Good evening, everyone. Thank you for standing by. Welcome to StoneCo's First Quarter 2025 Earnings Conference Call. By now, everyone should have access to our earnings release. The company also posted a presentation to go along with its call. All material can be found online at investors.stone.co. Throughout this conference call, the company will present certain non-IFRS financial information, including adjusted net income, adjusted gross profit, adjusted net cash, adjusted basic EPS, and ROE. These are important financial measures for the company, but are not financial measures as defined by IFRS. Reconciliations of the company non-IFRS financial information to the IFRS financial information appears in today's press release. Finally, before we begin our formal remarks, I would like to remind everyone that today's discussion may include forward-looking statements. These forward-looking statements are not guarantees of future performance and, therefore, you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from the company's expectations. Please refer to the forward-looking statements disclosure in the company's earnings press release. In addition, many of the risks regarding the business are disclosed in the company's Form 20-F filed with the Securities and Exchange Commission, which is available at www.sec.gov. In hindsight, I would like to highlight that the company is restricting the number of questions to two per analyst. Joining the call today is Stone's CEO, Pedro Zinner; the CFO and IRO, Mateus Scherer; the Strategy and Marketing Officer, Lia Matos; and the Head of IR, Roberta Noronha. I would now like to turn the conference over to your host, Pedro Zinner. Please proceed.

Thank you, operator, and good evening, everyone. I'd like to begin by reaffirming our annual goals and expressing how pleased I am with our first quarter performance. It was another successful chapter in our journey, marked by disciplined execution and continued progress toward our long-term objectives. This quarter, we focused on profitability, executing a new cycle of price adjustments across our client base in response to the yield curve increase observed in the second half of last year. At the same time, we continued to develop solutions and features that truly make a difference in our clients' lives. I believe our results reflect the strength of our client-centric approach, disciplined execution, and a rational competitive environment. When we take a step back and look at our performance in the context of our 2025 guidance, it becomes clear that we are on the right path. In the first quarter of 2025, we grew gross profits by 19% year-over-year, driven by effective repricing execution and a reduction in our average funding spreads. This result outpaces the 14% annual gross profit growth outlined in our guidance. On the EPS front, we accelerated year-over-year growth to 36%, significantly above the 18% growth implied in our full-year outlook. This acceleration was primarily driven by strong adjusted gross profit growth, improved efficiency in administrative expenses, and a more balanced distribution of marketing spends throughout the year. In addition, we repurchased R$843 million or 15.1 million shares during the quarter, including 5.7 million shares repurchased in March, which were not included in the share count used in our guidance. Over the past 12 months, our distribution yield reached 12%, underscoring our strong conviction in our strategy, our business, and our ability to execute. As a reminder, in our last earnings call, we laid out a disciplined capital allocation strategy based on three restrictive pillars, above which we would return excess capital to shareholders. With the close of 2024, we reached R$3 billion in excess capital. Of that, approximately R$1 billion has already been returned through share repurchases year-to-date. Today, we are announcing a new share repurchase program of up to R$2 billion, replacing the previous program. This move reaffirms our commitment to the framework and distribution policy we shared with you just a few months ago. With that, I believe we are well-positioned to continue executing our strategy, achieving our goals, and generating long-term value for our shareholders. Now, I'll turn it over to Lia, who will take you through our first quarter results in more detail. Lia?

