4Q23	3Q23	Δ q/q %	4Q22	Δ y/y %	#	2023	2022	Δ y/y %
Financial Metrics (R$mn)
Total Revenue and Income					2,870.6	2,737.7	4.9%	2,308.2	24.4%		10,495.4	8,083.5	29.8%
Adjusted EBITDA								1,557.2	1,506.1	3.4%	1,172.4	32.8%		5,699.8	3,976.4	43.3%
Adjusted EBT												603.8	485.5	24.4%	246.1	145.4%		1,793.4	486.6	268.5%
Adjusted EBT margin (%)					21.0%	17.7%	3.3 p.p.	10.7%	10.4 p.p.		17.1%	6.0%	11.1 p.p.
TPV (R$bn)												113.5	103.9	9.2%	100.1	13.3%		408.3	367.4	11.2%
MSMB												98.5	89.6	10.0%	81.9	20.2%		350.3	289.9	20.8%
Key Accounts											15.0	14.4	4.3%	18.2	(17.6%)		58.1	77.5	(25.1%)
MSMB Pix QR code	1							7.6	5.5	37.5%	3.1	146.3%		20.9	7.1	195.6%
Monthly Average TPV MSMB ('000)		9.2	9.0	2.1%	10.9	(15.1%)		9.3	11.1	(16.6%)
Active Payments Client Base ('000)	2		3,522.1	3,330.9	5.7%	2,584.0	36.3%		3,522.1	2,584.0	36.3%
2												3,471.3	3,279.1	5.9%	2,526.2	37.4%		3,471.3	2,526.2	37.4%
MSMB
Key Accounts											58.3	59.3	(1.6%)	65.0	(10.2%)		58.3	65.0	(10.2%)
Net Adds ('000)	2								191.2	316.2	(39.5%)	211.9	(9.8%)		938.1	817.9	14.7%
2												192.2	317.2	(39.4%)	211.8	(9.2%)		945.2	822.7	14.9%
MSMB
Key Accounts											(1.0)	(3.3)	(70.6%)	0.6	n.m		(6.6)	(2.4)	177.5%
Take Rate
MSMB												2.43%	2.49%	(0.06 p.p.)	2.21%	0.22 p.p.		2.45%	2.15%	0.30 p.p.
Key Accounts											1.28%	1.13%	0.16 p.p.	1.17%	0.11 p.p.		1.18%	0.95%	0.23 p.p.
Banking
MSMB Active Banking Client Base ('000)	3	2,096.5	1,931.6	8.5%	692.8	202.6%		2,096.5	692.8	202.6%
Client Deposits (R$mn)	4					6,119.5	4,450.8	37.5%	4,023.7	52.1%		6,119.5	4,023.7	52.1%
MSMB Banking ARPAC	5					28.4	25.5	11.4%	44.7	(36.5%)		30.6	40.5	(24.5%)
Credit
Credit Clients	6										10,752	3,747	186.9%	n.a.	n.a.		10,752	n.a.	n.a.
Working Capital Portfolio (R$mn)	7			309.4	113.5	172.7%	n.a.	n.a.		309.4	n.a.	n.a.
Disbursements - EOP (R$mn)				353.6	121.9	190.2%	n.a.	n.a.		353.6	n.a.	n.a.
Disbursements - Quarter (R$mn)				231.7	101.7	127.8%	n.a.	n.a.		n.a	n.a.	n.a.
Loan loss provision/Portfolio	8				(20.1%)	(20.0%)	(0.05 p.p.)	n.a.	n.a.		(20.1%)	n.a.	n.a.
NPL 15-90 days	9								1.96%	0.40%	1.56 p.p.	n.a.	n.a.		1.96%	n.a.	n.a.
NPL > 90 days	9									0.29%	0.03%	0.27 p.p.	n.a.	n.a.		0.29%	n.a.	n.a.

