Q3 2020 Xp Inc Earnings Call
And I just left margin between 18% as you can see the first nine months of 2020. We have delivered Revenue growth of 66% year-over-year reaching 6.1 billion b r l and and adjusted net margin of 26.9% with an adjustment off of 1.6 billion b r l is number in nine months is 44% higher than the entire year of 2098 and we just one more water to go. We have also expanded our ecosystem through m&a and investments in technology package. We said during our ideal Roadshow as well.
Look at our growth strategy is important to understand that everything happens through our technical death one hundred percent focused on life experience. We always say we are clients sent Sentra company and in by that uh to really do everything on behalf of our clients. That's why you've signed the video. We took Rico online brokerage fees to zero and XP reduced by 25% that was not Market pressure. Nothing like that. We just because of the scale we have because other products we are adding into our ecosystem any time we are able to we are going to give back to our clients that we believe will give back to us and these creates a very powerful ecosystem and willing to wage
and for the long term
couple of years ago, we initiated a process of investing in a model that integrates and Agility with strategic utilizing data analysis for decision-making and resulting in Greater scalability in the future. You're going to talk about that further down the stairs impatient with Thiago Motta because I think that during our previews quarterly results. We have not highlighted as we could be dead transformation going on a platform that I think it's worth showing to investors in the market engine.
Also, we have started just started to offer some banking products in service. So when we when we look at the banking wholesale Bank, here's a lot of those products they are able to be offered because of the banking licence credit card. For example cash Solutions effects in different scale than we used to do the S&P Market corporate and etcetera and you're just getting started there. It's more than that. We are adding to our ecosystem.
And finally and we talk about distribution channels and especially the is a network. We have decentralized our cash in order to wage increase the opportunity. The market is offering us as you all know the banks in terms of things. They are, you know, huge agenda of cost reduction month and by that closing Branch, it's a must especially after the pandemic where a lot of the common things clients had to become more jobs.
And the realize that they don't need.
As many brain cells they have 6 day and a great opportunity for the is a profession Google and we as leaders in that market. We are investing accelerating the pace of investment that segment and you can see that it's already generating good results for us as an example. We had on a monthly basis. Ninety miles is a Drive New I face per month of 277 and only in October we had more than five hundred coming to our platform that happens organically grew up existing. I say not Network.
And that's the record number ever in our history. So we are very positive about the momentum not only because of our competitors agenda of cost reduction a closing ranks, but also because of the low interest rates that we have in Brazil and we believe that it's time to invest more and we are off the benefits of those Investments down in the long term.
Now moving to our next slide when we talk about the the tdi's in financials. I will go a little bit faster here as assets. You already saw the number five hundred sixty-three billion all time high in our company. We had a huge very close the third quarter. We had this extraordinary enclosed that without these extraordinary influence. We still have a very healthy pace of net inflows on a quarterback thirty-nine billion compared to thirty six in the first quarter we go. So again, despite all these Grill we still have a very low market share compared to the incumbents and we believe that's a process that will continue with the next Waters in two years when we look at active clients. It's worth highlighting here dead.
That to our direct channel to direct including Rico clear and exclude sell the grill here today, ma'am direct has been responsible for more than 85% of the growth of the number of clients with the special highlights for two-year brand, but all the brands are growing really dead.
No moving, so next slide.
The darts is the same story. We told less water. The numbers have symbolized in a very high Plateau off of 2.7 million trades per day. And when we look at the market share Equity retail, we can't our leadership but not only them but we are able to please our market share in uh, a very favorable market for you, Merce to the stock market in Brazil and in terms of South Africa still, we now are by far number one with 28% percent of market share in Africa and our MPS around 70,000 keeping the highest of the industry so far.
Here I would like to highlight the the shift to higher-yielding assets. We called the application process, but it's more than only Equity version you're talking about Brazil that is highly concentrated in fixed income because of the height historical interest rates in our country from these sheets away from Sixteen complete to higher-yielding assets. It's a process that will take a long time in our belief. We can see here that the growth of 16th. And then we look at 2,000 December 2017 in compared to September 2026. Income is the lowest grow 63% still the higher absolute amount of more than two trillion. Yes.
Let me look at 120% 127 % alternative 61% but from a very low wage. I would like to highlight markets alternative because we believe they have huge potential to grow in the Club Quarters years. When you look at weeds, you're talking about one hundred forty five billion a trillion as of September. That's a fraction of the listed with Market in the United States. For example, and we were like piling in these markets. I remember when we were doing uh life and no Institutional Investor would invest in listed refund, but we said no we have to go and educate those institutional investors dead.
Cuz if this Market gets liquidity the secondary trading it will be another option of investment for portfolio managers in a market where hopefully managing members. You don't have that many options because the under development of the Brazilian Capital Market, and now when we look at to any twin a lot of those institutional money managers, they have bought shares in the secondary trading and we are by far number one in that month. When we look at Alternatives international funds we have table what about it? We have reached an AC obtained even has out of nothing A couple of years ago, but it's still it's, you know, not a big Market compared to the potential especially after we think about diversification of asset allocation for Brazilians in our platform has more than 60 funds offered and grown drive it after the same thing we dead.