Thank you, Pedro, and good evening, everyone. Diving into our first quarter '25 results, we're very excited with the milestones we have achieved. Such results reflect our execution in a less favorable macroeconomic environment with interest rates trending higher and we believe we have been successfully navigating this challenging scenario. On Slide 4, we highlight our main financial metrics on a consolidated basis. As you can see, we have shown good traction in revenues, gross profit, and bottom line. Our revenues grew 19% year-over-year and 2% quarter-over-quarter, despite seasonality in 4Q, resulting in revenues usually reducing sequentially in first quarters. This trend shows that we are on the right path. Our repricing initiatives have started to yield positive results despite the fact that it impacted in the quarter only partially. Adjusted gross profit also grew 19% year-over-year and decreased 3% on a sequential basis, mostly on lower quarter-over-quarter TPV, timing mismatch between the increase in prices and cost of funding, and on higher cost of services. Finally, our adjusted net income grew 23% year-over-year and decreased 17% quarter-over-quarter. This sequential reduction was mainly a result of our lower adjusted gross profit combined with higher investments in our distribution channels and higher effective tax rates. Looking on a per-share basis, adjusted basic EPS was R$1.97 per share, 36% higher year-over-year and 13% lower sequentially. The better per share performance compared to nominal net income is a result of our commitment to returning excess capital to our shareholders, with R$2.4 billion returned in share buybacks over the last 12 months and R$843 million in this quarter. On Slide 5, we dive deeper into our Financial Services segment performance. Starting with our payments business for MSMBs. Our MSMB payments active client base increased 17% year-over-year and 4% quarter-over-quarter to 4.3 million clients. We also continue to see increased engagement of this client base with our different financial services solutions, with our heavy user metric reaching 38% in the first quarter compared to 37% in the previous quarter. This trend is a natural result of our execution with regards to bundling financial services solutions and offering new features that address our clients' specific needs. MSMB TPV grew 17% year-over-year, even with the repricing efforts throughout the quarter. Going forward, we expect some deceleration in volume growth as a natural outcome of changes in our repricing policy, which should impact volumes throughout the remainder of the year as we prioritize profitability over pure volume growth in this scenario. Breaking down by types of transactions, MSMB card transaction volumes grew 10%, while MSMB PIX volumes grew 95% over the same period as PIX continues to cannibalize debit volumes. We believe this shift to be accretive to our results as we monetize PIX in line with debit and we see increased flow generating higher deposits with the usage of PIX. Moving on to Slide 6, we dig deeper into our banking performance. On the left side of the slide, we show the retail deposits evolution and breakdown. Our total client deposits reached R$8.3 billion, 38% higher year-over-year and 5% down sequentially due to seasonality. Deposits continued to outpace MSMB TPV growth, reaching 6.9% of MSMB TPV in the first quarter. As payments and banking bundles already have a high penetration within our base, the focus shifts increasingly towards driving further engagement with our solutions, where we expect to see steady evolution going forward. I would also like to recall that in our last earnings report, we have highlighted the changes in the mix of our time deposits going forward, aligned with what we call our cash sweep strategy. As we noted, we expect to convert a significant portion of our retail deposits into on-platform time deposits by issuing certificates of deposits. This will allow us to utilize such amounts to fund our operations and thus reduce our funding costs in line with a reduction also in our floating revenues. Such strategy is accretive to our bottom-line and also optimizes our capital structure. In line with this strategy, we have already started to ramp up time deposits. And by the end of the first quarter, R$6.3 billion of our total R$8.3 billion in retail deposits were already accounted as time deposits. The majority of such time deposits are a result of the cash sweep strategy and the remaining is related to investment product offerings to our clients. We expect this movement to finalize in the coming months, contributing to the diversification of our funding sources. Moving on to Slide 7, we give some color on our credit product evolution. Our total credit portfolio keeps growing consistently, reaching R$1.4 billion by the end of the quarter. Out of the total, R$1.3 billion relates to our merchant solutions, mainly comprised of working capital offerings to our SMB clients, and R$161 million amounts to credit card offerings with a special focus on micro-merchants. This steady portfolio growth continues to be supported by the good quality of our cohorts with 15 days to 90 days NPLs at 2.61% and NPLs over 90 days of 4.57%, increasing as a natural outcome of our portfolio maturation process. In terms of provisions, we have stabilized at a 12% provision level relative to our portfolio as we outlined in our last earnings call. And as a result, we will now transition to a cost of risk view, which was 10% in the quarter. Finally, our coverage ratio was 256% in the period, converging to more meaningful levels versus the previous quarters. To wrap up, on Slides 8 and 9, we bring our segmented view between Financial Services and Software. Our Financial Services segment revenues grew 20%, accelerating from 11% in the fourth quarter of '24 as a direct effect of our repricing initiatives throughout the quarter, which led to a sequential increase in revenues despite strong seasonal effects. Our adjusted EBT for the segment grew 21% year-over-year, reaching R$637 million and a flat margin despite macro headwinds. The improved year-over-year results combined with the repurchase of R$2.4 billion in shares in the last 12 months also led to an enhanced ROE of 27% for Financial Services in the first quarter of '25 compared with 23% in the same quarter of last year. Lastly, on the Software segment, we saw revenues growing 11% year-over-year, mainly driven by higher software recurring revenues, led by an increase in our Software active client base, combined with a higher average ticket. Stronger revenues combined with gains in costs and expenses led to Software adjusted EBITDA growing 12% year-over-year and posting a slight EBITDA margin expansion compared to the first quarter of '24. We're also starting to share our Software CapEx, which has shown improvement compared to Software adjusted EBITDA having reduced from 71% of EBITDA in the first quarter of '24 to 51% this quarter, contributing to stronger cash conversion in our Software business. To sum it up, this quarter's results present one more step towards achieving our short- and long-term targets. We believe we're on the right track to continue to help our clients by providing superior service and solutions and further generate value to our shareholders. Now, I want to pass it over to Mateus to discuss in more detail our overall financial performance. Mateus?

