StoneCo Reports Third Quarter 2020 Financial Results (October 29, 2020)

Summary

StoneCo Ltd. (Nasdaq: STNE) reports financial results for its third quarter ended September 30, 2020, in an earnings release dated October 29, 2020. The shareholder letter says that compared to the third quarter of 2019, TPV grew 114%, and 48% excluding Coronavoucher volumes, while revenue and adjusted net income grew 39% and 43%. It says net new active clients surpassed 63 thousand and adjusted net margin expanded over 800 bps sequentially, surpassing 30%. It also says the credit portfolio more than doubled to surpass R$1 billion and online TPV grew 575% year over year.

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Full text

Exhibit 99.1

3Q20
Earnings Release

October
29 th , 2020

investors.stone.co

StoneCo
Reports Third Quarter 2020 Financial Results

George
Town, Grand Cayman, October 29, 2020 - StoneCo Ltd. (Nasdaq: STNE) (“Stone” or the “Company”), a leading
provider of financial technology solutions that empower merchants to conduct commerce seamlessly across multiple channels, today
reports its financial results for its third quarter ended September 30, 2020.

To
our shareholders:

“After
two years as a public company, we are very proud to report a historic performance in the third quarter of 2020, with record TPV,
active client base, revenue and adjusted net income levels, despite the economic and health challenges brought by COVID-19.

Our
business model proved itself resilient and well positioned to capture opportunities that arose amid the increase in electronic
payments, digital commerce and recovery of overall retail sales. We believe the combination of the hard work of our client-centric
team with our technology and distribution capabilities were key differentiators for Stone at a moment like this when merchants
need our support the most.

Our growth has reaccelerated rapidly, and net margin has expanded over 800 bps sequentially

Compared
to the third quarter of 2019, our TPV grew 114%, and 48% excluding Coronavoucher volumes; our revenue and adjusted net income
grew 39% and 43%, respectively. The pace of growth of our TPV has improved every single month from April to September excluding Coronavoucher volumes, increasing from a 9% year over year growth in April to 52% in September.

Our
SMB business in the hubs has also recovered very strongly, presenting the same trend of acceleration in each and every month since
April, going back to over 50% year over year growth during the month of September.

We
have also seen a strong recovery in the addition of net new active clients, which surpassed 63 thousand this quarter, 26% higher
than the pace of client addition in the first quarter of this year.

Combined
with a strong growth pace, our adjusted net margin has expanded over 800 bps sequentially, surpassing 30% adjusted net margin
in the third quarter. This is mainly a result of operational leverage as our top line recovered.

Stone continues to evolve to become a complete financial platform

During
the third quarter we have rolled out our ABC platform to all our banking clients and expect to do the same for all acquiring clients
during the fourth quarter. The new ABC dashboard is simple and easy to use, offering our clients key features such as acceptance
of all payments methods, prepayments, credit, wire transfers, boleto issuance and bill payments, pre-paid cards, payment
links and a virtual shop . In mid-November, we will enable our clients to accept PIX transactions directly on the POS, using a
dynamic QR code, bringing more security and convenience to retailers.

The
number of transactions in our banking platform multiplied by impressive 8x in the third quarter compared with the second quarter
of 2020 and our credit portfolio more than doubled in the same period, surpassing R$1 billion. We keep our conservative stance
in our credit policy and are well advanced in the process of raising third party funding for our credit FIDC in the next couple
of months.

2

Our
Fintech-as-a-Service business is evolving

We
continue to advance our Fintech-as-a-Service business, with the capabilities of our platform evolving to attend the increasing
needs of our clients. Our platform serves a range of clients and business model needs, from the small digital SMBs to large marketplaces.
The growth in online transactions has been helping the strong growth pace in that business front. Our online TPV grew impressive
575% year over year in the third quarter and 76% excluding Coronavoucher volumes. Also, we have been able to grow together
with our digital SMB clients, as the revenue retention in the third quarter of 2020 compared to the first full quarter of operation
of those clients was above 100% for all recent cohorts.

We
have given important steps in building a Full-Commerce software platform

Regarding
our full-commerce software platform, we have given important steps: we have announced the transaction with Linx, a big step forward
to achieve our strategic roadmap. Also, we have invested in Questor, an ERP for accounting offices and SMBs. Their 6 thousand
accounting clients serve more than 450,000 businesses across the whole country. In the third quarter we had strong, fully organic
growth in our software client base, which increased more than 20% when compared to the previous quarter, reaching over 340,000
subscribed clients at the end of September.

Two
years ago, when we reported our third quarter 2018 results just after we became a public company, we mentioned that ‘ looking
to the balance of 2018 and beyond, we are excited about the breadth of opportunities available to us to continue to expand our
business, offer more solutions to merchants and build long-term shareholder value’ .

Our
team did a great job in addressing those opportunities and when we look ahead today, we are even more excited with what we can
achieve. Even though we are happy with our growth trajectory we think that we are still far from our potential and therefore we
will keep investing heavily on technology, team development and channel distribution as we see ourselves still in the early days
of our business.

We
will keep running our business with a young, fast and small company mentality where we are passionate about customers and obsessed
about details even though we already have some scale. We will continue betting on culture and people development, operational
leverage and disciplined capital allocation.”

Thank
you

Thiago
Piau, CEO

3

Operating
and Financial Highlights 3Q20

Total
Payment Volume (TPV)

R$ 69.7 BN

Up
113.8% year over year, or R$48.1 billion excluding Coronavoucher ,
an increase of 47.6%

Total
Revenue and Income

R$934.3
MM

An
increase of 39.2% year over year. Excluding Other Financial Income, primarily interest on cash, revenue grew 45.5% year over year

Adjusted
Pre-tax Margin

45.2%

15.3
p.p. higher than 2Q20, and similar to pre-COVID levels

Net
Income

R$ 249.1 MM

Up
30.2% year over year, with Net Margin of 26.7%

EPS
(basic)

R$ 0.87 per share

An
increase of 26.3% year over year

Take
rate

1.30%

Or
1.76% excluding Coronavoucher

Net
Addition (ex-TON) of

63.5k

similar
to pre-COVID levels and 26% higher than in 1Q20, leading to a Total Active Client base of 582.9 thousand (excluding TON), an increase
of 40.9% year over year

Adjusted Net Income

R$ 287.9 MM

Up
42.6% year over year, with 30.8% Adjusted Net Margin, similar to pre-COVID levels and 0.7 p.p. higher year over year

Adjusted
EPS (diluted)

R$ 0.99 per share

An
increase of 38.2% year over year

Adjusted
Free Cash Flow

R$ 288.6 MM

601.4%
higher year over year

4

Update
on Our Strategy Roadmap

We
are evolving our business strategy into three complementary and synergistic fronts:

(i) Financial Platform for SMBs : includes payments, banking, credit and other financial solutions for small and medium businesses.
When we started our company, we chose to begin with payments, as we understood that this was the main pain point of merchants
in Brazil. In the last few years, we have evolved our financial offering, beginning to pilot and then scale our banking and credit
solutions in a separate manner. In parallel, we have been creating our integrated financial platform, which integrates these three
solutions in a single product, with the high level of service that Stone has always provided. We are now rolling out this platform,
with all acquiring, banking and credit clients expected to have access to the new product by the end of 2020.

In
addition to our solutions for SMBs, we have TON, our venture in the micromerchant space, from which we can learn more about the
huge target audience of autonomous workers in Brazil and enhance our ecosystem of solutions.

(ii) Fintech-as-a-Service Platform : what we deliver as a product for SMBs we offer as a service for a range of digital clients
and integrated partners, such as small and large e-commerces, marketplaces, wallets, subacquirers and third party software, allowing
them to connect to the APIs of our proprietary end-to-end infrastructure of financial services. We are in the process of integrating
our PSP, gateway and core platforms into a unified offering. We offer solutions to enable acceptance with better conversion rates,
processing, split payments and settlement, reconciliation, fraud prevention, chargeback disputes, wire transfers, boleto issuance, bill payments, prepayments, credit and management of clients' businesses, among other features within our roadmap. All
that with a simple and comprehensive offering in order for clients to have a centralized way of managing their businesses, using
as a product or white label.

(iii) Full-Commerce Platform : W e
are building a full-commerce platform available to merchants of all sizes, both traditional retailers in the offline world who
want to digitize their businesses and digital-native players who want to quickly scale their businesses based on our software
platform, providing a seamless omnichannel experience . We started investing in a portfolio
of software companies in the past two years and the acquisition of Linx is a big step forward in our plans.

These
three pillars represent the strategic direction that we are pursuing in the company. While each one of them is at a different
level of maturity, their results are already evident.

5

3Q20
Performance Highlights

Financial Platform - Payments, Banking, Credit

After
seeing a strong impact from the COVID-19 outbreak in the second quarter of 2020, we saw significant improvement in retail activity
throughout the third quarter of 2020. Cities are slowly evolving to more flexible stages of economic reopening, allowing more
businesses to resume their activities while following all safety measures and, in many cases, with limited capacity.

