UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of November 2023

 

 

Commission File Number: 001-39155

 

XP Inc.

(Exact name of registrant as specified in its charter)

 

20, Genesis Close

Grand Cayman, George Town

Cayman Islands KY-1-1208

+55 (11) 3075-0429

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F

X

  Form 40-F  

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

Yes     No

X

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

Yes     No

X

 

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    XP Inc.
     
     
      By: /s/ Bruno Constantino Alexandre dos Santos
        Name: Bruno Constantino Alexandre dos Santos
        Title: Chief Financial Officer

 

Date: November 13, 2023

 

 

 

EXHIBIT INDEX

 

Exhibit No. Description
99.1 Press Release dated November 13, 2023 – XP Inc. Reports 3Q23 Financial Results.
99.2 XP Inc. – 3Q23 Earnings Presentation.

 

 

 

 

 

 

Exhibit 99.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3Q23 Earnings Release

 

November 13th, 2023

 

 

 

 

 

 

 

XP Inc. Reports Third Quarter 2023 Results

 

São Paulo, Brazil, November 13, 2023 – 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 third quarter of 2023.

 

Summary

 

Operating Metrics (unaudited) 3Q23 3Q22 YoY 2Q23 QoQ
Total Client Assets (in R$ bn) 1,080 925 17% 1,024 6%
Total Net Inflow (in R$ bn) 48 35 38% 22 118%
Annualized Retail Take Rate 1.34% 1.33% 1 bps 1.30% 4 bps
Active Clients (in '000s) 4,412 3,805 16% 4,013 10%
Headcount (EoP) 6,699 6,948 -4% 6,002 12%
IFAs (in '000s) 14.3 11.6 23% 14.1 1%
Retail DATs (in mn) 2.1 2.3 -9% 2.2 -2%
Retirement Plans Client Assets (in R$ bn) 67 58 15% 64 4%
Cards TPV (in R$ bn) 10.7 6.6 62% 9.7 11%
Credit Portfolio (in R$ bn) 19.9 16.3 22% 17.9 11%
           
Financial Metrics (in R$ mn) 3Q23 3Q22 YoY 2Q23 QoQ
Gross revenue 4,364 3,811 14% 3,728 17%
Retail 3,179 2,629 21% 2,892 10%
Institutional 386 577 -33% 385 0%
Corporate & Issuer Services 519 436 19% 283 83%
Other 281 170 65% 167 68%
Net Revenue 4,132 3,620 14% 3,549 16%
Gross Profit 2,896 2,615 11% 2,402 21%
Gross Margin 70.1% 72.2% -216 bps 67.7% 240 bps
EBT 1,157 983 18% 968 20%
EBT Margin 28.0% 27.2% 86 bps 27.3% 74 bps
Net Income 1,087 1,031 5% 977 11%
Net Margin 26.3% 28.5% -218 bps 27.5% -123 bps
Basic EPS (in R$) 1.99 1.85 7% 1.85 8%
Diluted EPS (in R$) 1.96 1.80 9% 1.83 7%
ROAE¹ 22.6% 24.4% -183 bps 22.0% 58 bps
ROAA² 2.6% 3.3% -69 bps 2.6% 1 bps

 

____________________

 

1 – Annualized Return on Average Equity.

2 – Annualized Return on Average Adjusted Assets. Adjusted Assets excludes Retirement Plans Liabilities and Float Balance.

 

 

 

 

 

Discussion of Results

 

Total Gross Revenue

 

Gross revenue was R$4.4 billion in 3Q23, up 17% QoQ and 14% YoY, primarily driven by growth in our Retail revenue year-over-year and a strong recovery in Corporate & Issuer Services quarter-over-quarter. Modal’s financials have been fully incorporated in 3Q23, accounting for R$161 million in Gross Revenue for the quarter.

