Ads
In addition to the machine: Stone’s strategy to double profits in four years.
The Stone Company has recently announced its new strategy, which includes integrating with Linx in an effort to attract new customers through its software business. This move has surprised the market, with the company beating third-quarter expectations. The management of Stone believes that investors should keep their optimism as the company aims to achieve an annual profit by 2024, which will triple the bottom line of the balance sheet. This ambitious goal was announced during the company’s Investor Day in New York.
CEO Pedro Zinner explains that historically, the company has prioritized growth speed. However, now there are plenty of opportunities to focus on efficiency in order to improve profitability. The company has built a profitable cash flow business strategy, which aims to deliver substantial profits by 2027.
One of the key highlights of Stone’s strategy is the focus on micro, small, and medium-sized enterprises (MPMEs). This group has always been a priority for the company, but their importance has been further bolstered. Stone aims to grow faster than the industry average in this segment and handle payments worth more than $X by 2027.
Zinner emphasizes that the goal is not to alter the strategy but rather to make implementation clear and concentrate on the most lucrative opportunities. The main business focus will continue to be on acquiring new customers, but Stone also intends to go beyond card machines and integrate its financial services and software business.
The growth strategy will be driven by the synergy between the businesses. Stone plans to supply financial products to the existing customers of its software company, solidifying itself as a “one-stop-shop” solution for MPMEs in verticals such as grocery stores, restaurants, pharmacies, and petrol stations.
“We’re making it clear to the market which verticals have the greatest potential for value extraction through the combination of financial services and software,” says Zinner.
The integration strategy with Linx’s software business has been a key part of Stone’s plan. In October, Stone announced that it would be restructuring to include Linx into its core business. This move was a long-awaited demand from the market, which had been requesting clear signs of business combination since Linx’s acquisition in 2020.
Stone also sees financial services as a major revenue driver. The company’s financial services platform has expanded from payments to include banking and credit solutions. Stone’s chief strategist, Lia Matos, believes that the software business is a differentiator and presents the greatest potential for monetizing the customer base.
At the beginning of the year, Stone identified an opportunity to resume lending and bolster its banking vertical. Despite facing challenges in 2021 due to the wave of insolvencies, the company now sees room to cautiously resume operations. Stone has already restarted its lending activities this year, with $X million in available credit. The goal is to reach $X million next year and surpass $X billion in card transactions by the end of 2027.
Apart from credit, Stone also plans to expand other financial services. The company currently has $X billion in deposits, and it aspires to grow to $X billion next year and $X billion by 2027.
With its new strategy and focus on efficiency and growth, Stone aims to double its profits within four years. By integrating with Linx and expanding its financial services and software business, the company is positioning itself for success in the rapidly evolving market. Investors are advised to keep their optimism and watch as Stone works towards achieving its ambitious goals.
