6-K - STNE - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGNPRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August, 2022

Commission File Number: 001-38714

STONECO LTD.

(Exact name of registrant as specified in itscharter)

4th Floor, Harbour Place

103 South Church Street, P.O. Box 10240

Grand Cayman, KY1-1002, Cayman Islands

+55 (11) 3004-9680

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F	☒	Form 40-F	☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

STONECO LTD.

INCORPORATION BY REFERENCE

This report on Form 6-K shall be deemed to be incorporated by reference into the registration statement on Form S-8 (Registration Number: 333-265382) and Form F-3 (Registration Number: 333-244404) of StoneCo Ltd. and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

StoneCo Ltd.
By:	/s/ Thiago dos Santos Piau
	Name:	Thiago dos Santos Piau
	Title:	Chief Executive Officer

Date: August 18, 2022

EXHIBIT INDEX

Exhibit No.	Description
99.1	StoneCo Ltd. – Unaudited Interim Condensed Consolidated Financial Statements For The Six Months Ended June 30, 2022.

Exhibit 99.1

UnauditedInterim Condensed

ConsolidatedFinancial Statements

StoneCoLtd.

June 30, 2022

REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATEDFINANCIAL INFORMATION

To the Shareholders and Management of

StoneCo Ltd

Introduction

We have reviewed the accompanying interim condensed consolidated financial statements of StoneCo Ltd (the “Company”) as at June 30, 2022 which comprise the interim condensed consolidated statement of financial position as at June 30, 2022 and the related interim condensed consolidated statements of profit or loss, of other comprehensive income, changes in equity and cash flows for the three and six-month period then ended and explanatory notes.

Management is responsible for the preparation and presentation of this interim consolidated financial information in accordance with IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards Board (IASB). Our responsibility is to express a conclusion on this interim consolidated financial information based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 – Interim Financial Reporting, issued by the International Accounting Standards Board (IASB).

São Paulo, August 15, 2022.

ERNST & YOUNG

Auditores Independentes S.S.

StoneCo Ltd.

Unaudited interim condensed consolidated statement of financial position

As of June 30, 2022 and December 31, 2021

(In thousands of Brazilian Reais)

	Notes	June<br> 30, 2022		December 31, 2021<br> <br>(Recasted)
Assets
Current assets
Cash and cash equivalents	4		3,786,847		4,495,645
Short-term investments	5		2,488,038		1,993,037
Financial assets from banking solution	20.5		2,856,887		2,346,474
Accounts receivable from card issuers	6		17,635,623		19,286,590
Trade accounts receivable	7		521,927		886,126
Recoverable taxes			211,009		214,837
Prepaid expenses			125,214		169,555
Derivative financial instruments	20		46,096		219,324
Other assets			264,259		332,864
			27,935,900		29,944,452
Non-current assets
Trade accounts receivable	7		51,084		59,595
Accounts receivable from card issuers	6		32,070		-
Receivables from related parties	13.2		5,021		4,720
Deferred tax assets	8.3		660,429		580,492
Prepaid expenses			144,371		214,092
Other assets			127,641		141,693
Long-term investments	5		221,457		1,238,476
Investment in associates			66,689		66,454
Property and equipment	9.1		1,680,647		1,569,520
Intangible assets	10.1		8,587,366		8,285,132
			11,576,775		12,160,174
Total assets	****	****	39,512,675	****	42,104,626

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

F-3

StoneCo Ltd.

Unaudited interim condensed consolidated statement of financial position

As of June 30, 2022 and December 31, 2021

(In thousands of Brazilian Reais)

	Notes	June<br> 30, 2022			December 31, 2021<br> <br>(Recasted)
Liabilities and equity
Current liabilities
Deposits from banking customers	20.5		2,704,963			2,201,861
Accounts payable to clients	11		14,596,737			15,723,331
Trade accounts payable			384,048			372,547
Loans and financing	12		2,416,897			2,578,755
Obligations to FIDC quota holders	12		981,986			1,294,806
Labor and social security liabilities			383,548			273,347
Taxes payable			235,375			176,453
Derivative financial instruments	20		192,831			23,244
Other liabilities			175,685			145,501
			22,072,070			22,789,845
Non-current liabilities
Accounts payable to clients			11,415			3,171
Loans and financing	12		2,771,078			3,556,460
Obligations to FIDC quota holders	12		623,717			932,368
Deferred tax liabilities	8.3		564,920			635,831
Provision for contingencies	14		189,069			181,849
Labor and social security liabilities			18,196			32,749
Other liabilities			606,480			345,133
			4,784,875			5,687,561
Total liabilities	****	****	26,856,945	****	****	28,477,406	****
Equity	15
Issued capital	15.1		76			76
Capital reserve	15.2		13,747,620			14,541,132
Treasury shares	15.3		(191,664	)		(1,065,184	)
Other comprehensive income			(281,602	)		(35,792	)
Retained earnings (accumulated losses)			(704,400	)		96,214
Equity attributable to owners of the parent			12,570,030			13,536,446
Non-controlling interests			85,700			90,774
Total equity	****	****	12,655,730	****	****	13,627,220	****
Total liabilities and equity	****	****	39,512,675	****	****	42,104,626	****

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

F-4

StoneCo Ltd.

Unaudited interim consolidated statement of profit or loss

For the six and three months ended June 30, 2022 and 2021

(In thousands of Brazilian Reais, unless otherwise stated)

		Six months ended June 30,				Three months ended June 30,
	Notes	2022		2021		2022		2021
Net revenue from transaction activities and other services	17		1,161,814		677,474		606,894		359,189
Net revenue from subscription services and equipment rental	17		869,991		292,837		437,840		152,888
Financial income	17		2,054,743		408,809		1,104,993		40,018
Other financial income	17		287,855		101,979		154,417		61,337
Total revenue and income			4,374,403		1,481,099		2,304,144		613,432
Cost of services			(1,300,538		(542,085		(626,170		(302,415
Administrative expenses			(510,269		(239,452		(272,020		(121,845
Selling expenses			(719,664		(385,920		(335,922		(223,155
Financial expenses, net			(1,662,958		(250,098		(954,711		(157,602
Mark-to-market on equity securities designated at FVPL			(850,079		841,168		(527,083		841,168
Other income (expenses), net			(102,142		(105,689		(70,315		(64,173
****	18	****	(5,145,650	****	(682,076	****	(2,786,221	****	(28,022
Loss on investment in associates			(2,001		(6,418		(1,324		(2,811
Profit (loss) before income taxes	****	****	(773,248	****	792,605	****	(483,401	****	582,599
Current income tax and social contribution	8.1		(152,354		(84,568		(84,544		(21,819
Deferred income tax and social contribution	8.1		123,304		(23,718		78,685		(34,776
Net income (loss) for the period	****	****	(802,298	****	684,319	****	(489,260	****	526,004
Net income (loss) attributable to:
Owners of the parent			(800,614		687,512		(487,390		529,176
Non-controlling interests			(1,684		(3,193		(1,870		(3,172
****	****	****	(802,298	****	684,319	****	(489,260	****	526,004
Earnings (loss) per share
Basic earnings (loss) per share for the period attributable to owners of the parent (in Brazilian Reais)	16		(R 2.57)		R 2.23		(R 1.56)		R 1.72
Diluted earnings (loss) per share for the period attributable to owners of the parent (in Brazilian Reais)	16		(R 2.57)		R 2.18		(R 1.56)		R 1.68

All values are in US Dollars.

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

F-5

StoneCo Ltd.

Consolidated interim statement of other comprehensive income

For the six and three months ended June 30, 2022 and 2021

(In thousands of Brazilian Reais, unless otherwise stated)

		Six months ended June 30,						Three months ended June 30,
	Notes	2022			2021			2022			2021
Net income (loss) for the period	****	****	(802,298	)	****	684,319	****	****	(489,260	)	****	526,004	****
Other comprehensive income
Other comprehensive income (loss) that may be reclassified to profit or loss in subsequent periods (net of tax):
Changes in the fair value of accounts receivable from card issuers at fair value through other comprehensive income			(55,789	)		(44,469	)		(25,155	)		(34,699	)
Exchange differences on translation of foreign operations			(17,089	)		807			8,602			244
Changes in the fair value of cash flow hedge - bond hedge	20.4		(175,107	)		960			(86,535	)		960
Unrealized loss on cash flow hedge - highly probable future imports			-			1,512			-			-
Other comprehensive income (loss) that will not be reclassified to profit or loss in subsequent periods (net of tax):
Effects IAS 29 in hyperinflationary economies			1,987			-			1,112			-
Changes in the fair value of equity instruments designated at fair value through other comprehensive income			(1,345	)		207,831			(1,345	)		(24,112	)
Other comprehensive income (loss) for the period, net of tax			(247,343	)		166,641			(103,321	)		(57,607	)
Total comprehensive income (loss) for the period, net of tax	****	****	(1,049,641	)	****	850,960	****	****	(592,581	)	****	468,397	****
Total comprehensive income (loss) attributable to:
Owners of the parent CI			(1,046,424	)		854,074			(595,405	)		471,754
Non-controlling interests CI			(3,217	)		(3,114	)		2,824			(3,357	)
			(1,049,641	)		850,960			(592,581	)		468,397

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

F-6

StoneCo Ltd.

Unaudited interim consolidated statement of changes in equity

For the six and three months ended June 30, 2022 and 2021

(In thousands of Brazilian Reais)

	Attributable<br> to owners of the parent
			Capital<br> reserve
	Issued<br> capital		Additional<br> paid-in capital		Transactions<br> among shareholders			Special<br> reserve		Other<br> reserves			Total			Treasury<br> shares			Other<br> compre-<br> hensive income			Retained<br> earnings (accumulated losses)			Total			Non-controlling<br> interest			Total
Balance as of December 31, 2020		75		13,307,585		(86,483	)		61,127		197,493			13,479,722			(76,360	)		(5,002	)		1,455,027			14,853,462			138,563			14,992,025
Net income (loss) for the period		-		-		-			-		-			-			-			-			687,512			687,512			(3,193	)		684,319
Other comprehensive income (loss) for the period		-		-		-			-		-			-			-			166,261			-			166,261			380			166,641
Total comprehensive income		-		-		-			-		-			-			-			166,261			687,512			853,773			(2,813	)		850,960
Share-based payments		-		-		-			-		51,160			51,160			-			-			-			51,160			23			51,183
Issuance of shares for purchased non-controlling interests		1		516,891		(208,481	)		-		-			308,410			-			-			-			308,411			(77,911	)		230,500
Issuance of shares for business acquisition		-		-		609,949			-					609,949			(609,949	)		-			-			-			-			-
Trasaction costs from subsidiaries		-		-		(7,716	)		-					(7,716	)		-			-			-			(7,716	)		-			(7,716	)
Repurchase of shares		-		-		-			-		-			-			(988,824	)		-			-			(988,824	)		-			(988,824	)
Non-controlling interests arising on a business combination		-		-		-			-		-			-			-			-			-			-			23,874			23,874
Sales subsidiaries		-		-		-			-		-			-			-			-			-			-			(1,220	)		(1,220	)
Dividends paid		-		-		-			-		-			-			-			-			-			-			(902	)		(902	)
Cash proceeds from non-controlling interest		-		-		-			-		-			-			-			-			-			-			893			893
Others		-		-		-			-		-			-			-			-			-			-			79			79
Balance as of June 30, 2021	****	76	****	13,824,476	****	307,269	****	****	61,127	****	248,653	****	****	14,441,525	****	****	(1,675,133	)	****	161,259	****	****	2,142,539	****	****	15,070,266	****	****	80,586	****	****	15,150,852	****
Balance as of December 31, 2021 (Recasted)		76		13,825,325		299,701			61,127		354,979			14,541,132			(1,065,184	)		(35,792	)		96,214			13,536,446			90,774			13,627,220
Net income (loss) for the period		-		-		-			-		-			-			-			-			(800,614	)		(800,614	)		(1,684	)		(802,298	)
Other comprehensive income (loss) for the period		-		-		-			-		-			-			-			(245,810	)		-			(245,810	)		(1,533	)		(247,343	)
Total comprehensive income		-		-		-			-		-			-			-			(245,810	)		(800,614	)		(1,046,424	)		(3,217	)		(1,049,641	)
Treasury shares - Delivered on business combination and sold		-		-		(703,656	)		-		-			(703,656	)		873,520			-			-			169,864			-			169,864
Equity transaction related to put options over non-controlling interest		-		-		-			-		(166,811	)		(166,811	)		-			-			-			(166,811	)		-			(166,811	)
Share-based payments		-		-		-			-		76,955			76,955			-			-			-			76,955			10			76,965
Non-controlling interests arising on a business combination		-		-		-			-		-			-			-			-			-			-			(941	)		(941	)
Dividends paid		-		-		-			-		-			-			-			-			-			-			(933	)		(933	)
Others		-		-		-			-		-			-			-			-			-			-			7			7
Balance as of June 30, 2022		76		13,825,325		(403,955	)		61,127		265,123			13,747,620			(191,664	)		(281,602	)		(704,400	)		12,570,030			85,700			12,655,730

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

F-7

StoneCo Ltd.

