Prepared remarks
Good evening, everyone. Thank you for standing by. Welcome to StoneCo's First Quarter 2026 Earnings Conference Call. By now, everyone should have access to our earnings release. The company also posted a presentation to go along with this call. All material can be found online at investors.stone.co. Before we begin the call, I advise you to review the disclaimer included in the press release and presentation, which outlines important information about forward-looking statements and non-IFRS financial measures. In addition, many of the risks regarding the business are disclosed in the company's Form 20-F filed with the Securities and Exchange Commission, which is available at www.sec.gov. Joining the call today is StoneCo's CEO, Mateus Schwening; the CFO and IRO, Diego Salgado; and the Head of IR, Roberta Noronha. I would now like to turn the conference over to Mateus. Please proceed.
Thank you, operator, and good evening, everyone. Let me begin with a broader view of our first quarter. The quarter was broadly consistent with the softer first-half dynamics we had anticipated. Three dynamics shaped the quarter. First, a macro environment that continues to weigh on smaller merchants; second, typical first-quarter seasonality; and third, a credit portfolio that continues to grow profitably, even though NPLs came in above our expectations. All of this while we work to bring churn to healthier levels and reaccelerate TPV growth. Against that backdrop, we grew revenue, held adjusted gross profit broadly stable and continue to return significant capital to shareholders. More importantly, this quarter marks the beginning of a transition phase between the extraordinary capital distribution linked to the Linx divestiture and the operational momentum we expect to build through the second half. The work underway gives us confidence in the trajectory ahead, and we remain fully focused on execution. Now I want to spend a few minutes on what matters most heading into the rest of 2026: our capital allocation discipline, our operating priorities and our commitment to shareholder value. Let's turn to Slide 3, where we show our capital distribution to shareholders across the last couple of years with emphasis on what we have delivered so far in 2026. Year-to-date, we have distributed BRL 3.6 billion, representing a 27% distribution yield. This includes the extraordinary dividend paid on May 4 with proceeds from the Linx divestiture and approximately BRL 0.6 billion in ordinary share buybacks. In addition, we still have at least another BRL 1.4 billion to be repurchased throughout this year. As we have consistently said, whenever value-accretive opportunities are not immediately available, excess capital gets returned to shareholders and the 27% yield year-to-date is a direct reflection of that commitment. Moving on, Slide 4 outlines our key priorities for the rest of 2026. On payments, our priority is to reaccelerate profitable TPV growth. To do that, we're focused on improving retention, managing churn more actively and simplifying the way we bring our broader set of solutions to clients. As we deepened our understanding of the drivers behind the elevated churn observed towards the end of 2025, one important point became clear. The churn pressure is not broad-based. Our legacy customer base continues to perform in line with historical churn levels, reinforcing the strength of our core value proposition. Instead, the pressure has been more concentrated among clients onboarded during 2025, a period in which the company began offering a broader set of products. As we expanded our offering into additional products such as instant settlements, investments and credit cards, our bundles and pricing architecture became more complex than they should have been. That created friction for some clients, and we are addressing it directly. We are now conducting a full review of our offerings, simplifying bundles and moving towards a cleaner and more transparent pricing structure. The objective is not to chase volume at any cost. The objective is profitable TPV growth, supported by better retention and deeper relationships with clients who use more of our ecosystem. It is still too early to call a definitive trend, but the initial data is encouraging. TPV growth is improving in April. We are watching leading volume indicators closely, and they suggest that the actions we are taking are moving us in the right direction. On credit, we're also being proactive and disciplined. Towards the end of last year, we saw our models beginning to perform below our expectations with first payment default rates increasing in newer cohorts. We responded quickly by adjusting pricing to preserve cohort profitability and by tightening our risk selection. Since then, we have implemented a set of model and policy changes and the early results are promising as first payment default rates are converging back to historical levels. Looking ahead, our priority