With the first one to democratize that type of investment for retail qualified investors adding private Equity Firm of our own Asset Management wage raised 1.3.
You didn't have more than $5,000 retail investors. Now one month ago. We did the same thing for other rather after you found manager. You'd beat after that raising the telephone industry almost eight hundred million among retail investors again with more than 5,000 clients. So we believe we're in beginning of this month open up, you know new options of investment for retail investors and these movements shifting away from 16 into higher-yielding assets Thursday. We have a long journey ahead of them. Just talk a little bit about the patient industry. It's worth highlighting that back in 2019. We started our own insurance company, but we find it a little bit more than 1 year ago. And it's a very new company has ten billion approximately dead.
Of you see as of September, which is a you know from zero to ten billion in a little bit more than one year. It's a great growth and achievement spec. You hear me? Look at the market share of not enforce. So here today. Our insurance company is able to get to win percent of them in terms of market share if we look at the transfer market because it's like 401K. We have two types of you. You have the Investments that you made and then you have the transfer of service. So what insurance company to another but he can be so that you can take your 401k from one platform to the other and that's a Market of Choice some zero which some players gain others lose in that.
Our insurance company has gained 55% of the market share. So for every 100,000. Yeah, I leave one platform 55 guys goes to our insurance company, but we still have nothing in terms of total market share. That's a fact. We have one person. The largest player has 30% of total assets in the customer in that market. It's a market that has a different pace of growth investment, but it's a very strategic Market that we tend to keep your own in the phone years as well. So just to highlight, uh new markets that we just entered. In fact, we expect to be alone in the seat.
No bullying to the financials. I just signed release record total gross revenue 2.2 billion. Yes in the third-place representing a 55% growth year-over-year very strong performance in retail retail representing more than three-fourths of our total revenue off and as you can see the Nexus line the retail Revenue year-over-year represented 80% of the same features and financial products, which is kind of linked to the African features Market itself, and also fixing them.
let me look at
articulate
the third water last twelve months 1.2 pretty much stable with what we had in the third quarter last year. He's also shows a lack of our business model and our Revenue stream as we keep adding new products. We are going to have different weeks from order to wage order. It's hard to predict and the take-away can vary also from quarter-to-quarter, but at the end of the day as the echo system keeps dropping adding products, we expect these Revenue growth to be even more resilient than in the past.
so moving to the Nexus line
I'm speeding up so we can can go for
Mothra into any institutional Revenue a group of thirty-eight percent. That's a more mature Market adding new institutional investors in our platform as we keep them during the independent Asset Management industry, but it's a more mature market. So we should expect a lower group compared to the retail more an issue or Services last month. We had a growth of 18% year-over-year quarter-over-quarter was a huge world because on the second floor of this year. We had the pandemic and the market window, but I would like to highlight grill Africa to Marcus business. We participated in 14 Deals this quarter compared to check for deals.
One year ago and keep drawing our representativeness in the Apple business as we did in the fixed-income business in the past in the Reeds. As I said before we were the Pioneers in that market and with the market we will open a lot of those funds Louise opportunities to improve airport for you. They are already listed with repeated. So a lot of followers going to the market, which is very healthy to develop the real estate business in religion.
The cost and structure the carbs in the sg&a as we look at our car. There is a slight margin compression compared to what can I do to product mix and also the investment TV is a network. I mentioned in the opening remarks when we look at the operating expenses, excluding the share-based compensation. We can see the operating Mavericks in our platform going from 35.5% in the third quarter of last year as a percentage of revenues to 31.9% as a third water. This year's this year. We had other operating income that reduces get back in fact in a positive way because of the incentives that we get from on a friendly basis dead.
from Beauty and
Also some Partners, uh incentives to have access to our platform the main one being diesel. So I'm moving to the adjusted net margin.
Or just the net income a rapid one goes to the second quarter, which was a very strong quarter as well 570 million of dead American without the training that we had the first one again showing the resilience of our business model and the adjusted net margin off a very strong base 27.1% in your third water much higher than our top range of long-term guidance of a 22%
No.
One more here. We we showing the video the ESG the awards that we have the SGS just want to highlight here Thursday. We did this financial education Journey for women. It's basically connecting women into our education platform to empower women off to get education in in fixing whatever they they are in to again linking to our DNA of Education since the beginning of our company. Also in terms of the the awards. We we are very honored especially the North American customer-centricity Awards 2012 in the category of best management customer experience that's really honor for us to get these Awards and that's the reason for calling.
our existence our clients
and now moving forward to before I passed to travel Mazda. The reason we brought here this Global strategy through technology is as I said in the beginning, I think that
We have a revolution in our company. We have had a revelation our company the last couple of years that I don't know if it's really clear for them. So I think it's worthwhile, uh explaining a little bit more what we have been doing why we are doing this the huge total address that we have the financial industry delay only mentioned in his letter to shareholders that in the last 12 months or drugs. Revenue was dead. Yes compared to the total was revenue of 2018 Leslie two years ago of 3.2 billion has almost 150% drop in less than two years in the total was left, but when we think about
Financial
Total addressable market in terms of Revenue. We are talking probably more than five hundred billion has so we have a teeny market share loss. You're not present in all verticals of the system. But if we succeed to do everything through our Tech enable platform with a big dog having a marginal cost tending to zero as we scale our business model. I think we are going to be in the right direction. So Master, please note we see when you would be nice for you to present yourself. I don't know if all investors know you are added so it would be great if you talk a little bit about yourself. Okay? Thank you. Hello, everyone good easy at the information. I would like to briefly into this myself as is the first time I speaking to you guys. You see that I am.
