XP Inc. (NASDAQ: XP) (“XP” or the “Company”), a leading
tech-enabled platform and a trusted pioneer in providing low-fee
financial products and services in Brazil, reported today its
financial results for the fourth quarter and full-year 2022.
To our shareholders
Despite several challenges and uncertainties faced during 2022,
the year was marked by important achievements and many lessons
learned.
The recent bull market cycle ended in 2021, boosted capital
markets and attracted Brazilian investors to more sophisticated
investment products.
As the main investment platform in the country and with the
largest specialized distribution network, XP Inc. benefited from
this scenario and from its scalable and disruptive business
model.
Between 2018 and 2021, our Client Assets, Gross Revenue and Net
Income expanded by 59%, 58% and 98% per year, respectively, well
above the most optimistic forecast by analysts and even ourselves
at the IPO.
Over that period, proceeds from the IPO and earnings were mainly
invested in: (i) preserving and developing the advisory channel;
(ii) strategic acquisitions and (iii) new verticals that are
complementing and improving customers' experience, as well as
increasing our addressable market.
We have no doubt that these investments will create long-term
value and gradually reduce the cyclicality of our business, which
can already be seen in the new verticals’ reported results.
The last monetary tightening cycle in Brazil began in 2013 and
took the overnight rate close to the current level of 13.75%.
Although ten years ago our business was substantially smaller,
going back in time allows us to clearly see the evolution of our
company from a countercyclical point of view.
In 2014, XP’s net income fell 40% relative to 2013 as 80% of
revenues derived from stock trading. With the market worsening, our
main KPIs — net inflow and the addition of new clients and IFAs —
were strongly affected too. The fact of the matter was that the
company’s performance was almost perfectly correlated with the
Brazilian stock market.
Returning to the present and analyzing 2022, which resembles
2014 for Brazil, the scenario for XP is quite different. Our
revenue grew 10% compared to 2021 and, even amidst many challenges,
our net income remained stable.
In short, we evolved from a single product to a diversified
portfolio of complementary businesses: Equities, Fixed Income,
Mutual Funds, Retirement Plans, International Investments,
Structured Products, Insurance, Banking, Cards, Institutional,
Corporate, Investment Banking, among others.
We are confident that we can grow consistently over the coming
years, and, unlike other growing companies, we have always been
profitable and able to overcome difficult times with resilient
results.
However, despite the relevant evolution of the business, we
humbly recognize that the benign scenario of recent years has
influenced the pace of our expansion, mainly in the increase of
headcount, which was largely facilitated by the effects of the
pandemic.
With a net addition of 1,200 employees in 2020 and 2,500 in
2021, we entered 2022 with a structure which was incompatible with
the challenges we would face. The sharp increase in interest rates
caused by persistent inflation slowed down client activity and the
Retail overall business.
While our main KPIs expanded healthily for such hard year —
R$155 billion net inflow and addition of 462 thousand new customers
and 2 thousand IFAs — the reduction in hiring and expense
adjustments made throughout the year did not prevent margin
compression in 2022.
Hence, in the fourth quarter, we began a comprehensive
adjustment of our cost structure. This adjustment was made possible
by the corporate transformation process initiated in 2021 and which
involved integrating our improved technology backbone to newly
formed business units. The main positive effects of this process
are increased agility to respond clients’ demands, more autonomy to
managers and, consequently, maximizing the use of XP's
resources.
Therefore, a substantially leaner cost structure will be seen in
coming quarters and, more importantly, its implementation won’t
compromise service quality nor the execution of our strategic
plan.
Such changes are aligned with the EBT margin guidance of 26% to
32% for 2023 to 2025, which is expected to converge from the lower
end to the top over the period.
In summary, we don't know how long the current monetary cycle
will last. However, we are adapting to the new scenario, staying
close to our clients and teams, and learning from headwinds.
We started 2023 with a lot of energy and confidence. Brazil
still has one of the most concentrated financial systems in the
world, and we believe that with resilience, discipline, and a
long-term vision, we will continue to gain market share from banks
and move towards building the largest and best investment company
in Brazil.
In the next paragraphs an update on expenses and return to
shareholders will be provided.
Expenses
On the personnel front, we ended 2022 with 6,928 employees. At
the end of January 2023, the total number of employees was 6,549, a
decrease of 5.5% compared to December.
SG&A expenses1 for 2023 are expected to be in the range of
R$5.0 billion to R$5.5 billion, comparable to R$5.6 billion for
2022.
Return to Shareholders
Throughout 2022, 18 million shares were repurchased, equivalent
to R$1.8 billion, including blocks from Itaú and Itaúsa. The
numbers represent 3.2% of total shares and 51% of 2022 Net Income,
respectively. In January 2023, another 3 million shares were
repurchased.
