Why StoneCo Ltd (NASDAQ: STNE) stock is rising

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StoneCo Ltd (NASDAQ: STNE) stock rose over 4.8% in the pre-market session on November 22nd, 2019 (As of  7:30 am GMT-5; Source: Google finance) after the company posted decent results for the third quarter of FY 19.

The company has reported the Adjusted Net Income of R$201.9 million in the third quarter of 2019, with a margin of 30.1%, as compared with R$89.3 million and a margin of 21.6% in the third quarter of 2018. The Company had generated Adjusted Free Cash Flow of R$41.1 million in 3Q19, compared to R$151.1 million in 3Q18. As of September 30, 2019, the Company´s Adjusted Net Cash position stood at R$4,589.8 million, compared to R$4,480.0 million on December 31, 2018, which is an increase of R$109.8 million.

The Total Active Clients reached 428,900 in the third quarter, which reflects the net client additions from 50,500 in 2Q19 to 68,700 in 3Q19. This increase is mainly due to SMB clients, as micro merchant additions from the Stone Mais product represented only 4,600 in the quarter, totaling a base of 15,600 micro merchants. 3Q18 comparison, when the company presented 83.7% annual growth. TPV grew came mainly from the hub operation, where the company had an acceleration in quarterly TPV addition.

STNE in the third quarter of FY 19 has reported the adjusted earnings per share of 17 cents, while adjusted revenue growth of 62.1 percent to $169.33 million in the third quarter of FY 19, beating the analysts’ estimates for revenue by 28.86%.

The company has delivered Net Revenue from Transaction Activities and Other Services of R$193.9 million in the third quarter of 2019, which is an increase of 42.5%, compared with the third quarter of 2018. This increase is mainly due to the R$10.9 billion growth in TPV year over year. Net Revenue from Subscription Services and Equipment Rental grew 59.2% to R$94.2 million in the third quarter of 2019 compared to the third quarter of 2018. This increase is mainly due to the higher number of SMB Active Clients.

Additionally, STNE anticipate the partnership with Globo (which was announced on July 30th) to be operational in 1Q20, after receiving antitrust (CADE) approval.

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