Background from other ciccio's. I have a bachelor in in Business Administration from inspector. And then the 8th Rome investing and ionosphere facial folder. I have started my career as a trigger in a headphone mean high frequency trading and I join XP six years ago. I have working different business segments from Equity retail cryptocurrency trading platform through the bulb and a half years ago. Did any invited me to leave the information of the company and should leave the technology
So as you can see all these lights we start huge transformation the company at the beginning of 2018. We decided it was time to change our organizational model and or mindset from Financial organization to acknowledge company. We started by Reardon izing or technology in conjunction with narratives or both of Business and Technology people working together side by side change the phone of waterfall model to an environmental biology long as you could see I I myself I am a busy guy and what we have been doing here is to really good technology and business together. You may see that we have grown from less than three hundred people two to two-and-a-half years ago to about a thousand people today and
Sloane fan squats 281 spots today, we have hired people with very different from like or traditional employees from companies like Google or positions of data and Engineering. However, we expect lower investment growth rates for the next year's because we are capturing games of scale. We expect to hire about 250 people over the next couple of years, of course here. I'm considering only the business that are already on the pipeline like Gees. Account credit card module and credit back the information before
You move to the next slide.
So we spend the last almost three years building attack enabled platform that allows us to provide financial and non-financial service to our clients through Thursday. We are able to access different segments and expand or 10 with very low marginal costs by leveraging our Tech platform. We have been able to expand to other segments such as education and crime in the next thing the last year's most of the building wise it's too early stage, but we expect them to make sure in the next couple of years or go for the next year's. It should it should be recognized as the best technology company in the world wage and use our platform other financial statements such as we think that
You live shows only a few numbers one case. The numbers are like for XTF and when we have the signal bulb, what did you gather the really incredible things as you can see or any PS4 or x 75 the Raging Apple Store it was for when I saw I saw the report at 7, but it's changed every day. But the highest Financial settlement in the financial service analyst customer engagement most optimal as you can see in the frequent that people access or apps. We are creating a powerful financially I could system to our customers in which we have been more service and products every month.
And you may choose why would have been doing such a huge piece of information in the company first by beauty of tax in the platform. We are able to instill or operation is very low marginal cost before tax system. We are able to gather a lot of data and use them to improve them to Market your platform to four times faster than other companies about this black screen as Blue Nation in the long run or product is going to be the experience new profile and that's why you have them in a customer Centric approach with design and data. What is together to Google personal experience?
You all can be sure we are ready for the future.
Thank you.
To bikini I'd like just to add as you can see our I mean, I've been next week since 2012 the profile of our employees has changed a lot as my explain.
What hasn't changed is?
Our culture and our driver to go after what we believe to be the right side by side with the car. So that's something that we started the company and started this company 2001 believing that by doing the right thing for the clients and being side by side with deadlines. We bailed shortcuts and uh hard work a lot of hard work and a big green you would get there. We we haven't gotten anywhere yet. I mean we would have achieved a lot but when we look at the size of the opportunity in the total addressable Market of the whole financial industry and Beyond the financial news, cuz we have known financial service rep. It said well, we think it's a very long journey ahead of us IPO. It was important step.
That journey and now I mean we are here with the accountability one year almost a year after the the IPO being a listed company. Thank you all the support that we have gotten from all investors that trust in our business model in ourselves. So thank you very much. And now we open I don't know how it's going to work laptop. You tell me it's going to be open or somebody to hand. Thank you, Thank you. So I'd like to ask about the the participants that want to raise any questions to raise their hand and I'm going to allow them to to make the question here. I saw some questions already. I was sent you to the Q&A area as well. But please feel free also to raise a hand here instead of my I myself making the questions or contributing. So this time we're going to be dead.
Doing something different here. So the first question comes from people about them.
Good evening. Can you hear me? Okay. Yes. I thank you everyone for the life of the growth that you talking about the scalability the mix and access, you know can improve um and just going back to the initial sort of my guide to get you a job at the IPO the 18th 22% Margin. Is that still realistic it just given everything that you're saying. I mean everything's going well and I know it's a long-term guidance and tax rate single up and a lot of moving Parts but you know either what would it take for that to actually become reality or or is it really more upside and like the results that we're seeing today are really maybe more realistic of the growth potential that you're describing.
Thank you. Thank you very much. And before we go.
Okay.