In 2023, the current buyback program will continue and upon its
conclusion a minimum return for shareholders in the form of buyback
and/or dividends will be announced.
Conclusion
Finally, I would like to express my gratitude to our executive
partners and collaborators.
We know that we have the right people and culture to continue
our journey of transforming the Brazilian financial industry and
building a better future for our existing and potential
clients.
To our shareholders, clients, and business partners, thank you
for your trust and always keep in mind that XP is our lifetime
project.
Thiago Maffra, CEO
_______________________________
1 - Excludes Revenue from
incentives from Tesouro Direto, B3 and others
Summary
Operating and Financial Metrics Operating Metrics
(unaudited)
4Q22
4Q21
YoY
3Q22
QoQ
2022
2021
YoY
Total Client Assets (in R$ bn)
946
815
16%
925
2%
946
815
16%
Total Net Inflow (in R$ bn)
31
48
-36%
35
-11%
155
230
-33%
Annualized Retail Take Rate
1.22%
1.49%
-28 bps
1.33%
-11 bps
1.29%
1.44%
-15 bps
Active clients (in '000s)
3,877
3,416
14%
3,805
2%
3,877
3,416
14%
Headcount (EoP)
6,928
6,192
12%
6,948
0%
6,928
6,192
12%
IFAs (in '000s)
12.3
10.3
20%
11.6
6%
12.3
10.3
20%
Retail DATs (in mn)
2.7
2.5
8%
2.3
16%
2.4
2.7
-11%
Retirement Plans Client Assets (in R$ bn)
61
48
27%
58
4%
61
48
27%
Card's TPV (in R$ bn)
8.2
4.4
86%
6.6
24%
24.9
10.4
140%
Credit Portfolio (in R$ bn)
17.1
10.2
67%
16.3
5%
17.1
10.2
67%
Financial Metrics (in R$ mn)
4Q22
4Q21
YoY
3Q22
QoQ
2022
2021
YoY
Gross revenue
3,337
3,447
-3%
3,811
-12%
14,036
12,799
10%
Retail
2,549
2,678
-5%
2,629
-3%
10,157
9,793
4%
Institutional
357
326
10%
577
-38%
1,919
1,277
50%
Corporate and Issuer Services
275
333
-17%
436
-37%
1,295
1,213
7%
Other
156
110
42%
170
-8%
666
516
29%
Net Revenue
3,177
3,260
-3%
3,620
-12%
13,348
12,077
11%
Gross Profit
2,067
2,363
-13%
2,615
-21%
9,382
8,555
10%
Gross Margin
65.1%
72.5%
-743 bps
72.2%
-716 bps
70.3%
70.8%
-54 bps
EBT
738
1,121
-34%
983
-25%
3,445
3,815
-10%
EBT Margin
23.2%
34.4%
-1,114 bps
27.2%
-391 bps
25.8%
31.6%
-578 bps
Net Income
783
991
-21%
1,031
-24%
3,580
3,592
0%
Net Margin
24.6%
30.4%
-576 bps
28.5%
-384 bps
26.8%
29.7%
-292 bps
Basic EPS (in R$)
1.43
1.77
-19%
1.85
-23%
6.44
6.42
0%
Diluted EPS (in R$)
1.39
1.71
-19%
1.80
-23%
6.25
6.26
0%
ROAE¹
18.1%
28.5%
-1032 bps
24.4%
-629 bps
22.8%
28.4%
-562 bps
ROAA²
2.4%
4.5%
-210 bps
3.3%
-93 bps
3.2%
4.6%
-143 bps
Discussion of Results
Total Gross Revenue
2022 vs 2021
Gross Revenue totaled R$14 billion in 2022, up 10% versus 2021
and reinforcing the increased resilience of our business model. In
a challenging scenario for Retail Equity and Issuer Services
revenues, the main positive drivers were (i) Institutional, (ii)
Corporate and (iii) Fixed Income, Float and Cards within
Retail.
4Q22
Following an all-time high total gross revenue on 3Q22, the 12%
sequential decrease was mainly driven by lower Institutional and
Corporate & Issuer Services revenues. These lines, which
together accounted for 80% of the decline, both had record
performance on the previous quarter and benefited from anticipated
deal flow and traded volume ahead of the Brazilian elections.
Retail Revenue
2022 vs 2021
While our main KPIs continued to expand, Retail revenue reached
R$10.2 billion in 2022. Annual 4% growth was primarily driven by
the growth of Fixed Income and Float, benefiting from higher rates,
and Cards, in line with higher TPV. These factors compensated for
the 21% decline in Equity revenue mostly associated with the 4.5%
Selic rate hike during the year.