In
that scenario, our acquiring business has posted significant growth throughout the third quarter, with strong growth in
TPV and client base. TPV year over year reached 113.8% in the quarter, with all months posting above 100% year over year growth.
Excluding Coronavoucher, the government financial aid program targeting the most vulnerable part of the population as autonomous
and informal workers and people without income, our TPV also enjoyed strong traction, with accelerating year over year growth
every month in the quarter, reaching 52.2% in September.

Chart 1: TPV growth (year over year) | Chart 2:
 TPV growth ex- Coronavoucher (year over year)

Such
strong growth came from different channels, including the hubs, which presented accelerating growth trend every month from April
to September culminating in 52% year over year growth in September, similar to levels reached in January and February and to Stone´s
overall TPV growth excluding Coronavoucher , as shown above. Also, in the third quarter, we had historical record addition
of TPV in the hubs on a quarter over quarter basis of R$9 billion.

We
have seen most economic sectors above pre-COVID levels in terms of TPV, except for Travel and Entertainment and Recurring Services.
However, we already see those two sectors slowly resuming activities and starting to regain a larger share of TPV. In addition,
we saw strong TPV and client base growth both quarter over quarter as well as year over year across all 27 Brazilian States.

Our
client addition (ex-TON) numbers are back to pre-COVID levels, reaching 63.5 thousand net adds in the third quarter after being
depressed in the second quarter by the immediate impact from COVID in mid-March. This led to a total client base (ex-TON) of 582.9
thousand in the third quarter.

6

Chart
3: Net Adds Evolution (90-days)

As
of September 30, approximately 60% of our salespeople were back to their daily routes and achieving high productivity levels,
which allowed us to post pre-COVID levels of net additions, despite lower number of employees. We have continued to hire new talents
to our company, preparing our operations for the continued strong growth of our business.

Our banking solution continues to evolve fast with increased engagement. We ended the quarter with a total of 357,100 open
accounts, and 88,600 clients receiving their sales directly in a Stone digital account. Also, we have seen increased traction
in the usage of our prepaid cards, with TPV multiplying by 2.4 times quarter over quarter. The strong evolution of our banking
platform resulted in banking revenues in the third quarter almost five times what they were in the second quarter, coming both
from SMB revenue growth as we increase our banking client base and from our partners, in our fintech-as-a-service strategy.

Chart 4: Banking Number of Accounts (Thousand) | Chart 5: Banking Revenue (Indexed to 100)

The
Brazilian Central Bank's instant payment solution PIX will begin to be accepted throughout the country by November 16 th .
Our digital banking platform is directly connected to the Central Bank, which will allow us to settle PIX transactions for our
clients, with good economics. Clients can open a Stone account and obtain a PIX key directly through their POS device within a
couple of minutes, enabling them to offer a new form of payment to their clients.

7

On credit , we continue to scale the solution while looking to achieve the best combination of risk and return, with a ROA 1 of approximately 2.5% and delinquency rates 2 roughly stable at single-digits in the quarter. We ended the quarter
with 73,000 clients with our credit solution, a 56.7% increase compared with the second quarter of 2020, and reached R$1.1 billion
in credit balances compared with R$491 million by the end of the second quarter of 2020, more than doubling quarter over quarter.
This strong increase was a result of the combination of a higher number of clients and a higher average loan size, which is still
small at R$19,000 per client. We have a relevant part of our outstanding portfolio comprised of clients who are at least on their
second loan with us, having fully paid their previous debts and we also continue to improve our credit scoring model.

Chart 6: Credit Number of Clients (Thousands) | Chart 7: Credit Portfolio (R$mn)

As
mentioned in the previous quarter, we intend to scale our credit solution mainly through third-party funding. In that sense, we
have set up a FIDC structure, through which we expect to raise third-party funding in the coming months. Also, we are in advanced
stages to have BNDES funding of up to R$500 million for our credit solutions.

Fintech-as-a-Service and Online Business

Our fintech-as-a-service continued
to show progress through the third quarter of 2020, with big contribution from an accelerated digitization trend in Brazil. Within
this strategy, our online TPV grew 574.9% year over year in the third quarter, compared with 131.2% in the second quarter. Excluding Coronavoucher volumes from our partners, which accounted for over R$20 billion in the quarter, online TPV grew 76.3% year
over year in the period.

1 Monthly return on assets, calculated as credit revenue, net of expected losses, divided by disbursed amounts.

2 Expected delinquency calculated as the percentage of the disbursed amounts that we do not expect to receive any
payments throughout the lifetime of each contract.

8

Chart
8: Online TPV growth year over year

Overall,
the combination of our Integrated Partners and Digital clients increased from 41% of our total payments volume in the first quarter
of 2020, to 51% in the second quarter, and reached 60% in the third quarter, with strong contribution from Coronavoucher volumes. Excluding volumes from the government aid program, Integrated Partners and Digital clients represented 44% of total TPV
this quarter, with hubs representing the other 56%.

In
the fourth quarter, TPV from Coronavoucher is expected to decline compared with the third quarter, as the government reduces
this temporary financial aid in terms of both value and eligible recipients as the economy recovers.

Full Commerce Platform through Software

Our
total number of software clients increased to 342,000 3 in the third quarter of 2020, up from 283,000 in the second
quarter of 2020. This represents 21% organic growth quarter over quarter .

Chart
9: Number of Subscribed Software Clients (Thousand)

We
currently have a comprehensive portfolio of software solutions among different segments including customer engagement, marketplace
services, social media platform and different types of POS/ERP solutions addressing different verticals to help clients better
manage their businesses and sell more.

In
October 2020, we made an investment in Questor, a ERP for accounting offices and integrated cloud ERP offering for SMBs. Questor
serves over 6,000 active clients and SMBs offering solutions related to accounting management, fiscal solutions and ERP.

3 Does not Include Questor.

9

Regarding
the Linx acquisition , announced on August 11, Linx's shareholders meeting is scheduled for the 17 th of November
of 2020 to vote on the transaction with Stone. We are confident that our offer is the best option for all stakeholders, including
clients, investors and employees and will help accelerate Stone's full commerce platform asset.

For
more information about the transaction with Linx, please refer to Stone’s Investor Relations website at https://investors.stone.co /.

TON

We
have evolved significantly in our TON venture throughout the quarter. We ended the quarter with 65.0 thousand active clients 4 in TON compared with 35.2 thousand in the second quarter, an increase of 84.6% quarter over quarter, representing 29.8 thousand
net addition of clients. We continue to see encouraging evolution in our main KPIs such as improvement in our cost of acquisition
(CAC) as we learn and gain efficiency in our marketing investments.

Chart
10: Number of TON Clients 1

TPV
in TON has been growing sequentially, with a compounded monthly growth rate of 40% from April to September, resulting in a third
quarter volume almost 2.7 times what it was in the second quarter.

Consistent
with Stone's commitment to provide the best service to clients, one of TON's differentials is also its level of service, which
is adapted for its target client, the micromerchant. According to Reclame Aqui 5 , a website focused on evaluating customer
complaints and level of service among companies in Brazil, TON leads in terms of service level with an 8.9 score compared to an
average of 7.2 for the two market leaders.

4 Clients that transacted at least once in the last 12 months.

5 Level of client satisfaction according to www.reclameaqui.com.br from Apr-20 to Sep-20 and website access on 20-Oct-20.

10

Operating
and Financial Metrics

Table
1: Operating and Financial Metrics

Main Operating and Financial Metrics | 3 Q20 | 3 Q19 | Δ | 9 M20 | 9 M19 | Δ
TPV (R$ billions) | 69.7 | 32.6 | 113.8 | % | 145.4 | 88.9 | 63.7 | %
Active Clients (ex-TON) (thousands) | 582.9 | 413.6 | 40.9 | % | 582.9 | 413.6 | 40.9 | %
Period Net Additions (ex-TON) (thousands) | 63.5 | 64.1 | (1.0 | %) | 102.0 | 145.7 | (30.0 | %)
Take Rate | 1.30 | % | 1.91 | % | (0.61 | p.p.) | 1.53 | % | 1.87 | % | (0.35 | p.p.)
Total Revenue and Income (R$ millions) | 934.3 | 671.1 | 39.2 | % | 2,318.4 | 1,793.1 | 29.3 | %
Adjusted Net Income (R$ millions) | 287.9 | 201.9 | 42.6 | % | 600.4 | 582.1 | 3.1 | %
Adjusted diluted EPS | 0.99 | 0.71 | 38.2 | % | 2.12 | 2.06 | 2.9 | %

Active
client base

In
the third quarter of 2020, we reached an active client base 6 of 582.9 thousand, or a 40.9% growth year over year. This
represents a net addition of clients of 63.5 thousand, close to the prior year period, despite a lower number of salespeople.

Chart
11: Active Client Base ( Excludes TON/Stone Mais) 7

(Thousands)

Client
base in TON 8 reached 65.0 thousand clients in the third quarter of 2020, 84.6% higher than the previous quarter, adding
29.8 thousand clients.