Thank you, Lia, and good evening, everyone. On Slide 10, we detail the evolution of our consolidated P&L on an adjusted basis. As Lia mentioned, total revenue grew 19% year-over-year and 2% sequentially. This quarter, I'd like to reemphasize a notable shift within our revenue composition. Beginning in late 2024, we've optimized our bundled offerings, significantly shifting revenue from transactional revenues to financial income. Consequently, financial income has increased notably, while transactional revenue has decreased on both quarterly and yearly comparisons. As we've consistently highlighted, that's another reason why it's important to track gross profit rather than individual revenue lines for a comprehensive understanding of our business. Now, moving to our costs and expenses lines. Cost of services increased 15% year-over-year, translating to a decrease of 90 basis points as a percentage of revenues. This was driven primarily by lower provision for loan losses, reflecting reduced provisioning requirements as we aligned working capital provisions more closely with our expected credit loss models and efficiency gains in customer service. Administrative expenses increased 5% year-over-year, resulting in a reduction of 90 basis points as a percentage of revenues as a result of continued cost discipline within G&A expenses. Selling expenses increased 12% year-over-year and down 100 basis points as a percentage of revenues. This decrease was primarily due to a more balanced distribution of marketing spend throughout the year. Financial expenses increased 23% year-over-year, representing a 90 basis point rise as a percentage of revenues. This increase was primarily driven by the higher average CDI during the periods. On the other hand, our cash sweep strategy allowed us to begin using client deposits as an additional funding source, which helped partially offset this impact by contributing positively to our funding costs. Our other expenses line increased by 109% year-over-year or 140 basis points, primarily driven by a positive non-recurring share-based expense reversal recorded in the first quarter of '24. Our effective tax rate was 19.7% in the quarter, down from 20.6% in first quarter '24 and in line with the level provided in our guidance. The year-over-year decrease was driven primarily by higher benefits from Lei do Bem combined with unutilized tax loss carryforwards generated in the sale of PinPag in first quarter '24, which did not happen again this quarter. Turning now to Slide 11. Our adjusted net cash position was R$3.8 billion at the quarter-end, representing a sequential decrease of R$0.9 billion. This decrease mainly reflects ongoing share repurchase totaling R$843 million in the quarter, in addition to investments to grow our credit book. Before we move on to questions, I'd like to thank everyone for your continued support. We remain fully committed to executing our strategy and creating sustainable long-term value for our clients, team and shareholders. With that said, we're now ready to open the call up to questions.

Okay, at this time, we are going to open it up for questions and answers. Our first question comes from Tito Labarta with Goldman Sachs.

Hi. Good evening, Pedro, Lia, Mateus. Thank you for the call and taking my question. A couple of questions. One, just on the outlook for TPV growth, right, because you're seeing the card TPV growth growing high-single-digits, low-double-digits, if you strip out the key accounts. How do you think about that growth? And then, also the PIX TPV growth, right, still strong year-over-year, kind of stable-ish quarter-over-quarter. I know you have the seasonality, but just to see how you think about the outlook for TPV growth, both within the MSMB and key accounts and within without PIX. And then, my second question, we saw the announcement from Totvs that now you guys are in negotiation for Linx. Just any color you can provide about that in terms of timing? I'm sure you can't discuss valuation at this point, but yeah, just any color you can provide there? And if you were to sell Linx, what would you potentially do with the proceeds of that? Thank you.