Unaudited interim consolidated statement of cash flows

For the six months ended June 30, 2022 and 2021

(In thousands of Brazilian Reais, unless otherwise stated)

		Six months ended June 30,
	Notes	2022			2021
Operating activities
Net income (loss) for the period			(802,298	)		684,319
Adjustments to reconcile net income (loss) for the period to net cash flows:
Depreciation and amortization	9.2		381,743			181,813
Deferred income tax and social contribution	8.1		(123,304	)		23,718
Loss on investment in associates			2,001			6,418
Interest, monetary and exchange variations, net			(221,463	)		(491,487	)
Provision for contingencies	14		1,580			3,373
Share-based payments expense			76,965			51,183
Allowance for expected credit losses			51,395			18,849
Loss on disposal of property, equipment and intangible assets	21.4		23,984			39,446
Effect of applying hyperinflation			1,525			-
Loss on sale of subsidiary			-			12,746
Fair value adjustment in financial instruments at FVPL			1,137,182			76,193
Fair value adjustment in derivatives			64,905			(4,826	)
Remeasurement of previously held interest in subsidiary acquired			-			(12,010	)
Working capital adjustments:
Accounts receivable from card issuers			2,639,765			(555,433	)
Receivables from related parties			6,338			(640	)
Recoverable taxes			(37,228	)		(44,049	)
Prepaid expenses			114,062			(231,746	)
Trade accounts receivable, banking solutions and other assets			465,068			(132,578	)
Accounts payable to clients			(3,138,412	)		962,847
Taxes payable			183,950			95,959
Labor and social security liabilities			92,917			(14,847	)
Provision for contingencies			(2,944	)		(5,325	)
Trade accounts payable and other liabilities			16,217			42,516
Interest paid			(252,166	)		(89,082	)
Interest income received, net of costs			914,594			684,899
Income tax paid			(86,601	)		(69,210	)
Net cash (used in) / provided by in operating activities			1,509,775			1,233,046
Investing activities
Purchases of property and equipment			(305,592	)		(524,710	)
Purchases and development of intangible assets			(153,078	)		(76,305	)
Acquisition of subsidiary, net of cash acquired			(62,373	)		(9,468	)
Sale of subsidiary, net of cash disposed of			-			(37	)
Proceeds from (acquisition of) short-term investments, net			(404,932	)		3,157,533
Acquisition of equity securities			(15,000	)		(2,480,003	)
Disposal of short- and long-term investments – equity securities			180,596			209,324
Proceeds from the disposal of non-current assets			20,552			100
Acquisition of interest in associates			(21,551	)		(38,563	)
Net cash used in investing activities			(761,378	)		237,871
Financing activities
Proceeds from borrowings	12		2,749,993			5,285,408
Payment of borrowings			(3,598,552	)		(1,508,236	)
Payment to FIDC quota holders			(625,000	)		(1,620,000	)
Proceeds from FIDC quota holders			-			584,191
Payment of leases	12		(45,423	)		(45,200	)
Repurchase of own shares			53,406			(988,824	)
Acquisition of non-controlling interests			(691	)		(602	)
Transaction with non-controlling interests			-			230,500
Dividends paid to non-controlling interests			(933	)		(902	)
Cash proceeds from non-controlling interest			-			893
Net cash provided by financing activities			(1,467,200	)		1,937,228
Effect of foreign exchange on cash and cash equivalents			10,005			17,522
Change in cash and cash equivalents			(708,798	)		3,425,667
Cash and cash equivalents at beginning of period	4		4,495,645			2,446,990
Cash and cash equivalents at end of period	4		3,786,847			5,872,657
Change in cash and cash equivalents			(708,798	)		3,425,667

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

F-8

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

1.	Operations

StoneCo Ltd. (the “Company”), is a Cayman Islands exempted company with limited liability, incorporated on March 11, 2014. The registered office of the Company is located at 4th Floor, Harbour Place 103 South Church Street.

The Company is controlled by HR Holdings, LLC, which owns 45.6% of voting power, whose ultimates parents are an investment fund, the VCK Investment Fund Limited SAC A, and a trust duly organized, The Pontes Family Trust, each one owned by the co-founders of the Company. The individual Company’s shares are publicly traded on Nasdaq (STNE) and depositary receipts (BDRs) representing the Company´s shares are traded on the São Paulo exchange (B3 under the ticker STOC31).

On June 1, 2022, the Company announced the intention to submit to the Brazilian Central Bank, regarding the Company´s subsidiaries Stone Instituição de Pagamento S.A. and Stone Sociedade de Crédito Direto S.A., of a technical requirement of change of control regarding the corporate restructuring involving the conversion of Eduardo Pontes interests in Company´s Class B super-voting shares (which are currently held indirectly through holding companies) into Class A shares directly owned by his family vehicles. As a result of the detachment of Eduardo Pontes from HR Holdings and consequently the conversion of his original Super Voting Class B to Regular Voting Class A shares, the two co-Founders of the Company would collectively and individually have less than 50% of the voting power. The implementation of such corporate restructuring is still pending of the Brazilian Central Bank approval.

The Company and its subsidiaries (collectively, the “Group”) are principally engaged in providing financial technology services and software solutions to clients allowing them to conduct electronic commerce seamlessly across in-store, online, and mobile channels and helping them better manage their businesses, become more productive and sell more - both online and offline.

The interim condensed consolidated financial statements of the Group for the six months ended June 30, 2022 and 2021 were approved by the Audit Committee on August 15, 2022.

1.1.	Recasted financial statements

The purchase price allocation was concluded by the Group for SimplesVet and VHSYS acquisitions on March 31, 2022 and for Linx acquisitions on June 30, 2022 (see details in Note 22.2). Therefore, retrospective adjustments were made in the statement of financial position as of December 31, 2021.

There were no impacts in the statement of profit or loss for the comparative period of six months ended June 30, 2021. The revised lines in the Statement of financial position are the follows:

F-9

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

	December 31, 2021<br> <br>(As previously presented)
Assets
Current assets
Recoverable taxes (a)		230,558	(15,721	)	214,837
Total current assets		29,960,173	(15,721	)	29,944,452
Non-current assets
Deferred tax assets (b)		431,755	148,737		580,492
Intangible assets (c)		8,370,313	(85,181	)	8,285,132
Total non-current assets		12,096,618	63,556		12,160,174
Total assets		42,056,791	47,835		42,104,626
Liabilities and equity
Non-current liabilities
Deferred tax liabilities (b)		617,445	18,386		635,831
Other liabilities (d)		348,458	(3,325	)	345,133
Total non-current liabilities		5,672,500	15,061		5,687,561
Total liabilities		28,462,345	15,061		28,477,406
Equity
Capital reserve (e)		14,516,767	24,365		14,541,132
Equity attributable to owners of the parent		13,512,081	24,365		13,536,446
Non-controlling interests (f)		82,365	8,409		90,774
Total equity		13,594,446	32,774		13,627,220
Total liabilities and equity		42,056,791	47,835		42,104,626
a)	The recoverability of tax credits previously recognized by Linx was reviewed by the Group.
---	---
b)	The Group identified deferred tax liabilities over tax amortization of goodwill previously recognized<br>by Linx due to past business combinations. These amounts were derecognized on the consolidated financial statements due to acquisition<br>of Linx by the Group. A deferred tax asset related to the tax benefit over the remaining fiscal amortization of goodwill was recognized.<br>Additionally, the deferred tax liabilities over identified intangible assets were reviewed.
---	---
c)	The adjustments refer mainly to the goodwill impacted by the items a) and b) described above and a fair<br>value of non-compete agreement signed with the Linx founders selling shareholders. Minor impacts refer to reviewed assessment of customer<br>relationship, software, and trademarks and patents identified in the business combinations with SimplesVet, VHSYS and Linx.
---	---
d)	The adjustments refer mainly to reviewed contingent consideration of SimplesVet.
---	---
e)	The adjustments refer to the contingent consideration in the form of equity instruments originated from<br>a non-compete agreement signed with the Linx founders selling shareholders.
---	---
f)	The adjustments refer to the fair value of non-controlling interests in SimplesVet and VHSYS over the<br>adjustments described in the item c) above.
---	---
1.2.	Seasonality of operations
---	---

The Group’s revenues are subject to seasonal fluctuations as a result of consumer spending patterns. Historically, revenues have been strongest during the last quarter of the year as a result of higher sales during the Brazilian holiday season. This is due to the increase in the number and amount of electronic payment transactions related to seasonal retail events. Adverse events that occur during these months could have a disproportionate effect on the results of operations for the entire fiscal year. As a result of seasonal fluctuations caused by these and other factors, results for an interim period may not be indicative of those expected for the full fiscal year.

F-10

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

2.	Group information
2.1.	Subsidiaries
---	---

The consolidated financial statements of the Group include the following subsidiaries and structured entities:

		% of Group's equity interest
Entity name	Principal activities	June 30, 2022	December 31, 2021
Stone Instituição de Pagamento S.A. (“Stone Pagamentos”)	Merchant acquiring	100.00	100.00
MNLT S.A. (“MNLT”)	Merchant acquiring	100.00	100.00
Pagar.me Instituição de Pagamento S.A. (“Pagar.me”)	Merchant acquiring	100.00	100.00
PDCA S.A. (“PDCA”)	Merchant acquiring	100.00	100.00
Stone Cartões Instituição de Pagamento S.A. (“Stone Cartões”)	Merchant acquiring	100.00	100.00
Linx Pay Meios de Pagamento Ltda. (“Linx Pay”)	Merchant acquiring	100.00	100.00
Stone Sociedade de Crédito Direto S.A. (“Stone SCD”)	Financial services	100.00	100.00
TAG Tecnologia para o Sistema Financeiro S.A.	Financial assets register	100.00	100.00
MAV Participações S.A. (“MVarandas”) (a)	Technology services	—	100.00
MLabs Software S.A. (“MLabs”)	Technology services	51.50	51.50
Equals S.A. (“Equals”)	Technology services	100.00	100.00
Questor Sistemas S.A (“Questor”)	Technology services	50.00	50.00
Sponte Informática S.A (“Sponte”)	Technology services	91.30	90.00
SimplesVet Tecnologia S.A. (“SimplesVet”) (Note 22.2)	Technology services	50.00	50.00
VHSYS Sistema de Gestão S.A. (“VHSYS”) (Note 22.2)	Technology services	50.00	50.00
Trampolin Pagamentos S.A. (“Trampolin”)	Technology services	100.00	100.00
Linx S.A. (“Linx”) (Note 22.2)	Technology services	100.00	100.00
Linx Sistemas e Consultoria Ltda. (“Linx Sistemas”)	Technology services	100.00	100.00
Linx Telecomunicações Ltda.	Technology services	100.00	100.00
Napse S.R.L. (“Napse Group”)	Technology services	98.00	98.00
Napse Uruguay SAS (“Napse Group”)	Technology services	99.00	—
Sociedad Ingenería de Sistemas Napse I.T. de Chile Limitada (“Napse Group”)	Technology services	99.00	99.00
Synthesis IT Peru S.R.L. (“Napse Group”)	Technology services	99.00	99.00
Synthesis Holding LLC. (“Napse Group”)	Technology services	100.00	100.00
Synthesis US LLC (“Napse Group”)	Technology services	100.00	100.00
Retail Americas Sociedad de Responsabilidad Limitada de Capital Variable (“Napse Group”)	Technology services	99.00	99.00
Synthesis IT de México Sociedad de Responsabilidad Limitada de Capital Variable (“Napse Group”)	Technology services	99.00	99.00
Mercadapp Soluções em Software Ltda (b)	Technology services	—	100.00
Hiper Software S.A.	Technology services	100.00	100.00
Reclame Aqui LLC (“Reclame Aqui Group”) (Note 22.1)	Technology services	50.00	—
Obvio Brasil Software e Serviços S.A (“Reclame Aqui Group”) (Note 22.1)	Technology services	50.00	—
O Mediador Tecnologia da Informação S/S Ltda (“Reclame Aqui Group”) (Note 22.1)	Technology services	50.00	—
Reclame Aqui Marcas e Serviços Ltda (“Reclame Aqui Group”) (Note 22.1)	Technology services	50.00	—
Thirdlevel Soluções de Internet S.A. (“Plugg.To”) (Note 22.1)	Technology services	100.00	—
Creditinfo Jamaica Ltd (“Creditinfo Caribbean”)	Credit bureau services	53.05	53.05
Creditinfo Guyana Inc (“Creditinfo Caribbean”)	Credit bureau services	53.05	53.05
Creditadvice Barbados Ltd (“Creditinfo Caribbean”)	Credit bureau services	53.05	53.05
Creditinfo ECCU Ltd (“Creditinfo Caribbean”)	Credit bureau services	53.05	—
Buy4 Processamento de Pagamentos S.A. (“Buy4”)	Processing card transactions	100.00	100.00
Buy4 Sub LLC	Cloud store card transactions	100.00	100.00
Vitta Corretora de Seguros Ltda. (“Vitta Group”)	Insurance services	100.00	100.00
Stone Seguros S.A. (“Stone Seguros”)	Insurance services	100.00	100.00
Vitta Tecnologia em Saúde S.A. (“Vitta Group”)	Health services	100.00	100.00
Vitta Serviços em Saúde Ltda. (“Vitta Group”)	Health services	100.00	100.00
Vitta Saúde Administradora de Benefícios Ltda. (“Vitta Group”)	Health services	100.00	100.00
StoneCo Pagamentos UK Ltd.	Service provider	100.00	100.00
Stone Logística Ltda.	Logistic services	100.00	100.00
Collact Serviços Digitais Ltda. (“Collact”) (c)	Customer relationship management	—	100.00
Stone Franchising Ltda.	Franchising management	100.00	100.00
Cappta S.A. (“Cappta”)	Electronic fund transfer	53.27	53.27
Ametista Serviços Digitais Ltda.	Electronic fund transfer	100.00	100.00
Esmeralda Serviços Digitais Ltda.	Electronic fund transfer	100.00	100.00
Diamante Serviços Digitais Ltda.	Electronic fund transfer	100.00	100.00
Safira Serviços Digitais Ltda.	Electronic fund transfer	100.00	100.00
TAPSO FIDC (“FIDC TAPSO”)	Investment fund	100.00	100.00
TAPSO II FIDC (“FIDC TAPSO II”)	Investment fund	100.00	100.00

F-11

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

FIDC Bancos Emissores de Cartão de Crédito - Stone III (“FIDC AR III”)	Investment fund	100.00	100.00
SOMA FIDC (“FIDC SOMA”)	Investment fund	100.00	100.00
SOMA III FIDC (“FIDC SOMA III”)	Investment fund	100.00	100.00
STONECO EXCLUSIVO FIC FIM (“FIC FIM STONECO”)	Investment fund	100.00	100.00
Retail Renda Fixa Crédito Privado Fundo de Investimento (“Retail Renda Fixa”)	Investment fund	100.00	100.00
MPB Capital LLC	Investment company	100.00	100.00
DLP Capital LLC	Holding company	100.00	100.00
DLP Par Participações S.A. (“DLP Par”)	Holding company	100.00	100.00
Reclame Aqui Holding Ltd. (Note 22.1)	Holding company	50.00	—
STNE Participações S.A.	Holding company	100.00	100.00
STNE Participações em Tecnologia S.A.	Holding company	100.00	100.00
VittaPar LLC. (“Vitta Group”)	Holding company	100.00	100.00
StoneCo CI Ltd	Holding company	53.05	53.05
(a)	MVarandas was merged into Linx Sistemas on April 1, 2022.
---	---
(b)	Mercadapp was merged into Linx Sistemas on January 1, 2022.
---	---
(c)	Collact was merged into Stone Pagamentos on January 1, 2022.
---	---

The Group holds (call options) to acquire additional interests in some of its subsidiaries. Each of the options has been evaluated in accordance with pre-determined formulas and R$ 44,560 were recorded in the consolidated statement of financial position as of June 30, 2022 as an asset under Derivative financial instruments (2021 – R$ 9,044).