4Q22
It is important to highlight that, given the key relationship
aspect of our advisory business, periods like the last quarter of
2022 pose several headwinds to the performance of Investments
(Equity, Fixed Income and Funds).
With high rates, which already make investors less inclined to
seek better returns, additional factors such as post-election
uncertainty, World Cup, and holidays, further reduced
advisor-client interactions recently. Hence, despite the
persistence of an adverse scenario in the short term, Retail is
expected to improve throughout 2023.
Retail revenue was R$2.5 billion in 4Q22, down 3% QoQ. The main
negative drivers offsetting Float and Cards revenue growth were:
(i) Equity, with lower Structured Notes revenue and less trading
days than 3Q22 (61 vs 65) and (ii) Fixed Income, with lower
distribution fees as a relevant part of DCM deals was underwritten
by banks rather than distributed to investors.
Retail-related revenues represented 80% in 4Q22 and 71% in 2022
of consolidated Net Income from Financial Instruments, as per the
Accounting Income Statement.
Take Rate
_______________________________
1 – Annualized Return on Average
Equity.
2 – Annualized Return on Average
Adjusted Assets. Adjusted Assets excludes Retirement Plans
Liabilities and Float Balance.
Annualized Retail Take Rate was 1.22% on 4Q22 and 1.29% for the
full year of 2022. The former was impacted by the dysfunctional
environment for Retail, similarly to 1Q22, while the latter
comprises the more benign scenarios of 2Q22 and 3Q22.
Institutional Revenue
2022 vs 2021
In 2022, Institutional revenue grew 50% versus 2021 primarily
due to (i) ongoing investments and focus on expanding our
Institutional franchise to better serve global and Brazilian
clients with a complete suite of services and (ii) FICC results on
1Q22 and 3Q22, which were boosted by increased volatility and
traded volumes due to war in Eastern Europe and elections,
respectively.
4Q22
Institutional revenue was R$357 million, down 38% from a record
3Q22.
Institutional revenue accounted for 6% in 4Q22 and 14% in 2022
of consolidated Net Income from Financial Instruments, as per the
Accounting Income Statement.
Corporate & Issuer Services Revenue
2022 vs 2021
In 2022, revenue totaled R$1.3 billion, growing 7% YoY on the
back of the Corporate business, which expanded more than 3x and
compensated for Issuer Services contraction of 33% amidst a weaker
deal flow across the board, but especially for ECM, when compared
to 2021.
4Q22
Revenue totaled R$275 million in 4Q22, down 17% YoY and 37% QoQ.
After a strong 3Q22 for capital market and corporate transactions
ahead of elections, companies were less active on 4Q22. Also, as
previously mentioned, average DCM distributed volume fell 35% in
October-November vs 3Q22, according to Anbima. With a relevant
underwritten volume, XP’s market share fell given our distribution
leadership and limited balance sheet usage.
Corporate and Issuer Services related revenues represented 5% in
4Q22 and 7% in 2022 of consolidated Net Income from Financial
Instruments, as per the Accounting Income Statement.
Other Revenue
2022 vs 2021
Other revenue, representing less than 5% of Total Gross Revenue,
totaled R$666 million in 2022, growing 29% versus 2021 mostly due
to the higher average Selic.
4Q22
Other revenue grew 42% YoY also due to Selic.
Other revenue accounted for 9% in both 4Q22 and 2022 of
consolidated Net Income from Financial Instruments, as per the
Accounting Income Statement.
Costs of Goods Sold and Gross Margin
2022 vs 2021
COGS reached R$4.0 billion in 2022, up 13% relative to 2021,
while Gross Margin fell 50bps mainly because of the positive
performance of Cards revenue and its associated investback
charge.
4Q22
Gross Margin was 65.1% in 4Q22 versus 72.5% in 4Q21 and 72.2% in
3Q22. Compression was mostly due to (i) sequential mix change, with
higher share of Retail driving increase in proportionate
commissions, (ii) R$27 million impact of criteria change on
interchange fee recognition. As of 4Q22, interchange fees on
installment purchases are fully recognized at the time of the
transaction, in line with other players in the credit card industry
and (iii) Prepaid Expenses write-off of R$35 million regarding
contract termination with IFA operations. A R$74 million payment
associated to the end of these contracts was recognized in Other
Operating Income.
Despite possible quarterly volatility, we expect Gross Margin to
remain stable in 2023 vs 2022.
SG&A Expenses
2022 vs 2021
Revenue from incentives from Tesouro Direto, B3 and others,
within Other Operating Income, totaled R$285 million in 2022, R$366
million in 2021 and R$353 million in 2020. Despite being recurring,
this line has components that depend on several and uncorrelated
variables. Hence, we believe that analyzing SG&A Expenses
excluding the incentives it is more appropriate.