• Financial Services segment Revenue reached R$2,870.6 million in 4Q23, 24.4% higher year over year. Segment growth was driven by the strong performance in our MSMB client segment, attributed mainly to (i) consistently strong TPV growth, increasing 20.2% year over year (24.8% if PIX QR code volumes were included) and more than twice the industry pace, as announced by ABECS, and (ii) a higher take rate of 2.43% in the quarter, up 22 basis points year over year.
• Financial Services segment Adjusted EBT was R$603.8 million in 4Q23, up 145.4% year over year and 24.4% quarter over quarter. Adjusted EBT margin reached 21.0%, an improvement of 3.3 percentage points from 17.7% in 3Q23. This sequential expansion was driven by an increase in revenues from the segment, combined with lower financial expenses. These effects were partially

1. Considers transactions from dynamic POS QR Code and static QR Code from Stone and Ton merchants. Both types of PIX can be monetized.
2. From 3Q22 onwards, does not include clients that use only TapTon.
3. Clients who have transacted at least R$1 in the past 30 days. Except for Client Deposits, banking metrics do not include clients of Pagar.me and Ton clients who do not have the full banking solution "Super Conta Ton".
4. Deposits from banking customers, including MSMB and Key Account clients.
5. ARPAC means Average Revenue Per Active Client. Banking ARPAC considers banking revenues, such as card interchange fees, floating, insurance and transactional fees, as well as PIX QR Code.
6. Credit clients consider merchants who have a loan contract with Stone until December 31st, 2023.
7. The working capital portfolio is gross of provisions for losses, but net of amortizations.
8. Ratio of accumulated loan loss provision expenses over the working capital portfolio in the period.
9. NPL (Non-Performing Loans) is the total outstanding of the contract whenever the clients default on an installment. More information on the total overdue by aging considering only the individual installments can be found in Note 6.1.1 of the Financial Statements.

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offset by an increase in other operating expenses and administrative expenses.

1. • Consolidated TPV grew 13.3% year over year to R$113.5 billion in 4Q23, driven by 20.2% growth in the MSMB segment, partially offset by a 17.6% decrease in Key Accounts' TPV. In 2023, total TPV reached R$408.3 billion, representing a 11.2% year over year growth, compared with an industry growth of 10.1% in the same period.
   • Total Payments Active Client base reached 3.5 million10 representing a total quarterly net addition of 191,200 active clients.
2. MSMB (Micro and SMB clients)
   o MSMB Active Payment Clients reached 3,471,30011, representing a 37.4% year over year growth and a net addition of 192,200 in 4Q23. The quarter over quarter decrease in net adds is mainly explained by fourth-quarterseasonality. Despite this effect, our continued investments in marketing supported the increase in gross adds, with positive trends in all tiers of clients.
   o MSMB TPV was R$98.5 billion, up 20.2% year over year and more than twice compared to the industry growth according to ABECS. This was mainly driven by the continuous expansion in our MSMB active payment client base.
   o MSMB TPV from PIX QR Code was R$7.6 billion in the quarter, increasing 37.5% compared with 3Q23, mainly due to an increase of use in our PIX POS solution. Including this volume in the MSMB TPV, the total year over year growth would have been 24.8%. PIX QR Code MSMB TPV includes transactions from dynamic POS QR Code and static QR Code from Stone and Ton merchants, with both types being possible to monetize. This volume is not included in the take rate calculation.
   o MSMB Average Monthly TPV per client decreased 15.1% year over year. This decrease is in line with the previous quarters and is a result of the Ton representativeness in the client mix, which is mainly used by micro-merchantsand have lower average TPV compared to our SMB merchants, which predominantly use our Stone and Pagar.me solutions.
   o MSMB Take Rate was 2.43%, 6bps lower quarter over quarter and up 22bps on a year over year basis. The quarter over quarter variation is mainly attributed to (i) a seasonal increase in debit over credit volumes, and (ii) a lower duration of prepayment.
   o Banking solutions12

1. Banking client base in 4Q23 reached 2.1 million active clients, increasing 8.5% quarter over quarter. This result was driven by (i) a larger number of Ton clients with our full banking solution, and (ii) the continued activation of new banking accounts within our Stone payments client base. The decrease seen in growth levels compared to previous quarters is mainly due to the end of the migration of Ton clients to our full banking solution.

1. Total deposits were R$6,119.5 million in the quarter, increasing 52.1% year over year and 37.5% quarter over quarter. This strong increase was mainly explained by positive impacts from our combined offer of banking and payments solutions driving higher levels of cash-inand by the seasonal and calendar effects at the end of the quarter.

1. Banking ARPAC (average revenue per active client) was R$28.4 per client per month, decreasing 36.5% year over year. The quarter over quarter evolution of 11.4% was mainly attributed to

1. From 3Q22 onwards, does not include clients that use only TapTon.
2. From 3Q22 onwards, does not include clients that use only TapTon.
3. Except for Total Accounts Balance, banking metrics do not include clients of Pagar.me and those Ton clients who do not have the full banking solution "Super Conta Ton".

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