 

Retail Revenue

 

(in R$ mn) 3Q23 3Q22 YoY 2Q23 QoQ
Retail Revenue 3,179 2,629 21% 2,892 10%
Equities 1,131 1,120 1% 1,064 6%
Fixed Income 718 489 47% 578 24%
Funds Platform 323 282 15% 341 -5%
Retirement Plans 98 85 15% 87 12%
Cards   259 146 77% 232 12%
Credit   49 40 24% 44 13%
Insurance   36 21 72% 36 1%
Other Retail 565 447 26% 511 11%
Annualized Retail Take Rate 1.34% 1.33% 1 bps 1.30% 4 bps

 

Retail revenue was R$3.2 billion in 3Q23, up 10% QoQ and 21% YoY. Retail revenue growth was driven by a combination of:

 

(1)Year-over-year and sequential growth in Fixed Income revenue, led by a strong performance in primary markets in the quarter;

 

(2)Strong continued growth in Cards revenue, which grew 77% YoY

 

Retail-related revenue in 3Q23 represented 68% of consolidated Net Income from Financial Instruments, as per the Accounting Income Statement.

 


Take Rate

 

Annualized Retail Take Rate was 1.34% in 3Q23, up 4 bps QoQ.

 

Institutional Revenue

 

Institutional revenue was R$386 million in 3Q23, stable QoQ and down 33% YoY. Year-over-year decrease is mainly due to a tough comp in 3Q22, with a lot of hedging demand in the pre-elections period.

 

Institutional revenue in 3Q23 accounted for 13% of consolidated Net Income from Financial Instruments, as per the Accounting Income Statement.

 

 

 

 

 

Corporate & Issuer Services Revenue

 

Corporate & Issuer Services revenue totaled R$519 million in 3Q23, up 83% QoQ and 19% YoY. The sequential increase in Corporate & Issuer Services revenue was due to the growth in Issuer Services revenue, mainly related to a strong pick-up in DCM activity in the quarter.

 

Corporate and Issuer Services related revenues in 3Q23 represented 9% of consolidated Net Income from Financial Instruments, as per the Accounting Income Statement.

 

Other Revenue

 

Other revenue was R$281 million in 3Q23, up 68% QoQ and 65% YoY.

 

Other revenue in 3Q23 accounted for 11% of consolidated Net Income from Financial Instruments, as per the Accounting Income Statement.

 

Costs of Goods Sold and Gross Margin

 

Gross Margin was 70.1% in 3Q23 versus 67.7% in 2Q23 and 72.2% in 3Q22. Sequential improvement in gross margin was mainly related to better revenue mix between products and channels in the quarter.

 

SG&A Expenses3

 

(in R$ mn) 3Q23 3Q22 YoY 2Q23 QoQ
Total SG&A3 (1,547) (1,501) 3% (1,246) 24%
People (1,048) (1,057) -1% (899) 17%
Salary and Taxes (396) (377) 5% (344) 15%
Bonuses (486) (510) -5% (428) 13%
Share Based Compensation (166) (171) -3% (127) 30%
Non-people (499) (444) 12% (347) 44%
LTM Compensation Ratio4 25.7% 29.8% -409 bps 26.8% -105 bps
LTM Efficiency Ratio5 37.3% 41.7% -444 bps 38.3% -108 bps
Headcount (EoP) 6,699 6,948 -4% 6,002 12%

 

SG&A3 expenses totaled R$1.5 billion in 3Q23, up 24% QoQ and 3% YoY. The sequential increase is in line with our annual guidance of R$5.0 to 5.5 billion in total SG&A3 for the full year of 2023. The main increases in SG&A during the quarter came from:

 

(1)Non-people expenses, mainly related to Expert event that happened during 3Q23;

 

(2)Modal expenses incorporation, which accounted for R$111 million in 3Q23.

 

Our last twelve months (LTM) compensation ratio4 in 3Q23 was 25.7%, an improvement from 29.8% and 26.8% in 3Q22 and 2Q23, respectively. Also, our LTM efficiency ratio5 reached 37.3% in 3Q23, compared to 41.7% and 38.3% in the same periods.