6 Excludes TON clients.

7 Active clients mean clients that have transacted at least once over the preceding 90 days.

8 For clients of TON, Active Clients mean clients that have transacted with TON or Stone Mais solution at least once over
the last 12 months.

11

Take
rate

Our
reported Take Rate was 1.30% in the third quarter of 2020. Excluding the effect from Coronavoucher volumes, which are debit-like
transactions and have lower take rate, our take rate was 1.76%, 2bps higher than the previous quarter, mostly as a result of the
cross-sell of new solutions.

Take
rate excluding Coronavoucher was 15bps lower than in the third quarter of 2019, mostly explained by (i) stronger debit
over credit mix, (ii) lower prepayment rates, especially in large clients, as a result of the lower base rate in the country and
(iii) 3bps from the clients' lifetime revision in 3Q19 as explained in our 3Q19 results ( please refer to our 3Q19 Earnings
Release ). These effects were partially offset by higher take rates in the hubs, helped by the cross-selling of new solutions,
as we diversify our business to help clients among their different needs.

Chart 12: Evolution of Take Rate 9 | Chart 13: Take Rate ex- Coronavoucher

TPV

Total
Payment Volume (TPV) was R$69.7 billion, up 113.8% year over year in the third quarter of 2020 compared with the prior year period.
Our TPV continued to show a positive growth trend on a monthly basis since the outbreak of the pandemic with all three months
of the quarter posting above 100% growth year over year. Excluding Coronavoucher volumes, the trend is even more positive,
with accelerating year over year growth rates since April, with July, August and September growing 42.4%, 48.1% and 52.2%, respectively.

Coronavoucher is a government financial aid program targeting the most vulnerable part of the population as autonomous and informal workers
and people without income. Those individuals receive the amounts in a prepaid card and many of them used the card to transfer
money to different digital wallets and to buy goods. Whenever those digital wallets use Stone fintech-as-a service platform to
process the cash-in transactions, we capture the related TPV, which amounted to R$21.6 billion in the quarter.

TPV
growth was strong both in the hubs as well as for Digital and Integrated Partners. In the hubs, TPV growth was strong among all
Brazilian States, following the same accelerating trend as total TPV and reaching growth levels in September similar to pre-COVID
levels.

9 According to IFRS 15, subscription revenue is accounted for over the expected life of merchants on a linear basis. As
part of the annual assessment of assumptions for linearization of subscription revenue, life of merchants was revised upwards
in 3Q19, contributing positively 3 bps to 3Q19 take rate of 1.91% compared with 2Q19.

12

Table
2: Quarterly Statement of Profit or Loss

Statement
 of Profit or Loss (R$mm) | 3
 Q20 | %
 Rev. | 3
 Q19 | %
 Rev. | Δ% | Δ
 p.p.
Net revenue
 from transaction activities and other services | 354.1 | 37.9 | % | 193.9 | 28.9 | % | 82.6 | % | 9.0 p.p.
Net revenue from subscription
 services and equipment rental | 92.5 | 9.9 | % | 94.2 | 14.0 | % | (1.7 | %) | (4.1 p.p.)
Financial income | 460.1 | 49.2 | % | 335.1 | 49.9 | % | 37.3 | % | (0.7 p.p.)
Other financial income | 27.6 | 3.0 | % | 48.0 | 7.1 | % | (42.5 | %) | (4.2 p.p.)
Total
 revenue and income | 934.3 | 100.0 | % | 671.1 | 100.0 | % | 39.2 | % | 0.0
 p.p.
Cost of services | (208.1 | ) | (22.3 | %) | (112.5 | ) | (16.8 | %) | 84.9 | % | (5.5 p.p.)
Administrative expenses | (106.2 | ) | (11.4 | %) | (71.2 | ) | (10.6 | %) | 49.1 | % | (0.8 p.p.)
Selling expenses | (139.5 | ) | (14.9 | %) | (101.7 | ) | (15.1 | %) | 37.3 | % | 0.2 p.p.
Financial expenses,
 net | (64.7 | ) | (6.9 | %) | (101.2 | ) | (15.1 | %) | (36.1 | %) | 8.2 p.p.
Other operating expenses,
 net | (43.3 | ) | (4.6 | %) | (11.4 | ) | (1.7 | %) | 278.3 | % | (2.9 p.p.)
Gain (Loss) on investment
 in associates | (1.1 | ) | (0.1 | %) | 0.9 | 0.1 | % | n.m | (0.2 p.p.)
Profit
 before income taxes | 371.5 | 39.8 | % | 274.0 | 40.8 | % | 35.6 | % | (1.1
 p.p.)
Income tax and social
 contribution | (122.4 | ) | (13.1 | %) | (82.7 | ) | (12.3 | %) | 48.0 | % | (0.8 p.p.)
Net
 income for the period | 249.1 | 26.7 | % | 191.3 | 28.5 | % | 30.2 | % | (1.8
 p.p.)
Adjusted
 Net Income | 287.9 | 30.8 | % | 201.9 | 30.1 | % | 42.6 | % | 0.7
 p.p.

Table
3: Quarterly Statement of Profit or Loss

Statement
 of Profit or Loss (R$mm) | 9
 M20 | %
 Rev. | 9
 M19 | %
 Rev. | Δ% | Δ
 p.p.
Net revenue
 from transaction activities and other services | 808.9 | 34.9 | % | 539.9 | 30.1 | % | 49.8 | % | 4.8 p.p.
Net revenue from subscription
 services and equipment rental | 266.1 | 11.5 | % | 239.9 | 13.4 | % | 10.9 | % | (1.9 p.p.)
Financial income | 1,146.0 | 49.4 | % | 883.7 | 49.3 | % | 29.7 | % | 0.1 p.p.
Other financial income | 97.5 | 4.2 | % | 129.5 | 7.2 | % | (24.7 | %) | (3.0 p.p.)
Total
 revenue and income | 2,318.4 | 100.0 | % | 1,793.1 | 100.0 | % | 29.3 | % | 0.0
 p.p.
Cost of services | (556.7 | ) | (24.0 | %) | (298.7 | ) | (16.7 | %) | 86.4 | % | (7.4 p.p.)
Administrative expenses | (270.0 | ) | (11.6 | %) | (213.3 | ) | (11.9 | %) | 26.6 | % | 0.3 p.p.
Selling expenses | (366.0 | ) | (15.8 | %) | (251.6 | ) | (14.0 | %) | 45.5 | % | (1.8 p.p.)
Financial expenses,
 net | (275.7 | ) | (11.9 | %) | (246.6 | ) | (13.8 | %) | 11.8 | % | 1.9 p.p.
Other operating expenses,
 net | (86.8 | ) | (3.7 | %) | (55.2 | ) | (3.1 | %) | 57.2 | % | (0.7 p.p.)
Gain (Loss) on investment
 in associates | (3.9 | ) | (0.2 | %) | 0.3 | 0.0 | % | n.m | (0.2 p.p.)
Profit
 before income taxes | 759.2 | 32.7 | % | 728.0 | 40.6 | % | 4.3 | % | (7.9
 p.p.)
Income tax and social
 contribution | (227.9 | ) | (9.8 | %) | (187.8 | ) | (10.5 | %) | 21.4 | % | 0.6 p.p.
Net
 income for the period | 531.3 | 22.9 | % | 540.2 | 30.1 | % | (1.6 | %) | (7.2
 p.p.)
Adjusted
 Net Income | 600.4 | 25.9 | % | 582.1 | 32.5 | % | 3.1 | % | (6.6
 p.p.)

13

Total
Revenue and Income

Total
Revenue and Income was R$934.3 million in the third quarter of 2020, an increase of 39.2% from R$671.1 million in the third quarter
of 2019. Total Revenue and Income growth was driven primarily by the 113.8% increase in TPV, partially offset by the 61 bps lower
take rate year over year, with most impact coming from Coronavoucher volumes, which represented R$21.6 billion in the quarter
and have lower take rates.

Excluding
Other Financial Income, which is mainly comprised of interest on cash, our Total Revenue and Income grew 45.5% to R$906.7 million
in the third quarter of 2020.

Chart 14: Total Revenue and Income in the Quarter
 (R$mm) | Chart 15: Accumulated Total Revenue and Income
 (R$mm)

Net
Revenue from Transaction Activities and Other Services

Net
Revenue from Transaction Activities and Other Services was R$354.1 million in the third quarter of 2020, an increase of 82.6%,
compared with the third quarter of 2019. This increase was mostly due to the R$37.1 billion growth in TPV year over year, with
R$21.6 billion contribution from Coronavoucher volumes, which although having lower take rates, have positive revenue contribution.

Net
Revenue from Subscription Services and Equipment Rental

Net
Revenue from Subscription Services and Equipment Rental was R$92.5 million in the third quarter of 2020, 1.7% below the third
quarter of 2019. This slight decrease was primarily due to (i) the change in clients' lifetime value in the third quarter of 2019
( please refer to our 3Q19 earnings release ), which positively impacted revenues from that quarter, (ii) a R$5.5 million
impact from linearization of COVID-related incentives given to clients through June and (iii) lower average subscription per client,
which is mainly a result of additional new-client subscription incentives.