is not simply to grow credit, but to grow it with the right risk-adjusted returns. We will continue refining our underwriting models, pricing risk appropriately and diversifying the portfolio across products such as credit card, overdraft and secured working capital offerings. We have recently begun disbursing secured credit products, and we believe these offerings can help us expand access to credit, deepen our relationship with merchants and reduce the risk intensity of portfolio growth. We're also committed to improving efficiency throughout the year. First-quarter results were affected by higher provisions and certain one-off expenses, including severance costs in addition to the quarter's typical seasonal softness. As these factors normalize, we expect operating leverage to resume, supporting continued improvements in our cost structure through disciplined prioritization and AI-driven efficiencies as we progress through 2026 and beyond. Finally, we're also focused on expanding the share of our clients using our full suite of solutions through our unified app, which we're progressively upgrading to address our merchants' needs across every financial workflow. Linked to that, we're making continuous investments in positioning our brands to reflect our evolution into a full-service financial partner. Turning to Slide 5. Our adjusted gross profit was BRL 1.5 billion in the quarter and adjusted basic EPS was BRL 2.19 per share. Although interest rates may continue higher for longer, our full-year 2026 guidance remains unchanged. We are on a trajectory that we believe is consistent with delivering within that range with performance weighted towards the second half as credit revenues continue to compound and the commercial initiatives we are executing begin to normalize retention rates. Finally, beyond the quarterly numbers, I want to flag that what drives us every day is straightforward: building a financial platform that Brazilian entrepreneurs can rely on for their core financial needs. We're moving fast towards that goal, executing against it with focus and discipline. With that said, I will pass it over to Diego, who will go over our financial and operating results for the quarter.
Thank you, Mateus, and good evening, everyone. Let me start on Slide 6, where we present our main financial metrics for the quarter. Total revenue and income reached BRL 3.6 billion, up 6% year-over-year. This growth was primarily driven by the continued expansion of our credit revenues and healthy profitability in payments. These tailwinds more than offset the expected headwind from lower floating revenues from deposits, which we started using as a funding source in early 2025 and reduced our revenue recognition with the benefit showing up as lower financial expenses. Adjusted gross profit came in at BRL 1.5 billion, broadly stable year-over-year as revenue growth was offset mostly by higher provisions for credit losses and increased operating costs. Gross profit margin contracted from 44.4% in the first quarter of 2025 to 41.6% this quarter, primarily reflecting the step-up in credit provisions, which we will further explore in this presentation. Adjusted net income increased 3% year-over-year and reached BRL 549 million in the quarter, but adjusted basic EPS grew over 4x faster, increasing 15% year-over-year, reaching BRL 2.19 per share. The EPS outperformance relative to net income was driven by the continued and consistent share buyback execution, reflecting our ongoing commitment to returning excess capital to our shareholders. On Slide 7, I want to briefly explain a reporting change that we're introducing this quarter. As we advance in our strategy to become the primary financial partner for Brazilian merchants, we are consolidating our active client base definition into a single unified metric: merchants that have generated revenue during the past 30 days across any of our payments, banking or credit solutions. While payments are still usually our first contact point with merchants, we have a growing number of clients with whom our relationship starts with other business fronts and then evolves into a broader relationship. As a result, we are discontinuing the separate disclosure of the micro, small and medium-sized payments active client base and banking active client base that we previously reported. Going forward, you will see one unified number. Under this new definition, our total active client base was 4.7 million clients in the first quarter 2026, up 13% year-over-year and 5% down sequentially. The sequential decline is largely a result of conscious actions to focus our efforts on a more engaged and revenue-generating client set. We're also introducing average revenue per active client as a new key metric to track how effectively we are monetizing our client relationships. ARPAC was BRL 247 per month per client in the first quarter 2026, down 3% sequentially and 11% year-over-year. The sequential decline largely