Disregarding the incentives, SG&A expenses reached R$5.6
billion in 2022, growing 18% versus 2021. The expansion is
primarily associated with (i) the 33% YoY increase in average
headcount impacting People expenses, which grew 15% YoY and
represent 70% of total SG&A. and (ii) Non-People expenses
growth due to higher Third Parties’ Services (Expert event) and
Data Processing associated with Move to Cloud to serve our clients
better with increasing scale.
SG&A expenses, excluding incentives, are estimated to be
between R$5.0 billion and R$5.5 billion in 2023 versus R$5.6
billion in 2022.
4Q22
SG&A expenses, excluding incentives, totaled R$1.4 billion
in 4Q22, flat YoY, reflecting the ongoing adjustment our cost
structure. R$242 million incentives on Other Administrative Income
in 4Q22 was related to incentives from Tesouro Direto, B3 and
others, including payments received from contract termination with
IFA operations.
Net Income and EPS
2022 vs 2021
Net Income and basic EPS were R$3.6 billion and R$6.44,
virtually stable relative to 2021. On a diluted basis, EPS for 2022
was R$6.25.
Management estimates Net Income between R$3.8 billion and R$4.4
billion in 2023.
4Q22
In 4Q22, Net Income was R$783 million, down 21% YoY and 24% QoQ.
Basic and diluted EPS were R$1.49 and R$1.43, respectively.
Other Information
Webcast and Conference Call Information
The Company will host a webcast to discuss its second quarter
financial results on Thursday, February 16th, 2023, at 5:00 pm ET
(7:00 pm BRT). To participate in the earnings webcast please
subscribe at 4Q22 Earnings Web Meeting. The replay will be
available on XP’s investor relations website at
https://investors.xpinc.com/.
Important Disclosure
In reviewing the information contained in this release, you are
agreeing to abide by the terms of this disclaimer. This information
is being made available to each recipient solely for its
information and is subject to amendment. This release is prepared
by XP Inc. (the “Company,” “we” or “our”), is solely for
informational purposes. This release does not constitute a
prospectus and does not constitute an offer to sell or the
solicitation of an offer to buy any securities. In addition, this
document and any materials distributed in connection with this
release are not directed to, or intended for distribution to or use
by, any person or entity that is a citizen or resident or located
in any locality, state, country or other jurisdiction where such
distribution, publication, availability or use would be contrary to
law or regulation or which would require any registration or
licensing within such jurisdiction.
This release was prepared by the Company. Neither the Company
nor any of its affiliates, officers, employees or agents, make any
representation or warranty, express or implied, in relation to the
fairness, reasonableness, adequacy, accuracy or completeness of the
information, statements or opinions, whichever their source,
contained in this release or any oral information provided in
connection herewith, or any data it generates and accept no
responsibility, obligation or liability (whether direct or
indirect, in contract, tort or otherwise) in relation to any of
such information. The information and opinions contained in this
release are provided as at the date of this release, are subject to
change without notice and do not purport to contain all information
that may be required to evaluate the Company. The information in
this release is in draft form and has not been independently
verified. The Company and its affiliates, officers, employees and
agents expressly disclaim any and all liability which may be based
on this release and any errors therein or omissions therefrom.
Neither the Company nor any of its affiliates, officers, employees
or agents makes any representation or warranty, express or implied,
as to the achievement or reasonableness of future projections,
management targets, estimates, prospects or returns, if any.
The information contained in this release does not purport to be
comprehensive and has not been subject to any independent audit or
review. Certain of the financial information as of and for the
periods ended of December 31, 2021 and December 31, 2020, 2019,
2018 and 2017 has been derived from audited financial statements
and all other financial information has been derived from unaudited
interim financial statements. A significant portion of the
information contained in this release is based on estimates or
expectations of the Company, and there can be no assurance that
these estimates or expectations are or will prove to be accurate.
The Company’s internal estimates have not been verified by an
external expert, and the Company cannot guarantee that a third
party using different methods to assemble, analyze or compute
market information and data would obtain or generate the same
results.
