Earnings call transcript Q1 2023

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Andre Martins

Good afternoon, and welcome to XP Inc.'s First Quarter 2023 Earnings Call. I'm Andre Martins, Head of Investor Relations. And with me are our CEO, Thiago Maffra; and our CFO, Bruno Constantino, who will be available for the Q&A section.

I kindly ask you to refer to the legal disclaimer section on the beginning of our presentation about forward-looking statements.

Additional information on forward-looking statements can be found on the SEC filings section of our website. that has remind to translation to Portuguese. important this a call option It's who questions to hands the want And participants ask Zoom on tool. may the their raise

opening Maffra, Now will to pass Thiago I'll deliver over the remarks. who

Thiago Maffra

who Good our afternoon, joining I first present few to I will want longer-term quarter, a turn all CFO our today's over with XXXX about will us positioning. in and call our today. results begin comments more thank and you Bruno, for the to outlook it QX for Then detail.

quarterly start with let's So our performance.

you remains a we As all similar the In know, rate interest outlook the to face challenging. to economies around macroeconomic world. continue environment other Brazil, high

for large In bondholders. Brazilian and corporate addition, important the a loss investors, its bankruptcy creditors for in filed quarter causing

capital low-risk credit are wait many while since pressure, a remain advisor the liquid, markets investors for impacted scenario As improve. corporate in under products, financial savings and has which to exchange this they keeping their result,

impacted the While to quarter, BRLXXX long-term closer this getting QX headwinds has having assets journey in ended in our core keep milestone, advancing we with in trillion our client first X billion. the business too

XXX the Additionally, grow ecosystem to clients addition advertisers. with continues XX,XXX of and our financial net

one-time the income while EBT revenue grew year-over-year. loss, and XX% excluding On financials, expanded the net gross our X% year-over-year, and X%

will we we not rates improves. that growth believe are again we macro the adjusted to these still better, used and look While which these numbers when are environment see the

well from cost I resilience our of and look we in efficiencies see quarter at our as positive model, when our signs improvement. performance, However, first structure business strength as

nearly XX% near-term EBT to our which from year-over-year, basis plans, increased XX% through QX, guidance and together included execution, line cards, retirement strong. to the cyclical in XX% expectations Because margin our were with less XX%. in focus range are example, was of XXXX. This points grew in quarter-over-quarter our our new million. credit insurance verticals BRLXXX of reaching revenues, For XXX on Revenue

So I was pleased with our line. execution the bottom on

investment XX of ranked survey. top the overall the the annual was and brand mind as remained valuable XP brand in Brazil Interbrand in most

We cash was net returned XX% to XXXX, through excess BRLX.X have share Over about we roughly to which income. billion of also remain our buybacks, committed returning shareholders. our

I year-to-date. have payout in believe have will we of ratio worth and a shares XXXX that BRLXXX similar reinforce million repurchased we

result, to maintain navigate a a balance be As of excess position liquidity carry any BRLX to positioning around should able a with cycle. sheet and conservative XP billion, we strong capital through

guidance ahead to of relative remains investing look unchanged. our through are we macroenvironment, remains XP competitors. Despite rest Brazil the outlook XXXX, platform stronger the As getting leading I in and a

and and are clients. revenues wallet with to our products channels our share advisory We closely reinforcing net more to working proposition investment core inflow opportunities, of in value high-quality gaining improve

I beyond XXXX, I As our look position competitive see getting stronger.

continue our advantage most. the focus leverage to platform First, This where the of our we will to core our leadership ecosystem investments. and excel is we and expand

achievable. points in have best-in-class companies. We technology we XX% We I With market points very believe platform shares XX% despite including if beginning environment. basis of and XXXX investments the XXXX, of gained include since have our currently of of basis advantage, XX and to a market mind XXX individual market challenging brand top X% share almost XX% product is

few just platform continue market I many we could side, complete and advanced and to product competitive us. the but the remind have a in build examples, go advantage. upon this the to On through we most

built bonds investors constantly not platform equity the equity funds an (ph) easily to are only retail first also offer where strategy, the traditional in the in the of keep being U.S. on private and the quickly but market clients invest for products We leaders player XX% at share in offshore innovating with XX% can and distribution having

in Adviser Folha a side, Financial newspaper distribution is were the the well XX number and year Brazil. this most Best in that to have the consecutive and been prepared largest On we elected row we We in for according platform have the Brazil one. Network XXXX Adviser voted

think is the the leading place player best helps partners I and us very our established in as this clients. and market the well attract

to into dealer products cross-sell base. relevant Another offer strategy current additional our is

massive We unlock value already work. to and here opportunity to have potential a it's starting

fast verticals new a As are advancing I already pace. mentioned, our at

have more clients cards, in during insurance NPS. stages is of see wallet our also investments this that accounts us as we the cross-selling already digital of early gain and improve share can such plan, our While helped and products our new from our

increasing continue to all an and serving portion focus meet will our lives financial needs. on of of their clients financial We

And to finally, we in levels everything third quality is our to ourselves with differentiate the market pillar continue service and in premium do.