The Group also issued put options over Reclame Aqui non-controlling interests. The Company does not have a present ownership interest in the shares held by non-controlling shareholders, so the Group has elected as accounting policy for such put options to derecognize the non-controlling interests at each reporting date as if it was acquired at that date and recognize a financial liability at the present value of the amount payable on exercise of the non-controlling interests put option. The difference between the amount recognized of the financial liability and the non-controlling interests derecognized at each period is recognized as an equity transaction. The amount of R$ 251,217 was recorded in the consolidated statement of financial position as of June 30, 2022 as an financial liability under Other liabilities (no amounts were recognized in 2021).

F-12

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

2.2.	Associates
		% of Groups's equity interest
---	---	---	---
Entity name	Principal activities	June 30, 2022	December 31, 2021
Alpha-Logo Serviços de Informática S.A. (“Tablet Cloud”)	Technology services	25.00	25.00
Trinks Serviços de Internet S.A. (“Trinks”)	Technology services	19.90	19.90
Neostore Desenvolvimento De Programas De Computador S/A (“Neostore”) (i)	Technology services	40.02	-
RH Software S.A. (“RH Software”) (ii)	Technology services	20.00	-
APP Sistemas S.A. (“APP”)	Technology services	20.00	20.00
Delivery Much Tecnologia S.A. (“Delivery Much”)	Food delivery marketplace	29.50	29.50
(i)	On July 02, 2021, our subsidiary Linx Sistemas signed an agreement to acquire an equity interest of 40%<br>of the shares of Neostore Desenvolvimento de Programas de Computadores SA (“Neomode”), through the execution of an Investment<br>Agreement with the shareholders of Neomode. The acquisition was conditioned to Brazilian Antitrust Authority<br>(“CADE”) approval, which occurred on November 19, 2021. The Company concluded the acquisition on
---	---

January 07, 2022, through a capital increase of R$ 6,083 and loans conversion in the amount of R$ 875, totalizing a transferred consideration of R$ 6,957.

(ii)

On May 02, 2022, the Group acquired a 20% equity interest in RH Software, a private company based in the State of São Paulo, Brazil, for R$ 2,320 through a loan agreement conversion. RH Software develops software directed to dental clinics, with which the Company expects to obtain synergies in its services to clients. The Group also holds a call option to acquire an additional equity interest in the period from 2 to 3 years counted from the date of closing of the agreement, which will allow the Group to acquire an additional 30% equity interest in RH Software.

The Group holds options (call options) to acquire additional interests in some of its associates. Each of the options has been evaluated in accordance with pre-determined formulas and no amounts in June 30, 2022 and December 31, 2021 were recorded in the consolidated statement of financial position as an asset under Derivative financial instruments.

F-13

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

3.	Basis of preparation and changes to the Group’s accounting policies and estimates
3.1.	Basis of preparation
---	---

The interim condensed consolidated financial statements for the three months ended June 30, 2022 have been prepared in accordance with IAS 34 – Interim Financial Reporting*,*issued by the International Accounting Standards Board (“IASB”).

The interim condensed consolidated financial statements are presented in Brazilian Reais (“R$”), and all values are rounded to the nearest thousand (R$ 000), except when otherwise indicated.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group’s annual consolidated financial statements as of December 31, 2021.

The accounting policies adopted in this interim reporting period are consistent with those of the previous financial year, except for the policies related to segment information as described in Note 3.2 as follows.

3.2.	Segment information

The information by segment is prepared and disclosed based on internal reports made available to Chief Executive Officer (“CEO”) and the Board of Directors (“BoD”), who are considered the chief operating decision-maker (“CODM”) of the Group. Since the first quarter of 2022, in line with the strategy and organizational structure, the Group presents two operating and reportable segments, namely “Financial Services”, “Software”, and presents other activities as “Non allocated activities”. For further details, see Note 23.

3.3.	Estimates

The preparation of the financial statements of the Company and its subsidiaries requires management to make judgments and estimates and to adopt assumptions that affect the amounts presented referring to revenues, expenses, assets and liabilities at the financial statement date. Actual results may differ from these estimates.

The judgements, estimates and assumptions are frequently revised, and any effects are recognized in the revision period and in any future affected periods. The objective of these revisions is mitigating the risk of matter differences between the estimative and effectives results in the future.

In preparing these interim condensed consolidated financial statements, the significant judgements and estimates made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that are set the consolidated financial statements for the year ended December 31, 2021, with no changes.

4.	Cash and cash equivalents
		December 31, 2021
---	---	---	---
Denominated in R	3,681,356		4,431,019
Denominated in US	105,462		64,593
Denominated in other foreign currencies	29		33
	3,786,847		4,495,645

All values are in US Dollars.

F-14

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

5.	Short and Long-term investments
	Short-term				Long-term
---	---	---	---	---	---	---	---	---	---	---
	Listed securities		Unlisted securities		Listed securities		Unlisted securities		Balance at 06/30/2022
Bonds (a)		433,689		2,052,285		-		-		2,485,974
Equity securities (b)		-		-		185,117		36,340		221,457
Investment funds (c)		-		2,064		-		-		2,064
		433,689		2,054,349		185,117		36,340		2,709,495
	Short-term				Long-term
---	---	---	---	---	---	---	---	---	---	---
	Listed securities		Unlisted securities		Listed securities		Unlisted securities		Balance at 12/31/2021
Bonds (a)		645,826		1,336,344		-		-		1,982,170
Equity securities (b)		-		-		1,215,791		22,685		1,238,476
Investment funds (c)		-		10,867		-		-		10,867
		645,826		1,347,211		1,215,791		22,685		3,231,513
(a)	Comprised of Brazilian Treasury Notes (“LFTs”), structured notes linked to LFTs and corporate<br>bonds in the amount of R$ 115,001, R$ 2,052,285 and R$ 318,689 (2021 – R$ 344,032, R$ 1,336,344 and R$ 301,794) respectively, with<br>maturities greater than three months, indexed to fixed and floating rates. As of June 30, 2022, bonds of listed companies are mainly indexed<br>to fixed rates in USD and hedged to Brazilian reais using Non Deliverable Forwards (NDFs).
---	---
(b)	Comprised of ordinary shares of listed and unlisted entities. These assets are measured at fair value,<br>and the Group elected asset by asset the recognition of the changes in fair value of the existing listed and unlisted equity instruments<br>through profit or loss (“FVPL”) or other comprehensive income (“FVOCI”). Fair value of unlisted equity instruments<br>as of June 30, 2022 was determined based on recent negotiations of the securities.
---	---
·	Assets at FVPL:
---	---

Comprised by Banco Inter´s shares, acquired on June, 2021. The change in fair value of equity securities at FVPL for the six months period ended June 30, 2022 was a loss of R$ 850,079. In June 2022, the partial sale of shares in the amount of R$180,596 was carried out.

·	Assets as FVOCI:

On June 30, 2022, comprised mainly of ordinary shares in entities that are not traded in an active market

The change in fair value of equity securities at FVOCI for the year ended June 30, 2022 was R$ (1,345) (December 31, 2021 – R$ 216,446), which was recognized in other comprehensive income

(c)	Comprised of foreign investment fund shares.

Short-term and long term investments are denominated in Brazilian reais and U.S. dollars.

F-15

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

6.	Accounts receivable from card issuers

Accounts receivable are amounts due from card issuers and acquirers regarding the transactions of clients with card holders, performed in the ordinary course of business.

	June 30, 2022
Accounts receivable from card issuers (a)		17,129,853		18,865,658
Accounts receivable from other acquirers (b)		555,497		436,035
Allowance for expected credit losses		(17,657	)	(15,103	)
		17,667,693		19,286,590
Current		17,635,623		19,286,590
Non-current		32,070		-
(a)	Accounts receivable from card issuers, net of interchange fees, as a result of processing transactions<br>with clients.
---	---

As of June 30, 2022, R$ 1,796,624 of the total Accounts receivable from card issuers are held by FIDC AR III (December 31, 2021 — R$ 2,363,476). Accounts receivable held by FIDCs guarantee the obligations to FIDC quota holders. Accounts receivable from card issuers in the amount of R$ 450,907 (December 31, 2021 – R$ 451,618) guarantee the liability with debentures.

(b)	Accounts receivable from other acquirers related to PSP (Payment Service Provider) transactions.
7.	Trade accounts receivable
---	---

Trade accounts receivables are amounts due from clients mainly related to loans designated at fair value through profit or loss (“FVPL”), equipment rental and other services.

	June 30, 2022
Loans designated at FVPL (a)		129,417		511,240
Accounts receivable from subscription services		247,807		232,109
Accounts receivable from equipment rental		157,219		159,771
Receivables from registry operations		34,611		41,449
Chargeback		44,038		26,783
Insurance		7,052		21,293
Others		59,215		33,494
Allowance for expected credit losses		(106,348	)	(80,418	)
		573,011		945,721
Current		521,927		886,126
Non-current		51,084		59,595
(a)	The Group has irrevocably elected to classify loans originated until June 30, 2021 at fair value with<br>net changes recognized in the statement of profit or loss. The amount is held by FIDC SOMA and FIDC SOMA III. The Company changed its<br>business model, and therefore, loans originated since July 1, 2021 are valued at amortized cost.
---	---

F-16

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

8.	Income taxes

Income taxes are comprised of taxation over operations in Brazil and abroad, related to Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL). According to Brazilian tax law, income taxes and social contribution are assessed and paid by legal entity and not on a consolidated basis.

8.1. Reconciliationof income tax expense

The following is a reconciliation of income tax expense to profit for the period, calculated by applying the combined Brazilian statutory rates of 34% for the six months ended June 30, 2022 and 2021:

	Six months ended June 30,						Three months ended June 30,
	2022			2021			2022			2021
Profit (loss) before income taxes		(773,248	)		792,605			(483,401	)		582,599
Brazilian statutory rate		34	%		34	%		34	%		34	%
Tax benefit/(expense) at the statutory rate	****	262,904	****	****	(269,486	)	****	164,356	****	****	(198,084	)
Additions (exclusions):
Mark-to-market on equity securities designated at FVPL		(289,027	)		159,822			(179,208	)		159,822
Gain (loss) from entities not subject to the payment of income taxes		23,414			20,435			21,285			(10,900	)
Other permanent differences		(10,570	)		6,906			(8,542	)		5,133
Different tax rates for companies abroad		1,860			(2,897	)		(271	)		(341	)
Equity pickup on associates		(680	)		(2,182	)		(450	)		(956	)
Unrecorded deferred taxes		(22,539	)		(31,958	)		(8,162	)		(16,848	)
Use of tax losses previously unrecorded		188			-			188			(12	)
Interest payments on net equity		-			5,932			-			5,932
R&D Tax Benefits		4,664			4,512			4,664			(210	)
Other tax incentives		736			630			281			(131	)
Total income tax and social contribution benefit/(expense)		(29,050	)		(108,286	)		(5,859	)		(56,595	)
Effective tax rate		n/a			14	%		n/a			10	%
Current income tax and social contribution		(152,354	)		(84,568	)		(84,544	)		(21,819	)
Deferred income tax and social contribution		123,304			(23,718	)		78,685			(34,776	)
Total income tax and social contribution benefit/(expense)		(29,050	)		(108,286	)		(5,859	)		(56,595	)

8.2. Nature andchanges in deferred income taxes

Under Brazilian tax law, temporary differences and tax losses can be carried forward indefinitely, however the tax losses can only be used to offset up to 30% of taxable profit for the period.