Hi, Tito. Lia here. Thank you for your questions. I'm going to take the TPV question and then pass it over to Pedro. So, regarding TPV trends, talking first about MSMB TPV, there are three key points to highlight. First is that our long-term guidance already implies some deceleration on TPV growth. So, the guidance that we provided for 2027 on TPV last quarter implies a 14% CAGR. So, this growth performance that we see is in line with this trend that we have already talked about. The second fact is that, naturally, in response to higher interest rates, as Mateus mentioned, we have implemented a broader repricing this quarter across our client base. These repricing efforts, they have performed very well, better than we expected, but some level of churn is always inevitable. So, this will modestly impact TPV growth in the short term. Third, obviously, macroeconomic environment does remain challenging. So, it's still a little bit early to say the full extent of its impact in the year. So, the message regarding the year is that TPV growth will decelerate somewhat. But overall, general trend regarding TPV is very much in line with our long-term guidance. Regarding PIX, we continue to see PIX strongly cannibalizing debit volumes. This is also what we see on the industry. So, when we look at ABEX industry data, for example, it does point out to very different behavior in terms of growth when we talk about credit card volumes versus debit volumes. And that is consistent also with what we observe in our base, right? So, PIX TPV cannibalizing on debit volumes, which is why we see the stronger pace of growth for PIX TPV versus card TPV. Regarding key accounts, I think nothing really different to say about key account TPV trends other than what we've already said. It's not the focus of our strategy. So, the majority of our investments, both in product roadmap and in go-to-markets are focused on MSMB clients. That said, our platform does address needs of some large enterprise clients and we do serve those clients on an opportunistic basis. But those are not the focus of our strategy. And because, normally, these clients can shift very large volumes very quickly, that tends to be a more volatile TPV behavior. So, you can see kind of strong shifts quarter-on-quarter. Those shifts have little impact on gross profit, but they do impact overall TPV. So, I think those are the general trends in TPV that we can highlight. And I'll pass it over to Pedro to talk about transaction.

Sure. Thank you, Lia. Thank you, Tito. Well, I think, as you all know -- as you noted, we have entered with -- into an exclusivity agreement with Totvs to negotiate the sale of the asset. I think, at this stage, I think it's really hard to provide any additional details regarding the valuation, as you already highlighted, or the duration of the exclusivity period. I think what we can say is that negotiations are progressing positively. However, given the complexity involved in the transaction of such a magnitude, I think there are a lot of factors that still need to be negotiated and agreed upon. And therefore, I think it's still challenging to specify an exact timeline for reaching a final agreement, but be certain that we'll keep the market informed as the discussions move ahead. On the allocation side, I think it's hard to talk about the future, given the uncertainty in terms of the closing of the transaction. What I can say is, if we were to make the decision today, I think we would do exactly what we're doing in terms of share buybacks. Because, when we assess the long-term implied returns of repurchasing shares, at current levels, we believe that buybacks represent a very attractive use of capital and seem to be value-accretive in terms of decisions for shareholders. So, that's the position as of today. Okay. Thank you.

Okay. No, perfect. Thank you, Pedro. That's a helpful color on that. Maybe if I can, just one quick follow-up on the TPV with Lia. Just on the cannibalization of debit, do you see a lot more room for cannibalization there? Any way to quantify that? And have you seen any cannibalization of credit, particularly with the PIX financing at all? So, has it impacted credit at all?

Hi, Tito. So, I think the answer to the first part of your question is yes. I think we can continue to expect debit volumes to be cannibalized by PIX. When you look at ABEX industry data versus Central Bank data, it also points to that direction because debit card TPV in the industry is sort of flattish, right? It was flattish throughout last year and it had actually a slight decrease in the first quarter. And when you look at PIX growth data, it's a very different trend. It's a strong growth. So, I do believe that this trend will continue. But also let's not forget that PIX cannibalizes on debit volume, but it also cannibalizes on cash. So, in general, it's accretive for us because PIX volumes become more deposits in the banking ecosystem and we continue to monetize on PIX. So, I think that's the first part of the answer. The second part is, no, we do not see any cannibalization on credit volumes and neither the industry trends are suggestive of that either, right? When you look at ABEX data for credit card TPV growth, it's 13.5% in the first quarter, which is a healthy growth level and it's not suggestive in our view of PIX cannibalization of credit volumes in the industry either.

Okay. That's clear. Thank you, Lia.

Thanks, Tito.

Hi, everyone. Good afternoon. Congratulations on the quarter. I wanted to discuss your price increases. You mentioned that you started repricing at the beginning of the year due to the yield curve widening last year. Now, we are seeing the opposite trend with the yield curve tightening. What does this imply for your pricing outlook? Would you consider passing on some benefits to your clients later this year? I'm asking because, as you noted, it seems like you are losing some market share and growing slightly below the industry. You also mentioned that churn has increased. From your perspective, if you start to see lower funding costs due to the decreasing rates in Brazil, would you think about repricing for your clients? Additionally, could you clarify what percentage of your clients have already been repriced? You indicated that you began repricing later this year. Thank you.