deliver are We a to web value experience. market group means that are clients they sure XP. It everything always This app the doesn't we we believe is the are good of our providing service bring levels. market. improving when this proposition just we focusing with aspect superior experience platform or main our to best in to every always the the in together on we mean used make I want delivering be engage that and that to the

the the can are training an advisors we we serve tools better. our so and we perform and innovating continuously them provide improving give clients As they example,

that makes get level that clients fast service efficient about Our and unique advertisers XP. customer support and feel always great them our ensures

experience ourselves the in competitive maintaining recent it This from of third-party that study As most XP ahead and edge. investment see distancing market NPS, remain our known We banks XP's already you advantage of terms reinforced in of we know, the on offer. and is well is can the traditional including a focused we in banks. the this

stronger us the which improve I I is on working. see saw and enabling macroenvironment. cost the to enabled better I to and our company, term, returning our us profitability for strategy in long-term and look cash near has progress plan shareholders as despite getting our the and term us fortify position to So our as performance and at long on continue QX a remain our We execution management, XXXX. difficult

making are the areas come folks cycle of we in We going keep of winning better think progress I to even share. to positioned out and are of our all market

So over now, I Bruno, to the who will will discuss you. the we Bruno, numbers and Thank for hand Q&A. be it quarter over available you. of to will

Bruno Constantino

some expenses I everyone. Thank I walk and additional more metrics non-recurring which quarter, one-time evening, the the large and adjusted this related in for and bonds to continue, that that revenue, through a I Maffra, impact a exclude earnings. But issuer of provide bankruptcy commentary you, everyone good showing detail corporate January. remind before are in our to filed financials our and want loss we of on perspective some will

clients to held significantly investment We our trade these of and be bonds for bankruptcy. The our when issuer bonds portfolio. own able filed the some for some bonds value of inventory to in dropped corporate our these in these of

in is As income note and This the This a to fixed gross not and overall to in hurt services. BRLXX that Brazil. event overall loss million million obviously, income of negative but incurred a retail insurer market revenue. also one-time (ph) activity volumes revenues important a retail our excluded fixed capital numbers, total result, we DCM in in impact million had and BRLXXX revenue, in BRLXX impacting other allocated event with our

let's XX. Now Slide move to

As can highlighting created you one-time just mentioned. have see, I column a loss the we

So revenue. our gross

year-over-year. gross in total exclude revenue quarter-over-quarter was revenue gross the our BRLX.X X% billion, and total to BRLX.X year-over-year. If Our was one-time the growth billion, loss, and we quarter X% flat plus quarter-over-quarter X% closer

last our Maffra the revenue capital resilience numbers where benefits total the building we be. the and of would it years. few over the But like our environment, top believe that we macro our and business show considering been diversification have of is As mentioned, we to not growth line weak model markets the

other was was terms same change line revenue, represented total at revenue major fourth our and revenue, revenue mix, of 'XX. to quarter issuer as service, and the compared there the beginning In year of this Retail X%; revenue X% XX%; last of total of quarter. Institutional XX% revenue. corporate no

Now let's for retail on Slide more a our detail XX. on double-click revenue little

revenue income year-over-year, environment platform, X% activities. meaning investments, equities total and quarter-over-quarter retail markets X% core the capital and trading Our fixed weaker grew despite and funds

which trading bright spot One grew declined and year-over-year, elections quarter-over-quarter and year. stocks. X% with in derivatives revenues Cup, Sales fourth quarter. but decreased World our X% due equities mention market overall the first more rebound human began fourth in equities, the in linked as this in to these was the of In to versus products, the to the are driven XX% by quarter which structure than quarter products interaction, suffered financial

flat was revenue X% adjusted grew and income, fixed In year-over-year. quarter-over-quarter

overall revenues an X% believe As was revenue environment. a I been our earlier, would more markets and decline capital in in growth XX%. comparing performance we grew also and by QX activity But this have our In was in line funds apples-to-apples, quarter-over-quarter year-over-year. platform, fees, excluding XX% stronger impacted normalized quarter-over-quarter mentioned

Moving down to verticals. new our

increase Our revenues overall year-over-year. continue an a strong of pace XX% at with to grow

call. Maffra I in remains last remain As noted, as to performance believe annual track deliver to stated we XXXX, earnings and XX% growth here our our in strong XX% on of

we one-time of at fourth more the little that a benefits note and because the look is I of in XXXX. would When comparison on seasonal this a basis, difficult quarter-over-quarter quarter

our a cards change holidays, in Black which business, created the to benefit revenue. addition BRLXX a in of the we revenue of example, For million the method quarter fourth Friday in one-time recognition had and

'XX. remained platform quarter-over-quarter BRLXXX million reach positive BRLX.X and quarter business, rates first from were TPV revenues cards and other in investment driven grew our These quarter-over-quarter And year-over-year. with international billion high in revenues the our XX% our strong business broker-dealer growth FX. such retail good in finally, our trends this, and benefits interest to a in float by Despite increase as which several XX%

retail XXXX for XX. months the XXXX, first Slide XXXX. XX our as revenues we Moving show to last in quarter the of Slide On XX, and

are of into helps verticals. but our macro we think impact the also this revenues, I the in the benefit diversification negative from environment illustrate new getting our

retail revenue nearly BRLX BRLX XXXX, not macro by billion, increase see, environment, decreased nearly competitive As positioning. but core you can an to our since significantly the in investments then billion grew of had due with our