Deferred tax recognized against other comprehensive income
Assets at FVOCI	155,025		27,544		127,481
	155,025		27,544		127,481
Deferred tax recognized against profit or loss
Losses available for offsetting against future taxable income	408,150		90,425		317,725
Deferred tax on other temporary differences	150,752		43,388		107,364
Tax deductible goodwill	89,618		(21,680	)	111,298
Share-based compensation	55,875		14,725		41,150
Assets at FVPL	(6,991	)	(2,408	)	(4,583	)
Technological innovation benefit	(10,523	)	7,970		(18,493	)
Temporary differences under FIDC	(95,918	)	(26,362	)	(69,556	)
Deferred income taxes arising from business combinations	(650,479	)	17,246		(667,725	)
	(59,516	)	123,304		(182,820	)
Deferred tax, net	95,509		150,848		(55,339	)

F-17

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

8.3. Unrecognized deferred taxes

The Group has accumulated tax loss carryforwards and other temporary differences in some subsidiaries in the amount of R$ 121,474 (December 31, 2021 – R$ 104,920) for which a deferred tax asset was not recognized and are available indefinitely for offsetting against future taxable profits of the companies in which the losses arose. Deferred tax assets have not been recognized with respect of these losses as they cannot be used to offset taxable profits between subsidiaries of the Group, and currently there is no other evidence of recoverability in the near future.

F-18

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

9.	Property and equipment

9.1. Changes in Property and equipment


Cost
Pin Pads & POS	1,498,271		369,477		(46,716	)	-		-	1,821,032
IT equipment	246,543		6,646		(2,427	)	-		1,147	251,909
Facilities	90,186		2,829		(1,922	)	-		-	91,093
Machinery and equipment	25,776		4,375		(7,623	)	-		24	22,552
Furniture and fixtures	24,754		407		(618	)	(210	)	118	24,451
Vehicles and airplane	43,586		70		(16,181	)	-		-	27,475
Construction in progress	14,078		16,794		(566	)	-		-	30,306
Right-of-use assets - equipment	4,629		187		-		-		-	4,816
Right-of-use assets - vehicles	31,547		3,229		(1,598	)	-		-	33,178
Right-of-use assets - offices	238,329		22,925		(23,030	)	-		-	238,224
	2,217,699		426,939		(100,681	)	(210	)	1,289	2,545,036
Depreciation
Pin Pads & POS	(438,346	)	(179,769	)	15,785		-		-	(602,330	)
IT equipment	(95,553	)	(25,896	)	1,669		-		-	(119,780	)
Facilities	(25,066	)	(7,015	)	269		-		-	(31,812	)
Machinery and equipment	(17,861	)	(3,532	)	3,031		-		-	(18,362	)
Furniture and fixtures	(5,516	)	(1,314	)	278		-		-	(6,552	)
Vehicles and airplane	(2,498	)	(1,986	)	3,449		-		-	(1,035	)
Right-of-use assets - equipment	(505	)	(393	)	-		-		-	(898	)
Right-of-use assets - Vehicles	(14,187	)	(5,733	)	1,486		-		-	(18,434	)
Right-of-use assets - Offices	(48,647	)	(20,776	)	4,237		-		-	(65,186	)
	(648,179	)	(246,414	)	30,204		-		-	(864,389	)
Property and equipment, net	1,569,520		180,525		(70,477	)	(210	)	1,289	1,680,647

(a) Includes Pin Pad & POS derecognized for not being used by customers after a period of time.

F-19

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

9.2. Depreciation and amortization charges

Depreciation and amortization expense has been charged in the following line items of the consolidated statement of profit or loss:

	Six months ended June 30,				Three months ended June 30,
	2022		2021		2022		2021
Cost of services		240,855		114,821		117,286		62,517
General and administrative expenses		118,721		43,929		69,778		23,336
Selling expenses		21,866		23,063		9,817		11,518
Other income (expenses), net		301		-		-		-
Depreciation and Amortization charges		381,743		181,813		196,881		97,371
Depreciation charge		246,414		128,197		128,118		68,863
Amortization charge (Notes 10 and 22)		135,329		53,616		68,763		28,508
Depreciation and Amortization charges		381,743		181,813		196,881		97,371

F-20

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

10.	Intangible assets
10.1.	Changes in Intangible assets
---	---
	Balance at 12/31/2021<br> (Recasted)			Additions			Disposals			Effects of hyperinflation <br> (IAS 29)		Effects of changes in foreign exchange rates<br><br> <br>(IAS 21)			Business combination		Balance at 06/30/2022
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Cost
Goodwill - acquisition of subsidiaries		5,581,691			-			-			-		777			205,640		5,788,108
Customer relationship		1,747,150			2,418			-			-		(123	)		83,122		1,832,567
Trademarks and patents		262,810			-			-			-		-			21,122		283,932
Software		1,083,402			100,473			(59,996	)		672		(5,300	)		10,732		1,129,983
Non-compete agreement		26,024			-			-			-		-			-		26,024
Operating license		12,443			-			-			-		(215	)		-		12,228
Software in progress		43,960			16,346			(2,005	)		-		-			-		58,301
Right-of-use assets - Software		72,463			15,308			(694	)		-		-			-		87,077
		8,829,943			134,545			(62,695	)		672		(4,861	)		320,616		9,218,220
Amortization
Customer relationship		(217,090	)		(34,909	)		-			-		66			-		(251,933	)
Trademarks and patents		(6,908	)		(495	)		-			-		-			-		(7,403	)
Software		(264,399	)		(81,512	)		46,328			-		1,800			-		(297,783	)
Non-compete agreement		(1,106	)		(5,039	)		-			-		-			-		(6,145	)
Operating license		(10,854	)		(900	)		-			-		409			-		(11,345	)
Right-of-use assets - Software		(44,454	)		(12,474	)		683			-		-			-		(56,245	)
		(544,811	)		(135,329	)		47,011			-		2,275			-		(630,854	)
Intangible assets, net		8,285,132			(784	)		(15,684	)		672		(2,586	)		320,616		8,587,366

F-21

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

11.	Accounts payable to clients

Accounts payable to clients represent amounts due to accredited clients related to credit and debit card transactions, net of interchange fees retained by card issuers and assessment fees paid to payment scheme networks as well as the Group’s net merchant discount rate fees which are collected by the Group as an agent.

12.	Loans and financing and Obligations to FIDC quota holders
	Balance at 12/31/2021		Additions		Disposals			Payment			Business Combination		Changes in Exchange Rates			Interest		Balance at 06/30/2022
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Obligations to FIDC AR quota holders (Note 12.1.1)		2,206,043		-		-			(736,176	)		-		-			114,950		1,584,817
Obligations to FIDC TAPSO quota holders (Note 12.1.2)		21,131		-		-			(1,515	)		-		-			1,270		20,886
Leases (Note 12.1.3)		273,455		41,649		(24,142	)		(45,423	)		-		115			7,367		253,021
Bonds (Note 12.1.4)		2,764,610		-		-			(50,395	)		-		(175,297	)		55,925		2,594,843
Bank borrowings (Note 12.1.5)		2,697,641		2,749,993		-			(3,667,810	)		4,464		-			154,353		1,938,641
Debentures (Note 12.1.6)		399,509		-		-			(19,822	)		-		-			21,783		401,470
		8,362,389		2,791,642		(24,142	)		(4,521,141	)		4,464		(175,182	)		355,648		6,793,678
Current		3,873,561																	3,398,883
Non-current		4,488,828																	3,394,795

F-22

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

12.1.	Description of loans and financing and obligations to FIDC quota holders

In the ordinary course of the business, the company funds its prepayment business through a mix of own cash, debt and receivables sales.

12.1.1. Obligations to FIDC AR quota holders

Payments mainly refer to the amortization of the principal and the payment of interest of the first series of FIDC AR III.

12.1.2.	Obligations to FIDC TAPSO quota holders

In February 2022, the Group negotiated an amendment of the contract to postpone the payment date of the principal to March 2023 and the benchmark return rate became 100% of the CDI + 1.80% per year.

12.1.3.	Leases

The Group has lease contracts for various items of offices, vehicles and software in its operations. The Group’s obligations under its leases are secured by the lessor’s title to the leased assets. Generally, the Group is restricted from assigning and subleasing the leased assets.

12.1.4.	Bonds

In June 2021, the Group issued its inaugural dollar bonds, raising USD 500 million in 7-year notes with a final yield of 3.95%. The total issuance was R$ 2,510,350 (R$ 2,477,408 net of the offering transaction costs, which will be amortized over the course of the debt).

12.1.5.	Bank borrowings

During the second quarter of 2022 the Group issued CCBs (bilateral unsecured term loans), with multiple counterparties and maturities ranging from short (less than 12 months) to long term (above 12 months). The principal and the interests of this type of loan are mainly paid at maturity, which is between one to eighteen months counting from their issuance date. The proceeds of these loans were used mainly for the prepayment of receivables.

12.1.6.	Debentures

On June 12, 2019 Stone Pagamentos approved the issuance of simple, secured and non-convertible debentures, sole series, for public distribution, with restricted distribution efforts, as amended, in the total amount of up to R$ 400,000, received between June and July, maturing in 2022. The Debentures are secured by Stone Pagamentos’ accounts receivable from card issuers and bear interest at a rate of 109.0% of the CDI rate.

The Group is compliant with all borrowing limits or covenants (where applicable) on any of its borrowing facilities.

13.	Transactions with related parties

Related parties comprise the Group’s parent companies, shareholders, key management personnel and any businesses which are controlled, directly or indirectly by the shareholders and directors over which they exercise significant management influence. Related party transactions are entered in the normal course of business at prices and terms approved by the Group’s management.

F-23

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

13.1.Transactions with related parties

The following transactions were carried out with related parties:

	Six months ended June 30,						Three months ended June 30,
	2022			2021			2022			2021
Sales of services
Associates (legal and administrative services) (a)		14			15			7			8
		14			15			7			8
Purchases of goods and services
Entity controlled management personnel		-			(16	)		-			(16	)
Service provider		-			(240	)		-			(240	)
Associates (transaction services) (b)		(943	)		(1,287	)		(262	)		(679	)
		(943	)		(1,543	)		(262	)		(935	)
(a)	Related to services provided to VHSYS (company unconsolidated in 2021) and Delivery Much.
---	---
(b)	Related mainly to expenses paid to Trinks and VHSYS for consulting services, marketing expenses and sales<br>commissions and software license to new customers acquisition.
---	---

13.2.Balance at the end of the period

The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:


Loans to management personnel	4,678	4,663
Convertible loans	343	57
Receivables from related parties	5,021	4,720

As of June 30, 2022, there is no allowance for expected credit losses on related parties’ receivables. No guarantees were provided or received in relation to any accounts receivable or payable involving related parties.

The Group has outstanding loans with certain management personnel. The loans are payable in three to seven years from the date of issuance and accrue interest according to the National Consumer Price Index, the Brazilian Inter-Bank Rate or Libor plus an additional spread.

F-24

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

14.	Provision for contingencies

The Group companies are party to labor, civil and tax litigation in progress, which are being addressed at the administrative and judicial levels, as well recognize risks of their activities that may require the recording of provisions.

14.1.Probable losses, provided for in the statement of financial position

The provisions for probable losses arising from these matters are estimated and periodically adjusted by management, supported by the opinion of its external legal advisors. The amount, nature and the movement of the liabilities is summarized as follows:


Balance as of December 31, 2021	15,610		16,383		149,856		181,849
Additions	9,164		3,187		656		13,007
Reversals	(8,076	)	(3,331	)	(20	)	(11,427	)
Interests	1,105		412		7,065		8,582
Payments	(2,786	)	(158	)	-		(2,944	)
Business combination	-		2		-		2
Balance as of June 30, 2022	15,017		16,495		157,557		189,069

14.2.Possible losses, not provided for in the statement of financial position

The Group has the following civil and labor litigation involving risks of loss assessed by management as possible, based on the evaluation of the legal advisors, for which no provision was recognized:


Civil	146,782	130,908
Labor	88,864	62,299
Tax	29,236	30,324
Total	264,882	223,531

The nature of the civil litigations is summarized as follows:

·	The Group is party of a lawsuit action for damages brought by a sub-acquirer seeking indemnity for the<br>withdrawal of the contract established between the parties. The amount considered as a possible loss is R$ 2,430 on June 30, 2022 (no<br>values as of on December 31, 2021).
·	The Group is party to a lawsuit filed by a commercial establishment characterized as a customer of a subacquirer<br>which had difficulties in the settlement of funds derived from debit and credit transactions carried out by the aforementioned establishments<br>and the possible loss value of the action in which Stone was called as a co-respondent, on June 30, 2022 was R$ 1,651 (no value as of<br>on December 31, 2021).
---	---
·	The Group is party of a Public Civil Action questioning accessibility requirements in machines and applications<br>used for payments with credit cards and touch screen transactions. The amount is R$ 2,023 as of June 30, 2022, considered as a possible<br>loss.
---	---
·	The Group is party to a collection lawsuits filed by a commercial partner, responsible for part of the<br>capture and indication of commercial establishments. considered as a possible loss is R$ 10,285 on June 30, 2022 (R$ 9,728 on December<br>31, 2021).
---	---
·	The Group is party to a collection lawsuits filed by a customer, whose high rate of disputed transactions<br>through credit card (Chargebacks) terminated the contract between the parties. In the action, the plaintiff requires payment of the chargeback<br>amounts which weren’t paid. The amount considered as a possible loss is R$ 6,326 on June 30, 2022 (R$ 6,249 on December 31, 2021)
---	---
·	The Group is party to considerable lawsuits whose root causes are connected with the business and it is usual in this operation. The<br>demands are primarily related to indimnity claims due to: (i) retention of receivables, (ii) payment account operation, (iii) credit concession<br>operation by SCD, (iv) disputed transactions through credit card (Chargebacks), (v) specific type of services Stone and (vi) discussion about<br>any divergence of fees agreed and applied in the business relationship established between the group and the accredited commercial establishments<br>and sub-acquirer had difficulties in settling the funds of debit and credit transactions carried out by the aforementioned establishments<br>and the total amount of possible loss of the actions in which Stone was called. The total amount of R$ 94,330 on June 30, 2022 (R$ 42,924<br>as of December 31, 2021).
---	---

F-25

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

The nature of the labor litigations is summarized as follows:

In addition, in the Labor Courts, the main causes are connected to (i) placement in a different trade union and (ii) payment of overtime. The claims are issued by former employees and former employees of outsourced companies, contracted by Stone.