Financial
Income

Financial
Income was R$460.1 million in the third quarter of 2020, an increase of 37.3% year over year, primarily due to the 47.6% growth
in TPV year over year excluding Coronavoucher combined with the evolution of our credit offering. These effects were partially
compensated by (i) lower credit over debit mix, (ii) lower prepayment penetration over credit TPV, (iii) slightly lower duration
and (iv) lower prepayment prices, especially in large clients, as a result of the lower base rate in the country.

14

Revenue
from our credit solution is accounted for at fair value and factors in expected delinquency rates.

Other
Financial Income

Other
Financial Income was R$27.6 million in the third quarter of 2020, a decrease of 42.5% compared to the third quarter of 2019. This
decrease was mainly due to the lower base rate, which resulted in lower yields on the Company's cash balance and short-term investments,
even after considering the cash raised in our follow on offering in August, which amounted to USD 1.5 billion.

15

Costs
and Expenses

In
the third quarter of 2020, we continued to invest in our business. We hired new talents for many areas in the Company, mostly
in operations, and continued to invest in technology and in the growth of our new solutions.

Chart
16: Operating Leverage 10

Operating
Costs and Expenses as a percentage of Total Revenue and Income was 48.6%, 11.9 percentage points below the second quarter of 2020.
This quarter over quarter reduction was mostly due to one-off events in the second quarter, mainly (i) severance costs from the
reduction of our workforce in May, (ii) a one-time fine from a card scheme related to the non-usage of a specific product called
3DS, as well as (iii) operating deleverage due to COVID-19 impact on revenues in the second quarter. For further details, please
refer to our second quarter 2020 Earnings Release. Therefore, we see a normalization of our total costs and expenses in the third
quarter.

10 Includes Cost of Services, Administrative Expenses and Selling Expenses as a percentage of Total Revenue and Income. Quarterly
unaudited data.

16

Cost
and Expenses

Cost
of Services

Cost
of Services were R$208.1 million or 22.3% of Total Revenue and Income in the third quarter of 2020, an increase of 5.5 percentage
points over the third quarter of 2019. This increase was mainly due to (i) higher provisions and losses 11 , (ii) investment
in technology and customer service personnel, (iii) higher card brand fees and (iv) variable compensation.

Compared
with the second quarter of 2020, Cost of Services decreased as a percentage of Total Revenue and Income to 22.3% from 29.8%, mainly
because of (i) lower Depreciation and Amortization expenses 12 , (ii) lower provisions and losses, (iii) lower brand
fees, mostly due to the R$14.0 million of one-time fine from a card scheme related to the non-usage of 3DS in the second quarter
of 2020 and (iv) gains of scale in transaction costs.

Administrative
Expenses

Administrative
Expenses were R$106.2 million, or 11.4% of Total Revenue and Income, 0.8 percentage points higher than the prior year-period,
mostly due to (i) higher third-party services and (ii) higher personnel expenses and variable compensation. These effects were
partially offset by lower travel expenses amid COVID-19 and lower Depreciation and Amortization expenses.

Compared
with the second quarter of 2020, Administrative Expenses decreased from 13.5% of Total Revenue and Income to 11.4%, mainly due
to gains of scale in our personnel expenses and lower overall other administrative expenses.

Selling
Expenses

Selling
Expenses were R$139.5 million in the quarter, an increase of 37.3% versus the third quarter of 2019, mostly due to higher marketing
investments in TON, as well as variable compensation.

Compared
with the second quarter of 2020, Selling Expenses as a percentage of revenues decreased by 2.2 percentage points, mostly explained
by lower average number of salespeople, as well as severance costs accounted for in the second quarter of 2020.

Financial
Expenses, Net

Financial
Expenses, Net were R$64.7 million, a decrease of 36.1%, compared with the third quarter of 2019, mainly explained by lower cost
of funds due to the lower base rate and higher use of own cash to fund the prepayment operation, which more than compensated the
higher volumes in the quarter.

Compared
with the previous quarter, Financial Expenses, net as a percentage of Total Revenue and Income decreased from 9.4% to 6.9%. This
reduction is mainly explained by the lower base rate in the country and higher efficiency.

11 Does not include provisions for delinquency related to our credit product.

12 Mainly due to the change in depreciation period from 3 years with a residual value of 30% to 5 years with no residual value.

17

Cost
and Expenses

Other
Operating Expenses, Net

Other
Operating Expenses, Net were R$43.3 million in the third quarter of 2020, compared with R$11.4 million in the third quarter of
2019. This difference is mainly related to higher share-based compensation expenses, mostly related to the tax and social charges
provisions in relation to the appreciation of our shares in the quarter.

Compared
with the second quarter of 2020, Other Operating Expenses, net were 8.0% higher or 1.4 percentage points lower as a percentage
of Total Revenue and Income. This lower figure is mostly an effect of stronger revenues in the quarter.

Profit
Before Income Taxes

Profit
Before Income Taxes was R$371.5 million, or 35.6% higher year over year, with a pre-tax margin of 39.8% compared with 40.8% in
the third quarter of 2019. This slightly lower margin is mainly a result of (i) the combination of higher Cost of Services, Administrative
Expenses and Other Expenses, net as a percentage of Total Revenue and Income, (ii) partially compensated by lower Financial Expenses,
net and Selling Expenses as a percentage of Total Revenue and Income.

Compared
with the second quarter of 2020, pre-tax margin was 15.8 percentage points higher with contribution from all Costs and Expenses
lines, mainly reduction in Cost of Services and Financial Expenses, net.

Income
Tax and Social Contribution

During
the third quarter of 2020, the Company incurred R$122.4 million in Income Tax and Social Contribution expenses, or a 32.9% effective
tax rate, compared with a 30.2% tax rate in the third quarter of 2019.

18

Net
Income and EPS

Adjusted
Net Income was R$287.9 million in the third quarter of 2020, with a margin of 30.8%, compared with R$201.9 million and a margin
of 30.1% in the third quarter of 2019.

Compared
with the second quarter of 2020, Adjusted Net Margin was 8.3 percentage points higher, mainly due to the 15.8 percentage points
higher Profit Before Income Taxes, partially compensated by a higher effective tax rate.

Chart 17: Adjusted Net Income in the Quarter (R$mm) | Chart 18: Adjusted Net Margin in the Quarter
Chart
19: Accumulated Adjusted Net Income (R$mm) | Chart 20: Accumulated Adjusted Net Margin

Net
Income was R$249.1 million in the third quarter of 2020, compared with Net Income of R$191.3 million in the third quarter of 2019.
Net Margin decreased by 1.8 percentage points to 26.7% year over year in the third quarter of 2020. This reduction is mainly explained
by the same factors mentioned above for the variation in Profit Before Income Taxes combined with a higher effective tax rate.

Adjusted
diluted EPS for the Company was R$0.99 per share in the third quarter of 2020, 38.2% higher than in the third quarter of 2019,
mostly explained by the 42.6% higher Adjusted Net Income. GAAP basic EPS was R$0.87 per share, an increase of 26.3% year over
year, mostly explained by the 30.2% higher Net Income.

19

Table
4: Adjusted Net Income Reconciliation (Quarter)

Net
 Income Bridge (R$mm) | 3
 Q20 | %
 Rev. | 3
 Q19 | %
 Rev. | Δ% | Δ
 p.p.
Net
 income for the period | 249.1 | 26.7 | % | 191.3 | 28.5 | % | 30.2 | % | (1.8
 p.p.)
Share-based
 compensation expenses (a) | 30.8 | 3.3 | % | 11.2 | 1.7 | % | 174.5 | % | 1.6 p.p.
Amortization
 of fair value adjustment (b) | 6.9 | 0.7 | % | 4.6 | 0.7 | % | 51.6 | % | 0.1 p.p.
Gain
 on previously held interest in associate (c) | 0.0 | 0.0 | % | 0.0 | 0.0 | % | n.a. | 0.0 p.p.
Other
 expenses (d) | 13.5 | 1.4 | % | 0.0 | 0.0 | % | n.a. | 1.4 p.p.
Tax effect on adjustments | (12.5 | ) | (1.3 | %) | (5.3 | ) | (0.8 | %) | 136.2 | % | (0.5 p.p.)
Adjusted
 net income | 287.9 | 30.8 | % | 201.9 | 30.1 | % | 42.6 | % | 0.7
 p.p.
GAAP
 basic EPS (e) | 0.87 | n.a. | 0.69 | n.a. | 26.3 | % | n.a.
Adjusted
 diluted EPS (f) | 0.99 | n.a. | 0.71 | n.a. | 38.2 | % | n.a.
Basic Number of shares | 292.8 | n.a. | 277.4 | n.a. | 5.6 | % | n.a.
Diluted
 Number of shares | 297.2 | n.a. | 282.2 | n.a. | 5.3 | % | n.a.