No, I mean, I think I think there is more upside. Okay, we we haven't revived the guy because right now we are in the middle of the process of our budget for next year in our review of long-term numbers internal. So I finished that we are going to decide what to do with that long-term guidance. But when we do that long-term guidance, we hadn't factored e totally the IPO structure helps to reduce the effects of that straight at the end of the day, but most importantly what we had in mind is exactly what mastering explains here today. We change the company and we do everything through technology and and to have a I mean our investment in technology if you look at our numbers in terms of people
You're hiring more than one thousand people most of them technology. We we entered we we moved from Joe's Crab Shack in our back its expense that we have in our financial. So basically our investment is NOT capitalized. We also talked about that matter. Most of it goes directly into our financials, but at the end of the day, we are talking about investment because think about it on a car business. For example, we have a lot of people working in describe everything through technology. We designed connected business people together that number of people growing in the future probably.
Some of those people will do other things in the company because when the business matures that's why Technologies for right to be able to have the scale and to get a lower wage crazy marginal cost to zero in the best scenario. The reason we gave that eighteen to twenty-two percent in the long term that our vision during the idea of what month look at the beginning there is a huge total addressable Market. There are a lot of markets we are not in yet and we've probably will start new businesses in our platform and and and they're it's hard to predict. It's hard to forecast how much we are going to have to invest and go too expensive than in the short-term pressure off our SUV in our margins. So that's why we did that line having said that we have not yet revived want to wait at least dead.
End of this year as I said to revise their whole long-term Financial of our our company, but probably there is room for upside there.
Great, thanks been very helpful. If I could just have one follow-up on that, you know, so in terms of the margins, I guess do you worry about having to invest more just giving the growth potential right? I mean it really the focus here should be on the revenue growth and and even with the asset make maybe potentially benefiting revealed a little bit right? I think the focus will be wage growth and you could suffer some margin pressure in the short term but given the growth potential you have that's really where the focus is. Is that there that's that's correct. When when we decided to reach the company last year off you probably would you know all kind of investors the market. I mean, it's it's it's when you become a list of the company, they took the bonus is that you can connect with great investors globally and they can help you become more intelligent and and have success in New Jersey.
your business the on
For those that allow the short-term Focus to drive the car. That's not us. We think as long as as we are and we we have to think about the opportunity of this, Let's only think about it. So if we have to invest in the short-term to you know have like compression of margin, but we believe it's on the benefit of the long term we're going to do it may look what we did with the online brokerage shoes. We didn't have some investors have to have it done then same thing to do if we are going to do it better do sooner than later and then have the clients recognize the relationship for the long term that's going to turn into benefits off for us.
What we do in terms of revenues in the short-term. We did the same thing with clear back in 2018. That's the kind of mindset that we have. So you are off 100% bright team what you just mentioned you think you guys appreciate it. Thank you. Thank you.
Next question comes from Thomas.
Hi, everyone. Good night good evening, and and very quickly on my side. We notice that prepaid expenses jump at almost 1 billion this this Thursday and just why don't you have a a sense of how this? Uh, how much is there still to come from from the deliveries is connected to the first edition of ifm. How much is this still more to come for next quarter? And how should we see this impacting cogs going forward in the next quarter's how how is the the account is prepaid expense to still time. If you could give us a bit more color on that. Thanks sure tonight. Thank you. So we cannot we cannot give you numbers for off the phone orders. How much did you have to come? That number has to do mostly with the investment in the is a network a nation the beginning of the person dead.
We believe we have a unique position in terms of different variables that justify that time of events in terms of how we recognize that in our females in our financials is based on on the contract that we have with very center of attention with that. So most of it they're talking about ten years if we we take 1 billion ten years is going to be 100 million wage. That's basically
Okay, perfect. Thank you very much.
next question comes from Christian Bolo
Hey, good morning. Good morning. Good afternoon. Good evening. How are you a question? Because I do think the operational performance was was was pretty strong. But but but you know, I kind of like to get some more color on the balance. She goes, I mean, it's up 126% year-over-year. I think open was 50% quarter-over-quarter to 88 billion days. I don't know what drove that like. How does that float? You know, I know we've had this, the past but but it seems to be a pretty a pretty significant movement quarter and and maybe the bigger question of a time really is like is there a I mean, what is the maximum size for your balance sheet you can comfortable to clean the balance sheet and at some point there's the ability to go to banish has some constraints on the actual business.
No, great. Great. Yeah, the the balance sheet blue a lot of water but most of the growth it's based on government off on on the in recalls on the assets and liabilities related sites. So that that's the kind of a tricky because it seems you see if you don't understand the balance sheet. You suck at it and say okay you're leveraging the the company that's not it because uh, it's like arbitrary most of its arbitrate opportunity in the 16 conditions related to age you to go in our asset, uh part of the balance sheet you're going to see that most of the number is related to government bonds and and and then Thursday and it's not a huge one because we're talking about a very liquid Market but we are we have a strong presence in that market. Yep.
Read this arbitrary in government bonds. And and uh, it's something that we do so from water to water. You can see a movement that the picture of the third water off that balance sheet with $88 billion in total. I'm not mistaken here and then you can gather production of Television to the next month for example home. So it doesn't mean that we are leveraging the company or taking more risk that's important too to say the the measure that we look in terms of wage basically the the farm in the stress test. And for example, we take our net worth of the group experience total approximately a little bit more than 8.5 billion highs and the limit for our one of one day with 95% of continents. It's dead.
this point
As of September, we have two basis points and the stress test that in our numbers. The maximum amount of 200 million has in the worst case scenario. We had uh, a maximum of fifty million has as of the number of September. So we we had all the positions that we have we look at the whole thing on a Consolidated basis in the group of the balance sheet is tricky because you're going to see some orders on the road the balance sheet shrinking off the other way around. It doesn't mean that you know, we are paying this or that in terms of in terms of that. We have excluding the month approximately 1.2 billion has on financial that to bond issue in the Brazilian Market in one that with FC Basel.