Despite our these, diversified its to ecosystem. revenue more same given increased XX% in time retail fast our really and stream the scale products new period, has total over ex-feasibility revenue

from business. the at point time, tailwind incremental the in will in more from since of verticals absorb our revenue the to X resilient helped us. new our million parts up this business for can to As and an impacts macro XXXX. which our of provide macrocycle more This times diversification could increased months, has turns, see, some over XX you some negative cyclical help And when BRLXXX become

Slide XX% XX, the had Now can see some SG&A, we In is incentives P&L performance our expense of structure first the begin shift first On to where you benefits our XX% year-over-year the quarter let's cost quarter-over-quarter BRLX capitalize. to and side billion. over quarter. of decreased just 'XX, strong to to in some adjustments excluding starting of

resulted share-based what we compensation Our quarter we plan XXX return in had headcount employees fourth the quarter in to in to quarter, expenses. 'XX in reach net to impacted levels management compensation share-based following expect this quarters, reduction but the This in to million a to X,XXX. normalized of BRLXX similar

we Our quarter, breaking past structure bringing pattern be. where efficiency it ratios of the to want in this improved years the company and

divided of since the incentives the by quarter the XX-month the our XXX can SG&A, basis our charts, level revenues on quarter-over-quarter first reach ratio, bar decreased is which under side to last you 'XX. left net example, efficiency lowest XX.X%, that excluding see For points page,

side revenues, expenses people, comp quarter since is compensation XX.X%, which divided salaries, our 'XX. slide, XX-month quarter-over-quarter bonuses SG&A, our share-based the level net lowest to you decreased fourth see last that the On XXX of points basis ratio, right by can and reach

we We efficiency billion, to meet XXXX focused we remain excluding forward. for improving BRLX.X guidance our here. SG&A, going plan to expect incentives ratios of our will annual and believe to I billion keep BRLX very on remain

net XX, Now and EBT moving income. Slide to

see can management, cost tax income before As and this result strong slide. our positively net were impacted, as of margins in our you a earnings

BRLXXX million, the loss excluding million margin with generated a BRLXXX with we XX% margin. or quarter, of the During a EBT XX.X% onetime EBITDA

seasonal quarter the benefited sustainable. million. 'XX think fourth of quarter of improved the XXXX, in also the SG&A is quality EBITDA first the BRLXXX significantly and fourth 'XX by I quarter that has in Recall incentives our compared to

our these, have been would quarter closer Excluding BRLXXX million. to fourth EBT

going benefit. and realizing this had first are the stronger million the in leverage that we In forward. a business operating position quarter, only of headwinds BRLX I gives an face is macro us the to important we any believe achievement

EBT million of our see to term quarter As can the taxes. in in nonrecurring we plan to by loss a XXXX. side meet finally, BRLXXX near million net was million, on the BRLXXX income guidance BRLXXX that of And right or the of page, margin remain our the on range result, first onetime you net of XX% 'XX excluding the XX%

As for stands. Maffra between BRLX.X net already income mentioned, billion annual BRLX.X guidance billion our and

will answer we move session will your much. questions. very the Maffra and you available to be which now, And both Q&A in to I Thank

Andre Martins

Thank you, Bruno.

we So move the session. to will Q&A now

of We have -- be a lot ask to I you patient.

have a to raised, lot of basis. and serve We usual, serve as want – will hands first we do

question from Goldman Sachs. Labarta first is from Tito. The Tito Hi,

Tito Labarta

they the couple questions. before questions we and Bruno. of the if out Hey, for Maffra. Andre. guess, first already results. I on Hi, had A on taking my call came known can. Hey good Thank I today. you inflows, Congratulations the just

of think And all those the just, help revenues about sort rest inflows stable your you year, inflows. can Just lines, recover? weak along relatively were do considering the of those impact, the us fairly right, think

think to here what Just be inflows increasing? from would revenues about and how can that drive on dependent up

the And kind seasonally some sum a from kept here, guidance this of to earnings the for also you a in it revenue quarter, potentially all definitely Thank to growth now, be on-track up, improve that you could fair the the end if bit I and you the weak goes -- know of It expenses. guidance, delivered outlook think upside had then second you inflows impacts guidance. here? and is I that on at a on the the just of given question can you. do is like it grow, there have think and right you mean, least is from revenues back little here? bottom

Thiago Maffra

first being being very to environment uncertainty of imagine and in low-risk I Tito. here can in question. are you? honest Bruno will Thank and part at the they high-level investors, we and very to inflows, direct the About for prefer your afraid, much with their it's How the second keep like very one. for take that are hard very investments. Hello, to you you, they and take money have liquid an today, and have rates they high-interest XX.XX%, the our

net the inflows we of if -- uncertainty, levels So that hard have that imagine especially it's to we will had in like level same the past, of the okay.

when rates, it interest of things say them -- if and some the Not and look goes I get together, much helps throughout went And you difficult inflows the But the track level. at that's numbers, all two it same institutions course, when of you all down. part. course, financial would the the we we of down, the to outflows give

others. don't we see getting So us efficient player than more any against

else. CGs more in the that it's then that liquid XX.XX%, there opinion, at So our anything like reflects important LCA's, products -- tax-free with

all-time at see companies. highs, higher more outflows are closer money, And the when is, look not second the look outflows, happened. point on what concentrated we they net-new to and you are the inflows, if we at We

