Q4 2019 Earnings Call
Greetings and welcome to the X P Inc. fourth quarter 2019 earnings conference call.
Time, all participants are they listen only mode. A question answer session I hope all the formal presentation.
Anyone should require operators.
Please press star is the only telephone keypad. Please note. This conference is being recorded.
I'll now turn the conference over to your Jose Carlos Bazaar head of Investor Relations Mr. Lazard you may begin.
Good afternoon, everyone. Welcome to X piece first earnings conference call 40 quarters into your ended in December 31st.
Thank you.
Hi, congratulations.
Joining me joining me today 40 called or do you have to benchmark founder and CEO.
So do you see a cool.
They all know how about that you'll be missed.
Got it looks cheap.
Mark do you still won't go and Trinity elite our friend director.
We will be available for todays <unk> session.
And also our fourth quarter earnings release presentation.
No Investor Relations website.
I'd like to remark that certain statements in this presentation and during the <unk> mi relates to future events and expectations and the search constitute forward looking statements within the meaning of the private Securities Litigation Reform Act all night human trial.
Actual results may differ materially from these forward looking statements.
Information concerning factors could cause actual results to differ from Fourq and statements you scraping. It now reports filed with SEC.
Please refer to slide number two important school there.
Contagion core foods great.
Now I'll turn the conference over to individual Delever, some opening remarks, starting on slide five Oh the presentation.
Sure.
Good afternoon.
Well that's true.
So the market.
First time I suppose.
I'd like to start school a.
That's right off off to get some.
The next few we continue to trust tremendous financial markets.
Oh My Gosh why.
<unk>.
[noise] batch.
No I'm perspective on the business was reinforced by the IPO can you just remember.
It wasn't northern part comes.
Oh, Im sorry, I landed <unk> goals.
The lightning.
Connecting what's being invested coming into <unk>.
Besides that.
That's right.
Operationally and financially.
Shaping sonastar kinda capacity of 409.
Hi.
Net income off more than one.
So we did your Australia right.
Oh, we recognized imports. So those results are small when compared to overall, but she's in financial system.
Oh, sorry, almost 500 beyond rising revenue.
Before we got more confident than elsewhere.
<unk> for Charlie.
Sure and concentrated market in Brazil.
Why do you see this country.
Just going forward.
[laughter].
<unk>.
You can change it.
<unk> expense in Brazil.
90% something that's my gosh.
Yeah.
<unk>.
Right.
Sure.
<unk> coffee <unk> has become a priority.
No.
<unk>.
Okay.
From a large bank I think the past.
It's tranche represents an exponential <unk>.
French and Spanish Education Art, you know where do you any.
Yes.
I wondered macroeconomic scenario.
[laughter] made before.
Exactly.
All companies.
Greetings restaurants, but all in confused breezy year.
Alright, Thank gosh, that's you know platform gas charge.
You do satish.
You should teach.
That's really makes talk as well.
I didn't mention Kols or just plain doing <unk> market you want to GDP.
Our debt, we just reported by dollar tree branch extinguish mattress.
Yes.
Next question, Steve talked to God dire Straits, that's one of which 64000 advisors spread there crush margins chicks sandridge off season national wide.
It continues to promote guestrooms, Trish and Dr. <unk> offering just be pretty much.
We also holding share when events can publish a large amount off do you still content.
Which would be for sure reticent to reinforce our competitive advantage.
It's just an ability or <unk> and yes, [laughter], just really well in all fall mainly from China and you just to bring chocolate change our completes banking experience to rethink customers.
By allowing dam shouldn't call shouldn't do you think restaurants, we Shakespeare.
Cutting catalinas commercial banks, where they have got checking account <unk> portion of their investments.
And finally, we are well capitalized interest.
I haven't been able to guys gosh open for many reports what do you just do prepared goes more to treat your current surprise just any sport patrons traction our comp.
Definitely jets Trowbridge will face it could you continuing to maybe I'll try to interest delivering sustainable.
Returns through our shareholders.
Our successful history, it's tool for try to interest in financial crisis that we surpassed it. Thanks chalk held true Grim open mind and interrupting your was pretty rich how partnership model and our long term alignment.
Horizontal maybe talk tragic it's true true.
The adequate to targets can you send beach.
We treated you do you start to steps one thing like speed.