reflects first-quarter seasonality, while the year-over-year decrease reflects client mix effects. Now let's turn to Slide 8. On TPV, starting this quarter, we're simplifying our disclosure to focus on total TPV only. TPV was BRL 137 billion in the period, growing 3% year-over-year with PIX QR code volumes continuing to outperform card TPV. This growth reflects the impacts of a more challenging macroeconomic environment for smaller merchants, the relative outperformance of digital sales where we have less exposure, and finally, the elevated churn levels identified last quarter that are still affecting our performance while being slowly addressed. On the other hand, retail deposits reached BRL 10.1 billion at the quarter end, growing 22% year-over-year and declining 9% sequentially, reflecting typical first-quarter seasonality. A better read of the underlying trend is the average daily retail deposits, which grew 7% sequentially and 26% year-over-year, reinforcing the ongoing development of our banking franchise when normalized for end-of-quarter timing effects. On Slide 9, we present our credit portfolio evolution alongside its revenue and new trajectory. Our total credit portfolio reached BRL 3.2 billion, growing 14% sequentially. Merchant Solutions, composed mostly of our working capital offerings, reached BRL 2.9 billion, growing 13% quarter-over-quarter, while our credit card portfolio reached BRL 400 million, growing 23% sequentially. Credit revenues kept their strong growth trajectory, both on a nominal and yield basis, reaching BRL 297 million in the quarter, up 25% sequentially and the portfolio yield reaching 3.3%, up from 3.1% in the fourth quarter and 2.6% one year ago. The growth in revenues reflects the expansion of the portfolio, but also the better risk-adjusted products and mix. Now on Slide 10, we focus on credit quality and provision expenses. During the first quarter, our models for micro, small and medium-sized merchants on the automated desk lost efficiency, and we saw newer cohorts performing worse than historical average, leading to higher-than-expected delinquencies, a trend that seems to have affected the entire banking industry, but is more pronounced in our portfolio given the concentration that we have on the segment. Our NPLs 15 to 90 days increased almost 60 basis points, driven mostly from the worse performance in the automated desk. The dedicated desk, while no longer the main driver of sequential movement, continued to contribute to an elevated baseline. NPLs over 90 days reached 7%, up from 5.2% in the prior quarter, but mostly as a carryover effect of select cases within the dedicated desk progressing into higher delinquency bands, along with the expected seasoning trajectory of our portfolio. In response, we maintained a conservative provisioning approach with our coverage ratio standing at 229%. We have provisioned BRL 166 million in the first quarter for credit losses, driving our cost of risk to 21.9%. Moving forward, we expect that the combination of tighter underwriting policies on the dedicated desk and the deployment of new models to the automated desk will push down cost of risk to lower levels at a slow but steady pace. The early signs that we have arising from first payment defaults indicate the path. Looking at the March cohort, we see a clear improvement compared to January and February, returning to levels closer to our baseline. While this represents one data point, we see it as a positive early sign. On Slide 11, our cost of services increased 420 basis points as a percentage of revenues year-over-year, driven primarily by higher provisions for credit losses, as I just described. Excluding provisions, cost of services increased a more modest 60 basis points, reflecting severance costs related to the workforce reduction we executed at the end of the first quarter and higher D&A as several technology projects were completed and moved into production. Financial expenses improved 150 basis points as a percentage of revenues year-over-year, reflecting the benefit of client deposits as a lower cost of funding source, which more than offset the impact of higher average CDI rate. As we keep developing our deposit franchise, deposits will increase their importance as a funding source. As a result, we have been able to reduce our total cost of funding from 100% of CDI in early 2025 to approximately 87% more recently, a meaningful improvement that flows directly into our financial expenses. Admin expenses decreased 30 basis points, reflecting continued operating leverage in our support functions. Selling expenses decreased 50 basis points, driven by lower marketing and distribution channel spending as a percentage of revenues. Other expenses decreased 50 basis points, primarily due to lower share-based compensation, which was partially offset by certain intangible write-offs. Effective tax rate was 14.3% in the quarter, a reduction of 4.5 percentage points on a year-over-year