Statements in the release, including those regarding the
possible or assumed future or other performance of the Company or
its industry or other trend projections, constitute forward-looking
statements. These statements are generally identified by the use of
words such as “anticipate,” “believe,” “could,” “expect,” “should,”
“plan,” “intend,” “estimate” and “potential,” among others. By
their nature, forward-looking statements are necessarily subject to
a high degree of uncertainty and involve known and unknown risks,
uncertainties, assumptions and other factors because they relate to
events and depend on circumstances that will occur in the future
whether or not outside the control of the Company. Such factors may
cause actual results, performance or developments to differ
materially from those expressed or implied by such forward-looking
statements and there can be no assurance that such forward-looking
statements will prove to be correct. These risks and uncertainties
include factors relating to: (1) general economic, financial,
political, demographic and business conditions in Brazil, as well
as any other countries we may serve in the future and their impact
on our business; (2) fluctuations in interest, inflation and
exchange rates in Brazil and any other countries we may serve in
the future; (3) competition in the financial services industry; (4)
our ability to implement our business strategy; (5) our ability to
adapt to the rapid pace of technological changes in the financial
services industry; (6) the reliability, performance, functionality
and quality of our products and services and the investment
performance of investment funds managed by third parties or by our
asset managers; (7) the availability of government authorizations
on terms and conditions and within periods acceptable to us; (8)
our ability to continue attracting and retaining new
appropriately-skilled employees; (9) our capitalization and level
of indebtedness; (10) the interests of our controlling
shareholders; (11) changes in government regulations applicable to
the financial services industry in Brazil and elsewhere; (12) our
ability to compete and conduct our business in the future; (13) the
success of operating initiatives, including advertising and
promotional efforts and new product, service and concept
development by us and our competitors; (14) changes in consumer
demands regarding financial products, customer experience related
to investments and technological advances, and our ability to
innovate to respond to such changes; (15) changes in labor,
distribution and other operating costs; (16) our compliance with,
and changes to, government laws, regulations and tax matters that
currently apply to us; (17) other factors that may affect our
financial condition, liquidity and results of operations.
Accordingly, you should not place undue reliance on forward-looking
statements. The forward-looking statements included herein speak
only as at the date of this release and the Company does not
undertake any obligation to update these forward-looking
statements. Past performance does not guarantee or predict future
performance. Moreover, the Company and its affiliates, officers,
employees and agents do not undertake any obligation to review,
update or confirm expectations or estimates or to release any
revisions to any forward-looking statements to reflect events that
occur or circumstances that arise in relation to the content of the
release. You are cautioned not to unduly rely on such
forward-looking statements when evaluating the information
presented and we do not intend to update any of these
forward-looking statements.
Market data and industry information used throughout this
release are based on management’s knowledge of the industry and the
good faith estimates of management. The Company also relied, to the
extent available, upon management’s review of industry surveys and
publications and other publicly available information prepared by a
number of third-party sources. All of the market data and industry
information used in this release involves a number of assumptions
and limitations, and you are cautioned not to give undue weight to
such estimates. Although the Company believes that these sources
are reliable, there can be no assurance as to the accuracy or
completeness of this information, and the Company has not
independently verified this information.
The contents hereof should not be construed as investment,
legal, tax or other advice and you should consult your own advisers
as to legal, business, tax and other related matters concerning an
investment in the Company. The Company is not acting on your behalf
and does not regard you as a customer or a client. It will not be
responsible to you for providing protections afforded to clients or
for advising you on the relevant transaction.
This release includes our Float, Adjusted Gross Financial
Assets, Net Asset Value, and Adjustments to Reported Net Income,
which are non-GAAP financial information. We believe that such
information is meaningful and useful in understanding the
activities and business metrics of the Company’s operations. We
also believe that these non-GAAP financial measures reflect an
additional way of viewing aspects of the Company’s business that,
when viewed with our International Financial Reporting Standards
(“IFRS”) results, as issued by the International Accounting
Standards Board, provide a more complete understanding of factors
and trends affecting the Company’s business. Further, investors
regularly rely on non-GAAP financial measures to assess operating
performance and such measures may highlight trends in the Company’s
business that may not otherwise be apparent when relying on
financial measures calculated in accordance with IFRS. We also
believe that certain non-GAAP financial measures are frequently
used by securities analysts, investors and other interested parties
in the evaluation of public companies in the Company’s industry,
many of which present these measures when reporting their results.
The non-GAAP financial information is presented for informational
purposes and to enhance understanding of the IFRS financial
statements. The non-GAAP measures should be considered in addition
to results prepared in accordance with IFRS, but not as a
substitute for, or superior to, IFRS results. As other companies
may determine or calculate this non-GAAP financial information
differently, the usefulness of these measures for comparative
purposes is limited. A reconciliation of such non-GAAP financial
measures to the nearest GAAP measure is included in this
release.
For purposes of this release:
“Active Clients” means the total number of retail clients served
through our XP Investimentos, Rico, Clear, XP Investments and XP
Private (Europe) brands, with Client Assets above R$100.00 or that
have transacted at least once in the last thirty days. For purposes
of calculating this metric, if a client holds an account in more
than one of the aforementioned entities, such client will be
counted as one “active client” for each such account. For example,
if a client holds an account in each of XP Investimentos and Rico,
such client will count as two “active clients” for purposes of this
metric.