Hey, Mario. Mateus here. Thanks for the question. So, the first part of the question regarding whether we plan to pass through or change the pricing policy, given the recent movements in terms of the yield curve, I think the short answer here is no. So, just to give a step back and a little bit of a recap, we decided to do a really extensive repricing wave in the first Q. But in terms of magnitude of the adjustments, when we did the repricing wave, we basically targeted the yield curve of the half of the year, which back then was around 15%. If we were to look at the yield curves nowadays, again, it's really close to that. It's 14.7%, 14.8%. So, the impacts of the yield curve tightening now are not big in the short run. I think it's the curve of the second half that really tightens. But that was not built into the repricing waves that we did back then. So, it really doesn't move the needle. The only thing that I would say, I disagree with your question, is that in terms of market share, we're not actually losing market share when we look at the target segment, which is MSMBs. So, market share was about flattish in the quarter. If you were to look at a longer-term window for the past 12 months, we actually gained like 0.1% or 0.08% market share. And again, like Lia said, in terms of our plan, that's pretty much what was embedded in the plan. The plan embeds a 14% CAGR until 2027. So, the expectation was always to keep a healthier pricing policy, focus on profitability, and not on growth at any cost. And I think the final piece of the question in regards to the extent of the base that was already repriced, the vast majority of the base was already repriced. Last earnings call, I think the message that we provided was that in our Stone brands, pretty much all the repricing wave was done. In the second Q, we did the repricing in our Ton brand as well. Results were also really good when we look at the churn levels versus the price increases that we did. There are still a few waves to be done in the second Q, but they are really small. I think the vast majority of the base was already repriced.

That's clear. Mateus, let me ask you then on the market share. As you mentioned, like your market share has been stable then. You used to be a story of gaining market share, right? How do you see your ability to grow your market share in the next couple of years?

Mario, to build on Mateus' point about market share trends, the 14% implied compound annual growth rate in our long-term total payment volume guidance suggests that we anticipate continuing to grow above the industry average and gain market share, although at a slower rate than in the past. This is expected, given the significant scale we have achieved and our presence in the micro, small, and medium-sized business segment. The key message we want to convey is that while our net positive market share gains will be at a lower level compared to historical trends, this aligns with our strategy. Regarding the drivers of this growth, the main factor is the ongoing execution of our plan to offer more solutions to our clients. We believe we have new opportunities to address our clients' challenges and to refine our pricing through bundling and offering strategies. This aspect is vital in how we aim to differentiate ourselves in serving our clients in terms of product, offering, and service. Additionally, it's important to acknowledge that Stone stands out due to our distribution capabilities, as we increasingly steer our organization towards a cohesive growth and distribution strategy that leverages data and technology. We aspire to become more proactive in identifying growth opportunities as we scale, which requires a clear understanding of detailed market data. By adopting a more unified go-to-market strategy that utilizes market insights and technology, we believe there remain opportunities for growth. Thus, distribution continues to be a crucial element in our business model.

Okay. No, that's very clear. Thank you very much.

Thank you, Mario.

Hi. Can you hear me?

Yes, Neha. We can hear you. Hi.

Hi. Congratulations on the numbers. I have a quick follow-up on the previous questions. I'm struggling to understand the expectation of a further slowdown in TPV growth. Since you've already made the pricing adjustments in the first quarter, any churn would likely have shown up more during that period. Also, given that all market players have been aggressive with their pricing strategies and are increasing their prices, why should we expect a decrease in volume in the MSMB segment in the upcoming quarters? I'm still not clear on that. My second question is regarding competition. With companies like Mercado Pago increasing their aggressiveness and making strong gains in Brazil by hiring more salespeople and enhancing their software offerings, do you anticipate any impact on your core MSMB segment? Furthermore, with Fiserv now entering the Brazilian market and recently completing a transaction, could their Clover offering pose potential competition to the software side of your business that you're trying to develop with key verticals? Any insights on this would be greatly appreciated.