The nature of the tax litigations is summarized as follows:

Action for annulment of tax debits regarding the tax assessment issued by the state tax authorities on the understanding that the Company would have carried out lease of equipment and data center spaces from January 2014 to December 2015, on the grounds that the operations would have the nature of services of telecommunications and therefore would be subject to ICMS tax at the rate of 25% and a fine equivalent to 50% of the updated tax amount for failure to issue ancillary tax obligations . As of June 30, 2022, the updated amount recorded as a probable loss is R$ 23,170 (R$ 21,934 as of December 31, 2021), and the amount of R$ 28,546 (R$ 27,376 as of December 31, 2021) is considered as a possible loss (contingency arising from Linx´s acquisition).

15.

Equity

---

15.1.Authorized capital

The Company has an authorized share capital of USD 50 thousand, corresponding to 630,000,000 authorized shares with a par value of USD 0.000079365 each. Therefore, the Company is authorized to increase capital up to this limit, subject to approval of the Board of Directors. The liability of each member is limited to the amount from time to time unpaid on such member’s shares.

15.2.Subscribed and paid-in capital and capital reserve

The Articles of Association provide that at any time when there are Class A common shares being issued, Class B common shares may only be issued pursuant to: (a) a share split, subdivision or similar transaction or as contemplated in the Articles of Association; or (b) a business combination involving the issuance of Class B common shares as full or partial consideration. A business combination, as defined in the Articles of Association, would include, amongst other things, a statutory amalgamation, merger, consolidation, arrangement or other reorganization.

The additional paid-in capital refers to the difference between the purchase price that the shareholders pay for the shares and their par value. Under Cayman Law, the amount in this type of account may be applied by the Company to pay distributions or dividends to members, pay up unissued shares to be issued as fully paid, for redemptions and repurchases of own shares, for writing off preliminary expenses, recognized expenses, commissions or for other reasons. All distributions are subject to the Cayman Solvency Test which addresses the Company’s ability to pay debts as they fall due in the natural course of business.

Below are the movements of shares during the three months ended June 30, 2022:

	Number of shares
	Class A		Class B			Total
As of December 31, 2021		266,490,063		46,041,185			312,531,248
Conversions		14,400,000		(14,400,000	)		-
As of June 30, 2022		280,890,063		31,641,185			312,531,248

F-26

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

15.3.Treasury shares

Own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognized in equity.

On May 13, 2019, the Company announced the adoption of its share repurchase program in an aggregate amount of up to US$ 200 million (the “Repurchase Program”). The Repurchase Program went into effect in the second quarter of 2019 and does not have a fixed expiration date. The Repurchase Program may be executed in compliance with Rule 10b-18 under the Exchange Act.

As of June 2022, the Company holds 366,345 (December 2021 - 3,599,848) class A common shares in treasury. The reduction in treasury shares mainly refers to: (a) the acquisition of Reclame Aqui, in which the company transferred, in February 2022, 1,977,391 class A common shares, previously held in treasury, to some of the selling shareholders and, and (b) to the sale of 974,718 class A common shares shortly after being contributed by the Company as capital increase in Reclame Aqui.

16.	Earnings (loss) per share

Basic earnings (loss) per share is calculated by dividing net income (loss) for the period attributed to the owners of the parent by the weighted average number of ordinary shares outstanding during the period.

The numerator of the Earnings per Share (“EPS”) calculation is adjusted to allocate undistributed earnings as if all earnings for the period had been distributed. In determining the numerator of basic EPS, earnings attributable to the Group is allocated as follows:

	Six months ended June 30,					Three months ended June 30,
	2022			2021		2022			2021
Net income (loss) attributable to Owners of the Parent		(800,614	)		687,512		(487,390	)		529,176
Numerator of basic and diluted EPS		(800,614	)		687,512		(487,390	)		529,176

The following table contains the earnings per share of the Group for the six months ended June 30, 2022 and 2021 (in thousands except share and per share amounts):

					Three months ended June 30,
			2021		2022			2021
Numerator of basic EPS	(800,614	)		687,512		(487,390	)		529,176
Weighted average number of outstanding shares	311,240,266			308,889,329		312,161,248			308,162,686
Denominator of basic EPS	311,240,266			308,889,329		312,161,248			308,162,686
Basic earnings (loss) per share - R	(2.57	)		2.23		(1.56	)		1.72
Numerator of diluted EPS	(800,614	)		687,512		(487,390	)		529,176
Share-based payments	-			5,762,231		-			6,355,798
Weighted average number of outstanding shares	311,240,266			308,889,329		312,161,248			308,162,686
Denominator of diluted EPS	311,240,266			314,651,560		312,161,248			314,518,484
Diluted earnings (loss) per share - R	(2.57	)		2.18		(1.56	)		1.68

All values are in US Dollars.

F-27

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

17.	Total revenue and income
	Six months ended June 30,				Three months ended June 30,
---	---	---	---	---	---	---	---	---
	2022		2021		2022		2021
Timing of revenue recognition
Net revenue from transaction activities and other services		1,161,814		677,474		606,894		359,189
Recognized at a point in time		1,161,814		677,474		606,894		359,189
Net revenue from subscription services and equipment rental		869,991		292,837		437,840		152,888
Financial income		2,054,743		408,809		1,104,993		40,018
Other financial income		287,855		101,979		154,417		61,337
Recognized over time		3,212,589		803,625		1,697,250		254,243
Total revenue and income		4,374,403		1,481,099		2,304,144		613,432
18.	Expenses by nature
---	---
	Six months ended June 30,					Three months ended June 30,
---	---	---	---	---	---	---	---	---	---	---
	2022		2021			2022		2021
Personnel expenses		1,116,103		538,451			560,702		303,338
Financial expenses (a)		1,662,958		250,098			954,711		157,602
Mark-to-market on equity securities designated at FVPL (Note 5 (b))		850,079		(841,168	)		527,083		(841,168	)
Transaction and client services costs (b)		557,498		255,796			252,982		147,280
Depreciation and amortization (Note 9.2)		381,743		181,813			196,881		97,371
Marketing expenses and sales commissions (c)		316,646		160,518			137,429		99,068
Third parties services		158,167		69,093			91,950		35,825
Other		102,456		67,475			64,483		28,706
Total expenses		5,145,650		682,076			2,786,221		28,022
(a)	Financial expenses include discounts on the sale of receivables to banks, interest expense on borrowings,<br>interest to fund FIDC quota holders, foreign currency exchange variations, net and the cost of derivatives covering interest and foreign<br>exchange exposure.
---	---
(b)	Transaction and client services costs include card transaction capturing services, card transaction and<br>settlement processing services, logistics costs, payment scheme fees, cloud services and other costs.
---	---
(c)	Marketing expenses and sales commissions relate to marketing and advertising expenses, and commissions<br>paid to sales related partnerships.
---	---

The Group provides a standard benefit package to all employees, consisting primarily of health care plans, group life insurance, meal and food vouchers and transportation vouchers. The commission paid to salespeople are included in personnel expenses.

F-28

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

19.	Share-based payment

The Group provides benefits to employees (including executive directors) of the Group through share-based incentives.

The total expense, including taxes and social charges, recognized for the programs for the six months ended June 30, 2022 was R$ 73,412 (2021 - R$ 78,509). The Group recorded in capital reserve the amount of R$ 76,955 (2021 - R$ 51,160) related to share-based payments.

Restricted share units and StockOptions

The Group has a Long-term incentive plan (“LTIP”) to enable the Group to grant equity-based awards to employees and other service providers with respect to its Class A common shares, and it was granted restricted share unit (“RSUs”) and stock options to certain key employees under the LTIP to incentivize and reward such individuals. These awards are scheduled to vest over a four-, five-, seven- and ten-year period, subject to and conditioned upon the achievement of certain performance conditions. Assuming achievement of these performance conditions, awards will be settled in, or exercised for, its Class A common shares. If the applicable performance conditions are not achieved, the awards will be forfeited for no consideration.

In February and March 2022, the Company has granted 85,243 and 107,487 RSUs with a fair value of R$ 84.95 and R$ 53.35, respectively, which were determined based on the fair value of the equity instruments granted and the exchange rate, both at the grant date. In the first quarter of 2022 the Group also cancelled 126,079 RSUs.

In the second quarter of 2022 the Company has granted 4,704,390 RSUs with an average price of R$ 49.53. The prices were determined based on the fair value of the equity instruments granted and the exchange rate, at the grant date. Moreover, the Company accelerated 383,030 RSUs and the Group also cancelled 69,210 RSUs in the second quarter of 2022.

As of June 30, 2022, there were RSUs outstanding with respect to 10,903,949 Class A common shares and stock options outstanding with respect to 32,502 Class A common shares (with a weighted average exercise price of US$ 24.92).

Performance share units

The Group granted awards as Performance share units (“PSUs”). These awards are equity classified and give beneficiaries the right to receive shares if the Group reaches minimum levels of total shareholder return (“TSR”) or a determined market value in a given period and continue to provide services over a specified period. The PSUs granted will not result in delivering shares to beneficiaries and will expire if the minimum performance condition is not met. The fair value of the awards is estimated at the grant date using the Black-Scholes-Merton pricing model, considering the terms and conditions on which the PSUs were granted, and the related compensation expense will be recognized over the vesting period. The performance condition is considered in estimating the grant-date fair value.

In the second quarter of 2022 the Company granted 4,051,090 new PSUs with an average grant-date fair value of R$ 2.57 and the Group also cancelled 1,221,000 PSUs. The grant-date fair value was determined based on historical data and current expectations and is not necessarily indicative of performance patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the PSUs is indicative of future trends, which may not necessarily be the actual outcome. For the grant mentioned above, the main two inputs to the model were: (i) Risk–free interest rate of 3.13% according to 3-month Libor forward curve for a 3 years period and annual volatility of 76.5%, based on the Company’s stock price, and (ii) Risk–free interest rate of 3.10% according to 3-month Libor forward curve for a 5 years period and annual volatility of 77.3%, based on the Company’s stock price.

F-29

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

20.	Financial instruments

20.1.Financial risk management

The Group’s activities expose it to a variety of financial risks: credit risk, market risk (including foreign exchange risk, cash flow or fair value interest rate risk, and price risk), liquidity risk and fraud risk. The Group’s overall financial risk management program seeks to remove or at least minimize potential adverse effects from its financial results. The Group uses derivative financial instruments to mitigate certain risk exposures. It is the Group’s policy that no trading in derivatives for speculative purposes may be undertaken.

Financial risk management is carried out by the global treasury department (“Global treasury”) on the Group level, designed by the integrated risk management team in accordance with policies and approved by the Board of Directors. Global treasury identifies, evaluates, and hedges financial risks in close co-operation with the Group’s operating units. On the specific level of the subsidiaries, mostly the operations related to merchant acquiring operation in Brazil, the local treasury department (“Local Treasury”) executes and manages the financial instruments under the specific policies, respecting the Group’s strategy. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, anti-fraud, use of derivative financial instruments, and non-derivative financial instruments, and investment of surplus liquidity.

The war in Ukraine has intensified global market volatility and supply chain disruptions which started with the COVID-19 pandemic, affecting the global economy specially through rising inflation and interest rates, which may adversely affect our ability to access capital to meet liquidity needs, execute the existing strategy, pursue further business expansion, and maintain revenue growth. The risks are being monitored closely, and the Group intends to follow health and safety guidelines as they evolve.