Okay, and one of the bones material in September and we just stay off four hundred million half. So basically reduced our dress with that on that perspective. Then you have the bank the bank in diesel is you're going to see in our liability side the deposits and the structure notes financing lateralized loan portfolio on the asset part of the bank, but that's when we look at the whole group. It's not that much but it's wrong our collateralized loan portfolio took a close to 1.5 billion Iraq.
Great. Thank you. Maybe just a follow-up question to Tiago this time. If I take a question, thanks for the presentation. You know, maybe just a simple terms. How do you how would you describe the competitive advantage and technology that she has relative to the traditional Banks and even the emergence in Texas? Right? Like what is it? Why is it sustainable over time? And then the second part of the question is it was like Bruno is that you know tighten the purse strings here and cost for Thursday. So you have to be more discipline next year, but I didn't I didn't project you would like to work on going forward or if warranty issue constraints are they sort of sort of big projects you would like to work on with the team and then what would they be maybe over the next couple of years?
Okay, let me check the first part of that person. I would say that as you mentioned how we compare like to the the inconvenience like the the D bank Thursday. We have a completely new technology environment. So we don't have Legacy systems. We don't have any Mainframe here, So we are like a eighty to ninety percent cloud-based. We use cutting-edge Technologies. So all all these Technologies make us to have a much faster time-to-market and a much better product because to give you an example as soon as I mentioned wage.
Are like we lost?
Are equipped car a few months ago it show data but uh on the street, it's because six months from the construction, like I'm using the product and that's how the tax platform enables us like to to have an advantage and decide that the quality of the product that we will leave a much better like a uh, if you look some of the banks you cannot like not even like reset your like fast food for the credit card. You have to go like to the bank. The bank is Kelly and that's the same like Imaging so word. So that's how we differentiate ourselves through technology.
And and and go to your second question question about opportunity here first. Let me start saying that in terms of cost-conscious. I mean, I'm also somatic in terms of costs. So we're investing a lot. We believe we should do it but the opportunity I had a voice we got to think in the long term as I said, but we are also closed Fanatics near the company everything that we have as an expense should be just five. We have a short and long-term View and in terms of opportunities. I think the main opportunity that we have is is with our existing plan we wage you keep saying about, you know, adding more products in banking services so we can cut completely the link.
Our clients needs to be that's probably going to take a while because it's a process in the basement, Banks. They are the banking. It's not that the technology. It's not weird and so forth. Uh, but we believe that our mindset the way the company is structured its not explained through technology in business people altogether designers, everything folks on the influence journey of the client can make this project a lot smoother and better for the clients and when you think about the existing clients, we using data analytics that we are accelerating but we still got a long way to go as well. We can be much more in terms of the experience the product offer or decline the next product to buy the better asset allocation. Yep.
We should see some that sense. We have the XP jeans and I cannot enter any more details here because those are you know, strategic products that we have faith in our company and I'm pretty sure it's not all most of our competitors. They they are listening to to us here. So I cannot enter in details, but existing clients offer the best opportunity if you're able to serve them better and everything in terms of experience products and apps
You can basically double our Assets in the custody if we get those two one hundred percent of share of wallet of our time.
So that's that's
thank you Christian. So let's go to the next question, please.
Hi, I would even have the one I think so.
Sorry.
Marcella please. Try again raised their hand again.
You muted my cell was almost out. Thank you. All right, can you hear me? Yes, perfect. All right. Okay, great. Sorry. My my baby's life backgrounds apologize. If you if you hear a small crack can agreements with that we engaged in the quarter was only if we could tell us you know, what was the the, you know the amount of money, you know up those that age, you know, in in this type of agreements, you know, that's the that's the first question and and the second question. You can call me Sab it on the on the expectations regarding in order the public consultation on order internalization. Uh, you know, I know this being hot
Topics, you know, I think your manifestation, you know, I think was very clear right? Well you guys can so you can comment a bit, you know, how you know when you think back to outcome, you know would be what if they can make sense, you know your view and and how meaningful you know, that could be comes up Earnest for you. Thank you. Okay. Thank you my cell in terms of in terms of the I I cannot say the exact number of when you see related to be long term. It's just that we we have done so far, but I can tell you that it's a lot. Okay. And again, I mean you're talking about investments in network that took a huge potential for growth as October number of you is Faith coming to the platform. It's not all you know, almost all of them through Thursday.
Our existing I say network of more than five hundred new Ice Age in one single month. So that that's how we see this. Uh, um profession only speaking about not only the number of existing I say this number was uh, basically less than $500 a month starts at the business. Uh-uh. So now it's close to what ten thousand getting you have to Discount those. I think that have the certificate that we not exercised the profession, but I kind of the day it's a profession that has grown a lot. And the reason for that is that you have to add to the IFA world the bank managers as well and there are several of bank managers office. And as I said, the the market is huge opportunity because a lot of Grants are going to be closed do people spread all over the hill that have these potential to become interpreters dead.
can I have a
Chance to our Platforms in one of our existing offices. So your your second question. I'm sorry, I forgot.