basis. This reduction is mostly a reflection of the aggregated benefits from deferred tax assets. Moving to Slide 12. We present our managerial capital position and return on equity. We're introducing this metric to provide greater transparency about our capital position on a quarterly basis. As a reminder, our capital ratio metric is based on the Brazilian Central Bank methodology for authorized entities, but we apply it to all StoneCo legal entities. Our capital ratio stood at 44% at the end of the first quarter, elevated by Linx's divestiture concluded in February. Excluding Linx proceeds, which were returned to shareholders on May 4, our capital ratio would have been approximately 29%, still comfortably above our 17% internal hurdle. It is also worth noting that we still expect to buy back BRL 1.4 billion worth of shares until the end of the year as announced in our last earnings call. Finally, our adjusted return on equity was 19% in the first quarter, up 40 basis points year-over-year, but down sequentially from 25% in the fourth quarter of 2025. The sequential decline reflects the recognition of BRL 1.2 billion in deferred tax assets related to the Linx goodwill amortization, which expanded our GAAP equity base and compressed the ratio by approximately 100 basis points. Additionally, it is important to remember that the extraordinary dividend linked to the Linx payment will reduce our equity base starting in the second quarter and will have a positive impact on our ROE going forward. Therefore, to wrap it up and going back to Mateus's initial comments, we had a first quarter in which TPV was soft, but in line with what we expected. And although it will be a longer journey, we believe we have the tools to further engage and retain our clients. In addition, we had a challenging backdrop on credit, but this is part of our learning journey as we build the business for the long term, and we remain highly confident that both credit and banking will be the main growth levers to our business in the coming years. With that, let's open it up for questions.
Questions and answers
Our first question comes from Daniel Vaz with Safra.
I was looking again at your 2026 priorities on payments. You said you're shifting focus from new sales to the active base, right? So you're looking at your active base rather than new sales. I wanted to understand how you are looking to improve ARPAC. When we see ARPAC right now, it's down 11% year-over-year and the client base contracted. Can you help us frame the trajectory from here? When do you expect ARPAC to move from a negative trajectory to a positive one? Any quarter or moment you can share? And the second related to that: what's the optimal number of clients you want to work with since you're focusing on your base? Does that mean that you're going to still have a net loss on your clients for the next quarters?
Daniel, Mateus here. Thanks for the question. The question is generally around ARPAC. When we look at ARPAC, it has been decreasing mainly because of mix, not because of a deterioration in the monetization of our core client base. What we're seeing now is basically two opposing trends. On one hand, we're expanding our ecosystem into new products, and when we do that, we also bring in more clients using lower-ARPAC solutions. For example, banking-only clients are valuable because they expand our relationship base and increase engagement with the ecosystem, but their initial ARPAC is naturally lower than that of a client using payments or credit. So that's one trend: as we open new products, we have new avenues to onboard clients who tend to use these newer solutions with lower ARPAC. On the other hand, clients that use multiple products—for example, payments, banking and credit—have ARPAC significantly higher than the company average. So short term, you have negative pressure as you open more avenues. But longer term, this is a big opportunity for the company. Those are the trends. As for the optimal amount of clients, it aligns with the first part of the answer: as we open new layers and new products over time, they become new sources of opportunity for us to onboard clients that were previously not in our TAM. In the end, that expands the number of clients we can target longer term. So we're not seeing a cap on active client base as of now.
Daniel, adding to Mateus's comments, naturally, this is the first time that investors see this metric. It's the first time we're reporting it. Over time, we should be able to disclose a vintage analysis for ARPAC in which investors will be able to see this increasing involvement from clients with us. The reason we're disclosing this is to unify how we look at clients. Previously, we reported different numbers for active clients in banking and payments. The idea here is to present to the market how we are looking at the client base and how we are positioning ourselves as a broader financial platform rather than a pure payments business.