“Client Assets” means the market value of all client assets
invested through XP’s platform and that is related to reported
Retail Revenue, including equities, fixed income securities, mutual
funds (including those managed by XP Gestão de Recursos Ltda., XP
Advisory Gestão de Recursos Ltda. and XP Vista Asset Management
Ltda., as well as by third-party asset managers), pension funds
(including those from XP Vida e Previdência S.A., as well as by
third-party insurance companies), exchange traded funds, COEs
(Structured Notes), REITs, and uninvested cash balances (Float
Balances), among others. Although Client Assets includes custody
from Corporate Clients that generate Retail Revenue, it does not
include custody from institutional clients (asset managers, pension
funds and insurance companies).
Rounding
We have made rounding adjustments to some of the figures
included in this release. Accordingly, numerical figures shown as
totals in some tables may not be an arithmetic aggregation of the
figures that preceded them.
Unaudited Managerial Income Statement (in R$ mn)
Managerial Income Statement
4Q22
4Q21
YoY
3Q22
QoQ
2022
2021
YoY
Total Gross Revenue
3,337
3,447
-3%
3,811
-12%
14,036
12,799
10%
Retail
2,549
2,678
-5%
2,629
-3%
10,157
9,793
4%
Equities
995
1,296
-23%
1,120
-11%
4,276
5,390
-21%
Fixed Income
393
484
-19%
489
-20%
1,886
1,619
17%
Funds Platform
311
332
-6%
282
11%
1,259
1,300
-3%
Retirement Plans
93
74
26%
85
10%
333
227
47%
Cards
234
86
172%
146
61%
593
180
229%
Credit
47
36
32%
40
18%
160
104
54%
Insurance
31
18
78%
21
51%
97
60
62%
Other
443
353
26%
447
-1%
1,553
914
70%
Institutional
357
326
10%
577
-38%
1,919
1,277
50%
Issuer Services & Corporate
275
333
-17%
436
-37%
1,295
1,213
7%
Issuer Services
140
270
-48%
228
-39%
699
1,043
-33%
Corporate
135
63
115%
207
-35%
596
170
250%
Other
156
110
42%
170
-8%
666
516
29%
Net Revenue
3,177
3,260
-3%
3,620
-12%
13,348
12,077
11%
COGS
(1,110)
(896)
24%
(1,005)
10%
(3,965)
(3,523)
13%
Gross Profit
2,067
2,363
-13%
2,615
-21%
9,382
8,555
10%
Gross Margin
65.1%
72.5%
-7.43 p.p
72.2%
-7.16 p.p
70.3%
70.8%
-0.54 p.p
SG&A
(1,135)
(1,122)
1%
(1,463)
-22%
(5,317)
(4,364)
22%
People
(892)
(952)
-6%
(1,057)
-16%
(3,943)
(3,427)
15%
Non-People
(243)
(170)
43%
(405)
-40%
(1,374)
(937)
47%
D&A
(46)
(52)
-13%
(44)
4%
(206)
(232)
-11%
EBIT
886
1,189
-25%
1,109
-20%
3,859
3,959
-3%
Interest expense on debt
(150)
(57)
162%
(128)
17%
(402)
(136)
196%
Share of profit or (loss) in joint ventures and associates
1
(11)
-113%
1
-180%
(12)
(8)
58%
EBT
738
1,121
-34%
983
-25%
3,445
3,815
-10%
EBT Margin
23.2%
34.4%
-11.1 p.p
27.2%
-3.9 p.p
25.8%
31.6%
-5.8 p.p
Tax Expense (Accounting)
44
(130)
-134%
48
-7%
136
(223)
-161%
Tax expense (Tax Witholding in Funds)¹
(192)
(157)
22%
(190)
1%
(754)
(567)
33%
Effective tax rate (Normalized)
(15.8%)
(22.5%)
6.6 p.p
(12.1%)
-3.7 p.p
(14.7%)
(18.0%)
3.3 p.p
Net Income
783
991
-21%
1,031
-24%
3,580
3,592
0%
Net Margin
24.6%
30.4%
-5.8 p.p
28.5%
-3.8 p.p
26.8%
29.7%
-2.9 p.p
Adjustments
110
95
16%
118
-7%
494
411
20%
Adjusted Net Income²
893
1,086
-18%
1,149
-22%
4,075
4,003
2%
Adjusted Net Margin
28.1%
33.3%
-5.2 p.p
31.7%
-3.6 p.p
30.5%
33.1%
-2.6 p.p
Accounting Income Statement (in R$ mn)
Accounting Income Statement
4Q22
4Q21
YoY
3Q22
QoQ
2022
2021
YoY
Net revenue from services rendered
1,565
1,552
1%
1,558
0%
5,940
6,196
-4%
Brokerage commission
544
541
1%
498
9%
2,103
2,465
-15%
Securities placement
361
493
-27%
525
-31%
1,631
1,917
-15%
Management fees
412
381
8%
361
14%
1,581
1,490
6%
Insurance brokerage fee
47
33
42%
35
35%
153
133
15%
Educational services
6
11
-41%
6
0%
27
71
-62%
Commission Fees
237
77
207%
135
75%
564
193
192%
Other services
102
165
-38%
143
-29%
449
532
-16%
Sales Tax and contributions on Services
(145)
(149)
-3%
(145)
0%
(568)
(605)
-6%
Net income from financial instruments at amortized cost and at
fair value through other comprehensive income
14
(543)
n.a.