Oh, that's first and that's again trust Trumping Oscar winning for possible.
Now I'd like to handle Colbert <unk> [noise] matching to date you all know between Q2 financial results Carol.
Thanks, Yeah, I mean really I mean, everybody just a if you notice any voice difference years, because we are apart because of these go I know grown up virus crisis, so moving to slide seven.
We present the evolution of our main operating keep yeah.
Assets under custody active clients and MPS.
Oh figures grew strongly in 2019 benefiting from the pontoon snowball effect generated through our brands and investments made to enhance our platform and you actually experience.
Our aim is he reached 409 billion Haggen December 2019, expanding 17%.
Versus third quarter, 19, and 103% year over year.
The risk on most of the markets in the fourth quarter 19 helped our aim see number, especially through the equity appreciation of our capacity.
These important you highlight that we don't considering the market to market or casting.
We'd get a healthy pace of net inflows during the fourth quarter.
With an average around 11 billion <unk> per month.
Our second keep yacht active Brian.
Spending 91% year over year to 1.7 million, reflecting solid performance across all our channels and three retail brands.
Lastly, xb ended the year with I'm, Yes, 73, highlighting the benefits of ourself, we foresee an echo system for all our clients.
We will address the potential impact from the Corona virus surprises.
Our Cape guys later during this call.
Well, it's like nine.
We show our drives revenue evolution and its breakdown across our businesses.
Just talking to 19 total gross revenue was 5.5 billion has.
72% year over year increase.
The growth in the fourth quarter 19 versus fourth quarter, 18 wasn't even higher increasing 90% year over year from 957 million <unk> in fourth quarter, 18, 1.8 billion high ice in fourth quarter 19.
The main drivers were number one mutual funds, especially performance fees in retail.
Number two equities in futures, you, both retail and institutional businesses and number three.
I see increased issuer services revenue.
In terms of revenue breakdown retail remains our most relevant segment line.
Representing 6% to 7% of total revenue versus 73% in 2018 with the Delta being mainly a function I'll be brief issuer services from 5% to 9% of total revenue reinforcing our diversified revenue profile and the benefits of our synergistic acquisitions.
Uh huh.
Moving to slide 10.
We see that 2019 was another outstanding year for the retail business.
Following the strong aims to grow up in macro Tailwinds, we take a revenue increased.
6% year over year, reaching 3.7 billion had.
In terms of asset classes.
I've already said in the previous is like the main highlights were mutual funds.
Performance fees in equity in a hedge funds.
And equities in futures trading, which followed higher overall volumes in between.
Looking at all where we can take rate.
Yeah, what that's when it did contraction in 2019 versus 2018 from 1.4% Q1, 0.2%.
The degrees, we frac reflect.
Firstly, the zero brokerage fees strategy at our brand clear, which you folks on board traders and what the dog in October 2018, therefore impacting results more meaningfully throughout 2019.
The second factor was the steep increase in 18, which what's caused by the stock market rally in large inflows in equities custody accounts without a corresponding growth in revenue. It is important to understand that concept when we think about easy answer.
Great going forward.
When we compared to take rate over the last 12 month in third quarter 19, with fourth quarter 19, It has been stable at 1.2%.
We do not expect much your change in the take rate going forward.
We will talk more about it when we have drastic run a virus gries impact in our keep yes.
On slide 11.
We present, our institutional and issuer services revenue segments.
We also both strong results in 2019.
Institutional revenue, reaching 802 million highs in 2019.
This represents an increase of 66% diversity thousand 18.
The girl was mainly driven by an increasing volumes of arboretum trading desks. Following the overall expansion in between and increase in secure placement fees with fixed income being the main contributor.
Our institutional sales and corporate access teams have been very active in 2019 with more than 1700 meetings organized during the year.
And successfully connecting institutional clients Q exactive industry experts and publications in Brazil.
Additionally, it is important to highlight our efforts and investments to computing, where we quantify our institutional channel and you'll be strong long term relationships, we have to international clients.
It's worth noting we recently added sitting on the seat heater as chief strategy and have the of research coming from a long don't where are you used to work for Merrill Lynch and obviously sure. It had all the equity sales in New York.
Also coming from a credit Suisse in New York.
Oh insurance services.
Revenue totaled 507 million households in 2019.