Our next question comes from Kaio Da Prato with UBS.
I have a question on the credit business. First, we saw some pickup in your cost of risk this quarter and some consumption of your coverage ratio. Can you comment a bit more on that? I'd like to clarify if this is only on the dedicated desk or also on your automated working capital solution as well. You showed first payment default improving in March after tightening underwriting—thanks for the data. How should we read that? Does that imply a deceleration in the pace of growth of the book going forward? And on cost of risk, should we expect some improvement going forward, or is this the new level we should work with?
Thanks for the question, Kaio. I'll give an overview on credit and then pass it to Diego to comment on coverage and cost of risk going forward. There were three main drivers behind the increase in NPLs and provisions in the quarter. First, the broader market deteriorated within the quarter—Central Bank data shows delinquency increased across the market in the first quarter. So part of what we're seeing reflects a tougher macro and credit environment in general. Second, starting toward the end of the fourth quarter, we saw our models beginning to underperform, meaning actual delinquency was above our expectations. Third, we did continue to see some isolated delinquency cases in the dedicated desk; given the larger ticket size in that portfolio, these individual cases can impact the overall numbers. How we addressed the problems: we increased pricing throughout the second half of last year to preserve cohort profitability; we implemented a new set of models and credit policies, which are now in production—this explains the early data from March with first payment defaults converging back to the norm; and we reduced the maximum ticket size in the dedicated desk to limit the impact of outliers. Going forward, we are moving more toward disbursing secured working capital products, which should gradually increase the share of secured lending in the portfolio and improve the overall risk profile. While the first quarter was clearly impacted, we believe we took the right actions. I'll pass it to Diego.
Kaio, on coverage, you'll see that coverage for both Stage 1 and Stage 2 remained flattish. Coverage for Stage 2 increased a bit and coverage for Stage 3 decreased slightly. The Stage 3 decrease is basically a result of different collateral levels and collateral enhancements we have for certain places that went through Stage 3. When you have strong collateral for a client on Stage 3, the LGD may fluctuate, and that's what leads to this fluctuation in coverage. As to cost of risk, we expect it to decrease back to the mid- to high-teens over time. It will take time because some of the delinquencies we saw in the first quarter still have to flow through the P&L in the following months, so there's a lag. More importantly, we expect the combination of new underwriting standards, reduced concentration in the dedicated desk and the new secured facilities we've been deploying to have a positive impact over time. The new programs from the National Development Bank (BNDES) have multiple benefits: they limit the yield we charge clients, but they enable a material reduction in risk given the nature of the programs. That allows us to increase the client base to whom we can extend credit, makes us more competitive, and supports demand from our client base.
Okay. Just a quick follow-up: the last part—regarding the pace of growth of the portfolio going forward—should this be more at these levels or a little different because of the measures you're taking?
No, Kaio, it didn't change. As we mentioned, growth of the portfolio will not be linear. As we deploy new products, models and expand to new publics, there may be short-term fluctuations. But we don't expect the overall decision to tighten underwriting a bit—given the recent macro backdrop—to affect long-term trends.
Our next question comes from Antonio Ruette with Bank of America.
Before my question, I have a quick follow-up on Kaio's previous question on credit. I understand the problem and how you decided to address it, but I want to focus on why it happened. Was it concentration in riskier sectors or segments than you initially thought? Was it underwriting issues or pricing? Rather than how you decided to address it, I'm digging into why it happened. My actual question is on the guidance you provided earlier: since you provided it, what came differently from what you expected in the first four or five months of the year, mainly credit or even TPV drivers?