So on right on it's they credits companies individuals, it's at now. tough environment. more have cash. the not a because that They the have need They the banks lower

we see So right of of lot companies now. outflows a

So business. in the it's that our investment that's opinion, part cyclical, something of

all more verticals, cycles that but decreasing the have for than other investments, growing, we in bad the are hand, and the new have all a the lines We business at we investments. are cycle and new compensating

Bruno Constantino

for today two net to revenue numbers, your was and what gross in lower, less question, of a mentioned the about inflows part component inflow, bull than it outflow. Maffra other it's inflow, And it's about, And part also the of Yeah. answer Tito, market sure. net of being relevant the

net higher, especially the going the mentioned, So lower number. that inflow by is if it the impacted Maffra outflow for as corporate example, is in wholesale, companies because revenue for be severely to in mean that is doesn't

depending being we higher On we keep in and short-term. on outflows, if even the the case, level of make the more can inflows contrary, revenue the

quarter to of weak seasonality, market XX% really about a but part example, the if compared the semester year. semester and resuming going far right the in longer-term really the was was the yes. capital compared on for at look so the weak second activity, second what was believe there that Around do of after the guidance favors terms the corporate first of a in DCM, period in the question, in I especially that we the is but year year, to very know this first Your I market the capital believe, semester. last it not semester. quarter, market. years XX% credit seasonality first the is happened weak case The we first now, it's -- second beginning still dysfunctional When January. for five regarding if it's see the in revenue be this average, the there was of to We a

Tito Labarta

Bruno. -- evolved very individuals -- Thanks, gross I Thank color Maffra. can if inflows. the follow-up can just Great. last you Maffra just just I helpful. any if I -- inflows the the there, market? also context, gross on given have you have out those the one And on maybe you, guess That's just you as or put how help over can acceleration year? with well mean, Any give there, into that decelerated put us since that those

Thiago Maffra

so... I'll pass it over to Bruno,

Bruno Constantino

few Tito, Thanks, just numbers. you to a Maffra. give

have the So this the disclose picture, the X%, at year, compared last just that's down of gross we quarter do the first to average big quarters the number. inflow around look not but the inflow, was you to we for when and year

it view. But our when up is So considering the at in we outflows, macro-environment XX%. much was not look

net has hurting been the most inflow. So that's what the

of down core and increased. total has I not the all investors It mostly part, segregate to client When companies, core it's our the been engine call the would outflow business, engine between -- wholesale our of break our retail related the we stable. assets,

see don't problem a there. we So

Of total understand low-risk core course, are compared this of We products. the the a of it's for but to they the as their Maffra not investors liquid not it's of level environment, with beta business. savings percentage assets, be, a keeping terms investment to engine is not considering mentioned, outflow where are we'd in investing, headwind that But like increasing. even client in

Tito Labarta

went AUC going Okay. the That's AUC I and Thanks so, very And Bruno. helpful, very context. it's retail much. Corporate see do up good down,

Andre Martins

Tito. Have a one. good Thank you,

from Bank America. of Pierry from is question Mario. Mario Hi, Next

Mario Pierry

question. Thanks guys. Hi for taking my

Let me ask two questions well. as

on one, reductions. First cost your

to any If base, quarter you're on to employee which to just compensation the in to concentrated the make that quarter, areas expenses. expecting second in? bit fourth expect if So could be that's up more a more reductions where why? understand specific also changes I your mentioned you go in you And to trying back these levels. the stock-based you little was

related used on it's give And second again then us high peak NPS can my you why that? some be to think doing a NPS still be and to color NPS, you. are going improve down question a is what is to it's I you of score. down, to can you XX Thank And your XX, but is

Thiago Maffra

your Thiago Hello, question. you Mario. here. Thank for It's

the of happened question the the is, areas, about a company, So, employees transformation digital company. your what of about what called been we first implementing CEO I we have since and became

the in teams finished would structure say, company. the the reorganization of units the we multi-disciplinary business last of the I of year So whole

And you when transformation, but, that of when some have you reorganize company, you gains. efficiency the do know course, a you

Lego when need XX you because you imagine some together, and okay. have You put only have you eight, -- of piece that

the of transformation, the of on years, the through okay. part company So these on which three pass we is because reduction

hired with over-hired. committed some during excess In necessarily We pandemic. part, we because culture. the our people it's not We

So, part part, and it's the because is efficient of because of excess.