The growth relative to 2018 was 185%.
The main highlights of the year, we're in order of contribution.
One DCM that's got the market our main revenue stream.
Did you very recurring in nature and resilient through market cycles.
Retail offerings and three you see on equity capital markets.
Now moving to slide 12.
We show or do you still content and other revenue.
These the content revenue reached 112 million housing 2019.
108% year over year.
The result was mainly driven by decreasing sales of online educational products through our X d. It we've got some poor.
During the quarter, we also launched speech.
I will tell you folks to independent research hows that enhance our high quality content.
We believe these revenue segment will continue to grow into any tailwind, but more importantly, if a differentiated to coupon that says with our customers in times like the one we're leaving right now.
More about that later in the presentation.
Other revenue grew 180% 82019 burst 2018, and total 420 million huh.
This is mainly related to our market maker businesses and better form growth, enabling our eco system to function well.
Next Ah Onez like 13, we present, our Cogs in operating expenses analysis, Cogs, which is mainly I say commissions and Green House see reached 1.6 billion had 19 versus 491 million <unk> 18, representing.
71% broke rate just your line with power revenue growth gross margin expanded 50 basis points during 2019 to seek to 8.7%.
Basically due to product mix.
Moving to operating expenses, there was a 44% animal increasing 2019.
As a percent Mg of net revenues expenses decreased from 42% in 2018% to 35% in 2019, reflecting the benefits of our open a rating leverage.
One is like 14.
We presented adjusted net income.
Which reached 1.1 billion horizon 2019, growing 119% from 491 million <unk> in 2018.
Just a net margin expanded from 16.6% in 18% to 20.9% between 19 above the midpoint of our guidance of 18% to 22% range.
In conclusion.
You're talking about 9000 boes to strong numbers across all segments of our eco system and I would like to reinforce our long term commitment and goal of growing our businesses, while maintaining a high level of profitability now I'm going to talk about our new businesses and the potential.
Back to of the growing a virus in our number going forward.
Moving to slide 16.
Here are we present, a roadmap for new businesses.
Most of it is related to the concept of providing our investor customers, a full service platform, including banking services, such as additional bank account payments and bad in credit cards.
Our clients can could completely the link with income that banks.
And we can grow our share of wallet.
Despite the crisis, we understand these initiatives creates long term value for XP and we're moving forward as planned.
But we know it is important you'd be flexible gyro and evaluate the scenario as decries evolve evolves.
Regarding our that can credit cards initiatives.
We are thrilled to announce our partnership with visa exit you sure partner of our cards.
Which we bring to allowance you still be here.
We have fallen in visa the best partner in the card segment as they bring a blend of superior service as we scale in a global acceptance footprint to all our customers. We're confident that the combination of or investment and financial digital services with the new cards to be launched with visa will further.
There are enhancing the experience of our clients.
Other highlights worth mentioning and I already talked about it quickly is that it's been business.
Run by Lucena Salvador, which is an independent provider of investment Compton has already said.
Needed more than ever in times like this.
Now we're going to talk about our view of potential impact of course, you might think rises in our business.
Moving forward to slide 17.
Here, we analyze the potential near term impact to our businesses related to the current a virus crisis.
It is important to highlight that these are managements opinion and not facts for sure.
We are not early stage obese graduates in Brazil, So it's hard hard to make any forecast.
Having said that.
In terms of assets under custody.
They did decline in the spot market of course negatively affect our equity position.
But not necessarily the nadeem flow and that's very important.
We believe to be at a very early stage of described as I said to conclude if these positive net inflows are going to compensate or not for any drop down into spot market regarding our <unk> at the end of this year.
Now moving to product mix on the right up rides on on this line.
If we compare.
With what happened in past Greg.
We should expect to see rising demand for fixed income products due to recent market sell off.
The difference nowadays, though.
The all time low interest rates in Brazil around 4% per year, and maybe going down even further.
Our customers will have to invest in some.
And we will be there to help them navigate through these hard times.
When we talk about Nadeem flows on the bottom of the left side of the slide.
It is our expectation that it will keep a positive trend.
Again, it's hard to say if the pace of growth will diminish or not going forward upped. Your now we haven't seen in major change in our net inflows except for few clients with large equity custody, but we don't necessarily causing any impact on revenue.