 

____________________

 

3 - Total SG&A and non-people SG&A exclude revenue from incentives from Tesouro Direto, B3.

4 - Compensation ratio is calculated as People SG&A (Salary and Taxes, Bonuses and Share Based Compensation) divided by Net Revenue.

5 - Efficiency ratio is calculated as SG&A ex-revenue from incentives from Tesouro Direto, B3, and others divided by Net Revenue.

 

 

 

 

 

Earnings Before Taxes

 

EBT, a good proxy for earnings power, was R$1.2 billion in 3Q23, up 20% QoQ and 18% YoY, mainly driven by revenue growth and improving operating leverage in the quarter. EBT Margin was 28.0%, up 74 bps QoQ and 86 bps YoY, in line with our medium-term annual guidance of 26% to 32% between 2023 and 2025.

 

Net Income and EPS

 

In 3Q23, Net Income was R$1.1 billion, up 11% QoQ and 5% YoY. Basic EPS was R$1.99, up 8% QoQ and 7% YoY. Fully diluted EPS was R$1.96, up 7% QoQ and 9% YoY.

 

 

 

 

 

Other Information

 

Webcast and Conference Call Information

 

The Company will host a webcast to discuss its third quarter financial results on Monday, November 13th, 2023, at 5:00 pm ET (7:00 pm BRT). To participate in the earnings webcast please subscribe at 3Q23 Earnings Web Meeting. The replay will be available on XP’s investor relations website at https://investors.xpinc.com/

 

Investor Relations Contact

ir@xpi.com.br

 

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 3Q23 3Q22 YoY 2Q23 QoQ
Total Gross Revenue 4,364 3,811 14% 3,728 17%
Retail 3,179 2,629 21% 2,892 10%
Equities 1,131 1,120 1% 1,064 6%
Fixed Income 718 489 47% 578 24%
Funds Platform 323 282 15% 341 -5%
Retirement Plans 98 85 15% 87 12%
Cards 259 146 77% 232 12%
Credit 49 40 24% 44 13%
Insurance 36 21 72% 36 1%
Other 565 447 26% 511 11%
Institutional 386 577 -33% 385 0%
Corporate & Issuer Services 519 436 19% 283 83%
Other 281 170 65% 167 68%
Net Revenue 4,132 3,620 14% 3,549 16%
COGS (1,236) (1,005) 23% (1,147) 8%
Gross Profit 2,896 2,615 11% 2,402 21%
Gross Margin 70.1% 72.2% -216 bps 67.7% 240 bps
SG&A (1,541) (1,463) 5% (1,246) 24%
People (1,048) (1,057) -1% (899) 17%
Non-People (493) (405) 22% (347) 42%
D&A (71) (44) 63% (51) 40%
Interest expense on debt (135) (128) 6% (152) -11%
Share of profit or (loss) in joint ventures and associates 9 1 562% 15 -63%
EBT 1,157 983 18% 968 20%
EBT Margin 28.0% 27.2% 86 bps 27.3% 74 bps
Tax Expense (Accounting) (71) 48 -248% 9 -874%
Tax expense (Tax Withholding in Funds)6 (169) (212) -20% (168) 1%
Effective tax rate (Normalized) (18.1%) (13.7%) -435 bps (14.0%) -410 bps
Net Income 1,087 1,031 5% 977 11%
Net Margin 26.3% 28.5% -218 bps 27.5% -123 bps
Adjustments 92 118 -22% 85 8%
Adjusted Net Income7 1,179 1,149 3% 1,062 11%
Adjusted Net Margin 28.5% 31.7% -321 bps 29.9% -140 bps

 

____________________

 

6 - Tax adjustments are related to tax withholding expenses that are recognized net in gross revenue.

7 - See appendix for a reconciliation of Adjusted Net Income.