20.2.Financial instruments by category

Assets as per statement of financial position


As of June 30, 2022
Short and Long-term investments	-	2,673,931	35,564	2,709,495
Financial assets from banking solution	-	2,856,887	-	2,856,887
Accounts receivable from card issuers	45,742	-	17,589,881	17,635,623
Trade accounts receivable	443,594	129,417	-	573,011
Derivative financial instruments	-	46,096	-	46,096
Receivables from related parties	5,021	-	-	5,021
Other assets	391,900	-	-	391,900
	886,257	5,706,331	17,625,445	24,218,033
As of December 31, 2021
Short-term investments	-	3,209,604	21,909	3,231,513
Financial assets from banking solution	-	2,346,474	-	2,346,474
Accounts receivable from card issuers	132,605	-	19,153,985	19,286,590
Trade accounts receivable	434,481	511,240	-	945,721
Derivative financial instruments	-	219,324	-	219,324
Receivables from related parties	4,720	-	-	4,720
Other assets	474,557	-	-	474,557
	1,046,363	6,286,642	19,175,894	26,508,899

F-30

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

Liabilities as per statement of financial position


As of June 30, 2022
Deposits from banking customers	2,704,963	-	2,704,963
Accounts payable to clients	14,608,152	-	14,608,152
Trade accounts payable	384,048	-	384,048
Loans and financing	5,187,975	-	5,187,975
Obligations to FIDC quota holders	1,605,703	-	1,605,703
Derivative financial instruments	-	192,831	192,831
Other liabilities	428,809	353,356	782,165
	24,919,650	546,187	25,465,837
As of December 31, 2021
Deposits from banking customers	2,201,861	-	2,201,861
Accounts payable to clients	15,726,502	-	15,726,502
Trade accounts payable	372,547	-	372,547
Loans and financing	6,135,215	-	6,135,215
Obligations to FIDC quota holders	2,227,174	-	2,227,174
Derivative financial instruments	-	23,244	23,244
Other liabilities	162,178	328,456	490,634
	26,825,477	351,700	27,177,177

20.3.Fair value measurement

The table below presents a comparison by class between book value and fair value of the financial instruments of the Group:

	June 30, 2022					December 31, 2021
	Book value		Fair value		Hierarchy level	Book value		Fair value		Hierarchy level
Financial assets
Short and Long-term investments (a)		2,709,495		2,709,495	I /II		3,231,513		3,231,513	I /II
Financial assets from banking solution (e)		2,856,887		2,856,887	I		2,346,474		2,346,474	I
Accounts receivable from card issuers (b)		17,635,623		17,635,560	II		19,286,590		19,283,921	II
Trade accounts receivable (c) (d)		573,011		573,011	II / III		945,721		945,721	II / III
Derivative financial instruments (f)		46,096		46,096	II		219,324		219,324	II
Receivables from related parties (c)		5,021		5,021	II		4,720		4,720	II
Other assets (c)		391,900		391,900	II		474,557		474,557	II
		24,218,033		24,217,970			26,508,899		26,506,230
Financial liabilities
Deposits from banking customers (g)		2,704,963		2,704,963	II		2,201,861		2,201,861	II
Accounts payable to clients (i)		14,608,152		14,162,097	II		15,726,502		14,628,794	II
Trade accounts payable (c)		384,048		384,048	II		372,547		372,547	II
Loans and financing (h)		5,187,975		5,179,648	II		6,135,215		6,121,966	II
Obligations to FIDC quota holders (h)		1,605,703		1,809,478	II		2,227,174		2,324,553	II
Derivative financial instruments (f)		192,831		192,831	II		23,244		23,244	II
Other liabilities (c) (j)		782,165		782,165	II/III		490,634		490,634	II/III
		25,465,837		25,215,230			27,177,177		26,163,599
(a)	Short and Long-term investments are measured at fair value. Listed securities are classified as level<br>I and unlisted securities classified as level II, for those the fair value is determined using valuation techniques, which employ the<br>use of market observable inputs.
---	---
(b)	Accounts receivable from card issuers are measured at FVOCI or at amortized cost, depending on the asset’s<br>contractual cash flow characteristics and the Group’s business model for managing each of them. For those assets measured at FVOCI,<br>fair value is estimated by discounting future cash flows using market rates for similar items. For those assets measured at amortized cost, carrying<br>values are assumed to approximate their fair values, taking into consideration that the realization of these balances and short settlement<br>terms.
---	---

F-31

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

(c)	The carrying values of trade accounts receivable, receivables from related parties, other assets, trade<br>accounts payable and other liabilities are measured at amortized cost and are recorded at their original amount, less the provision for<br>impairment and adjustment to present value, when applicable. The carrying values are assumed to approximate their fair values, taking<br>into consideration that the realization of these balances, and settlement terms do not exceed 60 days. These amounts are classified as<br>level II in the hierarchy level.
(d)	Included in Trade accounts receivable there are Loans designated at FVPL with an amount of R$ 129,417<br>in the six months ended June 30, 2022, this portfolio registered a loss of R$ 287,103, and total net cashflow effect was an inflow of<br>R$ 387,233. Loans are measured at fair value through profit or loss and are valued using valuation techniques, which employ the use of<br>market unobservable inputs, and therefore is classified as level III in the hierarchy level.
---	---
As of December 31, 2021	511,240
---	---	---
Collections	(387,233	)
Interest income recognized in the statement of profit or loss as Financial Income	292,513
Fair value recognized in the statement of profit or loss as Financial income	(287,103	)
As of June 30, 2022	129,417

The significant unobservable inputs used in the fair value measurement of Loans designated at FVPL categorized within Level III of the fair value hierarchy, are the expected loss rate and the discount rate used to evaluate the asset. To calculate expected loss rate, the Company considers a list of assumptions, the main being: an individual projection of client’s transactions, the probability of each contract to default and scenarios of recovery. These main inputs are periodically reviewed, or when there is an event that may affect the probabilities and curves applied to the portfolio.

In determining the discount rate, we consider that the rate should be a current rate commensurate with nature of the loan portfolio and the valuation method used. When rates for actual recent transactions are available and appropriate to reflect the interest rate as of the measurement date, we consider those rates. When such rates are not available, we also obtain non-binding quotes. Based on all available information we make a judgment as to the rate to be used. In prior periods we used the interest rate that we paid to senior holders of FIDCs on recent transactions. Considering we did not raise funding through FIDCs since February 2021 and the changes observed in the benchmark interest rate in Brazil and in the credit markets we currently build an interest rate curve for unsecured loans granted to us based on recent loans obtained and in quotes from financial institutions.

(e)	Financial assets from banking solutions are measured at fair value. Sovereign bonds are priced using quotation<br>from Anbima public pricing method.
(f)	The Group enters into derivative financial instruments with financial institutions with investment grade<br>credit ratings. Non-deliverable forward contracts are valued using valuation techniques, which employ the use of market observable inputs.
---	---
(g)	Deposits from banking customers are measured at amortized cost considering the immediate liquidity due<br>to costumers’ payment account deposits.
---	---
(h)	Loans and financing, and obligations to FIDC quota holders are measured at amortized cost. Fair values<br>are estimated by discounting future contractual cash flows at the interest rates available in the market that are available to the Group<br>for similar financial instruments.
---	---
(i)	Accounts payable to clients, are measured at amortized cost. Fair values are estimated by discounting<br>future contractual cash flows at the average of interest rates applicable in prepayment business.
---	---
(j)	There are contingent considerations included in other liabilities arising on business combinations<br> that are measured at FVPL. Fair values are estimated in accordance with pre-determined formulas explicit in the contracts with<br> selling shareholders. The amount as of June<br>30, 2022 is R$ 353,356 and is classified as level III in the hierarchy level.
---	---

F-32

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

The movement of the contingent consideration is summarized as follows:

As of December 31, 2021	328,456
Additions (Note 22.1.3)	36,015
Remeasurement at fair value recognized in the statement of profit or loss as Other income (expenses), net	3,832
Payments	(23,506	)
Interest recognized in the statement of profit or loss as Financial expenses, net	8,559
As of June 30, 2022	353,356

The significant unobservable inputs used in the fair value measurement of contingent consideration categorized within Level III of the fair value hierarchy are based on projections of revenue, net debt, number of clients, net margin and the discount rates used to evaluate the liability.

The Group has performed sensitivity analysis considering an increase of 10% and a decrease of 10% in projections of revenue, and number of clients. The result was an increase of contingent consideration in the total amount of R$ 50,265 considering increase in unobservable inputs and a decrease of contingent consideration in the total amount of R$ 60,062 considering decrease in unobservable inputs.

For disclosure purposes, the fair value of financial liabilities is estimated by discounting future contractual cash flows at the interest rates available in the market that are available to the Group for similar financial instruments. The effective interest rates at the balance sheet dates are usual market rates and their fair value does not significantly differ from the balances in the accounting records.

20.4.	Hedge accounting – bonds

During 2021, the Company entered into hedge operations to protect its inaugural dollar bonds (Note 12.1.4), subject to foreign exchange exposure using cross-currency swap contracts. The transactions have been elected for hedge accounting and classified as cash flow hedge of the variability of the designated cash flows of the dollar denominated bonds due to changes in the exchange rate. The details of the cross-currency swaps are presented as follows.

Pay rate in local<br> currency	Trade date	Due date
CDI + 2.94%	23-Jun-2021	16-Jun-2028	(10,820	)	(17,301	)	(19,255	)	25,736
CDI + 2.90%	24-Jun-2021	16-Jun-2028	(10,478	)	(17,301	)	(18,991	)	25,814
CDI + 2.90%	24-Jun-2021	16-Jun-2028	(11,589	)	(17,301	)	(18,595	)	24,307
CDI + 2.99%	30-Jun-2021	16-Jun-2028	(19,666	)	(25,950	)	(26,929	)	33,213
CDI + 2.99%	30-Jun-2021	16-Jun-2028	(13,500	)	(17,300	)	(17,815	)	21,615
CDI + 2.98%	30-Jun-2021	16-Jun-2028	(13,063	)	(17,301	)	(17,971	)	22,209
CDI + 2.99%	15-Jul-2021	16-Jun-2028	(8,175	)	(8,651	)	(8,436	)	8,912
CDI + 2.99%	15-Jul-2021	16-Jun-2028	(8,266	)	(8,651	)	(8,359	)	8,744
CDI + 2.96%	16-Jul-2021	16-Jun-2028	(20,365	)	(17,305	)	(15,350	)	12,290
CDI + 3.00%	06-Aug-2021	16-Jun-2028	(9,844	)	(7,648	)	(7,850	)	5,654
CDI + 2.85%	10-Aug-2021	16-Jun-2028	(10,659	)	(9,658	)	(7,809	)	6,808
CDI + 2.81%	11-Aug-2021	16-Jun-2028	(10,501	)	(8,654	)	(7,747	)	5,900
		Net amount	(146,926	)	(173,021	)	(175,107	)	201,202

All values are in US Dollars.

(a)	Recognized in the statement of profit or loss, in “Financial expenses, net”.
(b)	Recognized in equity, in “Other comprehensive income”. The balance in the cash flow hedge reserve as of June 30, 2022<br>is a loss of R$ 229,251.
---	---

F-33

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

20.5.Financial assets from banking solution and deposits from banking customers

Financial assets from banking solution are deposited by the Company in Brazilian Central Bank’s (“BACEN”) custody accounts or in Brazilian National Treasury Bonds, in order to guarantee the deposits from banking customers, as required for companies under BACEN regulation.

20.6.Offsetting of financial instruments

Financial asset and liability balances are offset (i.e. reported in the consolidated statement of financial position at their net amount) only if the Company and its subsidiaries currently have a legally enforceable right to set off the recognized amounts and intend either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

As of June 30, 2022, and December 31, 2021, the Group has no financial instruments that meet the conditions for recognition on a net basis.

21.	Other disclosures on cash flows

21.1.Non-cash operating activities


Fair value adjustment to accounts receivable from card issuers	84,528		67,378
Fair value adjustment on equity instruments/listed securities designated at FVOCI	(1,345	)	213,753
Fair value adjustment on loans designated at FVPL	(287,103	)	(917,361	)
Mark-to-market on equity securities designated at FVPL	(850,079	)	841,168

21.2.Non-cash investing activities

	June 30, 2022		June 30, 2021
Property and equipment and intangible assets acquired through lease		41,649		59,161

21.3.Non-cash financing activities

	June 30, 2022		June 30, 2021
Unpaid consideration for acquisition of non-controlling shares		1,132		2,486
Shares of the Company delivered at Reclame Aqui acquisition		169,864		-

21.4.Property and equipment, and intangible assets


Additions of property and equipment (Note 9)	(426,939	)	(417,301	)
Additions of right of use (IFRS 16)	26,341		53,535
Payments from previous period	(51,614	)	(33,353	)
Purchases not paid at period end	46,393		33,143
Prepaid purchases of POS	100,227		(160,734	)
Purchases of property and equipment	(305,592	)	(524,710	)
Additions of intangible assets (Note 10)	(134,545	)	(82,088	)
Additions of right of use (IFRS 16)	15,308		5,626
Payments from previous period	(41,898	)	-
Purchases not paid at period end	7,279		-
Capitalization of borrowing costs	778		157
Purchases and development of intangible assets	(153,078	)	(76,305	)
Net book value of disposed assets (Notes 9 and 10)	86,161		51,878
Net book value of Leases write off	(24,141	)	(1,108	)
Loss on disposal of property and equipment and intangible assets	(23,984	)	(39,446	)
Disposal of Linked's property, equipment and intangible assets, including goodwill	-		(11,224	)
Outstanding balance	(17,484	)	-
Proceeds from disposal of property and equipment and intangible assets	20,552		100

F-34

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

22.	Business combinations

22.1.Acquisitions in 2022

Reclame Aqui

On February 17, 2022 the Group acquired 50% of equity interest in Reclame Aqui Holdings Limited (“Reclame Aqui”). The Group also has the right to join the Board of Directors of Reclame Aqui with two seats out for four. Reclame Aqui is an unlisted company based in Cayman Islands, with operations in Brazil, which provides customer relationship software and other solutions to help companies better engage and serve their clients.

Plugg.to

On June 08, 2022, the Group acquired 100% of equity interest in ThirdLevel Soluções de Internet S.A (“Plugg.to”), a private company headquartered in the State of São Paulo, Brazil, for R$ 39,880. Plugg.to develops technology that works as a marketplace hub, offering fast and intelligent integrations between virtual store platforms, ERP's and marketplaces, with which the Group hopes to obtain synergies in its services to customers. The agreement with the selling shareholders provides for a contingent consideration linked to the achievement of certain operational goals and to the performance of net revenue for fiscal years 2023 and 2024. The amount of contingent consideration is limited to R$25,000. The acquisition is under review for business combination rules.

22.1.1.Financial position of the business acquired

The net assets acquired, at fair value, the consideration paid, and the goodwill amount recognized on the business combination date are presented below.