For example.
Oh, the clients with more than one didn't have nice of equity custody in our better for them.
Today represent in aggregate less than 10% of our total cause custody.
That generates.
Less than <unk>, 0.1% of total revenue.
So these lead us to the take rate.
If you see suffer from redemptions from large equity positions that do not provide revenue like for example, I just gave.
Our take rate should go up.
Just analyzing these factor.
If there is a shift in mix towards fixed income which is possible.
It will depend on.
Despite equities have been in general a higher take rates then fixed income.
The later has a much bigger market lower churn and usually upfront fee payments.
Again under these uncertainties scenario, we're facing it's too early to tell how our take rate is going to behaving twin twin.
Although we understand.
This is a different drivers.
Just to try to give you some additional color we highlighted in the next is like what happened in our keep yards in that's crisis in Brazil.
Moving to.
Slide 18.
Speaking here three episodes in Brazil.
2014 elections.
Joe asked me they in 2017 and the truckers strike in 2018, you know down despite the drop in the equity market, our agency and adding full performed well.
Any portfolio manager understands a force.
I do not have to say that best performance is not a guarantee of future performance.
But I guess that the point I'm trying to make it here is the phone.
Number one.
We need to be nimble agile adaptable and learn quickly from the crisis.
Number two.
Our business tends to be less affected by the crisis then other businesses.
Instead east largely digital and less dependent on logistics.
Number three.
We still see a massive long term opportunity in front of us.
Again with 90% of the 8.63 nights addressable markets.
Do you concentrated mainly in five banks.
And number for the competitive environment remains unchanged.
We believe our platform its position better than ever to overcome described this and we have the opportunity one more time to differentiate ourselves from the Cummins.
Remember.
We are focused on investments.
With an unique I say network.
Goes to our customers.
He is a huge difference in our view, especially in times like this.
Moving to slide 19.
You can see adequately I mean presented in the beginning at speed strong cash position, especially after the IPO.
And our extended that matured you.
We have more than 7 billion highs in cash and only point 4 billion agile that's maturing into when swing.
From a cash point of view, we are not comfortable position.
And situation to navigate through described.
Regarding our risk metrics, we follow.
Bailey, our var and stress test among other metrics and both have behaved well despite increasing volatility.
We do hedge our positions to protect our book of flows as market makers.
And just to give you assess.
As of yesterday, our board one day, 95% of confidence representing two point.
Zero, 8% of or network.
And our stress test represented points, 79% of our network all well below the targets we have established.
Company.
Now, let's move to my last slide and talk about some opportunity we understand described bring to us as any other correct.
So maybe it was like 20.
It is our belief that every cry this is an opportunity to get closer to customers.
And that is exactly what we had been doing.
These context, we benefit from our financial education, DNA and digital content platform.
Since the outbreak of the Corona virus crisis, our strategies research analyst and digital Influencers have intensified the publishing of reports and broadcasting of views.
We have been increasing the touch points with our clients.
Sure Dave.
More than 30 reports and lives were posted above the Craig with more than 600000 views. We also published daily market open and close lives meetings in both using not only the main social media channels, but also our proprietary investment portal information.
Our own TV network and execute it does that sound.
That's shown in the charts on the right.
The number of interactions in views increased sharply this month.
Reflecting our communication efforts.
Through the first half of March we already have nearly the same level of traffic on our research platform I think the entire month old February you for monies traffic also remains high.
With more than 5 million visitors through March 13th.
Again indication using our DNA and we believe information skied during periods like the one we're going through right now.
Lastly.
I've been asked me mansion.
The total addressable markets remains huge our partnership keeps folks on the long term we.
We believe the company is stronger than ever to go through the crisis and if necessary we will adapt quickly.
On behalf of ex <unk> I'd like to thank you all for your interest.
And now we will open the call for the Q any session. Thank very much.
Thank you, we'll now be conducting a question answer session. If you like to ask a question. Please press star one on your telephone keypad, a confirmation told when Kate Your line is in the question Q you may perhaps start to if you would like to rubric question from the Q4 participants using speaker equipment, and maybe necessary to pick up your handset.
Before passing the start he's one of them people will be pulled question.
Our first question is from Tito Labarta Goldman Sachs. Please proceed with your question.