Hey, Neha. Mateus here. I'll take the first part of how you piece together, typically, growth deceleration over the short term versus the repricing has been done in the first Q, and then pass it over to Lia to talk about the other part of the question. So, on the first piece, two things here. So, the first one is that when you think about the impacts of repricing, it's right that we did the majority of the repricing waves in the first Q, but they were done throughout the quarter. So, in terms of the impact of churn, even though it's small, you have the full impact on the following quarters, right? There is some lag. And the second thing is that, when you talk about the growth generally decelerating over the medium to long term, it's not only about the repricing waves. I think the repricing waves are important in the short-term, but not material when we look at the longer-term. I think there is also a matter of the overall size of the business here, which again was already embedded in the plan. So, given the size of the company, it's natural that, on a percentage basis, the growth rates over the long-term will be somewhat smaller, right?

Certainly. To elaborate on competitive dynamics, regarding the entry of global players into the market, we haven't observed any significant impact from these players on competition. We closely monitor competitive dynamics with great detail due to the robust data capabilities of our operational platform, allowing us to understand local competition effectively. In terms of local players adopting a distribution strategy similar to ours, we do notice this in certain regions, but it remains insignificant in relation to our focus on small and medium-sized businesses. We are continuously adjusting our distribution strategy to cater better to larger SMBs with differentiated service and offerings. The key takeaway is that while competitors are trying to replicate our model, we are always focused on staying ahead by evolving our approach using technology and data to identify growth opportunities. Regarding our product, as discussed on Investor Day, we are advancing our Stone solution to meet our clients' workflow needs. This strategy includes a software component that integrates financial and business workflows. Stone is increasingly becoming a management solution for our clients. We have the advantage of being closely linked to our clients, with our distribution covering 99% of GDP, and we have a clear understanding of market opportunities across Brazil.

Very clear, Lia. If I can just follow up on that? So, I do understand that the reason why Stone gained a lot of market share in the SME segment is because of the reach that you just mentioned and the good quality service that you provided. But what Mercado Pago was saying that they're seeing very strong volumes and that is because of the more comprehensive suite of products that they are providing, and one of that product is credit, right? They are being quite active in terms of giving credit to the merchants that are working with them. Do you feel that there is probably going to be more pressure, given competition to do, be more active in credit? And do you see any risk in that sense or do you see any pricing pressure coming from more intense competition in the SMB space?

Neha, I'll take the first part of the question and then Lia may jump in to complement. So, for the pricing piece of the question, the short answer is also no. So, when you look at the pricing environment, it's pretty much stable. And I think the repricing waves are a good indication of that. In the end of the day, I think there was a big worry with market participants on whether the market was going to be rational with these interest rate increases and I think what we saw pretty much for the industry as a whole was everyone repricing and being pretty much rational in terms of pricing. In terms of credit, I'll begin and then Lia may add. It's true that credit is a very important piece of the equation. I think when you mentioned a few competitors that we're seeing, I think we're talking about different client profiles here. So, in terms of our core SMB clients with the average sizes that we operate, I don't think there are too many other players focused on our target niche. But again, I think the general concept that you provided, which is credit being a very important part of the offering is undeniable. And on that front, when you look at the progress on our credit book, again, there is a big challenge in terms of our long-term plan. But I think if you look at the performance since the Investor Day, we're pretty much online or even slightly better than what we anticipated on that front. So, that's progressing well.

Yeah. I would have nothing to add, Neha. I think Mateus said it all.

That's great. Very clear. Thank you so much for your comments.

Thank you, Neha.

Our next question comes from Guilherme Grespan with JPMorgan.

Thank you, team, for the presentation and the questions. I have two questions. The first concerns the decline in net cash, which decreased by nearly R$1 billion. I understand that approximately R$900 million is being allocated for buybacks. However, the remaining amount seems to indicate that you did not convert all the net income generated this quarter into cash, as explained in the presentation regarding several balance sheet items affecting cash conversion. My question is about the future: were these issues one-time occurrences this quarter? If you generate, say, R$0.5 billion in earnings next quarter, should we expect to see R$1 billion in cash generation, or is this a persistent issue that will continue into the second quarter? The second question pertains to take rates. I would like to know your perspective on how we should anticipate take rates, net of funding costs, for the second quarter. It seems that the repricing benefits didn’t impact the entire quarter, which likely means gross financial income will increase. However, financial costs are also expected to rise. Can you clarify how you foresee the net take rate, after accounting for funding costs, trending in the upcoming period? Congratulations on the repricing; we value profitability more than market share. Thank you.