 

 

 

 

Accounting Income Statement (in R$ mn)

 

Accounting Income Statement 3Q23 3Q22 YoY 2Q23 QoQ
Net revenue from services rendered 1,822 1,558 17% 1,483 23%
Brokerage commission 525 498 5% 488 8%
Securities placement 637 525 21% 407 56%
Management fees 414 361 15% 419 -1%
Insurance brokerage fee 43 35 24% 42 3%
Commission Fees 206 135 53% 174 18%
Other services 169 149 13% 91 85%
Sales Tax and contributions on Services (173) (145) 19% (139) 25%
Net income from financial instruments at amortized cost and at fair value through other comprehensive income 142 563 -75% 618 -77%
Net income from financial instruments at fair value through profit or loss 2,168 1,499 45% 1,448 50%
Total revenue and income 4,132 3,620 14% 3,549 16%
Operating costs (1,122) (977) 15% (1,092) 3%
Selling expenses (50) (33) 53% (45) 10%
Administrative expenses (1,544) (1,503) 3% (1,276) 21%
Other operating revenues (expenses), net (18) 29 n.a. 24 -175%
Expected credit losses (115) (28) n.a. (55) 109%
Interest expense on debt (135) (128) 6% (152) -11%
Share of profit or (loss) in joint ventures and associates 9 1 n.a. 15 -38%
Income before income tax 1,157 983 18% 968 20%
Income tax expense (71) 48 -248% 9 n.a.
Net income for the period 1,087 1,031 5% 977 11%

 

 

 

Balance Sheet (in R$ mn)

 

Assets 3Q23 2Q23
Cash 3,822 2,916
Financial assets 214,838 216,446
Fair value through profit or loss 120,854 124,465
Securities 101,039 99,280
Derivative financial instruments 19,815 25,185
Fair value through other comprehensive income 38,486 33,091
Securities 38,486 33,091
Evaluated at amortized cost 55,498 58,890
Securities 6,175 7,824
Securities purchased under agreements to resell 12,252 15,786
Securities trading and intermediation 3,569 2,917
Accounts receivable 620 646
Loan Operations 26,645 24,088
Other financial assets 6,236 7,630
Other assets 7,586 6,498
Recoverable taxes 302 220
Rights-of-use assets 204 209
Prepaid expenses 4,401 4,270
Other 2,679 1,800
Deferred tax assets 2,023 1,532
Investments in associates and joint ventures 2,261 2,250
Property and equipment 348 301
Goodwill & Intangible assets 2,551 837
Total Assets 233,427 230,781
     

 

 

 

Liabilities 3Q23 2Q23
Financial liabilities 158,537 159,678
Fair value through profit or loss 32,888 40,800
Securities 14,342 14,554
Derivative financial instruments 18,546 26,247
Evaluated at amortized cost 125,649 118,877
Securities sold under repurchase agreements 39,517 34,623
Securities trading and intermediation   17,062 15,451
Financing instruments payable 53,094 51,931
Accounts payables 604 626
Borrowings 1,260 -
Other financial liabilities 14,112 16,247
Other liabilities 54,793 52,520
Social and statutory obligations 711 947
Taxes and social security obligations   488 442
Retirement plans liabilities 53,280 50,907
Provisions and contingent liabilities 110 79
Other 204 146
Deferred tax liabilities 74 134
Total Liabilities 213,404 212,331
Equity attributable to owners of the Parent company 20,014 18,440
Issued capital 0 0
Capital reserve 18,745 16,523
Other comprehensive income 107 264
Treasury (117) (117)
Retained earnings 1,279 1,770
Non-controlling interest 9 9
Total equity 20,023 18,449
Total liabilities and equity 233,427 230,781

 

 

 

 

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.