563
-97%
1,145
(1,559)
n.a.
Net income from financial instruments at fair value through
profit or loss
1,598
2,250
-29%
1,499
7%
6,262
7,440
-16%
Total revenue and income
3,177
3,260
-3%
3,620
-12%
13,347
12,077
11%
Operating costs
(1,071)
(866)
24%
(977)
10%
(3,871)
(3,430)
13%
Selling expenses
(48)
(64)
-25%
(33)
46%
(139)
(227)
-39%
Administrative expenses
(1,368)
(1,344)
2%
(1,503)
-9%
(5,641)
(4,693)
20%
Other operating revenues (expenses), net
235
233
1%
29
n.a.
257
324
-21%
Expected credit losses
(38)
(30)
26%
(28)
35%
(94)
(93)
2%
Interest expense on debt
(150)
(57)
162%
(128)
17%
(402)
(136)
196%
Share of profit or (loss) in joint ventures and associates
1
(11)
n.a.
1
4%
(12)
(8)
58%
Income before income tax
738
1,121
-34%
983
-25%
3,445
3,815
-10%
Income tax expense
44
(130)
n.a.
48
-7%
136
(223)
n.a.
Net income for the period
783
991
-21%
1,031
-24%
3,580
3,592
0%
Balance Sheet (in R$ mn)
Assets
4Q22
3Q22
Cash
3,553
2,601
Financial assets
177,682
172,585
Fair value through profit or loss
96,730
89,157
Securities
87,513
73,101
Derivative financial instruments
9,217
16,056
Fair value through other comprehensive income
34,479
40,238
Securities
34,479
40,238
Evaluated at amortized cost
46,473
43,190
Securities
9,272
8,060
Securities purchased under agreements to resell
7,604
8,047
Securities trading and intermediation
3,271
3,983
Accounts receivable
598
568
Loan Operations
22,211
20,411
Other financial assets
3,517
2,121
Other assets
5,761
5,509
Recoverable taxes
163
165
Rights-of-use assets
258
261
Prepaid expenses
4,240
4,196
Other
1,099
887
Deferred tax assets
1,612
1,509
Investments in associates and joint ventures
2,272
2,415
Property and equipment
311
308
Goodwill & Intangible assets
844
815
Total Assets
192,035
185,742
Liabilities
4Q22
3Q22
Financial liabilities
127,709
124,490
Fair value through profit or loss
22,135
24,145
Securities
13,529
9,469
Derivative financial instruments
8,605
14,675
Evaluated at amortized cost
105,574
100,345
Securities sold under repurchase agreements
31,790
31,429
Securities trading and intermediation
16,063
15,374
Financing instruments payable
43,684
41,416
Accounts payables
617
561
Borrowings
1,866
1,901
Other financial liabilities
11,554
9,663
Other liabilities
47,173
43,664
Social and statutory obligations
968
628
Taxes and social security obligations
365
249
Private pension liabilities
45,734
42,714
Provisions and contingent liabilities
44
38
Other
62
35
Deferred tax liabilities
111
120
Total Liabilities
174,992
168,274
Equity attributable to owners of the Parent company
17,036
17,465
Issued capital
0
0
Capital reserve
19,156
15,459
Other comprehensive income
(134)
(109)
Treasury
(1,987)
(681)
Retained earnings
-
2,796
Non-controlling interest
6
3
Total equity
17,042
17,468
Total liabilities and equity
192,035
185,742
Float, Adjusted Gross Financial Assets and Net Asset
Value
(in R$ mn)
We present Adjusted Gross Financial Assets because we believe
this metric captures the liquidity that is, in fact, available to
us, net of the portion of liquidity that is related to our Float
Balance (and therefore attributable to clients). We calculate
Adjusted Gross Financial Assets as the sum of (1) Cash and
Financial Assets (comprised of Cash plus Securities – Fair value
through profit or loss, plus Securities – Fair value through other
comprehensive income, plus Securities – Evaluated at amortized
cost, plus Derivative financial instruments, plus Securities
(purchased under agreements to resell), plus Loans and Foreign
exchange portfolio (assets) less (2) Financial Liabilities
(comprised of the sum of Securities loaned, Derivative financial
instruments, Securities sold under repurchase agreements and
Private pension liabilities), Deposits, Structured Operation
Certificates (COE), Financial Bills, Foreign exchange portfolio
(liabilities), Credit cards operations and (3) less Float
Balance.