are reductions So all they done. the

are So, as you company mistakes correct a with have when we Bruno mentioned, to partners, we fast with owners, the did. very

corrections. already we the So did

don't areas. specific the any see and can on guys numbers, have we You

are course, more, so company Of course, to cut we we company, preserve compliance like risk business course, on. in but to the we of lines and that and preserve say all where we early cut stage, cut on the have but to like over did so where areas of intelligence the the of less, credit

believe done. the are but about reductions On first SG&A. So, there question, asked your the you, I

mentioned, holds. Bruno guidance the As still

Of the but course, would guidance, the I are the are more right done. reductions, of -- now say we they to bottom

the they NPS we this for And but they points. presentation, we mentioned, about you happened presentation, with question on all as XX investments affluent have why? -- NPS the of in look second what no mentioned you have last And the the NPS. do when the happened months, customers five third-party risk. that eight XX.XX% like level independent ask That's you it's Your you up clients in for that the what they that companies our consultant number the survey, on we NPS, own went the surveys. see When of banks, the them, why, because returns of when big XX go, in with the

the point now. we that's right So are

investing CGs now. Of are not when hard consider because the you that rate buying a in of don't you it's bidding are course, have And you more scenario, not believe Selic you this portfolio well-balanced to diversifying. buying are a right course, portfolio, we

investment, NPS benefiting five cycle suffering we of we are But, the an that important right at the banks point on. that and levels so on to can it's more So net scenario. or of normalized now a and will believe course, big inflows factor we we believe change and some that's bit go the little

Bruno Constantino

next that quarters And that's should this we I cancellations without that mentioned I that we had performance come one-time. back question to and why stock see units this quarter, only of share-based is about compensation. to in restricted the the can in take units expect come resulted stock lower and Yeah, level in then impact the we

that new to fourth normal should between BRLXXX the the level partners welcome quarter. match than we the that come quarter. comment million second and a the And BRLXX to happen recently something going is in million million as first our the saw the of to partnership just We back quarter, in we also had BRLXXX there, that to not also in and more we

So together, expense in we all that forward. should increase going of an have that line

Mario Pierry

Okay.

that's clear. Now

Let were follow to related no charges -- to were reduction. then me severance one-off just this charges headcount taken there quarter? be no just up clear, There this

Thiago Maffra

there. in It's

Mario Pierry

Sorry.

Thiago Maffra

if sorry. in heard don't me, know I there. Everything you is

Tito Labarta

everything you is -- the much can how charges? quantify So were severance

Bruno Constantino

We that are -- look the BRLX the to the incentives. annual -- It's I BRLX.X to guidance guidance Maffra would mentioned, SG&A the stick have. leaning and annual That's guidance. we low-end guidance towards the as billion in first billion quarter, are of ex considering what happened we

Mario Pierry

much. very you Thank Okay.

Thiago Maffra

Thank you, Mario.

Andre Martins

Elliott Jeff. Next Good Research. evening, question Geoffrey from Autonomous

Geoff Elliott

Hi. Can you hear me, okay?

Andre Martins

We hear can Yes. you.

Geoff Elliott

we all, Hello? Thanks capital, completed, first been On deploying about payout and are that did of that buyback issued another while has there, to a thinking for program buyback why options close? but Great. capital? since for cancellation, and taking not why not the expect F-X now And you in heard what terms it then very do announce that see we in XX% the ratio slides, we you. much question. to Thank talk when the related form you it's second, of much should was Modal been Modal,

Bruno Constantino

Hi, Geoff.

will I the first. with one So second start

to expect soon. close We

central part is the bank Now approval,. only pending

happen as that because a As you everything we we F-X, different transaction, went to have we route the conclude -- planned. mentioned, withdrawn in

was the Meeting So of General approved. Modal

the during but and cannot everything Central only on guarantee So now it it's first Hopefully, we Bank get semester, to is we're it. track approval. going

in BRLX.X program allocation, the back and yeah, the we that's this BRLX billion the around bought already billion of year. if completed year million at XX and all the have BRLX.X in last of you BRLXXX share that bought we than have buyback, blocked less blocks terms billion. Itau months, In we Itau have look including XXXX, capital

As will ratio, Maffra around for payout XX%. keep know net a income We similar what to be. the mentioned, we're probably XXXX don't going which is

in of decided semester, guidance in first either to we yet. share net we our and haven't the semester, have BRLX.X buyback, dividends or through BRLX.X still income, are We complete billion the we're second going billion

Geoff Elliott

Thank Understood. you.

Bruno Constantino

Jeff. Thanks,

Andre Martins

in Next from Olavo UBS. line, Arthuzo

Olavo Arthuzo

guys. well? Hi Can hear me you

Andre Martins

Hi.

Olavo Arthuzo

hear well you Can me guys?

Thiago Maffra

Yes, can. we

Bruno Constantino

Yes.

Olavo Arthuzo

question. for the credit sorry of related Thank Actually, of that. Okay, the business. card for you. basically and trend cards this the Because expectations to you, evolving to two according have continues everybody, questions Thank company. credit my I is the believe to taking overall expand well I

XX% my first that active we than at this quarter. the on increased noted this So question on they penetration is regard clients, cards stood more of

this So you how more even like. like above penetration, guys could XX% us that my maybe a question target increase share Is figure there or much can XX%, this is that? with for

questions? something clarify And of cards it's related to BRLX,XXX here, monthly last were the the So like is average below which when much. very limits other Thank could this year question even two as below compared Because credit debts, that credit dropped just you XXXX this my or first my is basically if like or you see spending. of average you (ph) the quarter solely to can stricter related policies to lower on quarter, with to is the well