 

Adjusted Gross Financial Assets 3Q23 2Q23
Assets 216,300 216,881
(+) Cash 3,822 2,916
(+) Securities - Fair value through profit or loss 101,039 99,280
(+) Securities - Fair value through other comprehensive income 38,486 33,091
(+) Securities - Evaluated at amortized cost 6,175 7,824
(+) Derivative financial instruments 19,815 25,185
(+) Securities purchased under agreements to resell 12,252 15,786
(+) Loans and credit card operations 26,645 24,088
(+) Foreign exchange portfolio 4,240 5,556
(+) Energy 2,105 1,270
(+) Central Bank Deposits 1,722 1,885
Liabilities (183,729) (185,632)
(-) Securities (14,342) (14,554)
(-) Derivative financial instruments (18,546) (26,247)
(-) Securities sold under repurchase agreements (39,517) (34,623)
(-) Retirement Plans Liabilities (53,280) (50,907)
(-) Deposits (22,635) (25,668)
(-) Structured Operations (16,241) (15,248)
(-) Financial Bills (7,812) (5,206)
(-) Foreign exchange portfolio (4,562) (6,007)
(-) Credit card operations (6,442) (5,899)
(-) Commitments subject to possible redemption - (1,090)
(-) Other Funding (352) (185)
(-) Float (13,493) (12,534)
(=) Adjusted Gross Financial Assets 19,078 18,715

 

 

 

 

 

Net Asset Value 3Q23 2Q23
(=) Adjusted Gross Financial Assets 19,078 18,715
Gross Debt (9,428) (7,946)
(-) Borrowings (1,260) -
(-) Debentures (2,656) (2,379)
(-) Structured financing (2,114) (2,321)
(-) Bonds (3,398) (3,246)
(=) Net Asset Value 9,650 10,769

 

Float (=net uninvested clients' deposits) 3Q23 2Q23
Assets (3,569) (2,917)
(-) Securities trading and intermediation   (3,569) (2,917)
Liabilities 17,062 15,451
(+) Securities trading and intermediation   17,062 15,451
(=) Float 13,493 12,534

 

 

 

 

Reconciliation of Adjusted Net Income (in R$ mn)

 

Adjusted Net Income 3Q23 3Q22 YoY 2Q23 QoQ
Net Income 1,087 1,031 5% 977 11%
(+) Share Based Compensation 151 186 -19% 140 8%
(+/-) Taxes (59) (68) -13% (55) 7%
Adj. Net Income 1,179 1,149 3% 1,062 11%

 

 

 

 

 

 

 

Exhibit 99.2

 

 

1 3Q23 Earnings Presentation

 

 

2 Important Disclosure IN REVIEWING THE INFORMATION CONTAINED IN THIS PRESENTATION, 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 presentation is prepared by XP Inc . (the “Company,” “we” or “our”), is solely for informational purposes . This presentation 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 presentation 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 presentation 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 presentation 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 presentation are provided as at the date of this presentation, 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 presentation 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 presentation 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 presentation 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 December 31 , 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 presentation 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 presentation, 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 ) the negative impacts of the COVID - 19 pandemic on global, regional and national economies and the related market volatility and protracted economic downturn ; and ( 18 ) 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 presentation 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 presentation . 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 presentation 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 presentation 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 presentation also includes certain 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 presentation . For purposes of this presentation : “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, including equities, fixed income securities, mutual funds (including those managed by XP Gestão de Recursos Ltda . , XP Advisory Gestão 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 (Floating Balances), among others .

 

 

3 Index 3Q23 Financials 02 Q&A 03 01 Key Highlights A ppendix 04

 

 

1 Key Highlights

 

 

5 1 2 4 8 11 15 25 65 126 202 409 660 815 946 1,024 1,080 Notes: 1 - Calculated as SG&A ex - revenue from incentives from Tesouro Direto , B3, and others divided by Net Revenue. . 2 – Annualized Return on Average Equity. IPO 2019 2022 2021 2020 3Q 2023 2009 Client Assets R$ Billions Continued Growth With Profitability & Efficiency + 30 % CAGR Since IPO 3Q23 Results R$ 1.1 Bn Net Income +11% QoQ R$ 1.1 Tr Client Assets +6% QoQ 22.6 % ROAE² +58 bps QoQ R$ 1.96 Diluted EPS +7% QoQ 37.3 % Efficiency Ratio¹ - 108 bps QoQ