Thank you, Grespan, for your question. I’ll address both parts. The first part concerned net cash. You've almost captured the essence of the response. In this quarter, we experienced seasonal impacts and some one-off expenses. Specifically, we had prepaid expenses related to our contract with Grupo Global. This year, we've been engaged with the contract agreements for shows like Big Brother Brasil, and most of the payments associated with this contract occurred in the first quarter. Additionally, the balance sheet items, particularly higher labor and social security liabilities, are linked to the payment of variable compensation, which occurs in the first quarter. Moving into the subsequent quarters, these effects will not be present. Therefore, as you noted, the cash generation should exceed net income, excluding the impacts of credit and buybacks. Regarding the second question about take rates, I must admit that we’re focusing less on internal take rates because tracking them has become increasingly complex due to shifting lines. Our recent earnings release highlighted our significant progress with our cash-sweeping strategy, which alters the categorization of financial income and financial expenses. The metric we're concentrating on now is adjusted gross profit, which, when compared to total payment volume, rose from 1.18% to 1.23% from the first quarter to the first quarter, representing a 5 basis points increase. This increase primarily results from repricing and some seasonal factors, particularly since we have a higher mix of debit in the fourth quarter. For the second quarter, we anticipate some degree of increase due to repricing occurring throughout the quarter, but we need to consider that interest rates are higher in the second quarter compared to the first quarter, which explains why we don't expect a dramatic increase. That captures the general trend.

That's clear. Thank you, Mateus.

Our next question comes from Renato Meloni with Autonomous Research.

Hi, everyone. Congrats on the results here, and thanks for taking my question. So, just first on your deposit strategy, right? So, there was this big shift compared to the last quarter on your time deposits. Do you think you have achieved the right mix here, or do you still expect to grow time deposits? And are you still going to be reaping benefits from lower-cost of funding based on deposits here or we are already seeing most of it, right? And then just still on this, are you facing more competition from other peers? We've seen some higher yields being announced recently. So, I wonder if that's affecting your strategy and if you're rethinking anything there. And then, just a quick follow-up on financial income. I wonder if you can break down how much of the financial income growth came from repricing and how much was just from the reclassification from transactional revenues. Thank you.

Thanks, Renato. I'll address the first and last parts of the question, and then Lia can discuss the competition aspect. First, regarding the cash-sweeping effects, it's important to provide some context about our deposit strategy. As we mentioned in the last earnings call, we have begun implementing our cash-sweeping strategy, which involves shifting our retail deposits to time deposits. It's worth noting that while this transition causes us to forgo some income from the interest on our deposits, it is more than compensated by the savings in financial expenses since we won't need to rely on other funding sources. For this quarter, the R$6.3 billion represents significant progress in our cash-sweeping migration, but it’s not the final outcome; we expect the majority of our deposit base to be migrated in the coming months. However, given that this migration occurred late in the quarter, its impact on our profit and loss statement was minimal and essentially insignificant. We anticipate seeing this impact reflected in the coming quarters. Just to clarify, we lose the full CDI on our revenue but gain on our funding costs, resulting in an estimated annual gain of around 75 to 125 basis points from the deposits we migrate. You can use this information to gauge the future impact on our P&L. The second question was about financial income, particularly in relation to bundling. The situation is quite similar to the take rate question—it's challenging to break down because there are numerous factors at play. We've had shifts from transactional revenues to financial income, alongside other influences such as the growth in our credit portfolio and the cash-sweeping strategy. Therefore, the best way to assess this is to look at the overall gross profit or combined revenue streams rather than analyzing it line by line.

Perfect. Let me add to your question about competition. We observe new investment product offerings in the market almost every week, making it a very dynamic space. We have also tested various offerings and analyzed conversion and elasticity. Our findings indicate that for our merchant clients, investment products are significant, primarily for saving for specific goals. These promotions tend to be more effective in consumer banking than in business banking. We've tested different offerings ourselves, and we believe that what truly matters is providing clients the chance to save for various objectives within the Stone ecosystem, which is more crucial than the actual spreads.

That's pretty clear. Thanks, everyone.

Thank you, Renato.

Our next question comes from Daniel Vaz with Safra.