Thiago Maffra

remember XXK. clients penetration question, that Thank Olavo. the at About about question. started you Hello, only XP, if much in first cards, your very above for credit we

started we clients we on there Rico the escalate like XP recalled we I to would the in for -- and or card a So here, me year. Then Rico almost XXK, last that like that went say we and okay December, to but segment year someone November stuck started in was December below brand.

for banks, like that look we can brands have big the banks So penetration. and five we if the affluent at penetration these look if achieve, they XX% the when you look you at

of in is credit out one-off brands clients this So, cards. these XX of at affluent banks, have nine XX out

going penetration the a but a we while, to it's course, lot. increase of take we target, our that's So can believe

any have it's don't we So XX%, very of high, specific target, course, but.

are We improving.

delivering. are We

lot features, the quarters. a new cards benefits months or have next of for new the and in We

on are of we are working lot a and been the share -- we high-level penetration of services have we than to increase So on penetration, we more wallet working the have.

Of have TPV. primary someone you have card XX% of the course, of when you

So right now. that's focus our main

penetration. and new And for features, and the for mentioned, or going XP start we're new to increase so we with example, below the we the to about that at clients benefits, segmentation, again, expansion clients. products, And you down move pyramid as new Rico XXK can deliver

we Of per spending. at clients, segments client like you two spending if lower because have they XXK course, the have get top

If have bottom say spending we customer. go X,XXX would per I you the -- to XXXX,

low why number going increasing the of you're because the the seeing So clients are that's we down spending at segmentation.

Bruno Constantino

And question. it's comment? pertinent I can think, one to That, just Maffra, add I the

it's but strategy to analyze, long-term have strategy is to started think because cards, have pretty to but are We with bank if didn't for digital a It's we we journey, you cards. our a cards, is view have which about moving You clear. it, the our so didn't hard extend brick-by-brick. essential quarterly And account, long-term, a basis, here. the on we

Looking after and down long-term as this road this we journey. profitability go our

we new and the with directly the evolve can digital of penetration all that added it I from. we is only things that products fast part makes come our so our in of by clear and related course of XX on it and BRLXXX verticals, to need strategy going ecosystem, put how revenues the do and talked my of bank investment evolution services, not anything months we we in about slide Now to say scale But the totally XP in presentation, have of to where listening ecosystem. cross-selling our those those accounts, our and new connected we we're the to to And clients. million

those what do of just to would takes businesses. to it It's is extend convince and focus the we're wouldn't on our we I able life it after, quarter, going something also time, the scaling potential to able a with able XP. their and link clients going But get everything that's takes they're time, the the are view new it. after we going that with that, to banks, tells about to be in If to do financial be cross-sell are but

Olavo Arthuzo

very Okay. Thank much. you

potential monthly of this. (ph) a to just that us spending here? your debt Just that quick give represents share understand clients, limits the just BRLX,XXX of you of with how average much guys average the you on follow-up us for Can to like credit

Bruno Constantino

of many for the math. make to dynamic our -- example. have clients, hard it's a limit we No, We for

the -- We give of So because segregate have not would a and credit investments. clean the type related that do to you we disclosure. portion that to it's

expect you add I'm to verticals the that potential, sorry, you're yeah, grow mentioned. this help trying we to know the revenue year expect -- math. cannot between XX% those but, XX%. I I all make to see we So When as together, you new planning, to I what them

Thiago Maffra

of for our that Yeah. can is from a TPV, to but just you some credit customers. say have course, to here, assume big I opportunity, for the opportunity increase complement issue the constraint not the of would players. of bottom room, growth business, the But manage there, limit the not our is customers, we the biggest better of limits The that, segmentation some Bruno other because different like

an have opportunity, it's we course, Of a manage we some opportunity. but better clients, can huge not

Olavo Arthuzo

much, Thank guys. very you Yes.

Thiago Maffra

Thanks you, Olavo.

Andre Martins

you. Thank

question evening Neha Neha. from HSBC. Good Next

Neha Agarwala

IFA quick is business. or taking about first questions, Good light evening. a are on There with bit Congratulations you shed sentiment weak. question. the in the the some are more on vanilla. is now? thank securities, fixed-income Could you investment the results which IFA, inflows and net plain right Inflows what Two my for

So, a has for the in IFA very in IFAs? IFAs mortality the of been are new of any Difficulty] change gross and if seeing competitive dynamics network, terms strong, economics number in [Technical you the any color the regarding but would opening the helpful also Your up? change some be there

markets is easy My your second question -- share. regarding market

didn't if incorrectly, you in achievable much. doubling drivers are almost for that time not you I'm share? the market a what the about -- mind there XX% market that if horizon you XX% Is You to you your main mentioned be could Thank you so in have longer-term. hear I and share mentioned

Bruno Constantino

Okay. Thank one. Hi, Neha. take Bruno, one you. and This first I'll is the second can take Maffra the

IFA, when is compare the to first the regarding you break asset-light big first So model in too IFA example. mind, a even clients, to business bank very the salary of business investment not portfolio you have thing manager's with model for can -- an

asset-light, And well. the but only bank has compared it one benefits because is of reasons it the tax because manager is not to as

an Of to for Investment harder Business course, environment grow makes pace. accelerated this it tough the at

are mean the in of gearing it below So, this case. not doesn't headwind but terms the that's investments, everybody water, is people