Table
5: Adjusted Net Income Reconciliation (Accumulated)

Net
 Income Bridge (R$mm) | 9
 M20 | %
 Rev. | 9
 M19 | %
 Rev. | Δ% | Δ
 p.p.
Net
 income for the period | 531.3 | 22.9 | % | 540.2 | 30.1 | % | (1.6 | %) | (7.2
 p.p.)
Share-based
 compensation expenses (a) | 70.7 | 3.1 | % | 49.7 | 2.8 | % | 42.3 | % | 0.3 p.p.
Amortization
 of fair value adjustment (b) | 13.8 | 0.6 | % | 12.6 | 0.7 | % | 9.2 | % | (0.1 p.p.)
Gain
 on previously held interest in associate (c) | (3.0 | ) | (0.1 | %) | 0.0 | 0.0 | % | n.a. | (0.1 p.p.)
Other
 expenses (d) | 15.2 | 0.7 | % | 0.0 | 0.0 | % | n.a. | 0.7 p.p.
Tax effect on adjustments | (27.6 | ) | (1.2 | %) | (20.4 | ) | (1.1 | %) | 35.1 | % | (0.1 p.p.)
Adjusted
 net income | 600.4 | 25.9 | % | 582.1 | 32.5 | % | 3.1 | % | (6.6
 p.p.)
GAAP
 basic EPS (e) | 1.91 | n.a. | 1.95 | n.a. | (1.9 | %) | n.a.
Adjusted
 diluted EPS (f) | 2.12 | n.a. | 2.06 | n.a. | 2.9 | % | n.a.
Basic Number of shares | 282.6 | n.a. | 277.3 | n.a. | 1.9 | % | n.a.
Diluted
 Number of shares | 287.0 | n.a. | 282.3 | n.a. | 1.7 | % | n.a.

(a)
Consists of expenses related to the vesting of share-based compensation.

(b)
On intangibles related to acquisitions. Consists of expenses resulting from the amortization of the fair value adjustment on intangible
assets and property and equipment as a result of the application of the acquisition method, a significant portion of which relates
to the EdB and Equals acquisitions.

(c)
Consists of the gain on re-measurement of our previously held equity interest in Linked to fair value upon the date control was
acquired.

(d)
Consists of the fair value adjustment related to associates call option, M&A expenses and earn-out interests related to acquisitions.

(e)
Calculated as Net income attributable to owners of the parent (Net Income reduced by Net Income attributable to Non-Controlling
interest) divided by basic number of shares. For more details on calculation, please refer to Note 17 of our Unaudited Interim
Condensed Consolidated Financial Statements, September 30th, 2020.

(f)
Calculated as Adjusted Net income attributable to owners of the parent (Adjusted Net Income reduced by Net Income attributable
to Non-Controlling interest) divided by diluted number of shares. Adjustments consider share-based compensation expenses and amortization
of fair value adjustments, in line with previous disclosures.

20

Cash
Flow

Because
of the nature of the prepayment and credit businesses of the Company, the dynamics of the sale of receivables in Brazil, Stone
management looks at Adjusted Net Cash Provided by/ (Used in) Operating Activities and Adjusted Net Cash Provided by/ (Used in)
Financing Activities, both non-IFRS metrics. These metrics consist of transferring the following four working capital items 13 from our operating cash flow to our financing cash flow: (i) changes in Accounts Payable to Clients; (ii) changes in Accounts
Receivables from Card Issuers; (iii) Interest Income Received, Net of Costs 14 , which is shown separately in our Cash
Flow Statement but is directly linked to the funding of our prepayment operation and (iv) Loans Held for Sale related to our credit
operation (see Appendix "Notes on Cash Flows" for further details).

The
table below is a summarized version of our Statement of Cash Flows and Adjusted Free Cash Flow (a non-IFRS metric), along with
a reconciliation of these metrics with our managerial (non-IFRS) view of them, as well as reconciliation of Adjusted Net Cash
Provided by/ (Used in) Operating Activities and Adjusted Net Cash Provided by/ (Used in) Financing Activities to Net Cash Provided
by/ (Used in) Operating Activities and Net Cash Provided by/ (Used in) Financing Activities.

Table
6: Summarized Statement of Cash Flows and Free Cash Flow

S ummarized
 Statement of Cash Flows (R$mm) | 3Q20 | 3Q19
IFRS | (+) Adjustments | Managerial (Non-IFRS) | IFRS | (+) Adjustments | Managerial (Non-IFRS)
Net Income | 249.1 | 249.1 | 191.3 | 191.3
(+) Adjustments to Net
 Income | (116.4) | (116.4) | 118.3 | 118.3
(+) Working capital
 adjustments | (1,802.7) | 2,140.4 | 337.7 | (119.5) | 66.1 | (53.4)
(+)
 AR, AP, interest income received, net of costs (a) | (1,455.3) | 1,455.3 | 0.0 | (66.1) | 66.1 | 0.0
(+)
 Changes in Loans Held for Sale | (685.1) | 685.1 | 0.0 | 0.0 | 0.0 | 0.0
(+)
 Other working capital changes | 337.7 | 337.7 | (53.4) | (53.4)
(=) Cash provided by
 (used in) operating activities | (1,669.9) | 470.5 | 190.2 | 256.3
(-) Capex (b) | (181.9) | (181.9) | (215.2) | (215.2)
(+) Other investing
 activities | (7,442.0) | (7,442.0) | (82.9) | (82.9)
(=) Cash provided by
 (used in) investing activities | (7,623.9) | (7,623.9) | (298.1) | (298.1)
(+) Debt/FIDC
 issuance (repayment) | 862.7 | 862.7 | 190.5 | 190.5
(+) Working capital
 related to credit operation | (685.1) | (685.1) | 0.0 | 0.0
(+) Working capital
 related to AR/AP | (1,455.3) | (1,455.3) | (66.1) | (66.1)
(+) Capital events (c) | 7,845.4 | 7,845.4 | (0.2) | (0.2)
(=) Cash provided by
 (used in) financing activities | 8,708.0 | 6,567.7 | 190.3 | 124.2
(+) Effect
 of foreign exchange on cash and cash equivalents | 1.3 | 1.3 | 2.1 | 2.1
(=) Change in cash
 and cash equivalents | (584.5) | (584.5) | 84.5 | 84.5
Free
 Cash Flow (R$mm) | 3Q20 | 3Q19
Cash provided by (used in) operating activities | (1,669.9) | 2,140.4 | 470.5 | 190.2 | 66.1 | 256.3
(-) Capex (b) | (181.9) | (181.9) | (215.2) | (215.2)
Free
 Cash Flow | (1,851.8) | 288.6 | (25.0) | 41.1

(a)
Includes changes in accounts receivables from card issuers, accounts payable to clients and interest income received, net of costs
.

(b)
Includes purchase of property and equipment, plus purchases and development of intangibles assets.

(c)
Includes capital increase, repurchase of shares, acquisition of non-controlling interest and cash proceeds from non-controlling
interest

13 Each “Accounts Payable to Clients” recognized as a liability on our
 balance sheet is directly linked to an “Accounts Receivable from Card Issuers”
 recognized as an asset in our balance sheet. The Company receives payment from issuing
 banks first, and only then pays its clients, thus having no working capital requirement.
 When a client opts to be paid early (prepayment), the Company has a working capital requirement.
 However, the Company has the option to sell the receivables related to those payables
 from card issuers in order to meet such working capital requirements. The combined effect
 to the cash flow is a positive operational cash flow equivalent to net fees earned by
 providing such prepayment service. Whenever management opts to fund its prepayment operation
 with sources other than the sale of its own receivables, Net Cash Provided by/ (Used
 in) Operating Activities may be affected, as discussed in “Note on the impact of
 different funding sources for prepayment in the financial statements” in the appendix.
 However, management does not view such decision as translating into higher or lower ability
 of our business to generate cash operationally. In addition to prepayment, the Company
 has started to offer credit solutions to clients. The Company intends to fund its credit
 operation primarily through third parties (i.e. FIDC and debt), as well as with some
 own cash. Given the operational nature of our credit business, as in the case of prepayment
 mentioned above, management does not view related funding decision as translating into
 higher or lower ability of our business to generate cash operationally.

14 Interest Income Received, Net of Costs, consists of two items: (i) financial income from our prepayment activity, less (ii)
financial expenses related to the sale of receivables to commercial banks. The first item has direct influence on the level of
Accounts Payable to Clients in our balance sheet; the second item has direct influence on the amount of Accounts Receivables from
Card Issuers on our balance sheet.

21

Cash Flow

Adjusted
(non-IFRS) Free Cash Flow

The
Company defines Adjusted Free Cash Flow 15 , a non-IFRS metric, as Adjusted net cash provided by (used in) operating
activities (non-IFRS), less purchase of property and equipment and purchases and development of intangible assets ("Capex").

The
Company reported Adjusted Free Cash Flow of R$288.6 million in the third quarter of 2020, more than seven times what it was in
the prior-year-period, when the Company reported R$41.1 million in Adjusted Free Cash Flow. The increase in Adjusted Free Cash
Flow is explained by (i) R$391.1 million higher Net Cash Provided by Operating Activities related to working capital, (ii) R$57.8
million higher Net Income and (iii) R$33.3 million lower Capex. These effects were partially compensated by (iv) R$234.7 million
lower Adjustments to Net Income, mostly related to Interest, Monetary and Exchange Variations, Net and Fair Value Adjustments
in Financial Instruments at FVPL, partially compensated by higher Depreciation and Amortization and other effects.