Congrats on the results. I have two questions. Regarding the repricing during the quarter, you made several adjustments, correct? This led to a higher take rate. Is it reasonable to expect that you will continue to increase take rates in the next quarter to reflect the full impact of the repricing? It seems like you implemented some changes in January and some in February. I'm interested in how this will play out next quarter, assuming the impact is positive. Additionally, are there any further adjustments planned for specific customer segments? Regarding Renato's and Mateus's discussion about the net positive effect, you mentioned the potential for lower floating revenues and lower funding costs. Can you provide insights into the conversion that occurred in the first quarter? Has it already had a positive effect, or should we look for that in the second quarter moving forward? Thank you.

Hey, Daniel. Thanks for the question. So, the first one around the effects of repricing, you are right in the concept, which is we made the repricing waves throughout the first Q. So, the full effect will be felt on the second Q. Also, a small reminder on that end is that we did the full repricing waves for the Stone product in the first Q. On the Ton product, they were done throughout the second Q. So, there will also be some leftover for the third Q as well. Again, in terms of the metric, we're not looking at take rates internally anymore. The metric that we're tracking is gross profit versus TPV. And on that front, the message is the one that you just said, which is given that the full effects will be felt in the second Q, there is still some room for improvement there. The second part of the question, just to make sure that I got, I think it's whether the effects of the cash-sweeping were significant on the first Q or whether we should feel those effects on the second Q? Yeah. So, on that front, even though we did the migration of a significant part of the deposits on the first Q, they were done really towards the end of the quarter. So, from a P&L perspective, we had a minimal impact in the first Q. Most of the benefits will also be felt from the second Q onwards.

Our next question comes from Marcelo Mizrahi with Bradesco BBI. You can open your microphone.

Hi, guys. Congratulations for the results. My question is related to the volume. So, in the conference calls of many companies like Visa and some malls, they were referred about the impact of Easter on their volumes of sales. So, my question here is to understand the impact of Easter in the TPVs and volumes of Stone during the first quarter and the potential impact on the second quarter. So, could you give us some color about the volumes year-to-date, putting April together with the first quarter, or some color about that? Thank you.

Hi, Marcelo. Thanks for the question. I don’t see any specific trends on our end. This may be related to the characteristics of our client base. In our industry, a significant portion of the volume comes from large retail clients that we serve very minimally. Therefore, I don’t have any specific trends to highlight.

Okay. Thanks.

Our next question comes from Thiago Paura with BTG.

Hi, everyone. Thank you for the opportunity to ask a question. I have one regarding credit, which may follow up on a previous question. We just experienced another quarter of significant growth in the credit portfolio, showing 20% sequentially. My question is aimed at gaining a better understanding of the competitive advantage you believe Stone has in this area, particularly after the restructuring the product underwent. Mateus noted that the niche Stone is focusing on may differ slightly from other competitors. I'm trying to understand how your approach or underwriting model is distinct from others offering similar products to a comparable client base and what you see as your structural advantage in this regard to support your 2027 guidance for the credit portfolio. Thank you.

Thank you, Thiago. Let me provide some detail by taking a step back to discuss our overall credit strategy, which addresses some of your points. Firstly, there are two key aspects within our credit strategy that are somewhat distinct. The first relates to our longer duration working capital loan, a product we have developed and refined to meet the needs of our small and medium clients, particularly larger, more sophisticated SMBs. We are pursuing growth in this area through a digital approach while also investing in what we refer to as our credit specialist distribution. This specialist distribution focuses on credit, allowing us to tailor our offers for these larger SMB clients. The product experience stands out because repayment is aligned with client sales, making it a unique offering for SMBs. We remain optimistic about the growth trend in this segment, as portfolio growth has driven our overall success. The second part of our credit strategy is less mature but has shown promising results. This involves developing shorter-duration credit solutions to address different client needs. For example, we are scaling credit cards, which, while not as developed as our working capital loans, are better suited for micro clients with more consumer-like needs. There is significant potential for us in this area, particularly as we aim to serve a broader client base. Even with our SMB clients, we have received positive feedback on our shorter-duration products, such as solutions to help them pay suppliers or short-term loans and overdraft options. Overall, there is much work ahead, but we remain optimistic about our long-term guidance. Our differentiation will focus on how we offer our products, the product experience itself, and our approach to distribution.

Perfect. Thanks. Thanks, Lia. Thanks very much.

Thank you.

There are no questions at this time. This concludes the question-and-answer session. I will now turn over to Pedro Zinner, CEO at StoneCo for final considerations.

Well, thank you very much for you all for participating in our call. Hope to see you again in the next quarter. Thank you very much.

This concludes today's presentation. You may disconnect. And have a nice evening.