I mean, it's it's something that I believe, you know, it makes sense knighted states. For example, I'm here in the United States here. You have the time of completion with broker-dealers being able to internalize orders and so forth. Uh, but I don't know. I don't know you can win it's going to happen with that probably before that. I know there is a discussion going on, but probably I'm not sure before that. We can have the facilitation for you know apples. We only take for me to contract. We already have the experience that it's uh, uh, uh a good thing for retail client. We benefit from you for the credit to you and I am in the market and it's working really well. So why not extend that for a freeze liquid as a police or sure, but yeah internalization is dead.
On the road map of the regulator as well. So we'll see and and no way I don't have a number to to give the right away in terms of wage thing showed Revenue that we can have East that uh, internalization, uh idea Museum
Thank you for holding for just one just one follow-up question regarding the the client the recession, you know for in terms of the home last like, you know, the dxp platform. Can you come in a bit? What has be the ability to receive those clients, you know better or worse than you expected. Thank you. Yeah. Sure. I can we can further down the road. You can update that drives to leave that in the past considering know. I sales number warranty 3 but the picture it hasn't changed on average. Of course you have office, you know have migrated off left and 10% and others that have migrated more than 10% But uh, I would say the worst case scenario.
Around 25% So because what we do when something like that happened to me is will happen with the future. Remember, we we built this ecosystem you were working on on it's uh investing the is a profession or seven thousand years my own self. Then when when our deal with she told became publicly 2017, um other players realize that the business office the right one and start to invest in me. It's a natural thing to look at x p and the is a network they have built-in try to get some of the I see but again, the the new wife is coming to the mark are many many new ideas and I believe this profession as I said, we'll keep wrong. So in terms of of of the Dead
numbers of those that you know have left
That's that's it's it's nothing really different than what we have already shared with the market and when something like that happens what we do, we just distribute, you know, the whole point to be served from somebody or somebody else either internal advisor or another I say from a different office. The client has changed the priorities the client cannot it's when I say leaves the platform. It's it's not a good experience for the client at the end of the day. So we got to thinking that's what we do right away. That's why the retention rate is so high.
Thank you, but thanks a lot. Appreciate it. Thanks. Thank you. Thank you. Next question comes from
Hi there. Thank you for for taking my question. I have two questions as well. You know, you mentioned that you've seen faster growth for clear in real life clients. Can you can you share with us? You know what percentage of the gross things coming from from this to type of clients? And what is the average balance on this account? And and how could impact your ability to cross sell other products in the future you mention on your remarks right that you the opportunity is to monetize on the existing clients, but I was wondering you know, what is your ability to monetize on a recall versus a clear versus and XP accounts and then the second question. All right, perfect, Mighty. Thank you. Yeah, you are writing you think that this type of client on average they have a lower ticket and it should be like that right because for example
I seen it's worth it has to go to just fight self after a higher ticket plan and and and the number as I said including little clearer in in direct me to see it as a total. They were responsible here today to have more than 85% of the growth number of clients not in assets and the customer number of appointments and the way we want to type those type of clients. I mean every client a different equation and that's the beauty of having these thoughts second able platform because the tech enabled platform you see can our marginal cost, you know 220. That's that's the goal the long-term we are able to add those lines without having the burden of increasing too much the the cost to serve that point. It's one hundred percent, uh visible each month.
I think I mentioned about the clear example as one of the achievements we do things a lot clearer clients in our in our year-to-date here. Basically because of this acquisition process and it's the means to the number of individuals in the tree as well. And we have not including the cost to serve the one hundred percent increase the volume of what and the stability of the platform has improved throughout time. We suggest once we have made so The Courier clients are different profiles time because that's basically for Traders, right? The RICO clients are different profile and XT wage a little bit different as well. And I think the, you know the challenge here my exactly to keep adding services and products in our platform to an even though financial fraud.
Like subscription courses and and so forth.
I want a time and help that's fine too involved in terms of investments in the journey. Remember that we now are looking to climb in between the whole journey is what matters and for sure data and technology is going to help us a lot to have a better life like my start with the client. So that's what I mean. We've been doing different types of plants different type of products Service Experts at a point that we reach them while I experience for each file. That's that's the goal the future.
Okay. Now that's clear. My second question is related. You know, when you mention you reduced some of the trading fees for equities because you you wanted to there was no pressure to do something also, but when we look right you have to have this reputation costs for is a so, how how do you describe the competitive environment? You'll see a lot of consolidation. We're seeing some of you know in not only competition from from the incumbent Banks, but you know new players. Um, how would you describe this is competitive as you have seen you seen any easing from from your competitors?
Look first we didn't have to okay. We wanted to we could just left the I say to migrate to order platform and Thursday and 5 for the client with some of the iPhone. It's not that we had to we wanted to of course because of the competition as well. But, so we understand the right thing to do considering the momentum. We're leaving right now in terms of the opportunities that uh, this investment pulls to the home is a network as well. The thing is that before we were not, you know able to make those long-term Investments because of the Egyptians. We we have we have in this new house, but when you know, just uhhh matching, uh, a competitive proposal we can do it. Can you please the birth?