Net
Cash Provided by (Used in) Operating Activities

In
the third quarter of 2020, Net Cash Used in Operating Activities was R$1,669.9 million, compared with R$190.2 million of
Net Cash Provided by Operating Activities in the third quarter of 2019, a difference of R$1,860.1 million. This negative variation
is mainly explained by (i) R$3,011.7 million higher Net Cash Used in Operating Activities from Accounts Receivable from Card Issuers
and (ii) R$471.5 million higher Net Cash Used in Operating Activities from Trade Accounts Receivable and Other Assets, which includes
a R$685.1 million variation in Loans held for Sale related to our credit portfolio. These effects were partially offset by R$1,722.6
million higher Net Cash Provided by Operating Activities from Accounts Payable to Clients.

Adjusting
for the effects on table 6 above, our Adjusted (non-IFRS) Net Cash Provided by Operating Activities 16 was R$470.5
million, compared with R$256.3 million in Adjusted Net Cash Provided by Operating Activities in the third quarter of 2019. The
R$214.1 million higher Adjusted Net Cash Provided by Operating Activities is explained by items (i) and (ii) from the " Adjusted
(non-IFRS) Free Cash Flow" section above, partially compensated by item (iv).

Net
Cash Used in Investing Activities

Net
Cash Used in Investing Activities was R$7,623.9 million for the third quarter of 2020, R$7,325.7 million higher compared with
the third quarter of 2019, when the Company reported R$298.1 million of Net Cash Used in Investing Activities. The higher Net
Cash Used in Investing Activities for the third quarter of 2020 was primarily driven by R$7,301.0 million higher Net Cash Used
in Investing Activities from Acquisition of Short-Term Investments, net compared with the third quarter of 2019, as the Company
invested the August follow on proceeds, which should be mostly used to fund the acquisition of Linx.

15 Adjusted Free Cash Flow is a non-IFRS measure. Refer to the discussion on non-IFRS financial measures and reconciliations
included in this release.

16 Adjusted Net Cash Provided by (Used in) Operating Activities is a non-IFRS measure. Refer to the discussion on non-IFRS
financial measures and reconciliations included in this release.

22

Cash Flow

Net
Cash Provided by Financing Activities

Net
Cash Provided by Financing Activities was R$8,708.0 million for the third quarter of 2020, compared with Net Cash Provided
by Financing Activities of R$190.3 million for the third quarter of 2019. Net Cash Provided by Financing Activities for the third
quarter of 2020 was R$8,517.7 million higher mainly driven by (i) a Capital Increase in the amount of R$7,845.6 million in connection
with our follow-on offering in August 2020, compared to zero in the third quarter of 2019, and (ii) Proceeds from FIDC quota holders
in the amount of R$2,500 million from the launch of FIDC AR III, compared to R$20.0 million from FIDC TAPSO in the third quarter
of 2019. These effects were partially compensated by R$1,033.8 million higher payment of borrowings, mostly from one bilateral
loan in the amount of USD100 million, amortization of CCBs (" Cédula de Crédito Bancário" )
and R$529.8 million in amortization of FIDC AR II, among other smaller effects.

Adjusting
for the effects on table 6 above, our Adjusted (non-IFRS) Net Cash Provided by Financing Activities 17 was R$6,567.7
million in the third quarter of 2020, compared with Adjusted (non-IFRS) Net Cash Provided by Financing Activities of R$124.2 million
in the third quarter of 2019, a difference of R$6,443.5 million. This difference is related to (i) R$7,845.6 million from Capital
Events related to our follow-on offering and (ii) R$672.2 million higher Proceeds from Borrowings (net of payments), mostly from
the new FIDC AR III issuance, partially compensated by amortizations from FIDC AR II, one bilateral loan and CCBs. These effects
were partially offset by (iii) R$1,389.1 million higher negative working capital contribution compared with the third quarter
of 2019 due to a higher use of own cash to fund the Company's prepayment operation and (iv) R$685.1 million from credit given
to our clients.

17 Adjusted Net Cash Provided by (Used in) Financing Activities is a non-IFRS measure. Refer to the discussion on non-IFRS
financial measures and reconciliations included in this release.

23

Adjusted
Net Cash

Management
assesses net liquidity of the Company by Adjusted Net Cash, a non-IFRS metric. It consists of the items detailed in the Table
7 below:

Table
7: Adjusted Net Cash

Adjusted
 Net Cash (R$mm) | 3
 Q20 | 4
 Q19
Cash and
 cash equivalents | 2,192.3 | 968.3
Short-term investments | 8,185.0 | 2,937.0
Accounts receivable
 from card issuers | 15,919.5 | 14,066.8
Loans held for sale | 1,192.0 | 124.7
Derivative
 financial instrument (b) | 4.8 | 12.3
Adjusted
 Cash | 27,493.6 | 18,109.2
Accounts payable to
 clients | (8,477.3 | ) | (6,500.1 | )
Loans
 and financing (a) | (1,193.7 | ) | (2,912.0 | )
Obligations to FIDC
 quota holders | (4,555.7 | ) | (3,710.9 | )
Derivative
 financial instrument (b) | (12.9 | ) | (1.4 | )
Adjusted
 Debt | (14,239.7 | ) | (13,124.4 | )
Adjusted
 Net Cash | 13,253.9 | 4,984.8
(a) | Loans
 and financing were reduced by the effects of leases liabilities recognized under IFRS
 16.
(b) | Refers
 to economic hedge of cash and cash equivalents and short-term investments denominated
 in U.S. dollars

Accounts
Receivable from Card Issuers and Loans Held for Sale are accounted for at their fair value in our balance sheet.

As
of September 30, 2020, the Company´s Adjusted Net Cash position was R$13,253.9 million compared with R$4,984.8 million on
December 31, 2019, an increase of R$8,269.1 million.

This
increase can be explained by the following factors:

· | Cash
 and Cash Equivalents plus Short-term Investments increased by R$6,472.0 million, from
 R$3,905.4 million on December 31, 2019 to R$10,377.3 million on September 30, 2020, mostly
 as a function of the follow-on proceeds in the amount of USD1,464.7 million;
· | Loans
 and financing plus Obligations to FIDC quota holders decreased R$873.5 million from R$6,622.9
 million on December 31, 2019 to R$5,749.4 million on September 30, 2020 as the company
 was able to partially amortize its debt obligations;
· | This
 amortization was funded mostly with own cash as Accounts Receivable from Card Issuers,
 net of Accounts Payable to Clients decreased only R$124.6 million, from R$7,566.7 million
 on December 13, 2019 to R$7,442.2 million on September 30, 2020.
· | The
 Company invested R$1,067.4 million in its Loans Held for Sale, going from R$124.7 million
 on December 31, 2019 to R$1,192.0 million on September 30, 2020. The Company expects
 to scale its credit business mostly through third-party funding.
· | Finally,
 derivative financial instruments net position decreased from R$11.0 million on December
 31, 2019 to a negative position of R$8.2 million on September 30, 2020.

Combined,
these factors generated R$1,115.3 million higher Adjusted Debt, and R$9,384.4 million higher Adjusted Cash, which explains the
improvement in Adjusted Net Cash of R$8,269.1 million.

24

Other
Information

Conference
Call

Stone
will discuss its third quarter financial results during a teleconference today, October 29, 2020, at 5:00 PM ET / 6:00 PM BRT.
The conference call can be accessed at +1 (412) 317 6346 or +1 (844) 204 8586 (US), or +55 (11) 3181 8565 (Brazil), or +44 (20)
3795 9972 (UK).

The
call will also be broadcast simultaneously on Stone’s Investor Relations website at https://investors.stone.co/. Following
the completion of the call, a recorded replay of the webcast will be available on Stone’s Investor Relations website at
https://investors.stone.co/.

About
Stone Co.

Stone
Co. is a leading provider of financial technology solutions that empower merchants to conduct commerce seamlessly across multiple
channels and help them grow their businesses.

Investor Contact

Investor
Relations investors@stone.co

25

Other
Information

Forward-Looking
Statements

This
press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made as of the date they were first
issued and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of
management. These statements identify prospective information and may include words such as “believe,” “may,”
“will,” “aim,” “estimate,” “continue,” “anticipate,” “intend,”
“expect,” “forecast,” “plan,” “predict,” “project,” “potential,”
“aspiration,” “objectives,” “should,” “purpose,” “belief,” and similar,
or variations of, or the negative of such words and expressions, although not all forward-looking statements contain these identifying
words.

Forward-looking
statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond
Stone’s control.

Stone’s
actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors,
including but not limited to: more intense competition than expected, lower addition of new clients, regulatory measures, more
investments in our business than expected, and our inability to execute successfully upon our strategic initiatives, among other
factors. In particular, due to the high level of uncertainty with respect to the duration and scope of the COVID-19 crisis, the
quantification of impacts on our financial and operating results cannot be reasonably estimated at this time.