Fair value	Reclame Aqui<br> <br>(as of Feb 17, 2022)<br> <br>(a)
Cash and cash equivalents		418	362		780
Short-term investments		9,024	-		9,024
Trade accounts receivable		7,938	1,864		9,802
Recoverable taxes		148	91		239
Receivables from related parties		62	-		62
Property and equipment		1,285	-		1,285
Intangible assets - Customer relationship (b)		83,122	-		83,122
Intangible assets - Software (b)		10,732	-		10,732
Intangible assets - Trademarks and patents (b)		21,122	-		21,122
Other assets		63,651	97		63,748
Total assets		197,502	2,414		199,916
Trade accounts payable		17,401	3,943		21,344
Loans and financing		4,463	-		4,463
Labor and social security liabilities		2,190	541		2,731
Taxes payable		3,364	313		3,677
Other liabilities		3,154	-		3,154
Total liabilities		30,572	4,797		35,369
Net assets and liabilities		166,930	(2,383	)	164,547
Consideration paid (Note 22.1.2)		330,245	39,880		370,125
Goodwill		163,315	42,263		205,578
(a)	Identification and measurement of assets acquired, liabilities assumed, consideration transferred, and<br>goodwill are preliminary.
---	---
(b)	The Company carried out a preliminary fair value assessment of the assets acquired in the business combination,<br>having identified customer relationship, software, and trademark and patents as intangible assets. Details on the methods and assumptions<br>adopted to evaluate these assets are described on Note 22.1.2.
---	---

F-35

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

22.1.2.Intangible assets arised from business combination

Customer relationship

	Reclame Aqui
Amount	83,122
Method of evaluation	MEEM (*)
Estimated useful life (a)	5 years
Discount rate (b)	14.0%
Source of information	Acquirer’s management internal projections
(*) Multi-Period Excess Earnings Method (“MEEM”)
(a)	Useful lives were estimated based on internal benchmarks.
---	---
(b)	Discount rate used was equivalent to the weighted average cost of capital combined with the sector’s<br>risk.
---	---

Software

	Reclame Aqui
Amount	10,732
Method of evaluation	Replacement cost
Estimated useful life (a)	5 years
Discount rate (b)	14.0%
Source of information	Historical data
(a)	Useful lives were estimated based on internal benchmarks.
---	---
(b)	Discount rate used was equivalent to the weighted average cost of capital combined with the sector’s<br>risk.
---	---

F-36

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

Trademark and patents

	Reclame Aqui
Amount	21,122
Method of evaluation	Relief from royalties
Estimated useful life (a)	Indefinite
Discount rate (b)	14.0%
Source of information	Acquirer’s management internal projections
(a)	Useful lives were estimated based on internal benchmarks.
---	---
(b)	Discount rate used was equivalent to the weighted average cost of capital combined with the sector’s<br>risk.
---	---
22.1.3.	Consideration paid
---	---

The consideration paid on business combination is composed by the sum of the following values, if any: (i) consideration transferred, (ii) non-controlling interest in the acquiree and (iii) fair value of the acquirer’s previously held equity interest in the acquiree. The consideration paid in the preliminary assessments is presented as follows.

	Reclame Aqui
Cash consideration paid to the selling shareholders		42,273		20,880	63,153
Cash consideration to be paid to the selling shareholders		10,000		19,000	29,000
Shares of the Company delivered to selling shareholders (a)		113,779		-	113,779
Capital increase in the acquiree (a)		64,013		-	64,013
Non-controlling interest in the acquiree (b)		83,464		-	83,464
Call option in the acquiree (c)		(19,299	)	-	(19,299	)
Contingent consideration (d)		36,015		-	36,015
Total		330,245		39,880	370,125
a)	The Group used Treasury shares to pay some of the selling shareholders. The Group also used Treasury shares<br>for part of Capital increase in Reclame Aqui (see note 15.3).
---	---
b)	The Group has elected to measure the non-controlling interests in the acquiree using the present ownership<br>instruments’ proportionate share in the recognized amounts of the acquiree’s identifiable net assets.
---	---
c)	The Group has a call option to acquire the remaining equity interest to hold 100% of Reclame Aqui, which<br>can be exercised between January 1, 2027 and June 30, 2027. The option has been measured in accordance with pre-determined formulas and<br>was recorded in the consolidated statement of financial position as Derivative financial instruments. R$ 19,299 represents a preliminary<br>estimate on acquisition date. This value is periodically remeasured, which may result in an increase or decrease of the estimate, and<br>as of June 30, 2022 this option is included in the amount of R$ 44,560 mentioned in Note 2.1.
---	---
d)	Reclame Aqui contingent consideration will be paid to the selling shareholders in two periods –<br>after the closing of the 2023 (1^st^ period) and 2025 (2^nd^ period) fiscal years. The amount is based on predetermined<br>formulas which consider mainly the net revenue of Reclame Aqui at the end of 2023 and 2025.
---	---

Additionally, the Group holds a put option to sell the totality of its shares on Reclame Aqui to VLP Holding Ltd (non-controller shareholder of Reclame Aqui). VPL Holding Ltd also has a put option to sell the totality of its shares on Reclame Aqui to the Group. This option can be exercised by VLP Holding Ltd between July 1, 2027 and July 31, 2027, provided that: (i) the Company decides not to exercise the call option mentioned in the item c) above and (ii) certain metrics based on net revenue of Reclame Aqui are achieved. See note 2.1 for further details about accounting policy elected to those options.

F-37

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

22.1.4.Revenue and profit contribution

The combined statement of profit or loss from the acquisition date through June 30, 2022 for all companies acquired in 2022, is presented below:


Net revenue from subscription services and equipment rental	26,469
Other financial income	536
Total revenue and income	27,005
Cost of services	(50	)
Administrative expenses	(23,782	)
Selling expenses	(51	)
Financial expenses, net	(189	)
Other income (expenses), net	(857	)
	(24,929	)
Loss before income taxes	(2,076	)
Loss for the period	(2,076	)

Total revenue and net income for the Group is presented below on a pro-forma basis assuming the acquisitions occurred at the beginning of the year of each acquisition:

	Six months<br> <br><br> <br>ended June<br> <br>30, 2022
Pro-forma total revenue and income		4,383,301
Pro-forma net income		(807,713	)

This pro-forma financial information is presented for informational purposes only and does not purport to represent what the Company’s results of operations would have been had it completed the acquisition on the date assumed, nor is it necessarily indicative of the results that may be expected in future periods.

22.2.Acquisitions in 2021 – assessments concluded in 2022

During 2021, the Company conducted business combinations with some companies, including SimplesVet, VHSYS and Linx. The acquisitions of these companies were measured in 2021 based on preliminary assessments and included in the December 31, 2021 consolidated financial statements. The assessments were completed in the first quarter of 2022 for SimplesVet and VHSYS and in the second quarter of 2022 for Linx. The effects of the differences between the preliminary assessments (as originally recognized on December 31, 2021) and the final assessments was retrospectively accounted in the consolidated financial statements as of December 31, 2021. Therefore, the December 31, 2021 comparative statement of financial position was revised in these interim condensed consolidated financial statements (see Note 1.1).

F-38

StoneCo Ltd.

Notes to unaudited interim condensed consolidated financial statements

June 30, 2022

(In thousands of Brazilian Reais, unless otherwise stated)

22.2.1.Financial position of the business acquired

The net assets acquired, at fair value, the consideration paid, and the goodwill amount recognized on the business combination date considering the preliminary and the final assessments are presented below.