Of course, we know all the numbers and some of them we do not do so. That's that's one important important fee to to mention money in terms of the competition. Yeah. It's I mean Investments between a lot of news, right but we got to think about the profile of the client. We still look at the main competitors D-Link on the banks, you know, that's where our competition really is because the banks if you look at what they have they have the most valuable asset which is the client is where everything happens and they already have the clients right? So we need to convince the client to migrate toward the prices are here. We need to convince them experiment the platform and as you can see in our cohorts chart as the experiment the platform the engagement increases over time and then we bring more money great now we have two Acura.
Just again, that's what we've been doing other competitors that do not have what the banks have which is the client. It's a different profile.
Flying toward different competition. Uh, I think the real competition is within, uh Banks and if you look at everything that happened in Iraq now our numbers and in our market share details, for example with the competition. You can't find I always say look the compact it's going to be a chance for the next year's because there is a uh a trail in terms of investment in Brazil that it's a separate group Train. That's the way I see it shipped away from fixed-income into higher-yielding Prodigy. It's going to happen in people are you know trying to accelerate but at the end of the day when we look at the the the numbers of Market show that we have for example, I gave the equity retail market share we start to be here. You'll see above 50% uh-huh market share. We we ended off.
It's over with inequities with 58% market share increased our market share in this competitive environment where you just make sure it is true. So competition is good competition is good for the client. It's good for the customer. We we have to be back. We have to have better prices. We have to have faith in our services and and that's all ice. So that's it okay if I can follow up here, so it's kind of related the question as you mentioned so much, you know competition from the banks. We had Ito announced recently made they are planning on spinning off their mistake that they have on XP. What do you think that can change in terms of your relationship with bank and how could impact your operations? Thank you.
Yeah, I saw the announcement and I listen to I listen to parts of the install that by by trying to brush off first. I mean what what I can say, I mean it's important to to highlight S as we have always said that package deal announced in 2017 and executed in 2018 was important move for Express concern value creation. Understood life time was the best use that we could do and it's Davis a credibility important credibility Stan at that time. Our main competitor recognizing the business model. We have built through our lifetime very important.
And and that's going to do correctly explaining this call with the market last week. The original deal have the possibility of acquiring at some point down the road.
Has been modified by the central bank and it's okay not by expense control. Neither. Do you want to sell it?
And and the advanced studies in in the real world announced by itself in my view. It seems like a smart move to what value for its shareholders, but at the end of the day the controlling shareholders of it, they will keep control of these large steak explain. So from that perspective really my I don't think anything changed so my view nothing changing that perspective, but now if this will work,
comes together
with an improvement in these corporate governance
For our company in the long-term, I believe in that when when Central Bank changed the deal back in 2018 for approval.
You didn't change the governments of our shareholders agreement. We see so for example who has super-voting right shift usually designed only for calling shoulder, right? They also have some dealer rights. They have access to confidential information on a monthly basis that our shareholder being offered by our shareholders. You have to send to you threefold and they also have the right to indicate board members where we discuss the Strategic topics for topics for XP and forth competitive landscape were discussing here. So most rights that were given to back in 2017.
Nowadays, they they conflict with the best interest of extreme with because also complete with this Fair competitive environment that they believe Central Bank is going dead.
And and they also go against the best corporate governance you'd like to have a better corporate governance standards on behalf of which is our lives. So if this we are going to be announced intention to do I understand it's not done yet attention to do if it comes along with this Improvement in the corporate governance off and we believe it's a very good moment to revise all these together in the best interests of the company and the competitive landscape in Brazil can be very positive or our company in the long run. That's that's what I think about it, but further than that, I mean nothing changed.
Thank you very much. Thank you.
And not like myself. Thank you so much for your paternity. And then I have a quick I guess a little bit of an accounting question. So I really appreciate this balance sheet you guys put which are just the assets and the life that you obviously have effects leveraging effects of repose and others and these are just the cash flow as you present basically came from 8.9 billion to 7.6. Let's sample 7.9 about a billion cash burn in the order and my understanding is that this adjustment in cash this way you present this cash.
automatically adjust
For a couple of the items you mention in the net cash flow used for operating activities in example, if you get cash and invest more in treasury funds like you mention it here or other Financial assets, you would automatically adjust you have more assets you have more than I did. In fact, we'll be closing at zero a couple of them. And then you mention your growth of our only Channel distribution network box, which I believe probably had some impact in this cash outflow. So my question to you is out of that 1 billion that we've seen their how much was capex how much was other things and how that affects friends transferred to your balance sheet other items. Is it go through accounts payable to you know, everything including a face and go to a property like how exactly do spend a billion in the quarter base. Okay. Yeah first I mean the reason to have these stable then use is to explain birth.