Hi, Good evening, everyone. Thank you for the call maybe thorough presentation about couple of questions you get out I guess first on your E C and I understand it's difficult to predict it tends to market movement or the impact just trying to get a sense. If we look in the fourth quarter. You know you go back filling up around 11.
Then I estimate that market appreciation benefited you see roughly 7%.
I don't know in terms of maybe that's it makes the or just trying to understand how the market movement.
Actually impact you see like if the market for emphasis and.
How sensitive will you see beat to that and it's not just equity, but but other products you have Andre you see so you can maybe help us understand a little bit from that perspective, and then my second question. Bruno you you mentioned that they did think that take rate. It would mean you get anything material changes in the say great I understand.
Quarterly basis, and given the current market scenario is very difficult to predict [noise].
Doing IPO you were saying that it takes me could fall maybe closer to 1%. So yeah do you think it stays there and longer term perspective. This 1.2 and we saw this quarter you do think that's sustainable now did something change.
Yes.
You are you, saying it could be close it's it's a 1% and just to understand how you think about that from a long. It's in perspective, you know we're moving in the short term volatility. Thank you.
[noise], Okay. Good thing.
Thanks for the questions.
So going to question number one or the AMC.
As we said during the IPO basically we have three main parts of breakdown you see equities fixed income and fun sending funds. We we have all kind of funds a indebt third.
A third part a and I mean, they it varies from time to time.
But.
You can I assume that you know those three our domain. The main parts of course with the market dropped all the equity part and and.
Last smaller parts of the funds.
They tend to go down as well in terms of what you see.
But as I, just I setting the call into presentation not necessarily these dropdowns.
We'll have an impact in revenue, especially if we're talking about a portion of the.
Equity and you see that does not contribute in around it that way to a retail revenues we do have.
We are one of the main players in India stock loan markets. So we do have a large portion of equity crispin into markets.
And Oh, that's a large portion or does not necessarily a brief and retail revenue. So that's why it's hard to forecast the take rates going to your second question, because it's a function of retaining revenues divided by of course D.
Do you see and maybe if do you see goes down.
Losing part of the custody that this not contributed to revenue than the take rate should go up by these facts isolated as I said in the presentation.
I'm going to do a 1.2 going down to 1% or hired and 1.2.
It's the same thing that we we told you.
R&D at the IPO, a it's hard to forecast.
We we believed that there is not a price pressure a in in terms of of the funds and everything else in the markets considering that you already have very sad.
For example in zero brokerage fees for equities at the year one of our brands.
So we don't see that it's going to be more a function of that type of revenue that comes in and how do you see behaves.
Regarding you know does the market price [laughter] of all to secure said we have in our in our you see so yeah. That's that's basically it that I'm sorry, I didn't know if I answer your question, but it's really hard to too.
Forecast those two variables.
But I wouldn't expect you know the replay RAF and I'm, putting on different way I wouldn't expect the re ti revenue being impacted a in a strong way and because of a redemption of H.C. because of market market prices.
Yes, Thanks and that is very helpful. And then then the difficulty in forecasting it maybe just one follow up though <unk> moving I think they've been the institutional revenues go up so a big increase there maybe if you can help with that those into perspective also into the market movements I think how sensitive would that be did its is movements in the market have you could make.
300 million this quarter up 173 million last quarter. So I'm much of that benefited from the market and Conversely, I was going to be impacted in a negative scenario.
Okay, Yeah, basically once a day that the the the market appreciation that we had in fourth quarter.
Represented roughly more than 40% of D.A.C. growth. So it's not that you take the for all 9 billion highs of assets under custody as of December and you take up the 350 as of September 19, and it's about 20 billion per month as I said.
The pace you teach closer to 10 to 11 billion of net new money per month, and the rest is market appreciation.
What I can tell you use he's the following up to now we don't know how it's going to be going forward because of the crisis, but up to now we haven't seen any major impact in the net new money coming in.
So so far our.
Our platform has been healthy just as last year in terms of net new money.
Having said that we might have some as I said some equity custody.
We draw, but not necessarily with an impact in Enrique revenues.
Thanks, being again, sorry, I don't think that was my exact question, though I was asking why I'm <unk> due to seasonal revenues. So a big increase there was a over 300 million this quarter compared to when 73 last quarters. So just wondering and they sushi no revenues in the kind of okay that market movements in thanks.