 

 

6 Strategy Tracker Leadership in Investments Superior Product Offerings Client Focus Absolute Leadership in Core Business Grow with Our Clients’ Needs Premier Service with Unique Value Long - Term Strategy 3Q23 Performance x All - time - high in different Investments KPIs x Modal Incorporation x New Verticals grew ~3x in two years x Credit Card Principality x We remain at the top of the industry x Continuous focus on quality and excellence

 

 

7 Improved Profitability While Making Progress in Modal’s Integration Key Quarter Updates F inancial Results • Sequential Growth in Top - Line led by DCM Activity in the Quarter • Improved Profitability Metrics – +74 bps EBT Margin Improvement ( QoQ ) – +58 bps ROAE ( QoQ ) – +R$ 0.13 in Diluted EPS ( QoQ ) Modal Integration • Modal’s Financials are Now Fully Consolidated into 3Q23 Results: – R$ 161 million in Top Line – R$ 111 million in SG&A

 

 

2 3Q23 Financials

 

 

9 Gross Revenue 2,673 2,629 2,549 2,569 2,892 3,179 436 577 357 332 385 386 335 436 275 266 283 519 173 170 156 158 167 281 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 3,618 3,811 3,337 3,326 3,728 4,364 Retail Institutional Corporate & Issuer Services Other 74% 69% 76% 77% 78% 73% 12% 15% 11% 10% 10% 9% 9% 11% 8% 8% 8% 12% 5% 4% 5% 5% 4% 6% 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 Retail Institutional Corporate & Issuer Services Other +17% QoQ growth in Gross Revenue +57% growth in Corporate & Issuer Services’ representativeness Gross Revenue Breakdown % Gross Revenue Breakdown R$ Million

 

 

10 Retail Revenue – Core Strong Sequential Improvement in Fixed Income ...Combined with Stabilization in Equities & Funds 1,063 1,120 995 1,069 1,064 1,131 580 489 393 332 578 718 398 282 311 313 341 323 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 2,040 1,890 1,699 1,715 1,982 2,172 Equities Fixed Income Funds Platform +24% QoQ Growth in Fixed Income Retail Revenue Breakdown – Core R$ Million

 

 

11 Retail Revenue – New Verticals All New Vertical Products Continued to Grow …With Cards Being the Highlight in 3Q23 81 85 93 87 87 98 116 146 234 204 232 259 38 40 47 41 44 49 23 21 31 32 36 36 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 258 291 406 364 398 442 Retirement Plans Cards Credit Insurance +52% Combined YoY Growth Retail Revenue Breakdown – New Verticals R$ Million

 

 

12 Core Retail vs. New Verticals Revenue Notes: 1 – Includes Equities, Fixed Income and Funds Revenue. 2 - Includes Retirement Funds, Cards, Insurance and Credit Revenue . + 75 % New Verticals Continue to Help Offset Macro Headwinds … And May Provide Upside, at the Core, as the Market Recovers 5,426 8,309 7,568 1,610 780 914 2,010 194 2020 571 2021 3Q23 LTM 6,401 9,793 11,188 Revenue R$ Million + 182 % Core¹ New Verticals² Other

 

 

13 Corporate & Issuer Services Revenue Issuer Services Growth Mainly Related to DCM Activity In The Quarter 125 207 135 167 126 197 210 228 140 99 157 322 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 335 436 275 266 283 519 Corporate Issuer Services +105% QoQ Growth in Issuer Services Corporate & Issuer Services Breakdown R$ Million

 

 

14 Sales, General & Administrative Expenses (SG&A)¹ Notes: 1 – Excludes Revenue from incentives from Tesouro Direto , B3 and others. 1,094 1,057 892 760 899 1,048 375 444 485 285 347 493 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 1,469 1,501 1,377 1,045 1,246 1,541 People Non - people R$3.8 Billion in SG&A 1 YTD SG&A¹ Expenses Have Risen Mainly Related to Modal & Expert Event SG&A¹ R$ Million