Little bit about our balance sheet because all the Assets in my bill says, we we work a lot in the financial industry. It's different than an investor company order other sectors to understand the the cash flow of the building. So here is is more trying to map all the assets that we have with the liabilities that are is not our money and try to see what is the address of gross Financial assets and this water specifically, we introduced the bank and the bank changed a little bit easy efficient and can be legal because if you look at the asset part, you're going to see one point four billion of low one operation. That's the collateralized loan that we are renting in the bank. If you look at the liability Parts, you're going to see the deposits and the structure operated certificates the coins that we're dead.
Bank, now we can issue through the bank. Our own is structured operate over a operate operating certificate and that together add 2007 didn't hear I think the library point and that explains a little bit the reduction of the adjusted gross Financial assets, but going to your question about the 1 billion. Yeah, the one dealer is excellent because the investment in the in the the I say Network and you're going to see that as I explained through the next quarter's new cards off. There's you know, all the experiences with I assist those two. I'm more tired through the time of the of the long-term contracts that we have with God. Okay more than that. We also have a reduction in the the cash that it doesn't appear in the liability part here because we paid off
our hours of Entry our our bond issue into
2018 and as I said, we decided not to go over so uh together with interest it's 432 million has a beautiful water. Other than that we have investments in the C tax. We acquire also the deal with the bankers from palm trees and that's the investment we are we're doing as well and there was a cash disbursements. So it's it's basically, you know investments in the business a new bulb in fact and and the deal with the high Network segment. Uh, I have phase, uh, the bones being paid off and and and in the cash generation of the business itself, very detailed, you know, just one swear small follow-up or or any of these contingent on the specific goals and ma'am.
Or like those hundred percent like capitalized going to be appreciated no matter what.
Oh, no, there is Parts contingent on its there is an ounce in the basement. Yeah, there is there is continuing to Performance that I hope it's just more times throughout side is that we paid that uh, but uh the business is they have to perform for us to pay but I thank you very much money in Cuba. Well, we did receive all some also some questions here for the community so like to to provide you one question from Porsche, Woody, you know, could you please provide how it flows? You see in Revenue that training so far in the fourth quarter?
You see many photos and degrade. Yeah, I mean
it's it's going well, excluding the extraordinary in the third quarter. So the base the base of net inflows. It's it's going well. You see we have a large a large portion of our methods not only because of the profile of them we have in our platform. But as you saw during the presentation the athlete custody retail we are by far we have more than
Ten percentage points of leadership of the next component that one year and half ago. We were the second one not the first one luk athletes posted in the market. So the growth has been really exponential there and and because of this custody, of course, they're in a situation of the AC depending on what happens with the equity prices. So but having said that it's I mean it's business as usual day. So things are going well in terms of making money in terms of a sienta great. I would I would guess table. Okay. It's because depends on the fluctuation of the minimum wage, it's hard to predict but what I can tell you it's
Okay next.
Questions here from Mia. How should we think about the evolution of banking services over the next two to three years how will excuse product suit took like and in terms of Em are you are there any specific pieces errors that you make sense for it?
Okay, the basic service and products here. We are developing all of them. It's a continue process. So the collateralized loan is something that I am having back and you still have more to go there marginal on another one the issuing substructure notes in in the link with the secondary market trading wage. Um, it's also important, uh, they leave a brief institutional clients. It's something that also uh, we can sure increase the wage base their effects and other one you just corporate clients or retail clients and and in the credit card, it's on Battle tests increasing every month the number of clients there. Um, uh, and uh, the digital bank account is going to be the next the next stage together with with payment. So I think
Yeah, you know by uh beginning of next year first semester. We're going to have the whole suit of banking service products and improvements. It's going to be a continuing on a continuous basis Thursday evening last month nowadays not because we are leaders in I think the kind of platform investment, uh that we uh, we rely on that do not off work hard to get better because we always have how to get to get better. So the bank and service products going to be the same the same kind of of Journey I have the other question was I don't know about him in a what would make sense. We are always looking for in a new protein.
So yeah, we do have a pipeline doesn't mean that we're going to close any of them, but I will not get into specific details about what phone company in Houston on what we are actually looking at right now, but we are always looking at opportunities and working very, you know, healthy pipeline.
Well that concludes I think the Q&A session. Thank you for everybody participating until it's 1 1 hour and 30 minutes call. You don't know just your final comments off, please. Thank you. My final comment is to thank you. I'll I'll be investors that have believed in us so far. I know it's their short term but we are getting close to 1-year of IPO. It shows great. It would be able to deliver a lot more than what we said in the long-term. I know it's only a short-term Horizon here, but it seems great especially considering the perfect environment that we faced is here with these endemic that nobody uh site, for sure. I I hope every order and as the time goes by the investors and analysts. They they realize what is the what we believe
The real competitive advantage that we have.
Nor business which is our culture or people we talked a lot about that. We believe that I think it's endemic demonstrated that for ourselves. At least the way we were able to adapt overcome the challenges in in the way that the company as a whole uh-uh, you know, did The Impossible become possible and I hope you enjoy the fact of knowing a little bit more about an important partner that we have a leader in our company, so our CTO and and hopefully you're going to be able to meet so you don't get worried about leasing only sales here other other players and partners of our company, and we are you know altogether in his own journey, and thank you very much for for your lifetime. Thank you. Thank you. Thank you all.
Goodbye.