In short: Credit risk rises. Q2 revenue rose just 3% Y/Y to R$3.6B, below expectations, and adjusted net income fell 3% to R$0.6B; adjusted EPS still rose 9% to R$2.40 only because aggressive buybacks retired 40M shares over the past year. TPV growth improved slightly to 4% and active clients +6% to 4.8M. The merchant-bank push is working on the growth side — the loan portfolio more than doubled Y/Y to R$3.75B, credit revenue +153% to R$349M, retail deposits +22% to R$10.8B — "but credit quality is now the key risk": provisions jumped 128% Y/Y to R$188M and 90+ day delinquencies climbed to 8.6% from 4.7% a year ago, blamed on weaker H2-2025 and early-2026 loan vintages plus several specific troubled borrowers. Cost of risk improved slightly Q/Q to 21.5% on lower-risk government-backed loans but remains above last year; FY26 guidance maintained, now expected toward the lower end as Brazil's high interest rates persist. Bottom Line: "The next test is whether those weaker vintages are an anomaly as Stone continues scaling credit."
StoneCo provides card-payment processing to small and medium Brazilian merchants, and has been pushing to become their main bank — taking deposits and, crucially, lending to them. The lending part is growing spectacularly: the loan book more than doubled in a year and credit revenue rose 153%.
That is also the problem. Provisions — money set aside for loans expected to go bad — jumped 128%, and loans more than 90 days overdue rose to 8.6% of the book from 4.7% a year ago. Nearly doubling your bad-debt rate while nearly doubling your loan book is the classic sequence in which a lender discovers it grew too fast. Management blames specific weaker loan "vintages" (batches originated in late 2025 and early 2026) plus a few large troubled borrowers.
Meanwhile the underlying payments business is barely growing — revenue +3%, payment volume +4% — and reported earnings per share only rose because buybacks shrank the share count. Guidance was kept but steered toward the low end because Brazil's very high interest rates are not letting up. The negative read is about sequencing: the credit deterioration is visible now, while proof that those vintages were an anomaly is quarters away.
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