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GEORGETOWN, Cayman Islands - Financial technology provider StoneCo Ltd. (NASDAQ:STNE), a prominent player in the Financial Services industry with annual revenue of $2.3 billion, announced Tuesday it will divest most of its software segment through two separate transactions valued at approximately R$3.19 billion. According to InvestingPro data, the company has shown strong revenue growth of 13% over the last twelve months, despite recent market volatility.
The company has entered into a definitive agreement to sell Linx and related software assets to TOTVS for an enterprise value of R$3.05 billion, plus an estimated R$360 million in net cash position. The assets being sold represent approximately 79% of the software segment’s revenue and 71% of its profitability in 2024, according to the company’s press release. The transaction comes as StoneCo’s stock has shown significant momentum, with a 57% price increase over the past six months, though InvestingPro analysis suggests the stock remains undervalued based on its Fair Value assessment.
In a separate transaction, StoneCo has already sold SimplesVet, a veterinary software solution, to PetLove for R$140 million, representing approximately four times revenue. This deal has received approval from CADE, Brazil’s antitrust authority.
The Linx transaction still requires regulatory approvals, including CADE clearance. The final purchase price may be subject to adjustments based on the time between announcement and completion.
StoneCo will retain the fiscal goodwill of approximately R$3.8 billion from its original Linx acquisition, which will continue to be amortized within the group over the next eight years.
The remaining software businesses, representing R$326 million in revenues and R$32 million in Adjusted EBITDA in 2024, will either be integrated into StoneCo’s core offerings or operated independently while the company evaluates their strategic fit.
StoneCo indicated it will disclose detailed plans for the use of proceeds upon transaction closing, noting it expects to return excess capital to shareholders when immediate value-accretive growth opportunities are not available.
The divestments are part of StoneCo’s strategy to streamline operations and focus on its core business, based on information provided in the company’s statement. With a solid current ratio of 1.39 and management actively buying back shares, the company appears well-positioned for its strategic transformation. For deeper insights into StoneCo’s financial health and growth prospects, including 10 additional exclusive ProTips, investors can access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, StoneCo Ltd. has reported its first-quarter earnings for 2025, filing the unaudited financial statements with the U.S. Securities and Exchange Commission. This filing, required for foreign private issuers, outlines the company’s financial performance for the period ending March 31, 2025. Additionally, StoneCo announced a significant share buyback program, authorizing the repurchase of up to R$ 2 billion of its outstanding shares, reflecting its strategy to manage capital allocation and return value to shareholders. The company also disclosed the results of its 2025 Annual General Meeting, where shareholders voted on key proposals, including the election of board members and approval of executive compensation. Furthermore, Citi upgraded StoneCo’s stock rating from Neutral to Buy, raising the price target to $15.00, citing a positive outlook on the company’s future financial performance. Citi’s analysts have adjusted their forward 12-month net income estimates for StoneCo to R$2.4 billion for 2025 and R$2.9 billion for 2026. These projections represent an increase of 17% and 28%, respectively, compared to previous estimates. StoneCo’s recent developments indicate a proactive approach in financial management and shareholder engagement.
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