 

 

15 Efficiency & Compensation Ratios Notes: 1 – Calculated as SG&A ex - revenue from incentives from Tesouro Direto , B3, and others divided by Net Revenue. 2 – Calculated as People SG&A (Salary and Taxes, Bonuses and Share Based Compensation) divided by Net Revenue Compensation Ratio 2 LTM % Efficiency Ratio 1 LTM % 38.4% 41.7% 40.4% 38.3% 37.3% 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 27.9% 29.8% 28.5% 26.8% 25.7% 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 We Remain Disciplined in Our Cost Controls … With Both Our Efficiency & Compensation Ratios Continuing to Fall Steeply

 

 

16 Earning Before Taxes (EBT) + 18 % + 86 bps 983 968 1,157 3Q22 2Q23 3Q23 EBT Margin % 27.2% 27.3% 28.0% 3Q22 2Q23 3Q23 EBT R$ million We Achieved Significant Margin improvement … Driven By Improving Operating Leverage

 

 

17 Net Income + 7 % - 218 bps 1,031 977 1,087 3Q22 2Q23 3Q23 Net Margin % Net Income R$ million 28.5% 27.5% 26.3% 3Q22 2Q23 3Q23 Net Income Also Benefited from Operating Leverage... ... With Lower Net Margin due to Modal, Expert Event & Higher Tax Expenses

 

 

18 Annualized Return on Average Equity + 58 bps QoQ 22.9% 24.4% 18.1% 18.7% 22.0% 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 22.6% Notes: 1 – Annualized Return on Average Equity. Our ROAE¹ Has Continued to Grow Sequentially... … In Line With Our Focus on ROAE¹ Growth Over The Next Years ROAE¹ %

 

 

3 Q&A

 

 

4 Appendix

 

 

21 Non - GAAP Financial Information Adjusted Assets (from the factors listed below) reflects our business more realistically [B] Retirement Plans ▪ AUM from XP Vida & Previdência is accounted in both assets and liabilities [C] Float ▪ Uninvested cash from clients allocated in sovereign bonds Key factors inflating our balance sheet Simplified Balance Sheet (in R $ mn) Assets [A] [B] Retirement Plans [C] Float Adjusted Assets [A-B-C] Total 233,427 53,280 17,062 163,086 Securities - Fair Value through P&L 101,039 53,280 - 47,759 Securities - Repos 12,252 - - 12,252 Securities - Fair Value through OCI 38,486 - 13,493 24,993 Securities - Trading & Intermediation 3,569 - 3,569 - Other Financial Instruments 25,990 - - 25,990 Other Assets 52,091 - - 52,091 Liabilities + Equity [A] [B] Retirement Plans [C] Float Adjusted Assets [A-B-C] Total 233,427 53,280 17,062 163,086 Securities - Repos 39,517 - - 39,517 Other Finan. Liab. 40,800 - - 40,800 Pension Funds 53,280 53,280 - - Securities - Trading & Intermediation 17,062 - 17,062 - Other Liabilities & Equity 82,768 - - 82,768

 

 

22 Net Asset Value 22 (in R $ mn ) Adj. Gross Financial Assets NAV = Gross Debt - 3Q23 2Q23 Financial Assets 216,300 216,881 Securities & Derivatives 165,515 165,380 Loans 26,645 24,088 Repos 12,252 15,786 Other 11,888 11,628 (-) Financial Liabilities (183,729) (185,632) (-) Retirement Plans Liabilities (53,280) (50,907) (-) Market Funding Operations (47,040) (46,307) (-) Repos (39,517) (34,623) (-) Securities & Derivatives (32,888) (40,800) (-) Other (11,005) (12,995) (-) Float (13,493) (12,534) (=) Adjusted Gross Financial Assets 19,078 18,715

 

 

23 Investor Relations ir@xpi.com.br https://investors.xpinc.com/

 

 


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