About
Non-IFRS Financial Measures

To
supplement the financial measures presented in this press release and related conference call, presentation, or webcast in accordance
with IFRS, Stone also presents the following non-IFRS measures of financial performance: Adjusted Net Income, Adjusted EPS (diluted),
Adjusted Net Margin, Adjusted Net Cash Provided by / (Used in) Operating Activities, Adjusted Net Cash Provided by (Used in) Financing
Activities, Free Cash Flow and Adjusted Free Cash Flow, Adjusted Net Cash / (Debt) and Adjusted Pre-Tax Margin.

A
“non-IFRS financial measure” refers to a numerical measure of Stone’s historical or future financial performance
or financial position that either excludes or includes amounts that are not normally excluded or included in the most directly
comparable measure calculated and presented in accordance with IFRS in Stone’s financial statements. Stone provides certain
non-IFRS measures as additional information relating to its operating results as a complement to results provided in accordance
with IFRS. The non-IFRS financial information presented herein should be considered in conjunction with, and not as a substitute
for or superior to, the financial information presented in accordance with IFRS. There are significant limitations associated
with the use of non-IFRS financial measures. Further, these measures may differ from the non-IFRS information, even where similarly
titled, used by other companies and therefore should not be used to compare Stone’s performance to that of other companies.

Stone
has presented Adjusted Net Income to eliminate the effect of items from Net Income that it does not consider indicative of its
continuing business performance within the period presented. Stone defines Adjusted Net Income as Net Income (Loss) for the Period,
adjusted for (1) non-cash expenses related to the grant of share-based compensation and the fair value (mark-to-market) adjustment
for share-based compensation classified as a liability, (2) amortization of intangibles related to acquisitions, (3) one-time
impairment charges, (4) unusual income and expenses and (5) tax expense relating to the foregoing adjustments. Adjusted Net Margin
is calculated by dividing Adjusted Net Income by Total Revenue and Income.

Stone
has presented Adjusted Net Cash Provided by/ (Used in) Operating Activities, in order to provide an addition view of cash flow
from operations without the effect of funding decisions related to our financial solutions, that include prepayment business and
credit solutions. Stone has presented Adjusted Free Cash Flow metric, which has limitations as it omits certain components of
the overall Cash Flow Statement and does not represent the residual cash flow available for discretionary expenditures. For example,
this metric does not incorporate the portion of payments representing principal reductions of debt or cash payments for business
acquisitions. Therefore, the Company believes it is important to view Free Cash Flows measures only as a complement to our entire
consolidated Statements of Cash Flows.

Stone
has presented Adjusted Net Cash metric in order to adjust its Net Cash / (Debt) by the balances of Accounts Receivable from Card
Issuers, Loans Held for Sale and Accounts Payable to Clients, since these lines vary according to the Company’s funding
source together with the lines of (i) Cash and Cash Equivalents, (ii) Short-term Investments, (iii) Debt balances and (iv) Derivative
Financial Instruments related to economic hedges of short term investments in assets, due to the nature of Stone’s business
and its prepayment and credit operations.

26

Unaudited
 Consolidated Statement of Profit or Loss

Table
8: Unaudited Consolidated Statement of Profit or Loss

Statement
 of Profit or Loss (R$mm) | 3
 Q20 | 3
 Q19 | 9
 M20 | 9
 M19
Net revenue
 from transaction activities and other services | 354.1 | 193.9 | 808.9 | 539.9
Net revenue from subscription
 services and equipment rental | 92.5 | 94.2 | 266.1 | 239.9
Financial income | 460.1 | 335.1 | 1,146.0 | 883.7
Other financial income | 27.6 | 48.0 | 97.5 | 129.5
Total
 revenue and income | 934.3 | 671.1 | 2,318.4 | 1,793.1
Cost of services | (208.1 | ) | (112.5 | ) | (556.7 | ) | (298.7 | )
Administrative expenses | (106.2 | ) | (71.2 | ) | (270.0 | ) | (213.3 | )
Selling expenses | (139.5 | ) | (101.7 | ) | (366.0 | ) | (251.6 | )
Financial expenses,
 net | (64.7 | ) | (101.2 | ) | (275.7 | ) | (246.6 | )
Other operating expenses,
 net | (43.3 | ) | (11.4 | ) | (86.8 | ) | (55.2 | )
Gain (loss) on investment
 in associates | (1.1 | ) | 0.9 | (3.9 | ) | 0.3
Profit
 before income taxes | 371.5 | 274.0 | 759.2 | 728.0
Income tax and social
 contribution | (122.4 | ) | (82.7 | ) | (227.9 | ) | (187.8 | )
Net
 income for the period | 249.1 | 191.3 | 531.3 | 540.2

27

Unaudited
 Consolidated Balance Sheet Statement

Table
9: Unaudited Consolidated Balance Sheet Statement

Balance
 Sheet (R$mm) | 30-Sep-20 | 31-Dec-19
Assets
Current
 assets | 28,346.8 | 18,404.9
Cash and cash equivalents | 2,192.3 | 968.3
Short-term investments | 8,185.0 | 2,937.0
Accounts receivable
 from card issuers | 15,919.5 | 14,066.8
Trade accounts receivable | 1,358.1 | 249.4
Recoverable taxes | 60.1 | 50.4
Prepaid expenses | 56.1 | 12.5
Derivative financial
 instruments | 4.8 | 14.1
Other assets | 570.8 | 106.3
Non-current
 assets | 1,740.6 | 1,200.9
Receivables from related
 parties | 9.2 | 12.8
Deferred tax assets | 118.0 | 192.8
Prepaid expenses | 60.6 | 0.0
Other assets | 77.7 | 44.7
Investment in associate | 55.0 | 28.2
Property and equipment | 646.2 | 548.6
Intangible assets | 774.0 | 373.7
Total
 Assets | 30,087.4 | 19,605.7
Liabilities
 and equity
Current
 liabilities | 12,196.3 | 11,872.5
Accounts payable to
 clients | 8,477.3 | 6,500.1
Trade accounts payable | 166.9 | 97.8
Loans and financing | 842.1 | 2,947.8
Obligations to FIDC
 quota holders | 2,070.4 | 2,090.9
Labor and social security
 liabilities | 180.5 | 109.0
Taxes payable | 89.9 | 44.9
Derivative financial
 instruments | 12.9 | 1.4
Other liabilities | 356.1 | 80.6
Non-current
 liabilities | 3,289.0 | 1,760.2
Loans and financing | 491.5 | 87.5
Obligations to FIDC
 quota holders | 2,485.2 | 1,620.0
Deferred tax liabilities | 37.6 | 10.7
Provision for contingencies | 9.7 | 9.6
Labor and social security
 liabilities | 46.9 | 27.4
Other liabilities | 218.1 | 5.1
Total
 liabilities | 15,485.2 | 13,632.7
Equity
 attributable to owners of the parent | 14,508.8 | 5,972.4
Issued capital | 0.1 | 0.1
Capital reserve | 13,481.1 | 5,443.8
Treasury shares | (76.4 | ) | (0.1 | )
Other comprehensive
 income | (37.3 | ) | (72.3 | )
Retained earnings | 1,141.3 | 601.0
Non-controlling
 interests | 93.4 | 0.6
Total
 equity | 14,602.2 | 5,973.0
Total
 liabilities and equity | 30,087.4 | 19,605.7