22.2.1.1.Simplesvet | Fair value | Preliminary amounts (as presented on December 31, 2021) | | Adjustments | | | Final amounts (as presented on June 30, 2022) | || --- | --- | --- | --- | --- | --- | --- | --- || Cash and cash equivalents | | 11,107 | | - | | | 11,107 || Trade accounts receivable | | 96 | | - | | | 96 || Recoverable taxes | | - | | 20 | | | 20 || Property and equipment | | 179 | | - | | | 179 || Intangible assets - Customer relationship (a) | | 15,924 | | (9,098 | ) | | 6,826 || Intangible assets - Software (a) | | 2,807 | | 12,859 | | | 15,666 || Other assets | | 137 | | (21 | ) | | 116 || Total assets | | 30,250 | | 3,760 | | | 34,010 || Trade accounts payable | | 106 | | - | | | 106 || Labor and social security liabilities | | 566 | | - | | | 566 || Taxes payable | | - | | 580 | | | 580 || Deferred tax liabilities | | 6,369 | | 1,279 | | | 7,648 || Other liabilities | | 843 | | (580 | ) | | 263 || Total liabilities | | 7,884 | | 1,279 | | | 9,163 || Net assets and liabilities (b) | | 22,366 | | 2,481 | | | 24,847 || Consideration paid (Note 22.2.3.1) | | 39,583 | | (2,102 | ) | | 37,481 || Goodwill | | 17,217 | | (4,583 | ) | | 12,634 || (a) | The Company carried out a fair value assessment of the assets acquired in the business combination, having identified customer relationship, and software as intangible assets. Details on the methods and assumptions adopted to evaluate these assets are described on Note 22.2.2. || --- | --- || (b) | The net assets recognized in the December 31, 2021 financial statements were based on a provisional assessment of their fair value while the Group sought an independent valuation for the intangible assets owned by Simplesvet. The valuation had not been completed by the date the 2021 financial statements were approved for issue by the Board of Directors. In the first quarter of 2022, the valuation was completed. || --- | --- | F-39 StoneCo Ltd.Notes to unaudited interim condensed consolidated financial statementsJune 30, 2022(In thousands of Brazilian Reais, unless otherwise stated)22.2.1.2.VHSYS| Fair value | Preliminary amounts (as presented on December 31, 2021) | | Adjustments | | | Final amounts (as presented on June 30, 2022) | || --- | --- | --- | --- | --- | --- | --- | --- || Cash and cash equivalents | | 13,731 | | - | | | 13,731 || Trade accounts receivable | | 351 | | - | | | 351 || Recoverable taxes | | - | | 38 | | | 38 || Property and equipment | | 2,232 | | 4 | | | 2,236 || Intangible assets | | 2,522 | | (2,522 | ) | | - || Intangible assets - Customer relationship (a) | | 6,134 | | (5,462 | ) | | 672 || Intangible assets - Software (a) | | 14,583 | | 8,215 | | | 22,798 || Intangible assets - Trademarks and patents (a) | | - | | 21,513 | | | 21,513 || Other assets | | 109 | | (60 | ) | | 49 || Total assets | | 39,662 | | 21,726 | | | 61,388 || Trade accounts payable | | 3,515 | | - | | | 3,515 || Loans and financing | | 1,525 | | - | | | 1,525 || Labor and social security liabilities | | 2,019 | | - | | | 2,019 || Taxes payable | | - | | 174 | | | 174 || Provision for contingencies | | - | | 2 | | | 2 || Deferred tax liabilities | | 7,044 | | 7,393 | | | 14,437 || Other liabilities | | 177 | | (177 | ) | | - || Total liabilities | | 14,280 | | 7,392 | | | 21,672 || Net assets and liabilities (b) | | 25,382 | | 14,334 | | | 39,716 || Consideration paid (Note 22.2.3.2) | | 55,411 | | 7,167 | | | 62,578 || Goodwill | | 30,029 | | (7,167 | ) | | 22,862 || (a) | The Company carried out a fair value assessment of the assets acquired in the business combination, having identified customer relationship, and software as intangible assets. Details on the methods and assumptions adopted to evaluate these assets are described on Note 22.2.2. || --- | --- || (b) | The net assets recognized in the December 31, 2021 financial statements were based on a provisional assessment of their fair value while the Group sought an independent valuation for the intangible assets owned by VHSYS. The valuation had not been completed by the date the 2021 financial statements were approved for issue by the Board of Directors. In the first quarter of 2022, the valuation was completed. || --- | --- |22.2.1.3.Linx| Fair value | Preliminary amounts (as presented on December 31, 2021) | | Adjustments | | | Final amounts (as presented on June 30, 2022) | || --- | --- | --- | --- | --- | --- | --- | --- || Cash and cash equivalents | | 41,618 | | - | | | 41,618 || Short-term investments | | 431,444 | | - | | | 431,444 || Accounts receivable from card issuers | | 349,471 | | - | | | 349,471 || Trade accounts receivable | | 212,567 | | - | | | 212,567 || Recoverable taxes | | 43,927 | | (15,721 | ) | | 28,206 || Prepaid expenses | | 4,735 | | - | | | 4,735 || Deferred tax assets | | 47,362 | | 148,737 | | | 196,099 || Property and equipment | | 200,420 | | - | | | 200,420 || Intangible assets | | 56,917 | | - | | | 56,917 || Intangible assets - Customer relationship (a) | | 1,471,741 | | (899 | ) | | 1,470,842 || Intangible assets - Software (a) | | 340,780 | | - | | | 340,780 || Intangible assets - Trademarks and patents (a) | | 214,578 | | - | | | 214,578 || Intangible assets - Non-compete agreement (a) | | - | | 24,365 | | | 24,365 || Other assets | | 77,367 | | - | | | 77,367 || Total assets | | 3,492,927 | | 156,482 | | | 3,649,409 || Accounts payable to clients | | 332,902 | | - | | | 332,902 || Trade accounts payable | | 107,205 | | - | | | 107,205 || Loans and financing | | 346,151 | | - | | | 346,151 || Labor and social security liabilities | | 85,829 | | - | | | 85,829 || Taxes payable | | 34,635 | | - | | | 34,635 || Deferred tax liabilities | | 608,749 | | 9,714 | | | 618,463 || Provision for contingencies | | 164,259 | | - | | | 164,259 || Other liabilities | | 111,233 | | - | | | 111,233 || Total liabilities | | 1,790,963 | | 9,714 | | | 1,800,677 || Net assets and liabilities (b) | | 1,701,964 | | 146,768 | | | 1,848,732 || Consideration paid (Note 22.2.3.3) | | 6,737,900 | | 24,365 | | | 6,762,265 || Goodwill | | 5,035,936 | | (122,403 | ) | | 4,913,533 || (a) | The Company carried out a fair value assessment of the assets acquired in the business combination, having identified customer relationship, software, trademarks and patents, and non-compete agreement as intangible assets. Details on the methods and assumptions adopted to evaluate these assets are described on Note 22.2.2. || --- | --- || (b) | The net assets recognized in the December 31, 2021 financial statements were based on a provisional assessment of their fair value while the Group sought an independent valuation for the intangible assets owned by Linx. The valuation had not been completed by the date the 2021 financial statements were approved for issue by the Board of Directors. In the second quarter of 2022, the valuation was completed. || --- | --- | F-40 StoneCo Ltd.Notes to unaudited interim condensed consolidated financial statementsJune 30, 2022(In thousands of Brazilian Reais, unless otherwise stated)22.2.2.Intangible assets arised from business combinationThe assumptions adopted to measurethe fair value of intangible assets identified in business combination considering the final assessments are described below.Customer relationship| | SimplesVet | VHSYS | Linx || --- | --- | --- | --- || Amount | 6,826 | 672 | 1,470,842 || Method of evaluation | MEEM (*) | MEEM (*) | MEEM (*) || Estimated useful life (a) | 8 years | 3 years and 4 months | 31 years and 6 months to 34 years and 6 months || Discount rate (b) | 14.0% | 13.9% | 10.3% || Source of information | Acquirer’s management internal projections | Acquirer’s management internal projections | Acquirer’s management internal projections || (*) Multi-Period Excess Earnings Method (“MEEM”) | | | || (a) | Useful lives were estimated based on internal benchmarks. In the case of Linx useful life considers the observed behavior of Linx customers who historically present a very low level of churn. The asset was measured for each of the Linx subsidiaries and for this reason the useful life is variable. || --- | --- || (b) | Discount rate used was equivalent to the weighted average cost of capital combined with the sector’s risk. || --- | --- |Software| | SimplesVet | VHSYS | Linx || --- | --- | --- | --- || Amount | 15,666 | 22,798 | 340,780 || Method of evaluation | Replacement cost | Replacement cost | Relief from royalties || Estimated useful life (a) | 6 years | 6 years | 4 years to 10 years || Discount rate (b) | 13.6% | 13.5% | 10.3% || Source of information | Historical data | Historical data | Acquirer’s management internal projections || (a) | Useful lives were estimated based on internal benchmarks. The asset was measured for each of the Linx subsidiaries and for this reason the useful life is variable. || --- | --- || (b) | Discount rate used was equivalent to the weighted average cost of capital combined with the sector’s risk. || --- | --- | F-41 StoneCo Ltd.Notes to unaudited interim condensed consolidated financial statementsJune 30, 2022(In thousands of Brazilian Reais, unless otherwise stated)Trademark and patents| | VHSYS | Linx || --- | --- | --- || Amount | 21,513 | 214,578 || Method of evaluation | Relief from royalties | Relief from royalties || Estimated useful life (a) | Indefinite | Indefinite || Discount rate (b) | 13.5% | 10.3% || Source of information | Acquirer’s management internal projections | Acquirer’s management internal projections || (a) | Useful lives were estimated based on internal benchmarks. || --- | --- || (b) | Discount rate used was equivalent to the weighted average cost of capital combined with the sector’s risk. || --- | --- |Non-compete agreement| | Linx || --- | --- || Amount | 24,365 || Method of evaluation | With / without || Estimated useful life (a) | 5 years || Discount rate (b) | 10.3% || Source of information | Acquirer’s management internal projections || (a) | Useful lives were estimated based on non-compete agreement terms. || --- | --- || (b) | Discount rate used was equivalent to the weighted average cost of capital combined with the sector’s risk. || --- | --- |22.2.3.Consideration paidThe considerationpaid on business combination is composed by the sum of the following values, if any: (i) consideration transferred, (ii) non-controllinginterest in the acquiree and (iii) fair value of the acquirer’s previously held equity interest in the acquiree. The considerationpaid in the preliminary and the final assessments is presented as follows.22.2.3.1.Simplesvet| | Preliminary amounts (as presented on December 31, 2021) | | Adjustments | | | Final amounts (as presented on June 30, 2022) | || --- | --- | --- | --- | --- | --- | --- | --- || Cash consideration paid to the selling shareholders | | 15,650 | | - | | | 15,650 || Cash consideration to be paid to the selling shareholders | | 5,750 | | - | | | 5,750 || Non-controlling interest in the acquiree (a) | | 11,183 | | 1,241 | | | 12,424 || Contingent consideration (b) | | 7,000 | | (3,343 | ) | | 3,657 || Total | | 39,583 | | (2,102 | ) | | 37,481 || (a) | The Group has elected to measure the non-controlling interests in the acquiree using the present ownership instruments’ proportionate share in the recognized amounts of the acquiree’s identifiable net assets. || --- | --- || (b) | The final amount of contingent consideration was evaluated for the acquisition date based on predetermined formulas mainly considering the amount of revenue and profitability that the acquired company will have at the end of 2022 in different expected scenarios. || --- | --- | F-42 StoneCo Ltd.Notes to unaudited interim condensed consolidated financial statementsJune 30, 2022(In thousands of Brazilian Reais, unless otherwise stated)22.2.3.2.VHSYS| | Preliminary amounts (as presented on December 31, 2021) | | Adjustments | | Final amounts (as presented on June 30, 2022) | || --- | --- | --- | --- | --- | --- | --- || Cash consideration paid to the selling shareholders | | 18,656 | | - | | 18,656 || Previously held equity interest in the acquiree, at fair value (a) | | 24,064 | | - | | 24,064 || Non-controlling interest in the acquiree (b) | | 12,691 | | 7,167 | | 19,858 || Total | | 55,411 | | 7,167 | | 62,578 || (a) | Refers to the acquiree’s shares previously acquired from the selling shareholders. As a result of the acquisition of VHSYS in steps, the Group recognized a gain of R$ 12,010 in 2021 by the difference between the previously held 33.33% interest in VHSYS, at fair value, in the amount of R$ 24,064, and its carrying amount, of R$ 12,054. || --- | --- || (b) | The Group has elected to measure the non-controlling interests in the acquiree using the present ownership instruments’ proportionate share in the recognized amounts of the acquiree’s identifiable net assets. || --- | --- |22.2.3.3.Linx| | Preliminary amounts (as presented on December 31, 2021) | | Adjustments | | Final amounts (as presented on June 30, 2022) | || --- | --- | --- | --- | --- | --- | --- || Cash consideration paid to the selling shareholders | | 4,752,811 | | - | | 4,752,811 || Previously held equity interest in the acquiree, at fair value (a) | | 1,335,603 | | - | | 1,335,603 || Shares of the Company issued to selling shareholders | | 618,514 | | - | | 618,514 || Contingent consideration (b) | | 30,972 | | 24,365 | | 55,337 || Total | | 6,737,900 | | 24,365 | | 6,762,265 || (a) | Refers to the acquiree’s shares previously acquired in stock market or from the selling shareholders. || --- | --- || (b) | Refers to share-based payments that may be paid in the next months and to a non-compete agreement signed with the Linx founders selling shareholders. || --- | --- | F-43 StoneCo Ltd.Notes to unaudited interim condensed consolidated financial statementsJune 30, 2022(In thousands of Brazilian Reais, unless otherwise stated)| 23. | Segment information || --- | --- |Until the second quarter of 2021, the Groupevaluated the business as a single reportable segment. From the third quarter of 2021 onwards, due to the acquisition of Linx, andthe complexity of the business, the Company began to have two operating and reportable segments: StoneCo (ex-Linx) and Linx, as theCODM reviewed and monitored operations and evaluated performance considering such separate views. Starting in the first quarter of2022, in line with the strategy and organizational structure of the Company, the Group is presenting two reportable segments, namely“Financial Services” and “Software” and certain non allocated activities:| · | Financial services: Comprised of our financial services solutions which includes mainly payments solutions, digital banking, credit, insurance solutions as well as the registry business TAG. || --- | --- || · | Software: Comprised of two main activities (i) Core, which is comprised by POS/ERP solutions, TEF and QR Code gateways, reconciliation and CRM, and (ii) Digital, which includes OMS, e-commerce platforms, engagement tools, ads solutions and marketplace hubs. || --- | --- || · | Non allocated activities: Comprised of non-strategic businesses, including results on disposal / discontinuation of non-core businesses. || --- | --- |The change in segments reflect changes in ourinternal organization with Financial Services and Software each representing strategic business units monitored separately and havinga member of the leadership team responsible for such unit.The Group used and continues to use Adjustednet income (loss) adjusted as the measure reported to the CODM about the performance of each segment.The measurement of Adjusted net income (loss)from April 1, 2022 no longer excludes bond expenses (see note 12.1.4) in the segmented statement of profit or loss. As such in the statementof profit or loss as from April 1, 2022 the bond expenses are included in Financial Services Segment Statement of Profit or Loss. Informationfor prior periods (including the comparative periods and results from January 1, 2022 to March 31, 2022) have not been retroactively adjustedto reflect the new criteria. The effect in Adjusted net income of no longer excluding bond expenses from April 1, 2022 to June 30, 2022amounts to R$ 95.4 million.Segmented Statement of Profit orLoss| | | | | June 30, 2022 | | | | | || --- | --- | --- | --- | --- | --- | --- | --- | --- | --- || | Financial Services | | | Software | | | Non allocated | | || Total revenue and income | | 3,653,880 | | | 677,349 | | | 43,174 | || Cost of services | | (967,601 | ) | | (327,028 | ) | | (5,908 | ) || Administrative expenses | | (276,582 | ) | | (149,444 | ) | | (20,348 | ) || Selling expenses | | (590,288 | ) | | (120,040 | ) | | (9,336 | ) || Financial expenses, net | | (1,543,437 | ) | | (23,120 | ) | | (608 | ) || Other income (expenses), net | | (45,498 | ) | | (4,672 | ) | | (18,700 | ) || Total adjusted expenses | | (3,423,406 | ) | | (624,304 | ) | | (54,900 | ) || Loss on investment in associates | | - | | | (784 | ) | | (1,217 | ) || Ajusted profit (loss) before income taxes | | 230,474 | | | 52,261 | | | (12,943 | ) || Income taxes and social contributions | | (37,644 | ) | | (23,224 | ) | | (154 | ) || Adjusted net income (loss) for the period | | 192,830 | | | 29,037 | | | (13,097 | ) | F-44 StoneCo Ltd.Notes to unaudited interim condensed consolidated financial statementsJune 30, 2022(In thousands of Brazilian Reais, unless otherwise stated)| | | | | June 30, 2021 | | | | | || --- | --- | --- | --- | --- | --- | --- | --- | --- | --- || | Financial Services | | | Software | | | Non allocated | | || Total revenue and income | | 1,392,610 | | | 73,697 | | | 14,792 | || Cost of services | | (504,468 | ) | | (31,791 | ) | | (5,826 | ) || Administrative expenses | | (181,196 | ) | | (32,375 | ) | | (6,941 | ) || Selling expenses | | (374,929 | ) | | (7,241 | ) | | (3,750 | ) || Financial expenses, net | | (242,679 | ) | | (434 | ) | | 6,417 | || Other income (expenses), net | | (35,839 | ) | | (1,968 | ) | | (1,761 | ) || Total adjusted expenses | | (1,339,111 | ) | | (73,809 | ) | | (11,861 | ) || Loss on investment in associates | | (813 | ) | | (43 | ) | | (5,562 | ) || Ajusted profit (loss) before income taxes | | 52,686 | | | (155 | ) | | (2,631 | ) || Income taxes and social contributions | | (9,552 | ) | | (3,537 | ) | | 133 | || Adjusted net income (loss) for the period | | 43,134 | | | (3,692 | ) | | (2,498 | ) |Reconciliation of segment adjustednet income (loss) for the period with net income (loss) in the consolidated financial statements| | June 30, 2022 | | | June 30, 2021 | | || --- | --- | --- | --- | --- | --- | --- || Adjusted net income – Financial Services | | 192,830 | | | 43,134 | || Adjusted net income (loss) – Software | | 29,037 | | | (3,692 | ) || Adjusted net income (loss) – Non allocated | | (13,097 | ) | | (2,498 | ) || Segment adjusted net income | | 208,770 | | | 36,944 | || Adjustments from adjusted net income to consolidated net income (loss) | | | | | | || Mark-to-market from the investment in Banco Inter and related cost of funds up March 31, 2022 | | (930,638 | ) | | 836,151 | || Amortization of fair value adjustment (a) | | (71,443 | ) | | (15,700 | ) || Share-based compensation expenses (b) | | (44,560 | ) | | (67,088 | ) || Other expenses (c) | | 3,602 | | | (10,657 | ) || Tax effect on adjustments | | 31,971 | | | (95,331 | ) || Consolidated net income (loss) | | (802,298 | ) | | 684,319 | || (a) | Related to acquisitions. Consists of expenses resulting from the changes of the fair value adjustments as a result of the application of the acquisition method. || --- | --- || (b) | Consists of expenses related to the vesting of one-time pre-IPO pool of share-based compensation as well as non-recurring long term incentive plans. || --- | --- || (c) | Consists of the fair value adjustment related to associates call option, M&A and Bond issuance expenses, earn-out interests related to acquisitions, gains/losses in the sale of companies and dividends from Linx. || --- | --- | F-45