StoneCo Ltd (NASDAQ: STNE) stock rose over 6.6% in the pre-market session of March 14th, 2019 (Source: Google finance) as the company in the first quarter of FY 19 has reported 86% increase in the total revenue and income increased to 536 million reais compared to 288 million reais in the first quarter of 2018. This is mainly due to a year-over-year increase of 87% in net revenue from transaction activities and other services, a 85% increase in net revenue from subscription services and equipment rental, and a 68% increase year-over-year in financial income. During the first quarter, the company has grown the number of active clients by 93% compared to the same period last year, reaching nearly 310,000 active clients. This quarter, the net addition of clients crossed 40,000 clients mark for the first time.
Moreover, the adjusted net income is of 186.3 million reais the first quarter of 2019 with a margin of 34.8%, compared to 26.5 million reais in 2018 and a margin of 9.2%. The main factors that contributed to the growth in adjusted net income were increased in total revenue and income mainly due to higher KPV intake rate by focusing on growing the company’s base of S&D margins, operating leverage in most lines, especially cost of services and administrative expenses, and reduced cost of funds as the company switched to cheaper funding and increased the use of on-cash to fund the prepayment operation. Overall, STNE have seen strong operating leverage. The costs and expenses have fallen from 58.1% of total revenue in the first quarter of 2018 to 39.7% in the first quarter of 2019. The company had generated 108.8 million reais of adjusted free cash flow in the first quarter of 2019 compared to 21.2 million reais in the first quarter of 2018.
STNE has added in the first quarter of 2019 two important software applications to the company’s suite of solutions. The first one is Collact, which is a customer engagement and CIM solution designed to help merchants sell more by increasing customer-recurring traffic and to help them better understand their customers’ preferences. The other one is VHSYS, which is a self-service and omnichannel point of sale and ERP platform focused on supporting different types of retail and service businesses and Tablet Cloud, which is a white-label point of sale and ERP system focused on SMBs with simpler needs. The company now have over 32,000 clients that use at least one type of software service that STNE offer. This number includes 18,000 clients from VHSYS and Tablet Cloud and over 14,000 clients that use either Equals Raio-X, Collact, Linked Gourmet, or the online and offline gateway software