-- now, exactly ones. especially offices to invested hired IFA like also have much, we did environment that But XP most too need the adjust bull know, them, the they and are those we capitalized market offices them. a IFAs are are and biggest during done lump-sum, paying have they together considering helping -- those biggest with lot maybe have you IFA For have -- during there a the was the

health IFA we of So terms financial any not problem our network. see do in in

think a speak new added And numbers on point continue there really IFA IFAs. that We mean in in of believe, about going we going XXX of I new our is want is net keeps This market good basis, and quarter, and for the XP I attracting the all for main still regulation to XP, new IFAs the first that -- the to destination forward platform. tough to your growing macro-environment it's with be themselves. I This even IFAs business. will the especially CVM, for the than a more join IFAs, more new

Thiago Maffra

I the talking we when Neha, say XX% take to have market I we individuals. we only The like are okay? see Hello, question, share, way that about can second

X% zero the have and bottom, about at we clients million, on with BRLXXX,XXX say to to the and you at when have X% BRLXXX,XXX you we if If going we pyramid. top would But you middle have, I break market BRLXX AUC, three down let's only segmentation, share. include and break the the XX% down we of say back companies, you X% when look -- individuals, have the

bottom, the at XX% the X% X% the in at top. middle, So

to like go technology. we So -- been down, investing basically have this lot a

ago, Internal have So clients. us Advisors we serve loads go higher of technology, it was the BRLXXX,XXX, these because to and more hard much below very today, all BRLXX,XXX. few have having have possible above for have we CRM, we ways folks a to account that's we Why information customers on years IFAs or

middle, even for the In increasing, and create it's how more ultra-high-net-worth top, better of it's keep and the we services high-net-worth the customers. we same, at how

So years in XX% we grow. time middle to or on to what how we reach way have investing we extremes have in One mentioned, the could a many XX%. horizon, the investing been continue been and you lot

share. we XXXX, our market If you increased go since basis points XXX back, of

that years, XX in increased and good very year, So bps, a was we bps. investments, we XXX last tough increased environment for

XXX how plan, increasing the XXX to that's we So bps year. bps per keep

years more. course, grow Of we better will in less, will grow in years tough we

that how to only we in we the So that, we do and Brazil that is are we like that's how on house say focused see XXX% investments.

we allocation. So we sell sell products, don't sell services. We

other to higher how have We that's a differentiate sales players, when of in the level ourselves. and today, you compare comparison we

course the in that and very comfortable XX.XX% interest like about low-risk, a people very you liquid environment get the rate. about with now environment, Of worried have political tough macroenvironment a very products. are People

So faster growth. it's back really a of harder leave go them to macroenvironment but this some to It's believe buy the pace to here, portfolios Bank's income convince to we point like at temporary. change to invest and know we can to is we going

Neha Agarwala

-- If market I quickly follow-up question. Understood. the can the just on share

share have so do investing We pyramid? top of mentioned top your bottom X% where in pyramid? What see Thank of to technology the strategies you for the in you you pyramid. do the you of top the much. the can are the be have of the a in able you you So expand to pyramid, share the at lot that go

Thiago Maffra

the each Yeah. ultra-high-net-worth is personalized, much it the clients. about high-net-worth you're client of talking more and different When because top you is pyramid to when serves go

one the been the we Language] have because to been point building was lot, the and that the have the having we level I I close a but we something secured for two of competitive services, are the we -- (ph) of we was say the so important to to administration for so top. that very custody at of it would word time. past takes the of house So am trying have do funds, do remember [Foreign just same us other service the it's funds that be investing have to to years,

gain can to we share. So of we lot a believe start market

Neha Agarwala

share number current can your in of the is which one much. what terms IFAs? last of I the AUC, If Perfect. just coming you so IFAs market is on in -- the and from Thank of thing IFAs, terms

Bruno Constantino

Yeah.

we there not distribution about not We think have IFA saying it's keep we half channels, market the of do the just business. to than your we share we XX% And a growing. we to less keep many of the number. channels, when important with have AUC, disclose, The to expect But give we course, in but them IFA do total, is question, help one I channels. tools have more And an as is mentioned, going also that succeed. be XP all to and one that we

channels, platform. entrepreneur about agnostic can investment hub, to business the we are an We be our want an entrepreneurship connect in where to

So we growing for our announced not consultants, lot, channels in the other channel in XXXX. service and back if ecosystem. mistaken that a It's I'm example wealth, business in this pandemic new

more only IFA channels. have we So but growing, IFA. is we're it's going keep many not to important,

Neha Agarwala

Thank Excellent. much. you so

Andre Martins

Thank you, Neha. Bye-bye.

Next question, us. Marcelo Hi, joining you Telles for from Credit Telles. Thank Suisse.

Marcelo Telles

hear you me Can now? Hi.