Antonio, thank you for the question. Regarding why it happened: it appears to be a trend that affected the entire banking industry based on other banks' results. We have a larger concentration in the SME segment; we don't have other portfolios or segments, so the effect is more pronounced in our client base. The overall macro environment in Brazil, pressure on consumer delinquency and consumption generally impacted our clients. It takes a while to see some of that data, as shown in the first payment default charts. Although we saw it, it takes time to fix—it's a learning process. There's also seasonality in our clients' top-line, so that dynamic adds to the impact. On guidance: the uptick in provision expenses in the first quarter was a surprise and wasn't included in our initial guidance, but we can accommodate it within that guidance. We expect provisions to normalize throughout the year. In terms of TPV, the first quarter was soft but in line with our expectations. We expect TPV to grow faster in the second half and contribute to gross profit and net income. The biggest question mark is interest rates. When we provided guidance for 2026, we expected interest rates to end the year at 12.5%; today that is probably closer to 14%. Every 100 basis points at Selic levels impacts roughly BRL 200 million to BRL 250 million in pretax earnings. That effect is currently the most challenging point in our forecast. I think today we are probably closer to the bottom of the guidance we provided, but there is still a long way to go. We have other levers to pull; it will be an interesting year.
Our next question comes from Renato Meloni with Autonomous Research.
I would like to stick with the guidance, especially because we're seeing general deterioration in asset quality. Despite all the problems, we saw this in other banks. Do you think you still have space to continue growing credit into a credit cycle? You mentioned levers—what are they to achieve at least the bottom of the guidance, and what gives you conviction you might get there?
Renato, thanks for the question. On credit, while the macro scenario is more challenging than anticipated, our penetration within credit is still really small, so there is room to grow. If we pick and choose the right mix of clients, there is space to grow. Also, secured lending was not really there when we initially planned for the year. Now we have secured lending and other products—overdrafts, credit card—which give us more levers than in the past to build a good value proposition for clients. So while macro is tougher, we have more options to build growth. I'll pass it to Diego for the guidance portion.
I'll add to Mateus's point. One benefit of a challenging credit backdrop is that we may see better clients now who previously did not demand credit and are now considering it, creating growth possibilities without necessarily increasing risk. There are still opportunities. Regarding gross profit, interest rates remain the main driver in addition to credit. We have levers to pull on pricing depending on how quickly we decide to pass recent interest rate cuts to the base, but it's going to be a very volatile year. We'll operate the environment in a disciplined fashion daily.
Our next question comes from Neha Agarwala with HSBC.
On the credit product: you say you have more credit product options now, which will allow you to grow more. But doing more secured working capital should be less profitable than unsecured working capital in terms of pricing. Do you see that impacting the profitability you expect from the credit business for this year and the next two to three years in your budgeting? And second, you mentioned volume acceleration in the second half. What are the key drivers for that acceleration? Is it a better macro or your initiatives to reduce churn enabling more volume growth?
Thank you. On credit: when we move into government-backed programs, they demand lower rates and sometimes captive rates, but NII or NIM is not necessarily lower because of the risk profile and guarantees embedded in the product. We're talking about better rated clients; once we deploy credit to those clients, we tend to be more competitive in gaining share in credit from banks and in gaining other services, including deposits and payments. That's the first point. On TPV: the growth we expect in the second half has to do with lower churn among other factors. If we adjust churn levels and maintain the same investment in distribution channels, TPV tends to accelerate significantly.
On the churn piece, we're focused on three things. First, we're reviewing product offerings and bundles end-to-end with a clear focus on simplification and transparency across all distribution channels. Some simpler offerings have already been deployed; others require more work and should contribute more meaningfully in the second half. Second, we're adjusting sales-force incentives to better align origination with client retention and long-term value creation. Third, we're making targeted product and experience improvements to reduce friction and improve the client journey. All these actions together should start to yield more results in the second half. To emphasize Diego's point, we're not betting on the macro improving in the second half; it's more a matter of execution.
Our next question comes from Marcelo Mizrahi with Bradesco.
I have two questions on credit. First: what is the proportion of the dedicated desk compared to total outstanding credit? How much does the portfolio depend on the dedicated desk? Looking forward, I'm not clear why originations won't be impacted if you are adjusting risk appetite—reducing ticket sizes, tightening standards, increasing prices. Why would that not affect outstanding credit? Second: on the automated portfolio, can you help compare delinquency between the automated and the dedicated portfolios this quarter? Are we seeing the same pace of deterioration in both?