Okay, sorry about that I I mean, beginning of the question.
Yeah, the institutional this additional Bart.
It's basically a function of volume in into market. So as you know we are as I said, we are investing outside Brazil.
I mentioned that the hiring of.
Another partner Fabiani should that came to join US also a into breezy year markets.
We have to our you know institutional sales services. We are done one of the main players in the market as well so be grieving volume help that.
We we have basically a little bit more than 60% of institutional revenue come in Oh from Brazil.
A little bit less than 40 from outside but both markets performed really well in 2019, it's a function of volume in.
Basically.
Okay.
So.
Our next question is from Mariana today, though you B.S. Please proceed with your question.
Hi, thank him for the.
Marianna Your line is now a life.
If your line is muted on your end you anytime you do.
Our next question is from Marcello Tele Credit Suisse. Please proceed with your question.
Hi, Hello, Hello, everyone.
Thanks for afford to disclosure regarding <unk> record our bars in fact, that's that's very helpful or in your presentation.
I have a couple of questions. The first one you know Kindle tell us I mean, how much of your revenues a war related to.
Performance fees on your asset management platform, including both you know your own and third party funds and you know how how do you think that should play out.
Into 2002, I think would that be a you know I'd be tractor or two youre a revenue to a revenue yield.
And.
And my other question it no regarding.
The growth and they see I know you touch you know.
Those points in their presentation on the market is down close to 40%.
You know in.
Year to date.
And you know it looks like Youre equity participation you know theres a revenues is close to 230%.
<unk> retail revenues at least so I do think <unk> I know you may should you know there's a big portion for equity apart doesn't really generate you know a lot of revenue, but help me reconcile that affected the you know your brokerage side, you know represents close to 30%.
If youre, a retail revenues and even the decline that we've seen the market I mean, she louis back or perhaps a bigger a bigger impact on your revenue stream not only you see but on the revenues as well. Thank you.
Yeah.
Okay. My thank you the the first question about the performance fee.
Yeah. The he played an important role in the fourth quarter of 19.
We do not disclose exactly the number but yeah as you know they reach these seasonality in our business regarding the performance fees that are charged on on the middle of the year in June and in December.
And because of the market appreciation, we had last year.
Perform when she was ER ratified in that sense going forward.
Of course looking at the markets right now we beat your data we have a the performance fees will diminish significantly a we don't know how it's going to be in June neither in December.
But.
Having said that I mean that the business has other ways to compensate itself. That's a that that's that's the beauty of our you know our self reinforcing a echo system in our business. They are all interconnected somehow and because we are focused on investments the important thing to bear in mind disease.
<unk> people will have to invest in something right.
So either a government bond or equity funds or directly in equities or fixed income securities or reach but they will have to investing something and it's a function of the price of the secured and the frequency of of the trading and Andy investments made in all platform.
So up to now this year when the crises.
Ted what we noticed is the forming a the price of course, you know we'd say, it's now as you said the stock markets are around 40% down from from last year, but the frequency has been.
Very high.
There are two or two last year. So it's early to tell how it's going to behave.
Looking forward Yeah, we could have a short term impact of course, we're not immune to surprise I think nobody or almost nobody is but what we try to you know give a sense here is more a long term view a we we believe I mean that any prices. These once he's going to pass we cannot predict <unk> how long.
Just one I'll ask but it's going to pass and not necessarily a you know they deem that he's gonna be.
As hard at some I think looking at the drop in the stock market because as I said the ecosystem that we have in our business model can compensate itself or somehow.
And the your second question about the D D H C and D by the impact of of the the equity that's I mean, I think I kind of.
Answered that you know because of.
The equity as I said, the equity going down the age of equity going down is that these spark that goes down or leaves the platform is more related to the revenue.
Then the take rates will go up and not necessarily we're going to lose radnor because of that but of course at a lower price in the market for too long we.
We dealt you know frequent sub tradings and and so forth, Indiana part you can have an impact there, but then you compensate in other parts of the business because people again, we'll have to investing in something right.
That's very helpful.
Well on the just want one extra question regardless of technology.
Your systems are doing do you know this time of volatility in the market. A you know it seems that the you know xb. According to depress had experienced you know a lot of several.