28

Unaudited
 Consolidated Statement of Cash Flows

Table
10: Unaudited Consolidated Statement of Cash Flows

Cash
 Flow (R$mm) | 3
 Q20 | 3
 Q19 | 9
 M20 | 9
 M19
Net
 income for the period | 249.1 | 191.3 | 531.3 | 540.2
Adjustments
 on Net Income:
Depreciation and amortization | 61.6 | 43.9 | 184.9 | 107.7
Deferred income tax
 and social contribution | 31.2 | 22.5 | 66.4 | 53.0
Loss (gain) on investment
 in associates | 1.1 | (0.9 | ) | 3.9 | (0.3 | )
Interest, monetary and
 exchange variations, net | (199.4 | ) | 28.4 | (142.7 | ) | 55.7
Provision for contingencies | 0.4 | 0.5 | 2.2 | 2.2
Share based payments
 expense | 12.1 | 6.1 | 19.8 | 23.1
Allowance for expected
 credit losses | 5.4 | 6.6 | 26.4 | 26.8
Loss on disposal of
 property, equipment and intangible assets | 12.7 | 3.6 | 27.0 | 6.4
Fair value adjustment
 in financial instruments at FVPL | (41.6 | ) | 0.0 | (46.7 | ) | 0.0
Fair value adjustment
 in derivatives | 0.1 | 7.6 | 20.8 | (0.0 | )
Remeasurement of previously
 held interest in subsidiary acquired | 0.0 | 0.0 | (3.0 | ) | 0.0
Working
 capital adjustments:
Accounts receivable
 from card issuers | (2,976.8 | ) | 34.9 | (1,713.4 | ) | (3,267.9 | )
Receivables from related
 parties | (1.4 | ) | 0.9 | 6.2 | 3.9
Recoverable taxes | 66.7 | 4.9 | (8.5 | ) | (54.5 | )
Prepaid expenses | 3.2 | 1.1 | (104.3 | ) | (6.4 | )
Trade accounts receivable
 and other assets | (517.1 | ) | (45.5 | ) | (1,026.4 | ) | (85.6 | )
Accounts payable to
 clients | 1,317.3 | (405.3 | ) | 1,016.2 | (163.9 | )
Taxes payable | 35.0 | 31.5 | 208.7 | 159.2
Labor and social security
 liabilities | 73.7 | 15.6 | 87.9 | 24.0
Provision for contingencies | (0.5 | ) | 0.3 | (2.1 | ) | 0.4
Other Liabilities | 46.3 | 2.5 | 59.6 | (20.2 | )
Interest paid | (28.0 | ) | (31.0 | ) | (138.3 | ) | (117.6 | )
Interest income received,
 net of costs | 204.3 | 304.3 | 865.3 | 852.2
Income tax paid | (25.3 | ) | (33.7 | ) | (127.8 | ) | (126.6 | )
Net
 cash provided by (used in) operating activity | (1,669.9 | ) | 190.2 | (186.2 | ) | (1,988.3 | )
Investing
 activities
Purchases of property
 and equipment | (153.7 | ) | (197.2 | ) | (334.7 | ) | (314.2 | )
Purchases and development
 of intangible assets | (28.2 | ) | (18.0 | ) | (70.7 | ) | (47.7 | )
Acquisition of subsidiary,
 net of cash acquired | (28.0 | ) | 0.0 | (85.3 | ) | 0.0
Proceeds from (acquisition
 of) short term investments, net | (7,379.7 | ) | (78.7 | ) | (5,159.2 | ) | 59.8
Proceeds from the disposal
 of non-current assets | 1.7 | 0.1 | 6.6 | 1.0
Acquisition of interest
 in associates | (36.0 | ) | (4.4 | ) | (43.5 | ) | (11.5 | )
Net
 cash used in investing activities | (7,623.9 | ) | (298.1 | ) | (5,686.8 | ) | (312.5 | )
Financing
 activities
Proceeds from borrowings | 150.0 | 388.6 | 3,606.8 | 838.6
Payment of borrowings | (1,244.0 | ) | (210.2 | ) | (5,331.1 | ) | (211.6 | )
Payment to FIDC quota
 holders | (529.8 | ) | 0.0 | (1,646.3 | ) | 0.0
Proceeds from FIDC quota
 holders | 2,500.0 | 20.0 | 2,500.0 | 1,640.0
Payment of leases | (13.6 | ) | (7.9 | ) | (28.1 | ) | (19.3 | )
Capital increase, net
 of transaction costs | 7,845.6 | 0.0 | 7,845.6 | 0.0
Repurchase of shares | 0.0 | 0.0 | (76.3 | ) | 0.0
Acquisition of non-controlling
 interests | (0.2 | ) | (0.2 | ) | (0.7 | ) | (0.7 | )
Cash proceeds from non-controlling
 interest | 0.0 | 0.0 | 230.5 | 0.0
Net
 cash provided by financing activities | 8,708.0 | 190.3 | 7,100.4 | 2,247.1
Effect of foreign exchange
 on cash and cash equivalents | 1.3 | 2.1 | (3.4 | ) | 0.9
Change
 in cash and cash equivalents | (584.5 | ) | 84.5 | 1,224.0 | (52.8 | )
Cash and cash equivalents
 at beginning of period | 2,776.8 | 160.6 | 968.3 | 297.9
Cash
 and cash equivalents at end of period | 2,192.3 | 245.1 | 2,192.3 | 245.1

29

Appendix - Notes on Cash Flows

Note
on the impact of different funding sources for prepayment in the financial statements

A
natural consequence of TPV growth is the corresponding increase in both Accounts Receivable from Card Issuers and Accounts Payable
to Clients. When the Company makes a prepayment to its clients as part of its working capital solutions offering, it reduces
accounts payable by the corresponding prepaid amount plus fees earned by providing such prepayment service. In order to fund the
prepayment operation, the Company predominantly uses one of the following sources of funding: (i) the sale of its receivables
from card issuers to third-party banks or financial institutions, (ii) the issuance of senior and/or mezzanine quotas by FIDCs
to institutional investors, (iii) the issuance of debentures and private loans or (iv) its own capital from capital contributions
or cash flows from operations. These funding options lead to different effects on the Company’s statements of balance sheet
and cash flows:

1 | Sale
 of receivables: the true sale of receivables results in the derecognition of Accounts
 Receivable from Card Issuers. As a result, when a prepayment operation is funded through
 the true sale of receivables, both Accounts Receivable from Card Issuers and Accounts
 Payable to Clients are derecognized from the balance sheet in the same amount and the
 combined effect to the cash flows is a positive operational cash flow equivalent to net
 fees earned by providing such prepayment service.
2 | Issuance
 of FIDC 18 senior and/or mezzanine quotas: when the Company launches a new
 FIDC in order to raise capital, the amount raised from senior and/or mezzanine quota
 holders less structuring and transaction costs will be recognized on its balance sheet
 as cash and as a liability to senior and/or mezzanine quota holders. The Company then
 transfers its receivables from card issuers in its operating subsidiary to the FIDC and
 uses the cash to fund the prepayment operations. As a result of consolidating the FIDC
 in the Company’s financial statements, the Accounts Receivable from Card Issuers
 held by the FIDC remain on its consolidated balance sheet. This set of transactions generates
 a positive impact on the Company’s cash flows from financing activities in the
 amount received by the FIDC from senior and/or mezzanine quota holders less structuring
 and transaction costs. However, since Accounts Receivable from Card Issuers remains on
 the balance sheet but the Accounts Payable to Clients are derecognized, these transactions
 also cause a negative impact on our cash flow from operations. The net effect of impacts
 in cash flow from operations and cash flow from financing activities is positive.
3 | Debentures
 and private loans: when the Company issues a debenture or takes a private loan, the effect
 on the Company’s statements of balance sheet and cash flows is similar to the issuance
 of FIDC senior and/or mezzanine quotas.
4 | Deployment
 of the Company’s capital: when the Company uses its own capital to fund prepayment
 operations, it does not sell its receivables from card issuers and th ey
 remain on its balance sheet. However, its Accounts Payable to Clients are derecognized,
 and therefore these transactions cause a negative impact on the Company’s cash
 flow from operations.

18 Receivables Investment Fund (Fundo de Investimento em Direitos Creditórios) is an investment fund legal
structure established under Brazilian law designed specifically for investing in credit rights receivables

30

Appendix - Notes on Cash Flows

Note
on the impact of different funding sources for our credit solution in the financial statements

Besides
the prepayment operation, the Company has recently started to offer credit solutions to clients, which also require funding.
In addition to the sale of receivables, debentures and private loans mentioned above, the Company has the following main funding
alternatives for the credit business:

1 | Bilateral
 agreements with third-party financial institutions: the company may enter into agreement
 with third-party financial institutions, so that such institutions are the lenders of
 record for Stone´s clients. In such case, the third-party financial institution
 would bear the funding need and the credit risk of the transaction and the Company would
 recognize a fee for rendering services related to the transaction. This was the alternative
 the Company opted for its initial pilot phase of the credit solution, which has a positive
 effect in cash flow from operations.
2 | Issuance
 of Credit FIDC senior and/or mezzanine quotas: in that case, the company raises funds
 in the capital markets and issues senior and/or mezzanine quotas to investors, while
 keeping a very small amount of own cash invested in subordinated quotas. Besides providing
 most of the funding needed for the credit offering, this alternative also reduces the
 Company´s overall exposure to credit risk. The impact in our consolidated statement
 of cash flows has similar logic as the issuance of FIDC senior and/or mezzanine quotas
 mentioned in the section “Note on the impact of different funding sources for
 prepayment in the financial statements ” above.
3 | Deployment
 of the Company’s capital: if the Company uses its own capital to fund its credit
 operations, it decreases its cash balance and recognizes loan assets in its balance sheet.
 If the Company increases the amount of such loan assets, this has a negative impact in
 our Net Cash provided by/(used in) Operating Activities.
4 | Sale
 of loan assets: the true sale of loan assets results in its derecognition from our balance
 sheet, impacting positively our Net Cash provided by/(used in) Operating Activities .

As
of September 30, 2020, the credit portfolio outstanding to Stone´s clients was R$1,090.7 million. The Company funded R$25.1
million from a third-party financial institution through the funding model explained in the topic (1) above and R$1,065.7 million
is funded by the Company’s own capital through an investment in a FIDC and this amount is recognized in Loans Held for Sale
in the Company´s balance sheet. The Company, however, intends to scale its credit operation mainly through third-party funding,
especially alternative (2) mentioned above.

Loan
assets held in the Company´s balance sheet are accounted for at their fair value, which factors in market discount rates
and expected delinquency, thus representing the value that the Company would most probably be able to sell such assets.

31

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