Thank you. The dedicated desk today accounts for roughly 20% to 25% of our current portfolio. Our decision was to reduce the maximum ticket we extend to clients on that desk—reducing overall risk appetite in terms of size. We also reduced risk appetite for lower-rated clients. On the other hand, with the new secured lending programs we've mentioned, we're more competitive for larger clients we typically would not have extended risk to previously. Those programs change the P&L dynamic because of the guarantees. Regarding comparisons between portfolios, it's hard to compare delinquency directly because ticket sizes differ significantly. On the automated desk tickets go up to BRL 500,000 and the dedicated desk tickets are above that, sometimes reaching a few million reals. So one specific delinquency case on the dedicated desk—for example, a client in judicial recovery for a large amount—creates a bigger asymmetry in the overall ratios.
I'll add a third point: model improvements. We've deployed a new generation of models which allow us to better discriminate among clients and potentially increase the pool without increasing risk. A good example is the March cohort, which performed with lower first payment defaults even though March saw high disbursement levels. That shows you don't have a one-to-one correlation between tightening risk appetite and disbursement levels because we have more products and better models.
Marcelo, to reiterate: the portfolio mix changes, new products and better models allow us to continue disbursing while managing risk more tightly.
Our next question comes from Tiago Binsfeld with Goldman Sachs.
We wanted to understand your deposits strategy. There was a decline sequentially quarter-on-quarter with penetration over TPV staying stable. Is this mostly seasonality or also affected by the churn dynamics you discussed? Can you discuss how you expect both penetration and overall deposit growth to perform for the rest of the year?
Tiago, short answer: seasonality explains the quarter-to-quarter fluctuation. Moving forward, we've been investing to get other transactional flows from our clients beyond TPV, focusing on enabling clients to sell more and use more of our platform. When cash comes into the platform, we help clients manage it so it stays longer with us, increasing deposit duration and growing deposits at a healthy pace. Tools that enable selling through our app and payment links are part of this strategy, and then reinforcing workflows that make the money stay longer are the next step.
Our next question comes from Arnaud Shirazi with Citi.
My question relates to transaction activities in general. We see a strong year-on-year decrease, while it's clear that some income is moving to financial income, mostly through prepayment product. What should we expect for the transaction activity revenue line in the future? Should we see further pressure or is there a bottom? What's behind this dynamic?
Arnaud, nothing different than what we have discussed previously. We look at the client overall relationship and how we allocate pricing to the client—whether through financial revenues, MDRs, sale of POS or account fees is less important than the overall pricing to the client. Fluctuations among those revenue lines will occur, but it's about the best way to interact and sell services to clients.
Our next question comes from Ricardo Buchpiguel with BTG.
A follow-up on deposits. Can you provide more details on what we should expect for deposit growth and the cost of funding on deposits for the remainder of the year? To what extent could this be an important lever to offset a higher interest-rate scenario by reducing sensitivity to rates and adding more ARPAC in following quarters?
Ricardo, increasing deposits is the best way to hedge interest-rate fluctuations. Today we have strong exposure to interest rates because we have more assets at a fixed rate than liabilities, so when we fund in the wholesale market we pay CDI plus a spread. New client deposits are typically paid close to 0%, which is an important lever to reduce overall cost of funding and lessen exposure to rate swings. That said, the profile of our clients is slightly different from the overall economy— not all clients have large cash balances. It's an evolution: as we enhance engagement and workflows, we expect more money to stay in our accounts for longer durations.
We are showing no further questions. I would now like to hand the floor back to Stone's team for closing remarks.
Thank you all for coming. We remain focused on our execution, and we see you on the next call.
This concludes today's presentation. You may now disconnect, and have a nice evening.