It is a measure that we track internally daily, and it more
intuitively reflects the effect of the operational profits we
generate and the variations between working capital assets and
liabilities (cash flows from operating activities), investments in
fixed and intangible assets and investments in the IFA Network
(cash flows from investing activities) and inflows and outflows
related to equity and debt securities in our capital structure
(cash flows from financing activities). Our management treats all
securities and financial instrument assets, net of financial
instrument liabilities, as balances that compose our total
liquidity, with subline items (such as, for example, “securities at
fair value through profit and loss” and “securities at fair value
through other comprehensive income”) expected to fluctuate
substantially from quarter to quarter as our treasury manages and
allocates our total liquidity to the most suitable financial
instruments.
In order to explain how we measure our cash position or
generation internally, we are introducing the Net Asset Value
concept. Since we are a financial institution, we hold several
types of financial instruments with different characteristics,
hence the definition of net cash that makes more sense from a
business perspective is the Net Asset Value. It is basically the
adjusted gross financial assets net of debt instruments.
Float (=net uninvested clients' deposits)
4Q22
3Q22
Assets
(3,271)
(3,983)
(-) Securities trading and intermediation
(3,271)
(3,983)
Liabilities
16,063
15,374
(+) Securities trading and intermediation
16,063
15,374
(=) Float
12,792
11,391
Adjusted Gross Financial Assets
4Q22
3Q22
Assets
177,761
171,130
(+) Cash
3,553
2,601
(+) Securities - Fair value through profit or loss
87,513
73,101
(+) Securities - Fair value through other comprehensive income
34,479
40,238
(+) Securities - Evaluated at amortized cost
9,272
8,060
(+) Derivative financial instruments
9,217
16,056
(+) Securities purchased under agreements to resell
7,604
8,047
(+) Loans and credit card operations
22,211
20,411
(+) Foreign exchange portfolio
2,145
1,130
(+) Energy
647
619
(+) Compulsory
1,119
866
Liabilities
(146,194)
(140,597)
(-) Securities
(13,529)
(9,469)
(-) Derivative financial instruments
(8,605)
(14,675)
(-) Securities sold under repurchase agreements
(31,790)
(31,429)
(-) Retirement Plans Liabilities
(45,734)
(42,714)
(-) Deposits
(20,262)
(21,205)
(-) Structured Operations
(12,110)
(11,026)
(-) Financial Bills
(5,676)
(3,566)
(-) Foreign exchange portfolio
(2,405)
(1,420)
(-) Credit card operations
(4,987)
(3,996)
(-) Commitments subject to possible redemption
(1,049)
(1,074)
(-) Promissory Note
(47)
(20)
(-) Float
(12,792)
(11,391)
(=) Adjusted Gross Financial Assets
18,775
19,142
Net Asset Value
4Q22
3Q22
(=) Adjusted Gross Financial Assets
18,775
19,142
Gross Debt
(9,389)
(9,298)
(-) Borrowings
(1,866)
(1,901)
(-) Debentures
(2,029)
(1,956)
(-) Structured financing
(1,934)
(1,798)
(-) Bonds
(3,561)
(3,642)
(=) Net Asset Value
9,385
9,844
_______________________________
1 – Tax adjustments are related to tax
withholding expenses that are recognized net in gross revenue.
2 – See appendix for a reconciliation of
Adjusted Net Income.
Reconciliation of Adjusted Net Income (in R$ mn)
Adjusted Net Income
4Q22
4Q21
YoY
3Q22
QoQ
2022
2021
YoY
Net Income
783
991
-21%
1,031
-24%
3,580
3,592
0%
(+) Share Based Compensation
181
149
22%
186
-3%
793
658
21%
(+/-) Taxes
(71)
(54)
30%
(68)
4%
(299)
(247)
21%
Adj. Net Income
893
1,086
-18%
1,149
-22%
4,075
4,003
2%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230216005697/en/
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