Andre Martins

can. we Yes,

Marcelo Telles

time. two Bruno. for have the I Thanks Hi, questions. Maffra. Hi, Hi, Andre.

the rates. think already that BRLXX you implying the is alluded a curve clients -- the your do interest net Do you the you more to again? willingness billion quarter, Regarding decline inflow your maybe start in especially how risk business, in which impacts yield who of taking the

mean, cycle, do first net really you can rebound my we back I that's comment you be rates see start to levels to see on to if like just need that see inverted an would monetary so curve question. people to-single a enough perhaps considering are to we digit or do need easy already perhaps potentially bringing yield interest inflows or going

is question the despite in was with the very to quite quarter your the resilient And revenue regards difficult performance second micro-environment.

we were I services to quite the meaningfully saw Looking from financial think, accounting million. the at And instruments, from your million down income BRLXXX BRLXX from that net we think revenue going disclosure, XX% quarter-over-quarter. about see I

want back maybe standpoint? to that this any quarter in Just that was Thank come? just from just some a let's the extra operations you the do of weak I say, structured revenues think Or quarter the fourth that given to understand recurrence the very-very to you know normality there be or this in revenues how level in is known to already, first quarter can you. sustainable quarters more that might So quarter? have helped is

Thiago Maffra

Thanks. Okay,

start -- question and I your will the from second So then --

Bruno Constantino

can I one. first the take

Thiago Maffra

Yeah. Go first back to one. the

quarter-over-quarter financial you mistaken. the of from about was XX% a it growth if mentioned not I'm instrument, around net income there So

the So services relevance in there, from I mean, in financial from a income on so been the two is been that net number it's longer that revenue And is number. have suffering to part the instrument, things. statement view, financial Number-one, rendered. accounting has revenue compared in -- net the the income do has if grown the brokerage you of instruments to equity statement income two, term has that because commission we accounting look embedded floating main it's a And -- of market.

the went that example, year. a example, number, the year look to we in higher of this number BRLXXX first-quarter for that at down million you of for commissions, had million, in If brokerage of 'XX last first-quarter BRLXXX

number decreasing would floating the of part lot has I So and of highlight income. but been because A this there, in the of components macro-environment net it.

Bruno Constantino

level, course, we for lower interest-rate course, of business. if is good have is, our of that question, first your about Well,

low, in business, fixed-income see being but investments funds. best lower shape see upwards we we have back been people cycles more much of see funds that interest the the through and funds past for in moving start the to to is longer once the we ROA rates we which curve we multimarket going from other down Okay, see the it's [indiscernible] okay, have durations, because act to the

interest people -- So, we low high-yield down, we to products. rates to ROA fixed-income see expect reallocating more from once start going expect we products

Okay.

benefit that. So, from of we course,

move means like to we to are our that investors, it that, portfolios. going XP of to they are banks interest level Brazilian of diversified more to people from the see down, confidence of aspect of invest investors, start so probably the rates Another more in once willing higher, the

a I it's, It's good win-win say, scenario. the business. would So for

even low And for markets mentioned XP lower. many they revenues were about QX, today, third is capital markets, the in as they here are really point times the already and for QX we capital

Okay.

We we that public was can okay. And, back the course, event. So course, largest Americanas going lowest after it have level the to for information past quarters, many again guys, start -- event, markets you the capital see light you of of see. the

the to okay. see start still normal, again, back we that in to from see to we going once but past, rates start But we saw far peaks the things So interest the up, expect we we so down, capital money getting yield higher go products from net-new we better, business. markets see expect revenues to should for going going up, good it's start

Marcelo Telles

you. Thank your follow-up -- on And just a point. on your last

say, think rates even say, business? you they XX% you if you [Multiple so, rates, let's still They that level question think single-digit if go like say, possible stabilized, Speakers] need So your low-double-digit impact a on -- let's see could or a levels, let's to don't to

Thiago Maffra

so high-level around or down And the level, very-high, a and hard have problem XX Brazil, that's say is so know products the other have the convince to XX.XX, from on. prices globe all get they to X low-risk it's investors, freight, the it's okay, going XX. if you down, products. inflation the you tax-free that uncertainty, someone everything The when okay, would The with bonds in with you liquidity price daily we very stuff going I buy to or well, okay. They see move okay. any of than product, more

much that rates doesn't it's that but it's problem matter so change better, it's gets not for But for X%, will -- make biggest the confidence or okay, uncertainty, best very-high If again with how also X if or us, we the the for the macroenvironment, the okay. of there right money will level high had me, the now, we point business. When is not. it's so XX, on, scenario that's interest of mix a not it

say that's would the business. Something the like high-single-digits, I for scenario best

Bruno Constantino

in here call, a look market, the managers but risk at investors aversion. opportunities inflows funds and that add pretty stock have works we much And they still Right outflows bet portfolio here, not just I and have many lot the same. it of managers in to probably many now, portfolio the are getting

rates, Maffra it's as aversion. of So only interest risk about the it's not level mentioned,

change happens, a know quickly. inflows of don't people we're it then in or Whenever funds. seeing and a you can when in start type And people then because does it's cycle. that how, And to when and start cycle. riskier happen going that different back We jump -- but will

aversion, So important. of interest rates level not more is it's key, important, but it's risk

Andre Martins

Thank you was for it last your is question. one. the -- That

call. participating thank the in would you all So like to we for

and good be will available discuss team at a you to have IR results the We everyone. the night with

Thiago Maffra

you for guys being everyone on the Thank See call. you you very time. Thank next much.

XP (XP) 15 May 232023 Q1 Earnings call transcript