Comes off a speed that people not to be able to to trade or maybe you know things taken is lower.
In the platform, we've heard that from some you know I assays as well or do you. How do you about the current state Mccarthy Potter form or do you think you may have to invest more or to be able to you know to solve some of the or does bottlenecks are down the road or.
Let me just to hear your thoughts there. Thank you.
Okay, great. So yeah, the the thought to form a what I can tell you if that the platform he's working just fine.
We have a I T team all over it but.
But just bear in mind that X P is by far the leader of the markets right. So if we talk about retail in bovis by in equities.
We have around 50% of watch it sure. If we go to futures that number goes up to 60%.
So we have the volume of the market now a imagined that you know increasing by a number of five for example of people trying to logging at the same time of course, you can have a one or audio problem in terms of internment camps into platform, but all of that that we had a on the Wednesday.
When Brazil's steep goals for two and a half days a into markets was you know melting down outside Brazil, and when it opened everybody you know just jumped team at the same time, so reached its normal in any place a you're gonna have or some kind of some people will have a problem, but we kept our market share.
Yeah, Hi, stable for wall times, and and nowadays I mean, it platforms working just fine no. We don't have a problem in terms of the platform and the and you can check I mean, the best way that I recommend you to check that he's just go and look at the market share in in all kind of markets that we trade.
In Brazil.
Thank you very much.
As a reminder, we are now conducting a question answer session. If you like to ask your question. Please press star one and telephone keypad for participants using speaker equipment, and maybe not sort of pick up a handset before passing the starkey one moment. Please all we pull for questions.
Our next question is from Marianna today, though you'd be a please proceed with your question.
Hi, good nice nice sorry, I like the connections for Oh question, you mentioned earlier that Oh on inflows are not seem a major impact from kind of virus, a once understand a little bit better on a in terms of spread of makes me feel right.
Some changes and a in case of redemptions not only a fundamental thunder, but also from maybe the patient products. Thank you.
Okay. Thank you my Deanna Oh, yeah. The flows as I said I mean, so far it's been a business as usual.
We have a in dollar DNA are these the education business right the financial education business and a in times like these <unk> disease or a more important than ever for all all the Brazilian one one order.
One other I point to make here is that different than otherwise is that we have in each crazy somehow unique in itself.
And this one is a different ones for everybody all over the world, but one thing in Brazil that is different than other cries and he's the level of interest rates that we have so Brazil, where we're going to know tomorrow, but probably interest rates are going to be below 4%. We never had that need to doesn't mean age when we had the subprime strategies I bleeding.
Just rates were above a 14% something like that so to no bring decision to go to fixed income and by government bonds. Now is a different situation of course, there is a lot of volatility in the market. They can impact net inflows and decision film.
Investors how to invest but one thing we're very confident about that all platform keeps you know providing a better value propositions for to clients and as I said in the presentation times like these we stepping we'd go Oh, we go after our clients we expose our.
<unk> Weve, our financial education, DNA exactly two or you don't track in times of uncertainty what people need is information and we have that to provide them. So I believe that are looking in a in a short term view and most importantly, no long term view.
You position XP as a player in the market that you know really is there to have declined for the long term and that of course it helps the net inflow as well.
So.
It's it's hard to tell looking forward because again nobody knows what's going to happen with describe this.
But so far what it can Saudi is based on what we had seen on the babies.
So far then then adding flows or they are they being you know keeping the same pace.
Except for some large athlete custody.
And I made this point just so everybody can be aware that we might you know have a drop in assets under custody because of these are some small well it's more clients to clients I mean, with large Africa states, but that does not mean that will impact our.
Oh, where revenue because those large custody they not necessarily contribute to the revenue as odder equities and fixed income in Hodgkin studies that we have in our pets.
Thank you.
As a reminder, we're now can that go to your question answer session. If you like that they question. Please press star one on your telephone keypad for participants either degree equipment, and maybe not sort of pick up your handset before because of the Turkey. One another reason why we pull for questions.
There are no further questions that time, and I would like to pass the call back over to Carlos bizarre for closing comments.
Well, one small who'd like to thank you all corporate spending this conference call for additional questions. Please contact our Investor Relations Department or <unk>.
IR.
At X <unk> local look yeah.
Okay and everybody. Thank you.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.